Wednesday, 10 December 2008
Dáil Eireann Debate
Deputy Willie Penrose: I congratulate Deputy English and the Fine Gael Party on tabling this timely motion. We have had numerous debates in the House on the matter. We are speaking during the worst economic crisis since the Great Depression and the worst banking crisis in a century. We recognise this is a global crisis and requires a global solution. We in Ireland are fortunate to be participants in the eurozone. If we were not in the EU we would now be like Iceland, which is totally bankrupt, reliant on a bailout from the International Monetary Fund and with people getting extremely angry.
Over the past decade the Government has reduced taxes and increased public spending as if it believed the boom would last forever. When Labour was last in office and Deputy Quinn was Minister for Finance, growth in public spending was 7.25% and inflation was 2%, slightly below inflation in the rest of the EU. Between 1998 and 2001 public spending increased by 80%. This increase occurred as we were approaching full employment which led to our inflation rate rising to 4.2%, twice the rate of our EU partners in that period. The motion zones in upon this important point. Price inflation inevitably led to wage inflation which in turn eroded our competitiveness. Between 2002 and 2007 the volume of world trade increased by 50% while the volume of Irish exports of goods rose by only 10%. Our earnings from exports of goods have stagnated since 2002 and were it not for exports of services and an inflow of investment income we might have a balance of trade deficit.
I disagree with the Minister of State, Deputy McGuinness, on this point. The level to which public spending was increased was not the problem as there was a desperate need for most of the increases in spending. The problem was that the increase occurred so rapidly, with little assessment of value for money in many cases and that the spending was not funded by sustainable tax revenue. Now that the economy is in recession there is a panic-stricken attempt to suggest that we have a huge and inefficient public sector that we cannot afford. As several reports have shown, Ireland’s public sector is small compared with other EU countries and is not as inefficient as it is being portrayed. I fully accept there is some waste and inefficiency in some areas but even a hyper-efficient system cannot deliver services similar to those in the most developed EU countries from spending what is a much smaller share of GDP.
We need a reasoned debate on the public sector, what we expect from it and what we are willing to pay for it. We must accept that we cannot have European-style social services and a US-style tax system. Deputy Costello will speak about the accident and emergency unit charges and the impact they have. I congratulate him on his long-running campaign on the Mater Hospital in which he has been to the forefront in trying to ensure people get a decent and sustainable service. That is where public service money should be spent to ensure people have equity of access and treatment in the health system. The Labour Party is focused on getting good value for the money spent on public services.
The recent budget was a very ham-fisted attempt to reduce spending while the tax increases are unlikely to bring in enough revenue to significantly reduce the deficit. A recent TNS/MRBI poll showed that those hit hardest by the budget were those on lower incomes with more than 70% of working-class and working respondents saying the budget was too tough while only 51% of middle-class families had this view.
Export-led growth, which is the only sustainable growth for an open economy like ours, has slowed to a trickle since 2001. Most people did not notice the end of this growth because it was replaced by the property boom. An increase in population led to increased demand for housing which fuelled a construction boom which required more immigrant workers who needed more houses to live in. That was a cycle which any economist not in the pay of the building industry or the banks could have predicted would end in a drastic slump. The continuation and expansion of tax incentives for the building industry long after it was clear they were no longer necessary led to building and construction growing to 13% of GDP when the average for the rest of the EU was 5%.
The survival of viable and potentially viable small and medium businesses is now threatened by the unwillingness of banks to lend, not because the businesses are at risk of failure but because the banks are desperately trying to attract deposits rather than give loans.
What needs to be done to get the economy out of this crisis? The first thing to be done is to recall Einstein’s famous observation that we cannot use the thinking that created the problem to solve it. As the present Government and its predecessors have squandered so much of the fruits of the boom the options available are limited and some of the measures announced recently may make matters worse rather than better. The Government has increased VAT just as the UK has reduced it, giving shoppers an even greater incentive to shop in Northern Ireland. We then have nauseating appeals to “patriotism” in consumers by a Government which has allowed the cost of living for lower income families to rise through the various charges Deputy Costello will outline while setting up a tax regime over the years that enabled many of the super wealthy to pay no tax at all.
Several local authorities are increasing commercial rates at a time when many small and medium businesses are struggling to survive. The Government has left many local authorities short of income with local authority workers being laid off. I note that Westmeath County Council is facing a reduction of €13 million and the council will struggle to maintain those in permanent employment. Commercial businesses face enough threats without commercial rates being added. Many people will be at their wits’ end trying to pay the existing service charges. I call on the Government to increase the allocation to local authorities to ensure they will not be levying such rates on small businesses.
Deputy Joe Costello: I thank Deputy Penrose for sharing time. I compliment Deputy English and his party on tabling this valuable Private Members’ motion. I agree with Deputy Penrose’s final point on the need for the Government to invest considerably more funding in local authorities so that much needed local authority work can be done.
The Minister of State will be aware of today’s announcement that the number of families looking for social and affordable housing under local authorities’ remit has increased from 43,000 to 56,000. The irony is that at a time when the economy was booming, particularly the construction industry, which constructed far too many private houses, far too few public housing projects were completed. In my constituency almost €2 billion worth of regeneration projects that were to have been built through public private partnerships have gone down the tubes. There is no investment and we are desperately trying to get local authority or Government funding to fill the gap.
I attended a meeting last night with residents of O’Devaney Gardens to try to reassure them that they would not be left in the lurch. It has already taken ten years to try to get the various administrations to inject the funding and get the development to proceed. We are no closer to it than we were when the entire process started. Tonight I have heard that another public private partnership in my constituency, the Croke Villas development, has collapsed. We will need to push the boulder up the same way unless the Government is prepared to invest money in the local authority and take up those projects itself. This would provide much-needed public service projects that would provide housing for the people who need it and employment for those in the construction industry.
The Government amendment to the motion is a work of fiction as the Minister of State must agree. The first line states “commends the Government on the prudent management of the economy in the face of difficult domestic and international trading conditions”. Who in their right minds would commend the Government for the prudent management of the economy? It has made a dog’s dinner of the economy in recent years. This is the third Administration the Minister of State’s party has been in and the situation has gone from bad to worse. The second line states “welcomes the continued job creation and confidence expressed in our economy by business investors and the number of recent investment decisions taken across a range of sectors in the regions”. Did we lose 17,000 jobs last month? That is the figure but, according to the Minister of State, we have confidence in the economy and jobs are being created.
Let us look at the retail sector. The Minister of State’s last point concerned value for money for consumers and support for the Irish retail sector. Everybody is going across the Border. One cannot get into Newry now. There are queues of three, four and five hours on weekends. My constituents go up from Dublin to purchase in Belfast, going on the train or driving. It is the same right across the Border, on the line from Galway to Dublin. That is where the retail sector is suffering. What is the Government doing about it? It introduced the stealth taxes we have seen in so many areas. It increased VAT on goods and the situation is going from bad to worse.
In my view, the Government is doing zilch. There is no plan. When the Minister of State gets a plan and tells us what it is, then we can get out there and see whether we can make some progress in getting the economy back up and running.
