Kieran O'Donnell (Limerick East, Fine Gael)

Although I am speaking in a political forum, I do not wish to be overly political when I say that the pre-budget outlook that has been presented to the House represents an abandonment of the pre-election promises of the Government parties. Before the recent general election, Fianna Fáil promised to increase the old age pension to €300, to cut the standard rate of tax to 18%, to cut the top rate of tax by 1% and to halve PRSI from 4% to 2%. It was agreed at Cabinet level that 100 additional gardaí would be deployed in the Limerick East area, but we have not seen the extra gardaí. It was suggested that the Criminal Assets Bureau would be established in Limerick, but that has not happened.

The Tánaiste and Minister for Finance is talking down the economy, in effect. When the new Dáil met for the first time at the end of June, the Government introduced a Bill relating to stamp duty. The Tánaiste suggested at that time that Fine Gael was talking down the economy, but he is doing likewise at present. Deputy Mansergh argued that the Minister's stamp duty changes have worked, but they have been an absolute disaster. They have assisted just 2,000 first-time buyers and failed to reform stamp duty in the manner that is necessary. Ministers for Finance are charged with instilling confidence in the economy. In the previous Government, the then Minister for Justice, Equality and Law Reform, former Deputy Michael McDowell, stuck his head out and spoke about stamp duty reform. However he put his head back down and then every so often stuck his head out again when he thought it might be of political benefit but nothing was done. This created a lack of confidence in the market. When the opportunity arose for the Minister, Deputy Cowen, to amend the stamp duty legislation in order to make it equitable for families wishing to trade up and move house because of an increase in family size, the Minister ignored the opportunity. Stamp duty as it stands is an unfair tax and needs to be reformed. Whether the Government admits it or not, the housing market is stagnant. The Minister needs to step up to the plate and reform stamp duty.

This pre-budget outlook shows that the Government has relied too much on the boom in the residential housing sector for the growth in tax revenues and has neglected exports which are projected to increase in 2008 by only 6%. The pre-budget outlook refers to lack of competitiveness as having a significant effect on exports and there is a decline in manufacturing industry. We became too reliant on the construction industry bubble. The pre-budget outlook bases an increase of €2 million in tax revenues in 2008, which is an increase of 4.2%, on a total of 60,000 houses being completed in 2008. If the number of house completions is 50,000 or as low as 40,000, as predicted by some experts, this reduction of 10,000 completions will make a difference of €10 billion in revenue. This affects the amount of stamp duty, VAT and capital gains tax raised from the housing sector. Based on what was projected, stamp duty returns are down €400 million and this is having a significant impact.

The role of the Minister for Finance is to instil confidence in the economy but Deputy Cowen has not done this. He has failed to reform stamp duty and this was critical for the construction industry. Deputy Ardagh in his contribution stated he would like to see a short, sharp reduction in the number of houses being completed rather than this being carried out over a sustained period. I suggest Deputy Ardagh tell that to the young people whose houses will become negative equity overnight. A mechanism must be found to stabilise house prices so that young people can afford to buy houses. The last thing we want is a massive reduction in the number of houses and negative equity kicking in. This should not be allowed to happen.

I refer to table six of the pre-budget outlook on page A17 which shows an entry headed, Indicative Unallocated Provisions, which means contingencies. A total of €1.5 billion for 2008 is shown, the same figure as for 2007. This is to increase to €2.5 billion in 2009 and will increase again to €3.5 billion in 2010, an increase of €1 billion each year. The total in 2010 will be 2.3 times what it was in 2007 yet the overall Government expenditure has only increased by 4%, 1.4 times. This contingency — call it what one wishes — will be used by Fianna Fáil as a war chest nearer the time of an election. This contingency seems to be increasing every year as an overall percentage. There must be some control imposed in this area. The Minister has made a provision for unallocated capital and this is to be welcomed. He is making full provision for what is being provided by the NDP. I note his commitment made prior to the election that he would properly fund the NDP. I support that commitment but I have a problem with the level of the contingencies.

On the issue of value for money, the Minister proposes to increase health expenditure by 7%, €1.1 billion extra, making a total of €14.7 billion. I refer to the Comptroller and Auditor General's report for 2007, pages 136 and 141. The Comptroller and Auditor General is highly critical of the accounting and reporting systems in the HSE. Furthermore, this is endorsed by one of the Minister's officials, an Accounting Officer in the Department of Finance, who states that the system is grossly inadequate. Has the Minister gone to all the various Departments and asked about their accounting and reporting systems? The cutbacks in the health service are as a result of the shortfall of €200 million. This should not have happened and should have been highlighted months ago. The Government's job is to secure value for money for the taxpayer. Does the Government know whether the money it is doling out is being expended on administrative rather than on frontline staff? The reporting systems in all Departments must be adequate.

The accounting system in the HSE is no better than that in a corner shop. I mean no disrespect to corner shops which do not require such a sophisticated system as is required in the HSE. Money is being squandered by the HSE in various administrative areas. I predict that come late December, telephone calls will be made to the regional divisions of the HSE from HSE corporate headquarters telling them to spend any unexpended moneys. This has happened every year to date and I see no reason it will not happen this year. We are now in the month of October and elderly people are facing into the winter months but cutbacks have been announced across the health service and the effects are seen in the accident and emergency departments, in the speech therapy service and in the disability sector even though the 2005 disability Act provided for an assessment of needs.

I ask the Minister for Finance to reintroduce roll-over relief on capital gains tax which is an important issue and to carry out proper reform of stamp duty. I remind him that pension reform is vital. Older people should be entitled to receive their pensions on time and he should ensure proper pension provision for the future.

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