Deputy James Bannon is in possession and has four minutes remaining.
Finance Bill 2010: Second Stage (Resumed).
Issues that were not addressed in the Finance Bill include the wider credit crisis and the issue of late payments which are crippling small and medium-sized businesses throughout this country. Companies are stuck in a catch-22 situation with no money coming in, making it hard for expenditure such as staff wages to be met. According to a survey last October by the Irish Small and Medium Enterprises Association, 60% of businesses indicated that late payments were playing havoc with their cash flow levels. The negativity that has engulfed the economy has led to the deferral of a number of foreign direct investments that had been earmarked for the midlands and for my county of Longford in particular. The IDA has confirmed that key money spinning foreign investments scheduled to come to County Longford have been temporarily shelved as a result of a negative perception of our economic standing. The IDA said that it had expected more businesses to have come to the midlands. Although some projects have been postponed, according to the IDA it was not possible to name their locations. They would greatly benefit counties Longford and Westmeath where more than 15,000 are unemployed at present.
County Longford's multinationals have endured mixed fortunes for the past year and a half. Although Abbotts has confirmed its commitment to increase production capacity at its plant on the outskirts of Longford town, the US-owned company, Cameron, announced a 10% reduction in office and engineering staff through voluntary redundancies. This followed an announcement in 2008 that the company was to expand its existing manufacturing, research and development facility in County Longford, with the creation of 140 jobs over the next five years. This has all been put on hold.
The loss of these jobs is only part of the continuing job drain threatening the economic viability of counties Longford and Westmeath, where live register figures rose by 22.8% and 28.5% in the past year. The Government seems immune to the heartbreak and loss being experienced by families in these counties and across the country. This Bill will not give them hope that the Government has a grip on job creation. What plans are there to appoint a job facilitator for the midlands, particularly for counties Longford and Westmeath?
Who exactly benefits from this Bill? Would the Minister of State agree that the main winners are the Revenue Commissioners? According to a spokesperson for the Department of Finance, Revenue will gain because of enhanced powers to ensure that everyone pays the correct amount of tax. Where there are winners there will also be losers. Once again the losers are the struggling lower and middle income earners and those who have seen their jobs evaporate into thin air. The live register has risen again, despite the Minister's assurance in his budget speech that the worst was over. What the Minister forgot to mention was that the worst is not over for already hard hit householders. New stealth taxes are set to cripple further those who are unemployed and those who have faced pension levies, income levies and pay cuts. The Exchequer is reaching out a grasping hand to take hundreds of euro of extra taxes through road tolls,waste services and car parking charges from people who simply cannot afford to pay another cent.
The power this Bill will give to the Revenue Commissioners with regard to the black economy is welcome. Retailers have claimed a loss of €700 million in revenue from illegal selling of tobacco on the black market. The maximum fine for smuggling cigarettes has been increased from €12,695 to €126,690.
I welcome two other provisions of the Bill, namely, the extension of mortgage relief to 2017 for those who took out a home loan in 2004 or after and the provision of some help to hard-pressed farmers struggling to comply with the nitrates directive. I stress, however, that had the Minister not sold out farmers with regard to the payment of grants for the construction of slatted sheds, this belated help might not have been needed.
Can I tell the people of my constituency that this Bill is a serious attempt to get those among them who have lost their jobs back to work? Can I tell them that the Minister is making an honest effort to support the development of companies in Longford and Westmeath? Can I tell them that the pain will now be shared across every sector in the country? I think not.
I welcome the opportunity to make a contribution on the Finance Bill. The Minister said yesterday that we were setting the seeds for economic recovery and new job creation. Over the past two years, all Members, particularly Opposition Members, have been saying that the most important factor for recovery for the country is job creation. We need more jobs. However, the Government does not seem to have the slightest semblance of a job creation policy. Nothing the Government or any Minister has done indicates they have a job creation policy. Until that happens, the road to recovery will lead nowhere. The green shoots we heard mentioned are no longer green, despite the many opportunities that exist for the Government to act with regard to job creation.
In addition to the failure in the area of job creation, there is an issue with regard to finance being made available for small businesses. In constituencies throughout the country we all see small businesses folding. Yesterday, we heard of the 750 job losses in Halifax, Bank of Scotland (Ireland) and of job losses in Galway, the main industrial pivot of my county. These major job losses get the headlines, but small businesses in every town and village are, slowly but surely, shedding jobs. These all add up to a significant number and should not just be seen as a figure. Behind each job loss lies a family and the people connected to that family. In this Finance Bill, the Minister has clearly lost sight of these facts.
The director of Financial Services Ireland, Brendan Kelly, said recently that attracting senior staff to Ireland is essential to get firms to set up here and create jobs. That is all very well as a statement, but with no disrespect to the expertise that might come here from outside, we have never had as many people with the highest qualifications possible in every sphere of industry and technology as we have now, but they still cannot get work. As a result, they are leaving the country. If we look at our unemployment statistics, we see that the greatest proportion of those out of work are young people under 30 years of age, yet these are a great reserve of expertise in many areas. We must plead with the Minister to deal with this issue once and for all. He must return to this issue and provide a policy. Even if it costs money, he must do it in order to provide employment. The Minister has said that by the end of this year we will have a 13% rate of unemployment. Tragically, the rate will not stop at 13% judging by the current trend. We are only two months into 2010 and there has already been a significant increase in unemployment.
The Government has failed miserably to tackle the banks. We were promised 18 months ago and even a year ago that the Minister would, through intercession with the banks, make resources and finance available to small companies to help them develop and carry on in business. That has not happened. Until it does and until pressure is put on the banks, they will continue to claw back their losses in every way possible. Overdraft facilities and other accommodations available in the past have been withdrawn and businesses are collapsing. We can see from what is happening in our courts day after day that companies are going into examinership or being liquidated. This cannot be allowed to continue. The only intervention that will work is for the Minister to direct the banks to accept their responsibility. They lent the money before when they wanted to create competition, but now they are looking for the money back at the expense of small businesses.
