Finance Bill 2010: Second Stage (Resumed).

Wednesday, 10 February 2010

Dáil Eireann Debate
Vol. 701 No. 4

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Question again proposed: “That the Bill be now read a Second Time.”

An Ceann Comhairle: Information on Seamus Kirk  Zoom on Seamus Kirk  Deputy Arthur Morgan is in possession and has three minutes remaining.

Deputy Arthur Morgan: Information on Arthur Morgan  Zoom on Arthur Morgan  My contribution yesterday dealt with how the Government is focusing almost entirely on bailing out the banks and rescuing the developers while, on the other hand, special needs assistants in schools are being laid off in their hundreds. I wonder if the Government is aware of the consequences of its actions, including slashing social welfare, on very poor and low income families. The Government should have focused on the real economy. A stimulus package should have been introduced. Jobs are not going to create themselves; entrepreneurs need some assistance to get the show back on the road. The Government has been completely lacking in that regard.

From reading the newspapers in the past number of days one can see the level of job losses announced. Halifax announced 750 job losses, some 130 of which are in my constituency, and a further 200 jobs are likely to be lost in the mid-Louth area in Bitech Engineering. The Government is doing nothing about these job losses. It is time that it recognised the cruelty of the fact that 20% of those on the live register are under 25 years of age. Yet, there is no effort from the Government to get such people back to work. In fact, they are being blocked from getting back to education. I am sure other Deputies, like myself, have received a huge number of representations from people under 25 years of age who find there are serious obstacles put in their way in terms of trying to get back to education and training, which are not being provided for them.

The Finance Bill should have completely overhauled the taxation system. It has done virtually nothing. There has been a little bit of tweaking, such as the €200,000 levy on tax exiles. To a billionaire €200,000 is just pocket money — the levy could be three times its existing rate in order to have some impact on them. While we should recognise it as a start, it does not go anywhere near far enough. There are some 6,000 people currently registered with the Revenue Commissioners as tax exiles and the levy does not impact sufficiently on those people, many of whom are extremely wealthy. To many of us a levy of €200,000 is a substantial sum but to the people to which I referred it is a drop in the ocean.

[910]This is a cruel budget and Bill. It will not solve the problem. It does nothing to try to sort out the economic mess, which is most unfortunate because an opportunity has been lost.

Deputy Seymour Crawford: Information on Seymour Crawford  Zoom on Seymour Crawford  I wish to share time with Deputy Pat Breen.

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

Deputy Seymour Crawford: Information on Seymour Crawford  Zoom on Seymour Crawford  I welcome the opportunity to say a few words on this important Bill. I wish it was more worthwhile and positive. The Taoiseach remarked some time ago that we were over the worst, that things were looking up and that there were green shoots but, unfortunately, that was a bit premature. When we see the major job loses of the last few days in Halifax and other areas, never mind in constituencies like mine where individual jobs are being lost on a daily basis, we must realise that significant stimulus is needed to ensure that jobs are retained and produced.

The Minister for Finance, in his opening speech to this debate, advised that there was targeted support for enterprise but, unfortunately, it is extremely limited. Only this week as a member of the British-Irish Parliamentary Assembly I visited the United Kingdom to be advised that it understood that our Government was examining what it had been doing in England, Wales, etc., to stimulate the economy and look for jobs but, unfortunately, if this is being examined by the Government there is no sign of it in the Finance Bill. In his speech the Minister, Deputy Lenihan, said unless we sharpen our competitive edge we will be unable to return to a tried and tested strategy of export-led growth. It is strange that his speech has that line, and yet the strategy is missing.

We were promised that if we agreed to NAMA there would be major benefits to the banking system but, unfortunately, the reality on the ground in my area is that businesses and individuals, especially at farming level, have never been under so much pressure from the banks, not even in the 1980s. It is unthinkable that the Government should hand over so many millions of taxpayer’s hard-earned money without getting any assurance from the main banks that money would be made available for the necessary funding of ongoing businesses.

During the recent meeting in London to which I referred we were told by senior Government officials there that they were introducing structures to ensure Government payments would be paid on time, not in a month or two months but in a few days. It is something which we need to examine. I am dealing with farmers on a daily basis as that is the background from which I come. I am trying to get money which they were assured they would get last October. They cannot get an answer as to why they have not been paid. They have been told there are some difficulties with their applications.

When their consultants tried to find out what those difficulties were they were told it was all right, it was being checked. This is putting an impossible burden on many families. I appreciate that the Minister of State spoke of the need to enhance the capabilities of Revenue. The personnel in Revenue with whom I have dealt are among the better civil servants in the country. They have moved a long way over the last number of years, often having to deal with very difficult situations. I find them flexible in that they will co-operate with those who meet them and deal upfront with tax problems. However, it is vital that those who are abusing the system are actually dealt with and made pay their fair share.

