Finance Bill 2008: Second Stage (Resumed).

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

Deputy Kieran O'Donnell was in possession and he has nine minutes remaining.

I refer to the measures proposed by the Tánaiste and Minister for Finance in the context of the challenges facing the economy. Today's newspapers highlight a report by NCB stockbrokers, which states growth in the service industry slowed to a four-year low in January, the level of new exports among new service providers fell for the first time in 53 months in January and business confidence levels are well below last year's averages. Consumer confidence also fell by one third over the past 12 months. Yesterday €4 billion was wiped off the value of Irish shares, with banks and the construction sector particularly affected. The biggest task the Tánaiste will face over the next year is managing the difficulties in the economy, yet the Finance Bill is rudderless in that area. It is easy for a Government to manage during good times but it is much more difficult to do so in bad times when leadership is needed.

It is often said that the Opposition does not provide strategies for the future but I have some simple suggestions that the Government should implement as a matter of urgency to deal with the difficulties we are facing. The Tánaiste's main objective should be restoring confidence in the economy by improving competitiveness. In the contribution he made yesterday, he stated that Ireland's inflation rate was slightly above the EU average. Rather than be happy with that, he should try to bring inflation below the EU average. The Government must make a commitment to keep price increases in the areas it regulates below the rate of inflation. The national programme to restore competitiveness recommended by the National Competitiveness Council in its recently published 2007 annual report should be established immediately.

With the national pay negotiations about to commence, the Taoiseach and the Tánaiste should not lecture ordinary workers on pay restraint given their own exorbitant pay increases. The Tánaiste will receive an increase of the order of €36,500, which is more than the average industrial wage. It would appear that he is the highest paid Minister for Finance in the world, even though we are one of the smallest economies. The Taoiseach will receive a salary of approximately ten times the average industrial wage. In line with the proposal made yesterday by Deputy Mansergh, I ask the Government to decouple remunerations for senior civil servants from the private sector. Furthermore, I urge Ministers to refuse the pay increases recommended by the higher remuneration group.

The Government must develop a balanced business economy. We have been too reliant on the construction sector, which produces 15% of tax revenues and accounts for 25% of GNP. The Government stands indicted — when we joined the euro and interest rates fell that encouraged people to take out loans and resulted in an unsustainable situation whereby 90,000 houses were completed annually. The bubble has now burst, prices are falling by approximately 20% and many young people are facing negative equity. I welcome the proposed provisions on stamp duty but they are being introduced too late.

This is a small and open economy, so we must return to basics. We clearly need a construction sector but it must be sustainable. We have lost 30,000 jobs in the manufacturing sector since 2001, while the construction sector experienced a similar increase in employment. We need sustainable manufacturing, service and construction sectors, as well as sustainable foreign direct investment. We need to take a balanced approach by increasing exports of goods and services by 20%. In 2006, the increase was only 4% and the Central Bank is now projecting a mere6%. In January, growth in services slowed to a four year low and new exports by Irish service providers fell for the first time in 53 months. We must reverse that decline.

The case could be made for the Tánaiste to revise his budget projections. He based his construction figures on 55,000 house completions but the Construction Industry Federation is now projecting 30,000 completions. Ten thousand completions are equivalent to 1% growth and €1 billion in tax revenue, so 30,000 houses would represent a shortfall of €2 billion and a €7 billion Exchequer deficit. That could push us close to the 3% limit under the Stability and Growth Pact. It is important, therefore, that the Tánaiste introduce measures to enhance competitiveness in other sectors.

A 2% efficiency drive in the public sector would have yielded €3 billion per year for frontline services. I note that the level of expenditure for public services in January was 20% greater than last year's figure. Unless the public sector is properly reformed, I question whether the Government can hold to its expected 9.3% increase in deadlines. There has been significant wastage over the past number of years. Approximately €420 million has been spent on e-government, even though some projects have never been delivered.

A structured review of EU directives is required to determine how Ireland can maximise the benefits from them. The climate change strategy must be implemented as a matter of urgency instead of bringing in VRT and motor tax on cars and accelerated capital allowances.

In regard to my constituency of Limerick East, I welcome the proposals made by the Tánaiste on regenerating Limerick. I look forward to seeing the measures being introduced because they will be extremely important for the area.

The budget provides for a 12.5% tax on foreign dividends on holding companies based in Ireland. An immediate measure to enhance competitiveness would be to exempt such companies. We are competing with countries such as Holland to attract worldwide companies to locate their headquarters in Ireland and we must regain our comparative advantage in order to sustain employment.

The role of a Minister is to look after jobs and the most vulnerable people in society. Success in that regard requires a vibrant and open economy rather than over-reliance on the construction sector.

I welcome several of the initiatives set out in the Finance Bill. The first matter to which I wish to refer is the green element of the Bill and the provisions relating to improving the environment. We have employed various incentives and educational and other methods to try to encourage people to change their ways regarding refuse and the dumping thereof. I drove through various parts of my constituency on Monday last and observed that the quality of the grass on the verges at the sides of the roads has deteriorated as a result of the amount of rubbish being dumped there in plastic bags etc. The Finance Bill contains a number of tax incentives to encourage people to be more concerned about the environment.

