Wednesday, 2 June 2010
Dáil Éireann Debate
Deputy Willie Penrose: I am pleased to have an opportunity to contribute to the Bill introduced by Deputy Varadkar on behalf of Fine Gael. My colleague, Deputy Higgins, outlined the Labour Party analysis of the proposal last night. While the Labour Party will not support the Bill for various reasons, some of which our party president addressed last night, I nevertheless acknowledge Deputy Varadkar’s attempt to engage with the real economy and the necessity of regaining our competitiveness to enable us to engage in the marketplace.
The reality is that there has been a decrease in wages of up to 3.5% in the past year or so which has made us attractive once again from a real wage perspective and has contributed to a significant improvement in competitiveness. When allied with our 12.5% corporation tax rate, which is sacrosanct because it is so important in the context of attracting business, the high level of educational attainment, flexibility and adaptability of our workforce, and our quality of life, all these factors have propelled us to the forefront as an attractive environment for foreign direct investment. When one considers too the recent roadmap outlined by the IDA whereby it intends to create 105,000 new jobs by the end of 2014 or early 2015 and to attract significant investment in research and development — which is absolutely critical — we have some cause to be confident that we will be in a position to advance and sustain these important investments.
Having said that, it is essential that we do not lose sight of the indigenous sector. It is in this area that the Government has fallen down and can be constructively criticised. The small and medium-sized enterprise sector has been left on the back burner, with significant job losses throughout the State. Employers who provide three, five, eight or ten jobs are going bust, but that is falling below the radar. Such job losses do not receive the same attention and headlines as the closure of businesses with 200 or 300 employees, but they have an enormous impact on individuals and families in small urban areas, towns and villages throughout the country.
We have only to consider the calamitous way in which the proposed PRSI holiday has been handled to see how remiss the Government has been in this area. That proposal was announced in the December budget and welcomed by all of us, but six months later, we are still awaiting its introduction. We all saw it as an important way to boost employment to offer employers a tax break where they employ a person who has been unemployed for six months or more. Such a scheme would, under certain qualifying conditions, offer people the chance of a real job, not a substitution or replacement job, and save the employer €3,000. We were told the scheme would generate 12,000 jobs, yet all we have had is a statement last week by the Minister for Social Protection to the effect that its implementation is forthcoming.
That failure is a severe indictment of the Government and points to its apathy and lack of urgency in dealing with unemployment. Although many of us might have disagreed fundamentally with how it handled the banking system, the Government did at least have a strategy and a sense of urgency in that instance. Likewise, the broad parameters of its fiscal strategy have been clearly identifiable, regardless of whether one agrees or disagrees with specific cutbacks. I have referred to the banking, fiscal and unemployment issues as the tripod of challenges facing us. In the case of the third leg, unemployment, there has been no attempt to deal with it in the context of the real economy.
It has been outlined that the provisions of this Bill will mean an average saving of €400 per household per year, which amounts to €400 million to €500 million annually across the economy. However, taking that money out will leave a hole in the bucket. We are all in favour of accident and emergency charges, the cost of medicines and so on being reduced, and the Government has always used such charges as leverage. It is difficult to see how people will meet the increased costs. However, one cannot cut the income to hospitals, local authorities and other service providers without a significant and generally detrimental impact upon services and employment. A loss of income of up to €500 million is bound to have an impact on services. One either cuts services or raises money elsewhere; that is the reality and we must be honest with the people in this regard. We have already had significant reductions in public service pay. People do not want a situation where they save a few bob in one area only for that to have a knock-on effect in terms of taxation increases to fill the gap. If there is a gap it must be filled from general taxation or something else.
Local authorities are already pared to the bone. They do not have enough outdoor staff because of the moratorium and because they were given a directive by the Minister for the Environment, Heritage and Local Government that they cannot hire permanent or even contract staff. Most local authorities have during the past 12 to 18 months lost hundreds of contract staff. The local authority outdoor staff in my area are excellent and superbly efficient and productive in terms of the roadworks they carried out and should be allowed to do more direct labour work. There is too much rush here towards privatisation and contractual arrangements. Local authorities provide important employment in local areas. Those employed therein are the eyes and ears of local authorities. They have done tremendous work down through the years and have been often denigrated. I recall there was a programme which made a skit of local authority workers. As a son of a former local authority worker, I rejected that with the contempt it deserved. Local authority workers have an important role to play and there is now not enough of them to carry out essential and important work. If we continue to deny them more income, there will be fewer of them. What we will have then is the privatisation of local authority services. One has only to look across the water to see the serious consequences privatisation has left in its wake. Some economies are now engaged in reversing this process. We do not want to reach a point where we know the value of everything and the price of nothing. The Labour Party has unashamedly and unambiguously always stood on that platform.
There will be a net loss to the Exchequer. The question that arises is how is this gap to be filled? There is no such thing as a free lunch. Politicians appear continuously to perpetuate the myth that there is such a thing as a free lunch. However, nothing is free. The Government is examining the possibility of increasing many charges. As a child I travelled free by bus to school, a scheme introduced in 1968 or 1969 by former Minister Donogh O’Malley, without which, because I lived 12 miles from the school, I would not have been able to get there. Given that I was the eldest of ten children and my family had a medical card, I would probably still have been eligible to travel free on the bus. The cost of school transport increased to €175, then to €300 and it is now projected to increase to €500 from this September. I do not know if that is true but that is what people believe. This would be detrimental for the people involved. This is an example of where the Government is going.
The National Economic and Social Council, NESC, has analysed the fiscal crisis in the banks, the crisis in the real economy, the social crisis and reputational and ethical crisis. The big crisis for me is in the area of small and medium-sized enterprises. The figures released today indicate there has been an increase of 44,000 people on the live register during the past 12 months, with a 5,000 plus increase in April. I wonder, given those figures, if we have turned the corner. I read a report on this matter but I do not pay much attention to reports because the real economy is often different. The Ernst & Young summer forecast has predicted that unemployment will stubbornly remain at 10% for the next couple of years and that it will be some period before we recover.
The Government has run out of ideas and steam in terms of dealing with this issue. While it is important that we address the issue of job creation through foreign direct investment, we must do something to ensure the survival and contribution to employment of our 250,000 small and medium-sized enterprises.
