Finance Bill 2010 [Certified Money Bill]: Second Stage.

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

When I spoke on Second Stage of the Finance Bill 2010 in Dáil Éireann, I outlined how the measures being introduced will ensure all sectors play their part in the critical task of stabilising the public finances. This has to be the starting point to any consideration of how we develop taxation provisions in the context in which we currently find ourselves.

The extraordinary budgetary adjustments the Government has introduced during this economic crisis have halted the deterioration in the budget balance and boosted international confidence in our ability to put our house in order. There are now tentative signs that the economy is beginning to stabilise on a number of fronts. Key macro-economic and fiscal data released in recent months are generally in line with expectations. There is an emerging consensus among economic commentators that growth is likely to return in the second half of the year and re-establish itself on a full-year basis in 2011. This perspective is broadly shared by my Department. This is why I announced in my budget speech last December that we are now turning the corner with a plan to take us on the path of sustainable economic growth.

While there have been many difficulties during these challenging times, there has also been a broad consensus nationally that decisive action was required to preserve our hard earned economic and social progress. By taking the necessary corrective measures to stabilise the public finances, we have generally seen a positive reaction from investors and an easing in our cost of borrowing. Across the wider economy we are seeing a number of necessary adjustments which will help restore our cost competitiveness. In particular, general price levels continue to fall and there is evidence that labour costs are improving. This will greatly assist our competitiveness. In overall terms, these developments will position us to take advantage of a strengthening international economy and we can expect to see domestic business and economic confidence returning with increased economic growth in our leading export markets. This will ultimately translate into increased economic activity and employment opportunities. Continuous investment over a number of decades in our greatest resource, our highly educated and skilled workforce, means our potential to grow is enhanced as future economic development will be focused on harnessing emerging opportunities in knowledge-intensive sectors.

The Finance Bill is key to our fiscal and economic strategy. The Bill targets support to enterprise and the Government remains committed to providing a pro-enterprise environment and maintaining our relatively low tax burden on business. This will assist us to maintain and enhance our competitiveness. For example, the Bill extends the existing scheme of tax exemptions on the income and gains of new start-up companies in the first three years of operation. It will now be available to companies which commence to trade this year. Measures have also been introduced to enhance the existing energy efficiency scheme and the regimes for intangible assets and research and development activity.

In a major move, the Bill contains measures to facilitate the development of Islamic finance in Ireland. Islamic finance is the fastest growing sector of the international financial services industry and it is important that we are in a position to attract this new type of investment. Under these provisions, the tax treatment applicable to conventional finance transactions will be extended to embrace Islamic finance.

The Bill enhances the capability of the Revenue Commissioners on a number of fronts. Possibly the most significant measure is the introduction of a mandatory disclosure regime for tax schemes that have characteristics that indicate they may be abusive. By obtaining information on aggressive tax avoidance schemes at an early stage, the Government can decide, if appropriate, to close them down.

The Bill also facilitates access by Revenue to information in the possession of NAMA on any offshore entities or vehicles. In addition, it allows for a substantial increase in the fines a court may impose on those convicted on indictment of certain offences under excise and custom law.

We are aware of the long-term challenge posed by climate change and it is the responsibility of governments everywhere to change behaviour to reduce greenhouse gas emissions. As a result, the Bill provides full details of the carbon tax which I announced on budget day. The tax has already been applied to petrol and auto diesel. It will apply from next May to kerosene, marked gas oil, liquid petroleum gas, fuel oil and natural gas and the application of the tax to coal and commercial peat will be subject to a commencement order.

As a result of the European Court of Justice ruling against Ireland of 16 July 2009, the value added tax legislation must be amended to allow public bodies, including local authorities, to be subject to VAT where they engage in activities that lead to a distortion of competition with private operators. The Bill contains the necessary provisions. Examples of services that will now be subject to VAT include waste collection, landfill, recycling, off-street parking, toll roads, rent from certain lettings of commercial property and the supply of staff and data. It should be noted that such services are already subject to VAT where provided by a private operator. The standard or the reduced VAT rates will apply, as appropriate. The changes will generally apply from 1 July this year, but the application of VAT to the supply of sports and community facilities by public bodies, including local authorities, is being made subject to a commencement order. Education, health, water and passenger transport services will not be subject to VAT arising from the judgment. Business customers that charge VAT will be in a position to claim a deduction for any VAT charged by a public body. The impact on private individuals, VAT exempt entities and other non-registered bodies will depend on whether the VAT is passed on by the public bodies, which should be limited somewhat since public bodies providing the affected services will have entitlement to deduct VAT on their inputs.

In respect of tax expenditures, the Bill abolishes six tax reliefs recommended by the Commission on Taxation. I had already announced in the budget that mortgage interest relief would also be abolished on a phased basis and a number of property based reliefs in the health sector were removed by the Finance Act 2009. Senators will be aware that I propose to ask each of my colleagues in the Government to assess the effectiveness of tax expenditures within their sectors with particular reference to those that the Commission on Taxation recommended should be removed from the tax code. This process will commence shortly and my Department will review the outcome of the sectoral analysis. It is my intention to report back to the Cabinet on progress by the end of June. This new approach will place the onus for objectively justifying retention of expenditure on the sector benefiting from the relief. My Department will then be in a position to present the Cabinet, in good time for the 2011 budget, with an analysis on which decisions about the future of tax expenditures can be made.

I will refer to the detail of measures in the Bill. The Finance Bill 2010 is one of the larger Finance Bills of recent years and since it runs to 165 sections, Senators will appreciate that it is not practical for me to go through it section by section. Instead, I will describe some of its main provisions in the time available to me.

Part 1 covers a cost benefit analysis of tax expenditures. Senators will be aware that on Report Stage in the Dail I agreed to accept an Opposition amendment which requires that a report be prepared for Dáil Éireann on the tax forgone and the benefits in terms of job creation or otherwise arising from the expenditures included in the Bill. This amendment now forms section 1. It should be noted that the Government will propose a recommendation on Committee Stage to change the time period for the preparation of this report from one month after the passing of the Bill to three months. It is my belief a one-month timescale would be impractical and would not allow the preparation of a report of suitable substance.

Part 2 covers the income levy, income tax, corporation tax and capital gains tax. The budget day announcement that an exemption from the income levy would be provided for certain capital expenditure incurred by farmers in meeting the requirements of the EU nitrates directive is covered in section 3. This section also makes a number of technical amendments to the income levy, including placing the levy on the same footing as income tax for double taxation agreements and cross-border worker relief purposes. Two tax reliefs recommended for abolition by the Commission on Taxation are dealt with in section 5. This ends the tax relief for long-term care policies and the benefit-in-kind relief relating to the loan of certain art objects.

Section 6 contains a number of changes which will simplify the approval of qualifying health expenses for tax relief purposes. The requirement for approving medical institutions is removed. Instead, maintenance or treatment costs will now qualify for relief where they are necessarily incurred in association with the services of a practitioner or diagnostic procedures carried out on the advice of a practitioner. Under the revised arrangements, nursing home fees will qualify for relief, provided the nursing home concerned provides qualified nursing care on-site on a 24-hour basis. I am also amending the legislation to clarify that tax relief continues to be available in respect of private contributions made towards the cost of the upkeep of an individual under the fair deal scheme.

Changes to the mortgage interest relief regime announced in the budget are provided for in section 7. To support those who bought their homes at the peak of the housing market, relief is being extended until 2017 for those who took out a qualifying loan for a home purchase in 2004 or afterwards. It provides encouragement for those who may wish to purchase in the next three years and relief will be available at current levels until 2017 for loans taken out between 1 January this year and 31 December next year. This is an extension of six months on the budget day announcement.

Section 10 enhances the current remittance regime. It provides an incentive for foreign employees to undertake an assignment in Ireland. The scheme is being extended to include EU and EEA nationals, while reducing the amount of time they have to spend in Ireland from three years to one.

Section 12 provides for the abolition of tax relief on service charges. This change is in line with the recommendations of the Commission on Taxation. Provision of such relief is inconsistent with the overall thrust of having people meet the economic costs of the services provided. Relief can be claimed this year for service charges paid in 2009 and can be claimed next year for charges paid in 2010. However, there will be no relief for charges arising in 2011 which would have been claimed in 2012. An anti-avoidance provision in section 13 tightens the rent-a-room scheme.

Section 16 makes a number of amendments to certain pension-related tax provisions and introduces a requirement for the electronic delivery of certain information in respect of small self-administered pension schemes. Sections 17 to 19, inclusive, are designed to prevent abuse of certain share-based remuneration schemes for employees. As I announced in my Budget Statement, the Government seeks for high earners availing of tax incentive schemes to contribute more in the current difficult economic circumstances. Therefore, I am abolishing, with effect from 2010 tax year, the loss relief available to owners of significant buildings and gardens who are passive investors. Details of the changes are set out in section 21, with some transitional arrangements. The effective income tax rate paid by people subject to the restriction of reliefs or horizontal measure is increased from 20% to 30% in section 23. This change is an important move in ensuring all parts of society play their part in addressing the difficulties facing the public finances.

Section 24 brings Irish tax law into line with certain provisions of the EU treaties and will allow charities located in other member states access to the tax exemptions and reliefs already available to charities based in Ireland where all of the required conditions are met.

The windfall tax, a special 80% rate of tax on disposals of rezoned land which was introduced as part of the NAMA legislation, is amended by section 25. The provision will ensure material contraventions involving a rezoning are covered by the tax. The amendment also ensures the sale of one-off sites below an acre in size and €250,000 in value are not subject to the windfall tax.

Section 26 provides for the termination of the scheme of capital allowances in respect of child care facilities. The scheme, which was previously open-ended, now has a termination date of 30 September 2010, unless certain qualifying conditions are met. This measure is in line with the termination of other capital allowance schemes which were undertaken in the Finance Act 2009 and in line with a recommendation of the Commission on Taxation.

Section 27 amends section 372AW of the Taxes Consolidation Act 1997 which relates to the mid-Shannon corridor tourism infrastructure investment scheme. It extends by two years the period during which applications can be made and within which expenditure must be incurred for capital allowances purposes. Clearance will be required from the European Commission from a state aid perspective.

The tax relief that is currently allowed where donations of qualifying heritage properties are made to the Irish Heritage Trust is being extended in section 28 to similar donations to the Commissioners of Public Works. The overall financial limit on the value of such properties that can be donated in any tax year is, however, being retained.

Enhancing the attractiveness of Ireland as a location from which to conduct international business is an important theme in this Bill. The tax treatment applying to the new management company passport regime introduced by European legislation, the UCITS IV Directive, is clarified in section 31. The section also exempts investment undertakings from the requirement to obtain and maintain declarations of non-Irish tax resident unit holders where the investment fund in question is not marketed in Ireland to address the disproportionate administrative burden this places on industry. Section 33 removes the requirement for non-resident companies receiving dividends from Irish resident companies to provide a tax residence and-or auditor's certificate to obtain exemption from dividend withholding tax at source. Instead, a self-assessment system will apply.

The legislation on deposit interest retention tax is amended by section 37 in a number of respects. First, it removes personal retirement savings accounts from the scope of the DIRT regime. Second, it requires a relevant deposit taker to obtain the tax reference number of a person making a specified deposit. This will facilitate the introduction of the national solidarity bond announced in the budget speech. Third, financial institutions will make accelerated payments of DIRT tax to the Exchequer. Fourth, financial institutions must automatically issue statements setting out the amount of DIRT deducted rather than on request as at present.

I mentioned earlier that section 39 should enable us to tap into the growing market of Islamic finance, an industry that in 2007 was estimated to be worth approximately $700 billion and is estimated to be growing at roughly 10% per annum. Equally, it will ensure a level playing field is created for all commercial financial product providers so that the tax benefits that accrue to conventional financial products are also available to Islamic financial products.

Ireland's existing, but limited, arm's length pricing rules for manufacturing cease at the end of this year with the ending of manufacturing relief. The opportunity is now being taken in section 42 to introduce general transfer pricing legislation. The provisions will align Ireland's tax code in this area with international norms, namely the OECD transfer pricing guidelines.

A number of enhancements are being made to the scheme of tax relief introduced last year for the provision of intangible assets. The amendments in section 43 include additions to the list of specified intangible assets that can qualify under the scheme and a reduction in the period from 15 to ten years over which the assets must be held to avoid a clawback of the relief. The aim of these amendments is to increase the effectiveness of the scheme and to enhance its ability to attract international business to Ireland. The scheme is designed to facilitate Irish-based companies actively managing and exploiting intellectual property assets. It was never intended to cover expenditure on liquor licences, which expenditure is being specifically excluded from benefiting under the scheme.

Section 44 extends from seven to ten the categories of energy-efficient equipment eligible for the existing accelerated capital allowance scheme. The new categories included in this scheme are refrigeration and cooling systems, electromechanical systems, and catering and hospitality equipment.

The budget speech included an extension of the existing scheme where start-up companies have a three-year relief from corporation tax. Section 45 gives effect to this by covering companies commencing trade in 2010.

It is important the annual Finance Bill includes measures which ensure Ireland can continue to attract internationally traded services. Three consecutive sections, 46 to 48, inclusive, are aimed at this objective. These provisions provide for unilateral credit relief in respect of royalty flows from residents in non-treaty countries which is being extended to all trading companies, allowing unused credits in respect of foreign tax on branch profits to be carried forward and credited against corporation tax in succeeding accounting periods and to permit a company to carry forward excess losses of a foreign branch that were disregarded under section 847 of the Taxes Consolidation Act 1997. In a similar manner, changes are proposed in section 50 to the current tax treatment of dividends received by companies in this country that are aimed at improving the international business environment and help to encourage the creation of high quality employment in the economy.

Section 54 introduces a number of changes to the existing research and development tax credit scheme. The main change deals with a position where a company or company group is carrying out research and development activities in different facilities in separate geographical locations and the activities in one of those facilities is permanently discontinued.

Section 56 makes two amendments relating to the date of disposal and acquisition of an asset. The first amendment avoids a position where a person disposing of land under a compulsory purchase order could have been due to pay the liability before receiving compensation for the land. The second amendment ensures the proceeds from a CPO are liable to capital gains tax where the individual making the disposal dies before receiving the consideration.

Part 3 deals with Customs and Excise. The legislation for the introduction of a carbon tax and the consequential necessary legislative changes arising from this tax is set out in sections 64 to 87, inclusive. Section 88 confirms budget day announcements reducing the rates of alcohol products tax. Section 89 introduces amendments to the existing bio-fuel mineral oil tax relief scheme operated by the Department of Communications, Energy and Natural Resources. Sections 90 to 93, inclusive, provide for the updating of excise law provisions to reflect new European legislation introducing the new computerised excise movement control system.

Sections 94 to 101, inclusive, change the penalties applicable to certain offences under excise and custom law, increasing substantially the fines which a court may impose on persons convicted of such offences on indictment. Included here is section 97 which places on a clear legal footing the arrangements under which Customs and Excise can obtain information in respect of goods and passengers in advance of their arrival.

Vehicle registration tax issues are dealt with in sections 102 to 111, inclusive, including, in addition to the VRT items I already mentioned, the introduction from 1 January 2011 of a revised classification system for the registration of vehicles within the State to reflect the broader European classification system, and the introduction of a new requirement for vehicle insurers to inform Revenue where they issue a policy for a foreign registered vehicle for a period in excess of 42 days, which requirement will provide Revenue with a further tool to tackle VRT evasion by State residents who fail to re-register and pay the appropriate VRT on vehicles purchased outside the State. Included here are sections 107 and 108 which, respectively, confirm budget day announcements introducing a scrappage scheme and extending until 31 December 2012 the existing VRT exemption for electric vehicles and the existing VRT relief of up to €2,500 for plug-in hybrid electric vehicles.

Sections 112 to 133, inclusive, set out a range of changes to VAT. These changes include the reduction in the standard VAT rate by 0.5% to 21% with effect from 1 January 2010, the application of VAT to services provided by public bodies, including local authorities, the introduction of a margin scheme for second-hand means of transport and agricultural machinery, changes to the VAT treatment of telephone cards and prepaid top-ups for mobile phones, and the application of the reverse-charge mechanism to the supply of greenhouse gas emission allowances. In addition, sections 130 to 132, inclusive, make amendments to the VAT Acts to facilitate the introduction of a VAT consolidation Bill later this year.

Part 5 deals with stamp duty. Section 135 allows for the exchange of data between the Revenue and the Property Registration Authority in the context of the new e-stamping regime which was introduced in last year's Finance Act. A relief from stamp duty is being provided under section 138 to facilitate fund mergers enabling the reorganisation of funds into structures now permitted under recent European UCITS IV legislation. The levy on certain life assurance premiums is being amended by section 139 to exclude pensions and reinsurance business. The payment date for the levy is also being brought forward.

Provisions relating to a wide-ranging package modernising capital acquisitions tax are covered in section 147, the details of which are outlined in full in the explanatory memorandum. Delivered on an Exchequer-neutral basis, the changes will deliver significant benefits to customers and their agents, including the elimination of up to 75% of the current quantum of capital acquisitions tax documentation combined with the use of faster, simpler and more straightforward processes.

Part 7 covers miscellaneous provisions. Section 149 introduces a new mandatory disclosure regime for tax schemes that have characteristics which indicate they may be abusive. The measure will require promoters to give details of such schemes to the Revenue Commissioners, shortly after they are first marketed or made available for use. In certain limited circumstances, the obligation to disclose will fall on the users of such schemes. By obtaining information on aggressive tax avoidance schemes at an early stage before a loss of taxation becomes apparent, the Government can decide, if appropriate, to close them down before they can do significant damage to tax revenues.

The domicile levy is included in section 150. The levy will ensure wealthy citizens make a contribution to the national finances at this time of difficulty. It applies for the 2010 tax year and subsequent years.

In the Budget Statement, I highlighted the importance of improving the effectiveness of the Revenue Commissioners in addressing the challenges facing the collection of taxes, including dealing with tax avoidance. Sections 153 to 156, inclusive, contain several related measures which aim to achieve this objective.

Section 158 is the final step in the ratification process for new double taxation treaties with Bahrain, Belarus, Bosnia-Herzegovina, Moldova, Georgia and Serbia. It also provides for the ratification of eight tax information exchange agreements with Gibraltar, Guernsey, Jersey, Turks and Caicos Islands, Anguilla, Bermuda, Cayman Islands and Liechtenstein.

Section 161 provides for the introduction of a statutory scheme providing for voluntary deductions from members of the Judiciary to cover pension-related deductions.

Section 163 amends the Bretton Woods Agreements Act 1957 to provide that the Minister for Finance may guarantee the provision of a bilateral loan facility by the Central Bank, acting as agent of the Minister, to the International Monetary Fund, IMF.

I hope the Seanad has found useful this explanation of the Bill's measures. It is a comprehensive Bill that will enable us to take further steps on the path we have already established to fiscal and economic recovery.

The provisions are extensive and run to a large number of sections. However, it is worth bearing in mind that no substantive changes were made to income tax. The earlier emergency supplementary budget 2009 had already increased dramatically the imposition of income tax on taxpayers at every level. It had done so in a progressive and equitable way which ensured those who earned most, paid most.

As a result, however, of the various changes to income tax and levies introduced in the Finance (No. 2) Act 2009, it was clear a substantial number of taxpayers were paying more than 50% at the marginal rate on their income. The scope, therefore, for further increases in income tax was limited. Other branches of taxation have been examined and improved.

It is important, irrespective of which party is in government, that a strong signal is sent out through our taxation measures that Ireland is open and available for investment. In recent weeks, clear signals have emerged that international investors see Ireland as a desirable location for investment. That is a result of the budgetary decisions taken by the Government in the teeth of vigorous opposition. Those decisions have ensured that a measure of international confidence has returned to the country. They key task facing all of us is to translate that into confidence at home so we believe in ourselves as a people and in our capacity to tackle our economic problems. We must go ahead to lay the foundations for economic recovery.

Senator MacSharry normally expects me to have just a rant against the Government. However, I will take a break from that today as I have a series of questions, put to me by Members of the Lower House and the public, for the Minister for Finance.

The Senator is always constructive.

Public sector workers have taken a disproportionate hit with wage cuts and pension levies when compared to other taxpayers. The State part of the economy is in the direst of straits and controlling the public finances is the reason behind the Minister's introduction of the pension levy and wage cuts for public sector workers. The current industrial action being taken by public sector workers is damaging productivity in the State part of the economy. That will have a knock-on effect on the competitiveness of the overall economy, slowing down or even disrupting its recovery this year. What are the public sector unions seeking in their discussions with the Government? Knowing that would give us an opportunity to debate it further today.

