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Dáil Éireann debate -
Wednesday, 25 May 2011

Vol. 733 No. 2

Finance (No. 2) Bill 2011: Second Stage (resumed)

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

I am acutely aware of the concerns expressed by many people in regard to the affects of the pension levy. The people we represent believe those who landed our country in this economic position have walked scot free from their well paid jobs with lump sums and pension pots which are grossly excessive without being held to account for their actions. We need to restore fairness and justice to society. We must ensure that revenue raising measures go hand in hand with policies that will facilitate job creation and will hold rogue bankers to account.

The proposed pension levy is a temporary measure which will assist in the rebuilding of our economy. It is about our country and our people. The growth of our economy and the rebuilding of Ireland will help to restore the value and importance of being Irish and will help us as a nation. I welcome the Minister's statement yesterday that the Government will not raid investment funds or deposit accounts. I welcome his assurance to the House yesterday that the Government has no plans in this regard. It is important that the Government allays people's fears, driven in part by idle commentary and pure political gamesmanship by Fianna Fáil in particular.

The ideological pursuit of a low tax based economy to the exclusion of all other considerations is but one of the policy decisions that has forced the hand of this Government to implement difficult proposals. As part of the drive to push down the tax base, many reliefs and shelters were created. Unfortunately, these were designed to benefit those on excessive incomes and to allow those with more than ample personal wealth to further increase their net worth without paying a fair level of tax.

Much has been said and written during the past number of years in regard to property tax reliefs, which amount in value to €460 million. Yet, much less has been said about tax reliefs applicable to pensions, which amount to €3 billion. The tax treatment of pensions permitted high earners to syphon-off large parts of their income, thereby paying little tax while many, in particular on PAYE, could not benefit to the same extent. The pensions industry grew and developed on the back of these large tax reliefs. This lobby group has encouraged everyone to invest in their products, many of which are now not worth a fraction of their previous values. In the last two years, some of the tax reliefs have been clawed back but, given the economic morass in which we now find ourselves, there is little option but to continue to row back on some of the existing reliefs. It is important to recognise that a 0.6% levy is a temporary step.

I welcome the Government's decision to suspend the air travel tax. Airlines must now respond to the Government proposal. Rhetoric must be matched by action. The Government has honoured its commitment. The airlines must reciprocate. I call on Ryanair, Aer Lingus and other carriers to act in the national interest, enter into an agreement with the Government and not confine themselves to empty words and big advertisements. The time for talk is over. They must now act.

I welcome the Bill. However, a number of people in the pensions industry have raised legitimate concerns with me. Time has not allowed me to e-mail them to the Minister of State, Deputy Brian Hayes, or to the Minister. I hope they can be considered before Committee Stage.

This is a good beginning. It is not ideal, but the Government has shown it has a plan and a vision. At the core of that plan and vision is job creation and the protection of the Irish people. I welcome the Bill.

With the permission of the House I will share time with Deputies Tom Fleming, Stephen Donnelly and Clare Daly.

The performance of our colleague, Deputy Buttimer, is more reminiscent of the stage of the Abbey Theatre than of this House. He told us this was a brave and courageous initiative. I am sure he knows, because his Minister has already said it, that this is a very modest proposal. In fact, it is a minor proposal and totally inadequate to deal with the current unemployment crisis and recession. It does not bear any resemblance to the promises made by Fine Gael or the Labour Party during the recent general election campaign, when we were promised 100,000 jobs and 50,000 training places. While the Bill contains welcome elements, the Minister is right in saying it is a very modest and inadequate proposal.

Deputy Buttimer said there is no pot of gold and nothing in the Bill for the rich and powerful. He is wrong on both counts. I remember the 1980s when we went on PAYE marches and when hospitals and hospital wards were closing. At that time we were told there was no pot of gold. Some people were foolish enough to believe that. Very shortly afterwards we discovered that the rich and powerful had salted their wealth away in every nook and cranny they could find and sent most of it out of the country to offshore bank accounts.

Similarly today, there is a pot of gold. It contains the personal assets of the 6% of the Irish people who are super-rich, who have €250 billion in assets and who do not pay one ha'penny in assets tax. Deputy Buttimer is right about one thing. There is nothing in the Bill for the rich and powerful. There is no assets tax and no attempt to make the rich and powerful pay any of the costs of the recession. Not only does the Bill not contain an assets tax but the rich are exempt from the pensions levy. Very wealthy people can put huge sums of money into pension accounts that are exempt from the levy. There is a pot of gold, but have we the political will to go after it? The Bill contains no provision for the taxation of very wealthy people and they are exempt from the pension levy.

Deputy Buttimer also told us the Government would pay its debts. He suggested we should be proud of that. The EU and the IMF are not good Samaritans taking a neighbour out of trouble. European bankers who gambled recklessly and lost are now demanding that Irish taxpayers pay for their losses. They want an each-way bet on their reckless gambling. They want the Irish taxpayer, low and middle income families and the poor to pay.

There is no debt. This is a rip-off. The so-called payment of our debt means an unprecedented assault on living standards, mass unemployment, 100,000 emigrants per year, cuts in social welfare, tax increases and the continuation of the universal social charge which, during the general election campaign, the Government parties promised to review and scrap. The Government had an opportunity to review the charge in the Bill but it has not done so. We have long waiting lists in hospitals, patients on trolleys in hospital wards and special needs assistants and resource teachers sacked in our schools. In the last few days it was announced that 150 resource teachers have been withdrawn.

Rather than something to be proud of, the payment of this so-called debt — or rip-off — is something to be ashamed of. We must ensure that very wealthy people pay their fair share. They are paying nothing at present and they need to pay a once-off significant levy and a 5% assets tax for the future.

I welcome the main thrust of the jobs initiative. I hope it will create an environment that will invigorate and give positivity to all the areas of job creation targeted by the Government.

I have reservations and concerns about some aspects of the Bill. The Finance Act that followed the last budget contained a measure to oblige an employer to pay the 10.75% employer's PRSI on shares issued to an employee as part of remuneration. This made perfect sense as the shares were income, like all forms of remuneration. In this Bill, it is proposed that in the small number of companies that are in a position to give share options to employees as remuneration, the shares should be exempt from PRSI. This measure is geared towards taking care of the elite, who constitute about 3% of employers and employees in the country. This is inequitable and unethical. It is a devious measure that has been slipped through under the impression that it could be beneficial to employment as a whole. It is geared towards the very small minority of companies that are in a position to grant share options in remuneration packages to their employees. This would have to be paid for by the others who pay tax, directly or indirectly. It is appalling that it is being slipped through as a concession to the fat cats, who I estimate make up approximately 3% of the population. This elite group will gain from this measure while the huge majority of the citizens will pay for it. Money spent on this aspect of the scheme would be better spent on restoring cuts to the incomes of the blind, the disabled, carers and widows, who were affected in the last budget.

With regard to the 0.6% pension levy, many ordinary people, whether workers or small business people, have put aside a small nest-egg in an annuity that will return approximately €16,000, prior to tax, in 12 months.

It is shameful that these people are being hit indirectly as a result of the proposals before us. In many cases we should have a tiered system. Sums up to €500,000 should be exempt from the pension pot because it can take many years to accumulate such a sum. Beyond that amount, we could introduce the 0.6% rate up to €1 million, 1% from €1 million upwards and, on a progressive basis, 1.5% for €1.5 million and 2% for €2 million. There is a lot of money which could be targeted by amending this scheme, which would be fairer and more equitable as it would be a progressive tax and would not penalise the poor pensioner to compensate the fat cats.

I welcome the interim scheme, although the figure of 5,000 could be more ambitious and up to 30,000 workers could eventually be included in the scheme. As an incentive, there should be retention of medical cards and perhaps some of the rent allowance for up to three years from the time people participate in the interim scheme. This was previously done in 1994-95 by Deputy Joan Burton, who was Minister of State at the time. We should consider giving such an incentive to encourage participation in that scheme.

I strongly welcome the measures on tourism and the airline tax. If anything, we should give more in order to get as many people as possible into the country. We should do a special deal with the airlines to encourage low-cost fares and maximise the opportunity to bring people into the country to spend their money. There is good value at present in hotels, bed and breakfasts and other accommodation and in the general tourism industry. The only issue to which I take exception is the hiking of prices recently for the visits of the Queen and the US President as well as the European championship match. There were exorbitant and shameful prices here in the capital city, taking advantage of those visiting the country for a week, which created a bad perception on the international stage. This should not be tolerated and controls should be introduced. I ask that these matters be addressed in the context of the Bill.

I commend Deputy Peter Mathews on his stand in the House today. As Deputy Mathews pointed out, the total cost of the banking losses which the Irish people are being forced to pay is €100 billion. That is €72,000 of other people's debt for every single household in Ireland. The reward for bailing out European financial institutions is cuts, taxes and, most importantly, the real loss of our independence as a sovereign nation. Deputy Mathews' call to share the costs of bailing out the European financial institutions with Europe is morally, politically and economically correct.

The Taoiseach said emphatically in the House today that Ireland would pay its debts. Here is the point — they are not our debts. Half of the debt is ours, and we should pay that. Half of the debt belongs to the private sector. There is absolutely no moral reason for us to pay this. If a man and a woman drove themselves and their family into bankruptcy not just by paying their own mortgage but by paying the mortgage of their neighbours, they would be considered fools at best and insane at worst. Yet, that is exactly what we are doing. Paying of this debt will drive us into a national insolvency that the Government claims it is trying to avoid. Earlier this week, President Obama spoke of the spirit of the Irish. He spoke of our history of fighting for what is right and of fighting foreign powers. I implore the Government to remember this and take that fighting spirit back to Europe.

The Bill contains many good ideas and I hope it will protect existing jobs and help to stimulate new jobs, yet I cannot support it. Why? It is because we have no idea what the benefits and costs of the proposed Bill are likely to be. We know that the Bill will take nearly €2 billion out of the pensions of private sector workers. How many people will stop investing in their pensions? We do not know. How many people will move their deposits out of Irish banks? We do not know. We know that the Bill will protect Irish jobs and stimulate new jobs but how many jobs will it protect? We do not know. How many jobs will it help to create? We do not know. How much of people's private pensions will be required to pay for each new job? We do not know. How many tourists will it bring to our shores? We do not know. If the management team of a company made investment decisions like this, that company would be bankrupt very quickly.

The Cabinet of the previous Government acted in this way. It made critical decisions without bringing the assessments of those decisions to this House for review. As a result, we are bankrupt and we have lost our independence as a sovereign nation. Is it the intention of the Cabinet of the new Government to continue acting in this way? I sincerely hope not. This House is constitutionally bound to hold the Cabinet to account — that is our role. However, we can only perform this role if we know the projected costs and benefits of the legislation which the Cabinet is asking us to support. Without this information, the Members of the House should reject the Bill, not because there are bad ideas in it but because we simply do not have the information required to evaluate whether the Bill represents value for money for the Irish people.

Of course, it is likely that the Bill will be passed. It is assumed that every Fine Gael and Labour Party Deputy will vote for it, even though they have not been given the information required to make that decision. The implications of the Bill are wide. Taking €2 billion out of private sector pensions could have profoundly negative implications for our society for years to come. In this context, I oppose the Bill and ask my fellow Deputies in the Labour Party and Fine Gael to oppose it also, not because they are bad ideas but because we do not yet have enough information to know if those ideas are good enough.

When we strip the jobs initiative of the padding, waffle and unquantified and lofty aspirations, this is what it finally boils down to — a Finance Bill putting forward four measures which will not deliver a single job and which in fact will continue the policies of Robin Hood in reverse which have been a hallmark of this Government and its predecessor, namely, taking money out of the pockets of ordinary workers in order to pay for a crisis that was not of our creation. There has justifiably been much focus on the pension levy aspect of the Bill. Of course, as other Deputies have said, it would be an outrage to pass on this levy to pension holders who are already reeling from pay cuts, tax hikes, mortgage interest rate increases and so on. It is particularly scandalous that this would be envisaged in the context of the lack of choices considered by the Government in terms of other moneys it could have gone after to fund realistic jobs proposals or measures, such as those highlighted by Deputy Healy.

I want to deal with two of the other measures in the Bill which really expose the con it is, namely, the airport tax and the research and development, or R&D, tax credit. Let us be perfectly honest about this situation. The R&D tax credit is nothing more than the legalising of tax evasion. In reality, it would be better characterised as a form of economic prostitution. It will not create any wealth or create a single indigenous job, and it will not provide any useful service whatsoever. It is blatantly clear that this is simply about allowing Irish subsidiaries of foreign multinationals to "enhance", as it is termed, their accounting flexibility. In other words, they can write off this credit against their operating costs in Ireland and in that way give us an edge over neighbouring economies. It is a tax write-off scam that will allow the likes of Google, Microsoft, Facebook, and so on, to continue an attempt to persuade them to stay by enabling them to pay virtually zero tax on their worldwide profits. It is pushing it to say this will keep jobs in the country and it takes the biscuit to claim it will create any new ones. The only benefit will be the further enhancement of the profits of the multinational corporations.

It was laughable to hear one of the Fine Gael Deputies lauding the example of California, citing it as a model for the type of economics being pursued in this measure as if it was a good thing. He is, of course, correct in that California is a very good example of where this model leads. Let us look at where that state has arrived. The unemployment rate in California is 11.9%, almost 3% higher than the US average. More than 2 million people are unemployed in the wealthy state of California. They are unemployed precisely because of policies similar to those being advocated by the Government in proposals such as this, which basically puts our economy and ourselves up for sale in order to entice companies to come to this country and allegedly provide employment. It has not worked anywhere else and will not work here either.