The Finance Bill deals with some of the tax relief schemes which were questioned by the Commission on Taxation and verifies the situation regarding mortgage interest relief as introduced in the budget. However, if some structures are not put in place for the many people who have lost their jobs and are now caught in negative equity with serious mortgage problems, this [911]Government will have failed a large section of the community. Putting in place the necessary funding to ensure that genuine people must not and should not lose their homes would be money well spent.

I welcome sections in the Bill that will lead towards energy efficiency, such as the inclusion of equipment in buildings that will save energy. Clearly, this is an area in which we can improve our carbon issues and at the same time save money. Section 40 of the Bill is part of that process. However, I am interested to note that different sections of the Bill from section 41 onwards will give additional relief and support to some financial areas. The Minister for Finance stated he is confident that the measures will give tax benefits and improvements to foreign traders which in turn will improve the international business environment here and help to encourage the creation of high quality employment in the economy. Obviously, I support any increase in employment in the country but I can assure the Minister of State this measure will have little or no benefit to the people I represent in counties Cavan and Monaghan as none of these businesses is being encouraged by the Government or the IDA towards the Border areas. This is why it is so discouraging to see that little or no help was given to the agriculture or food industries for which counties Cavan and Monaghan are renowned.

It is now over two years since the Government removed installation aid from young farmers in spite of the fact that it was one of the incentives used to encourage them into agriculture. They were advised that if they got their green certificates they would be eligible to apply for installation aid and their parents or relations could apply for the EU farm retirement pension. The pension scheme has been restored to a small number of people but unfortunately neither installation aid nor any other support has been given to young farmers who desperately want to remain in farming. At this time no alternatives exist in rural Ireland.

I welcome the break being given to people in the farming community who made a great effort and spent a lot of money in their efforts to comply with the nitrates directive. The change in the taxation structure here is a welcome break from what was otherwise a very unfair system.

The food industry has been and still is under pressure from the sterling-euro relationship, along with the high cost of production south of the Border which, of course, will be made worse as a result of the carbon taxes. It is regrettable that the Fine Gael proposal to allow farm fuel to be removed from the negative charges was ignored.

I welcome the fact that from 1 January the rate of VAT in the higher level was decreased to 21%. Even more importantly, the UK has increased its VAT rate from 15% to 17.5%, resulting in much less of a differential in the two VAT areas. However, it was a major blow that the lower rate of VAT was not reduced to 10% which would have been a major impetus to tourism and other industries that depend so much on being seen as value for money.

In light of the recent breakthrough in Northern Ireland where, for the first time, the main parties seem to have sorted out their problems by direct discussion and negotiation, I believe it is important that the Government and its counterparts in the UK should look at the potential of cross-Border co-operation in tourism, agriculture and infrastructure in general. The entire Border region has suffered from the 30 years of the Troubles in Northern Ireland. There has been no inward investment and therefore no employment was created in areas such as counties Cavan, Monaghan, Leitrim and Donegal. If inward investment is not available then the Government must look at ways in which small industry can survive and increase employment. Unfortunately, there is nothing in this Bill to give such impetus.

After in-depth discussion with small industries, Fine Gael came up with clear proposals which would allow industries to get sufficient finance to keep going and also give a breather to the lower paid in respect of PRSI. Other people may have better ideas but we have gone past the time when these problems could be ignored. The creation of jobs must be the first priority to [912]get people off the social welfare treadmill and increase our exports to bring in much needed revenue.

The Minister of State’s speech emphasised the need to get employment going under the heading “Target Support for Enterprise”. This Bill does not give that support which is absolutely necessary. If we are to get out of this recession we must get people back into jobs. It is extremely disheartening to see families again having to say goodbye to their young people as they go to Australia, Canada and other places in the hope of finding a job. This is causing severe hardship to many families. Many of these young people are highly educated, at great cost to this country and to their families, but no stimulus has been provided in this Finance Bill when the opportunity was there to do so.

Deputy Pat Breen: Information on Pat Breen  Zoom on Pat Breen  I welcome the opportunity to share my time with Deputy Crawford and contribute to this debate.

Ultimately, there are no real surprises in the Finance Bill which simply gives the Government carte blanche to implement its budgetary measures. The reality is that public sector workers and people on social welfare bore the brunt of the budget. Its most disappointing aspect was the failure to introduce any stimulus measures which would have helped to kick start recovery in the economy, as Deputy Crawford pointed out. Yesterday the Governor of the Central Bank, Patrick Honohan, delivered a speech at Trinity College careers network centre where he warned that youth unemployment had jumped from less than 10% to over 31% in the past two years, much faster than the aggregate rate which went from 4.7% to 13.3 %”.

