Arthur Morgan (Louth, Sinn Fein)

A budget is not about winning elections. It is not even about making everybody happy nor is it about satisfying the tiny minority of privileged individuals who support the Progressive Democrats. It should be about understanding what is needed and meeting those needs where the revenue is available to do so, prioritising the least well off and ensuring high quality accessible public services to meet the needs of the population. Is that what the budget does? Does it prioritise the least well off? Do those on low and average incomes gain most? Is delivering public services a priority? Does the budget set down a marker to address the deficiencies in health care and housing? The answer is a resounding "No" to all these questions.

Many aspects of the budget involve smoke and mirrors. The Government is attempting to give the impression that it is doing things it is not. The Government parties would like us to think that those on low incomes are the main beneficiaries of the budget. While the lowest rates of social welfare, pensions and the minimum wage will increase, these are all long standing commitments, which were made before recent increases in the cost of living. They are, therefore, not sufficient to keep people out of poverty. Above all, these are deserved and overdue increases.

Top earners do not deserve the windfall that will result from the reduction in the top rate of income tax. Have they been paying more than their fair share of taxation? The Government has tried to wrap this measure up and present it to us as "rewarding work". Do those who are more than well rewarded deserve more than hard working people on low and middle incomes? High income earners will share a €1.25 billion personal tax package. They will receive the cumulative benefit of the increase in personal tax credits, the benefit of the widening of the standard tax band and they are the beneficiaries of the 1% reduction in the top rate. High income earners will gain the highest increases in weekly pay as a result of this budget. As IMPACT stated yesterday, they are "three-time winners" and if that is not enough, the Minister made a commitment to further reduce the top rate next year if returned to Government.

As my colleague Deputy Ó Caoláin said last night, a remarkable feature of the budget is that those earning the average industrial wage — €30,000 per annum — gain least per week from the budget. Workers on €30,000 per annum gain €8 per week compared to gains of at least twice as much per week by those earning more than €35,000. This budget clearly increases inequality between the low paid and the high paid. While those on the minimum wage are being taken out of the tax net, the key question is the increase in the minimum wage. ICTU had argued for a minimum wage of €9.03 while Sinn Féin had put forward a proposal for €9.30. The minimum wage will only be increased to €8.65 and this will be staggered in two instalments in January and July.

It is disappointing that the Minister did not increase the restrictions on the use of specified tax reliefs for high income individuals. Restrictions announced in last year's budget did not go far enough. Ensuring that high income individuals pay their fair share of taxation demands that such restrictions be significantly increased. No high income individual should be able to write off more than 10% of his or her earnings through such exemptions. The Minister seems to think he has done enough on this matter but he has not.

I welcome the introduction of the higher rate health levy of 2.5% for high income individuals earning more than €100,000. It is an acknowledgment that high income earners do not pay their fair share. That is not their fault because Government policy is the problem. Sinn Féin has long argued for the introduction of a higher rate of income tax for earners on or above €100,000. It is surprising that the Minister would choose to increase the health levy for higher income earners while failing to remove the PRSI ceiling. The PRSI ceiling is fundamentally unjust, as it means that those whose income exceeds the ceiling pay a smaller proportion of gross income in PRSI than those earning less than the ceiling. The increase in the health levy will raise €34 million a year whereas the abolition of the PRSI ceiling would raise €282 million. This money would have augmented the social insurance fund and funded more significant increases in welfare rates or pensions. It could have been used to ensure better redundancy entitlements for workers in vulnerable sectors whose jobs are increasingly moving to low cost economies.

Another astounding feature of this budget is that it fails to help those hurt by increasing prices, particularly low income families who can least absorb these increases. The €4 increase in the fuel allowance is paltry. At a time of unprecedented energy price hikes, those struggling to afford to heat their homes will be shocked by this minuscule increase. While the Minister announced an increase of €20 million for the greener homes residential renewable energy scheme, no specific measures were introduced to help low income families move to renewable energy systems. Sinn Féin has called for full cost renewable energy grants for those on low incomes. The costs involved in installing renewable energy systems remain prohibitive for those on low incomes while these grants cover only a small proportion of the cost.

The Minister made no announcement yesterday regarding the warmer homes scheme, which provides funding for insulation and other energy efficiency measures in approximately 2,000 eligible homes each year. Sinn Féin proposed additional funding to enable the scheme to meet the needs of 10,000 homes a year, which would have cost only €8.45million. It would have reduced heating costs for low incomes families suffering as a result of ESB and gas price hikes and reduced energy wastage but the Minister chose to do nothing. A total of 62,000 families live in persistent fuel poverty and the Minister has utterly failed them.

He was at pains to give the impression that the environment is a priority for the Government. The Minister tried to convince us that the purchase of a further €270 million worth of carbon allowances is an environmental measure but that is a stunt. Taxpayers should not have to bear this cost. Had the Government acted to reduce emissions, it would not be forced to purchase these allowances. Ireland should aim beyond the Kyoto Agreement, which merely represents a minimum level with which all states should comply.

At first the changes in VRT sounded promising. Sinn Féin has long demanded that VRT be based on emissions output. However, the Government will instead engage in consultation on this and it will not do anything. The higher rate of motor tax announced for high emitting vehicles will not be introduced for more than a year and, even then, it will apply to vehicles registered after January 2008. Why is the Government purposely giving people a year's notice of this measure? It amounts to giving people a year to purchase their SUV and face no penalty in increased motor tax, which is ludicrous.

Lest Sinn Féin be accused of being entirely negative, the Government has done much for small business and indigenous business in the budget, which is welcome. Sinn Féin has consistently argued for the Government to shift the focus from foreign direct investment to supporting the development and expansion of indigenous industry. It is clear that there is a need to develop indigenous industry. The economy has become dangerously over reliant on both FDI and sectors such a construction, which cannot continue indefinitely. We welcome the increased focus on research and development. The levels of research and development in Irish industry have not been what they should have been. However, if the Government was serious about supporting small business, as it pretends to be, it would not allow the disgraceful way that the agenda of liberalising the energy market is damaging small business. ESB prices are being pushed up to entice others into the market to compete with the ESB. Prices are being pushed up to bring in competition, supposedly to bring prices down. It does not make sense. The increases announced by the ESB will hit low-income people hardest. The increases demonstrate that the regulator is not upholding its duty to take into account the needs of rural customers, the disadvantaged and the elderly. The Commission for Energy Regulation is not serving the interest of the people or of business.

Before I conclude, I will make an important point in respect of spending in the health service. The Minister announced record spending of €14.3 billion on health next year. We have had record spending every year during the lifetime of this Government, but it has failed miserably to deliver efficient and equitable health care services to the people. Money is being poured into a two-tier system that discriminates against the patient dependent on the public hospital system. The health strategy has been binned. The Minister for Health and Children's silly and illogical private hospital collocation plan is starting to unravel with the news that the proposed hospitals at Letterkenny and Galway will not go ahead. The Government and the HSE cannot agree how many additional hospital beds we need. Public money should be spent in the public system only, with equal access for all based on need alone.

I hope the Government will recognise the shortcomings it announced with yesterday's budget. I look forward to a change of Government this time next year when, hopefully, those low-income families can be prioritised and we can get some more equality into the system.

See this speech in context