Wednesday, 10 February 2010
Finance Bill 2010: Second Stage (Resumed)
I wish to pick up on the point I was making in regard to the Private Members' motion on the pay cuts for the 600 higher public servants. I refer to the percentage increase which these people enjoyed in the good times. They are now being excused from some of the pain in the difficult times. These higher paid people made greater gains in the good times but are being exempted for taking their fair share of the pain at the expense of the lower paid public service workers.
I have just left a meeting of the Joint Oireachtas Committee on Arts, Sport, Tourism Community, Rural and Gaeltacht Affairs. The issue raised at that meeting by many, including Government and Opposition committee members, related to the travel tax and the reluctance of the Government to remove that tax at a time when figures show millions fewer tourists are coming to Ireland. I am not suggesting all the reduction in the number of tourists is due to the travel tax. Some of the €80 million collected in the travel tax could have been made up elsewhere. We all know of hotels and tourism facilities struggling to survive. Surely the response in this scenario should have been one of support and stimulus rather than one of tariff. It just does not make sense. The airlines and all the tourism bodies are in agreement. A review carried out suggested the removal of this tax yet it is still in place.
There are a number of stealth taxes and charges in this Bill which will not register with people until they have to deal with them upfront. The proposal to end tax relief for bin charges while at the same time introducing VAT on these services will mean a hugely increased charge and will lead to an increase in illegal dumping.
We have all heard the calls for business to be more competitive yet we have a carbon tax, increased toll charges and off-street car parking charges. How will this help business to be more competitive? It will have the opposite effect.
There is no consolation for farmers in this Bill. The continued hits they have taken not only in this budget but in previous ones will send farm incomes into a tailspin. In 2009, the incomes of farmers dropped by more than 30%. The ending of REPS 4 and the failure to pay farmers due money, even though only part of the money is coming from Government coffers, is another scandal. The figures I released for Mayo today suggest that 1,276 farmers are waiting for their REPS 4 payments, even though when I raised this matter with the Minister before Christmas he said they would all be paid in the lead-up to Christmas or in the first days of January. This is not good enough.
Even one small issue, such as the exempting of farm diesel from carbon tax, failed to materialise. This is nothing less than another tax on farming activity. Even the Government's own figures admit the overall effect of this Bill and budget will increase unemployment by 70,000 this year. Today's newspaper headlines may be the beginning of the confirmation of that, as 750 jobs were lost yesterday in Halifax.
Youth unemployment has risen by 150% in the past two years. There are no supports or stimulus for job protection or creation in this Bill. The young people who played no part in causing the problems in the economy are suffering the most. Where is the sense of fairness in this? In any activity in life confidence is one of the great things which will get people back on the rails. There is a total lack of confidence in this economy and this Bill confirms that.
I welcome the opportunity to speak on this Bill. There are a number of issues in the Bill and in the wider scope of finance to which I wish to refer. On the points raised by Deputy O'Mahony on agriculture and farming, there is no doubt there is a huge issue regarding farming incomes and the incomes of rural people in general. On the banks and the announcement yesterday of closures, when competition came into the sector and banks from outside the sector were setting up here, we all welcomed the reduction in interest rates, the terms and freely available credit which was coming on stream. There is a parallel to be examined regarding agriculture.
Multiples have come into the country and are delivering hugely reduced consumer prices. There is a lot of competition between the multiples regarding the price of produce on the shelves. At the same time, a fair price is not being given to the primary producer, farmer or processor. The country will face a major problem if we do not face up to that now, even if what we have to do is unpopular. In five or six years' time it will be a huge issue. Some of the multiples are currently showing profits in excess of €90 billion, which is almost twice what it costs to run Ireland. That is made on the backs of primary producers and small processors throughout this country. It is an issue which needs to be addressed.
Discussions are taking place regarding what should be done at European level. The issue also has to be tackled at national level because, while we all welcome the reduction in prices, it should not happen as a result of the decimation of what was once a very proud indigenous industry and which is still one of the main employers in the country. It must be examined in a serious and coherent way.
In recent months we have been given information from the stock market and stock brokers about the miss-selling of products to people, in particular to those who are vulnerable. Media attention was drawn to the effect of this and some matters are before the courts as people have taken cases. It is something which has to be examined. One case which has come to my attention in recent months concerns a client who is 75 years of age who had been sold a 26 year investment by one of the major stockbrokers in this country. The person concerned would have had to wait until she was 101 years of age before she could recover any of the money she had invested.
We hear that the stock market or our old friend, the Financial Regulator, is in charge of such practices but these are issues on which we need to zone in because they affect many people. From an examination of the press cuttings in recent weeks concerning small financial institutions and individuals taking cases regarding the miss-selling of products, one can only conclude that this will become a major issue for us.
On the Finance Bill, the Minister, in his speech on 9 December, reduced excise duty on beer and cider. At that time he made the point that he expected a reduction in prices from manufacturers and wholesalers and he would increase excise if that was not forthcoming. To date, nothing has happened and it is something which would be very worthwhile for the Government and the Minister to monitor because it is an important issue. If any direction given by the Minister in terms of excise or taxes is not matched by the industry, we must examine the matter.
The Finance Bill gives legislative order to the provisions of the budget. There is no doubt it was a tough and difficult budget in terms of spending cuts and so forth. There are a number of issues in the budget and Finance Bill which have to be welcomed, are far-seeing and should give us welcome relief. The extension of mortgage interest relief for qualifying homeowners who are entitled to it was due to end in 2010 but they will continue to qualify at the applicable rate until the end of 2017. Qualifying loans taken out before 31 December 2011 will continue to get relief at the current rates until the end of 2017. Transition measures are also provided for qualifying loans taken out after December 2011 and in 2012 the relief will be provided at reduced rates for the duration. Mortgage interest relief will be abolished entirely for the tax year 2018 and subsequent years.
The introduction of the domiciliary levy of €200,000 on all Irish domiciliary individuals who are Irish citizens will ensure that wealthy Irish domiciled individuals make a contribution to the State during these times of economic and fiscal difficulty. The contribution of wealthy people is a point which has been argued in this House on numerous occasions and this measure is recognition that the issue needs to be tackled. The levy will apply to wealthy Irish domiciled individuals with Irish-located capital greater than €5 million, worldwide income in excess of €1 million and all Irish income liability taxed less than €200,000. Persons liable for this levy will have to pay it regardless of whether they live or are tax resident here. The increase in the effective income tax rate paid by those subject to the restriction in reliefs for horizontal measured taxpayers availing of specific reliefs will now become subject to the restricted rather than adjusted income levy of €125,000 rather than €200,000.
These are some of the measures.
Some commentators have spoken in recent days about the worthwhile initiatives in the Finance Bill which are intended to try to generate foreign investment into this country. Since the foundation of the State we have benefited enormously from foreign direct investment. We provided a very worthwhile arrangement within our taxation system that encourages foreign direct investment. We also put in place a very educated workforce which has been to the benefit of Irish society over the years. Our education system has stood the test of time although in the future there must be new innovative education programmes. However, the system has encouraged investors and this Bill goes a long way towards ensuring there will be further encouragement. Many commentators broadly welcomed the Finance Bill and it is encouraging to note that even in these very difficult times it was welcomed.
Speaking in a broader sense, this time last year we saw the collapse of the financial markets and the banks and all the subsequent difficulties. We saw the short-sightedness in the way banking was dealt with. We must now look to our indigenous industries that have stood the Irish economy very well over the years. We have to consider foreign direct investment and ensure we have an attractive economy into which to invite people. I believe we are doing that. We must be very careful to ensure that message goes out at all times. That is our encouragement for the future.
We must accept also that we are in hugely difficult times and that people throughout the country are suffering severe financial hardship because of loss of employment, from advice given to them in recent years or because of family circumstances and other reasons. Many politicians on all sides of this House are in constant contact with community welfare officers regarding their constituents, particularly in recent months. They will know of people who unfortunately lost their employment but perhaps had a redundancy payment or some other savings which got them through. However, I have seen people across the desks from politicians or with welfare officers who are in great financial difficulty because their commitments still exist. These are people with young families or with young adults going on to third level education. We must be very mindful of this.
Last week regulations were introduced regarding mortgages and so forth. I believe there are new regulations in respect of what credit unions can do. Credit unions have always provided extra money for people, in both urban and rural Ireland, and have been the backbone in providing funding in difficult times. However, there was need for the new directives and I hope they will be signed shortly as a statutory instrument. These will allow the credit unions to reorganise loans and repayments for people, some of whom are in great difficulty in this regard.
I wish to make a very strong point concerning the Finance Bill. Many people have asked whether anybody foresaw the collapse in the financial system. A very large amount of money was freely available from banks and foreign banks introduced competition by coming into this country and competing with indigenous banks. Everybody had a race to the bottom. I firmly believe that if corrective action is not taken in respect of the food industry and what the multiples are doing, not only in this country but throughout the developed world, we will have the same situation in agriculture and the food processing industry in the not very distant future within three to five years. There is a drive or race to the bottom to get the cheapest price possible for the goods on the shelf and to have the cheapest possible product. This drives margins down further for the primary producer, the farmer, and the indigenous processors we have always known in this country. Over-regulation has come into play in the meat industry, especially in the beef processing industry, with the closing of smaller abattoirs.
This issue is probably too wide to be dealt with within an individual state because it extends across the European Union. Governments must take corrective action in this regard and take away power from the multiples regarding what they are doing at present where there is bulk buying on a grand scale. If we do not take away their powers we will end up with a desperately serious situation. The fear is that our agriculture will end up in the same situation as the financial sector. I do not say that as a scaremongering tactic but firmly believe it. Decisions have been taken at all levels with regard to agriculture and food production and the prices given to the primary producer which have eliminated a great raft of our own people who worked in that sector. During the past 20 years it was always said that big was beautiful, particularly in agriculture, and that it was right to take away many of the processors. However, it has led to a lack of indigenous processing.
I firmly believe that governments, both at national and European level, must take corrective action in regard to this issue and the power of individual multiple companies. These companies have profits in excess of €90 billion, nearly twice what it costs to run Ireland Incorporated and they must be checked. How Ireland stood up to the British empire is famed in song and story but there are empires across the world at present that are driving our primary producers and small industries into the ground, in both urban and rural Ireland. This will continue unless corrective action is taken. Although we may all believe in the Common Agricultural Policy and the moneys made available to the farming community to support them in producing food for reasons of food security, if we do not return to the basics of paying these people a proper price for their product we will end up in a very serious situation.
These are the three points I wish to make in respect of the Finance Bill. My primary point concerns agriculture and our relationship with the multiples. The second is the need to look at the way the stock market and stockbrokers have been regulated and the products they sold, especially to vulnerable people. I outlined the case of one person in her 70s. She was sold a 26 year product which would come to fruition some time around her 100th birthday. Some €180,000 was put into that scheme and she was left with nothing except a house. That business must be looked at in a very serious way. The regulator and the stock market find it very easy to kick it from one to the other.
Third, I welcome the initiatives in the Finance Bill regarding attracting foreign direct investment. We used to be very good at attracting such investment because of the initiatives of Governments of all parties throughout the years. We must continue to do that and must continue to have an educated workforce irrespective of the difficulties facing the country at present. We must ensure we have that system in place for Ireland to go forward.
This Finance Bill, which deals with matters outstanding from budget 2010, attempts to walk a very fine line between taking a first painful step towards the correction of the public finances on the one hand, and squeezing the life, such as it is, out of the economy, on the other. It is the harshest budget in our history. The measures to be implemented by this Bill constitute a huge risk. We seem to be caught in a downward spiral, where savage pay cuts and extension of VAT to public services are piled upon last year's severe tax and levy increases, without any investment strategy to deepen economic activity or retain and create jobs.
Taking €4 billion out of the economy is a risk. Historians will marvel at the depth of the crisis that caused the parties in this House to agree on that figure, even if they differed on how it should be done. However, that does not mean to say that it is without risk. Set against a backdrop of rising interest repayments on our borrowings and a credit freeze to the real economy, it is certainly a risk. That view has its adherents in the ranks of the Labour Party, in the trade union movement and in the views expressed by former Deputy George Lee, if I understood him correctly. More pertinently, it was a view entertained by the Minister for Finance, Deputy Brian Lenihan, before he introduced the emergency budget last April, but as the pace of economic decline worsened last year, presumably he changed his mind about the composition of the cuts, or perhaps the change was forced on him by our European authorities. Either way, we are managing only to run fast in order to stand still. Talk of having turned the corner or recovery being on the horizon is not a perception shared in the real economy. If credit has dried up and this remains unaddressed, more people will be forced onto the live register, thus undermining the value of the €4 billion cuts.