According to dentists, the abolition of the optical and dental benefit has had a significant effect. Even the Health Service Executive, HSE, is recommending patients have teeth extracted rather than having fillings or other preventive work carried out because it is more expensive. That is not the direction public dental hygiene should take. Will the Minister indicate how long he intends to suspend this scheme? If it goes on for too long, it will set back the improvements in dental hygiene made over the past several years. Is the suspension due to problems with the social insurance fund? Is the fund more or less depleted and there is a need to replenish it?

A recent controversy emerged concerning pension provisions for the self-employed. I have been informed about how this affects general practitioners, GPs, so I am wondering how it may affect other groups. GPs who work under the General Medical Services, GMS, scheme are entitled to a pension provision from the scheme as they and the HSE contribute a percentage to a superannuation fund. Many of these GPs may also have set up a private pension scheme before they joined the GMS scheme. I have been informed by an accountant that these GPs must use up all their contribution options to the GMS superannuation scheme before they can contribute to a private scheme. Is this the case? If so, what is the status of these funds? Should the GPs pull out of their private pension funds and transfer them to the GMS superannuation fund?

Among GPs there is an understanding that locums who cover holidays or a long-term illness at a practice are self-employed except in exceptional circumstances in which they would be considered PAYE workers. When I contacted my local tax office, however, it was under the impression that locums were categorised as PAYE in the majority and self-employed in exceptional circumstances. There is a need for the Revenue Commissioners to write to every pharmacist, dentist and GP using locum services to inform them on this issue. GPs will receive tax back on this issue, and this is happening already in the case of Shannonside Co-op where each individual could be exposed to a tax bill of up to €100,000. I do not know if this could happen in other sectors of the economy. No one has approached me on this point but if there is a misinterpretation of tax code by professionals or other businesses, the matter should be cleared up.

I should go back to ranting against the Government.

I am listening.

It is not as taxing.

No, I am listening.

It is not as distracting as when the Minister for Finance is talking to everyone else in the building when I am asking him these questions.

The Leader is trying to facilitate the House.

I think I will go back to doing the usual stuff. The issues of Irish domicile and the €200,000 income levy the Minister wants to impose on those with Irish residency were raised in the Lower House. Someone who has a substantial batch of assets in this country and moves to another European country can avoid paying capital gains tax on it. However, someone residing abroad with substantial assets in Ireland will be hit with this tax. The point made by Deputy Seán Barrett in the Lower House was not to abolish this tax but to grant leeway to individuals in this position. They should not be treated in the same way as those who use the tax laws to avoid paying capital gains tax by moving from this jurisdiction to another. Rather than deliberately avoiding tax, these individuals have investments in Ireland and are considered to be Irish domiciled or are residing in another country. They are being hit by this levy and are treated in the same way as someone trying to avoid taxes. Perhaps the Minister can revisit this and allow for differentiation between these individuals given that they are interested in investing in this country and have no issue with paying some levy here. What does the Minister expect this levy to contribute? If individuals are living in another European country, the tax regimes that apply in both states may mean that not much will be gained from the measure.

Deputy Ring raised the issue of Westport House. The 80% windfall tax may have a detrimental effect on the possibility of developing Westport House as a heritage site and a tourist amenity in the west. This might be an inconsequential effect of the windfall tax. The Minister did not pay much attention to it when he discussed it on Committee Stage and I wonder whether he has changed his mind or come up with substantial changes.

The Minister is aware of the mineralogical processors exemption from the carbon tax. He has been in contact with individuals who gave him a legal opinion on his reasoning for introducing this section of the Finance Bill. I am interested to know whether he has had an opportunity to examine the legal opinion and how he intends making amendments to the Finance Bill before we move to Committee Stage. There are ongoing concerns about the bio-fuel industry, even though I know the Minister has accepted a number of changes. The Minister will be making changes and I would like him to comment on the exemptions to bio-fuels. It seems that many of these bio-fuels were imported, which seems to go against the spirit of what the Minister was trying to achieve. Perhaps the Minister can explain how to focus the tax exemption so it works within the Irish economy.

All of us want to get rid of property-based tax relief but an issue has been raised about primary care centres and their future viability. Development of primary care centres has stopped, as with many large projects, because people are unsure of what the future holds. There is also the potential for existing primary care centres to fail. Primary care centres and teams are an integral part of Government health policy and of the health policy of nearly every political party in the Oireachtas. They are part of getting Government mental health policy, A Vision for Change, working because we are trying to undertake community mental health care at primary care team level and primary care centres are an integral part of this. This is different from the Government co-location plan which I strongly objected to because it was not the best way of using tax relief. I did not think it was going to improve the Irish health care service. The Government should have focused on getting efficiencies and reform at the public health care level first and then encouraged the private sector to work on its own. The policy was dangerous from the patient point of view and seriously flawed from the taxpayer point of view. However, primary care centres are different. We should get rid of tax reliefs on buildings but there is need to come up with innovative ideas to make primary care centres work and to continue their development over the next few years. This policy should have been driven harder over recent years. The centres work well where they are but development has stalled and we need to come up with a new idea to get this going.

The Finance Bill raises a problem about the availability of rental cars in the summer months. The industry has made the Minister aware of this problem. Some years ago, 26,000 cars were available to rent to tourists during the summer months. The industry estimates we need 18,000 cars but the concern is that only 12,000 will be available this summer. I am sure these figures have been provided to the Minister. If these figures represent the truth, it would be awful to think the tourism industry would be seriously compromised because of changes to the Finance Bill. If there is a shortage of rental cars, it pushes up the cost. If the lack of availability is made known to tourists, they may not travel. We must discuss this.

The Limerick regeneration project was addressed extensively on Committee Stage in the Lower House. Does the Minister have anything new to add? We can discuss this again on Committee Stage.

The Minister said he would announce the amount needed to continue the bailout of banks next week. Unfortunately, it seems we are going back to Europe to get a substantial amount of funding to carry this out. Perhaps the Minister cannot reveal the gross figure but can give some indication of how this will impact on the public finances. A number of weeks ago the Minister referred to budgeting projections for the next two years and failed to mention this figure, even though this will be the equivalent of running the Department of Health and Children. That is a substantial sum of money and I would like to see how that would fit in with the Finance Bill and how the budget will operate over the next few years.

I have two questions that relate to NAMA but are addressed in the Finance Bill. Up to 20% of hotels may be moved into the care of NAMA over the next few months. In some respects, that is indirect State aid to poorly functioning businesses. The banks are propping up these hotels to move them safely towards the cover of NAMA but this is having a knock-on effect on those hotels that are trying to make it on their own. It is difficult for them to compete against the hotels that will be moved into the care of NAMA and that are being shored up by the banks because when the banks are in receivership as they are now, they can to a degree keep their rates down. This can have the effect of closing down a hotel that might otherwise survive. There is, therefore, a need for the Minister to comment on the problem and address it quickly. This is not something that can be allowed to linger for months because not only will the hotels placed in the care of NAMA close but this may also happen to a number of others.

There is a need to reduce the number of hotel rooms within the hotel sector. We lost the run of ourselves because it is estimated that there are between 10,000 and 15,000 hotel rooms too many. There is no direction from the Government on the way this wind-down will occur. If the market is allowed to do it, it could end up closing down hotels that may have the potential to survive.

In regard to what is happening in NAMA, I have a second question I would like the Minister to address. This is an issue that has been raised with me by individuals who, to put it mildy, get pissed off when they read about developers——

That is unparliamentary language.

——whose assets have been taken over by NAMA heading off to Marrakesh for the weekend on their private jets.

I would like to hear the Minister's view on another issue. A spate of individuals appear to be transferring assets to other family members. People are reading this in all of the newspapers and asking me the reason individuals who are supposed to owe NAMA millions, if not billions, of euro are openly able to transfer assets to family members, which appears to have no effect on their obligations to the banks or NAMA. Why is it that no Minister is making any comment on the matter?

Can the Senator give me any details?

Of developers transferring——

The Minister can read about it in the newspapers.

I have not seen it. The Senator should furnish me with information on it. The legislation deals with the matter.

In that respect, the Minister might point out how it deals with it.

It sets aside any such transactions. They are void.

When we discussed the legislation, it was dealt with——

I cannot interrupt on Second Stage.

Senator Twomey to continue, without interruption.

I do not mind the Minister interrupting me because it would be interesting to know how long——

I appreciate the Senator does not mind but, unfortunately, I cannot allow it.

It would cover transactions——

The Minister will respond at the end of the debate.

In that case I will put the question to him. He said the matter is covered in the legislation — I obviously missed that part — but if that is the case, why are we being made aware that individuals are transferring assets to other family members? Is there a time limit in that regard? In other words, if they transfer assets over a 12 month or two or three year period before NAMA activates the process, will it have any effect? How does it affect individuals?

I would appreciate it if the Minister answered these questions. Otherwise, we can raise them again on Committee Stage and obtain more detail.

I join others in welcoming the Minister. As Members are no doubt aware, the Finance Bill provides for implementation of the measures announced in the budget. I am glad to have an opportunity to make some points on it.

What has occurred in recent years was unimaginable in terms of the economic downturn, the decisions that have had to be made in recent budgets and the economic measures the Government has had to introduce. Many of the measures taken in the past 18 months have not been easy. Some very painful measures have had to be introduced which have affected every household in the land. In normal trading conditions one might not set out to introduce the measures that have had to be introduced and many of those included in the Bill are no different. Public sector pay and social welfare payments account for two thirds of Government spending and serious measures have had to be taken to deal with them.

A major component is the cost of interest payable in servicing the national debt. A common measure of debt servicing costs is the ratio of interest paid to tax revenue collected. Last year debt interest accounted for 8.5% of tax revenue, which is set to increase this year. Our main aim, therefore, is to ensure we keep to the targets set by the European Commission to reduce our debt to 3% of GDP by 2014.

As outlined by others, a budget adjustment of €8 billion has been made in the past two years. As difficult as the public sector pay cuts have been to swallow, it does not deduct from the necessity of taking such measures in what are incredible economic times. Consumer prices have fallen by approximately 6% in the past year and, as the Minister outlined, are set to continue to fall. We must take account of this when commenting on the pay cuts. All Members of the Oireachtas have had to do their bit also, which has been painful. No one would wish for these circumstances but that does not change the reality that the cuts were necessary.

As the Minister said, the evidence from international organisations such as the International Monetary Fund, the European Commission and the OECD suggests consolidation, driven by cuts in expenditure, is more successful in reducing budget deficits than consolidation based on tax increases. We cannot tax our way out of the current economic difficulties, although the Minister has indicated we will have to consider broadening the tax base in future budgets. The measures taken by us have been welcomed internationally, as well as being used as an example in countries such as Greece, Spain and Portugal which find themselves in a more difficult economic position.

In terms of the budget, as outlined by the Minister and other Members in the various economic debates we have had in the House, our objective is to restore stability to the public finances, regain our competitiveness and, in so doing, rehabilitate and renew the banking sector. The aim of the budget and the Bill is to bring forward measures to save some €4 billion. The Bill is divided into two sections dealing with taxation, including income tax, the income levy, corporation tax and capital gains tax, and customs and excise, including the carbon tax, VAT, stamp duties, capital acquisitions, etc. The Minister outlined much of the detail in that regard.

During our debate on the budget prior to Christmas we discussed various new measures such as the car scrappage scheme, the introduction of a carbon tax, the domicile levy of €200,000 payable by Irish-domiciled individuals who are Irish citizens, a measure which is to be welcomed, the decrease in excise duty and the reduction in the VAT rate. In that regard, I note the United Kingdom, in its budget being announced, has not adjusted its VAT rate. The Border counties, about which I have been in contact with the Minister, have been seriously hit. Now that the anticipated change in the VAT rate that may have helped has not materialised, I ask him to examine the tangible suggestion I made in the House that would examine subvention by central government of the commercial rates payable by the retail sector in the Border counties. While it would cost money, it would be doable and might assist retailers in pricing themselves into the market in what is a very difficult operating environment, given current VAT rates, the 30% differential in the minimum wage, currency exchanges, etc. It is something that could be done. With assistance of others, I am compiling research on the actual cost but believe it is something we could do to help struggling retailers in that part of the country who are trying very hard to maintain employment. It will be hard to maintain employment in those areas. I have paid tribute here in the past to some of the initiatives taken by trade unions and businesses throughout the Border counties, in particular in Sligo where they have joined forces to promote a campaign entitled "Fair Dealers" which is pressuring retailers to come up with value for money options for consumers struggling on tighter budgets to find value for money. This campaign is being backed by the trade union movement which, in turn, is doing all it can to promote shopping local. I believe central government could provide tangible assistance in this regard. It is not conceivable that we will have a different VAT rate for the Border counties or that we could permit them to pay a lower minimum wage, which I would not support, but it would be tangible to consider this type of direct subvention which would assist retailers in pricing themselves into the market. This could perhaps assist them in paying their phone bills, insurance fees for the year or contribute towards employment of a part-time employee. Perhaps the Minister will consider that proposal.

Other measures of interest and referred to in detail by the Minister include extension of the mortgage interest relief scheme. I welcome in particular the extension of this scheme to assist homeowners. It is imperative that in the current climate we do all we can to assist homeowners, thousands of whom are facing the prospect of losing their homes owing to mortgage payment arrears. There exists also the possibility of future commercially driven interest rate increases, which have already begun to take effect, and rises in European Central Bank rates. Members will be aware that I am a founder of the Prevention of the Family Home Repossession Group which had the pleasure of meeting yesterday with the Minister. I know from that meeting that the Minister is fully committed to ensuring every possible protection is afforded to homeowners, including possible statutory protection which I know on the advice of the expert group and having considered all the options, the Minister is not against. I am confident that as a result of the work of that group and many others, and given the Minister's commitment, that the maximum possible support will be given to families facing the prospect of difficulty in meeting payments owing to interest rate rises which may be imminent and to the changed economic environment in which people are losing their jobs. Providing that security, through maximising the potential for people to remain in their homes, is to be welcomed. I thank the Minister for his commitment in this regard and for taking the time to meet with the Prevention of the Family Home Repossession group and for acknowledging and listening to its views.

The Finance Bill 2010 also brings forward a number of new measures which the Minister has already described in some detail. I would like to touch on a few of those measures. I welcome in particular the innovative approach taken by the Minister and departmental officials in this Bill to the development of Islamic Finance, which, as the Minister stated, is the fastest growing sector of the financial services industry throughout the world. When one considers what the development of the Financial Services Centre did for Ireland in a different decade, moves like this can perhaps help to ensure we provide the correct template to allow that industry flourish in this country as we look to the future.

In accordance with the European Court of Justice ruling of July, Ireland must broaden its VAT regime to cover public bodies, including local authorities engaged in activities such as landfill, recycling and waste collection, an issue which the Minister referred to in some detail. The Minister has indicated the possible introduction of a property tax. While this is again very unpalatable, I would welcome it. I recall that in 1977, more than 30 years ago, at a time when my father was Minister of State — the Minister's father, the late Deputy Brian Lenihan senior, was Minister at that time — domestic rates were abolished, which with the benefit of hindsight was not a good move. It may have been popular and welcomed by many families struggling at that time to meet those costs but I do not believe, in terms of the cost base of our nation and our regions' ability to develop on their own steam and local authorities' ability to fund their own capital projects and services, that it was a good decision. In the context of broadening the VAT take for local authorities and services which they provide I welcome the debate on property tax and local government funding. This issue must be examined. If one could wave a wand and nip back to 1977 one might perhaps adjust that measure.

The increase in fines for those in breach of customs and excise law, in particular to curb the increasing amount of tobacco smuggling, is a welcome initiative. The Revenue Commissioners have been given more powers to investigate and compel freight companies and shipping agents to work with investigators in tracking down smuggled goods. The range of provisions in the Bill that will assist innovation, research and development must also be welcomed. I welcome also that the tax charge on foreign dividends paid out of trading profits from countries with which we do not have a tax treaty will be reduced from 25% to 12.5%. The Bill also introduces a remittance scheme which allows executives earning more than €100,000 of overseas companies in the Republic to receive their salaries outside the country and to pay tax only on the money they remit. The extension of the remittance scheme under this Finance Bill will improve Ireland's ability to attract highly skilled, value-added, individuals capable of acting as magnets to attract economic activity. The scheme will now cover EU and European Economic Area, EEA, nationals while the condition that people covered by the scheme must remain in Ireland for a minimum of three years is to be reduced to one year, another welcome measure. These types of innovative measures must always be flexible and agile enough to implement as needed to assist the economy.

The Bill's provisions are aimed at bringing clarity with regard to the tax treatment applying to foreign funds managed from Ireland under the recent EU directive, including Undertakings for Collective Investments in Transferable Securities, as referred to by the Minister, and an extension of stamp duty to accommodate mergers of investment undertakings. Where shares in a company are transferred and the transferee procures either directly or indirectly for any debt of the company, or any related company, to be repaid, this debt will now be regarded as consideration for the transfer and stamp duty shall be payable accordingly. Small to medium sized enterprise business ventures are also encouraged in the Bill, with tax exemptions being made during the first three years of the company's existence and the application process being extended through 2010. One wonders if the first three years of profitability rather than the first three years of existence should apply given few companies enjoy the benefit of profitability in their first three years of operation. This is an issue which could be discussed further on Committee Stage.

The windfall tax has been mentioned. I note this provision is being amended in section 25 of the Finance Bill 2010 and that it relates to the NAMA legislation. I acknowledge I will have ample opportunity to speak about that issue on Committee Stage. I believe, having reflected on the matter, that the 80% windfall tax would have been great 15 or 20 years ago before we began rezoning land. I probably lobbied for some of that rezoning at the time. With the benefit of hindsight, I am not sure if this windfall tax is focussed. We do not need further rezoning as commercial green belt or agricultural land. I am concerned about brown field sites where formerly industrial or commercial activity took place. This tax could perhaps be applied in respect of rezoning this type of land for, say residential purposes, if appropriate, within towns and cities. There is no demand for such a measure at the moment; I am only looking to the future. I am not sure whether application of the windfall tax in this regard is appropriate now but will give an example of where it could be applied. Under Part V of planning and development laws 20% of all developments are required to be social and affordable homes. This would have been great had we been dealing with a blank canvass. However, that was not the case. In Sligo, Cork and Limerick, where the average social housing mix is in excess of 30% — nationally the figure is 15% — nobody is living in the towns. It is conceivable at least that as we seek to rejuvenate and obtain a better social mix of housing in areas such as Limerick, Sligo and Cork that we could consider zoning former brown field sites, industrial or retail in nature, for residential purposes. I do not believe it is appropriate in that context that we would have an 80% tax. As I stated earlier, there is no demand for this tax now but there will be before too long and we must be cognisant of that.

The provisions in Budget 2010 and this Bill are, as the Minister stated, about getting our economy back on track. I welcome the extensive work done by the Minister to date in this regard. Irrespective of health, the Minister has been inspirational. I referred earlier to a meeting yesterday between the Minister and a delegation seeking support for people struggling to meet mortgage repayments. The Minister was at that meeting bursting with enthusiasm. All he has done during the past number of years, as unpalatable as have been many of those measures for families throughout the country, is a great credit to him. It has provided leadership and confidence to many in the international markets and certainly to me. I agree with the Minister's assessment that it is time for us to be confident in our own ability to ensure we will come out of the other end. This will turn. The appropriate action has been taken to position us correctly to ensure we can capitalise on that when it does. Of course there are risks from international factors that are out of our control, such as whether there might be a double-dip recession in America when the stimulus runs out at the end of the year. Senator Walsh, who has done research over there in recent weeks, told me that economists over there expect 3% growth this year but when the stimulus runs out, there might be a double-dip recession at the end of that. These are matters out of our control. We can only focus on what we can control. What the Government has been doing in a variety of measures in stabilising the public finances, rehabilitating the banking sector and in trying to regain our competitiveness is starting to show dividends. The Minister has indicated that in his contribution. I wish him well in the future.

