Thursday, 26 May 2011
Finance (No. 2) Bill 2011: Second Stage (Resumed)
Mattie McGrath (Tipperary South, Independent)
I am delighted to have the opportunity to express my opinion on this very important Bill. I know how serious Deputy Neville has been about many issues during the last Dáil and all through his public life, and I am interested to hear his views in this regard also. The people have now had a chance to absorb fully the ramifications of the recent jobs initiative proposed by the Government, which received a mixed welcome from those directly affected, with some reaction favourable but much of it not. People expected more. It is opportune that Deputy Neville mentioned the promises made. Promises are often made by the Opposition but these ones were reckless. I was critical of the EU-IMF bailout and voted against it. No rocket science was needed to understand how serious and perilous the situation was, or the pressures on the then Minister for Finance, Deputy Brian Lenihan, and his Department. Even if the Opposition had made no reckless promises it would have been elected because people wanted change and voted for it. Now they are disappointed and deflated not to have seen any change other than of the seating arrangements in the House. They are becoming more bemused by the day and the hour.
The most recent confusion concerns the perceived support by the Minister, Deputy Noonan, and other colleagues in Government for the nomination of and campaign by the French lady, Ms Christine Lagarde, for the IMF post. A theory being put around is that this is to get her out of Europe because she has been so damaging to Ireland's cause. Many of the Franco-German alliance have been that way but I do not accept that theory. We got a reasonable hearing from the IMF which supported us for better rates than our so-called European friends gave us. With friends like those, one would wonder who needs enemies. I would be worried if Ms Lagarde were to take that job. It is said to be a European position but surely there is somebody who might be more favourably disposed to our country. I supported the Minister's nomination and I support many of his efforts so I call on him to come to the House and explain the thinking behind this because it seems to be a very cosy arrangement. People are confused and are becoming more so all the time.
I welcome the jobs initiative because I believe any such initiative is a good start. Tosach maith leath na h-oibre. However, this was only a tiny dip in the ocean. Deputy Neville spoke of a personal experience of being unemployed which was very generous on his part. We know of the perilous situation that exists for people who are out of work or about to lose their jobs, the despair that goes with that, the stifling of their relationships and their will to contribute to their communities and provide for their families. It is very humiliating and demoralising. There is a proposal to reduce the VAT rate from 13.5% to 9% from 1 July for many businesses operating in the tourism sector and this is very timely in view of the two successful visits of last week. I compliment all involved, the Taoiseach and the Tánaiste and Minister for Foreign Affairs, Deputy Eamon Gilmore, and everybody who engaged, including the previous Taoiseach, Brian Cowen, who had invited the queen to this country. I met her in Cashel, where, I am told, bookings have already doubled. People will come to see the famous Rock of Cashel which must be a good thing.
In that way the initiative was a good start because we must maintain the jobs we have. It will be very hard to create new jobs but every small business should at least be supported, given a breather and have the shackles of the harrowing and over zealous legislation and the official application of same removed. There is a great downturn in the economy, yet there is a myriad of teams of inspectors who have nothing else to do now because the construction industry has stopped. They are just making a nuisance of themselves. I do not condone law breaking or any undermining of people's work conditions but inspectors are making a nuisance of themselves with small businesses. I am tired of saying this but anybody who employs more than six people needs one person to deal with the bookwork, the inspectors and everything else. Many inspectors arrive unannounced. I do not say they should not come but they are over zealous in their work and must be called off. We must support the jobs we have. Many businesses need strengthening to offer better conditions regarding the jobs they have. Then they may be able to stay open on Sundays and other days, employ extra people or offer more hours to the staff they have. The hotel industry has experienced a number of very tough seasons, as have cinemas, theatres and sporting facilities, and I hope they will embrace this initiative and run with it. I hope that by 1 July it will be easy to handle and not involve too much paperwork. Management and staff in the local hospitality industry hope the move will boost tourism and football, as I believe it will. It is timely after the State visits and the exposure we received but we must be aware there is still a long way to go before the industry is back on its feet. Everybody knows that.
