Dáil Éireann debate -
Wednesday, 9 Dec 2009

Vol. 697 No. 3

Financial Resolution No. 1: Excise (Alcohol Products).

The Taoiseach

I move:

(1) THAT for the purposes of the tax charged by virtue of section 75 of the Finance Act 2003 (No. 3 of 2003), that Act be amended, with effect as on and from 10 December 2009, by substituting the following for Schedule 2 to that Act (as amended by section 50 of the Finance (No. 2) Act 2008 (No. 25 of 2008)):

"SCHEDULE 2 - Rates of Alcohol Products Tax

Description of Product	Rate of Tax
Spirits:	€31.13 per litre of alcohol in the spirits
Beer:
Exceeding 0.5% vol but not exceeding 1.2% vol	€0.00
Exceeding 1.2% vol but not exceeding 2.8% vol	€7.85 per hectolitre per cent of alcohol in the beer
Exceeding 2.8% vol	€15.71 per hectolitre per cent of alcohol in the beer
Wine:
Still and sparkling, not exceeding 5.5% vol	€87.39 per hectolitre
Still, exceeding 5.5% vol but not exceeding 15%vol	€262.24 per hectolitre
Still, exceeding 15% vol	€380.52 per hectolitre
Sparkling, exceeding 5.5% vol	€524.48 per hectolitre
Other Fermented Beverages:
(1) Cider and Perry:
Still and sparkling, not exceeding 2.8% vol	€32.93 per hectolitre
Still and sparkling, exceeding 2.8% vol but not exceeding 6.0% vol	€65.86 per hectolitre
Still and sparkling, exceeding 6.0% vol but not exceeding 8.5% vol	€152.28 per hectolitre
Still, exceeding 8.5% vol	€216.00 per hectolitre
Sparkling, exceeding 8.5% vol	€432.01 per hectolitre
(2) Other than Cider and Perry:
Still and sparkling, not exceeding 5.5% vol	€87.39 per hectolitre
Still, exceeding 5.5% vol	€262.24 per hectolitre
Sparkling, exceeding 5.5% vol	€524.48 per hectolitre
Intermediate Beverages:
Still, not exceeding 15% vol	€262.24 per hectolitre
Still, exceeding 15% vol	€380.52 per hectolitre
Sparkling	€524.48 per hectolitre

".

(2) It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

This resolution provides for reductions, with effect from midnight tonight, in the rates of alcohol products tax across the full range of alcohol products. The reductions, when VAT is included, amount to 12 cent on a pint of standard beer and cider, 14 cent on a standard measure of spirits and 60 cent on a standard bottle of wine, with pro rata reductions for other products. The expected cost of these reductions is approximately €90 million in a full year, when account is taken of the expected change in where alcohol products are sourced. The measures will reduce the consumer price index by approximately 0.3%.

As was stated in the budget speech earlier this afternoon, this measure is being introduced in order to protect revenue flows and to tackle the phenomenon of cross-Border shopping, which is having an increasingly negative effect on our economy. Careful consideration was given to calls before the budget for increases in excise duty on alcohol, but account had to be taken of the already high excise rates and prices for alcohol products here as compared to our neighbours in Northern Ireland and in the rest of the European Union. For the good of the economy, we have to recognise and attempt to reverse the increasing number of households leaving the State to purchase goods elsewhere.

Following the reductions in excise duty to be implemented in budget 2010, Ireland will still have the highest excise rates for sparkling wine in the EU, the second-highest excise rates for still wine after Finland, the third highest excise rates on spirits after Sweden and Finland, and the fourth highest excise rates on beer after Finland, the UK and Sweden. Consequently, for good health reasons, we continue to have high excise rates on alcohol products relative to most member states. It is considered that the reductions will not have much impact on the overall quantity of alcohol consumed in Ireland but they will impact upon where alcohol is purchased.

The reductions being made tonight must be passed on to the consumer, and I would reiterate that the drinks industry will be expected to play its part in contributing to the competitiveness of the cost of alcohol in the State. In the light of developments, these excise rates will be looked at again next year.