We have done a great deal in the context of issuing information regarding refuse, the dumping of rubbish and so forth but we have not been too successful. Providing incentives is the only way to ensure an improved and greener environment in the future. Officials from local authorities are charged with checking on the dumping of rubbish but the practice remains ongoing. Cork County Council has done great work on putting in place bring centres etc. However, careful consideration must be given to this issue.

My second point relates to section 20 of the Bill, which contains incentives in respect of farm partnerships. In the past 15 years, particularly in the context of the dairy sector, the farm partnership model was used to try to amalgamate smaller farms into single units. Some of these partnerships did not work or fell apart, for example as a result of the death of one of their members. I welcome the provisions on farm partnerships and I hope they will be implemented because many people, through no specific fault of their own, were affected when certain partnerships fell apart. I am glad the Government is taking action in respect of this matter.

Another issue to which I wish to refer is the giving of sites to family members by either a father or mother. The threshold in this regard is being increased dramatically, which is welcome. It is fine to ensure that sites can be transferred without incurring stamp duty payments and so forth. However, major issues arise in the context of rural planning and further such issues will come to light in the future in respect of the regulations that are to be introduced.

On the subject of sites, a farmer in my constituency wished to transfer ownership of a site to a school which had received a grant from the Department of Education and Science under the devolved grants scheme to build an extension. The individual in question wanted to give, free of charge, an acre of land to the school. In view of the prices charged for land, particularly in villages and towns, it is amazing that he was willing to donate the site. However, as a result of the regulations on taxation and stamp duty, the farmer in question could not transfer the land in the free and simple way he envisaged because a monetary value had to be placed on it. In addition, and even though there would not have been any exchange of funds in respect of the site, stamp duty would have had to be paid. I ask the Minister to examine this matter, particularly because many people are willing to donate small parcels of land to community projects, etc. Perhaps an amendment could be introduced in respect of this matter and people throughout the country might benefit as a result.

In recent years a great deal of effort and money have been invested in promoting agriculture. Some of the provisions in this regard in both the budget and the Finance Bill are welcome. The Department of Agriculture, Fisheries and Food has made available huge grants in respect of farm pollution and the protection of the environment and it is examining the possibility of expanding these because they have been of major benefit to people in rural areas, particularly those on smaller incomes, in the context of allowing them to put in place the proper facilities to ensure that the environment is protected from an agricultural point of view.

The Tánaiste and Minister for Finance made provision in the budget for a once-off grant for St. Joseph's Foundation in Charleville, which is the service provider for people with intellectual disabilities in north Cork and south Limerick. It offers a fantastic service and I cannot praise highly enough its chairman, Martin O'Donnell, its chief executive, Conor Counihan, and its staff for the work they do. The foundation is seen as one of the best service providers in the entire country and it does fantastic work. The funding provided is welcome, particularly in light of the huge shortfall relating to the hydrotherapy pool the foundation built for those who avail of its service. It is great that the Government is giving recognition to those employed by the foundation who do tremendous work in their communities in providing help not only to the service users but also to their families.

If I commented at length on the health sector, we could be here saecula saeculorum. Huge amounts of money have been included under the health service budget. There are a number of issues that arise from time to time, particularly in the context of the assessment of home helps. If a person is admitted to hospital for a week or ten days, when he or she returns home it will be almost three weeks before their home help service resumes. This only adds to the paperwork officials are obliged to complete. If a person is entitled to the services of a home help before he or she enters hospital, either for a routine stay or as a result of an emergency, surely he or she should be able to avail of those services again immediately upon his or her return home.

Consideration must be given to this matter because the home help service provides an excellent service and allows people to continue to live in their own homes for as long as possible. It provides support for families throughout the country and is a great initiative. Ten or 15 years ago, such a service was not available. Instead of being cut back, it should be enhanced in every way. We must ensure that the type of bureaucracy to which I refer is removed from the equation because it is not acceptable.

I wish to comment on the major resistance in Dublin to the decentralisation project and the transfer of parts of Departments or State agencies to locations throughout the country. Decentralisation is welcome because we need more balanced views rather than having everything centred on Dublin. The ideas and views contained in reports compiled from people in other parts of the country must be brought to the attention of central Government. I am glad the decentralisation programme is proceeding and I look forward to the fulfilment of the commitments made in respect of the towns of Macroom and Kanturk in my constituency. Decentralisation is a great project and it has benefited many people in various communities. There is no reason work cannot be done as well or better in locations other than Dublin. As Chairman of the Oireachtas Committee on Economic and Regulatory Affairs, I welcome the review taking place in the Department of the Taoiseach of the regulatory affairs bodies set up around the country. In that context, the committee now has powers to investigate the set-up, finances and operations of regulators in their reporting to the Houses of the Oireachtas. That should be welcomed.

Every public representative could comment on the amount of regulation that has come about in the setting up or carrying out of business, which has hampered such businesses across the country. There is a thought among the public and abroad that we interpret our regulations far more strictly in this country than elsewhere. This is particularly so in considering how regulations are implemented in other European countries.

I welcome the review being made by the Taoiseach's Department but as a Government and Parliament as a whole, we must consider this matter seriously. We must ensure no industry — small, medium or large business — or other group of people will be hampered by regulation going forward. There should be a clear method and system within the country that will minimise regulation.