The international media are acknowledging our progress in a major way. In the bond auctions Ireland is performing exceptionally well on a regular basis now. David Schnautz, a bond analyst with Commerz Bank stated: "We still favour Irish bonds in the peripheral space from a value perspective especially as Ireland is on the right track to fix its problems". That indicates the kind of commentary in support of that. The former Minister for Finance, Mr. Alan Dukes, who knows all about tough times, has come out in support of Government measures, as has Dr. Garret FitzGerald, a man with credibility, despite what certain members of the Fine Gael Front Bench might think. I will not go as far as to say that the family seems to be at war again. It is to be hoped that is not the case.

Both Fine Gael and Labour agree that the public finances must be adjusted by €4 billion but all that divides us is how that should be achieved. Let us focus on the positives and be confident in our ability to come out of this, capitalise on the good work that has been done so far and put our weight behind the Minister, Deputy Brian Lenihan, and the Government in ensuring we are best positioned to capitalise on the upturn when it comes, as it inevitably will come.

I wish to share my time with Senator Norris.

Is that agreed? Agreed.

I feel somewhat embarrassed and shy having heard Senator MacSharry say that his father was a Minister when the Minister's father was a Minister. As my father was never a Minister I really feel out of it.

It was to give credibility to the criticism I was about to make of a policy of the day. I assure the Senator it has nothing to do with nepotism.

Senator MacSharry spoke about the suggestion of a subsidy for the traders and retailers near the Border. While I have no idea how this could be made to work, it seems a much better solution than the proposals I have heard from others. My mother came from County Armagh and my father came from County Down. My only sister married in Portadown. It is anathema to me to hear people suggest we are not being Irish if we shop across the Border. I am not a partitionist but people who argue we should not shop across the Border are partitionists and we need to fight very hard to avoid that sort of thing.

I was in Brussels yesterday at a meeting at which 20 of the 27 EU countries were represented and we had plenty of time to discuss the economy. There is clear recognition of what the Minister for Finance has done and what has been achieved in recent months in Ireland. I was impressed that some people knew we had been spending €20 billion a year more than we could afford and that it was costing us approximately €400 million a week. The people present were not economists as such; they were traders, business people, retailers, wholesalers and people in distribution. Greece is the country of which we all know and it is a reminder to us of what has been achieved and how we have managed to get out, but we have no room to relax.

The example of Latvia was cited to me. It had a GDP of -17% and is now down to -2%. Ukraine, whose Parliament's Speaker visited the House during the Order of Business today, came from a GDP deficit of -15% to +2% or +3%, all inside a very short period of time. It is possible to achieve it. We are no longer part of the PIGS group of countries and I hope we do not get back into it. It is a reminder to us that we need to keep our attention on it and cannot afford to relax. Somehow or other we all — not just the Minister — need to ensure we can convince the rest of our community, especially the public sector unions, which do not seem to understand, how serious it could have been and how serious it could still be if we do not manage to achieve what we have set out to do. It very difficult to explain to them why senior civil servants did not seem to have the same setback that the junior civil servants had. Perhaps the Minister might again explain his thinking on that.

I am concerned that some of the steps the Minister is taking could damage our ability to get on top of things in the long term. One of them is the carbon tax. Senator Twomey has already spoken about this. Yesterday France abandoned the carbon tax because many French business people thought it would put them at a disadvantage compared with other EU counterparts which did not have a carbon tax. One media website stated: "Speaking in Parliament on Tuesday, Prime Minister François Fillon said the country's environmental policy needed to be ‘better coordinated with the European Union', particularly so that French companies do not lose ground against their German counterparts." My attention was only drawn to this at approximately 11 o'clock this morning. It goes on to quote the countries that have introduced or plan to introduce a carbon tax and those which have advised they are definitely not going to do so. It also quotes those countries that do not want tax harmonisation, of which we are one. It is therefore highly unlikely there will be tax harmonisation. We might find ourselves placing our businesses at a disadvantage because we have a carbon tax when our competitors do not.

This brings me on to my main point which is that we depend so much on exports and have been very successful in that regard. I had coffee yesterday with a man from Finland who spoke about the great difficulty that country has had because its exports have dropped quite dramatically. Our exports have not had any such dramatic drop and we must not do anything that might affect that. The danger is that anything that is not involved in exports may be in danger. When I was in college, Professor George O'Brien, who was dean of the faculty of commerce, and James Meenan explained to us that a country is a bit like a household and if one takes in one's washing for other members of the family but does not actually export or manage to get anything from outside the country, one is not going to be able to afford to live for too long on that basis. We need to focus our attention on exports to ensure we can succeed.

I very much agree with the overall sentiment of the Finance Bill, which aims to help to foster enterprise and employment, hopefully as the entire world economy is starting to improve. A few years ago I met the Secretary of Labor in the Administration of President George W. Bush. She said her job was not to create employment; her job was to create the environment so that the private sector could create the employment itself. When I hear calls for us to create jobs, I feel the jobs are much more likely to be achieved by the environment the Minister is trying to create in this Bill. The world economy is starting to improve, I hope, despite concerns about double dips. There are some positive signs.

Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.

I welcome the Minister of State, Deputy Haughey. Senator Quinn was in possession.

I welcome the Minister of State. I was saying before the break that I agreed with the overall sentiment of the Bill, which aims to foster employment through enterprise. The world economy is starting to improve, from which I hope we will benefit. There are positive signs. The latest quarterly economic outlook compiled by Bloxham stockbrokers states the economy appears to be moving in the right direction, having picked up in February after a disappointing January. The report also carries warnings against complacency by relying too much on economic recovery in the United States. The basis of the economy and the budget must be exports. We must not rely on producing just for the domestic market.

The Bill is very supportive of foreign direct investment. I hope the changes to the corporation tax regime made in the Bill will make it easier for multinationals to locate their headquarters, research departments and patents in this country. Experts on taxation have indicated that changes to the tax treatment of royalties will be a major boost. The legislation encourages multinationals to leave their patents and copyrights in Ireland by easing the administrative burden and providing tax credits. As has been shown by research, making the tax code simpler to understand and more fair, not just for multinationals but also ordinary people, actually raises more money for the Government. I strongly believe income can be increased in that way. I have opposed percentages all my life. Sometimes one can increase income by reducing the percentages. I have learned this from business but the same principle also applies in governance.

I recall when the former Minister, Mr. Charlie McCreevy, reduced the betting tax rate. He was howled at by some people who said he was looking after his friends in the horse industry. If I recall correctly, he reduced the betting tax from 20% to 10% and told us the following year that he had made more money from the 10% rate than from the 20% rate. He then reduced it to 5% and returned the following year to tell us he had also made more money from it. I am a great believer that one can sometimes make more money by reducing tax rates. We could also make more money by simplifying the tax code. When one makes the tax code simpler, one eliminates loopholes and opportunities for individuals and businesses to cheat the system. This is an area in which there is room for more simplification for the customer.

The Bill contains measures to enhance the research and development tax credit. I hope this will encourage even more multinationals to locate here. New talent will be attracted to conduct research and development in Ireland because of the measures being proposed. While the Government has made no concrete commitment to research spending beyond 2013, the recent report from the innovation task force commits the Government to investing at least 3% of GDP in research and development until 2020. Not to put a damper on such an aspirational document, but is this wise, given that the traded goods and services sector is dominated by multinationals?

There has been massive emphasis on promoting the idea that research and development in our universities will somehow mean we can create the new Google or eBay overnight. Government policy appears to have overlooked the obvious. Innovation policy should be focused on the needs of the customer, as is the case in Cambridge. Mr. David Connell is one of the authors of a very interesting report entitled, Exploding the Myths of UK Innovation Policy. In it he states: "The business of carrying out research and development contracts to solve customer problems and develop new products has been highly tuned by leading Cambridge firms." What happened in that case was that the universities had developed the product and the multinationals had taken it on and created jobs on that basis. We should heed this important report which emphasises that paid research and development to solve customers' problems often leads to ideas for standard, brand name products that can be commercialised through subsidies or separate spin-off companies. It is called a "natural, demand-led innovation process" which leads to high wage rate, export intensive industries — exactly the type of industries that are ideal for Ireland. I said earlier that I was in Brussels yesterday. I spoke to a man from Finland who told me how Finland's exports had dropped dramatically in the past year — the Finns are hoping to revive them — because they were based on basic products and not focused on the needs of customers in terms of research and development. That is a much better way to proceed and we must work hard to do this.

Our indigenous food industry is an example of where research and development are important. Food production is a massive area with potential that is often overlooked. I was a member of the group which set up Bord Bia in 1994. Ireland is renowned for food production. The United Nations Food and Agriculture Organization, FAO, has stated global food production will have to increase by 70% — I was amazed by that figure when I read it — to provide for an additional 2.3 billion people by 2050. In spite of this, I was disappointed when the Minister for Communications, Energy and Natural Resources, Deputy Ryan, said we should not even discuss genetically modified food. The world must produce more food and this is Ireland's strength. We should be able to debate the issue and discuss whether crop productivity can be improved with science. We should debate it, rather than say it is not open for discussion. I accept that Senator Boyle and I do not agree on genetically modified food. I am not sure who is right but I am sure we should debate the issue. We should not ban such a debate.

Our farmers must compete with others who are employing modern methods of production, otherwise we will be left behind. We need to find a way to be able to handle that. Ireland is the 24th largest milk producer in the world and the 17th largest beef producer. On the other hand, New Zealand is the 8th largest milk producer and its co-operative Fonterra is the world's largest dairy company which had a market share of 2.7% of world production two years ago. Glanbia was the 20th largest, with a market share of 0.4%. New Zealand is not as big as Ireland. Why can Irish producers like Dairygold, Kerry and Glanbia not be the biggest in the world? Why is a country like New Zealand much more successful than Ireland? It depends on our investment in research and development.

An area on which I wish to touch, which was mentioned by the Minister, is the potential for the expansion of Irish education. Educational services is another area where there is much room for expansion. We are world renowned in the field but Irish education exports do not even have a separate category when it comes to service exports. What must also be borne in mind is that education is Australia's 3rd biggest export earner, while in New Zealand education accounts for 7% of its export earnings. My contribution today concentrated on exports because, to a large extent, we have to depend on them. According to a new European Commission study of third level education, international recruiters believe that Ireland produces the most highly-employable graduates in the world, which is a great compliment to us. Universities in other countries have rated Ireland's universities as excellent. Another report from the European Commission stated that, considering their size, Finland, Ireland and Sweden are the countries with more universities pointed out by peers as being excellent. In analysing the efficiency of the various third-level systems worldwide, it found that Ireland, Japan, Sweden, Britain and the Netherlands were top of most efficiency lists. We have major opportunities to do things in that area.

The University of Phoenix, North America's largest private education provider, has increased enrolments from 384,000 to 455,000 in one year, which has been done without an increase in physical buildings. I am an adjunct professor of marketing in NUIG — I asked what "adjunct" meant and was told it means I do not get paid. I gave a lecture to five classes last year. One was in France, one was in Russia, one was in Virginia, one was in another part of the United States and one was in Galway. They were able to question me. It was very interesting to see what one can do with modern technology. The University of Phoenix has increased its enrolments by a dramatic amount which has been done without any increase in physical buildings. It was able to use electronic means of communicating and lecturing. In Ireland, Hibernia College is pioneering on-line education and exporting its knowledge to foreign universities.

As I have mentioned before in Doha, the capital of Qatar, there are branch campuses of a number of universities from the United States, including Cornell, Georgetown, Texas A&M and others. The University of Sorbonne in Paris has set up a campus in Abu Dhabi. The Royal College of Surgeons, long open to foreign students, has set up branches in Malaysia, Bahrain and Dubai, but there is much more that other Irish institutions like UCD, Trinity College or renowned second level or third level schools could do.

We could promote Irish exports through new European Union embassies. This country relies massively on exports. I have always argued that St. Patrick's Day is a brand which we should continue to use effectively around the world. We need to better promote our products, such as food, abroad. The formation of the European Union diplomatic service, the European External Action Service, and the new embassies that will be established could provide a really significant medium to promote Irish exports. There are a lot of Irish companies which want to expand but face some difficulties in doing so. How can we help such companies on the ground in the international arena? The External Action Service is meant to focus on diplomatic issues, but there is great scope for the service to get involved in business issues. In particular, small and medium Irish enterprises need help on such issues.

For instance, what does an Irish company which wants to expand in a country where there is no Irish embassy do? The European Union will have more embassies than any other country in the world, including the United States, so a massive opportunity is provided by the European Union embassies for Irish companies to expand into unexplored markets. I urge the Government to promote the idea of using the new European Union embassies to provide assistance to Irish companies which need some initial help to expand internationally.

I have touched on five different areas which are all related to the Finance Bill and what we should be doing. I said I support the Bill. We need to do a strong job in order to ensure we identify and maintain our reliance on exports and make sure we do not run into the same problems which could happen if we do not keep a determined, objective view on how we can manage to balance our economy.

We entered into budget 2010 and the Finance Bill, which underpins the policy implications of the budget, with an understanding, given that we contacted the European Commission for support for the medium-term to get our public finances in order, that we required an adjustment of €4 billion. It was something of an open secret that, as a minority party in Government, we would have argued that the balance might have been achieved differently. There may have been fewer cuts to public expenditure and more revenue raising measures.

The Minister for Finance got that decision right. In meeting our obligations under the six year programme we had to show, and have shown decisively, that we needed to get public expenditure under control. It has required difficult decisions in regard to public sector pay and social welfare. Unfortunately, it was unavoidable if we wanted to show seriousness and intent regarding how we were to get public finances back on track and, in particular, how we could examine the illustration of confidence which is needed among those from whom we will have to borrow money for a significant period of time until we achieve a budget balance.

It is a myth that budget 2010 has been expenditure-led. The Minister highlighted several measures in his opening speech on the Bill which show there is a strong commitment on the part of the Government to implement many of the recommendations of the Commission on Taxation. As a negotiator for the original programme for Government and its recent review, and having asked that a Commission on Taxation be established, it is important to commit ourselves to such a course because the decisions which will be made regarding budget 2011 will reflect many more of those recommendations.

In the 2010 budget and the Finance Bill we have attempted to address some of the measures which have caused ongoing public concern, such as the taxation of high earners and the tax treatment of those who claim non-domicile status, and how we can change the taxation system. The main contribution from the Green Party has been to increase the basket of taxation measures which are available in order to avoid the type of economic shock which we experienced in our Exchequer returns by being too reliant on particular taxes which were subject to economic vagaries. Chief among those is the introduction of a carbon levy. This plays a dual role as it provides the State with a form of income. It has been introduced in the way my party has always argued it should be, namely, that it is largely hypothecated. The purposes for which it will eventually be used are known in advance. We have several spending areas which have an environmental and economic benefit as a result of the revenue achieved through a carbon levy.

Some €100 million will be spent on the retrofitting of homes. We can put money into research and development in order to develop technologies in this area. We need to examine, in terms of social welfare, fuel allowances, when it is introduced into the sector. There is now a dedicated funding source which would not have existed otherwise. Those who have patently failed to understand the carbon levy have expressed fears that it has to do with a possible inflationary risk. Because the carbon levy is a set sum of money rather than the percentage tax we are familiar with as regards VAT, any rise in the cost of fuels is not reflected in a rise in the carbon tax itself. As the price of fuel increases, this will not be accompanied by an increase in the carbon levy rate.

It was good that it was introduced at this time, as we see the price of petrol again going above €1.30 a litre. It is not so long, about 18 months ago, since we were looking at a peak oil price of €1.45. A carbon levy is meant to achieve an improvement in the behaviour of society as regards how it uses fossil fuels. We were unprepared for the last cycle of price rises in petrol in particular and I believe we shall be more prepared as a result of this as well as the introduction of new policy measures including the greater use of renewable energy. The Government has a policy of achieving one third of electricity generation in this manner by 2020. This seems to be a policy that will be largely exceeded. Last year alone, some 40% of electricity produced on 8 August 2009 was from renewable sources. On average we are producing 12% of our electricity from wind generation.

In addition we have measures to improve the tax treatment of bio-fuels, which the Green Party welcomes. The bio-fuels argument is somewhat more complicated because it is more difficult to argue in favour of it on a global sense, since it is obvious that the growing of bio-fuel crops in the United States and South America in particular runs the risk of becoming a food replacement initiative whereas in Ireland we have a natural ability to grow more bio-fuels, since there is plenty of capacity here to grow both food and bio-fuel crops.

Even accepting the point just made by Senator Quinn, the potential Ireland has as an agricultural country and the need for debate on genetic modification, GM, has less to do with GM and more to do with the choices that need to be made. It has to be one or the other. My party and I believe that the greater economic potential for agriculture exists in presenting Ireland as a clean food producing country, and I should be quite happy to have a debate on this in the Seanad in the future.

On the other hand, the modification of tax has been looked at in terms of the manner in which we levy VAT. The reduction, while small, is a step in the right direction. My colleague, Senator Dearey, when he has an opportunity to speak later, will talk about the potential that has, particularly on the Border region. It is important that we modify taxes, particularly in a time of economic slowdown, to encourage spending. It is the encouragement of spending that will increase economic activity and enable us to find our way out of the particular situation we are in.

The other measures in the Finance Bill built along a similar principle are tailored, particularly in terms of financial services, to make Ireland more market friendly, in terms of market diversity, for example the provisions on Islamic finance which can be defined in those terms. Ireland has the potential to become a market leader in financial services in terms of environmental financial instruments — I know that has been talked about in a wider sense – as well as the whole area of ethical investment, which is something we have ignored too much in the past.

Returning to the new taxation measures, which I believe have been largely ignored, the fact that there is now a €200,000 fee for non-domiciled tax earners will go some way towards addressing the perception that there are people who live largely in Ireland, gain their wealth here but do not contribute to the workings of our society. Likewise, the reducing measure in terms of tax reliefs and the fact that the minimum rate is being increased by 20% to 30% will affect higher earners and help increase the individual contribution to a greater extent than in the past. These are important measures.

The success or otherwise of the 2010 budget and this Bill will depend on global economic recovery. While there are some encouraging signs in the most recent economic data, there is still a fear that there may be a double dip as regards some of the key economies we depend upon, such as the United States. While the US is currently in growth, there are suggestions that much of this is stimulus led and might be followed this year and next with either slower rates of growth or even a return to negative economic conditions.

The challenge for us is to find new markets and new ways of providing goods and services that will create a new and stronger economy, not just in the short-term but in the long-term also. I believe most of the recommendations to be found in the Government's smart economy document allow us to do exactly that.

I started by talking about the €4 billion adjustment that was needed and the fact that this was largely done by a series of public expenditure cuts. We have a commitment under the programme we have submitted to the European Commission for a €3 billion adjustment in the 2011 budget. It has been suggested that €1 billion of that is already accounted for by reduced capital expenditure in 2011 and the other €2 billion needs to be accounted for either by a combination of further curbs on public expenditure or new taxation measures. I am relatively confident that targeted new taxation measures will meet most of the shortfall.

We have also had a recent commentary by the European Commission to the effect that we need to be looking at the levels and projections for this particular plan with the emphasis on 2014. Undoubtedly we have to err on the side of caution and it could be that tax receipts may not reach what we were hoping for and further decisions might have to be made. However, it is important to be optimistic. If economic recovery is to be achieved, it will be by the provision of hope and confidence within the economy, which is largely a job for the Government.

Finally, in terms of further financial projections and where Ireland is as a country, it is important to note that not only are we engaged in an exercise of getting the State's books in order, the larger problem, perhaps the elephant in the room, is the element of private debt, in particular the level of personal debt that exists in society. Squaring that problem through a series of incentives that gets the balance right between an appropriate level of savings and encouraging people to spend in the economy, is the real challenge for the country in the years ahead.

There is no doubt that we have binged on spending over a ten-year period, and quite a number of people are in a vulnerable position as a result. The recent Cabinet initiative led by my colleague, the Minister for Communications, Energy and Natural Resources, in terms of mortgage debt, has been informed by the work of Senator MacSharry and others and is something that deals with part of the problem. However, in examining how the financial institutions are to be restructured, the key questions are how people may find their way out of the debt predicament and how money can be made available to allow for reinvestment in the economy, along with the ultimate spending of money in the economy to create more jobs. The economic indicator that will judge the success or otherwise of the Government's economic policies will be the number of jobs provided and the reduction in unemployment.

While unemployment is at an historic high at present of somewhere in the region of 420,000, this has decreased in the past month and indications are it will decrease again. If this is the beginning of a trend, we should welcome it because it means there will be a reduction in public expenditure by default and perhaps the availability of more money for investment purposes.

