Pat Rabbitte (Dublin South West, Labour)

This Finance Bill, which deals with matters outstanding from budget 2010, attempts to walk a very fine line between taking a first painful step towards the correction of the public finances on the one hand, and squeezing the life, such as it is, out of the economy, on the other. It is the harshest budget in our history. The measures to be implemented by this Bill constitute a huge risk. We seem to be caught in a downward spiral, where savage pay cuts and extension of VAT to public services are piled upon last year's severe tax and levy increases, without any investment strategy to deepen economic activity or retain and create jobs.

Taking €4 billion out of the economy is a risk. Historians will marvel at the depth of the crisis that caused the parties in this House to agree on that figure, even if they differed on how it should be done. However, that does not mean to say that it is without risk. Set against a backdrop of rising interest repayments on our borrowings and a credit freeze to the real economy, it is certainly a risk. That view has its adherents in the ranks of the Labour Party, in the trade union movement and in the views expressed by former Deputy George Lee, if I understood him correctly. More pertinently, it was a view entertained by the Minister for Finance, Deputy Brian Lenihan, before he introduced the emergency budget last April, but as the pace of economic decline worsened last year, presumably he changed his mind about the composition of the cuts, or perhaps the change was forced on him by our European authorities. Either way, we are managing only to run fast in order to stand still. Talk of having turned the corner or recovery being on the horizon is not a perception shared in the real economy. If credit has dried up and this remains unaddressed, more people will be forced onto the live register, thus undermining the value of the €4 billion cuts.

I accept the need to tackle the public finances crisis, or the structural deficit, and I hope the cuts do not further depress demand and worsen the recession. However, one thing I am sure of is that the Minister cannot come back for more pay cuts. Even before his December budget, the Minister told us how his European colleagues marvelled at the cuts he had implemented without provoking widespread public protests. He revisited severe cuts in December, but targeted the brunt of them at public servants. Employees on very modest wages were hit very hard, but there comes a tipping point. On the public pay front, there is no more low-hanging fruit. Therefore, Government focus must shift to the critical issue of employment. While asserting that we have turned the corner, the Minister is at the same time planning for a further huge increase of 75,000 in unemployment. Lack of opportunity is a further constraint on our young educated people, forcing them to leave the country. As other economies begin to emerge from recession, more and more of our educated youth will emigrate. If we lose a generation of educated young people to emigration, this will make the Government's objective of a smart economy even more elusive.

The most urgent necessity now is to ensure that small and medium enterprises have access to lines of credit. It would appear that there is an emerging consensus that even if the remaining obstacles in the way of a functioning NAMA can be cleared, it will still not meet the first objective set for it by Government, namely, to make credit available to sound businesses. All of the indications are that there will be more bumps on the road in respect of NAMA's mission than were anticipated by Government. The banks will endeavour to use as much of the ECB funds as possible to rectify their balance sheets. If, for example, a bank can access money at 1% and use it, for example, to buy Government debt, it will get a handsome return without taking any risk. If the expert advice is that, as the IMF advised, NAMA will not get credit flowing again, then the Government must devise alternative methods of making credit available to sound businesses. The Labour Party has been examining this question for some time because we have not shared the Minister's confidence that NAMA will unfreeze credit. There appears to be an extraordinary complacency at the top of Government on this critical issue. In an exchange yesterday with the Labour Party leader, the Taoiseach made it sound as if all we are doing is gathering up used cloakroom tickets and taking them to a hatch in Frankfurt where the banks will get funds at no expense to the taxpayer. The truth of course is that the Government is handing over the equivalent of the deeds of the house for ECB funds. It is mortgaging our children's future. The Minister must get tough with banks in terms of our national priorities.

I welcome the Minister's commitment to a national solidarity bond and hope in his reply to the debate he will elaborate on the conditions. This was first proposed by David Begg, General Secretary of Congress. All the evidence is that because of the extent of the lack of confidence in our economy, the savings ratios have shot up. I have no doubt, depending on how the Minister pitches it, that the bond will be oversubscribed. It ought to be expressly linked to the jobs effort in its promotion. Other than the solidarity bond, there is very little in the Bill to stimulate employment except for the provision designed to attract a share of available Islamic finance. The employment content of that initiative may be small enough. The Minister's gimmick on the levy for non-domiciled persons is typical of the way Fianna Fáil treats the Green Party. One does not need to be a tax specialist to know that one could drive a coach and four through this measure as proposed. Given the collapse in house prices, it will not be difficult to escape this measure. If it is designed to mollify public opinion, when the yield becomes apparent it will only serve to enrage public opinion. One would need to want to contribute under this measure as it is drafted. Otherwise, one would need to be a fool. Not many tax refugees are fools.

It is apparent that the Department of Finance took back control during 2009, having been asleep at the wheel for some time before or so oppressed by its political masters that it was paralysed. We had the appalling budget of 2007 which fed into the paralysis of 2008, but finally the Department won the battle in the internal row for 2009. It is difficult to find any Ministers who espoused the finance measures, who espoused, for example, the McCarthy report. One must admire the chutzpah of the Minister for Finance in coming into the House and seeming to offer remedies for a disaster caused by his Government. Perhaps he was not in Cabinet, but his colleagues do not have that excuse.

Before I hand over to Deputy Sherlock, I wish to repeat a point I have made previously about the sheltered private sector. The Minister comes in here seeking to impose new levies, additional taxes, pay cuts and cuts in social welfare, yet nothing is being done about the sheltered private sector. The prices being levied by professionals, who are cosseted, are only likely to be aggravated by the moneys set aside for professional advice in the case of NAMA. This issue remains unaddressed. I would also like to draw attention to a matter being debated elsewhere in the Oireachtas, namely, the manner in which top-level public and civil servants have been treated as compared to people on €30,000 and less. Competitiveness is not merely a function of pay. Too frequently, speakers on the Government side of the House come in here talking about competitiveness as if it was only about pay. The only way I see towards a restoration of pay levels in the public service, down the road, is through negotiation and implementation of the reforms that were on the table before Christmas. We need to get back there because there is no future in widespread industrial conflict. Nor is there any future in the Government continuing to provoke the Civil Service and the public service in the way it has done.

Finally, there ought to be a law to protect the Greens as we have legislation to protect other vulnerable species. To offer them an 80% windfall tax in circumstances where there is no development, and to offer them this levy on non-doms when nobody except one who is minded to want to offer to pay it would bother paying it, is really no way to treat a partner in Government.

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