Paul Bradford (Fine Gael)

I welcome the Minister of State to the House and commend the Labour Party on this motion, which provides, if Members will excuse the phrase, significant food for thought. It is an appropriate time of year and point in the economic cycle of the country to discuss this issue because consumer habits have changed very dramatically, through necessity, in recent months. Every retailer, shopkeeper or taxi driver we meet will talk about the downturn and the amazing reduction in spending. This will obviously have a major impact on the Government's finances and on jobs in our smaller shops, supermarkets and retail stores. It must be addressed and, as far as possible, it must be reversed.

We must recognise that there are two sides to this debate. On one side we have the issue of consumer confidence and what we and the Government can do to try to make progress in that regard, while on the other side of the economic equation is the issue of price control and value for money. I, as much as anybody in this House, regret the fact that the Celtic tiger era has come to an official end and that the past 15 or 16 years of ongoing significant economic growth have now ended. Every economic boom has many positive points — we all welcomed the increase in jobs and wealth in the country — but there are also negatives. From the point of view of the consumer, when money was more freely available and when people were better off in material terms, the idea of value for money and of the consumer watching in great detail what he or she was spending went out the door. People went into supermarkets, drapery stores or other retail outlets and purchased without even checking the price. Money was being spent like confetti. It is great that people had such money to spend, but many people now regret some of their purchases and the fact that they drove inflation because retailers were willing to charge anything if consumers were willing to pay whatever price was being demanded. Value for money went out the door.

Inflation was a serious problem 12, 18 and 24 months ago, but that problem has dimmed to a degree because of the drop in consumer spending. We failed as a society to preach the basic economic principle of demanding value for money. That is part of the problem we now face. We all want to ensure that the consumer — namely, you and I — has money in his or her pocket to spend and that growth will continue. However, in the future we will have to demand much greater value for money and consumers will need to be much more cautious. The economic climate has changed quite dramatically and even those consumers who have certain discretionary income available for spending are cautious in how they will use their money. We now see stores having pre-Christmas sales, which may never before have been on the agenda. Consumers with spare cash are still unwilling to spend because they feel prices will drop further. Perhaps they are correct; perhaps they are not. We cannot predict the future. There is now an onus on the Government to try to restore confidence to the consumer and thereby to the economy and to try to ensure the maximum possible amount of money is available for spending in the retail sector, particularly over the next few crucial pre-Christmas weeks.

The budget in October was regressive from an economic perspective in the sense that it took money out of the economy. I appreciate that we have to live within our means as a society but some of the budget decisions were unhelpful with regard to consumer confidence. If we look at any of the barometers of public opinion — not political opinion but consumer opinion — it appears consumers are fearful about the future and unwilling to spend their hard-earned cash. Our colleagues in the Labour Party spoke about the initiatives taken by the British Government. An interesting initiative was taken by Gordon Brown and Alistair Darling with regard to reducing VAT, which was seen as a dramatic and strong proposal. However, there appears to be a suggestion already — I am not sure whether it is from leaked memos or leaked reports — that the British Government proposes not just to reintroduce the original VAT rate in 12 or 18 months' time but to increase it substantially. Perhaps there is a benefit to this very short-term proposal from the perspective of the British Government, but it does not appear to be a long-term policy position. The Labour Party Government is also proposing to increase income tax for a significant number of taxpayers, which will certainly take money out of the economy.

I recognise the difficulties being caused to the Border communities due to cross-Border shopping, but there is a certain degree of political déjÀ vu, because this is something that happened in reverse when many Northern consumers came south of the Border to shop and spend, and we certainly did not put up any barriers. We have an island economy and I would be sad to see any measures which would discourage Southern people from going North or vice versa. Mentally and financially we must try to remove the Border as far as we can. We must deal with the situation caused by the British amendment to the tax rates but we can in no way discourage people from being mobile in their shopping habits. We certainly cannot declare that people who go to Northern Ireland for shopping purposes are unpatriotic.

The first thing the Government must do is to consider its own taxation policies. Fine Gael put forward as part of our pre-budget package of suggestions the concept of a 1% cut in VAT funded by a windfall tax on energy generators. The Minister is aware of that proposal and how well thought out it was. It was based on the fact that approximately €300 million per annum in carbon levies is being extracted from consumers by power companies. This block of money, which is not being passed on to the Government, should be utilised to reduce VAT by 1%.

There is much more that needs to be done. The idea of a shoppers task force is one with which I am comfortable. However, at a time at which we are looking at every quango and every suggestion for a new agency, we had better tread carefully. We have so many Departments, Ministers, groupings and agencies that if they were all doing their jobs even half properly, we might not need any new agency. However, I welcome the debate. It is no harm to put the idea of price control and value for money back at the top of the agenda. It slipped off during the time when people were throwing money around like confetti at a wedding but now that we have finished with that era, there is much we can do to turn the economy around.

Fine Gael is demanding pay restraint and certain pay decisions to be taken in the public sector but we must also try to ensure prices are kept under control. This policy needs to be centre stage in Government economic thinking. I thank the Acting Chairman for his discretion.