Another unfair aspect, about which one hears anecdotal stories on a daily basis, concerns hotels that are in NAMA. They are competing with ordinary, Irish, home-grown and, in many cases, family-run businesses which cannot compete. Yesterday under Standing Orders I tried to raise the appalling way NAMA is treating businesses. Those involved lack a basic understanding of how these businesses are run. They might have one business in NAMA but many other businesses are being stifled and having the tap turned off. There are cases in my county of pig farmers who have ended up in NAMA not being allowed to provide proper sustenance for their animals. They are given barely enough meal to keep going. NAMA wants them to sell the animals to repay some of their debts in order to make itself look good, yet it will not allow the farmers to feed proper rations to the animals to make them fit for sale. It is totally shoddy because those concerned do not understand how businesses are run. That is only one instance but it is the same way in the hotel industry. The people concerned have no understanding because they are accountants and solicitors. I do not say anything about them in regard to their careers but many of them are young and inexperienced and do not understand the situation. That is a basic flaw in NAMA which must be sorted out. These people have no problem about closing down accounts and bouncing cheques on suppliers and all of that, which causes trauma to businesses that have been trading for generations and decades.
The decision to create a national internship scheme in the coming two years, with 5,000 places on offer, is very welcome. That must be rolled out and the positions must be relevant and the projects worthwhile. It must try to involve young people, their brains and their enthusiasm. I give the scheme a cautious welcome but there is a need to be careful and to have more creative and innovative thinking to get the economy going and, in particular, to get the manufacturing and exporting sectors back to full capacity.
The recent report on joint agreements was disappointing, given the lack of clarity on the issue of wage rates in the sector. This, again, is part of a wider problem. I welcome the consultation on this by the Minister, Deputy Richard Bruton, and I hope there will be full meaningful engagement. I know of many cases where employers and workers, for the sake of their jobs, the company and the bond built up over the years, expressed an interest in wage cuts rather than to abide by the letter of the law to onerous agreements. They were happy to do that but then came the intervention of the National Employment Rights Authority, NERA, and other bodies which arrived on the scene flashing their badges and waving their wands, putting paid to that. Again, this showed no basic understanding. When NERA delegates came to the House, I questioned them on the numbers of staff and the facilities they had. It was unbelievable. NERA has five different regional offices and 130 or 140 staff, at a time when businesses are on the floor. When there were local agreements and staff were willing to participate in a fair way, with fair remuneration, NERA undermined that initiative.
Under the jobs initiative, €60 million will be provided for the repair and restoration of local and regional roads, with €10 million to go for school works and €15 million for improvements of footpaths, rail stations and pedestrian crossings. This is a pittance but I welcome it. I am aware of the difficulties that arise from the pensions proposal and this money is substantial from that point of view. However, we must get value for money in those areas. It is available and we cannot afford not to get it. In many works that are done today, for example, water schemes, etc., the builder or developer in charge must run and maintain them for ten years. There must be a link, as there is with roadworks, so that there will be a fall-back to the contractor. There are many good contractors but sometimes work is done that is not up to quality and there is no redress. Public money goes down the Swanee which is a bad outcome.
It is hoped that the jobs initiative will alleviate many of the problems that exist and also that it will deal with the human factor, as mentioned by the previous speaker. The human factor is seen when one walks into a household where a father and perhaps three or four sons and daughters are unemployed. It is demoralising for them and very tough on parents and everybody else. I refer to the 0.6% pension levy. My colleague in the Technical Group, Deputy Ross, pointed out some issues and the matter has received some media exposure as well. We must have private pensions and the slippage in private pensions is frightening. The take-up has waned in the past decade but we must encourage rather than diminish provision. We are looking in the wrong place. We should have examined the significant levies and fees that the middlemen get and the exploitation that goes on. We should have looked in that area for at least 0.3% of the amount to spread the balance. We should not scare people from investing in their future and pensions; we should encourage them. This is a negative move. I realise we must get the money somehow and from wherever we get it there will be criticism. There have been pension levies on public sector workers already and the move was seen to be fair from that point of view. Nevertheless, it is driving people away from investing in pensions.
I am not in favour of default. The word "default" is anathema to anyone in business. No one seeks to default because one has built up good relations with the bank, customers and everyone else. The word "default" is easy for economists to use and this is a pity because it is damaging. The previous speaker went into some depth on the matter. There are significant, unthinkable ramifications to a default in the case of ordinary business people or family home owners who cannot pay the mortgage and who are in negative equity. The last thing such people would choose is to default because it affects them for decades and it affects their ability to function properly mentally, physically and financially.