I accept the need to tackle the public finances crisis, or the structural deficit, and I hope the cuts do not further depress demand and worsen the recession. However, one thing I am sure of is that the Minister cannot come back for more pay cuts. Even before his December budget, the Minister told us how his European colleagues marvelled at the cuts he had implemented without provoking widespread public protests. He revisited severe cuts in December, but targeted the brunt of them at public servants. Employees on very modest wages were hit very hard, but there comes a tipping point. On the public pay front, there is no more low-hanging fruit. Therefore, Government focus must shift to the critical issue of employment. While asserting that we have turned the corner, the Minister is at the same time planning for a further huge increase of 75,000 in unemployment. Lack of opportunity is a further constraint on our young educated people, forcing them to leave the country. As other economies begin to emerge from recession, more and more of our educated youth will emigrate. If we lose a generation of educated young people to emigration, this will make the Government's objective of a smart economy even more elusive.
The most urgent necessity now is to ensure that small and medium enterprises have access to lines of credit. It would appear that there is an emerging consensus that even if the remaining obstacles in the way of a functioning NAMA can be cleared, it will still not meet the first objective set for it by Government, namely, to make credit available to sound businesses. All of the indications are that there will be more bumps on the road in respect of NAMA's mission than were anticipated by Government. The banks will endeavour to use as much of the ECB funds as possible to rectify their balance sheets. If, for example, a bank can access money at 1% and use it, for example, to buy Government debt, it will get a handsome return without taking any risk. If the expert advice is that, as the IMF advised, NAMA will not get credit flowing again, then the Government must devise alternative methods of making credit available to sound businesses. The Labour Party has been examining this question for some time because we have not shared the Minister's confidence that NAMA will unfreeze credit. There appears to be an extraordinary complacency at the top of Government on this critical issue. In an exchange yesterday with the Labour Party leader, the Taoiseach made it sound as if all we are doing is gathering up used cloakroom tickets and taking them to a hatch in Frankfurt where the banks will get funds at no expense to the taxpayer. The truth of course is that the Government is handing over the equivalent of the deeds of the house for ECB funds. It is mortgaging our children's future. The Minister must get tough with banks in terms of our national priorities.
I welcome the Minister's commitment to a national solidarity bond and hope in his reply to the debate he will elaborate on the conditions. This was first proposed by David Begg, General Secretary of Congress. All the evidence is that because of the extent of the lack of confidence in our economy, the savings ratios have shot up. I have no doubt, depending on how the Minister pitches it, that the bond will be oversubscribed. It ought to be expressly linked to the jobs effort in its promotion. Other than the solidarity bond, there is very little in the Bill to stimulate employment except for the provision designed to attract a share of available Islamic finance. The employment content of that initiative may be small enough. The Minister's gimmick on the levy for non-domiciled persons is typical of the way Fianna Fáil treats the Green Party. One does not need to be a tax specialist to know that one could drive a coach and four through this measure as proposed. Given the collapse in house prices, it will not be difficult to escape this measure. If it is designed to mollify public opinion, when the yield becomes apparent it will only serve to enrage public opinion. One would need to want to contribute under this measure as it is drafted. Otherwise, one would need to be a fool. Not many tax refugees are fools.
It is apparent that the Department of Finance took back control during 2009, having been asleep at the wheel for some time before or so oppressed by its political masters that it was paralysed. We had the appalling budget of 2007 which fed into the paralysis of 2008, but finally the Department won the battle in the internal row for 2009. It is difficult to find any Ministers who espoused the finance measures, who espoused, for example, the McCarthy report. One must admire the chutzpah of the Minister for Finance in coming into the House and seeming to offer remedies for a disaster caused by his Government. Perhaps he was not in Cabinet, but his colleagues do not have that excuse.
Before I hand over to Deputy Sherlock, I wish to repeat a point I have made previously about the sheltered private sector. The Minister comes in here seeking to impose new levies, additional taxes, pay cuts and cuts in social welfare, yet nothing is being done about the sheltered private sector. The prices being levied by professionals, who are cosseted, are only likely to be aggravated by the moneys set aside for professional advice in the case of NAMA. This issue remains unaddressed. I would also like to draw attention to a matter being debated elsewhere in the Oireachtas, namely, the manner in which top-level public and civil servants have been treated as compared to people on €30,000 and less. Competitiveness is not merely a function of pay. Too frequently, speakers on the Government side of the House come in here talking about competitiveness as if it was only about pay. The only way I see towards a restoration of pay levels in the public service, down the road, is through negotiation and implementation of the reforms that were on the table before Christmas. We need to get back there because there is no future in widespread industrial conflict. Nor is there any future in the Government continuing to provoke the Civil Service and the public service in the way it has done.
Finally, there ought to be a law to protect the Greens as we have legislation to protect other vulnerable species. To offer them an 80% windfall tax in circumstances where there is no development, and to offer them this levy on non-doms when nobody except one who is minded to want to offer to pay it would bother paying it, is really no way to treat a partner in Government.
In furtherance of the last point made by Deputy Rabbitte, the fact this is a windfall tax on landowners whose sons or daughters may seek to build a house near the family home in a rural area, based on a genuine housing need, is an issue that needs to be re-examined.
I wish to speak specifically to the issue of the carbon tax and the permutations of that tax for the agricultural sector. Speaking as a Deputy of the Labour Party, a party with no apparent natural ties with the agricultural sector, it could be argued that anything we may say on this subject will not always be taken seriously by those who operate within the rural economy. I want to put on record that what is vital to the recovery of this economy is how the rural economy will thrive.
The imposition of the carbon tax, for example, particularly as it pertains to marked gas oil or agricultural diesel, will have a severe impact in terms of the cost inputs for those who operate within the agricultural sector. Be they primary producers or agricultural contractors, the very fact a tax of this nature is being levied at 8.7% when road diesel is at 4.4% will cause an undue cost impact for those who are operating within this sector, and it needs to be revised. There is an irony to the situation. For the multiples such as Tesco, their lorries on the road are subject to a tax of 4.4% whereas the primary producers such as the farmers who are producing for the multiples are being levied at 8.7%, which will put a further squeeze on those primary producers in terms of their ability to supply goods into the market. This is an issue that needs to be taken on board, particularly by the Green wing of the Government, who have heralded this carbon tax as the dawn of a new age.
In principle, we are all in favour of the tax, but it has to be on the basis that it is levied with some degree of equity and fairness. I do not believe a proper analysis was undertaken of this measure before it was decided upon. It should be revised and revisited because it has not been costed and it will have a negative impact on the very recovery that is necessary for this economy, particularly in terms of how the rural economy weighs into that recovery. I would like a response from the Minister on this issue when he is replying to the debate.
I wish to refer the Chair to an e-mail I received from a farmer who is directly impacted as a result of this proposal. He stated:
I too have no problem with CT [carbon tax] but only if it is dealt out in fair way. To me it seems that this tax at nearly double the road % is a tax on production. ... Another concern I would have is that seeing new engines in tractors are going to cost on average between 20%-50% more than now, this tax would be a barrier to cleaner and newer emission targeted machines being used in agriculture, as people will just make do [that is to say, make do with existing machinery]. It is a fact that these newer tractors burn more fuel due to the nature of the emission recycling that goes on. ... By hook or crook everyone in agriculture will be affected by the rise, any contractor will just have to pass it on to customers, and they are finding it hard enough to get paid as it is.
We need to take a more lateral view as to how the carbon tax will be implemented. From an agricultural perspective, it is proven that agricultural incomes were down significantly in 2009 - the figures are there for everybody to see. If one is operating a large-scale farm unit, the chances are one will be able to absorb the extra costs because one has the economies of scale to be able to do so. However, in the case of a small farmer, such as a hillside farmer or sheep farmer on a small margin, any increase in costs of this nature could have the potential to put that farmer out of business. We need to revise this mechanism on that basis alone.
I keep coming back to the idea that if the agricultural sector is to form a part of our economic recovery, what we must not do is place an undue burden on the costs of production. The costs of production, if one considers the overall economy, have to be the same for agriculture as they are for the lorries that supply Tesco and the other multiples, which take their primary products from those same primary producers. We need equity in this regard.
I also refer the Chair to the proposal by the Irish Farmers' Association, which stated:
Farm diesel has excise duty charged at a lower rate than road diesel or petrol. Furthermore, the rate of VAT applying is the low rate of 13.5% as compared with 21% for normal automotive fuels. The low rate of excise duty also applies to farm diesel in other EU countries. This demonstrates recognition by Government and at EU level that a lower rate of taxation is appropriate for farm diesel, which is exclusively used in agricultural production, than is applied to other motor fuels.
Again, we need to take cognisance of the fact that agricultural diesel, by its very nature, is used on-farm and primarily for agricultural related purposes - or it should be - and, therefore, if its cost to the farmer is increased, many farmers will be wiped out, particularly those in marginal areas. I ask the Government to revise this provision.
I am pleased to have the opportunity to speak on the Finance Bill 2010, which will give effect to the budgetary measures introduced just before Christmas. Everybody in the House will agree it was a very difficult budget which has affected everybody in the country. Those in work are finding they have less money. Unfortunately, an increasing number of people are out of work and those on social welfare payments have seen a substantial reduction in their take-home income. In that regard, I want to praise the Minister for having had the strength to realise the situation the country is in and to put in place measures to correct the awful - I use the word advisedly - situation that is facing us. In simple terms, we are taking in approximately €32 billion per annum and spending in excess of €54 billion per annum, which obviously is unsustainable. Our living standards will be severely reduced. Ireland has had its independence for the past 90 years and it is essential that we sort out our financial difficulties. This Bill, the budget and plan which the Minister for Finance has put in place for the next three years, which has been approved by the EU, is the start of the difficult and painful road to recovery. Much time has been spent by this House and the media discussing the reasons we are in the situation we are. I do not intend to add to that debate which may well take place in other forums. We must focus on remedying the situation.
As I understand it, the main objective of the Finance Bill is the creation of jobs. The Government is committed to the development of the smart economy, part and parcel of which is sustaining and encouraging research and development. There are people who believe that research and development is carried out by people in white coats locked away in laboratories of no relevance to the remainder of the country. I commend Science Foundation Ireland, Enterprise Ireland the Industrial Development Authority on their tremendous developments in the research and development area. I believe that a strong research and development sector, which brings products through all the stages of innovation and to fruition and manufacture, is the way forward for this country. There is a much better chance of our sustaining jobs and developing new jobs if products are innovated here.
In that regard, perhaps the draftspersons might employ a little plain English in section 50 of the Finance Bill which deals with research and development and occupies four to five pages of the Bill. The only line I can understand is the final one which states that the section applies to relevant periods commencing on or after 1 January 2010. Perhaps the Minister will when replying to this debate or on Committee Stage explain the section to us. As I understand it, research and development is to be encouraged but perhaps the Minister will clarify the matter.
I welcome that the Minister has put in place a national solidarity bond, a savings product which will be available and administered through NAMA and will be open to subscription from all citizens. I am a member of the Joint Committee on the Constitution which is currently considering how the electoral system might be reformed and improved. One of the great debates occurring in that committee is the distinction between what a Deputy does at constituency level and in respect of legislation. There are people who look down on what is known as "constituency work". It is my contention that constituency and legislative work are one in the same: they are different degrees of the same issue.
Last September, a constituent, an old age pensioner in his eighties, visited me to discuss his medical card application, which according to the media is a constituency matter. During the course of our discussions the man stated that he would like to give a couple of euro every week to help the country get out of the situation it is in. I wrote on his behalf to the Minister for Finance. I am delighted that a national solidarity bond, in respect of which I am sure the Minister received many representations from Members of the House, is being introduced. What is considered a basic constituency matter has resulted in the Minister putting in place in this legislation a national solidarity bond to which many people will be willing to subscribe.
In the time remaining I would like to touch on an issue of increasing concern, namely, home repossessions, in particular how these repossessions are being driven by mortgage providers who are outside the bank guarantee scheme. There is increasing fear and concern among homeowners, some of whom have suffered a drop in income and others who through no fault of their own have lost their jobs, that their homes, their primary dwelling, will be repossessed. While I acknowledge the one year moratorium in this regard, I urge the Minister to seriously consider extending it to two years. I also ask that he put in place an independent body that can verify when an application in respect of home repossession is made so that the homeowner has been given every chance possible by way of interest only repayments, a two year moratorium or through the bank taking equity in the house, to remain in his or her home. I would like the message to go out from this House that we are actively looking after this situation on behalf of people.
Yesterday, we heard of the resignation of a Member of the current Dáil, which was a unique development. While I do not wish to get into the ins and outs of the matter, which is of some importance to the political party involved and to the Member who resigned, I believe that one of the factors of that resignation is the need for Dáil reform. Dáil reform has been on the agenda for many years. Quite frankly, we are going around in circles. The time has come to act and to not put this off any longer. Many Members are frustrated because they do not get an opportunity to speak on topical issues about which they may have much to say. I, and many Members on all sides of the House, believe the Dáil should be relevant to people's lives. We need to immediately reform the procedures of this House to ensure all of us elected to this House by the public can contribute in an equal and open manner.
