Enda Kenny (Mayo, Fine Gael)

He asked for prayers in Donegal, and they may well be necessary. This document does not provide certainty and clarity required to get this nation back where it should be. It does not address the real potential or open itself up to receiving the contributions that Irish people are prepared to make, provided they are recognised and respected as being fair. The Government made a big point about reducing the minimum wage but it has not acted on the other end of the scale, where exceptional salaries still apply. Nothing has been done about starting the process in this place about the cost of governance and the way we do business, and the Government is refusing to do so even today. It has indicated that we will come back some time at the end of January to debate the Finance Bill, whenever and if it is produced.

Everything for this Government is akin to groundhog day. It is not in any way to engage in justification of the past. Let that be dealt with, in all of its ups and downs and pluses and minuses, in the context of future democratic contests.

It is important for our people to know that not all of those gains are going to seep away. There is going to be a further adjustment, in addition to the adjustment in our standard of living we have seen in the past number of years, as we try to cope with the impact of this problem. Throughout the good years when there were increases in our resources we maintained a level of spend as a percentage of our overall GNP - the overall worth and value of our economy - which was pretty static, at around 28%. In other words, whatever investments we made and increased improvements we were able to give in whatever way we could were given to help working families. This was done by increasing the rate of income which would attract income tax, from €7,500, as it was at the beginning when things began to pick up, to more than €18,000. We did whatever we could do to improve age exemption limits for people who were elderly and had pensions. Whatever we could do in all of these areas, there was a greater degree of progressivity and help for those people.

When we introduced the minimum wage, which has been increased on many occasions, there was a view that we would keep it out of the tax net. That narrowed our tax base because we had more people in that area who had to be accommodated. There are a number of people who have wages above that level but which are related to that figure.

We now have an infrastructure to train people and favourable tax policies. Credit must now be made available by fixing the banking problem. This will include providing firepower beyond the capacity of our State behind which we can bring whatever extra capitalisation is needed to the banking system, and intensify as necessary the initiatives that we have brought forward thus far. The purpose is to make our banking system work so that it is part of the integral process of growing and building confidence for the future.

The growth rate we have set out for this plan is about 2.75%, which is based on ensuring that we have a net increase in jobs of over 90,000 between 2012-14, bringing unemployment down below 10% and making the adjustment of €15 billion, to be comprised of two thirds on the spending side and one third on taxation. We are proposing that balance because we believe it provides the best prospect of maintaining and growing employment. Other parties take a different view. We have set out what our proposals will mean for overall tax policy. We will have to see a sharing of the burden and those who earn most will have to pay most.

However, we cannot have a situation where more than 40% of working people are outside the tax net. There will have to be a contribution which is proportionate to their income as part of this attempt to redesign a tax system which would be sustainable for future circumstances. That can be done by respecting the principles of equity and progressivity while at the same time ensuring that everyone has to make contribution to the system.

If, for the sake of this debate, we take the Labour Party view, where half the reduction is through taxation and the other half through expenditure savings, what would that mean in terms of extra taxation? We would have to raise €7.5 billion rather than €5 billion in taxes. What would that come from? We propose a 16.5% reduction in tax bands and credits which would bring in about €1.8 billion. If the Labour Party perspective was to prevail, then to get an extra €1 billion as a contribution to the extra €2.5 billion one would have to have another 10% reduction in tax bands and credits. One would also have to double what we are doing on the site value tax, which would bring in another €500 million. One would probably have to double the carbon tax. If one wanted to see if some capital tax could be introduced, one could look at asset values, etc., and try to get another €300 million or €400 million there. One would also have to increase the VAT rate by another 2% to bring it up to 25%.

If the idea is that we can do this by taking measures, half of which fall on the taxation side and half on expenditure then the design of the programme changes significantly and the imposition of further taxes and the impact it would have on a recovering economy in terms of a growth strategy would be detrimental. We have opted for the strategy set out in the plan because we want to maintain jobs and have a growth strategy which has a prospect of working.

It is very important that we try to look at the growth strategy we have. In the real economy, even during this major correction in our economic fortunes, we are seeing an increase in exports and gains in competitiveness as a result of the policies we have already implemented. In this plan we are setting out the further sectoral policies which are needed to help in that area. The action to drive economic growth incudes the reaffirmation of the Government's unambiguous position of maintaining the 12.5% corporation tax rate, which is the cornerstone of our enterprise policy. Action has been taken to reduce costs for businesses and professional services. These will be ongoing and, together with the introduction of new and better focused business investment which will target employment schemes, they will help small businesses by transforming the old BES scheme.

We intend to maintain a high level of investment in research and development and innovation, double the number of industry-led research competence centres and target an increase in tourists to 8 million by 2015. Some of the initiatives in that respect were outlined yesterday by the Minister for Tourism, Culture and Sport, Deputy Mary Hanafin. We will also liberalise visa restrictions for visitors from long-haul markets, make proposals to develop Ireland as a location for green data services, establish an international content services centre, which is at a progressed stage, and look towards our natural resources in agriculture, agritourism and agribusiness, which has shown great resilience.

I remember at the height of the crisis in 2009 people suggested 40% of our agrifood business base would go because of a lack of competitiveness. Yet, the decisions we took meant that practically all of those bases not only survived but have the prospect of thriving on the basis of the food harvest 2020 strategy, which is now being put in place. They have added value to the agrifood sector and exports by over 40% during that period. Developing Ireland as an international centre for food and making sure that we can drive forward the many advantages with the elimination of quotas and a grass-based production system is something that has been set out in great detail. Tourism and agrifood businesses will be areas of growth based on indigenous enterprise that can be scaled up and internationalised, as we have seen.

If we want to create more jobs we have to continue with the competitiveness agenda, the central object of which is to ensure that economic growth is translated into the maximum possible number of jobs, then the barriers to employment decisions have to be removed. Many of the young and semi-skilled are not in the labour market and the challenge is to ensure they are able to participate in it. In this regard the Budget Statement by the Minister for Finance will include further details in addition to those announced in the four year plan. We recognise it is not just a question of activation, it is also a question of people getting access to jobs in an environment that can create jobs. We also recognise that we have to open up the labour market measures in order to maximise employment. That is of fundamental importance and must be proceeded with. We will also extend the PRSI employers' exemption schemes which incentivise employers to create jobs for people on the live register into next year.

A number of new and expanded work placement and upskilling programs will be introduced to help those on the live register back into employment, the details of which will be announced in the budget. Major reform to activation measures will be implemented which will ensure that there is regular engagement with people on the live register and that they are offered pathways to work, training or education. There is a need for control measures to make sure that people who are entitled to support are not denied that support as a consequence of activities in the black economy or because of those who use the State to earn an income in a way which is not in compliance with the rules or regulations that apply.

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