Can we have some order please? Deputy Higgins is in possession and I understand he has four minutes.
Finance Bill 2013: Second Stage (Resumed)
Go raibh maith agat, a Leas-Cheann Comhairle. Maidir leis An Bille Airgeadais 2013, níl anseo ach daingniú ar an déine mar pholasaí Rialtais, an polasaí céanna atá Páirtí an Lucht Oibre agus Fine Gael ag cur chun cinn le dhá bhliain anuas agus atá tubaisteach ó thosach go deireadh; níos mó ciorraithe agus níos mó ardaithe cánach ar ghnáth dhaoine agus ar ghnáth lucht oibre agus é sin ag cur isteach go tubaisteach ar chúrsai eacnamaíochta na tíre. Dá bhrí sin, chímid ráta dífhostaíochta 14.7%, agus 80,000 duine, daoine óga is mó, go raibh orthu imeacht ón tír an bhliain seo chaite ar imirce, mar nach raibh poist annso dóibh. Tá an bonneagar briste i ndáiríre, gan infheistíocht á cur isteach i gcúrsaí eacnamaíochta agus ciorraithe ar infheistíocht phoiblí.
Ag an am gcéanna, tá an Rialtas ag tabhairt isteach cáin nua ar a ghlaonn sé cáin mhaoine áitiúil, ach i ndáiríre cáin ar thithe ghnáth dhaoine agus an lucht oibre is ea í. An mhí seo chugainn, nuair a shroichfidh dhá mhilliún litir teaghlaigh mórthimpeall na tíre beidh raic ó bhun barr na tíre maidir leis an cháin áitiúil seo, mar thuigfidh an gnáth duine, don chéad uair i ndáiríre, chomh tromchúiseach is atá an cháin seo, suas le €400 nó €500 in aghaidh na bliana ar an ghnáth lucht oibre atá faoi bhrú cheana féin maidir lena mbuiséid baile agus a leithéid. Nuair a shroichfidh na litreacha seo na tithe, is féidir leis an Rialtas a bheith ullamh le haghaidh raic mórthimpeall na tíre. Beidh clampar agus fearg ar dhaoine. Is féidir leis an Rialtas bheith ag fanacht le feachtas ollmhór ar bhonn náisiúnta imeasc ghnáth dhaoine in aghaidh na cánach seo, mar tuigeann siad go bhfuil sí tromchúiseach go leor faoi mar atá ach go raghaidh sí in airde gach bliain, agus nuair a cuirtear leis sin an cháin ar uisce beimid ag caint faoi €1,000 in aghaidh na bliana ar gach teaghlach tar éis cúpla bliain.
Dá bhrí sin, bíodh an Rialtas ag feitheamh le feachtas chumhacht na ndaoine. Bíodh sé ag fanacht le daoine ar na sráideanna agus le daoine ag cur ina aghaidh i ngach slí gur féidir agus ag cur brú ollmhór ar na páirtithe atá ins an Rialtas, agus é sin go léir tuillte ag an Rialtas. Is tubaisteach an rud é dul chun cinn leis an gcáin áirithe seo. Ba cheart go dtarraingeodh an Rialtas siar. Ar deireadh thiar thall, is é atá ag teastáil ón tír.
Tá an córas caipitleach, an córas mhargadh airgeadais, briste ó thús go deireadh anois ionas nach féidir leis riachtanais ghnáth mhuintir na hEorpa a chomhlíonadh. Dá bhrí san, polasaithe raidiceacha maidir le hairgeadas agus le cúrsaí eacnamaíochta agus polasaithe sóisialacha atá ag teastáil, go mbeadh na bainc agus na hinstitiúidí airgeadais in úinéireact phoiblí agus faoi stiúradh dhaonlathach na ndaoine i dtreo is go mbeidís ag obair ar mhaithe le tromlach na ndaoine agus ní ar mhaithe leis an mhionlach beag, na boic mhóra, agus le brabús an mhionlaigh úd.
I am glad to have an opportunity to speak on this particularly important legislation, which gives legal effect to the budget. It is necessary to retrace one's steps for a few moments to consider recent history before one comes to conclusions as to what is the best medicine at present. A famous event in the history of this country once was described as the birth of a terrible beauty and in October 2010, another terrible beauty was born. It was the realisation of the magnitude of the debt that had fallen on the shoulders and backs of the people of this country. It was an appallingly difficult situation and was appalling for the outgoing Government at that time. As Members are aware, it was not entirely blameless but nor do I blame it entirely because the people voted for a succession of Fianna Fáil Governments and that is what happened. Moreover, regardless of whether it was right or wrong, the people are always right and one must accept their decision. However, one must study the consequences and what we now face to realise fully the difficulties under which the Irish people must bear up. Moreover, in this jurisdiction we were lucky that the Opposition parties were prepared to form a Government, because that did not happen in every other country.
