Michael D Higgins (Galway West, Labour)

I welcome the opportunity to speak about the budget and the context in which it was presented. It is important that we address rather than evade the consequences of this budget. That it proposes an adjustment of €6 billion even while the interest bill on our borrowings is €5.1 billion as a result of adding the problems in our banking system to the deficit and current borrowing tells one a great deal.

It is important to be truthful about what has failed and the origin of the difficulties in which we find ourselves immersed. They are not the problems of a functioning real economy, which thankfully is still in prospect. They are entirely the consequence of the irresponsible gambling that passed as banking. They were exacerbated by a failure of governance and a moral irresponsibility that will forever stain the reputation of professions such as auditing and accountancy, which were formerly regarded as operating to inviolable standards. I refer to the signing off of accounts. The failure of the State flows from the Secretary General of the Department of Finance through the Governor of the Central Bank and the Financial Regulator. At some stage we must be able to assure the public that we are moving into a new culture of regulation, responsibility, accountability and transparency.

Deputy Noonan referred this morning to simplistic notions of right and left. It is simply a fact that the regulation with a light touch advocated by the former Minister for Finance, Mr. McCreevy, and the light regulation described by the neoliberals of the Chicago school are concepts which come from the right. It is rare that one hears an argument from the left in support of deregulation or such light regulation as makes the destruction of the banking system possible. Deputy Noonan may not acknowledge it but there is a difference between the left and the right. The left recognises the social, the case for redistribution and the cohesive power of redistribution in establishing citizenship. The right, however, makes its case from the perspective of radical individualism and usually expresses itself in the Reagonomics of advocating that individuals' should be permitted to decide how they spend their money. That is the origin of the disaster in which we find ourselves and the result was an ugly, greedy, ostentatious and uncultured kind of expenditure. It is interesting to observe how the right reacts. I am sure the Minister of State at the Department of Foreign Affairs, Deputy Peter Power, was as appalled as I by the suggestion that we should not pay a penny in overseas aid until we balance our budget, which was made to The Irish Times by a distinguished Irish entrepreneur and philanthropist. This scandalous suggestion totally ignores the damage speculative gambling has done to Ireland's reputation. Our reputation has been saved by our overseas development aid programmes and peacekeeping operations, as well as by our writers and those who put genius into the version of Ireland they have delivered abroad. The damage to our reputation was done by professional people who lacked morals and bankers who lacked ethics.

The Labour Party is often asked for its suggestions. The issues to which Deputy Rabbitte directed our attention were discussed at a recent seminar organised by the policy institute at Trinity College Dublin to launch a report, Ireland's Tax Expenditure System: International Comparisons and a Reform Agenda, co-authored by Micheál Collins and Mary Walsh. Anyone who reads the report will note its estimate of the annual cost of Ireland's tax expenditure, including the property related expenditure to which the Minister, Deputy Hanafin, referred. As this expenditure is contracted over several years, the cost in tax foregone will continue beyond next year. There was a choice in this, however. The Government could have closed down the allowances immediately or else suspended them until 2015.

The total cost of maintaining the current allowances for the blind, widows and carers is €90 million. Before the sensitivities of Government Deputies start firing on all cylinders, they should ask themselves how it is republican to make the blind, those on invalidity benefits and carers suffer the consequence of actions of those involved in the banking sector. The estimated cost of the expenditure is set out in table 2 of the policy institute report. The OECD's figures on the top ten countries for tax expenditure as a percentage of GDP are set out in table 4 of the report. The figure for the United Kingdom is 8.651% but Ireland is close behind at 5.642%. One might have begun by investigating the impact of the various tax expenditures on the general structure of taxation. The Trinity paper quotes from the OECD paper of 2010.

Aspects of tax expenditures can cause the resulting complexity of the whole to exceed the sum of the complexity of the parts, in public perception as well as reality. As legal provisions, regulations, instructions and forms are piled upon one another, the body of tax wisdom needed to navigate the system can grow beyond the capacity of many non-experts. The marginal added provisions, even if they do not apply to a particular taxpayer, obscure that taxpayer's field of vision of what he or she needs to know. From a simple systems perspective, the potential interactions among additional tax expenditures could grow geometrically as more are added.

The Trinity paper gives the example of the Irish seed capital scheme, designed to refund prior tax paid by unemployed taxpayers to enable them to set up as self-employed, "which requires navigation skills to chart 52 pages of complex legislation".

If the Government said, "Look, we are in a tough place", it could, then, look at the place from which the great defects in the structure of tax and the economy began, which is among the people who have been taking the benefits.

Let me go back to the consequences of taking €8 off the meagre blind pension, for example. The way to judge that is to look at the consequences of taking that proportion out of a person's disposable income. On radio this morning with the Minister for Social Protection, Deputy Ó Cuív, I said the issue is that every cent of these low incomes is accounted for. The sum of €8 is not what counts but what it means as a proportion of disposable income. Then one places it side by side with the additional costs and then one considers a dependant in the household.

I watched the Minister for Finance respond to these kinds of arguments made by people like me. He said, "Look at the small number of people who are paying most of the tax". Let him realise that they are paying the tax because they are able to pay it and are in a position to do so. They are not a precious group of people whose sensitivities are so great that they cannot be asked to pay more. The other side of the issue, as the Trinity paper shows, is that they have a large raft of loopholes and hundreds of quasi moral professionals advising them on how to milk them. It is not the people on the blind pension, invalidity payment or the minimum wage, or any of those who are now to be dragged into the tax net, who have enjoyed all of these perks. The high earners and high taxpayers are the people who wined and dined with bankers, who were sending out messages to the public saying they were under-borrowed.

We in the Labour Party have been asked where we stand. Let us hear it from the two larger parties also. Is it that they want to go back to that space, from 2000 onward, from which they departed, or are they willing to move to a new space in which they will have new structures and new versions of professional accountability eliminating different kinds of tax concessions and so on? We will answer that question. That is what is in our publications, but let us hear it from the Government party when they reply to the debate.

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