Paul Coghlan (Fine Gael)

I welcome the Minister to the House for the first time in his new role as Minister for Enterprise, Trade and Employment and I warmly congratulate him on his appointment. I thank him for a comprehensive outline of his views and intentions and for addressing the many challenges ahead.

The maintenance of a competitive tax environment to drive economic growth is vital and a goal to which we all subscribe. I wish the Minister well with the outcome of the report of the enterprise strategy group and I hope the bringing of that report to the Government will lead to success for our economy. One of the biggest challenges referred to by the Minister was the demanding one of moving from an investment-driven economy to an innovation and knowledge-driven economy.

We wish the Minister well in regard to all of these challenges and goals, to which we all subscribe. However, the facts in the Ireland of 2004 are as follows. Two years ago the Government promised to keep personal and business taxes down in order to strengthen and maintain the competitive position of the Irish economy. In the following two years it implemented 31 stealth tax rises which cost the average family €1,800 per year. The average tax contribution per household this year increased by €2,800. Between 2001 and 2002, Ireland overtook the UK and Sweden to become the third most expensive country in the EU for consumer goods and services. By 2003, Ireland was almost on a par with Finland as the most expensive country within the euro zone, both countries being significantly more expensive than the next group of euro zone countries.

Dublin is now the 21st most expensive city in the world and more expensive than Los Angeles, Paris, Miami, Singapore, Honolulu, Vienna, Helsinki and Abu Dhabi. It is the fourth most expensive capital in the EU, behind London, Paris and Copenhagen. Ireland has gone from fourth in 2000 to 30th this year in the World Economic Forum's global competitiveness report, due mainly to the Government's failure to control prices.

The National Competitiveness Council stated that Irish prices rose 22% more than those in other EU countries in the years 1999 to 2003. Economic consultants Compecon Limited suggested the lack of competition in the banking sector is costing small business €500 million. The National Competitiveness Council stated in its 2004 annual report that the need to recover cost competitiveness was crucial to the country's medium-term economic future. Ireland came 14th out of 15 countries in terms of broadband penetration in a survey by the European Competitive Telecommunications Association. It has only 63,610 broadband telephone lines whereas Denmark, a country of similar size, has 839,170.

This, unfortunately, is the record of the outgoing Minister for Enterprise, Trade and Employment, Deputy Harney. In March 2000, she stated the Government was determined to tackle inflation by exposing previously sheltered sectors to competition. In September 2000 she stated that huge areas of the economy were still not exposed to competition, that this put pressure on inflation and that if competition was our yardstick, we had much more to do. She pointed to the telecommunications industry as an example, stating that the introduction of competition there had substantially reduced prices and improved quality, and that this must also apply in other sectors of the economy. She further stated that taxation of work was still too high and that in an environment where there was 20% tax on capital gains and 12.5% tax on corporation profits, we could not have a situation where the only people paying taxes above 40% and 20% were those who work. The Tánaiste also remarked that low to medium income earners — for example, those earning below the minimum wage — should not have to pay any tax.

In November 2001 she stated that job losses in Irish industry have less to do with the ownership of enterprises than loss of competitiveness. It is now almost 2005 and nothing has been done.

Small Business has borne the brunt of the Government's abject failure to protect our international competitiveness. The Irish Small and Medium Enterprises Association has warned that 35,000 small firm jobs are in danger. According to a survey carried out by the association, one quarter of companies stated they expect to be employing less people this year. The same survey showed that most small business owners perceive the Government as being regulators of small business instead of facilitators.

I wish the Minister well in achieving the goals he outlined in regard to a code of simplification. The Minister knows and we all accept that red tape and bureaucracy is bedevilling small businesses in particular in every part of the country. As I stated recently in the House, one of the best measures we could take on behalf of small businesses would be to increase the VAT threshold — the limit at which VAT applies. It would be an easy measure to take in an area that has not been touched for a considerable period and is crying out for redress. I urge the Minister to speak to the Minister for Finance in this regard so that, hopefully, this can be put right in the upcoming budget.

Mr. Jim Power, chief economist with Friends First, stated that Irish competitiveness has been seriously eroded by a sharp increase in the overall cost base, which will not be reversible. He further pointed out that to ensure the future prosperity of the Irish economy it is absolutely essential that investment in education to upskill the workforce, and a correction of the very damaging infrasturctural deficit, are given immediate real priority, not just lip-service. However, this is not the preserve of high-flying economists. Fine Gael's website, www.ripoff.ie, received 50,000 visitors in its first year.