I welcome the opportunity to speak on the Bill before the House. While I congratulate to some degree Deputy Varadkar on bringing it forward, I do not believe that it will fulfil its purpose, namely, a reduction in business and consumer costs. However, I compliment him on taking the trouble to prepare the Bill.
The Government has clearly identified our main problems as the banking crisis, the credit crunch and overall budget deficit. These are the key issues with which the Government is dealing and endeavouring to get under control. We all recognise that reducing costs for business is important. However, without functioning banks in terms of the availability of credit, businesses cannot survive or thrive. This must be the first priority. The Government has agreed to recapitalise the two main banks, Allied Irish Banks and Bank of Ireland, to the tune of €6 billion over the next two years. It is vital that the banks start lending this money which will provide businesses with the stimulus they need to trade profitably and successfully. Any business person will agree that driving costs down is inducive to economic recovery. However, our priority must be getting our budget deficit under control and getting credit flowing again.
It is true that the Government has driven down costs. Energy costs have come down by10%. It is hoped they will continue to drop as a result of new competition. Equally, the Government has banned upward reviews of rents. I make the point in respect of commercial rents that the trustees of many of our large pension funds are the people refusing to reduce rents. I believe they have a moral responsibility to endeavour to look after their tenants and to allow them trade more profitably than is currently the case. I appeal to them to be morally responsible. Deputy Penrose mentioned local authorities. A number of local authorities, including Fingal County Council, on which Deputy Varadkar and I served, have reduced commercial rates to businesses. It has shown the leadership we expect of all local authorities. There is no doubt but that local authorities have a role to play in this area and that they have huge budgets in respect of which they can bring about savings to business people.
Deputy Michael Kennedy: The pharmacy sector has also endured reduced costs. I believe the emphasis of Government should be on ensuring that our budget deficit and bank credit issues are to the forefront. These are our priorities and will be the forerunners to recovery of our businesses.
While Deputy Varadkar’s proposals are well-intentioned, the reality is that the issues involved are a lot more complex than he recognises. That the Labour Party does not support his proposals speaks volumes in terms of the future and the alternative Government of which Fine Gael and the Labour Party continually speak. There are clear ideological differences between both parties and not only on the business front.
Deputy Frank Fahey: I welcome the opportunity to speak on this Bill. As stated by the Minister, while on the face of it this Bill has a laudable purpose, namely, to reduce the burden of costs on consumers and industry — something we would all like to do — it bears no relationship to the budgetary or economic realities with which we are faced. Gimmicks and frills and facile initiatives such as that represented in the Bill before us will not create a single job or help a single person out of poverty.
The Bill would completely undermine the long established and carefully developed systems of independent regulation in this country. The overall objective of economic regulation in markets where there are traditionally natural monopolies is to create the conditions for competition to emerge and to help drive down prices. No more than the Fine Gael initiative to create 100,000 jobs, which are fictitious, this Bill will not do anything to serve the best interests of the Irish people. We can only achieve the objective of this Bill through greater competition and by driving down prices. In the transport area huge subsidiaries are paid to transport organisations such as Iarnród Éireann, Bus Éireann and so on. Reducing costs in this area, as proposed in the Bill, would simply ensure that we would have to pay greater amounts. There is a way forward by way of competition to make more efficient the services we provide.
It is appropriate that yesterday’s editorial of The Wall Street Journal outlines the futility of legislation such as this. Its editorial is headed “The Irish Example Dublin is Showing other Indebted Governments how to cut Spending”. It shows that the approach that has been taken by Fine Gael in Opposition has been populist and has attempted to create an impression among people that the situation in the country can be improved with these kinds of fictitious proposals. Yesterday’s editorial of that newspaper states:
In that editorial The Wall Street Journal— probably one of the most respected newspapers in the world — has cited the example of what is being done in Ireland as the way for countries to get out of their economic difficulties. It would not be writing that kind of editorial if we were to follow the type of policy we have heard proposed by Fine Gael in this House during recent months. This Bill is typical of that policy; it has put forward a populist-type proposal to cut costs across the spectrum. That will not get us out of our economic difficulties, rather it will ensure we will face challenges for many more years than we will have to if we continue with the tight, fiscal and financial reforms in which we are now engaged.
Minister of State at the Department of Enterprise, Trade and Innovation (Deputy Billy Kelleher): The debate on this Bill provides an opportunity to explore the proposals put forward by Fine Gael to deal with the difficult situation, nationally and internationally, in the context of the global credit crisis, the global recession, our internal difficulties and the dynamics that have stemmed from that. The Bill could be described as a smoke and mirrors emergency measures in the public interest Bill because it is simply creative accounting at its very best, and at its worst it is disingenuous in that it is claimed that if it was enacted, households could save more than €400 annually. The revenue will have to come from somewhere, otherwise there will have to be further cuts in services provided to the public by the various agencies and authorities that carry out work on behalf of the State for the people.
This Bill does not in any way address the serious situation the economy is facing on a number of fronts. Primarily, there is the difficulty in terms of credit availability, the vulnerability of the banking system in Ireland and the possible knock-on effect of deleveraging of debt for the foreseeable future, which would create huge pressures for the financial institutions and there is also the issue of their inability to provide credit to small and medium-sized businesses and to individuals who want to purchase homes, cars etc. For all those reasons, the big ticket item facing us is to try to ensure the economy recovers, grows, starts to expand and creates employment and opportunities again for our people.
This Bill camouflages what we should be talking about, which are the serious issues as opposed to the trivia that has been outlined in this context and the bluff about the fact that the enactment of this Bill would in some way save money. There is no creative or magic solution to trying to address the budget deficit. The money has to be raised somewhere, otherwise there will have to be further cuts.
The reality is that if this Bill was enacted, we would have to increase taxes further, cut pay more and then address the issue of social welfare pay also. It is disingenuous to say this is a cost-neutral——
Deputy Billy Kelleher: ——Bill and it does not provide for anything in terms of what we are trying to do, which is to restore competitiveness in the economy, increase exports, attract foreign direct investment and ensure we can sustain the growth that is projected at the end of 2010. For all those reasons——
Deputy Billy Kelleher: ——this Bill is not credible and it exposes the bankruptcy of proposals, particularly of Fine Gael, which has tried to be all things to everybody other than on the occasions of the responsible position it took on the bank guarantee in September 2008. Since then it has opposed almost every measure while saying out of the other side of its mouth that if it was in Government, it would address the issue of cuts. However, we had to address the difficult budgetary deficit in recent times.