Minister of State at the Department of Enterprise, Trade and Employment (Deputy John McGuinness): We already had a debate like this a short time ago. We certainly had it again during the course——
An Leas-Cheann Comhairle: I understand the Minister of State is sharing with Deputies Byrne, Dooley and the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Jimmy Devins.
Deputy John McGuinness: We had the debate earlier, in a different form, but with the same issues. Today during Question Time we dealt with some of the issues that were raised here. Although Deputy Penrose may disagree with my views on the public sector, nonetheless there is commentary within the OECD report which suggests certain changes should be made and that certain reforms are necessary. All I ask is that the culture and systems within that sector would change. Then we would have a system that we could all be proud of, including those who work in it. It would deliver effectively and efficiently in very difficult times on behalf of this country and it would offer a measurement against the rest of Europe in terms of benchmarking and how we are perceived abroad.
There was mention of other projects, where money was lost. It is true we lost money on certain projects. I sat on the Committee of Public Accounts as its Vice Chairman and most of my views are informed by that experience. Changes were made there in the wake of initial controversy and discovery of losses that brought about savings in terms of fixed price contracts. That proves that a committee of the House functions very well and is worthwhile.
Deputy John McGuinness: ——times are not experienced only by Ireland. They are worldwide. Every country has experience of that at one stage or another. I explained this. The Government is measured by how it manages the economy, how it puts in place the policies and the funding to deal with the issue, and by the confidence it has in different sectors. In the sector for which I am responsible, namely, the county enterprise boards, Enterprise Ireland etc, we put our money where our mouth is. An increase of 16% went to county enterprise boards. The companies that operate within those boards and within Enterprise Ireland are experiencing difficulty and they are looking to the Government for guidance, direction and leadership. That is what we are giving them by the direction we are taking.
I said earlier there is a need to look at the economy now and to consider how we might develop the actions and policies of county enterprise boards while we continue to increase by 16% their funding. That will allow them to engage with small and medium enterprises that create 800,000 jobs in this country. I acknowledge that to be the case, against the odds. I was at a conference last week attended by 400 women who were enthusiastic about getting involved in business. In second level schools 12,000 students participate in a scheme that encourages a spirit of enterprise and grows the notion of starting and being involved in business. That is an indication of how, in spite of what is happening, in this country there is a solid increase in business and in the numbers of people creating employment for themselves. Every month 2,700 enterprises are registered and over half of those are run by women. A total of €190 million has been spent by Governments since 1993 in support of the small and medium enterprise sector and 35,000 jobs were created through the experience with county enterprise boards.
Deputy John McGuinness: The question is what we do now. In my view, small and medium enterprises, county enterprise boards and Enterprise Ireland are central to what we must do as we move into better times. To do that we must restore confidence within those companies. We must ensure credit is made available. It is no harm in the course of this debate, whether it comes from this side of the House or the other, to send a specific message to the banks and tell them they must look at themselves and how they make credit available.
Deputy John McGuinness: We should criticise them in particular for inviting in companies which, after meeting with their bank managers, go away with much less than they brought. That is unforgivable in the economic situation we are experiencing. It shows that we must understand we are all in this together. It is not just Government policy that will take us out of this and it is not just the banks on their own that will make that credit facility available.
The banks should expedite their engagements with the European Investment Bank to ensure we have the appropriate level of funding available for the SME sector. In recent times I met with the Small Firms Association and with other individual business organisations and people involved in business. I suggested to them that perhaps we should look again at county enterprise boards and see if, by way of policy some money might be taken from the National Treasury Management Agency and be made available to the boards. We must step beyond the box to ensure small and medium enterprises stay alive.
Deputy John McGuinness: They are doing just that. We must not only talk about this here but must have a policy concerning it. We must do this in conjunction with the European Investment Bank and with the banks in this country. That is central to the county enterprise boards. If that encouragement comes from us, confidence can be built.
We have made choices in the course of this situation. Deputy Costello mentioned the trail across the Border, for example. I understand the difficulties towns have in that necklace across the Border between North and South. I was at a conference and saw at first hand the traffic jams as one goes into Newry and elsewhere. However, it must be understood that if we were to decrease the VAT rate we would reduce our take by €3 billion a year. We make choices in terms of our taxes and in the directions we take and the policy we make. Our decision with regard to VAT was to have it at that level. The United Kingdom came afterwards and did something different. We must protect the jobs that exist in the retail area and we must understand that local authorities have a role to play in this too. I can give as an example my local authority the chamber of commerce in Kilkenny. This season they launched vouchers for shoppers to attract them back to the retail business in their own centre. The IFA carried out an analysis of a shopping basket north and south of the Border and found there was only €6 in the difference.
Deputy John McGuinness: When one adds in the cost of travelling North and including the basket it cost €67 against the cost of doing the same shop in the South at €32. This should be made known to the consumer
Deputy John McGuinness: Retailers, the business sector from which I have met many people, local authorities, chambers of commerce, their national representative groups and Government all have a role to play in this. I have every intention of ensuring we deal with the banks and the organisations and that we encourage people to shop locally, or in the South. We must show them the results of the market assessments carried out by the IFA. There is plenty of other evidence that value for money can be achieved here in the South. In some cases it is a matter of offering information, encouragement and confidence building in that sector while acknowledging current problems.
Deputy Thomas Byrne: It is absolutely typical of the Opposition, at a time when inflation is reaching its euro-area target of 2%, to introduce a motion that is essentially about inflation and price increases. The real threat, of course, is deflation. There will be problems, in fact, if inflation goes below 2%. It is not good for the economy to have inflation at such a low level. It is a mistimed motion from the Opposition, and I commend the Government’s motion, which deals with the broader issues of the day, which are much more relevant to the ordinary person.
Deputy Thomas Byrne: Prices are going down. That is a fact based on the statistics. This is a mistimed, mismanaged motion by an Opposition who would mismanage the economy if it had half a chance. Thankfully, the people have not given them the chance.
Deputy Thomas Byrne: Why does the Opposition not refer to that in its motion? The Government amendment to the motion, which I agree with and support, mentions jobs, confidence in the economy, tax issues, inflation, and the national development plan — all the broader issues that are affecting the wider public. They are the important issues. Inflation is not an important issue at the moment.
Deputy Thomas Byrne: Inflation is coming down, and in fact deflation is a possible problem. We certainly do not want that to happen because it would be an utter disaster for the economy. We must talk up the economy, because talking up prices, when we are approaching deflation and prices are not increasing, is actually good for the economy provided it is moderated to an extent. The Government amendment mentions job creation, prudent management of the economy, taxation issues, inflation, the strategy for science, technology and innovation, the national skills strategy, the national development plan, and the Commission for Energy Regulation — a gamut of issues.
Another of the items mentioned is cross-Border shopping. This is a difficult issue for traders in County Meath and in the town of Drogheda near where I live. However, it is also a difficult issue for the people who are travelling across the Border to shop. I must say on their behalf that in difficult economic times I cannot blame them for looking for better prices. However, they must bear in mind when they do so the negative consequences for the local economy arising from the legitimate choice they make to shop in the North, in Newry or wherever. They should also look around their own areas. I am glad to see in my local supermarkets and shops unprecedented bargains which people would see if only they would look. We as politicians, with our chambers of commerce, can get the message out that stock is reduced in clothes shops, hardware shops and electrical shops across the board. There are two boxes of cereal for the price of one or two boxes of Christmas biscuits for the price of one in various supermarkets.
