I was dealing with the construction industry and their concern. I am not just representing the views of the industry because they are made available to all Members of the House, irrespective of party affiliation. I have listened to the ordinary contractor at constituency level. Those people in the past had been reasonably busy particularly with reconstruction grants initiated by the last Government and the new house grants and reconstruction grants which required the applicant to prove that a legitimate builder was being employed and that his VAT and tax payments were in order. This was a boost to the building industry, especially for the legitimate building industry. The abolition of those grants has done immense damage to the ordinary, small registered legitimate contractor and his enterprise. I listen to them on a daily basis admitting that they have to let people go because they have no work for them.
New house building seems to have slowed down particularly with the announcement by the Minister's colleague, Deputy Pádraig Flynn, of the new house purchase option available to local authority tenants. It is a great scheme for the local authority tenants and we all welcome it and wait with bated breath for the 1988 valuations which will be put on houses. Until those valuations are known, we will not know how generous or otherwise this new tenant purchase scheme will be. It has affected the building industry. Local authority tenants if at all possible availed of opportunities to better themselves particularly in the area of housing. The removal of the £5,000 special grant to move from a local authority house into either a secondhand house or a new house was an incentive for activity in the building sector that created employment for building industry workers.
There was a widespread belief that the Minister would reduce the VAT rate on the building industry to a level of 10 per cent. That might have made some contribution to the problem but, unfortunately, it did not happen and, as a result, the building industry is now in a dilemma and see no light at the end of the tunnel. They see nothing in this Finance Bill to stimulate employment; no local authority house building programme for the majority of our councils; some money to continue existing starts but very few, if any, new starts.
There has been an argument by various councils that they have a surplus of houses. I will accept that if that is so it may mean that one council could afford to wait until next year for a capital allocation but that is not true of all councils who still have long lists of people waiting to be rehoused; people who are entitled to be housed. Under the 1947 Labourers Cottages Act they are entitled to be considered by the local authority for housing because they are incapable of providing houses for themselves. I am sure Senator Brendan Ryan will deal with this issue and the whole question of homeless people and people who are in desperate need of having their housing conditions improved. These are the areas of the construction industry for which because of the capital programme reduction I see no prospect in the future unless something unforeseen happens.
I hope something will happen because it is an industry that has given a lot of employment in the past and whenever we as public representatives see building activity in any area, we recognise it as a vote of confidence in the area. We all welcome it no matter what the building is. Within the planning restrictions as laid down it is good to see things being produced and built whether they are houses, or factories, or whatever. The State has a major role in the national building programme, both in relation to roads and the production of houses, hospitals and other such public buildings.
The amnesty offered by the Minister for tax defaulters is a matter that I have dealt with briefly because I know that particular sector have been lackadaisical, to say the least, about how they treated their tax responsibility. Hopefully, the Minister's initiative will have the desired effect. If there are people out there who owe money and do not avail of this amnesty by the end of September they will be subject to considerable tax contributions to the State. Is it necessary for people to apply in the interim period to be considered? Is it expected that people will voluntarily apply or will they get a notice from the Revenue Commissioners referring to the announcement and saying: "This is your option: do you want to take it? Yes or no?", or are they expected to contact the revenue officials? Many of these defaulters do not even accept that they owe the money in the first place. We will have to break down that barrier and if the move gets in money that is due, congratulations to the Minister because that money should have been paid just as PAYE moneys are always paid.
I have looked with interest at the financial centre the Government are producing on the docks site and I want to congratulate the Taoiseach on his recent efforts in the United States to trigger off further interest in that project which, from what we have been told, was beginning to lag. Somehow or another there was a lack of interest in spite of the tremendous incentives that obviously were being offered to the financial sector and institutions in this country and outside it. We would like to have an update on how things are going, whether it is coming on stream as expected and what contribution, apart from the investment in the area, the project will make to the overall economy of the country.
I have tremendous reservations about the designation of areas under the urban renewal programme. I now see that corporations who have made legitimate application to the Minister for the Environment for inclusion in these urban renewal programmes have been put on the back burner. They have been put on "hold" and, because of the incentive that is being given to some areas, other areas with legitimate urban renewal to carry out are suffering from the disadvantage of not having been in the favoured few at the beginning. If I talk about the favoured few I refer to the extension of this scheme to areas that could not to any extent be considered for urban renewal; they are urban development. To extend a scheme like that, which was a good scheme, into other areas for urban development was not providing the type of incentive I had hoped this scheme was about. I would love to see this scheme being used by genuine urban areas, local authorities like those in Clonmel and Carrick-on-Suir, who had specific projects in mind and where a small incentive like this would be a tremendous advantage. They have to compete with the chosen few who were included in the first bunch and with the additional ones announced by the Minister.
