Mick Wallace (Wexford, Independent) | Oireachtas source

The State funded the Telesis report in 1982 and the Culliton report in 1992. The Telesis report emphasised the inadequacies of an industrial strategy based on foreign investment. It prescribed substantial reductions in grants for foreign firms, with an increase in aid for indigenous firms which were exporting or could be expected to increase exports. Little was done to change Irish policy in these or other directions. The Culliton report came to the same conclusions, despite a decade of severe recession and global restructuring, but nothing changed after this report either.

The logic behind the Government's support for a low corporation tax rate is simplistic and fundamentally flawed in the long term and, ultimately, damaging not only to this country but also to others, particularly those in the global south.

To quote Professor David Jacobson of DCU:

The monofocal Irish industrial policy sees development as something like the following:

Low corporate taxes => inward FDI => increase in high-tech => increase in exports => growth

This expresses inadequate recognition of the importance of indigenous firms and of all activities other than high-tech ones. For some reason we continue in Ireland to extol the virtues of the so-called smart economy, when we continue to appear well below OECD averages in most of the indicators of advanced technology infrastructures. Moreover, firms in low and medium technology (LMT) sectors continue to account for the vast majority - in nearly all OECD countries - of employment and contribution to GDP.

In short, there is much evidence to support the claim that our fixation on attracting foreign investment has had the unwanted effect of marginalising the development of indigenous industry. Ireland still lacks a coherent strategic approach to promoting indigenous enterprise.

Dr. Proinnsias Breathnach, a former professor of geography at NUI Maynooth, has recently pointed out that while US firms invested €129.5 billion in Ireland over the five years to 2012, and there was a total foreign investment inflow of almost €30 billion in 2012 alone, the vast majority of this inflow goes nowhere near productive activity, with roughly 60% going into financial activities, mostly financial intermediation, which have little connection with the real world where people work in producing goods and services.

Given this situation, the question that arises is this. What is this Government building here in Ireland if not a tax-break funnel for international capital with few or no lasting benefits for the Irish people? When these figures are reported in the press, minus any meaningful context, Government Members give themselves a little pat on the back. Mr. Breathnach does provide a little context when he questions how so much foreign direct investment in the country can be coupled with an 8% reduction in employment by foreign firms here over the last five years. He writes that the main part of the answer lies in how statistics agencies measure foreign direct investment flows. Thus, earnings of foreign companies that are reported in an economy but are not taken out are considered to be “reinvested earnings”, even though very little may be directed to productive activity, and are counted as an inward investment flow. Last year, these earnings accounted for three quarters of the total recorded FDI inflow into Ireland. Most of these earnings actually originated abroad but were declared in Ireland for tax purposes.

Not only does the continuation of low corporation tax rates in the current budget not produce an increase in jobs here, it robs other countries of taxes that should legitimately be theirs. Many of them are so poorly off that we are currently promoting financial aid schemes in some of them. The mind boggles. Not only is this Government content to preside over a massive rise in inequality within our own borders, but we are actively promoting rising inequality on a global scale.

Before this budget was even announced, Michael Taft of TASC looked at the previous two budgets. He suggests that without the Government cut to public investment, consisting of €1 billion in the previous two budgets, indirect taxes, whereby an extra €1 billion was taken out of the economy, social transfers, whereby another €1.3 billion was taken out of the system, and the reduction in public sector numbers, there would have been 50,000 more people at work. The Government tells us it is focused on job creation, but this is clearly not its top priority.

I am well aware that money does not grow on trees and it has to come from somewhere. We have talked around the houses about different forms of wealth taxes and people earning more than €100,000 paying a bigger share. To leave those issues aside for a moment, I do find it strange we have not discussed measures such as a sugar tax. This is at a time when obesity is costing the State over €1 billion a year, one in four of our three-year olds are either overweight or obese and almost two out of three adults over 50 are either overweight or obese. We can raise in the region of €200 million from taxing sugar-sweetened drinks and many of the food products that are bad for our health.

Coca Cola is bad for our health. The people who produce it need to be taxed directly in order to pay for the problems it is causing. I do not allow underage players in the Wexford Youths to drink Coca Cola. They can go and play in a different club rather than play with us if they are going to drink Coca Cola, because it is bad for their health. I banned the sale of Coca Cola in all our wine bars and restaurants because I would not let my kids drink it. I had a visit from Coca Cola about why I was not selling their product, and I told them that if I did sell it I would be a hypocrite, given that I do not let my kids drink it because it is bad for their health.

