Deputy McGrath stated, “Prime Minister Cameron opted out of the new arrangements because he failed to secure concessions for the financial services industry in the City of London. Given that a new financial transactions tax is likely to form part of the new arrangements that will apply to the other 26 EU countries, this could put Ireland’s financial services industry at a major disadvantage compared to London.

“We could soon have a situation where the financial services industry in Ireland will be subject to a new transactions tax, but the City of London will be exempt. Such a scenario could have serious ramifications for what is a critically important industry in Ireland. The financial services industry is highly mobile and we cannot allow a situation where London becomes a more attractive base than Ireland because of a new tax.

“IFSC firms now employ 33,000 in Ireland. The industry is a major contributor to the Irish economy. The Strategy for the International Financial Services Industry in Ireland 2011-2016, launched in July, targets the creation of 10,000 net new jobs.

“The Taoiseach Enda Kenny needs to urgently clarify if Ireland has committed to a new financial transactions tax and to state clearly what the implications of such a tax would be for Ireland given that the UK will be exempt.”

Today is not about the Government versus the opposition. All of us sitting here today have the privilege of being elected members of Dáil Éireann and it is our duty to put the Irish people ahead of any narrow party political interests. I have no doubt we share the same fundamental objectives for this country – to bring about economic recovery, to improve the quality of life for our citizens and to give them hope during this dark economic period. I believe it is our common purpose to make this country the best it can possibly be.

CC, today is the day that Fine Gael and Labour accept the responsibility that comes with being in power. The Government can no longer hide behind the actions or decisions of the previous government.

When this Government came to office last March, the Budget for the year had already been passed for them, despite their trenchant opposition to it, and FG / Labour had no major budgetary decisions to make until this week. From now on, you will be judged on your actions, your political choices and the results they bring for our people.

Over the past two days, the Government has made known its political choices. And let’s be clear about one thing – difficult and all as the circumstances undoubtedly are – the Government had choices. Yes, you are working within the framework of the EU / IMF deal, but in the words of Minister Noonan himself, speaking at the end of the last quarterly review in October: “The troika made it clear that they had no difficulty in substituting one fiscal measure for another with an equal value.”

So let there be no equivocation on this point – the decisions laid before this House yesterday and today are the decisions of Fine Gael and Labour and of nobody else.

The EU & IMF didn’t tell this Govt to cut child benefit for third and subsequent children; the EU & IMF didn’t tell this Government to increase the Drug Payment Scheme threshold to €132 per month for hard-pressed working families; the EU & IMF didn’t tell the Govt to cut the fuel allowance to vulnerable elderly people by 6 weeks……..and the EU & IMF certainly didn’t tell this Government to breach its own pay cap and give one of its special advisers a pay increase of €35,000. These were political choices made by FG and Labour.

We, in Fianna Fáil, have committed ourselves to a positive approach to opposition. We have not and will not oppose measures for the sake of it. If we agree with what you are doing, we will support you. If we disagree, we will oppose you and put forward what we believe to be a credible and realistic alternative. I regret to say that was not the approach of FG and Labour in opposition. In fact, your approach in opposition was utterly cynical. Measures that were so obviously necessary were opposed tooth and nail by Fine Gael and Labour.

Much of your opposition rhetoric not to mention reckless election promises are now coming home to roost. While in opposition and during the election, both FG and Labour gave people the distinct impression that there would be as easier and softer way of tackling our problems. Now that you’ve shown your hand, the Irish people have been left bitterly disappointed.

Various people who now sit around the cabinet table described this country as being ‘banjaxed’ as ‘as economic corpse’, as ‘a country in a pawn shop’. As a true republican party, we will not adopt such a negative, self-serving and corrosive style of opposition. We will call it as we see it, but we will never portray this country in a light that is unfair or that will undermine efforts to improve life for our people. This is a great country, going through an extraordinarily difficulty period in its economic history, but come through it I have no doubt we will.

CC, the Irish people have endured a great deal over the past 3 years or so. Successive budgets have forced more and more sacrifice on them. Many people are struggling to get by on a day to day basis; people are worried about providing for their children today and what future those children will have tomorrow. High levels of unemployment and forced emigration have re-emerged as an unwelcome feature in every community across the county.

Many families will spend this Christmas without loved ones, with young Irish men and women working in places as far away as Australia, Canada and the US. Their absence and their aspiration for a future in this country must be given expression in this House today.

