Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

I thank the Minister for his Second Stage speech and I welcome the opportunity to respond to it. As he began his contribution, the Minister took the opportunity to reflect on recent developments. Given the state of Ireland's economy, the fact that we did not incur a loss in the sale of Irish Life and that the dividend to be paid should nearly equate to the interest we would have had to forgo in investing the €1.3 billion, is to be welcomed. I agree with the previous speaker that we need more detail to see if this was the best type of investment, but the fact that we have not lost on it has bucked the trend of some of the financial institutions we have had to take on board in the past number of years.

There are serious concerns about redundancies. The statements are clear that voluntary redundancies are being sought. There are already estimations of savings of €40 million from the merger of Canada Life and Irish Life. There are fears that these savings will necessitate compulsory redundancies. I hope there is agreement and that the Government has ensured there will be no compulsory redundancies. What will that mean for job prospects in the future?

The Minister commented that the development illustrates that there is value in the State's holdings in Irish banks and that the Government will sell these assets when the price and time are right for the taxpayer. That statement is factually correct. My party and I have never disputed the fact that there is value in the banks. The National Pensions Reserve Fund currently values them at between €9 billion and €11 billion.

The Minister says the Government will sell these assets when the price and time are right. There is a significant expectation that the retrospection of the deal, in terms of separating sovereign and banking debt, is what we will achieve and that the ESM will purchase these for historic prices. I have concerns about the Minister's statement. Deputy Michael McGrath and other Deputies who are members of the Joint Committee on Finance, Public Expenditure and Reform have heard the banks say that if there is an investor, they will sell their assets. I worry about how that would play out in terms of trying to sell assets for more than their current market value. The investment was far superior to the current value.

In saying that, this is the Minister's second Finance Bill, and it is one of three Bills that cement the budget for 2013, the second austerity budget presided over by Fine Gael and the Labour Party.

When the Finance Bill 2012 was published, the Minister claimed he was making good progress in implementing the programme for Government. I am struck by the Minister's continuing references to the programme for Government. This programme, written by two parties that had received a huge mandate from the people, contains laudable sections, but I wonder if the Minister and I are in possession of the same document. In the programme for Government to which I have access, there is a statement that the outgoing Fianna Fáil policy of blank cheques for banks would be ended and we would step back from the edge of national insolvency. What happened last week, where the Government took on the debts of Anglo Irish Bank and Irish Nationwide Building Society in the form of a sovereign bond that writes the total on the cheque for once and for all and takes on the liabilities, making good the letters of comfort sent by the Minister to the Central Bank? The Minister continues to keep the coffers open for the banks and the bondholders.

The parties also promised in the programme for Government that there would be an end to asset transfers to NAMA because they were unlikely to improve market confidence in either banks or State. We all know that last week assets were transferred to NAMA from IBRC that totalled about €16 billion. The programme for Government contained a promise that a strategic investment bank would be established - that was a major pillar of Labour Party policy - but the Minister and I have had more than one exchange on that and we all know it will not happen any time in the near future. Its precursor has not even been brought forward in legislation despite it being announced over a year and a half ago.

The programme outlined how all remuneration schemes for banks subject to State support would undergo a fundamental review to ensure an alignment of interests between banks, their staff and the taxpayer. I know that the Minister will say we have to await the Mercer report. We were told it would be here by the end of the year but now we are told the Minister has access to the report. While the Minister is toing and froing, one of the banks that was subject to that review no longer exists and, lo and behold, the Minister was able to confirm today that some of the senior executives, despite losing their jobs in the liquidation, are now back being employed by the liquidator.

These are the commitments on which the Government claims to be making progress. Another commitment in the programme for Government is that any site valuation tax must take into account the significant number of households in mortgage distress. I will come back to that promise in detail later. The question can genuinely be asked if I have the wrong document or if the Government still maintains its progress in some of these programme for Government commitments.