The Minister's token response to the issue of people with incomes of over €1 million per annum was to impose a levy of €200,000 per annum. This is only a token gesture and is only a pretence to the electorate that something is being done. The Minister must get his act together in the interest of the many people who will lose their jobs and those who have put their hard-earned money into businesses that will go to the wall.
Last night, I listened with great interest to the contribution by Deputy Michael D. Higgins, who advocated a greater in-depth discussion on economic policy and the future direction we should take. I also listened to Deputy Joan Burton on "Tonight with Vincent Browne" where she expressed her preference for a return to Keynesian economics. In the past 100 years three main economic philosophies have impacted on our society. The first of these was Keynesian economics, which advocated a mixed economy, predominantly a private sector economy but with a large role for the Government and public sector. This served as an economic model at the end of the 1930s after the depression at that time and after the Second World War. It was a very successful model until the end of the 1960s or early 1970s when we had stagflation, due to the lack of governance over government expenditure. This caused trouble back in the 1970s, when our economy was also in great distress. It was followed by Milton Friedman, whose philosophy extolled the virtues of the free market economic system with little intervention by government. It was taken on board by Margaret Thatcher and Ronald Reagan as well as by the Russian Government. It worked for a while but lack of governance and light regulation again became a feature. There was excessive and reckless lending, and massaging of facts and figures, and we are now suffering the result of that economic policy of recent years.
Totalitarianism is the third area. It contained no lack of governance as it was governed by the centrist power which effectively destroyed all other countries which were under the control of that centre. We now witness the problems that policy created for the countries affected which are having great difficulty in rebuilding a sustainable economy. Those are the three philosophies which have had supremacy in the past 100 years.
Some of that totalitarian policy was expressed by members of the Official IRA and Sinn Féin, the Workers' Party, as well as the Workers' Party. I wonder if it has gone through the veins of those who have moved on to the centre left and are in this House today.
I agree with Deputy Michael D. Higgins that there should be more discussion on what economic policy we should follow. However, I would also contend that the Governments of this country have been very pragmatic in the policies they have followed. They have been successful, in the main, from the 1960s, with a blip in the 1970s and early 1980s, following which we improved, although we are now in trouble again. A great part of the reason we are in trouble is that there has been lack of enforcement of the substantial body of regulation contained in our legal system.
The Finance Bill is legislation that every year gives legal effect to the proposals that are outlined in the budget. Many of the contributions in the House were of a budgetary nature, which is understandable. However, there was dissent from the Opposition side, with the Finance Bill being contradicted, and it was said we were doing nothing for employment or to stimulate the economy. Of course, the Members on this side have said the opposite. What the Opposition is suggesting does not reflect the reality of Government policy and what has been done, particularly in the past year, in order to stabilise and achieve a working banking system.
There is significant investment in the economy. Over the next six years, €40 billion is earmarked for investment in infrastructure, €6 billion of which is for 2010. Some €130 million is for energy efficiency measures, €10 million is for the food industry, over €50 million is for support for new agri-environmental schemes, €120 million is for support to forestry and bio-energy and there is substantial support to employers through the stabilisation fund and the temporary subsidy scheme, which will cost in the region of €165 million in 2010.
A new scheme that will promote local employment and reduce PRSI contributions has been introduced. Under this scheme, when an employer creates a new job and employs a person who has been on the live register for six months or more, the employer will then be exempt from employers' PRSI contributions for the first 12 months of that employment. Typically, this will save approximately €3,000 per annum in the cost of employment, which is a huge saving in any business.
While many businesses have been afraid to take on new staff in the current economic climate, I hope this scheme will give them extra encouragement. It is particularly aimed at those who have been on the live register for six months or more, as these are the people who generally find it most difficult to find new employment. This is a strong, positive step by the Government to promote employment and I hope there will be significant uptake by companies and businesses.
The decision in budget 2010 to retain Ireland's corporation tax rate at 12.5% sends a clear message globally that Ireland is open for business. Given the current economic climate, it is vital a small country such as Ireland continues to attract new enterprise and employment. By retaining our attractive corporation tax rate, we are sending a positive signal to both existing and potential international investors that Ireland is the place to do business.
In budget 2009, the Government introduced a three-year corporate and capital tax exemption for start-up companies in 2009. I am pleased that in this Bill, the Minister for Finance has extended this scheme to companies which commenced trading in 2010. This will be at a cost of €6 million in 2010 and €15 million in 2011. This will be an incentive to new companies and it is vital they are given the support they need to succeed at this difficult time.
Ireland has been extraordinarily successful in attracting foreign direct investment, punching way above its weight for many years. Over the course of the past 20 years, Ireland has earned a reputation as one of the most attractive jurisdictions in which to establish an investment fund, ranking among the most flexible and advantageous international fund domiciles, due in no small part to the wide variety of funds which may be established under the Irish legal and regulatory system, as well as Ireland's ability to react promptly to the demands of both fund promoters and investors.
The latest development in Ireland's offering is the proposed new re-domiciliation process which will enable funds from other jurisdictions to re-domicile to Ireland in an efficient manner. Ireland's growth in the investment funds arena may be attributed to a number of factors, including regulation. Ireland is a regulated jurisdiction offering both UCITS and non-UCITS products across the whole spectrum from plain long-only products through to UCITS alternatives, hedge funds and FoHF, real estate and private equity schemes. The Irish Financial Services Regulatory Authority has many years of experience in authorising and regulating sophisticated investment strategies and products, and has adapted and developed its regulations to keep pace with developments in the funds industry internationally.
With regard to tax, Ireland has a favourable tax regime for investment funds, including, first, exemption from tax on the fund's income and-or gains; second, no withholding of taxes on distributions to non-Irish resident investors; and third, a wide and expanding network of double taxation treaties. With regard to the legal environment, Ireland operates under a common law legal system, with a variety of suitable fund structures — corporate, CCF and ILP. All of the leading fund custodians and administrators have operations in Ireland staffed by teams with in-depth experience across the full range of fund products. This is demonstrated by the fact that approximately 50% of all global hedge funds are administered in Ireland. Ireland's international status is also a factor. Ireland is a member of the European Union, the OECD and the Financial Action Task Force. As well as being an attractive jurisdiction for the establishment of new investment funds, Ireland now offers a relatively straightforward process for re-domiciling to Ireland an investment fund established in another jurisdiction.