Strangely, we also saw a reduction in inflation last month, although a very small one. If we can manage a small level of inflation into the immediate future, that in itself will also help us.

It is a slightly mixed message we are delivering today but I want to confirm that I believe the Minister has devised the right policy to get us through the public expenditure difficulties in which we find ourselves. The House needs to be prepared, as does the wider society, for the fact this is only the first step in a number of budgetary steps that need to be taken until we find ourselves on solid ground once more.

I welcome the Minister of State, Deputy Haughey. I listened to Senator Boyle with interest. I thank the Minister, Deputy Brian Lenihan, for his overview of this very large Bill. I hope the Minister and Senator Boyle are correct that there are hopeful signs the economy is beginning to stabilise and that there will be small signs of growth by the end of 2010 and more positive growth by the end of 2011.

As Senator Boyle said, the restoration of confidence is a nebulous and intangible thing. Without it, so much is lost and its presence is so important that it is part of the key to the problem. Having seen how my part of the country has been walloped, as it were, in recent times and how its tourist trade has suffered, I am greatly concerned for the future while hoping Senator Boyle is correct about the positive signs.

With regard to tourism, my area lost 1 million overseas visitors in the past year, there is a massive oversupply of bank-backed hotel rooms which are threatening viable businesses and we are being crippled by the Government's ludicrous departure travel tax. As we approach the summer months, it is incumbent on the Government to do all in its power to breathe life into our tourism industry, which, it would appear, is being allowed to die a slow and painful death.

Our largest tourism market, the UK, declined by 16% last year compared with 2008 and tourism revenue fell by €1.1 billion to €5.2 billion, its lowest level since 2004. There is no doubt that tourism in Ireland is hurting and in need of critical and life-saving attention.

The House is aware that at the annual conference of the Irish Hotels Federation in Galway recently, economist Dr. Peter Bacon said that the failure of banks to foreclose on insolvent hotels is damaging the long-term interests of the sector and is undermining fundamentally sound businesses. He went on to say that a quarter of hotels need to be closed and suggested that the orderly elimination of 15,000 hotel rooms is necessary before this year's peak season. What is more, an Irish Hotels Federation survey carried out in February revealed that 70% of hotels and guesthouses have experienced unfair competition from otherwise unviable hotels which are being supported by banks, and that some 88% of those surveyed said they are highly concerned about the viability of their businesses for 2010.

It is estimated that the sector is €15,000 in debt for every hotel room and only 5% of hotels are currently running a profit, as can be seen from current occupancy rates and the deals on offer which are clearly unviable. It is my hope that any wind-down of businesses will take place in an orderly fashion and that Fáilte Ireland see the merit of funding a significant home holiday campaign aimed at reviving what remains of this ailing sector.

Further damage is being perpetrated on the Irish tourism market by the Government's stubbornness in retaining the departure tax. Aer Lingus has stated the tax will cost the company €30 million this year and Ryanair has reduced routes and lowered capacity, which is nailing the industry in a big way. The Government's adviser, the Tourism Renewal Group, has called for the abolition of the tax as a survival action for the industry but the Government has spectacularly failed to listen. Other European countries with similar taxes in place have moved to remove barriers to access in a bid to stimulate tourism. Why do we not do something similar? My region has suffered greatly and there is suffering throughout all the regions due to the infliction of detrimental Government policies. I call for these issues to be addressed and for a concerted effort to be made to get what remains of our tourism sector off the floor and up and running again before it is too late. I do not understand why a suitable amendment to the Bill could not be made. I call for such an amendment and I would like the Minister to respond on this point.

The hotels which are being effectively prevented from closing by the banks, even though they cannot be run profitably, are being kept open for the period of seven years required for the purposes of the tax relief but to the detriment of viable businesses. Surely a mechanism could be found and a suitable amendment introduced to allow them to close without loss of the tax relief, as has been recommended by the economist Dr. Peter Bacon and others and adopted by the Irish Hotels Federation. As it would get over the difficulty, I recommend we take this course of action.

Allied to this, section 28 also requires amendment. Westport House was referred to but I also wish to refer to two other great heritage properties of which we are very proud, Muckross House and Killarney House. Perhaps an amendment could be made to allow for funding for Killarney House in particular as it is practically in the town of Killarney although within the national park. The house is being allowed to deteriorate rapidly and, while I understand some meetings were allowed in the house by the national parks and wildlife service, these have ceased owing to alleged severe water damage caused by the very heavy rains of winter. I ask that section 28 be amended to allow for funding in this regard. Funding has been promised in recent years but, to my knowledge, not a cent has been spent on works to improve that property which, sadly, is being allowed to deteriorate so much it is now in a dilapidated condition.

The economy has been badly affected by the domestic property crash, the global financial crisis, the recession in our export markets and the weakness of sterling. Economic activity as measured by gross domestic product fell 7.5% in 2009. We face three major economic problems: a large budget deficit as a result of the slump in Government revenues; the banking crisis caused by excessive lending to property as well as the international credit crunch; and loss of competitiveness reflecting the fast-rising costs during the boom years and, again, the weakness of sterling.

Much reference has been made in the House to the question of the banking sector, including earlier today when the situation at Anglo Irish Bank was mentioned. No one wants to see bad example or wrong signals being sent out. In the 70 or so cases, perhaps it may be the rate for the job in order to improve the bank's future. However, I think it is a bit thick for the Department to say that neither the Minister nor the Department has a responsibility as this does not ring right when it is a nationalised bank, if I may say so. Proper explanations need to be provided and these may be in train.

The Minister took steps back the line to limit the salaries of top banking executives and he was supported on all sides in this and the other House. We must take note of what is happening, particularly in a nationalised institution. We would all like to see it develop, if possible and, as the Leader has stated on a number of occasions, into another Industrial Credit Corporation, ICC, which did so much good work in the past for the economy. I do not know if this is possible.

We are sending out the wrong signals. I accept there was a complete clean-out in the case of Anglo Irish Bank but I firmly believe we are not repositioning ourselves correctly if, as it seems, so many bank directors and top management remain in the other systemic banking institutions. These people were responsible for the disastrous lending policies that got us into the present trouble. These people have no regard for prudential banking or for required liquidity ratios. We know about light-touch regulation which was equally disastrous.

I have concerns from the State's point of view. When the recapitalisation was begun, the Minister correctly took a 25% preferential stake in both AIB and Bank of Ireland and also assisted one or two other institutions — two building societies. He placed public interest directors on the boards. These are all excellent people and I have no quibble with them. However, seeing this is a rolling process, so to speak, or creeping nationalisation, depending on what way one wishes to look at it, the Minister, no more than the Department, probably does not yet know what will be required because there may yet be something to be heard from Brussels in regard to the banks' own plans for their short-term five year recovery approach. In regard to State aid rules, I am not too sure if Brussels has signed off fully on them. It sanctioned NAMA, thanks be to God. In addition to NAMA, there is also the possibility we need something of the good bank-bad bank policy concept. This might be very relevant in the case of Anglo Irish Bank. I await the Minister of State's response on this matter.

It is a bad policy on the part of the State to allow people at the highest level of management and on the boards, who were there during all the time of the disastrous lending policies, to remain for the period of the rescue attempts. This is not good example and it does not position us well or properly. I await the Minister of State's response. I am sure the Minister for Finance has the power to appoint further public interest directors and I recommend he does so. It is only when the transfers to NAMA are complete that we will know fully what will be required from the State by way of further recapitalisation. It appears the taxpayer will own in excess of 50% in the case of the two large banks. Few people in this House want to see nationalisation and I certainly do not. However, there will be a further capital requirement. In protecting the public interest I expect the Minister to act. It is only by having everything in proper order that credit can be made available to assist our economy and businesses in every town, village and city in the country in a proper and orderly fashion. There is too much of an overhang at the moment.

I will not have time to refer to a number of other matters, such as primary care services and the car rental business.

I wish to share time with Senator Larry Butler, with the permission of the House.

The debate on the benefits of the Finance Bill 2010 has been well answered at an international level. It is very easy to make a decision when there is no choice. The Government took long hours, days, weeks and months, to ensure the tough decisions were fair. It is no surprise that the effective cut in pay of 7% for public officials by means of the pension levy, provoked a reaction in Ireland much different than it might have done in France or Greece where there would have been stronger reactions. This is because social partnership was in place for a lengthy period. This social partnership has served us well. We are now at a critical juncture. I hope that social partnership will hold steady. I am very conscious that people may feel aggrieved. However, as to alternatives, we must consider where Greece finds itself. There were similarities between Greece, Spain and Ireland. The similarities ended when we took decisive action. At the moment, it is a question of whether it will be the EU or the IMF or a combination of both, that will step in to assist Greece.

In such a situation, it is a government's responsibility and duty to ensure the national finances are in order. This is what the Government has undertaken in the Finance Bill. It is possible we will have similar difficulties in 2010 until the second half of the year when growth will begin to be evident. We have to believe that growth will begin. My hope is that all the partners in the current talks will agree that the benchmarking process which took place in the good times could not be solely an upward process. It was never possible to have a situation where the benefits in the general economy would be shared by all of us in the public service but when the bad times came that we would stand alone in a golden circle and retain all our benefits. This was never feasible.

Given that the good times will follow, there should be an understanding that when the economy turns around, the public service will have the appreciation of the State once again and its significant contribution will be recognised.

We are not out of the woods yet. The figures for the final quarter of 2009 are available today. I note that unemployment had increased to 13.1% of the workforce at the end of 2009. This is a worry as people may now be more than one year unemployed. However, at the beginning of this year there have been very positive signs. Even today IBM announced the creation of 200 jobs in Dublin in its Smarter Cities Technology Centre, while yesterday we heard 150 jobs were to be created by eBay. Therefore, there are positive signs which would not be there were it not for this Bill to put our finances in order. It has become clear to international markets that we are committed and will take the necessary action to shore up the public finances. It may be that people, because of uncertainty in the world economy in the last 18 months, are saving significant amounts. Bank deposits have increased significantly. Where people were previously saving 2.5% of their income, they are now saving 12.5%. This means we will see a situation where the Government will be able to suggest a composite payment of their income and the money that was being saved will go to ensuring the public finances are in order.

Similarly, job creation has become the major issue in 2010. Last year the Government ensured State's finances were in order by rescuing the banks, the very method of doing business. We took the necessary steps that were subsequently internationally acclaimed to ensure deposits in the banks were guaranteed. Initially many European states indicated this was inappropriate but each followed our decisive action one by one and it proved to be correct. We also had to ensure we took lending that had gone sour off the banks' balance sheets and establish NAMA. That was appropriate in the light of experience in Japan where banks did not lend for 15 years.

With the Finance Bill we ensured the public finances were put in order. This has set the groundwork for us to concentrate on job creation. I trust this will be the year, following a difficult but successful 2009, in which we will see significant numbers of jobs created. We have experience in this area from the 1980s and should move capital allowances that were available in the property sector towards job creation in order that we can again engender a culture in which this will be a competitive economy, as it was in 2004, and use our position as the third most open economy in the world. Only Singapore and Hong Kong are more open. We are in a position, therefore, to make a significant difference after the budget for 2010 ensures the public finances will be in a healthy state.

Job creation must be to the forefront of Government legislation at this time. The finance Bill includes measures aimed at attracting investment and improving our image as a place in which to do business. The new transfer pricing rules contained in the Bill will help multinationals to defend the level of income and expenses of their Irish operations. In this regard, the new rules can be seen as a positive development for multinationals operating in Ireland. They endorse the OECD guidelines and bring the Irish tax regime into line with international norms in this area.

The Bill also clears up a number of issues related to research and development and intellectual property rights. These measures will drive the innovation culture needed. The Bill will extend the existing scheme of tax exemptions for start-up companies in the first three years of operation to include those commencing trade this year. It also contains a package of reforms in respect of capital acquisitions tax.

The Bill strikes a balance between supporting enterprise and enhancing the ability of the Revenue Commissioners to carry out their role. I congratulate the Minister for Finance, Deputy Brian Lenihan, and his officials in the Department.

I spoke on the Finance Bill during the boom when I was the Fine Gael spokesperson on finance in the Seanad. It was a difficult position to be in when there was plenty of money in the economy and the public were happy with the economic progress of the nation. It is amazing how quickly things change. The way our economic prospects deteriorated so much so quickly is the most startling thing that has happened in the last few years. What happened in the previous ten or 12 years and the contents of previous finance Bills led in no small way to this situation. The failure to plan for the future, particularly for a period when taxes from construction would decline, led us to this position.

Senator Hanafin mentioned the return to growth. He is right that economic commentators think there will be growth in the third or fourth quarters of the year. They have also clearly indicated that this will not have any impact on the economy and society in terms of decreased unemployment or increased Exchequer revenues. They do agree, however, that there will be limited economic growth at the end of the year. I hope that will be the case but we must wait and see if it materialises.

Senator Twomey specifically mentioned Westport House. I concur and ask the Minister of State if it is possible to accede to the Senator's request that Westport House be given a derogation from some of the measures included in the Bill, particularly that relating to the 80% windfall tax that could potentially be levied on those who operate the premises. I hope the Government will accede to this request because there is a small number of similar properties around the country and this is a major attraction in the Westport area.

We have had two of the worst years for employment. In the last 24 months 250,000 extra people have signed the live register, of whom over 90% are under 35 years of age. That is a shocking indictment of Government policy and a social disaster. These are the people who bought houses for €400,000 because they wanted to get on the property ladder, who were told by the Government that they would be foolish if they did not do so and that property would rise in price indefinitely. They have been hit hardest by our economic collapse. They have difficulty in making their mortgage repayments, while many others have already left the country, those lucky enough to get a passport. It is not only a personal disaster for the people concerned, their families and their communities but also an economic disaster for the country. We have invested a lot of money in educating these young people and we will lose vital skills if they emigrate. The central objective for the Government must be job retention and creation.

The reality is that the Finance Bill 2010 does sweet damn all to protect or create jobs. If we are to climb out of our economic hole, we have to get people back to work so that they can contribute to the Exchequer through their taxes. This Bill does little to enhance their prospects for future employment. It contains several positive measures, such as the extension of mortgage interest relief for the hard-pressed mortgage holders I referred to earlier and other minor changes in the tax code for research and development, but it lacks a strategy for addressing our major economic challenge of unemployment. For that reason, I cannot accept it.

We must encourage people to spend money. There is still money in Ireland but people are afraid to spend it because they lack confidence in the future. Money is to an economy what blood is to a human being and it needs to circulate if jobs are to be created. This Bill and the previous measures introduced by the Government, including NAMA, have done very little to circulate money through the economy.

Previous speakers, including Senator Coghlan, spoke about NAMA and I continue to have serious reservations about the significant financial drain it represents. I remain miffed by the Taoiseach's claim on the Order of Business in the Dáil some weeks ago that NAMA would get money flowing, even though the Minister for Finance has repeatedly stated that NAMA was never intended to achieve such an objective. Were we not told at the outset that NAMA would be instrumental in circulating money once again?

A recent survey conducted by the county and city enterprise boards reveals that 96% of small and medium enterprises in Ireland are concerned about the difficulties in getting access to credit. This is crippling the economy. If we are serious about job creation and protection, we should acknowledge that small and medium enterprises will do most of the hiring in the short term but that they face immediate problems in getting their hands on the money they desperately need. I recently learned about a Kilkenny businessman who runs a profitable operation for which he has borrowed €1.75 million from one of the State's leading banks. He was hauled before his bank manager for his annual review and told that he would have to sell 20% of his assets immediately or else the bank would put his entire business up for sale within 12 months. It simply wanted to remove his debt from its books, even though he never missed a repayment to a bank which is being recapitalised with our money. It is disgraceful that a successful business which is employing people in County Kilkenny is being put through such difficulties. I could offer many more examples involving similar businesses. More than anything else, we need to get money circulating through the economy but nothing in this Bill will help that to happen.

The enterprise spirit for which Irish people are famous continues to exist but the challenges in accessing credit and keeping costs down are crippling businesses and preventing good ideas from being implemented. The Government has a role to play in that regard but it has not yet faced up to the issues of upward only rent reviews, boardroom pay in the banks and salaries for the top people in the public service who have escaped relatively unscathed compared with lower paid public servants. Although the cost of electricity in this country has decreased in recent times, it spiralled out of control over the past eight years. Our electricity costs were at the European average at the turn of the millennium but they had increased to 1.5 times the average seven years later. The Government appointed a regulator who, in his wisdom, decided that the best way to serve the economy would be to drive the cost of electricity production through the roof. Small businesses have been particularly affected by these increases.

We need to give the people confidence and the Government has a major responsibility in this regard. A constant emphasis in this and last years' budgets was on the need for people to take pain. Workers in the public and private sectors have taken pain in bucket loads but they must also be given hope for the future. The players in the Kilkenny hurling team will burst themselves over the winter months because they believe they have a chance of winning the all-Ireland. We must give hope to the ordinary, decent worker or unemployed person that there is light at the end of the tunnel.

It is interesting to note that half of the €4 billion in cuts announced in the last budget will go on interest payments, while the remainder will be spent on the 75,000 people who are projected to lose their jobs this year. In effect, the Government's cuts have already been wiped out and it is running to stand still. That does not augur well for next year's budget.

Fine Gael is often criticised for failing to make its views known in advance of budget announcements. This time, however, we proposed an extensive alternative budget prior to the publication by the Minister for Finance of his own proposals. We emphasised the need to avoid hammering lower paid public servants who earn €25,000 or less per annum. These people should not be made to suffer to the same extent as those who are on higher incomes. Having introduced a cut across the board, the Government changed course several weeks later to protect the incomes of higher paid public servants, even while those on the lowest grades were forced to bear the full brunt of the budget measures. That was an unjustifiable decision. People need a sense of solidarity.

An earlier contributor spoke about the partnership process, of which I have been critical in the past because by the final years of the Celtic tiger it had become a vehicle for Fianna Fáil to give money to its friends. However, we have never needed social partnership more than we do today. This Government has dropped the ball because, for the first time in 25 years, there is no immediate prospect of harmony in that particularly important area. I urge the Government to do all in its power to ensure social partnership is brought back on track in the future, but it must be a sustainable social partnership.

In the run-up to the budget, Fine Gael raised the need to cut employers' PRSI to protect existing jobs and to allow for the prospect of taking on people in the future. This was ignored by the Government. We produced an extensive policy called NewERA on how it might be possible, through a small stimulus package, to create jobs in the economy. The Government has done nothing in this regard. Perhaps the new Minister for Enterprise, Trade and Innovation might have some new ideas in this regard. Certainly the former Minister did not.

I refer to such issues as the airport travel tax. The Government is still digging its heels in. It seems blatantly obvious that its actions are an attempt to thumb its nose at Mr. O'Leary and Ryanair but it is costing jobs and bringing in very little revenue to the Exchequer. This is an area of tourism in which the country has always excelled but we are driving people away. It makes no sense. The Government should get rid of the airport tax and such measures should have been included in this legislation.

I refer to the failure of Government in this Bill or anywhere else to tackle the tough parts of the McCarthy report, including such things as cutting quangos, which he recommended. The Government took the easy measures such as cutting welfare and so on which affected the lowest income earners in the economy, but it has not tackled the difficult problems, which is why I have a difficulty with the Finance Bill.

I wish to share time with Senator Mark Dearey. I was listening intently to Senator Phelan and I listened to and read the speech of the Minister. Senator Phelan is absolutely right to refer to money circulation and such issues facing small businesses and businesses in general in respect of our economy. This matter is crucial to the future of the country. However, he is confusing the Finance Bill with enterprise and employment initiatives. We are discussing the Finance Bill and, as I understand it, the job is to lay the groundwork for solid foundations upon which our economy can thrive.

There are many interesting aspects to the Finance Bill. It is one of the largest Finance Bills ever produced. I refer to an issue relevant to my own political party, that is, the carbon tax. There has been much discussion in respect of the carbon tax but it is a crucial part of the broad green agenda. I do not refer to the Green Party agenda but the environmental agenda which should be relevant to all parties. The idea is to move away from an unsustainable economy, largely based on unsustainable resources such as fossil fuels, and to try to move us towards an economy which is sustainable and based on such things as renewables and on what Senator Phelan referred to in the NewERA document produced by Fine Gael and in our smart economy policy document. We must move towards an economy which will last for thousands of years because people are sick and tired of this boom and bust cycle in which we consistently find ourselves. This has been one of the worst busts in many years. We have had the Celtic tiger years and it seems because of the way in which the economy is working at the moment, the higher we climb, the harder we fall. I hope to consider how we can do things differently as quickly as possible.

