Michael D'Arcy (Fine Gael) | Oireachtas source

The Minister is welcome back. He always gives us the benefit of his time. I agree with Senator Byrne, in that none of us on this side or the other is here just to blow kisses and backslap. Any time we can make a positive intervention, it can only be of benefit to many people.

We have made progress, but many challenges remain. One of the largest has probably taken up more of the Minister's time than anyone else's, that is, returning the banks to a functional state for a functional sector. How real are some of the banks' restructuring solutions? Mr. Boucher stated that the Bank of Ireland did not do write-offs. In that case, Bank of Ireland will not be in a position to resolve some people's issues. For some, there must be write-offs. On the other hand, AIB was the first to come to the table and agree to carry out write-offs under certain circumstances.

There is good news concerning the NAMA sector and its first cousin, the IBRC liquidator. Some commentators and politicians claimed that NAMA would exist for 20 or 30 years. Something similar was claimed about the IBRC liquidator. Last week saw the sale of the Projects Rock and Salt portfolios for €7.7 billion and the Project Sand sale of a financial instrument involving 13,000 or so mortgages for €1.8 billion. The latter is a cause for concern, though, as we expect the protection of the State to be available for those 13,000 mortgagors. When a representative of the Department of Finance addressed our finance committee on this matter, she expressed the Minister's opinion that, if the Central Bank was not in a position to acquire the agreement of bidders for that loan book, the Department would move with legislation. I support that approach. This House has sat early and late and would be prepared to do so again to ensure protection for people.

There are some positives. Motor sales have increased 8.9% year on year. This is pushing in the right direction. According to the Department's figures, €2.1 billion in VAT was accrued in February, representing a 7.1% increase on the same period last year. This suggests that people are prepared to spend. In the past, nowhere did people spend more than on property. There is a concern that some areas of Dublin's property market are heating up too much too quickly, but the drop in prices outside the Pale seems to have concluded. The natural extension is that property prices will increase.

Ten of the 14 sectors analysed by the CSO have seen job increases, which is to be welcomed. Agriculture saw the largest increase, followed closely by the hospitality sector. The 61,000 new jobs year on year must be welcomed. Unemployment remains too high at 12.1%, of course. As the Minister stated, the unemployment rate was 15.1% when the Government took office, but everything is relative and I do not want to beat up the previous Administration. The current level of 12.1% is too high and the objective is to reduce it further.

Nothing radical has been done in respect of rates yet, particularly for small to medium-sized enterprises, SMEs. I do not suppose that the Minister or the Department of the Environment, Community and Local Government can do anything about this until local authorities put their own houses in order. It would be a pointless exercise until the cost of doing business with local authorities was reduced to its absolute minimum. The Minister has the opportunity to reduce the rate overall. While a small reduction for the SME sector would not make the difference between their staying in and going out of business, it would have an impact on the €1 billion that is accrued from rates every year. The largest ratepayer in County Wexford is Tesco. Its profits are decreasing, but it remains the most cash-rich company. We do not want to give such businesses a break. Rather, we should consider something radical in respect of SMEs with three, four or five employees, perhaps a tiered system in which the large multiples paid more and the small units paid less.

The middle sectors of all societies never get a break. They pay all of the high taxes. VAT, employer taxes and income taxes are all at the maximum. If they increased further, there would only be diminishing returns and a growth in the black market. They rarely get grant aid of any nature, yet they drive the economy. The Minister has discussed this matter previously, but if it was possible to give middle Ireland the benefit of tax reductions, we would get the money back. More people would be hired in the process, creating a loop of employment that would benefit the Government's tax take.

I wish to touch upon where we are nationally. Fitch Ratings upgraded us to BBB+. We face challenges. This year's deficit is 4.8% of GDP. We will borrow €10 billion, which will be paid back at some point, perhaps not by us, but by our children or grandchildren. Our debt to GDP ratio was 124% at its peak. We anticipate that, as growth in the economy resumes, it will be easier to reduce that ratio.

Senator Barrett has referred to financial stimuli around the country. These projects must undergo cost-benefit analyses. They cannot be the pork barrel projects of the past. It happened in every jurisdiction. Whatever money we have, we must ensure that it is well spent and employs the maximum number of people possible.

Nothing radical has been done in respect of rates yet, particular for small and medium

I would like to see that cost benefit analysis done for every stimulus package. We spoke about the children's hospital. That must happen but there are other areas in which we are investing to employ people. The VAT rate reduction was the right thing to do but more analysis must be done to ensure we create more jobs. We would then be going in the right direction.