Richard Bruton (Dublin North Central, Fine Gael)

The economy faces its most serious threat ever. In the past 18 months we have lost 200,000 jobs, of which 90% were those of persons under the age of 30 years. They are the people to whom we look to create the dynamism for a knowledge economy and new enterprises for the future, the building bricks of our future economic success. We cannot afford, through the lack of Government ambition, to allow them to be faced with the bleak spectacle of unemployment or emigration. Unfortunately, that is what has already happened. They are the cream of our people who must be helped find opportunities. However, there must be far greater ambition than is displayed in this Finance Bill if we are to confront this huge underlying problem.

The Minister does not seem to appreciate the real danger that we will enter into a vicious cycle of cuts being undermined by rising interest rates and unemployment payments. This year the Minister admitted that of the €4 billion cuts he imposed, half will be whittled away by additional interest payments and the other half by the need to pay for the 75,000 jobs that he predicts will be lost in the next 12 months. That puts the economy in a vice-grip. It is as if we are running hard just to stand still. Last year, it was huge tax increases; this year, cuts in public service pay. We are asking people to make large sacrifices without the bigger picture of a strategy as to how we are going to get out of the hole in which we are.

My fundamental problem with the budget is that it lacks the ambition and a strategy in which people can believe. One key concern is that confidence is shot through in our community. John Maynard Keynes, an economist who has become fashionable again, once said, "If enterprise is afoot, wealth accumulates whatever may be happening to thrift; and if enterprise is asleep, wealth decays, whatever thrift may be doing". Our problem is everyone in our economy is caught in this move to thrift, this need to pull in their horns, to reduce their ambitions. That has a large knock-on effect on the rest of the economy.

We needed from this Finance Bill and budget something that would give people confidence and that it is time to think more positively. It needed to assure people to start getting money together for an investment project or spend on items they have postponed. That is part of the ingredient of a recovery that we have to envisage.

Fine Gael recognised this early on and put forward significant proposals, even in the taxation area, to address this. We wanted to cut employer's PRSI contributions, particularly at the low-wage level. We wanted the airport tax removed to strike a deal with airlines to bring more passengers into Ireland to kick-start to the tourism sector. We wanted to have a once-off cut in low-rate, labour-intensive VAT rates to assure people not to postpone labour intensive decisions such as house repairs. That is the sort of confidence building that is needed.

While I welcome the Minister's commitment to a national solidarity bond, I miss the context in which it will be launched. Fine Gael, by contrast, has been very clear. We believe the public utilities, assets owned by the people, provide a platform for a tremendous economic revival. This is the time to say we do not need an electricity network that is bottom of the class in Europe, the most high cost, the most dependent on fossil fuels and the least developed in terms of renewable energy. Instead, this is the time to say we can build a platform for success if we build a smart grid fit for the 21st century. Similarly, this is not the time to content ourselves with broadband speeds and capacity that are perhaps 5% of best practice. This is the time to say, yes, we can develop those assets that we own to provide a platform for the growth of the knowledge economy. This is not the time to tolerate €500 million in water going down into the ground without ever reaching a household, a family or a business because of leaks and under investment in the water network. This is the time to say, we can do something with these State assets.

This takes some courage. It takes the willingness to say we can afford to let some assets go now, for example, we can afford to sell our generation capacity that is not mission critical to the recovery of Ireland. We can provide equity for this sort of investment and then one will have a State equity or holding company and the opportunity to start raise money from private pension funds and from private individuals. Then one will start to see a strategy in which the Government is saying it wants a platform of smart grids, smart broadband, a well-resourced water authority that can start to drive, both investment now and successful enterprises for the future. That is the key element missing here. There is no ambition. There is no understanding of the central employment crisis that we face.

It reflects also a lack of ambition in the recent budget to do anything with the public service itself to set an agenda of change. To give the Minister his due, he put in place the McCarthy process which churned up the ground for the first time and which stated we need to consolidate and to change our high-cost system. We cannot afford to be replicating grant-giving powers, administration structures, HR structures and finance structures in 850 different agencies. We simply cannot afford that anymore. We must develop the concept of centralised shared services where these agencies are obliged to source, which can be done so much more cheaply. We needed to see in the budget the kick-start of that exciting reform agenda. Instead, the Minister has set back that reform agenda by the sort of brinksmanship that went on with the social partners at the end.