I would be the first to admit that, in some sectors, stringent regulations had to be introduced. In some cases, regulations are very worthwhile in the carrying on of businesses and saving lives in the case of the Health and Safety Authority. However, we have come from a position of little regulation to one with significant regulation, so it is important we get the balance right. I will consider the matter in committee and we will try to ensure the committee's work leads to regulation being limited unless it is worthwhile and benefits society. If there is a surplus of regulation, we will try to look at it.

I will also address the issue of infrastructure, particularly the amount of money which has been pumped in by the Government to roads, leading to upgrades of the main motorways and dual carriageways between cities. That is continuing and I am delighted the Atlantic corridor from Cork to Limerick and Galway is a priority under Transport 21.

Some towns are experiencing significant bottlenecks. Kildare and Monasterevin were very problematic for people driving from Cork or anywhere else on the N7 to Dublin ten years ago. Those towns have now been bypassed but the problems are further down the line. We have significant problems in places such as Charleville in north Cork and Buttevant. Funding has again been committed this year and I hope these projects will move on. Charleville in particular is clogged on a Friday from 3 p.m. until 7 p.m. or 8 p.m. and right throughout the week.

Much industry has started up in the area over the past three or four years and much employment is coming on stream. A new hotel opened recently, which should be welcomed. The only way we can ensure continued growth in towns clogged by traffic is to continue funding from the Government in the form of the Transport 21 programme. It should be front-loaded because at times when economic difficulties are apparent, there can be a tightening of funds.

There may be an inclination to cut these projects but it is important we continue to spend money on them to ensure we have the best possible road infrastructure to attract inward investment. As we have been attracting inward investment for some time, it is most important we ensure the investment, jobs and employment we have are supported. This also applies to the entrepreneurs and businesspeople running indigenous industries.

Others have spoken about competitiveness, an economic issue which the Government should look at carefully. We have a buoyant economy which we hope to continue.

The Minister has tried to bring in some incentives with the Finance Bill but there are significant untapped resources in our country. Many businesspeople have been good at developing industry, getting a bright idea and being forward thinking. Ballyhass Lakes in north Cork is an example, as much industry has been developed around a tourist attraction. That should be welcomed. We must ensure we have proper taxation incentives and encouragement from local Leader groups and enterprise boards so these people will continue to consider ideas and others will be encouraged in every possible way.

Over the years people criticised local authorities and Leader groups but the local Leader groups are doing fantastic work right across the country and should be encouraged. We are hoping for further funding under the Leader projects from the Department headed by the Minister for Community, Rural and Gaeltacht Affairs. I hope this will come sooner rather than later.

These groups have provided funding and encouragement to local people right across the country. They have been the first port of call for businesses and people looking at opportunities. They have provided advice and incentives. Related to my point on decentralisation, these people are already on the ground and can readily identify with an area or group of people in terms of providing encouragement. They have the benefit of being located within the local community and therefore know exactly what is going on.

Some of the groups are working with local community activists in the setting up of plans for villages and towns. These incentives should have been in place long ago and I am delighted they are finally being implemented.

I have some comments on how the budget and Finance Bill relate to people caring for others at home, be they elderly parents, siblings, sons and daughters or people with disabilities. All Members would state these people carry out significant work in society. The half-way carer's allowance was introduced in September 2007, which provided that anybody on a qualifying social welfare payment — a pension or disability allowance, although not the jobseeker's allowance — could get an allowance. That has alleviated significant concern and poverty for people in their homes. People who qualified for it have been absolutely delighted to get it. It was a great initiative which got many people out of financial difficulty.

Much funding has been put into the education sector, particularly the construction and renovation of primary schools over the years with the devolved grant. This grant has brought much benefit and allowed the boards of management of local schools incentives to get jobs done at a very competitive and reasonable price. The old scheme dealt with major refurbishments and we can see the cost differences for the Exchequer have been significant. I encourage the Department to carry on this fantastic work.

With these comments I commend the Finance Bill to the House and congratulate the Minister for Finance on an excellent Bill. There is much in the Bill that will be of great importance. The consolidation of farms was introduced and approved by the European Commission. Officials at the Department of Finance should consider including provisions on farmers who sold two farms to buy one, by way of amendment on either Committee or Report Stages. I commend the Bill to the House.

I wish to share time with Deputy Terence Flanagan.

I welcome the opportunity to speak on the Finance Bill. Although the Bill has a green tinge it represents another missed opportunity on the Government's part to address Ireland's deteriorating competitiveness. It fails to address some of the key problems facing our economy and to heed warnings, including those from the Central Bank, that growth will halve this year. The housing market is edgy, the latest information shows that prices fell by 7.3% in 2007 and a further drop of 5% is forecast for this year. The numbers on the live register are expected to rise by 26,000 due to the slowing of the economy. The numbers in work are set to grow by only 0.8% with spending to increase by only 1.5%. Faced with these challenges this Finance Bill lacks imagination. Investors looking to Ireland need reassurance but the Government is failing to take heed of the changed economic climate and to put in place any ideas to cushion the country during this bumpy period.

According to one of the national newspapers yesterday the Health Service Executive, HSE, is to receive approximately €370 million less in Government funding this year. This is not enough to sustain the level of our health service. As a Deputy from County Clare I am concerned about the implications this shortfall would have for the hospital in Ennis which is already facing serious challenges as revealed late last year following HSE cutbacks. Ennis General Hospital faces a shortfall of €3.5 million in 2008. Last week I read in another newspaper that the HSE in the north west drafted a list of cost saving proposals which would reduce the delivery of services. Will the Minister of State ask the Ministers for Finance and for Health and Children whether the services at Ennis hospital will be further reduced following the cut in funding for the HSE?

