Government Charges on Businesses: Motion.

Wednesday, 21 October 2009

Dáil Eireann Debate
Vol. 692 No. 3

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The following motion was moved by Deputy Phil Hogan on Tuesday, 20 October 2009:

Debate resumed on amendment No. 1:


Deputy Kathleen Lynch: Information on Kathleen Lynch  Zoom on Kathleen Lynch  Anyone involved in an Opposition party will know that a strong debate usually take place as to what will be the subject of a Private Members’ motion. No Private Members’ motion is ever tabled lightly. I take it that Fine Gael pondered long and hard about choosing this subject for debate, and that is the way it should be. The time allocated for debates in this House is precious and we are always conscious of the time. Therefore, this motion must be taken seriously.

I accept fully the bona fides of this motion, but in the current circumstances people are inclined to clutch at straws to make life better for different groups. There is not a Deputy in this House who does not have sympathy for people running small businesses. They keep our towns and cities going, our communities together, provide services and, to a great extent, keep the lights on. Therefore, there is a great deal of sympathy for these people because they did not make outrageous or outlandish profits but kept their businesses ticking over. They have always found it difficult to pay the charges levied on them and we have had a great deal of sympathy for them, particularly those of us who served on local authorities and would have been aware of the difficulties they encounter on a day to day basis. In the approach to the Estimates every year, we have received pre-Estimates submissions from small businesses.

If we were to do what the motion calls on us to do, and I understand the reason it has been tabled, the very essence of local democracy could be affected. Local democracy in this country is very limited in any event. We probably have local administration as opposed to local government. I constantly advocate that local democracy, local administration or local government should be given far more powers and support than it has been given. Those in local government are charged with collecting our rubbish, ensuring that we have clean water, our streets are lit, traffic flows, we have a safe thoroughfare, footpaths are kept in good repair, housing is provided for particular groups and that our cities and our towns run smoothly. If we are to deprive them of the very few streams of income they have, which is what would be the effect of this motion if taken to its logical conclusion, not only would the individual citizen suffer, but businesses would suffer. Businesses, by their nature, depend on the thoroughfare outside their premises being well kept to encourage people into their premises.

[658]Small businesses face significant competition from major shopping arcades and shopping centres located outside towns and cities. Such shopping centres are a major attraction because it is easier to park there and if people want to buying large household goods, it is easier to shop in the relaxed atmosphere afforded by such centres.

However, towns and cities are still a major attraction for people. In Cork in particular, we talk about going to town. It has been the tradition to go to town on a Saturday, whether to buy meat, clothing or to shop for the home. It is a tradition and part of what we do. When we walk through our towns and cities, we expect them to be kept neat and tidy and the footpaths to be maintained. That is the work local authorities do, and sometimes we forget that. The number of people local authorities have let go has also been forgotten in this debate. There are no more local authority social employment schemes. The horticultural input and additional services delivered by local authorities are no longer provided. On top of that, it is now proposed that they should be deprived of this source of revenue. I accept the motion has been tabled in good faith, but if it were to be enforced, we would have a much more depleted local government and the environs in which we live would be in a much worse condition. None of us want that.

There are actions we can take to assist small businesses, but they know that what keeps a small business in operation is the individual service a business gives its customers. Small businesses know their customers and that service is important to people, regardless of how remote we feel from multinationals. It is still important to people to know, when they walk into a shop, that the product for sale is safe and of good quality. Those are the things that will keep small businesses going. To say that local authorities would be deprived of funding to keep small businesses in operation is self-defeating. If the local authority cannot provide the service we charge it with delivering, people will no longer go into our towns and cities because they will not be safe, clean and pleasurable to walk around. This motion contradicts the provision of such services.

There is such a desperation to ensure businesses remain in operation that people will table motions such as this one. I do not believe the motion has been thought out fully, nor is it a positive step to take. We must think more seriously about this issue and be more clever in ensuring businesses remain up and running until we come out the other end of this recession, and we will come out the other end of it.

I am a fan of local government. The work it does is understated. We criticise those involved in it, but it is the essence of democracy. It is where the people are truly represented. That is the reason turnouts in local government elections are usually higher and depending on the ward or the activity of a local authority member they can be even higher. People have a close affinity with their local authority and when times were good, local authorities expanded their services and created an environment that was much better than was the case in the past. Now that times are tough they are cutting back on services. They have no choice in that regard. They have let go hundreds of people on temporary contracts who expected to go on to become full-time employees. Those are decent, honourable people who would have given great service to the State but the local authorities had no choice other than to let them go.

Every Member in this House has sympathy for small businesses. Without them, our shopping experience would not be as pleasant as it is, but this is not the way to proceed. Depriving local authorities of a funding stream is not the way to proceed.

We should not always pick on the easy target. It is easy to do that and it is a knee-jerk reaction. We are all sympathetic but we must think harder and find other ways of ensuring this economy stays on its feet until we come out the other end of this awful recession.

[659]Acting Chairman (Deputy Charlie O’Connor): Information on Charlie O'Connor  Zoom on Charlie O'Connor  The next speaker is Deputy O’Rourke. I would be grateful if she would indicate with whom she is sharing time.

Deputy Mary O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  I understand they are Deputies Collins, Blaney and Dooley, and whoever the Acting Chairman has on his list.

Acting Chairman: Information on Charlie O'Connor  Zoom on Charlie O'Connor  The problem is that I do not have a list and I have vanished from the list.

Deputy Mary O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  I will start to speak, they will shortly be in attendance. I am sharing in the first instance with——

Deputy Billy Kelleher: Information on Billy Kelleher  Zoom on Billy Kelleher  If I may,——

Acting Chairman: Information on Charlie O'Connor  Zoom on Charlie O'Connor  Just a moment, Deputy O’Rourke, the Minister of State can help us.

Deputy Billy Kelleher: Information on Billy Kelleher  Zoom on Billy Kelleher  ——the list is Deputies O’Rourke, Dooley, Collins, Deputy Blaney replacing the Acting Chairman, Deputies O’Brien and Mattie McGrath, and Minister of State, Deputy Calleary, will complete.

Acting Chairman: Information on Charlie O'Connor  Zoom on Charlie O'Connor  That is agreed.

Deputy Mary O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  I am happy to speak in this debate. I looked up the record because I heard my constituency colleague, Deputy Penrose, had spoken last night. My heart lifted because he stated he did not agree with the motion. I thought again of it as another factor in the famous Mullingar accord when all was sweetness and light in my constituency of Longford-Westmeath. Everybody was beaming at one another, and Labour loved Fine Gael and Fine Gael loved Labour, until they started to work out their policies. Deputy Penrose clearly stated he was not in favour of the motion and would not be supporting it.

Likewise, I found myself in accord with the esteemed Deputy who spoke before me as she outlined what local government does for a local region. Of course Deputy Kathleen Lynch is correct. Local authorities, be they town councils or county councils, are what keeps the place afloat.

I always remember from my years on local authorities that one was told the local authority is responsible for lighting, sewerage, water and housing, and therefore all that they do must be paid for by somebody. Of course we all would wish that there were no rates on this or that, but that is what I call voodoo economics, of the kind put forward in this motion. Who is to pay the county council workers? Who is to keep the streets swept? Who is to bring out the fire brigade when the call comes in the middle of the night? Who is to pay the men on the fire brigade?

As Deputy Lynch stated, the community employment schemes, which were beneficial in local authority areas, no longer exist. At a recent meeting with the county manager — every three months he meets the Oireachtas Members of the constituency which is extremely helpful — we were brought up to date and saw the economies which must be introduced in the local authorities to enable even a tiny core of local authority workers to be kept in employment.

Who is to pay for the running of one’s town or county? The chambers of commerce and all those worthy bodies would wish that there were no rates. In fact, over the past decade there have been only minute increases in the commercial rates in most rateable local authority areas because they have sought to keep them in line knowing how difficult is the business environment.

It is hugely daunting for anyone setting up a business or being in a business but one does not address this by chopping the nose off everybody who is working in a county council and [660]taking away their income at one fell swoop. It is a silly proposition. I suppose the proposers of the motion meant well. The previous Deputy was trying to be sweet but I have no inclination to be sweet about it. I cannot understand the motivation behind it.

Equally, while I am on my feet — the Acting Chairman will say it is not the issue but I will say it anyway — all of the Fine Gael Senators are lauding the great courage of Deputy Kenny in saying that he would abolish the Seanad. I saw no courage in that. I would see great courage if he said he would support the Government in the difficult task we face in the budget on 9 December. Telling a poor, hapless group of Senators that they are to be abolished did not require mammoth efforts of courage or determination. In the rush to get the headlines, he had to go one better than the Deputy Gilmore. One would get dizzy looking at their deeds of daring, except they are not daring but stupid.

