Paddy Burke (Fine Gael)

As the Senator has pointed out on numerous occasions, it is for the Government to govern and the Opposition to raise issues. He has also frequently informed the House that he will not be stopped from raising issues. Perhaps he should use the website as a means to do so.

Senator Mansergh is correct that the economic recovery started in 1987. However, many Ministers who wish to highlight a point in the House go back only as far as 1997. The Minister for Finance in 1987, former Deputy Ray MacSharry, did a wonderful job but the House should also acknowledge the role of the then leader of the Fine Gael Party, former Deputy Alan Dukes. He should be complimented on agreeing not to force a general election provided the minority Government in office acted within specific parameters.

Two of the main reasons for the Celtic tiger were the introduction of the single currency and the reduction in interest rates. I recently saw an interest rate quote of 3.5%. I remember paying rates of up to 20%. No business could survive today if it had to pay interest rates of 15% to20%, which was the order of the day in the 1980s and beyond. In the early 1990s, the current Taoiseach, as Minister for Finance, was placed under considerable pressure by the Opposition to devalue the punt. During his term of office, interest rates exceeded 30% and he was forced to devalue the currency. The greatest contributory factors to the economic recovery were the single currency and reduced interest rates. Our currency was a target for many speculators and was vulnerable and membership of the single currency created greater stability.

Small businesses are under considerable pressure on a number of fronts, notably wages, insurance, rates and taxes, and many will be lucky to survive. A new set of taxes, imposed through increases in water rates, refuse and sewerage charges, is also placing them under significant pressure. At times, local authorities appear to believe the multinationals are a never-ending well. It is often the case that the main contribution to local authority funds comes from a small number of companies. County managers frequently favour increases in rates and charges on the grounds that they will only affect a small number of companies, rather than the largest groups in the local authority area. This practice will drive many multinationals and other companies out of the country.

In many areas, the roads network does not meet required standards. In recent weeks, the Allergan plant in Westport, which has complained for years that its produce for export was being damaged in transit, laid off 325 employees. Although the roads network was not the principal reason, it was a contributory factor. The company can manufacture its products more cheaply in other parts of the world.

I was amused by the Taoiseach's statement that he was delighted President Bush, rather than Senator Kerry, was elected because it would be better for Ireland from a tax point of view. I do not know how he could have come to that conclusion. One need only consider The Sunday Business Post report from Sunday last headlined, "US tax amnesty will take billions out of Ireland". The law it refers to was signed only days before the presidential election in the US. The report states:

In a report to be published this week, investment bank Morgan Stanley warns that US companies will reduce the amount they invest in Europe as they absorb the money flowing back home. Morgan Stanley has identified the US companies which will most likely repatriate huge amounts of profits. . . . The companies, which lobbied for the tax break in the run-up to the election, are also big-name investors in the Republic. They include Dell, Intel, Oracle, Hewlett-Packard and Wyeth. Irish tax lawyers have warned that the move to repatriate billions of euro from Irish subsidiaries back to the US will raise burdensome duties for Irish directors.

The Taoiseach stated he was delighted that President Bush was re-elected and that this would have positive consequences for American multinationals in Ireland. He went on to state that had Senator Kerry been elected, the Taoiseach would have lobbied him in regard to the tax laws. The Minister should ask the Taoiseach to outline the current position, which I would also like to know. This law was changed in the run-up to the presidential election and this will have serious consequences for companies here. The Taoiseach should immediately contact President Bush in this regard. It is a serious issue and we do not want companies to leave the country, as in the case of Allergan which is moving part of its business to another location.

To sum up, there is significant pressure on small businesses. Increases in rates, water, refuse and recycling charges will add further to the cost of production. I am in the restaurant business and see first-hand the increases taking place. We regularly read in the national press that the prices charged in restaurants are out of control. While restaurants are at the lower end of the market, it is difficult to keep prices down because costs are high. When one compares the inputs businesses in this country must take account of when calculating their costs, they are at a significant disadvantage compared with businesses in other countries.

The 1% increase in VAT is a contributory factor in many instances, particularly for the service industry, including the transport and restaurant business. The increase plays an important role in increasing charges and the Minister for Finance should consider reducing it.