Leo Varadkar (Dublin West, Fine Gael)

The Minister may take the view that three to five pay increases in 18 months represents a pay pause. I do not, but people must use their common sense to decide who is accurate and who is not. Those who work in small and medium enterprises will face a real pay pause. Many will see a pay cut as they will lose their jobs. Some 1,000 jobs are lost every week, which is equivalent to one job loss every three minutes, all of which are from the private sector and most of which are from small and medium enterprises. We face a situation where owner managers or sole traders will experience a significant reduction in income and we will see a similar situation for many others. Given the Government decision not to increase the minimum wage, those earning it will face a pay freeze. There is one standard for poor people and another for the upper middle classes.

There is a cost to business with the Sunday premium, which has been debated in the House previously. This is causing the closure of pubs, hotels and restaurants and will close more without action from the Government. I realise the Minister of State at the Department of Enterprise, Trade and Employment may intend to act on this, but if not he will have an opportunity to vote on the matter by the end of February.

I refer to the issue of rising utility costs. Electricity and gas costs in Ireland are among the highest in Europe. We have seen very little action from Government to counter price increases in these areas. There have been increases in levies and rates. All local government councils will increase rates by 3% or 4% next year. The councils used to justify rate increases based on inflation, but next year there will be no increase in the level of inflation, there may even be deflation. However, there is another reason provided for the increase. The Government is increasing VAT and is set on destroying the retail sector in Ireland, to which Deputy Callery referred. This will set a significant price differential in the Border counties. My colleague, Deputy Joe McHugh will refer to this matter in greater detail.

Excise costs are also rising which puts more pressure on businesses. If the public finances were managed in a sensible way, or even in some kind of reasonable manner such as happened in Britain, we would not be in a position where we must raise taxes and increase excise duties. We are one of the few countries in that situation and it is because of Fianna Fáil and Deputy Brian Cowen.

Earlier, RTE and its role in encouraging people to shop in New York was mentioned in the debate. However, the Tánaiste has encouraged people to shop around and shop in Northern Ireland. The National Consumer Agency, a Government agency, has encouraged people to shop in Northern Ireland. We should not be concerned about RTE when there are national saboteurs such as the Tánaiste and the National Consumer Agency which encourage people to shop and spend their money in another jurisdiction.

The issue of regulation was mentioned. The Minister for Finance spoke of the effect of regulation on business. We all recognise the cost of regulation on business is very significant. The Irish Small and Medium Enterprise Association estimates one in eight employees spends time filling in forms. The Government made a verbal commitment in March to reduce the cost of regulation to business by 25%. The cost should have reduced by 3% or 4% at this stage, but a figure cannot be provided because the Government has not yet worked out to what all of the cost amounts. How can one reduce the cost of regulation by 25% if one has not worked out the base line cost in the first instance? I asked the Government how it would calculate this figure and if it would use the international standard costs model. The answer given was "No" and that it did not know which model would be used. It is like offering a 25% off sale when one does not know the cost of the goods in the first instance. This is why I refer to insincerity and verbal non-commitments from the Government.

A major focus of this motion is the banking crisis, which is creating significant problems for the viability of small businesses. Since we are in a recession, many small business will go under regardless of what is done in the banking sector. However, those which are or may again be viable need support, which is why it is very important there is action taken to address the problems in the banking sector very soon.

Earlier in the financial crisis we voted for the bank guarantee and we were told by the Minister for Finance that the problem in Irish banking was solely an issue of liquidity and that there was no capital crisis. We now know that is untrue. The guarantee was still the correct course of action to assist with the liquidity problems of the banks, but it has not made credit available to those who seek mortgages, those who can afford them and viable businesses. We need to recapitalise the banks and make credit available. Deputy Enda Kenny called for this some four weeks ago. For a considerable amount of time Fine Gael has called for public support for the recapitalisation of the banks and it should be done with public money from the National Pensions Reserve Fund. Private money could be used also, but it must come primarily from the National Pensions Reserve Fund and we must retain a properly capitalised solid banking sector in Irish ownership.

I endorse the views of the Irish Bank Officials Association, which expressed opposition to the Government proposals to, as the association put it, "do an Eircom" with the Irish banks. There must be swift action, which we have not seen to date on this issue. I hope we neednot wait until after Christmas for the banks to be recapitalised. If we wait until then, it will be too late and thousands of businesses will go under and with them will go tens of thousands of jobs.

Some progress has been made in terms of the European Investment Bank. The action and calls of the Small Firms Association was crucial and it is pleasing to see some progress made in that regard. Everyone in the House should recognise the importance of our position in the European Union. Never mind the European Investment Bank and its provision of credit for small businesses, where would we be now without the European Central Bank, propping up the financial services industry in the country at present through a capital injection of €65 billion? The answer is that we would be in Iceland. We should not forget the importance of the European Union in keeping the country afloat.

I refer to the settling of debts. In other jurisdictions a Government guarantee has been provided to allow debts to be settled within ten days. I believe there should be a similar provision here. The VAT increase should be reversed. It was suggested to me today that if Deputy Brian Lenihan was a superhero, he would be called VAT man, having increased VAT to the highest rate in the European Union, which is a serious mistake and which will make matters worse. The Government performance in paying debts to small business has not been bad, but a ten day measure is due.

I refer to a distinction in policy on the county enterprise boards. There are mixed feelings surrounding the boards, some are very good and some are not. A recent study of Enterprise Ireland, under which the boards fall, shows that more than 40% of the budget of Enterprise Ireland is spent on staff costs. It spends almost as much if not more on staff administration costs than on grants to business. While I do not believe Enterprise Ireland is in any way like the Minister's charge, FÁS in that regard, I will pay particular attention to the way it works in the new year. I will examine its costs and undertake a detailed review of the value of county enterprise boards with reference to the job they should be doing, namely, working for small businessmen, rather than what they do for themselves and on which 45% of the budget is spent.

I welcome the spirit of the motion. I hold grave concerns about what will befall the economy in the coming months. I have no confidence in the ability of the Government to rescue the situation. However, I plead that it should take the Christmas break to consider once more the policies being pursued. Hopefully the Government will return following the Christmas break with a U-turn in its economic policy.

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