The uncertainty around the redevelopment of the hospital causes serious concerns. When will the proposed €30 million worth of work commence there? It is already behind schedule and I understand that work on the planning process has not progressed because of last year's budget shortfall. My constituents will suffer if there is no proper health service in the county. Health services must be patient-centred but if the Government fails to provide sufficient funding for the HSE or the HSE has to trim its budgets patients will suffer.

The funding arrangements for Clare County Council are inadequate to deliver basic services especially in respect of water and sewerage. No sewerage system has been started in Clare in the past five years. There was good news for Feakle and the Minister of State, Deputy Batt O'Keeffe, in his former role in the Department of the Environment, Heritage and Local Government visited Clare several times to examine these schemes. Work has commenced in Feakle and Mullagh and is about to commence in Scariff but there are problems there too. The schemes have been cut back and areas just outside the towns have not been included.

The Department of the Environment, Heritage and Local Government will have to face up to these problems particularly in Ennis when the schemes commence. Only last week Clare County Council avoided being axed when it accepted a revised budget as a result of the shortfall in funding from the Department. I have tabled a question for the Minister urging him to meet the council officials, councillors and Oireachtas Members to consider the shortfall in the council's budget. If he has extra money in the water service budget, which runs to approximately €24 million, he should allocate some of it to Clare County Council particularly to deal with the crisis regarding the water filtration problem in Ennis. The Minister of State, Deputy Batt O'Keeffe, was also aware of the inadequate temporary supply in his former capacity. I hope the Minister will see fit to meet the delegation as I suggest in my parliamentary question.

The Minister of State at the Department of the Environment, Heritage and Local Environment, Deputy Tony Killeen informs me he will look after Clare well.

He has not done so. He says he is constrained in what he can do because he is in the Department of the Environment, Heritage and Local Government. He is taking a very cautious approach.

He assures me he will do it.

Clare County Council received €15.6 million whereas other county councils received more, for example Laois, €18.3 million and Waterford almost €23 million, which shows that Ministers are delivering to their own counties. I do not wish to say anything about the Minister of State, Deputy Killeen, at this stage but let us hope that he will deliver to Clare in future budgets. Clare was sixth from the bottom in the Department of Finance's funding league.

The Bill also falls short in respect of Shannon Airport. Over the past 18 months I have heard many statements from Ministers for Transport about a major tourism and economic plan for the region to cushion the blow from the introduction of open skies. The region has a history of innovation and with the proper Government support can play a pivotal role in its development. The Minister for Transport, Deputy Noel Dempsey, admitted in an interview on local radio last week that there was nothing new in the plan announced then but that it was a restatement of commitments already announced. The plan is about as exciting as a reheated lunch. It offers nothing and lacks imagination. Much of the money the Minister allocated had already been allocated in the budget in 2008 and it falls well short of the €53 million envisaged by the mid-west regional authority. The Government has failed the mid-west. It ran away from the problem caused by the ending of the Shannon-Heathrow service last year.

The delays in the construction of the extension of the US customs and border protection facility at the airport should be resolved as quickly as possible. I welcome the announcement yesterday by Zimmer of 250 jobs for the region over the next two years, and its €50 million investment. The Shannon duty free zone has been crying out for investment for many years. The good news however should not deflect from the serious blows to the area in recent months. Jobs were lost at John Crane, Aer Lingus, Tyco Electronics and yesterday Shannon Community Group closed with a loss of 22 full-time jobs for people with special needs. I hope those jobs can be reinstated in another area because these people find it hard to get jobs. I would like to see the development of more new companies throughout the county, particularly in my area, west Clare where it could play a major role in sustaining rural communities.

The provisions of the Finance Bill do not go far enough in extending tax credits for research and development. It does not introduce the necessary measures to enhance Ireland's position as a destination for foreign direct investment. I urge the Tánaiste and Minister for Finance to rethink and address these concerns.

I refer to the issue of schools, for which funding is completely inadequate. I welcome the announcement last week by the Minister for Education and Science on funding to Ballyea national school in Ennis, County Clare. Although Government Deputies will disagree, as an Opposition Deputy I played a role in embarrassing the Minister into delivering on this project. However, other schools throughout the county have infrastructural problems including St. Michael's community college in Kilmihil and the primary school at Inch, which awaits an extension. Moreover, three schools in Ennistymon are awaiting the go-ahead for amalgamation. The provision of education for young people constitutes a test of the Government, which it has failed.

I pay tribute to a great visionary, Dr. Brendan O'Regan, who died last week. Given the challenges the economy faces, we need a vision for the future and it is up to the Government to provide it. While Fine Gael also will provide vision, urgent investment is required in roads, railways, airports and sewerage schemes, as well as the infrastructure for towns and villages. The Finance Bill is a major disappointment. The Government has no long-term vision, lacks imagination and has passed its sell-by date.

I too welcome the opportunity to speak on the Finance Bill. Budget 2008 was one of the most disappointing budgets of the past ten years. There is a lack of investment in education, health, transport and the social economy. The Minister for Finance was happier to take the easy option than to drive change in budget 2008. It represented a test of leadership Deputy Brian Cowen has failed. Ordinary families and small businesses will pay for the incompetent mismanagement of the public purse that Members have witnessed in the past ten years. I refer to the hypocrisy of pre-election promises made by the Government on tax cutting, when voters were grossly misled on the state of the economy in the recent general election.

