Tony Killeen (Clare, Fianna Fail)

Tá áthas orm freisin go bhfuil deis agam caint ar an mbuiséad anseo anocht. This budget is responsible and sustainable and addresses the essential strategies required to ensure competitiveness. I am pleased that it addresses the regulatory and administrative burdens that posed a major problem for people in the small business sector. Some significant improvements have been made in that area.

The budget puts in place strategies that ensure our competitiveness. This year the extension and enhancement of the business expansion and seed capital schemes will cost €25 million in a full year and will contribute to developments in these areas. These schemes are a vital source of seed capital which is the lifeblood of start-up companies. They foster the development and growth of many small and medium sized enterprises, leading to the creation of quality employment opportunities.

There are also changes in the VAT registration threshold and corporation tax liability which will reduce the administrative and regulatory burden on the small business sector. The Government recognises the importance of research and development, and the enhancement of the research and development tax credit, estimated to cost €70 million a year, will further incentivise companies to engage in research and development. It will also encourage foreign direct investors to consider Ireland a good location for their research and development facilities and activities. The Government has invested quite significantly in this area in recent years although historically we had not grappled with it successfully. The emphasis for many years was on encouraging foreign direct investment and its attendant jobs which was welcome and successful. A total of 93,000 jobs are in foreign direct investment companies.

It is important for the future, however, that we have an indigenous research and development sector, all the more so if we can achieve it at multi-national level. They are increasingly showing a willingness to base some of their key research and development facilities here. The tie-up with third level institutions has been of critical importance in this area. Some previous speakers said that has not been as effective as it might be but the lead-in period from research and development is quite long and the benefits will be reaped between three and five years from now, or even further into the future, when Ireland's credibility as a location for research and development is properly established. That is a strategy we need to pursue if we are to be successful in this area.

As Minister of State with responsibility for labour affairs I am pleased that the changes in income tax will remove some 88,000 people from the tax net and help those who are unemployed to transfer to the active labour market. In a short period we have moved from having just under 1.1 million people in employment to just over 2 million.

That is the most dramatic increase in the workforce among our OECD partners. A critical factor in that achievement is the low level of tax on income. Ireland enjoys the second lowest tax wedge of all OECD countries. In this budget the increased credits, the widened bands and the rate cut to 41% will contribute to ensuring that we continue to move in that direction. Historically, we have learned that widened bands and much increased credits contribute substantially and much more dramatically to reducing the tax burden on workers to ensure that work pays. That is one of the critical strategies we need to embrace as we progress.

I am pleased the Minister guaranteed that if the national minimum wage is raised to the level recommended by the Labour Court, it too will remain outside the tax net, which is important for people working at that level. One of the claims made against the economy is that it makes the rich richer and the poor poorer. I was pleased to hear the results from the Irish Taxation Institute earlier which indicated that the benefits from the budget for the top 20% of earners averaged 2.5% while the benefits for the bottom 20% of earners was 9.5% on average. This confirms that the budget is strongly skewed in favour of those on lower incomes which is important in terms of ensuring parity across the workforce.

Interestingly, a recent European study showed that the top 20% of wealth owners in this country have just under five times as much wealth as those in the bottom 20%. The European average is 4.8%. We are moving quickly towards that point. Ten years ago, the top 20% were more than 5.2 times as wealthy as the bottom 20%. The difference is gradually being reduced and is coming close to the European average. This runs counter to what one would believe on reading commentary in this area which invariably suggests that wealth is gradually being repositioned in favour of those in the top 20%. That allegation is not borne out by recent research. The effect of the budget will be positive in this regard.

One of the areas to which people look in assessing a budget is that of social welfare payments. The Minister for Social and Family Affairs, Deputy Brennan, has a budget of over €15.3 billion. I cannot remember how much it was when Deputy Durkan was a Minister of State in that Department.

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