It was the most difficult challenge ever handed to an incoming Government. People can minimise it as much as they like and they can say they spoke to the troika and they know there are options. Unfortunately, the options were stark and, to be the fair to the outgoing Government parties, they recognised that. Perhaps they could have done a better deal but they did not. There might not have been time but if there had been a more careful study of what happened over the previous ten years, there would not have been a need to do anything of that nature. For whatever reason, we are in the position we are in now and we cannot wish it away.
I acknowledge politics is the art of the possible and a politician must sell his message, whatever it is, but there needs to be a recognition among those who purport to be the alternative in the future that they what they propose is realistic and attainable and will not have disastrous consequences for the people who follow them. That is the equivalent of misleading the electorate. All I have heard for the past six months is negativity, poverty, despair and sale of a common product - misery. It is appalling that mature politicians should use people's difficulties, concerns, cares and worries when they are in a vulnerable position to advance their cause regardless of the cost and the consequences for the people who listen to them.
We need hope in this country. The people have a right to expect honesty from their politicians and to be told the situation. Politicians should say honestly that if they follow this pattern, we will achieve a particular goal and success but it will not be easy because it could not be. I do not blame the Opposition parties for taking political advantage but there is a point when the competition between them has to be examined carefully to find out where they are heading and where the country could be heading in the future because this competition is about who can promise the most in the shortest timeframe while pretending there will be no cost and pain. I find it extraordinarily difficult to understand and it is appalling. I congratulate them because they are all opposed to cutbacks. With the notable exception of Deputy Michael McGrath, who acknowledged there is a situation that must be dealt with, the remaining Opposition Members are competing with each other because there is no doubt in their minds that the way forward is to promise as much as possible and pretend there is something in a pot that does not exist, which is extraordinary. They are all opposed to taxation and cutbacks and the only thing they have not promised at this stage is fine weather. This is only two years since the last disastrous appraisal of the country. I cannot understand how, in their lighter moments, they do not have a little aberration and say to themselves or somebody else that this is a little brazen and we should not go down this route so early.
One of the themes that is emerging in our public discourse is the need to more money in people's pockets. The Leas-Cheann Comhairle will recall with a great deal of fondness that the theme of the 1977 election campaign was to put more money in people's pockets because the country needed a boost. The poor unfortunate people believed what they were told and motor tax, rates and health charges were abolished. The people thought this was great because this put more money in their pocket. That election was bought. In similar economic circumstances to those we are in now with the country emerging from recession and two oil crises and just breaking through the surface, all of a sudden a massive avalanche of promises were made. Within two years, the Taoiseach of the day had to resign because the bubble had burst and the debt that had piled up was multiples of that when he took office. Fianna Fáil members looked at each other and they even blamed each other but then they shuffled their feet uneasily for the next 18 months before the Opposition parties had to come along to clean up the mess.
In 1987, following another period of difficulty the same Opposition parties had to deal with, a new slogan emerged: "There is a better way." Fianna Fáil did not say too much about what it was. The party then put up posters everywhere saying: "Health cuts hurt the old, the sick and the handicapped." The people presumed the alternative government was opposed to all these cutbacks. Little did they know what was coming but when it did, it came with bells on and, unfortunately, the people were codded once again. However, the best slogan of all emerged in 1997. At the time, 1,000 jobs a week were being created and the balance of payments, the budget deficit and every other economic indicator was in perfect order but the poor people were led away again into the valley of darkness and a newspaper headline on the morning of that year's election proclaimed: "It's Payback Time." Little did we know then the full extent of that payback, who would pay and how long they would be paying it back. It was a sad situation. I do not say this as a criticism of what was done at the time but this should never have been visited on the people again as long as they remembered what had happened previously.
However, the strange thing is it happened again. Many economists and experts with their eyes wide open nodded in approval and encouraged what was happening and said it was great but after every feast, there comes a famine. Little did we know the full extent of the famine that was bearing down on us at that stage. I would love reality to dawn again. For instance, the Opposition Members say more money should be spent on X, Y and Z and because we own the banks, we should be able to do this. They forget that we are also responsible for the banks, their deposits and loans and the basis on which money was, and is, lent. There is a tendency on the part of some Opposition Members to come to the conclusion that the people have short memories. I believe, sadly, they could be right about that but the people's memory is something they will have to concentrate on and I will not lecture them on that.
While Deputy Kelleher is not present, I must hand it to him. He deserved an Oscar last Thursday morning when he inquired of the Minister taking the Order of Business where the social dividend was from the promissory note deal. What a profound statement. I could not believe that, after 15 years in government and two years in opposition, he had the gall to suggest that everything had been resolved and the problem inherited by the incoming Government has suddenly, mysteriously and miraculously been washed away. It does not happen that way.
This would have serious consequences for the country. It is at least recognised by other European countries and those who lend us money, including those who must lend us €12 billion this year for current expenditure and those from whom we must borrow next year, that a responsible Government is in control. It is not easy for those on the Labour Party and Fine Gael benches to do what we must do and accept the responsibilities we must accept on behalf of the population of this country. If we do not do the awful job we have been given to do, it will be done for us with greater and harsher consequences. The sad part is that the only thing we can expect from the Opposition is criticism and derision, as has always been the case.