That is the message we have to get across — that it is worth people’s while to shop in their local area. We should not give out to them or criticise them because it is a difficult choice for them to make and I do not think they want to make it. We must make it attractive for them to shop in their own areas. Certainly, in my constituency, shops are making the effort. They are seeing the threat from the competition and they are moving forward on that basis. However, it is difficult for them, particularly with sterling hitting new lows this morning. This is good for cross-Border shops but not very good for the overall economy in the UK. We must encourage shoppers to see the value in their own areas and to shop there, because it does have an impact. While I recognise their right to shop in the North and the difficulties they are facing, they must bear in mind the consequences for the economy, for jobs and for their own families.
I commend the Government on its handling of the economy. We are facing difficult challenges we can only deal with in an international context. We need to consider the broader issues and not what is at this point the irrelevant issue of inflation, which the irrelevant Opposition has put forward as the main subject of its motion.
Deputy Timmy Dooley: I welcome the opportunity to contribute to this debate. Like my colleague, I am amazed at the audacity of the Opposition, particularly the Fine Gael Party, in putting down such a motion.
Deputy Timmy Dooley: Its members have been trotting in here week after week since the budget was introduced, bringing bands of supporters or interest groups from various parts of the country, and trying to indicate that the problems in the economy can be resolved without any impact on the budget. They identify the problems for us week in week out.
Deputy Timmy Dooley: ——to try to stabilise the economy. They talk about their own budget strategy, and I am delighted to see that Deputy English has mentioned that. It is terribly light on detail. There are many clichés and much hot air in there.
Deputy Timmy Dooley: Through the Chair, I suggest they bring it in. Let us have a proper discussion about it. If Fine Gael is talking about making savings of €4.5 billion in the budget strategy, it will have to make significant cuts somewhere. The Deputies continue in the same vein, saying there will be no cuts and no increases in tax. Tonight they do not want a reduction in VAT.
Deputy Timmy Dooley: There will be no extra borrowing for current spending. This is fairy-tale stuff. It is Lapland economics. It is as though they are going to write to Santa and all will be delivered on Christmas morning. It just does not work like that. That is why the strategy being put forward by this Government, which some people continue to fail to recognise, is about stabilising the economy and the banking sector and investing in infrastructure. The buzz word all over the world is “stimulus package”. We have had our own stimulus package here for many years. It is called the national development plan. We are on our second or third version of it.
Deputy Timmy Dooley: One need only look in my area to see what we are doing in the mid-west. We are investing in the western rail corridor; we are investing in the Atlantic corridor, which is the road network from Donegal to Waterford; we are investing in the tunnel under the Shannon; we have invested in the infrastructure of the airport, and we are continuing to do that. It is in this way that we will re-establish confidence in the economy. We are doing it in education. We are putting extra funding into the building programme this year to try to stimulate the economy. As Deputy Byrne said, it is mighty dangerous to start talking down the economy when inflation is reduced. Yes, it looks good, but when one goes below that threshold one moves into a downward spiral which has an entirely negative effect on the economy. The Government, in my view, is taking a very prudent approach. It is about rebalancing and economic stability.
We are also limiting borrowing. We have seen in the past the damage that large-scale borrowing for current spending has done. It effectively negates the efforts of the Government and future Governments to provide services for the citizens of the future who will be overburdened with debt if we are not able to manage at this time. We must move beyond this by taking decisive action which will lead to long-term stability. It will also help that we will be able to become more competitive as an economy. For far too long we have been losing good quality jobs in the IT sector and indeed in the semi-skilled and skilled manufacturing sectors to lower cost economies. There is an opportunity here for us to recalibrate our competitiveness and reduce our costs, but to do so in a way that does not damage the overall economy. We could not proceed with the kind of nonsense that is coming from the other side. Although there is a global downturn, Opposition Deputies are suggesting that we can just put our heads up and continue as before. That is a mighty foolish approach to take.
As Deputy Byrne said, inflation is coming down, and is below the EU average. Job creation is fundamental. We know that from our agencies: IDA Ireland, Enterprise Ireland and, in my region, Shannon Development. These do an exceptionally good job of targeting and encouraging investment, not just from indigenous companies, but also from the wider world in the form of foreign direct investment. We can see what has happened even in the last couple of days. There is a global economic crisis, yet in the last two or three weeks there have been announcements of significant numbers of jobs to be created in Cork and Wexford.
Deputy Timmy Dooley: These are multinational companies that are still prepared to invest in this region. Of course, I will be asking the Minister to ensure that Shannon is included in this and that we get significant investment in the industrial zone there to offset the job losses that have occurred recently at Element Six and others. I also take this opportunity to say to Aer Lingus that it removed the Shannon-Heathrow service last year on the basis that the cost base at Shannon was too high, but the workers have now put forward an aggressive cost-cutting plan. They have put the interests of the region well before their own personal interests. It is time Aer Lingus recognised that and immediately reinstated the Heathrow-Shannon link. It is vital to the continued competitiveness of the region, it is vital for connectivity and it is vital for the maintenance and growth of the job market in the region.
Minister of State at the Department of Enterprise, Trade and Employment (Deputy Jimmy Devins): I welcome the opportunity to address the House this evening. There are two issues I would like to talk about, which were raised last night. I want to deal with the national skills strategy, and I will also explain to the House the elements of our innovation strategy. The safeguarding of Ireland’s competitiveness and future prosperity requires us to maintain advantage over our competitors in a number of vital areas. The skills and competencies level of our labour force is one such area. This Government firmly believes that our future success can only be guaranteed by continuing our policy of investing in our education and training systems.
With free primary, secondary and third level education, combined with significant Government investment in vocational education and training, Ireland is well placed to take her place on the world stage as a star performer in the global knowledge economy. We are continuing to produce highly educated and skilled individuals. We will ensure that we have a labour force with the ability to meet the needs of enterprises and, more important, that will allow Ireland to respond quickly to emerging opportunities in the future. In other words, we must create and develop competitive advantage in terms of the skills and qualifications of our labour force. This will be key to maintaining our success and will allow us to continue to compete in the increasingly competitive global marketplace. Lifelong learning will therefore play a key role in enabling Ireland to remain competitive in the future. Compared with other countries, participation by adults in education and training is still significantly underdeveloped here.
Greater participation in lifelong learning by facilitating and motivating people to increase their skill levels and qualifications will be promoted and encouraged. Key to achieving this goal is the national skills strategy. To underpin long-term competitiveness our objective is to ensure that we build up the productive capacity of the economy through investing in people. This is being achieved directly through the science, technology and innovation strategy and through our skills strategy.
The national skills strategy was published in March 2007 and was completed by the expert group on future skills needs in response to the Government’s request for the group to undertake a comprehensive analysis of Ireland’s labour market and skills needs to the year 2020. The results of the analysis contain an ambitious vision for the skills profile in Ireland in 2020. It shows that if we are to progress ahead of our competitors then we need to increase our focus on skills development at a number of levels. We need to upskill by at least one level on the national framework of qualifications an additional 500,000 people by 2020. The strategy clearly shows that the majority of these people, in excess of 330,000, are currently considered to be low skilled. The implementation of the vision needs to have a special focus on the low skilled. In this way our workforce will have the skills to compete globally for jobs and investment. The national skills strategy has helped us to target specific skills and sectors that will become increasingly important in the next few years. It has allowed us to identify and address specific gaps in our skills base. It will help us to build an education and training system that will allow us to adapt and respond quickly to the changing global business environment.
