Leo Varadkar (Dublin West, Fine Gael)

I never thought I would hear the Greens arguing to cut welfare in order to bring down prices. If I made that kind of argument and certainly a year ago I would have been accused of all sorts of things. It is a very strange argument.

The reduction in the rate of VAT is welcome and the increase last year is now acknowledged as a significant mistake. The reduction of 0.5% will not make a significant difference in behaviour. What would have been useful to do would be to follow the proposal made by Fine Gael to reduce the middle rate significantly because that is the rate which affects services and will help deliver jobs. The Government has done something on excise duty to stop people travelling North or to encourage them not to go North and it is making a very small change in the VAT rate but if jobs had been put at the centre of this budget the money used in this reduction and the money from the carbon tax could have been used to reduce employers' PRSI and also to reduce that labour-intensive rate of VAT.

The same applies on the capital budget side. A total of €130 million is to be invested in new training and jobs schemes but the Government has taken €1 billion out of the capital budget so that is a cut of €900 million from jobs. In coming to this decision I wonder if the Government considered reducing the middle rate of VAT. If this was regarded as being too expensive did the Government consider reducing it for certain services? In France the rate was reduced for hotels and restaurants because they are particularly labour-intensive. It could even be reduced for the construction industry. Was any consideration given to this or was it the case that the Government thought the reduction in price difference between North and South would change behaviour?

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