Deputy McLellan is in possession. I understand the Deputy is sharing time with Deputies O'Brien and Ó Caoláin. Deputy McLellan has five minutes remaining.
Finance Bill 2013: Second Stage (Resumed)
In a time of fiscal austerity, cutbacks, mass unemployment and national despondency the arts offer a valuable and creative outlet for 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.
Sinn Féin again calls on the Minister, Deputy Deenihan, to respect and adhere to the arms length principle and to meet with the national campaign for the arts and other representative organisations. We urge the Minister to recognise that cuts to our key cultural institutions have the potential to cause long-term and irreparable damage to the National Archives and to the nation's collective history. For example, the National Library, which is primarily responsible for the processing and preserving of publications and historic documentary material, has again had its budget cut. This is in spite of the fact that since 2008, this key national institution has suffered a decline in purchasing power of 85% and had its overall budget cut by 44% in the same period.
As we begin the decade of commemoration, it is imperative that we have independent, robust, and well-funded national artistic and cultural institutions. Only then can the various commemorations be seen as an opportunity to revisit our past, with the aim of building a more equal and caring society. Sinn Féin calls on the Minister to develop an all-Ireland approach to arts and culture. We urge him to remember that the societal value of rare institutions often far exceeds their monetary value. On heritage, the Government's proposal to sell off Coillte harvesting rights will have a direct negative impact on 11 forest parks and more than 150 recreation sites. For more than 50 years, the use of the publically-owned Coillte estate by the people of Ireland has been made possible by the open access policy. Privatisation would undoubtedly bring an end to this and would also have a serious impact on domestic and international tourism. More importantly, according to the Bacon report no argument has been formulated to support the economic rationale for the sale.
On sport, we are in a situation where clubs, sporting organisations and community groups which were not successful in the recent allocation of grants under the sports capital programme will now have to wait until 2015 before they can again apply for funding. This is an appalling situation and, as with everything else, its effects are felt more deeply in working class areas where sport is vitally important for young people.
The cuts I have outlined are the result of poorly thought out policy decisions which will have a negative impact on our country and people. Sinn Féin is deeply concerned about the proposal to merge the Irish Museum of Modern Art, Crawford Art Gallery and the National Gallery of Ireland and we also oppose the proposed merger of the National Archives and the Irish Manuscripts Commission. We are also opposed to any change in the arms length principle or to any proposals which would interfere with the independence of key artistic and cultural institutions. The Government has not produced any information on a cost benefit analysis or headcount reductions which would justify the proposed changes but is hell-bent on embarking on a process of amalgamations, mergers, dissolutions of independent boards and non-renewal of vital leadership roles.
I listened to the debate for most of the day yesterday on the monitor in my office. It is clear many Government Deputies believe many of the measures contained in the Finance Bill will help get people back to work and stimulate the economy. A number of measures were announced which the Government feels will certainly stimulate the construction section of the labour force and will reinvigorate local economies through extending the employment incentive scheme. While the Bill contains some good elements, it will not come as a surprise that we do not believe the measures contained in it will stimulate the economy or get people back to work. Many of the measures fall very far short of what is required.
Despite these differences, something all Deputies will agree on is the role education can play in regaining our economic sovereignty and the role it will play in ensuring we have a highly skilled and adaptable workforce to meet challenges in the coming years. It is a well-known fact that a well-funded education system is necessary if we are to make the transition from recession to economic recovery. We also know that investing in education from the early years through to higher education creates the type of workforce which can change and adapt to labour conditions. This would mean that when we enter recession we have a very adaptable workforce and have in place training programmes and the further education systems required to meet the changing demands which industry puts on us.
If we look at some of the recent reports which have been published we can measure how well we are achieving this. The 2010 OECD Education at a Glance report examined what countries spend on education. It also examined how various education systems operate in various member states. It emphasised the importance of education not only to the individuals but to society in general and showed that a well-funded education system allows people to reach their potential and therefore allows society to deal better with recession. While the report did not state anything that was not already obvious to us as we all know well-funded education is essential, it highlighted a number of factors with regard to Ireland's performance in education and higher learning. It found the education spend in this State was the fourth lowest among the 31 OECD countries at approximately 4.7% of GDP. This low level of investment in education has resulted in our schools being underfunded and many of our universities struggling. It has also resulted in above average class sizes and a downturn in literacy and numeracy levels. Although the report was published in 2010 the data was collected in 2007 just as the so-called Celtic tiger was coming to an end. Since then we have had six more austerity budgets which have diminished spending on education even further.
The way the Government seeks to deal with the economic crisis and the resulting economic hardship being imposed on our citizens is to impose even harsher austerity and cutbacks on social spending which strike hardest of the most vulnerable in society. It also deepens social inequalities. Not only is the Government failing to stimulate the Irish economy, it is also entrenching the type of policies which further deepen the recession. I do not know whether the Minister of State, Deputy Perry, read our pre-budget submission, but if he has not he should do so because we made a number of proposals underpinned by very progressive taxation measures which would, if implemented and if we were in government, allow us to ring-fence the education budget this year. We would have made no cuts to the education budget or to the budgets of other priority Departments which are required to stimulate the economy. We proposed this because international best evidence proves ring-fencing and, where possible even in times of recession, increasing education budgets is the way to go.
On the collapse of the old Soviet Union, Finland's economy was in recession and it responded by prioritising and increasing spending on education. It invested in its education system, which is now seen as one of the more progressive in the world. Finland has a very solid economy and well-funded progressive measures which nurture learning from a very early age and carry through this learning process to higher education. It has a very adaptable workforce which is highly educated and skilled and can meet challenging demands such as the recession and economic crisis which has beset Europe. This is not just confined to Finland. Countries such as Norway and Sweden adopted very similar measures. It is something we need to do.
Looking much closer to home, because some people will argue the Nordic model would not suit this State, the findings of a recent study of primary school pupils in the Six Counties showed they perform better in reading and writing than pupils in any other English-speaking country in the world. This is a remarkable achievement considering the constraints imposed on the Executive there with regard to its finances and the receipt of a block grant. The Northern Ireland Minister of Education - a member of Sinn Féin - in association with the Executive and with cross-party support prioritised spending on education. Not only has it been prioritised but despite the reduction in block grants, a decision was made to increase spending on education in the Six Counties and they are now reaping the benefits, as the report shows. Two other studies verified the performance of the education sector there. The first was the Trends in International Mathematics and Science Study, TIMSS, and the second is the Progress in International Reading Literacy Study. They show the increased investment since 1997 in education is now paying dividends. We need to replicate this.
We must examine what we are doing in this State. For example, the Minister of State knows the importance of small and medium enterprises and the challenges they are facing. Some of the recent announcements of cuts in further and higher education colleges will have a significant impact in that respect. We need to start prioritising. It is not solely the responsibility of the Minister for Education and Skills; there must be a collective Cabinet decision to prioritise spending on education.
This Bill implements budget 2013, which I can only describe as being thoroughly reprehensible. It punished individuals and families on low and middle incomes, cut social welfare, cut health and other essential public services, and has clearly deepened the recession.
Austerity is not working and our economy is stagnant, despite all the public relations efforts of the Government to convince people otherwise. There are some 440,000 people unemployed in this State and emigration is back to the level of the 1950s - well over 1,500 people per week are leaving our shores to find work overseas.
The economic policies of this Fine Gael-Labour Government are virtually indistinguishable from those of their Fianna Fáil and Green Party predecessors. It is quite remarkable that the Government now presents as a triumph its so-called deal that for years to come will continue to saddle the people of Ireland with a massive burden of toxic bank debt, which is not and never has been ours.
The electorate was led to believe before the general election that the two Government parties were for burning bondholders and that it was Labour's way, not Frankfurt's way. When they got into office, however, they simply continued the policies of their predecessors and forced the people to pay for the misdeeds of Fianna Fáil.
Hope was raised again with last year's Eurogroup declaration that banking debt and sovereign debt would have to be separated. However, far from following through on that declaration and standing up for Ireland, the Government, in its recent deal, has turned banking debt into sovereign debt as never before. With the comments of Mario Draghi this week, it appears that there is a major question mark over the deal from the point of view of the European Central Bank. The ECB retains the right to compel the Irish Central Bank to sell bonds swapped for promissory notes when it chooses to do so. By forcing this State to dump its bonds early, the ECB would be forcing us into a situation worse than before this month's deal.
This is yet another reason for the Government to push for implementation of the Eurogroup's decision of last June to separate banking and sovereign debt. I do not believe it is too late to do so. The Government must insist that the Eurogroup's commitment of last June is followed through. If this Government does not make a radical change in its economic strategy, we are condemned to more budgets such as the one reflected in this Finance Bill. Approximately €3.5 billion is being taken out of the economy by budget 2013, mainly from front-line public service cuts and taxes on those who can least afford them.
A range of tax measures under the Bill is aimed at business. We judge each of them on its merits or otherwise, but I want to reiterate the point made by our finance spokesperson, Deputy Pearse Doherty. He contrasted the access given and attention paid to business interests, especially multinationals, with the access given and attention paid to some of the most vulnerable in society who were punished in the budget.
The Minister for Finance, Deputy Noonan, was bare-faced about it when he refused to countenance his Labour partners' proposal to increase the universal social charge for the highest earners. He said he was told by multinational CEOs that they did not like it, so he did not proceed. At least we know who really calls the shots. Little wonder then that there is no question of this Minister introducing in this Bill a third rate of tax for those earning over €100,000 - as we and others have advocated - even though this would bring in an additional €1 million per day, requiring the wealthiest to pay their fair share and thus alleviating the burden already on the shoulders of the weakest.
Instead of a higher top rate of tax and a wealth tax, the Government is imposing the so-called local property tax which is really a family home tax. If the Government believes its so-called deal with the ECB is of such great benefit, then let it scrap this tax. It should be scrapped anyway; it is grossly inequitable and will place a further heavy burden on those who are least able to afford it.
The excise duty relief for hauliers and transport providers is welcome, and I am happy to record so. Relief for hauliers is something that we in Sinn Féin have advocated, including in our jobs plan published towards the end of last year. In the constituency I represent, there is a large number of hauliers, most of them independent small businesses, and they have been badly hit by the recession. Extension and improvement of start-up tax relief is also welcome for small businesses in particular.
The increase in VRT is bad for individual motorists. It is another tax hike on top of so many others. It is also bad for business, especially small rural businesses that rely heavily on road transport. In addition, it is bad for the motor industry itself. Combined with continuing rises in fuel prices, this is clearly a bad move and I urge the Minister to reconsider it.
Those are the comments I would offer on the Finance Bill, despite accepting the validity of some of the measures contained therein, which I have welcomed. Tragically, however, for the greater number of our people the Bill spells further penury and ongoing distress.
I wish to share time with Deputies Brian Walsh and John Paul Phelan.
Is that agreed? Agreed.
I am delighted to have an opportunity to speak on this Bill. I acknowledge the sentiments expressed by Deputy Ó Caoláin which reflect his perspective on the legislation. However, the one aspect he missed concerns the extremely difficult circumstances the country is in. The Government would like to be able to do an awful lot more, but we are in an extremely restricted position. In recognition of that position, this Bill and the recent budget have addressed a large amount of issues that will have a cumulative impact for business and other sectors.
The Bill contains a number of growth measures but they will take time to feed through. Nonetheless, each small step will feed into many other Government policies, including the Pathways to Work scheme and the Action Plan for Jobs. I am delighted that the Minister of State with responsibility for small enterprises, Deputy John Perry, is present to hear this debate. He has had a great input into the budget. The ten-point plan for small business will lead to growth measures in that regard.
In addition to the ten-point plan, there are other new measures in the Bill. They are designed to improve the cash flow position and thus create jobs, as well as preventing job losses. From 2008 to 2011, we lost over 250,000 jobs in the private sector. First and foremost, therefore, before we even set about creating jobs we must stop that loss. We have done a good job in that respect because unemployment figures have stabilised.
We do not need to reinvent the wheel. If every small and medium-sized business could create one new job, it would have a massive impact across the country. It would be much bigger than the recent job announcements by multinationals, although they are very welcome.
Each measure in the Finance Bill is designed to help business sectors to trade, grow and invest in new products and markets. Cumulatively, these measures will kick in. For example, the increase in the VAT cash receipts basis from €1 million to €1.25 million is a definite step in the right direction. It is a positive change that was sought by industry and will help businesses with cash flow difficulties. We are limited in what we can do, but if that measure could be replicated in future budgets, in three or four years' time that figure could reach €2 million.
Over a couple of years, this would have a real impact. As for the extension of three-year relief from corporation tax for start-up companies that have unused credits, this can now be carried forward into future years for use against future corporation tax liabilities and in itself, that is extremely positive. There has been an increase in the amount of investment income that can be retained by close companies for incurring the close company surcharge from €635 to €2,000. Again, the Government is being mindful of the lack of credit that is available to small businesses. As all Members are aware, cash is king for small businesses and this provision is to address that issue. The Bill provides for an increase in the amount of expenditure eligible for research and development tax credits on a full volume base of €200,000. In addition, extending the employment and investment incentives schemes to 2020 was a measure sought by Forfás in its report of 2012 on the Irish funding environment and is very much to be welcomed. The scheme also has been amended to include hotels, guesthouses and self-catering accommodation, subject to review after two years to ascertain whether it is having the appropriate impact. The hotel sector alone employs approximately 51,000 individuals and the extension of the incentive to cover investments in the sector will help to sustain those jobs in conjunction with other initiatives such as The Gathering promoted by the Minister for Transport, Tourism and Sport, Deputy Varadkar, and so on.