I am pleased to have an opportunity to contribute to the debate on the Finance Bill 2010. It is obvious the Minister put a great deal of thought and effort into ensuring this Bill is relevant to the difficulties facing us. As Deputy Devins stated, the budget was tough and it impinged on all sectors of society. While some people were happy with the budget and others were not it reflects the economic times in which we are now living.
The Minister set about correcting the difficulties that have come about during the past few years and tried to ensure the budget was fair and equitable. While we would all like to have more input into the budget it is a matter for Cabinet and the Minister for Finance with some input from parliamentary parties and from the Opposition in terms of the policies it may put forward. Deputy Devins called on us to immediately commence reform of this House. I have always believed that good ideas from any section of this House should be taken on board and not thrown out for politics sake, an issue that may need to be addressed in the future.
I would like now to make a few points on the Finance Bill on which the Minister might reflect in the coming days prior to the Bill being forwarded to committee and on to the Seanad. The banks are causing major difficulties for small businesses around the country. In recent months, small businesses have made representations to me and other Deputies because their overdrafts have been halved or withdrawn. In addition, previous loan facilities have been withdrawn, which can cause serious difficulties for the small business sector. It is not good that businesses, which operated within bank guidelines for many years and did not go beyond their overdraft limits or over borrow, should receive a letter notifying them that their overdraft has been cut in half or withdrawn, or that a loan facility is being reduced. This is being done without any discussion with local bank managers or staff. Such decisions are now taken in Dublin, which is where many of the difficulties have arisen in the past year. A local bank manager is usually aware of the circumstances of most small businesses in his or her town or county. It is no longer left to a local manager, however, to make those decisions. They are now taken in some ivory tower in the Bank of Ireland, AIB or other bank headquarters in Dublin. Customers are really at the whim of someone there who decides whether they will get an overdraft or a loan facility for 2010. This is causing serious difficulties and job losses in many cases because businesses are unable to continue as they are not being paid.
Yesterday, the Governor of the Central Bank, Professor Honohan, also reflected some of the views expressed here by Deputies on the Finance Bill. He reiterated his criticism last year of banks for failing to lend to businesses, saying that "bankers have lost their edge in small business lending after years of property-based lending". I am not George Lee or a financial expert, but I would expect that Professor Honohan would have some input into the type of criticism he made at that conference yesterday. The Central Bank was caught out badly on how it operated in recent years. I have great respect for Professor Honohan, who is a star in this area at present, but what powers does he have to ensure that the banks he is criticising will make loans and overdrafts available to small businesses and others who need them? Perhaps the Minister for Finance can answer that question and say whether the Central Bank has any such role. I think it should have, and the Minister should be encouraging banks to act in the national interest.
I welcome the car scrappage scheme, which will protect jobs in the motor industry in every county. Many car dealers have told me that customers may have borrowed money to buy cars in recent years and never missed a repayment. However, when they want to change their cars, the banks say "No, we're not going give you a loan because you might lose your job. In a year or two's time, you might not have the wherewithal to pay it." That area needs to be examined.
Jobs are the way forward to deal with these economic issues. It might be sacrilege for me to say so, but I do not think there is much room for any more cuts in the public service. We are at an end in that particular area as far I am concerned as a Fianna Fáil backbencher. On the other hand, we need to look at how we can create jobs in future by developing and expanding the economy. Deputy Devins talked about the smart economy, which needs to be promoted and properly financed.
The Minister should also examine the wind and wave energy sectors. The Irish Wind Energy Association produced a report stating that up to 10,000 jobs could be created quickly in this area if incentives were provided along with the right mix of Government policies. The Minister should look at this possibility because we need to move on and examine how we can create jobs in future. This is one positive area because the production of fossil fuels is not infinitely sustainable. Wind and wave energy present an opportunity because we are rich in both commodities. We should not wait for Europe or the rest of the world to exploit these energy sources when we could become leaders in the sector, given proper incentives and the right approach.
The building industry is currently a no-go area, and it is unpopular to promote builders and that sector generally. I can speak for my own county, however, which is very dependent on the construction industry. For example, I know of two builders who employed 800 people up to 18 months ago, but they now employ less than 40. That has caused serious problems in a county such as Wexford. In addition, there are numerous other building companies there that are no longer employing workers. There is room for tax breaks in selective areas, such as primary care centres - referred to earlier by the Minister for Health and Children - sports facilities and centres for people with disabilities. Tax breaks can be selective and one should not throw all such breaks out the window. There are certain areas in which tax breaks could be used to encourage builders and developers to construct essential services, particularly in the health care sector, including for those with disabilities, where services are required for the future.
I agree with Deputy Devins about home owners. The one-year moratorium is not enough, so we should look at a moratorium of two, three or four years - or whatever length of time it takes people to be re-employed and thus meet the repayments they were making when they had a job a year or two previously when their home loans were originally taken out. That matter should be examined seriously.
Sub-prime mortgage lenders are acting like boot-boys up and down the country. They are frightening the life out of people. They loaned money to social welfare recipients and other low earners for houses, home extensions, cars, holidays, new kitchens or whatever was required. The loans were way above the means of such people who could never pay them back. I have had people coming to my constituency office who were on social welfare when they obtained such loans. Perhaps they did not provide full information to lenders at the time, but there is no way some of the people I deal with can ever afford to meet their repayments. Something needs to be done in that respect in order to help them out.
There are tremendous opportunities for development in the agricultural sector to create jobs, particularly in the food industry. Farmers have had a very difficult year with milk, grain and potato prices on the floor. I welcome the fact that the Minister has come up with some kind of compensation for potato growers who have suffered severe losses. Grain growers and milk producers have all lost out in recent times and are in serious difficulty. The multiples are fleecing the country's primary producers. A carrot producer explained to me recently that he was getting €100 per tonne, but by the time they ended up in the supermarket, carrots were being sold for €1,400 per tonne. That is unfair and farmers should be paid more for their produce.
I have asked the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Mary Coughlan, to examine this matter. She is talking about introducing a code of practice whereby multiples would treat producers fairly. I am not sure a code of practice would work, however, and legislation may be required in this area to encourage multiples to be fairer to producers. I encourage the Minister for Agriculture, Fisheries and Food and the Tánaiste to look at opportunities in the farming sector. I am grateful for this opportunity to speak on the Finance Bill. There are large amounts of money lying in credit unions, post offices and banks which people are afraid to spend at present. The Minister for Finance should consider introducing incentives for people to take out their money to invest it and get a return on that investment. We should utilise the money that is lying idle at present.
I am glad to have the opportunity to raise some issues that are important and I will be parochial in stating them. When the budget was announced and now when I read the Finance Bill I am struck by the lack of a stimulus package for the economy, and particularly for the significant number of unemployed people, who now number approximately 450,000. In south Tipperary alone, 8,514 people are unemployed. Cahir has 1,200 unemployed people, Carrick-on-Suir has 2,339, Cashel has 1,100, Clonmel has 2,479 and Tipperary town has 1,635. I want to highlight the benefit a jobs stimulus package could bring to an area like Tipperary town.
Several small businesses are under pressure and closing down. Tipperary town has been severely affected by the closure of Dell. In recent years, not a single IDA Ireland job has come to that area despite having an upmarket, top-class and well laid out advance factory. No jobs have been created there despite what happened with Dell and how it affected a great number of people in that area. I had hoped the budget would include a stimulus package for the small businesses, the many young people with ideas and the many young people in the Tipperary town area who are unemployed following the closure of Dell. A stimulus package would have a very positive impact in that area.
The country cannot come out of its difficulties unless we bring confidence back into the economy. Deputy Browne spoke about the money in credit unions and banks. This is because people have no confidence about spending money. They are all minding their money and very careful about where they are spending it because they have no confidence in the future. Fine Gael has outlined the many jobs a stimulus package could create in the environmental, renewable energy and other areas. The Government has completely ignored all the advice it has been given on a good stimulus package.
On the other hand, the banks that should be lending money to small businesses are not making overdraft facilities available. They are not allowing people the capital to run their businesses. On a weekly basis I hear from businesspeople who are not getting funding to the same extent as in previous years to allow their businesses to carry on and, in some cases, expand. When people talk about how badly the economy is doing and the issues affecting it, I often wonder what ideas the Government has on creating jobs. What ideas does it have for the 8,500 unemployed people in south Tipperary? There is no good idea or leadership coming from the Government. There are real opportunities to create jobs in many areas, including in the tourism industry. Last week, I spoke about the potential to create jobs in the fishing industry using our lakes and rivers.
I refer to existing jobs that are under pressure. Golf clubs provide employment to approximately 4,000 people. There is an unfair situation regarding VAT. There are ordinary old-style, community-based golf clubs which associations own, but private golf clubs are at a very severe disadvantage. Some of them are in the constituency of the Minister of State, Deputy Tony Killeen, and some are in mine. I believe there are three, if not four, of them in south Tipperary and they are at a major disadvantage. This is only a small way but they are great job creators. However, they are under great pressure because of the weather we have had - the significant difficulties last summer and the summer before then. They have also had to close down for week upon week in the winter. That is just one example of the many areas in which jobs could be protected and indeed created.
The Government should be far more realistic, should produce better ideas and give better leadership to the communities and the people who are anxious. A large number of people want to bring the economy from where it is and develop it. I call on the Government to wake up and help the people, and the people will respond.
I am sorry the Minister for Finance is not here. I have two questions to put to him through the Minister of State, Deputy Tony Killeen. Is there any connection between NAMA, the banks and the countless numbers of young people about to lose their houses? I cannot see a connection. We spent weeks and months debating NAMA here and perhaps I did not pick it up correctly. We all know that NAMA was set up to save the banking structure and we accept that we cannot run an economy such as ours without a decent banking system. However, we were also wise enough to understand that the bankers, builders and developers would get first call on anything that was going. Having read the Finance Bill as published, if I happened to be a householder or I lived in a house where I had lost my job or my spouse had lost their job and I had a very big mortgage, I see no connection between what NAMA stands for and what I and thousands more like me might have to put up with where we might lose our houses.
I have been around long enough to understand. Based on an independent study a few weeks ago, there are 300,000 empty houses. The courts could be clogged with approaches by the lending agencies to confiscate houses. They know, however, that they are not going to sell the houses, but instead will attract enormous odium if they put people out of their homes. This would be a PR disaster, and as bad as things are for them at present, matters would be much worse.
The hallmark of any Government, regardless of who is in power, will be to ensure a mechanism is found for the cohort of people who took on mortgages and literally did not know what social welfare was. They did not want to have anything to do with it, but wanted, instead, to work every day of their lives. They did not want any help at that stage, but believed they were self-propelled and could pay every penny they borrowed. It was not their fault that they were bushwhacked on the route. That had nothing to do with them, I can assure the Minister of State.
I do not have the time available to me to talk about the people who caused the crisis, but we can rest assured that they will not end up footing the bill. My central message is not about waiving interest for three to six months, but something much more fundamental to try to ensure people can recover within, say, five to ten years. If people are put on the side of the road, the Government will have to go back to the health boards and afford them all types of rental accommodation relief or the county councils will have to build houses for them, thus ensuring that the taxpayers are caught a second time. It is in all our interests to keep people in the houses they so richly deserve to live in.
We all accept that there has to be a serious readjustment as regards the way we do business in Ireland. Some people at the bottom of the ladder have been very badly hit in the public service and also in the private sector. I have always believed that as soon as downward pressure is put on all areas of expenditure such as labour costs, the effects would feed into the economy and bring about a state of competitiveness very quickly. Some things have been reduced in price. Farmers know that prices at the farmgate have dropped, remarkably, as I can attest, being a farmer. If there is not an improvement soon we shall lose the world of jobs in agriculture, but I shall return to this on another day. It does not mean that there is a dent in supermarket profits, however, and that has to be looked at.
If one goes to a solicitor, a doctor, a veterinary practitioner or any of the professionals one will find there is no change in what they charge. The cost of refuse collocation by the local authorities is increasing. If we are to attain the competitive edge everyone is proclaiming as regards doing business in Europe, the cost of all such services will have to come down very quickly.
I want to highlight a couple of Border anomalies the Finance Bill had the chance to address, but unfortunately did not. I had highlighted these issues with the Minister for Finance prior to the budget. One is the VAT on coal, together with the extra carbon tax on coal. I am glad there is a Member present from the Green Party, Deputy White, to hear what is happening and will continue to happen. We are going to get an influx of coal with higher carbon content from Northern Ireland, and we need to know what measures the Minister will put in place to enable the necessary powers to police this. It is all right to introduce a tax, but what will police the importation of coal from Northern Ireland?
