Joan Burton (Dublin West, Labour)

This budget constitutes a frank admission of economic incompetence on the part of the Minister for Finance and the Fianna Fáil-Progressive Democrats-Green Party coalition. That a Minister for Finance should think it necessary to change the stamp duty regime twice in six months is an extraordinary admission of failure. The mismanagement of the housing market is written all over the budget. The increased borrowing and limited tax and social welfare packages reflect the hit the Exchequer and the economy have taken from the property slump. The total allocation for improvements in the health service amounts to the equivalent of six days' spending on health.

On numerous occasions we warned the Government that allowing house prices to race ahead unchecked was making life impossible for buyers and that the economy was over-reliant on construction. However, it refused to listen and the sky is now dark with the chickens that are coming home to roost. This budget is an attempt to muddle through tougher times. It is not the new departure for a new era which the economy needs.

Among the headline changes of the budget, disability services see practically no change. In The Next Steps Forward, pensioners were promised €100 over five years, which is €20 per week. Today they receive €14 per week for contributory pensions and €12 for non-contributory. There is no improvement in medical card coverage and no fundamental reform of PRSI, which was a major element of the Taoiseach's pre-election promise in his Ard-Fheis speech. There is a small improvement in the income disregard for carers, which will be pretty well meaningless in the context of the inflation that faces them when they do their supermarket shopping.

What about the Green Party? In the spirit of Christmas, the Gordon Ramsay of the Government, the Minister of State with responsibility for food, Deputy Sargent, yesterday put up his tasty recipe for sprouts on his Department's website. I do not like them myself, but he obviously loves them. His instructions were to cover the pan and boil them briskly until the water is absorbed, add a knob of butter or margarine and keep an eye on them so that they do not burn at a later stage. What happened? The most green aspect of this budget is the cover of the budget document. The knob of butter is spread thinly over all the little social welfare increases. It is interesting to see that while Fianna Fáil are in hock to the builders, the Green Party seems to be going overboard on the Brussels sprouts.

The Minister was trying to juggle too many balls today. There were nods to the left, nods to the right, nods to prudence, nods to the public sector, nods to tighter spending controls and nods to greater efficiency. From this Government, a nod is as good as a wink. The Minister offered us a lot less in the package than the sum of its parts and an awful lot less than what the public is entitled to, as we enter far more turbulent times than we have experienced in the past 15 years. The Minister wants to reassure his party and the public, but he cannot escape the message contained in last Saturday night's White Paper and the grim message contained in the raw figures of declining tax revenues under almost every heading. Not since the 1980s has the graph of Exchequer revenues shown such a sharp dip, not even in the period of currency turbulence between 1992 and 1993. I am sure the Taoiseach must remember those times well, if only for those close and friendly meetings with his adviser and friend, Mr. Padraic O'Connor. As ever, leaders should beware the ides of March. This is also the first time since 1993 that the national debt to GDP ratio has gone up. Stevie Smith wrote a famous poem 50 years ago about a man thrashing about in stormy waters. Onlookers thought he was having a lark, but as the poem states, he was not waving but drowning. That describes the Minister for Finance perfectly today.

This Government no longer commands the economic agenda. It looks on helplessly as an economic storm looms over the horizon with no idea at all on how to come to grips with the new reality. Only a few short months ago, the same Minister offered voters a rosy scenario of our country's prospects. The Next Steps Forward threw caution to the wind with extravagant claims on tax, PRSI, pensions and living standards. Today's budget is a survey of what survives and a belated acknowledgement that we are in for a bumpier ride than was suggested to the public in May. Economic growth is on the slide. The Minister's forecast is for 3% at the beginning of the budget. I do not think he will be lucky enough to hit 3%, the way the housing market is at the moment. Every forecast is a little lower than the one before and nobody can rely on what the Minister says today. It will be adjusted a dozen times before we have another Budget Statement.

