Pat Rabbitte (Dublin South West, Labour)

The Minister was fully aware of the nursing homes issue and was quite prepared to clock up another hundred million euro of taxpayers' money without acting. When Mr. Pat McLoughlin's legal advice was brought to his attention, he had no argument after that. He should have known about the issue from the extension of the medical card to the over-70s but could not have failed to realise it from Mr. McLoughlin's advice, and no amount of retired civil servants' control of the English language could cover up the fact that responsibility lay with the Minister, but the Minister of State took the rap. The Taoiseach is sensitive about it because the Minister of State said he told the Taoiseach at a division in the House.

We are discussing the budget of a Government that has lost any sense of purpose other than hoping that it can buy people's votes at the next election with their own money. It lacks vision for the future and seeks to see how available money can be scattered around to avoid heavy defeat at the polls in the next general election.

For most of its eight years in power, the Fianna Fáil-Progressive Democrats Government unapologetically transferred income to the better-off in society but now we are asked to believe it has discovered society and community and that Professor Putnam and Fr. Seán Healy have become the favoured reading of the Cabinet. During the McCreevy years, it saw tax reduction as the only form of economic policy. Then, when its luck ran out and when its false promises were found out, it sent Mr. McCreevy to Brussels and promised that all was changed, changed utterly.

This budget shows that the supposed Pauline conversion on the road to Inchydoney was not so much a firm purpose of amendment as a firm aversion to purpose. This is not the budget of a Minister who wants to steer this country in the direction of future prosperity or a fair society, but of a Minister running around from one issue to the next, like a demented fireman in a burning forest, putting out electoral fires and dampening down hotspots of voter discontent.

This budget is little more than a series of attempts to address issues which have been preoccupying and aggravating voters: child care, transport, the standard rate tax band and tax avoidance by the super-wealthy. On each of these the Minister has sought to address, or to be seen to address, public concerns. In each case, he has done the bare minimum required, in his mind, to mute public anger. Many of his solutions are purely illusory. When in doubt, devise a five-year plan and forget to mention that the election is but 18 months away.

The Labour Party should be flattered by our ability to provoke a Government response when we raise an issue. We raised the issue of child care, millionaires who pay no tax, the heating allowance and the stealth tax imposed by not indexing the standard rate band. In these and other cases, we got a response — inadequate, but a response.

In several cases, there are now elaborate plans and strategies. There is to be a five-year plan for child care, just like in 2001 when there was to be a three-year plan for child care. The first two phases of that plan were implemented and then came the election, and the third phase was simply forgotten.

We have a ten-year plan for transport, just like in 2001 when we were offered a ten-year health strategy, with hundreds of hospital beds right away and thousands more to follow. The transport plan comes with money attached — just look at the capital envelopes. The Fianna Fáil manifesto, however, had a multi-annual plan to provide billions in additional funding for the health strategy. The Minister for Finance said health would be the first priority, come what may, but as soon as the election was over, the strategy was scrapped, the funding was not provided and a plan to privatise the health service has been introduced instead, or more correctly, a plan to create a parallel private health service has been introduced.

Pouring ointment on electoral sore points may seem like good politics but it is not a recipe for good government. That is not the way to chart a course to future prosperity or fairness, towards a society that has a place for every child, that offers a better life to those who get up at 6.30 a.m. to go to work and that offers a warm and secure retirement to the elderly. It does not add up to a vision for how we can lay the foundations of future prosperity and ensure more and better jobs in the future. It will certainly not arrest the race to the bottom in employment standards that the Taoiseach is so concerned about but is so unwilling to address. There is, frankly, no prospect of the Government ever adopting such a sense of purpose and vision. It is tired, jaded, bereft of ideas and reduced to responding to public anger in a piecemeal fashion.

We can say what we like about Mr. McCreevy — most of us in this House have — but Charlie McCreevy had an agenda. That agenda was changing the tax code and change it he did. It cannot be doubted that he left a very different tax code from the one he inherited. The millionaires who pay no tax are in no doubt as to what he achieved.

The agenda now is different, it is the one McCreevy neglected — reforming public spending and public services. While it is important to reverse some of the most regressive of Mr. McCreevy's tax breaks, the clear focus of the next Minister for Finance must be on public expenditure management and reform. We need to focus on the development and delivery of high quality public services with value for money for the taxpayer in the interests of society and the economy.