I have examples of that in my constituency in County Clare, with which the Minister of State will be familiar. The rise in unemployment among the under 25 age group is extremely worrying for the county’s many young people. Over the past two years the unemployment rate for this age group has grown by 137%, from 808 persons in January 2008 to 1,215 in January 2009. These are warning signals in respect of youth employment. The Government must deal with the situation and put in a stimulus package for these young people. If not, they will become despondent or do what they are doing, namely, leaving these shores in their thousands.

We have a very serious situation yet the Government is not introducing any stimulus measures to assist employers to sustain employment. In addition, it appears that the Government is not going to take any action to address the serious decline in our tourism and aviation industries. I know that Shannon Airport is very important to the Minister of State, who is from County Tipperary. I am hugely disappointed that no transitional measure is included in this Bill to abolish the air travel tax which is crippling the economy and tourism all over the country but especially in the mid-west region. County Clare is very dependent on Shannon Airport and any decline in passenger traffic at the airport has a very significant knock-on effect on the tourism industry.

This tax has been a disaster. When we see three airlines — Aer Lingus, Cityjet and Ryanair — plead with the Government to abolish it, something is seriously wrong. The tax is costing us a significant amount and the number of tourists is reducing. Passenger numbers are collapsing at Shannon Airport. Some 3.6 million passengers went through the doors of the airport in 2007 and in 2008 the number reduced to 3.16 million. The 2009 figure has yet to be published, but I understand it will be approximately 2.9 million. It is expected the downward trend will continue in 2010. Only last week, Ryanair announced that several of the destinations which were well supported from Shannon, such as Alicante, Faro, Barcelona and Lanzarote will move to other Irish airports.

It is time that the Government called Michael O’Leary’s bluff and abolished the tax. We would see then whether he would bring back those services to our airports. He plans to move [913]the services to other Irish airports, but he will do the same again and remove them when it suits him. The situation regarding the future of Aer Lingus in Shannon is also very uncertain. I have heard no commitment from the new director general that Aer Lingus is in Shannon for the long haul. It will be catastrophic for the region if these services go. The Government cannot just tax its way out of the recession. More innovative ideas are important as the recession deepens. It must introduce a policy that works and admit it got it wrong with regard to this tax.

It appears the Government’s only solution to the current crisis is to place a further tax burden on people. From 1 July 2010, local authority services will attract a VAT rate of 13.5% or 21% and hard pressed taxpayers will be faced with the prospect of paying extra money for waste collection and recycling services. The cost of public car parks and toll charges will also rise. The number of tolls on our roads continues to increase. Consumers who pay for waste collection will be hit with a double whammy as tax relief is to be phased out from next year. Many householders are already up to their eyes in debt and they will not be able to pay their bills.

I welcome some of the provisions in the Bill, in particular, the crackdown on the illegal smuggling of cigarettes. Customs and Excise made record confiscations in 2009, with some 215 million cigarettes worth €90 million confiscated in the first 11 months of last year. One haul of 120 million was the largest seizure in the history of the European Union. It is estimated that another 826 million illegal cigarettes are imported into this country, but these go undetected by Customs and Excise. A ten-fold increase in the fine for people who are convicted of this crime, from €12,695 to €126,970, is welcome. This should be a deterrent to criminals who cost the State a significant amount in lost revenue. This increased fine is a step in the right direction. We need more resources to be put into the Customs and Excise service if it is to be able to seize the significant amount of illegal cigarettes coming into the country.

I would like to address the issue of the imposition of carbon tax on farm diesel. Coming from a farming background, I am aware how much farmers use diesel. Farm incomes collapsed by over 29% in 2009 and there were cuts in the various farm schemes. Only half of the farmers in REPS 4 have received their payments to date, including the 376 farmers in County Clare. Many farmers are now in a desperate state. This is a time of year when they have no other income and many of them are under severe financial strain. Now they face an 8.7% increase in the price of diesel, compared to an increase of 4.4% for road diesel. This will put further pressure on farmers and agricultural contractors. The Minister must review this decision. The tax should only be imposed at the same rate which is being applied to road diesel.

The extension of the research and development tax credit system contained in the Bill will do nothing for small and medium enterprises or large companies operating here in Ireland. The changes in the Bill only cover companies operating in a corporate group structure. There was a golden opportunity for the Government to show it was serious about rewarding innovation and new ideas, but it has failed the test again.