On an issue that is of critical importance and to which previous speakers have referred in this Chamber on numerous occasions, the 12.5% corporation tax is of major significance in attracting inward investment. People commenting that it could be undermined does not assist Ireland in trying to attract inward investment, encourage people to locate in Ireland or consider Ireland as a location from which to export into Europe from further afield.
Playing politics with the serious position Ireland is in the context of its vulnerability, which is still evident, as was alluded to by Deputy Fahey in his citing of an editorial of The Wall Street Journal on Ireland, is wrong. We are vulnerable but we are on the path to recovery and it will be painful.
In terms of restoring competitiveness in the economy, competitiveness is a word that camouflages the difficult positions in which people find themselves with falling wages and rising unemployment, but it is essential that we ensure there is competitiveness in the economy in all areas, not only by way of a reduction in salaries and wages but also by ensuring efficiencies at Government, agency and local authority level and across the private sector. They are key areas in which we must continually ensure there are efficiencies. The energy sector is also critically important in this respect.
Deputy Billy Kelleher: It is amazing that we have set up regulators and independent organisations and agencies to act independently, yet this Bill suggests that the Government should interfere in every possible way with their independence. We cannot have it every way.
I would like there to be a reduction in local government charges for members of the public but we must be honest with each other. We cannot have it both ways. If we want to have public services, we must fund and pay for them. There is no simple way out of that. While the Bill may be well-intentioned, it is narrow in its focus. I would like to see it broadened to include other areas in regard to the debate tonight.
Deputy Varadkar has the report of an bord snip nua. We also have the report on the Commission on Taxation, which reported around the same time. That report referred to the broadening of our tax base and mentioned issues such as property tax, the funding of the provision of our public services and water charges. These are all areas that must be fleshed out for the future.
Deputy Penrose rightly mentioned provision of public services through local authorities and it is opportune to examine that proposal in more detail. Some of my Fianna Fáil colleagues and I met with a number of groups, including ISME, the Irish Hotel Federation, the Irish League of Credit Unions and many others that came to talk to us. The single overriding comment the small and medium-sized industry sector makes to us is that the cost of local government charges in this country is completely disproportionate. We must address these issues in a serious way for the future. Commercial rates, water charges, waste water charges and an entire pyramid of charges that kick in for business are prohibitive. There is no return for the person who pays these charges.
Deputy Niall Collins: ——have reduced their commercial rates? The exception of Fingal County Council was mentioned. To give that local authority credit, it is very innovative. I believe it has a link with the credit union movement by which it provides loans to small businesses.
If a party is in charge of 28 of 34 local authorities, as I know Fine Gael is in my area, in Limerick County Council and also in Limerick City Council and Clare County Council, one must ask whether it has reduced local authority charges where it is in control. If the party has control of local authorities there is a responsibility and the party should act as it means. Although it displays the intention in this House, it has the power at local level——
Deputy Niall Collins: Fine Gael cannot have it both ways. It wants it one way in this House but when it is in control of local government on the ground in county and city local authorities it does not act.
Mention was made of the privatisation of public services. Perhaps we should look seriously at that. Some parts of the public service should be privatised, for example, the Passport Office which has offices across the street and in Cork. The scenes we saw were scandalous. The Passport Office has acted as a barrier to industry in this country. I have come across, as I am sure other Members of this House have, people who were prohibited from travelling abroad on business because of delays in the Passport Office. That is an example of the public service that should be privatised. I agree that certain parts of it should not be.
We must look also at development levies which are a huge barrier. All local authorities have a development contribution scheme and now act as barriers to development in their counties. I offer an example from my area where a person wanted to build an extension to a nursing home, a service the public needs, but the development contribution was €110,000, more than the cost of building the extension. We need to look seriously at these matters but we cannot have it both ways.
An Leas-Cheann Comhairle: I call the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan. There are just over ten minutes left in the slot. We were expecting Deputy Thomas Byrne so that time will be available to the Minister if he does not arrive.
I welcome the opportunity to have a debate in the House on the crucial issue of competitiveness and how to achieve it. We must be careful that we do not become populist and grab easy headlines but must work through what will work in a proper policy driven way. In my area of responsibility competitiveness is an important element. There are prices for energy and communications and a number of State agencies such as RTE, Inland Fisheries Ireland and other bodies must reduce and improve their cost competitiveness.
I shall consider the regulated markets first because they are probably the most significant in scale. Communications is a €4 billion industry; energy is much bigger again, being worth perhaps €6 billion to €8 billion or more. Energy is an important cost component within our industry although one must be careful with energy statistics. Figures from Sustainable Energy Ireland show that for 95% of businesses energy makes up less than 5% of their costs. It is not a main input cost in production for most companies although there are a number of energy intensive companies where we must be especially careful.
On the back of European legislation directives, going back about ten years, we introduced a regulatory system. I believe it works. I believe what the Minister of State, Deputy Kelleher said. The Government must be very careful not to jump in with its two big lumpen feet, pretending or thinking we can do regulation better than the people we appoint and legislate for to do that job.
In energy this system is working. Our prices are and have been high, largely because of our dependence on fossil fuel arising from a long series of decisions. However, our regulatory system is working and the competitive market the regulators are helping to deliver is starting to bring prices down significantly, getting us back into line and in shape with comparative countries in Europe. I became aware of that in spring last year at the height of this economic crisis when competitiveness was a key issue. The issue of energy prices came to the fore and we did a number of things. With the regulator we set about this on a proper regulatory market basis and following good policy guidance, looking to see what we could do to bring down prices, in particular for large energy users which are those most at risk from high energy prices. We made a series of measures that used good regulation and the ability of the ESB, with the help of some of the large payments it received in recent years from selling some assets, to bring about a non-discriminatory, non market-distorting market basis. It brought down prices. We put more than €0.5 billion to that task as well as the benefits that came from lower energy prices coming on international markets. The result in 2008-09, from second quarter to second quarter, was that Ireland had the second largest price reduction in gas prices to business across Europe——
Deputy Eamon Ryan: ——and the third largest reduction in electricity prices for both business and householders. We benefited most and got the biggest reduction. In the process, having brought in all the energy companies, having listened to everybody and talked to them in great detail, it became absolutely clear to me that we now have a competitive market in electricity supply. For some years we have had one for the large energy users and are now coming to the point, with the introduction of companies into the retail residential side, of having a competitive market in electricity across the market in this country. That works. It brings down prices and drives efficiencies. It delivers better investments where the business communities take the risk in a free and competitive market. A number of companies are acting in this, several of which are real-scale international companies as well as our own domestic companies.
