Tom Parlon (Laois-Offaly, Progressive Democrats)

The non-contributory pension will rise by €16 per week, or 9.6%, and the first €100 of income earned will be disregarded for means test purposes to facilitate pensioners who want to work beyond retirement age without being penalised. Elderly persons will also benefit from the new home care packages, additional day care support and palliative care, helping elderly people to avoid unnecessary and prolonged stays in residential care hospitals.

Those on the lowest rates of social welfare will all receive an increase of €17 per week, bringing the lowest full personal social welfare payment to €165.80 per week, which is an increase of 11%. The monthly rate of child benefit will rise to €150 for the first and second child and to €185 for the third child and subsequent children. This year we will spend approximately €2 billion on child benefit alone compared with just €500 million five years ago.

A major theme of this budget was the very pressing issue of child care. The Government is conscious of the difficulties faced by families in this regard. Our task is to assist all parents, in particular during the early years of child rearing. To this end we have developed a five year child care strategy to tackle the problem by increasing options for parents in a balanced manner. This package will cost €317 million, rising to €600 million a year by 2008. On the supply side a major new national child care investment programme will run from 2006 to 2010 and will support the creation of 50,000 new child care places through capital grants to private child care operators. Income earned by child minders caring for children in the minders' own homes will be exempt from income tax and PRSI up to €10,000.

The Government is mindful of the importance of the first year of life in a child's development. Consequently, significant extensions to maternity leave are being made over the next two years. From March next, mothers of new-born children will have four additional weeks paid maternity leave, extending such leave to 22 weeks. This leave will be further extended by four weeks in 2007, so that mothers of new-born children will be entitled to a full six months paid maternity leave.

A new early child care supplement will be introduced which acknowledges the costs parents face, particularly those with pre-school children. This will be a direct payment available to all parents of pre-school children regardless of the parents' labour force status. The payment will be worth €1,000 per year for each child up to their sixth birthday. This supplement will be exempt from income tax, PRSI and levies and will be paid quarterly to parents of approximately 350,000 children under the age of six, costing €353 million in a full year. This new payment with child benefit will mean that in 2006 a family with two children under six will receive more than €5,000. This is a significant step forward in assisting families to meet child care costs.

The Government has radically restructured the taxation system. As a result more than one third of the work force are now outside the tax net completely. Yesterday's budget will mean that even more workers are taken out of the tax net and all those on the minimum wage will be exempt from paying income tax. The total cost of the income tax package is €900 million in a full year. Among the personal taxation measures contained in the budget were the employee tax credit, which will rise by €220 per year and personal tax credits which will rise by €50 per year. The tax exemption limit for persons aged 65 and over will increase by €500 single and €1,000 married, removing 1,700 elderly income earners from the tax net. The standard rate band will rise by €2,600 per year, just less than 9%, removing more than 90,000 taxpayers from the top rate of tax, ensuring that all those earning close to the projected average industrial wage will pay no more than the lower rate of income tax. To assist lower paid workers, the health levy threshold is increased to €440 per week, benefiting 72,300 lower paid workers.

As Deputies will be aware, a major review of tax reliefs was undertaken with the aim of achieving a fairer, more equitable tax system.

See this speech in context