Last week, we debated the mid-west task force report in the House. There is huge potential for energy and the development of renewable energy projects in the mid-west region, something I have pointed out on many occasions here. We have the Ardnacrusha and Moneypoint power stations and the gas pipeline runs from Limerick to Galway and along the Shannon Estuary. There is so much untapped potential. Denis Brosnan and his team stated in the report that a compelling case could be presented, in conjunction with appropriate incentivisation to attract mobile international investment. It is not just international investment we should target. We should also reward small and medium enterprises that invest in research and development.

The future lies in the development of an indigenous renewable energy sector. It is for that reason I believe Deputy Simon Coveney’s New ERA proposal merits a more in-depth response [914]from the Government benches. Under the Fine Gael plan, start-up funding would be provided for research and development, because we see the importance of the development of our smart economy and of positioning ourselves and supporting innovative ideas. If we do not invest in the future, we will not see green shoots in our economy for some considerable time.

Section 4 terminates the tax relief introduced by the former Taoiseach in the 1994 Finance Act for a benefit-in-kind tax exemption on employer provided art objects, which only benefited one individual. This is welcome. However, that exemption should never have been introduced as it is this type of cronyism that has led us into the current situation. The Taoiseach hopes we will have a soft landing, but the country has already crash landed. The Finance Bill, as presented, offers little in terms of creative or innovative ideas. It is another lost opportunity by the Government to lead us out of the recession. This is to be regretted.

Minister of State at the Department of Finance (Deputy Martin Mansergh): Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  I wish to share time with Deputy Peter Kelly.

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

Deputy Martin Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  Scarcely a day passes without favourable reference in the international press to the decisive budgetary action taken by Ireland to deal with the severe budgetary imbalances common to many countries at the present time, in the wake of the international financial and banking crisis. The fundamental issue over the past 18 months has been, whether we wish, within the supportive framework that eurozone membership provides us with, to undertake the necessary corrective action ourselves, allowing us discretion to decide how the burden is best distributed, or whether we let others simply dictate to us what we must do.

  1 o’clock

In the case of the most recent budget, the adjustment fell almost entirely on the expenditure side, which is outside the ambit of the Finance Bill. Anyone who studies the gap between nominal or gross pay on the one hand and net or take-home pay that falls within the tax net on the other will need little convincing that we have pretty well used up in the past 18 months any spare headway that may have existed. There is a considerable gap at this stage between what employers must pay out and what employees receive in their hand which, if it were widened still further, could become a considerable disincentive to employment, as has long been the experience in some continental countries. Calls for a higher rate of tax mostly focus on the larger headline salaries which exaggerate the scope for increased tax rates and levels rather than actual net pay. It was striking to note in the table circulated last night by the Minister for Finance with his speech in Private Members’ time that, with the exception of only some Secretaries General, the net salary of all other senior public servants in the Civil Service — deputy secretaries, assistant secretaries and equivalent grades in local government and the HSE — is now well under €100,000. The public, for the most part, does not realise this. Protecting those on lower income levels, while they have not been untouched, has been the priority — notwithstanding a barrage of propaganda to the contrary — because they generally have the least margin for manoeuvre.

Much of the language surrounding economic debate contains assumptions which bear little relationship to reality. Outside of public sector employment, which grew roughly from 230,000 to 330,000 over the past decade, a number which now has to contract somewhat because it is more than we can afford, the Government does not create or provide jobs. It can at best create the right framework for job creation. We do not live in a command economy where government can summon up at will investment and jobs for places badly hit by unemployment. It can promote areas, improve infrastructure, and provide retraining. Capital expenditure, while still high, has to contract also to a level that is sustainable and that we can afford. Incentives, often [915]costly, have to be carefully chosen. In the construction area, they contributed to over-capacity, for example, in the hotel industry. Ministers for Finance in the future will have to turn a deaf ear to most of the pleas from developers for incentives. I received representations recently on behalf of medical practitioners with regard to extra incentives to build private health centres. I was totally unpersuaded by the argument on behalf of people who are considerably better remunerated than the average. Normally profitable industries, wealthy people and politicians will have to get away from the “grants and incentives with everything” approach. The call for a stimulus package almost inevitably involves higher levels of Government expenditure, much of which is likely to benefit other economies more than ours, or using up the reserves in the National Pensions Reserve Fund, or selling off and privatising assets in a depressed market.

There are many in society at present who need help from the Government — there is no doubt about that. However, the scope for additional help is extremely limited given the State’s financial situation. We have to make the most of the help available. In the contributions today from the opposite benches, one gets no sense at all of the current financial situation. It is simply a case of “why don’t you reduce this and that tax and increase this and that subsidy”. A more hard-headed approach, realising the realities we are working under, would be helpful.

