Paul McGrath (Westmeath, Fine Gael)

I thank my colleague, Deputy Deenihan, for sharing his time with me.

Listening to some Fianna Fáil backbenchers earlier, I felt I was living in a different area from them. Some of them seemed to lose the run of themselves because they were talking about the budget being family-friendly and farmer-friendly. I will combine the two and point out a couple of items in the budget which are anything but family-friendly.

While I welcome the increased income disregard for the leasing of farmland, I remain disgusted that the Government will not change the system in order that one can obtain tax relief in leasing a farm to a family member. If farmer Murphy in County Waterford or County Westmeath wants to retire and hand over his farm to his son, he cannot lease it to him and gain the advantage he would get if he leased the farm to someone down the road, a total stranger. If we are trying to encourage farming and young people to enter it, as well as succession, it is very strange that a young farmer cannot lease the farm from his parents and see them receive the same tax relief as they would if they leased it to a stranger. That is awful. I looked up to see why this happens and when it first happened. The reason given for the ruling is that the provision is in place to avoid abuse. Who introduced this anti-family rule in respect of farm leasing? No one other than the Taoiseach when he was Minister for Finance. He brought forward the rule. That is disappointing.

Deputy Finneran told us what a great budget this was for young farmers and others. Has he gone deaf to what farmers are saying? Does he not hear the clamour from farmers with regard to EU directives, about which we heard much last night and will hear more tonight? Unfortunately, because of time pressures, I will not be able to join in the debate.

There is one aspect of the directive which has not received much mention, namely, the cap on nitrogen usage levels on farms. This evening I spoke to a well informed farmer who told me that one of the greatest difficulties in the introduction of the nitrates directive was the way in which the spreading of nitrogen on farms would be curtailed, that it would bring to an end commercial farming or play a major part in its ending. That will have a further effect on farm families.

Let us look again at the tax credits awarded in the budget. The Minister made much of the fact that he was increasing the tax credit for the coming year from €29,400 to €32,000. He must have forgotten that he had not increased it for a long time and that just to keep pace with wage increases and so on he needed to bring the figure up to €34,000.

We are failing to hear about a certain matter from the Government backbenches. The Minister of State is a very busy man and is aware, just as I am, of the following. Let us imagine two families living beside each other, one with two earners and the other with one. Let us say income between the two is €64,000. However, the household with one earner is penalised to the tune of €140 per week, or €7,000 per annum. It is penalised because the second member will not go out to work. Is that fair? It is anti-family. It is driving people out to work. That is not right.

I am glad the Minister for Finance has joined us because I want to mention a couple of particular items. In the budget he clamped down on investment in pension funds. That is a complex area which is difficult to fully understand. In fairness, he has tried to counter some of the difficulties and — let us be honest — abuses which have emerged. The approved retirement funds provision was introduced by the Minister's predecessor in 1999 and there was a big uptake but, of course, people began to abuse it. As the case studies show, some invested about €100 million in such funds. Who first designed this system? Did the designers not see that such difficulties could arise? Was it copied from some other country which had introduced it and, if so, did they not learn from its experience, or was it only the Irish Paddy who was going to abuse the system?

I understand the reason the Minister wants to close the gate. He is right and I agree with him. However, there are many at the lower end of the approved retirement fund investments scale who do not have €100 million invested in them but will now be penalised by virtue of this rolling tax which the Minister will impose on them, whereby 1%, 2% and 3% will be taken. This will affect those who are not well off but comfortable; individuals who have planned well for their retirement. It will affect them in how they plan for nursing home care and so on. While I agree with the Minister in introducing a cap at the top end, I do not agree with him in hitting those who have modest sums in such accounts. Before the Minister finalises it, perhaps he could examine this matter again. I have come across people with relatively modest sums. They made a wise investment. They did not abuse the system but they are annoyed because they are being clobbered because others abused the system. It is not fair.

The second matter I will ask the Minister to examine is the disclosure on bank accounts. I do not know how it will work or be enforced. Quite frankly, the Minister is using a sledgehammer——

See this speech in context