Senator Phelan referred to getting rid of quangos and not simplifying things and not taking the difficult decisions. However, this Bill refers to the recommendations of the Commission on Taxation and the abolition of six tax reliefs previously in place. My party favours the abolition of tax reliefs. They are good for a certain period of time but, unfortunately, they can get moved out of shape after several years. I believe tax reliefs should be short, sharp and there should be a clear life span on them. The purpose of tax reliefs should be to stimulate particular sectors of the economy, not to underpin the economy as a whole. The phasing out of tax reliefs on a gradual basis is something I welcome and it underpins this Bill.

I refer to the main point made by many speakers. The key factor facing the economy at the moment is for it to become more robust and provide employment for all the people. How do we do this? We are in a difficult situation with almost 440,000 people unemployed at the moment. Unfortunately, many companies are disappearing. The difficulty is that we face the stack of cards phenomenon whereby companies which owe money to other companies can no longer pay and this makes life difficult for the companies which continue to survive. However, there must always be a critical mass and a need for particular services by the people underpins a particular stability within the economy. It is not necessarily a matter for the Finance Bill but we need to come up with measures, build on the Bill and put forward measures which will underpin the economy and especially small business in this country.

There has been much discussion of the idea of a bank of national recovery, a measure I support. This is something we have done in the past and it is a way in which we can get out of the recessionary situation in which we find ourselves. Many small businesses in Galway have discussed the matter with me and have indicated the need to get credit to get through cashflow difficulties, a matter of great importance for their survival. Unfortunately, certain businesses find it very difficult to survive simply because of the crisis in the banking situation at the moment and the lack of short-term capital. It is crucial we deal with this issue in the shortest possible time because there is something of a gap between now and the time when the economy will be on the upswing again. There will be a crucial period during which we must guide as many of our small and large businesses and steer them through the difficult times ahead. I urge the Government to take account of this and to examine ways in which we can get credit flowing again in the shortest possible time.

I listened with great interest to the Minister's speech and, as a relative newcomer, I found it fascinating to see how policy finds its way through the Houses and, eventually, affects the likes of myself in my other life as a small businessman. Various bells went off in my head as I listened to the debate on the Finance Bill and tried to assimilate how it would work in the real economy and among small business people such as myself in the coming year. Overall, I affirm the thrust of the Bill which relates to the control of public finances. That issue has been, is and will remain paramount. This week, we received a serious reminder in this regard from the European Commission. In case it took the view we had done enough, we know we have not and that there is more to come, which is not a very pleasurable thing to say.

My experience of the control of the public finances has been a deflationary one and this has been very difficult to live with. It is one of corroded consumer confidence, a very fragile flower which must be nurtured again now that the difficult first tranche of decisions have been made and enacted. I understand more is to come but I believe the deflationary effect we have experienced to date is about as much as many small businesses, such as my own, can take. There must be further action in the next budget, whatever takes place. It is very important that this takes place in the context of improving consumer confidence and a willingness among the public to begin to spend again.

I am not referring to a bogus stimulus package. I suspect that even if we were to put some notional billions of euro into the economy tomorrow, many people would probably use it to pay off personal debt, a good end in itself but it would not achieve the desired effect of any stimulus such as the injection of cash into the US economy. In fact, it looks likely to cause a double dip. The indications are that in the months ahead there will be further retrenchment on the key indices in the United States economy which is showing some signs of recovery. That is serious for Ireland, but it shows that such packages are not a replacement for a more fundamental realignment of the economy.

NAMA, another theme that has dominated thinking on our financial position since the collapse of Lehman Brothers, needs to begin to do its job quickly. There is a key role in this regard for the regulator. It looks like NAMA will flush out and crystalise the bad debts that the banks, if left to their own devices, would probably spread out over the next decade and more to give us a kind of Japanese experience in terms of economic stagnation. The establishment of NAMA means they cannot do this.

NAMA has often been described as the least worst option and that is what it is. It is not something anyone would choose to do, but given the need for a functioning banking system and the obvious fact that the banks were not going to fess up on their own, NAMA will do what needs to be done in that regard. Next week's results which we are being told will show the worst corporate performance in the history of the State probably will be an indication that NAMA has brought a degree of honesty to reporting, which is good.

On the question of what the banks should do next, the regulator has a key role to play. Taking account of the fact that there will be further bad debts at a much lower, even personal level in the economy, the regulator needs to ensure the capitalising of the banks is sufficient to allow them to attract investment funds which they can then lend on to those operating in the real economy. That is critical. All will have been for nought if we do not ensure that happens. There is a considerable onus or responsibility on the regulator to ensure it happens.

I want to address a few issues in the Bill to which the Minister referred and one or two measures that will stimulate investment in small business and returning a little confidence to that sector. As the Minister indicated, section 44 will extend the accelerated capital allowance scheme to a range of new categories that will help small businesses to invest. It means that the cost of new refrigeration and cooling equipment, electro-mechanical systems, catering and hospitality equipment, as well as the wide range of listed items available for viewing on the website and already in place, can be offset against any corporation tax incurred in the relevant year. For progressive businesses, particularly those in the hospitality sector, this represents a significant opportunity. We have been hearing a great deal about tourism in the past few days. I welcome the provision and say, "More, please". It is useful and practical and will have a great effect on the ground.

I had two hopes for the carbon levy. One was that it would not be a percentage of the cost of a given fuel but a fixed amount per litre or tonne, depending on the relevant measurement, and it is so, which is useful. This means the levy will not amount to an additional burden but will be a fixed cost. My other hope was that it would be ring-fenced. In so far as the key areas in which it will be spent have been identified, it is ring-fenced. This means there is a sure-footed basis in moving forward with the warmer homes scheme, with research and development in renewables and with funding for a fuel allowance which I hope will become less of a burden during the years. As the warmer homes scheme reaches more houses that are performing poorly, obviously, people will need less fuel to heat them post-retrofit. This applies to rural transport also. This area need not be vulnerable any longer because the levy is being directed towards it and the other areas I have indicated. No levy or tax is ever popular, but this one has some merits. That it is being directed strategically towards improving the housing stock which, in turn, will reduce the need for a fuel allowance, as well as the research and development aspect, is extremely welcome.

Another issue which was raised recently by Mr. Mark Fielding relates to State guarantee schemes and whether the Minister would consider an idea to enable small viable businesses to begin borrowing again now, not in the distant future, on the basis that, for instance, businesses in the shellfish industry would be able to ask the banks to lend to them on a sectoral basis. The fact that the businesses had entered into an arrangement with the Government to guarantee a small portion of the lending should open up the prospect of a greater flow of capital to businesses in the future. I look forward to the Minister's response on the notion of a partial State guarantee for loans, not to an individual business which is always vulnerable to collapse but to a sector when the risk would be spread wide and the prospect of a catastrophic failure across the sector would be extremely remote. Therefore, the State's guarantee would be extremely unlikely ever to be called upon. Will the Minister consider this idea as one that would improve the prospect of sectors such as the shellfish industry which employs well over 1,000 people to help them to begin to borrow from banks which are currently unwilling to lend? Let us face it, although I hope NAMA will do what it needs to do for the country, there is an urgency when it comes to borrowing that I do not think the agency can meet because it will take more time to be really felt as a contributor to the real economy — a phrase I probably have overused at this stage.

I would like to share time with my colleague, Senator Norris.

Is that agreed? Agreed.

Particularly in discussing the economy and our future I am all in favour of hope. We all want to have a debate characterised by hope in order that we can be genuinely positive and face the future in that vein. That is the basis upon which any of us would like to come to this debate. Certainly, there is need for a restoration of hope and confidence in the economy. However, my problem with the debate is that while a number of speakers stated they hoped things would happen, it has been characterised by a significant degree of what I can only describe as wishful thinking not entirely — in some cases, not at all — based on the facts.

We started with the Minister's speech. He treated us to an account of what he described as "tentative signs that the economy is beginning to stabilise on a number of fronts". He spoke about unspecified key macro-economic and fiscal data releases as being generally in line with expectations. He repeated that growth was likely to return in the second half of the year and re-establish itself on a full-year basis in 2011. He also repeated his famous phrase from his Budget Statement that the economy was turning the corner. On the lunchtime news programme the Minister for Enterprise, Trade and Innovation, Deputy Batt O'Keeffe, was somewhat less positive than this, couching his remarks along the lines that he considered we had come close to a situation where we might turn the corner, which is somewhat different. I long for the day, as many do, when the economy genuinely will turn the corner. However, I vehemently disagree with politicians, particularly those in positions of power, seeking to persuade people on the basis of an assertion that there is a new state of affairs because, as of yet, it has not.

The second example of wishful thinking involves my colleague, Senator Boyle. He indicated that initially he was sceptical when last summer the Minister for Finance, with little discussion, changed the configuration between cuts and revenue measures that would make up the €4 billion to be taken out of the economy this year. However, he came around to the view that the Minister had got the balance about right. No one has explained to me, or could if he or she was being honest, how he or she believes the Minister got the balance right.

I was interested to hear Senator Dearey speak about the deflationary effect of the budget and say companies had reached the point where the pips were squeaking, at which no further pain could be taken in the deflationary spiral in which they found themselves. This is as a result, at least in part, of a direct decision by the Government which acknowledged the budgetary measures would have a deflationary effect. Last December it was known that taking €4 billion out of the economy would have a deflationary effect because it would reduce the spending power of citizens and, accordingly, the amount of money available in the economy for the purchase of goods and services. While Senator Boyle wishfully thinks this spiral may be coming to an end and that the Minister got the balance right, there is no evidence that this has occurred. Instead, every time one walks down any street one sees yet another retail unit boarded up because they cannot secure finance from the banks, their rents are too high, or, more importantly, because of the deflationary budgetary measures introduced by the Government in the finance Bill.

Many suggest that in a bid to turn matters around, they are seeking agreement through social partnership but often do not show evidence of so doing in their own conduct. I have heard Members opposite asking the trade unions to come back to the social partnership talks which, again, is wishful thinking. Did no one tell Senator Hanafin and others opposite that social partnership was blown up last December?

No, that did not happen.

I hear voices opposite again showing this wishful thinking as if one can talk it back into existence. Social partnership is at an end, as stated by the parties involved, not me. By its meaning, partnership requires people who want to work together while supporting, not undermining each other. It is simply not possible to talk social partnership back into being when one cuts the wages of persons earning €30,000 a year. It is just not feasible to wish that those who have faced wage cuts and levies would come back to the partnership talks table. It will require more direct intervention by the Government to turn this around. I hope it can be done but I have not seen much evidence of this as yet.

Senator Ó Brolcháin criticised Senator John Paul Phelan for claiming the Finance Bill contained little by way of an employment creation stimulus package. He said one would not find such a package in a finance Bill elsewhere. However, the finance Bill is the most important annual economic statement of the Government. Since yesterday's Cabinet reshuffle the Taoiseach and Ministers have been saying it is all about jobs and because the function is so important it will be spread across three Departments, not one. One cannot separate employment policy from the central economic policies as set out in the finance Bill.

The area which demonstrates the greatest wishful thinking – the real wishing well of our public discourse on the economy – is NAMA. Its advocates cannot persuade people it has worked because we do not know if it has yet. While the legislation has been enacted and some loans are being transferred, we do not know whether it will achieve its objectives. NAMA's advocates on the opposite side claimed it would ensure credit would flow again in the economy. In recent weeks, however, we have been told the International Monetary Fund invoked early on in favour of the Government's proposals stated it did not believe the agency would get credit flowing again last summer, a fact only revealed recently on foot of a freedom of information request. I accept any government will bring forward arguments which suit its position and conceal those that do not. However, there is a limit to the extent to which a democratic government should be permitted to do so, particularly when it is dealing with the economy and the finances of the country. The Government must level with us on all aspects of policy formulation on the economy. It is not acceptable for it to withhold information and advice given to it at the time of the introduction of the NAMA legislation.

I am delighted the accepted Report Stage amendment of my party colleague, Deputy Burton, has survived in the Bill, even though it looked a little rocky for a while. I also genuinely welcome the fact that the Minister, after his initial bout of uncertainty, agreed to accept the amendment. His Seanad recommendation will alter the period involved from one month to three, with which there will be no difficulty. It is important the Government shares with the Oireachtas, and through us with the public, the cost-benefit analysis of the tax expenditures provided for in the Bill. It is extremely important. When we examine the incentives and measures introduced in the past ten to 15 years, we must analyse them and assess whether it was correct to introduce these measures in such a profligate manner. It is correct that we have a mechanism to assess the expenditure, particularly in areas where we are forgoing tax and giving people an opportunity not to pay tax for a prudential reason or a good developmental reason. We should run the slide rule over these schemes publicly so the public can see what is happening in its name.

Returning to the theme of hope and acting positively, I attended an important event on Sunday. The Dún Laoghaire-Rathdown County Enterprise Board teamed up with the Dundrum Credit Union and introduced a scheme to extend lending to small businesses in the catchment area of Dundrum. This is being done in a prudential way, with great care exercised in how the credit committee makes decisions. It is a step of great importance by people in a community where there are assets that could be used more than they are being used. The credit union movement has a wonderful history and track record as a people's lending agency. It can now team up with the local enterprise board to see what it can do to make a contribution to providing lending to small businesses. Credit unions do not have a history of extending lending in that direction. That is an important gesture and an excellent development. I ask colleagues to consider this area. Important regulatory issues must be considered but we sometimes forget there is an enormous resource in our communities that allows us to make decisions and judgment calls on people's ability and willingness to bring employment to their local areas and turn around this dreadful situation. I welcome the Minister of State to the House and look forward to debating the details of the Bill on Committee Stage.

I call Senator Harris.

I thank Senator White for sharing time.

I apologise, I meant Senator Norris.

I am very flattered to be confused with that brilliant demagogue. I welcome the Minister of State and I applaud the fact the Minister for Finance attended the Chamber for the early part of the debate. He is a very busy man under much pressure and strain from various sources and it shows respect for the dignity of the House that he attended. I am sure the Minister of State and her advisers will take on board the salient points extracted from this debate and draw them to the attention of the Minister. I welcome the ongoing investigations into Anglo Irish Bank. I do not welcome arrests in particular because one always feels this is a regrettable and negative necessity. People need to see these figures held accountable and I welcome that this has happened.

We are lucky to have Deputy Brian Lenihan as Minister for Finance. He is an outstanding man and a man of courage, clarity and direction. We need a certain amount of firmness. I do not always agree with him but I hope he is right. Some elements may have misinterpreted certain signals. I hope NAMA works but the jury is still out. The Government took certain clear measures in the budget and, painful as they were, they have been welcomed internationally. They have led to an increased respect, in contrast with other European countries. Among countries with budgetary difficulties, Ireland is held up as an example of one that has dealt with this difficult situation with firmness and clarity. However, insufficient attention has been paid to the area of education. The Minister rightly repeats the cliché that our educated young people are one of our greatest assets. This Government should take seriously the real necessity to continue to invest in education in this difficult time. I look forward to a demonstration of the Government's commitment.

The Minister indicated certain measures are intended to support enterprise. This is what we need. This House has played its role. Last week, a group of us on this side of the House, with support from the Government side, amended the Energy (Biofuel Obligation and Miscellaneous Provisions) Bill to provide an opportunity to create 1,000 jobs in Waterford. That was a good day's work and I am glad I took part in it. This is what we need. We should also examine start-up companies and encourage initiatives. The Minister indicated this is part of the Government's policy, extending the scheme of tax exemption on the income and gains from new start-up companies over the first three years of operation. I am on this side of the House but I am not in opposition. I am an Independent Member and I am prepared to support the Government when it does things right.

It is forward-looking to consider Islamic finance, which is a comparatively recent phenomenon in European economic approaches. We must see if we can corner some of the market and this development is to be welcomed. There is a great amount of money floating around and Islamic countries have their own attitude to how usury must be handled, but it is appropriate to examine this.

I am glad some of the tax loopholes are now subject to critical scrutiny by the Revenue Commissioners. The Revenue Commissioners also have increased powers to close some of these schemes which may have been appropriate in the perceived boom but are certainly not appropriate now because they give advantage to the already wealthy classes. The Minister has continued to spell out the policy on carbon tax, owing to the influence of the Green Party. I note the difference between ourselves and the French because Mr. Sarkozy is in the process of backing down under pressure on this issue. It is good the Government has taken this on board.

I regret the influence of the European Union and its legislation means VAT is to be applied to local authorities. This is a form of idiocy. Local authorities are already starved of income and here we are penalising them further. It is a daft recycling process because they must pay money to the central Exchequer and then waste time trying to prise it back from the Exchequer. It does no one any good and is a form of EU lunacy. I am a strong supporter of the EU but when I see daftness, I call it by its correct name.

Thank God mortgage interest relief is being abolished on a phased basis. This must be monitored and should not be set in stone. We see the difficulty of people and the desperate pain inflicted on those who have mortgages at a time of falling property values, falling income and loss of jobs. We must be very sensitive and careful in these areas.

I do not think the Minister has done anything about the difficult position of the restaurant industry. I would like to see a reduction in taxes imposed there. Many restaurants are struggling and a number of them are closing. This is an important aspect of our tourism industry. The Minister referred to charity but I regret such a battle was fought and lost in this Chamber to have human rights provisions included in charitable definitions. This was a grave mistake.

I am delighted there is a windfall tax but this is closing the door after the horse has bolted and has certain negative consequences. In this period of retrenchment and difficulty, where everyone is feeling pain, it is difficult to argue for specific cases but I propose to do so. The Minister of State is aware that this matter was raised in the other House and received considerable support. I refer to Westport House, where Jeremy Altamont, a descendant of the great pirate queen, Gráinne Ní Mháille, is attempting to save that magnificent property. It is one of only seven historic properties, is important to our tourism industry and is an asset to the local community. It is threatened because they engaged in an attempt to realise some of the asset value of the estate to reinvest it to maximise the tourism potential.

The windfall tax was implemented to penalise speculators but in this instance it will penalise heritage properties. That is a problem. I understand my colleague, Senator Twomey, has put down an amendment on this issue. I have put down the same amendment and therefore we will be supporting each other. I ask the Government to examine it.

Westport Town Council and Mayo County Council asked the Westport House estate to draw up an overall master plan of the entire estate. They started this process in 2006 and the zoning is expected to take place in June or July of this year. The reason for that was that the town council wanted to complete its own development before it moved on to examine Westport but it means they are caught on the cusp of this date.

Lord Altamont took out a serious mortgage to finance the undertakings of this plan. He engaged a series of professionals in every appropriate skills area. They have worked in close co-operation with town county planners, the Heritage Council, forestry and all relevant bodies. The date is what will crucify them. They have given their lifeblood to salvage and restore this estate while creating valuable employment. They attract 50,000 visitors to the house each year and 10,000 visitors who stay in local caravan and camping parks. The consequences of this windfall tax will be catastrophic for the family and the cultural heritage of this country.

There are a number of ways of approaching this matter. It can be dealt with by special exemption. Nobody can say this has not been done because I know it has. I found a case where a Fianna Fáil Government did it in the interests of a Mr. Ken Rohan when he was restoring Charleville in County Wicklow, a magnificent property. We might not have it today otherwise. He is a wealthy man but it was done to save the house. There are arguments pro and con but the Government should at least examine it or else face the fact that we may lose something important and valuable to our life.

There is another way to do it. The Minister, Deputy Hanafin, said in the other House this would impact on no less than 18 local draft development plans and 50 local area plans but that is on the basis of draft development plans published prior to 30 October 2009 and rezonings made after that date. If the Government were to insert a long stop date on the adoption of the draft development plan to either the commencement of the Finance Act or 31 December 2010, that would reduce substantially the number of draft development plans that would be affected by the amendment. That is another way of doing it.

I say that in light of the fact that there is a democratic deficit in this section. As the Minister is aware, it was not discussed in the other House. It was one of those sections caught by a guillotine. The House did not get an opportunity to debate it in any shape or form.

Senator Norris, as you are dealing with my county I have given you some latitude.

I thank the Leas-Chathaoirleach. I am drawing my remarks to a conclusion.