Islamic finance is a growing player in the financial world and it is estimated that the fund is up to $800 billion and growing. Section 35 contains provisions which will help Ireland to attract our share of the growing market in Islamic finance.
The decision to introduce a national solidarity bond, announced in the budget, is given effect in the Bill. I congratulate the Minister in this regard. This bond will be administered by the National Treasury Management Agency, will provide alternative investment opportunity to small investors and will pay interest during and at the end of the term of investment. I welcome the provision in section 52 which clarifies that the disponer of land under compulsory purchase order has no liability to pay until compensation has been received.
The European Court of Justice requires that the VAT Act be amended to allow public bodies, including local authorities, to be subject to VAT. This has nothing to do with the Lisbon treaty despite the assertion of some people that it does. There are reports that full VAT in respect of a product or service will be added on to a bill. However, this is not correct. VAT on inputs can be offset against VAT on invoices which people receive and business customers who charge VAT can claim for any VAT charged by a public body.
In his Budget Statement the Minister said he would commence implementation of the Commission of Taxation report recommendations in 2010 and 2011. He has kept his word and has abolished six tax reliefs and extended mortgage tax relief for the benefit of mortgagees. I welcome the Minister's decision to clarify that tax relief is available in respect of private contributions made towards the cost of upkeep of an individual under the fair deal scheme. This tax relief on extra payments is welcome as our elderly population and the cost of nursing homes increases.
Section 33 introduces an amendment in respect of Deposit Interest Retention Tax, DIRT, which I welcome. This removes PRSAs from the scope of DIRT, requires a relevant deposit taker to obtain the tax reference number of the person making a specified deposit and that the financial institution will make accelerated payments of DIRT tax to the Exchequer. Also, the financial institution must automatically issue statements setting out the amount of DIRT deducted rather than honour a request in this regard as is currently the position. This amendment is welcome and timely.
I welcome the changes to the current research and development tax credit scheme. Research and development is vital to the development of our economy. The current scheme has been a draw-back to research and development in that people who invested in two sites could not, if one closed, transfer the benefit to the other site. As a result of the change where two sites are located within 20 kilometres of one another and one closes the benefit can be transferred to the other. It is vital that every assistance is given to our research and development agencies and companies.
There is much concern in regard to the housing market and people getting into financial difficulties with their mortgages. The repossession of family homes by financial institutions creates tremendous social, psychological and economic issues for borrowers and their families and places further financial pressures on the State. The Joint Committee on Finance and the Public Service heard submissions from Respond Housing and the Prevention of Family Home Repossession Group who outlined solutions to allow the borrower time and methods of addressing their debt. Following the hearings the committee submitted a report on the matter to the Minister for Finance. I was pleased to hear during the week of the decision by the Financial Regulator to make a statutory order to outlaw repossession of a house for one year. It is important that individuals who get into financial difficulty are able to approach their lending institution to discuss their problem and to try to reach an agreement which resolves it. I look forward to a more comprehensive report during the next few months from the Financial Regulator which will assist people in difficulty to work their way through these difficult times.
This Finance Bill in conjunction with the budget proceeds in the right direction and ensures that the primary objectives of budget 2010 are achieved. These objectives are to stabilise the deficit in a fair manner, to restore Ireland's competitiveness, to guard those worst hit by the recession, to stimulate crucial sectors of the economy and to sustain and create jobs.
I wish to share time with Deputy Stanton.
Is that agreed? Agreed.
I am deeply disappointed with the Finance Bill 2010 which does not recognise the crisis in society, due in part to the recession, in respect of mental well-being, in particular depression caused by the situation that has developed.
In general, I am disappointed that the Bill and budget did not respond to the needs, expressed for a number of years, in terms of under-funding of the psychiatric services. Some 6.7% of the total health budget is now allocated to psychiatric services. The figure for England and Wales is 13% and for Scotland 18%. We have neglected our mental health services and it is extremely disappointing that the Bill and the budget ignored the glaring need to respond to this issue.
Long-term psychiatric patients are living in Dickensian-type accommodation. The inspector of mental services, who recently spoke about particular institutions, has expressed horror in respect of the conditions in this regard. For as long as I have been a Member of the Oireachtas, now almost 21 years, there have been promises of funding in this area. However, during that period the total budget for the psychiatric service in terms of the overall health budget has been decreasing. Time and again we have spoken about this issue to no avail. I take this opportunity to remind the Government that it has again ignored this crucial societal and medical issue. People are entitled to modern conditions and facilities and to a response to the recommendations of the mental health services report entitled A Vision for Change which was accepted by Government four years ago. Despite the firm commitments made by Government these problems have not been fully resolved and the recommendations have not been fully implemented.
Moneys allocated two years ago by the Minister for Health and Children for the improvement of mental health services was syphoned off into the health budget. For the following two years, this was used as an excuse not to provide further funding to the mental health services. The Minister for Health and Children asked at a committee meeting why she should give money to the Health Service Executive to address mental health service issues when it will not use it for that purpose. I wonder who is in charge. The urgency with which this issue must be addressed in times of the recession is again highlighted in significant deterioration in the area of mental health. A report published last year indicated that more than 50% of respondents were going without food and heating.
I turn now to deal with problem debt, which is a real issue for many people in our society. At present, debt is a real issue for many people who may never have experienced such problems in the past. Of those who had debt problems, 71% ran out of money every week or most weeks, 87% relied on credit to pay for food and everyday costs, 56% went without food due to debt, 21% went without heating and 92% reported not being able to socialise. The research also found that people with mental health problems are three times more likely to be in debt as they are living on a low income and unable to work due to difficulties getting a job because of the stigma or due to ill health.
One of the challenges facing society, and in particular the Oireachtas and the Government, is to fund programmes to deal with psychiatric illness. Until we destigmatise it, society will not accept it as a normal illness, although that is what it is. People with psychiatric illness cannot help being ill, any more than those with a heart condition, influenza, diabetes or any other medical condition. In the case of depression, we know that with early intervention there is a 90% chance of achieving a full cure. People, and especially children, are not getting the opportunity to receive such intervention treatment.
