John Gerard Hanafin (Fianna Fail)

To give credit to the Taoiseach, he took the necessary steps to ensure the stability of the economy and our standing. He never once looked at the political implications for Fianna Fáil, rather he did what was necessary for the State. Given the situation in which we found ourselves at the time when world markets and the banking sector were in such a state of crisis, we took the necessary and difficult steps. That was despite the misrepresentation and fault lines that appeared between the Labour Party and Fine Gael on the bank guarantee, a fundamental tenet in ensuring our stability and which proved that any agreement between the two parties would not be in the best interests of the State because they could not agree on what was absolutely necessary. We took the tough decisions and did what was necessary. We are now ready to move further forward, given the level of growth in the last quarter of 2010, the position in world markets and the expectations for 2011 when the economy of the United States is expected to grow by 4% and the European Union and our other trading partners are expected to move forward. We will see growth, possibly stronger than the conservative estimates of the National Economic and Social Council.

We have restored competitiveness, repaired the banking system and are returning the public finances to stability. In taking the necessary measures we have had to make cuts. I accept there has been deflation and that people have lost their jobs. It is the concern of the Government to ensure we put people back to work. We see evidence of this already in that the rate of unemployment is falling. I accept emigration is a factor, but we have witnessed this previously. I look forward to the day when people will have the opportunity to return to the State because of the necessary measures we have taken.

We are expected to believe people who have an insight into politics which enabled them, in a sense, to politically see around corners were taking decisions to support bankers, as if they would put bankers before the people. The short-term soundbites and the ill-informed knee-jerk reactions do not do justice to what the Government has undertaken on behalf of the State. I look to the balance the Government has sought to strike in the public finances. When there were cuts, efforts were made to ensure the least well-off did not suffer. During the time when there was a surplus, it was not as if the Opposition was saying, "No, you have made the wrong choice; you cannot increase public spending. We want less money spent on schools and hospitals." Across every sector and Department, no matter how much was spent, there were calls for more spending. The Opposition parties had no special insight; it did not foresee what happened, except to throw the usual brickbats at the Government. They are the very ones who now accuse the Government of not seeing what it should have seen, of not knowing about the property bubble, despite the fact that the Fine Gael manifesto for 2007 proposed the complete abolition of stamp duty, throwing petrol on the flames of the fire.

We have been in this position before. Not only that, we were in a worse position previously. In the 1980s the debt to GDP ratio was 130%. Although there was an unemployment rate of 18%, we paid interest at a rate of 16% to 18%. There was sustained unemployment and emigration, yet we were able to turn that around. In the 1980s we paid more than 30% of our net income on interest repayments. Currently, our debt to GDP ratio is approximately 100% and before it turns, it will hit 120%. We also know that the economy is growing. We are paying 20% of our net income on repayments as we have access to cheaper funding than we did at the time. It is incorrect, therefore, to present the situation as a missed opportunity. It is also incorrect to say anyone else knew that this was coming down the line and that the recession would happen. We did save the economy because had we defaulted on our banking obligations, there is no doubt that, with the globalised economy, the amount of money that would have left the Irish economy and the inability of the Irish banks which might have looked to remain standing to access funds used in the normal course of business from other banks would have dried up immediately. The result is that banks would have failed and could have closed. Where would we have been then?

The taxation measures we have taken have always been taken with an eye on ensuring balance. The starting point in respect of the universal social charge at 2% is very low, being significantly higher for those earning more, as it should be in any progressive taxation system. Again, those who have more will pay more. Previously, 45% of people paid no tax. There will now be more people in the tax net. The reality is we have significant social services that must be paid for. The model on which we are now working is sustainable, which means that we must raise more in taxation in order to provide services.

There are other positives in terms of taxation measures such as the employment incentives in the form of reliefs for those who invest in employment creation. We will continue to ensure the 12.5% corporation tax rate is retained. It is the icing on the cake. The other positives are our competitiveness, our educated young workforce and the fact that the IFSC and multinationals are again contributing significantly to the economy. We have seen 18% growth in exports, even in the worst years of the recession.