Opposition Deputies tell us that the debt that will be placed on the shoulders of our children and grandchildren. I am amazed to hear Deputies take such a simplistic approach. If they had any knowledge of history, they would know the magnitude of debt diminishes with the passage of time. This is what has been effectively and adroitly achieved in the past couple of weeks. Unfortunately, it is the current generation that is paying the price, namely, those who acted as guarantors for their sons' and daughters' mortgages, having paid their mortgages during the 1970s and 1980s when interest rates were high and finally succeeded in clearing their debts. To give their children a chance to have a roof over their heads, they decided to act as guarantors for mortgages, only to find that the homes for which they and their sons and daughters had paid were in negative equity.
Earlier, the House debated the issue of restructuring mortgage arrears. I remember raising this issue in 2008 when I sat on the Opposition benches. The issue should have been addressed at that time when the problem was small and arrears were manageable. We can play around with the figures as much as we like. While I do not expect the Leas-Cheann Comhairle to reply, he must grin to himself when he drives around the countryside. I presume he does not laugh about the issue but what I like most is when people state they want a write-down. I have been around for a long time. I have been in and out of banks looking for mortgages and loans and experienced great difficulty repaying them because of high interest rates. However, I have not yet been given a write-down. People are entitled to be given relief in terms of interest reductions, extensions to the duration of the loan or the removal of penalties and such measures have been traditionally acceptable in all financial circles. If a problem is raised in a timely manner, even the most difficult bank or lending institution will be willing to engage, provided a realistic proposition is made. However, we now have people asking their lending institution to write down loans of €600,000 they took out to buy a house on the basis that they no longer believe they are able to repay it. We would all like to have our loans written down but it is wrong to presume that because we own some of the lending institutions, the taxpayer will come up with the readies to fund write-downs. I cannot understand how this approach is supposed to work. There must be some convoluted logic at work that I simply cannot grasp. It is appalling to suggest to people who are under pressure with borrowings and mortgages that this approach would work. People in this position have enough problems, without Deputies misleading them by pretend there is a silver bullet or magic solution which will wash everything away and leave them with nothing to worry about. It is sad that some are prepared to play with people's worries and cares at a vulnerable time.
I hope we do not get into auction politics even before the auction starts.
Three minutes remain.
I would love to have 33 minutes but one must make do with what one has.
Let us not do damage to the morale and moral fibre of our people before the auction even starts. Let us not break them by telling them we have a magic solution. Deputies will recall that there was no magic solution in 1977. On the contrary, we had disaster and disillusionment after the election, as we did after the 1987 election. In 1997, the outgoing Government left everything in pristine decision before it walked out the door. Unfortunately, 15 years later, the same parties returned to drag the country back off the rocks in a way that challenges everybody, whether in public administration or the private sector, in every aspect of their lives.
Deputies on this side do not accept the idea being promulgated by the Opposition that austerity was invented by the Government to punish people. The Government has been stuck with tough bookkeeping and housekeeping and must balance budgets, as the Deputies opposite are aware. If they do not recognise that we must adhere to the requirement to reduce the deficit to 3% of GDP, the position will become much worse because we would have an irresponsible Opposition waiting to replace the Government and drive the country down the road of total destruction. I hope this does not happen and I know the Leas-Cheann Comhairle shares that hope.
I will share time with Deputy Robert Troy.
In my 15 years as a Member of the Oireachtas I have never referred to a colleague's speech. However, having listened for 20 minutes to the previous contribution, I would like to correct a few errors. If the Opposition is engaging in auction politics, we learned to do so from the masters. Until two years ago, when my party was in government, the Opposition offered a panacea and quick fix solution to every problem that had to be addressed. If we are to be accused of doing down the Government, we learned to do so from the Labour Party which told us the country was banjaxed before deciding to lecture us about wearing the green jersey. If we are to be challenged about elections, we have a long way to go to be only half as good as the Labour Party was prior to the 2011 general election.
Deputy Durkan raised the issue of the abolition of rates in 1977. Before the Fianna Fáil Party manifesto was launched, the outgoing Labour Party-Fine Gael Government had reduced rates by 75% and promised to abolish the remainder if it was returned to power.
As to Deputy Durkan's point on the weather, in late April 2011 following a beautiful month of weather, the Deputy stated the reason the weather was so good was the change of Government. I did not hear him claim any credit for the weather last summer.
It sticks in the craw to hear a Government state we should wear the green jersey. No such obligation applied to the Labour Party and Fine Gael during the three years of austerity between 2008 and 2011 when they constantly did down the then Government. It did not matter to them what reputation they tarnished.
I did not intend to use my contribution on the Finance Bill to challenge the Government on any of the issues because we can contribute more by outlining our concerns.
