Willie O'Dea (Limerick City, Fianna Fail) | Oireachtas source

It is always difficult to follow Deputy Timmins. I have had a look at section 24. The Deputy's reading of it, that relief is reduced from 80% to 50%, is correct.

The purpose of the Finance Bill is to give legislative effect to the changes, in particular tax changes, announced in the budget. This Finance Bill, like others, provides for a number of changes, most of which are marginal and some of which I welcome in so far as they go.

The budget did little to tackle the main two ills confronting Ireland socially and economically, namely, the massive and growing unemployment crisis and the lack of credit which is causing much of the unemployment crisis. The official statistics, which do not always tell the full story, indicate that 14.6% of our population are unemployed. The figure in respect of people under 25 years of age is more than 30%. As I said, the official statistics do not, unfortunately, tell the full story. There are many schemes in place, including social employment and community employment schemes, all of which are worthwhile and many of which I support and accept the necessity for, which tend to mask the true rate of joblessness in this country. What also conceals the true unemployment statistics is the fact that many people are now hiding out in the education system. People are now remaining longer in the education system because there is no prospect of their getting employment.

What is worrying about the official statistics is that on each occasion the unemployment rate is announced, which is on a monthly basis, the proportion of people defined as long-term unemployed grows inexorably. We have reached the stage where more than 50% of the people in this country who are officially unemployed fall into the category of long-term unemployed. This is a social, personal and economic tragedy for the country. What more than anything else masks the true rate of unemployment or lack of job opportunities in this country is our startling levels of emigration. According to the Department's figures, last year more than 70,000 people left our shores. No doubt there are some who would have us believe these people left voluntarily as they wanted to see the Seven Wonders of the World. In my experience - I am sure Deputies on the other side will share this experience - 99% of the people emigrating from this country are doing so because they cannot find a job here.

The figure of 70,000 is startling. It amounts to 1,400 per week and 200 per day. Many of the 200 people per day who are leaving are people who have been highly educated, which education was dearly paid for by the taxpayers of this country. They are the type of people who have the skills, expertise and education we badly need to lift this country out of the economic morass. That they have to leave the country and go overseas to get work is a real tragedy. My main point is that emigration tends to mask the true rate of unemployment here.

The other difficulty confronting business here is the lack of credit. This country is starved of credit. In the mid-1840s we experienced the great potato famine. For the past number of years we have endured a great credit famine. The Minister for Finance has, by his own admission, stuffed the banks with capital, which is taxpayers' money. This was done not because we like the banks or because they are venerable institutions that need to be preserved but to enable them to extend credit to business. Credit is the lifeblood of business. It is needed if we are to get the economy and employment moving again. The banks have failed abysmally to give credit and nobody can dispute that. Nobody looking at this from the outside or objectively can deny that the banks have failed abysmally to do so. I will give an example.

The stated target in 2012 in terms of new lending by the pillar banks, as given to me by the Minister, Deputy Bruton and a number of other Ministers, including the Minister for Finance, Deputy Noonan, was €8 million. The pillar banks did lend €8 billion in 2012 but only €2.5 billion of it was new lending. The remainder relates to the continuation of loans and facilities already in existence for another year. The amount taken in by the pillar banks in 2012 by way of repayments from SMEs was €4.5 billion. Taking the figures of €2.5 billion in new lending and €4.5 billion in repayments, the amount of credit available to SMEs from the pillar banks in 2012 contracted by €2 billion. That is a fact.

The banks are still engaged in an Orwellian exercise to get people to disbelieve the evidence before their eyes, pretending that everything is normal. The latest argument is the old chestnut resurrected that they are prepared to lend but people are not asking for credit. People in business are not asking for credit because, while the banks say they have money to lend, the conditions attached to that lending are so stringent there is no point in their putting themselves to the expense of applying for it. That is the reality. Two years on, the Government needs to apply direct pressure on the banks. I welcome the proposed moves in this regard.

The Taoiseach seems to be acting like a latter day King Canute, suggesting to the banks that they might change their policy and advance credit, but this patently has not worked.

I welcome a number of measures in the Finance Bill, but somebody looking at the economic context in which we are debating the Bill would wonder to what extent are we detached from reality. The Bill contains various improvements, for example a provision that airport hangars will be treated as industrial buildings to attract accelerated capital allowances. Shannon Airport is in my neighbourhood and I welcome this measure, but one wonders what contribution it will make to the 440,000 people looking for jobs and the 200 people who emigrate per day.

As one of the many people who lobbied in favour of it, I welcome the extension of the fuel rebate to include coach and tour operators and hauliers. However, I remind the Minister of State that other businesses use their own fleets, such as catering businesses and concrete manufacturing businesses. From my reading of the legislation, if it is correct, the rebate does not extend to these and therefore they will be at a disadvantage vis-à-vislarge operators. I would like the Minister to examine this.

Changes are being made with regard to research and development reliefs, including to the definition of a key employee. The point has been made that there is no accurate measurement of the potential impact of this on investment in research and development. In fairness to the Minister I do not think there could be; it is not possible to measure it. This is a step in the right direction and I welcome the steps, small and incremental though they are, to change the tax regime with regard to research and development. We are seriously in danger of falling behind. Other countries have latched onto this and made their research and development systems very attractive from a tax point of view. We urgently need to encourage more investment. I repeat that the Minister, Deputy Noonan, is moving in the right direction in this regard but he is moving far too slowly.