Deputy Kieran O’Donnell

While I note with interest that the Taoiseach stated we have high excise duties for health reasons, I am not sure that is the full picture. Reducing excise duties has major implications, in particular for Border areas which have significant problems in the sense that alcohol has been a loss leader for shops over the Border, so there is certainly merit in this measure. In the last budget, the Government increased the VAT rate from 21% to 21.5%, which would apply to these alcohol products. I note that the increase in the last budget took effect virtually from budget day whereas the reduction in VAT will only take effect from 1 January next. I would have thought that during the very busy Christmas period it would have made a lot of sense, for the benefit of both businesses and consumers, to bring in that change effective from tonight rather than 1 January. I fail to see the logic of waiting until 1 January when the rates were increased more quickly after the last budget.

Furthermore, the Taoiseach made reference to the consumer price index in the context of boosting the economy. The budget is very short of proper fiscal stimulus in terms of an integrated policy for generating jobs and boosting the economy. The Government has made a token gesture in terms of employers' PRSI but we felt the cost to the employer should be cut by half from 8.5% to 4.25% at the lower rate and by 2% at the higher rate. There is no reference whatsoever to this. We are discussing cross-Border activity. The whole issue of the travel tax appears to be still sitting there. It has had a hugely negative effect on the tourism industry for the amount of revenue it brought in——

An Ceann Comhairle

We are drifting somewhat.

Deputy Kieran O’Donnell

I am trying to bring an overall perspective to the Financial Resolution. The key point is that, while I welcome it, if this is the only proper fiscal stimulus in the budget, it does not augur well in terms of Ireland coming out of recession.

Deputy Eamon Gilmore

If this were a stand-alone measure, I could see merit in it. I understand there is considerable cross-Border traffic in regard to the purchase of alcohol, that this, in turn, is leading to the purchase of other goods across the Border, and that a reduction in excise might halt and re-balance the situation. However, this is not a stand-alone measure. It has to be seen in the context of the wider budget, and has to be evaluated along with the other measures contained in the budget.

We are seeing significant reductions in child benefit, an attack on families and reductions in the payments that are being made to blind people, carers, those who have lost their jobs and widows. It is generally regarded that the budget of February 1982 fell on the VAT being charged on children's shoes. In fact, the vote that night was not on that issue at all, and the budget fell on excise duties on alcohol. The arguments made were on the wider budget, however, and the same principle applies here. I cannot see how the Government can justify reducing child benefit, which puts food on the table for children, and at the same time reduce excise to put drink on the counter for adults. This measure has to be evaluated against the entire budget and against the lack of fairness which is contained in it. For that reason, I am opposing this measure.

There is an additional reason that, in the context of the budget, this is an unwise measure. One of the purposes of this budget and one of the reasons that the €4 billion adjustment is being made is in order to restore some international confidence in this country. I have to wonder how this measure will be viewed in the international press, for example. Here we are, a country where the public finances are in trouble and where all of these harsh measures are being taken, and what is the Government doing? It is reducing the price of drink. Unfortunately, that is the way in which this will be judged by some abroad. For those reasons, I oppose this measure.

Deputy Arthur Morgan

I made my position and that of my party on the overall budgetary measures clear earlier. However, I very much welcome this proposal in the budget. I have seen first-hand the exodus of cars travelling through Louth on their way to Newry and I have heard stories from many of my neighbours and others in regard to the effect the cost of excise on alcohol is having on encouraging people to cross the Border. Alcohol is one of the main attractions incentivising people to cross the Border to shop.

I outlined an example here yesterday and I will not delay the House with the story. In short, three men in their 20s had trolleys, each of which contained about STG£500 worth of produce, and every single item was alcohol — there were no other products in their trolleys. This measure will go some way to combating the value of travelling such a distance for that purpose. I support the measure.

Deputy Alan Shatter

I understand the reason for the measure but I have some sympathy for what is being said by Deputy Gilmore. This must be put in the context of an overall budget strategy. If we take the decrease in excise duty on beer, and the decrease in child benefit, this could best be described as a beer for children budget.

The decrease in excise duty on beer together with the decrease in child benefit gives an interesting insight into this Government's warped and exotic value system. Its answer to hard pressed young families who are finding it difficult to make ends meet is straight out of the Marie Antoinette school of politics. With regard to children, the message is to forget the food and milk, let them drink beer.

This is a headline item. The Government's presentation of the reduction in excise duty of 12 cent per pint of beer and cider, 14 cent per half glass of spirits and 60 cent per standard bottle of wine is quite extraordinary. We received a four page summary of the budget in the House today, presumably for ease of reading for Fianna Fáil backbenchers. I found it particularly extraordinary that under the heading "Stimulus measures to create jobs and spur recovery", the most important item is reduced excise duty of 12 cent per pint of beer and cider, 14 cent per half glass of spirits and 60 cent per standard bottle of wine, and a 0.5% cut in the standard rate of VAT. This is the Government's policy on job stimulation. It is beyond belief. The big idea on jobs seems to be to encourage the unemployed to get drunk. The Minister for Finance and the Taoiseach should reveal what comedian was employed to put this document together.

