Paschal Mooney (Fianna Fail)

I thank Senator Ormonde for sharing time. I join with Members on all sides of the House in thanking the Minister for coming to the House to take Second Stage of the Finance Bill 2010, which is probably one of the most important Bills of its nature to be introduced in either House and is critical to the future of this country. I welcome the Minister's acknowledgement that the budgetary provisions outlined prior to Christmas and now to become law under this Bill have attracted significant international approval. I accept this may not seem all that important or relevant to those people who have lost their jobs in the current economic downturn. It is critically important for the future of this country that we keep our costs down and that we improve our competitiveness.

The reaction of the international investment community to the budgetary provisions introduced, harsh as they are, has been positive. The cost of servicing our national debt is decreasing and the cost of borrowing has significantly decreased. We are now within 1.5% of the German rate as compared with the cost of borrowing for Greece, the latest EU country to suffer severe budgetary difficulties. This shows a remarkable turnaround in the fortunes of Ireland during the past 12 months. It does not seem all that long ago that we were facing a Doomsday. The decisions taken by Government, unpopular as they are as acknowledged by the Taoiseach, Minister for Finance and Government and readily acknowledged on this side of this House, were necessary. The national interest must sometimes surpass any narrow partisan interest.

I was somewhat bemused to hear Senator Alex White attack the budgetary policies of this Government. I have yet to figure out where exactly the Labour Party stands on a wide variety of issues in the economic area. It reminds me a little of the famous dog of Irish folklore who walked a little bit of the road with everybody. Populist policies, no more than anger, do not create effective policies. I applaud the leader of the Labour Party who yesterday publicly called on the staff of the Passport Office and others in the public service involved in industrial actions to call off that action while talks are underway. I cannot understand why they persist with this industrial action when talks are as we speak taking place in Government Buildings. In the private sector, as pointed out by those working in that area, this would not happen. It would be unacceptable that a dispute would continue while talks are underway. I want to add my voice to that of all others who have spoken during the past two days of the intolerable inconvenience and anguish this is causing to ordinary people. Those in the trade union movement who decided on this policy and believed it would be seen as an attack on Government which would somehow bring it to its knees or reverse its budgetary policy are, I am sure, looking on in horror behind closed doors - they will never admit it publicly - at the public reaction to what they are doing. I hope commonsense will prevail. I have every confidence that the talks underway in Government Buildings between the trade union movement and Government will resolve this issue. Talk always resolves issues. Politics is about the art of the possible and the trade union leadership are fully aware of the difficult budgetary environment in which we are operating. I wish the talks well.

In the context of the criticism of Government, it is often forgotten - this needs constantly to be repeated - that we simply do not have money. It is costing more than €55 billion to service our economy, to keep people in jobs, to pay bills and so on. All we are taking in by way of tax revenue is €35 billion. The remaining €20 billion must come from somewhere. Had the Government not taken the decisions it took last December, I shudder to think what state this economy would be in now. Would we be like Greece, now relying on the IMF? It would be unprecedented for the IMF to bail-out a eurozone country. Would we be like Iceland which continues to try to recover from its economic Doomsday situation?

Like other speakers, I welcome a number of the initiatives included in the Finance Bill 2010, primarily because they appear to be working even at this early stage. There has been a decrease in unemployment. Again the House needs to be reminded that the Government is paying well in excess of €600 million to maintain more than 70,000 jobs in respect of people on short term working in the private sector. These people are working a three-day week because their employers are unable to provide five-day week employment. The Government is effectively paying to keep them in their jobs. These 70,000 people are included in the 430,000 figure referred to as being the total number of unemployed people. If one strips away the 135,000 to 145,000 people who could not or would not work during the economic boom and one adds that to the figure of 70,000 and includes the other 70,000 people in receipt of Government subsidies, the net unemployment figure is significantly reduced to well below 300,000, which everybody accepts is still totally unacceptable. That is what this Finance Bill and Government strategy seek to address.