There is a lack of credit available and while trying to sort out the banks, different ways also must be found to get funds into companies. While this is a good scheme, the Minister, Deputy Noonan, has acknowledged that take-up has been low and this point must be considered. The Government must provide certainty for both investors and companies and I ask the Minister to examine ways to improve the scheme. Obviously, there are fewer taxpayers with investment capacity for a scheme such as this and the Government must ensure the scheme can capture such investors as are present. I understand the accountancy bodies have indicated the scheme is not as attractive as it is included in the higher earners' restriction and this point should be reviewed. In addition, consideration should be given to whether the three-year investment period is too short to allow companies to put the investment to work and to generate a return.
As for other aspects of the Finance Bill, there is great recognition, in both this Bill and the previous budget, of farmers and the importance of supporting the agricultural sector. There is a real difficulty in Ireland because for traditional reasons, there are insufficient young farmers and insufficient land mobility. The Bill contains many measures that are greatly to be welcomed. For example, I refer to the capital gains tax relief for farm consolidation measures, which to an extent is a replica of the roll-over relief from the past, whereby land sold will have such relief once the proceeds are reinvested within 24 months. Similarly, the young trained farmers stamp duty relief on agricultural land transfers will apply for a further three years and this is to be welcomed. The extension of 100% stock relief for young trained farmers until December 2015 is crucial, as is the overall 25% general stock relief. Moreover, stock relief at a rate of 50% has been extended to other registered farm partnerships. Heretofore, this provision was only available for dairy partnerships, which was somewhat discriminatory, and its extension to beef, sheep and other partnerships is greatly to be welcomed.
Deputy, I must call your colleague. I am sorry, but your time is up.
These are the points on which I wish to commend the Finance Bill and I congratulate the Ministers responsible for their work on it.
I welcome the opportunity to contribute to the debate on this important Bill. At the outset, I agree with some of the sentiment expressed by Deputy Ó Caoláin who is sitting opposite. The Government is making decisions that are highly unpalatable but it received a mandate to do this and I would defend every decision the Government has made since it assumed office almost two years ago. In implementing its mandate to rectify the nation's finances, tough and difficult decisions must be made. I am sure Deputy Ó Caoláin would agree that for far too long on the Government side of this House, decisions were made with an eye to the next general election. Thankfully, the current Administration has confined the politics of the past. I remind Deputy Ó Caoláin that in the past year, the Government borrowed €14,000 million, quite apart from anything to which the Deputy referred such as moneys going into banks and so on. Leaving that aside, €14,000 million were borrowed to keep afloat the country in terms of essential services the Government provides. The only solution I have heard from the Deputy is a measure that would raise, to quote the Deputy, "an additional €1 million per day". Unfortunately, it is necessary to make adjustments far in excess of the figures suggested by the Deputy. What is difficult to accept in respect of the Deputy's argument, and indeed its sincerity, is that his own party in government in the North of Ireland is implementing some of the measures of which it is highly critical here in the Republic.
However, I welcome this legislation in its entirety. It constitutes another step towards the rectification of the State's finances and Ireland's continued economic recovery. I wish to focus briefly on one element of the Bill which might easily be overlooked in terms of its significance, namely, the extension of the exercise rebate on auto diesel to include private bus operators, as well as road haulage companies. Naturally, this measure has been welcomed by those within the sector but I believe it will have broader benefits in the wider economy. First and most obviously, the provision represents a shot in the arm for a struggling coach industry. After the previous excise duty rebate was abolished by the Government's predecessors, the number of coach tourism visitors to Ireland dropped to 418,000 from more than half a million in the previous year. The numbers have continued to decline steadily since then and stood at approximately 300,000 visitors in 2011. Coach tour operators have been obliged to contend with high fuel prices and stern competition from their counterparts in Northern Ireland and the United Kingdom, which can offer cheaper tours to clients because of the lower cost of diesel. One should be clear that there is a discernible correlation between the cost of fuel and the ability to compete for international visitors. This position was reflected in a Fáilte Ireland study last year, which found that high overheads and dwindling revenue had resulted in a scenario in which the coach tour industry was operating at a loss.
The provisions of the Finance Bill will offer a lifeline to companies in the industry and for many will constitute the difference between staying in business or ceasing to trade. At a glance, the benefits of this section of the Bill might appear limited and sectoral but this is not the case. The private bus and coach industry comprises approximately 1,900 SMEs which employ between 6,500 and 7,000 workers. They play a vital role in Ireland's transportation network and represent an important cog in the country's crucial tourism industry. Approximately 300,000 coach touring visitors came to Ireland in 2011, as I indicated, and this was worth an estimated €180 million to the national economy. Its monetary value aside, coach tourism is extremely important because it brings tourists to non-urban areas that would not otherwise benefit from tourism revenue, which is the lifeblood of many businesses in more remote locations. While I apologise for using terminology that might evoke bad memories in the Chamber, the coach tourism industry essentially facilitates the decentralisation of the tourism industry. It is extremely important as it both allows tourists to access some of the nation's remote treasures, thus enhancing the Irish tourism product, and allows for regional distribution of the associated benefits. As the Government works to invigorate the tourism industry, which is one of the tools with which the economy will be rebuilt, this consideration must be a priority of the Government.
One reason The Gathering initiative this year is such an important series of events is that the organisational nature of the idea will see tourism revenue diverted to towns and villages in every corner of the country. In addition, 86% of coach tourists stay in hotels during their visits, which sustains the ailing hospitality industry. Just as the abolition of excise rebates for private bus operators resulted in a decline in coach tourism numbers after 2008, conversely there is reason to believe the measures contained in this Finance Bill will result in an increase in the number of such visitors and benefits that are far more far-reaching than one might initially assume. Consequently, I commend the Minister on including this rebate in the Finance Bill, which I commend and support.
I also wish to support the Bill and am glad to have the opportunity to make a few points about it. I agree with the point made by Deputy Walsh in respect of the fuel rebate announced on budget day for hauliers and which, under the provisions of the Finance Bill, will be extended to bus tour operators as well. This certainly is a positive move for these two sectors and for hauliers in particular, who have been under severe pressure in recent years owing to the increasing costs of fuel.
Even over the past few weeks, fuel prices have begun to creep up again following a few months of decreases. There does not seem to be a satisfactory reason for the increase. The exchange rate, which was cited for so long as the reason fuel prices edged upwards over recent years, has not been an issue, particularly, in the past few weeks. The Government did not increase excise duty on fuel in the budget but the Minister announced tax relief on fuel for hauliers and has now made a similar provision for bus tour operators in the Bill. They will also be eligible for a rebate and I welcome his decision to include them.
I join Deputy Heydon in welcoming the measures and initiatives in the budget and the legislation aimed at promoting growth in the SME sector, which will be essential to the economic recovery of the country. I also welcome the tax changes in the agriculture sector, particularly those relating to farm consolidation and farm partnerships, which have been sought for many years and which make eminent sense. I recently spoke to a dairy farmer in Kilkenny in my constituency who wishes to expand production. He comes from a part of the country where farms are split up. He only has an 80 acre farm, which is not large, but it is in 14 different parts, which makes it difficult for him to expand but the measures contained in the legislation will mean he will be in a position, with some of his neighbours, to swap parcels of land without facing punitive taxes for doing so. This will improve his productivity and that of his neighbours and it makes sense for the economy, as the overall tax take will improve. I welcome the fact the Minister was in a position to take these suggestions on board.
I ask him to take another suggestion on board. He flagged well in advance that mortgage interest relief for first-time buyers would cease on 31 December 2012. I have been presented with a number of scenarios in my constituency where people building their own homes have drawn down part of their mortgage but construction is not complete yet. They are concerned that they will find themselves ineligible for the relief despite the fact that they started to draw down their mortgage before the deadline had elapsed. I hope the Minister will table the necessary amendments on Committee Stage to ensure this small number of people dispersed across the country who are trying to build their own homes are not disadvantaged. This may have happened because of reasons outside of their control relating to the planning process and difficulties getting construction under way. However, they had begun work before the turn of the year and I hope the Minister will address this.
I listened to most of the debate last night but I missed some of the contributions this morning. It was interesting to hear the historical discussion of budgets and elections in the 1970s with 1977, in particular, mentioned by people on both sides of the House. I was not born then and I can only refer to the comments and the coverage in the media and elsewhere of what happened then. However, I was alive and well and a Member of the other House for nine years between 2002 and 2011 and I had the privilege of being the finance spokesperson for Fine Gael for most of that time when the former Ministers for Finance, McCreevy and Cowen, were in office. I witnessed the decisions made by them to ramp up tax reliefs and to place so much emphasis on taxation revenue from property which could not be sustained into the future. This was pointed out to them, despite what some commentators say, on numerous occasions, even by members of their own Governments and certainly by Opposition Member but they refused to take any heed of the difficulties that might arise.
We have had an historic week in the House with the Taoiseach making an appropriate apology to the victims of the Magdalen laundries. The previous week, one of the most scandalously politicised motions was tabled by the Fianna Fáil Party, as it tried to make a political football out of that issue. However, its members have never tabled a motion to apologise for wrecking the economy and for ensuring thousands of young people are out of work and thousands more have had to leave the country to live far away from home hoping that at some stage the economy will recover and they will be able to return. Perhaps they might use their Private Members' time in the near future to apologise for their efforts in wrecking the economy and the futures of so many young people. They have apologised outside the House but it is about time they took the opportunity as soon as possible in the House to apologise for their role in the destruction of our country's economy.
I thank the Technical Group for sharing time and I acknowledge the presence of the Minister of State.
I also welcome the extension of the fuel rebate because when the budget was announced, I was disappointed. I welcomed the provision of the rebate for haulage contracts but, at the time, it was a mistake to leave out bus tour operators. I very much welcome the fact the Minister took on board my lobbying and that of members of his own party and the Opposition and the constructive submissions put forward on behalf of the industry, which highlighted that the income of tour operators was falling because of competition and increasing costs. A rebate had been provided in the past for coach operators but it was abolished a number of years ago. He has, therefore, restored it to a sector that had it in the past.
While the rebate is welcome, I would like him to go further and increase it because these people are losing business to operators from Northern Ireland who are able to take their business because they have access to cheaper fuel. A number of bus companies are run by families who have one or two buses and who do school runs. They are still finding it hard to make a living because the rates were much higher a few years ago while costs were much lower. The cost of insurance and motor taxes have increased while fuel prices and high labour costs are crippling the industry. Previously in the House, I asked why the Government could not have more vision to introduce an imaginative way of changing the tax take from fuel.
The average price of fuel is between €1.50 and €1.60 per litre. If the Government were to be imaginative and tax only the first €1 of the cost of a litre of fuel, in other words, tax would no longer be applied above a threshold of €1, people would be encouraged to travel more, more fuel would be used and the cost of work would decrease. Everything revolves around fuel, which is used by agricultural contractors, farmers and people travelling to work and making deliveries to shops. It would make a major difference to everyone if the Government took an imaginative approach to the tax it imposes on fuel.
It costs €80 or €90 to fill the fuel tank of an ordinary vehicle. Even if this cost were to fall to €40 or €50, it would still be expensive to fill up on fuel. Not many people outside the transport business realise that the articulated lorries used in haulage can hold €1,600 worth of diesel. If the cost of filling a lorry's fuel tank were halved to €600 or €700, fuel costs would still be substantial. I hope the Government will reduce the tax on fuel.
Small businesses must continue to be the backbone of the economy. A small business provides employment for the owner and perhaps a family member or neighbour and, if successful, it will create another couple of jobs. I am disappointed more was not done for small business in the budget and Finance Bill. While I acknowledge certain reliefs and tax credits were provided for companies engaged in research and development, these incentives are not enough. The Bill shows a lack of vision on the part of the Government.
Having run a small shop in a rural location for more than 20 years, I know at first hand how difficult it is to keep a small business going. Every day, one is burdened with various types of regulation, problems and difficulties. The Minister of State, Deputy Perry, may be interested in the following example of bureaucracy gone mad. Officials from the Health Service Executive will often visit small businesses such as shops with a delicatessen counter. HSE inspectors told the owner of one shop with a delicatessen counter to remove stools positioned at the counter because people were not allowed to eat a sandwich purchased in the shop on the premises unless the owner went to the expense of installing a male, female and disabled person's toilet. Small, struggling businesses cannot afford to do this. It is ridiculous to order the removal of stools from such shops to discourage people from consuming on the premises items they have purchased in a shop. Small businesses must try to live with these types of regulations every day.
While I appreciate the endeavours of the Government in trying to attract foreign investment, Ministers should not stand outside airports gazing into the skies in the hope that a foreign investor will land and create thousands of jobs. That will not happen. The Government should focus solely on trying to encourage the growth of more small businesses. It must not ignore the most important task, namely, the need to maintain, sustain and encourage existing businesses.
The closure of a small business has a knock-on effect. The most hurtful thing one can have on any street or village is a closed door. I am glad my constituency colleague, the Minister for Arts, Heritage and the Gaeltacht, Deputy Jimmy Deenihan, is present because he knows that my local area has been hit hard by the closure of small businesses. The village I come from once had 26 shops and six pubs but now has only two shops and two pubs. The continuing decline in small businesses is dealing an awful blow to rural Ireland. Governments, past and present, have let down those involved in small business. There is no broad vision for society and no jump-start for jobs.