However, since last summer the Minister for Finance spoke about delivering a tight budget. He tried strenuously to dampen down expectations created by his own party, with its unrealisable pre-election promises. In advance of the election, Fianna Fáil promised 2,000 additional gardaí, 4,000 additional teachers, 1,500 additional hospital beds, 2,000 additional consultants, tax cuts, PRSI cuts, affordable housing and much more. The deceit on which the election was won, which was a carbon copy of the general election win of 2002, is clear for all to see. Tax cutting proposals that were never viable have had to be abandoned in the face of a €2 billion shortfall in tax revenues. Despite much talk about value for money, I note that the Finance Bill does not mention how to achieve it.

The budget was a bitter disappointment to those who were promised by the Government that more families would be entitled to the medical card. In the programme for Government, Fianna Fáil promised to double the income limit eligibility for parents of children under six and treble it for parents of children with a disability. However, Fianna Fáil has reneged on that commitment. The Government could easily afford to extend the medical card scheme to all children under 18. Low to middle income families again have been let down and continue to bear the brunt of inequity in the health services.

When one considers the past 10 years, one sees Fianna Fáil's record of broken promises, failed policies and missed opportunities. Instead of using the benefits of recent wealth generation to help those most in need, the Fianna Fáil Government, with its recently-acquired partners in the Green Party, merely has ensured a continuation of health, education and other quality of life disparities between the haves and the have-nots. While some have done well from a Government intent on promoting a culture of greed, l am confident the electorate will pass judgment when next afforded the opportunity.

The Deputy should not hold his breath.

Fine Gael will continue to campaign for and on behalf of local communities that have been ignored or treated with contempt by the Government. We will stand up for those parents whose children are not being fully supported by the State. Children are being ignored because they have special needs, which certainly is not right.

The Minister for Finance has turned a €2.3 billion Exchequer surplus into a €4.9 billion deficit because of the sloppy, self-indulgent and wasteful manner in which he has spent money for more than two years. This constitutes the worst decline in Exchequer finances in the history of the State and must be debated. How and why did this happen? Although the Minister for Finance stated nine months ago that he would entirely wipe out Government debt, the Minister now intends to borrow €5 billion. The increases in current and capital spending of €4 billion and €1billion, respectively, reveal the destination of that €5 billion in borrowing.

While the stamp duty reform is welcome, it came nine months too late. Since the Tánaiste introduced the budget last December, all the economic indicators have been revised downwards. Much more difficult economic times certainly lie ahead. Unemployment is increasing; Ireland is close to the top of the European inflation league and the property market, despite the Tánaiste's botched attempts at stamp duty reform, is flat and is not working.

Although Ireland has one of the highest levels of personal indebtedness in Europe, the Tánaiste continues to insist all is well. I refer to another indicator with which the Minister of State at the Department of the Environment, Heritage and Local Government with responsibility for housing, urban renewal and developing areas, Deputy Batt O'Keeffe, is familiar. In 2004, 134 summonses were issued by the courts for house repossession. Last year, 465 summonses were issued, which constitutes an increase of 350%.

The Deputy should note that the percentage of repossessions is 0.006%.

Is that a percentage of the overall market?

As a total of 100,000 new houses have been built in the past ten years, there has been no increase in——

The Minister of State should tell that to the people whose homes are being repossessed.

Irrespective of what might be said, the Deputy should go with the facts.

The Deputy might continue. I can only protect him if he wishes me to so do.

The main domestic problem is the property market. The fall in house prices over the past year has had a major knock-on impact on construction activity. Employment in construction is falling and the live register is increasing. Exchequer returns for January highlight the effect on stamp duty receipts, which are a major source of income for the Government. They have halved, which constitutes a major problem. The Government parties must be held accountable for their mismanagement of the property market. They failed to control prices and, having overheated the market, were then directly responsible for the stamp duty debacle, which sent it plummeting.

While house price moderation will be a welcome development for the many thousands who wish to purchase a home, there is a real danger that people who have bought a home in the past two years using 100% mortgages could find themselves in negative equity. A rise in unemployment that was coupled with heavier debt burdens could increase the number of home repossessions in the coming years. The number of repossessions has already trebled since 2004 according to figures supplied by the Department of Finance.

Ireland also could be in line for serious home-grown sub-prime problems as those who over-stretched themselves with heavy mortgages during the boom times and who were helped by the financial institutions that the Minister did not bother to regulate before last Friday, face a harsher economic climate. Young men in particular are at risk of falling into the unemployment trap unless clear pathways are outlined for them to acquire transferable skills. There must be a significant focus on retraining and educational opportunities for such workers.

As for social and affordable housing, the Government has delivered half of what it promised——

That is not true.

——while 310,000 homes lie vacant. If we are to regain competitiveness and provide the world-class infrastructure and public services the people deserve, continued investment is essential. Our chronic traffic gridlock is simply one example of how the infrastructure deficit both curtails competitiveness and has a negative impact, which is often severe, on the quality of people's lives.