The other measure I consider to be a farce is the reduction of the airport tax. This is bandied around as if it were some sort of reality, the notion being that if one says something often enough it will not be a mirage. We are being asked to buy into the axing of a tax in return for an unspecified number of extra passengers, with no idea of how they will be delivered or how we may prove they have been delivered as a result of this cut rather than because of any other measures airlines adopt. Is it proposed that Ryanair may get the cut while Aer Lingus may not? It is a joke. No details are provided.

The key point is that the airport tax has already been reduced while passenger numbers have fallen. The idea that a further cut of 3%, even if it is passed on to the tourist, would be sufficient to cut across the international economic backdrop and entice people to come to this country is ridiculous. It is another vain hope that tourism will be a way out of our economic woes but against the backdrop of an international recession and other difficulties this will not be the case.

On their own, those measures highlight the fact this Bill will in no way scratch the surface of a problem that has left almost 500,000 people unemployed. Instead of implementing real measures and a key infrastructural programme that would put people back to work it is simply a giveaway to those who have the wealth in the first place.

I call Deputy John O'Mahony who is sharing time with Deputies Gerald Nash and Kevin Humphreys. I understand Deputy O'Mahony has ten minutes and the other two Deputies have five minutes each. Is that correct?

Yes, and I thank the Ceann Comhairle. I welcome the opportunity to speak on the Finance (No. 2) Bill which, in effect, is legislation to implement the jobs initiative announced some weeks ago. We consider these as an early attempt to tackle the biggest fallout from the mismanagement of this country and its finances during the past ten years. I refer to the unemployment crisis of the past two years and the growth in the number unemployed to some 450,000. Although everybody, including the Minister and the Government, acknowledges this is only a beginning, just a small part of an overall answer, at least it is a signal of hope that, compared to the last Government, this Government is not merely trying to fix the banking crisis but is trying to stimulate employment.

This jobs initiative will create an environment where businesses should find it cheaper to employ people and where apprentices can find a way of finishing their training. Tourists will find it cheaper to travel to the country and when they arrive they will find it cheaper to stay in excellent accommodation and eat in our excellent restaurants. They will find it cheaper to access and enjoy the wonderful entertainment, music and art we saw so successfully paraded in the past week.

We had the most successful ten days of marketing Ireland to the outside world that ever took place. I compliment our President, our Taoiseach, members of our Defence Forces and the Garda as well as many community groups. I especially include the GAA for the part it played. This country played to its strengths in the past week. Although the visits of the Queen of England and President Obama came at some cost to the State, that cost is minuscule compared to the free advertising we received during that period. Today I heard an expert analyst suggest it was worth €23 million of free tourism marketing.

It is very appropriate, therefore, that the jobs initiative and the Finance (No. 2) Bill appear at this time because they will help to maximise the impact and effect of those State visits and go some way to reverse the downturn in the numbers of tourists in recent years. There was a 13% decline in 2009 and a cumulative decline overall of 25% between 2007 and 2010. During those three years there was a 32% decrease of visitors from Britain.

Some of the above measures have been criticised because they were not introduced on a permanent footing. I note the contribution of Deputy Daly who stated that the travel tax measure does not quantify the numbers of extra tourists it will deliver. However, I believe it does because my reading of the jobs initiative is that if the measure is not successful by the end of 2012 the tax will be reintroduced. It is important to look to the future, to see if the measures deliver the result they are supposed to. It will be a strength of these measures that they do so. If they do not deliver other measures can be considered.

It is important not only to set targets but to see that the results measure up. I refer again to the jobs initiative and the free marketing for our country in the past ten days. It was disappointing to read in today's newspapers that Diageo is to reduce its workforce, especially within the marketing area, after the quantity of free advertising it received in Dublin, Moneygall and throughout the country during recent days. There is never a good time to announce job losses but this announcement was particularly ill advised and inappropriate at this time. Perhaps President Obama and the Queen should be offered a pint of Beamish or Murphy's when they come again, as we hope they do. On a more positive note I welcome the announcement last week of 200 new jobs at construction stage and 100 permanent jobs in Killala, County Mayo, with the granting of planning permission to Mayo Renewable Power for a biomass-fired power station. I hope this will be the first of many announcements in the energy sector in County Mayo in the coming months and years.

I refer to the section of the Bill that relates to the research and development tax credit and I welcome the changes proposed. I encourage the Minister to do even more in the end-of-year budget. Increased budgets for research and development will produce more jobs, so it makes sense to make it easier and cheaper to carry out research and development. I understand that Dr. Dick Kavanagh of the Industry, Research and Development Group has made a number of proposals in this area. These include increasing the tax credit rate from 25% to 35%, encouraging greater company-third level interaction and better utilisation of college resources by increasing to 25% the spend allowed, and encouraging company to company interaction by increasing the amount allowed to be subcontracted to 66%.

In this area, I ask the Minister to ouitline his intentions with regard to the provision in the last Finance Bill, which abolished income tax exemption on royalties payable on patented inventions for which substantial research and development was carried out in Ireland.

This was one provision which encouraged research and development in Ireland more than any other initiative during the past 38 years since it was introduced by the then Minister for Finance, Richie Ryan. It was amended over the years to remove abuses that had been highlighted but it was tax legislation that encouraged genuine investors to take risks and to try to come up with inventions which had commercial potential. It is my contention that we should not have thrown out the baby with the bath water. We should get rid of any abuses by all means but we should not withdraw the support and incentive when it is most needed.

The proposal of the industry group in this case is to encourage patents. Individuals named on a full patent should be entitled to an annual tax free royalty payment up to a maximum of the previous year's gross salary and subject to a 12.5% income tax charge. I am aware of a couple of companies in my constituency that are severely affected by the changes in last budget. I encourage the Minister to make some movement on this issue. In addition to welcoming the plan to review the affects of the abolition of the travel tax, it is vital to examine and check if the reduction of the VAT rate to 9% is being passed on to the consumer by the various sectors and services involved. It is in everyone's interest that this takes place because the more people and tourists who walk through the doors of restaurants, hotels and entertainment venues, the more money will be spent and the more profit made by those providing the services. If the lower rates are not passed on it will have the opposite affect.

I make a final appeal regarding the jobs initiative, which, despite the best efforts of some Members of the Opposition, has been welcomed. Many Deputies will have received many inquiries in their clinics and offices on how to apply for this or that. I appeal for an easy-to-follow, simple guide that uses understandable language and which is produced such that members of the public and businesses are aware exactly of what they must do to apply for specific training courses, skills training, internship schemes, the retrofit scheme or whatever.

I call for this is because of the following communication which I received some days ago from a constituent. I will read it out but I will leave out the names. It is from a heating and plumbing contractor:

I wish to outline our recent experience in trying to give a redundant apprentice employment and the problems we have encountered. An apprentice contacted this office seeking employment and spoke to me explaining his plight in being a phase five apprentice and redundant, unable to finish his training. We offered him work on a three-day week trial basis and we were in touch with the FÁS office No. 1. The forms were duly filled up and all of that went on but the forms had to be passed on from one FÁS office to another to another; there were three FÁS offices involved.

Eventually, he was informed that it was not accepted because he started work before the forms were completed even though the apprentice and the company followed the guidelines to the letter. The company was given the wrong forms but acted in good faith. From an employer's perspective there have been three FÁS offices involved and this delayed the matter. The letter continues:

The apprentice was informed prior to contacting us of the need to ring around for work and get the employer to complete the change of employer form. This is what he did. Should FÁS not be advising their apprentices not to accept the work until they are accepted on the scheme? We are willing to employ this apprentice but are receiving no help and support to do so. How does this fit into the Government programme? As a small business employing staff we are fully tax compliant. Is there any incentive or simple assistance to grow my business and employ staff within this sector?

I point this out as part of the frustrations. All the people in the FÁS offices were very helpful; I am criticising the system. My appeal is that this would be helped a good deal if there were simple rules and language to follow.

I beg the indulgence of the Ceann Comhairle for a moment. Since this is the first time I have spoken in the Chamber for several days I wish to acknowledge the passing of the former Labour Party Deputy for Louth, Michael Bell, who died last Friday. As Deputies will be aware, the late Michael Bell represented the constituency of Louth for 20 years from 1982 to 2002. I express my deepest sympathies to his family, supporters and to my constituents in Louth. I understand that arrangements will be made on a more formal basis to pay tribute to the late former Deputy Bell and I look forward to that opportunity.

I welcome the opportunity to speak on the Finance (No. 2) Bill. This is the most significant single step taken to date to deal with the unemployment catastrophe, one of a series of rotten legacies bequeathed to us by the last Administration. The provisions outlined in the Bill are not the panacea for all our ills but they represent a strong start for an Administration which, by any objective measure, has done more for jobs and economic confidence in two months than the worst Government in our short history managed to achieve in the previous two years.

We can look towards the future with a more positive attitude now. Such were the words of the Drogheda based hotelier Martin McGowan in the Drogheda Independent this week. He welcomed the slashing of VAT rates for hotels and other sectors of the economy, an element of the package announced this month which will have a significant positive impact on job creation and retention in an industry that has borne the brunt of the economic collapse.

The package of investment in jobs must be paid for and there are no easy options in this regard. The decision by the Government to propose to introduce a small, temporary levy on funded pension schemes has had its critics and I acknowledge some of the concerns expressed on this issue. However, I take issue fundamentally with the Eddie Hobbs of this world, who go relatively unchallenged on the airwaves of the nation when telling us how the sky will fall in as a result of this temporary and necessary measure. We are in a warlike situation. In periods of war or national emergency we are often required to do extraordinary things which may otherwise never have been countenanced. I prefer to view this small levy as an expression of social solidarity. Those out of work require the help of those working. An analogy could be drawn in the way the community rating system for private health insurance operates. That is a system to support or subsidise those who are ill and old or who require more serious and frequent health care interventions.

I refer to the capital element of the Bill. The Government will invest considerable sums in additional school works and in additional roads and transportation projects.

I have stated previously in the House and through the media and I will say it again, the State must ensure as a matter of urgency that the contractors who benefit from an injection of taxpayers' money remain, in so far as possible, within the State. There is an urgency to review the way in which public authorities in the State award public contracts. In my constituency and throughout the Border region, it is an all too common occurrence to witness substantial contracts from public authorities awarded to contractors from outside the jurisdiction. As a matter of urgency we must review this situation. We must be smarter, cannier and more intelligent in the way in which these situations are handled in the context of procurement requirements. I urge, understand and accept that it is outside the framework of this Bill, but the House and the State must address this fundamental matter in the coming months as a matter of urgency.

I wish to be associated with the remarks on the former Deputy Bell from Deputy Nash. He is a great loss to the Labour Party. I realise statements will be taken on the matter later.

It is important to listen to each other when we hold these debates. I refer to the earlier remarks by Deputy Donnelly and the contribution of Deputy Mathews. We did not get into the situation we are in all by ourselves. We did not get into the situation as a result of Fianna Fáil alone. There was a contribution from the rest of Europe as well and the cost of getting Ireland back on its feet must be shared throughout the EU. At this stage we are being treated despicably by our partners, who must take partial responsibility. It is has been constantly stated in the international media that Ireland is taking the measures to get the country back on its feet but it needs the assistance and help of our EU partners.

Over the last decade, we have invested significantly in research and development. I heard Deputy Clare Daly speak earlier about research and development tax credits. I come from the private sector, the pharmaceutical and technical industry, and in my experience, if we can anchor research and development in the country, we will anchor good jobs throughout the economy. If we can hold on to the research and development element and attract it into the State, it will grow further good quality, well-paid jobs. I welcome the increase in flexibility for research and development. It will encourage Irish companies to innovate and create the products and technology of the future.

Reductions in VAT on sales related to tourism, along with the removal of the airline travel tax, are excellent proposals and will increase the numbers of visitors. This morning my colleagues in the Labour Party told me that bookings are up and that there is a new increase in awareness as a result of the visits of Queen Elizabeth II and President Obama. It is also a result of the attractiveness and competitiveness coming into the economy. That attractiveness will grow and these measures will increase our competitiveness. There have been studies that show general VAT rate cuts do not have a high impact on consumer spending but the way the Government introduced those cuts will attract more tourists to Ireland and if the removal of the air travel tax is not successful, we will go back to it. The challenge has been offered to Ryanair and Aer Lingus that if they increase routes and tourist numbers, the cut in tax will stay but if the numbers are not delivered, the tax will be reimposed.

The PRSI reductions for low-paid staff are a significant concession to the hospitality and catering industries. Their calls for changes to the working conditions of their staff through the restructuring of the JLCs should not be followed; we are already showing flexibility and working together. Research has shown wage rates in the hospitality sector were 11% below the EU 15 average in 2008. We have made major concessions to that industry to make it more competitive. Any further increases in competitiveness cannot come through reducing pay for those on low wages. I also ask the Minister to keep tax expenditures under review because it is important these are passed on.

I am concerned about the amount of money being spent on tax cuts. I would prefer to see more of the money invested in infrastructure projects that would have the effect of addressing major structural issues in the labour market with the collapse of the construction industry. Many unemployed workers have no chance of being re-employed in the construction sector so we must establish a sustainable construction industry.

This is a small levy in comparison to the charges for managing pension funds; it is only0.6%. At the moment, members of pension funds are being charged 1.5% for the management of funds that have lost money because of bad management over the years. This is a four year temporary measure when we badly need investment in jobs.

This jobs initiative is the first step. I look forward to seeing increased employment and confidence in the economy and this is the first step in that direction.