The Government is committed to ensuring that the labour force is characterised by progressively improved skill levels reflecting the changing business needs of the labour market. An interdepartmental committee chaired by the Minister of State with responsibility for lifelong learning, Deputy Seán Haughey, will complete an implementation plan for the national skills strategy by the end of this year. This implementation plan will examine the existing provision of education and training and determine the key initiatives required to achieve the objectives of the national skills strategy.
Our future competitiveness and success as an economy and a society rest within our own hands. Targeting our investment in education and training to achieve the objectives of the national skills strategy will provide Ireland with competitive advantage in the key area of skills. Ireland’s workforce will continue to be the basis of our success. I have the utmost confidence in the ability of our workforce to compete successfully with the best in the world.
Our knowledge economy ambitions have to be underpinned by flexible ways of doing and organising business and how we innovate in all sectors of the economy. We are examining several ways of fostering an innovation culture in the economy and in society. In leading innovative countries, almost every policy domain is connected to innovation. It is therefore essential that we continue to maintain the best possible conditions across all policy spheres for supporting and sustaining innovation. We recently launched our innovation policy statement, Innovation in Ireland, which reinforces our efforts to create a framework for increasing innovation in the economy. The statement maps our progress across ten key policy areas and identifies opportunities where innovation can be better exploited.
My Department is currently working in key areas including the strategy for science, technology and innovation; research and development; and public procurement and services. The first report on the implementation of the strategy for science, technology and innovation, 2006-2013, will be published tomorrow. This report illustrates the success of the strategy to date. The first report shows that total research and development spending has almost trebled over ten years. Ireland’s total expenditure on research and development had risen to 1.56% of GNP at end 2006. Higher education research and development spending has almost quadrupled in current terms over ten years and is now at the EU and OECD average levels. This increased investment in the higher education sector is having a significant impact in terms of human capital development, leading to the attraction of foreign direct investment and commercialisation. This is paralleled by equally dynamic growth in business sector research and development which has risen to an estimated €1.56 billion in 2006, a 17% increase on the previous year. Over the lifetime of the strategy, as Government investment in public sector research increases, it is a key objective to retain our two to one ratio of private to public sector investment.
Enterprise Ireland and IDA continue to work closely with companies to strengthen the research and technological base of the enterprise sector. The strategic infrastructure investment of the programme for research in third level institutions and increased PhD output, combined with Science Foundation Ireland’s success in growing our human capital at the highest level, adding more than 30 world class principal investigator teams each year, and our success in connecting funded research teams with industry are together transforming what Ireland has to offer.
Collaboration between SFI researchers and industry has increased significantly. Science Foundation Ireland’s centres for science, engineering and technology, known as CSETS, have engaged with a wide range of industrial and other partners. The growing bank of researcher talent, coupled with the enhanced research and development tax credit, is a major factor for the IDA in attracting blue chip foreign direct investment and research and development into Ireland. This has resulted in a series of significant industrial and academic research collaborations. It is particularly welcome that as many as 40% of the 114 new projects negotiated by the IDA in 2007 were research and development investments.
Positive trends are also evident in early stage commercialisation. The number of real start-ups from the research investment has increased from five in 2005 to 13 in 2007; licences have tripled in number from 15 in 2003 to 55 in 2007; invention disclosures have grown from 135 in 2005 to 264 in 2007; incubator employment has gone from 135 in 2005 to 264 in 2007. While Ireland is still a relative newcomer to significant investment in research and development, the trends are very positive in light of the time lags that exist between investments and eventual outcomes.
The remit of Science Foundation Ireland was expanded from ICT and biotechnology to include the broad thematic area of sustainable energy and energy efficient technologies. A range of measures is supported by Enterprise Ireland to develop collaborative links between industry and academic researchers. These include innovation vouchers, innovation partnerships, industry-led research networks and competence centres.
The strategy supports a strategic and coherent approach to developing science teaching in primary and second level education, through the programmes piloted by Discover Science and Engineering, run in close co-operation with the curriculum support services. The overall objectives of Discover Science and Engineering are to increase the number of students studying the physical sciences and to promote a positive attitude to careers in science, engineering and technology. A major international review of DSE’s work in this area has just been completed.
Good progress is being made in supporting and developing North-South co-operation in research and development via a North-South innovation fund. An early win has been the agreement of an all-island innovation voucher scheme last month and SFI has developed a dedicated support mechanism to encourage researchers from the North to connect with SFI-funded researchers.
Deputy Damien English: I have many points to make. Some of the Minister of State’s colleagues decided to insult the people by slagging off the motion. It is wrong to maintain that this motion is a waste of time and is not the basis of a proper debate. Our motion reflects the reality of major problems facing businesses, such as increased Government charges. Petrol, diesel and oil are much dearer in Ireland than in the rest of Europe. Many people are travelling to the North to spend their shopping money there. These are serious matters. For Government Deputies to throw mud at these issues is insulting to the hardworking and hard-pressed people who expect the Government to take action and make changes.
I will not blame the Government for every problem. I accept international factors are causing problems for our economy. However, these have been compounded by the Government’s lack of action when it could make changes and improvements to keep prices and business costs down. By doing so, the Government would protect jobs, make it easier for people to spend money in the country and make exports more competitive. These problems, however, are compounded by bad government.
Last night the Tánaiste and Minister for Enterprise, Trade and Employment spoke about what retailers need to do. The Government has a stake in this and there is much it can do. The Government talks about retailers getting the message out to people that they do not save money by shopping across the Border. That is a job with which the Government can help.
Deputy Damien English: The Government is not doing it. The Minister of State gave a lovely speech about skills, which I agreed with, but it did not address the motion. Government Members keep on slagging off our motions. The reason we keep putting them down is that we want to get real debates to come up with solutions.
The Government fell asleep at the wheel. When it woke up, it took all the wrong actions at the wrong time. It increased the VAT rate when our EU counterparts decreased it. Petrol and diesel prices were 20% higher than the average EU price in October and November. Hopefully, they will be reduced over the next few months. However, this side of the House expects the Government to take a role in driving these prices down more quickly. Of course, there might be an incentive for the Government not to act on fuel prices. Up to 70% of the price at the pumps ends up in the Government’s coffers through duty. This is one area where the Government could act to reduce business costs.
Last night we argued for and against a reduction in the VAT rate, a topic I do not wish to go over again. However, the Government could take some pressure off businesses by allowing them to reschedule their payments of VAT and taxes to Revenue. It has been done by the UK tax authorities but in Ireland I am getting reports of the opposite. Revenue is putting pressure on businesses to pay up their taxes and VAT earlier and more quickly. Revenue is normally reasonable to deal with and often will allow people to push their payment schedules over 12 months. I believe it is doing the opposite now, coming down hard on businesses, on the Government’s instruction. The Government can address this matter.
