Richard Bruton (Dublin North Central, Fine Gael)

I congratulate the Minister on the opportunity to introduce the second Finance Bill. While it contains some positive provisions, which I welcome, it contains some negative ones, which I do not welcome. Given the nature of these debates, the time restriction and others reasons, I will concentrate more on the negative aspects.

The Bill provides for a further extension of the various property-based tax reliefs. This is happening, even though the Government has known for years that these tax reliefs had outlived their usefulness. It was already evident in 2000 that these reliefs had run out of rope. Naturally, the Minister for Finance at the time left it until after the general election to introduce his decision to curb them and bring them to an end. He did so at the end of 2002, shortly after the election. These reliefs were to come definitively to an end in 2004. However, the Government changed its mind a year later, when it extended the timescale from 2004 to 2006. We are now seeing a further extension, albeit on a partial basis, to 2008. An idea conceived of in 2002 to bring these tax reliefs to an end because they were being abused will be strung out over a subsequent six year period before they will be discontinued.

No doubt the Minister for Finance will say he did not know definitively that these reliefs were such bad value for money and targeted at the well-off. However, that rings very hollow. It was clear from an early stage that these provisions were very focused on an industry that was already extremely strong, and the so-called social benefits were diminishing. It was also very clear that it was particularly high income people who were benefiting. I sought in the past to put a cap of €100,000 on what any individual could take by way of these tax reliefs, which was rejected by the Government.

This aspect is not news. For the Government, the Taoiseach or anyone else to come into the Dáil and say they did not know about it and they are acting in a timely way is not true and the evidence does not support it. While the Minister for Finance knew in 2001 that these tax reliefs needed to be curbed, successive renewals and extensions were given without any effort to carry out the necessary evaluation. Yesterday's report must be viewed in this context. The Minister cannot claim plaudits at this stage for phasing out these reliefs four years after the Minister and the Government signalled they needed to be discontinued.

The amount of money involved is mind-boggling. I recall the Revenue Commissions referring to €200 million at most. The figure for the past five years is €1.6 billion, which is a huge sum of money. It is greater than the spending of at least five Departments. If one contrasts the scrutiny by the Minister's Department of any of the five Departments, compared to the scrutiny which was not carried out of the expenditure of this money year in, year out, one will become aware of the extraordinary contrast in the way the Department of Finance considers spending as against taxation. However, it is coming out of taxpayers' pockets in the same way, which is not acceptable.

It is scary to read in the Indecon report that the net tax forgone was more than double the total tax benefits across the 11 schemes examined. We were paying far too much for the benefits. We were paying twice as much for the benefits as should have been the case, which was a very bad return. The study indicated that while €4 billion has been invested under these schemes, another €6 billion will be invested under the various extensions the Minister for Finance introduced when he started to roll it forward from 2002 and 2004. He has brought €6.5 billion extra into these schemes in the period after he identified they should be discontinued. An avalanche of money has been invested in these schemes in that time. The Government facilitated this and it cannot be defended.

Its impact on tax equity has been very severe. The Minister is trying to say that people who criticise it are pretending wealthy people do not pay tax, which is not the issue. We are all aware that most wealthy people pay tax, but a small minority have used these schemes to the hilt. Unfortunately, even with the Minister's concession, I do not believe he is going far enough to deal with the issue. One can still invest €250,000 in a scheme, plus €250,000 through a pension fund. Some €500,000 is still allowable without a cent of tax being paid. It is only after that amount the Minister will put some restriction on these investors, which is an extraordinarily high income. At that level, one is talking about a tiny minority of people with mega money, which does not square up to the ordinary person's view of tax equity. Even though the Minister said he wants to achieve tax equity, this is not a practical way of achieving it.

The Minister said on the radio this morning, and again here today, that he agrees there should be a sunset clause and a cost-benefit analysis before any extension of tax relief is introduced. However, he appears to be saying, "Make me virtuous, Lord, but not just yet", which is the problem. The Minister decided to extend the film relief in the Finance Bill. I do not know whether it is a good or bad idea. His predecessor thought it was a bad idea. He produced some sort of cost-benefit analysis from the Revenue Commissioners to back up his view that it was a bad idea. He pulled the rug from under people who had certain expectations, but there was a universal belief across all the benches that one could not pull the rug from under people.

The Minister is introducing a new concession without carrying out any cost-benefit analysis. I did not hear anyone saying that the film industry deserves more reliefs. I have heard people saying that it is difficult to bring film-makers here, but that is a different issue. Cost-benefit analyses must be carried out before introducing any concessions.

The Minister said that he will extend the tax reliefs to private nursing homes and child care facilities for another few years. He has not proposed an end to this. The Minister has not indicated if it will be for three years, four years or whatever, nor has he said we need a proper cost benefit analysis. I do not know if the Minister has read them but I have looked hard at the cost benefit analyses that were carried out and they do not ring true as being the sort of analysis we ought to have to make sure that the concessions to private hospitals and nursing homes are in the context of the public policy we want to develop in terms of a strong public health system that is equitable. That means, for example, that we should promote public private partnerships, contract out opportunities to deliver within the public system, but by private practitioners. This is not what we are doing here. We are saying we will give tax subsidies to the private sector to do its own thing, which would not necessarily be consistent with public health policy.

We have seen problems with nursing homes and there are clearly public concerns in this regard. If we are to go forward with this approach, and the jury is out on whether it is a good or bad idea — I suspect it is not a great idea — we ought to have the kind of real analysis that is required in the context of the type of health policy we wish to pursue and ensure that it is the right way to go. It may be — I will not prejudge it — but the Minister has not done that and if he was genuine about wanting to see this, he would start now. I accept that one of his colleagues in Government believes it is the right thing to do but we need to see that stood up.

The Minister made a barbed comment in regard to the pension relief issue to the effect that it is extraordinary that I would be critical of this. Quite honestly, I am critical of this, for the reason I outlined earlier. The Minister is willing to give people who have substantial income, €32,000 every year for their pension fund. It is not just a once off payment for people who are well placed enough to set up pension funds because he has proposed to index this system so that the sum would increase every year. In contrast, he is saying to people who are at the bottom of the scale, who do not have any pension fund, that he will put in, at most, €2,500. The contrast between those two positions is dramatic.

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