I advise Fine Gael to be careful. Some of the populist measures that may look good in the press might not work out and would leave us with a distortionary effect that would mess up what clearly is a working system.
There is a similar regulatory structure in communications which took a similar sort of timeframe to establish. Just as CER is doing its job well on the energy side, ComReg is doing a very effective job in communications, in difficult circumstances. Again, there are legacy issues where some of our utilities went through very poor ownership structures and the taking out of many of the assets. It has not been easy. Again, we have been playing catch-up because of some of those legacy issues but I stand and support and have worked with the regulator in the regulatory policy we have pursued which I believe is working. It is based on competition and on being technology neutral with different companies. We are not the best at calling which technology will work but we can set the market conditions that allow others to employ technology and try to win the customer base.
We are starting to see this. As I said, we are catching up and still must go further and faster but if one looks at what is happening on the back of that regulatory process, one sees that prices are coming down. There are consistent reductions in prices for almost all users. We must push further with our European colleagues. However, in difficult times, our services are being improved on the back of competitive markets. There was the decision by cable companies to start running out 100 megabyte connectivity on a very widespread basis in this country. There was the decision by Eircom to start making investments in very difficult times when it has a great number of different challenges. However, the company knows it is in a competitive market, where if it does not go out and win the customer with faster speeds and better products, it will lose the customer to someone else and, therefore, we are seeing that it, too, is committing to investment in next-generation access. There have been very significant developments this year in what is called local loop unbundling. This is opening up more competitive and more open access markets where there is a real wholesale option. It is happening on the back of a good competitive regulatory market system.
I was in Europe on Monday at a meeting of the Council of Ministers. The message was not to mess with the regulatory systems, which are working and delivering for the country. We should be careful with some of the simple policy approaches; the approach taken in the regulatory system might not grab headlines easily but it works for the people of the country.
The Opposition might argue that it is more concerned with other Government spending. In my Department we have met the target in terms of bringing down the staff levels to what they were meant to be under the employment control framework. We are keeping a very tight ship and I can see the public servants in my Department working hard. It is important that this is known because it is an easy story to pit the private sector against the public sector. I do not see that in my own Department and, by and large, I see people working hard in a dedicated fashion to keep tight control of budgets. This is happening in my Department and across the public service because people currently have an eye on the public interest and on ensuring that we do not waste money or overspend.
I mentioned RTE and will take it as an example. There is a new regulatory system with the Broadcasting Authority of Ireland but even before it was up and running in a new role we could see what happened on the ground. In 2009, RTE saw an 18% reduction in operating costs, a 9% reduction in personnel costs and a 26% reduction in other costs. That effort is driven by management and unions responding to the economic crisis together; they saw revenues drop and realised that the licence fee and other income would not be certain so they carried out reallocations. These are real cost savings keeping RTE above the water.
I met the chief executive of An Post, Mr. Donal Connell, today and he is doing a fine job. He said it has been a tough operating environment, with revenues down and mail volume seeing a decrease in the order of 10%. The company is keeping its nose above the water and staying in the black by keeping its costs down, being flexible and delivering the required efficiencies.
Rather than me jumping in like Boy Wonder to solve the difficulties of An Post, RTE, the ESB, Bord Gáis or any other companies, we have a good system that is driving efficiencies and seeking improved performance in our economy. This should be replicated across the board because we are in a difficult economic position where competitiveness matters.
I regret that Deputy Byrne was not able to contribute but I welcome the opportunity to give some examples of what is going on in the real world under this Government. We are driving competitiveness to the nth degree through clever policy making rather than populist measures that may grab the headlines but which would not do the job.
Deputy Damien English: Some of us live in the real world, although the Government does not appear to. We have had this debate concerning cost issues to businesses and taxpayers over and over again. I read last night’s speech from the Minister of State, Deputy Dara Calleary, and was shocked by it because he spoke as if there was no real problem or issue. He and the Minister of State seated across from me, Deputy Mary White, sat with us during committee meetings over the space of four or five months when we listened to retailers and people involved in business telling us our cost price was way off compared to every other country in Europe. We have the highest banking charges and costs for telecommunications, energy, rents, rates, contribution levies, insurance and waste disposal. The list goes on, with all the costs in some way related to the Government or regulation from the Government.
It is time we woke up. This Bill is trying to change the mindset in order to drive down the charges which the Government controls. It is possible and there is nothing wrong with indicating that we want to achieve a 5% cut. In 2008, the Minister wanted to bring about a 3% cut in wages in State agencies. Although it was not achieved, there was at least an attempt. We want to achieve a 5% cut, which is possible.
This is not about cutting services or putting up taxes. We believe we can find another 5% in most of these agencies in cost savings, and in some cases where companies are regulated, profits can be reduced. This is not about populist measures or increasing taxes and what we seek can be achieved in other ways. We must find more savings in these budgets, and part of the issue is how the budgets are set in the first place. We would like to see parties competing for resources in Departments in order to earn budgets, and the sooner this happens, the better. They should prove their need and detail their spending.
Efficiencies can be rewarded rather than penalised. I worked in various State bodies over the years and I saw that if money was not spent, it would be lost the next year. That logic still exists and we want to change it. There should be a new approach to budgets, and part of the process is setting an overall target to cut costs. It has been too easy for the Government to add stealth taxes and sneakily increase prices here and there. Examples of this include television licences, accident and emergency department charges and local authority levies. Even getting a taxi now involves colossal costs which have been quietly increased. The registration fees in colleges did not rise quietly but jumped dramatically. It has been too easy for the Government because no targets have been set as an example of leadership, and no costs have been cut through decreasing charges. That is just not happening.