Deputy Olwyn Enright: Information on Olwyn Enright  Zoom on Olwyn Enright  The Minister of State should have listened to Deputy Richard Bruton’s speech.

Deputy Martin Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  Leaving aside the automatic stabilisers, such as higher welfare payments in a recession, which mean that, despite cutbacks, overall Government expenditure is flat rather than actually declining, the most stimulating action Government can take is to succeed in stabilising, then rectifying, the public finances. While, of course, this cannot be achieved or attempted to be achieved in one fell swoop, there is no benefit in unnecessary delay or in the image of a softly, softly, drawn-out approach which would allow us largely to continue business as usual, except that it would not because of the rapid impact of the negative confidence effects of such intentions. However, limited tax changes relating to business that are not costly in net terms can assist in improving Ireland’s competitiveness. It is primarily improvements in competitiveness and a lowering of the high cost structures in our economy, including wage costs, public and private, that will enable us to recover more quickly. In times like these, we have to ask ourselves which matters most in case of conflict, the maintenance of jobs or of pay and conditions.

The international recession has seen a markedly reduced tolerance for tax havens and for countries whose bank secrecy rules provide a tax shelter for large incomes of citizens resident in neighbouring countries. I have attended on behalf of this country several European and OECD meetings, the object of which has been to intensify pressure on countries not compliant with accepted international codes. One of the results has been the extension of double taxation and tax information exchange agreements, which have been brought before the Joint Committee on Finance and the Public Service. The attractiveness of Ireland as the headquarters of firms previously based on small islands has improved — Ireland, incidentally, despite what is often said, is a large island, the third largest in Europe.

A greater level of tax compliance worldwide is also of benefit to this country. As a relatively low tax country from a business point of view, our reputation must be carefully guarded. This is the reason for the provision tightening up on transfer pricing. At the same time, it is important to make it attractive for leading foreign executives to base themselves here for a few years; hence, the changes to the remittance system. An innovative provision in the Finance Bill is the accommodation of Islamic finance, in recognition of our increased links with the Middle East. There are also measures to improve the attractiveness of Ireland with regard to basing UCITS funds here.

[916]The North-South relationship in Ireland is a mixture of complementarity and competition. The Finance Bill reduces our standard VAT rate by 0.5% while, in another move, the British Government has put its VAT rate back up again by 2.5%, thus virtually halving the gap. There is certainly the possibility that a new British Government will narrow the gap further as a means of dealing with a deficit at least as large as ours. Deputy Seymour Crawford referred to the British stimulus. The British are only three months in advance of a general election and I suggest the Deputy observes their policy following the general election.

Deputy Olwyn Enright: Information on Olwyn Enright  Zoom on Olwyn Enright  That is what is needed.

Deputy Martin Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  Movements in the euro-sterling exchange rate have also begun to help exporting firms. The reduction in excise duty on a wide range of alcohol diminishes somewhat the incentive to cross the Border to bring back large quantities of drink. From a constituency point of view, I am always pleased to see a reduction in the excise duty on cider.

Mortgage interest relief has been extended, primarily to assist those who may find themselves in negative equity. It is, nonetheless, to be phased out in a few years’ time. It has long been recognised that, whatever about the psychological impact, the net financial benefit of mortgage interest relief to purchasers has been negligible, as the increased ability to pay has usually been more than absorbed in higher house prices. In time, the sharp reduction in house prices will be of definite benefit to young new entrants to the market, and it at last sharply corrects the grossly immoral redistribution of wealth that occurred in recent years between generations, to the great detriment of younger people, by creating large windfalls for older people, who in many cases did not really need it.

The carbon tax reinforces the message about the need to save energy, while there are incentives to insulate homes and to make greater use of public transport, in which investment is continuing. While tax relief on service charges may have initially helped us to avail of publicly or privately provided waste services, that incentive should no longer be necessary and, arguably, with waivers in limited cases, the user should pay the full service cost of waste disposal. There is a strong argument that most tax incentives, though not all, should be time-limited.

Deputy Pat Breen raised the question of the travel tax, which was debated on a number of occasions in the House. It raised €85 million in 2009 and is expected to raise €125 million this year. It is strange that when a company like Ryanair or, for that matter, Aer Lingus, puts on extra charges for baggage and so on, and adds on many charges to the basic price, there is never a peep out of anybody. The propaganda is directed entirely against the Government. Perhaps if airlines were to reduce some of the charges they have piled on, it might assist travel. The fact is the Government needs money. While I appreciate and am concerned about Shannon, I do not believe it is the correct diagnosis to consider that the travel tax is the source of the problem.