A second opportunity was missed in regard to tax administration. The issue of tax harmonisation in terms of people who live on one side of the Border and work on the other will be difficult to address. However, if specific issues have to be referred to a complex cases team at a European level, should there not be a more localised solution to such problems? It is not difficult to appoint somebody on either side of the Border to look at the different taxation anomalies that arise for people living on either side. That was another opportunity missed.
In terms of the Finance Bill and what it is trying to achieve, my colleague, Deputy Connaughton, has hit the nail on the head. The philosophy behind NAMA, for instance, is to get liquidity moving and finance flowing within the economy. From the Minister's perspective this would amount to a knight in shining armour in terms of kickstarting the economy. On the other hand we have increased taxation in virtually every area, not forgetting the increased insurance hikes people will have to face as a result of the flooding. Everyone is fearful of more and more taxes being imposed on them. It baffles us on this side of the House. Even the smallprint of the Finance Bill sets out how every single service in the local authorities, not just dustbin charges, but everything from photocopying to housing applications will incur administrative charges. All people see are increased taxes. These will have a knock-on effect on people's psyches. They are starting to hoard and considering what moneys might be available to them in a year, say, in case they lose their jobs. People are in a saving mindset and this is happening among those fortunate enough to have jobs.
That gives rise to the paradox of thrift, namely, the more people save, they less they spend. The less people spend the less money there is in circulation. The less money in circulation the more businesses will close down. The more businesses that close down the more people on the unemployment register. It is a negative spiral that can be stopped by this Minister, but the opportunity was missed in the Finance Bill because he is ignoring unemployment in deference to putting his energies into getting the banks to lend.
In this regard, in my constituency National Irish Bank is pulling out virtually every single branch in the Inishowen peninsula. The peninsula is bigger in area than County Louth and has a larger population than County Leitrim. In the two or three remaining branches everybody has to apply for new jobs. All those losing their jobs in the different peripheral regions of the county all have to apply for a job, including those working in the office in Letterkenny. That is a travesty for people who have bought into this idea. Unfortunately, there are good people within the banking sector who are getting labelled. One meets them on the street, their heads are drooping and they feel almost embarrassed in meeting the public, because they have all been categorised into that grouping.
On the question of international confidence, why is NAMA not being rolled out fast enough? Why is the simple transaction of moving loans from one balance sheet to another taking so long? It is raising a sinister question in the minds of many people, namely, whether there are reasons for the delays in moving these loans. It happened quickly enough in other countries where banks were bailed out and loan books moved. While it does not happen expeditiously international investors will ignore this country. This does not inspire confidence. The banks are being left in a vacuum. Deputy Connaughton pointed out the reality, namely, that they are not lending. They are not even lending to good customers with 40 years of seamless credit behind them, who never reneged on a loan or a repayment. It is a disaster, as the Minister of State appreciates, coming as he does from a constituency such as Clare. When commerce grinds to a halt it is disaster. Commerce is not happening. There is no movement of any kind. In fairness to the auctioneers they are trying hard to talk up the economy, saying it is bottoming out and so on. Perhaps it is, but commerce has ground to a halt and local economies are in trouble.
While I should have preferred if the Minister for Finance were present, I am glad the Minister of State, Deputy Killeen is here. He has a good name in the fishing sector because he has met the different fisheries representative groups. The Minister of State, Deputy Killeen, has gone to Greencastle, Castletownbere and various places throughout this island nation. He has travelled to such places and he is aware of the issues. I call on him to use his influence to get rid of the regulation grid lock in terms of quotas and days at sea. We should consider small ideas in the shellfish and marine sectors, where people have ideas about how to get back to work and what we should be doing at coastal level. It may be of interest to the Green Party to note the need for a review of the whole philosophy at a European level. We went down the road of bigger boats, smaller nets and bigger catches. We should try to facilitate the small men and boats traditionally involved in the marine sector. Let us consider the small options and start to work from the bottom because to get this country out of the logjam in which it finds itself, we must get back to basics very quickly.
I wish to share time with Deputies Cuffe and Cyprian Brady. I am pleased to have this time to speak on the Bill. There have been many implications for the budget, which was very difficult for all of us. It was an attempt to stabilise our public finances, improve our competitiveness, give stimulus to our economy and protect our nation's most vulnerable people, while ensuring our wealthiest make a greater contribution to the financing of the country. The budget addresses several environmental challenges, to which some speakers have alluded earlier, by investing in environmental protection, the green economy and tackling climate change at national level through the introduction of a carbon levy.
Failure to take the tough, necessary and painful decisions in December would have helped no one. By tackling the tough measures now, we hope the Government is on a good track to ensure we can protect future generations from a great saddle-load of debt. This year, the interest on our national debt will be €5 billion. While many people are experiencing the real difficulties of unemployment and low incomes, the country would not thank us in the long run had we shirked our duties to confront the problem of a State living well beyond its means. The Government has worked hard to balance austerity with protection. While there were cuts in welfare, there were also protections such as the protection of child benefit rates for those with no income other than social welfare. Where a carbon levy has been introduced there has been increased spending, amounting to 11%, to protect against fuel poverty, and spending on rural transport schemes. Since education is the central to investment in the future of the country, I am pleased the Green Party has worked hard in Government to protect funding.
I refer to certain sections of the Finance Bill, including those related to the increased progressiveness of the taxation code. Such measures are to be welcomed. Section 22 contains provisions to increase the effective rate of income tax from 20% to 30% for those at income levels in excess of €400,000 or those who avail of tax reliefs. This is a step in the right direction. While some of these individuals are injecting considerable investment into the economy, that is not reason enough to indemnify them from paying their fair share. The graduated structure of the income levy is another example of the increased progressiveness in the tax code which my party has tried to ensure.
I refer to a separate section of our society that should contribute its fair share, namely, our so-called tax exiles. I spoke about this issue during the debate on the 2009 Finance Bill. It is not morally sustainable for people to fully benefit from participation in our society while enjoying the financial convenience of tax immunity elsewhere.
I am pleased to see the introduction of the income levy for Irish-domiciled citizens. The Revenue Commissioners will have to be rather vigilant because efforts to conceal the worldwide income levels of some people will be vigorous. There may be difficulties with the valuation of Irish-located properties as well, but the challenges must be met. In a time when the country has only a modest income, it is not sustainable to have people in Ireland paying no tax while living somewhere else on paper. I am disappointed Deputy Burton is not in the Chamber this evening. Contrary to what the Deputy might believe, this measure is not a product of campaigning by the Labour Party, it is because of the Green Party in government. We made progress last year with the ending of the so-called Cinderella clause related to time spent by exiles in this country, and now we have secured the introduction of the levy.
With this Bill we have made progress in developing the green economy, contrary to the remarks of some Opposition Deputies this evening. The additions to the list of accelerated capital allowances for businesses investing in renewable and efficient energy systems are welcome. We can help meet our national targets of a 20% reduction in energy use and sourcing 40% of our electricity from renewables by 2020 with such incentives, which encourage small and large firms throughout the country to make changes to their energy systems. This, in turn, increases the competitiveness of such firms.
The introduction of the carbon levy is a welcome development, as I remarked earlier, as is the increase in funding to combat fuel poverty. Other Deputies referred to the problem of fuel tourism in Border areas, a matter that must be examined. The timing of the commencement order for the levy's application on home heating fuels provides for a balance between influencing our attitudes to carbon and protection of the vulnerable. Many have spoken about this measure and its likely impact. We cannot escape the need to de-carbonise our society. If we do not de-carbonise our country, it will be done for us.
I refer to the experiences of other countries such as Sweden, where a carbon tax of 10% was introduced. The resulting reduction in carbon dioxide emissions in parallel with a great economic development with growth in excess of 50% demonstrates such measures may be a positive experience for an economy. The levy makes renewables more competitive and incentivises the use of cleaner forms of energy. I trust the Minister of State will note there is an anomaly here, especially in respect of the levy on bio-fuels. An exemption for blends of 10% bio-fuel component or more is not feasible. We need an amendment to the Bill to maintain the incentive for bio-fuels at the conventional 4% to 7% component in motor fuels. As the Acting Chairman is aware, I have been driving a pure plant oil car for years. There should not be a levy on the bio-fuel component of fuels. It does not make environmental or economic sense. By imposing it on bio-fuel blends less than 10%, we will guarantee that there will be no further investment in an indigenous bio-fuel industry because blends above 7% are not saleable in Ireland.
Speaking as a former business person, the Bill provides good supports for businesses which are struggling to cope at this critical time. The Government should help viable businesses and encourage them in the future. The extension of corporation tax relief for start-ups is welcome and will, hopefully, encourage those who are considering new enterprises at this time.
I welcome the ending of certain tax shelters and reliefs in this Bill and the new powers given to the Revenue to execute its work more probingly. In particular, section 145 is important to ensure the work of NAMA and the Revenue Commissioners is co-ordinated. The Government must ensure NAMA does not become a vehicle for people to construct tax avoidance scams.
In the context of the current and often misleading debate about the implications of the new Planning and Development Bill before the House I welcome section 24, which amends section 649B of the principal Act and relates to windfall gains. The move to apply the 80% windfall tax on any gains attributable to a material contravention by a planning authority is welcome. I refer to Deputy Rabbitte's risible comment here approximately one hour ago regarding the need to protect the Green Party. The Deputy should note we can take care of ourselves. It may be of interest to the House that a material contravention was proposed for the local area plan of Muine Bheag, County Carlow recently. The only people who voted for it were Labour Party councillors. In Government, we are reforming the planning system-----
-----of the coming year must simultaneously increase the independence of local government financing. Real local Government reform can only take place if we give our local authorities more fiscal independence. Autonomy and responsibility must go hand in hand and we are making progress in this area with the non-principal private residence tax. I look forward to supporting local authorities with enhanced financial autonomy for local government in the coming years through water metering and a site value tax.
Some protection for the Greens, of whatever hue, would be appreciated.
The point I was making was that we became far too dependent on the good-time taxes during the boom years. There was considerable revenue from car sales, VAT and construction. Those in opposition during the boom said we needed to spend more in many areas and those in Government used a huge amount of the money available for current spending. Not enough time was taken by all of us to consider what would happen after the boom. The Green Party, when in opposition, asked how one could create a more steady economy and steadier taxation measures. It was hard to get that point across.
In government, we are seeing a shift away from the good-time taxes. They are few and far between now and it is right to apply taxation to valuable resources that cost us a lot of money and which involve a lot of carbon emissions.
As an environmentalist, I am guided by the principle that the "polluter pays". Charging for the carbon that is polluting our atmosphere is a useful way of focusing our minds on how we can adapt our behaviour to live in harmony with the world's natural resources.
When we use electricity to charge our telephones or watch television, we are already paying an implicit carbon charge.
Our electricity utility companies are part of the emissions trading scheme, the Europe-wide scheme to reduce emissions. A carbon levy in Ireland will have a similar effect by putting a charge on certain fuels, such as petrol or home heating oil, proportionate to the amount of carbon dioxide that is produced when the fuel is burnt. The more carbon the fuels contain, the greater the charge.
-----thus helping us to meet our climate change target of reducing emissions by 20% by 2020. It will be no mean feat to achieve that target. We cannot continue as we have done heretofore, despite protestations from some sides of the House on this issue.
This will create incentives for new businesses to create low-carbon technologies and improve energy efficiency, which will gradually wean us off our great reliance on imported oil. Such a levy will also bring stability to our tax base and ensure that we are not as susceptible to the sharp decline in the moneys used to pay for Government services. At €15 per tonne of carbon, it will add four cent to a litre of petrol, for example, and should cost households from €3 to €5 per week. While this is not a massive amount it is important to ensure that the effects on the most vulnerable in society are mitigated. The carbon levy will generate moneys for insulating homes, alleviating fuel poverty and providing better public transport.
Per capita, Ireland still ranks as the one of the highest emitters of carbon dioxide in the world. Aside from the moral argument that it is incumbent on each of us to play out part in solving this global problem, we will be faced with hefty financial penalties as part of any post-Kyoto deal requiring emission reductions. Consequently, it makes financial sense to put policies in place now that move us in the direction of a low-carbon economy.
The world's finite oil supply is another looming problem.
A carbon levy can be used to change household and business behaviour, incentivising greater energy efficiency in our homes and the use of cleaner, greener technologies that will lessen our energy dependence.
The difficult decisions that will be announced in the budget are in part attributable to the fact that we are too dependent on transactional consumption taxes such as stamp duty and VAT to pay for the services the Government provides. When the economy slows drastically, so does the revenue from consumption taxes. A carbon levy will broaden the tax base, stabilising the source of money used to pay for State services. By contrast with income tax, which as a tax on labour can have the effect of discouraging employment, a carbon levy taxes the bad stuff, so to speak, and will gradually move us toward low-carbon alternatives.
