Billy Kelleher (Cork North Central, Fianna Fail) | Oireachtas source

I welcome the opportunity to contribute on the Bill. In recent years, I have always tried to contribute on budgetary matters in the House.

Unfortunately, the budgetary arrangement and debate this time around has not been to my satisfaction in the sense that I am now speaking on the Finance Bill in advance of getting an opportunity to speak on the budget itself so it is a bit disappointing. I acknowledge there are time constraints and other priorities but I believe that at the very least, Members should be allowed to debate the budget before the Finance Bill is brought to the floor of the Dáil. I still look forward to contributing to the debate on the budget.

One must look at the backdrop when any budget and the financial measures that flow from it are presented to the House. Certainly if one looks at where Ireland is positioned and the challenges it faces internally and internationally, one must accept that prudence is a critically important component in developing financial strategies for any country, particularly an open economy like ours. Added to this is the uncertainty brought about by Brexit, which is clearly upon us, the lack of direction from the UK perspective in how we progress with Brexit and the EU's inability to answer the questions because they have not yet been raised from the UK's point of view. With that in mind, we must accept that we are in uncharted waters in terms of the impact it could and will have on the Irish economy and that of Northern Ireland. From that perspective, prudence is critically important. We must make sure that we go as near as possible to running a budget surplus or at least not a very large deficit. That in itself is critically important.

The rainy day fund has been discussed. It is a good idea because we know that if there are headwinds and we are buffeted, there is something there to limit the damage they would have on the economy and the Government and State will have an immediate capacity to inject a stimulus into the economy in the event of it requiring it. Consequently, a rainy day fund is prudent. People will ask why we would not spend that money now when we face the huge challenges that exist and argue that this would address many of the problems. Doing that on a continuous basis means that we would never get to the point where we try to address the counter-cyclical problems we have faced as a nation for many years. The rainy day fund will benefit us. In a way, we had a rainy day fund previously in the National Pensions Reserve Fund, which was, of course, raided on numerous occasions to try to shore things up in the face of the critical situation the nation faced from 2007 to 2010. That in itself proves that having access to a reserve in challenging times is a positive thing.

When one looks again at the budget and what we are trying to achieve with it, one must accept there are a couple of key areas that need support on a continuous basis. I am not talking about support in the sense of a handout from the State. I refer to small and medium-sized businesses, SMEs, and what they need is incentivisation and a stimulus. We pride ourselves on removing red tape and making it easier to do business. We think of ourselves as the best little country in the world in which to do business but when one distils it down, we are not the best. It is just that our SME sector is very innovative in its own right. However, it does not get the support from Government in terms of taxation policy and other soft supports to encourage and foster enterprise and innovation, to reward risk and in the event of things going wrong, to support the sector. Equally, when things go very right and a business does exceptionally well and has moved on and taken on more employees and at some stage, there is a wish to sell it on, there is an inherent barrier facing the people who have invested their money in establishing and developing the business. When they want to extract themselves from that business, there are inhibitors in terms of taxation policy. We must look at that, particularly with regard to SMEs, intellectual property and copyright and software design where the asset requirement is not massive but is mobile. Very often, those companies will leave our shores and go elsewhere as they plan to grow and expand with the idea in mind that at some stage when they are disposing of the business, they will not be caught by huge capital gains tax. I believe we must address this. If we are talking about stimulating innovation and enterprise and fostering people in terms of getting involved in this type of activity, we must allow them at least some benefit after years of work and investment. This is a key area that must be addressed.

Another area that must be addressed is access to seed capital. Again, we are not great at this when one looks at other areas of the world, particularly the west coast or even the east coast of the United States, as well as the UK, where there is incentivisation to back risk and provide private seed capital. This is not very evident in this country. Again, it requires changes to taxation policy. I know that as a nation, we are risk averse in many things but I believe there should be incentivisation to encourage people who have access to money to invest it in start-up businesses and that in the event of it going right, there is a reward but equally, in the event of it going wrong, losses can be written off etc. This is a key area that must be addressed.

There is no doubt that we are burning through our competitiveness at an alarming rate. We applaud ourselves for the fact that unemployment has dropped substantially in recent years down to a rate of approximately 4.2% or 4.3% to the point where we need to attract migrant workers to key areas of the economy to ensure the economy can sustain itself and grow and that labour is there to serve the needs of certain key areas of the economy. However, we are hiding behind the fact that our competitiveness is under major threat. All the indices and matrices the Government will use will indicate that is the case. The cost of energy, insurance and childcare along with rates are huge barriers to our competitiveness. All these issues come about because of policy decisions by Governments. Policy decisions by Governments have consequences for these areas of the economy, which have consequences for SMEs. Childcare is an area we have failed to grasp on numerous occasions and not only in the context of it being a barrier to and undermining our competitiveness. It is a barrier to a functioning society. We should accept that it is inherently wrong for families across this country to spend so much of their money on putting a roof over their heads and childcare. We are bordering on a situation where our society does not have any surplus in terms of being able to invest in social capital. Individuals and families are unable to invest in their social capital because they are slaves to bricks and mortar if they have a mortgage or slaves to the rental sector if they rent. They are equally enslaved to childcare costs. This is not acknowledged in a policy-driven manner. If we do not address these issues, we will store up huge societal problems. I do not mean to be alarmist but everybody will accept that people with children need to have money to invest in them - in the social aspect of their development. It is fine to talk about putting a roof over their heads but if there is so much pressure in that house because the family cannot afford other things that are important for the development of an individual, we are clearly undermining society and storing up bigger problems down the road. This budget has fundamentally failed to address the key areas of shelter and childcare and I have outlined the reasons I believe this to be the case.