It is important that debt collection agency staff receive mental health awareness training. Banks should adopt a system whereby customers can choose to have their account monitored for erratic spending to better protect their finances. Irish personal debt stands at a staggering €172 billion and is a significant cost on our mental health. Money worries are not just keeping people awake at night; they are causing high levels of stress, depression and in some cases self-harm and suicide. At a time when people across the country are anxious about their finances, debt depression is a real and growing concern.
People living with mental health problems are particularly vulnerable to being trapped in a cycle of debt and poverty with many unable to work due to ill health. People are becoming dependent on credit to pay for everyday essentials. Those on lower incomes are more likely to get credit from lenders who charge astronomical interest rates. It is a worrying trend as people are left facing a mountain of debt that they have no means of repaying.
If we are going to tackle this massive inequality and really help people who are struggling with mental health problems and debt, we need to see action by the Government, the HSE, banks, debt-collection agencies and other creditors. The Government must provide a lead in this respect. The Bill before us, however, has missed the opportunity to give such a lead. The budget missed this opportunity also in failing to allocate sufficient funds to a mental health service, which is totally underfunded.
Changes in practice, such as waiving fees when a customer has been unwell and introducing mental health awareness training for bank staff, would make all the difference. Creditors have a duty to help and not hound their customers, especially when they are coping with serious health problems.
People with bipolar disorder, which can cause sufferers to spend extravagantly during a manic phase or schizophrenia, are four times more likely to be in debt than the rest of society. According to the survey to which I referred earlier, fewer than one in three people with problem debt informed the organisation to which they owed money of their mental health problems because they did not think that they would be understood or believed. Some 83% of those who did tell creditors continued to be harassed about their debt payments. The Government must give leadership in this area and ensure that resources are available to psychiatric services to deal with this fallout from the current economic crisis.
An issue that has arisen in the past two weeks concerns the release from the Central Statistics Office of suicide levels for the first half of 2009. The Government must address the emergency that has arisen concerning these suicide rates. The latest figures from the Central Statistics Office show the number of deaths by suicide increased by 35% in the first half of 2009. Some 228 people took their own lives in the first half of last year, compared to 169 in the same period in 2008. The Government must pay heed to the link between recession, unemployment and suicide.
It is alarming that the Government has not responded to this emergency, although it is aware of it. As I said earlier, the Government responded inadequately to flooding before Christmas and to the big freeze-up after Christmas. It must now respond adequately to the suicide emergency.
Figures for the second quarter of 2009 show that there were 122 deaths by suicide in that period, which is an increase from 95 deaths by suicide in the second quarter of 2008. Taken with the first quarter figures for 2009, this shows that over the first half of last year 228 people took their own lives, an increase of 35% on the first half of 2008. Some 77% of the deaths by suicide were among men, while 40% of those who took their own lives were under 35 years of age. This, therefore, is a young person's problem facing those who have a lot of potential and much to contribute. We must bear in mind the trauma that suicide causes to the bereaved families and relatives. The Government should regard an increase of the magnitude of 35% in the number of suicides as warranting an emergency response.
The link between suicide and financial disaster has been well established. Unemployment, insecure employment, threat to or loss of home and restricted access to credit take a heavy psychological toll on public health. There is a reduction in mental well-being and an increase in mental health problems, substance misuse, relationship breakdown and divorce.
During recessionary times, there is a sudden gap between material needs and resources. In economic downturns, frustration increases as an increasing proportion of people cannot realise their financial goals. This frustration can increase aggression, including suicide.
Research published in 1967 found that the absolute value of change in stock market prices was associated with an increase in male suicide rates from 1929 to 1940. This confirmed the position that economic change downwards in the business cycle increases suicide. In earlier studies the rate of unemployment emerged as the leading predictor of suicide rates. There have been numerous studies of this type over the years. Most continue to illustrate a clear link between unemployment and suicide rates. This is true especially for males. All studies show higher rates of ill health, both psychological and physical, in men and women who are in insecure work or are unemployed. A protracted period of unemployment of people at a young age seems to have a particularly deleterious effect on the mental health of young men, regardless of their social background.
Unemployment affects the suicide rate and has a profound effect on a person, especially on the young and on those in middle age. Irish society awards status and prestige according to a person's position and contribution to work. Unemployment is associated with loss of face and of prestige. The unemployed are six times more likely to be suffering from a psychiatric disorder than those in employment, and they are three to four times more likely to take their own lives.
I welcome the opportunity to say a few words on this Bill. I pay tribute to Deputy Neville and I listened carefully to what he had to say. The impact of recession and depression on people's mental health and the stress which people are under very often because of financial pressures is something we are all encountering increasingly. We must redouble our efforts to assist people who are under unbelievable pressure at the moment. It is frightening.
The Minister recognises that the unemployment rate will peak this year at more than 13%. However, he does not take into account the 60,000 people who have emigrated, many of them young people. Almost every family has now experienced this. That is something the Minister should have acknowledged in his speech and perhaps he will do so when he sums up later. We need to work as hard as we can to encourage and support small business. There is not much mention in the Minister's speech about small businesses, which are haemorrhaging jobs at an alarming rate. I see no strategy in that regard from the Minister.
In his speech the Minister spoke about the responsibility to change our behaviour to reduce greenhouse gases and he has introduced a carbon tax and so forth. I recently raised the matter of electricity micro-generation with the Minister for Communications, Energy and Natural Resources. He told me that in February 2009 he launched the micro-generation programme, which had "the potential to provide up to 4,000 domestic customers investing in micro-scale projects with a financial payment for electricity exported back to the grid". This is direct import substitution. However, the uptake to date has been very disappointing. Although the target was 4,000, only 189 people had taken up the programme. I am glad the Minister for Finance has joined us. I asked people why this might be the case. Many people who want to participate in micro-generation are farmers who want to install a wind turbine on their land. However, they will be charged VAT to install a turbine. If the Government target is 4,000 and only 189 have taken it up, what is wrong? I believe VAT is a problem.
