Mr. James Coghlan:

With regard to the question on the VAT situation, I would not disagree with the member. A lot of the discussion around the 9% VAT rate relates to hotels in Dublin city centre. The same clearly does not apply to rural hotels. The 9% VAT rate cannot be seen solely with respect to hotels. The 9% rate and the old 13.5% rate essentially related to labour-intensive Irish indigenous companies. It went across a broad range of sectors, and I think that if we made that decision in one fell swoop without thinking of the consequences it would be a very difficult situation for an awful lot of people.

For example, I read last weekend that there was an Economic and Social Research Institute, ESRI, report looking at productivity in the multinational sector and the indigenous sector. In the small to medium enterprise, SME, sector, profit is 30% of wages on average. If wage costs account for 30% of a company's cost structure and profit is 10%, most people would not regard that as unreasonable. In other sectors however, profit could be a multiple of wages. The ability of SMEs to withstand significant reductions in sales, through VAT increases or increases in costs such as insurance, is very limited. We do not have a highly profitable SME sector in this country. That is a fact. We need to be really careful about putting it out there that if we make this change we will get €500 million and there will be no impact on the SME sector. That is complete nonsense.

A member asked about the public sector pay gap. It is a tense topic when it comes up. I think the first report of the Public Service Pay Commission was supposed to include international comparisons its scope. The last time I looked there was one page on the international comparisons in the report. There is a bunch of European studies on this topic. There are some ESRI studies. The ESRI did a report called "Comparing Public and Private Sector Pay in Ireland: Size Matters" by Elish Kelly, Seamus McGuinness and Philip J. O'Connell in 2012. That is worth looking at. I think the European Central Bank wrote some papers on the topic. There are at least two or three European papers on the topic. The research is there. If the Public Service Pay Commission is going to write a paper, it should really put all the evidence and data in there. If we are going to make decisions on this stuff, let us make value decisions. Let us not just make it up as we go along. Let us look at the evidence, see what it says and if we are going to make a decision, make that decision. However, we should do it in full knowledge of all the evidence available to us, both within Ireland and in the European context.