Joan Burton (Dublin West, Labour)

I have read scores of articles by people who argue that child benefit payments are of little importance, including journalists and academics who argue it would make no difference if the payment were restricted. Most of these articles were written by men, none of whom could state absolutely that he spoke for his wife or partner. I have yet to meet a mother of young or teenage children who says casually that child benefit has no importance to her. Perhaps I do not mix in circles where this benefit is a trifle. Certainly, I do not represent a constituency that places no value on the advantages of universal child benefit.

Almost every day I hear the voice of Marian Finucane on radio advertisements for the Simon Community, as I am sure everyone here does. She tells us that the current crisis has brought community services to breaking point. I hear the same message from Professor John Monaghan of the Society of St. Vincent de Paul. Are these societies lying? Is the Simon Community faking its message this Christmas? Is the Society of St. Vincent de Paul out of touch? Are they saying social welfare in Ireland is so generous that it can be cut? I have yet to hear a person who is genuinely in touch with ordinary families in the community who will say up-front that social welfare in the Ireland of 2009 is excessively generous and ought to be cut.

The Minister, Deputy Lenihan, should note that in this budget he looked for soft options and he believes child benefit is a soft option. He believes the recipients of social welfare are soft options. The Minister had a choice. There are thousands of tax exiles in Ireland, super-wealthy individuals. They boast of their contributions to charity and good causes. That is all very admirable but in a republic it is no substitute for paying one's fair share of income tax. I welcome the measure but I note the very careful phrasing of the reference to the possibility of a levy on tax exiles. We will know more when we examine the finance Bill.

There are poor bankers - God love them - struggling through the business pages with the awfulness of €500,000 per year. They do not have to contribute anything extra as a result of this budget in so far as I figure it. I am not aware of from where their extra contribution comes. The Minister, Deputy Lenihan, had a simple choice today of who to face down. Would it be the tax exiles, the poor bankers on only €500,000 per year or the mothers of Ireland? He made the choice and it says a good deal about the Minister, his values and his priorities.

Child benefit has been a success story, lifting the most vulnerable group of children out of consistent poverty. I congratulate Fianna Fáil on past increases in child benefit, as does everyone in the Opposition. Child benefit has succeeded in lifting children out of poverty because there was no means test. Ireland did away with tax allowances for children many decades ago. Universal child benefit has been the principal policy to help families with children and the principal recognition by society that raising children deserved financial support and recognition by the Government. As Members are aware, in the tax code a person with two children pays the same tax as a person with no children. A family or couple with three children pays the same tax as a couple with no children. However, we recognise children and the cost to their parents of rearing them through child benefit. I am perplexed that every time in the recent series of crises, budget adjustments and emergency measures that the Minister appears to pick on children.

The Minister increased class sizes. He slowed down the building of schools. He slashed support for child care. He abandoned plans for preschool education. We know that during all the years of our prosperity, we succeeded in lifting one child in every five who lived in consistent poverty in Ireland out of that poverty, from just below the poverty line to just above it. That is an important success in this country, because we are not a very equal society. Income is distributed very high up and there are very many people congregated at very low levels of income.

Why did the Minister dump a winning formula? Those who advocate social welfare cuts have it back to front; instead of cutting social benefits, we should protect them, especially for those at the bottom of the benefit scale. In this crisis, precisely because it is universal and efficient, social welfare offers an immense advantage in a recovery strategy. This is acknowledged by people in the Treasury and the Federal Reserve in the United States. Social welfare spending in European economies is a unique stimulus package that allows people on the very bottom to be able to spend. Today, the Minister has cut their spending power across a significant spectrum. The sum of €8 a week does not sound too much to people in this House but it is an awful lot to a widow. Likewise, a €4 cut in child benefit does not sound too much in this House but it is an awful lot to people who are buying sliced pans and sausages as the mainstay of their shopping trolley to feed their children. When one goes shopping, one can see the differential in different trolleys; who has the fresh meat and who has the sausages and the sliced pans piled up in the trolley.

It is not a good day for the people with the cheaper trolley. Let us not fool ourselves that it is; it will be tough on them. They will have to make hard choices about their children. Protecting benefits is simple, direct and progressive. It is a highly efficient way to prevent poverty and sustain purchasing power for the vulnerable in our population. Reducing benefits will save money. A rough calculation of the budget indicates that €778 million of the €4 billion cut is from the social welfare package and approximately €500 million has been cut from education. Those are the headings that are taking the brunt of today's cuts. It cannot be good for the economy that the Minister has cut purchasing power and it is certainly not good for the health of our society at this point.