Higher hospital and drugs charges will take another €50 million out of the pockets of families. As our health spokesperson has noted, the Minister for Health and Children has given up on the most vulnerable in society with her stealth taxes in accident and emergency units, hospital bed charges raised by 10% and the raising of the bar on drug refund schemes from €85 to €90 a month. Her stubborn refusal to increase the income threshold for medical cards, which currently stands at €184 per week for a single person, which is €13.80 lower than the social welfare payment to a single person, means people who have the misfortune to earn more than half the minimum wage will still be denied a medical card.

The Government's neglect of mental health and suicide prevention measures was perpetuated by its failure to include these vital issues in its budget day announcements. One in four people will suffer from some form of psychiatric illness in his or her lifetime. It is reported that 500 people take their own lives and 80,000 people attempt suicide or self-harm each year. These grim facts appear to have escaped the Government’s attention as it outlined its spending plans for the year ahead.

What have we to show after the ten-year Celtic tiger? Have we got leading-edge infrastructure, a world-class health service or efficiency in the public sector? We have not. The Minister has blown a huge tax bonanza and we have nothing to show for it. I am not happy with the Finance Bill 2008.

I wish to share time with Deputy Michael McGrath.

Is that agreed? Agreed.

I welcome the Minister of State, Deputy Batt O'Keeffe, and compliment him on doing a great job, although he might not get much credit from across the floor.

Sometimes when we are considering an important Bill such as this, we forget about its principal aims and refer to parish pumps and byroads. It is no harm for us, therefore, to advert to the main aims of the Finance Bill 2008, as outlined by the Minister for Finance yesterday. These include supporting enterprise and innovation, advancing sustainable development and ensuring a fairer tax system. I am sure the public is very pleased that we have somebody in the finance portfolio who not only has a steady hand but also a cool head. He does not listen to the rhetoric being expounded daily regarding intervention in the financial markets, not only in Ireland but internationally.

I am glad the Minister is a man of competence who understands what markets are about. He does not make loose statements or comments that will interfere with or do damage to Ireland internationally. This was brought home to me in a very straightforward way last week when the Governor of the Central Bank and Financial Services Authority of Ireland and the chief executive of the Financial Regulator appeared before the Joint Committee on Finance and the Public Service, which I chair. The clear message of these witnesses, who are independent of the Government, was that the measures taken and comments made by the Minister for Finance are to be welcomed.

When we consider what is occurring internationally, we note the panic measures in the United States. Most of the economic problems in the European Union and western world have surfaced on account of sub-prime lending in the United States. We do not have a problem with sub-prime lending here, as announced by the Governor of the Central Bank and Financial Services Authority of Ireland last week. He stated our financial institutions are not open to the problem. It is very important that this is known and stated in this House, but it was not stated by the media. The Governor stated that the measures taken in the budget and the facts that we have such high employment and are not open to the sub-prime lending problem in the United States are important to Ireland's financial stability. We should base our statements today on this fact.

Ireland is a small country with an open economy, and it galls me to realise people try to do it down in international finance houses. This is the nearest thing to financial treason that one can get. It is time for us to take a stand and state this country is sound. It is sound on many footings, it has the second lowest debt ratio in the European Union, it has nearly full employment and, in the past ten years, it has had one of the highest growth rates in the western world. These are the foundations on which the country is built.

People comment on the slowdown in the construction of residential housing and suggest the whole world will fall down around the shoes of Ireland. Construction accounts for 20% of our overall gross domestic product. I refer to all commercial and residential development. Is there anybody in this House who will tell me that construction in the commercial sector is slowing down?

It is not where I come from in the midlands. If anything, it is accelerating. New house construction accounts for 13% of our gross domestic product. Anybody with family or relatives buying a house will say it was inappropriate that house prices were increasing at a rate of 20% per year. What was to happen to young people who wanted to get a house for themselves? Prices were so high that they had no opportunity. I welcome the slowdown in the increase in house prices, as do many around the country, including young people setting up home for themselves.

In June 2006, the Governor of the Central Bank and Financial Services Authority of Ireland indicated that a readjustment was needed and confirmed to the Joint Committee on Finance and the Public Service last week that it is now taking place. These were his words and not those of the Minister for Finance or a political commentator. I accept that there is obviously a fallout in terms of employment in the construction sector and there will probably be a consequent increase in unemployment. The governor indicated that the number of unemployed could increase by 20,000 or 25,000 and that inflation may increase to 5%. These are facts of life.

Let us consider the responses to economic conditions in the United States and the European Union. I was in Brussels at a meeting on finance only a couple of weeks ago and there were individuals present who were pushing the president of the European Central Bank to respond to what was happening in the United States. I am glad to say the president has a cool head, just like that of the Minister for Finance in Ireland. The president said his first priority was to control inflation on behalf of the citizens of the European Union. That is a good position to adopt.

In terms of support for enterprise and innovation, I welcome the proposed developments in Cork and Limerick. However, I hope the Minister for Finance will address the matter of the proposed tax corridor for the lower Shannon region, which is not mentioned in the Bill. I am a great supporter of this proposal, which was announced some months ago, and I hope it will be implemented. It offers major advantages for counties Westmeath, Roscommon, Clare, Limerick and the entire Shannon region. The opportunity is there, under this proposal, to offer a boost to tourism in the area.

It is sometimes forgotten in this debate that the Minister for Finance, in his budget, Book of Estimates and Finance Bill, has maintained the capital budget for infrastructural development. This is particularly welcome. In my county alone, €55 million has been allocated for national roads this year.

