Leo Varadkar (Dublin West, Fine Gael)

It gives me great pleasure to move the Second Reading of the Financial Emergency Measures in the Public Interest Bill 2010. It is a Private Members' Bill, the intent of which is to reduce Government regulated charges to give businesses, consumers and the economy a much needed boost. We estimate that this Bill, if made law, would save the average household €400 a year and would reduce considerably the cost of doing business for struggling small and medium businesses and industries.

There have been many analyses of the current crisis but the best one was offered by the National Economic and Social Council. According to its analysis this country is facing a five-part crisis: a banking crisis, about which we all know, involving essentially banks that have either become insolvent or are in such a precarious position that they are no longer able to lend; a fiscal crisis whereby we are spending €20 billion more than we are able to collect in tax revenues; a crisis in the real economy which is essentially a crisis of unemployment and competitiveness; a social crisis, which is the impact of the recession on people's lives in that people can no longer pay their mortgages, are facing repossessions and cannot afford health care or health insurance; and also a reputational or ethical crisis, namely, the idea that people in this country have lost faith in our institutions or that there is an international loss of confidence in this State and in its capacity to pay its bills and our private sector's capacity to export and to deliver.

There has been a huge response to the banking crisis, one with which I do not agree but at least there has been a response. There has been a huge response to the crisis in the public finances and while I do not agree with the detail of it, I agree with the action the Government has taken to reduce the deficit, but there has been an inadequate response to the crisis in the real economy, which is a crisis of unemployment and competitiveness. I note the announcement today of 6,500 training schemes, which is welcome, but it is a drop in the ocean in the context of more than 400,000 people signing on the dole.

Fine Gael believes that what is required from Government is a comprehensive response to each of those five sub-crises. To date, the Government has concentrated its efforts on the budget and banking to the exclusion of everything else. While we may differ on the detail of the cuts and the choices made by the Government to reduce public spending by €4 billion last year, we accept the principle and the necessity of it, and that it should have been done early on. We were the first party to express our concern about spiralling public spending as far back as 2002 and the first to call for it to be reduced through measures such as the suspension of the national wage agreement, reductions in public sector numbers, savings in the drugs budget, culling quangos and reforming the rent supplement, among others.

There has been some revisionism in recent weeks, particularly in the context of the Government's fight back where having accepted the blame one week, it has now attempted to spread the blame and is trying to focus attention on Fine Gael's policies on stamp duties or the contents of our 2007 manifesto. However, Members can be sure of one thing, namely, that whatever caused this crisis it was not any policies or proposals put forward either by Fine Gael or the Labour Party. What caused it was the policies implemented by the party opposite, policies that led to reckless lending by the banks, unregulated and untrammelled, reckless increases in spending, unsustainable cuts in taxation and the slow undermining of our national competitiveness from 1999 onwards. In many ways, this Bill is about that; it is about competitiveness and attacking the crisis of unemployment and competitiveness in the real economy. This is the crisis that is doing the most damage to our economy and society in the long term.

Last year the Government introduced two Bills, one entitled "Financial Emergency Measures in the Public Interest (No.1) Bill" and the other entitled "Financial Emergency Measures in the Public Interest (No. 2) Bill", Bills that people like to call "FEMPI" for short. One of these Bills introduced the pension levy and cut fees paid by the Government to professionals for services provided to the State. The other Bill introduced a cut in public sector pay. In addition to that, Fianna Fáil and the Green Party, using social welfare legislation, cut child benefit and other social welfare payments. However, instead of the Government reducing its charges, it has increased them. Across the economy private sector businesses and the self-employed have reduced their prices, recognising that incomes have fallen and that they need to reduce their prices to retain their customers. Last year prices across the economy fell by 5% and if one excludes mortgage interest, prices fell by 2.5% - that is the extent to which prices have fallen across the real economy. Yet Government regulated prices increased by 6.7%. The disparity is evident; private sector prices have decreased by 2% to 2.5% and Government prices have increased by 6.7% in a deflationary environment. In real terms, Government prices increased by more than 11% last year, which was probably the biggest increase in Government prices in recent decades.

This trend has continued into 2010. The most recent inflation figures published this month by the CSO show that the price of clothing has fallen by 10.7%, the price of food has fallen by 7.1%. We should count ourselves lucky that the Government does not control the price of food or clothing because they would probably have increased by 11%. The prices that the Government controls have continued to rise. Transport prices have increased by 4.4%, education costs have increased by 8.9% whereas overall prices have continued to fall this year and have fallen by 3.2% in the year to April, according to the CSO.

