Michael D'Arcy (Fine Gael) | Oireachtas source

I have sometimes been very critical of Senator Byrne but I thought his contribution was sharp and on the ball. I do not give positive praise to the Senator very often but on this occasion, it was deserved. I want to start where Senator Byrne finished in regard to household debt. The increase in the ratio of debt to disposable income from 2002 to 2012 has been astonishing. It has gone as high as 2,013%, peaking at ¤214 billion which is an incredible figure.

Taking the adverse scenario, in five years the figure will still be 150% of disposable income, effectively meaning that between now and then we will maintain that high ratio, which is where the ratio is in the UK today. This means people will have a poor spending power, leading them to save and become more careful with money. If they do not spend money, it is taken from the economy.

The predominant fear to spend in Irish society is a major issue for the Government to crack. People are determined not to spend. If they go shopping they may have a meal but not have a coffee, and if people have lunch they may not get their kids a soft drink. This is why, as Senator Byrne noted, the second quarter was practically flat, with only ¤3 million in the difference stopping us reversing into recession.

When there were major credit booms and busts in the past, the issues were rectified through the likes of inflation, which gobbled some of the cost; growth, which took more of it; and write-downs. As inflation is a little over 1% now, it will not gobble much. The figures for growth will be out tomorrow and most people will be surprised if the growth prediction for 2013 is 1%, which means it will not be helpful. We are left with reducing the debt burden through a write-down. From the discussions we have had about usage of what we hope will be a personal insolvency Act, it seems we do not know what will be the attitudes of banks.

I welcome the Personal Insolvency Bill, which will come before us on 21 November. A crucial aspect of the legislation will be the agreement between banks and individuals. This will take in hundreds of thousands of cases and I wonder if banks will have the capacity to deal with hundreds of thousands of cases on a one-to-one basis. A valuation Bill is ahead of us and we should take this opportunity to improve the system of rates. The silliest aspects of this comes from case law. For example, if somebody is in business and leaves a premises, the rates burden, if unpaid, stays with the premises even if some other party occupies it. That is crazy as it means premises are normally left without occupants. Money would be spent on a premises that should be used for business but instead it is left idle.

I will provide an example of the cost of living for a citizen. I was recently told that when a person filled a tank of heating oil three years ago, the cost was ¤430. It now costs ¤1,100 to fill the same tank. People are not spending elsewhere because the cost to fill a heating oil tank has nearly trebled. Spending power in other areas has been removed. People commuting to work are in a similar boat. My own town is a commuter area for this city, despite being 50 or 60 miles away, and people do not have spending power because of the cost of the commute.

I am not saying we should slaughter some of the sacred cows but we should analyse their cost. For example, there should be a reasoned debate on corporation tax. Some will say that this would scare corporations out of the country but I am not arguing for this. Nevertheless, we should analyse the effects of a very modest increase of 1% and see if this would scare companies. I do not know if these firms would run if our rate was 13.5% instead of 12.5% but we should analyse the figures.

The burden arising from our current deficit should not fall completely on the taxpayer citizens of this country.

A property tax will be implemented and people are satisfied to pay more in taxes that they know and understand. People know and understand the property tax, as almost 70% of people have paid the household charge, which will evolve into the property tax next year. If people are given certainty about the figure for a fixed period such as five years, some of the sting may be taken from the process. People need certainty and if the Government gives it to them, they will accept some of the burdens more easily than if it just tells them what is happening without a long-term view. A longer perspective will make these issues more saleable.