Over the coming days, people will be coming to terms with the detail of the cuts announced yesterday and the tax changes today. They’ll find many unpleasant surprises buried in the detail, including social rate cuts by the way, such as for:

pensioners with less than an average of 48 weeks contributions per year (anyone who leaves workforce for some time including mothers……..) – statement clear ‘new payment rates’
disgracefully, for widows, you’re increasing the number of years contributions required to qualify from 3 years to 10 years…….
One parent family payment is also being cut by bringing the qualifying child age to 7
You have given the pretence that rates are being maintained – the truth is for many welfare claimants – their weekly income will be substantially cut.

But in the cold light of day, there are some measures that really should be reconsidered……..

Minister, the cuts you are imposing on young people with disabilities is deeply unfair. It is a heartless and cruel cut.

Cutting up to €88 a week from young people going on disability allowance – some of whom have severe and profound disabilities – is totally unnecessary Minister.

Young people with disabilities look forward an income of their own to give them a sense of independence and give them some quality of life.

Minister, last year, you rounded on the Government for imposing a cut in the blind pension – and I think you were right – it was the wrong thing to do. But what you are proposing here is also wrong.

Minister – you have the majority to bulldoze through whatever you want – you don’t need Fianna Fáil support – but for the sake of the €7m involved, Minister, will you have a second look at this cut to young people with disabilities.

In Education, the changes announced will effectively mean some schools will no long be able to provide guidance counselling to students. If they do, they essentially have an increase in the pupil teacher ratio. At a time when young people are under huge pressure to perform in school and conform with their peers – very often – the school guidance counsellor is the safety net that prevents a personal problem escalating. With youth mental health and suicide a growing problem for our young people, this is a cut which could come at a very high price for some.

Education is a core value for our party. As a country, given the direction our economy is taking, having a postgraduate qualification is becoming increasingly necessary for our graduates. The cuts you are planning in postgraduate education are socially regressive and economically counter-productive.

These changes will mean, in a great many cases, that the son or daughter of a widow, a carer or someone from a low income family will simply no longer have the option of postgraduate education. This is not right. Education is a gateway to a better future – both for individuals and the country as a whole. This cut – along with the further cuts to the student grants and the 20% to the fund for Students with Disabilities will save only €15m.

Irish Times today – 200 people earning €150k or more, with 100 of these earning over €200k.

Where is the fairness in that Minister?

On coming into office 9 months ago, this Government asked to be judged on its success in tackling the jobs crisis. If it does succeed, I and my party will be the first to congratulate the Government. The retention of existing jobs and the creation of new jobs simply has to be the number one priority for all of us. We can all accept that making inroads into Ireland’s unemployment rate will help to solve so many other problems. It would reduce our social welfare bill, improve our income tax take and increase disposable income in the domestic economy. It would be the most painless way of reducing our budget deficit and getting our economy back to track.

On coming to office, you promised a Jobs Budget within the first 100 days in Government. You delivered a jobs initiative last May, funded by a raid on the private pension savings. I regret that this initiative has so far failed to deliver.

The truth is that the number of people on the live register today is 448,600 – this is 7,300 higher than when you came to office. You have pointed to increased tourism numbers in 2011 as evidence that the Jobs Initiative is working, but this is compared to an exceptionally low base in 2010 and the signs of recovery in tourism were evident before the Vat reduction took effect in July.

Today’s budget fails to give any meaningful hope to those looking for a job. You have outlined some measures today designed to give a jobs boost – and they are welcome insofar as they go – once again there are no targets, no timetable for delivery – long gone is the talk of 100,000 jobs.

Minister, I am glad to see you’ve read our budget proposals on the USC, and you are exempting many part-time, casual and seasonal workers.

I am sure all members will agree it is a very modest change to a charge FG and Labour railed against last year.

Of course, you shouldn’t spin this change out of all proportion – anyone working full-time will pay the exact same as before.

CC, in assessing the impact of Budget 2012 on the Irish people, we need to look at the combination of today’s and yesterday’s announcements. When you examine the figures, people will be hit very hard indeed. Working families with children and families dependent on welfare will be the hardest hit.