Acting Chairman: Information on Charlie O'Connor  Zoom on Charlie O'Connor  Five minutes has now expired.

Deputy Mary O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  I do not agree with the motion. I agree with vibrant lively town councils and county councils which must have a measure of funding. The grants which come from the Department of the Environment, Heritage and Local Government have increased dramatically in recent years although perhaps not so much of late. The planning fees have not increased over the past decade either. To strip whatever money they are getting from the rateable valuations within their town and county is not the way forward for vibrant lively urban and county councils. I strongly disagree with the terms of this motion.

Deputy Timmy Dooley: Information on Tim Dooley  Zoom on Tim Dooley  I welcome the opportunity to participate in this debate. The Opposition Deputies have provided us with a timely opportunity to discuss the matter but, unfortunately, they have missed the point in an effort to gain political kudos yet again, something which is the detriment of this House and society generally.

The motion is short and seems to indicate that the Government is responsible for all business costs and, therefore, for the difficulties in which we find ourselves. That is fine but I am sure the public sees it quite differently.

Any objective analysis of costs facing business today would look elsewhere and would focus, not on this motion but on issues which have been raised in a review carried out by the competitiveness council earlier this year under the auspices of Forfás. That document is revealing because it identifies some areas that do not immediately come to mind as being significant in terms of the cost of doing business here. We all know about the issues of energy and labour, but the report indicates that, from an Irish business point of view, our legal costs are the highest in the OECD. That is something with which almost every enterprise now finds itself dealing. If our costs are the highest in the OECD, it is something which needs to be looked at without delay. It is not one of the Government related costs.

Surprisingly, there is also an indication in competitiveness council report that IT costs in Ireland are the highest in the OECD. I would have thought, since we had so many skills and so much IT development in this country, that we would have been lower down the scale. It is clear, therefore, that both legal and IT costs are causing great difficulties from an enterprise and business point of view and are something at which we need to look.

Labour is one of the biggest costs that all industries and businesses in the State must deal with. It is important that we would work towards controlling pay, both at public and at private level. It is vital to do that in terms of regaining competitiveness.

As a society, we need to learn from some of the experiences of the past and we must question the decision on increases in pay that AIB made today. That is not to take from the staff or any [661]contractual arrangements that might have been there. However, it is important to send out the most positive signals that we will work, at a minimum, towards freezing pay in those sectors. There were also issues of pay increases for staff within the ESB, which is something we should look at.

We must work from the top down. We must look at the entire remuneration process for the higher end executives and ensure that we set a proper ceiling for pay. We must move away from the notion of bonus pay and provide a much more simplified system of remuneration that rewards people for the work they do in a fair and equitable way but does not allow certain sectors to be paid in a manner that creates disharmony within the lower levels of employment. That will help us in regaining our competitiveness.

Energy costs also need to be addressed. The regulatory regime that is in place to control costs was slow to kick into action because of the structures that have been put in place to encourage competition. That is now starting to reap rewards, although we must be far more creative in resolving our energy needs through the use of green technology. We operate on the western seaboard of Europe which gives us access to wind, wave and tidal power generation. We need to invest more in this area to ensure we gain the competitive advantage that that energy, which is on our doorstep, could provide to industry for the future.

Acting Chairman: Information on Charlie O'Connor  Zoom on Charlie O'Connor  The Deputy’s time has expired.

Deputy Timmy Dooley: Information on Tim Dooley  Zoom on Tim Dooley  We need to work co-operatively, in line with the information adduced through the competitiveness council’s report, to identify those areas rather than coming up with bizarre ideas and seeking to blame the Government when it does not have a role in this area.

Deputy Niall Collins: Information on Niall Collins  Zoom on Niall Collins  Like other speakers, I, too, wish to make a contribution to the debate this evening. The motion, as worded, is short and provides us with an opportunity to have a broader debate on some of the issues pertaining to us. It is timely that we are discussing local government charges and their impact on business given our recent lengthy discussion in this House on Second Stage of the NAMA Bill 2009, Committee Stage of which will commence in the House tomorrow and continue next week. We are all aware of the stresses and pressures on business in terms of accessing credit and the resulting job losses in that regard.

On business, an issue often raised with me as a public representative is that of local authority charges, in particular the policies pursued by local authorities not in respect of commercial rates as mentioned by other speakers but in respect of water and waste water charges. Local authorities are charging a particular amount per cubic metre for water going into business and a different rate for waste water, which is crippling businesses.

There has been much debate in regard to the renewed programme for Government in terms of domestic water charges, a charge which it has been flagged will be introduced in the future. We will need to bring the proposed domestic water charges and waste water charges which are being foisted on business under one umbrella and to ensure charges are equitably spread. Business is suffering as a result of local authority charges.

I would like to see the Houses of the Oireachtas have access to the local government auditor. I am a member of the Committee of Public Accounts which has no power to bring before it for questioning the local government auditor in respect of any particular issue. We must ensure more joined up thinking if we are to keep charges down. There are many government agencies involved in the provision of social housing, a task which should be the responsibility of local authorities. The Health Service Executive provides rent supplement to people living in private rented accommodation while they are on the local authority housing list. There is no account[662]ability in this regard. If this issue was dealt with under one umbrella we would achieve economies of scale and savings which would help drive down costs in the future.

Another issue brought to my attention as a public representative is that of the black economy, which as a result of the stresses and strains being experienced by people, is rife. It is incumbent on our State agencies to establish more whistleblower mechanisms in an effort to snuff out what is happening in the black economy. It was reported earlier on the news that social welfare fraud of the order of €200 million has been unveiled so far. The target is to make savings of €600 million in respect of social welfare fraud.

The main issue of concern for me is the water and waste water charges being imposed on businesses throughout the country and the banking issues surrounding NAMA. I echo the comments of other speakers in regard to the proposed payment by Allied Irish Bank of pay increases at a time when we are discussing potential wage cuts and job losses right across the sector. It is not acceptable that the banks which we are supporting are awarding themselves a pay increase.

Deputy Niall Blaney: Information on Niall Blaney  Zoom on Niall Blaney  I am conscious I am substituting for the Acting Chairman, Deputy O’Connor. I have no doubt the Acting Chairman would like to comment on the service provided by the local authorities in Tallaght. I will not try to replace him but will stick to what I know in terms of my own area.

This motion is probably the most lazy that has been tabled since my time as a Member of this House in that it has no regard for the workings of local authorities or the pressures and financial constraints they are under at the moment. The motion has no credibility in that it does not set out any other area from which revenue could be achieved should there be a freeze on charges for businesses, as alluded to in the motion. This is a cheap stunt by the Opposition, as was the call earlier this week that Seanad Éireann be abolished and the number of Deputies in this House be reduced. That is cheap politics.

Deputy Deirdre Clune: Information on Deirdre Clune  Zoom on Deirdre Clune  It is the type of change needed.

Deputy Darragh O’Brien: Information on Darragh O'Brien  Zoom on Darragh O'Brien  Tell that to the Senators.

Deputy Niall Blaney: Information on Niall Blaney  Zoom on Niall Blaney  At the end of the day the general public will see this for what it is. Deputy O’Rourke referred earlier to a Labour Party member who does not support this motion. This shows that the Fine Gael and Labour parties, which for some time have been putting themselves forward as an alternative Government, are poles apart when it comes to devising policies. One wonders what type of mess the country would be in if they were given responsibility for returning our economy to stability, a task with which the current Government is dealing well. Neither of those parties has put forward any good or credible solutions.

Many local authorities are now controlled by the Fine Gael and Labour parties. This motion may be another cheap effort or stunt to remove the pressure from their councillors who must take tough action in terms of their budgets. Politicians must act responsibly. This motion does the opposite. We are all aware of the constraints on businesses, in particular small businesses, in our constituencies. Coming from a Border county I am aware of the extra constraints on businesses in that region. A little over a year ago, the Tánaiste aided by the Minister of State, Deputy Kelleher, undertook a study of the difference in the cost of running business either side of the Border. That study identified that difference to be approximately 40%. A lot of work has been done——

Acting Chairman: Information on Charlie O'Connor  Zoom on Charlie O'Connor  The Deputy has one minute remaining.