I recall difficulties in the Soviet Union many years ago when the propensity to drink excessive amounts of vodka resulted in President Gorbachev running a campaign to discourage Russian workers from over-indulging in vodka because of the impact it was having on attendance at work, particularly on Monday mornings. Here, however, we have the ancien régime, with a Fianna Fáil-Green Party politburo whose big idea on jobs is to reduce the excise duty on drink and encourage people to get drunk. It is extraordinary.

The Taoiseach made an interesting comment. He said we had high excise duty for health reasons, to discourage drinking. We have a problem in the State with people binge drinking. Yes, we must stop the traffic of alcohol across the Border, something that was stimulated substantially by the increase in VAT from 21% to 21.5% while the British reduced their VAT rate. We know from 1 January, the British are increasing their VAT rate again to 17.5%. It is interesting the Minister for Health and Children is departing now. If there was any health benefit in maintaining a high excise rate on drink, has anyone assessed the detrimental impact on health of reducing the rate? Is the Government's big idea for job stimulus the introduction of a drinkers' charter?

Whatever merit this proposal might have to address the difficulties being experienced by publicans in Border areas, and the difficulty of people shopping for alcohol across the Border, for this to feature as the major and primary job stimulant idea is beyond belief.

The Ceann Comhairle pulled up my colleague when he headed into tourism. The reason he was correct to do so is that this is described as the number one stimulus measure to create jobs and spur recovery, with a little heading to one side of the summary that reads "retail and tourism". Apparently not only do we want to encourage a booze culture, we believe the main attraction for tourists in Ireland is that the beer is cheaper.

We should be getting rid of the travel tax and lowering the rate of VAT for the tourism industry, hotels and restaurants to encourage employment in those areas where businesses are on the verge of collapse. The only policy, however, is to reduce excise on drink. This Government is bankrupt of ideas on how to tackle the jobs crisis. It is so out of touch, it does not deserve to be in power.

Deputy Pat Rabbitte

The truth is that we knew there would be serious cuts in this budget, everyone in the House saw that as an inevitability. Most of us on this side of the House, however, expected the Government to address the other side of the balance sheet and that there would be some element in it to restore growth as quickly as possible leading to job creation.

No one anticipated that when we said we would accept cuts that those cuts would be made to the blind person's pension, the carer's allowance, the disability allowance or those on the most basic pay in our society. People earning €30,000 will have their pay cut by 5%.

Everyone here expected the 5% cut operating for those earning from €30,000 up. Instead, by sleight of hand, the budget figures imply there will be a 15% cut in ministerial pay. We then find out that it is really only 5%, it is a 15% cut on the notional rate that applied before the 10% voluntary contribution last year. Ministers are cutting their own pay by 5% while they are cutting the pay of those at the most basic level of the public service by 5%. People on €30,000 will be cut by 5% while Ministers on €200,000 will be cut by the same amount. It is completely inequitable.

What job stimulus is there in the resolution? The only element of job stimulus is to reduce the price of drink. The weakness of sterling is the main issue, followed by the increase in VAT last year, which triggered the shopping spree in Northern Ireland. The Government now comes in and reduces the excise rate on the very same day the OECD publishes a report, "Health at a Glance 2009", that points out that of the 30 countries surveyed, Irish people are among the biggest consumers of alcohol. Having looked at spending and lifestyle habits across 30 OECD countries, we are the second highest consumers of alcohol. The Minister for Health and Children, however, leaves the House as the issue is raised.

The Minister for Health and Children has been advised by the Chief Medical Adviser about the damage being done in this society as a result of the levels of alcohol consumption. His Minister with responsibility for drugs has just produced a revamp of the national drugs strategy and, on this occasion, he has included alcohol abuse; I think, on balance he is right. We know that notwithstanding the damage being caused by opiate abuse and by other drugs misuse in this society that the greatest damage is being caused by alcohol abuse. The one provision in the budget that is being sold as a measure to stimulate revenue retention and job retention in this jurisdiction is to lower the price of drink. That is unbelievable.