I understand that farmers, who put in a diesel generator to generate electricity for their farm, pay no VAT on it. However, those installing a wind turbine to do the same job must pay VAT. I ask the Minister to review the matter. I believe there is an anomaly which should be corrected. If the Government is serious about micro-generation from renewable sources this matter could be addressed now in the Finance Bill. I ask the Minister to consider it on Committee Stage. He may have a reason for not doing it. In a response to a parliamentary question the Minister stated it would be acceptable if it were only for agricultural purposes. However, if a farmer wants to generate electricity using micro-generation for farming purposes he should be assisted and encouraged to do so. If VAT is a problem then perhaps that should be removed if it is possible.
Another matter is related if we want to encourage people in enterprise and so on. The Student Support Bill is languishing somewhere in Committee and has been there for years. Every day people contact us saying they want to go back to college or school. People contacted me today who had submitted an application in August and have still not received the grant. There is something awfully wrong there. Perhaps the Minister could bring forward the scheme for third level grants to earlier in the year. The Minister of State at the Department of Education and Science is also in the House. Why not publish the scheme in March so that before people go to college they know whether they qualify for the grant? Why wait until the end of August? People must prove that they are in need of financial support in order to get the grant so they must be not well off. However, they then must wait until February to get the grant. People are dropping out of college across the country because they cannot afford to keep going. They do not have enough money to buy food to eat. This is an administrative, bureaucratic problem that has nothing to do with anything else. I challenge the Minister for Finance to bring the scheme forward earlier in the year. The tax year ends in December. There is no reason these forms should not be available in March allowing students to know in June whether they will get the grant. If they get a place in college, they would then know they could finance it. This is something simple that should have been done long ago.
Some €900 million was supposed to have been provided for the disability strategy. I have asked several Ministers, including the Minister opposite, to provide me with a breakdown. It was supposed to have been €900 million over five years. Was it ever there? My suspicion is that it was not. I challenge the Minister opposite to go back to the Department. Either he or his predecessor committed €900 million for the disability strategy. Where is it? This goes back to value for money. I want to know if the money was provided and on what was it spent. Despite asking time out of number, no Minister can tell me what happened to that money and whether it ever existed.
The Bill makes no mention of tackling all the quangos and their cost. Although we have been promised it, it has not happened.
I call Deputy Penrose.
How much time do we have?
I am obliged to call the Minister for Finance at 9.45 p.m.
I wish to share whatever few minutes are available with Deputy McManus, but it is nearly a waste of time.
Is that agreed? Agreed.
I am willing to give the Deputies five minutes.
If that is by agreement, it would be possible.
I thank the Minister. I get paid by the word as he knows.
It is not quite policy in the Deputy's profession.
With due respect to the Minister, whom I am glad to see here, the budget is bereft of vision, devoid of ideas and lacking in philosophy. I am always very fair and there are some very good ideas in the budget. However, I am concerned that the budget contained nothing to tackle the scourge of unemployment and losing jobs. There was not just a tacit acceptance, there was an explicit acceptance that by the end of this year 75,000 more people will be unemployed. At a net cost of €20,000 each it would total approximately €1.5 billion, a very significant amount. I need not spell out the impact of that as I know the Minister is acutely aware of it. There is nothing for jobs in the budget.
I am concerned that we have got into confrontational mode, sometimes inspired by a right-wing media agenda that it is best to confront unions and adopt a macho pose that shows the Government is stronger and will muscle people down. However, the very people the Government is tackling are the people who have the few bob that the Government is giving them on behalf of the State and they actually spend it. The circular theory of money and the velocity theory of money are nowhere more pronounced than among the very people who are in the low and middle-income groups. The propensity and ability to save among those people is minuscule. The propensity to save among people from the high middle-income groups and upwards has increased from the normal 2.5% to 3% up to 10% or 11%. That is a also problem owing to lack of confidence. There is no confidence engendered in the budget to get those people releasing money and buying in the marketplace. Therefore we are perpetuating the problem rather than tackling and arresting it and introducing initiatives to try to get money flowing again.
It is about time the Government took the opportunity to get the trade union movement back into constructive dialogue. The Minister for Finance, a person of great sense and tremendous intelligence — I do not say that in any condescending way — knows this better than I do and can expound about it better that I would ever do. The opportunities that existed in early December should be revisited. Let us try to get the trade union movement and the Government back on the pitch playing a positive and constructive role. We should never denigrate or forget the impact of the previous partnerships and understandings. They should not be written off because it suits a media agenda to write them off. We should always pay particular tribute because without their participation and positive impact we would not have seen the illusion of success that some people enjoyed. How short term it was. Nevertheless, they played a major role in addressing the significant financial and fiscal crisis that existed from the late 1980s onwards. We cannot forget about that.
Youth unemployment is an enormous problem. Over the last two and a half years, there has been a 150% increase and it is a social timebomb. It is impacting negatively on young people and is an enormous challenge. The last figure was 84,398 and there is very little concentration on jobs. This cohort of people believes the Government has thrown them to one side. The only thing they could extract from the budget was the fact that it was an attack upon them. There was a reduction in social welfare for most of them. Most of them do not even want to draw it at all. As regards the back to education and back to work allowances, all the time limits should be cut out. If the Labour Party was in government or whoever, I would not vote for them, as a backbencher, unless they got rid of the stupid six-months and three-months limits. It is better to have people in the education system or to retain the back to work allowance or anything that gives soul and direction to people's lives.
That is right, discipline. Deputy Morgan is correct. The number of places available for further education and retraining should be increased, and there should be more graduate places, job opportunities and internships. My colleague, Deputy Michael D. Higgins has explained this in great detail. There was no jobs stimulus package and I cannot for the life of me understand how a little island nation with 4 million people, the size of Manchester, which has achieved so much on the cultural, social and recreational playing fields, in technology and everything can expect to get out of this recession without this. Why do we believe we are so different from everywhere else in the world that we can rise to the challenge, without a stimulus package — a country that depends on Ryanair and Aer Lingus to get people here?
