Deirdre Clune (Cork South Central, Fine Gael)

I wish to focus on a number of issues, one being the negative impact of the budget on middle class families with young children and those with older dependent children. I have been contacted by a number of people today and I have listened to radio coverage of the issues and read e-mails, reports and newspaper articles. The underlying theme is that people knew this would be a tough budget and that they would be hit in their pockets, but what is driving people insane is that the budget does not seems to contain a stimulus package for the economy. There is no emphasis in it on tackling waste in Departments, on ensuring efficiency measures are introduced or that the lack of competitiveness, one of the major obstacles facing the economy, is addressed.

A constituent, whom I know, e-mailed me this morning. His household has one income and his salary is €77,000 per annum. He works for a multinational company in Cork and he works 60 hours a week. He has one child. He returned from abroad to work here because, like many of us, he wanted to rear his child here and to put them through our education system. He had to buy a house in an inflated property market. He calculates that he owes 90% of his mortgage and he will be paying that for another 30 years. He estimates that the negativity equity of his house is some 23%. He has been hit with the income levy of 4%, the health levy of 5%, his mortgage interest relief has been withdrawn and he has increased PRSI contributions.

Another man also contacted me. He has four children. He earns €70,000 per annum and he reckons that the budgetary measures will cost him €6,750, just less than €7,000 per annum.

The removal of the early child care supplement will impact on the parents of young children. Middle income earners who have children who hope to go on to third level in September will also be badly hit by the increase in registration fees from €900 to €1,500, an increase of €600 per student. That increase in that fee does not yet appear to have registered with people, but it will have a major impact.

People are willing to do their bit, but for them the budget package does not contain imaginative measures or measures to generate jobs creation or a stimulus in the economy. The Government is taking money out of the economy. Therefore, people will have not have money in their pockets and will not be spending. This will impact on the retail sector. It will be one of the hardest hit sectors of the economy this year. We do not need to see economic returns or figures to appreciate that; we need only note the trade on the main street of every town. Those of us who walk through main streets of our constituencies at the weekend note the number of shops that have closed. People who are trying to run businesses find themselves in a dire economic situation. They have reluctantly had to let staff go or they have had to ask them to go on short-time work, to work part-time hours or to take holidays to try to balance their books. They did this in the hope that this budget would have contained something to address the situation but, unfortunately, it did not.

Fine Gael's pre-budget proposals suggested that tax increases should represent one third of the emphasis in the budget, with two thirds of the emphasis being on spending, but the Government has put two thirds of the emphasis on tax increases. It does not contain any imaginative or stimulus measures. The Minister for Finance admitted that increasing the VAT rate by 0.5% was a mistake. Why did he not address that in the budget? Why did he not introduce an imaginative measure such as reducing the lower tax rate to 10% for a short period? He should have reduced the VAT rate on services to make it more attractive for people to get small jobs done in their homes and to encourage such services. That would have been a small but effective measure.

A proposal such as exempting employers from PRSI payments for new employees for a period of up to two years would have encouraged employers to take on new employees and to create job prospects if the people felt like dipping their toe in the market. The budget does not reflect imaginative thinking and does not place any emphasis on job creation or job protection measures. Rather than being about jobs and job creation, the soft option has been taken and the Government's approach has been to simply collect money and to tax its way out of the problem.

In my view this has been a very disappointing budget. It has done nothing to give confidence to people and let them know there is a way out of our present difficulties. If we had been given some type of stimulus package in the budget, perhaps we could have kickstarted the economy. In fact, all it has done is stifle economic activity and we will pay the price for its negative impact.

See this speech in context