Foreign investment is vital and we appreciate the multinational companies which have located here and created jobs. Liebherr cranes in Killarney, for example, has provided thousands of valuable jobs since locating in County Kerry 50 or 60 years ago. This has also had major spin-off effects. To return to the closure of small businesses, when a door closes it seldom re-opens. Earlier this year, we were informed that up to 800 pubs will close in 2013. This is a startling statistic. Every one of these pubs provides employment for its owner as well as part-time and full-time work for others. I do not see anything being done to help the pub trade or try to keep these businesses afloat.
Before the most recent general election, the Fine Gael Party and Labour Party promised to abolish upward only rents. They should not have made a promise the Government would not keep. Rents have continued to increase and many people feel very sore about the Government's broken promise. No one asked Fine Gael and the Labour Party to make this commitment before the election, yet they did so and quickly forgot about it when they were elected.
It would not be constitutional. The Deputy should ask the Attorney General.
The Government parties should have known that before the election.
Rents are falling rather than increasing in County Kerry. The Deputy should stick to facts.
The Minister of State will have an opportunity to speak.
Is the Deputy claiming rents are increasing?
Please allow Deputy Healy-Rae to continue.
I have never interrupted the Minister of State. Am I hurting him by reminding him about broken promises?
The Deputy should tell it as it is. Rents are not rising in County Kerry.
I will not engage further with the Minister of State or rise to him because I am not supposed to get cross. I am clearly hurting him too much by referring to the Government's broken promises so I will discuss instead the unfair property tax.
It is amazing to hear Dublin Deputies now agreeing with me. The very people complaining about it are those who voted for it. It is their property tax. They said nothing in the House about changing it until it started to hit home with their constituents. Suddenly, they started complaining. From the outset I believed that the tax was unfair, imbalanced and unjust. It is amazing to hear those Deputies claim that the tax is wrong on the grounds that people with higher value homes will be unfairly hit. They should have considered that when they voted for the tax in the House, seeing nothing wrong with it at the time.
Houses in the middle of family farms should be valued at the low end of the scale because they are effectively worthless. No one would want to live in a house in the middle of a working farm, listening to cows bellowing at night. It is fine listening to cows if one owns them, but it is not nice listening to someone else's cows roaring in the middle of the night. Such people should be entitled to have their houses valued at the lower end of the scale.
The property tax will place an extreme burden on the people who can least afford it. I have sympathy for people who took out mortgages at the height of the bubble. They face significant decisions, for example, whether to pay their mortgages or the property tax each month. If they are unable to pay the tax, there will be considerable repercussions, as the tax is handled by Revenue.
While I have continuously stated my opposition to the charges, I have never actively encouraged people not to pay. Some Members of the Opposition who have campaigned against the tax might have told people not to pay while others have not, but responsible politicians would never tell people not to pay a charge. It would be like telling someone not to tax a car. One cannot do that. It is the law of the land, put in place by the Government. People must comply with it. I will always respect this fact, although I might not always agree with it. One must pay what one must pay.
I note the Government's living city initiative. This tax relief is narrow, in that it only applies to dilapidated Georgian houses. Why is it confined to cities in this way? As the cities involved are Limerick and Waterford, are Ministers being parochial? That is for them to answer.
I welcome the idea of providing tax relief on living in city centres, but where is the tax incentive for people to live in rural areas? This is a worthwhile question. Why could there not have been an imaginative tax relief for dilapidated buildings in villages? It would have been a boost to the building industry, which Government Deputies know is on its knees. The buzz that would have come from an incentive to encourage the rejuvenation of smaller towns and villages would have been significant. I urge the Government to consider the idea of a living town and village initiative and see how it goes.
I must mention the way in which front-line services are being attacked. I had hoped for more imagination on the Government's part rather than some of the roads being taken at present. I must also mention the effect of Garda station closures. I proved in the House that keeping a rural Garda station closed would cost more than keeping it open. It is amazing to pass closed stations and to see the lights on. The pole with the blue light outside the door that indicates a station is open is gone, but the lights and heating are on inside. All of the facilities are still in place and people are being paid to maintain them in an idle state. It was a remarkable ministerial decision devoid of reality.
In case people believe that I am only referring to rural stations, I will refer to Stepaside. That the Minister allowed a station of 34 gardaí to be closed on his watch, leaving thousands of people without a station - it was in his constituency, so he should have known better - drives home the point that he is away in cloud cuckoo land. As with the decision to close the rural train network many years ago, the Minister's decision will be remembered as a disastrous one.
I ask for the Leas-Cheann Comhairle's indulgence as I wish to end positively by welcoming the increase in tax relief on tuition fees. Given the high cost of education at second and third levels, however, more should be done to help families that are struggling to educate their children.
The Government must start recruiting new gardaí. That Templemore is closed is a disaster. I hope that the Government will consider this issue in the near future. I also hope that more will be done for our farming community to encourage people to keep farms. Transferring land to future generations is expensive. This issue should also be considered to try to encourage the early transfer of farms. It is nice to see people starting at an early age instead of needing to wait until someone is elderly or dies before the farm is transferred.
The next slot is shared by the Minister, Deputy Deenihan, and Deputy Twomey. They have ten minutes each.
I welcome this opportunity to contribute on the Finance Bill, particularly in reference to two matters of considerable importance to my Department. First, I am pleased that section 481 on the film tax relief scheme has been extended to the end of 2020. This was one of the important recommendations included in the creative capital report that I published in 2011 and that sets out a strategy for building Ireland's audiovisual creative economy. The extension will give a great deal of certainty to the Irish audiovisual sector during the next seven years and allow it to maintain existing jobs in the sector and, hopefully, create new ones.
Supporting and creating employment across all sectors is a priority for the Government. The film and audiovisual sector is playing its part and has managed to maintain a significant level of production in difficult economic circumstances. In 2012, a total of 55 projects were approved for funding under the section 481 scheme, with an Irish spend of €143 million. This compared with an Irish spend of €119 million in 2011, indicating a significant increase of some €24 million.
The major projects approved in 2012 in terms of Irish spend were "The Vikings", with a spend of €25 million, "Ripper Street", with a spend of €10.7 million, "Quirke", with a spend of €7.3 million, and "Foyle's War" with a spend of €5.9 million.
The section 481 funding across the 55 supported projects helped to maintain and create more than 17,000 jobs involving crew, cast and extras during 2012. That is a real, tangible and important contribution to our domestic economy. It is anticipated that a similar number of jobs will be supported this year by film projects funded by section 481. The change to a tax credit model from the current investor model will obviously be a significant change, but I am confident that with the extended lead-in period to the new arrangements the sector will be able to adapt to the new regime.
As Deputies are aware, section 481 is an important part of the architecture that underpins the Irish audiovisual sector. Another very important part of the architecture is the Irish Film Board, IFB. The IFB has primary responsibility for the support and promotion of film-making in Ireland, in respect of both the indigenous sector and inward productions. The agency is funded through my Department and is independent in its day-to-day operations.
As part of its remit, the IFB has regular meetings with international film makers, as well as attending major international film festivals to promote Ireland as a location for film making. I support that effort and, with An Taoiseach, recently met at Government Buildings with the renowned film director, Mr. Stephen Spielberg and the leading actor Mr. Daniel Day Lewis. The Irish film and screen industry can be a positive force for change and can drive economic growth by providing high quality local employment, increasing inward investment and promoting Ireland abroad and contributing to tourism.
Already in 2013, the IFB has attended a number of international film festivals and industry gatherings to promote Ireland as a world-class location for making films. This is very important work and it is hoped that it will pay dividends with major international productions coming to this country to give the opportunity to the wonderfully talented crews and actors from this country to display their skills for an international audience.
As Minister for Arts, Heritage and the Gaeltacht I also wish to welcome especially the introduction by the Minister for Finance of the living city initiative. It is a targeted tax incentive which seeks to promote the regeneration of urban historic areas on a pilot basis by focusing on encouraging people back to the centre of Irish cities to live in historic buildings, and encouraging the regeneration of the retail heartland of central business districts. The initiative will provide tax incentives for works performed to refurbish residential and retail buildings either to bring them up to a habitable standard or to make improvements to buildings which are currently inhabited.
The pilot will be delivered initially in two locations - Limerick and Waterford - given the deprivation index in these urban areas. The incentives will be targeted at owner-occupiers and will be subject to a commencement order which will be dependent on EU state aid approval. I fully support the development of a scheme for urban historic areas. The proposed pilot has the potential to assist the State, both at central and local government levels, in its responsibility to protect the nation’s architectural heritage, encourage sustainable development and the re-use of urban historic core areas. The scheme complements recent policy developments by my Department which include the historic towns initiative and the publication of a new guidance manual, Shaping the Future, aimed at the re-use of protected structures.
We must be pragmatic on this as on all other issues. The budget available to me to allocate to the built heritage has declined significantly. Between 2008 and 2011 the budget for the built heritage was reduced by the previous Government by approximately 75%. That leaves me in a difficult position in terms of the allocation of sufficient resources to the built heritage. I do not have the level of resources required to fund built heritage regeneration or restoration works that was available in the past. This means we must consider more creative ways to encourage people to live in protected structures, to work in buildings in the core of these cities, and to be able sensitively to adapt them to meet the requirements of 21st century use while protecting them for future generations. We see good examples around the country of the adaptation of buildings. It is something I strongly recommend. This is a challenge, but one in which the new living cities initiative will, I hope, play a pragmatic role in resolving.
The living city initiative will assist in preserving existing heritage assets, stimulate heritage-led regeneration and add to the long-term sustainable development of the locations. It is manifestly a positive development for the core areas of Limerick and Waterford cities. I thank the Minister for Finance for introducing the initiative in the Finance Bill.
I have designated Limerick as a city of culture in 2014. The Georgian built heritage is very much part of the celebration. I hope there will be a positive response from property owners in Limerick to the initiative. I hope we can celebrate the built heritage in the context of the initiative as well, apart from celebrating the other rich culture the city has to offer.
I have attended numerous events in Limerick city in the past two years and I am very impressed with the level of activity there in both the visual and performing arts. In addition there is a positive contribution by the various colleges - the University of Limerick, Mary Immaculate College, Limerick Institute of Technology and other institutions - and the various arts centres and venues in the city. I hope the initiative will give people in Limerick a further incentive to rise to the challenge of celebrating as the city of culture in 2014.
Since the beginning of this crisis the resilience of the Irish people has been truly remarkable considering what we have been through in recent years. We have seen the total collapse of our financial services, construction industry and massive budget adjustments, yet in the midst of all that we have managed to start to get control of public spending and there is still growth in the economy. That is truly commendable and I compliment the people of this country for what they have done. That is not to say there are not still massive outstanding problems the Government must deal with urgently. The mortgage arrears situation is a particularly urgent issue that must be taken on board at Government level and dealt with comprehensively because it remains a serious problem. The jobs situation is also important and requires attention. However, slowly but surely we are getting a handle on it.
There is a saying, from little acorns great oak trees grow. We must examine some of the measures introduced by the Government in recent years to bring about a recovery. On reading the reports and commentary from the media one would think the country is still in an awfully severe crisis and that there is no hope of recovery. It is interesting to learn that we have created 12,000 new jobs in the private sector in this country in the past year. I accept that we lost 250,000 jobs in the three years prior to the Government coming to power. We have a significant recovery to make but one must bear that statistic in mind. There is a reduction in the number of people on the live register.
It is a small decrease but it has been falling for the past seven months and that must be taken into account.
One of the most important actions the Government took to give people confidence to seek a job and return to work was the reversal of the minimum wage cut, which was one of the first moves made by the Government, and increasing the universal social charge exemption level from €4,000 to €10,000. That removed the 330,000 lowest paid people in the workforce from being liable to the universal social contribution charge. Those were positive measures and, while small, there is a need to highlight them to ensure people understand what is happening.
In terms of from where all these jobs are coming, they are coming both from foreign direct investment and our indigenous companies that are working hard, not only the small and medium enterprises but some of our bigger companies also. Initiatives are happening. PayPal, Eli Lilly, Cisco, IBM, Hewlett Packard and Abbott Pharmaceuticals are internationally recognised companies that are instantly recognised by most people in this country. All of those are investing in Ireland.
The Kerry Group, one of our indigenous multinational companies which has businesses across the world, is making a massive commitment to and investment in the country. That is because confidence that our economy is on the right track and that we are doing something right is being restored. International investment sentiment towards this country is improving. It may not be percolating down and it may not be recognised by everybody, but stability is coming into this country slowly but surely. The Government has been focusing on trying to get people back to work.
In normal international circumstances an economy must stabilise and start seeing growth before significant reductions in unemployment numbers can be achieved. We cannot wait that long, and that is the reason the Government is focused on examining different areas with a view to promoting employment within the different sectors. Many of the policies have been targeting that. Not all of those policies will work but at least the Government is trying to make things work.
The Pathways to Work strategy is targeting long-term unemployment. Some 5,500 places have already been filled on the new national internship scheme. An additional 15,000 places have been provided for further education and training programmes. A new ICT education strategy has been launched with the objective of doubling the annual output of ICT graduates from 1,000 to 2,000 by 2018. These programmes have very targeted and focused positions to get people into employment.
The VAT reduction on tourism related services has seen an increase in the number of tourists and more jobs are being created in the tourism sector. This sector has been identified as having potential for growth if we target our resources at it and it is making a return. Some people might try to knock that and say it might have happened anyway but it has happened. The Government is looking at such areas where it can invest our very scarce resources to see if we can get a maximum return on such investment.
The new support programme for home energy retrofitting has the potential to create 2,000 jobs across the country. It may be a small beginning but it will make an impact for those 2,000 people who will be able to go back to work and gain from the benefits that will make to their lifestyle.
