Marc MacSharry (Fianna Fail)

Deposit interest retention tax, capital gains tax and capital acquisition tax have all increased to 25%, which is part of the Government's base-broadening measures and ensures that all forms of income contribute to the fiscal correction.

The increases in the income levy can be seen as a progressive measure in so far as those who earn more pay more. Notwithstanding that many in the public sector will receive their pay packets for the month this week, there is no question it will bring an unprecedented level of reduction and will inflict pain on a great many families. We need to be conscious of that and to the fullest extent introduce any measures we can - I have spoken to the Minister in person about his - in the area of mortgage default which will help those who ordinarily would not have difficulty in paying their mortgages but for whom, with these necessary measures being introduce, the situation may change. Although the limiting of mortgage interest relief to the first seven years of a qualifying home loan may be seen as painful to some and, indeed, it is, it is also in line with the drop by the ECB in lending rates which, as the Minister alluded to, is unprecedented.

These are merely some of the highlighted tax measures to be introduced. The Commission on Taxation is due to report in July and full reform of the taxation system will take place then. An bord snip will also report in July on further cuts which we can make across the Departments, and they will be necessary. As I stated earlier, there is a level of outgoings that we can no longer support and we need to cut our clothe to measure - it is as simple as that.

GNP is projected to contract by 8% this year, as the Minister stated. Indeed, Senator Twomey also alluded to that. The contraction is expected to be more moderate in 2010 and in 2011: as international recovery gains momentum, our economic growth rate is expected to turn positive.

There have been small signs internationally of a pick-up, as the Minister alluded to this in his speech, and these signs are welcome. The recession hit Ireland harder than most, as we are one of the most open economies in the world and, it must be said, we had an over reliance on a tax base which was substantially in the property sector. Mistakes will always be made and any Government, as it looks back retrospectively, would like to have done certain things differently. I am sure this Administration is no different to those in the past. The fact of life is that Governments operate in a real-time environment and do not have the benefit of hindsight. We need to move forward in a confident and determined way to display to citizens that this Government can and will take the appropriate measures to get this country back on the road to recovery as quickly as possible.

Although there is a significant downturn in world trade, interestingly, the relative downturn in Irish exports is substantially less. We are holding our own in terms of market share while other countries are losing market share in the world economy. This is partly due to the nature and quality of our exports, many of which are in the food sector, as Senator Quinn will be well aware.

When compared to Singapore which has lost 30% of its export market share and Taiwan which has lost 40%, the Irish Exporters Association has forecasted that our exports will fall by 13% in 2009. This is significantly less than the countries I mentioned and is worth noting.

Another striking challenge for Ireland is the fall in the value of sterling, which has been difficult for indigenous exports. However, we are beginning to see the Irish market become more competitive as a national correction takes place in terms of our pricing.

The Government is continuing to implement initiatives to ensure the unemployed are given incentives for up-skilling and are ready to face the upturn when it comes. One such initiative announced by the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Coughlan, and the Minister for Social and Family Affairs, Deputy Hanafin, is a work placement programme and a short-time working training programme. The work placement programme is a six-month work experience programme for an initial 2,000 individuals who are currently unemployed. Under this programme there will be two streams, each consisting of an initial 1,000 places. The pilot short-time working training programme will provide two days' training a week for 277 workers over a 52-week period. I welcome this measure and others which are planned.

On reports in the news today of the suggestion that there may be cuts in social welfare, it would never have been an intention of Fianna Fáil in Government to cut social welfare. In fact, the record will show that Fianna Fáil in Government has produced more in the context of increases to social welfare and pension payments throughout the history of politics in this country. I very much hope that it will not become necessary to cut social welfare or to reduce the likes of child care payments in the future. Having said that, it is important we maintain an incentive to work and I hope we can find the appropriate balance in this regard.

There are difficult and painful measures contained in this Finance Bill. We have outlined that they are extremely necessary at this time. On that basis I commend the Bill to the House as another step. More will be required as we continue on the road to economic recovery.