The provision of 26,000 places for new trainees is welcome. The retrofitting for which we argued from these benches for the past 13 months is welcome but it has been announced and re-announced. This is the major jobs stimulus measure in the budget and it is almost beyond belief. One kicks away the blind man's stick, cuts the blind man's pension and on the other side of the balance sheet cuts the price of drink. That is a terrible epitaph for this dying Government.

An Ceann Comhairle

I call Deputy Crawford. I remind Deputies that we have a limited time of 45 minutes on this resolution, 23 of which still remain. I ask Members to endeavour to speak to the actual resolution.

Deputy Seymour Crawford

I will have no problem in doing that. On the one hand I welcome the recognition given by the Government to the fact that there has been a major problem of cross-Border shopping of which alcohol has been one of its main components. However, this could have been done in a much fairer and even-handed way by dealing with the VAT section of it which would have dealt with many areas, other than just alcohol. As other speakers have said we are living in very difficult times with many people turning to alcohol. I attended a number of funerals in the last few days of people who were openly advised that alcohol would end their lives. It is sad that in one week I came across four similar cases of people aged in their early 30s to the mid 50s. We must have a serious look at this issue. VAT and sterling have been the cause of much cross-Border shopping and cross-Border involvement and that is area that should have been tackled.

A reduction in VAT from 13% to 10% would have been a major boost to the whole tourism industry and would have been a much better way to go. I too could deal with all the other areas where there have been reductions such as the blind, the handicapped and the carers but I will leave them for another time.

An Ceann Comhairle

There will be other opportunities.

Deputy Caoimhghín Ó Caoláin

I am in favour of cross-Border shopping. It is a healthy and important part of developing relationships and understanding on a North-South basis and throughout the island of Ireland. However, what we are witnessing today is an unprecedented exodus from the southern Border counties, in particular, but from further South also with very serious consequences for the retail sector in the southern Border counties and for the sustainability of jobs across that area of economic activity. We in counties Cavan and Monaghan and in the other Border counties are witnessing the closing down and the turning off of lights for the last time on a week-by-week basis in countless businesses and all varieties of retail establishments.

Most surveys demonstrate that the biggest attraction in terms of the South-North traffic currently is people accessing cheaper produce and alcohol features largely in that shopping list. While this is only a small measure, it is an unfortunate one if people are to use it as the basis for further abuse in terms of what alcohol can do to individuals and families — that is not the intention, of that I have no doubt. The purpose of this measure is to try to stave off that exodus and to encourage people to shop locally, think locally and give support to their indigenous business within their respective communities. We have that interdependency. We depend on each other, no matter what walk of life we are involved in, be it in elected politics, business or whatever.

In my own home town of Monaghan in the weeks leading up to Christmas one can find prime car parking places on any of our main streets on the key shopping days of Friday and Saturday right up to the weekend gone by. This is having an enormously negative impact and the consequences are already in evidence in our community. This is replicated in all the Border counties and I believe it has impacted negatively even further South. I wish the Government's stimulus measure was far more progressive and much wider in its approach. The €136 million for job retention and job creation is a pathetic effort and pales into insignificance by comparison with the proposals we in Sinn Féin put forward in regard to investment in stimulus of the economy when we indicated that €3.7 billion was achievable and also necessary not only in order to sustain 100,000 existing jobs at risk but to create 100,000 further jobs in the coming 12 months.

I will support this measure because I accept it in good faith; it is not what I would wish to see as the sole response. We only argued for it on a temporary basis in terms of our pre-budget submission. What is essential is that we work towards a harmonisation of taxation across all its dimensions across this island and ultimately not to fear talking about the creation of a single currency approach going forward across the whole of the island. These are the major challenges. We cannot sustain two competing economies with two competing taxation rates and two currencies that of themselves are feeding into this negative impact that currently affects people south of the Border and that previously has affected people in business and jobs north of the Border. That wheel will turn again. It is in everybody's interest that we work towards a sustainable economy North and South that guarantees people in business the certainty of the future and those they employ.

In the context of all I have said and what has been mooted in terms of the Government measure, I record that I am willing to support this proposal at this point in time.

An Ceann Comhairle

I plan to call Deputy Jan O'Sullivan. Five or six other Members are offering and some time must be allowed for the Taoiseach to reply. Approximately 15 minutes remain.

