Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The self-employed expected some indication from the Government that there would be a change in the way they are treated. Successive Governments discriminated against them in the taxation system and in their failure to provide a safety net through the Department of Social Protection. The Government had an opportunity to deal with that issue today. As the employment situation recovers, we also want to see decent terms and conditions for employees. This Government promised a lot in that regard but it delivered very little. It is running out of time to deliver on major reforms of the labour market, and they need to be introduced without further delay.

In regard to the role of local enterprise offices, I recently had occasion to help a local SME which was not involved in exports. It was directed to the local enterprise office to get financial support. We get lip-service from the Government on supporting SMEs as the heart beat of the economy providing 800,000 jobs. The aforementioned company inquired into what practical assistance it could get, such as a grant to purchase equipment or employ staff, but it could get nothing because financial support is provided only to businesses engaged in manufacturing or internationally traded services. If this Government is genuine about supporting the small business community, it would deal with this type of issue very quickly.

The Government has promised tax reform but it has not addressed the major increases that people will face in the future. Mortgage interest relief is due to come to an end in 2017. Mortgage interest relief amounted to more than €400 million for nearly 500,000 families in 2012. It was worth €260 million last year. The ending of that relief in 2017 will be an effective tax increase which will offset the figures outlined today. The Government is determined to pursue universal health insurance. The White Paper it introduced on this subject last year contained a strong hint that tax relief on private health insurance, which has been already dramatically reduced, could be ended. In 2014, that tax relief was worth €350 million. The White Paper sneakily revealed a proposal to subsume the relief into the overall system for financial support for universal health insurance on a revenue neutral basis. That means people who currently pay for health insurance will be paying a hell of a lot more because the tax relief they currently enjoy will be gone. The Minister, Deputy Noonan, failed to address the issue of the local property tax. He commissioned a review from Don Thornhill but he could have nailed the matter today. Dramatic increases in local property tax rates following next year's revaluation could be avoided if the revaluation does not take place. He could have thereby put people's minds at ease. He outlined a package of €1.5 billion in taxes and spending in 2016 but he did not mention the other factors which directly affect household budgets.

The Minister's comments on banks and interest rates are weak and watery. There is nothing in what he said. I expected, and God knows there were plenty of leaks to the media in recent days, that there would be a significant statement from the Minister for Finance today. Previously, he came into the Dáil thumping his chest and saying the banks would have to deal with the issue of the standard variable mortgage rates, but we got nothing of the kind. Tomorrow, the CEO of Bank of Ireland will come before the Joint Committee on Finance, Public Expenditure and Reform. He will tell it that the cost of funds for Bank of Ireland currently is 1.03%, effectively 1%, yet it can continue to get away with charging 4.5% on standard variable mortgages across the country.

Some 300,000 people are paying way over the odds on their standard variable mortgages, yet the Government has arrived very late to this debate. It was dragged kicking and screaming into the debate having shown no interest in the issue. The Minister said it was a commercial matter for the banks and he would not get involved. We heard that many times. However, the penny has finally dropped that people will not put up with the situation. The issue is gaining a head of steam. An interest rate of 4.5% being charged at a time when the cost of funds for the banks is around 1% is unacceptable. As Minister for Finance, the Minister has a duty to speak up for ordinary people on this, as does the Governor of the Central Bank. We need to see progress on this issue because the current situation is not good enough. People will not be bought off with a 0.25% cut as the difference between the rate charged in Ireland by the banks and the rate charged in the eurozone is just over 2% at 2.09%. The Minister is aware of this yet he missed an opportunity today to lay down a firm marker in respect of saying he expects progress on this issue. His words were far too weak.

Where is the promised package of measures to deal with the problem of mortgage arrears? For weeks we have been hearing in the media about measures to dilute the bank veto and new measures to reform mortgage to rent schemes, but the Government cannot seem to get it together because its members cannot reach agreement among themselves on the issue of reducing the discharge period from bankruptcy. All this time, families who are struggling to hold onto their homes are paying the price. The official figures from the Central Bank show that the banks have proposed to take 30,000 family homes from people across the country and they say they have concluded solutions in respect of 16,000 homes. I hope this will not come to pass. I hope negotiations will take place and that these will result in sustainable restructurings being put in place in respect of these mortgages.

Currently, the banks hold all the aces. The Government has given them more and more power. It has diluted the rights of mortgage holders in the code of conduct on mortgage arrears and has allowed thousands of other mortgage holders have their mortgage sold from under their feet. They have been left powerless and are at the mercy of foreign owned vulture funds who can treat them as they like. Those mortgage holders have nowhere to go to vindicate their rights. They cannot go to the Department of Finance, to the Central Bank or to the Ombudsman and have been left hanging in limbo. The Minister has introduced legislation and we are awaiting Committee Stage of that legislation. I do not like how the Minister proposes to amend that legislation, but we will have that debate on Committee Stage. I urge the Minister to accelerate the legislation as it is vital for people who find themselves in this situation.

The bottom line is the bank veto needs to be removed. It is all very fine for the Minister to say the banks only use it in 25% of cases, but the people know it is there and know they will not get any restructuring of their mortgage unless the bank agrees. This is not good enough. The Minister seems to be coming around to the view that he must do something on the bank veto. We told him this was necessary over three years ago. We told him the way the insolvency service was being set up would result in the banks holding all the aces and homes being unnecessarily repossessed. The frustrating fact is that the solutions exist, for example a proper split mortgage with no interest accruing on the warehoused portion of the mortgage.

The banks are open to writing down debt. They should be, because the Government, the previous Government and the people have recapitalised them. They have more than adequate buffers to deal with the issue of mortgage arrears, yet they are singularly failing to do so. The Minister needs to bring forward the long-promised package of measures in respect of mortgage arrears and to deal with the issue of bankruptcy. We support the reduction in the discharge period to one year. If nothing else, that would put manners on the banks and force them to come to the table to negotiate a settlement. The bottom line is that the family homes of well over 100,000 ordinary families around the country are in mortgage arrears. These people should not have to become bankrupt to deal with their mortgage indebtedness. They deserve to get a proper restructuring of their mortgage and this should be done within the confines of the Central Bank code of conduct, the targets programme the Minister unveiled and through the insolvency service if needs be.

Fianna Fáil has outlined a number of other key changes we believe would make a real difference to the economy. We talk a lot here about an enterprise economy and about supporting entrepreneurs, but Ireland is being left behind. Let us be honest about that. When I look at the international trends in corporation tax and how entrepreneurs are treated, Ireland is now in the halfpenny place. The United Kingdom, for example, has relief for entrepreneurs of 10% in respect of capital gains tax and has also introduced a 10% patent box on intellectual property. Much of the investment Ireland is competing for now is highly mobile. We are operating within a hugely competitive marketplace and need to be conscious of that.

The Minister has started what I would regard as a dangerous trend, of diluting our corporation tax offering. Companies making decisions need absolute certainty about the corporation tax environment in which they will compete. It is in that context that Fianna Fáil opposed the measures the Minister brought forward on that issue. We have brought forward our own proposals on a special entrepreneur capital gains tax relief which we believe would make a significant difference. We have unveiled other proposals on DIRT and a range of other issues and we will have an opportunity to tease these out.

The Minister says the biggest risk facing the economy is domestic and political. I am not sure who he is pointing the finger at when he is talking about high taxation and high spending. That, as he knows well, is not the Fianna Fáil policy.

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