Tackling that agenda means a major shift in the approach of the Minister for Finance and his Department. The Department of Finance must return to the kind of reforming, innovative and developmental role that it once adopted, most notably in the 1960s. The Department has not functioned in that way for some time. Rather, its role has been reduced to being the keeper of the purse, constantly seeking to minimise expenditure in the short term, rather than taking a longer-term view. It certainly does not act as an engine of economic and social development. This is not a new problem. In his autobiography, for example, Garret FitzGerald wrote: "I had been concerned to observe how far the Department of Finance had moved from the innovative and developmental role it had played under T. K. Whitaker's leadership in the late 1950s and 1960s".

Every organisation needs a treasurer, a keeper of the purse who contains the urge to spend. No organisation, whether it be a local sports club or the Government of a country, can be without such control. We must maintain strict discipline over our public finances. For the Department of Finance and its Minister, however, that is not enough. It also needs to use its role in the monitoring and control of public expenditure in a proactive manner. This developmental function is a central element in the role of a modern treasury. It is also one which was legally assigned to the Minister for Finance in 1980, when the Department of Economic Planning and Development was abolished.

The functions transferred to the Minister for Finance at this time are worth reciting: to promote and co-ordinate economic and social planning for the development of the economy both generally and as respects different sectors and different regions of the country, to identify the policies it considers necessary for general economic and social development and to report to the Government, to identify in consultation with Departments of State and to review and appraise the plans and activities of Departments giving effect to the policies for general economic and social development adopted by the Government, to make proposals to the Government for the co-ordination of those plans and activities and for their integration with national economic and social plans and to review the implementation of such national economic and social plans as may be approved of by the Government from time to time and to report to the Government.

The Minister for Finance is simply not fulfilling this role. Instead we have a patchwork of different initiatives, regular failures of imagination and sheer unmitigated, unprecedented waste of taxpayers' money. The Minister came in here yesterday and sought to portray the impression that he had a great plan for our economic future and our society. In the end, he simply addressed the usual budget concerns and provided money for what he calls fourth level education. What it amounts to is a fund for universities and it is not clear in what we have heard so far whether the institutes of technology are included. The Minister for Education and Science, always on hand to educate people inside this House and outside it, is nodding her head. If that means "yes", I welcome and accept her assurance, but the Minister for Finance did not say that yesterday. His statement was endorsed by an exhortation to efficiency. He said:

This is a small country. It is not sensible to have our third level institutions pitched against each other across key disciplines. Instead what we need is the promotion of system-wide collaboration that can draw on the collective strengths of all of our third level institutions.

He wants universities to co-operate in using this money. How is this to be achieved? If fourth level education is so important, and it is, does it not deserve an institutional innovation? Is there not a case for a new university structure at national level, which would act towards the existing third level institutions in the way that, for example, the universities of Oxford and Cambridge act towards their constituent colleges? Might not such a new fourth level institution be able to co-ordinate the combined talents of our universities to attract the highest calibre of researchers from abroad, ensuring that they had the best possible facilities, while also arranging links to the individual colleges?

For all the high-minded talk, there is no joined-up or coherent strategy on how we are to address the challenges and fragilities facing the Irish economy or to build a stronger society. What is the plan for how we are to move up the value chain and create more and better jobs? How will we preserve living standards in the economy rather than indulge in a race to the bottom? How can we deal with an over-bloated construction sector which accounts for one in eight jobs and where a correction, which will inevitably happen, will have significant consequences for our economy? What is the Minister's view of the performance of the export sector? Does he have any thoughts on how SSIAs will affect inflation, let alone any strategy for dealing with it? Is he even aware of the disaster that is the Government's broadband policy and its implications for our economy?

It is incumbent on the Minister for Finance to develop a strategic vision for the future of our economy and our society and to structure public spending to these ends. However, the Government does not have that vision. The national development plan is a central case in point, launched with fanfare and spin and then allowed to run rapidly into the sand. From the beginning, the NDP had no departmental or ministerial champion. Each Department was responsible for its own bailiwick, no joined-up thinking, no Minister anxious to leave an imprint behind him or her and no single Minister responsible for implementing the national development plan. The next national development plan, about which the Minister, Deputy Cowen, spoke yesterday, will follow exactly the same pattern unless the next Minister for Finance drives its implementation.