Deputy Bernard Durkan would have loved to have had 33 more minutes. We were going to give them to him in order that we could listen - let us be honest - to his diatribe.
I will raise a number of issues pertaining to farming and taxation measures for farm partnerships. Dairy partnerships and the relevant taxation measures were introduced in 1989. It was indicated in the budget that such measures would be extended to beef and sheep farms. The provision is loosely outlined in the Bill and will be detailed in regulations. The need for this extension is considerable, given the large number of people, including families, involved in beef production who would benefit significantly. People with and without families should be treated identically under the farm partnerships scheme. I hope the Minister of State, Deputy Alan Kelly, will take my points to the Minister. Where taxation on land leasing arrangements is concerned, there was a tendency to treat non-farm leasing arrangements more beneficially than those for farm leasing. This was meant to encourage elderly farmers to lease land to younger people. However, family circumstances were omitted, despite the large number of people involved.
The rural hinterland faces a significant issue. Considerable pain is being felt in the retail sector because people are not spending. Shops are closing in provincial and major towns. In terms of the Minister of State's area of responsibility, information on the rural transport initiative was leaked last weekend. I hope I have understood the information correctly, as it means the initiative will not be removed from Leader companies, local partnership companies and county councils. However, the Minister of State might correct me if I am wrong. Retaining it would be welcome, as it has been very beneficial across the country, particularly for elderly people and rural communities.
The attitude of the past 25 or 35 years is the main issue, in that young people are not moving into rural areas in the west or my constituency. Someone told me that no one above the age of 45 years would be left in one of the provincial towns that I represented. We need to consider this issue.
Every Deputy is constantly being told about banks not lending to small business people and businesses being under savage pressure. Although there have been many initiatives, they have not tackled the problems. Banks report that they are lending to small businesses, but they certainly are not. People who have been refused financing attend public representatives' offices everyday. In some cases, the Credit Review Office has come down against the banks and allowed the application for credit to go through, which must be welcomed. However, this issue needs greater targeting.
Two weeks ago the House discussed the restructuring of the promissory notes and so forth. We meet people in our clinics who are not receiving credit, mortgages and so on from banks, even though they appear to have good credit ratings. They might be young people on a solid financial footing.
I hope the issue of farm partnerships will be addressed. I also hope start-up artisan food companies will get the credit they are seeking. Evidence shows that nearly 80% of start-up food companies will still be in existence ten or 15 years later. It is one of the sectors that has been successful in having firms stay in business, although I do not know whether it is because they do their homework before starting. There are many such companies and they have been able to avail of some funding. There are many any good ideas.
The Minister of State might clarify the issue of the rural transport initiative. I hope what we are hearing is correct.
I wish to address another matter. I needed to use my time to respond to what the previous speaker said. Wind energy is an emerging issue, particularly in the midlands. The opposition to wind turbines has built up a head of steam and such debates can become divisive in communities. The Department of Finance, the Government and the Oireachtas as a whole need to consider the matter. Communities in my constituency that had been united on a raft of issues for generations divided completely on this one.
I welcome the opportunity to contribute to the debate on the Finance Bill. I will reply to a couple of Deputy Bernard Durkan's remarks. Thankfully, I do not go as far back as him, but he forgot to remind us of what happened in the 1982-87 period. I wonder why. He stated our debt would not be levelled on our children and grandchildren and, of course, presumed inflation would eat away at it. I hope he is right.
Two weeks ago we gave qualified support to the legislation. We were acting reasonably and responsibly. As in the debate on the fiscal treaty, we on this side of the House supported the legislation because we believed it to be in the best interests of the country.
Given the fiscal treaty and the establishment of the European Stability Mechanism, ESM, fund, I wish the Government well in its negotiations on the National Pensions Reserve Fund, NPRF, money used by the previous Government to recapitalise AIB and Bank of Ireland. I mean this, as success in the negotiations is in the national interest. They were originally due to be completed by June this year, but we have since learned that they will not.
The Finance Bill gives legislative effect to many aspects of budget 2013. It also gives us an opportunity to reflect on and debate the many choices made by the Government. In this context, I ask two questions: are the measures fair and equitable and are those who can afford to pay the most doing so? Unfortunately, the answer to both is no. Just as the ESRI described the 2012 budget, budget 2013 is regressive, as it hits those on the lowest incomes the hardest.
As regards auction politics and Opposition parties competing against one another, we do not need to look too far back - the 2011 general election - to find a time when one party in the current Government had such advertising slogans as "Protect child benefit: Vote Labour" and "No increase in VAT: Vote Labour".
On the other hand Fine Gael pledged not to increase income tax. Despite the promise not to tax employment we had the abolition of the PRSI tax free allowance and the scrapping of the €127 PRSI exemption for those earning more than €352 per week which will cost €254 per annum. Some might say that is not a lot, but it costs €254 per annum for a person earning €25,000 a year and it will also cost €254 per annum for a person earning €250,000 a year. Where is the fairness and equity in that? It is simply not there.