I was with the Minister recently when meeting one of these applicant local authorities. He indicated that he is now in such a state with the scheme that it is unlikely to be continued. It has really got out of control, because everybody now wants to get it. Suddenly you will find that Ireland — as we are seen in the Community — will be one designated area and that the whole lot of it needs to be renewed. A new look is needed at the way we are going, so that the favoured few will not always be the beneficiaries from Finance Bills or from successive Governments, or in any change in the tax structure which is a genuine effort to reorganise the whole tax code, as we understand it.
The sooner we start off the process of dialogue about this the better. The problem in Opposition and still almost in Government — which Fine Gael are — is that they have to get the agreement of the Government party who like to have control of the reins. They do not want to have to go back to all-party committees to have discussions about Government policy, but that is what a democracy is about. When you have a minority Government it is extremely difficult to govern it with any credibility. When you do come up with what is a popular suggestion about the reduction of the tax bands, the immediate response is from the PAYE sector who would love to feel that there was a hope in the future for a reduction to 25 per cent. With an educated electorate — the only way you can now get away with that type of suggestion is to put the total package together. You must be able to say: "This is where we would get the £500 million or £600 million that will be required to give this recompense to the PAYE sector," which is, as everybody agrees, the over-taxed sector of our community.
All the demands for changes in the tax code have come from the other sector in the hope that, whatever else might be given, they somehow would be given the opportunity to pay less in the future. I have never once heard them express concern for the actual worker who had his tax removed from his pay before he ever sees it. I know the Minister will admit that that sector has been — to say the least — generous in the past with all Governments. Naturally, they had a right to question how the money was spent. They also had a right to ask questions when additional tax was demanded from them, as happened last year. In spite of that, the Minister curtailed the services to which they felt they were legitimately entitled. They had paid for them. Other legislation was brought in which even increased their contributions by way of health levies, health charges and hospital charges, all which have been covered previously under PRSI.
We have to be honest with people. We cannot do the three-card trick every day of the week. The PAYE sector have had about enough of it. They feel they have made a major contribution. They feel their services have been decimated because the Minister wants to do something with his balance of payments. In spite of all our efforts and the Minister's excellent figures he has to admit that we still borrowed more money this year. I saw a projection from his Department some years ago which showed that it will be about another four years, with our present trends, without any additional borrowing, before the repayments on existing commitments will be down. That is not just because the Minister did anything great last year or this year, or the fact that this Government took office.
This is happening because we were all realistic. We realised that we could not continue borrowing if we could not afford to pay it back. There are two ways of doing something. You can borrow — which most of us agree is the wrong way of doing it — or you can continue to give the service and make the sector who have not been contributing to the coffers help to pay for it. That is the realistic way to do it. It can be politically unpopular but, if we are being honest with ourselves in reaching a consensus, that is how it should be done. One way to do it is by at least doing something with the tax code.
The Commission on Taxation published two reports. The Minister's predecessor from his party and predecessors from other parties have always pointed to these Commission reports. It is popular to do that at public meetings. The reality is that we would be unable to implement any of the recommendations of the Commission on Taxation without a tremendous change in our whole attitude to tax and taxation. What is now exempt would be taxed in the future. Each Minister claims some little credit for little moves made in the tax area. They claim that such a move was mentioned in the report of the Commission on Taxation.
I accept the warning that the Minister voiced about 1992, the Single European Act and the integrated policy that is being talked about now by everybody. He is asked every day to explain to us what this will mean. I suppose he will assure us that, like joining the Community, things will not be any easier for any of us. Nothing will be cheaper than it is now, although various sectors will feel that, with a levelling off of all the taxes across all the boundaries, products that are twice as expensive here in comparison with Britain, Germany or France will all be the same price. I suppose, knowing the Minister, that he will make sure that his take for the State will be the same. Otherwise, there would be a loss to the Exchequer.
Usually when there is a loss to the Exchequer, the poor suffer most because their services are withdrawn, or the PAYE sector are expected to make up the difference. Until the Minister convinces me that other sectors will have to make their contribution to lighten the burden with the changes that will take place, I will fear that the situation will worsen for working people, poor people, people in need of work, and for hospitals, schools and for social welfare beneficiaries. The year 1992 could bring some tremendous changes. Our experience in the past has been that, when changes take place across the spectrum of taxation, such as border taxation and Customs and Excise levies, usually the people who suffer most are the people in the lower financial categories.
I hope the Minister will show some initiative in starting a debate, and also moving in Finance Bills between now and 1992, to take account of what will happen. The differences he itemised have been of the order of £400 million or £500 million. Many of us said this would happen. The Minister suggested in the Referendum debate one of the advantages would be doing away with all of these borders. They are not really there any more, but they are there from a taxation point of view. They are there for the traveller and for the tourist. They are there for the worker and for the emigrants.
This Government have a major responsibility. I do not see any evidence of it in the 1988 Finance Bill, except where the Minister refers to it briefly. That is my contribution at Second Stage. I will have some recommendations on Committee Stage, particularly in the area of increasing allowances within the existing bands in the whole area of taxation. I will be debating the various recommendations in further detail with the Minister and I hope I will not be too argumentative in the process.