Enda Kenny (Mayo, Fine Gael)

They introduced three-year budgets for all spending ministries to enable longer-term spending. UK ministries are given full end-year flexibility to carry forward any underspend from one year to the next so that wasteful year end splurges of money merely to get it spent are eliminated. Some areas in the Irish public sector, I understand, now receive cheques and payments for work they have not yet done, simply because agencies and elements of Government Departments are unable to spend the money allocated to them in 2007. We have a situation where Irish public sector managers still face, in many cases, a "spend it or lose it" choice at the end of each year.

The British introduced a resource accounting and budgeting system to capture accurately the full running costs of public services, including the value of assets, and to sharpen management incentives. In contrast, Irish public sector managers still do not account for the value or use of the assets under their control. The British introduced systematic, transparent outcome focused performance management systems in the form of public service agreements between the UK Treasury and line spending ministries. In contrast here the Government has only this year introduced annual output statements by Departments, few of which contain any concrete target for efficiency or performance and are not linked to resource allocation in the budget.

In short, Fianna Fáil-led Governments, spoiled by the property taxes that amounted to phenomenal figures from the debt-driven housing boom, avoided the hard decisions and new approaches being taken by other governments. Instead they stuck to the soft option politics of throwing money at every public service problem. After ten years in office the Government now joins that solemn chorus calling for wage restraint and public sector reform. It has announced a new efficiency review, to be carried out in 2008. However, when it comes to its own interests, there is no demand for reform and efficiency, but rather enormous pay increases, equivalent to €600 a week, with no matching performance improvement, as against the €14 for the single mother in Sligo this morning who, when asked what she thought of that increase, said "big deal".

Four new committees and three Ministers of State satisfied political demands in all the entourages. We can no longer afford these types of double standards and empty rhetoric about the need to achieve better value for money. Radical reform is not on the agenda of this Government. It just keeps doing the same thing, going back to the Taoiseach's basic ethics, namely, to get in here and stay here. To have any credibility whatsoever, the new efficiency review has to start by suspending the big pay increases for Ministers and senior public sector managers, making them conditional on the performances and efficiencies delivered. I guarantee, in two months time, when price increases have come in again and the budget is long-forgotten, people will remember that this Government, at a weekend, embraced the recommendations for higher pay for Ministers and higher public servants without any reference to performance, efficiency, output or standards, while everybody else could pay the price.

There is nothing in this budget for benchmarking. Obviously, that will kick in in 2009 and may well cost €300 million to €500 million — we do not know until the recommendations come out in January. The Minister for Finance should insist that every public body should independently deliver audited efficiency improvements of at least 2% during 2008. What is in his report is meaningless and there will be no increased efficiencies in the HSE or within any Government Department, given the way this is phrased. He should institute an immediate audit of every agency with the aim of achieving real far-reaching rationalisation. He should have held back €500 million, requiring bodies to bid for that new resource on the basis of delivering best practice at the frontline.

It would be childish not to welcome the improvements in pension and other social welfare benefit payments announced yesterday by Deputy Cowen, and indeed over successive budgets. Of course these measures are welcome. Even after the increases, however, one must reflect that the entire State pension for 2008 will still be less than one third of the pay increase now being accepted by the Taoiseach and Ministers. I look at the broken promises in this document as regards taxation, PRSI and all the rest, a point made by Deputy Reilly. We are now carrying out an audit, which I hope will be more accurate than the one conducted as regards the medical card for over-70s. The limit is now €184, so that a social welfare allocation of €197.80 could conceivably disqualify an applicant from receiving a medical card. Together with the charges now coming in, this means the Government has let down hundreds of thousands of people. The Government knew this was coming. Carrying out a blind ended audit is simply more waffle.

