Larry Butler (Fianna Fail)

This debate provides us with an opportunity to examine how our economy has been performing in recent months. We can see the drop in revenue and that the model which we had over the past 11 years needs to be reorganised because it no longer works. We depended extremely highly on spending tax and now we can see that spending has dropped through the floor. Therefore, we must examine how we will reconstruct our taxes and create a new model in terms of our economy. This is an opportunity and we must not lose sight of the fact that we have 1.8 million people at work. In the budget we must take into consideration how we will ensure that we protect these workers. This must be the function of any Government decision in light of where we find ourselves. We must ensure that we work smarter. We have to be smarter. We have produced a smart economy document. When people say one works smarter it means one has to work smarter and get better value for one's euro.

The cost of doing business here is a major stumbling block. This is an opportunity to deal with that. How do we do it? Rent paid by industry in this country is far too high and there will have to be a reduction in that regard. We will have to see a reduction in terms of power and energy. ESB and Bord Gáis charges will have to be driven down. This morning, I mentioned that we are being ripped off by GPs and consultants. That is not good enough and we have to drive down these costs. We cannot expect to take money out of people's pockets through taxes if we do not drive down the cost of services. That has to be a function of the budget and it is important that we deal with it extensively.

We must ensure our banking system works and that banks lend to small business. There is no evidence to suggest the banks have changed their ways. A major job has to be done in that regard. Our economy cannot function without credit facilities, and this is where our banks play a most important role. We will have to tackle the bad debts in the banks and possibly create a separate bank to deal with that and manage the debt situation over a number of years.

I remember the situation in the late 1970s in the UK, where people put the keys back in the door and left. One could not give property away, but we all know how that passed and how expensive land got in London and in counties across the UK. It will be no different here. We will find that certain lands will not be as expensive as they were, in places such as the midlands and so on, but it will come back, and so will land in Dublin, Cork, Limerick and in our big cities. We are not manufacturing any more land, as it is a finite resource. The bank will have to invest in it, the taxpayer will have to invest in it and the Government will have to invest in it. We will have to be patient about the management of it, which is vitally important.

The bank and management system that we have here is not acceptable going forward. There will have to be new governance within the banking system. Senator Hanafin mentioned how important it is to change that particular system. I will not dwell too much on it, other than to say that if we do not change the system, we will not have the confidence of the international market. This budget is being structured and we must stick as close as possible to the figure of 9.5% of GDP. We must send a message to the market. In many cases, the market has decided and we have seen what it decided for the banking system. The market decided it did not believe the banks. That is still the case, even though we have seen slight increases in the market. The market will judge the budget as harshly if we do not take the necessary steps.

At my parliamentary party meeting, I suggested we should look at the national pension scheme. Private pensions are currently costing us €3 billion in Government subsidies. That is not sustainable. Most pensions are losing between 25% and 50% of their value this year and that is the harsh reality. We would be far better providing a national pension scheme into which we would pay and which would realise anything up to €80 billion. That is a substantial amount of money. We have invested a substantial amount of money into the banking system, which will have a repayment back into the pension scheme. I also suggest that we pay a 3% levy on that pension scheme, which could be used by the Government to fund substantial developments that would have a payback over a period of 15 to 20 years in roads, water, transport or whatever. It is a way in which the Government could save money and borrow money at home, which is cheaper.

It is very important that we get to grips with the public finances. Taxation will not work unless we start looking to access the national development plan. We must look carefully at the finances of that plan. We should also examine the finances of the HSE, which is like a big hole in the ground. We must also look at the ESB, Bord Gáis, and Aer Rianta. Quangos are costing us €6 billion to run. We cannot afford them any longer and we must deal with them in the budget.