The scrappage scheme has provided a modest boost to the car industry, which has been very depressed over the past year. Certain generous reliefs that are art-related have been curtailed so as to draw a larger contribution from people and companies better able to make it. A number of measures contained in the Finance Bill are recommended by the Commission on Taxation. In conclusion, overall, the Bill implements and underpins the budget but also contains measures which are in general designed to support and to raise economic activity and employment.

Deputy Peter Kelly: Information on Peter Kelly  Zoom on Peter Kelly  The Finance Bill puts into effect many of the measures announced in budget 2010. The Bill comes after what was has been a very difficult year for many people in [917]this country. Over the past 18 months, the Government has taken the unprecedented step of making budgetary adjustments of more than €8 billion. This kind of adjustment is huge, and I am deeply aware that many people are feeling the pain. The many people who have lost their jobs and their families are suffering, as are the thousands of public sector workers who have seen their take-home pay significantly reduced, along with their standard of living. The reality is that we are borrowing over €400 million a week just to keep going. Had we not made these budgetary adjustments, our deficit would have ballooned towards 20% of GDP, threatening our very survival. While the Opposition may have different opinions in terms of what spending cuts it would implement and what tax raising measures it would introduce, it is in agreement that adjustments had to be made. The Finance Bill is the next step in our approach, which has been to protect jobs, provide a functioning banking system and return this economy to growth. It puts on a statutory footing the measures introduced in budget 2010. The Bill, which is pro-business and pro-enterprise, has been welcomed by independent commentators as another step in the right direction. It provides for a reduction in VAT and a reduction in excise duty on beer, wine and spirits. This comes at the time when the standard rate of VAT in the UK has risen by 2.5%.

According to the EU Commission, unit labour costs in Ireland fell by approximately 2% last year and rose by 4% in the UK, which translates to a 6% swing in relative labour costs. At the same time, the consumer price index shows that prices here are falling more rapidly than in Northern Ireland, the UK and the EU as a whole. The value of sterling vis-á-vis the euro plays a role in attracting shoppers across the Border. It is my hope that the measures announced in the budget will encourage people to shop local and will impact on our exports. I am sure people will rally round and shop local when they know they can get value for money.

The issue of negative equity is a very real one for many young families. It is one of great concern to many of my constituents in Longford-Westmeath. The extension of mortgage interest relief to 2010 is particularly welcome. The measures in regard to the car scrappage scheme are also welcome. The industry has been badly hit during the past two years and it is estimated that the scrappage scheme will protect 2,000 jobs in the sector. The Bill reiterates our commitment to a 12.5% rate of corporation tax, which is hugely important and has been welcomed by many financial commentators and experts. The tax exemption on the income and gains of new start-ups is being extended to companies that commence trading this year.

The Bill includes incentives to attract skilled workers to Ireland, which is vital if we are to continue to develop the smart economy and attract the brightest and best from home and abroad. The significant incentives in relation to research and development and the intellectual property environment introduced during the past two years are retained and enhanced. Ms Olivia Lynch of the Irish Taxation Institute stated in an interesting article in The Sunday Business Post that if Ireland is to get its economy back on track, we will need strong indigenous companies that are focused on export markets. She also pointed out that research and development does not just mean laboratories and white coats. Real innovation and research can be conducted in other areas, including engineering and financial services. Ms Lynch quoted a recent KPMG survey of 100 business leaders which showed that 86% of companies in Ireland were not participating in the research and development tax credit scheme because they did not believe they were conducting research and development or that the regime was relevant to them. It appears that many Irish companies conducting research and development are not aware that they might be eligible for assistance. Perhaps there is work to do in terms of publicising what is available.

A report published late last year by the high level action group on green enterprise identified the potential to create 80,000 jobs through tapping into the €700 billion global environmental goods and services market. Some 15,000 jobs have been created in this sector to date. This year, [918]€130 million is being provided for energy efficiency programmes and the national insulation programme will be extended to include an additional €50 million for a national retrofit programme, creating an estimated 5,000 jobs in 2010.

The Opposition’s criticisms of the Bill are not shared by independent commentators at home and abroad. The American Chamber of Commerce, which represents the 600 US companies employing in the region of 100,000 people in Ireland, broadly welcomed the measures in the Finance Bill 2010. It was stated in an article in The Economist of 4 February that Ireland is small but its Government has shown itself willing to take unpopular decisions to right its public finances.The Irish economy is more flexible, thus its medium-term prospects seem brighter. The economy grew slightly in the third quarter of last year and there are signs that tax revenues are recovering.

Deputy Olwyn Enright: Information on Olwyn Enright  Zoom on Olwyn Enright  I wish to share time with Deputy O’Mahony.