I understand a charities Bill is being drafted, but I am still not satisfied that we are up to speed with what is happening in other European countries in terms of offering incentives to those who wish to support charitable causes. I ask that the Minister examine this issue. There are wealthy people in this State who are prepared to offer their support. I do not want to see a situation where that investment may go to other countries because some of these people are not resident in the State.

My last two questions are relevant to the Minister for Communications, Energy and Natural Resources. First, I fail to understand why the roll-out of broadband has been put on the back-burner by his Department as far as rural areas are concerned. Second, why has the grant for energy efficient homes been withdrawn? It makes no sense that 1,500 houses have been excluded from the grant system at a time when we are promoting energy conservation.

I do not wish to be negative but rather to be fair and practical in my comments. I have been consistent in this regard throughout my time as a public representative. We must address matters that are important to us and to our constituents. We should never shy away from speaking up, whether we are in Government or Opposition, on issues important to the public. I always believed that. People in this House and elsewhere will respect us so long as we are consistent in this regard.

I thank Deputy Finneran for sharing time. I welcome the opportunity to speak on the Finance Bill 2008. I begin by welcoming the comments made by the Tánaiste and Minister for Finance in the Chamber yesterday in regard to the Cork docklands project. He stated:

The Cork project is at the beginning of a process of evaluation and we need to assess how best to devise proposals that would meet with EU state aid requirements. It is an exciting project but at this stage it is still a work in progress.

He went on to say that the Cork docklands forum is expected to report by the middle of the year and that he remained "open to looking at ways in which the tax code can be used creatively to encourage investment and change behaviour".

I take great heart from those comments. It is important to put the docklands project in context. The area comprises 166 hectares on both sides of the River Lee. The project sets out a vision for a new urban quarter characterised by high-quality design, residential, employment and leisure opportunities, and a superb quality of life in a high-density urban setting. It is a short to medium-term project underpinned by the national development plan and the national spatial strategy. It is incorporated in the Cork area strategic plan and the Cork city development plan.

I acknowledge the immense work carried out to date on the project by the lead organisation, Cork City Council, particularly the directorate set up specifically to deal with the project. I note the contribution of Mr. Pat Ledwidge, the director, and Mr. Joe Gavin, the city manager, who drove forward the Cork docklands development strategy 2001 and the Cork docklands economic study 2006. Next week, on 11 February, Cork City Council is expected to adopt the south docks local area plan. The overall docklands venture is estimated to be a €4 billion project and it has the potential to bring 20,000 additional residents to Cork city and to create up to 25,000 jobs. I look forward to the completion of the report of the Cork docklands steering forum this summer. I am sure this report will provide the template and guidance for further Government support for the project.

In debating the Finance Bill, we must consider the current economic backdrop. The projections for 2008, which underpin the fundamentals of our economy, are a targeted gross domestic product, GDP, increase of 3% in real terms, the creation of 24,000 new jobs and the maintenance of inflation at 2.4%. We are aiming for a general Government deficit of 0.9% and a debt to GDP ratio of just under 26%, which would be one of the lowest in the European Union. Thus, the Finance Bill is based on realistic but challenging targets that we must achieve if the progress of recent years is to continue. The early indications are positive. I welcome the January Exchequer returns which, although only preliminary, are in line with Government projections. We hope that trend will continue in the months ahead and that the outturn for 2008 will be in line with the budget.

It is important to acknowledge the volatility in the financial markets and the impact this has had on every open, developed economy, including Ireland. It is clear that no country can completely insulate itself against the implications of instability in financial markets. The sub-prime crisis in the United States and the subsequent credit squeeze has undermined confidence in financial markets generally and has contributed to the 26% reduction in the ISEQ index in 2007. The volatility and sensitivity of the market to emerging data was underlined this week when a company as consistently successful as Ryanair saw its share price reduced by 15% at one point as a consequence of a statement concerning trade conditions.

The World Bank this week cut its growth projection for China to 9% because of uncertainty in the global economy. Since 1997, the Irish economy has grown by an average annual rate of 7%. This puts into context the outstanding economic performance of the State in recent years. There must be stability in interest rates in the coming months, and some downward movement would be welcome. The European Central Bank is widely expected to leave rates unchanged following its meeting tomorrow. It is interesting that all 83 economists polled by Reuters last week expected the rates to be unchanged, and most expect cuts to 3.75% by June and to 3.5% by the end of the year. This would offer some relief to mortgage payers, complemented by the extension of mortgage interest relief as set out in the Finance Bill.

The Bill includes several pro-business measures. I particularly welcome the reduction in the administrative burden on small and medium-sized enterprises, SMEs, and business-friendly measures such as revised preliminary tax payment arrangements for corporation tax for small and start-up companies, the increase in VAT registration for small businesses and the enhancement of the research and development tax credit scheme. These measures will help to make our economy more competitive and to generate entrepreneurial activity. We must create an environment that encourages people to take the risk of setting up a business. There must be a pro-enterprise culture that responds favourably to people who take that risk. It is essential we continue with the low taxation regime for corporation tax and send out a clear signal again that there is no threat to the 12.5% corporation tax rate Ireland enjoys at present. The performance of the Irish economy in 2008 will have much to do with confidence and consumer sentiment. There has been far too much negativity about our economy in recent months. As public representatives, we have a duty to use our position to promote our economy and instil confidence in businesses and consumers about the future of our economy.