We will continue to establish Ireland as a digital hub with new jobs and investment announcements for new and established companies in that sector. Twitter, Google, PayPal and Dropbox are all names which are instantly recognisable to the text savvy younger and older generations of this country. Everybody knows those organisations. Those massive global companies with huge potential for growth are establishing themselves in Ireland.
A major new school building initiative is being launched which will create an estimated 15,000 direct and 3,000 indirect jobs in the coming years but, more importantly, it will provide 80,000 school places to cater for the increase in the school population. These are important initiatives spread across the country and they will make an impact.
The partial credit guarantee scheme has been launched to assist small and medium-sized businesses and there is also the separate microfinance fund. In terms of the impact of all these measures on a macro level, and I would move away from talking about billions because people do not quite grasp the scale of those figures, the deposits held in Irish banks have increased to €155 billion, which is up €15 billion from the lowest point that was reached in July 2011 of €140 billion. That represents small increases and improvements but it shows that small changes are taking place which are positive ones in the right direction. We should be very supportive of these changes.
People have spoken about how the Government is trying to be as fair as possible in seeking to protect the vulnerable and the sick. There are things that are being done that should be highlighted and commended. The increase in mortgage interest relief to 30% for first-time buyers between 2004 and 2008 is helping that cohort of people who are the most vulnerable to negative equity and to mortgage arrears because they paid the highest price for their houses. They are usually young people and have also been vulnerable to job losses since our economy crashed. We have provided €67 million in 2012 in grants to improve or adapt private homes of older people and people with a disability. That is significant in light of where we are at this moment in time. These are the small issues with which the Government has been dealing, which have made a significant impact on people's lives, have helped to get this country working again and have helped to ease the financial pain and the shock of austerity on those who are most vulnerable in our society.
I am delighted that the Government announced the public private partnership infrastructure stimulus programme which is focused on delivering a maximum number of jobs and the best infrastructure to help our people. It will deliver new schools across the country, health centres and new Garda stations. The ones that I am aware of did not add that much to the communities.
There is a need for us to be more realistic about what we can achieve with our resources and not to think that we should hold back progress. If we were to work on the basis of the theories of some of the Opposition Members, our gardaÍ would still be going around on bicycles. We have to constantly change and innovate how we do everything. That applies to the health service and education. The school education curriculum changing and Garda policing is changing. Everything changes in society and we need to change with it. There is a need for some Opposition members to be more open and broad-minded about what the Government is doing.
There will be huge changes to infrastructure. I am glad that the PPP programme announced today will kick-start the construction of major roadways in the country and not just provide the necessary jobs but improve our infrastructure to ensure we can remain competitive and increase the number of jobs created from foreign direct investment and in SMEs. I have pointed to the massive increase in jobs in the private sector.
I hope that the discussions on extending the Croke Park agreement will deliver. There is a very serious issue in that regard. The days of just giving money to get us out of our problems are over. If these talks were to fail, there is a serious threat that public sector pay might be cut in the future. I hope that does not happen. There is huge potential for the Croke Park deal to be extended and to continue delivering on piecemeal but important changes that have happened so far. I would like to see this being worked out and implemented.
I am glad to have the opportunity to make a short contribution on this important Bill. While I am sure there will be a finance Bill next year enacting the measures announced in the next budget in the latter half of this year, I presume a Second Stage debate on that Bill will be a process that will be quite different from the current process due to the changes being heralded by new EU rules on budgeting. The recent agreement on the two pack virtually ensures that the next budget will be in October and will be subject to greater EU budgetary and economic co-ordination among eurozone countries. I note the remarks of the Minister, Deputy Noonan, yesterday:
I very much welcomed this morning's agreement on the 'Two Pack'. This is a key piece of the eurozone’s economic architecture and has been an Irish Presidency priority.
I compliment the Minister, Deputy Noonan, his Department officials and the officials in the Irish permanent representation in Brussels for their hard work and effort in achieving this deal.
I also take the opportunity to remind Ministers that there is always a risk associated with announcing a budget, even in draft form, in October when the economic data for that year are not available. I am sure the Department of Finance and the Minister, Deputy Noonan, are more conscious than any of us of the importance of November in regard to income tax and taxation returns in general. The risk includes the increased possibility of having to produce supplementary budgets the following year to correct for shortfalls. Perhaps the Government has already discounted this risk or weighed it against its own experience. After all, budget 2013 was held at the beginning of December last year but the Government still had to provide supplementary Estimates for the Minister for Health, Deputy Reilly and the Minister for Social Protection, Deputy Burton. Indeed, in the case of the Department of Social Protection, that supplementary Estimate was almost €700 million, which was almost furtively brought to a Dáil committee on the morning of the announcement of last year's budget. Perhaps when the Minister for Finance gets an opportunity to wrap up this debate, or during Committee Stage, he might expand on the impact of the two-pack deal, and the six-pack deal, on the preparation, time tabling and announcement of the next budget, setting out roughly how the sequencing will work and the role the Oireachtas will play.
Many analysts and observers have criticised budget 2013 as deeply unfair, unjust and regressive. Those comments came not just from political parties but from many independent economists and other analysts. Unfortunately last week's CSO statistics show that poverty is increasing. There are now in excess of 700,000 Irish people living in poverty and the proportion of our population now at risk of poverty has jumped considerably. As we all know from our everyday work in our constituencies, there are huge pressures on families, particularly those with mortgages and dependent children. There is nothing in this Finance Bill that undoes the extra pressures that were put on families with the budgetary measures such as the taxation of maternity benefit, the reduction in child benefit, the reduction in the back to school grants, the abolition of the PRSI allowance and so forth. These measures all placed additional pressures on families whose household budgets were already under pressure before they were introduced.
My colleague, Deputy Michael McGrath, in his contribution to this debate on Tuesday night welcomed some of the measures the Minister and the Government are introducing, particularly in the area of support for the SME sector. We all understand the enormous importance of creating the proper environment for much-needed job creation. Daily we are seeing the devastation that unemployment is causing to individuals, families and communities. This is a problem across the country. It is not just an urban or a rural phenomenon but a societal one. Our towns and villages are being hollowed out, not only by the numbers of well-educated, bright and intelligent young people who are leaving home and travelling abroad in search of work but by the numbers of men and women who are withdrawing from community life, having been caught in the cycle of long-term unemployment. There are now nearly 200,000 people out of work for more than a year. This is a very serious issue because we know that once someone spends a year or more out of the workforce, it becomes increasingly difficult to get back to full-time paid employment at a decent wage level. We also have the problem of many self-employed people who do not have adequate social welfare entitlements once they are no longer in the labour force. That is a particularly difficult issue and I have come across many constituents who were self-employed but who are no longer gainfully employed; they just want to get on a back-to-work scheme but they cannot because they do not qualify for an unemployment payment.
We saw in the 1980s and 1990s how difficult it was to overcome and end the scourge of long-term, almost cross-generational, unemployment which had blighted this country in the preceding decades. Unfortunately estates, communities and parishes were blighted through unemployment and emigration. Jobs must be at the heart of the Finance Bill and at the heart of most of our legislative measures and discussions in this House. Creating the conditions for job creation is the biggest single policy lever the Government possesses to end the fatal spiral of poverty. We all welcome recent significant job announcements, mainly through foreign direct investment and some, more importantly perhaps, through indigenous enterprises. Much of those job announcements are additional employment opportunities at major corporations that were established here in the past ten to 15 years. Of course, any new enterprise setting up in this country for the first time is very welcome and my party warmly welcomes any such announcements. While announcements like these are welcome, both for the jobs directly created and for the investment they bring to a locality, our unemployment crisis will not be resolved by foreign direct investment alone, welcome and important as it is. The jobs crisis will be truly tackled only by indigenous job creation, by small and medium sized local Irish businesses growing, succeeding, maintaining and creating jobs and by start-up firms who see a niche in the market and then supply that market.
There is still a great entrepreneurial spirit in this country. It exists in every county, town and parish but it needs support, backing and confidence to thrive, both from local government and central Government. It also needs a continuing reduction in regulatory costs, which are still a huge burden on enterprise. The Minister has said the SME sector will be the driver of the economic recovery across the country but we do not see enough in this Finance Bill to help create or foster, sufficiently, that entrepreneurial environment. The Minister proposes some new measures in regard to improving research and development in the area of tax credits and includes hotels in the employment and investment incentive scheme, which my party welcomes. However, these and other proposals could hardly be described as radical or far-reaching enough to make a serious dent in the unemployment figures. We are in the midst of a jobs crisis which is compounded by an ongoing slump in domestic consumption. This is the time for more creative and dynamic thinking.
As I already mentioned, the economy is suffering from very weak overall levels of consumer spending. At the same time, there is still a very significant level of saving happening, as Deputy Twomey mentioned earlier. Another major issue in the domestic economy is the significant growth in the black economy. As a Border county Deputy, representing the counties of Cavan and Monaghan, I have a particular concern about the smuggling of fuel across the Border, not just diesel and petrol but also solid fuels. Alcohol, tobacco and a range of other products are also being smuggled across the Border. Unfortunately, that economy is thriving and is doing untold damage to our revenue base here. My colleague, Deputy Michael McGrath, made specific reference in his contribution to this debate to the growing issue of the smuggling and illegal sale of solid fuel products in the Border area. The proposed extension of the carbon tax to solid fuels on a phased basis will not help to combat this illicit trade. As colleagues in the House will be aware, the Government intends to gradually increase the tax rate applied to €10 per tonne from 1 May 2013 and to €20 per tonne from 1 May 2014. As I understand it, this will add €2.50 to the price of a 40 kg bag of coal and 50 cent to a bale of briquettes, leaving an average family paying an extra €130 over the winter months. Introducing these phased carbon tax increases on solid fuels without considering their impact on poorer families and on the increasing incidence of fuel smuggling is not an example of joined-up thinking. A number of years ago, when the carbon tax was first introduced, the intention was that it would not be applied to solid fuel, that is, coal, turf, etc., until there was practically an equivalent price north of the Border. That is not the position at the moment and I know some fuel traders are very concerned about the possible impact on the trade south of the Border due to the price differential that will occur when the extra tax is imposed. I ask the Minister and his officials to examine the particular effects of this proposed tax increase and the potential loss to the Exchequer that might result.
Fuel merchants have pointed out to me that smuggling and the potential for further losses in the trade will mean having to let employees go, with a resultant loss of income tax, PRSI and other revenue to the Exchequer. I hope this issue can be examined before the Finance Bill is finalised.
Deputy Michael McGrath, on behalf of our party, offered a modest but potentially effective suggestion that could stimulate local activity throughout the country. He proposed providing a tax credit of up to €2,500 for approved home improvement work, subject to the home owner engaging a registered tax compliant contractor. This simple cost effective measure could provide a significant boost for local economies, as contractors purchase goods and spend money in their local shops. It would also help reduce activity in the black economy, particularly in small scale building jobs, home improvement and renovation work. By using the tax code imaginatively, we could bring more of this activity into the mainstream economy where it would generate additional revenue for the Exchequer rather than being a burden on the public finances. Such a measure would have the added benefit of increasing VAT and income tax receipts.
I join with other colleagues in welcoming the extension of the employment and investment incentive scheme to the hotel sector. The tourism industry is important throughout the State, particularly in rural areas where it is not easy to attract foreign direct investment or set up a major manufacturing plant. Tourism, which depends on the natural resources of a rural area, can be very important. Many hotels, particularly in the Border counties of Cavan, Monaghan and Donegal, are in significant financial trouble. Many face debt overhangs which, if not addressed, will lead to significant job losses.
Once again, the Minister could and should go further than he has. My colleagues have already suggested a number of further policy avenues and we will urge the Minister to take them on board during the course of the debate. Deputy Michael McGrath has already spoken about the possibility of setting up a hotel restructuring fund, using funds from the National Pensions Reserve Fund to purchase assets with a commercially sound prospect of profitability and growth. Alternatively, the Minister should look to setting up a qualifying investor fund for hotels that may be attractive to private investors, especially from abroad, who would like to invest in Irish hotels but do not wish to own hotels directly.
I believe we undervalue the importance of the hotel sector and infrastructure in the generation of local employment and its contribution to the economy. A good hotel can be as important to a small town as a substantial factory. This sector is under increasing pressure because of the growth in hotel numbers and bed capacity throughout the country in the past decade.
With regard to the increase in vehicle registration tax, VRT, a garage owner instanced to me the example of a run-of-the-mill car such as the Volkswagen Passat. The change in VRT in the budget amounted to an increase of almost €900 on that standard family car. People in the motor industry are concerned about possible job losses. Sales have gone down substantially. A different person, who worked in the motor industry some years ago and is now retired, asked me to urge the Government to consider a car scrappage scheme. I do not know how feasible that is, but the point made to me by this former worker in the motor industry was that many of the people who availed of the previous scrappage schemes were people who had money in the bank and were careful about spending it. He thought a scrappage scheme would give leverage and generate extra expenditure. In view of the severe difficulties facing the motor industry throughout the country, this could be given some consideration. We also know that car scrappage schemes have contributed considerably to the enhancement of the environment.
Commercial rates are a considerable burden for many small enterprises. Commercial rates are a tax which is not based on ability to pay. Owners of several small hotels and public houses have shown me their rates bills. These substantial sums of money must be paid before a business turns a single euro. This area needs major reform and we need to address it.