I welcome the chance to speak on the Finance (No. 2) Bill. First, however, I wish to express my sympathies to the family of the late Deputy Michael Bell, to Deputy Nash and his Labour Party colleagues. Deputy Micheál Martin will take part in the tributes at a later stage. On a happier note, I extend good wishes to my fellow county man, Senator Paddy Burke, on his election as Cathaoirleach of the Upper House and wish him well.

I welcome the context surrounding the introduction of this Bill. Despite the pleasant distractions of the Government over the past week, we are now back to reality. Unemployment is one of the major issues facing us. It directly affects people on a day to day basis in a manner that micro-economic issues do not. This Bill should be the start of a debate in these Houses on a focus on unemployment and how we tackle it. The committees will be established next week and each committee will have a role to play in doing this, regardless of whether it has a direct input into an economic brief. Each committee should be tasked upon establishment to identify areas within its brief that could create employment. By doing so, the Oireachtas will show to those 440,000 people who are unemployed that we understand their situation and that we are taking it seriously. The situation is dealt with on a daily basis in our clinics and we must, while dealing with each personal situation, deal with it at a macro level as well.

The introduction of the jobs initiative and the accompanying Bill we are discussing today send a positive signal that we are taking these issues seriously and I welcome them. I acknowledge Deputy O'Mahony's remarks on the practical difficulties on the implementation of the placements and related issues. The Government, while in Opposition, spoke of the need to create a one-stop shop for benefits and everyone in the House would support such a measure. There is equally a need for a one-stop shop for employers who are seeking to access some of the places announced in the jobs initiative or over the course of the last few years. It is ridiculous but common that three different employment agencies must be consulted. When we include the local employment service and various other wings of Government that must be involved in the creation of a place, it would put many employers off engaging. I ask the Minister to look at the creation of a simple system to access these places. Otherwise, we will be here again this time next year to discuss places that were not taken up or where funding was allocated for them but because of red tape they are still lying empty.

While welcoming some aspects, I cannot ignore the difficulties we have with the Bill. For me personally, many of those relate to the expectations that were created in advance of the launch of the employment initiative. Before the election there were claims about the NewERA document and all that went with it by both parties. The programme for Government contained more claims and promises about this issue. The pension levy, however, has become the main focus of debate around the jobs initiative and that is unfortunate.

The common response from the chorus-line opposite is that Fianna Fáil is responsible for this, that Fianna Fáil got us here and the Government's hands are tied. That will get the Government through the next few months, undoubtedly, because that is the political climate, but it will run out of road with it because it was elected on the basis of promises made on employment creation, expenditure and taxation that it will have to deliver upon. While it can throw that comment back at us, it cannot use it with the expert bodies.

Deputy Nash criticised Eddie Hobbs and I agree; there are many in the commentariat who have made stars of themselves in recent years. I see Deputy Mathews in the House and I give him credit for at least having the guts to put his name on a ballot paper and to come into this House to take responsibility for what he said before the election, unlike so many of those who appeared on panels with him, who did not have time to get ready for the election, but continue to lecture those of us who had the balls to put ourselves in front of the people and stand by the decisions we are taking.

There are, however, people with greater inside knowledge than some of the commentariat and they are concerned about the pension levy. Over many years, the political and financial systems have tried to encourage people to make provision for their pensions. It was a shared, all-party decision to allow substantial and generous tax incentives in this regard. However, this decision was taken in the knowledge that the country is facing a pensions time bomb. It was taken as an acknowledgement by the Oireachtas and Government that we had a responsibility to encourage people to provide for their pensions.

However, the Government's proposal has undermined much of that work, whether intentionally or unintentionally. Security and guarantees were offered with regard to pension provision. Management fees and pension provisions were high and the performance of pensions has been disastrous for many people in the past number of years. However, this was outside the Government remit as these were commercial issues and decisions in which neither the Government nor the political system had any input.

This levy is a Government raid, an attack on what has been a suggested and agreed policy on the security of pension provision. I do not doubt the Government's and in particular, the Minister's personal intentions that it is only a four-year, temporary levy. I say that in the knowledge there are few more honourable people in this House than Deputy Noonan. The Department of Finance has a different interpretation of the word "temporary" than the dictionary definition. Over decades, many levies were introduced as temporary measures but which are still being levied on all our pay cheques to this day. If we could align the definition of "temporary" in the Oxford English Dictionary with the Department of Finance definition, I would be more reassured. I acknowledge that the Minister has done that.

The pensions time bomb is still in existence. Those who work in the private sector today have had to make provision in order to be able to maintain their lifestyles in retirement. This has been done in the face of losses which are beyond their control. I fear that this levy will add to the sense of mistrust about pensions and to the attitude that somebody else will look after it, that we can live for the moment. Unfortunately, circumstances for many people mean they cannot afford to make that provision. We have undermined it with the introduction of this levy.

The Society of Actuaries in Ireland could not be said to be a part of the celebrity commentariat. The society has noted that these changes will have the cumulative effect that people will lose faith in the stability of the system and will lose the confidence to commit to future pensions savings. I acknowledge the society has a vested interest because it represents actuaries and this is their day job but it will be the challenge for this and future Governments to restore confidence in our pension provisions. This is a significant challenge but some smaller challenges may perhaps be addressed on Committee Stage.

I wish to comment on the initiatives for the tourism sector.

Before the Deputy moves to speak on tourism, I wish to make a statement for the record of the House. The Deputy made a comment in the spirit of the debate regarding the taking away of levies. I know he did not personally mean anything by it but it is important to correct it by saying that Governments impose levies and take them away; the Civil Service do not do so.

I know the comment was made in the spirit of the debate.

My point is the meaning and definition of the word, "temporary".

I welcome the initiatives for the tourism sector. I have listened to some Deputies on the other side who were predicting that hundreds of thousands of tourists would come here on the back of the €3 reduction in the air travel tax. I more particularly welcome the initiative announced this morning by the Minister for Transport, Tourism and Sport, Deputy Varadkar and the Minister of State, Deputy Ring, about what is termed "staycations", the stay at home vacations, a €1 million initiative to encourage Irish people to holiday here. However, when some airlines charge passengers €40 to print an A4 sheet of paper or €15 if one wishes to throw a plastic bag in the hold, I am a little sceptical about their ability to deliver extra passengers on the basis of a €3 reduction in the air travel tax.

I would be more confident about the ability of airlines to deliver extra passengers if the agreement to which the Government has referred had been done before the introduction of this Bill to the House. The Government is committing to reach agreement with the airlines about a quid pro quo. It has decided to reduce the air travel tax on a date to be agreed if the airlines promise to bring in more people into the country. However, the legislation does not specify a date. We are all familiar with regional airports and we all know that airlines make commitments and promises to bring in hundreds of thousands of passengers if they are given extra supports but they rarely live up to the expectation. Fianna Fáil will take the Government on trust. I would ask the airlines flying into Ireland, in particular, Ryanair and Aer Lingus, as a gesture of faith in their ability to deliver on bringing in more tourists, to implement the €3 reduction on airfares now, as a gesture of their faith in their ability to deliver on the fares.

However, the airlines have moved on the debate to the subject of Dublin Airport Authority airport charges at Dublin, Shannon and Cork airports. We are well used to Michael O'Leary rattling cages and cheerleading but when the chief executive officer of Aer Lingus becomes involved, it is time we all took notice. Aer Lingus is the anchor tenant in Terminal 2. It seems to me that the biggest challenge facing us in an attempt to persuade the airlines to engage with tourism promotion projects and to reduce the cost of bringing people into Ireland is the question of airport charges. If a substantial reduction were to be offered this would raise issues about the viability of the DAA and the Vote of the Department of Transport, Tourism and Sport.

We are tinkering at the edges with a €3 reduction which I am not convinced will make any significant difference when the big elephant in the room is the need for us to completely reform the way we run our State airports. Colm McCarthy in his report has highlighted some of these issues. I do not have to tell Deputy Breen about them. We should not be overly optimistic.

I welcome the reduction of VAT in respect of certain goods and services. I do not believe it will save money for consumers but it will give the message that we are cutting costs. I am at a loss and it has not been explained to me how as an island nation we introduce a tourism initiative, reduce the rate of VAT on many tourism-based services but the cost of car hire has been deliberately excluded from the VAT reduction. I ask the Minister if he could find a way of considering its inclusion in the initiative. The United States and the United Kingdom are our key markets and tourists arriving by aeroplane need a car in order to get to the key tourist areas which we want to promote. They will need a car to get out of the capital city — I mean no offence in saying that. Our rates for car hire are already higher than our competitor markets by virtue of our general high cost base and because of the small size of our market.

This initiative was an opportunity to make a direct attack on car hire which is one of the bigger costs of a holiday in Ireland but I am afraid that chance has been missed. I suggest that on Committee Stage the Minister could explain the costing for including car hire in the initiative because I suspect it would be very small. If the reduction were to be applied between now and the end of December it could be reviewed subsequently.

I suggest that timing is important because this is when people are deciding on summer holidays. The country has had a fantastic week with images of the visits of the Queen and President Obama broadcast around the world. However, the imagery from Iceland in the past few days is not helpful because it may reinforce a decision to stay at home. Now is the time to reduce these costs so that when people are making travel and accommodation arrangements they will know that bookings after 1 July will benefit from all the reductions. If we are to do something about the rates for car hire, it would be preferable for tourists to know that if bookings are made after 1 July they will benefit from the reduction. This is why I ask the airlines to bring in the reductions now for those planning to travel to Ireland.

This is an initiative aimed at tackling unemployment and as such is welcome. One of the issues facing unemployed people is the difficulty in making their social welfare payments match the cost of living. One of the biggest problems they face is the cost of fuel, which is going through the roof on a daily basis. The Government continues to have an opportunity to reduce the 13% VAT rate that applies to fuel. A decrease in fuel costs would make a difference to people's daily lives. I ask the Government to show us how much it would cost the Exchequer if it were to reduce fuel costs by decreasing the rate of VAT on fuel. How much would that cost in the context of the resources that are available? The documentation that was provided on the day of the jobs initiative included target figures for the amount of money to be raised through the pension levy. Although a great deal of money will be allocated to capital expenditure and various initiatives, not all of the money that will be collected under the levy will be spent. I think there will be an underspend of approximately €180 million. If the money accrued from the pension levy is to be spent directly on the jobs initiative, as the Government has said it wants to do, that underspend will have to be addressed. A number of areas could be suggested to that end.

The jobs initiative announcement did not refer to the work that is under way to transfer the trade functions of the Department of Enterprise, Jobs and Innovation to the Department of Foreign Affairs. The transfer has not happened because there has been a delay in bringing the delegation of powers measures before the House. It suggests there is a problem. Two and a half months have passed since the composition of the Government was announced, but the arrangements for transferring powers and functions have not yet come before the House. I do not want to be the second Deputy in a day to be thrown out for complaining about the delegation of functions. It is an issue. I congratulate the Government on its decision to give trade functions to the Department of Foreign Affairs. Such cohesion is long overdue. It will focus the trade section and the foreign affairs section. If we do not do it quickly and ensure that our message is properly joined-up, it will lose its effectiveness. Although our export sector is powering ahead and our international markets are doing very well, there is a danger we will get complacent and take it for granted that those markets will continue to do well and to demand our goods. It is proper and right that we should focus on domestic issues, but we should not lose our focus on the export market. We need to move ahead quickly. I would like the Government to come before the House next week to introduce legislation providing for the proper reorganisation of Departments. Two and a half months into the lifetime of the Government, it is only fair for us to expect such action to be taken. It is necessary to allow everyone to focus on ensuring our export markets continue to perform strongly.

I welcome the initiative and the spirit in which it was introduced. The many omissions from the initiative are particularly disappointing for the public, however. The expectations of the people were not created by Members on this side of the House nor by what happened before the election, but by Members on the other side of the House when they were in election mode and when they prepared the programme for Government. However, I welcome the various additional capital initiatives that are to be pursued throughout the country. Deputy Nash spoke about contracts. The Minister of State, Deputy Brian Hayes, is directly responsible for this matter. I reiterate my request for the Construction Contracts Bill 2010 to be advanced as a matter of urgency. We need to give subcontractors some security when it comes to Government contracts. The biggest jobs initiative we could adopt would involve guaranteeing Irish jobs to Irish suppliers. At this stage in our economic development, we should challenge things like EU procurement rules and ensure the money the Government has found and put aside for capital investment stays in this country.

I would like to share time with Deputy Breen.

Is that agreed? Agreed.

Deputy Calleary should not start rewriting history so soon. He has suggested the people are unhappy because of things that were said during the general election campaign.

That is not what I said.

They are unhappy because of what has happened to our economy over the last couple of years. They have given us a huge mandate to sort out the unholy mess that was made by the previous Government. Some serious decisions will have to be taken on this side of the House. We are ready for that challenge. When Opposition Deputies speak, it is important for them to try to tell the truth. They should understand they were also elected to try to help the people to get out of the mess this country is in. Some ridiculous statements that were made in this House are quietly being put to rest as solid arguments against them are made by Ministers on this side of the House. We will constantly face tough challenges over the next couple of years. We will have to deal with them.

It is important to continue to look for solutions to the problems we face. A few weeks ago, the Master of the High Court said that if a Government Minister would meet him, he could draw up a solution to the problem of mortgage arrears on the back of an envelope. I would be interested to know whether the Judiciary is prepared to use the Civil Liability Act 1961 to help people with mortgage arrears. This legislation, which has been around since the early 1960s, allows the question of whether the banks were reckless in offering loans to be taken into account. It has the potential to help people with mortgage arrears, but it has not been tested in the courts because nobody has taken a case to the point at which a member of the Judiciary could make a decision on it. I would be interested to hear members of the Judiciary comment on that. If this legislation can be used to show the banks were reckless to a certain degree, it might ensure that a degree of responsibility is placed on them. The banks gave loans to people who are now being pursued through the courts to continue to make repayments. We should seek answers from the Judiciary with regard to this legislation and ascertain whether they have any concerns about it.

