John O'Mahony (Mayo, Fine Gael)

I welcome the opportunity to contribute briefly to the Fine Gael motion. I thank our spokesperson, Deputy Varadkar, for bringing it before the House. Many people are concerned about the economic challenges facing them, but the plight of our consumers, and the businesses that supply them, is at the top of the list. The plain people of Ireland, who are already dealing with spending cuts in education, health and agriculture, have also been hit in their pockets as a result of the increases imposed in the budget and the ill thought out and short-sighted policies of the Government. Instead of stimulating the economy, these policies are crippling it.

In recent weeks, our neighbours in Britain announced a VAT rate reduction of 2.5%, from 17.5 % to 15%, in an effort to stimulate their economy and encourage spending. We have gone in the opposite direction and increased the VAT rate, with the result that the differential between the two states has increased from 3.5% to 6.5%. This one change alone has made it more difficult, if not impossible, for small businesses in particular to compete with their counterparts in the North. It has led to an exodus of shoppers north of the Border, at great inconvenience to those concerned, which is crippling businesses in the South. The VAT increases also mean that businesses are paying increased transport charges to get their goods to shops.

There have been calls on businesses in this jurisdiction to drop their prices in an effort to stop this outflow, but they need help to do so. Both consumers and businesses are being hit from all sides by Government charges. It was confirmed recently that Government service charges are now running at ten times the rate of inflation. This gives the lie to the claim that all our economic problems have arisen because of global developments.

It is easy to understand why consumers are infuriated that they are still paying €1 for a litre of petrol or diesel when the price of a barrel of oil has dropped from $147 to less than $40. Increased taxi fares are in place since November even though the price of oil is tumbling and taxi drives did not even seek these increases. One taxi driver told me last week that he and his colleagues would be before the courts if they did not implement the increase in fares. Instead of encouraging more people to use public transport, as is the Government's stated aim, the Minister for Transport has sanctioned increases in bus and train fares, despite falling fuel prices, to help meet the cost of the pay deal and a reduction in public transport usage because of the recession. Instead of stimulation, the Government is encouraging stagnation. Why is the pre-tax price of petrol in Ireland 24% higher than the European Union average, with corresponding figures for diesel and home heating oil of 18% and 19%, respectively? My colleague, Deputy Bruton, pointed out last week that these gaps in prices are costing Irish consumers €30 million per month.

Before coming into the Chamber to speak on this motion, I received a telephone call from a member of the chamber of commerce of a town in Mayo. He told me of the visits he paid to local businesses today, of the apprehension and fear for the future on the part of business owners as sales figures continue to tumble. They have lost confidence as they see customers either not spending or travelling to the North to shop. It is a hollow gesture to ask people to be patriotic when they are not getting the help and stimulus they need.

What is needed is leadership from the Government. When faced with a similar crisis in the United States in the 1930s, US President Franklin D. Roosevelt opted to invest in public projects in an effort to restore confidence. We all know that confidence is a strange animal. In all walks of life, it helps people to think and behave differently. The Government must restore confidence in the business sector. I commend the motion to the House.

See this speech in context