Brian Ó Domhnaill (Fianna Fail) | Oireachtas source

I welcome the Minister of State. Today's debate on the Finance Bill is the copperfastening of budget proposals. I welcome some positive elements in the budget, particularly the tax changes on the agricultural side which will be beneficial to farming and relate to the issue of milk quotas which are being abolished from 2015.

It is clear from the budgetary arithmetic of the past three to four years that the focus has been on looking at all the spending lines and tweaking up or down without looking at the overall context of where we are as a country and where we want to be in ten or 15 years time. I said on budget day that one should never waste a recession. To some extent, we have wasted the recession because we have not challenged those who should be challenged, whether it be the sectoral interests or the banking interests, nor have we taken the opportunities to look at all the public spending and whether we are getting value for money in certain areas.

That did not happen and perhaps it should have happened. As Senator Quinn said, we are looking at bringing in more indirect taxation to balance the deficit. There will be a primary budget surplus next year for the first time in many years, but in real terms there will not be a surplus, because the interest on the loan must still be paid and that will give a general deficit. To meet that deficit new charges are being introduced. Some were contained in the four year plan, in the EU-IMF agreement, such as the property taxes that have already been introduced and the water charge that is being introduced. The latter is a consumption tax, which is in real terms one of the most regressive forms of taxation that can be brought in.

People could pay for the water through a consumption tax, like the water tax, or through general taxation, which is more progressive. There will be a major impact on lower income households through the consumption tax, which is the water charge that is coming in next year. That is why there are so many people marching on the street - those who can least afford to pay will have to pay the same as those who can afford to pay. There are families who cannot afford to pay an extra €30, €40, €50, €60 or whatever it is going to be. That is where the difficulty is coming from, from a political point of view for the Government, but also from a family finance point of view. I do not want to hog the debate by going into that.

Over the last four years there was a rigid adherence to the troika's plan. The troika is now gone and the Government finds itself having to make decisions on its own. It appears that has created certain difficulty since the troika left. Perhaps that is why there are so many people marching on our streets. There were opportunities to challenge the public sector cartels as well, particularly the semi-States companies. The new quangos created by this Government have effectively been given powers to dictate their own terms and conditions. That will have consequences not now but perhaps in five or ten years time.

The banks were allowed to lean on the Department of Finance in terms of the new insolvency legislation. We see the new insolvency organisation having public meetings around the country which are poorly attended because the public knows the insolvency laws are not fit for purpose and the banks have been given all the power. It is only starting to come home to roost now, when the banks are exerting that power on individuals who are finding themselves in mortgage arrears. That will have a huge knock-on effect on the economy over the next few years. A commitment which was apparently given in 2012 that some of the banking debt would be absorbed into the new ESM programme or the backdated finance would be made available seems to have been going off the political agenda. That would have a huge impact on the future finances of the country and on our taxation model. If some of that banking debt could be evaporated into the ESM, it would be very beneficial. I know he is not directly in the Department of Finance but perhaps the Minister of State, Deputy Nash, could provide the House with details on that.

Other issues were also raised-----