Kieran O'Donnell (Limerick East, Fine Gael)

Nee Lenihan. I apologise. Deputy O'Rourke claimed that this budget was taking from people who could afford it, but this is not the case. The 1% levy is being charged on people who are paying the minimum wage. In last year's budget, the Government made reference to the fact that 878,000 people were outside the tax net. That is no longer the case, as the budget is taking money from people who can ill afford it.

The Deputy also spoke about the budget helping the corporate sector. There are certainly measures that do this, namely in the area of small business. I welcome section 27 of the Bill, which deals with new businesses that can pay no tax for the first three years where their liability is less than €40,000 per year. However, from my experience as an accountant, I know that tax is not always the consideration during the first few years of a business. The big consideration is access to finance from the banks, but people cannot get that access at the moment. The banks need to be recapitalised as a matter of urgency to ensure that happens. They need measures that will enable them to take on employees.

At the moment, available measures include the PRSI exemption scheme and a revenue job assist scheme. Employers are exempt from employers' PRSI.

However, the people they take on must be in receipt of jobseekers allowance or benefit for the previous two years. That should be amended to allow employers to hire people who have just become unemployed. The Government's key task is to ensure that the minimum number of people possible go on the live register. We must try to ensure that people are kept in employment.

The role of Government is to create a climate which enables business people to provide employment, operate profitably and contribute to the Exchequer through taxes. Through those taxes, the Government can then provide public services, infrastructure and look after the most vulnerable in society. On all those counts, this budget fails.

The budget fails across a range of areas, including education, to which Deputy O'Rourke referred. It sets primary and second level education back by many years. Ireland operates in a global economy and to do so successfully, it must become a knowledge-based economy. We must develop value-added services in the multinational sector to retain jobs and the springboard for that is education. If we do not invest in education at first, second and third level, we will be sorry in the long term. I have been approached by parents and teachers in Limerick who are worried about children not being provided with a proper education. Parents of second level students are worried that the reduction in teacher numbers will mean that certain subjects will only be available at ordinary rather than higher level in some schools. These are genuine worries. The cutbacks in education should be reversed, but the Government has not done so. The Government must ensure that class sizes are reduced and that the number of teachers in schools is maintained at current levels.

In terms of the public finances, the Government is not making the hard decisions that are required. Four wise men will be appointed to a review body, which has become known as An Bord Snip Nua, to make recommendations on public sector reform. The Minister for Finance will make an announcement on this review body at 4 p.m. today. I wish to know the terms of reference for that body and when it is expected to report to the Government.

The director general of FÁS resigned today because outrageous sums of money were spent by executives of that organisation. The call from my party leader, Deputy Enda Kenny, for the board of FÁS to resign is appropriate. We must move on from the current debacle. FÁS has a budget of €1 billion. While I welcome the establishment of the aforementioned review group, it is also critical that a person with expertise in the reform of large organisations be appointed immediately to scrutinise the spending of the boards of all State agencies. That person should examine all expenses incurred and determine whether board members are flying first class or otherwise wasting money. Having conducted such an examination, the appointee should then set out specific rules and regulations on expenditure that will apply to all State boards.

The vast majority of those working in the various State agencies, including FÁS, do an excellent job. However, at the higher level of such organisations, outrageous amounts of money are being spent. This also applies to the banking sector, where outrageous sums are being paid to senior executives, based on perceived good performances. At the same time, some 40,000 ordinary employees in that sector are worried about their job security. Many of those same people have their savings tied up in bank shares. I have not seen one executive in the top banks lose his or her job but we have heard much talk of enormous rationalisation of the sector. The Government must bring certainty to Irish banking. The question of the recapitalisation of the banks in order to allow small businesses to prosper is critical. Equally important, however, is the number of jobs in the banking sector. People are worried in that regard and the Government has a responsibility to try to maintain employment.

Having appointed a person to examine spending in all State and semi-State agencies, the Minister should revert to the House in two weeks' time to outline how immediate savings can be made. We must have proper reform. Those working in the public sector must be given additional mobility to enable them to advance. At the same time, we must reduce or eliminate all wastage in the public sector in terms of administration, bureaucracy, improper procurement and so forth. The Minister of State, Deputy Mansergh, is currently examining the procurement area and I look forward to his up-to-date report on the matter. It certainly appears to be the case that enormous amounts of money are being wasted in a number of areas. One only has to look at examples such as PPARS and the electronic voting machines. The latter machines are still sitting in storage, slowly rotting away, while people are struggling to gain access to education and health services. Much money has been frittered away on useless projects.

I wish to refer to specific provisions in the Finance Bill. I have already referred to the income levy provision in section 1 of the Bill. That levy should not apply to those on the minimum wage. Section 3 of the Bill deals with the parking levy, which is estimated will yield €5 million in 2009. The levy will only apply to those working in major cities, including Limerick. A person who, for example, works in an industrial estate on the outskirts of Limerick city will not have to pay a parking charge, whereas a person working in the city centre will have to pay €200 per year. It is a ludicrous, anti-competitive measure that should be rescinded and I will table an amendment to that effect.

Section 8 of the Bill deals with tax relief for health expenses. I seek clarification from the Minister regarding nursing home charges. There now appears to be no mention of claims for relief on such charges becoming standard rated in 2010. I ask the Minister to make a commitment that nursing home charges will not be standard-rated for all years going forward because the cost of nursing home charges is already prohibitive for families and individuals. Many people are currently getting tax relief at the marginal rate for all medical expenses and, given the inadequacies in and high cost of our health service, that should remain the case.

