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

I thank the House for facilitating this debate and welcome the opportunity to speak. It is important that every Deputy has an opportunity to speak on the annual budget and raise issues about which he or she has genuine concerns, not only in the context of the national budgetary framework but also, from time to time, on more regional and local issues. In that regard, it important that Deputies can convey views from their constituencies.

The budgetary framework is set against a backdrop of grave uncertainty. We all acknowledge the disquiet caused by Brexit and the events that will unfold tonight and tomorrow in Westminster, Brussels, Dublin and Belfast. Any Government would have to take that uncertainty into account when framing a budget. However, other issues are also affecting the broader international economy. The America First policy, for example, has the potential to have a profound impact on the Irish economy because a large number of American anchored multinational companies have located operations here. That is a headwind of which we have to be conscious and which we must take into account in formulating policy.

We have a great dependency on multinational companies. Attracting them to Ireland has been the template for the expansion of the economy for more than 40 years. This approach has been underpinned by the policies of successive Governments, including through our 12.5% corporation tax rate, which has been a critically important factor. Equally important has been our access to the European Union as members of the EU, the fact that we are English speaking and our geographical location between the United States and Europe. We offer many advantages for multinational companies and we have benefitted greatly from the critical mass of such companies located here, be they in the areas of medical devices, pharmaceuticals, financial services, or companies like Microsoft, Google and Facebook. All of the major companies that are household names have made large investments here. From that perspective, the America First policy is a critical issue that we must face up to because in the long term, we cannot take for granted that there will be continued expansion of and investment by the multinational scene in this country.

For this reason, it is important that we try to expand indigenous small and medium sized businesses. We talk about Ireland as a great country in which to set up a small business and do business. While it may be a great country to start up a small business, it is not a great country in which to continue to run a business owing to the costs with which businesses are burdened. Those costs undermine the competitiveness of the broader economy and the ability of small and medium sized businesses to grow and operate in our volatile and open economy. While we consistently applaud ourselves for being good in this area, the evidence shows that the contrary is the case.

Access to capital is a serious problem for small and medium sized businesses. Our pillar banks are dysfunctional at this stage when it comes to funding start-up companies. Enterprise Ireland is now in the business of providing soft loans to small and medium sized businesses. Traditionally, it took out equity in companies but it is now providing loans. We could argue about why that is the case but I suspect it is because our pillar banks are no longer able to assess small and medium sized business plans and have become completely risk averse. Lending to the sector has dried up as a result. We will continue to pretend that it has not but all the evidence shows that it has. The credit review group in the Department of Business, Enterprise and Innovation is toothless and incapable of dealing with this issue. The Central Bank seems to be moribund and uninterested, to say the least, in trying to establish why our pillar banks are not in the business of lending money. The banks change short-term overdraft facilities to term loans and pretend it is new lending. They are up to every trick in the book, as they have been for a long time. I do not say that lightly or to be alarmist.

I have yet to meet people in business organisations or chambers of commerce who can say with certainty that our banks are on the side of business, helping and supporting businesses, assessing and analysing a business plan, and actually funding it. Our access to capital is a major problem.

Allied to this, we have not been great in incentivising entrepreneurs and giving them seed capital support. It is very challenging for private equity to get involved in start-up businesses in this country for a number of reasons. First, if it does not succeed, there is a loss. If it does succeed, it is hard to capitalise that business at some stage down the road and for the investor to take out their money. There is no incentive for people to invest money with the hope that if the company grows and expands, they will be able to capitalise it at some stage in the future, take their equity and move on. Seed capital entrepreneurs need to be able to do that. That happens in the US, on the west coast and the east coast. It also happens in the UK and elsewhere. However, we do not have that flexibility in this country. We do not seem to have that capacity in terms of policy development and maybe also in terms of our history and tradition of funding; we expect the State to do it all. However, we need to unshackle that element of private equity investing in companies, being able to capitalise at some stage down the road and take out profit. Profit is not a dirty word. We need to look at the issue of capital gains tax for small and medium-sized businesses. We have an opportunity to do that now.

We are obviously obliged to comply with EU budgetary deficit requirements. We also need to be conscious that the economy is facing headwinds. There are also major pinch points in the economy following a lack of investment in infrastructure over a number of years. We can see evidence of that in our public transport systems and roads. Our third level institutions are under enormous pressure in trying to expand their facilities to provide proper education and training. We seem to be eternally incapable of addressing the issue of how we fund third level education. If we want to have the best graduates in the world, we need to have the best universities in the world. If we do not face up to that, we will remain forever moribund and in mediocrity. We should aspire to be ambitious and go well beyond that.

Housing has just been discussed. I know simplistic solutions have been proposed in this House on many occasions. I do not stand here this evening, believing I have any grand answers. We are absolutely failing generations of people with what is happening at the moment. Every day families are traipsing around the capital city awaiting a phone call from emergency accommodation officers advising them where they can sleep that night. Traditionally that would have been for single people with drug addiction, alcoholism, mental health issues and other illnesses. However, the homelessness we traditionally saw has gone beyond that. Families are sleeping in cars and vans, and on couches. Families are sleeping in hotels and bed and breakfasts which they have to vacate at 10 a.m. and traipse the street again until that evening.

I am not criticising; I am just highlighting. The difficulty is that it has gone beyond the issue of traditional homelessness. It is now evident across society and in every region. People in south Dublin are now paying €2,000 a month to put a roof over their heads. People in parts of Cork North Central, the constituency I represent, can pay up to €1,400 for a nice two-bedroom or a three-bedroom house.

