Damien English (Meath West, Fine Gael)

Before I forget, I wish to point out to Deputy Peter Power that corporation tax of 12% was a rainbow Government initiative. We agree with it and believe in it because we started it. We will certainly keep it and will even improve on it. People speaking here often forget reality and I wanted to point that out.

I will not speak about doom and gloom, I will speak about confidence and where we need to go. We will speak about new ideas, but in my speech I wish to focus on what we can fix, and the Government has a direct role in fixing. As a party, we are prepared to work with any Minister or Department on new initiatives and ideas but we also have to face the facts. According to a recent ISME survey, business confidence in Ireland has plummeted to a four year low. Small businesses, particularly in the distribution, retail and construction sectors, are markedly less optimistic about the prospects for the economy than they were one year ago. The slowdown in the housing market and the continuing erosion of competitiveness are feeding the gloomy mood. However, the Government seems to have no effective game plan for tackling the challenges we face other than to mouth the usual platitudes.

The Minister of State's contribution was probably the most honest I heard today. He admitted that mistakes were made. I agree with him that we have had some success but we cannot continue to look backwards instead of developing confidence and competitiveness for the future. We must keep our heads out of the sand. It will not be easy because an effective plan is needed to reduce costs and inflation and to make us more competitive. The single biggest challenge facing small businesses in Ireland is competitiveness. The cost of doing business has increased significantly due to a mixture of high inflation, strong growth in wages, particularly in the public sector, increases in the cost of State services and a greater burden of regulation. It is now 8% more expensive to do business in Ireland than in Britain.

The Government's attempts to address this issue have been driven by public relations rather than policy. Put under pressure by Fine Gael and Eddie Hobbs to deal with inflation, the Government decided in a blaze of publicity to abolish the groceries order. Fine Gael opposed the decision because we did not believe it would impact on prices and feared it would significantly affect small suppliers of the multiples. Abolishing the groceries order had little or no impact on the price of food, although it did lead to a reduction in the price of alcohol, the benefit of which remains to be seen. Thankfully, Government Deputies are to lead a review of the abolition.

As any economist could have pointed out to the Government, food inflation was never the real problem. Between 2000 and 2006, the consumer price index rose by 27.5% but food prices rose by 16.2%, below the overall rate of inflation. Ireland's high rates of inflation and costs of business are driven by charges for water, refuse and miscellaneous services, which have increased by a whopping 239%. The cost of electricity has increased by 52%, motor tax by 27% and rail transport by 32%. In other words, the main price increases have occurred in services provided by the Government or in the utilities it regulates. As far as businesses are concerned, the Dick Turpin of rip-off Ireland is the Government rather than the private sector. This morning, the CEO of the IDA appeared before the Joint Committee on Enterprise, Trade and Employment, where he admitted that the contribution charges imposed by local authorities are having a serious effect on business location decisions.

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