Turning to the Bill itself, a Finance Bill should do a number of things and I want to give my overall impression of what the Bill does and does not do. A Finance Bill should, in times of recession anyway, contribute to reducing the deficit. Does this Bill reduce the deficit? One could argue it does, even if it does not do so in a way that I would agree with or support. A Finance Bill should stimulate economic activity and support business. Does this Bill do that? It certainly attempts to support business and there are a range of business measures in it, some good and some bad. It definitely fails, however, to stimulate the economy and certainly fails to stimulate domestic demand.

While there are some good measures for business in the Bill, they are no substitute for a real and meaningful stimulus, such as the one my party presented to the Minister last year in our jobs action plan "Create Jobs, Create Growth". That plan required actual spending on infrastructure creation which would have assisted business and created jobs, as well as a series of measures, such as abolishing upward-only rent reviews, that would have saved many businesses from closure. Deputy Michael McGrath was right; the Government has butchered the capital budget and continued what Fianna Fáil was doing before it. Capital spending has fallen from €10 billion to €4 billion, with the present Government responsible for €2 billion of that reduction.

The Finance Bill should also act to ensure redistribution. It should have at its heart a policy of fairness. Does this Bill do that? Clearly, the answer is "no" unless we believe redistribution should have some sort of reverse effect, from the bottom to the top. As it was last year, this Finance Bill is a disappointing missed opportunity.

I live in the real world. In the budget the Minister had the chance to reduce the deficit fairly, to stimulate business and to ensure that middle and low-income families were protected from the worst of the necessary financial adjustment. Because I live in the real world, I submitted a budget alternative to the Department of Finance. I know the Minister receives hundreds of these submissions each year and I know many of them are unrealistic, demanding as they do provisions for vested interests without any interest in how those provisions are funded. The budget I submitted, however, was tough but fair. It contained a series of measures to meet the budget target of €3.5 billion, from tax proposals to savings in the public spend. It did this without targeting the vulnerable and while supporting families and mortgage distressed householders. To protect these groups, it sought tax increases from higher earners, a fairness in the tax code and an end to the gravy train for politicians and top grade civil and public servants, to name but a few measures. All or any of these could have been done in this Finance Bill but the Minister and his colleagues in Government chose not to.

I am reminded as we stand in this Chamber tonight that by the time we debated last year's Finance Bill, the Government had been forced into several U-turns because of measures announced in the preceding budget. The attempted cuts to people on disability benefit and the cuts in funding for disadvantaged schools - both proposals from Labour Party Ministers - had to be shelved. That was a good thing. The cuts should never have made it on to the agenda but a U-turn was better than forging ahead with something so deeply unpopular as to be unsustainable.

Unfortunately, no such wisdom has been shown in the two months that have passed since the announcement of the budget for 2013. For example, despite a collective and emotional campaign against the cut to the respite grant, the Government has stayed determined to implement that cut in its entirety. The line has been that there is nowhere else that sum of money could be found, but here we have a detailed Finance Bill that has numerous additional new sections to those that were announced in the budget. Many of those new sections, if they come to fruition, will entail additional costs to the Exchequer. There is no money to reverse really harmful cuts such as that to the respite care grant, but other measures have been inserted without any proper costing. That is simply not acceptable.

The Minister argues that they are an essential cost in that they assist business or indirectly foster growth, and I am sure that is true in some but not all of the cases. They are a cost none the less. How is it that the Minister can find money for these measures but not to reverse the respite grant cut? I am particularly concerned that the Department does not seem to be able to put a cost on these new measures, a trend that is apparent time and again. Last year I asked for the Finance Bill to be costed section by section and that could not be done. During a briefing on the Bill today, the officials, who otherwise did an excellent job answering questions as thoroughly as possible, could not tell me an estimated spend for a number of these sections. In some of the sections there will be an expansion of measures that were introduced last year even though there are no data that show the effectiveness or cost of those measures in the last 12 months.

The Minister cites our overall growth projections and deficit targets as justification and vindication of his second austerity budget. We are all agreed we need good economic indicators, but these figures mean nothing if they are having no tangible impact on people's real lives. They might mean a lot to people examining the economy who are trying to steer the ship in the right direction but mean nothing to those trying to get by day by day.

