Brendan Ryan (Labour)

I welcome the Minister. We need to begin the difficult work of rebuilding the Irish economy from the bottom up, and protecting and creating jobs. This Finance Bill does none of this. It puts short-term accountancy over long-term recovery. It puts balancing the books over rebalancing our economy. The budget was brought forward to give the impression of activity on behalf of the Government in dealing with the declining economy. Old age pensioners, schoolchildren and their parents, and taxpayers have been lamenting ever since. Where is the strategy? Does this Finance Bill help or hinder the economy? That is the test. We needed a budget that helped to stimulate the economy, stem job losses and get people who had already lost their jobs back to work. We needed to see businesses, big and small, regaining confidence that their bank would be open for business and that the Government would be proactive in this for them.

Governments around the world are reflating their economies and reforming their banks to give fresh hope to their people. Our Government, in this Finance Bill, is doing the opposite. In this Finance Bill, the Minister increases VAT by 0.5% to 21.5%, one of the highest in Europe. Only Poland and Sweden have higher VAT rates. Our VAT is 6.5% above the new rate of 15% just across the Irish Sea and in the North. The Finance Bill imposes an income levy on all incomes over €18,304 without any marginal relief. Anyone earning slightly above the minimum wage who works overtime to boost their income risks being hit by a 1% charge on the whole of his or her income.

The news that there will be a 6.5 percentage point difference between VAT rates in the Republic and the UK, including Northern Ireland, has hastened the stampede of shoppers from the Republic to the North and the UK. It seems unbelievable that when the British Chancellor is slashing VAT rates from 17.5% to 15%, our Minister for Finance, Deputy Brian Lenihan is increasing our top VAT rate from 21% to 21.5%, one of the highest rates in Europe. The proposed VAT increase is one more own goal in a budget that has not stopped unravelling since 14 October. Just when Governments around the world are trying to stimulate consumer demand, our Minister seems to want to strangle it. It was the wrong signal at the wrong time to Irish consumers. Leadership was required in this area and, sadly, is lacking.

The Government forecast an average unemployment rate of 7.3% for 2009, which was hopelessly optimistic as we learned yesterday when the ESRI forecast an average rate of more than 10%. An entire generation of young people could find themselves locked out of the jobs market. Tens of thousands of people are losing their jobs from building sites and factory floors, as we are all aware. We need a major programme of training and upskilling to help people acquire the transferable skills needed for the 21st century.

A related matter regarding people's capacity to enter the marketplace is social welfare. The Social Welfare Bill withdrew child benefit for 18 year olds while hiking up college registration fees by €600. The parent of an 18 year old child stands to lose in excess of €1,000 in 2009 and just under €2,000 in 2010 from the changes to child benefit alone. Some 100,000 more people are on the live register than a year ago. In one of the meanest budgets ever, qualifying for jobseeker's benefit has been made much more difficult. This is a slap in the face to the many thousands of people who have lost their jobs through no fault of their own. They also have to wait seven to eight weeks to have their claims processed, which is scandalous.

Investing in public transport, promoting green technology enterprise and shifting to eco-friendly energy will stimulate the economy while providing the foundation for long-term sustainable growth. Growing the green economy now is not just good for the environment, it is also good for the economy. If we invest in Government action now, we can set out on a path to smart, green growth. Limited initiatives such as the bicycle grant scheme and home insulation are small pieces in the jigsaw, but they do not help us see the bigger picture. We need to overhaul radically the way our country is powered and the way we do business.

The Bill contains some positive measures. Significant measures to increase and broaden the tax reliefs on research and development expenditure, including for qualifying buildings, is welcome. These are necessary if we are serious about moving up the value chain. If we are serious about winning jobs in emerging high-tech sectors and attracting laboratory jobs of the future to replace those being lost on factory floors and construction sites, we need to match the research and development investment of those countries at the top of the competitiveness league. We support these limited measures, but when it comes to the type of economic transformation that the country now needs, they are insufficient.

Looking to the future with confidence is not easy. People have lost confidence in the triumvirate of the Taoiseach, the Tánaiste and the Minister for Finance to lead us out of the economic mess in which we now find ourselves. That is not just a political point, but is the reality we are hearing on the ground. The much heralded plan for economic recovery was launched yesterday and turned out to be very little beyond aspiration. There is no new money, no actual decisions, and nothing from which we can take hope. It contained 100 pages of restated and rehashed old ideas with the exception of those stolen from the Labour Party.

The transport element of the plan is short on specifics on public transport. Priority is given to additional buses and bus priority measures, but there is no mention of the metro and no timeline for the rapid transit systems needed to make our cities low carbon and attractive to young people and investors. Even the flagship idea of a venture capital fund is vague and unspecific. Borrowing to boost the economy in the short term by investing in education and infrastructure will see us in a better position to develop the economy over the medium term and balance the books over the long term. Putting money into the economy rather than taking money out is what we need at this point. It should happen as part of a coherent, co-ordinated economic strategy, but it is sadly lacking. Has the Government any strategy to generate stimulus at this stage to replace some of the demand which has been wiped out by the credit crunch? I do not think so.

The Labour Party, through our leader Deputy Eamon Gilmore and our finance spokesperson, Deputy Joan Burton, has set out the framework of a billion euro stimulus package. This package would include a significant primary and secondary school building scheme, putting construction workers to work building new schools, refurbishing old schools and improving educational opportunities for future generations. It would also include a meaningful and comprehensive insulation scheme to retrofit houses and schools across the country, putting construction workers to work at reducing Ireland's energy dependency, as well as a significant investment in public transport to improve quality of life, to reduce carbon emissions and to ensure that our infrastructure is good enough to attract the very best international businesses to the country. The €1.2 billion in development levies currently held by local authorities should be allocated for immediate use, putting construction workers to work building much needed community infrastructure around the country. New SME centred credit lines from the European Investment Bank must be utilised to the fullest extent. Small and medium sized businesses are the lifeblood of our economy and can be the engine of our economic recovery, but they must have access to the credit they need to grow and prosper.

The challenge for politicians in the debate on this Bill is to chart a strategy for economic recovery that is both realistic about the challenges we face and optimistic about what we can achieve in the future. We need to invest in our people and in our infrastructure so that we are poised to profit from an upturn in the global economy whenever that may come. We need to begin the hard work of rebuilding the Irish economy from the bottom up, retaining, protecting and creating jobs. The reason the Finance Bill 2008 is so inadequate is that it does none of the above. It puts short-term accountancy over long-term recovery and puts balancing the books over rebalancing our economy.