Ivor Callely (Fianna Fail)

I welcome my colleague, the Minister of State at the Department of Finance, Deputy Martin Mansergh, back to the Chamber. I note the Minister of State has spent much time in the Chamber over the past few days, weeks and months, as well as the Lower House. I understand the Minister of State has additional work because our good friend and colleague, the Minister for Finance, Deputy Brian Lenihan, is unwell and hospitalised currently. I take this opportunity to wish him a full and speedy recovery. It is probably a reflection of the amount of effort, work and personal commitment the man has put into his portfolio over the last number of weeks and months, much to the benefit of this State.

The budget and the emergency financial measures that the Minister, Minister of State and colleagues in Government have produced show that Ireland is capable of addressing its problems directly. The budget represents a comprehensive approach to addressing the problems faced by this country. I listened with interest to Senator Harris's comments and that is exactly what the Government is doing in a very courageous way. It is not alone what it has done this year but what it will do next year with the additional changes to be introduced. It will result in a more robust tax system which is more suited to the needs of a country with a young and increasing population and in which there will be many reasons to be optimistic, despite the current gloom.

We have suffered from a combination of internal and external negative economic factors. However, the business cycle is changing and the fundamental attraction of Ireland as a place to do business will return. The Minister has announced that the international economy has exited recession and that recent indicators suggest economic activity in Ireland is turning the corner, which is good news. The number losing their jobs has stabilised and the appalling job losses of the early part of 2009 have, I hope, come to an end. Ireland needs to ensure it maintains its attractiveness as a location for multinational investment, indigenous enterprise, jobs and export-led growth. It is only by doing this that we can earn our way as a country with profitable enterprise, increasing employment and the means for the State to provide services for those in need and jobs. The decision not to increase income tax is correct at this time, given the reductions in private and public sector pay rates.

Corporation tax yields significant revenue for the Exchequer. A total of €5 billion was collected in 2008, down from a peak of €6.7 billion in 2006. Foremost among the budget announcements was the commitment by the Minister to retain our 12.5% corporation tax rate. This is good news for existing foreign investors in the economy who might otherwise have had to explain to their head offices why they should stay in Ireland. It will also help us to maintain our rate of capturing new foreign direct investment and to give a confidence boost to the indigenous sector. The rate, as the Commission on Taxation and the Minister have both pointed out, is part of brand Ireland and part of our attractiveness as a location for high value export oriented manufacturing and services. The extension of the three-year corporate and capital tax exemption for start-up companies in 2010 is also welcome. Start-up companies are the acorns in the forest and should be supported and nurtured.

I have been a contacted by a number of people, including accountants, about the deadline for registration for the capital exemption scheme for nursing homes which is due to expire this month, with the completion of projects set for June 2011. Everybody faced issues this year, given the economic conditions, bank lending practices and the availability of investors. Projects in the pipeline have not reached fruition and will not meet the deadlines set for the scheme. We need the benefits that will accrue from the scheme because of our demographics. We, therefore, need beds in the system. Will the Minister of State kindly revisit the scheme and make an early announcement? The earlier, the better, but if cannot be done this side of Christmas, clarification should be provided early next year. I am happy the Minister of State may have to contact others, but I would like him to give an indication to the House.

The reduction in the top rate of VAT to 21% is a small but significant improvement. The reduction in the rate of excise on alcohol products will mean that there will be better value to be had in the South when compared to the previous situation vis-á-vis Northern Ireland. I support the calls made by others regarding excise duty. While this issue only affects wholesalers and I acknowledge there are swings and roundabouts, the benefits were not great during the years the budget was announced in January because stocks were not as high after Christmas as before it. I hope an amicable resolution can be reached on this issue.

Small businesses are being starved of credit for working capital and development purposes. In some cases, this is a reaction to the capital constraints on the banks, but in others it appears more to be an unwillingness to extend credit. Even though businesses may be trading profitably, their credit facilities are not being renewed or expanded, as was the case, and companies are at risk of failure because they cannot access credit, which is unacceptable. The credit appeals mechanism announced by the Minister in respect of SMEs, farm enterprises and sole traders is welcome. The facility will also enable a review of the credit policies and practices of the banks in regard to all SME sectors, with particular attention being paid to the retail sector, tourism and agriculture. That is welcome. Perhaps provision should be made for a review every six or 12 months to make sure it is working.

We must reduce the cost base faced by consumers and businesses. In particular, it needs to be ensured there are incentives to reduce costs and increase productivity and service delivery in all areas in the private and public sectors. This means, for example, that the semi-State sector cannot be immune from the pay adjustments throughout the economy. There is an enormous number of such bodies and a clear message must be sent to them that their rates of pay from the top down must not be excessive; the overheads such as rent that they incur must suit their requirements and that their manning levels and procedures must be compatible with the efficient and effective delivery of services. The message must be clear that all salaries and wages paid from the public purse need to be reduced in line with the reductions suffered by public servants and private sector workers through pay reductions and job losses. They are expecting it.

We need to encourage strong competition in any area in which there is excessive profit taking by opening these markets to robust competition. Our overall borrowing requirement is made up of structural factors which the reduction in public sector pay will address, international cyclical movements which are beginning to adjust, and capital investment requirements.

The Minister announced a new single scheme for all new entrants to the public service in the context of future pay costs, which is a necessity. The escalation in pay and pensions costs left no alternative but to do this. The potential effect of the changes proposed will be profound. It is estimated the changes will reduce the actuarial cost of public service pensions from an estimated €108 billion to €87 billion.

Apart from the economic aspects of the budget, I would like provision for additional support for the community and voluntary sector to be made in the finance Bill. These organisations play a vital role in the social fabric of Irish life. I propose a mechanism, whereby individuals could earn additional funding for their charity by doing unpaid work of between 50 and 200 hours per annum.