[663]Deputy Niall Blaney: Information on Niall Blaney  Zoom on Niall Blaney  ——behind the scene by the Tánaiste and her Ministers of State. The most recent figures I have seen have identified that difference to be just under 20% now. The Government is working behind the scenes and is taking real action to try to reduce the costs imposed on businesses, including energy prices which have decreased in the past year or two. These are the type of actions that are going on behind the scene. The Government is making real efforts to tackle the difficulties being faced by business rather than engaging in cheap politics. I hope this motion will be seen for what it is. I am sure it will be defeated tonight.

Deputy Darragh O’Brien: Information on Darragh O'Brien  Zoom on Darragh O'Brien  I am pleased to be given the opportunity to speak on the Government amendment to the Private Members’ motion tabled by Fine Gael. The Government remains committed to ensuring that Ireland remains open for business to both foreign and domestic companies and enterprises. As a small nation we have been incredibly successful in attracting foreign direct investment against stern competition. Indeed, even in these difficult times we continue to attract such investment, which is vital to creating jobs and maintaining the diversification of our economy. Our continued success in attracting new research and development ventures into Ireland is a real example of how Government policy in areas such as taxation and up-skilling, in real terms, creates new high-end jobs. As the Minister of State mentioned in his speech yesterday, a recent World Bank study rated Ireland 7th out of 180 countries in terms of ease of doing business. It is important for me to put on record my praise for the work done by our State agencies on a daily basis to ensure people set up new business in Ireland. In particular, I commend both Enterprise Ireland and IDA Ireland for the sterling work they do on behalf of this country.

As I have said previously in the House, there is no doubt Ireland will come through this recession more quickly than some commentators and celebrity economists — one of whom is now a Member of this House — would have us believe. To do this, however, we must regain competitiveness, and the signs are that we are going in the right direction. A recent European Central Bank report on the top 15 countries showed that labour costs in those countries have risen by 3% in the past 12 months, while Ireland’s have dropped by approximately 4%. This is a sharp and badly needed correction. We are now behind the EU 15 average. Ireland, to ensure future economic prosperity, needs to reduce its labour costs further. I commend the many people who have, in the interests of maintaining jobs and competitiveness, seen the bigger picture and agreed to wage freezes and, in many cases, reductions. I sincerely hope people in other sectors will follow that example.

Many of my colleagues have mentioned the recent salary increases granted to certain employees in AIB. The board’s decision to allow a 3% pay increase was nothing short of disgraceful and shows no regard for the taxpayer or the Government which has come to its rescue. In the current climate, for AIB even to contemplate paying increases, which are effectively coming from taxpayers’ money, shows how out of step it is with the times. It also shows utter incompetence. Over the next week or so we will have a further opportunity, on Committee Stage of the National Asset Management Agency Bill 2009, to ensure that this bank and others do what they are supposed to do, which is to support viable Irish businesses. AIB, in particular, is not doing this. We as a Government need to take a tough stand with the bank, by way of legislation, to ensure it supports viable Irish businesses and stops putting up barriers to progress and further investment.

I also appeal to the Revenue Commissioners to take a more understanding approach to businesses, particularly in the SME sector. I am extremely concerned about the feedback I am receiving on a daily basis from small businesses about the way they are being dealt with by the Revenue Commissioners in the current climate. The heavy-handed way in which attachment orders are being used needs to be urgently reviewed. I am fearful that because of the approach [664]being taken with this sector in particular, the Revenue Commissioners are putting in peril the very existence of some firms. I am asking it now to take a medium-term view when dealing with firms that have always paid their taxes and are now experiencing difficulties in doing so. I am not asking them to write off any taxes owed but simply to look at the track records of businesses and take a realistic view with regard to the payment of outstanding taxes. Its approach at the moment is counterproductive and is putting businesses at risk. If businesses go to the wall, the Revenue Commissioners will never see the taxes that are due to them. I urge the Minister for Finance and the Minister of State, Deputy Billy Kelleher, to seek assurances from the Revenue Commissioners that it will do business with business.

The Government amendment to the motion shows the Government is taking the necessary steps to support our SME sector and, in particular, our export sector. However, we need to do more. We must ensure this area is prioritised because we will come through the recession with the assistance of Irish firms and businesses.

Deputy Mattie McGrath: Information on Mattie McGrath  Zoom on Mattie McGrath  I support the Government amendment. As other speakers have said, it is all about restoring our competitiveness. It is important that we remain competitive and return to where we used to be. I acknowledge the measures taken by the Government to help enterprises, especially in the SME sector. We are currently acting at too slow a pace and I urge the Minister and his colleagues to do more to speed up the process. Access to funds is a major problem for small businesses. I know many small business owners — indeed, I am one myself. They are the backbone of our communities and provide great employment. Many were set up in other recessionary times.

It behoves all of us to ensure that our banking system, especially the banks which have been subject to our so-called bailout — I will call it support — release funds to these businesses because they are clearly not doing so. Business people need overdrafts to survive. I know of a couple of cases in which people were expecting cheques and had themselves written cheques to other suppliers and service providers, but when they received the cheques and lodged them to their banks, instead of going into their current accounts, the money was put in against their overdrafts. This is not acceptable and it must change.

We all understand that local authorities cannot survive without funding, and they probably should receive better funding than they do currently. However, I recently took the unusual step of writing to the county and town managers to ask them to consider a moratorium on rates. It is not that ratepayers do not want to pay; they have always paid and will pay again. However, they are so hard-pressed at the moment, with so little business, that they need a moratorium not so that they do not have to pay the rates, but to give them some space. That is badly needed. I am also concerned about some of the other charges, such as water charges and planning fees. We will need to consider this and be reasonable about payments, perhaps by spreading them over a period or providing a flexible system of payment.

We are badly served in the area of energy costs. While the ESB provided a good service for many years, it is now a monopoly, especially in the provision of services and lights to local authorities. We must open this up to competition. It is not good enough for the ESB to charge what it likes and give an appalling service, which it does, and sometimes no service. This issue must be addressed. I also ask local authorities to encourage their staff to take simple measures to cut down on energy costs, such as switching off equipment, lights and so on.

There is a range of other costs, such as labour costs. I too condemn the board of AIB for granting pay rises to some of its staff. The debate on NAMA that will take place tomorrow and next week is timely. AIB is giving two fingers to those of us who are trying to drive down costs. I am not criticising the bank officials at the desks, who are doing a good job under tough [665]conditions and are getting a lot of stick from a frustrated public, but this contractual arrangement flies in the face of what we need to achieve.

There is a whole plethora of quangos, from that which implements HACCP to the National Employment Rights Authority to those dealing with health and safety, and back to the Revenue Commissioners and the sheriffs, which are now operating. This is akin to State terrorism. It is terrorising small business people who want to pay their money. They have always paid their bills and intend to pay them, but they need space and to be treated kindly and sensitively. This must be taken into account by our public service and those who are in positions of trust. They are respected, but people are frightened and intimidated by them and this is not acceptable.

Deputy Deirdre Clune: Information on Deirdre Clune  Zoom on Deirdre Clune  I wish to share my time with Deputies Michael Ring, Pat Breen, Lucinda Creighton, Andrew Doyle and John O’Mahony.

Acting Chairman: Information on Charlie O'Connor  Zoom on Charlie O'Connor  Is that agreed? Agreed.

Deputy Deirdre Clune: Information on Deirdre Clune  Zoom on Deirdre Clune  This motion is clear in its call on the Government to freeze all Government charges on businesses until 2012. We have had and will continue to have many debates to highlight the difficulties being experienced by small businesses throughout the country, businesses that employ more than 800,000 people between them. These businesses which are found in every parish, community and every small and large town are the backbone of our economy, but they are suffering. The Government could help them in many ways, but particularly in the area of charges over which it can have control, such as local authority charges for water, energy, waste, commercial rates and the charges involved in complying with the numerous layers of red tape concerning regulations for small businesses.

The Tánaiste has often referred to the need to address the issue of competitiveness. Fine Gael has clearly outlined its policy in this regard and our members outlined last night and will do so again tonight some of the areas where we can improve our competitiveness. Lack of competitiveness is one of the major overhangs from the Celtic tiger era. In 2000, we were fifth in the global competitiveness league, but last month we had slipped to 25th place. Two areas mentioned as contributing to this fall were lack of access to financing and inefficient Government bureaucracy. These areas were highlighted as significant problems for businesses in Ireland.

Competitiveness in this regard is a measure of the capacity of our exports to compete with other products. Irish exports are set to fall 13% in 2009 and services are expected to drop by 20% from their 2008 levels. Overall, our exports were worth €154 billion in 2008. The problem for exports is that they must compete against those of other countries and, as mentioned, we have slipped to 25th place in that regard. The problem is our exports carry the excessive burden of costs when they compete with other products.