In recent years we have seen a substantial increase in exports in all sectors. That is welcome. There has also been relative currency stability, particularly between the euro and sterling. In the last quarter of 2008, sterling depreciated by more than 24% in the three month period from October to December. That put huge pressure on Irish businesses that were exporting to the sterling area because their prices were set and they had bought in at a different exchange rate. There has been some weakness in sterling recently and we must hope for continued stability in that currency. We export more than 40% of our goods to the sterling area, our nearest neighbour, and exports are hugely important for economic growth and job creation.
I have already welcomed the improvement in tax credits for research and development. In the past 12 or 15 years, there has been huge investment and expansion in research, development and innovation. That was provided by Exchequer funding and assisted through Government Departments and State agencies being able to draw down substantial funds from Europe. In a newspaper article early this week, Commissioner Máire Geoghegan-Quinn outlined the value and necessity of investment in research and development. She highlighted our country's success in drawing down substantial funds from the Seventh Framework Programme, FP7. Bodies such as Teagasc and the Marine Institute have been leaders in drawing down funding from the European Union. We know we need continued investment in research and development, not only for major corporations but also for small and medium enterprises.
In recent years, there has been greater collaboration and partnership between our universities or institutes of technology and industry. For far too long, we had too many institutions in Ireland. Universities, institutes and commercial semi-State bodies worked in isolation. That has changed in the past decade or so and can improve even more. Research and development in universities must be industry led as well as learning led. Some of our universities and institutes of technology are forward thinking and progressive in working with industry in their areas to ensure that research and development assists the development of product and creates added value. A representative of a major international corporation in the food industry told me they had invested in this country because of the research capacity of the Teagasc facility in Moorepark. I welcome the introduction of additional measures to assist research and development.
Research and development must not just be confined to the major players in industry and business: it is also important for the small and medium enterprise sector.
I welcome the opportunity to contribute to the Finance Bill, which implements the taxation measures announced in the budget in December. A key issue in the budget was job creation. That is the most important issue we must deal with by introducing incentives and supports for job creation.
We currently have over 400,000 unemployed and to lose one's job is one of the most traumatic events that can take place in a person's life. I have personal experience from many years ago of being told at 8 a.m. one day that I would be made redundant on statutory redundancy after several decades of contributing to an organisation. The trauma of losing one's job and becoming unemployed is not fully understood or appreciated. There is a period almost of mourning, and we know from many studies that it affects self-esteem and relationships. There are serious implications attached to losing a job, especially now when so many people have mortgages and personal debt and have planned their lives around full-time employment, and this causes extreme stress. When we meet someone new, we ask three things: their name, where they live and what they do. We attach a lot of value to the contribution we make to society in our daily lives.
That stress can create extreme difficulties within families, particularly if there is a danger of losing one's home. Our home is very important in our lives and that is why it is so important that all of us in this House agree that the mortgage situation must be dealt with as quickly and fairly as possible, with an understanding of the effect the threat of the loss of a home has on a person. It is vital also that this factor is recognised by the banks as part of their civic responsibility towards their customers, whom in some ways they placed in that situation. We can say the client requested advice and made the final decision to borrow, and that is correct but the banks were, with hindsight, reckless in how they dealt with the housing bubble that has caused us so many problems.
When stress arises in a family because of the loss of employment, personal difficulties can occur and no matter now much parents might want to protect their children from the stresses they are experiencing, inevitably the children and young people are affected. Many of those in this situation bought their homes at the time of the property bubble, were settled and have families. Those are the people who have been worst hit by job losses and mortgage distress. Often these stresses can cause relationship breakdown or family difficulties and can lead people to take comfort in alcohol or drug abuse to try to relieve these stresses. We know going down that road can lead to serious mental health difficulties. The unemployed are six times more likely to suffer from a psychiatric illness than those in employment, and are two to three times more likely to take their own lives.
Everything must be done to overcome those difficulties. Small and medium enterprises have a key role to play. We recognise the work of the IDA on job creation and the recent announcements that have been made, but our own indigenous small and medium-sized enterprises are also key and must be encouraged to provide employment and opportunities for those who find themselves in a difficult situation. I welcome that fact that the Finance Bill builds upon the SME supports introduced in the budget and includes measures to support small and medium-sized enterprises. The SME sector will drive economic recovery across the country and I welcome the Government's commitment to supporting the sector. The primary focus of the budget and the Finance Bill is job creation.
We do not hear much about the poverty trap now. It still exists for unemployed people who might be offered short-term employment of a few weeks duration. They find it difficult to decide to move off benefits because it is very difficult to recover those benefits. The system should show more flexibility when a person is offered short-term employment.
I welcome the €35 million allocated this year to the introduction of A Vision for Change, but we have yet to see the plan that is in place to develop those mental health services.
The plan this year is to bring in over 400 professionals to develop the community-based mental health services. It is important that the plan is in place quickly because the delay last year frustrated the implementation of it and there has been a carryover to this year.
Finally, I welcome the Minister of State, Deputy Kathleen Lynch's, commitment to the area and support on this. I am looking 12 months ahead-----
Deputy Neville's time is up.
-----when we will be asking for a further €35 million for 2014.
I wish to deal with a few aspects of the Finance Bill.
I will start on section 19, which deals with the tax treatment of farmers. I welcome the extension of the stock relief. This, especially the 100% stock relief for young trained farmers, is comforting news to the agriculture sector. These are measures which mean a great deal in the farming scene. The Bill also mentions that these particular farmers must have business plans set out and agreed with Teagasc.
This raises another aspect at which we could look. As important as business plans are, cash-flow analysis is very important. Maybe we should encourage taxation measures that would allow for part-time employment in farming businesses to conduct cash-flow analysis on a continuous basis because farming is up and down and it will get more volatile as things happens. I note there has been a horse food scandal lately, and all that went with it. Unfortunately, for farmers, it means that their income could dip through no fault of their own and it is important to have constant analysis of the accounts. I would welcome allowing some tax incentive to employ someone who is a third party, obviously, not a member of the farm.
Section 24, which amends section 1003A of the Taxes Consolidation Act 1997 and provides tax relief for donations of heritage property to the Irish Heritage Trust or the Commissioners of Public Works, is a practical change and I welcome it. It allows accompanying buildings and lands to be donated in tandem with heritage gardens. I accept it is a small part of it. It is a good measure. It will see important heritage properties coming to the State at little cost. It is really important because we may not get the chance to get these properties again. However, I encourage the Minister to increase the tax relief, from the 50% he is seeking, to 65%. I understand there is more being purchased and he is trying to get value, but in this depressed property market, even allowing 65% relief on what is essential one-offs would be practical.
I welcome section 29, the living city initiative. Certainly, we all can appreciate that getting families back into the centre of cities and refurbishing old homes brings life to cities. It is a nice measure in the Bill.
In section 45 I think there is a problem. The limit of €3 million should be removed for capital gains tax on land transfers. This discourages lifetime transfers and that is something we cannot do. In death, obviously, there are no capital gains tax implications. We do not want a situation where farmers will not transfer land over until they go to their eternal reward. There is an elderly population in farming and with the targets we are setting out for ourselves in Harvest 2020, this is a worrying issue. We will not achieve those targets with land not being transferred to young farmers. It simply will not happen. Any measure that discourages the transfer of land cannot be allowed. Capital gains tax was introduced in 1974 when land was valued at approximately €500 an acre and the indexation factor, which was abolished in 2002, had reached a factor of approximately seven, giving land a value, roughly speaking, of €4,500 an acre. This causes a capital gains issue of approximately €8,000 an acre presently. I will not elaborate on marginal relief - it gets too complex. However, it is something that needs to be looked at because there is no initiative to hand land over. Also, a consideration of €3 million might sound considerable, but when one adds up the cost of stock and buildings, such as milking parlours which are getting ever more complex by the day, and one reaches that figure and it will be an impediment to transfer over. This also applies to many qualifying business, not only farming.
Unfortunately, there is not a retirement scheme in place. The retirement scheme, which was most valuable and which came through Europe, allowed a retirement pension for elderly farmers. It gave them a sense of financial security and it allowed them transfer over their land. There is nothing like youth and vibrance to increase production and to move farming in a new direction. I am glad to say I was a recipient of the farm retirement scheme in the sense that my parents received it. It created the stimulus to transfer land. It allowed us to move in a direction which saw production increase considerably and, therefore, more benefits to the State as we moved along. This is one area that needs to be looked at more closely.
Section 46, which is a really good measure, provides relief from capital gains tax for restructuring of farms. One of the historical problem we have faced in Ireland is the whole farm structure. The fragmentation issue is incredible. Having ones farm in different fragments is a high cost game as one must travel from one place to the other. It costs to move machinery and animals. One cannot build up necessary infrastructure because one does not have enough land around one's parlour. This is a fabulous scheme and I am amazed it has not been thought of earlier. I advise the Minister to keep an open mind on the final date here and not to be wedded to the closing date in the Bill. Farmers have a tie to their land and it takes them a while to get their head around letting go of a part of their land and swapping it for another. The Minister merely must bear in mind that there might be a conflict until it sinks in properly that this is a good idea. I would watch it closely. It is something on which momentum could take a little while to build up.
I might have a look at section 56 regarding niche producers and micro-breweries, especially ones where there is micro-production of cider. Such business persons need a stimulus in early production and maybe we should look at them being allowed allowances.
On section 59(1)(c), on carbon tax, I encourage the Minister to enter into discussions with the farm contractors' associations regarding carbon tax on farms. It is only another spancel to production. Farmers do not have large incomes at present and this is something that needs to be looked at.
Maybe the Minister should consider tax reliefs for those who substitute fuel with carbon-neutral options because there are options out there. The reason I ask for tax reliefs in this area - these are quite specific - is because there are high capital costs in putting in place systems which replace diesel fuels in agri-production. It is akin to the inverse of section 59(1)(c). If it is good one way - as they say, sauce for the goose is sauce for the gander - it should work in both directions.
Section 71 relates to VAT. While this reduction, from 5.2% to 4.8%, looks innocuous, it has had a significant effect on the pig sector. I will go into more technical detail on this. The matter has generated much stress there. Maybe it needs to be exempted for that sector because it is on its knees.
They do not particularly need any more nasty shocks along the way.
I wish to address the issue of rates. For many people not involved in business, there is no appreciation of the issue. Rates need to be considered in totality. It is possible for a business to have huge ground cover and very low turnover. For such a business, rates could represent a major proportion of the profit whereas for a multinational on the same land, it would only represent a fraction of it total turnover. That needs to be borne in mind.
I welcome the Bill which contains many progressive provisions and a few that need to be considered in more detail.
I call Deputy Ó Snodaigh, who is sharing time with Deputies Ellis and Stanley.
I welcome the opportunity to speak on the Bill. Believe it or not, there are one or two good aspects in it and I will try to capture them in the points I make and I want to ask some questions. We cannot consider a Finance Bill on its own, as it is part of a package along with the Social Welfare Bill, the property tax and, later this year, the water tax. It also comes on top of a previous Finance Act. I am greatly concerned about the cumulative effect of all those measures. Child poverty is increasing and since the Government came to power, long-term unemployment, including youth unemployment, has increased. Emigration is increasing and poverty levels are increasing. The Finance Bill will not address that and, in this case, will add to the distress of many sections of Irish society.
It is disappointing that the Bill does not provide for a wealth tax. Deputy Pearse Doherty has explained the benefit of introducing a wealth tax on the model that exists in France. It does not include provision for a third rate of income tax on moneys earned in excess of €100,000. It does not include a tax on online gambling and a range of other proposals made not just by Sinn Féin but also by the trade union movement and economists who have said there is an alternative to continuing policies of austerity that the Government and its predecessor have imposed on the public.
The Bill provides for changes to the carbon tax. When that is added to the changes to VAT the Government introduced, it adds to the problem of fuel poverty over time because those who are most dependent and have less disposable income are the poorest in our society. Many of them depend on social welfare but it is not exclusively those dependent on social welfare. In this society many people, who in the past would have been regarded as middle class, are now feeling the brunt of Government policies and the effects of poverty. Every Deputy in this House will understand that from having dealt with the public. The problem is that the Government does not seem to be listening to the plight of those people and when the Bill goes to Committee Stage, I urge the Ministers to listen to proposals made to reduce the effects of the Bill. We also need to take stock and change direction as proposed by others whereby the burden of ensuring that Ireland continues to work to get through the problems created by the previous Government and by this Government does not fall on those who can least afford it.
Last week Ms Nessa Childers, MEP, of the Labour Party launched a report that starkly highlights the effects of austerity, the Caritas Europa report. It was a study of the impact of the crisis and austerity on people, with special focus on Greece, Ireland, Italy, Portugal and Spain. The report's findings demonstrate beyond doubt that the austerity measures are impacting very negatively on the lives of people in poverty and are driving more people into poverty. It shows the increased unemployment levels in those countries, especially youth unemployment and long-term unemployment. It shows the increase in financial distress of those who are dependent on social welfare in those countries as well as those who are on low pay or reduced employment. It shows that income poverty, child poverty and fuel poverty have increased in all those countries. That report and others show a lack of poverty proofing of budgets here. That is not just the fault of the present Government but also its predecessor. The simple steps to ensure that budgetary measures do not drive people into poverty are not being taken. Nor is there equality proofing, something that the Labour Party had sought in the past. I again urge the Government to consider that because the people most affected are often parents in the home trying to ensure there is food on the table, that the home is heated, and that children can go to school healthy with food in their stomachs and wearing proper clothes. Irish society has seen a reversal in that regard and we are going backwards instead of forwards.