There still is no ambition. I still have not seen the Government, either through the Minister or any of the other Departments, confirm it is taking up the McCarthy agenda, not the social welfare cuts which were taken up but the more difficult heavy lifting of cutting out quangos, closing down agencies, establishing shared services centres, forcing the knock-on changes and contemplating the need for redundancies.

The Minister needs to create the momentum for change. That is what this country is crying out for. People know this will be painful and it will not be pleasant, but they also know that we must go through that. Dr. Craig Barrett stated yesterday there are now 3 billion new capitalists out there. Some 3 billion people from China, India and Eastern Europe who, in our heyday ten years ago when we had a successful economy, were not players. Ireland could be very successful doing what we had and we could be quite smug in our success. People wanted to get into the bastion of Europe, for example, American companies wanted to get inside the walls and trade in Europe. Now that world is changed. On the model on which we built our success, we must realise that we face a much tougher and more competitive environment and the Minister must give people a sense that there is a purpose and a mission here.

I do not pretend for one minute it will not be tough. Effectively, we will have to mimic a devaluation of our currency. We will have to drive down costs across the board, not only public service pay costs but business rents, boardroom pay and the rip-off that has scarred this country. It must go right through the structure. It must be in public utilities and in the charges for which the Minister and his colleagues are responsible. Then we will start to hear people saying that there is a strategy here and that the Government is not just about hitting the little people; it is about doing something that is fair across the board. Later this evening the House will discuss exempting high-paid public servants from the impact of this, which is the wrong signal at a time when we are trying to achieve the change.

We now need big ambition from Government. There are tough measures to take but the big ambition, hope and belief is essential to getting through these difficult times. Instead, there is merely a tidying-up exercise in the Finance Bill. It falls so far short of motivating anyone to put his hand in his pocket to invest or to do something new to build confidence.

The Minister did not bring forward the ideas of his Commission on Taxation on its narrow range of proposals. It had interesting ideas. Its members wanted to help the unemployed get retraining and this was an area of tax relief that they proposed. That would start to give some people the opportunity to say that here is something coming back from the taxes they paid all those years.

They suggested that research and development which is supposed to be part of the feed into a knowledge economy should become allowable, not only against corporate tax but against pay related social insurance, and that such would bring a wider range of companies into thinking about research and development and about investing in the products of the future. That did not figure either. We do not see any such extension of the research and development credit.

They recommended to us that we should support not just start-up companies but sole traders, giving the sort of break that last year the Minister gave to companies. There are many people per force of circumstance considering starting up businesses. Why not give them the same break the Minister offered to companies?

Some of the commission's recommendations for some reason were ignored while the Minister sought others, which are not anything like as significant or which do not make an impact. I thank the Minister for the brief from his officials, but the bottom line was that all of these proposals put together would cost nothing. One cannot achieve a great deal of stimulus with something that costs nothing, and that is a problem here. This was a tidying-up exercise, with a little given there and a little taken back here. There was no attempt to say it is time to give people a leg up and a bit of confidence.

The Minister's non-domicile tax proposal is about as watertight as the string bag we, as kids, used to carry down to the shops in which one could not bring anything liquid back because it would gush out. I note comics such as "The Beano" are being revived and perhaps it could do a job on the Minister's non-domicile tax. The exemption is ridiculous. There is an escape hatch therein that is ridiculously wide. One must have Irish-located capital, excluding shares held in any company which carries on a trade, greater than €5 million. One would be caught only if one's private residence is worth over €5 million. It would not cost such a person much thought to transfer his or her stately home to his or her spouse, and suddenly with one bound this need not be paid. It is no surprise we got no estimate as to what this will raise. This will only get payments from persons who want to be seen to pay something. Maybe there are a few public-spirited people who would recognise that they ought to be paying something, but I just cannot see it working as a tax to put pressure on those who have been avoiding paying tax. The Minister would not find any of the new income levels he introduced last year having the sort of escape hatches for ordinary persons that are being built into this new tax.

