Pat Gallagher (Donegal South West, Fianna Fail)

I am grateful for the opportunity to contribute to this debate and thank Deputy O'Connor for agreeing to share his time with me. I first came into this House in June of 1981 and experienced the economic difficulties of the 1980s. I was proud to be here in 1987 as a Minister of State in the Government which laid the foundations for the economic recovery of the 1990s. Social partnership, which the Government entered into at that time is one of the bedrocks upon which our economy is now established. In addition, our membership of the European Union gave free access to a market of more than 500 million people for our goods and services. The high standard of education of our young people also contributed to our economic recovery.

Unfortunately, we are in difficult times once more, something I did not think I would experience again in my political lifetime. However, we are an island economy which is highly dependent on exports and the fact that there are so many factors outside of our control makes it more difficult to deal with our problems. Having said all that, the economy must be managed properly and financial rectitude is vitally important.

The price of oil has dropped considerably in recent times, which is a welcome development. However, while the drop in price is reflected at the pumps, it is not reflected in the surcharges on transatlantic flights. The airlines should be called to account for this. When the price of oil rose, the surcharge was increased, although perhaps this is an issue for another day.

I refer to the banks which have contributed to the current economic downturn. They were too generous in giving 100% mortgages to customers, which is now causing serious problems for those who have lost their jobs and are unable to make their repayments. The banks have a responsibility to assist us now. They cannot continue to exercise the type of pressure they are exerting on businesses. They must work with business people rather than against them.

I am pleased that the Minister was pragmatic with regard to the 1% levy and agreed that it would not apply to those earning less than €18,304 per annum. I also welcome the age-related exemptions for those over 65 whose gross income is less than €20,000. The 3% levy does not concern us in Donegal. There are very few, if any, people in the county earning more than €250,000. Unemployment in Donegal has increased by 60% in the past 12 months, which is very serious. While we are very proud of our county and would not swap it for the world, there is no doubt that the fact that it is squeezed between the Atlantic Ocean and Northern Ireland, with only a five kilometre border with the Republic, causes its own difficulties.

PAYE workers will pay 1% on their income, as will many self-employed people. With regard to the latter, I am particularly concerned about hard-pressed farmers. I seek clarification from the Minister on the issue of capital allowances and whether they will be taken into consideration for farmers. Farmers are very hard pressed at the moment, which is not helped by difficulties with the installation aid and the early retirement scheme. I have received letters from mothers of young farmers who are concerned about the serious consequences of the suspension of such schemes. I hope the suspension to which the Minister refers will take age into account. Perhaps the Minister will look at the entire area again. The changes to the disadvantaged area scheme and the suckler cow scheme will also affect many farmers in my constituency. I hope the Minister will decide to divert the envelope of funding that is available in Europe at the moment to the sheep sector, which is particularly hard pressed.

The Bill refers to the corporation tax rate. Successive Governments have retained our low corporation tax rate, while various European countries have argued for tax harmonisation. If they want to harmonise taxes, let them come down to our level. The purpose of harmonisation was to remove Ireland's competitive advantage, which has been so important to our economic development. Section 5 outlines certain exemptions regarding corporation tax, which I welcome.

Some Deputies have suggested to the Minister that the regional airports should be exempt from the airport levy for flights within the country. The additional funding that the levy will yield will have a crippling effect on regional airports, even at the lower rate of €2. In the case of flights between Donegal and Dublin, for example, many of the passengers on those flights are cancer patients travelling to Dublin for treatment. That should be taken into account by the Minister. The airport levy provision was tweaked very recently. Many rushed out to welcome the pragmatic decision of the Minister, but all politics is local. I come from west Donegal where it takes one full hour from west Donegal to the N56 whether it is in to Letterkenny or in to Donegal town. The airport is in west Donegal because of the pragmatism and commitment of many people who went with their heart rather than their head and it has been quite successful. The public service obligation has been extremely helpful to us. There is no public service obligation on the Dublin to Prestwick flight. It is being done by Aer Arann on a Tuesday and at weekends. It is 145 miles from Carrickfin to Prestwick, but we are just fortunate that it is within the 300 km from Dublin. It makes little sense. This was amended to facilitate other airports in the country without any thought being given to Carrickfin.

As a result of the commitment of those in Carrickfin, we now have a Saturday flight to Rotterdam. The distance from Dublin to Rotterdam is in excess of 475 miles. Those who are flying in from Rotterdam do not pay the €10 but when they are flying back out again from Carrickfin they must pay €10. This will have a crippling effect. I suggest to the Minister that he must find some formula, taking into account the size of Carrickfin or the fact that it is a developing airport, that it is contributing substantial funds along with Fáilte Ireland and Saoirse Ireland to the marketing of this charter route. Last year, 1,247 passengers flew from Rotterdam and spent a week in Donegal and wrote glowing reports on their return. They wrote about scenery in Donegal, the lakes, rivers and mountains. The hills and the stunning coastline captured the hearts of these visitors and they could not wait to show their videos to their friends to convince them to come to Donegal. The marketing campaign is under way and this year we hoped with an 80% payload to have about 1,680 passengers coming to Donegal. This would mean we would have to find €16,000 whereas the Minister should allow us an exemption. I hope the Department of Finance will use its ingenuity to find a solution. It found it elsewhere for the other airports in the country, for Knock Airport — of which I am very supportive — and for Galway and others, to ensure they were brought nearer to the west coast of the UK. The Department should now find some formula to exempt Donegal. There may be an exemption in existence of which I am not aware but I ask it to consider that many cancer patients avail of this very important service.

While I may sound somewhat negative I am a realist and a pragmatist and I have been through all this before. I realise there has to be financial rectitude. The Minister has a most difficult job to do. On the positive side, the Committee Stage of the Social Welfare Bill is under way in another part of the building as we speak. I recognise that Fianna Fáil has never forgotten those who have played such an important part in the development of this economy and the €7 increase in pensions is important.

I take the opportunity to commend the Minister for his pragmatic response to the case I and many others made on the medical card issue. Many of our elderly may never use the medical card but at least at this stage in the autumn of their lives, they can take comfort in the knowledge that they have one. I do not have time to refer to other issues tonight such as the carbon tax and VRT which I do not regard as fully equitable and I will expand on that point tomorrow.

Mar focal scoir, tá áthas orm an deis a fháil páirt a ghlacadh sa dhíospóireacht fíor-thábhachtach seo. Gheobhaidh mé deiseanna eile amach anseo maidir le h-oideachas agus an cháin ar fheithiclí a thagann isteach ó thíortha eile.

See this speech in context