Peadar Tóibín (Meath West, Sinn Fein)

The protection and promotion of indigenous industry is key to economic growth and employment. Our local businesses, manufacturers, technology companies, services sectors and retailers are bearing the brunt of the economic downturn. The trading environment in the last number of years has been unparalleled and we are now facing into a further European recession. This extended period of contraction has been deepened by successive Government policies, which have put the interests of bankers and bondholders over the needs of indigenous businesses and the requirements of our people and the national interest.

A Government elected to sweep away the mistakes of the past and right wrongs and abuses is now indistinguishable from what came before, with the economy paying the price. Sinn Féin's amendment to this motion highlights a number of issues facing our community. It highlights the dysfunctionality that exists where a Government claims that it is for growth and jobs but implements policies which retard growth and jobs. The key drivers of competitiveness are education, infrastructure, energy provision, innovation and low costs, including rents and rates.

Rates are a major factor affecting the sustainability of our small businesses. For example, a typical pub in Dublin now has a €40,000 rates bill per year, which on average is the same as its rental costs. Rate collection is on the floor in many local authorities, with Dublin City Council having difficulty claiming more than 70% of rates. My council, Navan Town Council, collects 72% of all rates.

There is a need to review the commercial valuations and Sinn Féin believes in a system of progressive rates. With all taxation systems, Sinn Féin has indicated that as one earns more, more should be paid. Why should it be any different for a business? Why should a small, indigenous business that is hanging on by its fingernails at the moment be forced to pay the same amount as a highly profitable international multiple retailer? In the North, Sinn Féin has supported the holding of industrial rates to the rate of inflation. We have also introduced a rebalancing system in favour of small and medium-sized businesses which puts a further burden on large international multiples who can afford to pay.

However, rates are only one cost. Rental costs also impact on the sustainability of enterprises. The Government has failed to do anything about upward-only rents. The situation should never have become legal in the first place. Upward-only rents do not only affect the private sector, the Government is tied into upward-only rents to the value of €53 million a year. The State, the most sought after of all tenants, signed leases that it could never renegotiate downwards. Given the rental decreases that have occurred recently, this equates to approximately €10 million wasted per year by the Government.

While there has been a lack of urgency in dealing with upward-only rents, the Government is quick to move ahead with cost increasing measures such as VAT increases. The same Government that ruled out income tax increases to high earners is very happy to implement a 2% increase in VAT and other flat taxes and charges on low income earners. The union, UNITE, has stated that the increase in VAT will have four times the impact on low income families than on high income families. That is fundamentally unjust. So much for Labour acting as a balance to the excesses of the Fine Gael right wing.

The VAT change will also impact adversely on indigenous industry. It will increase costs and drive down demand. It will increase the differential between prices North and South. In October 2009 the late Mr. Brian Lenihan acknowledged that the VAT increase he introduced increased the differential in price between North and South and that was a disaster for the economy of the southern Border region with approximately €700 million lost in trade in a short period. At a time of deeper and longer recession it is understandable that people will use their feet and travel to make savings.

Businesses are facing nearly a perfect storm at the moment with concurrent crises occurring such as falling demand, rates, upward-only rents, energy costs, the credit freeze and increases in VAT. On top of that the Government is now talking about lifting the cap on out-of-town hypermarkets. The Government is proving to be the biggest threat to the economy and to small business. If the Government had the political will it would be within its gift to turn this around. What is necessary is to stimulate demand, drop the plans for VAT increases, work with our colleagues in the North of Ireland who are looking to harmonise VAT, excise and taxes across the island of Ireland, and introduce legislation to end upward-only rents right away.

What Sinn Féin proposes in our amendment to the Private Members' motion will rebalance the burden of rates onto the large profitable multinationals and take it off the shoulders of small, indigenous Irish businesses that are suffering. We have done in the North of Ireland, which shows it is possible. We are also calling for a system that will allow for a progressive rates bill to be put in place whereby the more one earns as a small business, the more rates one would pay. These are simple but necessary ideas. They have been implemented in other economies across the world.

What we have in this State is approximately 255,000 people dependent on the retail industry and we have a Government that, at best, is moving at a snail's pace but, at worst, is implementing a range of policies that are actively putting those companies out of business. I appeal to the Minister of State, Deputy O'Dowd, to do his utmost. The proposal we make is revenue neutral as far as central government is concerned. There is no decrease for central government. If a local authority wants to increase the rates and increase its income, it can do so. If it wants to decrease rates, it can do so. The level of income of central government would not be affected negatively but it would allow small businesses to get through the next two years of recession and, I hope, make it through to a better time. I appeal to the Minister of State to try his best to make such changes.

See this speech in context