Council rates, development levies and parking charges are putting serious pressure on retailers and small businesses. This is a direct result of the Government cutting the percentage funding per scheme to local authorities. Local authorities then have to raise more money locally. The only way to do that is to hit small businesses. The day is gone when small businesses could sustain ever increasing local government charges. These need to be reduced and that is where the Government can play a role.
I see people leaving towns in County Meath such as Navan, Kells and Trim to shop elsewhere. Who can blame them if they believe they will get bargains elsewhere? There is a duty on us to drive retail business costs down to help reduce retail prices. We could make it easier and more attractive for people to shop in our towns and villages, rather than going to the North, if parking charges were reduced and more park-and-ride facilities provided. The Government may argue that is the responsibility of local government but it does not have the funding to provide these services. It needs help from central Government.
Last night the Tánaiste and Minister for Enterprise, Trade and Employment claimed reports due out in a few weeks will show there is a 5% difference in the cost of doing business in the North and in the South. That is untrue. The real difference is between 25% and 30%.
Deputy Damien English: The Tánaiste claimed preliminary findings show a 5% difference. It cannot possibly be true when wage, property and other costs are taken into account. I accept some retailers in the North of Ireland are able to avail of economies of scale in the UK. That is why we have to drive other economies of scale. We cannot just say there is nothing we can do about it. We have a duty to protect jobs and need to act to bring costs down in doing that. The Minister of State, Deputy McGuinness, spoke about the role of county enterprise boards. Their remits need to be expanded to examine job protection, not just job creation, in this economic climate.
I commend Deputy Varadkar for putting down this important motion on consumer issues and the cost of shopping, an issue that affects people day in, day out. You, a Leas-Cheann Comhairle, and I were members of the committee on enterprise in the 29th Dáil.
The then Government promised, following a report from the then chairman of the Competition Authority, that it could reduce the cost of a typical basket of household goods by €500 million per annum if the groceries order were reformed. Until the reform of the order, prices of food products were rising by 1.7% per annum, which took into account escalating input, labour and energy costs.
The Minister believed the rhetoric of the then chairman of the Competition Authority, Mr. Fingleton, and his successor, Mr. Prasifka, which had an ideological tinge to it. They suggested if State intervention were taken away in the supply of goods and services to the grocery market, prices to the consumer would be reduced. What has happened since the groceries order was removed has been nothing short of a catastrophe for the consumer, however. There has been an 18% increase in the cost of a typical basket of household food products. There has been no apology from the Minister responsible for this debacle, Deputy Martin. Deputy Micheál Martin is a Minister well known for reading his brief and he must get assistance in these matters on a regular basis. He never apologises to the consumer, whether in the health area or in enterprise, trade and employment, for the damage he has done. The consumer is picking up the tab for the mistakes he has made.
There is a 37% reduction in volume in the normal weekly shopping in Border counties. This is the message from retailers and RGDATA, whom I rang today to check the figures. That is a savage reduction and extends further down the country, with a 10% reduction in volume in Drogheda. Dublin is also affected by the fact that there is a more competitive atmosphere in which to shop in companies on the other part of the island.
It is interesting that the republican party has a problem with people shopping in Newry. That is the hypocrisy we must deal with from time to time. We need transparency and a better response from Government. The UK has reduced VAT and given assistance to small businesses in respect of corporation tax. We are asking small businesses in this jurisdiction to pay tax in November, even though they will not have calculated profits until 31 December. In order to fill a gap in finances, successive Fianna Fáil Ministers for Finance bring forward a payment, whether capital acquisitions tax, capital gains tax or corporation tax. That is not the way to do business in a planned way. Would it not be better to wait for the Christmas season so that retailers can pay tax in January? At least they would know whether they have made the money. To estimate tax at this time of the year is like the Lotto.
Fianna Fáil policy on the groceries trade and small business has pushed larger profits into the hands of larger multinationals. It has squeezed suppliers and lost employment. We now know what the toothless National Consumer Agency, set up as a fig leaf to give some indication that the then Minister, Deputy Martin, was doing something, is able to do nothing.
Deputy Michael Ring: I refer to two points that Deputy Hogan spoke about. The Minister for Finance spoke about patriotism and Fianna Fáil always wraps the green flag around itself when it is in difficultly. I am very surprised that Fianna Fáil is complaining about people crossing the Border. Since the foundation of the State, Fianna Fáil has never recognised the Border. It always said the Six Counties were part of Ireland, and I agree. I do not see any difference if people shop in the South or the North. I am surprised because Fianna Fáil was a great party for wrapping that old green flag around it.
Deputy Hogan spoke about rip-off Ireland. They are talking about wearing the green jersey again. When some businesses had the opportunity, they ripped the jerseys from the men and women of this country and robbed them left, right and centre — rip-off, rip-off, rip-off. There is a God above, times turn and times change. Now they must compete. What really upsets me is that we had a Government and a Minister who did nothing.
With the petrol and diesel price problem, what did the Government do when retailers would not bring down the price while the country was on its knees? Petrol and diesel were being bought on the world trade market at a reasonable price, but retailers here would not pass the price on. There was no patriotism there. Now the time has come when the Government should deal with these problems.
Small businesses have been attacked by Fianna Fáil, which always talked about being the party of small business. They have hurt, attacked and robbed small businesses. Last week, I was travelling on the N5 and went through the toll. A sign informed me that from next Monday the toll fee would increase by 10 cent because of the rise in VAT. I calculated it at home and the VAT increase was 1.5 cent. Rip-off Ireland is still at its best and they charge people 10 cent instead of 1.5 cent. That has been going on for too long and now they want people to be patriots and pay above the odds. Businesses should make prices competitive.
It is time we took on Tesco and Marks & Spencer. Why should they charge Irish citizens more than they charge citizens in Britain? Why does our Government not bring them into the Department and tell them that if they want to trade in Ireland they must treat our people equally, not charging them dearer prices than in England?
Small businesses cannot carry local authorities any longer, paying water charges, refuse charges, rates and benchmarking for local authority workers. The Minister and the Government should write to every county manager drawing up estimates to say that there should be no increases in rates.
In the town I come from, Westport, the taxpayers of Ireland and Europe helped to buy much of the land for Irish Rail and helped to set up the rail service. What did Irish Rail do with the land around the town? It started to charge for parking on ground the taxpayer worked hard for and provided funding for. Irish Rail is ripping off the consumer again.
Let us have fair play. Let us protect and help the consumer. I want Irish business to do well and make a fair profit but I want them to stop continually ripping us off. They have been at it for the past 20 years and it is time for some competition in the market. The Minister should bring in Marks & Spencer and Tesco and tell them to charge the same as they are charging in Britain. If they do not like dealing in this country, they can go because they are the ones that put many small businesses out of business in this country. They are still at it and the Government has made it easy for them in regard to planning laws.
Deputy Dinny McGinley: This motion addresses two serious economic difficulties we have had for a number of years, but particularly this year. I refer to the rapidly rising rate of unemployment. It is unbelievable that we have lost well over 100,000 jobs in Ireland in the past year. In Donegal unemployment has increased by 60% to 70%. It is due to the fact that we have allowed things to get out of control and have charged ourselves out of the labour market. I refer particularly to the 12,000 jobs we have lost in Donegal in the past ten years. These jobs are not lost to the world economy; they are simply being transferred from Donegal to eastern Europe, north Africa, Mexico and the Far East. It is entirely due to the way we are taxing industry and jobs. The Government bears a major share of the responsibility. It will get worse unless we do something about it and enact the proposals made by our spokesman in this motion.