Deputy Jan O’Sullivan

I do not usually go on at length and neither will I do so tonight. Along with my party leader there will be many people scratching their heads around Europe wondering why the one thing we have incentivised in Ireland in this budget is drinking. We lead Europe in terms of binge drinking by young people, we almost lead Europe in drinking generally and the one thing being made cheaper is drink. We have all the information on the negative effects on the health services of drinking and on the health of our nation and on our accident and emergency departments. Just yesterday we were informed that drink plays a significant part in incidents of rape yet we are encouraging people to drink more. If one takes five people living beside each other in small houses in Ireland, the blind man in one house will be hit, the mother with three children will be hit in her child benefit payment, the poor elderly man who is a chronic diabetic and has a heart problem will now have to pay for his medication——

An Ceann Comhairle

My worst fears are being realised as the Deputy is going off on tangents.

Deputy Jan O’Sullivan

——and the guy sweeping the streets will have his wages cut while the fellow living at the end who wastes all his money in the pub is the one guy who will benefit from this budget. I rest my case. This is the worst Irish solution to an Irish problem we have ever seen.

Deputy Pat Rabbitte

It is the Fr. Jack budget.

Deputy Willie Penrose

I am chairperson of the Joint Committee on Enterprise, Trade and Employment and I visited Dundalk and the Border region last January and spent two days there. We are acutely aware of the problems that are arising. I am also acutely aware many people not only in the Border counties but also down in the deep South are going over the Border into Newry and elsewhere. The committee visited Banbridge and Belfast and Deputy Morgan was with me on that visit. I am aware of the impact in Dundalk and areas around the Border. In this context I would like to know what will be the impact of this provision. The very important issue is that the 0.5% increase in the rate of VAT did not sound very significant but the psychological effect is fundamental. At the very time when the VAT rate was falling in Britain where Alastair Darling brought it down by 2%, we widened the differential. Along with the weakness in sterling and everybody offering an exchange rate of parity with sterling, I ask if this will make any impact. I do not know how much impact it will make on employment and I would support every measure that stimulates employment but this may well be construed as mere tokenism in terms of job stimulus——

Deputy Alan Shatter

It is more of a stimulant.

Deputy Willie Penrose

Its elevation to a primary role in this stimulus package defies logic and belief. Where is the stimulus package? Why was there not a stimulus package as proposed by the Labour Party last week? This would have ensured that the dead weight would not be countervailing against that and there would be real, new jobs with labour intensive industries encouraged. I am a little shocked by this provision because the VAT increase is not significant enough. Even though Mr. Darling plans to take away the 2% decrease in VAT next year, it is still too wide a gap.

Money allocated for job retention and renewal is abysmal. Why not have a PRSI reduction for a defined period of time that would be a real stimulus for getting people back to work? I am worried that the 5% reduction will have an impact which will leave people earning less than the minimum wage as a result. For instance in the case of a 52-week year and working 39 hours a week, a person earning €18,000 is earning roughly €9 per hour but the 5% reduction will mean a reduction of 45 cent to €8.55 per hour which is below the minimum wage. What will be the impact of this upon a person earning €18,000, apart from the impact of the reduction in child benefit?

An Ceann Comhairle

We are getting away from the resolution.

Deputy Willie Penrose

One set of people will never forgive this Government now and that is the carers. I was their spokesperson——

An Ceann Comhairle

There will be other opportunities to deal with that at a later stage.

Deputy Willie Penrose

——and I know how they feel tonight.

Deputy Kieran O’Donnell

I refer to the pamphlet on budget 2010 produced by the Government. The first item under stimulus measures to create jobs and spur recovery is effectively the reduction in excise duties. I refer to the national retrofit programme, the VRT on motor vehicles, the scrappage scheme, forestry and getting credit flowing, which is only a sop and will not be properly implemented. To make a reduction in excise is the only stimulus measure to deal with job creation while cutting child benefit at the same time means that Fine Gael will be forced to oppose this resolution. It is very disappointing and the Government is doing nothing for getting the economy back to health. Half the general Government deficit is a result of unemployment and this has not been addressed.

Deputy Seán Sherlock

I refer to the Minister's speech where he said that recent CSO data shows that 44% of cross-Border shoppers buy alcohol. This assumes that 56% do not buy alcohol and it presupposes that some people's motivation for going across the Border is primarily to buy alcohol. I do not think it warrants the measure produced here. There are other ways of tackling the tide or stemming the flow across the Border.

As my colleagues have also mentioned, regarding the cuts in public sector pay, 5% on a salary of €35,000, will reduce the salary by €1,500. How in the name of God will that kind of a reduction allow anybody——

An Ceann Comhairle

This is a very narrow resolution and the Deputy is going miles away from it.