I would like to point out that, unusually, this matter received support not just from Fine Gael. There was some degree of support from Labour and Sinn Féin also supported Westport House. Perhaps it was because of the Pirate Queen.

I am glad some attempt has been made to deal with the position in Shannon because it has been hit by the difficulties in Shannon Airport. I predicted that. I knew it would happen, regardless of whether we did the dirty thing and allowed the rendition flights through Shannon. It was going to happen anyway but I welcome the amendment of section 372A W relating to the mid-Shannon corridor tourism infrastructure.

My final point, and I am sorry to end on a negative note, is that I do not approve of the announcement the Government made on budget day concerning reducing the rates of tax on alcohol products. That is a disastrous mistake. It is weakening to the country. We have a serious alcohol problem and we should address it instead of reducing the rate. I thank the Leas-Chathaoirleach for his indulgence.

I would like to share time. I will take five minutes and leave the remainder to my colleague, Senator Mooney.

Is that agreed? Agreed.

I welcome the Minister of State. I am glad of the opportunity to say a few words on the Finance Bill. I congratulate the Minister for Finance, Deputy Brian Lenihan, on his grasp of this serious position and the tight measures he has introduced, which must be welcomed. That is reflected internationally.

I would like to focus on an area of the Bill that relates to promoting Ireland as a good place in which to invest and set up. We have a highly talented pool of well-educated graduates from which foreign investors and companies can choose and I hope the provisions in the Finance Bill will ensure they are utilised. That is the reason I believe investment in education must come to the forefront.

I acknowledge that while the budget brought about some cuts it earmarked significant investment for the economy. In the next six years €40 billion is earmarked for investment in infrastructure, €6 billion of which will be for this year. Some €130 million is for energy efficiency measures, €10 million for the food industry and €50 million for support for a new agri-environment scheme, among many more. That is a broad-brush view on the investment in terms of what is earmarked for the future.

As announced at the time of the budget, €130 million in funding was provided to create 26,000 training places. That is the area on which I want to put emphasis because there are many people out of work who must be brought back into the workforce. This is an opportunity to re-employ those people and allow them to be up-skilled in their original areas of expertise.

A total of €165 million was provided through the stabilisation fund for the temporary employment subsidy scheme in 2010. The Tánaiste recently announced that a second round of this scheme will be made available to some 1,620 companies. That will provide many small, medium and large businesses with valuable supports at this time.

A new scheme which will provide local employment and reduce PRSI contributions is introduced in this Bill. Under this scheme, when an employer creates a new job and employes a person who has been on the live register for six months or more the employer will be exempt from employer's PRSI contributions for the first 12 months of employment. That is a huge plus in my book because it opens the door for them, so to speak.

The Islamic finance tax measure will help to promote Ireland as a more attractive location for international fund-raising operations, in addition to providing Irish companies with an alternative source of funding.

The decision to retain our corporation tax at 12.5% is most welcome and sends out a good message to international investors that Ireland remains open for business.

I am also pleased to see the extension of the tax exemptions for start-up companies for the first three years of trading being continued this year. It is vital that we support start-up companies in the small to medium enterprises sector. We must nurture those entrepreneurs who are willing to invest and develop pro-enterprise businesses in the economy.

I welcome the changes to the current research and development tax credit scheme. Research and development is vital to the advancement of our economy and one of the key areas identified by the Government is in the context of the knowledge economy. In that regard, successive Finance Acts have improved the scheme for tax credits on qualifying expenditure for research and development credits.

The current scheme has been a drawback to research and development in that people who invested in two sites could not transfer the benefit to the other site if one closed. As a result of the change, where two sites are located within 20 km of one another and one closes, the benefit can now be transferred to the other. It is vital that we continue to assist all research and development projects. We must do everything we can to encourage stronger learning in education and provide employment for college graduates. To come back to my original point, education is the key to our success in the future. We have always leaned on education as the way forward for Ireland and should not shirk our responsibilities in this area. Education at third and fourth level will ensure we are a knowledge economy. If we go down that road and ensure investment in this area we will succeed in the future. We must ensure we publicise the fact that many companies other than those which operate outside of laboratories are entitled to research and development tax credit.

I thank Senator Ormonde for sharing time. I join with Members on all sides of the House in thanking the Minister for coming to the House to take Second Stage of the Finance Bill 2010, which is probably one of the most important Bills of its nature to be introduced in either House and is critical to the future of this country. I welcome the Minister's acknowledgement that the budgetary provisions outlined prior to Christmas and now to become law under this Bill have attracted significant international approval. I accept this may not seem all that important or relevant to those people who have lost their jobs in the current economic downturn. It is critically important for the future of this country that we keep our costs down and that we improve our competitiveness.

The reaction of the international investment community to the budgetary provisions introduced, harsh as they are, has been positive. The cost of servicing our national debt is decreasing and the cost of borrowing has significantly decreased. We are now within 1.5% of the German rate as compared with the cost of borrowing for Greece, the latest EU country to suffer severe budgetary difficulties. This shows a remarkable turnaround in the fortunes of Ireland during the past 12 months. It does not seem all that long ago that we were facing a Doomsday. The decisions taken by Government, unpopular as they are as acknowledged by the Taoiseach, Minister for Finance and Government and readily acknowledged on this side of this House, were necessary. The national interest must sometimes surpass any narrow partisan interest.

I was somewhat bemused to hear Senator Alex White attack the budgetary policies of this Government. I have yet to figure out where exactly the Labour Party stands on a wide variety of issues in the economic area. It reminds me a little of the famous dog of Irish folklore who walked a little bit of the road with everybody. Populist policies, no more than anger, do not create effective policies. I applaud the leader of the Labour Party who yesterday publicly called on the staff of the Passport Office and others in the public service involved in industrial actions to call off that action while talks are under way. I cannot understand why they persist with this industrial action when talks are as we speak taking place in Government Buildings. In the private sector, as pointed out by those working in that area, this would not happen. It would be unacceptable that a dispute would continue while talks are under way. I want to add my voice to those of all others who have spoken during the past two days of the intolerable inconvenience and anguish this is causing to ordinary people. Those in the trade union movement who decided on this policy and believed it would be seen as an attack on Government which would somehow bring it to its knees or reverse its budgetary policy are, I am sure, looking on in horror behind closed doors — they will never admit it publicly — at the public reaction to what they are doing. I hope common sense will prevail. I have every confidence that the talks under way in Government Buildings between the trade union movement and Government will resolve this issue. Talk always resolves issues. Politics is about the art of the possible and the trade union leadership are fully aware of the difficult budgetary environment in which we are operating. I wish the talks well.

In the context of the criticism of Government, it is often forgotten — this needs constantly to be repeated — that we simply do not have money. It is costing more than €55 billion to service our economy, to keep people in jobs, to pay bills and so on. All we are taking in by way of tax revenue is €35 billion. The remaining €20 billion must come from somewhere. Had the Government not taken the decisions it took last December, I shudder to think what state this economy would be in now. Would we be like Greece, now relying on the IMF? It would be unprecedented for the IMF to bail-out a eurozone country. Would we be like Iceland which continues to try to recover from its economic Doomsday situation?

Like other speakers, I welcome a number of the initiatives included in the Finance Bill 2010, primarily because they appear to be working even at this early stage. There has been a decrease in unemployment. Again the House needs to be reminded that the Government is paying well in excess of €600 million to maintain more than 70,000 jobs in respect of people on short term working in the private sector. These people are working a three-day week because their employers are unable to provide five-day week employment. The Government is effectively paying to keep them in their jobs. These 70,000 people are included in the 430,000 figure referred to as being the total number of unemployed people. If one strips away the 135,000 to 145,000 people who could not or would not work during the economic boom and one adds that to the figure of 70,000 and includes the other 70,000 people in receipt of Government subsidies, the net unemployment figure is significantly reduced to well below 300,000, which everybody accepts is still totally unacceptable. That is what this Finance Bill and Government strategy seek to address.

I congratulate the Taoiseach on his Cabinet reshuffle yesterday. I wish all of the new appointees well in their new positions. What appears to have been forgotten in the media frenzy that surrounded personalities is that at the core of Government strategy is a focus on job creation. All the changes at departmental level, apart altogether from the appointments made, are geared towards upskilling those who are unemployed, improving the competitiveness of the nation and the creation of more jobs. That is what is at the core of Government policy as reflected in the measures of this Finance Bill.

Economic commentators are suggesting that because we are an open economy our growth will be export led. I caution that that perhaps may not be the panacea that is being suggested. The UK has been effectively printing money for the past 12 months. Its largest trading partner is the eurozone and yet it remains in recession. Growth in the eurozone is, to say the least, sluggish. The German economy has not yet started to show growth despite its being one of the largest export led economies in the eurozone. I suggest that the Minister go further than he has in this Finance Bill by introducing some economic stimulus. It has been already shown that the introduction of the car scrappage scheme has stimulated employment or at least stopped the haemorrhage of jobs from the motor trade. It also generated significant economic activity and has been proven to have worked in other countries too. This is an example of where the Government might in the short term appear to be losing tax revenue but in the medium term is generating more revenue owing to economic buoyancy. Towards this end I ask, speaking as a person coming from the tourism sector, that the Government seriously consider as we come to the summer season significantly reducing VAT on restaurant and hotel meals. This particular stimulus has been already initiated and is working well in other tourist countries on the Continent, in particular France, which are competitors of ours. This would not, in my opinion, result in a reduction in tax take but would stimulate extra business and would assist in preventing a haemorrhaging of employment from the hotel and leisure sector. It might encourage people to eat out, which they have not been doing. It was reported yesterday that at least one restaurant a day was closing down, which is extraordinary.

There may be some value in considering a public works programme to be operated by local authorities. For many years the FÁS schemes operated very effectively in cleaning up towns and villages and enhancing urban environments. The programme seems to have been reduced significantly as a result of the budgetary cutbacks. There are many people, particularly in rural areas, who want an excuse to get up in the morning to go out to work. While they may not necessarily have trained for such work, many, particularly those who have been relying on farm income, would welcome such a stimulus.

The Minister might elaborate somewhat on the national bond which, in effect, is another way to print money legally within the European Union. The announcement was made in the budget and the Minister made reference to it in his Second Stage speech, but he did not elaborate on the modalities of how it would work. The country will respond positively once it is launched. I am interested in hearing more information on it.

I refer to one of the more intriguing proposals in the Bill, the inclusion of the principles of Islamic finance in the Irish finance system for the first time. Colleagues may not be aware that Islamic equity funds are a growth industry and estimates of the worth of their assets run to €3.5 billion worldwide. There is thought to be almost €1 trillion in assets under management according to Islamic principles worldwide. As the market in this sector is growing at 10% per year, it does not take long to realise that soon more and more lenders and companies will start to offer products that fit the requirements of such a clientele. Now that Dublin has a mosque, it will not be long until we see an Islamic window opening.

I do not want to go into the details of why this measure has been introduced. Primarily in Islamic finance, usury or the collection of interest is forbidden. According to the Koran, there are many laws surrounding contract and general dealings. Sharia law is complex in how it influences Islamic banking practices. The challenge will be to create compliant products that match western products. Having said that, perhaps the focus may be on a more western-driven concept and adherents may be willing to accept less in order to remain compliant to their faith. In any case, we can expect to see at least some Islamic finance products on offer in the Irish financial market at some stage. The Bill makes significant moves towards creating Ireland as a centre of Islamic finance outside the Middle East, which is to be welcomed. It will be interesting to see how the initiative develops. Obviously, it is one that has been given serious thought in the Department of Finance and I hope the legislative proposals in the Bill will open the way to creating another important channel of finance to help the budgetary position.

We are still in extremely difficult times. The budget is one of a number addressing the particular difficulties and challenges facing the economy. It is not an easy time, particularly having come out of a very profitable and affluent period. The suddenness of the downturn has caught everybody by surprise, even to the point of shock. I am convinced, however, that if we continue to maintain the budgetary proposals contained in the Bill and our budgetary policy, we will come out of it sooner rather than later.

As one Paschal follows another, I wish to pick up on some of the themes Senator Mooney mentioned. I wish to speak about one big area and then focus on a smaller one.

Senator Mooney gave a very accurate overview of the economic environment in which Ireland is operating, which has important implications for the Finance Bill and the overall strategy it represents, about which I have some questions and points to make. The general situation the Senator outlined is one in which the European economy is at best sluggish. In order to pay for the social welfare services we enjoy — let alone do anything else — the European economy probably needs to grow by 1% to 2% every year. The signs are that it will not do this. On the other two engines of our export growth, the Senator has pointed to what is happening in the United Kingdom. The British Government, under whatever party, will embark on spending reductions which will probably be as tough as ours. The outlook for economic growth in America and the way it is performing are at best uncertain.

All the markets on which our market has depended for economic prosperity, Europe, the United Kingdom and America, are facing challenges that in some cases are on a par with those we are facing. We have all had the expectation that those economies would recover to further pull in our exports of goods and services which, in turn, would reflate our economy. The period of time that will take could well be much longer than any of us has anticipated. This is a very troubling context within which the country is plotting its security and way forward. I say this because the financial course of action we are following is one of deflation and reducing Government spending. It is a policy our party has supported for practical reasons. We are spending approximately €50 billion a year and taking in approximately €30 billion. A €20 billion gap needs to be bridged. We are also following this course of action because of the agreement we have made with the European Commission to support the economy and the different borrowing arrangements the country will need. Particularly at a time when our international reputation is high, it is important to take stock of where we are and the consequences of that approach.

I return to the contribution Senator Mooney made. I agree with him on many of his suggestions as to the way forward. It is extremely difficult to see how we can deliver a broad domestic stimulus to the economy while still delivering the deflationary budgetary strategy to which we are signed up. Deflation and reducing Government spending are about reducing how much we allocate, which is the exact opposite of a stimulus package and identifying a particular part of the economy and supporting it with increased Government spending.

I return to a matter I mentioned during the Order of Business this morning, the report of the innovation task force which the Government published two weeks ago. From a strategy point of view, it contains little with which people would argue. It is all about its implementation. We have a range of plans across the economy in writing. Will our current course of deficit reduction, into which we are locked for reasons I understand, take us to a point where, when the global economy recovers, we will not have spent the money we need to increase the productive capacity of our infrastructure both soft in terms of our young people and hard in terms of broadband and so on? We may not have spent enough in these areas to allow the country to pull through and take advantage of a global economic recovery as it happens. In addition, if that global economic recovery takes longer to happen, will we be spending enough money domestically both in the private and public sectors to deliver the tax receipts we need, deal with the issue of unemployment and the pressing issue of funding the Government services we all want? Even in the cut and thrust of partisan debate it is incumbent on us to take a step back and, if these are the things we want to deliver, ask whether the plan we are locked into at present will allow us to deliver them. I return to the report of the innovation task force which I mentioned earlier. If we have not delivered that strategy and those building blocks in two or three years and the main reason is that the programme of deficit reduction has meant the money is not there to do it, is that the place in which we want to find ourselves?

Let us consider the different plans we have relating to spending on social services, for example, on education to ensure our young people are equipped to deal with a national and global economy which will be very different from anything we have experienced to this point. If we find our young people do not have the education they need, indeed, not just our young people but also our middle aged people who will be as much in need of that retraining as others, and if that has not been delivered owing to the deficit reduction plan, is that a price worth paying? I must be honest and say I am not sure of the answer to that question. Given where this country stands at present, it is a question worth discussing.

At some point there will have to be a trade-off between a deficit reduction programme, which is where we are at present, and a programme for creating jobs and demand. I am concerned we are reaching that crossroads and that, in the context of consumer demand and the need to get people to spend the money they are saving at present, the confidence or flicker of hope we need will take longer to deliver than we are willing to admit. The deficit plan in which we are engaged might be one which delays the day that money is spent because people see taxes increasing and spending decreasing. I look forward to the Minister's response on this point. We do ourselves a disservice if we cannot responsibly discuss this issue in the Oireachtas.

Having discussed the overall background to this Bill, I wish to focus on a specific point which will be dealt with in an amendment I will move on Committee Stage. It relates to the need to support spin-out activity from high tech companies in our economy. I will elaborate on this on Committee Stage but I will outline the background to it now. It is a very important issue to which the Government could respond now. In launching the task force report last week the Taoiseach made the point that the members of the task force had focused on how to deliver a step-change in the level of company start-ups and their growth to international scale to drive job creation and innovation export-focused sectors. Mr. Chris Horn is very supportive of this but he made the point in some of his work on the innovation task force that engineering a positive feedback loop is the critical insight and the most critical objective for the smart economy. If there is a positive feedback loop, we will create sustainable growth and a rapidly increasing number of direct and indirect jobs.

There is a great deal of investment in research and development, but is that investment directly leading to the commercialisation of that research and development which will then lead to creating jobs? At this point in our national economy and given our desperate situation there is a need to ensure the research and development spend directly feeds into commercialisation and wealth and job creation. Spin-offs is an area where this is happening. What is a spin-off? A spin-off is where a group of people within a large company encounter a piece of technology or thinking that is unique but does not form part of the competitive advantage or focus of the company within which they work. They take that piece of research or insight from the company and form their own company to drive it forward, make money and create jobs with it.

This is happening to a large extent in Ireland at present. I can give three commercial examples. Hewlett Packard has licensed some of its intellectual property to a smaller company in Ireland called Crosspan. Signals, a company based in Ireland, is using technology that was transferred from Microsoft and InnisTech, another high-tech company, bought some software production from Microsoft that was not part of where Microsoft was going but was something that could create jobs and wealth in Ireland. The majority of our colleges are engaged in this type of activity. It is happening in Maynooth and in parts of Trinity College. IONA Technologies is a great example of this. It contributed a great deal to the smart economy in Ireland and was a spin-out from research that was taking place in Trinity College.

An amendment we have proposed in this regard was discussed in the Dáil. The Minister acknowledged the thinking behind it but did not accept it. The amendment proposes to change the research and development tax regime to incentivise companies to commercialise the research and development that is already taking place within the company to allow that to become a spur to a new company being formed. We have a research and development tax regime at present that is as important to the prosperity of this country as the corporation tax regime, something that is not appreciated. It protects and encourages research and development. The amendment we propose, which we will discuss on Committee Stage, would incentivise companies to examine the work they are already doing, commercialise it and use it as a way of creating additional jobs. It is a practical proposal relating to a part of our economy which we all talk about and are committed to but with which we might not have the time or expertise to engage.

We can use this measure to spur employment and wealth creation. Chris Horn, who has a huge amount of expertise in this area, has independently endorsed the amendment as a good idea that should be implemented. It will be the litmus test of how committed the Government is to the implementation of the report which it published with great fanfare last week.

I welcome the Minister of State, Deputy Finneran, to this important debate on the Finance Bill. In the last two Finance Bills we have had to address issues which were unprecedented in my time as a Member of the House. I am sure that is the case for most Members. There has been a global economic downturn which has challenged not only the capacity of our small economy to deal with it but also the capacity of the largest economies in the world. Like other countries, we are slowly and gradually trying to work our way through it as best we can.

When one considers the scale of the difficulties that emerged in 2008 — the banking sector difficulties leading to the property collapse, the total global downturn, the ensuing huge unemployment and the consequential huge fiscal deficit — it is fair to say that anybody who found themselves facing such challenges could quite easily have been overwhelmed. It is acknowledged by fair people on all sides of the political divide and elsewhere that the Minister for Finance has risen to these challenges in a way that is commendable and has inspired people that we can work our way through it. While difficult challenges still face us for the future, we have shown, without being scared of taking very difficult political decisions, that the capacity and potential of our State to recover is reasonably good. We will only recover when there is a global improvement. There are varying opinions as to when that is likely to occur, a point to which I will return.

The big issue is the failure of banking worldwide. We experienced a huge increase in property prices here. Lending was provided at an irresponsible level, mainly in the pursuit of short-term profits. There was an abject failure of our regulatory authorities to recognise the risk factors involved and to take any effective action to try to bring some semblance of reality to the situation. That mirrored what happened in other countries, not least what happened in the United States where, I understand, more than 100 banks have collapsed. In time the fact that Lehman Brothers was allowed to collapse may be seen as a huge mistake on the part of the Bush administration because of the systemic importance of the bank. It was far from the biggest bank in the United States, but it had a huge knock-on effect. The size of the economy and, in particular, the markets in the United States meant the collapse reverberated across the western world.

