Eoghan Murphy (Dublin South East, Fine Gael) | Oireachtas source

I thank the Minister and the Chief Whip for facilitating the House to provide time for this important debate on the economy. I have spoken previously about the importance of having an open budgetary process. Since it came into power the Government has been more transparent than any previous Government in terms of the information that has been provided on the economy and where we hope to go in the next three to five years. However, we can do better. We should benchmark ourselves against best practice in other countries where a budgetary committee might sit throughout the year examining various issues. A budgetary committee would be a forum for a debate such as we have had in the Chamber in recent days and the various ideas that have been brought to the table. It would allow people to come forward with ideas, debate them and have them fully costed. If ideas are on the table there would be a clear understanding of what measure A would achieve or what measure B would yield in tax or how it might help the economy. All Members would benefit from such an open process conducted throughout the year. It is an aim of the programme for Government. I hope the current debate can evolve into something more detailed and open for next year as we approach the budget for 2014.

Related to that and relevant to this debate is a Bill I published earlier this year, the Tax Transparency Bill. As Members of the Dáil, we are well informed about the details of the budget and the different possibilities that exist in regard to taxation, cuts and expenditure, but the general public may not be as informed or as clear as to what the Government is doing with their money. The purpose of the Tax Transparency Bill was to allow the Minister, with each budget, to send a statement to every person who pays taxes, detailing what taxes they would pay for the following year and how those taxes would be spent, in euros and cents, across the different Departments and according to the different programmes in each Department. People would actually know where their money was going. The benefit is that people would be brought closer to the process and could see the value of the money they are paying in taxes, how it actually helps people in terms of social protection, how it pays teachers' salaries and everything else. It might also bring into starker relief the challenge we face in terms of the deficit, the correction we must make and the debt we face. If one were able to look at that figure in terms of how it is proportioned per person it would bring the challenge we all face into closer relief. When we talk about the different choices facing us, people could see what the Government was doing with their money. If a government's stated priority was education, people would see that reflected in the tax transparency statement they received. They would see spending shifting to the Department of Education and Skills and increasing year on year, whatever the difference might be. Will the Minister, as part of this process, consider that Bill? The United Kingdom is to adopt a measure of this kind in 2014. Its budget comes out in March. If we could link in with UK officials, given the good relationship we have with that country, we could study what they were doing and when they moved to act on this for March 2014 we could do the same thing that year, but at the end of the year.

This year we have had growth for the first time in a number of years, which is incredibly positive. The fact that the economy is growing must be at the core of everything we discuss. Deputy Lawlor spoke about the basic increase in employment we need to make each year just to keep our head above water, but if we want to take people off the live register we must make an even bigger increase. Growth gives us a platform for that. Of course we need to grow more. The domestic economy is where growth must happen if we want to see the high unemployment figures really come down. It is incredibly important that we focus on that area.

From a macro perspective, some weeks ago we debated the Fiscal Stability Bill and the Irish Fiscal Advisory Council that was set up in tandem with the Bill. I made some points then which I reiterate now. Three essential points stood out for me in regard to the advisory council's report of 2012. First, we should make a bigger correction this year. We are anticipating a budget correction of €3.5 billion, with a number of corrections still to come in subsequent budgets. With a deficit so large, we remain too exposed to external events. It is necessary to close that deficit as quickly as possible so that we can regain control and again make decisions for ourselves in terms of the economy and what we want to do. I support that assessment by the FAC. We should cut more and should do so more quickly.

The second point that stood out for me in the report concerned the options to be considered when framing the budget. All options should be considered. We should look at everything, including possible tax increases, although that would not be my choice. There are changes in social welfare we could make. There are other costs which we are not currently able to examine, but it is important to the debate that we examine the opportunity costs of keeping a certain policy in place or what could be gained by moving from one policy to another. These are the decisions we make and, in order that we can stand over them, it should be possible to see, page by page, why we make them - that it is because we believe we are getting such and such a benefit and that is the reason we are deciding to take such and such an action.

