Paul Coghlan (Fine Gael)

I welcome the Minister of State, Deputy Haughey, to the House. The Minister for Finance, Deputy Brian Lenihan, gave us an overview of the Bill's proposals. I recognise it is his responsibility to encourage, stimulate and talk up the economic situation as best he can, but judging by yesterday's ESRI report and other indicators, not alone are matters bad, they will get worse in 2009 and 2010. I agree it is time for a pay freeze for several years throughout the entire economy. I would like to see more agreement across the political divide on that matter and reform of the public service. I have no doubt that is a matter to which political leaders are giving attention.

I had hoped the Minister for Finance would have refined certain budgetary measures to bring about a better economic situation for our people, particularly those in Border areas. The different VAT rates of 21% and 15% that apply between the two jurisdictions have led to problems. While we all want more revenue to flow, the Minister could have removed the VAT differential. The high VAT in the South affects a range of products, such as clothes, groceries and alcohol. People can make up to 30% in savings if they shop across the Border and this is widening with the increasing strength of the euro against sterling. This disparity will come more into play and will be to our disadvantage in the financial short term.

Yesterday, the Government launched its economic revival plan, which we wish well. However, all commentators think it is too aspirational. There are some good measures for the smart economy and, hopefully, in time they will bear fruit. People seem to be despondent, however.

We are all concerned with the unfolding developments with the banks. The Minister is certainly taking his time with the recapitalisation programme. It is 12 weeks since the bank guarantee scheme was put in place. We gave it all the necessary urgency and the House sat all night to get it passed. Unfortunately, it did not steady the markets but was necessary for depositors to prevent any runs on the banks. The Minister has made subsequent announcements about the banking system but has not taken any measures.

I hope the €10 billion co-fund with investors and shareholders for banking recapitalisation will be developed more with shareholders than investors. We do not want foreign equity houses or venture capitalists funding our banking system. The Minister has stressed the banking system is one of the essential cornerstones of the economy. However, earlier he spoke of a rationalisation of banks with a reduction from six to two banks. While it might be necessary to strengthen the banks against foreign competition, it might not be good for competition. We need to hear further from the Minister on this matter.

On the one hand, the Minister speaks confidently but takes a softly-softly approach to bank recapitalisation. While some claim he is prevaricating, I believe he means well, but it is taking a long time. We wish it did not have to take so long but we will have to bear with it. While I am not seeking an SSIA-type scheme, perhaps a tax incentive for bank shareholders could be included in the co-funding arrangements.

Our tax exiles are as Irish as ourselves. Many of them have done much good work in making large amounts available to charity. In this time of great need, we need them. Will the Minister talk to them and see how they can be harnessed for the good of the economy? No one should be outside the fold now.