In January the Irish League of Credit Unions "What's Left" tracker report highlighted starkly the position we are in. The Bill will compound the problems of the 61% of respondents who said they had €100 or less left at the end of the month once their essential bills were paid. Some 1.59 million people are left with €50 or less at the end of the month once their essential bills were paid. That is before the Government imposes the property tax and water charge on them. Price increases in respect of the ESB, Bus Éireann, etc. come separately from this legislation and are allowed by Government. Yesterday, we heard that AIB is considering increasing its mortgage interest rate, which will impact on many people with €100 or less on which to survive.
There is a cumulative effect and a whole package of documentation on that. This week we had the leak of Ms Ita Mangan's report into child benefit, which is also causing major concern and distress. If the Government starts moving in that direction, as the Minister is suggesting - in fact, she has already moved in that direction because the previous two budgets cut child benefit despite a Labour Party promise - that will be another wad of money coming from that €100 or €50. In some ways that says it all. If the Irish League of Credit Unions carries out the same report at the end of this year, I believe we will find that the numbers have increased. We will also find that the numbers who have absolutely nothing or are in the red at the end of the month will have increased.
The Bill contains the miserly change to target women through the taxing of maternity benefit and the health and safety benefit, the weekly payment for employed women who are breastfeeding. How miserly is it to tax that?
That the Minister and Government propose to target childbirth by way of tax on maternity, adoption and health and safety benefits is an indication of their grubbiness.
I regret I will not have time to speak on the benefits of the Bill, including the film relief and proposed changes in tax on off-licence sales, on which I would encourage the Government to do more. I would ask that the Minister consider a change in the VAT regime on exercise and sports goods. Were these items to be zero rated for VAT purposes, it would help Ireland and Europe - this is also a European issue - in tackling obesity and its associated illnesses, the cost of which to the Irish and European hospital systems is enormous.
I could say a great deal more. It is hoped I will have an opportunity on Committee Stage to put forward other proposals.
This Finance Bill will give effect to many of the measures contained in the budget published by this Government at the end of last year. This means it is an instrument for the implementation of further policies rooted in unfairness, in equality and austerity. The Bill also contains some good measures.
This Government has introduced two budgets. Thankfully, it was forced to review some of the most odious provisions of the first budget following huge public outcry. This has not, unfortunately, been the case in the intervening weeks since announcement of its second budget. Despite the U-turns the Government's first budget hurt ordinary people hard. The cut to rent supplement has had a damaging affect on the lives of many people across this State and is exacerbated by the failed housing policies of this and previous Fianna Fáil-led Governments. Owing to a lack of political desire or will to create a sustainable housing system, coupled with a seemingly strong motivation to subsidise private profit, the past few decades have seen unrelenting attacks on the public housing stock and a slow decay of structures which allowed for permanent social housing provision. This means that almost 100,000 people wishing to put a roof over their heads and those of children must rely on rent allowance. The cost in this regard, when combined with the cost of the RAS scheme, is €500 million. Following the budget, these people are now paying more for their accommodation, which is often of poor standard, cramped and poorly managed. Far too many landlords have asked for money under the table. Some people have lost their homes while others, having already had it tough, struggle harder so that this Government can make a small saving in comparison to what could have been saved from the missed opportunities which characterised that budget.
Despite the need for revitalisation of Limerick, Dublin and Cork, funding for regeneration projects has also been slashed. Will this Bill result in better outcomes for people? The answer is, it will not. While it contains some positive measures for businesses, which I welcome, it will result in less spending by people in the local economy and a reduction in the amount of money in the pockets of those who spend the highest proportion of their income. Most low paid people lost out in the last budget. Everybody earning more than €18,000 lost €264 per annum and many were also hit by the reduction in child benefit. It is now increasingly likely that child benefit will be further cut by this Government. Parents, workers over the PRSI threshold and homeowners, many of whom are up to their eyes in debt, have been hit hard by the recent budget. It is not surprising that those who earn up to €100,000 per annum do not understand what a few less euro at the end of the week means for others. However, this is putting families under serious pressure and making life in Ireland hard and difficult for young and qualified people whose friends have already emigrated and are wondering what is here for them besides mistreatment and more of the same.
In its jobs creation plan and budget submission, Sinn Féin put forward alternatives which would be fair and based on equality. It also called for an equality budgeting process similar to that which operates in the Scottish Parliament. The Minister for Finance in Scotland works with groups dedicated to creating a more equal society to ensure that budgetary measures do not target the most vulnerable and essential services are retained. Once again, Sinn Féin was ignored. Once again, the rich escaped pretty much unscathed by this budget. There are more millionaires in Ireland now than there were last year. There are more people with huge amounts and liquid assets yet this Government continues to focus on cuts to those who can least afford them and have already paid their fair share of tax.
On top of all the aforementioned cuts, the Government proposes the introduction of water, household and septic tank charges, all of which will impact heavily on people. This Bill should address the needs of the economy and the people in a realistic way. It should also take into account ability to pay. That is the way it should be proofed.
This Bill underpins six austerity budgets, the most recent of which is having a devastating affect on low and middle-income families and services. The policies of this Government - of which we have seen more in the past week - continue to sow the seeds of industrial arrest, in particular in Laois-Offaly, where there are many prison officers, gardaí, hospital workers, attendants and so on. While the headline pay of these people may appear large when deductions are made they are left with little. Families are finding it increasingly difficult to balance their household budgets.
This Bill provides tax breaks for those who least need them at a time when the Government continues to hammer vulnerable groups. The PRSI change will further strangle the economy because as people's incomes are reduced they will have less money to spend in the domestic economy. The issue of upward only rent reviews has not yet been dealt with. The upward only rent scheme is a landlords' charter. It is proving to be a huge obstacle, particularly in provincial towns where there is low footfall in terms of the maintenance of the viability of businesses. I ask that the Government revisit this issue. Upward only rent reviews are squeezing the life out of businesses that are only breaking even and hanging on.
Section 29 provides for generous tax breaks for the owners of Georgian houses in Limerick, which is the constituency of the Minister for Finance, and in Waterford. Such people can claim up to 100% tax back on money spent over ten years. The irony of this is the commitment given by Government in the programme for Government to regeneration, in particular in Limerick. Little has been done in that regard and time does not permit me to go into detail. Everybody knows that little has happened in terms of real regeneration of particular areas. As I stated, this Bill introduces tax breaks for owners of Georgian houses. What type of message does this send out to people living in areas needing regeneration?
Sinn Féin made a comprehensive budget submission, which was costed and solutions based, to the Minister for Finance. We could hold it up to any of the budget submissions made between 2008 and 2010 by the Government parties when in opposition.
Sinn Féin did not check it with the Department of Finance.
We did. The Minister of State and I can have that discussion another day.
Sinn Féin had the chance to do so but did not avail of it.
The figures provided are based on information from departmental officials. It is up to the Minister of State if he wants to accuse those officials of lying. I will not do so because I do not believe it is true.
Sinn Féin did not take up the offer.
We are not saying we have all of the solutions.
Sinn Féin offers no solutions.
Our submission was solution-based. It was put forward in an attempt to assist the Government in achieving savings and introducing fair tax proposals that would assist it in meeting the budget deficit target. Sinn Féin agrees with Government on the need to close that gap.
This gap must be closed. Our proposals were made in an honest way. The difference between our proposals and what is contained in the Finance Bill and the budget is that we were trying to be fair and progressive. We were trying to protect low and middle income families and stimulate the economy and help job creation. If this does not happen the domestic economy will not move, and this has been well covered. Two weeks ago the Government had an opportunity to lift the Anglo Irish Bank debt off the shoulders of the public but instead we had high drama, which some would say was stage-managed, to galvanise the debt and nail it onto our backs and the backs of our children. This is to be regretted. The Finance Bill will not lift people out of poverty. Unfortunately, it will create more poverty, and I do not say this lightly. We have nine or ten months until the next budget and I ask the Minister to examine some of the proposals we have made and consider them. We believe they can help stimulate economic growth and help protect those on low and middle incomes who most need our protection.
I thank the Minister for his work on the Bill and I am grateful for this opportunity to debate it. Despite what the previous speaker stated, I believe the Bill is positive and reflects some of the positive focus the Government places on job creation in particular. At the forefront of the Government's agenda is the task of job creation and getting the 450,000 people on the live register back to work. It is the only means by which we can lead this country to recovery and is at the core of virtually every decision made in the Chamber. Creating an environment for sustainable job growth while also bringing our deficit closer to the mark year on year is by no means an easy task but it is what we said we would do and what we were elected to do.
The Bill introduces innovative measures to support Irish businesses while retaining foreign direct investment as a cornerstone of our economic progress and targeting investment in areas with the capacity to create good sustainable jobs. In this regard, the Bill has been welcomed by financial and business industries nationwide, which is a major achievement in itself. The area I represent, which will be in the new constituency of Dublin Fingal, has always had a particular interest in the development of the aviation sector given the presence of Dublin Airport. I very much welcome the provisions in the Bill to introduce industrial building allowances for the sector and the provision of an accelerated capital allowance scheme. Both of these measures will encourage expansion and growth of the industry. While I have singled out my constituency, it is of course true the success of the sector is of national importance, and I will attempt to put this into perspective. Ireland is the premier global location for aircraft leasing and the aviation sector now manages more than half of the world's aviation fleet, according to the Federation of Aerospace Enterprises in Ireland, with assets worth more than €83 billion. In the past two years passenger numbers have begun to recover at a rate of 2% per annum. This is expected to increase in 2013 with new routes announced several months ago, at the end of 2012. These figures were provided by Dublin Airport yesterday.
According to the 2011 Oxford Economics report, the aviation sector contributes €4.6 billion to our GDP and an extra €5.3 billion in related benefits through tourism. It supports 54,000 Irish jobs, 16,000 of which are direct with the remainder indirect. To put this into a local perspective, Dublin Airport makes up the largest concentration of employees in my constituency. The most recent figures available suggest approximately 10,000 jobs are directly located on the campus of Dublin Airport. Indirectly, more than four times this amount of jobs are created in the overall region as a result of employment at the airport. These statistics do not even reflect the impact of the sector's contribution to export business expansion, world market accessibility and overall business transport costs. These sectors must be carefully guarded and I very much commend the Minister for the contribution to the industry in this respect. The measure will attract more aviation sector business and jobs throughout Ireland, and will encourage businesses to expand. It will also create an opportunity for increased growth in aircraft maintenance and repair. It is probably worth pointing out the outstanding work of the local authorities, Fingal County Council and Dublin City Council, to facilitate this growth.
With regard to tourism and transport, the auto diesel excise reliefs for hauliers and private coach companies are significant and have been widely welcomed nationwide. There is genuine relief in particular in the haulage industry, which has been struggling in terms of competitiveness due to the price of fuel. I hope this measure will contribute largely to protecting jobs in the sector and in time grow the industry to create further expansion and employment. I also welcome moves to include coach operators in this relief to provide some shield from the ever-increasing price of diesel. Our coach operators are at the forefront of our tourism industry and reducing costs for them will mean value for money for tourists, whom we will particularly welcome to the country in 2013 given it is the year of The Gathering.
I also recognise the very welcome provision in section 29 for a pilot urban regeneration scheme. This is effectively an inner-city regeneration programme in itself. If the scheme is successful it will lead the way for the restoration of many historic buildings in our cities, some of which are of intrinsic architectural value. It will not only allow the public to take pride once again in the appearance of our streets and our city heritage but it also has enormous potential to get people back into the city centres to live and work. To directly contradict the comments of the previous speaker, this is not about lining the pockets of investors; it is about directly facilitating homeowners to regenerate their properties and live and work in the inner city. The opportunity to restore and bring a new lease of life back to the street in areas which have been forgotten and allowed to deteriorate is a very exciting prospect and I hope it will get the investment and interest it deserves. The initiative is very much at the first stage and there is a long way to go, but it is a worthwhile project to begin.
We are one of the strongest performers when it comes to foreign direct investment, and recognising that any savings in the Bill do not impact on this in any way is key to the success of our future. The Government has steered us successfully from a period of uncertainty on the international stage to a position we are working towards of being one of the best small countries in which to do business. The Taoiseach has repeated this on a number of occasions, including today when visiting Microsoft. As a small country we were ranked first for investment initiatives to attract foreign direct investment in 2012 and this did not happen by accident. It was as a result of the determination by the Government to ensure our attractive position is guarded through retaining our current level of income tax and corporation tax, and continuously reforming the ease with which to do business.
US multinationals alone employ more than 100,000 people in the country. While some would be very quick to question the incentives offered to these companies in Ireland, it would be very difficult to question the value of 100,000 workers in sustainable jobs paying taxes, spending money and contributing to our economy. A total of 16,000 new jobs were created through foreign direct investment last year alone, and I commend the Minister for putting Ireland on top of this competitive stage by protecting these jobs and securing in the Bill the means by which we can continue to welcome more jobs and grow our economy.
The Finance Bill is a very welcome development as it seeks to address in a meaningful way the difficulties being experienced by many small and medium enterprises throughout the country. Small and medium enterprises are the single most important sector in our economy and benefit every town, village and parish by creating employment and providing services in parts of Ireland where multinationals are notable only by their absence. The protection of the sector at this period, through a restructuring programme and the provision of measures capable of addressing its rising problems and needs, is the responsibility of the Government and I am delighted to see the response of the Minister for Finance in this area.
The constituency I represent depends totally on the small and medium enterprise sector for employment due to the reluctance of the IDA to engage with areas of lower population. The small and medium enterprise sector in Cavan and Monaghan is one of the most vibrant and progressive in the country. For this reason I welcome the ten point tax reform plan aimed at supporting this sector.