The third point made in the advisory council's report was about groupthink, particularly in regard to our assumptions for growth for the coming years. That is an important warning. When we talk about the boom and bust people say that nobody saw what was coming. Some did, but they were not listened to because society in general was going in one direction. We do not want to see groupthink evolving between our troika partners, the Department of Finance, the Central Bank and the ECB, because there is a risk that we could be wrong. When that happens, it happens, but we want to be prepared for that eventuality in case it transpires that our assumptions for growth next year are not as robust as we think they are. If we made a bigger correction in the budget this year, that would help us get past that fact. In that way, I believe the three points link in together.

Another point I wish to pick up in today's debate relates to the upcoming budget. We need an ethical investment policy for the National Pensions Reserve Fund. At present we do not have such a policy for our fund; our only restriction is that we do not invest in companies that manufacture cluster munitions. Other countries such as Norway, whose policy is very successful, have a progressive ethical investment policy for their pension fund. Currently, there is just over €5 billion in the discretionary part of the NPTF. Some €10 million of that, which is Irish taxpayers' money, is invested in companies that develop nuclear weapons. I do not agree with that and believe it is a direct contradiction of our foreign policy and our history in this area. This is only a small issue, but if the Minister is to make any changes to the use of the discretionary fund in the NPRF, he might adopt components of the Nuclear Weapons (Prohibitions of Investments) Bill, which I introduced earlier in this term. That could be done quite easily and would not involve much work. The precedent already exists in the prohibition of investment of the fund in cluster munitions manufacture, and the language is practically the same. We could adapt that to achieve a clear ethical investment strategy for the NPRF, thereby building a more robust strategy for ethical investment for the country, because this is taxpayers' money. It is a good fund to have although, unfortunately, much of it has now gone into the banks. It is important that we invest what remains properly, according to what we believe our values are as a nation.

Let us stay on the macro side of the economy and consider the banks before discussing the budget. There is a clear problem with the banks. There is no proper credit market in the country at present and we must continue to focus our attention on this. The Government has its own microenterprise loan fund scheme, which is welcome in the current climate. However, we should not need to have this and if there were a properly functioning banking market it would not be necessary. We must focus our attention on getting credit flowing again and getting it out of the banks. We might consider the deposits of Irish householders in the banks. Irish household wealth on deposit in Irish banks is just short of €100 billion, which is huge money. I do not believe the answer is to tax that money but, rather, to release it from the banks using some mechanism we might have at our disposal, perhaps a taxation policy or investment scheme policy which would encourage people to take the money out. They are not making any money because of inflation and because interest rates are so low - in fact, they are losing money. We need to get them spending and putting money into the economy again, in their local towns, investing in small businesses or offering small loans to friends who are trying out some enterprise, whatever it may be. This money is not made up of huge amounts owned by a small number of people, but smaller amounts owned by many people. Many people are saving and we need to get confidence back about the economy so that they can start spending the money. The €100 billion on deposit owned by Irish people is where the stimulus will come from in the domestic economy. We must get it out of the banks. That is key.

I have a general point on taxes, which relates to the last point. We should keep taxation as low as possible for as many people as possible. We have to give the responsibility to the people to spend their money as they think best, and allow them to spend it in the economy, whether through investment or through buying and consuming. That applies also to the VAT we level on services and to the corporation tax rate and the income tax rates. In that way, people can spend their money as they see fit.

I have some other small points, which I will make quickly as my time is running out. I refer to the property tax. I have already corresponded with the Minister and offered my thoughts on how the tax might look. It is important to bring in new taxes, something we will do in the coming budget, and to give some certainty about the duration and cost of such taxes. If we are to bring in a property tax we should say what the amount will be and that it will be fixed for a period of, for example, three to five years. People can then have certainty and this will give them confidence in their own situations, just as we want to have confidence in the national economy when we spend that money. The decrease in VAT that we introduced as part of our first jobs plan has been successful, and we should extend it to other sectors of society. We should keep taxes for employment as low as possible because we want jobs to be created. That is important.

There are a number of enterprise investment schemes in operation. These are good, but are a little complicated for people to use. The maximum amount a person can get back through the system is in the region of 30%, whereas in the UK there is an enterprise investment scheme that operates at 50%. If a person decided to invest €10,000 in a company, a friend's enterprise or a local business, in time they would gain a return of €5,000.

I will communicate the rest of my points to the Minister in correspondence.

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