Jimmy Deenihan (Kerry North, Fine Gael)

It would be an understatement to claim we are facing one of the most economic challenging times ever. Solutions are not easy to come by. The problems we are experiencing have been festering away over the past ten years when wrong decisions were made because of expediency and to win political favour. We have stored up problems with which we must now deal. It will not be easy, which the Minister for Finance has accepted on several occasions.

When economic times were good with an abundance of moneys there was much to say during the Finance Bills. There were, however, many reasons for the economic boom. Between 1994 to 1999, Structural Funds gave a major boost of €9 billion to the economy. At the same time, the building boom began. In 2006 alone, some 90,000 houses were built which each brought in €100,000 in tax revenues, which amounts to €9 billion. It follows that if only 26,000 housing units will be built this year, there will be a major shortfall for the Exchequer.

Another factor of the economic boom that is often overlooked is the investment by American technology firms. It began with Intel in the late 1980s and continued into the 1990s when Silicon Valley technology firms invested in Ireland. They are still pushing our export boom.

Another aspect of the economic boom which will not continue is borrowing. From 1977 to 1981 a Fianna Fáil Government trebled the national debt from £4 billion to £12 billion. We are always reminded of the then incoming Fine Gael Government doubling it but rarely reminded of who trebled it. Eventually when various Governments decided they had enough of State borrowing, it was replaced by individuals borrowing. Today, Irish borrowers owe the banks an alarming €400 billion, a figure given by the Minister for Finance to the Labour spokesperson, Deputy Joan Burton. That borrowing is not sustainable. The likelihood of that rate of borrowing continuing will not happen. As a result consumers will not be spending as much on the high street as they used to, with the result there will be less revenue from taxation.

The UK Government has cut its VAT rate from 17.5% to 15% which will have a major impact on areas such as our tourism industry. In a way, we are already competing with Northern Ireland. While Tourism Ireland is responsible for promoting the island of Ireland, there is an emphasis to promote the North more than the South to prove to all political parties in the North that all-Ireland arrangements work. People attending international holiday fairs have realised this is the case. The Ceann Comhairle, who was Minister for Arts, Sport and Tourism, will understand this too. With the reduction in the UK VAT rate, there is a greater reason to visit Northern Ireland. Meanwhile the Minister for Finance has raised our VAT rate from 21% to 21.5%. Prices in the North will be competitive. Several people who went on shopping trips recently to Newry and Belfast that I spoke to could not believe the difference in prices. The Minister will have to examine this issue because it will lead to another outflow of funds.

I thank the Minister for reviewing the betting tax proposals. There has been a proliferation of betting shops in many towns. I do not understand how a town of 4,000 people like Listowel can sustain five betting shops. However, the original proposal on betting tax would have closed some of them. I also welcome the review of the airport tax. Kerry Airport would have been severely disadvantaged, as Knock would have been too, if the original charge had not been reviewed. I am glad the Minister listened to our concerns about this and has amended the proposal.

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