Richard Bruton (Dublin North Central, Fine Gael)

This undoubtedly has been a difficult budget and it has had to be so. The new Government has inherited a situation in which spending is running more than 40% ahead of what is being raised in taxation. Ireland is locked out of all the borrowing markets and is in a position in which the only source of borrowing now available to us is from the European Union and the IMF and even then only on the strictest conditions. Consequently, the Government does not have available to it the options of postponing adjustments or considering options that many would like to pursue. It was never going to be easy to raise €3.8 billion, as the Minister for Finance was obliged to do in this budget. However, it is important that this budget is not simply about austerity. Were the Government to approach its challenges simply in terms of austerity and fixing the banks, as had been the dominant theme of the years before the formation of the present Administration, it would sell the people short. As a nation, the most profound challenge we face is how to confront the huge jobs challenge before us. This budget, as with every action by the Government, must be about jobs and growth, as well as about meeting the important fiscal targets that are essential to our economic survival. This is the context that has shaped the thinking behind this budget.

The jobs challenge is a profound challenge for this country. In the last three years, 350,000 jobs have been lost, more than two thirds of which have been lost by people under the age of 30. In any normal assessment of an economy, that is an extremely grim picture. These are the young, talented people who are the future of the economy. Sadly, many of them are finding their futures in other countries. Hopefully they will return but certainly one of the most profound challenges we face as a nation is to match the needs of people who wish to continue to work and to give of their talents here. The challenge is to build a strong nation here at home that can meet the ambitions of which the Taoiseach spoke in his address, namely, of being the best small country in which to do business, to be a good country in which to grow old and to be a good country that commits itself to high standards and decency in the manner in which it treats people.

This is the reason that employment has shaped every element of this budget. Recovery and employment creation are shaped to a considerable degree by the sort of decisions a Government makes on both spending and taxation. As for taxation, the Government consciously has made the decision not to impose further tax on work or business profits in this budget. The Government is aware, as every independent expert will confirm, that if one loads tax on work and on profits, one will stifle recovery. Consequently, the Government has been obliged to consider other ways. It is highly significant that this year, the Government has sought to raise taxes from property, which in many ways is a new departure. It has increased the tax rates across the board in respect of capital acquisitions tax, CAT, capital gains tax, CGT, and deposit interest retention tax, DIRT. It also has introduced a household charge. In total, the Government will raise almost €400 million in taxes on capital or property in some form. This constitutes a significant broadening of the tax base and avoids the necessity of going back to penalising work, which has been too much of a feature of budgets in recent years. Approximately 80% of the tax raised in recent years has come from tax on work and this has not been good for our economic recovery. This year, the Government consciously is focusing on raising money from items that do not damage economic prospects, such as property, as well as picking indirect taxes. It is known that where one raises money from indirect taxes, people at least still retain the income with which to make their own decisions. Families who are under severe pressure, as many are, at least have the choice of how to apply that income to meet their mortgage, health and education commitments, areas where there has been no tax increase on their spending.

The priority of job creation has had a profound mark on the tax selections in the way in which the Minister for Finance has sought to incentivise opportunity here, and particularly to promote employment creating opportunities. He announced a suite of measures yesterday across a range of enterprises, and at their heart is making the setting up of a new business much easier. Last night, we gave effect to an initiative that, to be fair, was started by Fianna Fáil when it was still in Government, that allows an individual who wants to set up a company to claim up to €600,000 in income tax that he or she paid during the past six years to put into the business as equity. The Minister also indicated that this company would be free of tax for the first three years of its operation. That is a clear signal to people that setting up a business is favoured and will be supported by Government to the best of our ability.

The Minister has also given a clear signal that the future of companies with the capability to expand will rest with their investment in innovation and their willingness to enter new markets. He has given explicit recognition to that in the tax relief on research and development and for placing staff in the new BRIC countries - Brazil, Russia, India and China - where we need to build new export markets because of the profound shift in future purchasing power away from our traditional markets.

Another thing that has characterised this budget is the determination to spread the load in a fair way. With the raising of taxes on wealth, whether they be CAT, CGT or DIRT, the money is coming from people who can afford to pay. That has allowed us not only to protect other incomes from increases in taxes but also to introduce something that I believe will be universally recognised as fair, namely, removing people earning under €193 a week, or €10,000 a year, from having to pay the universal social charge. Anyone would recognise that the limits set by the previous Government were simply too low. Having people pay the universal social charge on an income as low as €80 a week simply was not fair, equitable or fitting in terms of any normal view or approach.

The budget has also been important in that the Government has kept commitments it made to the people. We kept the commitment that we would not raise income tax, that we would protect basic rates of social welfare and that we would provide relief to those who purchased their homes when prices were most expensive between 2004 and 2008. We also kept the commitment to extend free GP services to people who have the most important need, that is, those with a long-term illness whose condition will not simply go away. We kept our commitment in regard to literacy and numeracy, with which the Minister, Deputy Quinn, will deal. We also kept our commitment to provide for mental health, which has been a much neglected area in our health services.

I believe this budget has struck the right balance. Certainly it is not an easy budget and all of us would like to be doing things that are not possible, but we have protected resources for creating employment and for those who are willing to commit to and take the risk of creating an enterprise that wins exports and rebuilds our economy.

We have tried even in these very difficult times of limited resources to share the burden in a way that would be seen to be fair. I do not expect any applause from people for this budget but I think people will recognise that this is a workman-like commitment to reform on a road that will be difficult for everyone in this country. I believe we have the ambition to create a strong economy built on strong enterprise, winning back our export markets and providing employment here at home. That is a vision and an ambition well worth fighting for. This is the first step in that respect.

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