I mentioned some areas over which the Government could have direct control. In its pre-budget submission, the Small Firms Association has outlined the six major issues on which they want the Government to act and over which it could have influence. The first of these is energy. Last week the National Competitiveness Council stated we were significantly out of tune with other EU countries. We are the fourth highest of the EU 27 in terms of energy costs and 35% more expensive than the average. Large and small businesses throughout the country must deal with those costs.

Water charges are also an issue. Any Members who have been involved with local authorities are aware of the cost to businesses operating within the regime. They must pay for water coming in and for waste water. This is a huge burden on businesses. They are crying out for transparency on charges. Businesses are told they are only bearing the burden of costs relevant [666]to themselves, but we need light and transparency on the issue because they seem to be taking an unfair share of the burden.

Local authority rates are another issue. Fine Gael has made a commitment that where the party is in control in a local area, there will be no increase in commercial rates. It is far too easy an option for local government to concentrate on and increase commercial rates. The rate must be forced down. This will be a difficult issue for local authority members, but they must work within their budgets and not use the soft option of increasing commercial rates, particularly in the current climate. The emphasis of this motion is on getting the Government to focus on the issues under its control.

Deputy Michael Ring: Information on Michael Ring  Zoom on Michael Ring  I am glad of the opportunity to speak on this motion. The Government, the Minister and local authorities must begin to live in the real world this year. Small businesses are collapsing. They are under pressure and are sick and tired of keeping local authorities going, as they have done over the past number of years.

The first issue of concern is rates. Why do local authorities collect rates? What services do they provide to small businesses who pay rates? In my area all they provide is aggravation for people trying to create employment. I will give two examples, of two people who visited my clinic last Monday. The first was a man with a small abattoir. He kills sheep for freezing for people in rural areas. For every 30 sheep he kills, he must leave Westport and take the 30th sheep to Ballyhaunis for testing because of departmental regulations. The other man who came to me employed six or seven people in the garage business. He told me a story about the local authority. Due to the fact he sprays cars, he had to apply for a licence from the local authority. It costs him €540 to spray a car, and the licence from the council costs €600. However, he told me that anyone could go into a shop and buy the same paint and start painting and do so from 5 p.m. until 10 a.m. when the local authority members return to work. That is unacceptable. This man is being put out of business by the State, while the State helps and encourages other people in the black economy. They can travel to Northern Ireland and bring in the same paint and do the same work, but he is trying to be honest and pay his taxes and rates. However, he is sick and tired of having inspectors come into his business every second day.

The same is true of abattoirs. We have closed down more abattoirs in County Mayo because they could not compete. The man who came to me had a similar story. When the inspector came in to him, the owner of the abattoir took up the paperwork, tore it up and said he had enough and was leaving the business. He closed down his business, leaving three or four people without jobs. He could not get up every morning worrying about who was going to come into his business next. He was doing his best and making an effort. Local authorities, inspectors and the Government must realise the private sector is finding things difficult. It is not easy in business currently. There should be no increase in rates this year. I told the Mayo county manager he should cut back rates this year. Why should we have an increase? Businesses are not able to pay an increase. Local authorities must conduct their business properly.

Another area of concern is the new charges being brought forward by planning authorities. When a man from my town applied for planning, the county council imposed a €90,000 betterment levy. Then he went to An Bord Pleanála, which looked for further information. He had to send in a revised plan but by then the local authority had imposed a parking levy of €250,000. Do these officials live in the real world? The man appealed this to An Bord Pleanála, which had some common sense and reduced the levy to €90,000. The man, his daughter and family were about to set up a business, but before even getting started, he had to pay Mayo County Council a levy of €90,000. Are we trying to tell people we do not want employment? Are we trying to tell people we do not want work? Can the public service just think up a figure, throw [667]it out and say it is fine? This must stop now. If the recession does one thing, it may make the local authorities and the Government begin to realise how hard it is for small businesses to survive.

My constituency colleague, the Minister of State, Deputy Calleary, is now in the House. He knows what I am talking about. Businesses are finding it hard. They are unable to survive and are under a lot of pressure. I warn the Minister of State and his officials that we are sick and tired of regulations. The Minister of State can stop the regulation in his Department because all it is doing is creating jobs for the boys and girls in health, councils and everywhere else while the self-employed and the taxpayers have to pay to keep them in jobs. They are doing their best to close them down and that type of attitude has to stop. We have to encourage, help and tell the employers that we want them to help in this recession and we want to stop over-regulation.

As somebody who canvassed for the Lisbon treaty ratification, I would not have done so were it not for the fact that we needed Europe this time. People are sick and tired of the regulation coming from Brussels, but I do not blame Europe. I blame the Minister of State, the Government and officials in the Department of Enterprise, Trade and Employment. Every single official has to go ten times further, but while he or she is assured of a pay cheque on a wet day or a fine day, the person who is self-employed must go out and earn it.

Deputy Pat Breen: Information on Pat Breen  Zoom on Pat Breen  This is a very good motion and it is timely. I believe it was the late President John F. Kennedy who said the time to repair a roof was when it was leaking. This Government has received numerous warnings to the effect that the roofs of many businesses in the country are not just leaking, but about to cave in. The clock is ticking for many businesses. Red tape, as Deputy Ring said, high rental costs, lack of credit and cash flow are among some of the problems that have forced many businesses to close down. On several occasions here I have cited the example of Parnell Street in Ennis where ten businesses have closed in the past 12 months and there are 20 more vacant on the street. The rapid increase in unemployment and the deterioration in the aviation and tourism sectors have dealt a hammer blow to the mid-west region.

Today it is reported that Ryanair is threatening to pull 75% of its services out of Shannon Airport as it negotiates a new deal with the authority. It serves 27 destinations, so just imagine if Ryanair were to axe 75% of its services what that would mean for Shannon Airport, as regards jobs and indeed tourism for the entire region. The Government might as well turn off the lights if this happens, and then there is the threat from transatlantic services as well that are about to close their cabin crew bases at Shannon. These airlines, including easyJet and Aer Arann blame the €10 travel tax for killing off tourism. I believe the Government should take note of what is happening in other European countries in relation to the travel tax.

Take the Netherlands, for example, which introduced a travel tax in 2008. It saw the detrimental effects the tax was having on tourism and axed it. I would appeal to the Minister of State, Deputy Calleary, as he is here tonight, to ask the Minister for Transport to get rid of this tax. It is causing untold damage in the regions and for tourism, generally, in this country. All the Minister has to do is to ask his counterparts with transport portfolios in the Netherlands, France or wherever these taxes were introduced to see that it is wrong and kills off tourism.

We should be welcoming people here with open arms. If the Government does not change its mind as regards this tax, it will not have to worry about tourists, because they will not be coming. European Commission President José Manuel Barroso visited Shannon Airport prior to the Lisbon treaty referendum. He announced, funnily enough, that €23 million was to be made available from the EGF to assist the retraining and re-skilling of workers who had lost their jobs, including the former Dell employees. However, the Tánaiste admitted to me last [668]week that this funding has not been put in place. It has to get the stamp of approval from the European Parliament and the Council of Ministers. Again I ask the Minister of State to appeal to the Tánaiste to put this funding on the agenda for the next Council of Ministers. It is extremely important that this money is fast-tracked so that people do not have to wait until 2010 for the retraining process to begin.

Foreign direct investment has had a significant impact on our economy over the past 15 years. However, the major share of employment has been indigenously created by, for example, the local shopkeeper, the hairdresser, the butcher and the publican. By their very nature such businesses make a big impact on local communities, yet many of them are closing down because of high costs and people going to the large retail stores. Local enterprise boards, too, have played a significant role in assisting in the creation of local employment. I was surprised the McCarthy report recommended they should be abolished. They were established in the first place to fill a gap as regards support for local enterprise development, as identified in the small enterprise taskforce report. Since they were first established in 1993 they have assisted in the creation of 33,800 throughout the country, giving financial support to more than 900 new projects per annum between 1993 and 2007. They have assisted in job creation and the average cost per job is only €5,485. In order for them to continue to create employment opportunities and promote enterprise at local level, I believe such local enterprise boards, including the Clare Enterprise Board in my constituency, play an important role in job creation for businesses and we should be very slow to abolish them.

