Feargal Quinn (Independent)

I welcome the Minister of State, Deputy Haughey, to the House.

When I came into the House almost 16 years ago, I did not have much experience of how to look at a Bill. I had experience of being in business and looking after customers. I began to consider Bills as though I was dealing with a business, whether they were health Bills, education Bills or any other type of Bill. How would a business person consider a particular Bill? Thus, I considered the Finance Bill and the budget as would a business person.

I agree entirely with Senator Butler's statement that we had no choice but to have a difficult budget. However, as a business person I lived through the 1960s, early 1970s and mid-1980s, which were very tough times. I examined what businesses, including my own, had to do. One of the first things one must do to survive is to look after one's customers. Who are the customers? In this case the customers are the citizens of Ireland, and the Minister's duty is to consider how he can act in the best interests of these citizens. That is a wide remit. He had a choice; he could have done something else, as businesses sometimes do. They sometimes decide to balance the books and forget about their customers for a particular year. I have a fear that this is what the Minister tried to do. I do not think he looked at the broader picture. He decided he had to balance the books immediately, and he therefore took steps that a business would not have taken.

A business would normally try to generate income and cut costs in tough times. I remember those tough times; we did have to cut costs and we did have to generate income. This Finance Bill does not seem to do that. Instead of looking after the customers and trying to generate income, the Minister decided not to cut costs. The costs of the public sector are large. Business managers would have said to their employees that they must take a cut this year and would have reduced prices in order to generate more business. We have learned so well that sometimes a lower percentage brings in more money. If one brings down one's price one generates more money.

It appears as though the British Government, the supposedly socialist Labour Party Government, has taken this attitude. It has decided to generate more business and to get people to spend more. I do not know whether it is the right thing to do, but it has at least given the example of cutting the VAT rate rather than increasing it. What did we do? We increased the VAT rate, although not by very much. We also raised taxes by introducing a 1% income levy, or 2% if one earns over a certain amount, although this will apply for only a couple of years. In other words, we have decided to solve this by putting up our prices. What do we do with capital gains tax? We said the same thing: we will put it up, at a time at which it is highly unlikely there would be any capital gains anyway.

The Minister has taken the opposite attitude to that of a business person. A business person would have said, "I am going to do something to generate more income." We have done that over the years. We brought down corporation tax from 30% to 12.5%, and every time we brought it down we took in more money. I remember the former Minister for Finance, Deputy McCreevy, coming in here and saying he was going to reduce the betting tax from 20% to10%, and there were howls. People said he was looking after his pals, because he is from County Kildare, which is great racing country. He came in a year later and said he had taken in far more money at 10% than he had taken at 20%, and he decided to reduce the tax again to 5%. He came in the following year and said he had again taken in more money. I mention this example because we are talking about the business of running our finances.

The objective of the Finance Bill is to make sure the citizens of Ireland do better. There may be a time in which we must cut costs and make sure we generate more income. The message we see in this Finance Bill is wrong. I may not have thought that on the day of the budget, but looking back I realise there were two steps we could have taken, and we took the wrong step. I would have preferred to see the Minister generate more business and cut costs instead of putting up prices, because in the business world that usually ensures that one loses one's customers and gives one less chance of survival.

There are steps the Minister can now take and should have taken in this case. One of them involves retailers and small businesses — those small and medium-sized enterprises that are trying to survive. How do we manage at a time in which there are major difficulties with finance and liquidity? One of the things the Government could have done was to give these enterprises a little break and, instead of asking them to pay their VAT within 30 days, stretch the length of time required for payment. It would provide a little more liquidity and give them a chance. I am talking about 60 days, 90 days or 120 days. Yes, it would cost the State that liquidity, but it would not cost it any money because in the long term it would get back its money. For one year the Government could say that retailers do not have to pay their VAT within those 30 days. That would encourage retailers, manufacturers and those who export goods by giving them a belief that the Government is supporting them and is trying to generate income rather than increase its prices.

I am drawing what is perhaps a facile comparison with business. However, a person with business experience would have done something different. A very successful businessman once said to me that he always worried when he saw someone running a government who had no experience of getting money together at the end of the week to pay the wages. There is a danger that in these Houses — I will upset many here by saying this — those who have never run a business or had to worry about getting money to pay the wages at the end of the week do not have that experience, although they may be well educated and experienced in many other ways. I may be too simplistic in my description, but I am expressing a concern that we have gone in the wrong direction this year. At a time when there are major financial difficulties, I would like to see small and medium-sized entrepreneurial businesses encouraged. I would like to see them generate activity and income. I would like to see the Minister's message go much further in that direction rather than being about balancing the books and raising prices. Of course it is important to balance the books, but this may be the very year in which he should have cut costs. There was a time to do it. It was possible to say to the public sector that we are facing a difficult time and everyone should take a pay cut. Those earning less than €30,000 or €40,000 could take a 10% or 5% pay cut and those earning more than €80,000 could take 20% or 10%. It would be possible to do this with the support and enthusiasm of the population.