Businesses want an action plan to bring these costs down. Our businesses are not competitive but this country can only solve its problems through exports. That is something on which we probably all agree. For too many years we thought selling houses to each other would make us rich as a country but it did not. The exporting of goods and services is the only way to bring more money to this country. If businesses cannot compete on price, their products will not compete as exports. That is why these charges must be driven down. Businesses need a chance to survive.
If the Government is not prepared to reduce these charges by 5%, we can consider other areas. The high level group on business regulation came before the committee today, having been given the job to implement a 25% cut in red tape by 2012. One would imagine that in the current economic climate we would speed up the delivery of that target but we are not in a position to do so. The group spent the first three years drawing up a flowery list of reduction targets; it will spend another year implementing a plan to achieve these targets. A dog in the street could draw up such a list.
It is a pity the Minister of State, Deputy Kelleher, is gone as yesterday he attended workshops and will attend them again later in June and July. He will speak with people in business about areas in which regulation can be cut. Group after group comes before every committee we have to give us a list of areas in which we can cut costs and regulation, but we only organise more flowery meetings to delay any opportunity to give businesses a chance to reduce costs. Government regulation is adding to the cost of business. We must begin to address this one way or the other.
There are other examples. Many businesses in this country cannot compete with counterparts across the Border because of the VAT rate. People can cross into the North, where the prices are the same but one can get away without paying VAT in some of the hardware stores. We could try to fix that problem to give businesses an opportunity to grow.
I am glad Deputy Collins mentioned local authority charges. Fine Gael has held a majority on most councils for the past nine months but we are not in charge of the budgets because the money comes from the Government to every council, which then decide what to give or cut. A small amount is raised in some county councils from rates but the majority of funding comes from the Government. That funding has not matched population growth and service delivery in most counties. The contribution to local authorities from the national tax take has decreased every year since the former Taoiseach, Deputy Bertie Ahern, took office as leader of Fianna Fáil. The level was brought down and local authorities were expected to find a greater percentage of their own funding.
Local authorities are not in a position to introduce all these rate reductions because they are not in charge of the finances. Local authorities, under the direction of Fianna Fáil, were told to bring in contribution levies which the Deputy claimed are causing a serious problem. They are a major barrier to business and job creation.
If a person wants to set up a small business employing ten people, the first thing received is a bill for €80,000 or €90,000. That is before a shovel is even put in the ground, which is ridiculous. These are Fianna Fáil policies backed up by the Greens rather than those of Fine Gael. We should not muddy the waters because it is quite straightforward to see who is in charge of this country and in Government. This Bill seeks to change this logic and we must reduce costs if we are to survive as a country.
Deputy Denis Naughten: After pouring €14 billion into a septic bank, the Government has finally realised that Fine Gael was right. The Taoiseach’s admission in the House today that the Government was considering winding down Anglo Irish Bank was a welcome announcement. The difficulty is that the €14 billion put into the bank could have created 80,000 jobs in our economy. It has taken the Government 16 months to reach the same conclusion highlighted by the Opposition during that period. For 16 months, the Government could have focused on creating jobs and supporting small businesses instead of maintaining the high lifestyles of developers.
The Government has shored up the builder’s bank and those who owe it billions of euro have been living the high life, travelling via business class on sun holidays with their families or popping cases of champagne in London clubs, all on the back of taxpayers’ financial pain. They continue to live the high life while being bankrolled by the public, which is struggling to keep up with increased interest rates, rising taxes and cuts in pay and social welfare supports. The Government tells us this pain is necessary to save Anglo Irish Bank, the septic bank.
Last year, while private sector prices fell by 2.5%, Government prices increased by 6.7%. This is unsustainable. It is time that we gave the public a break. Instead of looking to the television licence, accident and emergency charges and leaving and junior certificate students to support the lavish lifestyle of the elite, it is time to give something back to the public. Last week, a hike in school transport fees from €300 per primary school child to €500 was announced. This is anti-rural, anti-family and unsupportive of rural transport.
A reform of the system has been promised for years. As Deputy English stated, this Government is always one report or consultation process away from making a decision, yet Government controlled charges continue to rise and need to be cut in line with wage and social welfare reductions. We are looking to give householders who are struggling to survive €400 into their pockets. Not only would this benefit them, it would also reduce the cost of doing business, improve competitiveness and save jobs. Instead, the Government has neglected the issue.
I am glad the Minister, Deputy Ryan, attended the House, gave us his suggestions and tut-tutted what Fine Gael is doing. Ten years ago, I stood in the Chamber and told the Government that it was about time for it to get its act together where broadband was concerned. Our five broadband networks are owned by five semi-State companies and the Minister has done nothing about bringing them together, working them and sweating those assets in the interests of the taxpayer. We cannot even put the broadband networks on a single map even though the Minister has been in office for three years. His predecessors were sitting on their hands for the preceding ten years. It is time the Government started pulling up its socks. It is time it started focusing on the real issues, namely, the 440,000 people on the dole with nothing to do.
Deputy Pat Breen: I welcome this opportunity to contribute on the Bill. I congratulate my colleague, Deputy Varadkar, on introducing it. As he stated last night, an average of €400 per household would be saved annually if the Government made the Bill law. This would reduce the cost of doing business for struggling small and medium-sized enterprises.
Before the Minister, Deputy Ryan, left the Chamber, he told us that we should live in the real world. Small reductions mean a great deal in the real world. I can give an example. Recently, a number of people attended my clinics in west County Clare because the rent for local authority houses had increased by €5 per week. They were struggling, as the increase made a significant difference to them. They were trying to get a reduction. This is the real world. It is how people live. Increases like that are serious for those who are struggling. Given the week that is in it, a week in which €2 billion is being pumped into Anglo Irish Bank, this is ironic. Figures published today show that unemployment has reached an all-time high of 439,000.
People are angry. They did not create the mess. Everyday, I meet people who ask why there has not been a bailout for the ordinary people who are in dire straits due to these financial circumstances. Small reductions for many householders would set an example. They must deal with significant debt commitments despite being hit by job losses, pay cuts and pay freezes. In my constituency of County Clare, disposable income during the height of the boom was between 90% and 95% of the national average. Today, 96% of consumers have no choice but to reduce grocery costs, which will have a ripple effect on local businesses, many of which are barely keeping afloat.
