I would like to take this opportunity to welcome the Finance Bill. I believe that it sets out a number of goals and sends out a positive message which helps to create an atmosphere in which we can make a start to tackle the considerable problems which plague us as a nation.
This is most certainly a time of crisis, and the greatest crisis we have is a crisis of confidence. We are ill served by those who seek to contribute to that crisis by their pessimism and cynicism. Rather we should be emphasising our strengths, talents and adaptability of our people, the comparative beauty and peacefulness of our country for tourism and, from a positive approach of confidence and hope, go forward to resolve our current problems. There is too much begrudgery and negativeness around, both inside this House and in the wider public media. Certain sections of our media seem to have an inability to report anything positive. Indeed, I grow more and more angered and more and more disgusted with those in our society who sit in their protected ivory towers and tell us what a desperate and hopeless country we are living in — the cosy economists and commentators who have the luxury of dishing out widespread comment and offering solutions while ignoring to fill the gap between how to achieve the solutions.
I do not question the democratic right of comment, rather I appeal to these people who are inside and outside the House to be more positive, not to knock for the sake of knocking. I accept the ultimate responsibilities lie with politicians. However, it would be to everyone's benefit if we all work together for a more positive climate. Get rid of the begrudgers and bring back hope and confidence in our political system, in our politicians and in our peoples' minds.
Achievements must be recognised. This Finance Bill is an achievement, considering our position just five months ago. Without the initial budgeted strategy, any response to Culliton, or son of Culliton, Moriarty, in any form would have been impossible. The positive innovations set out in the Finance Bill were only made possible by the effects of the clear signals sent to the market in January 1993.
We have an unemployment crisis which needs an urgent solution. High currency values and high interest rates, if they had been allowed to continue, would have substantially increased our unemployment levels. Having tackled the currency and interest rate crisis successfully, the Minister for Finance, Deputy Ahern, has given us a Finance Bill with several innovative measures, such as tax rebates for start-up businesses, the renewal and expansion of the BES, capital gains tax changes, and I for one wholeheartedly and sincerely congratulate the Minister on his achievements.
It is no surprise to me to find a Fianna Fáil Minister delivering a finance policy which has job creation as its primary goal. As a party, it has always been one of our primary goals, although we may not have been as successful as our ambitions wanted us to be in the past. Employment for our people has always been integral to the Fianna Fáil philosophy. As early as 1928. Eamon de Valera committed our party's economic policy to work towards the fullest level of employment possible. Taking and updating his words in our own style, I remind the House of that commitment: "We believe there ought to be available for every person in the country employment which will bring enough recompense to enable them to maintain their families, and the whole organisation of the State ought to be to that end".
Government policy is now focusing on that principle. Therefore, the philosophy of employment through enterprise, and reorganising State support bodies so that they are primarily organised to work together to tackle unemployment, is a very welcome and positive move.
I have to admit my irritation and anger when I hear public representatives, mostly from the Opposition benches, casually admit their resignation to the view that we will never achieve full employment. This is now the cop out which will be used to argue away our ghastly unemployment statistics. Rather we should recall de Valera's resolve that, whatever the level of unemployment, it is grossly unacceptable and we must work constantly to bring it to its lowest possible figure.
All politicians should bear the responsibility and be ashamed if one family is allowed to live in poverty. We all lose out if the talents of any Irishman or woman are left unused in idleness and waste. The futures of all our children are threatened if one child cannot look forward to a life of hope and fulfilment. Our people deserve this. It is time all the begrudgery, negativeness, backbiting, political gains, scandals and all the other attention diversions stopped and that we all focus our attention on working together fully committed to solving unemployment and giving back our people confidence and hope.
We should remember that we have worked to solve many problems which stalked us and seemed insurmountable only a few short years ago. No one has told us it will be easy and I do not believe any of us are naive enough to believe it will. But we are well placed to do so. Through the efforts of previous Fianna Fáil led Governments we have achieved a level of social consensus which has never been seen in this State before. I urge the Government to build on the strength of that social consensus, to seek co-operation from the social partners to renew their efforts. It would, in my view, be a serious backward step if this consensus is lost.
I urge the business community, to adopt policies for growth and expanison. I call on our Irish public companies to contribute to the long term prosperity of our economy by investing in the long term future of our people rather than concern themselves with quick and immediate return on investment in markets outside Ireland. Irish management of multinational companies already based here should not lose any opportunity to seek further investments in Ireland from their parent companies, particularly with regard to R & D activities.