I represent a Border constituency, like some previous speakers on this motion. My constituency stretches from Bundoran in the south along the Border almost to the city of Derry. Every day of the week I see so many of our people crossing the Border and spending their money in shops in Derry and Strabane. I do not blame the housewife for doing that. We know that times are difficult and when they see the bargains on the other side of the Border, across they go.
I met someone last Monday who for the first time ever went to a grocery place in Strabane and spent £120 or €140. When she came back she went through the list and priced it in comparison to what she would pay at home. Her calculations showed a saving €70 on a basket of groceries. The retailers in Northern Ireland are sensible people and canny traders. Some are offering €1 per £1, which will exacerbate a difficult situation.
I met someone in Dublin last night who had been to Omagh. He went into a multinational in Dublin to buy an energy saving light bulb for which he paid 97 cent. In the equivalent shop in Omagh, he bought five bulbs for £1. That is a huge discrepancy, which the Government must address. As Deputy Hogan said, the Government has established toothless quangos, which cannot deliver the goods or control the situation.
I compliment our spokesman for tabling the motion. Small businesses throughout the country and, particularly along the Border, are in serious difficulty because of the haemorrhaging of finance across the Border. A euro spent in Northern Ireland has as detrimental an effect as a euro spent in the US, Tenerife or Spain. It is a drain on the economy and it will cost jobs and income in the long run.
Deputy Tom Sheahan: The consumer is hit by everything that impinges on the retailer and the severity of the hits over the past number of years that retailers have had to take from the Government have impinged on the consumer. For example, County Kerry has the second highest local authority rate in the country, which is hard to believe, given we have probably the second worst infrastructure. When I was young, my family had a small shop for which my parents paid a rate that covered water, sewerage and refuse services provided by the local authority. A rate was not struck by Kerry County Council this year. Councillors have had several budget meetings but they have been unable to strike a rate. However, for a peripheral county such as Kerry to have the second highest valuation rate in the State is absolutely crazy.  I support the county manager, who is trying to keep the rate as low as he can as he tries to balance the books while facing a reduction of between 8% and 10% in the amount he will receive from the local authority fund this year. However, he is well aware that next February councillors expect up to 100 small businesses to go to the wall in the county because of charges that are passed on to the consumer.
As Deputy McGinley said, it is difficult to fault people travelling across the Border to shop but the Government has played a major role in this because the Northern Ireland authorities have not had to promote or advertise their businesses because we have done it for them. Print and broadcast media highlight the queues into Newry every day and people’s natural instinct is to want to visit Newry to see what is happening.
Small businesses are suffering because of the rate. While VAT is not applied to food, it is applied to luxury items. I tabled a parliamentary question to the Minister for Finance asking him whether in his wisdom he believed a telephone was a necessity or a luxury for doing business. I also asked separately whether he believed Internet access and broadband were necessities or luxuries in the context of business. He replied that he did not understand both questions. Businesses must pay VAT on the use of telephones and Internet access. This is detrimental to the expansion of indigenous industry and this impacts negatively on foreign direct investment.
The tourism, hospitality and food sectors, which include restaurants, hotels, delicatessens and butcher shops, are being destroyed by over regulation. They are being hammered by environmental health officers, EHOs, week in, week out. When such regulation was needed over the past few months to save the pig industry, it did not happen. Farmers and ancillary businesses were hit by over regulation by EHOs but they did not do their job to save the industry.
Deputy Paul Connaughton: The motion is extremely timely, as it returns the focus to value for money and rip-off Ireland. We thought that because of the exposure generated by Eddie Hobbs a few years ago, we would not hear about rip-offs anymore. However, small and medium-sized businesses always have been and always will be the backbone of employment in the country.
I do not have time to go into many issues but energy costs are very important for every businessperson. This was an unusual year for the pricing of petrol and diesel. When the price of oil on the world’s commodity markets peaked at $147 a barrel in July, the price of petrol and diesel at the pumps increased significantly and, generally, people bought it, with some feeling they were lucky to get it, which was the conditioning at the time. However, in recent months the price of oil reduced gradually to only $40 a barrel in recent days, yet the price at the pumps did not decrease proportionately. Someone made a great deal of money in the interim and that raises a question.
A €23 million sewerage scheme will commence in Tuam, County Galway, over the next month or two. The local people also want broadband and natural gas and one would expect that all the cabling, pipes and so on would be laid during one big dig. However, the Minister for the Environment, Heritage and Local Government can only pay for the pipes for the sewerage scheme while the Minister for Communications, Energy and Natural Resources does not have the money for a broadband scheme, nor does Bord Gáis for the gas spur. Nobody is in charge of the shop, although the sewerage scheme will be completed in a year or two. The streets will probably then be dug up the year after and, with a bit of luck, they will be dug up a third time. If this is joined-up thinking I do not know who is in charge of the shop.
Minister of State at the Department of Enterprise, Trade and Employment (Deputy Billy Kelleher): I wish to respond to a few issues raised by various Deputies during the course of the debate. With regard to consumers and competition, recently the Tánaiste met a cross-section of retailers and had a good exchange of views with them on the preliminary findings of a Forfás study on the relative cost of doing business North and South.
There is a misunderstanding with regard to the preliminary findings of this study. The study showed that higher operating costs for labour, property, energy and other utilities in the retail sector in the Republic justify a price differential of approximately 5% with Northern Ireland for grocery items and approximately 7.5% for goods in department stores. However, as we are all aware the gap is a great deal higher than this. Something is happening because the study shows that there is a 5% extra cost to business in the Republic in the context of labour, property, energy and other utilities. We must be honest with ourselves. We will continue to pursue this to ensure retailers get value for money.
We will continue to implement the consumer strategy report. Its main recommendation, the establishment of the National Consumer Agency, NCA, is driving other recommendations. For instance, the NCA will produce guidelines for retailers early in the new year. The Tánaiste has already indicated that in future the Competition Authority reports to Government will receive a published response from Government addressing its findings and recommendations within a set time limit.
The Commission on Energy Regulation has already introduced public hearings. Recently, it held its first open public forum on energy tariffs on 10 November during its consultative period for tariff reviews. This is welcome and we support this new method of consultation.
Inflation in Ireland is on a downward trend. The latest figures available for October show Irish inflation down to 4%, while our EU standardised HICP figure is only 2.7%, giving Ireland the fourth lowest inflation figure in the European Union. Irish figures for November, to be released tomorrow, should reflect early Eurostat estimates and demonstrate that this downward trend is continuing, with price pressures in Ireland beginning to level off.
On 1 December, after a consultation process that included the first ever open forum on energy prices, to which I already referred, the Commission on Energy Regulation announced it would not implement price increases for gas or electricity from January 2009.