Everyone must readjust, including Departments and Government agencies. That is what the Bill is about. Price reductions would provide much needed assistance for the hard-pressed consumer. Instead of taking this approach, the Government’s policy has been to place additional pressure on people. For example, the carbon tax added to the cost of rural households’ fuel bills despite rural incomes falling by 30% last year. The issue is out there.
Deputy Pat Breen: No. We are discussing reductions, not scrapping taxes. Small reductions would be the most important factor. Last week’s announcement regarding the VHI saw fears about further price hikes in health insurance, although that was outside the Government’s control. This will place considerable pressure on the public health sector.
While doing some research tonight, I read a quote from Nobel Prize winning economist Milton Friedman, an adviser to President Ronald Reagan. Mr. Friedman stated: “The government solution to a problem is usually as bad as the problem”. He must have been thinking about this Government. I urge it to support the Bill and the people. Small reductions mean much and governments can lead by example.
Deputy Andrew Doyle: I commend Deputy Varadkar on introducing the Bill, which tries to close the gap on a graph. Some 5% represents €400 per annum per individual. If one gives €400 to a family on the margins, it probably means the family will not go to another agency, such as the community welfare officer service, to be bailed out and to have some bills paid. The effect will be a reduction in money spent, as the amount will not be transferred from one part to another. If one gives €400 to someone who has money to spend, the chances are that it will allow him or her to spend that money somewhere in the system, which will include VAT and keep someone in a job.
The list in my hand details a death by a thousand cuts. It includes the stealth taxes sneaked upwards by the Government in every budget when no one was paying attention thanks to the big ticket items on the agenda. For the past two weeks, we have been told in state of the union speeches by the Taoiseach and others that we have “turned a corner” and are on the road to recovery. Today’s figures show an all-time high of 439,000 people unemployed and 255 people losing their jobs per day, but we have “turned a corner”. God help us because we are actually bouncing along the floor, not turning any corner. As has been stated, the Government has been slow——
Deputy Andrew Doyle: The chief executive of ISME stated today that “We are in the throes of the worst economic crisis in living memory and it is critical that we stem the number of job losses. Unfortunately, the Government is ignoring this fact and is contributing to an already dreadful situation by refusing to apply any coherent policies to address the issue”. A perfect example is the delay in the PRSI exemption.
We had a debate last night about the recovery of windfall profits through carbon allowances at €75 million per annum for two years. A total of €150 million has been lost due to the Government’s delay in implementing a policy. Deputy Coveney has been consistently pointing out that this revenue stream was being ignored and people were getting it for free.
We are overburdened with red tape. The HSA has become an industry in itself. If we want to fill a pothole in the road and the pothole expands after a flood, then the HSA must write a new health and safety statement. It is that ridiculous. That is a public service cost. We cannot lecture to the private sector on cutting costs and feeling the pain. The graph presented in this Bill highlights the gap that is growing. Instead of bringing this Bill before the House in its own guise in six months, which the Government inevitably does, it should accept it tonight.
Deputy Seymour Crawford: I welcome the opportunity to say a few words on this Bill. I cannot help but refer to some of the comments made earlier. Deputy O’Kennedy was very worried about the ideological differences between Fine Gael and the Labour Party. I cannot think of any greater difference than that between Fianna Fáil and the Green Party. Fianna Fáil has rolled over in many areas and it has caused some of the increased costs that we are bearing today. According to another speaker, the country has been built on proper regulation. I know that the regulators for electricity and gas held up the price as long as they could, but some of the other regulators have a lot to answer for, and the €22.5 billion needed for Anglo Irish Bank explains why. We have to ask why the price of petrol and diesel are so high today. Farmers and contractors are paying 44% more than they paid this time last year when we compare the respective prices of a barrel of oil. Therefore, there are question marks over some of these regulators.
It was very interesting to hear The Wall Street Journal quoted. I would rather listen to ordinary low-paid civil servants on the ground and others who have to bear the increased costs and problems in this country. It is hard to take lectures from people who have caused so many problems. Only today, Eircom has put up its prices by 3%. Every person I meet who is trying to set up a business in rural Monaghan cannot get broadband. Deputy Conlon sent out letters and fancy cards to such people telling them that we would get the broadband, but the broadband never arrived.
In the time available to me, I would like to refer to electricity costs and water charges. The electricity costs for Wellman International in Mullagh are twice the costs for the company’s factory in France. That difference costs the company €2 million every year. We are lucky we still have the company because it is committed to the area. A small factory outside Ballybay is in a business where it must use a lot of water. It recycles its own water, but it still has to pay the waste water charge. This is completely and utterly impossible for that factory to bear, along with the high level of rates. Jobs are being lost in that area because of increased costs, and little effort is being made to control them.
If we want to restore any sense of fairness in our society and if we want to get co-operation from those in the workplace who have taken great hits in their income and in the level of services they receive from the State, then we must do things like enact this Bill. This is a positive step taken by Fine Gael. We are trying to bring forward ideas to assist in a very difficult budgetary situation. I have listened to the Minister and members of the media telling the Opposition that we should be responsible and take seriously the difficulties we are facing. However, the minute we bring forward any decent proposal to help the situation, it is cast aside as if we do not matter. This is precisely the attitude that was adopted by the lead Minister of State last night when he dealt with this proposal.
The Government has lost touch with reality in its dealings with members of the public. It does not understand that if people’s income is to be reduced, then we must bring down costs equally so that we have a reasonable standard of living and that we get co-operation from both the trade union movement and from the individual on the street. We cannot expect to have public charges remain at the same level or be increased while at the same time ask people to take massive cuts in income and services. That is precisely the Government’s response to this Bill.
Deputy Calleary said that this Bill bears no relation to budgetary or economic realities. We are talking about people. The Government Deputies are obsessed with theory. We are talking about practicalities. We are talking about increased day-to-day costs that must be faced by people on reduced income. Business people are struggling with overdrafts and struggling to collect money owed to them. If they are trying to retain people in employment, they need help from the State and not sympathy. They need help in the form of reduced charges, be they rates, water charges, waste charges and so on. These things are in the control of the State, yet Deputy Calleary tells us that the Bill would “completely undermine the long established and carefully developed systems of independent regulation in this country.” Who runs the country? Are we now run by regulators? Where is the Government? Does it not take decisions any more? Is it a mortal sin if we breach some regulation because it is in the interest of the people who we were elected to represent? Have we lost our way?