Chambers of commerce in Ennis, Kilrush and Shannon have long argued the need for reductions in rates and rents as well as for a freeze in local authority rates. In spite of pre-election promises by the Government that action would be taken and a freeze put in place for three years, no legislation has been enacted to review these charges. My colleague, Deputy Leo Varadkar, has consistently called for the introduction of such legislation. Before last June the Taoiseach promised to freeze local authority rates for three years. We in Fine Gael believe the freeze should be for five years. The ball is now firmly in the Government’s court. Given it has failed to meet its previous commitments I do not know whether it will deliver on this, either.

The Government cannot expect the economy to recover if it continues to ignore the problems that are forcing small and medium-sized businesses to close their doors. The results of a recent survey conducted by Retail Excellence Ireland show the true extent of the problems facing businesses if rent reductions are not made. More than 50% of the businesses surveyed pointed out that if rents were not reduced, between one and five people would be made redundant. Some 40% of retailers believed they could not survive if rent reductions were not forthcoming — with 30% of those worried they would go out of business within six months.

Small businesses are the backbone of the economy in every county. The Taoiseach recently opened a small business in my constituency, Clare Springs, which employs ten people, and will, hopefully, increase its workforce to between 20 and 30. It is managed and owned by Paul and Tom Conlon, who invested €4 million without any help from the State. That is an example of people who identified an opportunity and saw it take off. I would urge the Minister of State to support the Fine Gael motion in the House tonight.

Deputy Andrew Doyle: Information on Andrew Doyle  Zoom on Andrew Doyle  Time and again we are asked by the Government to be constructive, as I keep saying. Over the last month we have introduced simple straightforward Bills that could have been accepted and the closest we have ever got to acceptance is the Government’s amendment to this motion, which does not address the simple one-liner, “That Dáil Éireann calls on the Government to freeze all charges on businesses until 2012”, a three year freeze. The amendment skirts around the issue entirely. What catches the eye in particular is that it [669]commends the Government on its strong focus on training and up-skilling of those in the workforce and those recently made redundant. It cannot be serious when unfortunately all around us the dirtiest word in people’s vocabulary at the moment is “FÁS”. There is not and there has not been a strong focus. Preparation has not been made for the rainy day in the way it should have been.

  8 o’clock

We in Fine Gael are trying to promote a situation whereby the Government does all in its power to protect every job it can from being lost. Every job gives a human being the ability to earn a living and, where applicable, help him or her to support a family. It also contributes to the tax revenue, which keeps the wheels of the State running — the public sector and its services. It is important to bear in mind that there is a human side and an economic side to it. The worrying aspect to the current downturn is the fact that we have low interest rates with relatively low energy prices. Every time there is an indicator that the economy is improving, the price of oil has tracked upwards with it. It is outside our hands to a great degree until we can harness our own resources.

Before he was elevated to his current role, the Minister of State, Deputy Dara Calleary, was on the Joint Committee on Climate Change and Energy Security with me. We all know the potential for alternative energy that exists off the coastline of his county. As we are not there yet, we need to deal with what happens in the world energy sector. Ireland’s economy will lag behind every other economy, but it will not lag behind when it has to pay for its oil and gas. That is a factor outside our control. In everything else we do we should become competitive and drive down all our costs.

Deputy Michael Ring mentioned abattoirs. I could go on ad infinitum about how they have been closed and over-regulation by people who just do not seem to have a grasp. I know of one case where an abattoir started its kill at 9 a.m. The vet did not come in until 9.30 and made them dump the perfectly healthy animals that had been slaughtered. That is not acceptable on the part of someone paid by public money that comes from private industry. There was no question of anything untoward having gone on. It is not right to have over-regulation instead of proper auditing and spot checks, which is a much more satisfactory approach as highlighted by Patrick Wall in the reports following the pork dioxin crisis.

We need to take a stand to give people a chance to make a plan in the knowledge that they will not be faced with an increase in rates. We would argue that there should be a PRSI holiday for anyone creating a job. There should be a VAT reduction. In the same way that the corporation tax reduction brought in more corporation tax, that calculation should be done for VAT. The reduction should at least be applied for a year to see if it works. One of the big arguments about the Lisbon treaty focused on protecting our integrity in determining corporation and other tax rates. Corporation tax was the one everyone wanted to target. Our low corporation tax means that we take in a large amount of corporation tax. Everyone accepts that. We have become a hub for companies involved in financial services, information technology and pharmaceuticals where corporation tax is applicable. Why do we fear reducing VAT so much? I do not see the logic. I have heard the Minister for Finance defend maintaining high VAT rates.

Our biggest market is outside the eurozone. The sterling exchange rate of 92p to 93p to €1 is killing exporters. As we are an export-based nation, oil prices and exchange rates which are outside our control have a major effect. While we also do not control interest rates, that is not an issue at the moment. We need to stimulate the economy, get people back to work and give some certainty and encouragement. The Government should not come up with amendments that skirt around and praise everything that has been going when jobs are being lost on a daily basis. Our proposal is to freeze all Government charges for the next three years, which is not [670]difficult. The ever-decreasing number of businesses that are paying rates and employing people should not be faced with the uncertainty about possible increasing charges penalising them for staying in business.

Deputy John O’Mahony: Information on John O'Mahony  Zoom on John O'Mahony  I am delighted to have the opportunity to speak on this topic that affects every town and village throughout the country. I compliment Deputies Phil Hogan and Leo Varadkar on tabling the motion. The need to help small businesses should be a core value of any economic policy at any time. It should be a core value of any economy at any time, but particularly now during a time of recession. In the past 18 months this recession has come crashing down the tracks at unbelievable speed.

Over the years thousands of jobs were provided by small businesses. They would not grab the headlines. There would not be a Minister rolling into town with his cavalcade to announce them. There were five jobs here, ten jobs there and 15 jobs somewhere else. However, they were the businesses that paid their charges. They were able to absorb the increasing charges during the good years. They paid their taxes. They did not get millions of euro in grants from IDA Ireland, but they kept our economy ticking over. Many of these businesses are now in difficulty.

We all know and accept that businesses are being screwed by the banks. I met a small businessman in Claremorris a few weeks ago. He told me he looked for a loan of €50,000 a few years ago to expand his business and was offered €300,000 by the banks, which could not stop giving money out to him. However, he was cautious and wanted to see if his figures held up. As they held up, he went back a few weeks ago looking for the same €50,000, but now the banks will not lend it to him. That is the real situation facing businesses at the moment. If he had got that €50,000, he would have provided two or three new jobs. That is not earth shattering and would not make news headlines. However, repeated over thousands of small businesses around the country it would bring taxes into the economy and we would not have the major deficit of billions of euro we hear about every morning in the Chamber.

Another hammer blow for many of the small businesses has been the hiking of VAT rates with the effect in the lead-up to Christmas in recent years of traffic jams heading out of the State to buy groceries and other goods. We all know the effect it had on the motor industry. The Minister of State, Deputy Dara Calleary, will be very aware of the 15 jobs lost in the Casey motor company in Ballina last week. That company has been providing jobs in Mayo for the past 40 years, including coming through the difficult times of the 1980s.

The motion effectively suggests solutions to the problems of small businesses that are evident in every city, town and village in the country. On a walkabout in a few towns in my constituency of Mayo last week, I lost count of the number of small shops and businesses that have closed down and been boarded up in recent months. The Government amendment refers to a focus on training and up-skilling, looking forward to future export growth. It was not too concerned about export growth during the property bubble when billions of pounds were being given to developers to build hotels left, right and centre that are now closing down. The reality is that small businesses cannot get money from the banks. Their charges from local authorities and Government are going through the roof. Their customers are disappearing and those who are left have no money to spend because of the levies imposed on them.

Acceptance of the motion would send out a clear message that somebody cares and is willing to help in their hour of need. It has long gone beyond time to get real on all these matters that would make a difference. Earlier, I referred to all the boarded-up shops and businesses in the towns throughout the country. Could new businesses not be given a derogation from the need to pay some rates for an initial period so that the business could get up and running? These [671]are not ordinary times and they need extraordinary solutions to get us out of this mess. If we keep doing the same things that we have always done, we will end up with the same results. Today’s problems need different solutions from what would have been acceptable five years ago. The upward-only rent reviews represent one example of legislation that is not sufficiently flexible.

The Government amendment refers to a strong focus on training and up-skilling for those who have recently been made redundant. The criteria, qualifications and availability of these courses need to be made much more flexible than they were in the past particularly at this stage. I want to ask a serious question. If the Minister of State took this Government amendment into the small shops and businesses in his own constituency of Mayo tomorrow morning, what would those businesspeople say to him about the support they are getting? I think he and I know the answer.