Let’s take the example of a working family with 4 children, over the course of a year:

On child benefit, they lose €432
On Vat, they will pay at least €400 extra.
On Drug Payment Scheme, they will pay €144 extra.
On household charge, they will pay €100.
On motor tax, excise duty, carbon tax, at a minimum €100.
If they are fortunate enough to have private health insurance, the VHi has said a typical €2,000 premium will now cost at least an extra €1,000.
Total €2,176 – excluding increases in school transport charges, public transport increases etc.
Let’s take the example of a family with 3 children (aged 3, 8 and 14), who paid income tax for years but where the principal earner lost his / her job at the start of the recession and the family now rely on mortgage interest supplement to keep the family home:

On child benefit, they lose €228.
On the fuel allowance, they lose €120.
For the youngest child, they lose €200 on the back to school allowance. For the two older children, they lose €105 between them.
The Vat increase will them at least €250.
On motor tax, excise duty, carbon tax, at a minimum €100.
Their minimum contribution towards mortgage interest supplement will increase by up to a staggering €572.
Total €1,575 – and this is a family entirely dependent on welfare.

These are two examples of families already hard hit by the recession. It would be unrealistic to think they could unaffected by the budget.

The major flaw in this Budget, Minister, is that its impact is not progressive – in fact it is a highly regressive budget. It is also socially regressive because of the choices you’ve made.

It’s all very well to tell people you’re not hiking up income tax and you’re not cutting basic welfare rates – but that’s cold comfort when families already struggling to get by realise the impact of the budget on them.

I’ll tell you one thing– these families won’t be taking Minister Varadkar’s advice and booking a holiday on the back of this budget any time soon!

You are not asking the very high earners to shoulder more of the burden.

CC, the Government’s entire budgetary plans for 2012 are based on a projection of the economy growing by 1.6% next year. I sincerely hope this growth level is achieved and exceeded. But on behalf of my party, I have to set out the analysis as I see it. With each passing day, the Government’s forecast for economic growth in 2012 looks increasingly optimistic and out of line with the views of a range of independent commentators.

Consumption in the domestic economy continues to contract. Consumer sentiment is weak and the extra money being taken out of people’s pockets through this budget, as I’ve demonstrated, will make matters worse. While we hope the ECB will further reduce interest rates later this week and which you should be demanding be passed on to both personal and business customers, on all other fronts, the omens for consumer confidence have deteriorated in recent months and 2012 looks like yet another very fragile year for the domestic economy.

Our exports reached record levels this year and have the potential to drive us back to economic growth. Multinationals operating out of Ireland and many Irish businesses have performed remarkably well in the export sector.

But the risks before us are stark. Our ambitions for an export-led recovery are now under serious threat from the ongoing Eurozone debt crisis and its impact across the globe. Our main trading partner, Britain, has dramatically downgraded its own growth forecast for 2012 from 2.5% to 0.7% of GDP.

The European Commission has downgraded its forecast for the Eurozone economy in 2012 from 1.8% to 0.5%.

Others predict that the Eurozone could slip back into recession. In simple terms, if there is less demand among our main trading partners for the goods and services we produce, our exports will suffer and will act as a drag on our economic growth.

With an optimistic growth forecast of 1.6% underpinning this budget, I believe the Government’s strategy for the public finances is based on shaky foundations.

In its Quarterly Economic Commentary published last week the ESRI downgraded its growth forecast for 2012 to 0.9% and goes so far as to project a contraction in GNP. The OECD has a similar outlook projecting just 1% GDP growth, well below the 1.6% the Department has forecast. The plan is to reduce the deficit to 3% by 2015. This is based on achieving a 26% growth in tax receipts while implementing a 30% cut in capital expenditure over the period.

The 9% increase in income tax receipts the Minister was forecasting for 2012 before he even stood up in the house today looks ambitious even taking into account the carry over effect from last December’s budget. As the Minister is only too well aware, the last 3 months have shown a sharp deterioration of tax receipts.

In November, alone tax receipts were €337m off target. The White Paper on Receipts and Expenditure showed that the full year tax take would be €700m below target for this year and even this is flattered by his mid year raid on private pensions which yielded €460m.

As the Minister has pointed out many times, every 1% of economic growth is worth about €800m to the exchequer – so, if for example, our growth ends up being only 0.6% – the budgetary plans for 2012 will be thrown out of line by €800m. This underlines how critical it is to bring about economic growth in 2012 and future years.