As our interest rates continue to fall, I would call on our financial institutions to give encourgement to the innovator and the entrepreneur. All the reports, and the reports on reports, and all the response reports on the reports and the response reports on the response reports based on the original reports, will create no enterprise and no employment unless the circumstances are right for the business community.
The majority of our business community are not high profile public companies with Stock Exchange quotes, but rather small worker owner businesses. Reports will not fill the gap to enable these people to trade successfully, make profits, and provide employment. The fundamentals must be right. This does not include just interest rates and currency rates, but also the level of bureaucracy, taxation regulations and company law requirements. These are areas that take a small business man away from concentrating on and developing his business and have too much prominence and importance in business dealings in our country. We have now adopted a European law framework suitable for the economies of Germany and France but which does not suit and is not viable for the majority of small business enterprises and only serves to create more bureaucracy and paperwork.
Our taxation system, its high level of bureaucratic concentration and its high generation of paperwork, is completely out of touch with job creation. Comment today mostly focuses on the need for tax reform, and this is a very valid argument. However, just as important is the need for reform and simplification of many of the rules, regulations and bureacratic requirements of our tax system.
Self-assessment was sold to the business community as a way of removing the burden of paperwork from the system and simplifying the tax code, but it has in fact developed in the reverse way. The extent of paperwork now being demanded from business, including third party returns, where you must disclose payments of over £1,500 to certain types of services, and other similar returns is bad for business. Let our Revenue officials — Lord knows we have enough of them — do their job of checking compliance and the accuracy of returns as was set out as a fundamental principle of self-assessment. This burden should not be passed over onto business, which has clearly been the case in Revenue policy in recent times.
Another example of this is the ridiculous rules that apply to a construction industry where a company must nominate a particular individual to hold the company's construction cert and which allows payments to be made by principal contractors gross. Ridiculous new arrangements brought in by Revenue insist that each company should have a nominated individual who must visit every such company he deals with and present an identity card. Revenue will not allow the identity card to be posted, or any employee of the company other than the nominated individual to deliver the cert. In fact you have a situation where the individual has to leave his business, get into his car and visit his various customers to produce the card in person. Is this the type of regulation that is good for business and conducive to creating employment? To my mind, construction regulations and the various returns which businesses are now obliged to send into the tax office in addition to their yearly accounts and tax returns are bad for business because they take the businessman's mind off expanding and developing his business and thus providing employment. There is also a need for a culture change in the Civil Service, particularly in the Revenue service. Officials need to appreciate that they are there to serve and co-operate with business, not present obstacles and barriers.
The business community are the Revenue's customers; if there was no business or the number of business was to reduce, then there would be no need for a Revenue service. As unemployment and the number of business liquidations have increased, more and more people are working in Revenue services. There is a definite need for a change of attitude in the Revenue Commissioners to business. It is clear that the substantial powers given to the Revenue in recent years, in good faith, have not had the positive effect that was intended.
Self-assessment has failed to relieve the bureaucratic burden on our business. It has substantially increased it, as demonstrated in the policies of the Revenue in dealing with business in recent times. We need tax reform as a separate measure and it would cost us nothing to reorganise Revenue policy and procedures, and encourage our civil servants to be pro-business.
One of the areas that Revenue and inspectors are now concentrating on is that of mileage payments and expenses. Let me recall a recent case. The individual involved, a company director, was concerned that he might in the future be subject to a Revenue audit and that the Revenue Commissioners might be dissatisfied with the amount of reimbursement. There are approved mileage reimbursement rates in place for all civil servants, depending on engine size and official mileage in the mileage year, and these rates run on a sliding rate from a maximum of 66.5p per mile. Many businesses have adopted the Civil Service approved rates as a guideline when reimbursing persons providing their own transport. In the case I mention, the individual set about getting an approved mileage rate on the basis that the Revenue auditors would not accept Civil Service mileage rates in the case of business. On submitting details of the type of vehicle, vehicle value, expenditure on tyres, repairs, insurance, fuel, services and average annual business and private mileage, he was approved by the Revenue on the basis of a lower mileage rate than if he was a civil servant. On querying this he was informed by the Revenue Commissioners that the formula used to calculate his mileage rate is per the Taxes Act and that he was not entitled to the Civil Service rate except where the rate achieved under their own formula is greater than the Civil Service rate. Is this a good approach to business? After all, it will be through this business that jobs will be created, not through the Revenue services.
