Dara Calleary (Mayo, Fianna Fail) | Oireachtas source

The Government and all of us share the aim of creating more jobs and resolving the unemployment crisis. It is the collective aim of the Deputies from every party in this House and the Independent Deputies. In the 2011 mini-budget, the Minister, Deputy Noonan, announced a reduction in the VAT rate from 13.5% to 9% as part of an initiative aimed at creating jobs in the hospitality industry. Various figures point to the success of this initiative. According to the Restaurants Association of Ireland, up to 9,000 new jobs have been created in that sector alone. The Central Statistics Office has confirmed that the level of employment in the employment, accommodation and food services sectors has increased by 13.3% since the introduction of the initiative. This equates to a net increase of 15,200 jobs in the overall hospitality and tourism industry. Everybody acknowledges that this initiative has worked. It has provided opportunities to 15,200 people who might otherwise still be on the live register or might have left the country like so many others. It has led to substantial savings in the social welfare bill and in other areas.

It is hard to believe in terms of this successful initiative that the rug is about to pulled from under an industry that is creating employment. Why would the Government consider reversing an initiative that has created so many jobs? As late as yesterday evening in this House, the Minister for Finance gave a very strong indication that he was considering its reversal. Somewhat bizarrely, he said that when he reduced the VAT rate, he had not received one representation calling on him to do so. He said it was all his own idea. I remind the House that the Government has promised to create 100,000 new jobs over its five year lifetime. During yesterday's debate, the Minister described the reduction in the VAT rate as a "pump-priming exercise". He went on to explain that notion:

The idea of pump-priming is that where something is weak, one gives it a break to make it stronger. However, when it is strong it should fend for itself.

The tourism and hospitality sector depends on the domestic economy as well as on visitors. While there are some very early green shoots, we know our domestic economy cannot be described as strong. I am asking the Minister for Public Expenditure and Reform why the Government is considering the reversal of an initiative that has created more than 15,000 extra jobs. If the Government increases the VAT rate, it will do serious damage to the value perception of our tourism industry, which is an area in which there can be further job creation.

See this speech in context