As we emerge from the recession, we must balance income with what we need to spend. I am conscious of the fault lines in the proposals made by the Opposition. One side suggests it would cut the number of public servants and abolish the Seanad. Those of us who have given our working lives to politics to try to do better or ensure the public service is functioning properly would be asked to just go. I suggest the better way would be to have a much fairer taxation system in order that we could ensure those who did provide a service would be retained. The public service provides a service for the State and has an economic value. A previous Member suggested we were not petty as a people. Having a second Chamber is one of the classic forms of government. It is in existence to provide balance and a second voice. Let us consider the amendments made in the past term and the number of amendments to legislation we have made, sometimes at the request of the Dáil and sometimes of our own volition: some 2,000 or so have been made. Let us consider that one third of all legislation is published here and that often Ministers who arrive in this House take the view that the best debates take place here because they are done not with a view to the local constituency but to the national constituency. With this in mind, are some of the cuts proposed in the sound bites not somewhat petty?

We need balance in the economy and we must look to people who are less well-off. As we face into the election, the debate should focus on how we use the resources we have to ensure social equity and it should be balanced. I expect there will be a four-week campaign such that the knee-jerk reaction can be taken out of the system and we can hold a true debate, without snide personal remarks, not on personalities but rather on the issues. We must focus on bringing a proper election option to the public.

I am pleased that property related reliefs are being considered, especially in light of the great number of tax breaks overhanging. Some people who invested at one time may be significantly disadvantaged because they invested significant amounts based on the taxation system. I welcome that the Government has decided to defer a decision on this matter such that social equity can be addressed in any changes. I also welcome that we will ensure a reduction in stamp duty. This reduction will ensure that the property market will find a better ceiling and floor for the prices achieved for properties. A great deal is dependent on the values of properties in the banks. It has always been clear to me that we must find value for properties in this State. The fact that the Government has reduced the amounts of the property-based tax significantly will ensure this at a time when property values are falling.

Recently, I heard a suggestion in the House which was most interesting and I call on the Minister of State to take it to one of his officials. Perhaps there may be some means to produce a report on it. There are advertisements on international television stations for the Malaysia My Second Home programme. As part of the programme the Government allows people from outside the state to buy properties there. It also allows them to bring in a car at a lower VAT rate and it provides access to certain visiting rights, visas and so on. Given the expatriate population of the Irish and the overhang of property here, would it not be a wonderful suggestion to examine how we could incentivise people to purchase properties in Ireland and provide incentives to ensure those who are wealthy and abroad, who have Irish connections and who wish to return could benefit? We could benefit as well. This was Senator Feargal Quinn's suggestion and once I heard it I thought it was one of the best suggestions.

I call on the Minister of State to address a particular interest of mine, that is, the green energy sector, whereby we could be the Saudi Arabia of the world because of access to tidal and wind power and the other benefits we have as an island nation off the west coast of Europe. The presence of offshore resources is significant. I have long believed Europe should have a place for offshore. We have drilled little: only 170 wells have been drilled but we have found significant resources in Ballycotton, Seven Heads, Helvick and Corrib. This represents a good hit-rate. In the UK and Norway, some 4,000 wells have been drilled. Our national boundary for energy resources extends some 200 miles into the North Atlantic. Would it not be of benefit for Europe to take a direct interest in our offshore resources? What a great boost it would be for Ireland to see the first commercial oil reach our shores. What a boost of confidence that would represent. I leave such suggestions to the Minister of State in the full knowledge that there will be an election and a new Government will be formed but I call on the Minister of State to ask an official to examine this option to put in place what I hope would be useful suggestions that may benefit the State.

The Finance Bill as outlined represents a mixture and a balance. There are increases in taxation where necessary. We realise we will pay somewhat more in tax but we have achieved stability against the most difficult headwind possible. We are back to growth and there is a future for our people.