I very much welcome the opportunity to contribute briefly to this debate on the Finance Bill, which puts into effect the measures announced in the budget in December. For the past 18 months, this economy has been bombarded with challenges associated with how we function as a country and pay for the provision of public services. This Bill must ensure that all sectors of society make a contribution at this particularly dangerous time for the country. It is now being recognised internationally that the measures taken over the past 18 months, while painful for everybody, are stabilising and will stabilise the economy. This is the case although nobody likes to see people suffering as a result of cuts or changes to welfare payments.
Members should recall December 2008 when the Taoiseach announced and launched the smart economy document. He set out clearly what we had to do, when we had to do it and how it should be done. In the subsequent debate, the Tánaiste began one of her speeches by stating the measures being taken were about "jobs, jobs, jobs". This is still the case.
With the unemployment rate of 13% that has been forecast, we cannot afford to take any further hits. We must plan for the future and position ourselves where we were before the recession hit us. The targeted measures in the Bill to keep people in employment, create jobs and educate the workforce to take advantage of whatever opportunities arise can only be welcomed.
Delegations appear before the Joint Committee on Enterprise, Trade and Employment, of which I am a member, to explain how hard it is to do business and how much they are snowed under by red tape and bureaucracy. It is up to us to change that, and the measures we take to do that can only be welcomed.
We must keep the balance between our low tax burden and the economy we enjoyed while continuing to provide the essential services that people have come to expect from the Government, and the public service has a major role to play in that regard.
I have been operating advice centres for many years. We are back to the time when young men, and older men who have been let go from their jobs, came in with their CVs looking for employment. Public servants also have come in, not to complain but to state that they felt they were being targeted. As a direct result of some of the changes that had to be made, which are particularly painful for everybody on all sides of the House, these measure will ensure that we come out of the position in which we find ourselves.
We must compete internationally and build up a positive reputation. In recent years we built up a significant reputation internationally as a good place to do business. This is the time to be out there selling Ireland. We did it previously and we can do it again. Tourism Ireland, whose representatives came before the Joint Committee on Arts, Sport, Tourism, Community, Rural and Gaeltacht Affairs today, is selling Ireland abroad every day of the week. That is what we must do.
I welcome the change in Revenue's powers, particularly in regard to tobacco smuggling. That is a major issue and is one we must deal with.
The Acting Chairman might remind me when my time is coming to an end.
There was a commitment in the budget that this would be a pro-employment Finance Bill. There is nothing in this Bill that demonstrates that aspiration. We expected something would be done regarding employers' PRSI but it has not been done.
On one side of Leinster House there are mostly "To Let" signs. I have never seen as many "To Let" signs since coming to Dublin 27 years ago. On the other side of the building the signs are "To Rent". That is manifested throughout the country.
In recent weeks I have never had as many small businesses contacting me that cannot get finance from the banks, that are in serious trouble in terms of their rent, the tax man and even the council in respect of charges. Those small businesses will be closing their doors. I listened to the debate on the monitor and heard a number of speakers refer to finance being available from banks. The banks have closed down at this stage. They did not do it before Christmas. Obviously, they waited to see what would happen over Christmas, but Christmas was a disaster in many instances, especially for small restaurants and shops. A serious issue now arises that is not fully understood by people who do not move outside urban areas.
When we debated the NAMA legislation last summer, I recall saying that NAMA would be there to rescue the banks, which it did in one way, but it would not guarantee any finance for small businesses. What I forecast then has been confirmed.
There was also a major commitment to research and development and intellectual property in the budget, but I see nothing in this Finance Bill that will give that incentive. If we are to compete in the future with China and India we must provide jobs in intellectual property and other high end jobs if we are to succeed. There is no provision in this Finance Bill that will guarantee that.
The unemployment problem is spiralling out of control. With all the jobs that will be lost in small businesses, I am convinced that by the end of this year the unemployment figure will be well over 500,000. That is a staggering figure. I do not know what those people will be doing when they are trying to find work or how they will pass the time, pay their mortgages, look after their families and so on. Nationally, the figure for January is 436,936. In terms of the figures for Kerry, in January 2009 it was 13,303. In January this year it increased by 3,615 or 27.2%. It is now 16,918. That is a record figure in the history of Kerry. Even in the bad times of the 1980s there were factories in Kerry and things were happening. There was emigration and we lost many young people, but something was happening. It is not happening now.
Previous speakers mentioned the fact that the IDA has not created any jobs in their areas. The IDA has not introduced a single new industry to Kerry in the past ten years. Even during the time of the Celtic tiger the IDA brought itineraries to Limerick but in the main to Cork, especially when the Minister, Deputy Micheál Martin, was there, but not to Kerry. We got 13 itineraries in five years and I am sure most of those were golf tourists. They came to Kerry on the pretence of looking at sites but the real reason was to play golf on some of our links. It has been a disaster from a Kerry point of view. Kerry has been off the map in terms of Government and IDA policy.
I want to refer to one issue in particular, and I am sorry that my Green Party colleagues are not here because it concerns the carbon tax. At this time there is no great incentive for people in this country to get into the area of biofuel energy. I know that because Federico Pucciariello, who played with Munster as prop, has returned to Argentina to set up a biofuel energy business, Rosario Energy. He had great attachment to Munster and would love to do something similar here but having examined it and got experts to look at it, it would not be viable. On the one hand the Green Party talks about developing biofuel energy but, on the other, it is imposing a carbon tax that will impact on the biofuels sector. That is a contradiction.
Green Biofuels Ireland Ltd in County Wexford recently made a good presentation to the joint committee. It has proposed a number of amendments that no doubt will be promoted by Deputies representing Wexford. A representative of that company said it is inappropriate to impose a carbon tax on a renewable green fuel that reduces carbon. He further stated that the biodiesel produced by Green Biofuels Ireland Ltd., some 30,000 tonnes annually, will make up approximately 50% of the biodiesel element of the obligation we will introduce under the Energy (Biofuel Obligation and Miscellaneous Provisions) Bill 2010. He also said it reduces carbon emissions by 90,000 tonnes annually and should not attract a carbon tax levy.
On the one hand, we are trying to encourage people to produce biofuels but, on the other, we are taxing them. We are introducing an obligation that 4% of transport fuels will comprise biofuels but we are giving the sector a disincentive. I hope the Minister of State will bring that to the attention of the Minister.
This Bill will do nothing to get credit flowing to small and medium-sized businesses. In the past ten years most small and medium-sized businesses took their eye off the ball when told to diversify into property investment and blue-chip shares in Irish banks to make up for pension provisions. When the whole bubble burst, many of those self-employed or small enterprises went bankrupt. What is obscene about this economic downturn is that those people who got out of bed before eight o'clock every morning to better themselves, create employment and add to the economy are now pariahs. Most of the self-employed have nowhere to turn. The banks have put the boot in and they cannot get any social welfare benefits. They do not have the currency to get back on the first steps of the ladder to recreate the economy. The economy can only be saved by those entrepreneurial and innovative people. However, because the banks have turned the screw and decided to repair their balance sheets, the country has lost the cohort that will take the risks and work around to clock to create employment. That very skills-set is now redundant.
These businesses were good customers of the banks but are now considered bad ones. National Irish Bank, licensed by the Central Bank, despite having 40% of banking business in Roscommon has closed down eight of nine branches there. It claims it wants to be a cashless bank. The branch on my road has not issued a loan since last January because the bank will pull out of this country. There is nothing the Government can or will do about it. When its staff are laid off, they will go on social welfare. Unless we can change how the country thinks and works, we will end up a basket economy.
Recently I lodged a cheque from the State into my current account which will take five days to clear. Due to this delay, 15 cheques that I issued just after lodging that cheque will be returned to me by my bank at a charge of €15 per cheque with the claim of insufficient funds available. I have raised this issue five times with the Minister for Finance but nothing has been done about it. The Government has no interest in the self-employed, the people who created the economy. It is only interested in its own survival and for the banks to repair their balance sheets.
I agree the non-principal residence tax is a good idea for raising moneys for local authorities. However, having visited the Roscommon Associations in Manchester, Birmingham and London, I know many emigrants feel let down that the little house they have back in Ireland, some without even electricity or running water, will be charged this tax. They want to be good citizens but the local authorities are insisting they pay the €200 tax. That is an insult to the Irish diaspora which actually helped rebuild this country by sending money back from abroad. The Government must apologise to those emigrants in the United States and the United Kingdom who have tried to keep a link with this country by keeping a small house, some times just a pile of stones, for not considering them when introducing this tax. It must be amended because the local authorities have not considered all factors involved.
Action needs to be taken against the lucrative black economy in tobacco smuggling. We know the Government loses millions in revenue each year because of this. What we know is often only one tenth of what we should know. I welcome the prosecutions that have so far been taken. However, the Government has created a market in illegal tobacco smuggling which must be more seriously tackled.
The Finance Bill contains many stealth taxes. Credit must flow again for businesses. The banks must be asked some hard questions. The Government has no difficulty in letting the banks close down businesses and, therefore, putting people on the unemployment lines yet it has not asked the banks the hard questions. I have heard it talk about doing so for the past two years but nothing has been done about getting credit flowing again.
Like my colleagues on this side of the House, I find the Finance Bill to be a disappointing follow-up to the cruel December budget imposed on lower paid public servants, the blind, the disabled and others. The Fine Gael Party disagrees with the budget's measures and last night tabled a motion on Private Members' business on the inequitable move in which higher paid civil servants took less of a pay cut than lower paid civil servants.
The Bill imposes more stealth taxes on households and motorists. Regrettably, it does not contain a jobs policy to get people back to work and contribute taxes so as to ease the tax burden on other workers. The Fine Gael Party produced a comprehensive policy on transforming the economy, which was, of course, criticised by Ministers. It proposed the establishment of a new holding company, New Era, to invest in a new green energy infrastructure such as wind and wave energy production and the water infrastructure. The latter has become crucially important considering events after Christmas with water shortages and 43% of supplies being lost through leaks in the pipe network. Moneys from the National Pensions Reserve Fund, loans from the European Investment Bank and the sell-off of non-essential State companies would be used to fund the programme which would create up to 100,000 new jobs. Yesterday, the Minister for Finance admitted the unemployment rate could reach 13% later this year, putting Ireland's rate at the second highest in the Eurozone. Why the Government will not seriously reassess the Fine Gael programme is beyond me.
The Bill extends relief on capital gains tax for three years to new companies established in 2010, a welcome provision. However, the Bill does not address credit flow and helping small businesses which are in difficulties. The Minister for Finance must do more to resolve their plight. No provision is made for giving a PRSI break to employers who take on new employees. The new powers to be given to the Revenue Commissioners are to be welcomed. It is hard to understand why this was not considered earlier when it was known there was much tobacco smuggling.
My party also has stated that people cannot be consistently taxed to the hilt while seeking to get the economy out of a recession, yet that seems to be exactly what the Minister is doing here. He is hitting households hard, with VAT being imposed at 13.5% on waste collection and on recycling, while motorists also will be hit with higher off-street parking and motorway toll charges. Ordinary households will find it much more difficult. In Fine Gael's alternative budget of December last, we stated we would cut the VAT rate down to 10% to stimulate services and get things moving again.
The Bill implements six recommendations from the Commission on Taxation but ignores some of the other recommendations in the commission's report, principally about lowering the stamp duty rate which applies to house purchases. Clearly, if we want to get some kind of housing market moving again in this country, the Government must look at the way stamp duty is impacting on ordinary home buyers.
There is nothing in the Bill for the unemployed, to help them retrain and to contribute again, and also to help them receive further education. That needs to be looked at again.
We have not turned the corner. Unfortunately, this year will be much more difficult for many people. I welcome the extension of the moratorium on housing repossession. Clearly, solutions must be found because all it will do is defer the inevitable where we have a problem with people paying mortgage arrears. A proper jobs policy must be looked at, and perhaps the Government can look again Fine Gael's proposal.
I welcome the opportunity of speaking on the Finance Bill 2010. Before I speak on the specifics of the Bill, it is important to look at the context in which it comes before us. It's main purpose is to give legal effect to the budget we passed here in December.
The main issues framing the Bill are to ensure that the Government took steps to stabilise the budget deficit in a fair way, to safeguard those worst hit by the recession and to stimulate crucial sectors of the economy to sustain and create new jobs.
On taxation, because that is essentially what a finance Bill deals with, tax increases have been highly progressive and the rates cannot increase much further. The top 4% of earners will pay 48% of all income tax and 50% of earners will pay no income tax at all, which is important to bear in mind. There has been a big change in that pattern in recent times. Three years ago, one third of income earners paid no tax, one third paid at the 20% rate and one third paid at the top rate. The position has changed dramatically in recent times. It probably has to do with many people who are in part-time jobs not on the higher rate of tax. Essentially, there is a higher marginal rate of tax, at 52% for employees and 55% for the self-employed.