There has been much debate here about some of the decisions taken regarding bank guarantees and the establishment of the National Assets Management Agency. If we are truthful only time will tell the success of these measures. It would be fair to say there has not been any real well-argued alternative to doing what we did. While it is unpalatable for the establishment of an agency which is under the support of the State, failure to take such action would have led to more adverse problems.

All of this feeds directly into the Finance Bill. It created a situation whereby there is now a huge hole in our public finances. It is fair to say some of that has arisen because of excessive growth in the cost of the public service. In 1998, some 220,000 people were on the public payroll, which included those working in all of the public services which we administer and all pensioners who are paid from those services. That figure is now approximately 370,000, an increase of 150,000. Our expenditure increased to some €57 billion. In the halcyon days of property development and the consequent revenue stream which came from properties, it was possible to cover that. The revenue stream last year was some €32 billion. There is a very significant gap of, I understand, €24 billion.

We need to be conscious that, early last year, we endeavoured to reduce the deficit to €20 billion for 2009. That was the stated intention. Despite the significant reductions in expenditure and tax increases, the deficit was some €24 billion. Statements on public finances for the first few months of this year indicate that, despite the fact that there was a reduction in €4 billion in the last budget, there will be a deficit of some €22 billion or more. There is a lot of disquiet in the public service about the reduction in pay but, unfortunately, in the good times pay in the public and private sector was allowed to develop at a rate which made us uncompetitive. That is a huge issue for us now and will be in the future.

In October 2008 I articulated that we needed a 10% pay cut. In effect, we needed to reverse benchmarking. It brought nothing by way of productivity to the public.

That is just not true.

No interruptions.

On a point of order, that is incorrect. It was signed off by various committees from the Government.

Senator, you will get an opportunity to reply.

I wish to say that, without interruption, a person who, I understand, was in or had recently vacated the position of chair of the Irish Congress of Trade Unions, stated it was like going to an ATM to get money.

He did not. On a point of order, that is also incorrect.

He did not tell us that is was like going to an ATM to withdraw cash using the taxpayers' PIN and not their own. Benchmarking should not have happened without benchmarking across other states in the European Union and any productivity which would accrue from it should have been clearly defined in advance. Unfortunately, we are now in a very difficult situation from which we may find it extremely difficult to extricate ourselves sensibly in the future, given the global economic background. One thing any company has to do when it hits turbulence is to take corrective action immediately. Pay is one way of doing it, and it is difficult. I recognise that people in the public and private sector have entered into financial obligations and commitments in the expectation of a revenue stream, and when it is reduced it has consequences and poses difficulties for people. However, the one thing companies do is downsize the numbers.

I complimented the CPSU this morning. It has highlighted clearly the significant dysfunction in our public services. People who worked in the Passport Office have telephoned to say they were willing to come in and give of their time voluntarily to issue passports in order to meet the demands of the people who are left in extreme difficulties because of the action in the Passport Office, which nobody could stand over, given the difficulties it is posing for people. That needs to be said.

In our public services we are extremely fortunate to have excellent people who work very hard and without whom the system would collapse. However, beside them are many people who are not functioning at all. A public servant contacted me today and talked about the holidays people have which, in some instances, extend to 45 or 50 days a year. It is unheard of and one could not achieve it in the private sector. There is reaction to the pension levy and we have all been affected by it. The reality is that one could not buy the pension scheme which we enjoy in the public service in the private sector, and there is no recognition of that.

We also cut social welfare. All of it is highly regrettable but necessary if we are to restore any shape to our public finances. One thing that troubles me is that there is great division between economists as to what is likely to happen in the short to medium term. There is a view that because we are seeing growth at present, this will continue and we shall reap the rewards by next year. Economists have been expressing serious concern about China, which has been relatively unaffected, and the Asian countries. At the moment they are providing a high degree of stimulus not just for their own economies but elsewhere by their transfers and investments abroad, particularly in the United States in which there are some concerns in this regard.

Last week I had the opportunity to meet a prominent economist in the US, Dr. Arthur Laffer. He is famous for the curve he did at the Washington Hotel some years ago. He talked about the various stimulus packages in the US and I had not realised there were so many. There is a farm Bill, a housing Bill, the Larry Summers Bill, which is costing $170 billion, the AIG Bill costing $185 billion, Bear Stearns, Fannie Mae and Freddie Mac, which he reckons at some $5.5 trillion. There is the $700 billion Paulson package, which was President Obama's initiative. Dr. Laffer said that all of this indicated an overreaction. He estimates that the stimulus initiative comes to $3.3 trillion and because that will expire towards the end of this year as well as the tax increases triggering in from 1 January next, while the US economy may grow by around 3% this year, it will decline by about 6% next year, which means it could be 6% down on 2010. Obviously, if he is right this will have global consequences.

I am only saying this as a background to where we are. We need to be very careful and ensure, in so far as we can, that we correct as much of the public finances as possible. I honestly believe this means a significant reduction in numbers and greater productivity. I shall finish by saying that the early retirement schemes we have had in the past have tended to be an avenue for the really good people in the public service to get jobs in the private sector. If that continues, it will have an effect on quality within the public service. Again, this is just another challenge that needs to be watched in the context of everything we are considering at present.

I welcome the Minister of State, Deputy Peter Power. We tend to meet at times when I have difficult amendments to deal with, and I have another one today. Before I get to that point I wish to explain that it is no wonder the media get it wrong when one hears a spokesman for a Government which knew every line of the benchmarking agreement being so underinformed and unaware of what actually went on. It takes my breath away that somebody on the Government side of the House can talk about public sector reform when I have, since Senator Walsh was elected nine years ago, talked about Seanad reform on foot of three or four reports which he has been unable to put into play. I am not going to waste any more time on benchmarking, apart from saying a few things. On the issue of no recognition being given of the value of pensions, it will not take the Senator long to find out that it is on the second page of the benchmarking report, which shows how it was taken into consideration, signed off on not just by the ICTU and the unions but by IBEC and a High Court judge, to the effect that they did their assessment, related it to the private sector and then reduced it from the top quartile to the second or third. They then applied the value of the public sector pension. Therefore Senator Walsh is incorrect.

There is no basis——

The Senator can check this if he wants.

I know it is written there. I am not saying it was not.

That says precisely what was done. I know the Senator does not like it because it is a good story upset by the facts. He should go into journalism where he would be a big success.

There is no basis——

In terms of the ATM machine, that was not a discussion about money at all. It was about the fact that regressive trade union members such as Senator Walsh, afraid of change, were worried not about the amount of money they were going to get but what they would have to do to earn that money in terms of additional productivity and reforms.

Nothing happened.

In doing that I explained that this was like building up credit in productivity. Once credit had been built up in a whole variety of things, a few of which I have mentioned, one could take out what one was entitled to, just as easily as one could use an ATM machine. It is very straightforward and of course the Senator does not like it because it spoils a good story.

That is not true.

He could find out what was done by walking into his local national school where he can look at the difference in terms of the promoted posts for teachers and teaching, what they had to do before benchmarking and what they have had to do since in terms of middle management. In fact, just ask the outgoing Minister who feels very strongly about this because he is arguing with Government internally and privately that the ban on promoted posts is causing an enormous problem. The reason is that is where an enormous element of the productivity bought by benchmarking exists and this will now be lost to the Government.

When the Senator returns to his office he should ask somebody to open the Department of Education and Science website and look at the reports on whole-school inspections on any school in the country to see when the last inspection was carried out and the report published. That was another issue of benchmarking. I could go through a whole list of them and every one of them was signed off by a committee established by the Senator's Government.

How were they signed off?

As key performance indicators. I could go further than that, but if the Senator wants to raise a few more issues I shall bury those out of sight as well. That type of stuff reflects for me the difficulty of reform. All my life I have argued, mainly with my own people, about the difficulty of managing change, how important it is to a progressive society and what needs to be done in the public sector. I am delighted that the Taoiseach has now established a post for public sector reform and that the Minister of State, Deputy Dara Calleary, has responsibility for that. I certainly will be of any assistance I can to him in that regard. I have ideas on how to do it straight away. Instead of complaining about things, it is preferable to put forward solutions. There is a very simple solution to the issue of people coming in and out of the public sector. If every promoted post in the Civil Service was open to competition, this could be dealt with.

There is no point in the Senator nodding his head. His party has been in Government for the past 15 years——

I agree with that. I have been saying that for years.

It is just a matter of taking a decision.

I accept that.

The second thing is to abolish TLAC. TLAC is an internal affairs system for the promotion of higher civil servants. Higher civil servants should be promoted like anybody in a semi-State company, for instance. If help is needed for an appointments commission or whatever, it should be a normal appointments process.

People I went to school with who became civil servants were among the brightest. They are still the brightest, with extraordinary intellectual talents, but the system has been developed not to allow such talent to flourish but rather to encourage people to move slowly and conservatively forward without rocking the boat, right up to the top. I guarantee that if competition were introduced for those positions, they would come to the top with credit. Anyone who has dealt closely with our civil servants knows the value and the intellectual capacity within the system. It is only a matter of releasing it. I have done it in other organisations. Give people the opportunity to flower and they will do it.

I was greatly disappointed that this Government did not come to a deal with the unions before Christmas. This was the only trade union group in Europe, it should be remembered, which conceded to its own members and the Government of the day that since the State needed €4 billion, it would have to get it.

It could not get it.

I can assure the Senator the money was there.

It was unpaid leave.

It is funny where the term "unpaid leave" comes from. It is called short-time in the private sector and unpaid leave in the public sector. Is it not strange how politicians can take a double view on something? That is called speaking out of both sides of the mouth.

The HSE is grossly overstaffed.

In the private sector when people are put on short-time and do not get paid, people understand that, but when it is done in the public sector it is called "unpaid leave" or something. Somebody might explain the difference to me. If I had been told the unpaid leave, as he called it, or short-time, as I call it, was going to be more difficult than what is happening at the Passport Office, in one tiny corner of one Department in the public sector, I would suggest it shows the value of the judgment of those on the backbenches of one of the Government parties which cannot work this out for themselves, and I would be sorry for them. There is a long road ahead and it is not going to get any easier.

I know of the good work the Minister of State, Deputy Peter Power, has been doing in many different ways. There is work that can be done in this regard, and I accept reform of the public sector is needed. What is on offer from the trade union movement is a cutback of 15,000 in numbers, which would give the Government its savings. One could travel as far as Moscow and one would not find such an offer. Ask any colleagues in any European country where they would get it.

This is after the numbers increased by 150,000.

The offer is there. They would have to work out how it is to be done, but the offer is there.

To come back to the core of the Bill, I believe every joint committee should get a letter from the Taoiseach or the Minister for Finance stating that job creation in the committee's sector should be top of the agenda for the year and that the Government wants to see results and ideas coming from each committee on job creation in each sector, whether it relates to energy, natural resources or otherwise.

I spoke this morning to Deputy Simon Coveney, who has some very good ideas on the whole area of natural resources, including in the Minister of State's constituency. There is a tidal flow of 5 knots twice a day in the Limerick estuary which could, for example, be used by a company called OpenHydro which is based across the road from Leinster House and which got a huge commitment from the Scottish Government to operate in the Shetland Islands. While I am not suggesting the potential is as good in the Shannon estuary, there is potential. There is similar potential in the Leas-Chathaoirleach's constituency around the Achill islands and in north-west Mayo, which has the most energy-rich waves in all of Europe at 2.5 m.

I have not spoken to the Minister about my amendment because I do not want to bother him at present as he is under enough pressure. I asked for the issue to be dealt with in the Dáil and it was raised by Fine Gael and the Labour Party. While I will deal with the matter in detail on Committee Stage, I would appreciate if the Minister of State would listen to my argument.

The issue is as follows. In the event of medical negligence cases in the courts, where negligence is found at present, an award is made to some person. The case might involve, say, damage at birth or an accident. The award is made by calculating that the person has a certain life expectancy and it will cost a certain amount per year to look after him or her. Therefore, the judge has no choice but to multiply the remaining years by the quantum per year, add in costs, legal fees and all the rest and arrive at the figure to be awarded. The award is tax free.

This system was introduced at various times by a Fianna Fáil-Labour Party Government and a Fine Gael-Labour Party Government, so all of the parties present were involved in the changes. Deputy Pat Rabbitte was involved in the changes as part of the Fianna Fáil-Labour Party Government and the former Taoiseach, Mr. John Bruton, was involved at another time.

My point is as follows. Medical science has advanced to such a degree that it is no longer that easy to decide somebody who has had a serious accident will be completely and permanently incapable of normal independent living for the rest of his or her natural life. Therefore, the simple thing to do would be to make an annual award and put aside money for the cost per year.

This is what the Judiciary wants and what the insurance industry feels is fair. I am the vice chairman of the Personal Injuries Assessment Board. While the board does not deal with these cases, I am very aware of what happens as we have very closely examined this area. This area was also examined ten years ago by the Law Reform Commission, which made the recommendation that such awards should not fall due for tax.

I understand the Department of Finance was agreed on this point until just before Christmas. However, it has now backed off due to a fear, as was stated in the other House, that a possibility arose that this would lead to its decision going ahead of the law. That is not the case. This is a very simple issue with no real revenue implications because such revenue implications have been covered in the original legislation. The amendment seeks to allow judges to award a per annum amount rather than a lump sum quantum.

How does this help industry? It helps because it affects the cost of insurance. If the person held liable is in industry, the person's insurance company is liable for the total amount, whereas that total amount might not be necessary because a person might recover or be able to utilise later advances in medical science, whatever the medical condition, and a lesser amount would need to be paid. Everybody is a winner in this situation. It is simple and straightforward change which I ask the Minister to make.

I wish to raise a further issue. The then Minister, Mr. McCreevy, introduced changes to the pension provisions some seven years ago with my full support and he discussed them with me at the time. We were worried about the fact that in the case of a lump sum, it was necessary to buy annuities, which were very poor value. Not only that, if a person died, the lump sum did not go to the person's estate but went back to the insurance company, so nothing was left for the remaining family.

The then Minister, Mr. McCreevy, introduced legislation to the effect that on retirement one could take a certain amount of a lump sum — I believe it was 25%, although the amount is not important. The rest had either to be invested in annuities, which use the old-fashioned system whereby one would get the money on an annual basis and it would go back to the insurance company when the person passed away, or, alternatively, it was put into an ARP fund and the person got income from it each year and paid his or her income tax on that. When the person dies, the remaining amount goes to the person's estate.

What is happening is that this income is subject to PRSI, which I assure the Minister of State was never the intention of Mr. McCreevy. One does not pay PRSI on annuities and he did not intend at any stage that people would be worse off by choosing the other option.

We must remember that, with annuities, a person gets more of an income but loses control of the money, whereas if the person puts it into the fund, the money still effectively belongs to the person or the person's estate. I would like to hear a response on both of those issues.

On the question of banking, we need to define what is a bank. One of the things that happened in the past ten years is that we forgot what banks are. Banks suddenly became financial institutions, building societies, developers, entrepreneurs and builders under various different names, and they were certainly involved in sub-prime lending and all sorts of variations of financial services. This cannot happen any longer because it is what created the bank we could not deal with. This needs to be defined under the articles of association of each bank.

Although he got no credit for it, Commissioner McCreevy has done extraordinarily good work in Europe. A crucial aspect of his portfolio concerning regulation was to try to get agreement on audit, accounting and banking standards. We need to introduce regulations in Europe, the UK and the US in order to ensure one aspect cannot be played off against the other, either by movement or, worse, when they are working on the difference between the regulations here and the regulations there. These are issues that need to be addressed.

In conclusion, with regard to the national partnership, what we in this country need is for everyone to work together. We do not want people arguing outside the Passport Office and making us look like a Third World country. We need to get past this. We need to get everybody onside and convince them plausibly to work together. This country needs to be governed, the Government needs to get money, people need to increase their productivity and we need to create employment. We will do that by working together so we need to get the partnership programmes back together.

Many commentators said there were no stimulus measures included in the finance Bill. I will endeavour to highlight a number in the Bill which are to be welcomed.

Two and a half years' ago the Government undertook a process of stabilisation of the banks and took measures to deal with the property bubble and meet the shortfall in the economy. Senator Walsh was correct when he picked up on one of the most important aspects to be considered during a recession, the need to ensure the overspin was returned to normal. It was unrealistic to think one could return to the levels of 2003 and 2004, but we are succeeding slowly. However, we are nowhere near out of the woods in terms of the savings required in the public sector.

The trade unions are correct on this occasion in that they want to begin early negotiations with the Government, instead of what happened last year when it was left until the eleventh hour and they were then unable to carry their members and had to allow the Government to make the necessary changes to meet the financial position. That is one of the most important things that happened. The trade unions let their members down in that regard and we see the results today with the queues outside the passport office. Senator O'Toole is correct in his view that this makes us look like a Third World country. The trade unions can blame themselves for not getting on board. They now realise, if they do not wish to see further cuts to their members' wages next year, they will have to negotiate a proper public service delivery programme required by the public who pay for it.

There are an extra 150,000 people working in the public service. Despite this, I would like to see a complete overhaul of the health service. It has a middle management tier which should have been removed two or three years' ago but it is still in place, costing us upwards of €1.5 billion. The Government needs to take this into account when framing the budget for next year. The overview of the health service should include how we can deal efficiently with the current position in accident and emergency departments and consultant waiting lists. I refer to what happened at Tallaght hospital where middle management staff did not open letters for two or three years. These are the issues that will need to be dealt with in the next budget.

The Government acted correctly in introducing a one-year moratorium but the possibility of having a two-year moratorium on mortgage repayments should be considered. The Government is considering ideas to deal with distressed mortgages. The Joint Committee on Social and Family Affairs suggested 22 amendments in its report. Deputies Byrne and Enright are also members of the committee and had a part to play with regard to the proposals. They are 22 reasonably good proposals dealing with mortgages and general indebtedness. Senator Boyle said we went on a spending spree for a number of years for which we were paying dearly. There has, however, been a significant increase in savings, from 2% to 14%.

The budget looked at ways of cutting expenditure and reducing waste in the system and there were no increases in taxation. Previous budgets increased the levels of taxation but it was not possible to continue this policy, as it would depress the economy as a whole.

I recommend examination of professional fees. While wage costs have reduced across the sector, GPs have increased their charges by another €5, from €60 to €65. Such increases need to be curbed, as they cannot be allowed to continue. Professionals such as solicitors continue to charge the same fees. I am not casting any aspersions on the profession but its members need to live in the real world and consider a reduction in fees in line with those across the sector. I make the same suggestion to barristers. The general public needs to see that we are being fair and that everybody is taking a cut. The Taoiseach took the lead with substantial cuts in his own salary. We all suffered the same level of cuts, which is important.

The loss of Dell was a big blow to Limerick but it is encouraging to note there is a fund of €14.8 million, with a top-up fund of €9 million, available for the upskilling of workers. This is the way to invest in people to introduce new skills and ideas which will be of benefit to all those who have lost their jobs. I have no doubt younger workers will find new jobs. In the past three months substantial job creation projects have been announced. A total of 1,600 or 1,700 jobs were created in the period, although others were lost.

The social welfare bill comes to €22 billion. I suggest that the Minister for Social Protection and the Minister for Finance examine the possibility of putting in place a grant of €10,000 for two years to take people off the dole, and not to borrow that money but to take it from the social welfare budget, so those companies that are prepared to take people off social welfare, be they SMEs or multinationals, can do so. If people are on lower wages I also suggest we do not remove their medical cards immediately and that they could retain them for up to two years. That would encourage people back to the workplace and save the Exchequer around €2.5 billion. When a person is taken off the dole, even if we are giving a grant for two years, that person will be taxed and that tax will come back to the Government in revenue. Such a saving would be terribly important.

Considering the tough budget, it is important to see there was expenditure on child care, with 250 social workers who will be working under the auspices of the Minister of State, Deputy Barry Andrews, to ensure we deliver a better service to the young. That is vital in view of the fact we had such a difficult budget.

We should remember that the EU and the IMF have seen in the last three budgets that we were serious about addressing our budget. Consequently, it now costs less for this country to borrow money. We are credible on the bond market.

I was a critic of AIB Bank, calling for it to bring its funds back from abroad, sell off its property and put its house in order here instead of having the Government spending money on it. Its overseas investments are valued at around €2.3 billion so it is time for AIB Bank to bring that money home and do what other banks are doing across Europe. It would be a start and instead of the Government putting €4 billion into that bank, it would mean €1.2 billion of support would be necessary for AIB Bank.