When you take the political commitments made by FG / Labour and the 2012 budgetary strategy outlined today and yesterday, the Government has given itself very little room to manoeuvre. If you look at the four main income headings – you have used all your headroom in Vat in one fell swoop (the PfG caps the top rate at 23%); you have committed to no income tax increases for the lifetime of the Government; all parties agree corporation tax should not be increased, and there is a limit to how much excise you can add to a litre of petrol or a pint of beer.

On the expenditure side, you have ruled out any reductions in welfare rates for the 5 years of the Government, you appear to be committed to the Croke Park deal to 2014 – so you have left very little room on either the revenue or expenditure side should your growth forecasts prove to be too optimistic.

Without question, you have made the easier political choices in this budget – I am not so sure you will have that luxury in your future budgets.

The sobering news for FG / Labour backbenchers is that far from this being the hardest budget in the Government’s life, it may actually prove to be the easiest!

Since coming to power, the Government strategy has been to look for easy targets to raise tax revenue, ideally ones they think people will not notice. The Government raided private pensions for €460m but because people don’t see it coming out of their disposable income the Government felt they would get away with it. Now they are focusing on VAT, hoping they will not notice that either.

The Minister may be trying to pass this off as simply an increase in tax on luxury items but in fact many everyday items will increase in price as a result of this, including:

Mobile and landline phone calls – Adult clothing and footwear – Car Park charges – Detergents – Petrol and Diesel – Prams – Shampoo – Soap -Toothpaste
These are hardly luxury items Minister!

When news of the VAT increase leaked in the German Bundestag, the Minister was quick to put out his analysis that it would have a greater impact on the better off. In fact, the distributional effects of VAT in Ireland were examined by the ESRI in a paper published in July.

The results were unambiguous. They showed clearly that those hardest hit by a Vat increase are households in the lowest 10% income bracket, households in rural areas, and one parent families.

A few months ago, Minister you said “What we really need is for people to go into the shops and start buying again” Well one would think that the Government policies would also encourage people to spend – then you go and increase Vat! People are being given mixed messages.

Increasing Vat by 2% in this budget is a major mistake. At a time when exports are facing a challenging environment, there was an opportunity to put an emphasis on the domestic economy, but you have decided to do the opposite.

Small retailers will be left with the dilemma of whether to pass on the increase and suffer the loss of sales or try to absorb it themselves and run the risk of putting the survival of their business in jeopardy.

With very few people likely to get a pay increase in 2012, this Vat increase means an across the board reduction in purchasing power and a consequent fall in the standard of living.

In his reply to me last week the Minister stated that the VAT increase would raise €670m. The Summary of Budget Measures shows that the expected full year out-turn from the increase will be €670m in a full year – clearly indicating that there will be an impact on the volume of retail sales from the increase. It is a basic law of economics – if you put up the price of goods and services – the demand is going to fall………….

Let’s take one example, car sales have already gone in to decline since the end of the scrappage scheme in June. Figures released on Friday by the Motor Industry showed that car sales in November were 50% down on 2010. The 2% VAT increase will add €300 to the cost of an average family car. The State collects considerable revenue from car sales both in terms of VAT and Vehicle Registration Tax. The Minister may find it is not just VAT returns that are depressed by the proposed increase but also the revenue he takes in from VRT and also excise duties as people cut pay on spending in other areas.

In launching the jobs initiative the Government’s argument was that by reducing the lower VAT rate from 13.5% to 9% it would stimulate demand in labour intensive sectors of the economy. I believe that this Vat increase further undermines the earlier policy decision to reduce the lower Vat rate.

We also need to consider what the impact of the VAT change will be on retailers in the border region. Minister, you have played down the significance of Vat as a driver of cross-border shopping. And it is true to say that Vat is not the only factor…….the relative euro / sterling exchange rate of course also influences where people living in the border region and beyond do their shopping.

However, those closest to the situation believe this Vat increase will make a difference. North of the border, the Chamber of Commerce in Derry are delighted with the increase – they have stated the VAT increase in the Republic will have a beneficial knock-on effect for businesses in Derry.

The sentiment south of the Border in Dundalk, is the complete opposite. Dundalk Chamber of Commerce has said the Vat increase will hurt businesses in their area.

The Minister would appear to be banking on their being no deterioration in the exchange rate against Sterling but there is a risk the Minister could find himself in the midst of a perfect storm next year caused by a combination of the VAT increase and a weak Sterling.

