Olivia Mitchell (Dublin South, Fine Gael)

I welcome this opportunity to speak on the Finance Bill and largely welcome its contents. Last March, when I was Opposition spokesperson on tourism, I tabled a Private Members' motion which proposed nine solutions to our tourism problems. I am delighted to see that, as part of the jobs initiative and this Bill, five of those solutions are being delivered by the Government. This is despite the fact that the previous Government seemed to think that none of the solutions was even possible or desirable. The Government's good sense in targeting the tourism industry as an area of potential economic growth has been borne out by this morning's news from the OECD that, while our economy is static, other economies are growing. When economies begin to grow again so does discretionary spending, including on holidays, which is precisely the target audience we are looking for as part of the measures in this Bill. The tourism sector employs large numbers of workers and in recent years has attracted large-scale public and private investment. We may have gone overboard somewhat in building hotels, but many other investments were made in tourism attractions and activities. The legislation is therefore capitalising on investments made in the recent past.

We have all the ingredients for tourism, including beautiful landscapes, but there is no doubt that we lost competitiveness. In addition, we were hit worst by the world recession. We are beginning to recover competitiveness the hard way, but the intention of these legislative measures is to copperfasten that recovery. For instance, one of the really good measures provided for in the Bill is the 2% reduction in PRSI costs for employers of low-paid workers. There are many such workers in the hospitality and other sectors. The domestic economy is depressed, particularly in retail areas such as hairdressing and hospitality. Those domestic sectors really need a boost, so the Bill's proposed measures should help.

A lot has been said this morning, both on radio and here in the House, about employment regulation orders and joint labour committee agreements. The reality, however, is that they are completely out of date, redundant and damaging employment. They were part of the problem and largely part of the reason we became so uncompetitive. They preceded labour protection and minimum wage legislation, but for some reason they outlived it and caused enormous trouble to the economy over the years. Those who say those agreements do not need to be reformed - we have heard it again here today - deny the reality of what has happened. Tens of thousands of workers in the hospitality sector have lost their jobs and, in addition, restaurants are closing hand over fist. It may not be obvious to us in this little bubble of the Grafton Street and St. Stephen's Green area, but outside the city restaurants are closing daily.

It is almost impossible to get a meal on Sundays outside Irish cities because hotels and restaurants cannot afford to provide meals due to the higher Sunday wages that had to be paid. It is not the lowest paid workers who are being affected by this situation. For instance, people were being paid €20 an hour to wash dishes on Sundays, which is over double the minimum wage. I congratulate the Government for taking on this issue because it is a sensitive one. Nonetheless, it is ultimately for the good of the economy. Low-paid workers and the unemployed would prefer to have real wages than to have virtual entitlements to wages if only they had a job. Jobs are crucial for the economy.

The real benefit in this legislative package will come from the air travel tax changes. Obtusely, the previous Government refused to accept that this was having a major impact on tourism. It was not that potential tourists decided the €10 tax was going to make any difference to the cost of their holidays, it was the airlines which took the impact, which amounted to hundreds of thousands of euro. Therefore they simply moved their aeroplanes to foreign airports and provided air services to and from other cities, none of which was in Ireland. Tourism Ireland found itself paying huge sums to try to incentivise people to travel to Ireland from destinations that had no direct access here. We are a small island nation so easy access is vital via direct flights. People do not come here for three months or a year, as they do to Australia; they come here for a few days, so direct flights are essential. That is why the air travel tax had a really negative impact on tourism. It is now up to the airlines concerned to bring aircraft back here, thus increasing the number of routes they operate out of this country. The single most important aspect for tourism is that people can get here easily.

The proposed reduction in VAT from 13.5% to 9% will also help the tourism industry. Admittedly, it is just for two and a half years but this measure will kick-start the sector by helping restaurants, caterers, hotels and cinemas. These are all facilities that add to holidays taken here both by domestic and foreign visitors. This is all about relative costs. People did not stop coming here because our economy had crashed or because of the weather. They stopped coming because we were uncompetitive and these legislative measures recognise that. We must now capitalise on the publicity received in recent weeks with the visit of Her Majesty, Queen Elizabeth II, and US President Barak Obama. In addition, money is being spent abroad by Tourism Ireland to promote Ireland as a good value destination.

I also welcome the visa measure in the Bill. This is something the previous Government could not possibly deal with and instead blamed the Department of Justice and Law Reform for it. It is amazing, however, that the new Minister for Justice and Equality has been able, almost overnight, to change the mind of his Department on this matter. I am not sure how it will work, but I understand there will be mutual recognition of British visas held by people coming from emerging economies such as China and India, which are the current growth areas. The new measures will give us an opportunity to capitalise on the huge growth in tourism to Europe from those emerging economies as part of the London Olympics next year and the Special Olympics.

In addition, the new measures will mean that adding a few extra days to a visit here will not involve the complexity of visiting Beijing to collect a visa personally, which up to now was one of the requirements and thus a major disincentive to anyone obtaining a visa to visit Ireland, not to mention the fact that it cost approximately €100. That measure is very welcome therefore.

It would be remiss of me not to mention the downside of this financial package, that is, the pension levy which nobody welcomes. It would not be true to say that it would be of little consequence to lose 2.4% of the precious and hard-earned fund one has put by for one's retirement and old age. Saying that such pensions attracted large tax benefits is also irrelevant, since that was the context in which people made their investments. Had the benefit not existed, they might have made other arrangements. We cannot pretend a pension levy is good news, but we hope it will be seen to be justified in the long term by benefiting pensions. The money accruing from the levy will go entirely into job creation. I hope this will provide pension funds, which have taken a considerable hit in recent years, and the economy an opportunity to recover. I also hope it will enable people to provide for their future.

See this speech in context