Meanwhile, inflation is set to remain stubbornly high and that is as much the fault of this Government's domestic policies as the fault of international conditions, such as high oil and commodity prices. For most people, the budget is about the cost of living and it has no good news on that front, and little prospect of better news for the time to come. Working families will not be getting similar pay rises to Ministers. Over 1 million of them will earn less in a whole year than the Taoiseach's proposed rise in salary of €38,000. These people will not have the luxury of being exempt from extra fuel and car taxes like the Ministers who are driven around in State cars. There is a wider gap than ever between what Ministers experience daily and the reality of belt tightening that families will have to endure. People in the ordinary economy are living in a parallel universe to members of this Government.

The proposed changes in stamp duty are really a humiliation for the Minister for Finance. In June, he brought in stamp duty reforms which he told us would restore stability and certainty to the housing market. He told us that the changes would be good for certainty, good for affordability and good for society. Today, he had to return to stamp duty for the second time in under six months with his tail between his legs. This is an admission of economic incompetence. The Minister has mismanaged and misjudged the housing market and the Exchequer borrowing he is announcing today is the direct result of that. The bungling of the stamp duty issue has been extraordinary. The flight from the housing market first began with the former Minister Michael McDowell's attention grabbing stunt. He declared that stamp duty could be abolished because the Government did not need the revenue. It was followed by months of inaction by the Government, followed by a badly constructed and inadequate reform last June. The Government did not realise that the problem with stamp duty was not simply about first-time buyers, but more especially about those trading up.

In the reform proposals for stamp duty put forward by the Labour Party in 2006 and before the election, we pointed to the difficulties for those who were trading up. These people had exhausted their first-time buyer's relief on buying an apartment, but five years later had one or two children and desperately needed to buy a family home. We told the Minister that was where one of the critical problems existed, but he refused to listen. Since then, the housing market has slumped and the Minister is now trying to rescue it from the wreckage of his policy.

Old habits die hard with this Minister. Somebody buying a second-hand house for €500,000 in the Dublin area will save €11,250, which is welcome. However, somebody buying a house for €2 million will save €28,750. That is the way all these reforms go. In the June reform, stamp duty for first-time buyers was abolished so that many of those who benefitted were very wealthy families able to spend over €1 million on houses for their children. With this new reform, the more one has, the better one does.

Things happen in the real world. There are oil shocks, climate shocks, wars and a sub-prime crisis. I think I was the first person to mention that latter term in this House. One of the journalists working here asked me what sub-prime meant. Now every junior bank clerk and first-year economics student knows all about it. Stuff happens. As former British Prime Minister Harold Macmillan said: "Events, dear boy, events." Plans for spending and taxation should take into account the major uncertainties that a frothy housing market generates for consumer demand here and across the developed world. One needs a contingency reserve in one's plans for what may happen and I do not see one in what I heard today. The changes in the housing market are a serious concern for many people, not just for the banks and financial institutions which are worried about the quality of their land and property lending.

Before the election the Minister and his party boosted the housing bubble as far as it could go. Now that the bubble has burst the consequences for many ordinary families may be severe. Although Irish house prices are falling, they remain extraordinarily high by international standards. In today's climate of much higher interest rates young people who want to enter the housing market cannot afford the €350,000 to €450,000 that is being demanded in our cities for modest one-bed and two-bed houses and apartments. Funding a mortgage cost of €1,600 per month on a home cost of approximately €350,000 is an enormous financial strain on most young people whose earnings have not kept pace with interest rate rises. The bursting of the housing bubble happened because the Government encouraged house prices to rise to ridiculous levels.

While house construction costs rose, they did not rise as fast as land prices. Crazy land prices for developers speculating in land fed into enormous price increases for modest family homes. Given the close relationship between Fianna Fáil and the developers, we cannot suggest that Fianna Fáil, the Minister for Finance and the Taoiseach did not know about this. They chose to put their heads in the sand and allow the market to be stoked higher. The Irish banks have been willing accomplices in allowing land for family housing to be bid up to crazy prices. Much of that speculation took place in an environment that was not only tax free, but in which the Minister and his predecessor created an endless range of unnecessary tax breaks for property investment.

The Minister talked about the school shortage but could not even force the builders to hand over sites for schools at current use value. He had to allow his friends in the building industry to demand top dollar for school sites.

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