Deputy Seán Sherlock

——with a mortgage and children to be able to live any kind of a decent life in this country? Is this what this Republic has been reduced to? It is an absolute shame.

An Ceann Comhairle

The Deputy will have ample opportunity to make that point on a later resolution.

Deputy Willie Penrose

The parallel is compelling.

Deputy James Reilly

If I am allowed to speak without interruption I will be finished in 30 seconds. The Government is prepared to hurt the sickest and poorest with prescription charges and another €20 a month on the drugs refund scheme at a time when if one has the temerity to earn a little over half the minimum wage, one does not qualify for a medical card and this measure is the best they can come up with.

An Ceann Comhairle

My worst fears are being realised.

Deputy James Reilly

I asked the Ceann Comhairle not to interrupt me.

An Ceann Comhairle

I know but I want the Deputy to keep to the resolution.

Deputy James Reilly

The Government did not increase the tax on cigarettes which fill our hospitals with sick people and they make alcohol cheaper which will result in a higher consumption of alcohol — as proven by research — and a greater increase in all the issues related to alcohol use, problems in the home and at work. The most dire tyrants in history have used this sinister policy to keep the poor and minority peoples down. Give them cheap drink and keep them in a stupor. This is a sad reflection on a Taoiseach who was once a Minister for Health and it shows the Government's priorities are certainly not the poorest, the sickest, children, carers, the disabled or the blind. I oppose the motion.

Deputy Billy Timmins

On a point of order, it might be no harm for the Ceann Comhairle to point out to Members that there is limited speaking time, that many speakers wish to contribute and that they should speak to the resolution.

An Ceann Comhairle

I am actively encouraging them to do so.

Deputy Billy Timmins

Perhaps the Ceann Comhairle should be a bit more firm with them.

I can understand the Government's reasoning and what it is seeking to achieve with this resolution but it will not be achieved and it is the incorrect mechanism. The difficulty is not the actual cost of a pint or spirits or the aim to encourage tourism or stop the cross-Border shopping rather it is the cost of doing business here. The Taoiseach comes from a small rural town and will know better than anyone that rates and water charges, insurance, electricity and gas prices, PRSI etc. are the issues that needed to be addressed. This would have sent out a much better signal than the terrible signal sent out by this resolution. Far more could have been achieved by addressing the core difficulties which I have outlined.

Deputy Emmet Stagg

The measure before the House proposes to take money directly from widows, carers, handicapped people, the sick, the unemployed, and children. It will take food off their tables simply to provide cheaper drink. The cost of that will be hungry children and we will have hungry children at the expense of providing cheaper drink. No society could countenance such a measure which results in children going hungry arising from the measures in this budget. We are providing further funding——

An Ceann Comhairle

Look, Deputy Stagg, we have a number of resolutions to deal with before midnight.

Deputy Emmet Stagg

The Ceann Comhairle can "look" all he likes.

An Ceann Comhairle

If Deputies persist in speaking off the point, we will not get through the resolutions.

Deputy Emmet Stagg

We are examining the resolution and putting it into perspective before making a decision. What we are deciding to do is leave children hungry while we reduce the price of drink.

An Ceann Comhairle

That has nothing to do with the resolution.

The Taoiseach

The motivation behind the resolution is as outlined by Deputy Ó Caoláin, namely, to try to deal with the phenomenon of cross-Border trade which is causing a major haemorrhage in our revenue base. It is important that we seek to do whatever we can in this respect. I take the point that the main problem in cross-Border trade relates to the differential between the euro and sterling, which has reduced by one third since mid-2007.

I noted from Deputies' contributions that the further speakers' constituencies were from the Border, the less knowledgeable they were of the situation. It is very much the view of people who live in the area that the difference in alcohol prices, while not the determining factor, is, on an anecdotal and analytical basis, an important factor in determining the numbers who are travelling across the Border and while there taking the opportunity to purchase other goods and services. This is not a phenomenon but a fact with which business communities right across the Border area on the Republic side are having to contend.

As has been stated, there have been occasions in the past when the differential was the other way. There is a longer term structural issue that I would like to see resolved by more harmonious rates being applied across a whole range of areas in order that we would eliminate the economic distortions caused by the existence of the Border in the first place. The issue with which we are dealing tonight, however, is that there is a specific problem which we need to address.