Members of the Irish Farmers Association are protesting in Dublin today about the margins being taken by multinational companies on farm produce. I will not get into that debate now because I am sure it will arise during the Private Members' debate later this evening. It is interesting that the Office of the Director of Corporate Enforcement raided the offices of the IFA to confiscate computers as part of its investigation into insider trading. It astounds me that the same office is unable to get the passwords of some computers in Anglo Irish Bank. That situation has been going on for a couple of years. We need to try to get answers to questions of this nature on the floor of the House. Why has the investigation into Anglo Irish Bank been dragging on for so long? Why was the Office of the Director of Corporate Enforcement, accompanied by the Garda Síochána, able to threaten IFA staff who refused to hand over their computers with arrest and prosecution on suspicion of breaking competition law when, at the same time, that office has been unable to compel Anglo Irish Bank staff to provide the passwords of laptops as part of its investigation into the greatest corporate scandal in the history of this State? I would like answers to these questions.

I spoke in the House two weeks ago about the issue of burning bondholders. Many Opposition Deputies have had a great deal to say on the matter. The Government's position is that it is not really the way forward. Two days after I spoke about the matter in the House, Professor Morgan Kelly argued in a newspaper article that we should default, basically, on over €100 billion of State loans. He made the consequences of such an approach quite clear. He said that if we default, we will have to adjust next year's budget by €20 billion because we will no longer be in a position to get any loans from anybody. He said that in such circumstances, we will have to cut social welfare payments and public sector pay by a third, we will probably have to increase taxes and we will add such unpredictability to our economy that nobody will be sure where we are going. I am surprised that Opposition Deputies have not commented on what Professor Kelly had to say. Have they realised the idea of burning bondholders is a flawed policy that would land everyone in this country who is in trouble in a serious crisis? When questions of this nature are thrown across the floor, it is sometimes useful to throw them back. When Opposition Deputies are commenting on the Professor Kelly doctrine, which has been espoused by some of them since the day this Government was elected, perhaps they will explain its consequences for the people.

This House needs to have a serious debate on the Croke Park agreement. Significant portions of the agreement are expected to have been implemented by the beginning of September, which is 12 weeks away.

If the political establishment, public servants and everyone else involved in providing services fail to co-operate on the implementation of the Croke Park agreement, it will result in a serious crisis. As the International Monetary Fund has pointed out, if we do not make substantial progress in addressing our problems, it may unilaterally take difficult decisions on our behalf. This should be the focus of our debates in the coming weeks.

This is straightforward legislation which includes a levy on pension funds. It will be necessary to continue the debate on providing pensions for the vast majority of employees who do not have an occupational pension. The value of my small, private pension has been decimated, not because a levy of 0.6% is to be imposed on it but because the fund managers made poor investment decisions. Despite the value of many pension funds declining by between 20% and 50% in recent years, pension management companies continued to charge significant management fees. These fees are not applied to the profits they make but to the total value of the fund and are far in excess of 0.6%, the level at which the Government levy has been set.

Opposition spokespersons and pension fund managers argue that the proposed Government measures will create a crisis in pension funds. It is the mismanagement of pension funds that will create the crisis. The previous Government failed to address the excessive management fees charged by pension funds. In its 14 years in power, it did not conclusively address the issue of providing pensions for citizens who do not have access to occupational pension funds, notwithstanding the many discussions in the House on White Papers and Green Papers on pension reform. The House must continue to debate pensions and produce innovative solutions to ensure those who are fortunate enough to have a job can pay into a pension fund with confidence that it will be available to them when they retire. Many of those who retire in the next five to ten years will not receive the level of pension they expected. This has nothing to do with the 0.6% levy which is being introduced to try to rejuvenate the economy but the result of pension fund management. This issue must be given serious consideration. The Government will take on board any constructive proposals made by the Opposition.

Only a few, short years ago, the annual interest repayments on the national debt amounted to less than €1 billion. Next November, the Vote in the budget for interest repayments on the national debt will be in excess of €4 billion. The difference between these figures would pay for many school places and hospital beds. While many more difficult decisions will need to be made in future, the Government is prepared to make them while minimising the hurt and pain they cause to citizens. That is what being a responsible Government is about.

I welcome the opportunity to speak on Second Stage of the Finance (No. 2) Bill 2011.

I grew in confidence with every word the Minister for Finance spoke yesterday evening. He stated the economy is expected to return to growth this year following three years of recession. This is partly due to our strong export performance. Gross domestic product is forecast to grow by 0.75% in 2011 and 2.5% in 2012. I welcome the increase in exports and it is significant that many multinational companies are performing well. They must be nurtured and minded because they provide solid, stable employment.

The jobs initiative programme was designed to be cost neutral. Over the period from 2011 to 2014, the total cost of the package of measures in terms of revenue foregone and expenditure amounts to €1.8 billion. The programme will be funded on a cost neutral basis to fulfil the commitments of the joint EU-IMF programme of financial support. Funding will be generated from the application of a temporary levy on funded pension schemes, an issue on which many speakers have contributed.

I concur with the Minister's statement last night that we are moving in the right direction. The jobs initiative will add to public confidence. It received a broad welcome from many interest groups when it was announced some weeks ago. The programme for Government promised a jobs initiative programme in the first 100 days of government and we have lived up to that commitment.

The visits of Queen Elizabeth and President Obama in the past week have created a feel-good factor and, above all, placed Ireland at the centre of the global stage following several years in which our international reputation has been tarnished. The feel-good factor evident in Dublin and elsewhere, including Ennis and other parts of my constituency, will prove to be a major boost. Tourist numbers will increase, especially the number of tourists from the United States, which it seems will be relatively good for July and August, and Britain. Some of the measures included in the jobs programme will further boost tourism and jobs. I commend the Minister on introducing these measures because tourism will play an important role in creating the environment in which economic recovery takes place.

Unlike some of the finance Bills that are produced following budgets, this is a short Bill of only six sections. It contains four key measures, namely, the research and development tax credit, suspension of the air travel tax, introduction of a second lower rate of VAT and imposition of a temporary pension levy.

The Government has affirmed its commitment to maintain the 12.5% rate of corporation tax. As the Taoiseach, Tánaiste and Minister for Finance have stated, the corporation tax rate is not up for negotiation. The Minister for Finance will meet the French Minister for Finance, Ms Christine Lagarde, today to discuss a number of issues, specifically a reduction in the interest rate for the EU-IMF bailout. However, we will seek much more than a cut in the interest rate and I am sure the corporation tax rate will also be at the forefront of his mind. The Taoiseach's statement today that the Government is not seeking further time to repay its debts is a sign of confidence.

I propose to discuss the details of the Bill. Section 1 deals with the research and development tax credit. This credit is important for industry and complements the corporation tax rate. It has influenced the decisions of many international companies to locate in Ireland. As I noted, multinational companies are making major strides in increasing exports and profits. Many of them have been established in my own region of the mid-west, including Intel which has an outstanding research and development facility at its Shannon plant. Intel will be developing products there for the next ten years. It is a specific area but a very important R&D plant nonetheless.

Section 2 deals with the travel tax, which has been a contentious issue for the travelling public as well as the airlines since its introduction in 2009. While airlines have more important issues on their mind at the moment with the ash cloud moving towards mainland Europe, they should take this matter seriously because they have been campaigning for its abolition for over two years. They should work with the Minister for Transport, Tourism and Sport to create a plan to boost passenger numbers coming here, thus stimulating the tourism industry and creating jobs.

Tourism has been hit badly in recent years but Ryanair, in particular, is well based to boost those figures. The company's end-of-year accounts were published last week, showing that the airline carried 72 million passengers in Europe and made a massive profit of €401 million last year. As a successful Irish businessman, Michael O'Leary should take the national interest on board and play his part in our economic recovery as he did during the Lisbon treaty campaign. We all remember that famous debate he had with Declan Ganley on "The Frontline" programme when he was campaigning for a "Yes" vote. Mr. O'Leary said then that Ireland's future success depended on being at the heart of Europe as a member of the EU. It is important for him to think of Ireland's future now also. Ireland is his base and Ryanair is an Irish airline, so there is an onus on him to boost tourism figures here. Aer Lingus has a commitment in this respect as well.

Section 3 is an important part of the Bill which amends the VAT Consolidation Act 2010 to reduce VAT from 13.5% to 9% in respect of certain goods and services mainly associated with the tourism industry to stimulate employment. I hope that hotels, restaurants and other providers will take this great initiative on board and reduce costs accordingly. Unfortunately, Ireland had a reputation of being an expensive holiday destination, but this is a golden opportunity for us to sell the country as a destination of better value.

This week in Dublin over 3,000 delegates are attending a world telecoms conference at the National Convention Centre, which will generate huge revenues for the capital city. All hotels in the capital are booked out and this is happening straight after two State visits. I am worried, however, that our rip-off culture still exists in hotels. This week and last, hotels doubled their room prices due to the special events taking place. That matter must be worked on.

Tourism Ireland's genealogical programme and marketing campaign in the United States is important. Deputy Calleary referred to car hire and asked why that was not included in the VAT decrease. The bigger problem with car hire, however, is a shortage of vehicles rather than the VAT rate on such vehicles. Many car hire operators went out of business during the period of office of Deputy Calleary's Government.

All the measures in this Bill are welcome and will boost tourism. We must also plan for 2012, which is important. I had other things to say but I have run out of time. However, I know the Minister will consider constructive suggestions on Committee Stage. I hope the Opposition will do so, too, so that the Bill will get a speedy passage through the House.

A previous speaker referred to the article by Professor Morgan Kelly and, in that respect, it is possible to agree with an individual's analysis without agreeing to whatever solution they may wish to provide. There is often more than one way to provide a solution.

With regard to the debate on the jobs initiative and the Finance Bill, some 30 minutes were used to ask questions at the end but only ten minutes were available for replies. Unfortunately, however, we did not get answers to some of the questions posed. It would be great if the Minister of State could provide such answers.

One of the questions I wanted an answer to concerned whether or not the money being provided to finance the project is equitable. I pointed to the fact that the pension levy is a flat tax and income blind. The same rate will be applied to a person on €40,000 as to someone earning €500,000 and paying into the pension fund. A person who is struggling financially will have the same rate applied to them as a rich and powerful figure. Under the Government's system, many people at the top of the pensions pyramid may get away scot-free. Those on the bottom, however, will incur a higher imposition of this levy. It mirrors the impact of the universal social charge or USC, whereby those earning over €75,000 had the incidence of taxation reduced, while those below that figure had it increased.

I also asked about defined contributions and benefits. Will there be a difference in the incidence of this taxation between those two groups? Some people may pay as much as €2,000 over the period of the new tax, while others will pay nothing. Most families are trying to get by from day to day, as well as forecasting the money they will be surviving on in future. It is important that they should have some idea of how much it will cost them. We asked the Minister how much will be charged to each of those sectors. The Minister did not answer those questions but perhaps he did not have the information on the day. It would be interesting, however, if those questions could be answered in future.

I will answer them.

Excellent. In that way, people will be in the know. At that time, the Minister responded with another question which I will paraphrase. He asked whether there was any type of tax that people actually liked. I suggested there are taxes that people are willing to pay, such as a progressive tax. With the latter system, the rate of tax increases on the amount that is taxable. Thus, the incidence of taxation is lower on those with low incomes, but is much higher for those with a greater ability to pay. It is not a new idea and has been around since the 18th century. It is a tax that is universally recognised as the best way of imposing taxation on people but, unfortunately, it is not the ideology that is currently being used by Fine Gael or the Labour Party. The continuation of the USC is an example of a regressive taxation system, as is the pension levy. In addition, the Government's proposed property tax and water tax are all flat taxes which have a regressive impact on those paying them. Why is it so difficult to convince the Government of the importance of having progressive taxation, when it is such a universally understood and accepted tenet of tax?

We also have difficulties with the meagreness of proposals concerning the jobs initiative and the Finance (No. 2) Bill. Some 440,000 people are unemployed while 50,000 are emigrating annually. The latter figure is akin to the number of students sitting the leaving certificate examination each year. It is shocking that so many individuals are forced to leave the country. Emigration has been a gaping sore in Irish society since the Famine. In many ways it could be said that emigration is the curse of the Irish. Thanks to Fianna Fáil's gross economic mismanagement and the continuation of a policy of retrenchment by Fine Gael and Labour, more than 500,000 people have been made unemployed or forced to emigrate.

This issue is of such magnitude that it demands a significant response. It demands a Keynesian-type stimulus, something similar to what was on the lips of Fine Gael and Labour Deputies during the election campaign, yet we have been given a shockingly damp squib. It is sad that, despite the number of possibilities presented to the Government to improve the situation, it has said, "No".

Many sectors of society feel let down that they were ignored in the jobs initiative. I have spoken with farmers and those involved in the agrifood sector who are disappointed that their sector was ignored. Let us walk through the different sectors that have been ignored — ICT, health and life sciences, financial services, creative industries, marine, medical services, education, transport, logistics and distribution. They have all been left out of the jobs initiative. One would imagine that two parties that have been in opposition for 14 years would have had time to develop comprehensive plans for these areas so that they could hit the ground running in terms of implementation. Unfortunately, this has not been the case.