We want our banking system to function. Senator Joe O'Toole was right that banks lost the run of themselves, trying to become developers and entrepreneurs. That is not their job. The job of a bank is to lend money and to get it back with a margin on it. It is simple enough. When the banking report is complete, we will see clearly that the mistake was that the banks went away from the system they had. When I was building, my bank manager would look at whatever project I was working on and would ask me when it would be finished. I would ask when he needed his money back and it was my job to ensure I paid back the loan and interest within that timeframe. The banks moved away from that model. Now if a business applies to a bank manager, the application is sent to head office to someone who does not even know the applicant to make decisions about those with a 25 or 30-year track record. I hope I have contributed to this Bill and I commend it to the House.

I welcome the Minister of State, Deputy Peter Power, to the House. I also commend the Minister for Finance for attending the House earlier and I wish him the very best of luck. It was great to see him here making his Second Stage speech.

I support my colleague, Senator Norris, and Deputy Michael Ring on the proposed amendment to the Finance Bill. The Government has tabled a recommendation to the Bill so it must go back to the Dáil. There is no problem with the Government accepting another recommendation, therefore, and it should consider that being put forward by Senators Twomey and Norris on Westport House.

Senator Norris made a great case for Westport House, as did Deputy Ring and others. Lord Altamont and Westport House have been great ambassadors for Westport, Mayo and the entire country. The house is a great attraction for the west and more than 50,000 visitors head there annually. Something should be done about this and the recommendation set out by Senator Twomey is simple. It proposes a new section 26 that will state:

Section 644AB and 649B of the Taxes Consolidation Act 1997 shall not apply where a change in the zoning of lands was contained in a draft development plan or a draft local area plan published prior to 30 October 2009 and adopted after 30 October 2009. The zoning of lands in the draft development plan or a draft local area plan published prior to 30 October 2009 and adopted after 30 October 2009 shall be deemed to be the actual zoning of the land on 30 October 2009 for the purposes of section 644AB and 649B of the Taxes Consolidation Act 1997.

The explanatory memorandum for the Bill states:

Section 644AB contains the income tax and corporation tax provisions and section 649B contains the capital gains tax provisions. The amendment changes both sections in the same way.

The amendment provides for an exemption from the 80 per cent tax rate for disposals of small sites. For the purposes of the exemption, a small site is one that does not exceed 0.4047 hectares (one acre) in size and whose market value at the time of disposal does not exceed €250,000.

The memorandum also states:

Section 25 amends sections 644AB and 649B of the Taxes Consolidation Act, 1997 which concern the circumstances in which a special 80 per cent tax rate is to be applied to "windfall" profits or gains from certain land disposals. These sections were inserted into the TCA by the National Asset Management Agency Act 2009.

Lord Altamont and Westport House provide a great service. There is an open house with 50,000 visitors per year. The upkeep of such estates is costly and other work needs to be done. If the work is to be done and the house is to continue to act as an attraction, it will require substantial funding. That funding can only be secured in two ways: borrowings or the disposal of assets.

I cannot see how Lord Altamont would borrow money to upgrade his house in order to open it to the public. We are seeking an exemption so that a sale of land will not be subject to the 80% windfall tax. This is a simple measure which can easily be included in the Bill. I am aware the Minister understands the issue.

Given that the Bill must go back to the Dáil, if the Government does not agree with the recommendation proposed by Senators Twomey and Norris, it could introduce a further amendment on Report Stage to make a specific provision for Westport House. Perhaps such an amendment would require that the tax foregone is spent on the house and its grounds. I am sure a way could be found to support this worthy project. As has been pointed out by previous speakers, there are only seven houses of this type in Ireland and they are a huge attraction to visitors.

Westport House is a tremendous asset for Westport, which is one of the finest tourism attractions in the country. A significant proportion of our visitors come from Northern Ireland, England, America and central Europe. The grounds of Westport House are on occasion used as a camping facility.

Much comment has been made about the disappointing situation at the Passport Office. It would be a simple matter for an official to prioritise the people who need their passports tomorrow in the queues outside the office. People at the back of the queue who needed passports straight away were waiting a couple of days to reach the front. I hope this issue is resolved for the travelling public. I dealt with an issue involving a quantity surveyor who is responsible for 80 jobs and had to travel to England urgently. He went to the Passport Office at 9 a.m. but was told he would not get a passport. I believe that gentleman has a constitutional right to a passport and that he would win his case if he took it to the High Court. He was forced to take the boat and find his way from Holyhead to London. That he made his appointment on time even though somebody could not process his passport demonstrates his commitment. The Government has handled the issue very poorly.

The proposals which Fine Gael has brought forward deserve the Government's consideration. The NewERA document prepared by Deputy Coveney proposes to create up to 100,000 jobs. Given the current economic state of the country, these proposals deserve to be taken on board because the measures introduced by the Government are not working or are being implemented at a very slow pace.

This morning, the Leader incorrectly argued that Anglo Irish Bank is similar to the Insurance Corporation of Ireland, ICI, which was established to support industrial development. There is a big difference between the two, however, because the money that the Government invested in ICI was used to establish and promote enterprises. Anglo Irish Bank is broke and needs €7 billion to keep its creditors at bay. It simply cannot pump credit into Irish businesses.

Fine Gael proposes a national recovery bank.

What would be done with Anglo Irish Bank?

It would invest €1.5 billion which would be used to pump €15 billion to €20 billion straight into Irish businesses. That would give them a lifeline they do not have at present. The Minister of State will have personal experience of the problems faced by small and large businesses in his constituency.

What would Fine Gael do with Anglo Irish Bank?

Fine Gael has a plan for Anglo Irish Bank. The Government should discuss my party's proposals for a national recovery bank.

I am listening.

The Minister of State might be listening but he is not hearing. The Government is not even prepared to enter negotiations with my party leader and Deputy Bruton.

We are listening to them on the floor of our Parliament.

The establishment of a national recovery bank would allow money to be pumped straight into small businesses, which are closing left, right and centre.

We face serious problems in that too many houses and commercial developments are lying empty and some areas lack adequate infrastructure. One estimate suggests that up to 340,000 houses are lying empty. I commend the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Finneran, on his work in the area of housing but we have to fill those empty houses with people because otherwise they will be demolished. I do not know what will happen to the considerable number of small commercial developments which already exist but there will be little need for further such developments for a long time to come. Perhaps the Government could find a way of leasing them or offering them for free to start-up businesses.

I have raised the issue of tourism on numerous occasions. I welcome the appointment of the new Minister for Tourism, Culture and Sport and wish her predecessor the best of luck. I know he is suffering bad health at present and perhaps that was part of the problem. We have lost out in terms of tourism over the past several years.

Not because of that.

It may well not be the case but, in any event——

It is not right.

I have said that I wish him well. We have fallen down in regard to tourism over the past several years. Even though we have an unprecedented number of hotel rooms and air routes and our infrastructure is better than ever, we have never received so few tourists. We have never had more golf courses. While we have the products, including golf courses, rivers, lakes and mountains, we have no tourists. We are not marketing the country properly. The Government should ask Michael O'Leary to fill all the empty hotels. I assure the Minister of State that if the Government entered into a contract with him, I have no doubt that he would fill them overnight.

I do not know if I could beat such an offer from Senator Burke. I do not agree with him but——

Sinn Féin and Michael O'Leary — what a combination.

Some of the recent debate in the Lower House on Deputy Varadkar's comments illustrates the closeness in economic policy of the two major parties, Fine Gael and Fianna Fáil. It is clear that there are those within the Fine Gael Party who are not trying to get into government and who support Government policy. This amplifies the fact that the two parties have a similar economic policy, especially on the banking system. The Minister of State sought to drag in the previous speaker because in reality his proposals are very similar.

We recognise the country's finances are in crisis. What we needed last December was a budget that recognised this fact and would start to raise the necessary revenue to address the problem. Instead, a lightweight budget was announced, followed by a lightweight finance Bill. The Government's decision to cut us out of recession rather than raise revenue and stimulate the economy is not working and will simply not work. This should have been seen as an opportunity to ensure fairness in the taxation system and address some of the anomalies which cost the State billions of euro each year.

The finance Bill gives the Government legislative power to manage the State's finances. It implements budget decisions and introduces new measures aimed at tackling the country's budget deficit. In the past week Sinn Féin has revealed that what is not included in the Bill is just as important, if not more so. Through my party colleague, Deputy Morgan, we revealed the news in the Dáil that within three months of its appointment and before work properly began, the members of the board of NAMA had received pay increases. This flies in the face of everything the Government has stated about the State's finances. Some 12 days after the announcement of the harshest budget witnessed in decades, a budget the Government maintained we needed urgently, NAMA approached the Minister for Finance, Deputy Brian Lenihan, to seek vast pay increases, with which it was rewarded. Public servants had their pay cut by 5% but the chairperson of NAMA was granted an increase of 70% at the same time. The real question is how are we to take the Bill seriously when such measures are taken by the Government behind closed doors. That is one example of many in which we can see double standards.

On Committee Stage I propose to submit several amendments to ensure a fairer finance Bill. One such measure would require the Government to put all decisions about remuneration in NAMA, which comes from taxpayers' pockets as in the case of all its other financial dealings, before the Houses of the Oireachtas. We call on the Government to reverse the pay increases immediately. It is clear that this was not the criterion under which members of the board were hired. The line we have been hearing from spin doctors within the Government is that they have suddenly realised the people concerned have a great deal more work to do, but it simply does not wash. We are all aware of NAMA's vast workload, but a 70% pay increase for the chairperson and increases for others working part-time are untenable at a time when the Government is slashing frontline services and attacking the pay of some of the lowest paid workers in the public sector.

I intend to submit amendments to have the Government ringfence moneys raised by way of the new VAT measure inflicted on the State by the European Union. They would require this money to be directed towards the local government fund, with an instruction that it be used to help local authorities to reduce service charges and rates. It is clear the Government's taxation policy is crazy. Throughout the boom years it was totally dependent on consumption taxes such as stamp duty and VAT receipts. The Official Report of the Dáil shows that time and again we raised this issue with the Minister for Finance and other Ministers and highlighted the need to move away from these fair weather taxes. At the time Fianna Fáil did not listen and poured extra fuel on the fire in what was already an overheating economy. This is related to my first point because Fine Gael argued likewise. The over-dependence on consumption taxes was unsustainable because they were indirect taxes and unreliable in generating an income stream for the Exchequer on a long-term basis. As a consequence, when the economy——

What taxes would Sinn Féin introduce tomorrow?

The Seanad should be used as a forum in which to tease out different policies. We argue for a third rate of tax of 48% for individuals with incomes in excess of €100,000. That would be fair. If one has an income in excess of €100,000, one could be liable to pay tax on the excess at a rate of 48%. I cannot see why that should not be applicable. The Department of Finance has shown it could generate approximately €455 million were it to be applied.

No. It would lose money and drive jobs out of the country.

No, it would not. I refer the Minister of State to a reply to a parliamentary question from the Department of Finance. He prefers to suggest Department of Finance officials, through the Minister for Finance, should mislead the Dáil in answer to a question. When we asked if a third rate of tax of 48% was to be introduced for individuals with an income in excess of €100,000, the answer was that such a measure would generate or save this amount of money for the State.

Also, we argue that we should follow other European countries such as France in introducing a solidarity tax on assets with a value of more than €1 million. In that context, we would exempt the family farm and individual houses. Such a measure could raise well in excess of €1 billion. In fact, we have estimated it could raise €1.6 billion, while others such as UNITE have argued it could generate a sum in excess of €2.2 billion. There are other ways to do it, but the Government has decided to take from the lowest paid in society. It has decided to raise revenue and remove social welfare protection for those aged under 25 years, cutting the value of their supports by more than 50%. This makes no sense to me.

The arguments are very simple. Should we introduce a solidarity tax such as that in place in France and other European countries on assets with a value in excess of €1 million, or should we cut dole payments to those under 23 or 25 years by €100? The answer is clear to me. Obviously, those with the ability to do so should pay more. Should we introduce a third rate of tax for individuals with an income in excess of €100,000 such that they would pay 7% more in tax? Of course, we should. It would make more sense than cutting elsewhere.

Some 30,000 public sector workers registered with the Department of Finance live in my county — County Donegal — of whom some 26,000 have an income of less than €30,000. What decision has the Government taken during the past year? It has cut their income by 13%. Approximately 20,000 of the people concerned have an income of less than €20,000.

I understand there are no simple solutions to fix the economy, that nothing is easy in this world and that the Government's actions have consequences. However, it is a matter of priorities and for some reason the Government has decided that the priority should be to fix the banking institutions.

It is a priority.

Why did some adviser not sit down with the Minister to inform him that the plan would not wash because we were pumping billions of euro into Anglo Irish Bank and the Minister was about to agree or give him consent to an increase in the payment made to the chairperson of 70% or €70,000? At a time when the Government is crucifying people who are dependent on social welfare payments and crucifying front-line public sector workers, why was it not flagged that this will not go down well, is not the republican thing to do and is unfair? Why was it not flagged to the person who is working three days a week heading up the finance committee of NAMA that to increase his or her salary by €50,000 after being a couple of weeks in the job was not the right thing to do?

I do not understand where the Government has gone wrong here. As I have stated previously, nobody comes into politics to hurt anybody else. Everybody comes into politics to do the best for their country and for their community, and those from the Government parties believe they are doing right.

It is my job and the job of others to challenge the Government's priorities. In government and in politics, one cannot do everything and one must prioritise. I believe the priorities the Government has followed are the wrong ones. Those priorities are causing serious pain and are ill-judged. I understand that Ministers cannot be over every single issue but when issues are flagged to them, they need to be taken on board.

We got our news from Deputy Mattie McGrath on RTE today. It came from his conversations in the corridors of Leinster House with the Minister for Finance. We are still waiting for him to tell us what the telephone call was in the background and whether these payments to the employees of NAMA are to be reversed.

That is correct.

Perhaps we should not blame the Minister for that issue because it seems, from what Deputy Mattie McGrath told RTE today, that the Minister was not aware these payments were to be made, but he is aware now. He is also aware that this is money we have taken off the sick, the disabled, pensioners, young unemployed and front-line public sector workers. I met such a worker yesterday in my constituency. He is off work at present because he has a bite-mark on his hand. He works in the health sector and a patient attacked him. He has a broken nose and bruises on his face. Public sector workers such as he are the ones that others want to condemn, stating they are leeches on society and are lazy and inefficient, but these are the same fellows who walk into work in the face of danger and who know there are dangers in their job. They go into work and the Government takes money off them.

The Minister asked the question and those are the answers. The Government knows our proposals. They are costed by the Department of Finance. They contain an entirely different set priorities and they can work. We need to have a sensible argument about priorities, not the kind of tick-tacking to the effect that what my party is doing is a disgrace, with the Minister wagging his finger. What we need to say is that this is a set of proposals that can take the country down this road, and have an intellectual debate about those priorities.

Last week I launched a jobs initiative for the young unemployed, a set of proposals that I believe would take 50,000 young unemployed under the age of 25 off the dole and that would put 40,000 of them into employment and 10,000 of them into educational courses. Although there was a caveat in that regard in questioning the solidarity tax and the money it could raise, I am glad to read that a Deputy within one of the Government parties has come out and said there was merit in those proposals. That is the type of sensible debate to which I refer. Not everything said on this side of the House is off the wall and neither is everything that is said on the other side of the House. There are good initiatives and good sensible proposals among Deputies and there are restrictions and difficulties in trying to implement them.

Nobody, whether in Government or in Opposition, is elected to do damage to his or her own community or to hurt people, but because of the priorities of the Government, I believe that such is the consequence of what is happening. It is my job and the job of others in Opposition to convince people there is a fairer and better way. In that light, I propose to look at the Finance Bill and table a number of amendments. I mentioned that the issue of the remuneration of NAMA officials should come to the Houses of the Oireachtas for approval because it is our money, and also that the new VAT being imposed by the European Union should be ring-fenced and injected into the local government fund with a direction to local authorities that they use this additional funding to reduce service charges and rates. I have mentioned the excessive reliance on fair-weather consumption taxes. There are opportunities to seek out, even at this late stage, a fairer way to deal with the present state of the country.

The Finance Bill does not cut it. In the past week we have heard the European Commission state that it finds the Government's economic recovery plans optimistic and wants the Government to slash spending further, which will contract the economy even more. My party believes that what is needed is the polar opposite. We need to stimulate the economy, create employment and take the focus away from bailing out the banks. I accept we need to deal with the banks. We have a different proposal. We need to get credible financial institutions back up and lending to business, but we also need to look at other priorities which the Government is missing.

I hope my amendments may be considered by the Government. However, there is a bigger debate. I welcome the interjection by the Minister of State, Deputy Peter Power, because the Seanad is so outdated. Senator Alex White stated previously that we should be looking at how to do our business better and this should be a forum for teasing out policy. One of the points made to me when I was elected to the Seanad is that there is a different type of atmosphere in the House, that one aspect conducive to this atmosphere is that there are no higher levels or tiers in the Seanad, that everyone, bar the Cathaoirleach, is on the same level and that this creates a more friendly atmosphere. We should apply all that and the relationship between both sides in the Chamber to use this House as a real think-tank where policies can be debated, which debate is not taking place at present. We hear of Fine Gael's policy plans, of Labour's policy plans and of Sinn Féin's policy plans or alternatives in the Dáil, but the reality is that none of these gets a chance to be teased out, worked on or explored in a proper fashion. We should cut out much of the nonsense that goes on in the Seanad — many of the statements and much of the Order of Business — and, at a time of crisis, start to use this forum in the way it was really intended in the Constitution, that is, to allow the best minds in different fields to deal with the national issues of the day. There is scope to do that, but that is for a different debate. I look forward to the Committee Stage and moving my amendments.

Cuirim fáilte roimh an Aire Stáit, Deputy Peter Power. The last section of Senator Doherty's speech resembled someone perhaps looking for transfers in the by-election in Donegal. I hope he will not need them and that Barry O'Neill will win the by-election.

The backdrop to this Finance Bill is an economic crisis. Unemployment in the State is now 13.1%, according to Central Statistics Office figures published today. That is an increase from 12.5% last year. The figures paint a picture that does not lie. The group that has been hit most severely is that between the ages of 20 and 24, which records a 9% fall in employment from last year. At the end of last year, 189,100 men and 78,400 women were unemployed, which represents a 57% increase for men and a 49% increase for women over the same year.

At a time when the Government speaks about the smart economy and rewarding and recognising research and development, it is worth putting on the record of the House that the unemployment rate among those with a third level honours degree or higher qualification was 6.1% and the unemployment rate among those with a third level ordinary degree was 8.6%. Those are people out of work. They are not able to find employment. Those are people who are educated and who will make a valuable contribution to society. At the end of the last quarter in 2008, 267,000 were unemployed.

Yesterday, we saw a missed opportunity with the Cabinet reshuffle. That gives me the cue to welcome the new Minister of State at the Department of Agriculture, Fisheries and Food, Deputy Connick, and congratulate him and his family on his appointment. I hope he will transform the Department and I wish him well because he is an honourable man. Although he will have a short tenure in the Department because Fine Gael will be there soon, I hope he will bring a reforming zeal to his office.

I thank the Senator for his comments. I hope Fine Gael will not be in the Department for some time.

The Finance Bill contains no jobs stimulus package or incentives to reward entrepreneurship. For the public sector worker, there is a further accentuation of the 2008 taxation measures and the 2009 budget measures. The Government has successfully waged a war on the public sector worker. It has wrongly demonised those workers, accentuating the divide between the private and public sectors.

The Government has also intentionally created stealth taxes through road tolls, bin charges, parking fees and increased VAT. If we must rebalance the economy, it must be done equitably. I am glad we have gotten rid of the over-reliance on revenues from the construction and property sectors. That boom would never sustain us in the future. I am appalled, however, as I am sure many colleagues are, at the distress experienced by many who attend my advice centres regarding their homes. They were forced to buy property in the middle of a boom but now face negative equity with many of them already having suffered a cut in hours at work, in their salaries or their jobs. Many friends of mine who work in the public sector have been forced to make practical not exotic choices with what they do with their disposable income. Do they go out on Friday night or stay at home? Do they buy for their children or for the household on such a week?

Earlier Senator Donohoe made the point money is being hoarded by people because they are afraid to invest it. Consumer confidence is at an all-time low.

Debate adjourned.