Worryingly, the VAT take has been below profile in each of the last six months. The cumulative underperformance in 2011 has been €464m with less being taken in this year than last year despite the rise in the Consumer Price Index. The Vat reduction in the Jobs Initiative doesn’t fully explain this.

It should be noted that current Government Ministers reacted with hysteria when the previous Government increased Vat by 0.5% to 21.5% in October 2008:

Minister Bruton said: “The Minister has made decisions today that will threaten to turn a recession into a depression.”

Minister Burton said “In today’s Bill, the Minister is proposing to increase VAT by 0.5% to an astronomical 21.5%. This is one of the highest rates in Europe.”

She described it as ‘ the single most disastrous action he took in the early budget for 2009. This mistake, she said, sent shoppers scurrying over the Border to queue in ASDA in Enniskillen and Sainsburys in Newry.

Well how the times change! I would love to know Minister Burton’s private thoughts on increasing Vat to 23% in this budget!

Increasing VAT is the wrong tax measure at the wrong time. We accept that an increase in VAT will at some point over the next four years form part of the process of closing the deficit. However, to frontload the increase all in one year could kill the recovery stone dead.

We believe the Government’s decision to impose a levy on private pension funds was deeply unfair. In effect, you are raiding the private savings of Irish citizens and the measure runs contrary to the long established principle of encouraging people to save prudently for their retirement.

It was a sneaky levy – you said it was a levy on the industry but of course the industry is passing it on to pensioners by way of reduced benefits and to workers by way of increased contributions…..pensioners don’t see it on their statement……..Tara Mines…..

The decision was taken against the advice of the Pensions board and indeed officials and the Minister for Social Protection. I’m highly sceptical of the Government’s promise to end the levy in 4 years time. Become embedded in the system, link with jobs measures will become blurred over time…………..

Instead of imposing this levy, Fianna Fáil is proposing an investment stimulus of at least €5.6 billion over four years. The Government’s pension fund levy should be ended and replaced with a mandatory investment by private pension funds of 4% over four years (average 1% per annum) in the Strategic Investment Fund announced by Government in September. This would be an investment of €700 million per annum and would be supplemented with an equivalent annual investment from the NPRF. This would offer a long term cash flow benefit to private pension funds while stimulating economic activity and developing the infrastructure capacity of the State. The Strategic Investment Fund should also be open to regular savers in a manner similar to the National Solidarity Bond.

Minister, enterprise has to be put at the centre of all aspects of Government policy. While we have to continue to attract foreign direct investment, small and medium sized Irish businesses will lead this recovery. We need to give them every possible assistance.

We need an appeals mechanism based on economic circumstances to limit the burden of commercial rates.

We need a significant enhancement of supports for small businesses would I proposed in our budget submission would include a doubling in the budget for County and City Enterprise Boards.

I believe the Government should convene an Economic Advisory Council, to complement the work of the Fiscal Council, comprising a broad range of representatives from the private sector to advise Government on enterprise and wider economic policy. The membership of the Council could be drawn from the key sectors of the economy including SMEs, Financial Services and the export sectors such as the agri-food industry.

The steps we have taken since 2008 have resulted in a marked improvement in our competitiveness. The European Commission forecasts that by 2012, Ireland’s competitiveness will have improved by 14%. This progress must be continued.

Minister – I firmly believe we need to start encouraging rather than penalising the self-employed in this country. As a means of encouraging entrepreneurship, the State should consider a voluntary PRSI scheme for the self-employed so they can claim Jobseekers Benefit and other welfare benefits if their business fails. The current system is a real deterrent to someone thinking of starting a new business.

During the election campaign, retailers were promised that legislation would be introduced to end upward only rent reviews. The current limbo has created a vacuum in the commercial property market. The worst thing about all of this is the uncertainty it is creating – retailers don’t know where they stand – investors can’t make investment decisions while this uncertainty remains – you need to make a decision one way or the other!

I don’t know how long it takes to get advice from the AG about the constitutionality – but this is going on for 9 months

On the proposed €100 household charge – people have known this charge was coming for some time – people are worried about where this charge will end up at –I didn’t hear any unequivocal commitment that this will be replaced in one year with a more equitable charge??

The bill doesn’t provide any exemptions for carers, widows, the disabled and pensioners. Will people in negative equity, mortgage arrears and those who paid massive amounts of stamp duty in recent years have to pay the charges?