Minister of State at the Department of Enterprise, Trade and Employment (Deputy Dara Calleary): Information on Dara Calleary  Zoom on Dara Calleary  I want to thank the Deputies who have spoken for their contributions to the debate. I would like to address some of the points raised. In opening the debate yesterday, the Minister of State, Deputy Kelleher, pointed out that the motion is based on the relatively misleading premise that Government charges are the biggest cost faced by businesses in Ireland, which is not the case. Costs such as energy and labour are of more immediate concern to businesses, large and small, and the availability of credit is the key issue facing the SME sector at present, as has been said by all Deputies during the debate.

Let us also remember that improving the business environment for companies is not only about simply cutting percentages off costs and charges, although that is vital. It is also about driving efficiencies across a whole range of areas that will, when achieved, lead to lower costs, greater productivity and improved working conditions, some of which were referred to by Deputies Ring and Doyle earlier.

The Minister of State, Deputy Kelleher, spoke yesterday of the Government’s consciousness that the administrative burden of regulation falls more heavily on small businesses than on most. This is recognised internationally, and makes the current administrative burden reduction programme all the more beneficial for small firms. The need to foster entrepreneurship at every level is central to our economic recovery, and the Better Regulation agenda is a key pillar of this work. Already, the high level group on business regulation, lead by my Department, has identified more than €20 million of administrative cost savings for business. I would again urge business, especially small business, to continue to submit practical suggestions where they feel the current burden is greatest. I, with the Minister of State, Deputy Kelleher, share a special commitment to this project in order to reduce this burden as soon as possible.

The issue of workplace inspections was raised throughout the debate. I recognise there is a need to streamline, as far as possible, the various inspections that are carried out by the State in order to ensure the laws of the land are being applied and that workers are not being exploited or put at risk in the workplace. The Social Welfare and Pensions Act 2007 provides for exchanges of certain information between the Minister for Enterprise, Trade and Employment, NERA, the Minister for Social and Family Affairs and the Revenue Commissioners. This facilitates the operation of joint investigations by the three parties, or a combination of the parties. The focus of NERA in such investigations or inspections is on checking for breaches of employment law, while the Garda National Immigration Bureau may also participate.

To date, such joint inspections are only undertaken where there is suspected serious non-compliance or where the employer is refusing to co-operate with one or more body. NERA has undertaken 50 such joint inspections since the beginning of 2008.

[672]Further work is being undertaken to make greater improvements in this area. An informal group of inspection agencies has been set up to discuss the issues around risk-based enforcement and to investigate how agencies and Departments may co-operate more closely to improve effectiveness. The group is focusing on potential co-operation between agencies and Departments, as well as identifying cross-cutting themes. The group intends to report its findings to the high level group by the end of 2009. Again, I wish to reiterate my personal commitment in this area.

The Government is taking a number of steps to support businesses, particularly SMEs, as was outlined earlier in the debate. Not all of the actions are about new schemes or spending money but about providing practical solutions and advice for companies. Even straightforward assistance such as the guide for boosting productivity in companies, which was recently produced by Forfás, is free to businesses and can make a difference on the ground.

The Minister of State, Deputy Kelleher informed the House last night about recent trade missions to China, Canada and the US, where the Tánaiste is currently on a mission. Each of these lead to new or extended contracts for some companies and opened important doors for others. Separate to trading deals being done around those, however, there have also been a number of wider job creation announcements from multinationals already in Ireland or setting up operations here, such as Equinoxe AIS in Deputy Perry’s constituency in Sligo, SITA in Letterkenny, McAfee in Cork, PayPal in Dublin and Citrix Systems. Even today, there has been further positive development with the announcement from the Irish Technology Leadership Group in the US of the creation of a $100 million venture capital fund, and the setting up next year of an Irish technology centre in the heart of Silicon Valley. In addition, the software company, Sajan, is to establish a new European headquarters in Ireland.

Today’s KBC consumer sentiment survey was more optimistic than it has been for the past two years. Business sentiment has improved in regard to the broader economy and, while business conditions are still tough, they are not nearly as bad as they were earlier in 2009.

We are very aware of the challenges. I look forward to working with the Opposition and the committee in order to address them.

Deputy John Perry: Information on John Perry  Zoom on John Perry  I congratulate the Ceann Comhairle on his appointment and wish him the best of luck.

The Fine Gael motion calls on the Government to freeze all Government charges on business until 2012. Speaking as a Deputy who understands the needs of business, I know this motion is the most appropriate response to the circumstances facing every small rural business in the country.

Recently, the Government organised a blue skies event at Farmleigh to look into a rosy future when we are next back in the land of plenty. It took the focus off the current crisis facing the country which was probably a welcome relief for some Ministers, even if it only lasted for a day or two. Now, however, we are back to reality with a vengeance. Ministers are going around the country outdoing each other with the talk of cuts in Government expenditure. The question must be asked, however, what about the current businesses struggling to create wealth and to maintain employment. Nobody in the Government is sitting down with real business people working a 40-hour weekend at the coal face to ask them about the difficulties they are experiencing.

We are in the midst of an unemployment crisis. Unemployment is at record levels in the north west. We must do everything we can to maintain existing jobs and to keep people in employment. The Fine Gael motion puts it up to the Government to assist business in a practi[673]cal manner by reducing the Government-imposed costs of carrying on a business. It demonstrates that Fine Gael’s priority is to listen to those already providing employment. The motion is about the specific topic of Government-imposed costs on business. The Government’s amendment is about a general commitment to driving down the cost of doing business in Ireland.

In case the Minister is not aware of the situation in the private sector, the Government is driving down the cost of doing business in that sector. This Fianna Fail-led Government has crashed the national economy and the private sector is suffering the brunt of this crash. Existing locally-based business are struggling to stay afloat, with the service sector on the floor at present, including hotels, restaurants and many other areas. All the evidence on the ground is that private sector local businesses and service operators are making significant reductions in their cost base. This is the only option they have to try to keep the business alive and keep people in employment.

We are an open, exporting economy. Some companies are closing down and jobs are moving abroad, in some cases to other EU countries. This clearly shows that our costs are seriously out of line with competitor countries. We must get our costs down in the public sector to match what is happening in the private sector. Whatever about reducing the cost of the provision of public services, it is critical to maintaining employment in the private sector that there be no increase in Government charges on business until at least 2012.

Over the past 12 months, Fine Gael has brought forward a number of specific proposals that focus on the preservation of existing jobs by providing immediate practical measures that will reduce the cost of doing business. Regrettably, the Government has seen fit to block and frustrate every practical measure proposed by Fine Gael. Keeping down and reducing Government-imposed costs is crucial for any business to survive in the current climate. The Government must control and reduce its own direct costs on business as a key contribution to national recovery. However, instead of reducing costs on business, the Government has maintained and in some cases actually hiked up charges and costs to business. Energy costs are too high, VAT and indirect taxation is, unbelievably, the highest in Europe. Every day, companies struggle with tax bills, needless red tape and bureaucratic road blocks.

Many companies and small businesses are facing extinction in the present economic crisis. The situation is even more critical for businesses in the Border counties, which are on the floor. These companies struggle every day with the euro to sterling differential. The Government must take action now to give viable business the best chance to survive the current economic downturn. The motion is a valuable and urgent practical measure. It fits into the bigger picture of improving competitiveness through minimising Government-imposed charges on business. It is about the survival of small companies and small family businesses. It is about trying to support the business people seeking to protect their businesses, including family businesses, and the staff employed in them. These businesses are key to getting our country out of the mess created by the Government. I call on Fianna Fáil Deputies to support the motion.

Deputy Olivia Mitchell: Information on Olivia Mitchell  Zoom on Olivia Mitchell  I propose to share time with Deputy Varadkar.

An Ceann Comhairle: Information on Seamus Kirk  Zoom on Seamus Kirk  Is that agreed? Agreed.

Deputy Olivia Mitchell: Information on Olivia Mitchell  Zoom on Olivia Mitchell  I am pleased to support this motion, which goes to the heart of our economic problems. There is no doubt that there has been a reduction worldwide in the overall amount of goods and services traded. Our particular difficulty is that the amount of Irish goods and services being sold has reduced by more than the international average. This is not just because our financial crisis is more extreme than elsewhere but because we have become grossly uncompetitive, declining from fifth in the world nine years ago to 25th in recent months. [674] The reality is that our economy cannot and will not recover if we are unable to sell our goods and services, and we will not be able to do so if our prices are higher than those of our competitors. It is a simple equation. My colleague, Deputy Bruton, has been saying for months that we cannot work our way out of the current budgetary crisis by increasing taxes; we must do it by reducing costs.