A new system will be introduced on PRSI. There will be a universal social contribution to replace PRSI, the health levy and the income levy and it will be paid by everyone at a low rate, but on a wide basis. That will come into effect in 2011 and it was included in the Budget Statement. Income tax will then apply on a progressive basis to those with higher incomes.
That is the general background and framework of the Bill. I will refer now to a couple of individual issues I am keen to see are included in the Bill.
The Finance Bill introduces relief from the income levy for 2010 and subsequent years for certain capital expenditure incurred by farmers in meeting the requirements of the EU Nitrates Directive. After the budget over 12 months ago, one of the biggest issues raised with me by farmers in my constituency was that they could not deduct capital allowances in respect of the income levy. Many of them had invested up to €100,000 under the farm waste management scheme over the previous year or two. Notwithstanding the generous Government grants, there was a big net investment by the individual farmers. It is recognised that this was only done to meet the EU Nitrates Directive and to address environmental issues. It has not increased farm output and it is good that such investment is being allowed to be offset against the income levy introduced last year.
Another farmer taxation issue is that the definition of a qualifying farmer for a number of issues to get especially enhanced stock relief at 100% for the period of four years is now being broadened. Up to now, a person had to hold what is known as a green certificate, but the definition now adds the bachelor of agricultural science - agri-environmental sciences - awarded by University College Dublin to the qualifications already covered by this section. I have met people working at farming who held a bachelor of agricultural science but did not technically hold the green certificate and who were excluded from those provisions. It is good to see that loose end being tidied up here on this occasion.
A big issue is that section 11 will abolish the relief from 2011 onwards in respect of service charges due to local authority and those providing waste collection services. Up until now, people could get tax relief on their bin charges. The Joint Committee on the Environment, Heritage and Local Government, of which I am Chairman, discussed at length this topic of household waste collection. The Ombudsman published a report on the matter over a year ago and arising from her report, we discussed and compared the cost of the collection of waste services and the charges per household in the different local authorities. There was a marked difference in the charge to the householders depending on whether it was being collected by the local authority or by the private sector. For instance, almost 20 years ago my county privatised the service entirely and the local authority has not had a refuse collection bin lorry since then. That has led to another anomaly on VAT. Where I live in Castletown, I was able to obtain each year tax relief at 20% on my refuse collection charge, which, at €396, is very expensive, but my immediate next-door neighbours who are on social welfare could get no tax relief because they were not paying income tax. It was wrong. I stated on the record here that it was wrong that myself and others with reasonable and high incomes could get tax relief on their waste collection charges when people who were on social welfare or who did not have a taxable income were not able to get it. I suggested that perhaps granting people on social welfare an amount for waste collection in the social welfare household benefits package, which includes free electricity units and free television licence, to equalise the situation might have been one way of addressing it but, because of the changed economic situation, the decision has been made to level the playing pitch between myself and my neighbour by removing the tax relief for people like myself. If that is the price I must pay for equality, it is only fair. It is correcting an unfair system.
That leads me neatly on to another matter. Myself - I take myself as an example - everybody in County Laois and several hundred thousand householders throughout the country have our refuse bins collected by a private contractor. We have always had to pay VAT on that whereas in other local authority areas where it was collected by the local authority, the authority did not have to charge VAT on that service. That was wrong, made no sense, was illogical and had to be dealt with. The European Court of Justice stated where a local authority is competing with the private sector for the provision of services such as car parks or refuse collection, if the private collector must pay VAT and he or she is collecting directly on the same street with the local authority, it is only right that the local authority should have to pay VAT. Many people will be in a hullabaloo over this issue and the raising of costs, but those of us who have been paying VAT on our charges up to now felt it was slightly anomalous that those in other counties did not pay VAT for the same service. In a way, I am pleased the anomaly is being removed.
This Bill contains several initiatives to improve Ireland's competitive position as a good place to invest. Throughout the Bill, there is a heavy emphasis on collection, restriction of the existing tax reliefs and enforcement. Changes to corporation tax relief will make it easier for multinationals to locate their headquarters, research departments and patent and copyright facilities in Ireland. The financial services industry, which is primarily based in the International Financial Services Centre in Dublin city, will benefit from these changes to modernise the tax rules governing the investment of funds.
Another worthwhile measure in the Bill is the restriction on tax reliefs for high earner. For the first time, this measure will ensure there is an effective 30% rate of income tax for those benefitting from various tax reliefs. Time and again, Deputy Burton complained that high income earners had an effective tax rate of 1%, 2% or 3%. That is being abolished. High income earners claiming these reliefs will have to pay a minimum of 30% tax, regardless. It has been increased from 20%. Even if they are entitled to reliefs, those reliefs will be restricted to ensure they always pay a minimum of 30% tax.
The Revenue Commissioners are being granted significant additional powers of investigation, collection and enforcement across all tax headings. It must be noted that Ireland already has a good compliance record for tax payment by international standards but I always caution that in a recession there is a tendency towards increased activity in the black economy. The Revenue Commissioners are aware of that and must be extra vigilant to ensure there is not a drift from the white economy to the black economy because of the recession. This Finance Bill gives extra powers, which are essential on this occasion.
Like my colleague, I welcome the opportunity to speak on the Finance Bill 2010. My colleague set out the context in which this Bill has come about, namely, to give legal effect to the December budget which brought about cuts of more than €4 billion. It was probably the toughest budget this House has ever seen. This was set against the background of the number of unemployed being in excess of 430,000. This is a very regrettable situation, in particular in my home town of Castlebar where today the Halifax Building Society informed people they will lose their jobs by the end of July. The National Irish Bank branch further down the street will close at the end of the year. This is an unfortunate consequence of the terrible banking situation in which we find ourselves.
Many people are in trouble with their mortgages. We all know of the problems people face in regard to business. It is now time for us to rebuild and focus our attention on maintaining and creating jobs. I disagree with my colleague opposite who said this Bill does nothing in regard to creating and maintaining jobs. Several measures have been introduced between the budget and the Finance Bill which go a long way towards doing just that.
As announced at the time of the budget, €130 million in funding was provided to create 26,000 training places. Some €165 million was provided, through the stabilisation fund, for the temporary employment subsidy scheme in 2010. The second phase of that job subsidy scheme will be implemented in the coming weeks and we hope it will provide many small, medium and large businesses with valuable supports at this point. In my constituency, many companies have applied for that assistance and it will make a huge difference when it becomes available.
We are maintaining our low tax base which has been a huge factor in, and benefit to, our economy with a corporation tax rate of 12.5%. I welcome the extension of the scheme of tax exemption on income and gains of new start-up companies for the first three years. This will be now available to companies which commence trade in 2010. That is a very welcome development. I also welcome the reduction of 0.5% in VAT. It is a small but important confidence building measure which has been greatly welcomed by the retail sector. We hope it will have some impact in terms of retaining jobs in that sector.
One cannot discuss the Finance Bill 2010 or the budget without referring to the public sector pay cuts which have been tough, in particular on the lower paid. That must be acknowledged. It has been tough on everybody in society but in particular on lower paid people and that is why I am pleased that, under section 22, the high earners will have to pay more. That was spelled out in the budget and it is being given legal effect in this Bill. People availing of the tax incentive schemes will have to contribute more in these difficult circumstances. In 2010, the effective rate of income tax for those benefiting from these reliefs will be increased from 20% to 30% on top of which they will also pay PRSI and levies.
While I am on the subject of allowances and incentive schemes, it is important we recognise that while many of these allowances are being abolished, they have a place, in particular when they provide for very important infrastructure in our economy. Today, as a member of the Joint Oireachtas Committee on Health and Children, I attended the launch of the primary care report which hopes to see in excess of 500 primary care teams set up in the coming years. There is a very important role for the private sector in building these primary care centres. It is an important investment in the health infrastructure of our economy and it is of real benefit to the ordinary people. At a time when there is no capital available from Government to build these centres, this needs to be seriously considered. The Minister for Health and Children, when she addressed the committee today, referred to that fact and said she would support it. I would like the Minister to consider that in the near future, if possible.
I welcome the domicile levy in section 141 which has been spoken about in this House in the past. All Irish nationals with a worldwide income in excess of €1 million and whose Irish-located capital is greater than €5 million will be required to pay an Irish domicile levy of €200,000 per annum, regardless of where they are tax resident. These measures show we are serious about tackling the high earners. It is important that they are seen to pay more, in particular when we are taking money from the lower paid through public sector pay reductions. It is important those measures work and are effective.
The farming community has been going through a very difficult time in recent years. There is no money to be made across many sectors, whether milk, beef or sheep. In my constituency, a large number of farmers are in REPS - in fact, the highest number in the country - and many of them are on, or below, the average income for farming. It has been very tough and, therefore, I welcome the income levy exemption for expenditure incurred by farmers under the farm waste management in section 2. This is an important measure. The Government invested more than €1.1 billion in the farm waste management scheme. The scheme was set up to improve our environment and I welcome that income levy exemption, which is an important measure.
One can discuss the merits and demerits of the carbon tax, but I would like to bring to the Minister's attention how it impacts on the farming community. From 10 December 2009, the carbon tax applied to fuel, oil, natural gas and peat briquettes. However, it will apply to other fuels, including farm diesel, from 1 May 2010. The farming community is extremely concerned about this and I have received many representations from it in my area. It estimates that it will increase farm production costs by €13.2 million in one year. Will the Minister consider this at a time when the farming community is already struggling in terms of its income? While I welcome the fact that the Minister made provision in the budget for those not availing of REPS 4, in that they can now get up to €5,000 under the new agri-environment scheme, I ask him to reconsider the date for commencement in regard to farm diesel because of the impact it will have on the farming community.
I refer to the windfall tax of 80%, with which I disagree. Any tax of 80% is crazy. By the time one adds any additional costs involved for the disposal of land, the overall tax take increases to approximately 90%. It is inequitable, unreasonable and unworkable and I hope it will be removed in the foreseeable future. It should not be included in the Bill.
On job protection, I welcome the fact that the Bill contains a number of measures to restore confidence in some industries which have been dying on their feet. I refer in particular to the car industry. It is worth bearing in mind that in my constituency there were as many people working in the car industry as were working in the construction industry. Sadly, thousands of those jobs have gone in recent times. The introduction in section 102 of the car scrappage scheme which, in effect, reduces the price of a new car by €1,500 when a ten year old car is traded in and scrapped is a welcome measure. It is something for which we have asked for the past number of years and it is long overdue. It has come too late, unfortunately, for many companies but I welcome its introduction.
I also welcome the changes regarding the extension to mortgage interest relief in section 6, which gives some help to people who have been struggling with their mortgages. As Deputy Feighan mentioned, it is not popular or cool to discuss the construction industry and how we might support it at the current time. One can discuss property developers ahead of any company, but we often forget that beneath that there are many thousands of people, such as blocklayers, plasterers, plumbers or electricians who are out of work and are currently in a very difficult position. We have to do something to kick-start our construction industry, whether through the introduction of allowances for, as I mentioned earlier, the creation of new primary care centres around the country or the building of schools. It is important that at a time when costs are lower than they have been for some time that we introduce such measures.
The solidarity bond is something about which I wrote to the Minister for Finance approximately 14 months ago. I welcome its introduction in Finance Bill 2010 in order that ordinary people can now contribute to the funding of our economy.
The Taoiseach and the Minister for Finance must be very grateful for the news sensation of this past week, that is, the departure of George Lee from the Dáil and Fine Gael. It has taken the public eye, in some considerable measure, off what I can only describe as a rotten Finance Bill. It is yet another chapter in the story of this Government's disastrous mismanagement of the economy. George Lee's decision is ironic given the former Deputy's proclaimed passion was for fixing the economy.
I do not want to discomfit Deputy O'Donnell, but if George Lee wanted to bring about something radically different from the Fianna Fáil-led Governments of the past 12 and a half years he made a strange choice in going to Fine Gael because there is little basic policy difference between Fianna Fáil and Fine Gael. Perhaps George Lee decided to go before people started talking about Tweedledum and Tweedle-lee. It is a question on which I will leave the Labour Party to ponder as it eyes up its hoped-for Fine Gael partner in Government after the general election. In the meantime those of us who remain in the Dáil representing our constituents have to deal with reality and this Finance Bill is a very harsh reality indeed, and there is no way of prettying it up.