What regulator set the cost of a television licence at €160? The Minister for Finance sets that. It is entirely within his grasp to cut some of these charges by a miserable 5% and reduce the cost of a television licence to €152. What regulation will we undermine if we do that sort of thing? If we reduced the driving licence fee who would we upset? The passport application fee is €80 but we cannot even get passports. People have queued but have lost business because they cannot get a passport to fly out to carry out business and through his Minister of State, the Minister for Finance is telling me that we would undermine regulatory systems. He is not dealing with reality in his response to this serious Bill.
I doubt the Minister for Finance had the opportunity to read this Bill because from my past dealings with him I would have thought he would have had a more compassionate, understanding and intelligent response to a request, where it is within the Government’s powers, to through greater efficiency reduce costs imposed on the taxpayers of the country or, where it is within its remit, to reduce the cost of such items as a television licence, which would not upset the budgetary calculations for the year.
Everybody will have to make sacrifices yet all the Government can do is rush into the House with emergency legislation. There is never any difficulty in increasing taxes or imposing charges and the Government seeks the co-operation of the Opposition in taking these measures. However, when it comes to a genuine effort by the Opposition to try to bring into line reductions in income with greater efficiencies and reductions in charges over which the State has some control, the Government finds it difficult to accept it.
Ministers make speeches and lecture the private sector on getting its costs under control. Did the decision to increase the third level registration fee from €850 to €1,500 cause many problems? It was an increase of almost 100%. All we are asking for is a 5% reduction. What astonished me was the negative response. I am sure the Government neither read nor thought about this Bill. The new company filing standard fee is €100. How would it affect the budgetary estimates if it was reduced to €95? It may be small money but when it is all added up it means a lot of money to a lot of people. I am providing small examples. A driving test fee is €110. What is wrong with reducing that by €5.50? These are the signals the Government should be sending out; that in asking people to take a cut in salary or wages in turn it will endeavour to reduce charges from the huge list available to all of us if we had the time available to consider the matter further.
This is a genuine sign that not only is the Government tired but that it has lost ideas and the will to take the trouble to think up new ways of getting balance in society through fairness in asking people to make sacrifices and show by example that in doing so it will respond, even if it is as small as reducing the cost of the television licence by 5%. It is not about the €8 difference that this would make; it would be a sign that the Government is taking this seriously, that it is asking people to reduce their income and in turn it will reduce their costs. The Government wants to maintain the level of costs and in some cases increase them but it expects everybody else to reduce their income. I rest my case.
Deputy Leo Varadkar: I thank my colleagues for speaking in favour of the Bill and the Sinn Féin Party for supporting it. I regret the Labour Party is abstaining on the Bill but I respect its decision, which I understand is based on its concerns that we will not be able to find the requisite savings to fund a reduction in Government charges by 5% and I will address that later in my speech. Parties in the House are different and Fianna Fáil and the Green Party manage to work together. I am sure we can work together with the Labour Party. When it comes to high Government charges and high utility prices, the Labour Party and Fianna Fáil are much closer to each other than the Labour Party is to us and I am very happy with that.
Deputy Leo Varadkar: The Bill is simple; it proposes to reduce all Government charges by 5% and calls on Government regulators to reduce their prices and give relief to consumers and business. As Deputy Doyle mentioned, this graph says it all. I know I am not supposed to use props but perhaps the Leas-Cheann Comhairle will allow me to do so on this one occasion. This shows the extent to which prices have fallen in the real economy but Government regulated and controlled prices have continued to increase. Essentially, this Bill is about telling the Government it should do exactly what it expects its workers, people on social welfare and those in private business to do, which is to reduce their prices and accept a degree of reduction.
I will respond to some of the arguments made. Some Members, including the Minister of State, Deputy Calleary, stated this would cause a cost to the Exchequer. The majority of the cost of this would fall on the utility companies, such as the ESB which made a profit of €200 million last year, Bord Gais Éireann, which made a profit of more than €100 million and Eircom, which made a profit of more than €100 million and increased its prices today. I note the fact that in his contribution the Minister for Communications, Marine and Natural Resources, Deputy Eamon Ryan, made no reference to the fact that a company which makes more than €100 million a year increased its prices today.
Of course the PPP toll contractors would be affected by this and so would the NCT companies, and so they should be. If the Government was able to use financial emergency legislation last year to ride roughshod over the contracts of public servants working for the Government and the contracts of pharmacists and other professionals, why can it not do the same when it comes to toll operators? We know about the sweetheart deal done by the Government and the toll operators which requires that tolls increase with inflation but do not decrease with deflation. It would be entirely legitimate to use financial emergency measures to force that cut. The small number of costs that would fall directly on the Government spending Vote would be approximately €70 million.
The Minister for Finance is familiar with the McCarthy report, which has a menu of €5.3 billion in savings from which to choose. In his Department, it has spare capacity to be reduced by the OPW at €20 million; benchmark rents and occupancy levels with the private sector at €20 million; and IT efficiencies and Revenue Commissioners at €8.6 million. Those three measures alone are enough to reduce Government charges by 5% across the board.
It was argued by the Minister of State, Deputy Calleary, that the Bill would undermine the long established and carefully developed system of independent regulation. We do not support the system of regulation as it is organised. There are too many regulators and there should be a single utility regulator. The regulators operate on a cost plus model; how much does it cost and how much can be added for profit. That is not a good way to have a regulatory market. They should be asked to squeeze their costs and that is not happening. Ministers can make policy directions to regulators and have done so before.
The Minister for Communications, Marine and Natural Resources, Deputy Eamon Ryan, who has been accurately described as the moral adviser to the Government, sought to give advice to Fine Gael on this occasion. He told us the Government was driving competitiveness to the nth degree. However, the World Economic Forum does not agree with that nor does the World Competitiveness Yearbook. These bodies, which assess international competitiveness every year, state that Irish competitiveness is continuing to decline because all the Government has done is cut wages. It has not addressed any of the other issues that affect competitiveness. That is why, according to these two bodies, overall we continue to decline in competitiveness.