Does he honestly think that anybody adversely affected by budget 2013 cares if he is pleased that we are in line with the troika targets or that he has met the budget adjustments this year set by the troika? They do not care about any of that because numbers are meaningless to them. They are interested in impacts and results. If the result of the Finance Bill and the budget is to improve their lives, then they and I will believe the Minister has done a good job. If the Minister announces a new measure in the Finance Bill which he considers absolutely necessary to improve the economic realities of those across the State and his measure works as he says, then he has done a good job.

However, to date, the Minister has not done a good job. I will use the example of one of the new measures announced last year, the special assignee relief programme, SARP, because the Minister announced this with much fanfare last year and dedicated a large section of his speech to its introduction at budget time. This tax-free clause was to be the measure that attracted high-powered executives to Ireland to stimulate economic activity and create jobs - we all will be aware their children got free fees, or they got tax reliefs against their fees and flights to and from America or from wherever they came.

The Minister told us that SARP would place us up there with our tax competitors, who are becoming increasingly more clever than us in the race to the bottom to attract FDI at any tax cost. When I tabled a parliamentary question in October to provide an update on SARP given that it was such a central element in last year's Finance Bill, including the number of persons who have availed of the tax relief, the total amount of relief awarded and the number of jobs that have been directly created as a result of this relief, the Minister could not give an answer. In fairness, I appreciate that many tax measures can only be viewed in their totality after being one year in effect and I tabled the question today to see if the Minister can give me an answer. There was much hubbub about this being tied to job creation, etc. The Minister also must be honest. He touted this scheme as an essential new additional spend to budget 2012, for all the reasons that I have already outlined. With a scheme as important as he told us this would be, I am more than a little surprised that he has not monitored it more closely to see how successful it has been. I am also more than a little curious to see how much it has cost and how many jobs it has created.

The impact of SARP might not be clear, but there are some facts at our disposal. For instance, since the Government has come to power 20,000 jobs have been lost in the economy and long-term unemployment has increased. Also, in the same two years, 167,000 people have emigrated, 70,000 of whom are from within the 15-24 year demographic. We also know that over the past year IDA created just over 6,570 net jobs. Armed with facts like these, the Minister can understand why anyone would be sceptical about how effective this Finance Bill will be for the economy as a whole.

There can be no denying that this Finance Bill is oriented towards a section of the business community. I am acutely aware that the economic strategic policy of the Government appears to rest, not merely on a hope and a prayer, but on an ever accommodating tax code for the international business community so that it will come flocking to Ireland's rescue. Such a policy has its work cut out for it. The City of London, the Dutch and Singapore are all adapting their tax systems and attempting to outstrip Ireland as a tax-friendly location for business. It is most important that we continue to offer a competitive regime to attract foreign direct investment into this State but the attractions should include more than just the tax code. They should also offer first-class infrastructure, world-class graduates and a society to which any high-flying executive would want to move his career and family.

That said, I am concerned that in the Bill, and in the Department in general, there does not seem to be a policy on an effective rate of taxation for business. There is much discussion about this and the failure of the Minister to deal with this in the Finance Bill is seriously questioned. I have asked parliamentary questions about this in reply to which the Minister has been less than forthcoming with his information, and yet across the world, from the OECD to the European Commission and economic forums of world leaders, this issue of Ireland's business tax rates, and the lack of an effective tax rate which allows major companies to pay a very small amount of taxation using schemes and loopholes, has been dominant.

Everyone wants business to succeed and be accommodated, but there is a growing consensus that this cannot be done at any price. It is not bad to use finance legislation to deal with the tax system to attract business, but it is limited in its applications. It is clearly something on which the Department is lobbied quite intimately by certain vested interests.

As I have stated, I do not object to this if the results of it are positive for all of the people of Ireland, but I question whether there is equality of opportunity to lobby the Department. When an auditing firm or a stockbroker sends the Government its list of tax incentives needed to facilitate business, does it receive the same level of attention or more than the submission from the respite carers' group that tells the Minister the cut to its grant will not only decimate its quality of life, but probably end up costing the Exchequer more? That is merely an example of what the people will wonder when they see the contents of this Bill and the boxes it ticks and does not tick. There are many other examples.

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