As the litany of wasteful and foolish expenditures of the Government is well known, there is no need for me to repeat it. It comes with a very real cost attached. Every euro wasted by the Government is a euro not spent on health, new teachers, supporting families and tackling crime or anti-social behaviour. Not only is waste socially injurious, but it represents a drain on our economy and a threat to our current and future competitiveness. Where public services and productive infrastructure are provided at a cost, which is greatly in excess of the cost of similar provision in other countries, Ireland is at a corresponding competitive disadvantage.

The absence of a visionary approach to development is evident elsewhere as well. Last year, the enterprise strategy group, established by the Tánaiste, Deputy Harney, published a report, Ahead of the Curve, which attempted to chart out a future for Irish enterprise policy. It was an attempt to put flesh on the idea of moving up the value chain. One of its conclusions was that a precondition for economic success is what it described as effective and agile government. What was so striking was the statement in the report which reads as follows: "The Irish public system proved itself capable of such responsiveness in the past, but many believe that Ireland has lost its former ability to respond quickly and flexibly to identified needs and there is no longer a clear focus on enterprise as a key economic driver". That is not the Labour Party speaking but the enterprise strategy group, established by the Minister, Deputy Harney.

There can be no more damning indictment of this, the so-called pro-enterprise Government. As I meet people throughout the country, I am increasingly struck by the shared sense of a Government that is anything but effective and agile. This must change. If we are to bridge the gap between economic success and social failings, and if we are to lay the foundations for future economic prosperity, we must reinvent the way the Government does its business, starting with the way it spends our money.

I see little in the Minister's speech yesterday on parliamentary oversight of public spending and public expenditure decision-making. There is a paragraph about it in the report. However, it appears to pay lip service to a report I prepared at the request of the Committee of Public Accounts, which it endorsed subsequently and sent to the Secretary General of the Department of Finance for comment before publishing it. In the report, we addressed the entire question of public expenditure decision-making and the parliamentary oversight that is currently absent. The Committee of Public Accounts does not address that issue. It gets regular requests for intervention in current public projects, but that is not the role of the Committee of Public Accounts. The role of the committee is to examine the spending post hoc.

The weakness in the system is in the preparation of the Estimates, the manner in which it is done, the manner in which it is inaccessible and impenetrable and the manner in which it is approved after a half year's spending or more is over. We made specific recommendations in terms of the Estimates process, the bilateral meetings that go on between Ministers, the timing of it and collapsing the Estimates publication and the budget into a single event. When questioned in the House on the matter, the Minister appeared to effect his usual dismissive approach that if a proposal did not come from him or the Department, it apparently has no merit. While he paid lip service to it yesterday, it is far from clear that it means a significant change in the way we do things. I mean no disrespect to the Department of Finance officials, for whom I have great respect, but by any international comparison, parliamentary oversight of the Estimates process is inadequate.

There is a table at the back of the report I drew up relating to the Estimates debates for the 15 Departments this year. It shows that, for example, €11 billion spent on health attracted an hour and a half's discussion in committee. The select committee system is not working in that sense. I put forward the proposition that the finance committee should have this responsibility and should be resourced to do the job properly. I am aware it would mean more accountability for the Government and the senior officials in the Department of Finance, but that is a price we must pay in modern governance. Merely because all wisdom was reposited with Government, the Executive and the permanent government in the past does not mean that is good enough for the future.

There was no shortage yesterday of money to be spent, but there was a shortage of ideas, imagination and vision. Let us look at the child care package as an example. For months families have been promised that the Government would address the child care problem. As my colleague Deputy Burton stated yesterday, our children are not the problem, and nurturing children is one of the central functions of any human society. The Government seems to have forgotten that and for years it has done little to address the child care issue. When it got a bloody nose at the by-elections, as Deputy Kenny said, it decided child care would be addressed and we were all assured it would be the main priority. A sum of €19.23 per week is the full measure of that priority. After all the hype, the amount to be delivered will be less than €20 per week, in a country where the average cost of full-time crèche care is nearly €170 per week. It is commonplace to pay €200 per week for the care of a young child, all from post-tax income.

The provisions will do nothing for school-going children. Do they not merit consideration? The Minister has opened a new division, not between mothers or spouses who opt out of the workforce for a short period to care for their children and those with children who remain in employment, but between families with children under six and families with children over six. Apparently parents in the latter category do not deserve help with child care costs.

The other significant item of news is that there is to be an extension of maternity leave. I welcome such a proposal. The Labour Party published its proposals in this regard. However, in spite of the extension, half of the additional maternity leave will be unpaid. According to the Irish Examiner child care poll, 57% of mothers do not avail of unpaid leave and only 22% avail of more than four of the eight weeks to which they are entitled at present. In stark and simple terms, unpaid leave does not pay the mortgage.