I welcome the opportunity to speak on this rather unambitious legislation. I was amused to hear the Minister of State, Deputy Martin Mansergh, criticise the Opposition for commenting on issues which affect their constituencies given he had welcomed the measures in respect of relief on excise duty which will assist people in his constituency. The Minister of State cannot have it both ways.

My concern is that this legislation comprises a multitude of traps which will put further pressure on already crucified Irish households. When speaking on last year’s Finance Bill I described these households as “struggling”. This year, I genuinely believe many are way past struggling. At a meeting last week of the Joint Committee on Social and Family Affairs, at which the Acting Chairman, Deputy O’Connor, was present and the issue of mortgage related debt was discussed, the Minister for Social and Family Affairs, Deputy Mary Hanafin, described members of the committee, myself included, as “alarmist”. I am alarmed. Anyone with any idea of what is going on would be alarmed. The alarm bells have been ringing and the Government has been given plenty of warning, but it has chosen to ignore them.

People are in dire difficulty. How can I, or any of my colleagues, not be alarmed when I must negotiate with a mortgage provider on behalf of a constituent who is so despairing that he wants to end his life? That is the reality of the position in which people whose family homes are being repossessed are finding themselves. The man concerned believed he had failed his family because their home was repossessed. People are coming into our constituency offices to discuss the financial mess they are in, many of whom were self-employed and are now not entitled to anything owing to the class of stamp they paid. The reality of what we are dealing with on a day to day basis does alarm me.

The Finance Bill 2010 fails to do anything to help people. While, as Deputy Kelly mentioned, it contains a proposal to extend mortgage interest relief, one can only obtain that relief if one is earning an income on which one pays tax in the first instance. Unfortunately, hundreds of thousands of people are not in that position, thousands of whom have mortgages. The Minister for Communications, Marine and Natural Resources announced a few weeks ago, prior to the publication of this Bill, that this matter would be addressed in the Finance Bill 2010 but there is nothing in it which does so. I am sure there were many experts, including financial experts, involved in drafting this Bill. The Government has set up another group of experts to examine the issue of mortgage debt. How much advice does the Government need? This issue has been considered by FLAC, the Law Reform Commission and the Joint Committee on Social and Family Affairs, and various people in the financial services area have submitted papers on it. In the meantime, while all this is happening, the Minister of State has set up another group. Thousands of families and home-owners go further down the spiral of debt and are closer to [919]losing their homes, but they must wait longer for a solution. While they are waiting their homes become less valuable, their debts rise, and their credit rating is permanently damaged. Now they face a myriad of extra taxes and charges on top of pay cuts and levies. People expected some level of pay cuts and tax changes, but the way in which the Minister of State has gone about it is desperately unfair. The notion that certain people within the public service will take a smaller percentage cut than all lower grades sticks in people’s throats. It makes it impossible for them not to be utterly disillusioned and frustrated.

The Minister of State has asked Fine Gael for alternatives, but when they are produced he does not listen to them. He does not want to know. He wants us to produce them for the sake of the exercise, but they are not examined. No doubt several speakers on the Government benches will say “Fine Gael never provided alternatives”, but we did. They should read what Deputy Richard Bruton had to say yesterday on the Finance Bill and even before the budget was published. There were fairer alternatives. Last week, I saw one Fianna Fáil backbencher come into a committee and after all the Opposition speakers had made their contributions, he accused us of not providing alternatives. He was not even there to hear the alternatives we had put forward, which makes a mockery of the exercise we were going through.

Fine Gael does not apologise for wanting to protect those on incomes under €30,000 from paycuts because we see how impossible it is for them to survive at present. Yet the Government looks at performance-related pay as part of a basic package, rather than as an exceptional payment for working harder, smarter, better and being exceptional. Maybe those who are not going to take the same level of paycuts will not notice the removal of tax relief from bin charges or raising VAT on local authority charges, but hundreds of thousands of others will. Where has the green influence gone that we were supposed to get? It is all about money now and the Greens are happy because on paper they think they have an influence. In reality, however, every household will pay more for refuse collection, coal, briquettes, home heating oil and, let us face it, soon for water. The purpose of these carbon or green taxes is supposed to change our behaviour and teach us to reduce consumption. It is supposed to make us more conscious of the value of these scarce resources, but the Minister for the Environment, Heritage and Local Government has fallen perfectly into Fianna Fáil’s web of regarding these charges merely as a means of making money. It is no longer about using less and changing behaviour. In fact, many Government Deputies have spoken about the amounts of money they hope to raise through these taxes instead of the target being to reduce usage. What is worse is that these charges will proportionately affect the worst off the most, taking far bigger portions of the household budgets of less well off people than those who are better off. This is despite the fact that they cannot afford to make their homes more energy efficient because the grants have not gone far enough.