I was greatly in favour of the Government's proposals to renegotiate the terms of the deal. The Government led the people to believe it was simply a matter of new energy and new people going to Brussels and the IMF and that if they came over here we would deal with them and have the deal changed in weeks. Sadly, the people have been let down. I had hoped we could do this as well but it appears there is intransigence. Our new-found friend, Christine Lagarde, was one of the main obstacles to this. Perhaps there are clever plans to shift her to the IMF. However, we received some favourable terms from the IMF and certainly more so than in the case of the EU. To put Ms Lagarde there is like putting one's best player elsewhere. We are playing Cork next Sunday in Cork but we will not give Lar Corbett to the Cork team and it is like doing that, which bemuses me. The public seek explanations and are confused. I look forward to reading the newspapers at the weekend to see how they deal with it. The course of action is letting down the people and their hopes.
Before coming here, I attended a meeting involving Chuck Feeney's organisation. The purpose of the organisation is to connect people with the Parliament and their civic duties. This process has been set up and is being funded. We are representatives of the people. I do my humble best as do the vast majority of the 166 Members as well as the new Senators. Confidence in the House is being eroded as a result of the great expectations which were built up in the knowledge that there was not one penny in the pot. This happened previously in 1977. I was involved at the time and the then Fianna Fáil Government made promises that were not necessary. At that time, the people sought change as well. They wanted the coalition in place at the time out as quickly as possible. Thankfully, the electorate is more sophisticated now and it can see through this. There is a need for a sense of civic duty among ordinary young people who should get involved and stay involved. The situation at present is demoralising, concerning and disconcerting and they are switched off by it. They believe they have been let down and hurt. I could continue to say a good deal more but I am being repetitive. The initiatives taken by the new Government are perceived to be more up-front and honest, including the appointments to the Seanad which were imaginative and independent-minded and which I welcome.
Everyone knows with regard to the financial issue that the thing is on the floor. We must support and encourage the jobs already in place in the first instance and we must stabilise these and stop the haemorrhage taking place. We must explore new ways of creating and stimulating the creation of jobs. The receiver industry is a racket and must be tackled. It is the fastest growing industry in the country at present. They are merciless when they move in and they charge exorbitant fees, legal and otherwise. Receiver fees are of phone number proportions. Receivers go into companies in trouble, including hard-working family businesses and other businesses that have been in operation for many decades and which are being demoralised. They are being plundered. Legislation must be changed rapidly. The stories one hears are disturbing.
The Judiciary gives scant regard to the rights of chief executive officers of companies, company owners and company law. There is little right to defence. This is demoralising and is driving away entrepreneurs. It is leaving them with a bad taste, showing them in a bad light and stifling their initiative to recover and to return to business again. When self-employed people become unemployed they have no access to support from the State for a long time and this must be examined. This area must be tackled. Reference was made to €60 million but money is scarce although I recognise we are critical of where it has come from. We must examine where there are disincentives for business which are driving people out of work and we must deal with this.
The regulators are legion. We are altogether over-regulated in this area but we have no financial regulation. These people should be put into more constructive, supportive roles for business and companies. They should go out to see if they can help. I welcome the initiative from the Bank of Ireland this week. It is running a business enterprise week. This is the type of thing we need from the many institutions of State. The intention is for representatives to arrive into a business and indicate that they are there for half an hour to talk and to determine if they can provide support. That represents a positive change and is the type of new thinking we need. This type of re-training and re-skilling must be carried out by officials working in State agencies. I do not mean to knock them; it is simply the way they were trained for the positions in a different time when the Celtic tiger abounded. They must be re-skilled, reinvigorated and arrive in a supporting role.
If there are breaches of the law they must be dealt with. As a businessman, every letter I get from the Revenue contains at the end a reference to a sizeable monetary fine or prison sentence. This is simply not fair. This amounts to threatening people. It is a case of them and us and the old baggage of the State against the people and this is being encouraged. We need a sea change. These agencies must come out and support businesses. I realise Enterprise Ireland, the enterprise boards, certain officials in county councils, the IDA and many other groups carry out tremendous work. However, the people who police this area and who are stifling the initiatives must be re-trained and re-skilled in a supporting role rather than a negative role to try to keep the jobs we have. If these people and small businesses are supported in a small way, if each company created only one extra job, we could halve the dole queue at very little or no cost. These agencies should provide a supporting role and companies should be allowed to trade. A little credit from the banks which are in receipt of taxpayers money would help as well. I thank the Acting Chairman, Deputy Jack Wall, for his forbearance and I look forward to further engagement on this matter in future.