I have been raising the issue of reform of the enterprise sector since being elected. It should have been a pillar of the jobs initiative. Last week, I was telephoned by a woman from the west who was interested in setting up a food company. She has knowledge, experience and drive. She needs a small helping hand from the State to carry out a feasibility study. She applied to her county enterprise board for a small grant of approximately €3,000 or €4,000, which would allow her to conduct studies of the product, whether it would last on shelves, whether it passed certain sales regulations, etc. She was denied the money because the board told her it had none left for the year. Bear in mind that we are in May. An individual who wanted to set up an indigenous business to create indigenous jobs was told "No" by the Government.

This is not the only type of grant that has been exhausted by many county enterprise boards. For example, an employment grant normally amounts to €10,000 and is applied for twice per year, that is, €5,000 after the first application and €5,000 six months later. Its purpose is to allow the applicant to employ someone new or take himself or herself off social welfare and to develop a new business. Consider the economics behind this grant. After eight months or so of social welfare savings and PRSI and tax contributions, the grant pays for itself. However, individuals looking for it from some county enterprise boards are being told no money is available. This is a shocking indictment of the enterprise development sector.

Many of the Members opposite will have spoken to the hundreds and thousands of small businesses throughout the State that are in dire need of micro finance. In many cases, credit unions have deposits that could be reasonably, well and safely transferred into micro credit for business. Some of the county enterprise boards launched similar campaigns a number of months ago whereby they would work hand in hand with the credit unions to develop the micro credit sector. However, they are no longer being allowed to do so. Again, the State has said, "No". Opportunities for indigenous jobs arise every day, but they are being ignored by the State.

When I asked the Minister how many jobs the initiative would create, he might have been wise when he refused to give the number. Neither he nor the Deputies os mo chomhair were shy before the election when they stated they would create 100,000 jobs.

It is interesting that the mitigating word "Could" is being underlined. Unfortunately, it was not underlined enough prior to the election.

It was. I wrote it.

It also stands in stark contrast to some of the communications being sent by a number of Deputies. Straight after the announcement of the jobs initiative, Fine Gael and Labour Deputies ran back to their constituents. Some local newspapers are festooned with headlines about the thousands of jobs coming to Meath, Offaly and Mayo. Somewhere along the line, the truth is either not being told by the Minister, Deputy Noonan, or by the Deputies speaking with their constituents. There is a blatant disparity between the facts provided in the Chamber.

What the Deputies did not say was that many of the new jobs and funds will come from existing schemes. Many of the jobs will only be created for a period of two or three months. In many cases, Peter's job is being robbed to employ Paul. The Deputies did not mention in their press statements that the actual number of additional jobs contained in the document is approximately 400. They did not mention that, in the jaws of the most devastating recession ever faced by the State, the initiative will only add 15 jobs in a county like Meath, for example. The comparison between need and provision is shocking.

According to the ESRI's figures, 500 young people emigrate every four days. The jobs initiative will stop four days of emigration. For the rest of the year, it will be business as usual. The jobs initiative is a PR initiative virtually free of substance. It momentarily raised the hopes of hundreds of thousands of people and quickly dashed them. For this reason, the jobs initiative is contemptible. In recent weeks, I have spoken to a large number of enterprise organisations and community groups. Their muted welcome to the document was in desperate hope rather than in confidence. Enterprise organisations are putting on a brave face in an effort to buoy expectations in the market.

The Minister has told us there is no other option and that the straitjacket of austerity bequeathed to the Government by the former Fianna Fáil Government stops any movement. I would suggest that the strictures are self-imposed. Sinn Féin has identified €2 billion in the National Pensions Reserve Fund, NPRF, that could be used as a kick start to the economy. The Government has told us it has no room to manoeuvre and that Europe will prevent anything else, but there is a compulsive desire on the Fine Gael and Labour benches to prove themselves to be the best Europeans in the class. Sometimes, it is difficult to know whether the parties opposite are working in Ireland's interests or in the interests of Europe. Are they on the side of the core European countries? I will provide a number of examples to prove this point. Fine Gael and Labour forget that being pro-European does not mean slavishly following the core European states. Rather, it means creating a sustainable Europe that promotes the interests of the core and periphery and does not pit them against each other.

Today is a case in point. Deputy Breen informed the House that the Minister, Deputy Noonan, will meet the French Minister, Ms Christine Lagarde, who has just announced that she is seeking the position of the managing director of the IMF. She vigorously opposed a reduction in the exorbitant interest rate being forced on Ireland. This interest rate is pushing Ireland off the default cliff. Ms Lagarde has also said Ireland should increase its corporation tax rate. Many within the foreign direct investment sector have said that this corporation tax rate is a key competitive advantage for the State, and any change in it will cause major unemployment. It is mind-boggling that the Minister of State, Deputy Creighton, has said, despite this, that she believes Ms Lagarde would be an "excellent candidate". She stated: "[S]he's eminently qualified, and if she's nominated, we're likely to support her". She is suggesting that we support a candidate who is working contrary to Ireland's interests and whose interests are incongruent with ours. If Fine Gael and the Labour Party support this individual in seeking that position, they are themselves working contrary to Irish interests.

It is time the Government woke up to the harsh reality that the interests of the core European states are not necessarily ours. If there is a gap between the interests of Ireland and those of the core European states, the Government is mandated to support our interests in Ireland. Over the last three years, Fianna Fáil, Fine Gael and the Labour Party have implemented unprecedented austerity measures at the behest of the core European nations and the ECB. This has caused massive pain to the weakest in society. It has reduced the effectiveness of our health service and education system and pushed more than half a million people into unemployment and emigration. The austerity measures have caused our economy to flatline. The supposed goal of bringing down our bond interest rates has not actually happened. Returning to the bond markets before 2012 under the current policies would be very difficult.

This jobs initiative, and the accompanying Finance Bill, is a child of these failed policies. As a result, they will effect little if any long-term mitigation of the core problems in Irish society.

I wish to share time with Deputy Kieran O'Donnell.

I welcome the opportunity to speak on the Bill. Despite the financial straitjacket that has been placed on us by the IMF, the Government has set out a targeted support scheme for the lower paid, the unemployed and the tourism sector. Deputy Tóibín was critical of the lukewarm responses of some organisations outside the House to the jobs initiative. I remind him that the Irish Hotels Federation hailed the announcement as one of the most comprehensive policy initiatives supporting the tourism industry in the past decade. It is clear that the measures taken under this initiative — including a reduction in VAT on a variety of accommodation, catering and entertainment services, the abolition of the airport tax, the reform of visa requirements, and the halving of PRSI, along with the joint marketing initiative between Tourism Ireland, the Dublin Airport Authority and the airlines — will have a significant positive impact on inward tourism.

Anyone from any part of the world or from this country could not but agree that the Government was correct in its decision to focus resources on the tourism sector based on the high profile visits of Queen Elizabeth and President Obama, which will have a significant positive impact, in both the short and medium term, on people's perceptions of the attractiveness of Ireland and on the inward movement of people to this country. The Government's support of visitor businesses and tourism will increase job opportunities, not only on a seasonal basis but all year round. Some people are criticising the fact that jobs will be created on a seasonal basis, but it is important to recognise that there are many thousands of people, especially young people, who need work during the summer months to pay for their third level education. Many of them have not had the opportunity to do that, and seasonal work is very important to them. It is also important for those who are unemployed. Many people I know would be delighted to have an opportunity of two or three weeks' work, never mind three or four months. Any seasonal opportunity or full-time labour is to be warmly welcomed.

The economic regeneration of this country must start with tourism, and I believe it will. The major visits that have happened over the past ten days are the first step towards enhancing our tourism package. The groundwork has been done. However, it is just the beginning. Much more work needs to be done, especially in the counties I represent, Leitrim and Roscommon. There is major untapped tourism potential in both counties, which needs to be developed. We should not consider tourism purely from a west coast point of view; we should not just accept that once one leaves Dublin, the scenery on the west coast is the tourism package. There is a lot of potential in the midland and peripheral counties, and it is important they are not ignored. One significant step that could be taken is the use of the River Shannon as an asset. It is potentially a major asset for tourism in this country, but at the moment it is the dividing line between all the tourism regions, so that instead of focusing our resources on the river, we are focusing them away from it. It is about time Tourism Ireland and the development agencies woke up to this fact and used the River Shannon as an asset. We must develop the tourism potential of counties such as Leitrim and Roscommon, which have unspoilt beauty.

We should maximise the use of Ireland West Airport in Knock, which can bring tourists directly into the region, as well as developing the cross-Border aspect of tourism. We must facilitate tourists who visit Northern Ireland in coming south of the Border and those who visit Ireland in going north of the Border. The announcement made by the Minister for Justice and Equality, Deputy Shatter, about the tourism initiative has been underestimated. The single decision to introduce short-term visas allowing people to travel across the Border — something I raised in this House on numerous occasions with the previous Government — will have a significant impact in terms of bringing tourists into this jurisdiction and developing cross-Border tourism. For that reason, if for no other, Members on the opposite side should welcome the initiative. Much more needs to be done about visa issues.

We also need to address the clustering of attractions in counties and regions. The less developed counties include Leitrim, which I believe should be developed as a county of culture. It has many assets, including people that are known both nationally and internationally. There is major potential to develop heritage tourism in Roscommon, which has been overlooked by the tourist industry. My county was formerly the capital of Connacht, having been home to the kings of Connacht and the High Kings of Ireland. Among its attractions are the Napoleonic fortifications, King House and the Cistercian Abbey in Boyle and Strokestown Park House, where the Famine Museum is located. I could provide a list of many more places of interest. However, the point I wish to make is that the counties which have been less developed up to now or which have been ignored by the tourism industry have some major assets. We must assess these assets in order that we might market them. I have already outlined the position with regard to heritage tourism in County Roscommon. I am of the opinion that Roscommon should be marketed as a heritage county because doing so could make it distinctive from other parts of the country. The position is similar with regard to County Leitrim, particularly in the context of arts and culture. The latter has a significant reputation, both nationally and internationally, in this regard. County Leitrim and its attractions should be developed, enhanced and marketed properly.

Instead of ignoring counties in the midlands and those which are less well developed we should seek to use them. If we could encourage tourists who arrive in Dublin Airport and then travel on to the west to stop off on their journey and spend one night in one of these counties, it would have a dramatic impact in the context of bed nights and bed numbers and also the overall spin-off for local economies.

I wish to return to the issue of the holiday visa waiver scheme. This is an extremely positive mechanism which has been introduced by the Government. I hope the latter will also consider the position with regard to student visas. Again, there is major potential in the context of developing that sector which could possibly bring an extra €1 billion into the economy if dealt with in the proper way. It is important that the requisite checks and balances be put in place. If there is proper co-ordination between Tourism Ireland and the Departments of Justice and Equality and Education and Skills we can ensure that there will be an extremely effective and secure regime in place which will make Ireland attractive to the sector in question.

We have built up a major reputation in respect of education over a long period. We should now be in a position to pass on what we have learned. Students who want to come here to learn English or to appropriate the technological skills their counterparts in this country already possess should be able to do so. The route we must take should involve building on our assets and on what we do best. We can then, based on this, concentrate on developing our economy.

I understand there are ten minutes available to me. Is that correct?

There are just under ten minutes available to the Deputy.

Perhaps the Acting Chairman will inform me when there are two minutes remaining.

I presume the Deputy will have a killer final blow to deliver in those two minutes.

I will have a particular message to deliver to the Deputy at that point.

I welcome the opportunity to contribute to the debate on the Finance (No. 2) Bill 2011. I will deal first with the measures it contains. The jobs initiative announced by the Government does not contain a promise to deliver a large-scale plan. We are restricted in that regard by the terms of the deal with the EU and the IMF. As with the Bible story of the loaves and the fishes, the Bill brings forward measures which are very practical in nature and which will, in my view, an exponential impact on business in Ireland.

Contained in section 1 is a change in the research and development tax credit which will place it on an above-the-line basis. This will have a major impact on multinational companies coming to Ireland. It is a simple measure but it will have an enormous effect.

The air travel tax acted as an impediment in the context of flights coming into this country. For the mid-west and for Limerick in particular, Shannon Airport is a vital part of local and regional infrastructure. To ordinary people it may appear that the air travel tax brought in a great deal of money, namely, €100 million. However, there is no doubt that it had a massively negative impact. I welcome the fact that the Minister will now have at his disposal the tools to allow him to abolish this tax. He is proceeding in that regard by obliging the airlines to bring in additional flights in return for its abolition. That is the type of governance which appeals to me because it seeks to obtain value for taxpayers' money.

I accept that in the context of the VAT rate which applies to the tourism industry, there might have been an argument to also reduce the 13.5% rate in the areas where it applies. However, the reduction is targeted at the tourism sector, which is underperforming. The number of tourists visiting the country has fallen by 25% since 2007. For the mid-west and Limerick, tourism is vital. It is responsible for bringing visitors to the region and for filling beds in hotels, guesthouses, etc. Coupled with the abolition of the air travel tax, the reduction in the rate of VAT that applies to tourism will have a massive effect.

Deputy Naughten referred to short-term visas. Again, what is proposed is integrated into the area of tourism. This will have a huge impact in terms of confidence etc. Ireland is now a country where people believe things can happen. That is certainly true but practical measures must be put in place.

The Bill does not deal directly with it but I am of the view that the loan guarantee scheme will have an enormous bearing on people's confidence. Small business is the lifeblood of this country in the context of the contribution it makes to the Exchequer and with regard to the employment it creates. If a person in business requires an extra overdraft facility of €10,000, the banks being unwilling to take a risk on him or her may determine whether jobs are retained. It is in cases such as this that the loan guarantee will come into play.