The agricultural sector has again come to the aid of our struggling economy. For so long that sector was the shrinking violet of a past age, and farmers found it difficult to interest their children in taking over farms. Thankfully, however, there has been an enormous change in this area and we are now seeing a new generation stepping into the breach. It is encouraging to see the Minister bringing forward packages in the Bill to smooth the transition and encourage modernisation. The introduction of a modern way of farming to this sector has had enormous potential for a country with a reputation for quality produce at a time when the world's focus is targeted on the procurement of quality food.
Unemployment is undoubtedly a major factor in today’s society and no more so than in my constituency of Cavan-Monaghan. It is a major issue for the Government to deal with. In this regard, the package of measures contained in the Bill designed to support small and medium businesses could not be more welcome.
I welcome the decision by the Minister, Deputy Noonan, to extend the employment and investment incentive and the seed capital scheme for a further seven years. The benefits of these schemes can be seen throughout Ireland and in particular in counties like Cavan and Monaghan. I hope that other small and medium enterprises will be encouraged to take up this funding while it is available.
It should also be noted that the Minister has extended the employment and investment scheme to the hotel sector. It is to be hoped this will motivate the owners of hotels and other guest accommodation to secure funding to carry out necessary repair and maintenance work on their properties.
The tourism industry is vital to the economy and currently provides 190,000 jobs or 11% of total employment in the country. The Cavan-Monaghan area has benefited from a large number of tourists coming to the area over the past couple of years to partake in numerous festivals. I anticipate that when we welcome back our returning emigrants for The Gathering, they will find reasonably priced accommodation in an excellent state of repair. This is most important for marketing the country.
The provisions of section 19 are to be applauded. The extension of stock relief until the end of 2015 will greatly benefit the farming community and especially those in my own constituency of Cavan-Monaghan. The inclusion of beef and sheep partnerships will benefit a number of farmers who had unnecessarily lost out on this relief. This also reaffirms and incentivises the benefits of education to young farmers and may encourage them to seek out grants which would enable them to pursue further education. Young farmers need to be encouraged to remain in Ireland to help secure the future of the farming sector which is an integral part of our economy. Any financial assistance extended to young farmers is money well spent.
Section 46 is also important to the farming community and deals with restructuring capital gains tax. Tax relief will now be available to farmers where the proceeds of a sale of farmland are reinvested for restructuring purposes. Exchanges of farmland are also to be included. Of course, all such sales and exchanges will be certified by Teagasc which will confirm that such transactions were made for the purposes of farm restructuring.
This provision should also assist those involved in the thriving agrifood sector who will now have an opportunity to consolidate and implement more efficient farming systems. It is vital that farmers are made aware that the scheme is only scheduled to run until 2015, so that any plans may be considered in the near future.
Sections 48 and 49 provide for repayments for auto diesel used in the course of business by qualifying road haulage and bus operators. I am pleased to see that the Minister for Finance has extended this relief to bus operators and it is to be hoped this provision will alleviate some of the pressures associated with running businesses dependent on auto diesel. This sector has suffered greatly as a result of the cost of auto diesel, which is their main input. I hope the relief may incentivise bus operators to provide new routes and in particular to provide more services to rural communities, particularly in counties Cavan and Monaghan. We hope to welcome a large number of tourists to our country in 2013 as part of The Gathering. It would be a great improvement if bus transport was in plentiful supply.
I reiterate my approval of the Bill and, in particular, my appreciation of the provisions specifically dealing with SMEs, the farming community, hauliers and coach operators. These matters have long required attention but were ignored by previous governments. Job creation and retention in small and medium businesses, the tourism sector and the farming community have been bolstered by the actions of this Government. This Bill is a vital component in those continuing efforts.
I want to focus on the many positive aspects of this Bill. For the first time in many years there is a recognition that SMEs will be crucial in getting the economy going again. The ten point plan includes measures that will make a real difference for the SME sector, such as reforming the three year corporation tax relief for start-up companies, increasing the cash receipts-based threshold for VAT, amending the company surcharge to improve cashflow for SMEs, and assisting foreign earning deductions for work related travel in certain additional countries. These are important measures for our economic recovery. Jobs are what this is all about and the Bill's measures will bring long-term dividends.
The Bill's provisions for the agricultural sector are also beneficial. In the past, agriculture was not highly regarded. When we were concentrating on bricks and mortar, agriculture was looked upon as second class. For the first time in many years, however, agriculture is now seen as the sector that will get the country up and running again.
There are a number of important initiatives in the legislation, including capital gains tax relief, which will enable restructuring. The Bill also extends the general 25% relief for young farmers. It is important to get young farmers back on the land. In Europe, Ireland has one of the lowest percentages of young farmers. We need to increase that number in order to achieve agricultural production targets in line with Food Harvest 2020. Prior to now, there was discrimination in farm partnerships in that they were confined to dairying. However, the beef and sheep sectors have now been included.
I welcome the Bill's provisions on auto diesel which have been extended to hauliers. The haulage industry has been on its knees in recent years, yet it provides an essential service to all sectors in society. The extension of these provisions to bus and travel companies is also welcome, particularly when we are trying to encourage more tourists to come here.
Agricultural contractors have been left out, however, and I would ask the Minister to reconsider the issue. They currently play a key part in agriculture and without them the sector would not be able to exist. Agricultural contractors are finding it very difficult due to the carbon tax that is being levied on them at the moment. The Minister should re-examine the matter and see if some relief can be made available to them.
I also wish to address the property tax element of the Bill. For the last two days, I have listened to the hypocrisy on the Opposition benches, in particular from Fianna Fáil and Sinn Féin. The latter party has no problem with having a property tax up North. They say they are an all-Ireland party, but if so, why not have the same on both sides of the Border? The average house in Northern Ireland pays £1,500 or £1,600 in property tax. We are introducing a property tax down here which is only a fraction of that.
Yesterday, I listened to my constituency colleague, Deputy John McGuinness, saying that it was the wrong tax at the wrong time. Was it the wrong time to introduce the universal social charge two years ago? Was it the wrong time to reduce the minimum wage two years ago? We all know the answer. We have got to be realistic.
Twice in my lifetime the country has been brought to the brink of economic disaster. In 1977, the problem began when the Government of the day did away with domestic rates on houses. That is where our problem began and since then we have been struggling to make up the difference. We must now bring certainty to the equation. Even though it is difficult to introduce any new tax at the moment, the property tax will bring certainty. People will know exactly what they will have to pay and there will be no change until 2016. The property tax will take pressure off commercial rates which represent one of the biggest disincentives to SMEs starting up. In 2015, local authorities will have the opportunity to set their own property tax, which will alleviate pressure on commercial businesses. Hopefully, by then we will be back up and running, as we should be.
I wish to share time with Deputy Seamus Healy.
Is that agreed? Agreed. I will have to call the Minister of State to reply to the debate at 2.15 p.m.
I have often heard members of the Government refer to the national finances as being a bit like household finances. I am sure Members have often heard the phrase, "Watch the pennies and the pounds will take care of themselves." At a national level, one can apply the same logic: "Watch the millions and the billions will take care of themselves."
The question is whether the Government is watching the millions. It emerged recently in several national newspapers that financial pressure on International News & Media, INM, has led it to enter into talks with its banks to restructure its debt. Political and business sources believe a write-down of up to €100 million may be in play. One article also explained how much of this write-down would fall on the people's backs through the nationalised banks and the figures to emerge are somewhere between €12.5 million and €13 million. When it comes to watching the pennies or the millions, it appears as though a decision will be made to spend some of these scarce millions on saving the necks of multimillionaires. What could be done instead of giving them this money they do not deserve to be let off? It is funny and very sad at the same time. Members heard a fantastic speech the other day by an Taoiseach, Deputy Kenny, on what went on in the Magdalen laundries. However, I find it somewhat strange that one apologises on one day and then goes on to abuse again the following day, by which I mean we must make choices as to where we spend our money. At present, it appears as though we are deciding to give money to multimillionaires while at the same time, it was reported this week that a child sex assault unit faces closure over staffing. Approximately 100 children have been treated or assessed since it opened in April 2011, some of whom were as young as 18 months old. It is the country's only dedicated 24-hour sexual assault treatment service for children and adolescents. We have choices to make and I believe the Government is making the wrong choices. We are choosing multimillionaires before choosing to take care of sexually abused children and then we have tears in this Chamber when people apologise for something. That is great but one must follow through continuously because one cannot abuse one day, apologise the next day and then go on to do the same thing again while expecting to get away with it.
What could be done with €12.5 million or €13 million? We are making a choice in this regard and choices are so difficult. I will provide Members with an idea of what could be done with this money instead of giving it to multimillionaires. Figures obtained by a newspaper show that despite cochlear ear implants for both ears being international best practice for children with profound deafness, the HSE does not fund the double procedures. Beaumont Hospital has sought funds since 2009. It provided a business case for the bilateral operation, which involves implanting an electronic device in both ears. However, the minimum cost of €36,000 to €40,000 for a double implant is not being provided and patients only are being given implants for one ear. It appears as though the choices being made are creating situations for children that are akin to going into Specsavers in the morning only to be told one only has enough money for one lens for one's child's glasses and that while it is not ideal, there is significant evidence this will benefit them were they to shut their other eye. However, this is the decision we are making. While the unilateral implant greatly improves hearing for profoundly deaf children, the lack of a bilateral service means hearing still is problematic. This is what is being done to children while we decide to pay back the richest people in this country on debts they took on in the knowledge of what they were doing. The advocacy group DeafHear has stated this meant hearing service improvements such as the newborn screening programme were being hampered. However, Beaumont Hospital's chief executive, Liam Duffy, stated there was little the hospital could do. Beaumont Hospital is not funded for bilateral implants - how could it be when one must fund multimillionaires to get them out of a hole - but recognises it is best practice to perform simultaneous bilateral implants and second implants for those children who already have received one. The hospital has been in contact with the HSE since 2009 regarding the funding necessary for bilateral services and submitted a business case in October 2012. Since the programme commenced 17 years ago, 346 people have received cochlear implants, with ten receiving bilateral implants and at present 350 children await a second implant.
I know Members on this side of the House are only a rabble and, according to the Government, do not really represent anyone. However, I have an amazing piece of technology in my office called a calculator. I tapped into the calculator to find out what it would cost to give good quality hearing to these 350 children in order that they would not need an special needs assistant, SNA, in the classroom and the State would not be obliged to spend additional money on them or to provide a special stereo for them in their classrooms. How much would be needed? The refrain of the Government is it must make choices but guess what choice it must make? We have a choice of funding the multimillionaire media moguls to the tune of €12.5 million to €13 million or giving a second cochlear implant to every single one of the aforementioned children. It is the Government's choice and it should make it. It is a choice between the children and the multimillionaire media moguls. I have a suspicion about who the Government will choose.
This Finance Bill continues the programme of austerity the Government has embraced since it came to power, having promised and committed otherwise during the general election campaign. It targets low and middle-income families, is deeply unjust and regressive and deepens the divide in Irish society. It is important to remember what this austerity means in practice. I have to hand recent figures, which are not mine but come from the Central Statistics Office, stating that 7% of the population now lives in consistent poverty, which is up from 4.2% in 2008. It tells one that in the third year-on-year increase, 733,000 people, or 16% or the population, are at risk of poverty. It tells us that 90,000 children live in consistent poverty and 230,000 children live in relative poverty at a time when a so-called Minister for Social Protection has cut child benefit and has recently instructed community welfare officers nationwide not to pay any grants to needy families who might need a few bob for their children's communions or confirmations. This is what austerity means. It means there are 180,000 people in mortgage distress and that 430,000 people are on the live register, more than 50% of whom are long-term unemployed. Moreover, that figure of course would be much larger but for the 250 people per day who emigrate.
Austerity also means the Finance Bill does not contain a single provision that creates employment. Figures have been thrown out recently by various Ministers suggesting jobs have been created. However, independent assessment by the Central Statistics Office has demonstrated repeatedly that there has been a net reduction in jobs in the economy since the Government came to power. This is a Government of jobs destruction, not of job creation. The figures are clear that at the end of last year, there were fewer people at work in the economy than was the case a year previously. The numbers employed have fallen from 1.845 million in 2011 to 1.841 million in 2012.
This Bill is predicated on a reduction in employment in 2012, which happened, and stagnation of employment in 2013 but, unfortunately, it looks like it will be worse than stagnation because to tackle the unemployment problem, the Government needs to create jobs and not only the environment to create jobs. The Government needs to engage in job creation because private enterprise has failed and companies have been on an investment strike for the past number of years.
We are repeatedly told that there is no choice, but there are clear choices. The Minister for Finance recently informed the House by way of reply to a parliamentary question that the top 10,000 earners in the State had a total annual income of €5.95 billion, an average of €595,000 each. He also said that the top 1% of income earners or 21,650 high earners, had a gross annual income of €8.742 billion, an average of €403,760 each per annum. These people are not being targeted or being asked for one additional cent in this Bill. None of them probably works in the public sector and the Taoiseach is not even included in that figure. The Government does not propose in the legislation to target additional revenue from these people. We could easily, without causing difficulty for them, generate €1 billion in additional taxation from them. The Government parties propose to extract €1 billion from public servants over the next three years, the vast majority of whom earn close to the average industrial wage but they will not touch people who have incomes of €595,000 or €403,000 per annum. This is a Government which supports the wealthy and powerful in this society similar to the old buddy system where a small minority of people are in a golden circle.