Another proposal in the Finance Bill relates to taxation on maternity benefit. That is an unfair attack on working women. They pay tax on the portion of their benefit paid by employers but by extending tax to the social welfare element of their pay it is an attack on working women. The taxation will also apply to adoption benefit. It is unfair and it is inequitable. I am sorry if the Government parties take offence from the Opposition pointing out exactly where the inequity and unfairness lies in the budget. There is an increase in health insurance at a time when thousands of people are not taking out private health insurance because they cannot afford it.
In conjunction with the Finance Bill we will have the introduction of a property tax. Government Deputies try to distance themselves from this morally unjust tax by saying it was the previous Government that negotiated it in the memorandum of understanding. The truth is that at the time the proposal put to the troika involved a suite of options including a site valuation tax – a different issue altogether. Instead of the economy and the ability of people to pay since then improving, the situation has become worse. If that is the only reason preventing the Government from seeking an alternative, why do the Taoiseach, Tánaiste and Minister for Finance with their great negotiating skills not renegotiate the deal and have the property tax removed? Everyone knows – Government backbenchers and people on the street - that the troika does not care how the targets are met once that happens.
The question was asked about the alternatives that were put forward. It has been said that the Opposition is against everything and for nothing. At the time of the previous budget, our finance spokesperson, Deputy Michael McGrath, produced a fully costed alternative but the Government did not accept it. The Minister of State, Deputy Alan Kelly, is shaking his head. One of our proposals, namely, to increase the universal social charge by 3% for people earning more than €100,000 was proposed by the junior member of the coalition Government, but it was not accepted. We were led to believe that was the case. We are not privy to what goes on in government but we were led to believe from the leaks and spin in the newspapers that is what was proposed but it was not adopted. The Government said the reason it could not adopt the measure is because increases in universal social charge and income tax are taxes on employment. However, indirect taxes are okay. Who does the Government think will pay those taxes? They will be paid for out of income but if there is no income in one’s pocket, how could one pay tax?
There are no exemptions in the property tax for people who have already paid large amounts of stamp duty, despite the recommendation of such a measure in a report. People in negative equity are not recognised. There is no clause relating to inability to pay. It is totally and utterly unjust and unfair. That is not just being said by me; it has been said by many Government backbenchers on numerous occasions.
I wish to move to a point where there is an opportunity to create jobs. The best way to bridge the deficit is to get people back to work. A total of 430,000 are unemployed. Recent figures suggest that 90,000 young people emigrated to Canada, New Zealand and Australia in the past three years. I compliment the Government, IDA and Enterprise Ireland for the job they are doing in attracting foreign direct investment to this country. That is to be welcomed. However, a greater emphasis must be placed on small and medium sized enterprises in this country. I welcome the suite of proposals introduced in the budget to benefit them but those measures alone will not support small and medium sized enterprises. I was shocked and amazed to hear, while listening to the monitor, the Minister of State with responsibility for small business, Deputy Perry, say that the only thing needed to support small business is confidence. He is travelling the length and breadth of the country and he said that is all that is wrong. I wonder who he is meeting because week-in and week-out, all Deputies meet business people who cannot get access to credit. Of the €8 billion that was lent by the pillar banks last year only €2.5 billion was new credit, the rest was restructured.
If one walks down the high street in any provincial town one sees shops closing because once again the Government reneged on one of its key promises, namely, the abolition of upward-only rent reviews. The promise has been swept under the carpet. It could be done before the election but it cannot be done now. In the context of commercial rates the Valuation Acts are outdated and do not take into account a person’s ability to pay. That is something that could be examined. Commercial rates, upward-only rent reviews and the Valuation Acts are three key areas on which the Government should act in order to make a real difference. I am not just saying it for the sake of it. All we have to do is take a look at what has happened in recent weeks. B&Q and HMV were two large employers in this country which cited upward-only rent reviews and commercial rates as being among the reasons they are closing their doors. This is an opportunity the Government can control to ensure we support the retail sector, SMEs and get people off the live register and back to work because that is the easiest way to bridge the deficit. That is a better option because it would not inflict unfair, inequitable taxes and charges on the struggling middle class who simply cannot take anymore.
I call the Minister of State, Deputy Alan Kelly. He is sharing time with Deputies Michelle Mulherin and Pat Breen. They have five minutes each.
I welcome this opportunity to speak on the Finance Bill 2013. The Bill represents an important step for this country, one that allows us to contemplate a better time even though the country is currently in a difficult position. However, we have hope. We are beginning to build towards periods of stability. I hope in the years ahead that will help us to a great extent but we must face many harsh choices.
