Seán Crowe (Dublin South West, Sinn Fein)

Many sections of the Investment Funds, Companies and Miscellaneous Provisions Bill are being introduced to prepare the ground for the transposition of EU directives. It is interesting to note that the State is far quicker to implement EU directives relating to matters of this nature than it is to implement EU directives relating to environmental issues, for example. It often drags its feet on such matters. This State was one of the first EU member states to implement a directive relating to undertakings for collective investment in transferable securities, known as the UCITS product directive. It was also one of the first member states to transpose the UCITS management company directive.

The Bill gives the Irish Financial Services Regulatory Authority the power to regulate the borrowing requirements of non-UCITS common contractual funds. It also regulates the assets which can be dealt with and the manner in which they can be dealt with.

I welcome Part 7 which amends certain aspects of consumer legislation to increase the maximum fines which can be imposed on conviction. I also welcome Part 4 which enacts provisions which need to be enacted in primary law to ensure the effective transposition of the EU market abuses directive, which relates to insider dealing and market manipulation. The public good must be protected in the market economy. The free market must be reigned in and market abuses such as insider dealing and market manipulation must be stamped out.

The debate on this Bill offers a timely opportunity to comment on the Government's enterprise, tax and pensions policy. For too long, consecutive Governments have considered the development of indigenous enterprise to be less important than the promotion of foreign direct investment. The Minister for Enterprise, Trade and Employment recently announced that approximately 100 jobs will be created in a multinational financial services company. Perhaps the Minister thinks such jobs are more glamorous than the jobs created on a daily basis by entrepreneurs in small and medium-sized enterprises. Much more needs to be done to promote the development of such enterprises. We should recognise that most employment stems from them.

This country's over-reliance on foreign direct investment makes it more vulnerable than other European economies to a global economic downturn. When one considers the unstable nature of global markets and global capital, it is clear that such an over-reliance is dangerous. The quality and quantity of resources which are made available to inward investors should be made available to indigenous enterprises. We should guard against the destabilising effect of short-term capital inflows, for example, by ensuring that we have a strong indigenous enterprise sector and strong regulatory institutions in the banking and financial sectors.

This State's economic and taxation policy should be underpinned by the objective of making the economy serve society, rather than vice versa. We need to ensure that the revenue generated by our economic stability is used to provide the highest quality of essential services and to vindicate everyone's socio-economic rights.

The development of the International Financial Services Centre was achieved after the Government imposed the lowest business tax rates in Europe. Such low rates have undermined this country's capacity to tax some of the most profitable companies in the world, including those involved in the financial sector. I do not know why a large chunk of the economic activity that takes place in the State is overlooked when the tax burden is being assessed. The low-tax model adopted by the Government is not adequate to provide European norms of public service and infrastructure.

This country has a low level of public sector provision. The low level of provision offered is heavily over-subsidised by high VAT, which hits the poorest sectors of society most heavily. The increase in the gap between rich and poor in the wake of the Celtic tiger years is evident when one contrasts the economic circumstances of those working in the IFSC and those living in the north inner city communities which surround it.

The State's tax base is too narrow to fund the social objectives I have mentioned. Personal taxes are not particularly out of line with the desired level, but that cannot be said of business taxes, wealth taxes, property taxes and tax shelters for the rich. That taxation policy has been focused on reducing the overall tax burden has benefitted those with resources rather than maximising benefits for all.

According to CORI's justice commission, the State has generated sufficient resources to take every man, woman and child out of poverty, but its resources have not been focused on producing such an outcome. That is clear when one examines the Government's expenditure on social protection and its taxation policy, for example. The economic growth we have experienced over the last decade has not been primarily targeted, much to the State's shame, at reducing the gap between rich and poor or at bringing Ireland's level of social protection in line with EU levels.

UCITS and non-UCITS common contractual funds are vehicles for the management of pension funds. The debate on the Bill before the House represents a timely opportunity to make a number of comments on the pensions situation in this State. The Government hoped that the introduction of personal retirement savings accounts would be the main instrument to be used when trying to ensure that 70% of those in employment have pensions cover.

The PRSA scheme has not been particularly effective for a number of reasons. It was proposed as a means of making it easy for workers on modest incomes in jobs where occupational incomes do not exist to save for their retirements. It was intended that it would be compulsory for employers to facilitate employees who are establishing PRSAs, for example by making deductions from wages if they were asked to do so. Workers on modest incomes do not have enough money to invest in their pensions. They must service huge mortgages because of inflated house prices. Even if they understand the importance of investing in pensions, they might not have the money to do so. It should be borne in mind that being offered a tax offset is much more of an incentive for people on higher incomes than it is for those on lower incomes.

The wiping of billions of euro from the value of pension funds following the collapse of the global market did not help to increase the level of enthusiasm for taking out pension plans. The popular interest in such plans was also damaged by revelations about the large-scale abuse of construction industry pension schemes. SIPTU claims that up to 50% of building workers are not covered by the pension scheme for construction federation operatives because many cowboy employers have failed to make compulsory contributions. SIPTU has called on the Minister for Social and Family Affairs, Deputy Brennan, to introduce a centralised collective system for pension contributions by builders.

Experience in Britain and the United States shows that PRSA-type pensions work only if employers also contribute to them. The Irish Congress of Trade Unions has proposed that employers should be required to pay a minimum of 10% of salaries to defined contribution schemes. It has also suggested the introduction of an employee 6% tax. Such suggestions deserve to be examined and considered.

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