Minister, this is a socially regressive budget. Its impact will be felt hardest by low and middle income families with children, by young people with disabilities, by vulnerable elderly people, and by students trying to build a better future.

You had the option of closing loopholes and targeting higher income earners. Instead you have played your trump card by increasing Vat in the first year of the Government’s 5 year life. This is despite the clear evidence of the weakness on the domestic economy. The tens of thousands of families in mortgage difficulty will find nothing in today’s announcement that will help them. People outside medical card guidelines who take out medical insurance will be hit with massive premium increases. The 448,000 on the live register have not been given any real hope.

The real flaw in this budget is its inherent lack of fairness. The Irish people know that cuts have to be made and that taxation has to increase and are willing to accept changes if they believe them to be fair.

Unfortunately, as these measures are rolled out over the weeks ahead, I believe that basic test of fairness will has not been achieved by this budget. The real measure of this budget and this Government’s economic strategy will be whether real inroads are made in the months ahead in reducing unemployment across this country. I am sure, Deputies that is a measure we can all agree on.

· 224,000 to be exempt from universal social charge while increasing rate for those earning €115,000

· Greater pension reductions for retired public servants, politicians

· No VAT increase

· €250m more for capital expenditure in 2012 for labour intensive projects

· Scrap private pension levy in favour of €5.6 billion investment stimulus

· Accelerated implementation of Croke Park savings

· Establishment of an Economic Advisory Council

· Double the budget for County and City Enterprise Boards

· Complete the review of bankers’ pay in guaranteed banks

· 20,000 extra local employment scheme places

Fianna Fáil Finance Spokesperson Michael McGrath said: “Fianna Fáil supports the need for an adjustment of €3.8 billion in the public finances in 2012. We have published today our proposals for achieving the deficit reduction. In addition, our document is underpinned by practical measures to support enterprise and improve confidence in the domestic economy.

“We are proposing the establishment of an Economic Advisory Council to advise Government on enterprise and economic policy. We are doubling the budget for enterprise boards and we are allowing an appeals mechanism for businesses burdened by local authority rates.

“In light of developments in the eurozone and global economy, we are concerned that the Government’s growth target of 1.6% may not be achieved. This will clearly have implications for the achievement of the deficit reduction target of 8.6% in 2012 and corrective measures may need to be taken during 2012.

“Fianna Fáil proposals for Budget 2012 do not include the 2% VAT increase planned by the Government. We believe retail sales and consumer confidence are too fragile and the Government risks a severe contraction in demand.

“In recognition of the ongoing burden on the public from the fiscal adjustments needed, we are proposing that the Public Sector Pension Reduction for retired senior civil servants, public servants and politicians be increased and will impact on pensions greater than €75,000.

“Fianna Fáil has focused our proposals on the need to stimulate growth in the economy to create jobs. We are proposing an investment stimulus of at least €5.6 billion over four years. This involves phasing out the private sector pension levy and replacing it with a mandatory investment by private pension funds of 4% over four years (average 1% per annum) in the Strategic Investment Fund. This amounts to an average yearly investment of €700m and would be matched by an annual investment from the NPRF.

Public Expenditure and Reform Spokesperson Sean Fleming stated, “The Croke Park agreement is delivering substantial savings by way of reduced public sector numbers and non-pay savings. We believe additional savings can be achieved through the rigorous implementation of this agreement. On capital expenditure, we are providing an extra €250m in 2012 relative to the Government’s figure, and we believe this spend should focus on labour intensive projects around the country. Despite the expenditure savings required, we believe the extra investment in the enterprise sector and the additional local employment scheme places will deliver jobs.

Deputy McGrath stated, “The admission by Minister Noonan that his estimate of the extra revenue for the State from increasing the top rate of Vat to 23% does not factor in any reduction in demand is quite incredible. In arriving at the estimate of €670m of additional revenue for the exchequer, the Minister has confirmed the estimate ‘does not take into account any behavioural change on the part of taxpayers as a consequence of such a measure’.

“If you speak with retailers in any town, village or city in Ireland, they will tell you that a 2% increase in Vat will lead to less consumer demand. In the border county areas, retailers are adamant the Vat increase will encourage more consumers to shop across the border.