Deputy Billy Kelleher: This is welcome news for business and consumers. As Deputies know, in the context of prices referred to by Deputy Connaughton, we have an unregulated market and we do not have price controls over the price at the pump. It is a competitive market and people must be conscious of shopping around and supporting those——
If Ireland is to maximise its future competitiveness in the global economy, we will continue to need the best possible regulatory environment. In a difficult trading environment, we will work to ensure businesses are not burdened with unnecessary red tape. So far, we have been performing well in this area. The World Bank ranks us the third cheapest location in the world for business start-up regulation and the seventh easiest place in the world for doing business.
Deputy Billy Kelleher: While it is important that we highlight the inadequacies in certain areas, such as a lack of competition or the fact that people travel from the Republic to the North, we must also acknowledge many positive things are happening here. The World Bank’s rankings show that we have a balance——
Deputy Deirdre Clune: This is the second time in two weeks we have had a Private Members’ debate focussing on the business sector. The previous debate was on the small business sector in particular and we urged the Government to support small businesses and help to ensure that credit was available to them at a crucial time.
In recent weeks, we have seen small businesses take another hit, particularly those in the Border region. Many speakers in this debate mentioned the large queues shown in the media of consumers moving elsewhere to purchase products and groceries. Who can blame them? The consumer will always follow prices and this is the nature of the beast. If prices are cheaper in another jurisdiction people will go there. We have seen the queues going to Newry and heard about the devastating effect this is having on businesses in the Border region. The weakness of sterling against the euro does not help those operating in this jurisdiction.
Not many people from Cork will go to Newry to do their shopping. However, I know of many people flying to Manchester and London in the UK on day trips and buying small goods, small electrical goods, computer games, Christmas gifts, clothes and other items. It is happening in other areas but perhaps it is not as obvious.
The appeal of the Minister for Finance, Deputy Brian Lenihan, to Irish people to be patriotic and to stay at home to do their shopping will not ring true with anybody. People want to see action from the Government to ensure factors which contribute to high costs here can be reduced. Increasing VAT, even if it is by 0.5%, is going in the wrong direction. If anything we should see a reduction in inflation, encourage people to spend money and send out a more positive message in this area.
We hear this country is an expensive place to do business. The Small Firms Association and ISME regularly come before the Oireachtas Joint Committee on Enterprise, Trade and Employment outlining the costs they face. As local authorities begin the process of setting commercial rates, Fine Gael has asked them to be conscious of small businesses and, where possible, to ensure that commercial rates are not increased. I am glad to have read today that Cork County Council will not increase commercial rates. I am disappointed Dublin City Council increased them by 3% as this will be another burden on businesses.
Areas under the control of the Government that can be effective in reducing the burden on businesses include waste and water charges. In Cork, we have a serious problem as the water treatment plant in Little Island in which we had major investment has resulted in an increase in costs to businesses which now have to pay for water going in and water coming out. This was not in their reckoning as many people thought that money for the treatment plant was coming from Europe through the Cohesion Fund. The cost of running the facility is an enormous burden on businesses.
We do not have domestic water charges. However, from a business point of view there is no transparency in the charges administered by local authorities. There is no way of knowing what is the contribution from Government to the local authority fund. These are the issues which are frustrating for people. They feel there is no transparency and they are lumbered with costs. These are areas which the Government can control. It should be the case that something as important as the contribution to domestic water charges is a defined item so businesses can clearly see what the local authorities are charging and that it is a fair price. That type of transparency does not currently exist.
I am sure there was an open and frank exchange of views when the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Coughlan, met recently with retailers. I assume the latter did not waste the opportunity to outline the costs they face both in terms of local authority charges, as I have indicated, and energy costs. In August, for example, electricity charges were increased by 17.5%, while gas prices rose by 20%. Since that time, the price of a barrel of oil has decreased from $147 to $45. Why have we seen no corresponding reduction in energy costs? We accept that those costs are related to the price at which oil is purchased on the international market at a given time, but when that price drops to such an extent, that reduction should be reflected in the price of electricity, home heating oil and gas.
The Commission for Energy Regulation recently organised an energy forum. This public initiative was welcome, but no consumer representative was included. Consumers are taking all the hits without being given any voice. The National Consumer Agency has urged people to shop around and to shun retailers who charge large mark-ups. The chief executive officer of the agency, Ms Ann Fitzgerald, has acknowledged that costs are higher in this State but the question that must be answered is exactly how much higher they are. I very much look forward to the report referred to by both the Minister and the Minister of State, Deputy Kelleher, which will outline the costs to retailers and others trying to do business in this jurisdiction. If the report is as positive as the Minister suggests, it should help to ensure better value for consumers by contributing to the ending of rip-off Ireland.
There are other areas in which the Government can have a significant influence in terms of charges to consumers. In the health service area, for example, we have seen an increase in medical centre charges, accident and emergency charges and the cost of private and semi-private beds in public hospitals. Added to these are the failure of the Government to keep the cost of medicines down, as well as the recent imposition of the levy on health insurance. All these increases are adding to the cost of living for consumers. On top of the added tax burden on the average family of €2,450 arising from the budget, these increased charges do not spell good news for consumers. Rather than calling for patriotic action from citizens, what is required is an effort by the Government to reduce costs to both businesses and consumers.
Deputy Leo Varadkar: I took the 7.38 a.m. train from Coolmine Station this morning. I try to use public transport as often as possible but sometimes the will does not meet the expectation. It is the first time I have travelled on this particular train for some six weeks and I immediately noticed that there was plenty of space in the carriage. My first thought was that additional carriages had been provided, but I discovered on disembarking at Connolly Station that this was not the case. Although I am aware of all the statistics, it was then that I was struck by the extent to which the recession is being reflected on train services and main streets. For the first time in four years, there are seats on the train in the morning.
After a breakfast meeting, I went to a jeweller’s shop to get my watch repaired. I walked back through Powerscourt, down the lane with all the jewellery shops, along Grafton Street and on to Dawson Street. I counted 14 signs on this journey indicating premises for sale or to let. This is a remarkable sight in central Dublin and gives an indication of how far the situation has deteriorated in just two or three months.
This is why I find the Government’s counter-motion so strange. It is Alice in Wonderland territory, particularly in respect of the commendation of the Government on its prudent management of the economy. Whatever the Government has been, it has certainly not been prudent. Not even its supporters would make that claim. A borrowing requirement of 8% or 9% of GDP next year does not arise as a result of prudent governance. Many economies are experiencing recession but none within the European Union or the OECD will have a borrowing requirement as large. Prudence does not lead to a deficit of that magnitude. It is worrying that the Government considers itself to have been prudent in its management of the economy.
The Government motion also notes its commitment to tackling inflation in areas over which it has direct influence. Leaving the regulators aside, where the Government has indirect influence, the areas in which it has direct influence include health charges, which are increasing by 52% this year, somewhere between 50 times inflation and infinity times inflation. As I said yesterday, CIE fares have increased by 5% and Luas fares by 4%. The charge for processing naturalisation applications by the Department of Justice, Equality and Law Reform has doubled. Every Government charge has increased by at least ten times the rate of inflation. It is wonderland stuff for the Government to state that the charges over which it has direct influence are not increasing.
The Government also congratulates itself on its continued investment in the national development plan. Admittedly, our allocation for capital investment is substantially greater than that of other countries. However, the reality is that funding for the national development plan will be reduced by 10%, or €1 billion, in 2009.
