Michael McCarthy (Labour)

I welcome the Minister of State, Deputy Kelleher, to the House. I look forward to interacting with him on the Finance Bill 2009.

Much has been said in recent times about the economic downturn. It is unfortunate that we find ourselves in the current situation. To paraphrase Laurel and Hardy, "That's another fine mess they've gotten us into." No one would win any prizes for guessing who "they" are. We have seen an unbelievable waste of Celtic tiger resources in recent years. Senator Boyle might want to believe he is sitting on the opposite side of the House and talking about honest politics, but it is about time he started to exert influence at Government level to have meaningful debate rather than just making cheap political soundbites at the other side of this House.

Let us look at the enormous wealth, prosperity and success this country enjoyed in the Celtic tiger years. There were the haves and the have-nots. Unfortunately, many people were left behind but when there was a lot of money around there was no long-term thinking on the part of Government in terms of providing for a possible downturn in the future. The downturn came with profound consequences. The manner in which thousands of people have joined the dole queues has been almost like a tsunami. People who were working or were self-employed and were doing well, rearing their families and making valuable contributions to the taxation system have suddenly found themselves unemployed, which has brought a whole host of difficulties. I was unemployed twice in my life and I know it does not do much for one's morale to join a dole queue every week and not to know when one will come off it given the bleak future.

The downturn provides us with an opportunity to reconfigure Government schemes such as the back to work scheme and other social welfare schemes. Now is the time to reconsider such schemes and to provide for more training and upskilling. That would allow people the opportunity to get a qualification, skill or trade and to contribute again to the economy when the upturn comes. We have no reason to think it will not happen. We need to ensure the people on the dole queues will not be on them for the long term. We all know families who have been affected by people losing their jobs and more people will end up on the live register before the end of the year. The ESRI forecasts in that regard are quite frightening. We must be careful about spending on social welfare. IBEC has made stomach-churning proposals that we should slash social welfare. People living on €220 a week find it difficult enough to live on that type of money without more being taken from them. We need to ensure supports are in place for people, not just financial supports but the provision of education to allow them to train and upskill. We must ensure we do not create poverty traps or long-term unemployment such as we saw in the 1980s.

When all is said and done we are left with two classes of citizen. There are those I mentioned who are working hard to make a living and to rear their families, who are making their rightful contribution to society through the PAYE system and, unfortunately, there are others who legitimately live for significant periods of time in this country, who are proud to say they are Irish but yet do not pay tax in this country. I will refer to tax exile status this afternoon when we consider Committee and Remaining Stages of the Bill. Every good luck to somebody who has been successful owing to their business or entrepreneurial skills. Many of them got it by hard graft. I am sure none of them stayed in bed and had someone knock on the door, hand them the idea and send them off. It is about time we started being fair and used the taxation system to ensure those who fly in and out under the Cinderella rule pay their dues. All we are looking for is equality and some element of fair play.

The rate of unemployment increase is alarming. I look forward to the Minister of State's reply on existing schemes. There are many obstacles to people who wish to return to full-time education. I know of a person who was employed. I will be vague but try to give as many details as I can at the same time. They decided to go back to education to pursue a four-year university degree. The individual has a partner and young family and lobbied the Minister for Health and Children, Deputy Harney, on the provision of support. No grants were available to enable that individual to access some financial support from the State to return to study. People who complete third level courses and graduate in various disciplines generally pay tax at the higher rate. The grant system is a great investment in a person's education. It would be a great return if we could use that system to facilitate the return to education of people who have become unemployed recently owing to the downturn in the economic fortunes of the country. We need to invest in education.

I have a question for the Minister of State on the effective marginal tax rate. For many years the Progressive Democrats mantra was that this was a low tax economy and people paid very little tax. We now know that many people did not pay any tax. That type of right wing political ideology has created huge hardships for the economy. The Progressive Democrats Party has been wound up and is no longer in existence. What will be the effective marginal tax rate for those earning €80,000 a year once the Finance Bill is enacted? What does the Minister of State think of the ESRI report that asserts that the rates of taxation have risen from 43.5% in 2008 to 52% in 2009? I have the table from the Irish Taxation Institute. A person who is self employed and earning €40,000 is on a rate of 50%. These are quite frightening statistics, and it is a mockery to say we have low tax rates when clearly we do not. We now have two income levies, the health levy, the PRSI increase and the pension levies for those in the public sector.

