Feargal Quinn (Independent)

He instilled confidence in people and I congratulate him thereon. If he were receiving marks on the manner in which he delivered his speech, he would receive high marks.

Before the budget, I wrote in one sentence that international investors need to see that Ireland has a comprehensive, credible, multi-year plan to tackle the deficit in our public finances, place our banking sector on a sound footing, transform the funding outlook and support our economy. The Minister achieved this and would receive marks in this area if I were giving them. With regard to the economy, the sovereign debt market, the banking system and public finances, the Minister would receive high marks for instilling confidence internationally. He claimed he would do so and achieved this.

A business in financial difficulty would handle a financial crisis in a slightly different way from the Government. A business facing a crisis owing to costs rocketing out of sight and the failure to bring in enough income would state it would have to tackle the problem. It would also state it would have to instil confidence and hope among its people, be they customers or employees. The Minister cut costs only to a certain degree and this is where he would lose marks. If half of the savings are to accrue from cutting costs and half from increasing income, the Minister got it wrong. Much closer to a quarter of his savings are to accrue from cutting costs and three quarters are to accrue from increasing income. This is a lopsided way for a business to go.

Something far more serious needed to be done with regard to cutting costs. When one looks back to the past five or ten years one sees where our costs have escalated. One of the challenges facing us is to cut costs and the Minister did not grasp this clearly enough. However, he increased the tax rates and I do not agree entirely with Senator Norris on this. There was a need for imagination on this but we did not have it.

In 1987 we had similar problems. One could say they were bigger problems than those we have now with regard to debt. The then Minister for Finance, Mr. MacSharry, grabbed hold and cut costs but imagination was also shown. This was when the financial services centre was instituted and a target was set to reduce corporation tax over the following years. We reduced taxes on occasion to bring in more income. This is the message I would have liked to have seen in the budget.

On many occasions in the past, particularly over the past 15 years, we saw that by reducing the percentage tax we increased income. A good example of this, which Senator Norris mentioned, was betting tax. I remember when the then Minister for Finance, Charlie McCreevy, introduced this he was howled at in this House. He reduced it from 20% to 10% and Members of this House argued he was looking after his friends in Kildare. He returned the following year and told the House he had taken in far more money at 10% than he did at 20% and that he would reduce it to 5% the following year. He did so and took in more money again.

This is how a business operates. A business decides to reduce prices to bring in more income. I did not get the sense of any touch or flair of this in the budget and for this I would fail it in marks. The Minister did not raise confidence in the long term. Yes, in the short term he has done the correct things but there is a need to do something in the long term and I do not think we did so. Lip service was given to research and development and the Minister spoke about science. This is where we will have an opportunity to do something. However, the Minister only touched on it. We should heavily invest in this if we are to act in this area.

In the budget, the Minister used the words "restoring competitiveness" but there was a degree of complacency. The Minister stated:

Private sector wages need to adjust and are adjusting. I hear examples every day of companies and employees reducing costs and changing work practices in order to safeguard employment. It is this flexibility that will restore our competitiveness and provide the basis for future prosperity.

I do not think we are doing nearly enough. He continued, "With the introduction of the pension levy, the public sector has also lowered its costs". We must do far more than he gave us the opportunity to do in this area. This shows a lack of confidence in this area and this complacency concerns me.

A number of weeks ago I recounted a meeting two years ago with the former US Secretary with responsibility for employment. She stated her job was to ensure there were more jobs in the US. She explained it was not her job to create these jobs but to create the environment in which entrepreneurship can create these jobs. This is not understood. If we are to make this an entrepreneurial, attractive country to create jobs we must do far more than we are doing. I did not see the spark of imagination I had hoped for in the budget.

Businesses need money and a very large number of them are short of it. Steps could have been taken in this regard but they were not. The Minister has admitted it was probably an error — I believe he used the word "mistake" — to have increased the VAT rate last October at the same time as the rate was reduced in Britain and Northern Ireland. The British seem to believe that by reducing the rate they will do more business, encourage more business and will take in as much if not more at the lower rate than the higher rate. We slipped it up 0.5% hoping it would not be noticed.

There is a realisation now that many businesses are short of cash. It would not have been an impossible task to stretch the length of time in which these businesses must pay VAT. VAT must be paid within 30 days. It would not have been impossible to stretch this to 60 or 90 days. Every business in the country would have had a little more flexibility and cash. This would not cost the State anything in the long term — it would have cost in immediate cash flow — to do this for one year. The Minister was not thinking about how to create entrepreneurs to create jobs and how to put more cash into the system on this basis.

I support the move the Minister made with regard to the banks. It is the right direction and it appears the international markets have stated they think the solution should be given approval. To mark the Minister, he is getting honours in one or two areas but he will fail in a few others. I hope he identifies the challenges which exist and that we will see changes in the Finance Bill to create the atmosphere and optimism we need and to encourage businesses to create more jobs.