I have had my differences with Michael O'Leary, probably more than many. He is probably at a different end of the political spectrum to me, but I respect him. He often says things with which I fundamentally differ but if he says there is an 80% drop in tourism because of a "tourist tax", I must believe him. I would not side with everything he says as regards charges, but if Spain and every other country is doing away with this tax to attract tourists we must address this. Tourism is so important for the midlands, as the Minister knows. He knows all about Athlone and the importance of tourism there, and his aunt will be making a case to the Minister in this regard. It is very important throughout the midlands. We have beautiful lakes, from Loughrea, through to Lough Erne, Lough Derravaragh, Lough Owell and Lough Ennell, the best places in the country. We need to get tourists in, but we are inhibiting them by imposing unnecessary taxes.
Tourists will spend once they arrive at their destination. Somebody accused me the other day of never coming up with an idea for bringing people in. If he was in government, he said, he would give tourists €10 and €20 vouchers to spend. If such vouchers are given, the recipients will spend €200. I remember, as a young lad going to Atlantic City when one was given $100. The Minister probably did this, too, as a student. When one went in with the $100 one was quickly cleaned out, but at least the money got one in and one never forgot the experience. It was a good lesson.
It is extremely worrying that 60% of young people in a recent youth poll expected to be unemployed after graduating. We are all in favour of the carbon tax, but I must warn that there are areas of agriculture on which we could be impacting in a very negative way if it is introduced in the manner now being planned. I appeal to the Minister and his officials not to throw the baby out with the bath water. The carbon tax is a good idea, but we could end up negatively impacting on the agricultural industry, depending on how we apply it. It is no use adding charges to the productive sectors of the economy that could militate against achieving the additional production that is vital for getting us back on the road again. I thank the Minister.
I thank Deputy Penrose for giving me five minutes of his time and indeed, the Minister, for allowing this.
Everybody understood that this was going to be a tough budget, but what caused dismay was how pessimistic it was. It offered no hope as regards the challenges we and our constituents face, particularly in relation to unemployment. Factored into the budget was a greatly increased number of people coming on the dole, 75,000, instead of a calculated position that would provide opportunities for job creation in the course of the year.
Reform is a word that is used a good deal in this Chamber, but I felt, in particular, that no attempt was being made to reform the public service. We had an bord snip nua, Colm McCarthy's report. Most of us agreed with parts of it, while not everyone, even on the Government side, agreed with all of it. However, that was some type of template that the Government simply ignored when it came to dealing with reforming the way the State operates.
Even as late as today the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, has had to extricate himself in a rather undignified fashion from a situation, essentially of his own making, as regards appointments to the RTE board and the Broadcasting Authority of Ireland. An bord snip nua said there should be no broadcasting authority but rather one regulator for communications in broadcasting. This would save money and be a streamlined approach to make Government work better. However, the Government does not care and is not interested in reform.
The Government is, however, interested in reducing people's incomes. I should like to put it on the public record that the next time somebody starts to bash the public sector we should remember the men who went out and kept our roads open all over Christmas and the new year. The only thanks they got at the end of that lengthy period, while the rest of us tried to enjoy ourselves, was less money in their pay packets. That is the reality of the Government approach to this. It is not reform but rather an attack on people with very modest incomes who deserve better.
As regards employment, there is nothing in this budget that opens up the opportunities that exist for us. It is extremely frustrating when one looks at the opportunities that are there, particularly in the area of renewables, in energy and the smart economy that everyone talks about. The reality, however, does not match the talk or the rhetoric. The Labour Party produced a document not long ago which clearly set out the fact that 80,000 jobs could be created in the energy sector if we had a Government willing to head up such an initiative. We itemised the areas, one of which is so simple that I challenge the Minister to look again at what he calls the national retrofit programme, which is included in the budget. Essentially, there is no additional money allocated. It is a grand name for funding that is already in place for various grant schemes that operate out of Sustainable Energy Ireland and some money that is allocated to local authorities.
If there are changes it will not be because there is additional funding. It will not mean that more people are taken on, construction and highly skilled workers who could be put to work retrofitting homes in a way that would meet the challenges we all face regarding climate change. It simply means there are some management reorganising schemes, and when one looks at the figures at the end of last year for the particular grant scheme which was introduced, where about €45 million was allocated — the home energy scheme — they show that something like €34 million remained unspent by the end of the year. There was what I would not quite consider to be manipulation, but certainly a little reorganisation to try to make the figures look good. However, the figures are actually damning when one considers the need to retrofit our buildings. We cannot continue to burn up fossil fuel and cause carbon emissions as we have done in the past. We can put people to work who have the skills and we can do so now. However, I regret deeply that the Minister has simply failed to consider the opportunity that existed under his nose in this budget to put people back to work.
I thank the many Deputies who made their considered and useful contributions to the debate yesterday evening and today and I look forward to a constructive discussion on Committee Stage. I will try, as far as possible in the time available to me, to address the points raised by the Deputies yesterday and today. Of course, there will be a further opportunity on Committee Stage to deal in greater detail with issues covered by the Bill.
I refer to some of the more general issues raised, especially by Deputies Bruton and Burton. It was argued by some that the Bill does not contain a vision. Deputy Higgins suggested the Bill was unimaginative while Deputy Enright suggested it was unambitious, but I disagree. The Bill contains significant measures that will enable Ireland to build on its existing strengths as an economy. These measures, when taken together with our budgetary strategy, will protect existing jobs and create additional ones. They will support export-led growth in services and goods, the best way of maintaining and enhancing our international competitiveness, which I highlighted on 9 December as a key focus of the budget this year. Unless we sharpen our competitive edge, we will not be unable to return to the tried and tested strategy of export-led growth.
Some Opposition Deputies described the Bill as a housekeeping exercise devoid of ideas to deal with the challenges facing us at present. Such a view contrasts sharply with the commentary from the industries and enterprises on which we will rely to create well-paid jobs in the economy as we return to growth. It was suggested the Bill lacked focus and placed an unfair burden on taxpayers. This, after all, was a budget that contained no personal tax increases and some reductions in consumption taxes. The Opposition must lack focus or must be unable to see the big picture if this was not evident from the budget.
