Feargal Quinn (Independent)

I examine Finance and other Bills to see whether we are taking the right direction for the long term. I had an interesting meal last month with Elaine Chao, the US Secretary of Labour. She is the first young Asian woman to sit in the US Cabinet. She said that her Department's objective is to create the environment where the private sector can create jobs because it was not the job of those in Cabinet to do so. This is something we do not hear said often or loudly enough. Consider what has happened in France where it was believed it was the Government objective to create jobs. This belief led to dramatic errors such as the 35-hour week. There the Government is trying to claw back through youth employment initiatives and this is presenting problems.

Each year the Finance Bill is an opportunity to stand back and look at how the economy is doing from a long-term perspective. In the past two weeks we have seen two forward-looking and optimistic forecasts, up to 2020. I have a long enough memory to recall 1994 when the ESRI published what then seemed an absurdly optimistic forecast up to the end of the century. As matters turned out, the ESRI erred in that economic results were far better than its forecast. The point I wish to make is that our general readiness not to believe the forecast led us into a trap, the consequences of which we are still paying for today. We did not believe the ESRI forecast and our housing, infrastructure and population were not ready for the even better results.

We must do a better job now. We must consider the forecasts and try to decide whether they are in the right direction. The forecasts have pointed out the direction our economy is likely to take. We must look at them and ask whether the Minister is taking the right steps. In general terms I agree he is.

Theodore Roosevelt said: "In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing." I look at the Bill and wonder whether there is a danger the Minister is tending to step back and do almost nothing because there is only a year to an election. I am not saying this is what is happening, but there are many signs that the Minister did not present a dramatic budget.

The failure to make proper plans will be far more costly the next time round. It may well be that we have not judged the situation correctly and that the future has a few tricks in store for which we are not ready. If there is something worse than not planning properly for future growth, it is not planning properly for a downturn. We do not have to look too far back to find ourselves guilty of that. At the height of the millennium boom even the straight-laced mandarins of the Department of Finance seemed to have thrown caution to the wind and I remember how difficult it was for me to make myself heard when I tried to sound a note of caution. The dotcom collapse came and we had some setbacks.

This Minister has in general handled affairs well, but there is a danger that he may pander to some calls such as the one Senator Mansergh mentioned regarding the cap on artists' income. On balance the Minister may have made the right decision. The artists' exemption was a win-win situation. When it was introduced by former Minister for Finance, Mr. Charles Haughey, Ireland did not have any income from artists because if they earned a lot they went abroad. The concept of a zero tax rate on artists' income was sensible and it played well for us in many ways.

We have had a number of innovative proposals in recent years, such as tax incentives for the building of car parks, park and ride facilities and hotel rooms. That was an example of encouraging private enterprise through incentives. Senator Mansergh mentioned private retirement homes, about which I have a query. The Minister for Finance has increased the claw-back period from ten to 15 years, the objective of which is to ensure that property that was built for one purpose is not used for another. However, there could be a danger that the ultimate objective of more nursing homes may fall foul of that change.

We need to plan for an increasingly optimistic future but also for a decline in the market in case the latter happens. We need to plan for a situation in which our economy grows to the extent that economists have been forecasting, while also planning for the opposite eventuality, that our economy is struck by a downturn, driven in part by the ways in which the world changes or by something like bird flu or SARS. We need to plan, regardless of whether the crystal ball gazers are right. The tragedy for this country, which given our recent history is not unlikely, would be if we failed to plan properly for either eventuality. That is the outcome I fear most and the one against which I warn today. The Minister for Finance has taken the right steps but he must be reminded of the danger of going in only one direction.