In summary, the mid-west region is heavily dependent on tourism and the multinational sector. The change to the research and development tax credit, which will make it possible to reflect it above the line, will be crucial to the latter and the abolition of the air travel tax and the reduction in the rate of VAT which applies to the tourism sector will bring people to the region.

In the context of the EU-IMF deal, there have been discussion regarding the 1% reduction we are seeking in respect of the rate of interest we are being charged. Such a reduction would have given the Government an additional €400 million to spend on the creation of extra jobs. A number of measures are required so that we might move forward. The first of these is a reduction in the interest rate. The second is the need to obtain funding from the European Central Bank in the medium term. The latter is vital.

There are two major aspects to the Stability and Growth Pact, which was put in place before the introduction of the euro. The first of these is the fact that a country's annual budget deficit can be no more than 3% of GDP and that its total national debt can be no more than 60% of GDP. These parameters were drawn up against the backdrop of the introduction of the euro, when it was obvious that there would be a significant reduction in the interest rates paid by countries such as Ireland. A measure designed to deal with the growth in credit that was about to occur should have been build into the Stability and Growth Pact. It was clear that there would be an increase in the level of credit available to countries such as Ireland on foot of the significant drop in the rates of interest they would be obliged to pay.

It is interesting that Germany and France breached the terms of the Stability and Growth Pact in the early 2000s. At that time, Germany and France were restructuring their deficits. Both countries should be aware of the mammoth task that Ireland now faces in restructuring its deficit. Responsibility on a European-wide basis must be shared for the fact that the Stability and Growth Pact did not cater for the growth in credit. In hindsight, measures should have been put in place to deal with it. In the past, Ireland did not breach deficit rules such as the ratio of the annual government deficit to gross domestic product not to exceed 3% or the ratio of gross government debt to gross domestic product not to exceed 60%. However, a massive growth in credit, particularly in the property sector, was going in under the radar and which was clearly a recipe for disaster. It is critical that other EU member states are aware there must be a European-wide solution to this problem. As the IMF stated, they must realise that to enable Ireland to deal with its difficulties, it must be given an interest rate reduction and guaranteed medium-term funding from the European Central Bank.

The jobs initiative in the Finance (No. 2) Bill is a start in the process of Ireland tackling its economic difficulties. An entrepreneurial culture must be fostered in this country. Having been self-employed for 12 years, I know it is the key ingredient to economic recovery. The jobs initiative is enterprise orientated with the reduction in the VAT rate and the provision of a microfund and a loan guarantee scheme. We must encourage more people to set up self-employed businesses. In other countries, even those that fail are admired. Many multinational companies like to take on individuals from such a background.

Measures in the Finance (No. 2) Bill will foster an enterprise culture and begin to grow confidence again in the economy. They will ensure the reward of the country coming out of recession.

The Finance (No. 2) Bill is very much in line with expectations based on the jobs initiative announced in the House recently. The Bill effectively gives the technical details required to give effect to the jobs initiative. It has been debated as to whether the jobs initiative can be considered an attack on private pension funds. There will be an opportunity to debate it in more detail on Committee Stage.

I hope, however, the Taoiseach and Minister for Finance will accede to Fianna Fáil's request to publish the advices they received relating to overall pensions policy. We are all concerned about the long-term viability of and the deficits in many of these funds. It would seem bizarre the Government would seek to undermine the financial stability of these funds. Accordingly, it is important the advice the Government received is published, perhaps on Committee Stage. It would give all Members an opportunity to decide whether the pension levy is the most appropriate way to raise the jobs initiative funding, which in the end is a rather modest stimulus to the economy.

I welcome this stimulus and any measures that might ultimately re-ignite a level of activity in the economy. However, the initiative falls far short of what was promised prior and during the general election campaign. Deputy Kieran O'Donnell stated the Bill was relatively modest and did not seek targets for job creation. On February 23, Fine Gael, however, promised to publish a jobs budget within 100 days of going into government which would result in the creation of 100,000 jobs by 2015. The Tánaiste and Minister for Foreign Affairs told the House on 6 April:

The totality of the Government's economic programme is aimed at the creation of jobs. The jobs budget will be introduced in the month of May. The detail of how many jobs it is intended to support and the precise measures to provide and support the provision of jobs will be contained in that Budget Statement.

These are some of the expectations that have been created. I do not want to refight the general election on the floor of the House. I accept we lost the election and the Government has the support of the people in its difficult endeavour. However, it would be nice if it recognised it has changed its stance and, maybe, leaped ahead too liberally in the election campaign. It should set targets that are more realisable. After the election, there is an expectation among the public that the Government has a magic wand to resolve this economic morass. It would be a good start if it were more honest and upfront about the speed by which recovery can be achieved.

While there is some potential with the measures contained in the Finance (No. 2) Bill, it is also a gamble. The potential impact the levy on private pension funds will have on their viability might outweigh the amount it will raise which may well be only a thin spread of funding across certain sectors, particularly tourism.

As tourism spokesperson for Fianna Fáil, I know how much the sector has the potential to get the economy back on track. Our loss of competitiveness, however, has impacted on our capacity to compete internationally for tourists. Notwithstanding that, I cannot see how the reduction of the VAT rate for the sector is enough to have a meaningful impact on Ireland's attractiveness to tourists. The Government has proposed the 9% rate will apply mainly to restaurant and catering services and areas such as museums and art gallery exhibitions, fairgrounds or amusement park services, hairdressing services, printed matter such as brochures, maps, programmes, leaflets, catalogues, magazines and newspapers. I am not sure how a VAT reduction in newspapers and magazines will resolve our economic problems. Another example is in eating out where this reduction will result in a reduction of €2 for an early bird meal for two that comes to €50. That would not buy one cup of tea, let alone two. How many times would a visiting couple have to eat out to save the price of a full meal? That is how people view these types of measures and I am not sure if it will re-ignite activity in this sector. I hope, however, it will have some impact. The abolition of the travel tax has potential. The introduction of the travel tax became something which was being positioned against us by the airlines. Often, perception becomes the reality. One particular airline has a tendency to utilise the media in an effective manner, often engaging in a greying of the facts in an effort to spin the message that the travel tax was somehow the cause of the drop in passenger numbers. The drop in passenger numbers out of and into Ireland during the past two years has been largely as a result of the downturn in the economy.

During the boom years from 2005 to 2007, activity at our airports was very strong. However, when one analyses more closely the figures in this regard one finds that much of that traffic was Irish people travelling abroad on short breaks and so on, which was a change in pattern of vacation. When one analyses the figures to an even greater extent one finds that approximately 80% were Irish originating passengers and 20% were inbound. I accept that when flights are no longer operational because that 80% of passengers, or a percentage of them, are not travelling there is a corresponding reduction in inbound travel. It has been suggested that the abolition of the travel tax will recreate activity. I am not sure it will. I do not believe Irish people are ready or have the wherewithal to recommence travelling, which is, perhaps, not bad a thing. Perhaps we need to be promoting the notionof staycations which would encourage people to remain at home and spend whatever limited money they have here.

As regards Shannon — Deputies O'Sullivan and O'Donnell will be familiar with what happens in the Shannon region — I have always believed that any truthful and detailed economic analysis of the region would have found that the activity of a particular airline had not benefited the region during the boom years as much as some people thought. I believe it was a drain on the resources of the region at a time when people travelled more freely, had more money and ready access out of the country to sunnier locations. It is often stated that access to sunny destinations is of benefit to the region. However, all it does is take Irish money out of the country. Ryanair has been particularly good at promoting this. I ask the Minister for Finance and, in particular, the Minister for Transport, to be mindful of this in entering into discussions about the reduction of charges at airports, which I accept are important and need to be balanced.

Airlines must come to the table with a better presentation in terms of how they manage their charges. There exists a smokescreen to present all the charges as somehow being those levied either by way of tax or landing or other general charges, which ultimately is money needed to pay for the management of the infrastructure, to ensure the airports are kept up to standard and to pay staff working there. There is a considerable amount of work to be done in this area to assist the tourism sector. However, it would be wide of the mark to believe the tourism issue would be resolved by a reduction in the VAT rate and the abolition of the travel tax. That will not happen because the bulk of activity at our airports was outbound.

From a tourism perspective, we must be far more imaginative and must look to the attractions we have. Competitiveness is essential but at the end of the day people come to Ireland for a particular purpose. That purpose has changed. I listened with interest to Deputy Naughten's contribution. I acknowledge that some people come here for heritage and genealogical reasons and I have no doubt more will do so as a result of the visit of President Obama and his wife in the past couple of days. There was a similar surge in this regard when former Presidents Regan, Kennedy and Clinton — President Nixon to a lesser degree — visited Ireland. Notwithstanding this, there are peaks and troughs in activity. We must concentrate on our nearest neighbour — the recent visit of Queen Elizabeth II will be helpful in this regard — and on the European market. We must tailor our product. No longer will people come here because we have lakes, green hills and other folksy types of things. They were an offering for a different time. We must be much more imaginative in terms of developing a product. While Irish music is an important product we must ensure we do not fall behind because we are not providing for families in particular, in respect of whom we have given up the market. We have ceded this sector to the sun destinations. Not every family wants to go to a sun destination but they do want facilities appropriate to their needs.

There is a role for Government in terms of bringing innovation to our tourism product. Deputy O'Donnell will be familiar with the late Mr. Brendan O'Regan who was the brainchild behind the mid-western Shannon region. Often, too much emphasis is placed on the airport because it is the access point. People came through the airport for a reason. The folk park developed through Mr. O'Regan's ingenuity, the Cliffs of Moher, Adare and so on were products of their time and were very successful. However, it is time we came up with something to operate in parallel with them. We need to find the new Brendan O'Regan and to bring a level of competition to tourism on a regional basis. We must encourage regions to compete for funding for iconic projects. The Cliffs of Moher in County Clare is one such project into which we all put a great deal of effort in terms of ensuring it received appropriate funding to upgrade its facilities. The State and European Union invested some €30 million in that project. While it has been of much benefit to those who visited it, it has not resulted in an increase in numbers.

We need to look to new ideas and to invest money in the creation of the next wave of products and attractions, which will be a hard task. Often governments — this is true also of my party when in government — believe such tasks are for the industry, that it need only create the environment for job creation and others should come up with the ideas. However, we must provide a stimulus to encourage people to come up with ideas and must ensure such ideas are supported. We have seen the benefit and potential of the convention centre. It is an iconic project which is heavily funded by the State and will have true potential in time. We need to come up with similar projects outside the Dublin region. The mid-west, because it has the infrastructure, is well positioned in this regard. However, I do not wish to be parochial when speaking about such an important matter. I am concerned that money is being spread too thinly and I am not sure it will have the impact suggested. I hope there will be some benefit.

The explanatory memorandum refers to the 9% VAT rate applying to sporting facilities, in respect of which there is an anomaly. A European Court of Justice judgment found against Ireland in regard to the manner in which VAT is collected from public versus private bodies, including in respect of parking, leisure facilities and so on. There has been much toing and froing on this issue, including when Deputy Brian Lenihan was Minister for Finance. This relates to section 117(2)(b) of the Finance Act 2010 which was not commenced because the then Minister ordered a review of the legislation which was enacted to satisfy the ECJ judgment. The Dublin Chamber of Commerce has made a submission to the Minister for Finance on the jobs initiative in which it requests that consideration be given to the unfair competition by VAT exempt bodies to deal with the outcome of the European Court of Justice judgment which was taken against Ireland by the Commission. It further states that this matter needs to be considered in the context of the unfair competition “by local authorities and other VAT exempt public bodies”. It is an issue which is particularly acute in the leisure industry, where the failure to charge VAT on non-core activities resulted in predatory pricing by VAT exempt bodies. The Dublin Chamber of Commerce believes urgent attention should be given to the creation of a level playing field for public and private sector bodies competing for the same market, not only in order to engender fair competition but also to ensure Ireland is fully compliant with its obligations under EU law.

That has an impact on private operators providing services in the leisure sector where they compete with publicly funded bodies. For example, there are a number of privately operated five-a-side soccer pitches. Private operators have funded their own operations but are competing with universities and local GAA and soccer clubs which have been funded through capital investment under the sports capital programme. A private operator, who has funded his operation, must pay VAT while our friends in the clubs and societies, the bulk of whose capital funding is provided by the State, do not return VAT. This is creating a disparity, and the European Court of Justice found it to be unfair. The unfairness also applies to parking and other services. An element of this judgment awaits commencement. It is in the Finance Act 2010 but has not been commenced. I ask the Minister for Finance to give consideration to the commencement of that section as part of the jobs initiative. He was quite vocal on this issue himself when, in a parliamentary question on 19 October 2010, he asked the then Minister if he would commence that section. I may be overstating Deputy Noonan's position. He asked when the ministerial order regarding the leisure sector, arising from section 117 of the Finance Act, would be commenced. I ask the Minister to deal with this issue in his later remarks.

Prior to the general election, the parties now in government made much of the necessity to deal with upward-only rent reviews for existing leases. I am anxious that this be dealt with. I was concerned about this issue myself at the time. The advice from the Attorney General was that the issue moved into the area of property rights and involved constitutional matters. At least one of the parties in opposition at that time had received a legal opinion that would give support to its case that the matter could be revisited. It would be nice to see that legal advice brought into effect, if it is still available, as early as possible. Could it be presented by way of legislation, either as an amendment to this Bill or in some other Bill?

I ask the Minister for Finance to ensure that appropriate funding is put in place to deal with our regional airports. There are concerns about the operation and capital expenditure of our regional airports, which are important from a tourism and business perspective. Much of this initiative is about keeping business in place and assisting tourism. Regional airports are not always widely used for tourism but they are an important feature in support of business. In places like Galway, Kerry and Donegal there is an effort to generate some level of economic activity. The links between Dublin Airport and those regions are vital. We need to ensure they have the appropriate funding to be able to operate.