The CSO also points out that the figure for net personal assets, which does not include business assets, farms or homes, is higher than it was in 2007, having increased from €111.675 billion to €120 billion in 2011. In addition, wealthy people have increased their income and assets during the recession. For instance, a recent report by Nick Webb in a Sunday newspaper highlighted that the 300 wealthiest people in the State increased the value of their assets by €12 billion in 2010 and 2011. Wealthy people have made money during the recession while the vast majority of people lost income. They have significantly increased their assets but they are not being asked to pay their fair share. The Government has choices but it has chosen to target lower and middle income families with cutbacks and increased taxation and it is allowing wealthy people with significant income and assets, which have increased during the recession, to get off scot free. James Connolly would turn in his grave. In a year that is the centenary of the 1913 Lockout, that is a sad reflection on the Labour Party.
I thank the many Deputies who have made considered and useful contributions to this debate. On Tuesday, Members asked why were we bringing in the Bill so late at night. The phrase "in darkness" was used as if people could not work or journalists could not report on us after sundown. The reason was that the Minister for Finance wanted to make the opening contribution on Second Stage and his schedule meant that this would not have been possible otherwise.
I would like to address the sale of Irish Life to Great-West Lifeco, which was raised by Deputies Michael McGrath, Doherty and Boyd Barrett. Following completion of the sale, all decisions on employees will be a matter for Great-West Lifeco whose chief executive officer has stated that any job losses that would occur following the acquisition of Irish Life would be on a voluntary basis. The State will recoup in full the investment made by the taxpayer and will also receive a dividend from Irish Life, an asset which the State did not intend to hold for the medium term. We do not expect Irish Life to be asset stripped. Great-West Lifeco views Ireland as an important strategic market and, through its Canada Life subsidiary, has operated here since 1903.
With regard to budget measures generally, a number of Members referred to fairness. Ireland has been consistently assessed highly by the OECD for the progressivity of its taxation system. It is estimated that in 2013, the top 5% of income earners will pay 44% of the total income tax, with those earning €50,000 or less, comprising 78% of income earners, paying 19% of the total. Furthermore, it is estimated 841,000 individuals, some 40 % of the income tax base, will be exempt from income tax. When marginal rates of tax are high, jobs are lost. That has been the experience and that is the evidence. Indirect and capital taxes have a less adverse impact on employment. However, that does not mean that the wealthy should not carry the principal burden of tax. The minimum effective tax restriction on high earners is designed to ensure this.
The question of tax justice cannot be resolved simply by dealing with income tax. Other taxation measures are being taken by the Government, which will bring about further equity across the board. The property tax is one such measure, which will assist in ensuring fairness throughout the tax code. I agree that the tax code is an instrument to bring about equality and fairness, to which the Government is committed. It is not all about income tax, as other taxes can achieve those outcomes as well, which is often ignored by Members opposite, including those who proclaim to be left wing or socialist in their thinking. One of the great contradictions, and there have been many, that has been thrown up by this crisis is the spectacle of socialist commentators and politicians opposing property taxes.
Their position is extraordinary and counter-intuitive of my understanding of socialism and social democracy. In any case, I digress.
Deputies Michael McGrath and Doherty referred to the lack of a stimulus programme for the domestic economy. In striving to restore sustainability to the public finances the Government has always been mindful of protecting the emerging recovery. We outlined a number of steps in budget 2013, including a ten point plan for small and medium-sized enterprises. At the same time, Ireland is in a programme of financial assistance and we have made firm commitments to bring down our deficit to sustainable levels by 2015. We have consistently achieved these commitments and remain committed to achieving the overall deficit reduction objective by 2015.
Capital expenditure was addressed, particularly by Deputies Michael McGrath and Doherty. The Minister for Public Expenditure and Reform was determined to avoid further reductions to the capital budget for 2013 over those already agreed as part of the review of the public capital programme for 2011. A number of adjustments were made which led to the overall ceiling being increased by more than €60 million. The Exchequer capital programme will be augmented by a €2.25 billion infrastructure stimulus package announced by the Minister for Public Expenditure and Reform in July 2012.
Deputies Doherty and Boyd Barrett commented on the effective rate of tax paid by companies in Ireland. It is worth restating that all companies in Ireland pay the standard 12.5% rate on their trading profits which are generated in Ireland. In general, the ability of companies to lower their worldwide rates of tax using international structures reflects the global context in which all countries operate. We have seen much commentary and information recently about the types of procedures and techniques that have been used by companies throughout the world to circumvent national tax codes. The only way to combat such arrangements is for countries to work together to consider how international rules can be amended to ensure fair levels of taxation. It is self-evident that it is not possible for one country to address this issue on its own because it involves a set of techniques and approaches which is international in its effect and can only be combated by a concerted international approach. In this regard, Ireland is an active participant in the OECD project on base erosion and profit shifting. With regard to Deputy Ross's suggestion that the rate of corporation tax be reduced, it would be impossible to justify such a measure as it would have a significant deadweight cost and any change would contradict the Government's stated commitment to the 12.5% rate.
In response to the points made by Deputy Michael McGrath on the National Asset Management Agency and the hotel sector, NAMA does not own or operate hotels. The agency's role in respect of the properties securing its loans is that of a secured lender. Other than properties that have been enforced, all of which are listed on NAMA's website and managed by the appointed receivers or administrators, properties, including hotels, continue to be managed by their existing owners or their professional managers or agents. More than 900 hotels are operating in Ireland and NAMA has exposure to only 13% of the sector.
To respond to Deputy Colreavy's comments about State revenue from oil exploration, this is an expensive business with significant upfront costs. Government policy is based on the need to strike a balance between the need to give sufficient encouragement to those who would search out and extract natural resources and the need to ensure the State secures an appropriate return.
A number of Deputies referred to the local property tax. The Finance (Local Property Tax) (Amendment) Bill 2013 will be considered by the Oireachtas shortly. Deputy Michael McGrath and others suggested that no account has been taken of ability to pay the tax. On the contrary, a range of provisions exist within the Finance (Local Property Tax) Act for exemptions and deferrals which are income related and take account of difficulties faced by people in mortgage distress.
A number of Deputies have also referred to valuing residential properties prone to flooding. As a self-assessment tax, it is, in the first instance, a matter for the property owner to calculate the tax due under the local property tax, based on his or her assessment of the market value of the property. The impact of serious and regular flooding on a property is one factor a property owner would take into account.
With regard to Deputy Michael McGrath's comments about the research and development tax credit, the cost of the regime in 2010 was €224 million. The suggestion to remove the 2003 base year would have a minimum additional cost of €45 million per annum. However, this and other issues will be considered as part of the review being carried out by the Department of Finance.
Deputies Michael McGrath and Doherty made reference to analysis of the outcome of previous Finance Bill measures, particularly the special assignee relief programme. We should have data in respect of the programme's first year of operation later this year.
The Minister of State should note that we are obliged to bring the debate to a close at 2.30 p.m. For this reason, he may wish to adjust his notes.
Deputy Timmins raised the issue of funding for companies in areas that are considered to be non-assisted for the purposes of the employment and investment incentive. The guidelines governing this scheme state that aid is restricted to providing financing up to the start-up stage for medium-sized enterprises located in non-assisted areas.
Deputies Michael McGrath, Doherty, Mattie McGrath and Lawlor commented on vehicle registration tax, VRT, and road tax. The revised VRT rates and structure were agreed following consultation. Given that the industry has been calling for a second registration period, it is prudent to monitor the impact of these changes. While the increase in motor tax rates is a matter for the Minister for the Environment, Community and Local Government, it is important to note that the CO2 based system introduced in 2008 has worked well. The re-registration of vehicles, an issue raised by Deputy O'Donovan, has been proposed previously. The various stakeholder agencies involved were consulted and are not in favour of such a measure.
Deputies Doherty, Boyd Barrett and Stanley raised concerns about the living city initiative. The objectives of this modest pilot initiative are to encourage people back to the centre of cities to live in historic buildings and encourage the regeneration of the retail heartland of central business districts. I find it difficult to understand how any serious objection could be made to such a scheme. I do not know if the Deputies' concerns are born of any particular objection to assistance being given or allocated towards our Georgian heritage. I cannot speculate as to whether this is the motivation for the concerns expressed by certain Deputies but the idea that we should not take such a progressive step to protect the fabric of the architectural heritage of our cities is strange.
Deputy Timmins asked about the reduction in the level of tax relief provided for donations of heritage property to the State from 80% of the market value to 50%. This measure is in recognition of an extension of scope of the scheme and to provide better value for money for the State in respect of donations of property.
Deputies Michael McGrath and Mattie McGrath suggested tax relief for home improvements. Tax relief available on interest paid on loans for home improvements until this year was not effective in stimulating such activity.
Deputy Michael McGrath raised queries about the arrangements to give effect to the commitment in the programme for Government to cap taxpayers' subsidies for pension schemes that deliver income of more than €60,000 per annum. The Minister indicated that these changes would be put in place next year. The Deputy also referred to the pension fund levy and expressed doubts about its cessation. The legislation is clear on this point and the Minister made a specific commitment in his budget 2013 speech that the levy would not be renewed after 2014.
Deputy Michael McGrath stated he would press for an extension of the pre-retirement access to additional voluntary contribution provisions and Deputy Kyne also raised issues in this regard. Deputy McGrath also expressed doubts about the tax yield. We have to be cautious in this area. The Minister has deliberately restricted this measure to a proportion of contributions made by pension scheme members above their regular or compulsory contributions. The estimates included in the budget arithmetic are based on pension sector figures of the value of additional voluntary contributions and on the assumption that 10% of these contributions would be encashed over the three year period of the access option.
Deputy Pringle suggested the sale of alcohol in off-licences be examined, while Deputies Michael McGrath and Mattie McGrath drew attention to a proposal to apply a levy to such sales. Legal advice received from the Office of the Attorney General suggested this could not be introduced without breaking European Union rules. Further examination of this issue is continuing. I have a particular interest in this area. As I indicated previously, I intend to introduce measures on alcohol, alcohol policy and legislation to deal with these issues, including alcohol pricing. My proposals will be brought to Government in the near future.
Deputy Michael McGrath referred to the stamp duty levy on health insurance contracts. This provision is only one element of the permanent risk equalisation scheme provided for in the Health Insurance (Amendment) Act 2012. The scheme is linked to the principle of community rating, which needs to be supported by a scheme that subsidises the cost of health care for older and sicker people across the market of health insurers where one or more companies have a greater share of such customers. The support system currently in place, known as risk equalisation, is a vital element of Government policy on the health insurance system.
I note that time does not permit me to address all the issues raised in the past couple of days. A small number of matters remain under consideration for inclusion on Committee Stage and the Minister for Finance looks forward to another informed discussion at that stage. Consideration will also be given to any constructive suggestions put forward during this debate.
- Barry, Tom.
- Breen, Pat.
- Buttimer, Jerry.
- Byrne, Catherine.
- Byrne, Eric.
- Cannon, Ciarán.
- Coffey, Paudie.
- Conaghan, Michael.
- Conlan, Seán.
- Connaughton, Paul J.
- Conway, Ciara.
- Corcoran Kennedy, Marcella.
- Creed, Michael.
- Daly, Jim.
- Deasy, John.
- Deering, Pat.
- Doherty, Regina.
- Donohoe, Paschal.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J.
- Farrell, Alan.
- Ferris, Anne.
- Fitzpatrick, Peter.
- Flanagan, Charles.
- Flanagan, Terence.
- Gilmore, Eamon.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Hayes, Tom.
- Heydon, Martin.
- Hogan, Phil.
- Humphreys, Kevin.
- Keating, Derek.
- Kehoe, Paul.
- Kenny, Seán.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Kathleen.
- Lyons, John.
- Maloney, Eamonn.
- McHugh, Joe.
- McLoughlin, Tony.
- McNamara, Michael.
- Mitchell, Olivia.
- Mulherin, Michelle.
- Murphy, Dara.
- Nash, Gerald.
- Naughten, Denis.
- Neville, Dan.
- Nolan, Derek.
- Ó Ríordáin, Aodhán.
- O'Donovan, Patrick.
- O'Mahony, John.
- O'Reilly, Joe.
- Penrose, Willie.
- Phelan, John Paul.
- Quinn, Ruairí.
- Reilly, James.
- Ryan, Brendan.
- Shatter, Alan.
- Stagg, Emmet.
- Stanton, David.
- Timmins, Billy.
- Tuffy, Joanna.
- Twomey, Liam.
- Wall, Jack.
- Walsh, Brian.
- White, Alex.
- Adams, Gerry.
- Boyd Barrett, Richard.
- Broughan, Thomas P.
- Calleary, Dara.
- Collins, Joan.
- Cowen, Barry.
- Crowe, Seán.
- Daly, Clare.
- Doherty, Pearse.
- Dooley, Timmy.
- Ellis, Dessie.
- Ferris, Martin.
- Flanagan, Luke 'Ming'.
- Fleming, Sean.
- Fleming, Tom.
- Grealish, Noel.
- Halligan, John.
- Healy, Seamus.
- Higgins, Joe.
- Kirk, Seamus.
- Kitt, Michael P.
- Mac Lochlainn, Pádraig.
- Martin, Micheál.
- McConalogue, Charlie.
- McDonald, Mary Lou.
- McGrath, Finian.
- McGrath, Michael.
- McGuinness, John.
- McLellan, Sandra.
- Moynihan, Michael.
- Murphy, Catherine.
- Ó Fearghaíl, Seán.
- Ó Snodaigh, Aengus.
- O'Brien, Jonathan.
- O'Sullivan, Maureen.
- Pringle, Thomas.
- Ross, Shane.
- Shortall, Róisín.
- Smith, Brendan.
- Troy, Robert.
- Wallace, Mick.