In terms of an instrument used to develop and rejuvenate our economy and to set down clear policy guidelines, I question where this Bill will rate in the full measure of time? I still believe this Bill should be consigned to the shredder as it will certainly not make any contribution to the development of our economy and the creation of jobs. Every party, every independent Member of this House, has spoken about one issue in recent years — job creation. Elections have been fought on job creation. Committees have been established on job creation. Departments have been changed for job creation. There have been massive changes effected everywhere. Yet the one instrument that could have recognised and dealt with the need to make real progress in this area, this latest budget, was not availed of for that purpose.
At the time the Minister made his Budget Statement I had a certain sympathy for him, because the circumstances then prevailing in our economy were not very favourable. We just had the currency crisis and the devaluation of our pound and the outlook for ordinary people — PAYE workers, mortgage holders and those with loans large or small —was deplorable. One felt that the Minister was endeavouring to do the best he could, given the deck of cards and the way the hand had been dealt him. He was trying to make the best of dire circumstances.
What has happened since is that, beyond eveybody's expectations — including those of the Department of Finance, the Government and the Minister himself — things have changed dramatically for the better. Certainly, that has not come about as a result of any Government action in the recent past, or because economic conditions here have changed. Clearly, this has arisen because of international factors changing and the decision — taken too belatedly — to devalue our currency ultimately forced on the Minister for Finance. Let us accept the benefit of what has occurred in recent months since the Minister introduced his budget.
I would have thought that this Finance Bill would have presented the Minister with a golden opportunity to effect within a very short space of time substantial alterations to his budgetary proposals since circumstances had changed so dramatically. I would have thought that the proposals for a 1 per cent income levy, a probate tax, VAT increases on clothing and the footwear industry, could have been dramatically altered or abolished altogether. Indeed, I would have expected that the Labour Party in particular, since this is a so-called partnership Government, would have seized that opportunity, with their six Ministers at the Cabinet table, to persuade the Minister for Finance to effect such alterations in the Finance Bill. I believe such amendments would have been welcomed by all sides of the House. But, more importantly, it would have been welcomed by employers, employees and the unemployed, those on the margins endeavouring to sustain a job, those seeking work and those employers who have been barely hanging on. Clearly that opportunity was not taken. What message does that convey to us? It demonstrates that this Government over its lifetime will do nothing radical and will not be reforming or imaginative. Certainly, it will not take risks where such may be called for, but will generally plod along, hoping that at the end of the day when its term of office will have expired at least it will not have made matters worse. That would appear to be the objective of this Government — that it will not make matters worse and that nobody can criticise it in such circumstances.
In this respect the Minister for Finance has proved himself already to be a replica of many of his predecessors who served in Coalition Governments with the Labour Party. It appears he became a prisoner of a push by the Labour Party — from a totally different ideological viewpoint — and of weak leadership in the Taoiseach's office. It is clear to me that in endeavouring to accommodate certain philosophies or moves in certain directions he was unable to maintain his position and undertake the action he believed fundamentally should have been taken by him as Minister for Finance. Clearly he had not the back-up of his Taoiseach to implement the necessary changes, while bending to the needs of the Labour Party on the other side. That crippled the previous Coalition Government involving the Labour Party in the mid-eighties and the previous Coalition Government in which the Labour Party were involved in the seventies.
While the lessons and constraints on us because of European influence may not be as dramatic or devastating on our economy, certainly they will not improve our economy or the position of those who seek employment in the years ahead.
I listened with great interest to what Deputy Costello had to say in this Chamber about an hour ago. Certainly he is not the same man who was a colleague of mine some short six months ago in Seanad Éireann, when he was well able to speak of his own volition in a very coherent and able manner. It was something else to behold him here today, coming in to deliver a Government-type script the contents of which he clearly did not believe in and with which he was uncomfortable. He said one thing I want to nail down here today in the context of tax reform. More than any other party here the Progressive Democrats tried — and with considerable success, particularly during our time in Government — to bring about reform of our taxation system, in particular a reduction in the tax wedge on those at the margins. In what appeared to be a follow-on to what the Taoiseach stated in recent weeks, Deputy Costello said that the tax reform that had taken place had not led to increased employment here.
That is totally wrong. I might recommend that the Deputy and others, including the Taoiseach, read the latest annual report of the Revenue Commissioners for 1991, in particular page 18, and refer to the graphs shown there. One graph shows that employment growth between the years 1989 and 1991-92 was by any yardstick substantial — 1,120,000 people were employed in 1989 and the figure is now approaching 1.2 million people. Clearly there has been sustained growth in employment during the period 1989 to end 1992. It is extraordinary that that growth should occur at the time the Progressive Democrats were in Government, demonstrating that it was occasioned by the tax changes and the continuation of the action taken in previous years having a real effect in the marketplace. Not only did the numbers at work increase, having been flat or on a downward trend for a considerable number of years before that, but the number of employers also rose significantly, from approximately 100,000 to 115,000 traders and employers.