I congratulate the Taoiseach on his Cabinet reshuffle yesterday. I wish all of the new appointees well in their new positions. What appears to have been forgotten in the media frenzy that surrounded personalities is that at the core of Government strategy is a focus on job creation. All the changes at departmental level, apart altogether from the appointments made, are geared towards upskilling those who are unemployed, improving the competitiveness of the nation and the creation of more jobs. That is what is at the core of Government policy as reflected in the measures of this Finance Bill.

Economic commentators are suggesting that because we are an open economy our growth will be export led. I caution that that perhaps may not be the panacea that is being suggested. The UK has been effectively printing money for the past 12 months. Its largest trading partner is the eurozone and yet it remains in recession. Growth in the eurozone is, to say the least, sluggish. The German economy has not yet started to show growth despite its being one of the largest export led economies in the eurozone. I suggest that the Minister go further than he has in this Finance Bill by introducing some economic stimulus. It has been already shown that the introduction of the car scrappage scheme has stimulated employment or at least stopped the haemorrhage of jobs from the motor trade. It also generated significant economic activity and has been proven to have worked in other countries too. This is an example of where the Government might in the short term appear to be losing tax revenue but in the medium term is generating more revenue owing to economic buoyancy. Towards this end I ask, speaking as a person coming from the tourism sector, that the Government seriously consider as we come to the summer season significantly reducing VAT on restaurant and hotel meals. This particular stimulus has been already initiated and is working well in other tourist countries on the Continent, in particular France, which are competitors of ours. This would not, in my opinion, result in a reduction in tax take but would stimulate extra business and would assist in preventing a haemorrhaging of employment from the hotel and leisure sector. It might encourage people to eat out, which they have not been doing. It was reported yesterday that at least one restaurant a day was closing down, which is extraordinary.

There may be some value in considering a public works programme to be operated by local authorities. For many years the FÁS schemes operated very effectively in cleaning up towns and villages and enhancing urban environments. The programme seems to have been reduced significantly as a result of the budgetary cutbacks. There are many people, particularly in rural areas, who want an excuse to get up in the morning to go out to work. While they may not necessarily have trained for such work, many, particularly those who have been relying on farm income, would welcome such a stimulus.

The Minister might elaborate somewhat on the national bond which, in effect, is another way to print money legally within the European Union. The announcement was made in the budget and the Minister made reference to it in his Second Stage speech, but he did not elaborate on the modalities of how it would work. The country will respond positively once it is launched. I am interested in hearing more information on it.

I refer to one of the more intriguing proposals in the Bill, the inclusion of the principles of Islamic finance in the Irish finance system for the first time. Colleagues may not be aware that Islamic equity funds are a growth industry and estimates of the worth of their assets run to €3.5 billion worldwide. There is thought to be almost €1 trillion in assets under management according to Islamic principles worldwide. As the market in this sector is growing at 10% per year, it does not take long to realise that soon more and more lenders and companies will start to offer products that fit the requirements of such a clientele. Now that Dublin has a mosque, it will not be long until we see an Islamic window opening.

I do not want to go into the details of why this measure has been introduced. Primarily in Islamic finance, usury or the collection of interest is forbidden. According to the Koran, there are many laws surrounding contract and general dealings. Sharia law is complex in how it influences Islamic banking practices. The challenge will be to create compliant products that match western products. Having said that, perhaps the focus may be on a more western-driven concept and adherents may be willing to accept less in order to remain compliant to their faith. In any case, we can expect to see at least some Islamic finance products on offer in the Irish financial market at some stage. The Bill makes significant moves towards creating Ireland as a centre of Islamic finance outside the Middle East, which is to be welcomed. It will be interesting to see how the initiative develops. Obviously, it is one that has been given serious thought in the Department of Finance and I hope the legislative proposals in the Bill will open the way to creating another important channel of finance to help the budgetary position.

We are still in extremely difficult times. The budget is one of a number addressing the particular difficulties and challenges facing the economy. It is not an easy time, particularly having come out of a very profitable and affluent period. The suddenness of the downturn has caught everybody by surprise, even to the point of shock. I am convinced, however, that if we continue to maintain the budgetary proposals contained in the Bill and our budgetary policy, we will come out of it sooner rather than later.