All taxes, charges, levies, licence fees, rates and duties, no matter who initially bears their cost, eventually filter down to the consumer, whether domestic or foreign. In other words, it is ultimately the consumer who must pay the extra charge. It is up to central Government, Government agents and local authorities to reduce their own costs in the same manner as businesses have been required to do. Moreover, it is not merely a question of charges. The regulatory and administrative burden on every business, large and small, private and semi-State, has increased substantially in recent years. I refer to costs arising from the accretion of legislation in recent years, including regulations relating to equal status obligations, freedom of information, health and safety, data control, accounting requirements, payroll costs and so on. Even apparently minor issues have an impact, such as the cost of administering the travel tax or the burden imposed on local authorities in implementing the pension and income levies. All these initiatives may be necessary and worthy in their own right, but the Government must be conscious that they increase the cost to every business and consequently the cost of every service and product.

We must at least ensure there is some rationalisation of administration in order to reduce costs. In the restaurant industry in Dublin, for example, there is a ridiculous arrangement whereby fat traps must be inspected by Dublin City Council. Instead of arranging for this to be done by its environmental health officers, who call to every restaurant in the city several times a year in any case, the council has contracted a private firm to carry out these inspections. It is not a case of collecting the fat but of inspecting it. It goes without saying that the associated cost is imposed on businesses, amounting to an additional tax of €600 or €700 on top of the rates already being paid to the city council. The issue of rates is of particular concern for the tourist industry. I am aware of one hotel whose owner is paying rates in the order of €10,000 per week. It is totally unsustainable to have to pay that amount before even selling a sandwich. It is important that the revaluation of hotels be done quickly, but it currently seems to be taking forever. Another issue is that revaluations are based on size rather than earning power, but empty bedrooms do not earn anything.

In terms of the Government shooting itself in the foot when it comes to the tourism industry, the travel tax is the Daddy of them all. Tourism supports some 250,000 jobs in the State and for an island country there is nothing more important than access. Trade from our largest market, Britain, is falling dramatically largely as a result of this tax. The trade between Ireland and Britain is hugely price sensitive and in some cases, the tax is greater than the fare. It is a no brainer that something be done to address this. Calls to that effect have come from all involved in the industry and all of the airlines. The Government is sleepwalking into a situation where indigenous airlines are increasingly taking aeroplanes out of Ireland in order to serve more competitive locations. We will never get those services back. No matter what we have to offer, no matter how good our hotels or how attractive our tourism product, it is of little use if people find it too difficult or expensive to get here. In that case, we are simply pouring away all the investment that has been made in recent years.

The 20% increase in wine excise duty in the last budget slipped under the radar because it did not affect everybody. However, such a substantial increase in the cost of wine has led to redundancies in the trade and the closure of many wine businesses. Worst of all, the impact extends into the broader economy because alcohol is the major driver of cross-Border shopping. [675] People travel to the North to purchase wine and end up buying far more than that. Money is being driven out of the country as a direct result of Government action, with inevitable job losses.

Travel agents are also suffering as a consequence of regulatory requirements and have become something of a disappearing breed. The onerous 4% bonding charge puts them at a disadvantage relative to on-line travel websites. That charge made sense when most people booked their holiday through an agent rather than on-line, but it now amounts to inequitable treatment. This must be revisited in order to reduce costs and save jobs.

Deputy Leo Varadkar: Information on Leo Varadkar  Zoom on Leo Varadkar  I thank my colleague, Deputy Hogan, for tabling this important proposal to freeze Government charges on business. I had hoped there might be cross-party support for the motion because the measures it contains seem so obvious. We are facing a multifaceted crisis, a large component of which relates to jobs and competitiveness. We are relying on the private sector to create jobs because the Government is broke and cannot do so, but those jobs will not be created until we restore our competitiveness. We must make Ireland a good place once again in which to do business, and that means reducing cost levels. The motion, however, does not even go that far but merely proposes that the cost base not be increased for three years. I am very disappointed that the Government is not prepared to support Fine Gael’s proposal to assist businesses.

Deputy O’Rourke observed earlier that the Labour Party’s decision not to support the Fine Gael motion was indicative of a difference in our respective policies on this matter. If we did not have different policies we would be the same party. Deputy O’Rourke does not even seem aware of her own party’s policy. The Fianna Fáil manifesto for the local elections included a commitment not to increase local government rates for five years. However, Deputy O’Rourke acknowledged earlier that this policy has changed and described the increase in rates as minuscule. The reality is that the increase in rates has been massive, as have the increases in other charges imposed on business, such as water and waste charges. In the case of a small business whose owner wishes to sell spirits, for instance, the budget increased the licence fee payable from €300 to €500, with the same sum applying for beer and wine. A small shop with a very modest turnover must pay that licence fee in order to sell wine and must then pay the VAT, excise duty and other taxes associated with selling the product.

We expect the private sector to reduce prices and it has done so. We expect it to reduce costs and it is doing and will continue to do so, but it needs some assistance from the Government in that regard. However, that assistance is not forthcoming. Companies are being squeezed on one side by the effect of the recession on consumer spending and on the other side by Government charges. The result is that businesses are going to the wall and jobs are being lost. Until we reverse this policy of hiking more and more costs on business, the situation will continue to deteriorate. The Government must begin with energy costs, which have increased from the second lowest in Europe when this party was last in office to the second highest today. The existing regulatory structure should be done away with and an instruction issued immediately to the ESB to reduce its prices within two years to the European average. That will make a difference. If Ministers are prepared to show leadership by reducing their salaries in line with European norms, they must also have the courage to impose that leadership on entities such as the ESB and Bord Gáis in order to secure price cuts for consumers.

The Government must reduce its costs, review the joint labour committee, JLC, system, which is holding up labour costs unnecessarily, and reduce regulation or at least hold it steady for the next three years. That is all we ask. We have called for a national action plan on competitiveness to reduce the cost of business in order to make it possible for businesses to survive and create jobs when the upturn comes. However, we have not even gone that far in [676]the proposal before us today. All we are asking for in this motion is that the Government does not make things worse for the next three years. The fact that the Minister of State’s party and the other Opposition parties cannot support this really says it all. Only one party in this country supports business and employment, and that is Fine Gael.

Amendment put.

The Dáil divided: Tá, 71; Níl, 49.