It applies to the economy as well and to our competitiveness.

Pressure must come on for wage increases if people are paying €1,400 or €1,600 a month for a room in south Dublin. This is happening. The idea that we can consistently force people to pay exorbitant costs for in mortgages or rents and that will not have a knock-on effect on our competitiveness defies logic. One does not need to be an economist to accept that this is an issue. Any handy home economics student would know that. We have, collectively, failed to come up with solutions in this House to address the issue. It is camouflaged while the economy is growing, but any pressures will find our competitiveness out and there will quickly be massive job losses and SMEs under major pressure again. The pressure will come from employees because of the cost of living. People will have no choice. They must live somewhere and, if they have children, must provide childcare. There is little being done. There have been few efforts to even address it.

The cost of credit must also be addressed. A recent report from the Central Bank showed that Ireland has the highest interest rates in the eurozone for residential mortgages and SME lending. Our pillar banks are pillaging us and gouging profits from the pockets of mortgage holders and SMEs. A cursory look at the interest rates charged across the eurozone shows that Ireland is at the top of the tree. Our pillar banks pay the lowest deposit rates but charge the highest interest rates. They then issue, with great fanfare, the profits they are making every now and again. In a sheltered economy like ours, where there is little competition in the credit market, it is obvious they will make lots of money. They are gouging it from mortgage holders and small and medium-sized businesses. A variable interest rate in this country, over the lifetime of a 25-year mortgage, means an Irish family will pay €60,000 more compared with the average in the eurozone. The government then says various sectors of the economy are competitive and the country is competitive. Ireland would be much more competitive if the banks accepted they have a role to play in ensuring reasonably priced credit is available to mortgage holders and to small and medium-sized businesses but they do not.

There is ostrich syndrome on this issue. Everybody is afraid to challenge banks, including the Central Bank. We saw how inept and incompetent the Central Bank and regulators were in previous times. There is deference again being shown to the banking industry. Bank officials are back high on the hog again and, at the same time, failing to provide credit at reasonable costs where there is almost no risk, particularly in the domestic mortgage market. They are pillaging and gouging us. The average interest rate in the eurozone is 1.77%; in Ireland, it is 3.3%. That is double the rate.

Small and medium-sized businesses face the same issue. It is almost impossible to get lending to them. Banks are spending a lot of money trying to convince us that they are lending to small and medium-sized businesses. A cursory assessment would show that they are not lending where there are key demands in the economy for credit. The Credit Review Office in the Department of Business, Enterprise and Innovation should be wound up. It is a waste of time and I say that as one of the people involved in trying to establish it a number of years ago. It does not have teeth and it does not have the capacity to assess the credit market. We need independent assessment of what lending our banks are doing.

I do not believe the Central Bank always acts as an honest broker when it is delving into the banks. The proof of that lies in its lethargy and ineptitude in dealing with the tracker mortgage scandal. It was forced by the Committee of Public Accounts, the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach and others to take action. Officials were slow to act. That is another key area of policy that must be addressed to ensure the banks are competitive.

The Government can borrow. Interest rate charges to the Government are among the lowest in the eurozone. At the same time, our banks are charging the highest rates. There is an inherent difficulty in the banks that must be addressed. The Government should be proactive in establishing an independent assessment of banking practices in this country, if the Central Bank is incapable, too inept or unwilling to do it. Something must be done. Every day, people who are taking out mortgages are enslaving themselves for 25 years. A mortgage in another part of the eurozone will cost €60,000 less over the lifetime of that mortgage. That money could be invested in children and their hobbies and the social capital of the house; something productive in our society. The banks will not allow us do that.

The 2017 brief for the Minister for Business, Enterprise and Innovation makes numerous references to investment in rural Ireland. There have been recent difficulties with broadband provision. Delivering the roll-out of broadband is beyond whoever is in charge of the Department of Communications, Climate Action and Environment. We have been talking about it for years. It has been raised continually in this House for 20 years. Rural broadband has been around this House as an issue as long as I have, yet there are still 542,000 homes without access to reasonable broadband. I live less than three miles from St. Patrick's Bridge in Cork as the crow flies and, if not for being able to access satellite broadband, I would be down to 1.2 Mbps on my line. That is three miles from St. Patrick's Bridge, which spans the River Lee in Cork city. We want to ensure Ireland is a modern, vibrant country that can not only attract foreign direct investment but can elevate itself as well. We could provide more resources into rural Ireland if there was a broadband service. It could become self-stimulating. People could work from home, rather than having to always go to urban areas. i have been informed by many multinational companies that up to 15% or 20% of their workforce could work from home if broadband services were better. People are dragging their children out of bed and into the car every morning, haring the across the countryside to drop them to childcare facilities at 7.30, and going off to work for some company, all because we, as a nation, have not got our act together. Broadband is a critical part of any modern economy and must be delivered quickly. The lack of ambition and lack of ability to deliver broadband is a scandal. I do not know who to blame, or at whom to point the finger, but the Department that has been overseeing this for a number of years has failed to make inroads into this issue of strategic importance to rural Ireland.

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