Joan Burton (Dublin West, Labour)

I move amendmentNo. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"notes the Pre-Budget Outlook incorporating Pre-Budget Estimates for Public Services 2008, published by the Tánaiste and Minister for Finance on 18 October, 2007 and having regard to the statement by the Minister that 2007 represented a turning point for the Irish economy, calls on the Government to take all necessary steps to:

maintain infrastructure development as provided for in the National Development Plan;

continue investment in the health and education systems; and

protect the living standards of those on low incomes."

I have no doubt the anthem for this year's budget will be "after the ball is over" because that is the dilemma we are facing. Our grandmothers were fond of telling us that doctors differ and patients die. I wonder what they would say about economists and the Department of Finance forecast. One prediction is for zero growth in 2008, others including the Department of Finance predict 3% and the Sunday Independent for its own curious political agenda plumps for the 5.5% forecast given by the wise experts of NCB. Internationally the IMF is honest enough to admit evidence of a significant slowdown and a confirmation of the credit crunch that has left the financial markets in sustained turmoil for months — and it is not getting any better.

It has not gone away, you know, just because there are no queues in front of banks. Just today Standard & Poor's had some salutary warnings about Irish growth prospects should the downturn in housing construction persist with implications for the credit ratings of Irish construction firms and banks because they are so inextricably entwined together. So who is right? It is like doctors who are a trifle confused about the proper strength of medication to be given to the patient. God help the patient who must trust their judgment and God help the Minister who must rely on what the dismal scientists have to tell him.

However, that is as much sympathy as the Minister will get from me in the context of the budget. If he has budget difficulties, the Minister has only himself to blame. He took a strictly political view this time last year and opted to spend at a rate that could not be repeated. He then, no doubt reluctantly, allowed his Taoiseach to throw caution to the winds and make profligate promise after promise in the run up to the general election in May. Looking at the Fianna Fáil general election promises, the taxation commitments for 2008 come to more than €1 billion and its spending promises total €888 million. That is nearly €2 billion in promises for 2008. The Minister is responsible for standing over that. Promises were made of €300 pensions, lower taxes for everyone and significant reductions in PRSI. Now after the ball is over the Minister is facing up to a headache. As that song goes it is "many the hopes that have vanished after the ball". The Minister might ask for the Solpadeine quickly because that is what he seems to need from the economic side.

Today it is more than the hopes of a jilted lover that have vanished. The reputation of the Minister and his party for economic wizardry and competence has vanished also. The Minister, perhaps in an unguarded moment in a press conference last week, said that he could not be expected to manage the wind, that we could not shape the wind and that we could just hope it was on our backs. The Minister is managing the nation's economic fortunes in the hope that it will be all right on the night. It used to be a wing and prayer but today Fianna Fáil does not do the prayer, faith, certainly not charity and, therefore, what we are left with is hope. The Minister conceded that the favourable international winds of recent years allowed him to spend so politically but he must recognise the winds have changed and his scope to deliver growth is severely hampered. I cannot believe the Taoiseach could announce such a set of election promises in March without the full knowledge that oil prices would remain high, housing construction was slowing and would remain stagnant for a long time and no significant foreign investment project announcement was on the cards for Ireland in 2007.

This is the man who boasts of his immense intelligence network that lets him know about anything that is stirring. Could he or the Minister for Finance not have known, given their close association with house builders, how stagnant the market was and the automatic chain reaction that would result, affecting the Exchequer and the economy generally? We can only conclude that they set out to deceive and they succeeded in that exercise in the crucial months before the country went to the polls. I cannot have sympathy for the Minister if he is faced with headaches in framing the budget. He brought them on himself promoting expectations of continued growth in the spring and, with equal sincerity, promoting pretty much the exact opposite now that the leaves are falling in the autumn.

I do not propose to engage in an exercise that talks down the economy, as that would be a futile exercise for anyone foolish enough to attempt it, but we must be realistic about significant trends and challenges. The Opposition has a proper duty to put the Minister on the spot to test his capacity to handle difficult times as well as boom times. I refer to a number of the trends and studied ambiguities within the pre-budget report, one of which concerns investment inflow. Suddenly Ireland has fallen out of favour. In 2006 the State experienced a respectable flow of foreign direct investment and a high rating in international league tables for such super mobile investment but in 2007 good news has not been reported with no major announcement to boast of and clear indications that these funds are looking elsewhere for a more favourable home than Ireland offers, despite its generous tax regime.

The CSO states the complete value of foreign investment has fallen by no less than €13 billion in 2006. Overall at €170 billion, it is still a very good figure but a further reduction in value would seriously erode confidence. The loss of value will mean a significant switch in our economic climate. The earliest years of the Celtic tiger era were fuelled primarily by foreign direct investment and not by tax cuts. The Progressive Democrats Party is wrong in this regard because the tax cuts followed the period of growth initiated by my colleague, Deputy Quinn. In 2007, this sector's contribution to economic growth has reduced significantly and there is little evidence the Minister has a back up policy to turn this around.

The low corporation tax regime, important though it is, no longer has the cachet it once had and many other countries offer packages that are as good, and often more competitive, than Ireland. Investors must look at Ireland and wonder why key skills in science and engineering have such a low status that few students are attracted to pursue associated courses in our universities. How can the Government expect companies that rely on these skills to invest here when young people demonstrate such little interest in acquiring them? The economic Ministers and the Minister for Education and Science do not pay enough attention to this issue. However, every August we witness ritual hand wringing by them about the scarcity of graduates in science and related disciplines.