This Bill implements a savage budget which targeted the weakest in our society to pay for the economic mess created by the wealthiest. It has targeted children with cuts in child benefit and education. It has penalised carers and others dependent on social welfare. It has hit medical card holders, hospital patients and PRSI workers. The Government, to put it bluntly, is making war on public service workers and on young people. Our youth are bearing the worst of the unemployment crisis and have started to emigrate in droves once again. What is the Government's solution? It is not to retain or create jobs but, rather, to cut social welfare supports for the young unemployed. Well over one in four young men between the ages of 18 and 24 are now unemployed in this State. In this dire situation disadvantaged communities are being penalised with cuts to community infrastructure such as drugs projects and payments for people on community employment and jobs initiative schemes.
All the Taoiseach, the Tánaiste and the Minister for Finance seem capable of doing is wringing their hands and shrugging their shoulders. That is their reaction to the latest disaster, namely, the loss of 750 jobs in the Halifax chain, on which I and other Opposition Deputies pressed the Taoiseach earlier. It did not ambush the Government; it was long signalled. Where is the promised new accountability of the financial institutions? Why are employers allowed to throw workers onto the street in this manner? Most importantly, what is the Government going to do to save these jobs, the livelihoods of 750 workers and their dependents?
On top of all that the Government has already imposed on the people it now imposes even more in this Finance Bill. One of the most far-reaching and punitive provisions is the removal of the VAT exemption from local authority charges. People will face increases of 13.5% in local authority waste charges, parking charges, charges for the use of leisure facilities and so on. We learn in the media today that the Department of the Environment, Heritage and Local Government stated in a circular that a whole range of other charges will be also subject to the VAT increase.
The extension of VAT to public bodies will increase the cost of living for already hard-pressed householders and businesses. The fact this is an EU directive validates the argument which Sinn Féin made against the introduction of these charges at the outset. The power to administer them has been taken from local level and now from national level, and outsourced to Brussels which is more concerned about the profits of private enterprise than the provision of much needed services. How much more control will the Department hand over to Brussels in the coming years? We have already learned, to our great cost, that the European Union's one-size-fits-all approach does not work. The ECB's interest rates and their impact on the property bubble is proof of that.
This VAT dictat is a monstrous example of how the European Union has been allowed to ride roughshod over Irish democracy. The abolition of the VAT exemption for local authorities in this Bill arises from a European Court of Justice ruling which claimed that the exemption was unfair to private operators. What we have here is the driving through of the privatisation agenda, and what a farce it is.
The supporters of unbridled privatisation and competition for State and local government services claim it will lead to cheaper prices for the consumer. However, the exact opposite is happening. As a result of this ruling money will be taken out of the pockets of already over-burdened Irish taxpayers. It is an outrage against democracy because it is our right as Irish legislators -or so I always believed - to exempt Irish local authorities from VAT if we so decided and we should accept no outside dictation on this matter.
The Minister for Social and Family Affairs, Deputy Hanafin, is reported as having urged local authorities to be sympathetic to social welfare recipients when setting rates of refuse charges. She cited the waiver system operated by many local authorities but the waiver system is totally inadequate. In 2008, the Ombudsman investigated the waste waiver schemes operated by local authorities and described the system as a shambles. She found that seven local authorities have no waiver system of any kind in place on the grounds that the service is provided exclusively by private operators. Others only give waivers for refuse that is not collected by private operators. One county has three different waiver schemes in place while the average value of the waiver varied from €40 to €357. The three Ministers, Deputies Mary Hanafin, Brian Lenihan and John Gormley, should recall the words of the Ombudsman in that report. She said this "highlights a significant social policy deficit, with local authorities increasingly driven by commercial considerations, while the needs of the poorest and most vulnerable people in society suffer".
The Government has not implemented the recommendations of the Ombudsman's report and in this Finance Bill it is imposing a further VAT burden on top of local authority charges. We in Sinn Féin totally reject the Government's cave-in to the EU on this issue. Budget 2010 was a deflationary budget based on cuts to public expenditure and on contracting the economy to make a dent in the deficit. It did not contain sufficient measures to stimulate the economy and nor does this Finance Bill.
The Government's approach to the economy is not working. Reducing public spending as opposed to implementing a stimulus plan and a jobs strategy has had no effect on the real economy. The live register is growing daily. Banks are still not lending. Let us make no mistake about that. The banks are still operating closed shops. Our competitiveness ranking has not improved. All the Government's strategy has achieved to date is plaudits from right-wing commentators who enthusiastically promote the application of outdated and disproved economic theory to vulnerable countries. People do not matter to these commentators who are obsessed with policies that maximise corporate profit.
This Bill should have been about an overhaul of a finance system dependent on unreliable indirect taxation such as VAT and stamp duty, a system that previous Fianna Fáil Ministers for Finance designed and implemented. However, the Government's unwillingness to deal with the tax issue and to upset vested interests is very much on show in this Bill. Very little of the extremely detailed analysis by the Commission on Taxation is being introduced. My party does not agree with all the findings of the commission but it examined hundreds of tax reliefs, for example, and found them to have no value to the Exchequer. Only a handful of tax reliefs are being abolished in this Bill, one being the bin charges tax relief. This is a relief that helps low income families and only costs a few million euro per year to administer. One might compare that to the retention of mortgage interest relief for landlords which costs the state €300 million a year. Once again the Government has allowed wealthier people in this State to carry on untouched by a Finance Bill while ordinary people must continue to bear the brunt of the recession.
There are a number of measures in this Bill that will further contract the economy. The introduction of this carbon tax is a negative because it increases energy costs and adds to an already spiralling cost base. Environmental taxes should be revenue neutral - as had been promised initially – but this carbon tax is designed to bring money in for the Government and had, therefore, to be agreed between Fianna Fáil and the Green Party before its introduction.
This Bill ignores the reality of the economic climate in which we live. It extends the scheme of tax exemption on the income and gains of new start-up companies, but to what new companies does it refer? There is no credit available to start-up companies from banks. Tweaking of the tax system is not useful to these companies when they cannot even come into existence.
This is not the only example of mere tweaking in this Bill. The artists' tax exemption has been reduced but nothing is being changed regarding how decisions on who qualifies for the exemption. We want those who deserve to qualify and those for whom the tax exemption was introduced to benefit from it. Over the course of the past year we have seen some strange cases applying and benefiting from the exemption. Great literary works such as the memoirs of Deputy Bertie Ahern and Gerry Ryan qualified for the scheme. I always found that there was more craft to Deputy Ahern than art, although his skills were undoubtedly many. Lo and behold, I noticed at Christmas that his memoirs were available on CD, read by himself. I considered buying a copy to send to a person I did not like but decided I did not dislike anybody enough to send them such an item in the post.
John Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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Deputy Ó Caoláin has a few crafts of his own.
John Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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The Deputy has a slight case of amnesia.
John Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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Will the Chair allow time for this?
On a serious note, however, the artists' exemption was supposed to be for people who were struggling to earn a living doing creative work. It should not be available to wealthy people as yet another perk.
This Bill is merely tinkering around the edges of a fundamentally flawed finance system. It is reflective of a Government that has no grasp of how serious the economic situation is and is lumbering from one ill-thought out plan to the next. That is reflected across the board, including in the Department of Health and Children.
It might be a more even split than that.
I welcome the opportunity to make a brief contribution to this important debate on the Finance Bill. I am challenged by following such a renowned speaker and such an entertaining speech, particularly at the end. I do not know whether to compliment the Deputy or not. By the way, I have read the book, which is very good.
I will not pick on Fine Gael although standing in this position reminds me of a recent time when I was sitting beside Deputy Mary O'Rourke. She followed a speech by the former Deputy, George Lee, saying that she wondered how RTE would cope in its coverage of the budget without George Lee. I wonder how Fine Gael will cope without George Lee in this Finance Bill debate.
I wish George Lee well.
I listened to many of the speeches on the Bill and noticed that the Acting Chairman at the time allowed Members to talk about parochial issues so I might include some too.
While we may disagree with some aspects of the budget, it is important we look at it and the Finance Bill from the point of view of an attempt to create a situation where investment and confidence are recreated. I have just been watching the RTE and TV3 news programmes to see the latest bad news, which mainly concerned the response of Europe to the Greek situation and its consequences. This brings home to us the difficult economic situation in the world currently.
Deputy Niall Blaney will remember, because he is Co-Chairman of the British-Irish Parliamentary Assembly, that at a recent meeting of the assembly I made the point to colleagues from Northern Ireland, Britain and the islands - I was interested in hearing their reaction - that in each of our jurisdictions and parliaments the problem is all considered the fault of the government and saying otherwise has no impact. When such a suggestion is put to a body like the assembly, the people from the British Parliament and from the Northern Ireland Assembly understand what I mean. The current crisis has affected the economies of countries throughout the world; even support for Barack Obama has plummeted and he lost a seat that had been in Democratic hands for almost 50 years. That is the situation and who knows what will happen in future elections. The situation has been difficult.
I represent the constituency of Dublin South-West and live in Tallaght, which I know is no different in this regard from any other place. I am keen to represent not only Tallaght here, but also the Dublin region. I often hear my country colleagues say that everything happens in the Dublin region, but it has suffered and so has Tallaght as a result of the crisis. I live in a constituency where over 10,000 people now sign on in the local social welfare office. None of us has been immune from the situation. I have great concern for those who have been affected. I do not wish to repeat myself, but I have pointed out on more than one occasion that I try to bring my own experiences to my politics. I have been made redundant three times in my life, and it may happen me again. I know what it is like to struggle, to wonder and to worry about the situation. I have listened to many colleagues talk about the challenges families face and I was the Acting Chairman when Deputy Olwyn Enright made a fine contribution about families under pressure.
The Joint Committee on Social and Family Affairs, which is chaired by Deputy Healy-Rae and of which I am vice chairman, has examined many such issues in recent times. Deputies Thomas Byrne and Olwyn Enright have prepared a report, which will be launched next week, which deals with the high level of indebtedness in Irish society. On a number of recent occasions the committee took the initiative to bring in people to talk about these issues. For example, it brought in senior staff from the Educational Building Society to discuss how we could deal with these issues. People are suffering in a way they never did before. I conduct nine clinics a week where I attend and listen to my constituents. People come to my clinics who were in jobs up to a year or six months ago. They had comfortable lives, but now they have suddenly found themselves facing great challenges. We are all entitled to our personal politics, but we all have a responsibility to deal with those issues and to advise the Government to continue to build confidence, create jobs and invest.
I would like to mention three particular issues. Last night, Deputy Arthur Morgan mentioned special needs assistants. I acknowledge this is a big issue in Tallaght currently and it has been on the news all week and mentioned on the "Today with Pat Kenny" show and other shows. St. Joseph's special school in Balrothery faces huge problems because one third of its staff, or more, is threatened by cuts because of a decision which is being appealed. I have spoken to the Minister for Education and Science and told him that, in my view, the proposed cuts in that school are drastic and should be re-examined. I use this opportunity to support that school.
Second, I would also like to use this opportunity to support the West Tallaght Resource Centre. The Minister for Finance, Deputy Brian Lenihan, myself and other colleagues attended a public meeting in the centre last week to discuss the difficulties with regard to the possible closure of the centre. I wish to support the centre and its work.
Third, the loss of jobs due to the closure of Halifax Bank was mentioned in the Dáil this morning. Any visitor to the Square in Tallaght will see the Halifax Bank shop, the official opening of which I attended. The workers there, to whom I spoke today, are just as devastated as all other Halifax workers here. It is a shock to Tallaght that these jobs are gone, but I know this shock is repeated throughout the country. It is important we take the opportunity here to show solidarity with those workers.
Members are entitled to make political points in this debate and I am sure colleagues right across the floor will continue to do that. I will listen to that debate. However, it is very important that we try to build confidence and move forward. I look forward to hearing what the Minister will have to say. Without being patronising, I would like to wish the Minister, Deputy Brian Lenihan, continued success with his endeavours.
I welcome the opportunity to speak on the Finance Bill presented by the Minister for Finance, Deputy Brian Lenihan. There has been a major focus in recent times on our financial situation, and rightly so, and many people are uncertain of our ability to pull through the current economic crisis. While I term it the "current" crisis', it has been with us now for some time, which has led some people to scepticism. Some people may say that is a natural process for the human psyche. The process of economic stabilisation has been slow but steady and it will play out over the course of this year and next year.
There is no quick fix to our problems. We are in a global economic downturn, with added banking problems, and must work our way out of it. That is exactly what we have been doing under the leadership of our Taoiseach, Deputy Brian Cowen. We found ourselves in a very unfortunate position, but one which has been improving and will continue to do so. We have faced tough budgets over the past two years, budgets that were neither popular nor painless. Many people have been affected by the decisions taken in recent budgets, but our job is to put this country back on its feet again and not to get caught up in popularity contests. I believe history will prove this Government's courage in time.
