Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)

The Taoiseach and the Minister for Finance must be very grateful for the news sensation of this past week, that is, the departure of George Lee from the Dáil and Fine Gael. It has taken the public eye, in some considerable measure, off what I can only describe as a rotten Finance Bill. It is yet another chapter in the story of this Government's disastrous mismanagement of the economy. George Lee's decision is ironic given the former Deputy's proclaimed passion was for fixing the economy.

I do not want to discomfit Deputy O'Donnell, but if George Lee wanted to bring about something radically different from the Fianna Fáil-led Governments of the past 12 and a half years he made a strange choice in going to Fine Gael because there is little basic policy difference between Fianna Fáil and Fine Gael. Perhaps George Lee decided to go before people started talking about Tweedledum and Tweedle-lee. It is a question on which I will leave the Labour Party to ponder as it eyes up its hoped-for Fine Gael partner in Government after the general election. In the meantime those of us who remain in the Dáil representing our constituents have to deal with reality and this Finance Bill is a very harsh reality indeed, and there is no way of prettying it up.

This Bill implements a savage budget which targeted the weakest in our society to pay for the economic mess created by the wealthiest. It has targeted children with cuts in child benefit and education. It has penalised carers and others dependent on social welfare. It has hit medical card holders, hospital patients and PRSI workers. The Government, to put it bluntly, is making war on public service workers and on young people. Our youth are bearing the worst of the unemployment crisis and have started to emigrate in droves once again. What is the Government's solution? It is not to retain or create jobs but, rather, to cut social welfare supports for the young unemployed. Well over one in four young men between the ages of 18 and 24 are now unemployed in this State. In this dire situation disadvantaged communities are being penalised with cuts to community infrastructure such as drugs projects and payments for people on community employment and jobs initiative schemes.

All the Taoiseach, the Tánaiste and the Minister for Finance seem capable of doing is wringing their hands and shrugging their shoulders. That is their reaction to the latest disaster, namely, the loss of 750 jobs in the Halifax chain, on which I and other Opposition Deputies pressed the Taoiseach earlier. It did not ambush the Government; it was long signalled. Where is the promised new accountability of the financial institutions? Why are employers allowed to throw workers onto the street in this manner? Most importantly, what is the Government going to do to save these jobs, the livelihoods of 750 workers and their dependents?

On top of all that the Government has already imposed on the people it now imposes even more in this Finance Bill. One of the most far-reaching and punitive provisions is the removal of the VAT exemption from local authority charges. People will face increases of 13.5% in local authority waste charges, parking charges, charges for the use of leisure facilities and so on. We learn in the media today that the Department of the Environment, Heritage and Local Government stated in a circular that a whole range of other charges will be also subject to the VAT increase.

The extension of VAT to public bodies will increase the cost of living for already hard-pressed householders and businesses. The fact this is an EU directive validates the argument which Sinn Féin made against the introduction of these charges at the outset. The power to administer them has been taken from local level and now from national level, and outsourced to Brussels which is more concerned about the profits of private enterprise than the provision of much needed services. How much more control will the Department hand over to Brussels in the coming years? We have already learned, to our great cost, that the European Union's one-size-fits-all approach does not work. The ECB's interest rates and their impact on the property bubble is proof of that.

This VAT dictat is a monstrous example of how the European Union has been allowed to ride roughshod over Irish democracy. The abolition of the VAT exemption for local authorities in this Bill arises from a European Court of Justice ruling which claimed that the exemption was unfair to private operators. What we have here is the driving through of the privatisation agenda, and what a farce it is.

The supporters of unbridled privatisation and competition for State and local government services claim it will lead to cheaper prices for the consumer. However, the exact opposite is happening. As a result of this ruling money will be taken out of the pockets of already over-burdened Irish taxpayers. It is an outrage against democracy because it is our right as Irish legislators -or so I always believed - to exempt Irish local authorities from VAT if we so decided and we should accept no outside dictation on this matter.