It is easy to forget the extent to which the Government controls prices in the economy through direct charges, indirect taxes and through its regulators. Among the prices and charges directly set by Government are the television licence fee of €160 a year, the driving licence of €25, the passport fee, if one can get a passport, of €80, the accident and emergency charge of €100, the inpatient charge of €75, the charge to sit the junior certificate or the leaving certificate of approximately €100, the third level registration fee of €1,500 in a country in which supposedly we do not have third level fees, not to mention prescription fees.

Businesses and farmers must also pay Government charges, including charges such as a filing fee of €100 that must be paid by a new company, a company annual returns charge of €40, meat inspection fees of €5, an application for a bus or a truck diving licence of €110 and I could continue. There are the fees charged by the OPW for the Government Publication Service, fees and disposals charged by the OPW, receipts for tests, examinations and analyses by the State Laboratory, valuation tribunal appeal fees, valuation certificates and valuation revision fees. There is even a fee one is required to pay to the film censor. There are data protection fees, immigration registration fees, visa fees and fees that must be paid to the Private Security Authority. Many Members will be familiar with the problem being experienced in the private security industry on foot of the massive fees being imposed on it by the PSA. There are fees for nationality and citizenship certificates and fees for firearms. Many Members will be familiar with the impact that the broadcasting licence fee has had on independent broadcasters in particular this year. There are veterinary inspection fees on live exports, fees for the inspection of dairy premises, fees from the sale of vaccines and livestock farm produce, fees for seed testing certification fees by the Department of Agriculture, Fisheries and Food. There are also licensing fees, road transport licence fees, work permit fees charged by the Department of Enterprise, Trade and Innovation and employment agency licence fees.

There is the statutory levy imposed by An Bord Bia and fees charged by Forfás and the NSAI. I could go on forever. A huge number of fees charged by the Government bring in receipts. Of those I mentioned, receipts bring in approximately €414 million a year. On top of that are the prices of petrol, diesel and home heating oil which consist, for the most part, of taxes levied by Government, including excise, VAT and the carbon tax. The Government has raised an extra €5 million so far this year in extra VAT just as a result of the rise in the price of petrol and diesel, which comes on top of what it projects for the budget on that basis. There are all the prices set or influenced by the Government's regulators, including bus, train and taxi fares which are agreed either by the Minister or the NTA, motorway tolls which are, in some cases, set by the NRA, electricity and gas prices set by the Commissioner for Energy Regulation, telephone and postal charges set by ComReg.

I take exception to the decision today of Eircom to introduce a price increase by stealth, in the rounding up of the way it calculates bills. One will be charged for every minute one speaks on the telephone even if it is for only ten seconds of that minute. There are all the airport charges which are agreed by the Commissioner for Energy Regulation. We know the extent to which the increases in airport charges have had an impact on tourism. They have cost us routes to Irish airports and, as a result, are costing us in terms of tourism.

Despite the recent reductions in electricity prices our household electricity prices are still above average in the euro zone and are among the highest for medium sized industries.

We should not forgot local authorities which also impose significant costs on businesses and charges on consumers. These include waste and water charges and on-street parking fees. We know now that from July there will be VAT of between 13.5% and 21.5% imposed on people who use those services. It probably will not be imposed on businesses because they would be able to reclaim it from their VAT returns but it will be imposed on consumers. That will mean the biggest one-year increase in waste and water charges for those who pay them, at a time when prices across the rest of the economy are going down and when, most crucially, incomes are going down. It is as if the Government wants to squeeze people and businesses. On the one hand, it reduces people's income through pay cuts and taxation, on the other it increases its own prices or those it controls. It is essencially a pincer movement against the people, the private sector and the business economy.

I welcome that the Government has established a bord snip, as one might call it, for local authorities and I look forward to seeing its report in the coming weeks. However, it is important that the Government should respond to this quickly, say which recommendations it will implement and which it will not. It is more than a year since the McCarthy report was published, if I remember correctly, and we still do not know from the Government which recommendations it will implement and which it has decided not to, let alone why. The Government should respond quickly to the report on efficiency in local government and make an early commitment to split the savings between the Exchequer, taking perhaps 50% to reduce the deficit and using the other 50% to reduce charges to business and consumers.

