Robert Troy (Longford-Westmeath, Fianna Fail)

I welcome the opportunity to speak on the Finance Bill 2012. To be fair, last December's budget was never going to be easy. The target that had to be achieved involved reducing the deficit to 8.6% of GDP and taking €3.6 billion out of circulation. It was always going to be a difficult task. Fianna Fáil supported those targets. In our budget proposals, we submitted how we would achieve them. Ultimately, the target was reached on foot of a collective decision by members of Fine Gael and the Labour Party. We welcome some aspects of the approach that is being pursued, such as the increase to €10,000 in the universal social charge exemption. However, many elements of the budget and this Finance Bill are regressive. One after the other, Government backbench Deputies have praised the Government for its fairness and for protecting the weakest and most vulnerable. If only this were the truth. The ESRI assessment of the budget states:

Looking at the impact of the 2012 budget, it is clear that the greatest reduction in income is for those on the lowest incomes - a fall of between 2% and 2.5% for the poorest 40% of households. This compares with a fall of close to 1% for the next 40% of households, and of 0.8% for the top 20%.

This is a dreadful assessment of an extremely regressive budget. Prior to the general election, the Labour Party made clear that top earners must make an appropriate contribution to addressing the deficit. We do not see any sign of such measures. Prior to the budget, the Fianna Fáil Party proposed increasing the universal social charge for those earning more than €115,000 per annum but no action was taken and those at the higher end of the income scale got off scot free.

Given the limited time available to me, I will concentrate on a small number of issues. Only today, Chambers Ireland noted that the seasonally adjusted 9% decrease in the value of exports to €7.5 billion in December from a high of €8.5 billion in November signals a need for a greater focus on the domestic economy. At a time when we should be rebuilding the domestic economy, the Government has decided to increase VAT to 23%, the fifth highest rate in the European Union. This measure will have a devastating effect on local economies and small businesses and will cost jobs. The distributional effects of the VAT increase were examined by the ESRI in a paper published in July. It found that those hardest hit by the VAT increase are households in the lowest 10% income bracket, households in rural areas and one parent families. Once again, we have had an attack on the most vulnerable.

How can the Government, which only a few short months ago heralded a reduction in the lower rate of VAT as a mechanism for creating jobs, subsequently argue that an increase in the higher VAT rate will not have any effect on jobs? Its argument does not add up. Many retailers in my home town of Mullingar argue that the increase in VAT will dampen demand and cost jobs. While we will have to wait on the figures for the first quarter to find out who is right and who is wrong, I predict the VAT increase will cost jobs.

Referring to the Government's proposal on mortgage interest relief, the Keane report stated:

The Group examined the proposal to increase mortgage interest relief to 30% for First Time Buyers in 2004-08 but it was considered that this change should not be recommended. The proposal would give increased relief in an indiscriminate manner as it would give benefits to all who took out mortgages in the relevant years, regardless of their economic circumstances.

This is as an untargeted proposal that would not benefit many people who are in financial distress, including those who bought homes in 2003 or earlier, those who have bought homes since 2008 and some families who traded up during the qualifying period in order that they would have more space. The mortgage problem needs urgent attention. Many people, through no fault of their own, are at their wits' end. They live in fear of losing their home, are struggling to meet day to day expenses and do not have any quality of life. This is not only an economic problem but a moral issue and it is incumbent on all of us in Parliament to address it.

Recently, a person visited my clinic who is working full-time and is at his wits' end because he had run out of petrol while driving on three occasions. He cannot afford to fill his car to get him to and from work because he is crippled by his mortgage repayments. The budget did not offer him any support.

Of the 800,000 mortgage accounts, more than 8% have been in arrears for more than 90 days and approximately 70,000 have been restructured. At the global Irish network on 8 October 2011, former US President, Bill Clinton, identified the mortgage crisis as the principal issue holding back the Irish economy. At the same event, the Taoiseach stated the Government would "make decisions in the next couple of weeks [and] there will be additional facilities for people who have distressed mortgage situations to help ease that problem". The only positive development since the Taoiseach spoke on the issue has been the increase in mortgage interest relief for a specific group of home buyers.

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