I am glad to have an opportunity to speak on this Bill for a number of reasons. It is the first step taken by the Government, as promised during the course of the general election and in the programme for Government, to introduce a jobs initiative. There have been many inquiries about what the jobs initiative would entail. I was adamant that it should be positive. I am sure everyone in this House felt similarly.

The Bill is positive. It touches the most important aspects of our society, with particular reference to our economic society. If we do not regenerate growth in our economy and encourage employment creation we will not go anywhere. We are in a deep recession and a difficult position. We cannot wish it away. It will not go away. We must work our way out of it. We must work harder for longer and for less, as you and I know, a Chathaoirligh. This is difficult but that is how it is.

Sacrifices must be made. The Bill imposes sacrifices on people. Of course people do not welcome that. They could not do so. The situation we are in is not one we would wish upon ourselves. It has come upon us. I am not about to blame the Opposition for the situation. I simply say it is there now and we must deal with it. The Government must deal with it in the only way it can. That is by introducing measures that are calculated, strategic and will impact positively on our domestic economy and in the wider economy throughout Europe.

I have listened to many speakers over the past few days asking why the Government did not do X, Y or Z or why it did not spend more money. Do people not understand that there is no money available? The country is borrowed up to the hilt. It is all gone. It is spent. What happens when you bet on a racehorse? As you and I well know, a Chathaoirligh, if the horse wins you have money in your pocket but if the horse loses you have an empty pocket or a hole in your pocket. Unfortunately, we now have a massive hole in our pockets. All the people of the country must put their shoulders to the wheel and do the things that must be done to bring about a change.

We must also restore confidence in our position internationally. There is no good saying we are great guys. We all said that during the boom times of the Celtic tiger. We were great guys. We were the richest country in the world. Do Members remember when we were the second or third richest country in the world? Where were we going? What were we thinking about? We were not the richest country in the world. However, we are good, and if we do the things we know well and do them better, we will be good again. We will not be lectured to by anyone or subordinated to anyone. We know our obligations. They are before us and graphically presented to us. If we do not stand up to them our credibility is at stake.

Our credibility may be questioned in the way the Celtic tiger was allowed to boom on. We all know that after every boom there is a bust. The famous roaring twenties were followed by the hungry thirties. After the boom came bust. It has always been the same. Ask any householder. If you spend your money unwisely you will pay the price. Do we have the grit to pay the price? I believe we have. I believe the Government is doing the right thing.

The Minister set out the sections of the Bill. Research and development are hugely important at this time. We must use innovation and technology to advance in the areas we are good at. This can and will be done. We must create a situation where economic growth can take place. We must give those who are interested in promoting that concept some leeway and latitude. Every single Government Department has within its ambit the capacity and responsibility to look at itself and find out how best to contribute to this concept. Over the past ten years, in every Department we have seen the growth of bureaucracy, red tape, obstacles and recirculating correspondence in such a way as to give employment but no growth to the economy. That may give temporary employment to somebody but it is of no benefit to the economy whatsoever. As you and I know, a Chathaoirligh, because we have spent time in the health institutions and local authorities, this goes right down to every Department. Every Government Department is being examined to see how it can contribute positively to the situation in which we find ourselves and towards the goal of achieving the targets that have been set.

On another issue, I am amazed that some Members of the Opposition refer to what was promised before the election. The current Government promised nothing. The Government parties said we are in a difficult situation, we will do our best to work out of it and we will do everything possible to ensure we alleviate in so far as we can the impact on the people of this country. That is what the Government is doing and where its responsibility lies. Nobody said it was going to be easy or that it would be achieved overnight. It is not much more than 50 days since the formation of the Government. I would be amazed if the country had been turned around and we were back in boom times again. It will not happen that way, it was never thought of as happening that way and nobody ever promised it would happen that way.

It may be that some of those who now find themselves on the Opposition side of the House, although they are absent from the Chamber at present, had the notion that were they on this side of the House now, they would recover the economy overnight. It took them 15 years to sink it to its current depths, and they did it magnificently and to such an extent as to leave a huge burden of responsibility not only on the Government but on the people. They did it without permission. They never asked the permission of the people or whether it would be all right to do what they did. They just did it — that is the way it is.

I congratulate the Minister, the Government and the two Government parties for their willingness to tackle this task in the way they are doing. I am sure we have not done everything right and that improvements can be made. One of the points identified by some in recent years was the difficulty of achieving economic growth. We knew this two or three years ago. On 29 September 2008, we who were then on the other side of the House identified these issues and the difficulties faced by the economy and the people at that time. We knew it would not be an overnight success no matter who got into power. Those who suggest there was a promise of overnight success or a promise that everything in the garden would be rosy are wrong.

The provisions in regard to the research and development tax credit are positive and will help to achieve economic growth. Incidentally, I note the Minister has identified a positive element in the sense that there will be economic growth. Some of us thought two, three or four years ago that there would not be any economic growth and that we would now have negative growth. It is hugely important that we have achieved what we have. It is a huge success, even in a very short space of time. It is true to say that the outgoing Government was forced to make those provisions and do what it did, although it did not like to do it. The fact is that this must be carried on. We must continue to improve our economic position because the difficulties have not gone away.

With regard to the markets and economic activity, the Minister in his speech stated that with the contraction in the economy from 2007 to 2010 tourism between this country and the UK fell by 32%, or almost one third, which is a huge issue. We hope, as I am sure everyone in the country does, that the promotion this country has received in the past couple of weeks will be of benefit to that sector, which is very labour intensive and a sector where jobs can be created quickly. Tourism is totally governed by demand, however, and we must create that demand. Hopefully, we are doing that.

The issue that has received the most attention is the pension levy. No levy will be welcomed. If the Government had any other options, there would not be a pension levy and there would be a much easier regime generally in regard to the current economic performance. There are no other options, however. When I hear it suggested that we will not pay the European banks and we will default, I find it extraordinary. I am sure the Acting Chairman, Deputy Ciarán Lynch, has advised constituents over a long period. One of the things I am sure he never advised them to do is to go into a bank or financial institution and tell the person behind the counter "I will want money for the next four or five years on an ongoing basis to run my house or business but I will not pay you back the money I owe you". That would be a strange situation and would create in the mind of the person on the other side of the counter the possibility that he or she would be taken for a run. Unfortunately, we cannot take people for a run any more. We cannot take them around the course for a gallop.

We must be up-front and honest, and tell our European bankers that we intend to deliver. We might not like the terms and conditions they have set down, and we will negotiate better terms when we get to the higher ground, but we must get to the higher ground first. This means we must be able to tell the bank manager or person on the other side of the counter that this is how we propose to run the budget for the next two or three years, that it will achieve results and that, when it does, we will seek a review of the situation. This is what is done ordinarily in banking practice. When one gets to a particular situation, one can negotiate. One can do many things when in a bargaining position but, if one is not in a bargaining position and is waiting for a cheque to come from some institution to pay the wages for the coming years, it changes the situation dramatically.

The Bill does something along those lines. It reassures the international institutions that we are not just a bunch of chancers, that we take matters seriously, that we intend to stand up and be counted and to run our economy in the way it should have been run in recent years. If anyone doubts that, we need to go back 14 years to find a situation where the Minister for Finance left Government with the books balanced, everything in order, the engine running perfectly and job creation running at 1,000 jobs a week. People have forgotten how it was in 1997. A strange situation developed in the meantime where everybody said——

I withdraw that, Acting Chairman. Everybody did not say it.

Everybody did not say it. Some people said it, but they said it unwisely. What they were saying was that a crowd of fools had left the budget of the country and the finances in good order, had job creation going well and had our international reputation at the highest known level, but they would change all that. They said they would improve on that, recalibrate and do it better, then put themselves on the international stage in a way that was never known before. They forgot one thing, namely, that we can never live above our means and we can never pretend. When one is dealing with international financiers, pretence is a dangerous game. Unfortunately, they were wrong but they did not have to pay; the country and its people have to pay and the Government has to pay on behalf of the people. This is why we are where we are at present.

In a situation like this, what we need to do is to pick out the small areas, the little tweaks, that can be positive. We must try to leave the negativity behind us. Let us remember that the people who are now most negative are those who were the most positive during the boom times. After all, it was never going to end. However, the realistic growth in the economy that was in place in the mid-1990s was not good enough for those experts who sought to do better. They were wrong, and they failed.

The measures being taken by the Government are positive. We do not live in a society which is carefree any longer. We must pick up the tab, work harder and make sure we restore confidence in our country. Every measure taken by Government must be along those lines. Every Minister must look at the functions and services under the remit of his or her Department with a view to identifying how best each Department can adjust to take advantage of the situation. If that is done we will find a positive outcome in sight but if it is not we will have failed. I would be the first to admit this.

In the past I have often been a critic, on all sides of the House. That is a healthy sign, a good thing. However, it is extremely important that all of us recognise one point, namely, we cannot wish away our present situation but must work at it. When we work at it we will succeed. Some time ago I was at a meeting where the Commissioner, M. Michel Barnier, was present. He commented on this country and was positive in what he said. He stated he had every confidence in Ireland, that we had the ability to do well in the areas we knew well and that this would be the salvation of our economy. I believe he is right. There have been many other commentators, both from Europe and within this country, who are less positive but we should recognise those who are positive and those who at least give us encouragement. We should steer away from those who proclaim on a regular basis that all is lost and we are going nowhere, that we do not count and should get out of the eurozone, out of Europe and fend for ourselves. We should say to people who think along those lines that this is not an option. We are not in the business of trying out experiments. We do not have that latitude. We have a simple problem ahead of us, namely, to get the economy going again, get our people back to work and ensure we show to everyone around us that we are capable of doing whatever job needs to be done and whatever task is handed to us, and that this will remain the case.

The Minister also stated there had been some speculation that the Government would proceed to raid investment funds or deposit accounts. He wished to assure the House the Government has no plans in this regard and stated, "The Government regards as a top priority the safeguard and security of savings and would not wish to consider any step that would impact negatively on this confidence". He is absolutely right. What we need is for people to put their savings into this country and this economy. Ultimately, that will benefit the economy magnificently.

The Minister had to try to steer a course around the obstacles and present a situation that would be beneficial from the point of view of generating confidence in our economy on the one hand, and international confidence on the other hand, while impacting as lightly as possible on those who are negatively affected by this Bill. Had there been other options, the Minister clearly indicated they would have been taken. He also stated, on page 7 of his document that: "My officials are consulting the pensions industry and other interested stakeholders on the legislative provision in this section with a view to minimising where possible any unnecessary difficulties which this measure may give rise to". That is a very important statement.

The Deputy's time is almost concluded.

I knew my time would come eventually.

I am talking about parliamentary time.

Some would suggest it should have come a long time ago. However, I wish to emphasise that section of the Minister's speech. I again congratulate him on the introduction of this Bill at a very difficult time and am delighted to support it.

I call Deputy Mick Wallace who I understand is sharing time with Deputies Maureen O'Sullivan, Thomas Pringle and Joan Collins.

I reassure Deputy Durkan that I too am very keen to stay in Europe. I am also an optimist at heart and believe everything is possible but I also believe we should get a fair deal from Europe which is not the case at present. I say to the Deputy that when a person goes into a bookie's office and backs a horse, if the horse does not win, the person loses. I agree with him on that point. However, if a person bought bonds in a bank and lost on them, that person would still get the money back under the present arrangement. That is a bit different.

There are many elements I like in the Finance (No. 2) Bill, especially the VAT proposal which will be an enormous boost to the hotel and restaurant industry. I believe in the principle of investment. Investment stimulates an economy whereas austerity drains it. Unfortunately, we are probably not getting as much investment as we would like and are getting much more austerity than we would like. Unfortunately, too, austerity probably hits the less well off in our society more than anybody else.

There is a big problem in regard to getting things moving in this country, namely, the lack of a banking system that functions. We were told about a strategic investment bank. Perhaps it is still on its way but it is really needed. Bank lending is a problem — banks are not lending. They do not see our businesses as safe to lend to and do not believe in them. I read an article in the Financial Times today about the HSBC in Britain which stated that in the first quarter of the year HSBC’s lending volumes rose by €28 billion. The writer asked where most of that money had gone. It went to the fast-growing markets in Asia: “in stark contrast to western markets like Britain and Ireland, where, more than two years after the peak of the financial crisis and despite repeated agreements with governments to boost the availability of finance banks are still reluctant to lend to businesses”.

Believe it or not, the Irish Government is in a privileged position in that it owns a couple of banks. I might prefer if it did not but it does. We must stop asking the banks to lend money to us and must tell them to do so, given that the State owns them. It would be a great boost to our economy to have again a banking system that functions.

The biggest problem with the Finance (No. 2) Bill is the pensions element. A great number of people have telephoned me to express serious disillusionment with what has happened. One might claim that 0.6% does not seem to be very much but that amount is calculated on the full value of a pension each year. What really worries people is that may only be the beginning; it may not be the end. It will be perceived as the thin end of the wedge. For the past number of years we have talked a great deal about the need to encourage people to begin a pension. It is difficult enough to do that because one is asking people to store away money for 30 or 40 years in the hope it will be there ultimately when it is really needed. When something like this happens it dents people's confidence and there is no doubt that confidence has left many people. It was bad enough that many pensions suffered badly because of the recession but it was a new phenomenon to find that the Government would raid them. This will have a really negative impact on trying to persuade people to invest. We have an ageing population and we need to work at persuading people to have pensions. Robbing them is not a good idea.