Recent years have been tough for Irish businesses of all sizes. They have been tough for consumers and the economy overall. Fixing the country from the previous Government's actions is much more than a sprint - it is a marathon - but growth forecasts for the years ahead are beginning to rise, our borrowing rates are coming down and, to date, we have maintained industrial peace for the most part, thanks to the Croke Park agreement. I take this opportunity to wish those involved in the current negotiations the best with their endeavours. We have removed the term "basket case" from our country, inflicted on us by those across the floor.
We are very proud of the efforts the Government has put into restoring confidence in the country and in restoring our reputation across Europe and elsewhere in the world. This separates us from many of our European colleagues who are in difficult circumstances in European countries and gives confidence to our investment community. This legislation builds on that confidence.
We should remember that when the previous Government destroyed this country's economy, it did not destroy it for one or two years. It destroyed it for a whole generation and that cannot be forgotten. We got a new Government but we did not get a new economy despite what previous speakers have said. However, we are making serious progress and by the end of 2013 we are likely to have our third consecutive year of growth. That represents a very solid starting point for recovery and something that could not have been contemplated two years ago.
This Bill is heavily focused on assisting the SME community, the people who will bring us out of the recession. I accept that none of the proposals represents a silver bullet for the economy because there is no such thing. Such a thing is impossible, but the measures are targeted at key places in the economy which will drive growth. They include the three year corporation tax relief for start-up companies, tax measures to improve cashflow, additional tax credits for research and development, extending the employment and investment incentives and venture capital improvements, among others. The focus is very clear: we want to empower our small businesses to go and take on new opportunities. We are trying to reshape our economy, moving away from boom-bust, property dependent cycles to an economy where the best and brightest of Irish people are retained in Ireland making and selling world-class products to the rest of the world for a profit which is ultimately to be reinvested in Ireland Inc.
We must remember that we are an open economy that needs to allow our businesses to think on their feet and explore global opportunities as they arise. New companies need breathing space and access to credit. The corporation tax relief will give them this and it should make life somewhat easier for entrepreneurs when it comes to accessing credit.
The extension of the employment incentives allows for generous incentives specifically for businesses which are taking people off the dole and can be used in the vital services, particularly in the tourism sector. One way of getting money into this economy is through tourism. I know a great deal about tourism, having worked for Bord Fáilte and its successor, Fáilte Ireland, for a number of years, and the retention of the 9% VAT rate for this sector is hugely welcome and supported.
The research and development incentives will allow us to keep up with the world economy. We are still behind in terms of the registering of patents and generating PhDs, but we are catching up. We are developing an entrepreneurial community that is willing to create a true smart economy. We need to focus in on certain areas, including IT, clean tech, pharmaceuticals, medical devices and specialised food.
To mention one area under my remit, public transport, the extension of the fuel duty rebate to the transport sector will be applied to passenger transport, and this is very welcome. It is a very difficult time for transport operators in this country but this will ease some pressure on the many small operators throughout the country. It is a struggling sector but is a vital part of our infrastructure, our tourism sector and of the social fabric of communities across the country.
Among our other problems is that of personal and business debt that is contributing to a lack of confidence and suppression of demand. Many SMEs are focused solely on survival. Even the ones that are making money will be more likely to use that funding to pay down debt rather than maximising their profits or reinvesting in their business. This will change as we improve the business environment, which this Bill directly addresses.
The theme is very clear. We will not solve our country's economic problems with one Bill like this or even ten Bills. What we are making clear is that, as a Government, we want a vibrant, thriving small business sector to lead a new Irish economy. This Bill, together with many other reforms the Government has carried out, will help us deal with this debt and unemployment crisis, and we can look forward after three years of growth to a better three years of growth ahead. I do not subscribe to the doom and gloom merchants in the Opposition who want to monopolise misery for themselves as if they are the only ones who care.
Private sector employment is up and we want it to grow more and public servants are continuing to foster the country towards recovery. As a country we remain hungry for business and investment. The deal on the promissory note puts us in a much healthier space. Interest on our bonds is down and we are able to borrow money as a country, something the previous Government robbed from us, but it is something this Government is getting back and this Bill will assist us in bringing us forward.
I will speak directly to the Bill. Section 30 provides for a scheme of accelerated industrial buildings allowances for the construction or refurbishment of certain buildings or structures used in connection with certain activities pertaining to the aviation sector and, in particular, buildings that accommodate activities such as maintenance, repair or overhaul of commercial aircraft. I ask that the dismantling of aircraft also be included in paragraph (b) of section 31. It is not referred to in the body of the Bill but this is also a distinct activity which can be a very lucrative business for airports. It is an up and coming area and has been identified as a growth area. I welcome the fact that this provision is applicable to all our airports. I look forward to seeing the benefits of this. This particular accelerated capital allowance encourages investors to get involved in construction of these aviation specific facilities. Anything that stimulates such investment and the development of a potential and market for jobs and business activity, which has been identified, is very welcome. I commend the Minister and his officials on this initiative.