It is not correct to suggest that one is contending that this is the major part of an economic stimulus or recovery in the economy.

Deputy Kieran O’Donnell

That was stated in black and white.

Deputy Alan Shatter

It was described as such.

The Taoiseach

As the Deputies know, the main features of a budget point out what we are discussing now in terms of VAT reductions, etc. I have been a Member of the House for 25 years and having listened to the Deputies speak without interruption, I ask them to allow me to continue without interruption.

The reduction of excise on alcohol products is to assist in seeking to reverse what has been happening in recent times. It is not suggested the reduction is a panacea but it is suggested that something positive needs to be done in an effort to stem the flow. It is also the case that many people are finding that a very competitive position is developing in other goods and services in the Republic vis-à-vis Northern Ireland. However, the particular issue of alcohol is having an extraordinarily distortionary effect on the genuine efforts being made by traders in the Republic to confirm the bargains and good cost competitiveness available in retail outlets in the Border region.

It is a bogus argument to suggest the level of excise duty determines output. There is no indication that the reduction in excise will change the level of alcohol consumed, although it may lead to an improvement in terms of the location where alcohol is purchased. By protecting our revenue base in that respect, it will enable us to provide more funds for the general good, about which Deputies have spoken.

There is no Government policy to promote irresponsible drinking. As we know, there are people who suffer from addictions to alcohol and other drugs, legal and illegal, and it has nothing to do with their socioeconomic status or the amount of money they have in their pockets.

Deputy Jan O’Sullivan

What about 13 and 14 year old children who drink?

The Taoiseach

Responsible drinking is not determined by the level of excise. If it were, this country would not have the alcohol problems it has given that in many cases we have the highest excise levels in the European Union. That is a rather nebulous and fallacious argument.

Deputy James Reilly

That is untrue.

The Taoiseach

I am just making that point that it is a nebulous and fallacious argument. In dealing with that issue, the important issue is to have proper education on prevention and promotion of responsible drinking. I take the point that binge drinking is an unwelcome phenomenon in this country and one which needs to be addressed. It will not be addressed in respect of the excise duty rates on alcohol. As I stated, if that were the case, the evidence would be very much in favour of moderation, rather than the immoderation about which speakers have been complaining and worrying in some of the contributions thus far.

Regarding the question of economic stimulus generally, the economic stimulus of any budget in the present circumstances must be to cut our expenditures given the level of revenues we are generating. This budget is succeeding to the extent that it seeks to stabilise a deficit which has emerged and must be brought under control and reduced in the coming years as per the plans we have with the European Commission, as members of the euro area, to meet our obligations under the Stability and Growth Pact. That in itself provides a confidence factor.

In addition, the Government's capital investment programme totals 5% of GDP. Considering that we are facing into 2011 with a contraction of perhaps 0.4%, this in itself indicates the important stimulus the capital investment programme represents. Apart from this, on the current side, we have the employment subsidy scheme and the stabilisation fund. Also of great importance is the role played by social welfare payments in maintaining many tens of thousands of people who unfortunately are in short time or part-time work. The automatic stabilisers provided by our social welfare system run into the hundreds of millions of euro in terms of support for people who find themselves short of full-time employment but, thankfully, not in full-time unemployment.

There are many arrangements, whether specific enterprise supports or in the job training or activation areas. We are increasing to 180,000 the number of people we have this year in these areas. Hundreds of millions of euro are being properly expended in seeking to support those who are in unemployment, providing training and activation opportunities for them, maintaining support through the social welfare system for part-time employment and, most important, taking the necessary macroeconomic decisions, such as an adjustment of €4 billion for the coming year, to bring about a situation where we are more cost competitive, those who are in full-time employment have some prospect of maintaining their position and the companies in which they are employed can return to greater profitability and trade effectiveness and thus increase job security. That is the means by which the stimulus in this budget is constructed. To reduce all of this effort and activity to the suggestion that this is the prime stimulus factor is not correct. We are all aware that we live in a far more diverse and sophisticated economy than that.

I commend the resolution to the House on the basis of the purpose for which it is directed, namely, to seek to improve cross-Border trade to the benefit of this jurisdiction on the basis that there is evidence, both empirical and anecdotal, to confirm that the sale of alcohol in Northern Ireland is an attraction to shoppers from the Republic that is causing a wider haemorrhage of revenues from the country by virtue of people shopping more generally in the neighbouring jurisdiction as a result. I ask that people accept the recommendation in that spirit. Some of the rather extreme arguments I have heard are not the basis for this motion being brought before the House.