I welcome the changes to stamp duty in the residential sector, the further improvements in the income tax and tax credit areas for individuals, the environmental measures, the changes to VRT and motor taxation and the changes to the VAT regime on commercial property. In my former life as a chartered accountant, I was familiar with the complexity of treating VAT on long-term and short-term lettings of commercial property and I welcome the changes the Minister announced in the Bill.

I wish to share time with Deputy Sherlock.

Is that agreed? Agreed.

I wish to concentrate on three aspects of the Finance Bill which relate to issues omitted from, rather than included in, the Bill. I commend the Revenue Commissioners, and the Department of Finance if it had a role in it, on their new production, Simple Guide to Tax Credits, which is being sent out to taxpayers. It is a very good publication, a huge improvement on any literature on tax credits sent out to people previously and it is very welcome. Many people do not yet understand the area of tax credits.

It is to facilitate the Deputy's newsletter.

As public representatives, we must remind ourselves annually of the different aspects of the tax credit system. This publication is worthwhile, well explained and well illustrated, and I congratulate those involved in producing it.

However, I draw attention to the reproduction of the tax credit certificate in the publication. There is a note to taxpayers which states that this section lists the yearly tax credits one now gets, that the amount of tax credit one pays is reduced by the amount of each tax credit and that tax credits are worth money to one and that one should make sure to claim if they are due. It is important to try to get across the message that people need to claim their due tax credits. However, tax credits are not necessarily worth money to everybody and that is the problem.

It is about a decade since the then Minister for Finance, Charlie McCreevy, signalled his intention to introduce a tax credit system. He was very much praised for that move at the time. We all looked forward to the introduction of a tax credit system and the development of that as the years went on but, unfortunately, we have not seen that kind of development. We are still at the very early stages of the introduction of a tax credit system.

I very much regret that the Minister has not availed of the opportunity to expand that system because it has much potential in terms of providing flexibility and a very effective instrument to the Minister of the day to achieve certain things through the tax net, particularly in regard to the redistribution of wealth.

The move to calculate income tax on a tax credit basis instead of a tax allowance one has made very little appreciable difference to most workers. The standard rating of some tax credits could have been managed under the old system. It seems the Government has changed the method of calculating income tax rather than changing the calculation itself. Without applying all tax credits on a refundable basis, the move to tax credits has been largely meaningless. Without a refundable tax credit system, people outside the tax net, typically those on low wages or in part-time, seasonal or term-time work, lose out on every euro in tax relief available to those inside the tax net.

Taking minimum wage earners and low paid workers out of the tax net is obviously very welcome but it is not enough. Figures published recently show that 30% of all households at risk of poverty are headed by a person in a job. What that indicates is the move towards a low income economy, which has occurred in recent years, and the fact that all of us as public representatives are increasingly coming across families where the head of the household is working but simply cannot make ends meet because the wages are so low. Agencies, such as the St. Vincent de Paul Society, have drawn attention to this problem on numerous occasions. The working poor undoubtedly need and deserve State assistance. The absence of a fully refundable tax credit system is preventing that. If we were to move towards refundable tax credits, it would be possible to target those people and families, in particular, who are most in need.

The Minister boasted recently about the fact that almost two out of every five workers are now outside the tax net. That is very welcome but it means that for the almost 40% of the working population, improvements in the budget, whether in the level of tax credits or any new tax credits, are of no benefit to them. Families on low incomes outside the tax net have not benefited from recent budgets. The only way to tackle this issue is to move towards a system of fully refundable tax credits.

There has been a small amount of movement on tax relief on mortgage interest and on medical insurance costs. Those credits are now refundable, which is welcome, but what about all the other credits?

The credits equate to four ECB interest rates.

There should be a fully refundable system in place so that even if a person does not pay tax, he or she gets the benefit of additional initiatives in budgets. Too many people were precluded from changes and benefits in recent budgets. We need to change that and introduce a very targeted instrument to improve the situation of working poor families, in particular, which are finding it very difficult to survive. That call is echoed by the Irish Congress of Trade Unions. In its pre-budget submission. It appealed to the Government to move towards a fully refundable tax credit system.

I refer to tax relief on pensions. At present there is a rich man, poor man approach in that the more one earns, the more benefit one gets from the State. That is not an equitable system by anybody's reckoning. As it stands, one can claim tax relief on pension contributions up to €250,000. There is no justification for that. Those who are wealthy and who can afford it are welcome to put away as much as they like for their pensions, that is their business, but the State should not subsidise those pension contributions. The level of relief available to people at the top rate annually equates to more than twice the State old age pension. That is indefensible and should not be allowed to continue. There should be a reasonable cap on the level of relief. The Irish Congress of Trade Unions again raised this issue. It talked about a cap of approximately €130,000 in terms of contributions. That is pitched at just about the right level.

I refer to the approach to the taxation of rental income which came up recently at the Committee of Public Accounts when the Revenue Commissioners appeared before it. The Comptroller and Auditor General described Revenue's approach to taxing rental income as haphazard and ineffective. They are fairly damning words to use. That area needs to be seriously tightened up and a serious approach to pursuing the many people who have a nice income from rental property which is not tracked and taxed needs to be taken.

I referred to three areas which I regret are not tackled in this year's Finance Bill and I will pursue them with the Minister.

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