The one measure people will see in this - it is no surprise that it was the headline that jumped out at everyone - is the application of VAT. The only notable measure, or one which one can get one's head around, is that the Minister has decided to extend VAT to a range of public services. He tells us that this is brought upon us by EU decisions but we are probably talking about €200 or €300 a year that will have to be stumped up by those affected, much of which will come from those who are on their knees and struggling.

This Finance Bill has followed its predecessor in the budget. It lacked the ambition needed for this very difficult time. We must take a tough approach to our public finances, implement cost-cutting across the board in the private and public sectors and become fit, lean and mean again. However, it had to have the other side. It had to show the State was willing to match with commitment and imagination the opportunities we have. We still have opportunities open to us. The successes that created the Celtic tiger, the enterprise that built up strong sectors, still exists and needs to be nurtured and encouraged. I am disappointed it has fallen short.

I refer to the extension of carbon tax to coal and peat. There seems to be a huge problem in terms of trade from Northern Ireland in these products. I understand that, effectively, no system has been developed by the Minister or by anyone else on how to keep out much dirtier higher carbon content coal coming from the North VAT-free. In regard to this tax proposal for which the Minister is now taking enabling powers, although he is at least holding his hand in terms of the date of implementation, I do not see the corresponding enabling power on how he will police this and make it something which is not unfair to people trading in this space. Worse still, people will be bringing in more environmentally negative product to be used here. I do not see the solution that one needs. This tax needs a corresponding solution on the enforcement and compliance side to match it.

Not to be entirely negative, I welcome the Minister's decision in regard to mortgage interest relief. An extension for people who would otherwise have seen their mortgage interest relief disappear this year is welcome because many of those people borrowed in 2004 and in the following years and have been put to the pin of their collars. They paid at the top of the market and I welcome the relief for them.

I welcome a relief we discussed last year, namely, a break for people in the farming community who are trying to comply with the Nitrates Directive. Ignoring that as if it were part of their basic income and taxing them on it was very unfair.

I also welcome some of the decisions the Minister made to bring greater clarity to, and to open up, opportunities in the financial services sector which I hope are successful. At a time when the financial services sector has taken a hammering, people are encouraged to see there is still optimism and initiative. For example, people are looking at supporting green finance as a genuine opportunity to develop for Ireland. This is a growth sector - managing funds that want to concentrate on environmentally sound areas and supporting the markets in carbon trading. Ireland has developed back office skills. There is opportunity in these areas. These are sectors in which we need to sweat those opportunities. While we seek to rebuild our regulatory structure and to restore confidence, we must match that with a willingness to spot opportunity and to play to our strengths in key sectors. We still have key sectors and these must be the drivers of our long-term growth prospects.

I listened to Deputy Gilmore earlier when he asked questions about the smart economy document which has become a bit of an embarrassment to the Government. If it is serious about the smart economy document, it must have dates which must be driven. Commitments set out must be honoured and someone must have the sole authority to drive it and give us a sense that the Government is hitting milestones. People do not believe that is happening.

People viewed that document on the knowledge economy as putting a big bulldog clip around everything and saying this was our smart economy strategy. If it is a strategy, there must be deadlines, milestones and someone must be responsible for delivering them and if he or she fails, he or she must be accountable for failing. Deputy Gilmore put his finger on this and stated that there are milestones in the knowledge economy document and no one is paying any heed to what was said or what was to be delivered.

That goes to the core of why we are not succeeding on big strategy statements. Why did we not deliver on our climate change strategy after eight years? The reason is no one is put in a responsible position and no one is given authority or the budget and if things go wrong, no one is held responsible. We must move on that. If we are to believe the smart economy document is anything more than a cover for the Government's nakedness, we must see someone drive it, take responsibility and hit those deadlines. However, we have not seen that.

I look forward to Committee Stage which is always an opportunity to learn more about the individual proposals and to tease out the difficult aspects of tax law. I cannot say I always look forward to it with relish. It is a period in the dungeons when the only advantage is that the fourth estate is rarely there to disturb us. I look forward to engaging with the Minister, his colleague or whoever will handle the various aspects of the legislation.

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