One thing that scares me about the Minister is that he seems to be crushed by economic dogma that essentially comes from the right. He is a pleasant man but he seems wedded to a right-wing view of society and recovery. I prefer to think outside the box. The dogma that is coming at us, day in day out, is from the same people who cheered on the calamitous building boom for years and ignored the early warning signs of a banking collapse. I cannot understand why so many economists in this country deride the idea of stimulus. Why are many European economies showing some modest signs of recovery while ours continues to lag behind? The Minister promised the previous Fianna Fáil Ard-Fheis that, on his watch, Ireland would be the first country out of recession. That has not happened and it is not going to happen.

Why are we still in deep recession with growth prospects stubbornly elusive? It is because the Government's policies are very much at variance with the formulas pursued by many others. Unlike countries that have poured money into consumer demand and public projects, the Government has preferred to give our money to banks in the hope that some of it trickles through to the general economy and to businesses and enterprises; trickle down, that old favourite tune of the right wing. It has not done so and there is no prospect of any change in bank policies. Good luck to the new committee set up by the Minister. We met with Mr. Boucher and Mr. Sheehy for several hours approximately two weeks ago and they stonewalled on every single demand from Deputies on all sides about credit flow. Mr. Sheehy was the most frank because he is close to retirement. He just said that it is not going to happen. All that has happened is that bank debt has been converted into taxpayer debt with catastrophic effect on our sovereign debt capacity.

All around Ireland businesses are closing. Businesses need customers but customers need confidence to get out and spend. Confidence is the most elusive but most vital ingredient of economic policy. One cannot bottle it or buy it and there is precious little in today's budget that will inject any ray of confidence into the households of this country. I am sure the Taoiseach is aware of an amazing fact, namely, that there are savings in this country of €81.5 billion. The savings have been galloping up, just like in Japan in its lost decade, and in Germany for a long period, which is where much of our cheap credit came from. Germans did not want to buy new kitchens and the Japanese did not want to buy anything new at all. We are doing now what they did; we are saving more.

As a result, customers have stopped going to shops. People are nervous about the future. They have stopped going to shops in the Republic because they know they are being ripped off, for example, on the sterling exchange rate. There is footfall in shopping centres and shopping malls in Dublin and its outskirts and in towns around the country. People walk around the shops but one sees very few shopping bags. In previous years at Christmas time people were laden down with shopping bags. If one walks over to Grafton Street one will see only one or two stores with big crowds. The budget ought to have been directed at those people. Let us imagine if just 10% or 20% of those savings that are building up were released for spending into the economy. It would transform the Minister's take from VAT and other taxes. However, the budget had just one focus and that was just too narrow for the times we live in. The economy certainly needs medicine. The virus injected by successive Fianna Fáil Ministers for Finance into our economic bloodstream has made painful medicine a necessity, but the patient needs nutrition as well as medicine to stage a full recovery. Today's budget is strong on medicine but sadly thin on nutrition.

I wish to address the issue of fairness and tax. Fianna Fáil made a conscious decision today not to in any way change the tax burden, except to a limited degree, on high income earners. Fairness is probably the most vital ingredient that can unite people in the challenge we face to restore national solvency. Fairness unites; the Minister's package will divide. More than ever, we need a one-Ireland mentality, a one-nation vision that can demand burden sharing on the understanding that it is shared by all in proportion to their ability to take the pain.

I have been appalled by the vicious smearing of public sector staff in recent weeks in which Ministers have connived. If there is to be a blame game, they want to have someone else in the firing line. They have let loose the dogs of war on every public employee. Why should the private sector go down this cul-de-sac? It is private sector businesses who benefit most from public spending. It is private businesses that build the schools, supply the hospitals and sell computer services to the State. The State is the biggest customer of indigenous private business. The campaign to denigrate the public sector is no great help to business. In a way, it is biting the hand that feeds one. If one cuts public funds, it is private business that takes the biggest hit. Let us make no mistake; we are genuinely all in this together. The Government that divides our people at a time of crisis does not deserve to govern.

