Joan Burton (Dublin West, Labour)

Rising rents help only investors. We need houses as homes for families. It is notable that tax relief for people renting increased by 11%, but by 31% for people renting out a room. The Minister is still trying to have it both ways. He is trying to keep the investors, above all else, happy, but he is not prioritising families that want to buy homes to live in. Given the way the market is turning, in favour of investors as opposed to families and individuals buying to live in an area, we have a problem in every new estate in every part of the country with an over-dominance of investors who are churning tenants. The consequence in many new estates is that communities cannot be built up. The Minister should talk to his local GAA club. If the tenants change every year, how does one develop community? The Minister has not got that balance right. He still tries to have it both ways. Last year he promised to close some of the loopholes in stamp duty that allowed property developers to avoid paying stamp duty on some large transactions. He failed to proceed with that. He listens more to the big developers than to the people who want to buy a home to live in.

Today's budget bears more than a passing resemblance to those of 2003 and 2004 after the 2002 general election. It is standard operational procedure for Fianna Fáil to throw money around before an election and then to retrench, cut back and tax in the immediate aftermath. We are to have a revival of that musical from the McCreevy days. The growth rate of the economy has slowed significantly. It is one thing to present an optimistic picture, but another to be in denial. We are coming down from 14% spending growth and pre-election largesse. The Minister said today he hopes to keep growth in current spending at approximately 8.2%. We need a different approach to fiscal policy to face up to such different circumstances. Unfortunately we do not know and will not know how the corrective measures proposed by the Minister will impact. This year we saw the impact of the HSE trying to live more moderately within its budget. The consequences of the cutbacks were not pleasant.

Even as expenditure growth is reduced to a more sustainable level we must have regard to key economic and social objectives. It is unfortunate though not surprising that the Minister failed in that task. Ireland may be heading for a period of slower growth. It will take a number of years for the imbalances built up under this Government's stewardship to unwind. However even a lower growth rate, skilfully managed, should yield a dividend. In most European countries a growth rate of 2.5% to 3%, which the Minister projects, would yield social improvements and a social dividend for families.

What are we getting for the 8% increase in current spending? There is a fairly minimal social welfare budget and most Departments are being told to soldier on for another year, without any extra resources for improvements in service. The allocation to the fire services in the Department of the Environment, Heritage and Local Government failed to provide for a full local fire service in Bray, even after the tragedy that town experienced recently.

The vast bulk of the expenditure plans in this document are devoted to keeping things as they are. In other words, it is the Government's intention to simply plough on, doing things the way it has always done them. There will be plenty of rhetoric about the need for other people to be realistic and more productive, but there will be no serious endeavour to change the way the Government conducts its affairs so that real progress can be seen from this 8% spending growth.

The Minister has provided for a significant increase in capital spending at 12%. We have urged a more ambitious capital investment programme for years, in public transport and research. We welcome the additional resources for the national development programme, but I wish I could have more confidence in the Cabinet's capacity to deliver the projects on time and within budget. I can cite two cases in point. Ireland lags dangerously behind as regards broadband access. The CEO of eBay, a big employer in my constituency, tells of his "embarrassment" when he has to reveal Ireland's weakness in this area to his international colleagues. The percentage of Irish businesses and homes with access to broadband is one of the lowest among Europe's leading states. More importantly, he highlights how this might seriously reduce Ireland's chances in securing new foreign investment projects.

I want to also mention the annual bugbear of integrated ticketing, an essential precondition for the operation of improved public transport. Tens of millions have been spent with no end product to date. It has not moved forward one iota in the past 12 months, so who is in charge? Most major cities operate one, even where there is a mixed delivery of services by private and public operators. Munich, Rome and Lisbon operate smart cards that offer seamless transfer from buses to trains to trams. I wonder whether the Taoiseach has ever used the metro link of his beloved Manchester to get to Old Trafford, or does he get his friends there to lay on a limousine service?

This is where aspiration gives way to cold reality. Extra billions may be allocated to the capital programme, but will it all disappear in extra costs, overheads, consultancy and service charges? The record of this bunch of Ministers in the delivery of services on time and inside budget is hardly inspiring. Capital investment is not the only investment governments need to make. They also need to invest in communities and the people for both economic and social reasons. The Fianna Fáil manifesto at the last election contained a number of worthwhile initiatives, which if implemented, would mark real social progress. I do not pretend that all of these plans can be implemented straight away. However, the budget could have begun the process of implementing the most important of them. We were promised 4,000 new teachers for our schools, a doubling of the capitation grant for primary schools. In the area of health, we were promised 1,500 extra hospital beds and 2,000 hospital consultants. There were to be 2,000 extra gardaí on our streets. In social welfare there were to be further increases in eligibility as regards the carer's allowance. I do not regard what has been done today as coming anywhere near fulfilling that promise. On and on it goes, not to mention all the tax promises that were made in the Ard-Fheis speech, when the Taoiseach threw money around like confetti.