The pension levy is actually a tax. The reason it is called a levy is because the Government cannot introduce a tax between budgets. Therefore, it called it a levy although it is the same thing. Is it fair that a cleaner in a school or a part-time firefighter, of whom there are many of them in the Minister of State's city and county, must pay a pension levy when they will never receive a public service pension? This is an issue that has been communicated to the Government by spokespersons of my party in the Dáil and by the trade unions. There are people cleaning schools or who are part-time firefighters in every town and village in the country who are paying a pension levy and not getting a pension in return. It is a mockery to suggest in the first place it is a pension levy because it is not. It is a form of taxation, allied to the health levy, the income levies and the PRSI increase, that is creating huge difficulties for people.

Most of us who have been knocking on doors in recent weeks will have come across families similar to the one I encountered in west Cork. Both parents are public servants who are not earning big salaries but because of the income levies, the PRSI increase and the pension levies, they have had to cut out the extracurricular activities for their children such as music lessons, Taekwondo or any other classes that involve a fee. They have had to reconfigure their finances and cut out many of these things. The quality of family life suffers terribly because of it.

The straitened economic times are contributing to people's negative mental health. There is huge pressure on people in the current economic climate. There was a piece in the Irish Examiner recently which stated that many marriages will run into difficulty owing to this type of economic hardship. We need to be mindful of this.

Senator Boyle was very quick to mention the setting up of the National Asset Management Agency as the panacea for all ills. When it was announced, some people thought it was a good idea but when they teased it out, it is not nearly as clear as was being suggested. Dr. Michael Somers of the National Treasury Management Agency did not mince his words at the committee when he made statements on the possible operation of NAMA:

I am still not sure how the proposed NAMA operation would interact with the NTMA. Government statements have said it would be under the aegis of the NTMA [The Minister stated this when he announced the setting up of NAMA] ... it depends on the legislation.

Dr. Somers suggested that if it were up to him, he would prefer management of the debt to remain with the banks where there was experience and expertise in dealing with it, in which case the NTMA could oversee their operations. However, he said he was unsure what the agency's position was at the time. Does the Government realise the gravity of that statement? If the individual who is charged with overseeing NAMA is unsure of its operation, how can the compliant taxpayer and the citizen of this country expect to have any faith in that organ of the State? It does not do much for investing faith in the Minister's statement.

When asked what he knew about NAMA, Dr. Somers stated that he knew very little apart from what he had read in the newspapers. When he was asked about the workings of NAMA, he stated that he did not know whether NAMA would be a function of the NTMA, or whether it would have a separate board and the NTMA would just carry out the management. He said he did not know what NAMA was going to be. When asked why the NTMA has four external boards, he said: "It is like this: one would not start from here if one was starting again." That is quite serious and I would be interested to know the Minister of State's comments on the issue.

We are all aware of people making an honest few quid from small and medium-sized businesses. The downturn has come, the banks have stopped lending and there is huge pressure on these people. These businesses often form the backbone of the rural economy. There are other areas of industry that can flourish during the economic downturn but because of draconian legislation enacted by both Houses, the fisheries industry in this country is on its knees. That is one of the areas that can flourish through the boom and we can learn a lot from that. The Government should listen to the concerns of fishermen and look at the operation of the Sea-Fisheries Protection Authority. Homes of fishermen were raided in west Cork as if they were common drug dealers or part of some kind of Colombian drug cartel. These are the people on whom we depend unofficially to police our shoreline. These are the people who came across the cocaine haul off the coast of west Cork.

We rely on the people who were 40 miles out from Killybegs and discovered a massive stash of cannabis. They contacted the mainland and stated they would come back to Killybegs on the condition that when they got back, the Naval Service would seize the drugs and they would be allowed to go back out to where they were and fish the water there. When they came into Killybegs, the Sea-Fisheries Protection Agency officers were there and they boarded the vessel, checked the log, the gear and the quantity, quality and volume of catch. These people had only complied with the law and contributed to ensuring our shores are not used to import drugs freely into the State, yet that is the treatment they got from an organ of the State. We can depend on these people to regenerate rural economies only if they are allowed to do so.

Representatives from these organisations attended a meeting of the Joint Committee on Agriculture, Fisheries and Food. They have clearly stated that the current criminal sanctions against fishermen are putting them out of business. They are being criminalised by being brought in front of Circuit Court judges and their catches are being confiscated, as are their boats and equipment. This is unbelievable but it is happening. Will the Minister of State, Deputy Haughey, ask his senior colleagues to look at relaxing the criminal sanctions, introducing administrative sanctions and giving a break to people in an industry on its knees?

Small and medium-sized businesses are paying high rents for their premises. One particular retail outlet on Grafton Street saw its rent increase last November from €118,000 to €165,000 per year. That is enormous by any stretch of the imagination. That premises is now standing idle and will remain so if it costs €165,000 per year to rent. The Minister should bring in the landlords and demand flexibility to give people a break in the current economic climate.