I said in the House recently that there was a lesson to be learned from the peace process. Nothing is agreed until everything is agreed, and we all jump together. The word "all" is one of the simplest in the English language. It means the public sector, every rank and every grade. It means the professions in the law, medicine and accountancy. It means the well-paid executives in the banks, commerce and industry. It means those who did exceptionally well from the boom years, of whom there are many. Did the budget ask a fair amount of sacrifice from all those people? I do not think it did. Many of the tax shelters remain firmly in place. A feature from a recent edition of The Sunday Business Post promoted a holiday home scheme in County Wicklow. It is in a beautiful part of the garden county, however, the focus of the feature is not the gorgeous scenery but the attractive tax breaks that come with the purchase. There is no sign there of any let up in the availability of this and other kinds of breaks that so corrode our tax code of its progressive character and fairness.

The reports of the Revenue Commissioners still tell amazing tales of high earners with incredibly low effective tax rates. The restrictions in the 2006 budget only scratched the surface. I welcome the further restriction today. However, I remind the House of what Mr. Cliff Taylor wrote in the The Sunday Business Post last Sunday.

A study of those who were aggressively claiming tax reliefs - many of them related to property - showed that the €500,000-plus income group [that reference is to persons who each have an income of 500,000 or more] had increased their tax contribution, but just to the bare 20 per cent.

The Minister has proposed to increase that by another 10%, but as he said at the start of his contribution, the marginal rate of tax on the average civil servant or private sector worker who earns above €60,000, €37,000 in the case of a single person, is approximately 53% and their average rate of tax is much higher than what the Minister is proposing today.

It is an ancient tale. When these people call for low taxes, they often mean simply no taxes. If we take the relief for pensions, we had startling and valuable information from the ESRI last week on this topic which revealed a staggering €2.9 billion cost for this heading on its own. That is €2.9 billion per year in tax reliefs for pensions. Deputies should know that the top 20% of earners take two thirds of all the pension-related tax reliefs. A miserable 1.1% goes to the bottom 20% of earners. We allow a pension pot to go as high as €5.4 billion. In the UK, it is less than half of that. Why not reduce the limit to €3 million? It would still be very generous. We allow tax free lump sums up to € 1.3 million. That could be capped at €150,000 or €200,000. The ESRI identified savings of €500 million.

The Labour Party did not go that far in its pre-budget plan. We suggest a yield from savings - reductions for the people at the very top - of €330 million. As long as these tax expenditures remain such a dominant feature of tax policy, the goal of tax justice will remain a fantasy. The measures taken so far to remedy this injustice have been half-hearted in the extreme and this tepid approach has been repeated in today's budget.

This Government has no reputation to lose but it has choices to make. Tax justice decisions are always hard to make - hard choices that Ministers pretend to make but which they never stop dodging. The Minister for Finance dodged many of the hard choices today.

One of the difficulties is that our economy is experiencing the worst recession most people alive have ever experienced or, I hope, will ever experience. It is already worse than the 1980s and it is not over yet, certainly not in this country. Fortunately, the remedial measures adopted by the European Central Bank and other central banks have so far staved off a full slide from recession into total depression. That might change if the ECB takes a harder line on credit or on interest rates. It could also change if we go too fast down the road that the Minister has mapped out today.

The consequence of cutting back on everything in sight is to push the country into a depression. That is a mad recipe for rising unemployment, social disruption, deeper poverty and falling living standards. The philosophy behind this budget has the potential to push our economy into a death spiral of decline. Above all else, there is no clear message of hope from this budget for the hundreds of thousands of people on the live register and the 75,000 additional people who Fianna Fáil plan to have on the live register next year.

Taxes are down and the deficit is out of hand. What does Government do? It cuts spending power in the economy even more. Immediately, consumers spend less and less. By cutting welfare payments and child benefit, families have less to spend and tax yields drop further. That is the death spiral and it haunts this budget like the ghost of Mr. Micawber.

We have an economic crisis on our hands, we have an unemployment crisis and we have a credit famine. However, this Minister is dealing with these crises solely as national debt and banking crises. That is too narrow a focus.

There is a character in Roman mythology called Janus who showed two faces to the world looking in opposite directions at the same time. This Government is like Janus. One face tries to be the responsible and prudent manager of the nation's wealth, stabilising the budget and coming to grips with a new cold financial reality. Then we have the opposite face, the obedient agent of a reckless gang that brought this country to bankruptcy and ruin.

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