Paul Coghlan (Fine Gael)

I am glad to have the opportunity to say few words in this debate. I welcome the Minister of State and thank him for his contribution. I can identify with much of what Senator Ó Murchú said on the issue. There is no doubt we all have a vested interest in returning the economy to sustainable growth as quickly as possible. As the Minister of State pointed out, everybody has been and will be affected by the deterioration in the economy.

One of our primary concerns must be the creation and protection of jobs. That is essential if we are to get the economy back on a growth path. We need to reduce the burden on the State caused by the large number of unemployed and get them back into gainful employment. In my area we have been greatly affected not just by the flooding, but also by a great decline in tourism, which has been very damaging to jobs, morale and confidence. It has been an extremely challenging year in the industry, particularly in sectors such as golf tourism, and the suffering is likely to continue into 2010. We urgently need help to mitigate the challenges we face.

As golf tourism becomes ever more competitive internationally, increased Government support, through financing promotional initiatives by Fáilte Ireland and Tourism Ireland, is ever more vital to restore Ireland's position as a leading golf destination. We have suffered terribly in this regard. Given climate change and other factors, perhaps it will continue to decline and we will not be able to control it. Therefore, more emphasis may have to be put on walking holidays and many other activities which are equally important. The removal of the €10 airport tax on tourists would go a long way to encouraging tourism. Reducing the VAT rate to comparable levels in the United Kingdom to improve our competitiveness would also make us more attractive to British tourists, as there has been a significant fall in the number of tourists from Britain in 2009 and this trend will continue in 2010.

We are all very concerned about what has happened in the retail sector and the fact that a number of our own citizens are travelling north of the Border. We need no further increases in indirect taxes. The impact of an increase in the rate of VAT on goods would further depress consumer spending here. I hope the Government will take action on the issue in the budget. An increase in the rate of VAT would drive more consumers to the North and make it extremely difficult for retailers to compete on what is already a very unequal playing field. We need to restore balance.

The Government needs to reduce regulatory charges, including water and waste charges, commercial rates and other levies for specific sections of industry. There is a necessity to reduce the cost of complying with obligations on businesses, which costs need to be driven down by central government as part of an initiative to control costs, encourage businesses to survive, reduce the regulatory burden and enhance competitiveness. We have lost out greatly in this respect.

Controlling public spending is absolutely vital. We need to modify the social welfare system to encourage people to work. We also need to encourage banks to make credit available to SMEs and the Government to clamp down on illegal tobacco and alcohol sales which are causing huge losses of revenue to the Exchequer. Specific measures are needed in the budget to keep local businesses afloat and people in jobs, the most critical issue for our economic well being.

The Minister of State made a good contribution and I look forward to something positive in the budget. He has held out the promise that good measures will be introduced in it. If that is the case, we will welcome them. However, a major reduction in excise duties and VAT is vital for the future of the economy. As consumer confidence is very fragile, we urgently need a stimulus to restore it. It is critical, therefore, that the Government does not increase taxes in the budget and that the bulk of the adjustment to be made to the public finances is on the spending side.

In the last year 30,000 jobs have been lost in retailing. Consumers must be encouraged to spend. Members of the public are now saving 12% of disposable income and need to be encouraged to spend some of this in order to create employment and give the economy a boost. This can be done by convincing them that they will not face increases in taxation and through proactive measures to encourage spending. The minimum required is a reduction in the rate of VAT to the same level as in the United Kingdom.

There is no doubt that there was a huge failure in the banking system. The banks fuelled the greed. What they did was inexcusable. There is a perception that developers and bankers created the bubble but, in fact, they destroyed the Celtic tiger.

The failure and reluctance on the part of some in high society such as judges and the heads of various important public bodies and quangos to take a pay cut are totally inexcusable and lead to a sense of injustice. No one can excuse himself or herself and stand aside from this national effort. The taxpayer simply can no longer afford the luxury to which the people concerned have become accustomed.

There has not been a proper clear-out at the top of the banks, at director or management level, which is doing nothing to restore the confidence of the average taxpayer. The Minister needs to exercise more control and authority in this regard.

Flexibility and changes in work practices to reduce the overall cost of and improve services to the public, as well as the removal of restrictive practices which have been hugely damaging, need to be tackled urgently. The figure being spoken of, namely, €1.3 billion on the spending side, is a mere stumble in the right direction. If the necessary medicine is meted out equitably, the people will accept it, which is in keeping with the tenor of the Minister of State's remarks. I hope that will be the outcome of the budget.