Information on Dermot Ahern  Zoom on Dermot Ahern  Ahern, Dermot. Information on Michael Ahern  Zoom on Michael Ahern  Ahern, Michael.
Information on Noel Ahern  Zoom on Noel Ahern  Ahern, Noel. Information on Barry Andrews  Zoom on Barry Andrews  Andrews, Barry.
Information on Chris Andrews  Zoom on Chris Andrews  Andrews, Chris. Information on Seán Ardagh  Zoom on Seán Ardagh  Ardagh, Seán.
Information on Bobby Aylward  Zoom on Bobby Aylward  Aylward, Bobby. Information on Joe Behan  Zoom on Joe Behan  Behan, Joe.
Information on Niall Blaney  Zoom on Niall Blaney  Blaney, Niall. Information on Aine Brady  Zoom on Aine Brady  Brady, Áine.
Information on Cyprian Brady  Zoom on Cyprian Brady  Brady, Cyprian. Information on Johnny Brady  Zoom on Johnny Brady  Brady, Johnny.
Information on John Browne  Zoom on John Browne  Browne, John. Information on Thomas Byrne  Zoom on Thomas Byrne  Byrne, Thomas.
Information on Dara Calleary  Zoom on Dara Calleary  Calleary, Dara. Information on Pat Carey  Zoom on Pat Carey  Carey, Pat.
Information on Niall Collins  Zoom on Niall Collins  Collins, Niall. Information on Margaret Conlon  Zoom on Margaret Conlon  Conlon, Margaret.
Information on Sean Connick  Zoom on Sean Connick  Connick, Seán. Information on Brian Cowen  Zoom on Brian Cowen  Cowen, Brian.
Information on John Cregan  Zoom on John Cregan  Cregan, John. Information on Ciaran Cuffe  Zoom on Ciaran Cuffe  Cuffe, Ciarán.
Information on John Curran  Zoom on John Curran  Curran, John. Information on Noel Dempsey  Zoom on Noel Dempsey  Dempsey, Noel.
Information on Jimmy Devins  Zoom on Jimmy Devins  Devins, Jimmy. Information on Tim Dooley  Zoom on Tim Dooley  Dooley, Timmy.
Information on Michael Finneran  Zoom on Michael Finneran  Finneran, Michael. Information on Michael Fitzpatrick  Zoom on Michael Fitzpatrick  Fitzpatrick, Michael.
Information on Seán Fleming  Zoom on Seán Fleming  Fleming, Seán. Information on Beverley Cooper-Flynn  Zoom on Beverley Cooper-Flynn  Flynn, Beverley.
Information on Paul Nicholas Gogarty  Zoom on Paul Nicholas Gogarty  Gogarty, Paul. Information on Noel Grealish  Zoom on Noel Grealish  Grealish, Noel.
Information on Mary Hanafin  Zoom on Mary Hanafin  Hanafin, Mary. Information on Seán Haughey  Zoom on Seán Haughey  Haughey, Seán.
Information on Jackie Healy-Rae  Zoom on Jackie Healy-Rae  Healy-Rae, Jackie. Information on Máire Hoctor  Zoom on Máire Hoctor  Hoctor, Máire.
Information on Billy Kelleher  Zoom on Billy Kelleher  Kelleher, Billy. Information on Peter Kelly  Zoom on Peter Kelly  Kelly, Peter.
Information on Brendan Kenneally  Zoom on Brendan Kenneally  Kenneally, Brendan. Information on Michael Kennedy  Zoom on Michael Kennedy  Kennedy, Michael.
Information on Tony Killeen  Zoom on Tony Killeen  Killeen, Tony. Information on Michael Kitt  Zoom on Michael Kitt  Kitt, Michael P.
Information on Tom Kitt  Zoom on Tom Kitt  Kitt, Tom. Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan  Lenihan, Brian.
Information on Tom McEllistrim  Zoom on Tom McEllistrim  McEllistrim, Thomas. Information on Mattie McGrath  Zoom on Mattie McGrath  McGrath, Mattie.
Information on Michael McGrath  Zoom on Michael McGrath  McGrath, Michael. Information on John McGuinness  Zoom on John McGuinness  McGuinness, John.
Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  Mansergh, Martin. Information on Micheál Martin  Zoom on Micheál Martin  Martin, Micheál.
Information on John Moloney  Zoom on John Moloney  Moloney, John. Information on Michael Moynihan  Zoom on Michael Moynihan  Moynihan, Michael.
Information on Michael Mulcahy  Zoom on Michael Mulcahy  Mulcahy, Michael. Information on Éamon Ó Cuív  Zoom on Éamon Ó Cuív  Ó Cuív, Éamon.
Information on Seán Ó Fearghaíl  Zoom on Seán Ó Fearghaíl  Ó Fearghaíl, Seán. Information on Darragh O'Brien  Zoom on Darragh O'Brien  O’Brien, Darragh.
Information on Charlie O'Connor  Zoom on Charlie O'Connor  O’Connor, Charlie. Information on Willie O'Dea  Zoom on Willie O'Dea  O’Dea, Willie.
Information on Noel O'Flynn  Zoom on Noel O'Flynn  O’Flynn, Noel. Information on Rory O'Hanlon  Zoom on Rory O'Hanlon  O’Hanlon, Rory.
Information on Batt O'Keeffe  Zoom on Batt O'Keeffe  O’Keeffe, Batt. Information on Mary O'Rourke  Zoom on Mary O'Rourke  O’Rourke, Mary.
Information on Christy O'Sullivan  Zoom on Christy O'Sullivan  O’Sullivan, Christy. Information on Dick Roche  Zoom on Dick Roche  Roche, Dick.
Information on Eamon Ryan  Zoom on Eamon Ryan  Ryan, Eamon. Information on Trevor Sargent  Zoom on Trevor Sargent  Sargent, Trevor.
Information on Noel Treacy  Zoom on Noel Treacy  Treacy, Noel. Information on Mary Wallace  Zoom on Mary Wallace  Wallace, Mary.
Information on Mary Alexandra White  Zoom on Mary Alexandra White  White, Mary Alexandra. Information on Michael J. Woods  Zoom on Michael J. Woods  Woods, Michael.

Information on Bernard Allen  Zoom on Bernard Allen  Allen, Bernard. Information on Pat Breen  Zoom on Pat Breen  Breen, Pat.
Information on Ulick Burke  Zoom on Ulick Burke  Burke, Ulick. Information on Catherine Byrne  Zoom on Catherine Byrne  Byrne, Catherine.
Information on Joe Carey  Zoom on Joe Carey  Carey, Joe. Information on Deirdre Clune  Zoom on Deirdre Clune  Clune, Deirdre.
Information on Paul Connaughton  Zoom on Paul Connaughton  Connaughton, Paul. Information on Noel Coonan  Zoom on Noel Coonan  Coonan, Noel J.
Information on Simon Coveney  Zoom on Simon Coveney  Coveney, Simon. Information on Seymour Crawford  Zoom on Seymour Crawford  Crawford, Seymour.
Information on Michael Creed  Zoom on Michael Creed  Creed, Michael. Information on Lucinda Creighton  Zoom on Lucinda Creighton  Creighton, Lucinda.
Information on Michael D'Arcy  Zoom on Michael D'Arcy  D’Arcy, Michael. Information on John Deasy  Zoom on John Deasy  Deasy, John.
Information on Andrew Doyle  Zoom on Andrew Doyle  Doyle, Andrew. Information on Bernard Durkan  Zoom on Bernard Durkan  Durkan, Bernard J.
Information on Frank Feighan  Zoom on Frank Feighan  Feighan, Frank. Information on Martin Ferris  Zoom on Martin Ferris  Ferris, Martin.
Information on Charles Flanagan  Zoom on Charles Flanagan  Flanagan, Charles. Information on Terence Flanagan  Zoom on Terence Flanagan  Flanagan, Terence.
Information on Brian Hayes  Zoom on Brian Hayes  Hayes, Brian. Information on Tom Hayes  Zoom on Tom Hayes  Hayes, Tom.
Information on Philip Hogan  Zoom on Philip Hogan  Hogan, Phil. Information on Paul Kehoe  Zoom on Paul Kehoe  Kehoe, Paul.
Information on Enda Kenny  Zoom on Enda Kenny  Kenny, Enda. Information on Pádraic McCormack  Zoom on Pádraic McCormack  McCormack, Pádraic.
Information on Shane McEntee  Zoom on Shane McEntee  McEntee, Shane. Information on Finian McGrath  Zoom on Finian McGrath  McGrath, Finian.
Information on Joe McHugh  Zoom on Joe McHugh  McHugh, Joe. Information on Olivia Mitchell  Zoom on Olivia Mitchell  Mitchell, Olivia.
Information on Arthur Morgan  Zoom on Arthur Morgan  Morgan, Arthur. Information on Denis Naughten  Zoom on Denis Naughten  Naughten, Denis.
Information on Dan Neville  Zoom on Dan Neville  Neville, Dan. Information on Michael Noonan  Zoom on Michael Noonan  Noonan, Michael.
Information on Aengus O Snodaigh  Zoom on Aengus O Snodaigh  Ó Snodaigh, Aengus. Information on Kieran O'Donnell  Zoom on Kieran O'Donnell  O’Donnell, Kieran.
Information on Fergus O'Dowd  Zoom on Fergus O'Dowd  O’Dowd, Fergus. Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  O’Keeffe, Jim.
Information on John O'Mahony  Zoom on John O'Mahony  O’Mahony, John. Information on Maureen O'Sullivan  Zoom on Maureen O'Sullivan  O’Sullivan, Maureen.
Information on John Perry  Zoom on John Perry  Perry, John. Information on Dr James Reilly  Zoom on Dr James Reilly  Reilly, James.
Information on Michael Ring  Zoom on Michael Ring  Ring, Michael. Information on Alan Shatter  Zoom on Alan Shatter  Shatter, Alan.
Information on Tom Sheahan  Zoom on Tom Sheahan  Sheahan, Tom. Information on P. J. Sheehan  Zoom on P. J. Sheehan  Sheehan, P. J.
Information on David Stanton  Zoom on David Stanton  Stanton, David. Information on Billy Timmins  Zoom on Billy Timmins  Timmins, Billy.
Information on Leo Varadkar  Zoom on Leo Varadkar  Varadkar, Leo.  

Tellers: Tá, Deputies Pat Carey and John Cregan; Níl, Deputies Paul Kehoe and David Stanton.

Amendment declared carried.

Motion, as amended, agreed to.

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