Arthur Morgan (Louth, Sinn Fein)

I hope the Minister will respond to the contents of our submission because I would like to debate it with a Minister, either in the House or elsewhere. The sooner we do so, the better.

The Government's agenda of going after low income families is grossly unfair. The proposal to increase the VAT rate from 21% to 23% is another regressive measure. I warmly welcomed the Minister's decision to reduce VAT by 0.5% in last year's budget. The measure had an immediate effect in reducing the number of shoppers crossing the Border into towns such as Newry, Enniskillen and Derry. The effect was almost instantaneous and helped businesses in Border towns which had been badly affected by the previous increase in the VAT rate. An increase in VAT will have a significant effect. It will result in larger car parks being built in Newry, Enniskillen and Derry, while shopping centres in those towns will be extended to cope with the influx of shoppers from this State. Businesses in the South within a large radius of Border will close their doors.

VAT is a regressive tax because lower income families pay a substantially larger part of their income in VAT on ordinary household goods than well off families. The proposal to increase VAT is grossly unfair and completely wrong.

The Government proposes to reduce public service numbers by 24,750. While I fully support reform of the public sector, it should not be dragged out over six or seven years. We do not need more reports which will lie on a shelf for years. Public service reform should be led by a Minister who is up for the job and will act quickly to ensure efficiency in the public sector. If this involves job losses, so be it, because we need an efficient and effective public sector that will deliver the services people in this State deserve. To take an axe to the public service, as proposed in the plan, will probably result in the most competent public servants leaving the sector or retiring. A more efficient process should be introduced to ensure the public service does what it should do.

It is proposed to increase the student service charge from €1,500 to €2,000 per annum. This is despite everything we hear about the smart economy. The Green Party informed Deputies earlier that it had been successful in protecting education. However, as my colleague, Deputy Caoimhghín Ó Caoláin, addressed this issue at length, I do not propose to be repetitious.

An average growth rate of 2.75% has been projected for the four year period. Some of this growth is based on current export levels. I believe the export figures are being distorted by several percentage points as a result of the vast amount of plant and equipment leaving the State, mainly destined for Poland. I do not know if this trend, which has been particularly acute in the past 12 months, has been factored into the export figures as a dividend for the State. It is nothing of the kind. It is a short-lived phenomenon and we will shortly experience its repercussions.

Sinn Féin offered a different approach from that of the Government. We proposed to levy additional tax on those with individual incomes of more than €100,000 per annum, cap public service pay at €100,000 and introduce substantial pay cuts for Ministers, Deputies and Senators. Were our proposals considered? None of them has been included in the four year plan, which suggests the Government does not like my party's approach.

Sinn Féin also proposed substantial debt reduction measures amounting to €4.67 billion and a stimulus package in excess of €2.5 billion to promote job creation. Any amount of evidence is available that the system has capacity for jobs growth. For instance, the agrifood sector, to which several speakers referred, has major potential for jobs growth and export development. Despite this, the Government has not given any signs that it will take significant measures in the sector.

Sinn Féin's tax raising proposals focus on those who can afford to pay as opposed to those on the minimum wage. The Minister for Finance informed the House that the reductions in expenditure are "focused on the areas of greatest cost", which he proceeded to list as public sector pay and pensions, social welfare and programmes such as the public capital programme. Rather than approach expenditure reductions on the basis of identifying who can afford to pay, by his own admission the man in charge, the Minister for Finance, attacked the high cost areas. We know the reason the Minister faced in the completely wrong direction when he sought cuts.

I took the opportunity to find out how Greece was managing its memorandum of understanding, in other words, the terms and conditions of the bailout it was provided. Among the impositions made by the EU-IMF were an increase in VAT rates, an increase in excise on fuel, tobacco and alcohol - I suppose we could live with that one-----

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