Paul Coghlan (Fine Gael)

I welcome the Minister of State, Deputy Haughey. I listened to Senator Boyle with interest. I thank the Minister, Deputy Brian Lenihan, for his overview of this very large Bill. I hope the Minister and Senator Boyle are correct that there are hopeful signs the economy is beginning to stabilise and that there will be small signs of growth by the end of 2010 and more positive growth by the end of 2011.

As Senator Boyle said, the restoration of confidence is a nebulous and intangible thing. Without it, so much is lost and its presence is so important that it is part of the key to the problem. Having seen how my part of the country has been walloped, as it were, in recent times and how its tourist trade has suffered, I am greatly concerned for the future while hoping Senator Boyle is correct about the positive signs.

With regard to tourism, my area lost 1 million overseas visitors in the past year, there is a massive oversupply of bank-backed hotel rooms which are threatening viable businesses and we are being crippled by the Government's ludicrous departure travel tax. As we approach the summer months, it is incumbent on the Government to do all in its power to breathe life into our tourism industry, which, it would appear, is being allowed to die a slow and painful death.

Our largest tourism market, the UK, declined by 16% last year compared with 2008 and tourism revenue fell by €1.1 billion to €5.2 billion, its lowest level since 2004. There is no doubt that tourism in Ireland is hurting and in need of critical and life-saving attention.

The House is aware that at the annual conference of the Irish Hotels Federation in Galway recently, economist Dr. Peter Bacon said that the failure of banks to foreclose on insolvent hotels is damaging the long-term interests of the sector and is undermining fundamentally sound businesses. He went on to say that a quarter of hotels need to be closed and suggested that the orderly elimination of 15,000 hotel rooms is necessary before this year's peak season. What is more, an Irish Hotels Federation survey carried out in February revealed that 70% of hotels and guesthouses have experienced unfair competition from otherwise unviable hotels which are being supported by banks, and that some 88% of those surveyed said they are highly concerned about the viability of their businesses for 2010.

It is estimated that the sector is €15,000 in debt for every hotel room and only 5% of hotels are currently running a profit, as can be seen from current occupancy rates and the deals on offer which are clearly unviable. It is my hope that any wind-down of businesses will take place in an orderly fashion and that Fáilte Ireland see the merit of funding a significant home holiday campaign aimed at reviving what remains of this ailing sector.

Further damage is being perpetrated on the Irish tourism market by the Government's stubbornness in retaining the departure tax. Aer Lingus has stated the tax will cost the company €30 million this year and Ryanair has reduced routes and lowered capacity, which is nailing the industry in a big way. The Government's adviser, the Tourism Renewal Group, has called for the abolition of the tax as a survival action for the industry but the Government has spectacularly failed to listen. Other European countries with similar taxes in place have moved to remove barriers to access in a bid to stimulate tourism. Why do we not do something similar? My region has suffered greatly and there is suffering throughout all the regions due to the infliction of detrimental Government policies. I call for these issues to be addressed and for a concerted effort to be made to get what remains of our tourism sector off the floor and up and running again before it is too late. I do not understand why a suitable amendment to the Bill could not be made. I call for such an amendment and I would like the Minister to respond on this point.

The hotels which are being effectively prevented from closing by the banks, even though they cannot be run profitably, are being kept open for the period of seven years required for the purposes of the tax relief but to the detriment of viable businesses. Surely a mechanism could be found and a suitable amendment introduced to allow them to close without loss of the tax relief, as has been recommended by the economist Dr. Peter Bacon and others and adopted by the Irish Hotels Federation. As it would get over the difficulty, I recommend we take this course of action.

Allied to this, section 28 also requires amendment. Westport House was referred to but I also wish to refer to two other great heritage properties of which we are very proud, Muckross House and Killarney House. Perhaps an amendment could be made to allow for funding for Killarney House in particular as it is practically in the town of Killarney although within the national park. The house is being allowed to deteriorate rapidly and, while I understand some meetings were allowed in the house by the national parks and wildlife service, these have ceased owing to alleged severe water damage caused by the very heavy rains of winter. I ask that section 28 be amended to allow for funding in this regard. Funding has been promised in recent years but, to my knowledge, not a cent has been spent on works to improve that property which, sadly, is being allowed to deteriorate so much it is now in a dilapidated condition.

The economy has been badly affected by the domestic property crash, the global financial crisis, the recession in our export markets and the weakness of sterling. Economic activity as measured by gross domestic product fell 7.5% in 2009. We face three major economic problems: a large budget deficit as a result of the slump in Government revenues; the banking crisis caused by excessive lending to property as well as the international credit crunch; and loss of competitiveness reflecting the fast-rising costs during the boom years and, again, the weakness of sterling.

Much reference has been made in the House to the question of the banking sector, including earlier today when the situation at Anglo Irish Bank was mentioned. No one wants to see bad example or wrong signals being sent out. In the 70 or so cases perhaps it may be the rate for the job in order to improve the bank's future. However, I think it is a bit thick for the Department to say that neither the Minister nor the Department has a responsibility as this does not ring right when it is a nationalised bank, if I may say so. Proper explanations need to be provided and these may be in train.

The Minister took steps back the line to limit the salaries of top banking executives and he was supported on all sides in this and the other House. We must take note of what is happening, particularly in a nationalised institution. We would all like to see it develop, if possible and, as the Leader has stated on a number of occasions, into another Industrial Credit Corporation, ICC, which did so much good work in the past for the economy. I do not know if this is possible.

We are sending out the wrong signals. I accept there was a complete clean-out in the case of Anglo Irish Bank but I firmly believe we are not repositioning ourselves correctly if, as it seems, so many bank directors and top management remain in the other systemic banking institutions. These people were responsible for the disastrous lending policies that got us into the present trouble. These people have no regard for prudential banking or for required liquidity ratios. We know about light-touch regulation which was equally disastrous.

I have concerns from the State's point of view. When the recapitalisation was begun, the Minister correctly took a 25% preferential stake in both AIB and Bank of Ireland and also assisted one or two other institutions - two building societies. He placed public interest directors on the boards. These are all excellent people and I have no quibble with them. However, seeing this is a rolling process, so to speak, or creeping nationalisation, depending on what way one wishes to look at it, the Minister, no more than the Department, probably does not yet know what will be required because there may yet be something to be heard from Brussels in regard to the banks' own plans for their short-term five year recovery approach. In regard to State aid rules, I am not too sure if Brussels has signed off fully on them. It sanctioned NAMA, thanks be to God. In addition to NAMA, there is also the possibility we need something of the good bank-bad bank policy concept. This might be very relevant in the case of Anglo Irish Bank. I await the Minister of State's response on this matter.

It is a bad policy on the part of the State to allow people at the highest level of management and on the boards, who were there during all the time of the disastrous lending policies, to remain for the period of the rescue attempts. This is not good example and it does not position us well or properly. I await the Minister of State's response. I am sure the Minister for Finance has the power to appoint further public interest directors and I recommend he does so. It is only when the transfers to NAMA are complete that we will know fully what will be required from the State by way of further recapitalisation. It appears the taxpayer will own in excess of 50% in the case of the two large banks. Few people in this House want to see nationalisation and I certainly do not. However, there will be a further capital requirement. In protecting the public interest I expect the Minister to act. It is only by having everything in proper order that credit can be made available to assist our economy and businesses in every town, village and city in the country in a proper and orderly fashion. There is too much of an overhang at the moment.

I will not have time to refer to a number of other matters, such as primary care services and the car rental business.