I am totally opposed to section 8 which for the first time in history will impose a tax on maternity benefit. This has to be taken in conjunction with the cuts in child benefit in the two most recent budgets and the cuts to the back to school clothing and footwear allowance. It is an attack on children and women. Niamh O'Ceallaigh, a spokesperson for a leading parent's group, stated when this was announced in the budget that it is as if the Government does not want women to have children. This provision will affect 46,000 people and will yield €40 million for the Government's coffers. This means that a woman who happens to get pregnant will be on average €833 worse off. What I equally object to is the spurious reason given in the budget speech for its introduction. We were told there is a lacuna in the law as this State benefit is not taxed. We lived with it for a long time and suddenly when the country is on its knees and people are literally struggling to get by from week to week we discover we have fallen in love with the idea of uniformity in the tax system.

I welcome the measure to provide groups for retail investments but I wonder how effective it will be in practice. I imagine there will be very few of them because the company must be quoted on the stock market and taking into account the expense of this I doubt we will see more than one or two in the country. However, it is a move in the direction of other countries and may attract some foreign capital into a sector that has run into the ground.

The Minister, Deputy Noonan, also announced that when he obtains permission from the European Union he will introduce a scheme to enable people to repair their houses and repair retail shops in certain city centre areas. The two cities chosen were Limerick and Waterford. I must be careful about what I say because I represent a Limerick constituency in conjunction with the Minister, Deputy Noonan. I welcome any concession coming to Limerick. The Minister, Deputy Noonan, explained this was not just a stroke and that he was not just giving money to his own constituency. He explained there was a very good scientific basis for this and I agree. He based it on the level of unemployment. Limerick is the unemployment blackspot of the country. Unemployment in Limerick city runs at 28.2%, which is almost double the national average, and youth unemployment runs at more than 50%. This is the constituency represented by me, the Minister for Finance and the Minister of State with responsibility for housing.

I know many people who live in the inner city area of Limerick, which will be subject to this tax relief. They live in pretty shabby rundown derelict houses and are in a very poor position to repair them. They could do with assistance from the taxpayer or whoever. I am very surprised the forthcoming assistance will be confined to people living in Georgian piles. I have represented the constituency for a long time and there are people living in Limerick city centre who are a hell of a lot poorer than people who happen to be living in Georgian houses in Limerick. Georgian houses look well and add to the tone of an area but the Minister, who knows the city pretty well, knows there are many others apart from those living in Georgian houses who could do with a bit of assistance and it certainly would improve the aspect of the city.

With regard to the other part of the concession, which is assistance for retailers to do up their shops, it will be difficult enough to operate it in Limerick because as far as I can see most retail units in the city centre have closed down. The place is a shambles. I was approached at the weekend by one or two people who were minded to take over derelict shops and do them up. They asked me to find out how the tax relief would operate and when it would come into effect. I made inquiries from the Department of Finance and spoke to some very courteous officials who told me that given the necessity to obtain European consent it would be at least 12 months before it comes on stream and that there is little or no chance it will be retrospective. When I told my constituents this and gave them the bad news they said they would not go ahead but would wait. Instead of acting as an incentive to do something with the rundown retail shops in Limerick it is beginning to act as a deterrent, which I am sure is not the intention.

I welcome the provisions for early access to pensions, but I must say they are too restricted and are likely to make very little difference because they exclude the self-employed, who are the people who would be most likely to benefit from the measure and take down capital and put it into the economy. This will reduce the effectiveness of the schemes severely. The increase in the health insurance level comes at a time when the sector is being driven to the brink of collapse. I deplore the provision which scraps the €127 PRSI exemption for those earning more than €352 per week. It means that people earning just over €18,000 a year will be hit in the same way as people who earn a multiple of this. It is a blunt, unfair and regressive provision. I find it deeply ironic that a Government which includes the Labour Party could not bring itself to impose an extra 3% in the universal social charge on the share of income of people earning more than €100,000 per annum but could bring itself to impose an extra €5 a week, or €264 per annum, in tax on people earning €18,000.

I do not see any thing in the Finance Bill, and nor did I hear anything in the budget, about pensions payable to senior civil servants, senior bankers and senior politicians.

The level of those pensions has scandalised the public, the people who are struggling from week to week. Is the Government aware of credit union surveys that show people who are supposed to be on respectable incomes, such as gardaí and nurses, have little or no disposable income once they have paid their bills? They are scandalised by the amount of pensions being paid to retired civil servants, bankers and politicians.

Fianna Fáil has definitive proposals in that regard and the Government could do much worse than take those in hand and implement them. It would demonstrate leadership and give an example to the people whom we are asking year in and year out to bear austerity.

The forthcoming insolvency legislation will not make any impact on the question of mortgage arrears, which represent a dam waiting to burst. Those arrears have the potential of an iceberg threatening the ship of State. Some 190,000 people, or one in five, are in mortgage arrears. Almost 30% of residential mortgages are either in arrears or have had their mortgages restructured. We are talking about 450,000 people who are experiencing difficulty in repaying their mortgages. That is a serious problem.

Some 50% of house owners with mortgages are in negative equity, yet those are the people on whom the Government is proposing to impose a property tax. I always thought the idea of a wealth or property tax was to tax an asset, but for over half of mortgage holders we will be taxing a debt. It is a new departure to impose tax on debt. Those in arrears, in negative equity and struggling to survive, are being forced to pay a property tax, while water charges area coming down the road. The Government must focus on these issues from now on.

The 2013 budget follows its predecessor of 2012 in being regressive. We have had about eight budgets since the advent of austerity. The 2012 budget was the first regressive one, which punished the poor more than the well off. The 2013 budget continues this trend.

The Government's own think-tank, the ESRI, has pointed out that in budget 2012 the poorest 40% of households saw a decrease in their income of 2.5%, while the income of the wealthiest 30% of households decreased by only 0.7%. In other words, the poor were hit four times harder than the rich and the budget of 2013 continued this process.

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