Deputy James Reilly

Should we ignore all the medical research which shows alcohol consumption is predicated on price?

Deputy Alan Shatter

The Taoiseach failed to mention the research.

Question put: "That Financial Resolution No. 1 be agreed to.".

The Dáil divided: Tá, 88; Níl, 75.

Tá

• Ahern, Bertie.
• Ahern, Dermot.
• Ahern, Michael.
• Ahern, Noel.
• Andrews, Barry.
• Andrews, Chris.
• Ardagh, Seán.
• Aylward, Bobby.
• Blaney, Niall.
• Brady, Áine.
• Brady, Cyprian.
• Brady, Johnny.
• Browne, John.
• Byrne, Thomas.
• Calleary, Dara.
• Carey, Pat.
• Collins, Niall.
• Conlon, Margaret.
• Connick, Seán.
• Coughlan, Mary.
• Cowen, Brian.
• Cregan, John.
• Cuffe, Ciarán.
• Cullen, Martin.
• Curran, John.
• Dempsey, Noel.
• Devins, Jimmy.
• Dooley, Timmy.
• Fahey, Frank.
• Ferris, Martin.
• Finneran, Michael.
• Fitzpatrick, Michael.
• Fleming, Seán.
• Flynn, Beverley.
• Gogarty, Paul.
• Gormley, John.
• Grealish, Noel.
• Hanafin, Mary.
• Harney, Mary.
• Haughey, Seán.
• Healy-Rae, Jackie.
• Hoctor, Máire.
• Kelleher, Billy.
• Kelly, Peter.
• Kenneally, Brendan.
• Kennedy, Michael.
• Killeen, Tony.
• Kitt, Michael P.
• Kitt, Tom.
• Lenihan, Conor.
• Lowry, Michael.
• McDaid, James.
• McEllistrim, Thomas.
• McGrath, Mattie.
• McGrath, Michael.
• McGuinness, John.
• Mansergh, Martin.
• Martin, Micheál.
• Moloney, John.
• Morgan, Arthur.
• Moynihan, Michael.
• Mulcahy, Michael.
• Nolan, M. J.
• Ó Caoláin, Caoimhghín.
• Ó Cuív, Éamon.
• Ó Fearghaíl, Seán.
• Ó Snodaigh, Aengus.
• 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.
• Woods, Michael.

Níl

• Allen, Bernard.
• Bannon, James.
• Barrett, Seán.
• Behan, Joe.
• Breen, Pat.
• Broughan, Thomas P.
• Bruton, Richard.
• Burke, Ulick.
• Burton, Joan.
• Byrne, Catherine.
• Carey, Joe.
• Clune, Deirdre.
• Connaughton, Paul.
• Coonan, Noel J.
• Costello, Joe.
• 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.
• Flanagan, Charles.
• Flanagan, Terence.
• Gilmore, Eamon.
• Hayes, Brian.
• Hayes, Tom.
• Higgins, Michael D.
• Hogan, Phil.
• Howlin, Brendan.
• Kehoe, Paul.
• Kenny, Enda.
• Lee, George.
• Lynch, Ciarán.
• Lynch, Kathleen.
• McCormack, Pádraic.
• McEntee, Shane.
• McGinley, Dinny.
• McGrath, Finian.
• McHugh, Joe.
• McManus, Liz.
• Mitchell, Olivia.
• Naughten, Denis.
• Neville, Dan.
• Noonan, Michael.
• O’Donnell, Kieran.
• O’Dowd, Fergus.
• O’Keeffe, Jim.
• O’Mahony, John.
• O’Shea, Brian.
• O’Sullivan, Jan.
• O’Sullivan, Maureen.
• Penrose, Willie.
• Perry, John.
• Quinn, Ruairí.
• Rabbitte, Pat.
• Reilly, James.
• Ring, Michael.
• Shatter, Alan.
• Sheahan, Tom.
• Sheehan, P. J.
• Sherlock, Seán.
• Shortall, Róisín.
• Stagg, Emmet.
• Stanton, David.
• Timmins, Billy.
• Tuffy, Joanna.
• Upton, Mary.
• Varadkar, Leo.
• Wall, Jack.

Tellers: Tá, Deputies Pat Carey and John Cregan; Níl, Deputies Paul Kehoe and Emmet Stagg.

Question declared carried.