“At a time when consumers are very sensitive to price, a 2% Vat increase will certainly depress consumer demand and will cost jobs in our economy. At a time when people are struggling to make ends meet, consumer demand is price elastic and it is inconceivable the Minister has not taken this into account in calculating his figures. It is not too late for Minister Noonan to change his mind and drop the proposed Vat increase which will only lead to weakened consumer confidence, less spending in our economy and less jobs in the retail sector.”

Deputy McGrath stated, “The figures released today by the Central Bank show that, at the end of September 2011, 62,970 or 8.1% of residential mortgages were in arrears of 90 days or more. A further 36,376 mortgages have been restructured and have not fallen into arrears. The corresponding figure for the end of June was 55,763 mortgage accounts or 7.2% and there were 39,395 restructured mortgages not in arrears.

“In addition, in response to questions I raised with the Central Bank when they appeared before the Oireachtas Finance committee in October, further evidence has been provided of the scale of the underlying mortgage crisis. The Central Bank has informed the committee that, at end June 2011, some 46,634 mortgages were in arrears of less than 90 days. Therefore the number of mortgages in some level of difficulty is approaching 150,000 representing close to1 in 5 of all residential mortgages.

“It is absolutely clear from the figures that the mortgage arrears problem is accelerating. The situation is not helped by the indecision and lack of action on the part of Government.

“The Keane report on mortgage arrears was presented to the Government on 28 September. Seven weeks on, the Government has not made any decisions on the Keane report and has not come forward with any action plan for dealing with the urgent problem of mortgage arrears. The Minister for Finance informed me in the Dáil this week that he will most likely make an announcement between Budget day and the Dáil Christmas recess.

“The only thing this Government has done for mortgage holders is to break every promise it made to them – including the promise to give an extra €166 per month of mortgage interest relief and to force banks to absorb ECB rate hikes.

“Fianna Fáil’s bill to establish a non-judicial debt settlement system dealing with mortgage debt and other forms of personal debt has passed second stage in Dáil Éireann and has been referred to the Justice committee. The Government should move this bill through the legislative process or publish its own bill without delay.

“The Government should prioritise this issue and come forward with its plans for dealing with the mortgage arrears crisis in advance of the budget.”

Deputy McGrath stated, “It is being reported that a document presented to the budget committee of the German lower house of parliament revealed that Ireland will raise its top rate of Vat to 23% in the budget on 6th December.

“According to the reports, members of the German parliament have been given details of the Irish budget three weeks before the Irish parliament and the Irish people. If this proves to be true, it would be a staggering and unprecedented breach of faith with the Irish parliament and Irish people on budget plans. It would represent a fundamental breach of established protocols in relation to the disclosure of budgetary measures.

“We need to know whether the Irish government has revealed the detail of its budget plans to the German budget committee. In addition to the reported planned Vat increase, what other information has been given the German authorities about the budget plans?

“The Minister now needs to clarify the precise nature of the budget information which has apparently already been given to German parliament. In addition, for what purpose was the information presented to the German budget committee yesterday?

“The Minister for Finance needs to make a comprehensive statement on this matter today.”

“The lack of any strategy for economic growth, job creation and restoring confidence in the domestic is notably absent from this Statement. Without a clear and coherent plan for economic renewal, the task of achieving our public finance targets will be made all the more difficult.

“The Government has acknowledged that 60% of adjustment made in the economy to date has been on spending side. Despite the rhetoric of the Labour Party in opposition and during the election, the Statement released today admits that the majority of the future adjustment will also be on the spending side. Proving perhaps that it’s more a case of Fine Gael’s way than Labour’s way when it comes to budget process.

“Fianna Fáil is disappointed with the level of detail in the Statement. The Government is again not clear on the issue of possible future income tax changes. Its commitment not to increase income tax over the lifetime of the Government has been heavily qualified. Its focus today on raising significant cash amounts through indirect taxation will only cause further uncertainty and a reluctance to spend in the domestic economy. The Statement fails to provide the necessary certainty and clarity to consumers about how taxation measures over the next four years will affect them.

“Today’s statement has no emphasis on job stimulation at all. Job creation measures are completely missing from this four-year fiscal plan. Fine Gael and Labour promised a jobs budget, then whittled it down to a jobs initiative that they raided pension funds for. This plan indicates that they have abandoned their own targets and their promises to voters, and job creation is not their priority. The truth is that the number on the live register is higher today than it was when the new Government came to office in March.