I do not expect the Minister to implement all these plans straight away, as I have said, but he could make a start. Along with most Deputies, I would love to see some of those 2,000 gardaí on the beat in my constituency in the future. I could certainly find work for the 4,000 teachers and the 2,000 hospital consultants would make a real difference to the health services. How many of them will be employed this year and what planning is being done to ramp up teacher training?

The Minister claims his budget leaves a strong financial balance sheet. The jury is out on that claim, but the social balance sheet is not as strong as it ought to be, in any sense. As a country, Ireland must get past the antiquated notion that all capital spending is investment and all current spending is consumption. The knowledge economy we aspire to is driven by education, which is crying out for investment at almost every level. There is an urgent requirement for more capitation funding in primary schools, a need for targeted reductions in class sizes and we need specific measures to deal with literacy and numeracy problems.

Addressing many of these issues will require current spending, but it is ultimately investment in the productive capacity of the economy. Studies show that it is the quality of teaching that most influences the quality of outcome in educational achievement. There is no better investment in the future of our country, for example, than to set out a plan to provide universal free pre-school education. The return on that investment would be enormous, but this budget does not recognise that type of expenditure as an investment at all. I find it surprising that Ministers so consistently refuse to listen to the National Competitive Council's advice on this issue. It is a Government agency that is asked for its advice year in year out. It points out that those countries with enviable records in economic competitiveness set great store by the provision of early childhood education. It is a topic of lively debate in the USA, for example. This winter's headline book from Harvard University Press is called The Sandbox Investment. I would like the Taoiseach to read it with the same care he has devoted to Robert Putnam's book, Bowling Alone. The Harvard book argues that pre-school investment has a priceless payoff. The author states simply that the kids first policy is smart economics. Putting kids and education first is smart economics, according to Harvard, this year.

There are more than 878,000 workers, as per page C22 in the budget, on such low incomes that they do not qualify to pay tax at all. These are people for whom a winter 'flu without a medical card or a doctor-only card becomes a nightmare, particularly if they have one or two children and must make multiple visits to a doctor at €50 per time, along with another €30 for medication. If any member of such a family gets sick for more than a three-week period, medical costs for just the 'flu could easily amount to €300, the equivalent of a full week's net wages. The Society of St. Vincent de Paul refers to the many people, the 878,000 in this category, as the working poor. These are people in work on low wages. They are not paying much tax or PRSI, but they have to pay doctor's bills, for school trips, rent or a mortgage on an affordable house if lucky enough to get one.

Child dependant allowances are critical for such families. I welcome the increases today, small as they are. However, they should be paid at least on a fortnightly basis. The method of paying them on a monthly basis and the early years supplement on a quarterly basis does not help the budgeting of families on the margin, who need every penny on a regular basis. Family income supplement, FIS, has to be made more accessible for such families. A whole range of Government agencies, such as the National Economic and Social Council, have researched this and suggested, in line with proposals made by the Labour Party a long time ago, a supplementary child benefit payment or a refundable tax credit. The Government has been stalling, perhaps because such a proposal would be costly, and I have no doubt there would be administrative difficulties to be overcome.

Nonetheless, such a payment could make a significant impact on the lives of the one in nine children who live in poverty. In this respect, one of the groups most at risk of poverty is children in lone parent families. The one parent family payment is structured in such as way as to make it harder for people to move into financial self-sufficiency while also making it harder to form long-term relationships.

Social welfare penalises young people who want to get married or live together openly. The penalty ranges from €70 and upwards per week to more than €1,200 per month if rent allowance is involved. Some time ago, the Minister promised to put an end to or modify the co-habitation rule because it makes no sense to encourage parents to live apart when they could be living together and caring for their children.

What about individualisation? The Minister also presides over this tax penalty on a parent who wants to stay at home with children, particularly during the baby years, or on someone who may want to stay at home and care for an older relative. I recall the Minister promised this time last year, as well as in his manifesto, that he would address the issue. At present, a married couple where only one person works pays an extra €6,240 per year in taxation. I did the maths on the changes quickly and after this budget the penalty will increase to €6,270 per year. A two income couple will pay €6,270 per year less in tax if their income is €70,800 or higher. This is the legacy of Charlie McCreevy with regard to individualisation and the penalty on choice for families who may want to care for their children full-time at home.

Last year, the Minister introduced a modified table of who pays income tax at the higher rate. Today's figures show a shift up from 19.8% last year to 21.58% of families who pay tax at the 41% rate. Even on the modified tables the Minister now provides on the people who will drift into the 41% bracket, this is an increase of 66,000 people. This is because the changes in the bands and credits are not and will not be sufficient to provide for the increase in wage inflation expected next year. More and more people, particularly young single people earning more than €35,000, will pay tax at 41% if they receive a bonus or an overtime payment. They will also pay PRSI so they will continue to be heavily targeted by the Government.

The Government proposes to use €50 million of taxpayers money in 2008 to pay fines to the EU Commission because Ireland is above the emissions target. We pay higher electricity prices to the ESB so it can buy emission allowances because it plans to emit so much more CO2 than the allowance it received in the emissions trading scheme. If the Government had developed renewable energy properly instead of frustrating it at every turn, renewable energy would be producing much more electricity than it does at present.

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