John Perry (Sligo-North Leitrim, Fine Gael)

I congratulate my party colleague, Deputy Varadkar, on introducing this important motion. During last year's election campaign, Fine Gael told the people that Fianna Fáil had lost its way by becoming more complacent and less competent throughout its years in office. It is sad that our analysis has proven to be so accurate so clearly and so quickly. Fine Gael has consistently pointed out not only that the Government is responsible for this country's sustained loss of national and international competitiveness, but also that it is indifferent to the phenomenon. We have relentlessly pointed out the economic dangers and personal risks of the domestically generated housing bubble. Such problems are largely of the Government's own making and have little to do with international factors. The Government ignored our warnings about these serious problems. The consequences of the Government's incompetence are visible everywhere, for example, in the latest CSO figures, the Exchequer figures for income and expenditure and the unemployment statistics.

The most spectacular example of Government incompetence can be seen every day of the week when large numbers of cars queue to go across the Border. I am disappointed that the Tánaiste, who has a key portfolio, is not here to hear me explain that she has misread the situation. Thousands of people cross the Border each day to do their shopping. This problem relates not only to domestic shopping, but also to other sectors. People's construction needs are being met by companies north of the Border. A serious and genuine crisis is developing for retail and wholesale traders along the southern side of the Border. The bulk purchasing of domestic goods of every description is a significant problem for retailers in this jurisdiction. Similarly, the bulk purchasing of wholesale goods and services is becoming a serious problem for wholesaler traders here. Such purchasing would not exist if a level taxation playing field was in place. The Tánaiste was quoted last week as telling retailers to drop their prices. It costs 30% more to create a job in this State than it does in the North. Retailers and wholesale traders in this jurisdiction are losing business and market share to an extent that threatens their viability.

I recently received an anguished telephone call from a representative of a leading building supply company in my constituency. He thought he had negotiated the sale of a new kitchen installation with a builder for approximately €13,000. However, a few days later he learned that the builder had crossed the Border to purchase the same installation for less than €10,000. One might ask how this saving was achieved. I wish to make it clear to the Minister that there is a loophole in this area. The builder in question crossed the Border, submitted a VAT number and purchased the installation without having to pay VAT. It is as simple as that. The transaction also assumes that the builder gave a valid VAT number. In this case the VAT will come back to him several months later, but for that period the builder will have a better cash flow — a critical advantage when credit cannot be obtained. Of course it may also happen that the builder gives in an invalid VAT number in which case the VAT bill never comes back to him.

The Government must take responsibility for this situation. It is a major anomaly and is crippling businesses. The Government must take urgent action in order to prevent these companies from failing. Fianna Fáil in government in this jurisdiction has failed to control local costs and failed to control taxation and VAT levels. The VAT and duty differentials that apply between the Republic and Northern Ireland are leading to the unprecedented levels of customers from our jurisdiction engaging in cross-Border shopping.

However, the problem is not confined to currency, duty and taxation levels. Irish pre-tax prices are also dearer than those, north of the Border. Retailers and wholesalers in this jurisdiction simply cannot afford to be put at such a competitive disadvantage in these very difficult times. The failure of Government to deal immediately with this crisis will result in even more Irish business failures, in job losses and in losses in Exchequer income.

This is a very important issue and I am very disappointed the Tánaiste, who is based in Donegal, is doing nothing for small businesses. Every business in the six Border counties is on its knees. All the Tánaiste can suggest is for retailers to drop their prices when the costs of creating a job here are 30% higher. Rates and all other Government charges are considerably higher than those in Northern Ireland. If the Tánaiste wants to get competitive she should reduce the Government costs, including VAT, and then we can have some hope of doing business.

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