The example I have outlined demonstrates an overall problem in the attitude of the Revenue services and in other parts of the Civil Service to business. We need efficient service of the highest standard in terms of competitiveness and positive attitude from all Government Departments, agencies and semi-State bodies. Anything less will undermine the efforts of this House and the Government to implement the provisions of this Finance Bill. It is no solution to transfer problems from one sector to another. We need real, long term solutions. If there is one fundamental weakness in the various reports it is that they do not fully address this area. Are business people expected to fall into line out of a sense of national pride or for the benefit of Northern Ireland? Incentives and financial rewards must be put in place. The days of Stalin and Lenin are long gone.
I would also comment on the need, in making policy, not just to approach it from the point of view of start up business. Our greatest hope for short to medium term expansion in the economy is to expand our existing business. While it is positive and worth while to put incentives in place for new business, it is vital to help expand existing business, and I refer the House to the provisions of the Finance Bill in this area. Subsidies and grants will only keep new business alive for a limited time. Urgent and positive action is necessary to deal with the more fundamental problem of developing existing business and stopping its decline. Let us not set about creating enterprise for the sake of enterprise or enterprise where we will see the least return. Our priorities must be existing business. I suggest that the Government focus on the problems of existing small business because therein lies our greatest hope of immediate and rapid change in our economic development.
There is a need for large scale tax reform. Our workforce is one of the most demotivated in the free world. How could it be otherwise? After many workers pay tax of 48 per cent, they see another 7.25 per cent of PRSI disappear and then they pay the new 1 per cent levy which amounts to over 56p in every £ of their wage packets. The Government should gear our taxation machine to be more pro-domestic business. The argument that radical tax reform is not affordable or possible does not stand up to scrutiny when one examines the real cost of existing policies. There must be sufficient incentive to encourage a healthy entrepreneurial spirit and promote business success and there must be incentives for all our workers.
I would ask the trade unions and the farming community to continue the consensus we have had. I call on the Government to give serious consideration to innovative proposals relating to offshore banking and an amnesty for repatriated funds. These will serve to keep our interest rates down and encourage investment in Irish enterprise. We must also build on our tourism infrastructure and provide state of the art conference facilities, sports facilities and anything which attracts people and business and which plays to our strengths and advantages.
I urge the Government to exercise the greatest care in its use of the European resources at our disposal. We must develop an industrial policy which is not based on a well-intentioned subsidy grant mentality which provides only temporary employment for as long as the subsidy is there. There must rather be a long term view taken which not only creates lasting employment but addresses the causes of the failure of existing businesses with the loss of jobs that inevitably follows.
The opening of the European market is both a testing time and a time of promise. Nobody thought it would be otherwise. We must use the resources which Europe provides for the greatest benefit of our people. We must find our niche in the European market. I am confident that we shall.
I am also concerned about our role in Europe and I am troubled that we have, in a matter of months, seen our pride as Europeans turning sour. Our peripherality to the mainland of Europe is a serious problem that faces us in the European context. We will soon be the only island nation in Europe without any land connection to our fellow EC partners. In a united states of Europe we would be like Alaska, but without the oil. This, combined with our relatively small population, should give us cause for concern about our future. While it is true that European funding is designed to help us overcome this problem, we must ensure that when these funds have been spent the problems have been minimised.
Great play has been made of the £8 billion of Cohesion Fund money which the Community is dedicating to Irish infrastructure. Although I welcome the provision of this money and look forward to its effect of improving the quality of Irish life, in view of our most recent experience in Europe I feel compelled to ask if this £8 billion is really designed to bring Ireland to a competitive standard equal to that of the European giants, or if it is simply conscience money?
Will an Irish businessman really be able to compete on an equal basis with his counterpart in Germany or the Benelux countries after this £8 billion is spent? Is £8 billion actually enough to put our infrastructure on an equal footing? How can we be sure whether it is or not? Roads and motorways on their own are not enough to solve long term unemployment. We cannot be sure, but I believe there are additional guarantees which we must negotiate to ensure that we have the means to overcome our remote location and small population base. It is important that we get an early commitment from the Government in relation to an adequate injection of equity into Aer Lingus for the purpose of giving us secure access to Europe and our markets around the world.
In summation I welcome this Bill as a start — a very good start to fulfilling one of the original tenets of Fianna Fáil economic policy, namely, adequate employment for our people. Let us be realistic as to what this Finance Bill can achieve. Politicians cannot legislate specifically to solve the unemployment crisis. We can get the climate, the environment and the economic fundamentals right for business to provide employment. One does not manufacture jobs like a product. One creates the right climate for doing business, and jobs follow jobs. Policies based on grants and subsidies generally do not work because when the grants and subsidies finish the jobs finish up as well.
This Finance Bill represents a step in the right direction. It is an encouraging and positive start for this new Government and sets out a solid foundation for effective Government over the next few years.