Paul Bradford (Fine Gael)

I am glad to have an opportunity to contribute to this debate on the national recovery plan. Its title is similar to the original plan for recovery in 1987 which, in fairness, led to a genuine degree of economic recovery at that time. In this much more difficult and financially disastrous time for our economy, it is vital that this plan or a variation thereof is equally successful.

There has been much talk about this plan during recent weeks. It was billed in strong lighting. I always had reservations, not about the final document but about the amount of credibility anyone could expect from such a document. In fairness, and this is not a party political point, economics is a moving boat at present in that we cannot determine with any great certainty the markets, international growth rates, the banking problem and so on. This plan is based on growth figures, some of which are deemed to be overly optimistic. Let us hope they prove slightly pessimistic and that growth does increase significantly, which would be of major assistance in turning around the future of our country.

The basis for this national recovery plan, even though flagged some months ago, stems from the fact that the Government was aware, even though we did not have any final announcements until last week, that there may well be a need for outside intervention from the IMF, ECB and so on and that such intervention could only come about with the production by Government of a substantial plan for the next three to four years. That intervention from outside agencies has come to pass. Negotiations between the IMF, ECB, other agencies and the Irish Government are ongoing at present, the fruits of which we will see soon. A plan was necessary and I wish the Government well with it. Regardless of what party presented the plan, I do not believe it does or could provide all the answers. Its whole basis is the projections for growth.

I have not undertaken detailed scrutiny of the plan but have heard various media, party political and brief summaries on it. I have also read the leaflet accompanying the plan. I was disappointed to read about the adjustment figures which, as outlined by my colleague, Senator Healy Eames, will pose further challenges in terms of cuts in resources. The adjustment figure portrayed in this plan comprises two thirds cuts or spending restraint and one third taxation. I am not an economic expert but then who is? Most experts have got it wrong anyway. There is substantial international advice, economically and historically, that such a proportion is not the best way to deal with adjustments, rather such adjustment should be higher on the savings side and lower on the taxation side. There is a substantial body of evidence to show that where an adjustment goes too heavily on the taxation side, it is a barrier to job growth and creation. What this country desperately needs next week, next month and next year, apart from the obvious political change, is a job creation strategy, which will be difficult to put in place when this plan proposes substantial increases in tax and VAT. My first note of caution is that the balance of spending cuts and taxation is wrong. Further spending cuts would challenge the numbers working in the public service. That would cause its own difficulties, as outlined effectively by Senator Healy Eames, but that is a debate for another day.

I refer to a number of specifics that jumped off the page. I am concerned about the proposed increase in VAT. When the Value Added Tax Consolidation Bill was before the House last week, the Minister of State pointed out that one third of the tax take was accounted for by VAT. There is room to add money to the State's coffers by increasing VAT rates, but it would come at the cost of jobs and not stimulating the economy. Therefore, this proposal needs further reflection.

I refer to the move towards property taxation. Ireland is unique in not having property or local taxes. During the reign of the next Government there will have to be a huge overhaul of the taxation system. We would be living in cloud-cuckoo-land if we did not acknowledge that such an overhaul would result in the introduction of local or property taxes or a combination of both.

This leads, in turn, to the reform of politics. Local government is as broken as national government and in need of urgent reform. When reference is made to growth, stimulus plans and the future, we must consider political reform and leadership. Perhaps the demand was not on the Government to address political reform, but if we are to reform the country economically, we have to reform it politically. That is not a party political point. We need a renewed local government structure with real powers, responsibilities and revenue raising and spending opportunities. That would transform local government. Many officials are trying to do so much with so little within the structures of local government, including through enterprise boards and ADM, Leader and partnership groups. Presumably, they do valuable work, but all of that work should be the function of elected local authority members. A medium-term strategy for structural and economic reform must involve local government and genuine political reform. The Minister of State who has a broad interest in politics will have read the Fine Gael document, Reinventing Government. If I was commenting on his party's proposals, I would say they were not perfect and I am sure he will say ours are not perfect, but, sadly, that is how politics works. There is a significant body of reform proposals in the document authored by Deputy Bruton that would transform this society and economy in a relatively short time. I hope the next Government will take on board much of what is contained in the document. A significant element of the economic crisis stems from a lack of political leadership at Government level, a lack of political debate at Oireachtas level and a lack of political responsibility among us all. That must change, but as I have said on numerous occasions, it cannot change within the confines of the current electoral system which puts a premium on potholes over policies. While recommendations along these lines need not necessarily be part of this plan, any reform programme for the economy, society and priorities will have to have a substantial chapter on political reform. That is missing from the plan.

With regard to taxation, I am sketchy on specifics, but reference is made to broadening the tax base which, presumably, will result in people currently outside the tax net being brought into the taxation system to pay tax. That will be difficult to accept for those affected, but we must adopt the principle that everybody should pay some tax. In tha regard, the broadening of the tax net is welcome. However, we must be cautious that we do not go down the easy to travel road of the late 1970s and early 1980s of piling tax increase upon tax increase, which was disastrous economically. That would generate a short-term fiscal dividend for the Minister for Finance, but it would cause economic chaos. This is not an ideological perspective. We must continue with a policy of low taxation and making it attractive for people to create and take up work. That issue is addressed somewhat in the plan through reductions in social welfare payments and the national minimum wage.

I am not disappointed with what has been produced because nobody could expect a new economic-social-political bible to emerge following a few months' work. This is necessary, presumably, to send a signal to the international markets and I hope our short-term economic masters, the ECB and the IMF, that we have a plan. I look forward to further debate on this issue. This is the beginning of a new book of political and economic reform, but it is only the first of what will have to be many chapters. Reform has to be at the core of everything the Oireachtas and society engages in in the next few years. There must be reform of our economic structures, thinking, politics and practice. We can blame the banks, markets and every other external factor, but, as politicians, we are responsible for taking wrong decisions and not taking others. We cannot remove ourselves from this. We need to create political space for debate, decision-making and new political structures in the years ahead. If we do, we will help to rebuild and regenerate the economy.

I wish the Government well with the plan. Its days are numbered, but, for the sake of the country, I hope we will see the beginning of the plan's implementation and, in conjunction with publication of the budget, we will create certainty for the markets and provide hope and optimism for the people. We are short of money, but, more than this, we are short of hope and confidence. The debate on the plan should, at least, lead to optimism and hope and a point where we will, at least, begin to speak politically about a new beginning. The next Government which I hope will be led by Fine Gael will have to take charge of the programme of national recovery. We will have new ideas, politics and policies to bring on board, but there is much in the document with which we agree and some which we will change, but I hope all of us can work together to rebuild and save the country.