The Minister for Social and Family Affairs, Deputy Hanafin, is reported as having urged local authorities to be sympathetic to social welfare recipients when setting rates of refuse charges. She cited the waiver system operated by many local authorities but the waiver system is totally inadequate. In 2008, the Ombudsman investigated the waste waiver schemes operated by local authorities and described the system as a shambles. She found that seven local authorities have no waiver system of any kind in place on the grounds that the service is provided exclusively by private operators. Others only give waivers for refuse that is not collected by private operators. One county has three different waiver schemes in place while the average value of the waiver varied from €40 to €357. The three Ministers, Deputies Mary Hanafin, Brian Lenihan and John Gormley, should recall the words of the Ombudsman in that report. She said this "highlights a significant social policy deficit, with local authorities increasingly driven by commercial considerations, while the needs of the poorest and most vulnerable people in society suffer".

The Government has not implemented the recommendations of the Ombudsman's report and in this Finance Bill it is imposing a further VAT burden on top of local authority charges. We in Sinn Féin totally reject the Government's cave-in to the EU on this issue. Budget 2010 was a deflationary budget based on cuts to public expenditure and on contracting the economy to make a dent in the deficit. It did not contain sufficient measures to stimulate the economy and nor does this Finance Bill.

The Government's approach to the economy is not working. Reducing public spending as opposed to implementing a stimulus plan and a jobs strategy has had no effect on the real economy. The live register is growing daily. Banks are still not lending. Let us make no mistake about that. The banks are still operating closed shops. Our competitiveness ranking has not improved. All the Government's strategy has achieved to date is plaudits from right-wing commentators who enthusiastically promote the application of outdated and disproved economic theory to vulnerable countries. People do not matter to these commentators who are obsessed with policies that maximise corporate profit.

This Bill should have been about an overhaul of a finance system dependent on unreliable indirect taxation such as VAT and stamp duty, a system that previous Fianna Fáil Ministers for Finance designed and implemented. However, the Government's unwillingness to deal with the tax issue and to upset vested interests is very much on show in this Bill. Very little of the extremely detailed analysis by the Commission on Taxation is being introduced. My party does not agree with all the findings of the commission but it examined hundreds of tax reliefs, for example, and found them to have no value to the Exchequer. Only a handful of tax reliefs are being abolished in this Bill, one being the bin charges tax relief. This is a relief that helps low income families and only costs a few million euro per year to administer. One might compare that to the retention of mortgage interest relief for landlords which costs the state €300 million a year. Once again the Government has allowed wealthier people in this State to carry on untouched by a Finance Bill while ordinary people must continue to bear the brunt of the recession.

There are a number of measures in this Bill that will further contract the economy. The introduction of this carbon tax is a negative because it increases energy costs and adds to an already spiralling cost base. Environmental taxes should be revenue neutral - as had been promised initially – but this carbon tax is designed to bring money in for the Government and had, therefore, to be agreed between Fianna Fáil and the Green Party before its introduction.

This Bill ignores the reality of the economic climate in which we live. It extends the scheme of tax exemption on the income and gains of new start-up companies, but to what new companies does it refer? There is no credit available to start-up companies from banks. Tweaking of the tax system is not useful to these companies when they cannot even come into existence.

This is not the only example of mere tweaking in this Bill. The artists' tax exemption has been reduced but nothing is being changed regarding how decisions on who qualifies for the exemption. We want those who deserve to qualify and those for whom the tax exemption was introduced to benefit from it. Over the course of the past year we have seen some strange cases applying and benefiting from the exemption. Great literary works such as the memoirs of Deputy Bertie Ahern and Gerry Ryan qualified for the scheme. I always found that there was more craft to Deputy Ahern than art, although his skills were undoubtedly many. Lo and behold, I noticed at Christmas that his memoirs were available on CD, read by himself. I considered buying a copy to send to a person I did not like but decided I did not dislike anybody enough to send them such an item in the post.

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