I wish to refer to the abolition of the employers' rebate in respect of statutory redundancy lump sum payments. Since it has been announced and in the run-up to this, there has been a good deal of campaigning that this might not happen. From the experience on the ground, I believe that this measure in the budget is having a devastating effect on sole traders, whether they are renting or they are owner-occupiers. They could be downsizing, winding down their businesses either because of the current economic climate or for health or retirement reasons, and would need to come up with a lump sum for employees, and they would now have to pay 100% of it. The way these small businesses are going, they do not have the money. They will be in a position where they will become personally liable. Their personal assets become liable for a redundancy debt which could see them having to mortgage or sell their own homes to pay a debt of a redundancy lump sum to an employee.
I know a business person in the process of downsizing their small business who had to pay redundancy of €40,000 to an employee. That individual cannot get €10,000 to pay the tax man to get a tax clearance certificate to allow them conduct their business. The vulnerable are the sole traders like the owners of shops, pubs and restaurants who do not have the protection of the corporate veil, which means their personal assets, including a family home, could be required to discharge a redundancy payment.
We know many small businesses are not making a profit and many men, women and couples engaged in them are barely earning what we would call a living to support themselves or their families. These are small businesses, and if they go to the wall, these people are not even entitled to mainstream social welfare payments. This is a desperate situation for many and it is biting on the ground. People are trapped. Not only have they got a dead business in some cases but they find that if they wind it up, they are personally liable to pay employees who obviously need a redundancy payment.
It must be pointed out, however, that during the boom times when there was money in this country, 60% of the cost of the redundancy payment was covered by the Government. Now, with these businesses on their knees and on the back of TalkTalk going bust when it did, which heaped the cost of those redundancies on the State, small businesses are being asked to pay 100% of the redundancy. That is manifestly unfair. The evidence for that is manifesting itself. These sole traders should not be treated the same as large multinational corporations, which in many cases were incentivised to come to this country at a cost to the Exchequer, when businesses are struggling and feeling very hard-pressed. An exceptional case must be made for people who are not trading under the corporate veil. That issue must be seriously examined.
It is a very repressive regime, especially for those at a later stage in their lives who may not have much in their businesses. They may have a small lump sum and they are being asked to pay that for redundancy. I do not believe that is fair.
I welcome the opportunity to contribute to this debate. While the Finance Bill itself is somewhat technical in nature, nevertheless it is an important step in giving legislative effect to the budgetary measures announced by the Minister for Finance, Deputy Noonan, last December.
Economic recovery is contingent on the implementation of a number of initiatives. Fixing our banks and restoring our finances is the key to creating the necessary economic activity which will drive job creation. Creating the environment for job creation is a key priority for this Government. Considerable work has already been done to restore our international credibility and the key to attracting foreign direct investment is maintaining our favourable corporation tax rate. As Chairman of the Oireachtas Committee on Foreign Affairs and Trade, I have been speaking to various potential investors and this is a very significant factor in determining whether companies locate here. In that context, I welcome the fact that the Minister for Finance has recognised this and that there will be no change in the level of corporation tax being applied here.
Foreign direct investment projects alone will not suffice in the battle to combat unemployment. A key sector in job creation in many of our communities is the small to medium enterprise sector, to which the Minister of State, Deputy Kelly, referred earlier. The economic crisis has taken its toll on this sector and quite a number of businesses have been forced to close down. I was talking to a hairdresser in Ennis recently who told me that were it not for her promotional days, when she cuts her prices by almost 50%, she would be gone out of business. The problem for many such businesses is that while their revenue streams have fallen significantly, their costs have not been reduced proportionately.
I welcome the work being undertaken across a number of Departments to ease the burden on SMEs by reducing red tape, improving their cash flow and helping them to access funding. I commend the Minister for Finance, Deputy Noonan, the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, and the Minister of State, Deputy John Perry, on their efforts in this regard. The additional measures being introduced in the Bill will provide even more support for these valuable businesses. It is important that small businesses in our communities are given the necessary assistance because they can create one, two or three jobs which helps to sustain communities, particularly in rural areas.
The changes to the tax relief for new start-up companies are also welcome. An exemption from corporation tax for those start-ups that begin a new trade will allow these companies to grow and is particularly welcome given that the most difficult time for any business is the beginning, when the company is trying to get off the ground. For those SMEs who have moved to a stage where they would like to expand, the changes in the research and development credit system will allow them to invest in research and development, which is critical to the success of these companies going forward.
The tourism and hospitality sector is a very important part of our economy. It is estimated that revenue generated from overseas visitors last year was in the region of €4 billion. Buoyed up by The Gathering for 2013, further growth is expected this year with an additional 325,000 visitors expected to come here to celebrate the various Gathering events which are taking place all over the country. The spin off will be particularly important for communities in my own County Clare, where tourism and tourist-related activities provide a livelihood for many people.
The extension of the excise duty rebate on diesel for licensed road hauliers to include licensed passenger transport from 1 July will provide a major boost to tourism in County Clare. I met quite a number of these operators in the run-up to this decision and can assure the House that they are operating with significant costs. This relief will make a real difference to them in supporting local employment. I wish to thank the Minister for Finance for taking their concerns on board.