That improvement, given the picture that had obtained in the preceding years, was a substantial turnaround. That was an improvement this Government should have foreseen and should have sought to continue the process which had led to those increases for the first time in many years. One would have thought that they would have sought to continue that process in this budget and Finance Bill. In addition, over that period the number of VAT registrations arose. It can be clearly seen therefore that employment was growing, the number of employers increasing and that many aspects of our economy were improving.
That leads me to question what will be the effect of the budgetary provisions and of this Finance Bill. Since the figures are there to prove it already, I predict we will see a reduction in the numbers at work here. We have observed already their effects on the clothing industry, with companies and retail shops closing down and jobs being lost. I might point out that, even before the introduction of this budget, the clothing industry itself had predicted a decrease in activity in retail and manufacturing sales in the current year. Yet, the Minister increased the rate of VAT on the industry by 30 per cent. That is appalling. Members on the Government side of the House said that each industry has to bear the brunt but I do not know of any other indigenous industry of such importance, in terms of its potential to create employment, which had to endure such a shattering blow in the budget. It is hard to understand the reason, given that between budget day and today the country has been crying out for changes, that these cannot be made.
The point I wish to make to the Labour Party and to its colleagues in Government, the Fianna Fáil Party, is that it is wrong to suggest that the changes made during the past few years in regard to tax reform have not led to the creation of jobs. The figures prove that they have. I have no doubt that I and others will return to these figures in the years ahead when a different picture will have emerged for the simple reason that the Government will have moved backwards. For the first time in five years a Government has introduced a budget which will widen the tax wedge. That will be the hallmark of this Government in developing the economy.
The 2 per cent probate tax can only be described as despicable. In the present climate, when we are experiencing difficulties in the economy, it is outrageous that such a tax should be introduced on estates valued over £10,000 without having any regard to the effect this will have on the people involved. There is a presumption on the part of the Minister for Finance that somehow these people have cash reserves and substantial savings in bank or building society accounts but, as the Minister and everybody in this House should know, those who own small businesses and small farmers are struggling to survive. The Minister seems to believe that these are easy pickings, that it is a matter of taking only small sums of money out of the estate and that this tax will not have any real effect. However, people will be forced to sell some of their assets, which they need to stay in business to pay this tax. It will ultimately affect their ability to sustain their small businesses and employment in those businesses.
Where are the majority of these small businesses and enterprises to be found? They are in rural Ireland. We are trying to keep them away from Dublin, which is being turned into an urban monolith. In introducing this tax the Minister is attacking the fabric of the cottage industry — the small shopkeeper and small farmer. I would like to know who dreamed up this 2 per cent tax, who had this flash of inspiration and who the genius was who saw this as an easy way to raise some extra funds to balance the books without having any regard to the impact it would have. It is reprehensible at a time of great turmoil in a person's life, the death of a family member, that they will have to meet an unnecessary tax liability. It should never have been introduced.
It is to the shame of the Minister and the two parties in Government that they have stood over the introduction of this tax. The vast majority of Deputies on the other side of the House represent rural constituencies and they continually meet business people who are struggling to keep small towns and villages alive. Yet, they can cynically stand over the introduction of this disgraceful tax. This is extraordinary and I do not understand it.
During the past 24 to 48 hours there has been a great discussion on the changes in telephone charges by Telecom Éireann. Everybody will welcome the reduction in international telephone call charges given that they were out of kilter with charges in the rest of Europe to the detriment of industry in this country. Coupled with this, local telephone call charges have been increased while rental charges are among the highest in Europe.
In reference to the Culliton report, I do not accept that Governments have the right to interfere in public companies. Business cannot operate if, on the one, hand, they are told they must operate on a commercial basis and, on the other, they are issued with Government decrees. The way to ensure fair and reasonable telephone charges is to bring monoplies to an end. I do not believe in monopolies, be they private or public. Is the ESB next in two months' time, to be followed by An Post? When is Government interference in commercial semi-State companies to end? It is both unwelcome and unwarranted. As everybody is aware, the answer is to bring monopolies to an end and create competition in the market place. We should let the market place and the consumer decide the value of any product or service. We should not create artificial barriers to trade.
I subscribe to the view that we should have a simplified tax system which would result in the removal of hidden benefits and tax breaks so that the person earning a wage would have the right to retain the largest possible amount of money in his pocket, would be the master of his own destiny and decide for himself what he wants to spend his money on. It should be possible to do this if we only had the guts and the courage to do it. Instead, we keep introducing incentives with the result that those who want to do anything need to have a firm of accountants and tax consultants to advise them. This is not the way forward and the sooner we realise this the better. In the long run if the consumer and the employer had spending power they would use it in such a way that jobs would be created.
I have a great deal more to say but time has run out.
