Peter Kelly (Longford-Westmeath, Fianna Fail)

The Finance Bill puts into effect many of the measures announced in budget 2010. The Bill comes after what was has been a very difficult year for many people in this country. Over the past 18 months, the Government has taken the unprecedented step of making budgetary adjustments of more than €8 billion. This kind of adjustment is huge, and I am deeply aware that many people are feeling the pain. The many people who have lost their jobs and their families are suffering, as are the thousands of public sector workers who have seen their take-home pay significantly reduced, along with their standard of living. The reality is that we are borrowing over €400 million a week just to keep going. Had we not made these budgetary adjustments, our deficit would have ballooned towards 20% of GDP, threatening our very survival. While the Opposition may have different opinions in terms of what spending cuts it would implement and what tax raising measures it would introduce, it is in agreement that adjustments had to be made. The Finance Bill is the next step in our approach, which has been to protect jobs, provide a functioning banking system and return this economy to growth. It puts on a statutory footing the measures introduced in budget 2010. The Bill, which is pro-business and pro-enterprise, has been welcomed by independent commentators as another step in the right direction. It provides for a reduction in VAT and a reduction in excise duty on beer, wine and spirits. This comes at the time when the standard rate of VAT in the UK has risen by 2.5%.

According to the EU Commission, unit labour costs in Ireland fell by approximately 2% last year and rose by 4% in the UK, which translates to a 6% swing in relative labour costs. At the same, the consumer price index shows that prices here are falling more rapidly than in Northern Ireland, the UK and the EU as a whole. The value of sterling vis-á-vis the euro plays a role in attracting shoppers across the Border. It is my hope that the measures announced in the budget will encourage people to shop local and will impact on our exports. I am sure people will rally round and shop local when they know they can get value for money.

The issue of negative equity is a very real one for many young families. It is one of great concern to many of my constituents in Longford-Westmeath. The extension of mortgage interest relief to 2010 is particularly welcome. The measures in regard to the car scrappage scheme are also welcome. The industry has been badly hit during the past two years and it is estimated that the scrappage scheme will protect 2,000 jobs in the sector. The Bill reiterates our commitment to a 12.5% rate of corporation tax, which is hugely important and has been welcomed by many financial commentators and experts. The tax exemption on the income and gains of new start-ups is being extended to companies that commence trading this year.

The Bill includes incentives to attract skilled workers to Ireland, which is vital if we are to continue to develop the smart economy and attract the brightest and best from home and abroad. The significant incentives in relation to research and development and the intellectual property environment introduced during the past two years are retained and enhanced. Ms Olivia Lynch of the Irish Taxation Institute stated in an interesting article in The Sunday Business Post that if Ireland is to get its economy back on track, we will need strong indigenous companies that are focused on export markets. She also pointed out that research and development does not just mean laboratories and white coats. Real innovation and research can be conducted in other areas, including engineering and financial services. Ms Lynch quoted a recent KPMG survey of 100 business leaders which showed that 86% of companies in Ireland were not participating in the research and development tax credit scheme because they did not believe they were conducting research and development or that the regime was relevant to them. It appears that many Irish companies conducting research and development are not aware that they might be eligible for assistance. Perhaps there is work to do in terms of publicising what is available.

A report published late last year by the high level action group on green enterprise identified the potential to create 80,000 jobs through tapping into the €700 billion global environmental goods and services market. Some 15,000 jobs have been created in this sector to date. This year, €130 million is being provided for energy efficiency programmes and the national insulation programme will be extended to include an additional €50 million for a national retrofit programme, creating an estimated 5,000 jobs in 2010.

The Opposition's criticisms of the Bill are not shared by independent commentators at home and abroad. The American Chamber of Commerce, which represents the 600 US companies employing in the region of 100,000 people in Ireland, broadly welcomed the measures in the Finance Bill 2010. It was stated in an article in The Economist of 4 February that Ireland is small but its Government has shown itself willing to take unpopular decisions to right its public finances. The Irish economy is more flexible, thus its medium-term prospects seem brighter. The economy grew slightly in the third quarter of last year and there are signs that tax revenues are recovering.

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