Paddy Burke (Fine Gael)

I welcome the Minister of State, Deputy Calleary, to the House and take this opportunity to wish him well in his portfolio. While I have had an opportunity to do so when in the Chair, this is the first occasion I have had to do so from the floor of the House.

I welcome the opportunity to speak on the IMF and OECD reports. I wholeheartedly agree with previous speakers that the report of an bord snip nua should be published. People have a right to know what is in that report. Having read it, perhaps they will better understand the situation in which we find ourselves. I agree with Senator Leyden that we must be at the heart of Europe. If not, emigration will be the only option for the majority of people in this country although where they would go I do not know. It is important we support the Lisbon treaty thus ensuring we remain at the heart of Europe, a debate we had yesterday. I believe the Irish people will make the right decision in the forthcoming referendum.

The IMF report contains three firm statements: we have lost a decade and it will be 2017 before recovery takes place in this country, gross domestic product in Ireland will fall by 13.5% between 2008 and 2010, and Ireland was perhaps the most overheated economy of all advanced economies. These are stark statements about our economy and how it has gone down the tubes in the past 18 months. However, as Senator Bradford stated, we do not need reports to know what is going on. The majority of people know exactly what is going on.

Senator Callely stated that people should know what is going on. The dogs in the street know the state of the economy in this country. The Senator also referred to the banking sector not lending to small and medium-sized businesses. The reality is, despite what Senator Butler said, the banks do not have the money to do so. They owe €35 billion and are worth only €15 billion. Effectively, the banks in this country are broke and are using the money given to them by this Government to stay afloat. That is how I see it and I believe it is how the majority of the people see it.

It was amazing that every time an announcement was made about the Government measures being introduced to deal with the banking crisis, including the bank guarantee scheme, the nationalisation of Anglo Irish Bank and the recapitalisation of Bank of Ireland and Allied Irish Banks, share prices went down. The Minister for Finance stated the purpose of each of these measures was to ensure share prices increased. However, they have the opposite effect. Allied Irish Banks share price decreased in the past week from 180 cent to 120 cent. There is no confidence for shareholders or other people to invest in Irish banks. It has been stated that Anglo Irish Bank loaned in the region of €15 billion on the American market. This is now worth only €4 billion. There is no doubt that some bank in America will buy that loan for €4 billion, which means a further €10 billion loss to the Irish taxpayer in the context of the nationalisation of Anglo Irish Bank.

We must stimulate the economy. This is not happening because the Government has no plan to do so. This is the reason for the continued growth in unemployment. Small and medium-sized businesses are encountering huge problems in terms of electricity prices, insurance, health and safety issues, water, sewerage, refuse charges, rates, telephone costs, VAT and high interest rates. The banks are screwing them on short-term capital and interest on overdrafts. The interest rate on overdrafts has increased to 12%, 13% and 14% for those lucky enough to get one. Most businesses cannot even get an overdraft.

Local authorities have no funding, an issue that should have been debated prior to the recess. The majority of local authorities in this country are broke, their overdrafts have been cut and Departments are not paying them for jobs undertaken on their behalf. This is going to result in a considerable number of lay-offs in local authorities, in particular those working outdoors and so on. A plan must be devised that will start the regeneration of the economy.

The Government needs to address the issue of VAT rates which are 21.5% and 13.5%. If we have learned anything since the 1980s it is that the black economy grows during a recession. The black economy is increasing every day of the week. High VAT rates foster the black economy. They encourage people, when pricing a job, to exclude VAT because often they have no alternative but to do so to remain in business. The Government has stated on numerous occasions that the Opposition has put forward no proposals. We have put forward proposals on various issues during the past 12 to 18 months. VAT in the services sector is payable at 13.5% and in other sectors at 21.5%, which is criminal. It is driving people out of business. One has only to walk down Grafton Street to see the number of premises boarded up. The same is happening in every town in the country. Fourteen premises on the main street of Castlebar are closed. That is all due to the economy that is not generating any capacity for the service sector to develop.