Thomas Pringle (Donegal South West, Independent)

The Bill gives effect to the taxation elements of the Government's modest jobs initiative. The Government is pinning all its hopes on an export-led growth strategy to get us out of this recession. The Minister pointed out that exports increased by 9.5% last year and it appears this level of growth will continue this year as well. However, depending on whose figures one believes, we face economic growth of 0.5% or 0.8% for 2011. The effect of this is effectively no real growth this years with, at best, unemployment not increasing. This is hardly a success.

The financial services, pharmaceutical, software and food sectors have all seen growth in exports. Exports to Brazil, Russia, India and China, the BRIC countries, increased to more than 12% last year. However, gross domestic product has declined by 15% during the past three years. The problems we have are in the domestic economy, not the export sector but the Government is placing all its eggs in the basket of export-led growth. We need to stimulate the domestic economy by supporting small and medium sized enterprises and encouraging these firms to get into the export market. This would provide real jobs growth and would put much needed money into circulation through the wages paid to new workers.

The foreign direct investment sector accounts for more than 90% of exports and employment in these firms has probably peaked. The potential for jobs growth in these sectors is limited. However, the potential for growth in the SME sector is vast. Focusing support and the jobs initiative on the firms with the potential to grow would make a good deal more sense. As I mentioned in the House when discussing the jobs announcement earlier, countries such and Estonia and Slovenia have a greater focus on exports from SMEs than we do, with figures of 23% and 21% respectively. In Ireland only 11% of SMEs export with only 2.4% of revenue coming from the export of goods and services. Clearly, this is where the potential for growth lies. Encouraging the research capabilities of universities to focus on SMEs could lead to export growth that would help to increase the number of jobs.

Measures included in the Bill legislate for a stimulus or boost for tourism, including the abolition of the travel tax and the reduction in the VAT rate to 9% for tourism and catering related activities. The abolition of the travel tax is dependent on the agreement of the airlines to boost visitor numbers in the country. Already, airlines such as Ryanair have stated they do not have agreements on visitor numbers and the abolition of the tax will probably be built into an increase in prices that will boost their profits and will not result in the hoped for benefits. Their campaign has moved on to the cost of using airports in the country and they seek to have control of these handed over. The sections in the Bill which allow the tax to be restored if the increased numbers are not achieved are vital. The use of the carrot and stick is the only way to ensure a proper response. Equally, the change in the VAT rate must be monitored closely. While the reduction in the rate will not make a great impact on prices, it should help to increase employment and boost confidence. The impact should result in a boost in confidence in the sector and encourage the industry to grow and create jobs. It will be important to monitor the success or otherwise of the reduction and we must be prepared to make the required changes if the necessary level of job creation does not materialise. The Government has avoided committing to any jobs numbers expected from the initiative but we must wait and see what the impact will be in our areas.

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