Enda Kenny (Mayo, Fine Gael)

I wish to share time with Deputy O'Donnell.

There was no standing ovation for that contribution. The supplementary budget introduced has destroyed the hopes of thousands of families. I predict by the end of the next quarter thousands of small retail outlets will close. There is nothing in the budget to protect or to create jobs or to give a stimulus, hope or confidence or a feeling the Government is interested in keeping people at work and creating jobs. The Government has not dealt to any extent with the public finances. It did not touch the HSE, FÁS or CIE. Sending teams to Frankfurt, New York and Dubai to explain that the Government here is on the right track is misleading the people. That will not happen. Sending teams to explain what the Government has done regarding the public finances and rectifying the situation in so far as the economy is concerned is not true.

The supplementary budget should have been about squeezing out of public spending waste and inefficiencies, which have been the hallmark of Fianna Fáil Governments for years. Instead, it was about squeezing the life out of young, middle income families. The budget should have been the opportunity to set out an inspiring vision and a plan for renewing enterprise, exports and employment, following the cronyism and bubble economy of the past decade. Instead, it was turned into a bookkeeper's budget in which the economy will be chased down by increasing taxes and cuts in investment. The Minister outlined the figures in his Budget Statement yesterday.

With this supplementary budget, the Taoiseach's Government has proven beyond all doubt that it does not have the vision, capacity or capability to lead this country out of a worsening economic depression that threatens to sink the hopes of an entire generation. The credit rating of 12 banks was downgraded this morning. In early February, I called for a fairer budget from the Government that would restore confidence to the economy. The tests I set out for such a budget were challenging but very achievable. Last week, the Fine Gael Party showed the Government the way with our own published detailed pre-budget analysis. We said, first and foremost, the budget had to be about protecting and promoting jobs, which everybody understands. Local radio stations all over the country, as anybody will attest to, have been inundated with calls from small business people, including shopkeepers, who employ two, three, five, ten or 15 people. The supplementary budget has put a stake through the heart of their businesses and there is no stimulus in it to give them confidence to keep going.

We said the budget should be about protecting and creating jobs. Every job loss costs the Exchequer €20,000 and costs an individual loss of status, dignity, pride and confidence. We pointed out that the Government could not chase down the economy simply by increasing taxes and cutting investment. That is why we identified targeted and affordable temporary tax breaks to give a sense of confidence to business such as a cut in the lower rate of VAT from 13.5% to 10%. As Deputy Mitchell has pointed out on a number of occasions, this would stimulate confidence in the hospitality and hotel industry among those who might spend a few euro on a holiday or who travel to Ireland. Deputy Varadkar also proposed a PRSI relief for employers on a number of occasions to stop the haemorrhage of jobs. Neither proposal would be massively expensive but they would have been massively effective in giving confidence to businesspeople to keep going. Of course, they were not listened to.

The Government has given a vague assurance to think about some plan or other for more public private partnerships in the construction sector. The lowering of the VAT rate from 13.5% to 10% would have directly impacted on small contractors building everything from patios and back kitchens and carrying out renovations, which would have meant employment locally spread throughout the country. If the Government has been preparing a plan to create jobs and the Cabinet has had ten meetings in the past number of weeks, precious little thought was put into the business of protecting and creating jobs.

We highlighted that even as Exchequer borrowing is cut, the Government could restructure and recapitalise commercial State-owned high performance companies to drive a massive €18 billion investment programme in broadband, energy and water over the next four years, which would reposition our economy to meet the challenges for the next ten or 20 years without costing the taxpayer 1 cent while creating up to 100,000 jobs. The Labour Party had a different view on whether it would see a stimulus in this plan. However, our stimulus was designed and created on the basis that there would be no cost to the taxpayer. The Government Chief Whip said he welcomed this, while the Taoiseach said he would not pour cold water on it. These are real propositions to deal with the future challenges of the country in the next ten to 20 years.

The Taoiseach expressed reservations about the precise structure of the proposals but, at least, they represent an opportunity and an acceptance of the challenge by the Fine Gael Party to put up a credible alternative way of providing jobs. If almost 500,000 educated, fit and healthy people are walking around next year with nothing to do at a cost of €20,000 each to the Exchequer on average, that is a recipe for potential anarchy, social unrest and a great depth of frustration. My belief is that the budget should have focused to a greater extent on job protection and creation and a jobs plan and on providing a stimulus, even if meant temporary cuts in the VAT or PRSI rates to give people confidence. Instead we got nothing but cuts of €2 billion in investment by 2011. These are small school buildings, primary care centres and community centres. People will not be able to contribute the small sums they did to anything from communions to confirmations or local fundraisers. The Government has unduly pressurised the voluntary movement.

In our pre-budget analysis we said that the economic planners should learn the lesson from Sweden and Finland in the 1990s and from our own country in the 1980s, that no country has ever successfully taxed its way out of a recession and back to economic health. We also said that the effort to cut runaway borrowing had to be tilted in favour of cuts in day to day spending over tax increases. Did the Government listen? Not at all.

This budget has made a savage smash-and-grab raid on middle income families. An average family with two children will pay €4,600 a year, bringing the total deduction from their income to €7,000 when added to the tax increases last October. The tax increases will outweigh cuts in day to day spending by three to one this year and by over two to one in the coming three years. That is the wrong direction to take. It is the wrong placing of the Government's sail if, as the Taoiseach says, it cannot do anything about the wind. It is exactly the opposite of what is needed to get our economy going. The Taoiseach should go out on the streets and talk to people or telephone his own people in Laois-Offaly, the small businesses and shopkeepers, who have ideas. Would anybody now want to invest here? Did someone not point out on CNBC yesterday that the €90 billion was presented as a proportion of GDP in the United States, equivalent to several trillion dollars? That is not a very inspiring message for American business which is so important to us.

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