The 2010 budget and the Finance Bill build on the work that started in budget 2009. We have made significant progress in stabilising the public finances. The adjustments involved very hard decisions and I am aware of their impact on citizens, but they were necessary to ensure the very financial survival of the country. Those decisive actions have enabled us to stabilise the deficit and have led to a reduction in the cost of borrowing by the State.
In the run up to the budget, I made it clear that we could not tax our way out of our difficulties. My sense was the main Opposition party agreed with this view. Accordingly, the budget focused on expenditure and did not increase the burden of income tax. That approach also informed the development of the Finance Bill. Deputies will be aware that there are no tax increases in its provisions, apart from a number of measures aimed to ensure high earners pay their fair share and I make no apology for including these measures.
In her contribution to the debate, Deputy Burton moved quite a distance from the subject to engage in a discussion about the banks and the builders. Loth though I am to follow her departure from the subject of the debate, I wish to deal with the accusation that I misled the House about the attitude of the IMF, International Monetary Fund, to NAMA. Deputy Burton was relying on a newspaper report of last Monday. The note on which the report was based contains a ringing endorsement of NAMA by the IMF. In fact, it states that "the IMF would have been encouraging the adoption of a NAMA-type initiative even if the Minister for Finance had not already announced it".
It stated no credit would flow.
It is quite clear from the note, which is now on my Department's website, that the IMF fully backed the Government's policy on the banks and the establishment of NAMA.
No, it did not.
I do not intend to revisit the debate this evening, but Deputies are aware that there was a very intensive debate culminating in the enactment of the legislation. I remind Deputy Burton that time and again during that debate I stated that we need to be clear that it is not in the interests of the banks or of this economy for the banks return to the excessive and imprudent lending of the past.
The Minister's recipe is no lending at all.
That is the last thing we need. It was in the context of a discussion about that very point that Mr. Seelig made his remarks about the impact of NAMA on the availability of credit. I am very pleased that Mr. Seelig has, at my request, agreed to serve on the board of NAMA when he retires from the IMF this year.
He stated there would be no resulting credit flow.
We are all concerned about the availability of credit.
The Minister has not done anything about it.
This is why the credit guidelines were included in the NAMA legislation and this is why NAMA was set up to cleanse the banks' balance sheets of toxic loans. The IMF delegation agreed with this view and that point was made in the debate.
I refer to measures contained in the Bill. I welcome the support given by Deputies Bruton and Kennedy and the Minister of State, Deputy Roche, on the extension of mortgage interest relief for those who bought at the peak of the housing market. The extension of mortgage interest relief will help those who purchased in 2004 or later, and the transitional measures may, as Deputy Kennedy highlighted, act as a stimulus to those who wish to enter the housing market at this stage. The commitment to remove this relief altogether by 2018 will provide significant savings to the Exchequer. Deputies Crawford and Enright suggested mortgage interest relief is not available for individuals on low incomes. Mortgage interest relief is a tax relief of up to 25% on interest. It is applied at source, thereby reducing the total mortgage payment. It is available to all qualifying loans regardless of the income of the mortgage holders.
Deputy Burton referred to the budget speech, in which I indicated high earners must pay their fair share. The amendments to the restriction of reliefs measure announced in the budget and set out in this Bill will curtail severely the number of tax reliefs that can be used to reduce the income tax liability of those on high incomes. It will ensure that, in addition to PRSI and levies, those with high incomes and using reliefs will have an effective income tax rate of approximately 30%. I thank Deputy Moynihan for his support on this and other taxation issues in his contribution.
Deputies Bruton, Burton and O'Donnell all referred to the need for tax incentives for start-up companies. In particular, Deputy Burton referred to the need to help indigenous start-ups and in the Bill I have made provision for an extension of the tax exemption for new start-up companies introduced in budget 2009 to companies who commence to trade this year. The Commission on Taxation proposed to extend the measure to non-corporates until 2011. New start-ups that commence trading in 2010 may continue to avail of the exemption up to and including 2012.
Deputy O'Donnell made reference also to the research and development tax credit scheme and proposed that the credit should be allowed to be offset against PRSI. This proposal is not new and I am aware of other proposals to allow companies set off the tax credit against payroll tax liabilities. The suggestion has serious implications for the Exchequer in respect of the funding of pensions and social insurance payments in future. There are serious difficulties in acceding to such requests having regard to the implications for the social insurance fund into which contributions are paid. The research and development tax credit scheme has been improved in most budgets and Finance Acts since its introduction in 2004. Significant enhancements have been made to the scheme in budget 2009 and the Finance (No. 2) Act 2008. These and other changes have made the scheme one of the most competitive schemes of its type, a matter to which I point in response to Deputy Burton's assertion that Ireland's only competitive advantage is its 12.5% tax rate.
I am conscious there are reasons, other than cash-flow, certain companies and advisers wish to allow the tax credit to be offset against payroll costs but it should be possible to devise an accounting solution which will deal with the issues in this area.
I agree with Deputy Burton that Ireland's reputation is the key to our future success, both from a regulatory and a tax policy perspective. The Government has announced significant reform of regulatory structures. Legislation in this regard will be before the House this year.
Deputy Burton also referred to a front page article in the Sunday Business Post which alleged a tax loophole cost the Exchequer €400 million in lost revenue. Deputy Ardagh questioned whether the figures quoted in the story were correct. Unfortunately, the tax loss figure quoted in the story was highly inaccurate. The amount of artificial capital losses claimed was €409 million and the amount of capital gains tax potentially under threat was in the region of €85 million. Furthermore, contrary to that newspaper report, I point out that artificial losses are already being challenged by the Revenue under the general anti-avoidance provisions contained in the section 811 of the Taxes Consolidation Act 1997. Deputy Burton then questioned why something was not done before now about this matter. However, the Deputy should note that much has been done. While the UK introduced a broad based approach to tackling such aggressive avoidance in its Finance Act 2007, we already had the general anti-avoidance measure in place. Then, we took measures under the Finance (No. 2) Act 2008 to counter aggressive avoidance schemes which had come to light, involving the creation of artificial capital losses. Such schemes will continue to be under review. I am surprised the Deputy did not go the trouble of checking the facts on this matter for herself rather than relying on a highly inaccurate newspaper report.
