Seán Sherlock (Cork East, Labour)

The Minister for Finance made a call to patriotic action. It was more of a cull in terms of patriotic action because despite the circumstances in which we find ourselves, the current difficulties we face and the external factors that have affected this economy, there was no imagination in terms of the framing of this budget. There was little by way of providing an economic stimulus that would create jobs and build a foundation on which we could climb out of this morass if not in the short term at least in the medium term. Instead of putting in place some inventive measures, the Government decided to slash and burn across the divide.

To take one sector, agriculture is a primary producer. Food and drink exports amount to €8.2 billion to €8.6 billion every year but at a time when production was going on in that sector and in the face of a global food scarcity, the Government decided to take money out of that productive part of the economy by way of cuts in the installation aid scheme and not extending the farm waste management scheme.

It has been proven that every euro spent within the rural economy has a multiplier effect and it stays within the rural economy. In cutting the installation aid scheme and other such schemes, the Government is automatically reducing that multiplier effect and the potential within what was a productive sector. That did not make economic sense. I ask the Minister, when replying, to address that particular aspect because we need to be imaginative about the direction in which this country is going in this tough economic climate.

The issue of VAT is one on which I would like the Minister to respond. If we are in an inflationary period and if there is less money in the economy, and public and consumer sentiment is non-existent, why would the Minister increase VAT at a time when people are not spending money? The returns to the Exchequer will be significantly reduced anyway. If the Minister could stimulate such demand by reducing VAT he would, by extension, increase returns to the Exchequer. That seems to be the most logical approach. He should not increase VAT but maintain it at the current rate or reduce it marginally but he certainly should not increase it in the current climate. I do not understand the reason the Minister has done that, and perhaps we could get an answer as to his logic in that regard.

On the Taxes Consolidation Act 1997 relating to research and development activity, we all agree that foreign direct investment has been very good for this country. That is something that has been a bedrock of policy for a number of years but we need to consider whether we should continue to rely on foreign direct investment.

I welcome the tax credits for research and development but I again question the reason for the base year of 2003. If a company is involved in research and development there is a good possibility that its research could predate that date. I would have favoured 2000 as a base year to try to exercise a credit of that nature but perhaps there is a logic to the Minister's position on that. He might respond to that when replying.

On the issue of banking, we need some consistency. Banks, by their very nature, have been profligate in the way they have lent in that much of it was developer led. There is an opportunity now through this State guarantee to enforce a new culture on banking. I argued last night in our Private Members' motion that an ecological loan book could be set up. At a time when not everybody will be eligible for the national insulation scheme we could set up a system of preferential rates that would allow people to borrow for improvements to their homes that would offset carbon. As I understand that scheme, the State has the control to enforce that type of lending and I do not understand why it does not do that. That would have a knock-on multiplier effect in terms of job creation. If preferential loans could be given to people who are not eligible for grant aid for home improvements, it would have a positive knock-on effect for the local economy. We need a little more imagination. While we all acknowledge the position we are in, four Ministers are involved in the Enterprise, Trade and Employment brief and surely many actions can be taken to stimulate the economy. This party has given many ideas about what we would do if we were on that side of the House and there is scope for those to be taken on board.

There has been much battering of the public sector of late. I know umpteen local authority outdoor staff on Cork County Council's northern division who have been let go. They were either on temporary contracts or had tendered for jobs. One of them has worked for the council as a JCB operator for more than 30 years of his life, was out on call at 2 a.m., 5 a.m. or whenever the council wanted him and gave a good service. If we are to have an argument in this House about culling the public service we must be careful.

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