All this is taking money out of the family system that they should be investing in themselves. People do not appreciate the impact this will have and the problems it is stirring up because parents do not have surplus cash to invest in their children, such as the child who has reading difficulties where the parents from time to time might get some assistance for that child, the child who is brilliant at music, but they cannot afford piano lessons for that child or the child who would like to play football or hurling, but the pressure is on because they just do not have that money. We are effectively enslaving an entire generation to bricks and mortar again. We have tried it before and it failed; and it will not succeed this time.

It is now necessary to have two middle to high-income earners, living with mam and dad for a number of years before they get the deposit together and before they can even go to the market to contemplate buying a house. From the day they buy that house they are on a treadmill of misery to fund that mortgage for 20 years. That is with historically low interest rates. Even though Ireland has the highest interest rates in the European Union, historically the ECB rate is the lowest it has ever been. That will not stay low for 20 years as otherwise it will show the European Union is failing as an entity because there will have been no economic growth.

We will store up major problems because if they can barely afford to buy a house now with historically low interest rates, what will happen in three, four, five or six years' time when interest rates start to rise across the European Union? They will go from 3.2% to 4.3% or to 5.2%; who knows? However, we know for sure they will not stay at historically low rates forever.

If two-income families cannot afford to buy a house in Dublin with historically low interest rates, what will happen in years to come? It is almost foretold that there will be great major problems. In the meantime there is no surplus money available to families to do the things families should be doing, which is investing in themselves. They should be investing in the social capital of that household, lightening the burden of the State, investing in themselves in order that the State does not have to do it. However, it seems we will enslave them again for another generation.

This is not some ideological view of mine; it is just the harsh reality of economics. We are storing up problem after problem. The Minister of State and I see it every week in our clinics, as does every Deputy in the House. Parents constantly tell me they would pay for it if they had it, but they do not have it and the State cannot give it to them either. That issue must be addressed. Because the Minister of State, Deputy English, is in the House taking the debate tonight, I had written down housing, infrastructure, competitiveness and entrepreneurship as the focus of my budget speech.

We must accept that the changes required in the overall economy are coming too slowly for us to reposition ourselves. I point particularly to the area of competitiveness. Our competitiveness is being continually undermined. The most recent report shows we have dropped to 23rd in the ranking of competitiveness. That should set alarm bells ringing. Once our competitiveness starts to drop, other issues start to roll in. Requirements for wage increases further erode competitiveness. These are wage increases to fund mortgages and rising rents. All these things continually feed into the economy. That is fine when the economy is rising as it is at the moment, but it will not always grow at the rate it is growing.

We know for certain that at some stage it will slow and then the Government will be found out because our competitiveness has been eroded. Competitiveness is a significant issue because we do not know what Brexit will bring. We do not know what it will bring with the United Kingdom, for example. A key issue in terms of what will happen in the negotiations tomorrow in Westminster and here is the common travel area with the United Kingdom. I hope there will be no barriers in trade between the Republic and the United Kingdom. It would mean that an Irish person can still work in the UK unhindered and in the European Union unhindered through the free movement of people. It will mean our labour pool has access to two markets. In view of the fact the United Kingdom may not have access to the European market any more, it will mean our labour pool will primarily see the UK as an area for employment. Our economy could be under significant pressure very quickly in trying to keep skill sets in the economy. If one looks at all the metrics across all the skill sets, we are under pressure in every one of them. Our apprenticeship roll-out has been slow. The training programmes that are required for the economy in key areas of construction, both commercial and residential, are light years behind what we need in terms of ramping up productivity and output. We were very slow to acknowledge the issues. I remember in the House the Government was still talking about knocking ghost estates when everyone else was saying we need houses. We did not ramp up the apprenticeship schemes on time. We do not have enough engineers, architects, planners or construction workers across all the trades and crafts. There is a very long lag. If European labour is cut off from the United Kingdom, this economy and labour pool will be potentially pulled to the United Kingdom. I do not know what is in the text but I detect it would be of concern if the United Kingdom did not have access to the European labour market but had access to the Irish labour market because of the common travel area. The issue of skill sets is a significant impediment to the economy's competitiveness. I have spent the past 18 minutes highlighting the problems. It is important we acknowledge the issues.

In terms of infrastructure, I spoke about the national issues but I also have to talk about local issues. The North Ring Road is not in the national development plan and it should be. The North Ring Road is the road that was envisaged to run from the Glanmire bypass across the northern district of the city joining the south link road in Ballincollig. It is on plans and there was a rough route. It is very important that this road is developed in the short and medium term. I will tell the Minister of State why. It is not because it runs through the constituency I represent but because if anything ever happens to the Jack Lynch Tunnel, which is now the only real link between north and south, we will see serious problems and consequences. It can happen from time to time as a result of flooding or maintenance on the tunnel. That whole region comes to a standstill. The whole region of south Munster, in terms of access to ports, the airport and hospitals is completely and utterly dependent on the Jack Lynch Tunnel. If we had a circuitous orbital route at least if something happened to the tunnel as a result of maintenance, a catastrophic accident or some infrastructural problems, we would have a link around the city to serve it. It would also bring some balance to the city because all the development is on the south side of the city and we do not have enough infrastructure to encourage investment in the north side. From that perspective I urge that the Government looks at it. It would also assist in opening up the area to further housing development, which is something we critically need in the constituency of Cork North-Central.

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