The Minister's Department equally relies on the Sunday newspapers.
I have put the record straight. The Deputy can examine the record. A number of Deputies referred to the carbon tax.
The Minister's Department relies exclusively on that Sunday newspaper for its outings.
The purpose of the carbon tax is to send a price signal which recognises the environmental cost associated with the consumption of fossil fuels.
Are we to ignore placed stories from the Minister's Department from now on? We will no longer be able to read them.
This price signal will stimulate innovation and increase awareness of energy efficiency. The impact of the carbon tax on agriculture has been mentioned by a number of Deputies, including Deputies Crawford, Breen, O'Mahony, Sherlock and Naughten. Although I appreciate the position many farmers currently find themselves in, the excise duty on agricultural diesel is only around one tenth of that applying to auto-diesel. That in itself is a significant concession. The new carbon charge must be based on the emissions that arise from the fuel used. Therefore, to ignore such emissions would simply undermine the rationale for the tax in the first place.
Deputy Bruton pointed out that the application of a carbon tax to coal and peat creates difficulties because of the potential for products with lower environmental standards to be sourced in Northern Ireland. I agree with him and assure him I will not be introducing the tax on coal and peat until I am satisfied this issue is addressed appropriately. That is why a specific date is not signalled in the legislation. Work has already commenced on this matter within the Department of the Environment, Heritage and Local Government.
Deputies Bruton and Burton referred to local authority services being made subject to VAT on foot of a decision by the European Court of Justice in July 2009. To comply with the court's ruling, it is necessary to extend VAT to certain categories of local government services.
I suggest that the Minister circulate the rest of his speech.
The rest of the speech relates to the domicile levy, which I have no doubt we will revisit on Committee Stage.
It is past 10 p.m.
Unlike my colleagues, I would like to hear the speech.
There are no new innovations on the levy to be announced in my reply this evening. I will abide by the ruling of the Ceann Comhairle.
It will be clear to Deputies that difficult decisions in all areas of policy must continue to be taken. However, such decisions are necessary as we continue to restore sustainability to our public finances and enhance international confidence in Ireland as a place to do business. This Bill, giving effect as it does to a range of targeted measures, is a vital part of this process.
- Ahern, Dermot.
- Ahern, Michael.
- Ahern, Noel.
- Andrews, Barry.
- Andrews, Chris.
- Ardagh, Seán.
- Aylward, Bobby.
- Blaney, Niall.
- Brady, Áine.
- Brady, Cyprian.
- Brady, Johnny.
- Browne, John.
- Byrne, Thomas.
- Calleary, Dara.
- Carey, Pat.
- Collins, Niall.
- Conlon, Margaret.
- Connick, Seán.
- Coughlan, Mary.
- Cowen, Brian.
- Cregan, John.
- Cuffe, Ciarán.
- Curran, John.
- Dempsey, Noel.
- Devins, Jimmy.
- Dooley, Timmy.
- Finneran, Michael.
- Fitzpatrick, Michael.
- Fleming, Seán.
- Flynn, Beverley.
- Gogarty, Paul.
- Gormley, John.
- Grealish, Noel.
- Hanafin, Mary.
- Harney, Mary.
- Haughey, Seán.
- Healy-Rae, Jackie.
- Hoctor, Máire.
- Kelly, Peter.
- Kenneally, Brendan.
- Kennedy, Michael.
- Killeen, Tony.
- Kitt, Michael P.
- Kitt, Tom.
- Lenihan, Brian.
- Lenihan, Conor.
- Lowry, Michael.
- McDaid, James.
- McEllistrim, Thomas.
- McGrath, Mattie.
- McGrath, Michael.
- McGuinness, John.
- Mansergh, Martin.
- Moloney, John.
- Moynihan, Michael.
- Mulcahy, Michael.
- Nolan, M. J.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- O’Brien, Darragh.
- O’Connor, Charlie.
- O’Dea, Willie.
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- O’Hanlon, Rory.
- O’Keeffe, Batt.
- O’Keeffe, Edward.
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- Power, Peter.
- Power, Seán.
- Roche, Dick.
- Ryan, Eamon.
- Sargent, Trevor.
- Scanlon, Eamon.
- Smith, Brendan.
- Treacy, Noel.
- Wallace, Mary.
- White, Mary Alexandra.
- Woods, Michael.
- Allen, Bernard.
- Bannon, James.
- Barrett, Seán.
- Behan, Joe.
- Breen, Pat.
- Broughan, Thomas P.
- Bruton, Richard.
- Burke, Ulick.
- Burton, Joan.
- Byrne, Catherine.
- Carey, Joe.
- Clune, Deirdre.
- Connaughton, Paul.
- Coonan, Noel J.
- Costello, Joe.
- Coveney, Simon.
- Crawford, Seymour.
- Creighton, Lucinda.
- D’Arcy, Michael.
- Deasy, John.
- Deenihan, Jimmy.
- Doyle, Andrew.
- Durkan, Bernard J.
- English, Damien.
- Enright, Olwyn.
- Feighan, Frank.
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- Gilmore, Eamon.
- Hayes, Brian.
- Hayes, Tom.
- Higgins, Michael D.
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- Kehoe, Paul.
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- Lynch, Ciarán.
- Lynch, Kathleen.
- McCormack, Pádraic.
- McEntee, Shane.
- McGinley, Dinny.
- McGrath, Finian.
- McHugh, Joe.
- McManus, Liz.
- Mitchell, Olivia.
- Morgan, Arthur.
- Naughten, Denis.
- Neville, Dan.
- Noonan, Michael.
- Ó Caoláin, Caoimhghín.
- Ó Snodaigh, Aengus.
- O’Donnell, Kieran.
- O’Dowd, Fergus.
- O’Keeffe, Jim.
- O’Mahony, John.
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- O’Sullivan, Jan.
- O’Sullivan, Maureen.
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- Rabbitte, Pat.
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- Sherlock, Seán.
- Shortall, Róisín.
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- Tuffy, Joanna.
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- Varadkar, Leo.