The Minister, Deputy Ryan, also stated that the regulatory system works. I do not think anyone else believes that. He stated the energy regulation system works. I do not think anyone else believes that either. He stated that the regulatory system was reducing energy costs. However, the only reason energy costs increased in the first place was because of the Government’s regulatory system, which stated that instead of achieving competition by splitting the ESB or privatising part of it, it would increase costs in order to bring other semi-State players into a fake competitive market. The only reason prices are decreasing is because they were falsely inflated by the Government’s regulatory model.
The Minister for Transport, Deputy Noel Dempsey, demonstrated some of the typical bankrupt thinking of the Government by stating that bus and train fares could not be reduced due to the financial situation of Dublin Bus, Iarnród Éireann and Bus Éireann. However, higher fares reduce passenger numbers. There are a number of reasons there are fewer passengers, most particularly the Government’s recession, but higher fares reduce the number of people who use bus and train services. There are plenty of efficiencies that can be achieved in CIE and there can be bus competition, for which Deputy O’Dowd on this side of the House has always argued. Deputy Fahey and the Minister, Deputy Lenihan, during his brief contribution — I am sorry he cannot make a greater one — told us about The Wall Street Journal praising the Government. I have no doubt it is praising the Government. This Government is working for The Wall Street Journal . It is the favoured newspaper of the bond holders, the people who are being protected by the Government’s banking policies. I am not interested in Wall Street, nor is this party. We are interested in main street and that is what this Bill is about. It is about businesses, consumers and people on main street, Ireland.
In regard to Deputy Collins, who raised a fair point about Fine Gael control of local authorities and asked why we did not cut the rates there, we actually have in some cases — Dún Laoghaire-Rathdown County Council being one example — and in Cork, Limerick and other areas we have frozen rates. That is despite the fact that the budgets given to local authorities by Governments have been reduced. We have set a very good example there. Even though the Government has reduced funding to local authorities we have not increased rates in the local authorities which we control and in one or two examples we have cut them.
This is a good Bill; it is timely, fair, workable and affordable. I hope if the Government does not accept the Bill that it will at least give consideration at budget time to setting aside €20 million, €30 million or €40 million to reduce Government charges by 2%, 3% or 4% and make the point that it understands that Government prices have to come down and that it understands the concept of fairness.
|Allen, Bernard.||Barrett, Seán.|
|Breen, Pat.||Burke, Ulick.|
|Byrne, Catherine.||Connaughton, Paul.|
|Coonan, Noel J.||Coveney, Simon.|
|Crawford, Seymour.||Creed, Michael.|
|Creighton, Lucinda.||D’Arcy, Michael.|
|Deasy, John.||Deenihan, Jimmy.|
|Doyle, Andrew.||Durkan, Bernard J.|
|English, Damien.||Enright, Olwyn.|
|Feighan, Frank.||Ferris, Martin.|
|Flanagan, Charles.||Flanagan, Terence.|
|Gilmore, Eamon.||Hayes, Brian.|
|Hayes, Tom.||Hogan, Phil.|
|Kehoe, Paul.||Kenny, Enda.|
|McCormack, Pádraic.||McEntee, Shane.|
|McGinley, Dinny.||McGrath, Finian.|
|Mitchell, Olivia.||Morgan, Arthur.|
|Naughten, Denis.||Neville, Dan.|
|Noonan, Michael.||Ó Caoláin, Caoimhghín.|
|Ó Snodaigh, Aengus.||O’Donnell, Kieran.|
|O’Dowd, Fergus.||O’Keeffe, Jim.|
|O’Sullivan, Maureen.||Perry, John.|
|Reilly, James.||Ring, Michael.|
|Shatter, Alan.||Sheahan, Tom.|
|Sheehan, P.J.||Stanton, David.|
|Timmins, Billy.||Varadkar, Leo.|
|Ahern, Bertie.||Ahern, Dermot.|
|Ahern, Michael.||Ahern, Noel.|
|Andrews, Barry.||Andrews, Chris.|
|Aylward, Bobby.||Behan, Joe|
|Blaney, Niall.||Brady, Áine.|
|Brady, Cyprian.||Brady, Johnny.|
|Browne, John.||Byrne, Thomas.|
|Calleary, Dara.||Carey, Pat.|
|Collins, Niall.||Conlon, Margaret.|
|Connick, Seán.||Coughlan, Mary.|
|Cregan, John.||Cuffe, Ciarán.|
|Curran, John.||Dempsey, Noel.|
|Dooley, Timmy.||Fahey, Frank.|
|Finneran, Michael.||Fitzpatrick, Michael.|
|Fleming, Seán.||Flynn, Beverley.|
|Gogarty, Paul.||Gormley, John.|
|Grealish, Noel.||Hanafin, Mary.|
|Harney, Mary.||Haughey, Séan|
|Healy-Rae, Jackie.||Hoctor, Máire.|
|Kelleher, Billy.||Kelly, Peter.|
|Kenneally, Brendan.||Kennedy, Michael.|
|Killeen, Tony.||Kitt, Tom.|
|Lenihan, Brian.||Lenihan, Conor.|
|Lowry, Michael.||McDaid, James.|
|McEllistrim, Thomas.||McGrath, Mattie.|
|McGrath, Michael.||McGuinness, John.|
|Martin, Micheál.||Moloney, John.|
|Moynihan, Michael.||Mulcahy, Michael.|
|Nolan, M.J.||Ó Cuív, Éamon.|
|Ó Fearghaíl, Seán.||O’Brien, Darragh.|
|O’Connor, Charlie.||O’Dea, Willie.|
|O’Donoghue, John.||O’Flynn, Noel.|
|O’Hanlon, Rory.||O’Keeffe, Batt.|
|O’Keeffe, Edward.||O’Rourke, Mary.|
|O’Sullivan, Christy.||Power, Peter.|
|Power, Seán.||Roche, Dick.|
|Ryan, Eamon.||Sargent, Trevor.|
|Scanlon, Eamon.||Smith, Brendan.|
|Treacy, Noel.||Wallace, Mary.|
|White, Mary Alexandra.|
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