This budget is highly conservative when it comes to tax reform. Gone are the promises of PRSI reform and the promise to reduce the standard rate in 2008, which was in Fianna Fáil's election manifesto. Gone is the top rate of tax promised by Deputy Cowen in his last budget. It is only a source of some amusement now that the one tax that was reformed yesterday was the measure the Minister for Finance had completely opposed. I witnessed his body language, words and aggression last May or June against this tax, and it was incredible. The Department of Finance never wanted anything to do with stamp duty. Whether the claims by the builders, who certainly got around Fianna Fáil last weekend, worked, they certainly have had their day, because the tax is being reformed. I cannot complain about that because Fine Gael, and indeed the Labour Party, had a very clear document about reform of stamp duty. That reform, however, was to be introduced at a time when confidence was still very high and it would not have waned like it has now. What has happened is akin to a particular make of car that was imported 20 years ago, where there were problems with the petrol tank. The internal paint on those cars began to peel off if the level of petrol, or confidence, were to run low. When it did, elements of that paint got stuck in the filters. Even when the car was filled with petrol afterwards, it still never moved as it had originally.

Confidence has ebbed out of the property market. In a desperate move, where he was completely and utterly opposed previously, the Minister now introduces stamp duty reforms. While that will move some houses in terms of contracts being dealt with, it will not restore the level of confidence the Government had hoped for. In fact, when builders or developers are now faced with development charges, with the acquisition of land at more than €1 million per acre in some places, the cost for them of producing houses will be a figure below which they cannot sell.

People may feel stamp duty reform will bring major benefits, but I doubt it, given the international perspective and the uncertainty in banks with regard to interest rates and the ability to pay back mortgages. Serious issues surround first-time buyers getting on the property ladder. These issues include the cost of land and servicing land and the lack of real Government policy to provide for serviced land in sufficient quantities to reduce costs.

The point-blank refusal during the year of the Minister for Finance, Deputy Cowen, to have anything to do with stamp duty reform now seems hypocritical in the extreme. This is the second time the Minister has been done down on this matter from his point of view. I believe this budget was changed over the weekend and there was no serious intent to reform stamp duty until the figures became perfectly obvious during the past ten days. Perhaps the big builders and developers got around the Government last weekend.

The promises made with regard to tax and PRSI were broken. Back are the stealth charges and charges which were a feature of tax policy in the previous administration. The threshold for the drugs repayment scheme increased by €5, accident and emergency unit and hospital charges increased by 10%, motor tax rose by 10% and the employee PRSI ceiling rose by €1,900. The budget failed to fully index income tax credits and bands against earnings. These are all direct stealth charges, particularly against the middle-income group which will now be forced to pay more. As well as dragging more workers into the top rate of tax, the effect of these stealth charges and taxes will be to increase the rate of inflation by 20% next year, putting further pressure on living standards for those on low incomes. It will also undermine national competitiveness.

I am concerned about the drop-off in the level of corporate taxes now available to the Government. I do not have the details of the figures so I do not know whether the increase in exports we experienced this year was due to expenditure on research and development available to international firms here but being spent abroad. When this detail becomes available it will be interesting to see why a fall-off occurred in the level of corporate tax paid in view of the fact that exports increased in 2007.

Seven years ago, the national climate change strategy committed to the reform of VRT and carbon levies to reduce Ireland's greenhouse gas emissions. For seven years, the Government did nothing about this while 500,000 new houses were built, in many cases in areas which meant people had to travel 50 miles, 60 miles or 70 miles to work, which led to 600,000 new cars on the road. There was a 55 minute delay on the road from the west this morning and it is like that every morning. The projections for car use by 2020 is that it will rise to approximately 3 million.

No consideration was given to emissions or commuter comfort and the Government locked Ireland into unsustainable energy uses for years to come. The Government has made no attempt to reach the Kyoto targets set for us. We now wonder why we must borrow large sums of money to pay our way out of the emissions commitments this country made under the Kyoto Protocol.

I welcome the changes in VRT. Why would I not do so? Fine Gael proposed these changes two years ago. The Government acts only when it is late and when the potential benefits of early action have long since been diluted. This happened with stamp duty and VRT reform.

The Minister for Finance, Deputy Cowen, is not here this morning. If he were serious about building a platform for this country's future, why were difficult decisions left by the wayside in the budget? It is a soft option to borrow money, balance the books and keep it going as best one can. In recent weeks, the Government faced two motions of no confidence in the Taoiseach and the Minister for Health and Children. This budget will not restore the level of confidence people need.

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