The arrangements which have been put in place at Shannon Airport, The Gathering 2013 and the announcement that the national Famine commemoration will take place in Kilrush on 12 May next will all provide an important boost. Under the chairmanship of Ms Rose Hynes, the creation of the new Shannon Airport Authority has led to renewed optimism about the airport. While figures for January show a drop in the average monthly number of flight movements through the airport, the airline commitments already secured by the new authority for this summer give rise to optimism. The airport has secured a 25% increase in transatlantic capacity, with new services from Chicago and Philadelphia, as well as a return to St. Patrick's Day services for Aer Lingus on the cards. UK and European traffic is also set to expand. There will be a new Faro service, Flybe has returned to serve Glasgow and there will be increased frequency on a number of holiday destinations such as Bodrum, Malaga and Palma. These are all positive signs and I expect that there will be further announcements in due course. I understand that developing a link with a hub airport in Germany is also a priority and work is progressing on this. I am also aware of a number of expressions of interest from airlines who wish to use Shannon Airport as a transit stop on route to the US, given the availability of pre-clearance facilities. I have been facilitating a number of meetings with the authority and I expect to see some more developments in the future. In the next week or two we will also see the introduction of military pre-clearance into Shannon, which will give the airport some leverage in terms of allowing other airlines to transit to Shannon Airport for this purpose. This will form a very important part of the pre-clearance facilities at Shannon Airport.
Shannon Airport is unique in that it has evolved over many years in response the various changes in the aviation industry, thanks to the capacity of the management and staff to adapt to those challenges. Going forward it is vitally important for Shannon Airport to concentrate on developing a mix of business and I was delighted to hear that Ms Hynes say recently that she is hoping to expand services further at Shannon Airport, in keeping with the strategy for developing a new, strong mix of airlines. Generating what would be considered non-core business has always been important to the airport. Shannon has already built up a strong reputation as a location for aircraft maintenance and I welcome the changes to section 30 proposed by Deputy Mulherin in this context. There are approximately 30 aviation-related businesses located in the airport already and the provision of an accelerated capital allowance scheme for the construction of hangars and tear down pads, which the Minister has introduced in the Bill and which would apply for a seven year period, should greatly enhance the airport's capacity to develop this side of its business. Plans are already afoot for the creation of 850 jobs in this area and I would hope we can attract further projects.
Since the collapse of the Celtic tiger and given the high levels of debt in the country, including personal debt and mortgage debt, I have campaigned for the past two years for people to have early access to AVCs or pension funds. I am dealing with a number of cases where families have found themselves in mortgage arrears. During the good times they had invested in AVCs and pension schemes. Now they need this money but cannot access it. I thank the Minister for Finance for taking on board these concerns and for introducing measures in the Bill which allow such people to have early access to 30% of their AVCs, which will be of enormous help to a number of families who are in mortgage distress.
There are a number of other issues which I would like to address tonight but given the time allocated, I am not in a position to do so. Suffice to say that I believe that a number of important measures being introduced in this Bill will foster increased economic activity across a number of sectors. I also recognise that there are a number of difficult decisions which have to be taken by the Government and which may place a difficult burden on people. However, achieving our fiscal targets by managing our finances in a prudent and fair manner will improve our budgetary situation and will ultimately help to alleviate the burden on our people.
I welcome the opportunity to speak on the Finance Bill, particularly in light of the pressing and important issues facing the country at the present time. The importance of the economy and the impact that economic policy, be it good or bad, can have on the lives of ordinary people cannot be underestimated. While it would be naive to suggest that everything begins and ends with the economy, there is no doubt that the economy matters in ways that most people rarely, if ever, think about. For example, when we think about economic matters we often think about banks, financial institutions and so forth. Rarely, if ever, do we associate economics or the economy with the arts, sport, public libraries, our built heritage, forests, mountain walks, lakes and rivers, yet all of these areas have been significantly affected by the recent budget and more importantly, by the policies of slash and burn favoured by the Fine Gael and Labour Party Government.
Sinn Féin is deeply concerned, for example, by the proposal to merge the Irish Museum of Modern Art, the Crawford Gallery and the National Gallery of Ireland. We are also opposed to the proposed merger of the National Archives and the Irish Manuscript Commission, to any change in the arm's length principle or to any proposals that would interfere with the independence of key artistic and cultural institutions. The Government has not produced any information on cost-benefit analysis, headcount reductions and so forth that would justify the proposed changes, yet it is hell bent on a process of amalgamations, mergers, the dissolution of independent boards and the non-renewal of vital leadership roles.
In a time of fiscal austerity, cutbacks, mass unemployment and national despondency, the arts offer a valuable and creative outlet to people. In a mature society that values expression and creativity, the arts have the potential to enrich lives. They help us to think about the world and our place in it in a more imaginative, innovative and abstract way.