A precedent for this was mentioned recently. In 1957 the US was shaken out of its complacency when the Russians sent the Sputnik into space. Within a short period, the US education system got its act together and upgraded its attention to science, maths and engineering with spectacular rewards, which it still reaps. The Government should examine how the US did this and the painstaking approach adopted to reverse the decline in science education. The Minister and myself debated this issue in Donegal last July but the Minister for Education and Science still has not indicated that she is even aware of this issue, even though she is the lead Minister in the development of science and technology in education.

I refer to a number of other issues. Ten days ago Fingal County Council announced an ambitious programme of more than a dozen primary and post-primary schools to cope with the massive increase in population in areas such as Castleknock, Blanchardstown, Mulhuddart, Balbriggan and Swords. It is unusual in my experience of government in Ireland — I am sure the Department of Finance was as surprised as I was — for a local authority to announce significant capital commitments for new schools, given the current expenditure implications for spending on staff and so on. The commitment to new schools is absolutely essential. Has this additional capital commitment, which featured prominently on radio and television, been provided for in the context of the population increases to which the Minister referred in framing the pre-budget outlook? Where is it included in the Estimates? What is the status of capital commitments on school funding? Will we have to wait until budget day or later to find out the detail of the schools building programme and the consequent staffing commitments for the new schools? Is the Minister for Education and Science even aware of this commitment? Has she paid the Minister for Finance a visit to discuss Fingal County Council's correct identification of areas that need new schools?

A further area of commitment on the part of Fianna Fáil during the general election campaign involved a climate change programme and a significant reduction in carbon emissions. The pre-budget document gives no indication as to the Minister's thinking on these important issues. I do not know whether he intends to propose tax changes that will reduce carbon emissions and encourage people to save energy. It is a limited document when one considers this is one of the critical questions not only facing Ireland but the world. The general understanding following the election was that a serious climate change and carbon reduction programme was one of the cornerstones of the deal between Fianna Fáil and the Green Party to form a coalition Government. However, the pre-budget document is silent on what the deal will mean on budget day. This is an important issue because it features prominently in the programme for Government.

The Government also made a significant commitment, which I strongly support, regarding overseas development aid. As the economy slows, we need to know what will be the impact of this commitment on an ongoing basis on the Exchequer. The commitments on climate change, ODA and the construction and staffing of new schools arising from population increases are as significant as the commitment to the national development plan but if the Minister is facing a levelling off or a reduction in expenditure capacity, we need to know how he proposes to approach them. The pre-budget outlook does not tell us very much about his thinking. In the run-up to the election, the Minister's approach to spending was almost entirely political. Now that the budgetary situation has turned around, he must act in the national interest.

The Minister asked about the Labour Party's commitments. In the event of cutbacks, we want to ensure those who are marginalised and disadvantaged are not further reduced in circumstances. We seek to maintain the commitments made to the development of key infrastructure, which forms the basis of future economic growth. Now is the time to review areas where administrative overheads and vanity projects have led to wasteful spending. The issue for the Minister and for Fianna Fáil is whether they have the bottle to adopt this type of approach.

In the course of the general election, the Minister made specific commitments to lower both the higher and standard tax rates. He promised to reduce significantly and reform PRSI, not just over a five-year period but on an annual basis. He further promised to index bands and allowances for PAYE taxpayers. The first line of the section on tax promises in Fianna Fáil's election manifesto referred to indexation, tax bands, PAYE and personal credits. Fianna Fáil promised to undertake all these reforms within the expected tax take.

Now that the Minister has acknowledged that the tax take for next year is likely to decline even further than it did this year, the question arises as to which of these promises will be jettisoned on budget day? In terms of ordinary workers and their families, the key objective the Minister must deliver is to maintain the value of income tax credits, bands and allowances in line with inflation. If he fails to do so, there will be a repeat of the situation from 2002 to 2007, where the failure to expand tax credits, bands and allowances for inflation meant they were effectively frozen and thus constituted the largest stealth tax of all for ordinary workers and their families. Some 50 stealth taxes were introduced in those early years of cutbacks under the Minister's predecessor, Charlie McCreevy. The most significant of these was the failure to index the various tax credits and bands.

Where does the Minister stand on this? What is the use of a pre-budget outlook if he is not prepared to impart his thinking on the pre-election promises that must now be curtailed? He may hope the electorate will have forgotten these broken promises by the time of the next election in 2012. This time, however, it will be a case of: "Fool me once, shame on you; fool me twice, shame on me." We will look closely at the package announced by the Minister on budget day to see whether he takes the electorate for a complete bunch of suckers now that the election is safely over.

The recent chaos in the health services has led to significant suffering for many individuals. I do not know whether this is a tactic pour encourager les autres , that is, to ensure other overspending Departments get back into line as quickly as possible. The Labour Party amendment proposes that in examining the pre-budget outlook, the emphasis, looking forward to budget day, should be on maintaining critical infrastructure investment, protecting the marginalised, poorest and most disadvantaged from cuts, and protecting key areas such as health and education.

The Government has put forward proposals to change and reduce funding for community crèches. These operate in some of the poorest areas in all our constituencies. Now that the EU funding for this service is due to end later this month, my understanding is that the Government proposes to revert to offering funding for crèche places only to those in receipt of social welfare assistance. This means that families on the most minimal incomes could soon face commercial crèche prices for community crèche places. These can be as high as €200 per week in Dublin. This is a recipe for introducing another poverty trap. The pre-budget outlook is silent as to the intentions of the Government in this area.

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