If we are not going to rob the pensions where will we get this €1.9 billion? Deputy Peter Mathews spoke very well today. He suggested there must be a negotiated restructuring of €75 billion; €50 billion with the ECB and €25 billion with the bondholders. He suggested the money should be cascaded down and invested in the economy to deal with household debt. For this to happen, if there is to be a negotiated restructuring, Europe has to see sense. In my view, Europe does not believe how bad things are in this country. Unfortunately, because of our export figures a false picture is created. Things are not as good as people abroad seem to think. We must reinforce to Europeans that the figures do not add up and we will not be able to meet all the repayments. Therefore they must treat us more fairly.

In the short term, while we wait for the Europeans to see some sense, salaries over €100,000 must be dealt with. A wealth tax of 1% would bring in €1.2 billion in this country. There is a wealth tax in countries such as France, Switzerland and Norway which seems to work well enough. Surely the wages that Deputies and Ministers get and the pensions and lump sums they get when they leave here amount to outrageous money. People cannot believe that we can still get this money in the present climate. There are people with State jobs getting more than €500,000 per year but we are cutting resource teachers for Travellers in schools.

The Deputy should conclude to allow for three other colleagues to speak.

It is immoral that people get more than €200,000 for any State job, whether in Government, any State company or in television.

When approaching any legislation basic questions should be asked with regard to whether it will make a difference, what sort of a difference and whose lives will be affected. When I consider the Finance Bill I question whether it will make a difference and for whom. I admit to approaching anything in the financial line with a degree of scepticism. No matter who it sets out to benefit appearances can be deceptive. There are too many examples of creative accounting, tax loopholes, tax evasion and false information. No matter what tax measure is introduced it immediately becomes a challenge for someone to get around, under or over to avoid paying his or her just taxes.

The Minister referred to corporate tax as being the heart of the matter. I reiterate some points I have made already. We cannot be a tax haven for companies which use us to avoid paying their lawful taxes in their own countries. I am struck by the irony of the suggestion to ask President Obama to help us to protect our 12.5% rate when he condemned it during his first presidential election campaign. European countries need not take the high moral ground on their stated higher rates when, in fact, they have tax concessions and loopholes for companies. A small increase in corporate tax would make a significant difference to what we need at the moment. However, at the least we should ensure that 12.5% is collected from everyone and not an effective rate of tax in single figures as we are led to believe.

Let us consider particular aspects of the legislation. I wish the Minister, Deputy Varadkar, well in reaching agreement with the airlines regarding the suspension of the air travel tax and I hope it will bring in additional passenger numbers. The review should come sooner than the end of 2012 so it can be reversed if it does not bring in the additional numbers envisaged. I do not believe the air travel tax was the reason we saw a reduction in the numbers travelling to Ireland. The astronomical pricing here to stay and eat contributed to the fall in tourist numbers. It was disquieting, to say the least, to learn of the significant hike in accommodation prices during the past week because of the various sporting events and visits. It is too long to wait until the end of 2012 to examine the effects of the change. There should be consistent and regular mini-reviews and instant action should be taken if it is deemed not to have positive effects.

It has been established that most of the visitors we have are associated with the cultural area. I have been appealing for some time for resources to preserve suitably the historic area from the General Post Office, GPO, to Moore Street, Moore Lane and O'Rahilly Parade. Let us consider the number of visitors to the National Museum in Kilmainham. With the centenary of the 1916 Rising approaching the economic potential is vast. If funding were allocated for preservation there would be jobs and, afterwards, retail opportunities for business, jobs as guides etc. We have speculated a good deal on the royal and presidential visits. I hope we accumulate significantly from them.

We know more than 300,000 jobs have been lost, there has been a doubling of the numbers unemployed and that the projected level of increase in employment is not expected to be enough to reduce unemployment. We badly need measures to make a difference. Are these measures for the benefit of society or the marketplace?

The Government was elected on a platform of being honest, having greater accountability, bringing political reform, stopping the bonus culture, adhering to principles of fair share, ensuring bondholders will pay and that tax shelters would be closed. The Government has correctly blamed the previous Government for the disastrous situation we are in. However, it is time to move on from the blame game. The Government must take responsibility and address the matters on that platform and where we stand on them. The bonus culture and excessive salaries are still alive and well. There have been no reversals and no payback from the Mr. Fingletons and Mr. Drumms and political appointments continue. As a PAYE worker and a former teacher, if I underpaid my tax, Revenue would come after me and rightly so. However, one can defraud the country, continue to play golf, go on holidays and live the high life. The payback from those people could have been used for this jobs initiative. Is it not possible to require bondholders who foolishly lent funds without sufficient assets secured to pay back something? Instead, there is a levy on funded pensions schemes and personal pension plans. I realise it is temporary but I am unsure whether we are good when it comes to "temporary". Those who were sensible and prudent enough to save for their retirement now must fund this initiative.

Let us consider the jobs in the retail sector. Some 20,000 businesses employ tens of thousands but sales are in decline. I trust the intention of the Minister of State, Deputy Perry, to establish a national retail forum will grasp the issue. The way forward should focus on small and medium sized enterprises as the key to employment growth in retail, the green economy, social networking, agribusiness and food. The talent and ideas are in place. One need only consider the young entrepreneurs in our schools and the Young Scientist & Technology Exhibition. The song holds that when the going gets tough, the tough get going. Leinster showed this last Saturday and I believe Ireland can do so as well but I have my doubts about whether we are making the right decisions in this Finance (No. 2) Bill.

The Bill gives effect to the taxation elements of the Government's modest jobs initiative. The Government is pinning all its hopes on an export-led growth strategy to get us out of this recession. The Minister pointed out that exports increased by 9.5% last year and it appears this level of growth will continue this year as well. However, depending on whose figures one believes, we face economic growth of 0.5% or 0.8% for 2011. The effect of this is effectively no real growth this years with, at best, unemployment not increasing. This is hardly a success.

The financial services, pharmaceutical, software and food sectors have all seen growth in exports. Exports to Brazil, Russia, India and China, the BRIC countries, increased to more than 12% last year. However, gross domestic product has declined by 15% during the past three years. The problems we have are in the domestic economy, not the export sector but the Government is placing all its eggs in the basket of export-led growth. We need to stimulate the domestic economy by supporting small and medium sized enterprises and encouraging these firms to get into the export market. This would provide real jobs growth and would put much needed money into circulation through the wages paid to new workers.

The foreign direct investment sector accounts for more than 90% of exports and employment in these firms has probably peaked. The potential for jobs growth in these sectors is limited. However, the potential for growth in the SME sector is vast. Focusing support and the jobs initiative on the firms with the potential to grow would make a good deal more sense. As I mentioned in the House when discussing the jobs announcement earlier, countries such and Estonia and Slovenia have a greater focus on exports from SMEs than we do, with figures of 23% and 21% respectively. In Ireland only 11% of SMEs export with only 2.4% of revenue coming from the export of goods and services. Clearly, this is where the potential for growth lies. Encouraging the research capabilities of universities to focus on SMEs could lead to export growth that would help to increase the number of jobs.

Measures included in the Bill legislate for a stimulus or boost for tourism, including the abolition of the travel tax and the reduction in the VAT rate to 9% for tourism and catering related activities. The abolition of the travel tax is dependent on the agreement of the airlines to boost visitor numbers in the country. Already, airlines such as Ryanair have stated they do not have agreements on visitor numbers and the abolition of the tax will probably be built into an increase in prices that will boost their profits and will not result in the hoped for benefits. Their campaign has moved on to the cost of using airports in the country and they seek to have control of these handed over. The sections in the Bill which allow the tax to be restored if the increased numbers are not achieved are vital. The use of the carrot and stick is the only way to ensure a proper response. Equally, the change in the VAT rate must be monitored closely. While the reduction in the rate will not make a great impact on prices, it should help to increase employment and boost confidence. The impact should result in a boost in confidence in the sector and encourage the industry to grow and create jobs. It will be important to monitor the success or otherwise of the reduction and we must be prepared to make the required changes if the necessary level of job creation does not materialise. The Government has avoided committing to any jobs numbers expected from the initiative but we must wait and see what the impact will be in our areas.

Like many others, I have spoken on the jobs budget, stimulus and initiative previously. As other Deputies have stated, the Government put forward a modest jobs initiative only two weeks ago. Although there are no figures put on jobs, the idea that this jobs initiative could potentially create 250,000 jobs is immediately counteracted by the 220,000 jobs being lost in the public sector. This does not make sense when it comes to creating jobs. A national job strategy is needed, with investment from the Government. I outlined in the last debate how the money can be raised and it is a choice the Government will have to make again and again, whether to go after those with no money or those with money. There is plenty of wealth in this country; the rich have got richer and there are ways to take that money from them and for them to contribute to us getting out of the recession, even under the market system.

The briefing paper from the Chief Whip's office states that legislation is being prepared to allow pension scheme trustees or administrators the option to adjust benefits payable under the pension schemes or plans. I have no doubt this option will be used by the pensions industry. I bring to the attention of the Minister the position of the Irish Nurses and Midwives Organisation, which demands the levy should be taken from the profits of the industry, particularly their marketing and hospitality funds. The pensions administration companies have made massive profits for many years, despite huge mistakes when playing the market, which then required huge additional injections of capital to meet pension requirements. There is no necessity to pass on this tax to people who have already suffered pension levies, wage cuts and increased taxes.

Provision for the option to pass on the levy should be removed from this Bill. In fact there should be no levy. The amount the levy will raise could be easily raised by other measures. A substantial amount of income is exempt from PRSI and income levies. We are continuously asked time and again for alternatives so here they are: exemption of capital gains and inheritance and gift tax would raise €290 million per year; exemptions on rental and dividend income would raise €89 million per year; the ceiling on PRSI contributions would raise €120 million a year; and PRSI exemptions on share options would raise €29 million a year. The abolition of those exemptions would provide €500 million without touching anyone's pension.

The amount this levy will raise could be raised by treating income from capital investments and rents in the same way as PAYE income. Having made such a start towards a fairer and more equitable way of dealing with the crisis, the Government might move on to the wealth tax and close off tax breaks that go overwhelmingly to the wealthy and use that money to create a real jobs stimulus package that will put billions of euro into creating jobs. That is the choice this Government has.

I was glad to hear Deputy Joan Collins's speech, where she said there should be no levy, and then argued in favour of a wealth tax. I am amazed at Deputies from the United Left Alliance opposing this levy. They are taking the same side as the right wing commentators, the managers and trustees of pension funds and Mr. Eddie Hobbs.

I am taking the same side as my brother who works for Diageo.

I recommend Deputy Collins listens to an interview on "Today with Pat Kenny" with the economist Colm Rapple. Some of the points he made would make me believe that Deputy Collins should rethink her position on this particular wealth tax. He made the point that opposition to the levy is being stirred up because in principle it is a wealth tax. It is being opposed because it is a wealth tax, and the pensions industry is doing the stirring, even if it had a different position before, although I have spoken to people who work in the industry who tell me this is a fair tax.

It is 60 cent on €100, as pointed out by Colm Rapple. In April, the average managed fund went up by 7%. He said it was a tax on wealth and is relatively fair. He pointed out that 50% of workers are not in pension schemes — the low paid — and these are the very people who have been paying tax to fund the tax reliefs that have allowed some people to put these funds into pension funds. I asked a parliamentary question last week to find out how much tax was foregone for tax relief on these pension funds. In 2006-7, the figure was €3 billion. The 0.6%, the €470 million over four years, is a minuscule amount in comparison to the wealth that was put into these pension funds over the years.

With this levy, the more a person has, the more he will pay. Colm Rapple pointed out that 80% of the funds put into pension funds come from the wealthiest 20% in the country. There are those on middle incomes who have put money into these funds but these do not make up the bulk of those who pay into these funds and the tax foregone. All of us as taxpayers funded the tax breaks that allowed this wealth to be put into these pension funds.

Pat Kenny asked during the programme if people would not be taxed when they take the money from the pension fund when they retire and it was pointed out that is not generally the case and that average earners would not have paid tax on these pensions. A married couple with an income from a pension of €36,000 between them would not have paid any tax on the pension when they retired. This idea that it will hit people on low incomes is absolute rubbish. It is a disgrace the way Deputy Joan Collins and Deputy Joe Higgins have talked about raids on pension funds while, in the same breath, talking about the need for a wealth tax. Which tax on wealth will the Deputies favour? They will probably oppose a property tax. This is wealth — savings is wealth — that has been put away. Deputy Maureen O'Sullivan said this is a tax on prudence but this is a tax on wealth that was put away at the expense of the taxpayer, the 50% of people who do not have a pension scheme, who are mainly low paid workers and whom Deputy Collins should support. Many unemployed people who paid taxes over the years to help the State pay for the tax foregone will hopefully benefit from the jobs initiative.

Whatever criticism the Deputy has of the jobs initiative, that is fine but to argue against the pension levy leaves her with no credibility at all if she calls herself a socialist. One of the people who texted the radio programme claimed Colm Rapple was an old fashioned, unreconstructed socialist. That is what people used to say about Deputy Joe Higgins but now he is suddenly defending the pension funds industry.

The pension funds industry is not representative. Those who are stirring this up are not speaking for everyone who manages pension funds. I got a letter before Christmas from Owen Dwyer, a senior partner in Irish Pensions and Finance, who wrote to Deputies in November 2010 arguing against reducing tax relief on pensions while suggesting a levy on pension funds. I spoke to him today and he said in his opinion the levy was not a bad thing for people with personal, company or AVC pensions. He said it would have a greater impact on those with defined benefit pension schemes.

Debate adjourned.
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