Stephen Donnelly (Wicklow, Independent)

We must see the Bill in the context of the overall deficit adjustment required. We all know it is impossible to make a €3.8 billion adjustment without causing some pain. Many have said there will have to be more. I read some of the analyses yesterday which stated ours was the lowest adjustment in the five eurozone countries in distress. Our growth projections are now so low that it is probable we will miss our growth and deficit targets and that the Government will be back to introduce a supplementary budget some time in 2012.

There are elements in the budget which I welcome. Moving towards shared services is a great idea, as is placing the focus on the use of generic drugs. Moving to consolidated procurement practices is also welcome. However, these things are difficult to do, as they are complex. I wish the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, and his team all the best and hope they can extract as much effectiveness from this as possible.

I welcome the widening of the universal social charge band in the Bill. The readjustment of child benefit payments is reasonable within the current context. The focus on reducing fraud in the welfare system is long overdue. It is welcome that current social welfare bands will be maintained, which is very significant, although I do not believe the Government will be able to maintain this further than perhaps the next 12 months.

I also congratulate the Minister for Social Protection on her roll-back on the disability issue. I refute the media commentary that this is, in some way, politically embarrassing. We must allow Ministers and fellow Members to make mistakes and to listen to the people, their party members and members of the Opposition.

The Bill and the budget in their totality need to meet two conditions. They need to be fair and effective. It is reasonable to assert that they are unfair, as we know, mathematically, this is a regressive budget. The sums have been done and we have seen the reports and know it hits the poorest the hardest and that it directly targets lone parents, small business owners, students and participants in community employment schemes. Until recently, it targeted people with disabilities. However, those at the top will remain relatively untouched.

The Bill is also regressive. By any reasonable definition in a western democracy, it is unfair. The only rationale for introducing something we would all agree was unfair is if it would be incredibly effective and make the county less equal, that we would create a large number of jobs and, therefore, everyone would benefit in the long run. The theory the Government has stated it is using is that if one is trying to create jobs, one does not tax labour, rather one taxes consumption. In a normal economy and in normal times, that is true, but in this economy and at this time it is not. The Government is applying incorrectly basic economic theory to a complex issue. I know it is trying to create jobs, but this application of economic theory will achieve exactly the opposite.

VAT is being increased by 2%. We know that small businesses will close down as a result. The Government's own logic for its jobs initiative is that by reducing VAT jobs will be created. If we look broadly at the figures the Government has suggested for its jobs initiative, increasing the VAT rate will probably put tens of thousands out of work. It will cost hundreds of millions of euro in social welfare and result in a lack of returns to the Exchequer. We know it will drive people over the Border.

There are issues around the employers' redundancy rebate. We know this decision will accelerate redundancies as employers try to get them through before the budget measures take effect. Pension contributions for employers are also being increased. The Government is passing a massive bill from the State to small business owners. It has not been able to differentiate between large multinationals which can afford redundancy payments and small businesses which simply cannot afford to do so. People have contacted my office - I am sure other Deputies have been contacted, too - to say they run a small business in Wicklow or some other location and that they will now have to put one to five people out of work. That is happening. The economic theory the Government is applying will achieve exactly the opposite of what it is trying to do, which is to create jobs.

We need further analysis. There has been no analysis of the impact on poverty which I believe the Minister is legally obliged to provide. The level of analysis on the issue of VAT is ridiculous. The Government is counting on having €670 million in additional revenue, but it assumes there will be no drop in consumption. There will probably be a drop to the tune of more than €150 million. The Government assumes there will be no redundancies, but there will. We have not seen any regulatory impact or gender impact analysis. These are critical in establishing which are the most and the less harmful provisions and I would like to see them.

I have absolutely no doubt my contribution will not change a single line in the budget or the Social Welfare Bill, but when the Minister for Finance and his colleagues are coming up with a supplementary budget and considering policy for next year, I ask them to, at least, consider that the application of the economic theory being used will achieve the exact opposite of what it is they want to achieve.

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