Deputy Leo Varadkar: The Government welcomes the recent decision of the Commission for Energy Regulation not to increase the price of gas and electricity. The reason for recent significant increases in those prices was the rise in commodity prices. That upward trend is now turned on its head, with commodity prices falling back to where they were 18 months ago. Yet the Government celebrates the fact that there has not been another increase in prices. It seems that when commodity prices rise there is a corresponding increase in utility prices but, when they fall, the Government merely congratulates itself that there is no further increase. Surely there should be an increase when commodity prices rise and a decrease when they fall. That seems logical but it is clearly not the view of the Government.
Deputy Leo Varadkar: The Government’s counter-motion includes a reference to reducing the burden of regulation on business. I acknowledge that the Government is making some effort in this regard but, at the same time, it is taking other actions to increase it. We are given a mythical target of 25%, but this cannot be achieved if one does not know what is the baseline. Given that there has been no analysis of the baseline cost of regulation, how does the Government expect to quantify a reduction of 25% when it cannot quantify 100%? That is akin to proposing to reduce one’s weight by 25% without ever weighing oneself and to extrapolate that one has lost weight simply because one has eaten fewer buns. That is how the Government is working out its targets in this regard.
I thank the Minister of State, Deputy Kelleher, for responding to the contents of the motion in his reply. The Tánaiste’s reply, on the other hand, was merely the single transferable speech on enterprise, trade and employment. I understand the Forfás study to which the Minister of State referred indicates that the cost of doing business in the Republic is between 5% and 7.5% higher than it is in the North. I look forward to reading that report because the accuracy of this statistic seems highly doubtful and contrary to common sense. Taking into account higher labour costs, employer’s PSRI, rates, utility costs and so on, one can only conclude that the differential must be far higher, probably close to 20%. The higher VAT rate is an additional factor.
The Minister of State referred to the report of the consumer strategy group. Two years after that report was delivered, only nine of its 27 recommendations have been implemented. The Minister of State also referred to the reports of the Competition Authority. I welcome the undertaking that there will be a response from the Government to future reports of the authority. However, why has there been no response to the reports already published? Is it necessary for the authority to publish another report on opticians’ or dentists’ charges before there can be a Government response?
There is no doubt that inflation is decreasing. However, incomes are stagnant and take home pay is decreasing because of tax increases. Most people will take home less money in six months’ time than they do now. For that reason, value for money and consumer issues are even more important than they were in the past. That is why it is important that falling inflation, or potentially even deflation, should not be an excuse to get away with increases in VAT, Government charges and prices levied by utilities. We should use the opportunity of the recession to make our economy more competitive by bringing those costs down. That is the reason Fine Gael tabled this motion. By reducing VAT, insisting the regulatory system is reformed so there is a fair way of setting costs and by reducing and freezing the cost of business we can become competitive again. That is the approach we will need if the economy is to grow again when the recession ends in 2010 or 2011. On that basis, I commend the motion to the House.
|Ahern, Dermot.||Ahern, Michael.|
|Ahern, Noel.||Andrews, Barry.|
|Andrews, Chris.||Ardagh, Seán.|
|Aylward, Bobby.||Behan, Joe.|
|Blaney, Niall.||Brady, Áine.|
|Brady, Cyprian.||Brady, Johnny.|
|Browne, John.||Byrne, Thomas.|
|Calleary, Dara.||Carey, Pat.|
|Collins, Niall.||Conlon, Margaret.|
|Connick, Seán.||Coughlan, Mary.|
|Cregan, John.||Cuffe, Ciarán.|
|Cullen, Martin.||Curran, John.|
|Dempsey, Noel.||Devins, Jimmy.|
|Dooley, Timmy.||Fahey, Frank.|
|Finneran, Michael.||Fitzpatrick, Michael.|
|Fleming, Seán.||Flynn, Beverley.|
|Gogarty, Paul.||Grealish, Noel.|
|Hanafin, Mary.||Harney, Mary.|
|Haughey, Seán.||Healy-Rae, Jackie.|
|Hoctor, Máire.||Kelleher, Billy.|
|Kelly, Peter.||Kenneally, Brendan.|
|Kennedy, Michael.||Kirk, Seamus.|
|Kitt, Michael P.||Kitt, Tom.|
|Lenihan, Brian.||Lenihan, Conor.|
|Lowry, Michael.||McEllistrim, Thomas.|
|McGrath, Mattie.||McGrath, Michael.|
|McGuinness, John.||Mansergh, Martin.|
|Moloney, John.||Moynihan, Michael.|
|Mulcahy, Michael.||Nolan, M.J.|
|Ó Cuív, Éamon.||Ó Fearghaíl, Seán.|
|O’Brien, Darragh.||O’Connor, Charlie.|
|O’Dea, Willie.||O’Flynn, Noel.|
|O’Hanlon, Rory.||O’Keeffe, Batt.|
|O’Keeffe, Edward.||O’Rourke, Mary.|
|Power, Peter.||Power, Seán.|
|Ryan, Eamon.||Scanlon, Eamon.|
|Treacy, Noel.||Wallace, Mary.|
|White, Mary Alexandra.||Woods, Michael.|
|Allen, Bernard.||Bannon, James.|
|Breen, Pat.||Broughan, Thomas P.|
|Bruton, Richard.||Burke, Ulick.|
|Burton, Joan.||Carey, Joe.|
|Clune, Deirdre.||Connaughton, Paul.|
|Coonan, Noel J.||Costello, Joe.|
|Coveney, Simon.||Crawford, Seymour.|
|Creighton, Lucinda.||D’Arcy, Michael.|
|Deasy, John.||Deenihan, Jimmy.|
|Doyle, Andrew.||Durkan, Bernard J.|
|English, Damien.||Enright, Olwyn.|
|Feighan, Frank.||Ferris, Martin.|
|Flanagan, Charles.||Flanagan, Terence.|
|Gilmore, Eamon.||Hayes, Tom.|
|Higgins, Michael D.||Hogan, Phil.|
|Howlin, Brendan.||Kehoe, Paul.|
|Lynch, Ciarán.||Lynch, Kathleen.|
|McCormack, Pádraic.||McEntee, Shane.|
|McGinley, Dinny.||McGrath, Finian.|
|McHugh, Joe.||McManus, Liz.|
|Mitchell, Olivia.||Morgan, Arthur.|
|Naughten, Denis.||Neville, Dan.|
|Ó Caoláin, Caoimhghín.||Ó Snodaigh, Aengus.|
|O’Donnell, Kieran.||O’Dowd, Fergus.|
|O’Keeffe, Jim.||O’Mahony, John.|
|O’Shea, Brian.||O’Sullivan, Jan.|
|Penrose, Willie.||Perry, John.|
|Quinn, Ruairí.||Rabbitte, Pat.|
|Reilly, James.||Ring, Michael.|
|Shatter, Alan.||Sheahan, Tom.|
|Sheehan, P. J.||Sherlock, Seán.|
|Stagg, Emmet.||Stanton, David.|
|Timmins, Billy.||Tuffy, Joanna.|
|Upton, Mary.||Varadkar, Leo.|
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