Wednesday, 10 February 2010
Finance Bill 2010: Second Stage (Resumed)
John Browne (Wexford, Fianna Fail)
I am pleased to have an opportunity to contribute to the debate on the Finance Bill 2010. It is obvious the Minister put a great deal of thought and effort into ensuring this Bill is relevant to the difficulties facing us. As Deputy Devins stated, the budget was tough and it impinged on all sectors of society. While some people were happy with the budget and others were not it reflects the economic times in which we are now living.
The Minister set about correcting the difficulties that have come about during the past few years and tried to ensure the budget was fair and equitable. While we would all like to have more input into the budget it is a matter for Cabinet and the Minister for Finance with some input from parliamentary parties and from the Opposition in terms of the policies it may put forward. Deputy Devins called on us to immediately commence reform of this House. I have always believed that good ideas from any section of this House should be taken on board and not thrown out for politics sake, an issue that may need to be addressed in the future.
I would like now to make a few points on the Finance Bill on which the Minister might reflect in the coming days prior to the Bill being forwarded to committee and on to the Seanad. The banks are causing major difficulties for small businesses around the country. In recent months, small businesses have made representations to me and other Deputies because their overdrafts have been halved or withdrawn. In addition, previous loan facilities have been withdrawn, which can cause serious difficulties for the small business sector. It is not good that businesses, which operated within bank guidelines for many years and did not go beyond their overdraft limits or over borrow, should receive a letter notifying them that their overdraft has been cut in half or withdrawn, or that a loan facility is being reduced. This is being done without any discussion with local bank managers or staff. Such decisions are now taken in Dublin, which is where many of the difficulties have arisen in the past year. A local bank manager is usually aware of the circumstances of most small businesses in his or her town or county. It is no longer left to a local manager, however, to make those decisions. They are now taken in some ivory tower in the Bank of Ireland, AIB or other bank headquarters in Dublin. Customers are really at the whim of someone there who decides whether they will get an overdraft or a loan facility for 2010. This is causing serious difficulties and job losses in many cases because businesses are unable to continue as they are not being paid.
Yesterday, the Governor of the Central Bank, Professor Honohan, also reflected some of the views expressed here by Deputies on the Finance Bill. He reiterated his criticism last year of banks for failing to lend to businesses, saying that "bankers have lost their edge in small business lending after years of property-based lending". I am not George Lee or a financial expert, but I would expect that Professor Honohan would have some input into the type of criticism he made at that conference yesterday. The Central Bank was caught out badly on how it operated in recent years. I have great respect for Professor Honohan, who is a star in this area at present, but what powers does he have to ensure that the banks he is criticising will make loans and overdrafts available to small businesses and others who need them? Perhaps the Minister for Finance can answer that question and say whether the Central Bank has any such role. I think it should have, and the Minister should be encouraging banks to act in the national interest.
I welcome the car scrappage scheme, which will protect jobs in the motor industry in every county. Many car dealers have told me that customers may have borrowed money to buy cars in recent years and never missed a repayment. However, when they want to change their cars, the banks say "No, we're not going give you a loan because you might lose your job. In a year or two's time, you might not have the wherewithal to pay it." That area needs to be examined.
Jobs are the way forward to deal with these economic issues. It might be sacrilege for me to say so, but I do not think there is much room for any more cuts in the public service. We are at an end in that particular area as far I am concerned as a Fianna Fáil backbencher. On the other hand, we need to look at how we can create jobs in future by developing and expanding the economy. Deputy Devins talked about the smart economy, which needs to be promoted and properly financed.
The Minister should also examine the wind and wave energy sectors. The Irish Wind Energy Association produced a report stating that up to 10,000 jobs could be created quickly in this area if incentives were provided along with the right mix of Government policies. The Minister should look at this possibility because we need to move on and examine how we can create jobs in future. This is one positive area because the production of fossil fuels is not infinitely sustainable. Wind and wave energy present an opportunity because we are rich in both commodities. We should not wait for Europe or the rest of the world to exploit these energy sources when we could become leaders in the sector, given proper incentives and the right approach.
The building industry is currently a no-go area, and it is unpopular to promote builders and that sector generally. I can speak for my own county, however, which is very dependent on the construction industry. For example, I know of two builders who employed 800 people up to 18 months ago, but they now employ less than 40. That has caused serious problems in a county such as Wexford. In addition, there are numerous other building companies there that are no longer employing workers. There is room for tax breaks in selective areas, such as primary care centres - referred to earlier by the Minister for Health and Children - sports facilities and centres for people with disabilities. Tax breaks can be selective and one should not throw all such breaks out the window. There are certain areas in which tax breaks could be used to encourage builders and developers to construct essential services, particularly in the health care sector, including for those with disabilities, where services are required for the future.
I agree with Deputy Devins about home owners. The one-year moratorium is not enough, so we should look at a moratorium of two, three or four years - or whatever length of time it takes people to be re-employed and thus meet the repayments they were making when they had a job a year or two previously when their home loans were originally taken out. That matter should be examined seriously.
Sub-prime mortgage lenders are acting like boot-boys up and down the country. They are frightening the life out of people. They loaned money to social welfare recipients and other low earners for houses, home extensions, cars, holidays, new kitchens or whatever was required. The loans were way above the means of such people who could never pay them back. I have had people coming to my constituency office who were on social welfare when they obtained such loans. Perhaps they did not provide full information to lenders at the time, but there is no way some of the people I deal with can ever afford to meet their repayments. Something needs to be done in that respect in order to help them out.
There are tremendous opportunities for development in the agricultural sector to create jobs, particularly in the food industry. Farmers have had a very difficult year with milk, grain and potato prices on the floor. I welcome the fact that the Minister has come up with some kind of compensation for potato growers who have suffered severe losses. Grain growers and milk producers have all lost out in recent times and are in serious difficulty. The multiples are fleecing the country's primary producers. A carrot producer explained to me recently that he was getting €100 per tonne, but by the time they ended up in the supermarket, carrots were being sold for €1,400 per tonne. That is unfair and farmers should be paid more for their produce.
I have asked the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Mary Coughlan, to examine this matter. She is talking about introducing a code of practice whereby multiples would treat producers fairly. I am not sure a code of practice would work, however, and legislation may be required in this area to encourage multiples to be fairer to producers. I encourage the Minister for Agriculture, Fisheries and Food and the Tánaiste to look at opportunities in the farming sector. I am grateful for this opportunity to speak on the Finance Bill. There are large amounts of money lying in credit unions, post offices and banks which people are afraid to spend at present. The Minister for Finance should consider introducing incentives for people to take out their money to invest it and get a return on that investment. We should utilise the money that is lying idle at present.