The provisions in section 12 regarding mortgage interest relief are revenue neutral. The Government is giving relief to first-time buyers, which is welcome. However, it is clearly financing that by taking tax relief away from those who are not first-time buyers. People must move within the market and one of the biggest problems in the current housing market is the fact that bridging finance is not available. If I own a home and wish to move, I cannot do so until I sell my first home. Bridging finance is not provided. Similarly, if a person wishes to move to a second home, his or her mortgage interest relief drops from 20% to 15%, which is a penal measure in the current climate. I welcome the removal of the so-called "Cinderella clause" as it applied to non-residents in section 13 of the Bill.

I have no hesitation in welcoming measures which I feel will be of benefit. Equally, though, I have no compunction about criticising those measures which I believe will not bring our economy out of recession. I have already made reference to section 27 which deals with tax exemption for new businesses for their first three years in operation. However, the recapitalisation of the banks is just as important in terms of making finance available to such businesses.

Section 30 deals with tax credits for research and development, which I welcome. However, the credit should be based on expenditure incurred in the relevant tax year. The reference year at the moment is 2003 which is problematic because it means that if companies made large-scale investments in research and development in that year, they will be penalised. The Government is implying that it will be volume based, but that is not correct. It will be based on 2003. I will be looking for an equal volume basis. Section 30 has a provision whereby claims for research and development expenditure up to the end of December 2007 will have to be made before the end of this year. It was normal to allow a four-year measure. I will be tabling an amendment to the effect that all expenditure up to the end of 2007 could be claimed for up to the end of 2009 to allow people become used to the new measure. As it stands, people are being told they will need to submit a claim for 2007 within the next month. This is a penal and counter-productive measure which should be amended.

Fine Gael proposed that employers should be allowed to put research and development credits against employer's PRSI and I ask the Minister to consider this proposal. Section 34 proposes bringing forward the date for payment of corporation tax by five months for certain companies. It proposes bringing the date forward from November to June. This is a penal measure in the current climate and it will have significant effects on cash flow. It is anti-competitive and this is not what the Government should be doing to get the economy off the ground. Section 39 proposes an increase in capital gains tax from 20% to 22%. This is also a penal measure. Section 80 reduces the top rate of stamp duty from 9% to 6% for non-residential properties for all disposals after the 15 October and this provision is to be welcomed. However, if people cannot have access to finance, this measure will be of no use. The Minister must deal with practical as well as theoretical issues and this is not being done. He must interact with the economy.

Section 50 deals with the airport tax. The Government has rowed back on this measure since the budget and the charge is now €2 for all travel more than 300 km from Dublin Airport. I wish to make specific reference to Shannon Airport which is our international airport in the mid-west and the west. Shannon Airport is being penalised heavily by this travel tax. The €10 travel tax will apply to all transatlantic flights from Shannon. If the Government is committed to balanced regional development, this travel tax should not apply to Shannon Airport or anywhere on the western seaboard because it is a penal tax which works against us.

Section 67 will increase the rate of VAT by 0.5%. There is now a differential of 6.5% between ourselves and Northern Ireland and the UK where the VAT rate is 15% and ours is 21.5%. This is adding to inflation and the Government should not have increased VAT. In simple terms, Fine Gael's pre-budget document proposed no increase in taxes. It made proposals for stimulating investment and proposed €25 million for retraining in the construction sector. I see nothing of that nature in the Bill. Fine Gael proposed that the national development plan continue with investment whereas the Government proposes reductions. This shows a lack of vision on its part. This country has a great opportunity over the next three years to ensure that competitiveness is restored. This will be achieved by keeping taxes down and ensuring that Government charges do not penalise business. We must ensure that local authorities are not being forced to raise rates. The Government has reduced the local government fund by 7% and this will put pressure on local authorities. A charge of €200 has been imposed on non-family homes which is to be collected by the local authorities but which is to be sent to the Central Fund. I ask why this income cannot be retained by the local authorities. I expect the Government to show it has a strategic vision when this Bill reaches Committee Stage.

Agriculture has always been our historical natural resource and it continues to be one of the country's major resources. This budget was penal in its provisions as regards farmers and the installation aid and retirement schemes. Small business must be funded so as to allow it to progress and provide employment. Otherwise, there will be more people unemployed and dependent on social welfare. This is an unhealthy position for both the State and for the people themselves. We must get to grips with the public finances and proper public sector reform. My hope is that the Minister and the Government will appoint someone with significant experience in this area to investigate all the boards of semi-State bodies to see whether there is wasteful expenditure as has been the case in FÁS. This may be happening in other State agencies. This person should then report back to the House within a period of two weeks. The country is looking for confident direction and leadership and a set of strategies. I expect to see the Minister for Finance back before the House next February or March with a supplementary budget because he is projecting a 1% increase in revenue in the budget and this will not happen. There is talk of a 6.5% deficit in the GDP. I expect this will be in the order of 9% or 10%. We cannot continue in this fashion. We need direction and this Government is headless. It does not appear to know what it is doing which is extremely worrying. It needs to take control and come up with a set of policies to ensure that this economy becomes competitive, that people are not becoming unemployed and to ensure that people can stay in their jobs and secure their homes and provide for their children's education. The Minister must rescind the education measures in the budget, for the sake of the families and the children. He must give a sense of direction which currently the Government does not have.

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