We are not prepared to make employers contribute in respect of child care. Employers demand European-level participation rates of women in the workforce, yet we seem to be afraid to statutorily underpin career breaks, maternity leave and part-time work. The Government has been very generous to employers over almost nine years. There are a number of examples even in this budget. We had a very interesting discussion last night on the financial resolutions pertaining to tax remittances. The closing off of the loophole in this regard by financial resolution is calculated to save the State €100 million in lost income tax. We have been very generous in allowing people who earn more income than the rest of us to invest it in tax-efficient schemes to generate more wealth for themselves, yet we seem to be fearful of requiring employers to make their contribution to the critical issue of child care.

It is particularly disappointing that the budget does not address the issue of universal pre-school education. Universal pre-school education is a central plank in the Labour Party's child care policy, and for good reason. The social, economic and developmental advantages of pre-school education are enormous and it is now regarded internationally as a vital element in any serious attack on poverty and disadvantage. In a world where people will increasingly trade not on who they know but on what they know, the combined nurturing of children by family and society is the key to the future well-being of individuals and countries. The Government does not seem to believe our children are worthy of that investment.

I wish to say a few words about taxation. For some time, the Labour Party has been arguing that the main issue regarding taxation is one of fairness. Given the prosperity of our economy, there is no pressing requirement for increases in taxation. There are, however, deep structural inequalities in our tax code. The Government has presided over the accumulation of tax reliefs and incentives that have allowed the very wealthy in our society to pay little or no tax. Such was the anger provoked among the public that the Minister felt obliged to be seen to change the circumstances that obtained. However, it is by no means clear that he has done so. He stated:

I propose now to place an annual overall cap on the extent to which specific incentive reliefs can be availed of. The cap will apply to those with income over €250,000 per year. It will operate by reducing by half the amount of income that can be relieved from tax by certain specified tax reliefs. This measure will help eliminate the phenomenon of tax free millionaires and increase the effective rate of tax on those with high income towards a minimum of 20%.

Will the cap really eliminate the phenomenon of tax free millionaires and, if so, how? Unless one introduces a minimum effective tax rate whereby high earners, irrespective of the extent to which they avail of tax reliefs, are subject to a minimum tax liability, it surely remains the case that a person can continue to accumulate reliefs until he or she pays no tax. My party proposes that the minimum liability be 20%.

I do not know what "towards a minimum of 20%" means, nor do I know what is implied by "certain specified tax reliefs". Does it mean, for example, that one can no longer avail of the relief applicable to investment in car parks but that one can avail of it if investing in the private medical facilities on public campuses proposed by the Minister for Health and Children, Deputy Harney? None of this is spelled out and I envisage many accountants generating income that they might invest in car parks at the end of the process. The Department has again excelled itself in constructing a form of English than is entirely inaccessible and impenetrable in respect of matters about which it does not want us to know.

I do not understand how the system will work. Each individual relief may be capped but there will be no limit on the adding up of reliefs. I do not understand how this can be claimed to be a minimum effective rate of tax. If it were, the Minister would say so, rather than use carefully judged language about increasing the effective rate of tax "towards" a minimum of 20%. The people who get up at 6.30 a.m. do not have tax rates "towards" 42%, they just pay 42%. They also pay PRSI and levies and, as Deputy Kenny stated, they are now expected to pay tolls to come to work. They make these payments from modest incomes, which are substantially more modest as a result of the non-indexation of bands since the general election. They do not pay rates of tax "towards" any given percentage, they just pay, and so should the millionaires. It is clear from the Minister's budget that the millionaires will not do so. A whole new class of no-tax millionaires will be created through investment in private hospitals. They will be provided with land on the sites of public hospitals and with generous tax breaks. They will cherry-pick what is profitable to provide in the health service and leave the expensive and the difficult to the public sector. In the process they will drive up costs, drive up insurance bills and cause a migration of skilled labour from the public health service to these private institutions.

All this, we are told, arose from an accidental meeting between Mr. McCreevy and a constituent in Naas. This person just happened to suggest including a special section in the Finance Bill for those who wanted to build private hospitals. That was done and the Tánaiste and Minister for Health and Children, Deputy Harney, is building on that, thus aggravating further the existing two-tier system.

See this speech in context