As I stated, this Bill does not create a charge on the Exchequer but it requires all Ministers to present to the Dáil within four weeks a plan to reduce by 5% charges set by them. We estimate the cost of doing this to be in the region of €60 to €70 million in a full year. It will be up to Ministers to find the necessary savings from their own Vote but this will not be hard. The McCarthy report contained more than €5 millionsworth of savings. I do not agree with all of them, nor does my party. However, even identifying and implementing just over 1% of the proposed savings would produce the money necessary to implement this measure. For example, implementing the proposals on the rationalisation of State agencies, the abolition of quangos or even the proposals on public procurement would provide the €70 million necessary to reduce Government charges across the board and still leave plenty to be saved.

With regard to the prices set by the Government's regulators, the Bill requires that the Ministers for Transport and Energy, Communications and Natural Resources invoke their powers - which are in existing legislation - to make a policy direction to the regulators, calling on them to publish within three months their proposals to reduce the prices they have set. The regulators should aim to reduce prices and tariffs to the euro zone average. When we framed this Bill, we suggested there be an additional 5% cut across the board in all those prices but that cannot be done because energy prices, in particular, are affected by a number of different factors, for example, the price of a barrel of oil.

However, there is plenty of room for further reductions in regulated prices. The ESB made a profit of €340 million a year, for example. Some of that is being used to reduce electricity prices but more of it should be used now to that end. These are State owned companies and should act in our interest. At a time of falling incomes, when so many people and businesses are under pressure, those profits should be squeezed to reduce the price of electricity for domestic users and businesses. The same applies to Bord Gáis which made a profit of €119 million last year. Again, it does not need to make such big profits this or next year. Eircom, which increased its prices today, made a profit of €141 million last year. I do not know what profits Vodafone or O2 made but I imagine they were significant. They certainly charge more than they do in other countries and I imagine they make more profits here than in other countries. Those companies can well afford to bear the burden of reducing costs in these areas.

The airports, An Post, toll operators and transport companies may find it more difficult to make these savings but they should be able to do so. Everybody in the public sector, Departments and State agencies, people in their household income and everybody in their private businesses have had to find savings, reduce the amount they spend and do things in a different way. Those bodies should not be exempt just because they have a commercial remit or aare defined as State companies. If everybody else has to reduce their charges and prices and find efficiencies they should have to as well.

This is a simple Bill but it is an important one. As a country we must improve our cost competitiveness. We have fallen from a situation in 1997-1998, when my party handed over the management of this country to the party opposite, where we were, by some measures, the first, second or third most competitive country in the world. We have fallen now to 23rd place according to one measurement, 31st according to another. Disappointingly, we continue to slide in the international competitiveness league.

Competitiveness is about a number of different factors. It is about costs - of utilities, services and property. There does not appear to be any co-ordinated Government action plan to restore competitiveness. There are a great number of plans in other areas and much big talk, there are taskforces and various documents but there is no clear plan from the Government as to how we will address the deficits in competitiveness, not only on the cost side but on the infrastructural side and in Government services to business. The Government appears to think the only way to reduce costs is to cut wages but it is wrong. There are other ways to reduce costs and they should be pursued. In particular, businesses need the boost this Bill would give them by reducing the costs imposed on them by Government.

Citizens and consumers need this Bill too. They have had their incomes and benefits cut and their taxes increased. Many have lost their jobs. If the Government can use financial emergency legislation in the public interest to cut pay and benefits, surely it can use the same mechanism to cut Government charges and prices and give consumers and citizens a little relief.

At the beginning of my speech, I spoke about the five part crisis, namely, the banking and budgetary crises, the crisis in the real economy and the reputational and social crises. The Financial Emergency Measures in the Public Interest Bill 2010 is about the crisis in the real economy, about showing the Government understands the concept of fairness and that it is willing to reduce its own prices and charges, not only the wages and benefits of others. It is about supporting businesses, especially small businesses, by reducing the pressure the Government imposes on businesses through regulation, charges and taxes. At a time when businesses are suffering from banks not extending credit or squeezing working capital, it should be the case that the Government can assist them in some way, particularly by reducing the burden imposed by Government charges. In many ways, small and medium enterprises are the backbone of the economy, employing 900,000 people during the boom, a number which has probably fallen to 750,000 or perhaps lower.

I would hate to see the number fall further so there should be a co-ordinated Government approach to help struggling private sector businesses by introducing legislation that will force land and property owners to bring down rents, continuing to invest in infrastructure rather than cutting back, as is intended, and helping to reduce costs, particularly non-labour costs now that labour costs have decreased. This Bill is timely, beneficial, sensible, affordable, relevant and doable. I commend it to the House.

See this speech in context