Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)

I thank Deputy Kathleen Lynch for sharing time.

This is not an innovative Finance Bill by any stretch of the imagination. To my mind, it does not signal that the Minister for Finance is up to the challenge presented by the current economic circumstances. There have been a number of significant worrying developments since the budget was announced at the start of December, some of which I will outline.

The Central Bank has predicted that the downturn in construction will mean the loss of 23,000 building jobs this year alone. The Exchequer surplus was a mere €630 million in January, down from €1.7 billion in January 2007. The number of people claiming unemployment benefit rose in January at the fastest pace since 1980. The International Monetary Fund, IMF, has warned that a recession in the US would inflict significant damage on the Irish economy. There has been a string of job losses over the past two months, including most recently 350 at Allergen, based in Arklow, County Wicklow, 200 at the Jacob Fruitfield factory in Tallaght, 240 at Dawn Meats in Ballaghadereen, County Roscommon, and just last week it was announced that 130 jobs at Grove Turkeys in Smithborough, County Monaghan, in my constituency, were also to be axed.

Repossessions are rising while falling house prices push those who borrowed at the height of the boom into a negative equity scenario. Recent rises in interest rates have also made it difficult for many homeowners to meet repayments. All of that paints a very gloomy picture indeed in this, the first week of February 2008.

As economic growth forecasts are revised downwards, the challenge for the Minister for Finance and the Government is to ensure the revenue is there to provide for public services and that necessary interventions are made to stem job losses while creating alternative employment. This can and must be done but what is required is the political will at Government level to do it.

The economic difficulties which we now face were, at least in part, avoidable. The Government failed to address the issue of declining competitiveness. Indeed, some of its actions significantly contributed to the loss of competitiveness, including the failure to roll out needed infrastructure fast enough and the privatisation of Eircom which detrimentally retarded the roll-out of broadband. In relation to that, may I say that, like many other Deputies I have been contacted by a whole raft of people from different walks of life for whom their particular job, function, whatever, is seriously impaired by the absence of broadband accessibility in their respective areas. I have had representations from County Cavan and County Monaghan in recent weeks and I know that is replicated in other parts of the country. That is a hugely important issue. What has happened in terms of the failure to roll out broadband, as promised, is absolutely criminal because people have made commitments to work from home, something that was encouraged for years. Now they find the situation untenable and cannot continue.

The construction sector was allowed to become over inflated and the economy over-reliant on that sector. There has been a clear absence of intervention to retrain vulnerable workers, particularly in the construction sector where, according to the Higher Education Authority, 80,000 workers have only a second level education. The Government sleep-walked into this situation. While others were recognising the serious vulnerabilities in the Irish economy, this Government and this Minister for Finance were insisting that everything was going fine. They deemed those who raised legitimate concerns about the state of the economy to be merchants of doom and such a charge was thrown back at us across this Chamber repeatedly in recent years.

Despite repeated warnings that the boom could not last indefinitely as the State slipped down competitiveness rankings and as trouble brewed in the US economy, this Government did nothing. Despite numerous calls from the trade union movement and others for action on training and upskilling, nothing was done to protect vulnerable workers who are now losing their jobs. Nothing was done to fast track the roll-out of infrastructure and to stop the decline in competitiveness. The provisions in this Bill will not be enough to address the extent to which this State continues to lag behind other EU states in terms of research and development capacity within enterprise.

The poor state of public services after more than a decade of this Government, in particular in the health system, has also contributed to the erosion of competitiveness. Our public transport system is totally inadequate with Dublin and other urban centres suffering from crippling gridlock that is hurting business, undermining competitiveness and leading to a very negative quality of life situation for so many people and destroying the quality of life of those forced to commute.

The Government's failure to plan for the future of the economy will have serious consequences for the Exchequer. Tax revenue across a range of taxes is down while the burden on the social insurance fund is set to rise as a consequence of the increased number of redundancies and a growing level of unemployment. The social insurance fund needs to be able to cope with these increased demands and for that reason it is crucial that there are no cuts in PRSI contributions into the social insurance fund. Neither has there been any measure to address the expansion of low-paid employment, something which has serious long-term consequences for the tax take, both in terms of income tax revenue and revenue from spending taxes.

We are still waiting for the proposed commission on taxation to be established. What is the delay? Perhaps we might get some indication of that in the Minister's response to Second Stage of the Finance Bill. The proposed commission on taxation must be established now and set the task of determining the best way to fundamentally restructure the tax system to create a progressively distributive tax system through which revenue is raised in a fair, transparent and accountable manner in order that the Exchequer has the revenue needed to reduce inequalities, improve public services and deliver infrastructure. That is the task of Government first and foremost.

It is time the Minister for Finance outlined what action the Government is to take to put the economy back on a solid foundation and ensure we regain competitiveness. This Bill should have set the tone for the Government's approach but it does not. A further challenge arises from the fact that decisions on interest rates and exchange rates are now under the control of the European Central Bank. Never has a state been so limited in its ability to respond to its individual economic situation. Considerable economic sovereignty has been ceded to the European Union and what the ECB does in the best interests of the EU as a whole or in the interests of larger states such as Germany and France may not be in the best interest of Ireland. With our particular vulnerability to developments in the United States, we may find ourselves in a different economic situation from the states of mainland Europe with different approaches needed but none possible because we have ceded the opportunity to respond appropriately and in our patent interest.

There are measures in the Bill that are to be welcomed. Sinn Féin welcomes the new measures to tax the profits of exploration companies exploiting our natural resources, although these do not go far enough. We are also concerned that this tax will not apply to exploration licences granted before 2007. Sinn Féin welcomes the overdue reduction in the rate of VAT on non-oral contraceptives from 21% to 13.5%. We also welcome the fact that those on the average industrial wage are to be kept within the standard tax band and that unsustainable tax cutting proposals have not been implemented.

At a time when Irish pension funds lost €9 billion in value between the end of June and the end of November 2007, we would have liked to see reform of the excessively generous tax incentives for private pension savings which disproportionately benefited a wealthy minority. The cost of tax breaks has soared in recent years and has not been effective in ensuring full pension coverage, particularly among the least well off.

While this Bill contains measures to promote energy efficient technology among businesses, we would have liked to see the inclusion of an innovative scheme to assist the low income households to insulate their homes and to install sustainable heating alternatives.

On the other issues, on amendments and proposals that we may be able to put forward that might not be disallowed on the basis of affecting the Exchequer returns, we look forward to the opportunities presented on Committee and Report Stages.

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