The Government should not accept that companies are putting products on the market without taxing them heavily in order to compensate for the fact that there is a cost to the Government every time people consume such products. Companies are allowed to do things but we sometimes do not take on board the costs they create, which are called externalities. For example, in the case of a company with a cement factory that is causing pollution for those nearby, the carbon issue does not half cover the problems that are being caused. There is a huge cost that the State and, indirectly, the taxpayer must pick up for many of the things companies do. The people who sell sweet drinks and foods containing added sugar are part of this equation.

Perhaps there are some problems I do not know about, but I would like to think that there must be scope for financial gain on the part of the State in regard to online betting, which is a massive and growing industry. Despite the fact that we love to gamble, I do not believe the people of Ireland would be jumping up and down if a tax of 5% was introduced on online gambling in Ireland. Maybe Paddy Power has too much power - I do not know - but the people in general feel we could use the money very well.

The Minister might say I am picking the measure I like for praise, as I get from a benefit from it. Nonetheless, the retention of the VAT rate for the catering industry, restaurants and hotels makes sense because it is a winner for the State in the long term, not just because of the jobs it creates but also because it sustains the industry. The measure that allows people who are properly registered do building work is a clever idea because, while much of the work would have taken place in any case, this does deal positively with the black market. It is a sensible idea.

One thing I am not so impressed with is the change from the one-parent family tax credit to the single-parent child carer credit. The measure is pretty self-explanatory. I will read a short letter, which other Members have also received. The writer states:

It is with deep regret that I learned about the proposed Single Person Child Carer Tax Credit in the most recent Budget - it effectively means that I now face the reality of having to reduce the contact time I am currently granted with my two children in order to save this Govt... [approximately] €18 million.

Should it be passed I will lose approximately €40 per week in a tax credit, or €160 per month.

I currently pay over a third of my salary in maintenance towards my kids - and this is right & proper; I am a responsible parent, whose first thought is ALWAYS what is best for my children. I continue to pay maintenance even when I have my children for a weeks holiday over each of the holidays and every second weekend. I try to feed them with healthy foods but consequently cannot afford cinema trips, fun activities at weekends, etc.

I live 40 miles away from my kids, do all the driving out to collect and driving out to drop them off.

I have to pay rent on a place that is comfortable enough to act as a second home to my two kids, and all the utility bills that accompany such a home.

My home is in negative equity. I am in considerable arrears on my mortgage. I also continue to pay off debts accrued during the course of the marriage.

My weekly expenditure averages at just under €500, which my weekly wage does not currently cover. The withdrawal of the current One Parent Family Tax Credit effectively means an 8% reduction in my weekly income ... something has to go in order to accommodate this loss; the only thing I can cut is petrol money, which will inevitably mean I will have to reduce the amount of time I can spend with my children.

Please, I implore you to advise me how I explain this to my children! I've done everything I possibly could to date to remain a positive influence and presence in their lives.

All Deputies have heard many similar sad stories. These stories are not becoming any less prevalent.

Export figures may be improving, our GDP may appear to be fine, we may be reducing our deficits and there may have been a great deal of discussion about an economic recovery, but we must ask who will benefit from all of this. What is really frightening about this recession is that more than half the people of Ireland are finding it difficult to survive. The position with regard to the domestic economy remains extremely problematic and this is having a massive impact in a number of areas. I have admitted that some of the measures introduced by the Government have helped. In light of all the fiscal adjustments that have been made, there is less money to go around and there has been a huge reduction in the potential spending power of the majority of people.

The most recent figures available in respect of poverty date from 2011. From 2007 to 2011, risk of poverty in Ireland rose from 23% to 29.4%. It is difficult to imagine that the position has improved in the past two years, particularly in light of what has happened during that period. it is frightening that so little research is carried out in respect of social mobility. Those who were born into the bottom 20% of society 30 years ago had greater potential to improve their lot than do their current counterparts, which is terrifying. After the Second World War, in the period between 1945 and the mid-1970s, a wonderful and powerful adjustment took place in the developed world in respect of social inequality. Everybody - including big business, the better paid and the lesser paid - benefited from this adjustment. Things were good all around. People do not like us to refer to neoliberalism but the fact remains that the latter has had a dramatic impact on how society is organised in the years since the period to which I refer. Sadly, that impact has not been for the good. We must start asking questions about the sort of society in which we want to live. As matter stands, the lack of fairness and the growth in inequality in society are hurting people.

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