“Unemployment is projected to remain high at 11.6% by 2015. The Government has admitted today for the first time that their programme only aims to bring about 65,000 jobs by 2015. That’s a long way from the headline grabbing 100,000 jobs agenda.

“On the issue of stimulating the economy, the Government has taken the easy political option and has targeted a significant cut in the capital programme of €750m for next year. The capital budget is already under spent for this year and the Government is showing a distinct lack of interest in planning for the future. Now is the time to invest in our infrastructure and position Ireland in a strong, competitive position for recovery. Money spent now on capital projects will go a long way and key projects, now likely to be pushed out many years, could be completed in a more cost effective way if they’re progressed now.”

“The Minister for Finance Michael Noonan has said he wants the banks to pass on today’s interest rate reduction. I believe it is incumbent upon the Minister to make sure that this is done. Fine Gael promised to force the banks to absorb interest rate increases but failed to deliver when the ECB twice increased rates earlier this year.

“Thousands of families across the country are struggling with high mortgage repayments. Those on variable rate mortgages saw their monthly repayments increasing earlier this year as the Government stood by. Fianna Fáil has proposed to establish a Mortgage and Debt Resolution Office to deal comprehensively with mortgage and debt difficulties and our legislation is currently before the Oireachtas Justice Committee having passed Second Stage in the Dáil.

“A swift response from banks to today’s ECB rate cut will go some way to easing the stress being felt by thousands of families. However if the banks fail to act the Minister and the Financial Regulator will have to step in to ensure the public and not just the banks benefit from the rate reduction.”

He commented, “Today Fine Gael and the Labour Party have formally abandoned one of their most important election promises. By writing the $1 Billion cheque to pay off unsecured unguaranteed bondholders in Anglo Irish Bank, they have betrayed voters and exposed the cynicism at the heart of their election campaigns and their time in Opposition.

“What will be even more galling for voters is the fact that the flip flopping of the last eight months by Fine Gael and Labour has delivered a bonus for bond market fat cats potentially running into hundreds of millions of Euro.

“A quick look at the prices that this Anglo bond has been trading at over the last year demonstrates the point. The price dropped from 70-75 cent in the euro in December 2010 and January 2011 to a low of 52 cent on 14th February 2011. It is clear that the rhetoric from Fine Gael and Labour during the General Election campaign, promising to burn these bondholders, drove down the price.

“Investors who bought these bonds at this time will have doubled their money in just 9 months! The new Government can hardly complain about speculators making money from these bonds, since it was their empty promises that drove down the price in the first place, and their betrayal of voters that delivered the 100 cent in the euro return.”

The Irish government must use the agreement reached at the euro summit early this morning to reduce the cost incurred by the State in recapitalising Irish banks, according to Fianna Fáil Finance Spokesperson Michael McGrath.

Deputy McGrath stated, “At a European level, it is to be welcomed that the euro summit has agreed on a template which aims to resolve the ongoing eurozone debt crisis. It remains to be seen, however, whether the agreement will have any enduring success.

“From an Irish perspective, it is noteworthy that the government did not seek any reduction whatsoever in the Irish debt burden and has committed itself to paying its debts in full, while at the same time Greece will benefit from a 50% write down of its debt. The government is clearly of the view that Ireland’s total debt burden is entirely sustainable and manageable. This is markedly different from the rhetoric we heard from Fine Gael and Labour before last February’s election.

“It is deeply disappointing that the government did not achieve any recognition in the agreement of the extraordinary cost incurred by Irish taxpayers in rescuing Irish banks. The Taoiseach should have sought an explicit assurance in the communiqué that new powers being given to the EFSF to recapitalise European banks could be used to reduce the ongoing cost being incurred by Ireland in recapitalising Irish banks. There is now a compelling case for this issue to be revisited given that Ireland had to recapitalise its banks at a time when no European fund was available to support it.

“In addition, it now seems certain the Government will proceed with the repayment in full of €3.5 billion of unsecured, unguaranteed bondholders at Anglo Irish Bank and Irish Nationwide Building Society, starting with a €700m payment next Wednesday. The government has failed utterly to achieve any progress on this front despite its clear promises on the issue.

“It is also clear from the communiqué that Taoiseach Enda Kenny and his European colleagues are preparing the ground for further Treaty change to strengthen economic and fiscal integration across Europe, which may well result in another European referendum here in the not too distant future.”