We have taken some inspirational steps in recent months and many people around the world have been watching the outcome of these steps. Some openly admired the initiative shown by our Government and others have imitated the steps we have taken. The bank guarantee scheme, the nationalisation of Anglo Irish Bank, the introduction of NAMA and recent budgets have amounted to positive action. This is something of which we should be proud. We have come a long way, but we have further to go and of that there is no doubt. I am confident we will return to being as strong as ever as a nation if everybody gets behind the wheel. We must also take heart from the IMF's support of NAMA, which was a bold and original initiative. It took the crisis by the scruff of the neck and promoted a valid solution. This is what real politics is about, not the populist shouting across the Chamber we unfortunately see so much of. There was more of that tonight.
I spoke in the House recently about our resilience as a nation and the concept of the Irish "meitheal". Our mettle as a nation has been tested in recent times and it is against these tests that we show our true ability. It is only when we work together that we can show optimal ability as a nation. It is with this in mind that we must move forward. We have been let down by our banking system and been wronged by some of those running the system. However, I look forward to due justice being served upon those deserving of it. Some Members believe an example should be made of some of these people immediately to show that this type of behaviour is unacceptable. There is no doubt that some people would feel better about our future if we did that. However, it is more important that a thorough investigation is held in order to hold up all those responsible as an example of wrongdoing. None of those involved deserves anything but the full rigour of the law. That is the approach being undertaken and I look forward to its conclusion.
There have always been populist politics and these have been exacerbated throughout this period of economic instability by many in this House. There has been much talk of bailing out banks and developers. There is only one group of people the Government is interested in bailing out. These ordinary individuals in the street, going about their daily business, are the people we intend bailing out, first, by guaranteeing that their savings are safe and, second, by introducing the policies of this Government to reorganise our financial system to ensure that the people have access to credit to meet their needs.
There has been much furore over pay cuts for public sector workers of late. I acknowledge the huge contribution the public sector has made to dealing with our financial predicament in the past 18 months. It was never about pitching public sector workers against private sector workers. However, the fact is that thousands of private sectors workers have lost their jobs, many of whom are dependent upon social welfare for the first time in their lives, which is a difficult situation in which to find oneself. We all know many people who have found themselves in this situation in recent times and we empathise with them. The more fortunate members of the private sector are striving to hold onto their jobs and they have taken substantial pay cuts, but many are unsure about their futures or how long their jobs will last.
It is in these circumstances that we must realise it is not a competition between the public and private sectors. Frankly, we did not have the money to continue paying the public sector wage bill. We simply could not afford it. Changes were imminent. Nobody wanted to see jobs being lost and, therefore, everybody was asked to contribute. It was not a pleasant measure to enforce but it was necessary. Further adjustments may have to be made in this area and I am hopeful discussions can be resumed with the social partners in order to obtain satisfactory measures for all concerned. Job security is of the utmost importance and must be top of our agenda for any future discussions.
The Finance Bill is giving effect to some of the measures announced in the budget last December. It will give effect to the reduction in VAT from 21.5% to 21%, which will go some way towards helping businesses along the Border, particularly in Donegal, which I represent. There has been much media coverage of those travelling across the Border for shopping in recent months. The increase in the UK VAT rate will also assist those in business in such areas. Furthermore, the decrease in the excise duty on alcohol is a welcome initiative. Again, coming from Donegal, I am well aware of the difficulties arising from cross-Border trading. The decrease in the excise duty on alcohol and the VAT rate are considered to be wise incentives.
The introduction of the domicile levy of €200,000 on all Irish-domiciled individuals who are Irish citizens to ensure that wealthy Irish-domiciled individuals make a contribution to the State is vital. There has been much resentment levelled at these individuals in the recent past and this is a welcome move.
The challenge of attracting investment and jobs in an increasingly competitive environment is also being addressed in the Bill. Advantageous taxation measures are being introduced to ensure that Ireland can actively compete against other world leaders, and several tax reliefs are coming into being. Last week, Jean Claude Trichet, president of the ECB, said that our initiatives are very impressive and similar sentiments have been expressed in various commentaries across the world.
In regard to Ireland's financial position and the measures being taken by Government, we will continue to take issues on board and deal with them in such a way that Ireland will be back as a competitive country in which to do business. With companies such as those highlighted, we should be encouraged as a nation to show our mettle to the rest of the world. We all acknowledge people are experiencing tough times out there. We have come a long way and we must take those final steps together to ensure Ireland is back out there as a competitive country. All positive input is welcome.
The Minister for Finance, Deputy Brian Lenihan, last week published the Finance Bill 2010 which gives effect to the measures announced by him in his Budget Statement on 9 December last. The Bill contains measures that, though clearly difficult, are necessary to stabilise the economy. It is important to highlight that this Bill also contains many pro-enterprise measures, which have been welcomed both at home and internationally. As Deputy O'Connor noted, listening to the difficulties being experienced by the Greek economy in particular, and the reluctance of the Greek Government to face up to those difficulties, its position is in sharp contrast to the Irish experience, which has shown we are capable of making and willing to make very difficult decisions. The Irish Government is being held up in many circles as an example of best practice in tackling the economic difficulties.
All parties accepted that savings of €4 billion had to be found in this budget. Obviously, people will have very different opinions about how this was to be done. The Government was as fair as it could be and has tried to ensure to the best of its ability that the most vulnerable are protected.
The domicile levy of €200,000 was a correct measure, which will see the wealthiest of our society contributing more to help the economy through this difficult period. Some measures have undoubtedly been difficult for many people, including an unfortunate but necessary reduction in public sector pay. Overall, while those measures were and are difficult for the people experiencing them, we in this House included, I welcome the decisive action taken by the Cabinet and the Minister for Finance in dealing with the current economic crisis.
I am also pleased to point out some very positive initiatives contained in the Bill. As I said, there are many sensible pro-enterprise measures that will make Ireland a more attractive place to do business. One of those measures amends the remittance basis of taxation so it will be easier to attract highly qualified managerial or technical people to Ireland to ensure Irish industry operates to world class standards. Furthermore, the simplifying of the processes to pay dividends and royalties and expanding the tax regime to facilitate international companies locating their headquarters here should increase Ireland's attractiveness to large corporate companies.
For small and medium-sized enterprises in operation here in Ireland, a credit system review scheme is to be established which will give SMEs, farm enterprises and sole traders the right to appeal, where an application for credit is refused by a financial institution participating in NAMA, after the bank's own internal process has been finalised. Under this new scheme, if it is recommended that credit should be granted, the participating institution that refused credit must comply or provide a written explanation for its refusal. In recent months, I have been contacted by countless SMEs which have informed me of the difficulties they are experiencing in accessing credit. However, banks have been telling a different story in claiming that they are open for business. While this new credit system should prevent the banks from fudging the facts, more needs to be done to free up credit to the SME sector.
The Tánaiste recently indicated that she might put in place a bank guarantee scheme. I have previously called for this measure to be implemented and I again put on record my support for the scheme.
The Minister for Finance, though having had to find savings, has attempted to do so in the fairest way possible and has also implemented many smart and welcome measures which will benefit Ireland in the long term. I again commend the Minister for Finance on his hard work and dedication to rectifying Ireland's economy. I commend the Bill to the House.
It is with a certain sadness that we consider the Finance Bill this year, for a number of reasons. I take this opportunity to wish the Minister for Finance a full return to health, which is something all of us in this House and anywhere else should recognise.
The other issue that evokes a certain amount of sadness is the impact of the Finance Bill on the people we all represent. It is sad, after all the money that floated around this country and all of our claims to be one of the richest countries in the world - we were supposed to be the third richest county - that we have come to a situation where each segment in our society is being hit again and again.
The Government has proclaimed that there is a crisis, as if an atrocity has been committed and the crisis was created by somebody other than it. The Government has also proclaimed that there is a world crisis. There is a bigger one here and it was created by the Government, which is what is sad. There will come a time when the electorate will have an opportunity to respond. The Government has adroitly slid away from responsibility and moved into the shadows saying that, while we are in a sad and serious situation, it was unable to control particular matters. However, it could have done so.
At some stage the electorate will connect the two issues, which is important. If the electorate does not do so, nothing will change and we will be having the same debate in five and ten years time with the same group of people sitting on the Government side complaining about a crisis of some description for which somebody else will be to blame. The Government has no intention of accepting any responsibility for any crisis. As a result, the electorate will lose its democratic right to change the Government, leaving it free of responsibility.
Reference was made earlier to the carbon tax. The Green Party told the House how good the carbon tax will be for the people. Perhaps we should ask some of the people who will be affected by it what they think, including those people who will pay higher prices for their fuel and energy, people who are being already hit in several others by high mortgages, many of which they cannot pay, negative equity and job losses. The Government is acting as though nothing at all is happening. I have never before in my life witnessed anything like what is going on. It is almost as if the public has been hypnotised. I must keep an eye on the television to see if a subliminal message is being transmitted to lull the people into a false sense of security. It appears people have an inability to react.
Another issue of concern is competitiveness. We are all aware of our lack of competitiveness for the past eight years. It is recognised on world markets that we are not competitive. What do we do? We introduce a budget and a Finance Bill which makes us less competitive, which is truly extraordinary. The Government has announced that we have a particular problem and has stated it has no control over it because the same is happening all over the world. It happened in America and was bound to happen here we are told. There has been no word about the property boom which carried the economy away as though nothing would ever end. Perhaps the Acting Chairman will indicate how much time I have left.
That is great. One can do an awful lot of damage in a couple of minutes.
The windfall tax was mentioned. What does the word "windfall" denote? It is like manna falling from heaven in respect of which there is no penalty; it is all gain and no pain. It will be great fun to witness the impact of this at local level. The theory is that this will restrict development at local level. We have been told there has been too much development. Another theory is that we should demolish many of the dwellings built because there are too many of them, which is sound economic thinking. If we keep going as we are there will be fewer people in this country in employment carrying a bigger burden of tax resulting in a constriction of the economy. This is not the first time this has happened; we seen it all before in the 1980s. Sadly, we are going down the same road once again. The Government has learned nothing from the past 20 years. I do not expect it will learning anything between now and the next time the electorate goes to meet them at the polls.
My final point relates to the high level of mortgage interest arrears in this country. During the debate on NAMA, Members on this side of the House asked that something be done to address the issue of mortgage interest arrears. So far, nothing has been done. While a moratorium in respect of house repossessions has been introduced, there is no moratorium on the interest that is clocking up and the arrears being racked up on a daily basis.
This Bill does nothing to address the hardship being experienced by people in terms of mounting bills and so on. On top of this, interest penalties, of up to 9% in some cases, are resulting in their bills growing on a daily basis. The Government stated it would introduce legislation to deal with this issue. We are still waiting for it. We are as near to getting it now as we ever were. As time goes by it will become evident the Government never had any intention of looking after these people. Sadly though, it will be too late for the people concerned.
I am a firm believer in people helping themselves. I do not agree with easy hand-outs which create a spiralling pattern of dependency. Self help is the route out of poverty. People must be enabled to help themselves whether personally or in respect of business.
This Bill stifles such initiatives and lessens the chance of a quick rise from adversity. On the one hand, it is a missed opportunity on the part of Government to maintain and create jobs and, on the other, a vehicle for the introduction of stealth taxes. It is amusing to note that the Minister in the first sentence of his speech yesterday trotted out his usual platitude that the Finance Bill 2010 ensures that all sectors will play their part in the critical task of stabilising the public finances. Does the Minister really believe this? Does he believe, given the unequal targeting of the low and middle income workers, that this Bill in any way removes that inequality? Can he assure us that this Bill will require all sectors of this country to pay their share? Were that the case, there would be no need for this week's Private Members' motion. Perhaps higher civil servants and the Judiciary slipped his mind.
According to the Institute of Certified Public Accountants in Ireland, CPA, the Bill contains little support for native business and shows the Government to be out of step with the day-to-day realities of our national companies and their employees. In a Bill designed to enact a budget that is focused on cutting public expenditure and stabilising the budget deficit, little is to be seen by way of effort to support our struggling business community. Measures such as a reform of the PRSI regime, which acts as a deterrent to employers to increase staffing levels, have been ignored. However, with a belated realisation that export-led growth, such as that experienced during the boom years, is the best hope for a decimated economy, the Bill contains some measures to maintain and perhaps enhance inward investment.
The Government has yet to show any proof of a competitiveness and viable job creation strategy. With NAMA proving to be less than the great white hope predicted by the Taoiseach, businesses are starved of cashflow. The Government pushed through NAMA despite the IMF's reservations in terms of whether it would lead to an increase in lending. While it is undoubtedly true that NAMA will cripple taxpayers for years to come, it is, as feared, not increasing the supply of credit to the economy. Fine Gael's plan for a national recovery bank would get credit flowing and realise the long awaited national stimulus for which we have all been waiting.