Where is the overall plan in this Bill? I often wonder about the level of communication Ministers have with each other, both in Cabinet and elsewhere. We are in an employment crisis of huge proportions, yet there seems to be no co-ordination between Ministers to tackle it. The Ministers for Social and Family Affairs, Enterprise, Trade and Employment, and Education and Science should work together constantly to co-ordinate solutions. Instead, however, responsibilities are fragmented between Departments and there is no co-ordination. Effectively, we need a Minister for work to get Ireland back to work. That is where the concentration should be. There is so much nonsense in the system that it makes it impractical.

Deputy Martin Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  What about the communication between Deputy Bruton and former Deputy Lee?

Deputy Olwyn Enright: Information on Olwyn Enright  Zoom on Olwyn Enright  I was speaking about the Cabinet, but the Minister of State might not have too much communication with them either.

[920]A person on social welfare who wants to do a two, three or four-week FÁS course, must sign off social welfare. At the end of the course he or she must sign off from FÁS and sign back on social welfare. That process involves four different visits to various State agencies just to undertake a short course. The person involved will receive the same payment — the methodology is nonsensical.

Last year, the Tánaiste announced a work placement programme. In January, the Minister for Social and Family Affairs released a statement telling us how great was this programme. She congratulated IBEC on doing something similar. Fair dues to IBEC for that, but as of end-December 2009 only 129 places in the 2,000-placement programme had been filled. That scheme is not working, yet a Minister releases a statement saying how great it is based on those figures. That is nonsense.

The timing of FÁS courses is important. They begin at 8.30 a.m., which immediately excludes a large proportion of people. For example, one-parent families find it difficult to start at that time. Why can such courses not start at 9 a.m. or 9.15 a.m. just after primary schools open? Most of the jobs those people wish to be trained for also start at around 9 o’clock. A bit of common sense is required. Numbers attending social welfare offices are rising, yet the alternatives do not seem to exist.

In the summer of 2008, the Minister for Social and Family Affairs announced a plan to tackle unemployment for the under-25s. The result was that more people than ever in that category now find themselves unemployed. What worked in the boom is not enough now. The same old courses will not equip young people for a very different environment. People who walked into jobs ten years ago now find themselves facing competition from hundreds of others who are attending interviews. The unemployed include a new generation of people, many of whom have excellent qualifications. A six-week FÁS course to retrain them will not cut it.

Some schemes have been tweaked but we need a dramatically different approach. We should examine the option of offering payment for retraining and second-chance education. In County Offaly, one of the two counties I represent, there is one third-level institute, but there are only 50 PLC places for retraining. That is the solution we are being given by the Government, despite the current numbers of people unemployed. It is pathetic.

The huge blow of the Halifax closure announced yesterday effectively means another empty shopfront on a main street in my constituency and others. That will add to the number of shops, pubs and restaurants that have shut their doors in the past few months. Many of them could not even wait for what they hoped would be a better Christmas period because their level of indebtedness was so high. They cannot get any relief from financial institutions. In small provincial towns and villages, they may be small employers but they are crucially important ones. They need to be supported in the same manner as larger companies, but there is nothing in the Bill to achieve that.

Government TDs are concerned with the importance of national and international commentators, but I would give them one word of warning. The real commentators on what the Government is doing in this Bill will be the Irish people. Their comments may not be quite so glowing.

Deputy John O’Mahony: Information on John O'Mahony  Zoom on John O'Mahony  I am glad of the opportunity to contribute to this debate on the Finance Bill. We are all in agreement that following the economic turmoil of the past 18 months in particular corrective measures needed to be taken. In our opinion they should have been taken much sooner. We are now reacting rather than being proactive. There was also a definite acceptance among the general public that savings had to be made. As long as they were rolled out and implemented fairly, the public was willing to accept some of the pain. They will accept [921]it if it is meted out in equal measure, but that did not happen with many of the provisions included in this Bill. A prime example is cited in the Fine Gael Private Members’ motion, to be debated later, whereby 600 of the highest paid public servants are being dealt with in a totally different manner from lower paid public service workers who are being crucified with levies and charges from all angles. It is simply unfair, yet in yesterday’s debate on the Bill the Minister for Finance suggested it was populist and begrudging to raise this issue. I fail to see how anyone could agree with that statement.

The Government’s position on this matter is grossly unfair and indefensible. It flies in the face of the assertion that those who earn more should pay more. The expansion of numbers employed in the public service should be also noted. In the past ten to 12 years, it expanded at a far greater percentage rate in the higher grades of principal and assistant principal officer, where numbers increased by 462% and 339%, respectively.

Debate adjourned.

Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.


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