Stephen Donnelly (Wicklow, Independent)

I would like to address three specific areas in the Bill. First, the approach to Government is taking. Second, the impact it will have. Third, some alternatives which would be better to some of the decisions made.

In terms of the approach, the budget is technically unsound and incompetent. It has had inadequate parliamentary oversight and mangles basic economics in arriving at its conclusions. I will cover two examples of technical incompetence. One is VAT. The projected Government take from the 2% increase in VAT is €670 million. It turns out that does not include the fact that consumption and employment will fall and small and medium enterprises in Wicklow and around the country will go out of business and lay people off. It also does not take account of reduced corporation tax.

Conservatively, if one added in those three factors the €670 million projected take by the Government would be reduced to €300 million to €350 million, which is one third of the entire projected increase in the tax take. A 15 year old studying economics could tell one that should be in the analysis. It is mind-boggling in its incompetence that it is not in the Bill. I discussed the matter directly with the Tánaiste in this House and he confirmed none of it is in the Bill.

The second element is the growth target. There is a budget deficit target of 8.6%. The Taoiseach seems to be standing over the growth forecasts of 1.3% on which this is predicated. He stood over it in the House even when a vast array of organisations downgraded it. Finally, the Central Bank has downgraded it to 0.5%.

I have two examples of inadequate parliamentary oversight. One is the lack of technical appendices. There are no decision criteria, cost benefit analyses or basic analysis that any parliament in a developed country would expect in order to be able to interrogate the Government proposals. In 2008 a World Bank report looked at budgetary processes and we were ranked second from bottom in the OECD.

There are two interesting metrics. The first is the amount of technical detail supplied to parliaments in order to allow them to interrogate government proposals. Out of ten we scored zero. The second is the amount of time parliament is given to interrogate government proposals on a finance Bill. The minimum recommendation is three months. Out of ten we scored zero. It is another example of the most centralised decision-making process in Europe. It is disgraceful.

The third area in the approach is the extraordinary misunderstanding of economics. It is like someone at the Cabinet table sent someone down to Hodges Figgis to buy an introduction to economics who read the first chapter, which said if one wants to promote employment one should not tax labour, but then the book was lost and a decision was made to do that. There is no elasticity analysis. There is nothing to say were we to increase income taxes this is the number of people who would leave the country or choose to stop working.

I met a senior lawyer recently and put this to him. He said he is already being taxed at a margin of over 60%. He earns an awful lot of money and if the Government increased tax to 70% he would probably stop working for a few weeks of the year. I asked him what the problem was with that. There are a lot of unemployed lawyers who would love to work those hours.

The Government is utterly misusing economics, which it does not seem to understand. It has no analysis to back up the ridiculous, flawed assertions it is making. Even if, at the margin, people at the higher end did 5%, 10% or 20% less work, that is fine. There are a lot of unemployed people who need work.

Let us accept we have a highly progressive tax system. I understand we have the most progressive tax system in Europe. If one compares someone earning €100,000 to someone earning €25,000, the person earning €100,000 pays 20 times more tax than the other person. That is a highly progressive system.

The Government said we could not possibly increase taxes on people earning over €120,000 because they would all move en masse to Australia for some reason it did not back up. First, that is nonsense. Second, we are in survival mode. A lot of money has to be found quickly. The principle applied should be to find the money we need that does the least social and economic harm. On those criteria this budget and this Government has failed entirely.

Last week I visited the community centre in Fassaroe in Bray. Fassaroe is one of the most disadvantaged communities in Wicklow and I was shocked by what I saw. The staff told me the Finance Bill and the cuts the Government has made so far are hitting the most vulnerable in that community so much that children are now being sent to the drop-in centre to get food. We are setting up proxy soup kitchens in our most disadvantaged communities in a country of abundance, even though we are insolvent. The staff told me they are now using their tea money to buy school jumpers and shoes for some of the children returning to school because their parents do not have the money.

If the Government Members think I am making this up, I will run through a quick case study of a single mother with four children who lives on the estate. She has a new-born baby, a three year old, an eight year old and a 12 year old. She was on lone parents' and community employment scheme allowances but because of the consolidation she has lost €3,525 per year, because of the cut in the fuel allowance she has lost €120 per year, because of the child benefit cut she has lost €432 per year, because of the cut to the back school allowance, she has lost €305, because of the confirmation and communion grant cut, she has lost a further €180. This is a total of €4,562 in cash that a single mother with four children in my constituency must take. We should compare that reduction of €4,562 with someone earning €150,000 who faces a total hit of €100.

It gets worse. The woman works on a community employment scheme that is threatened because of the 66% cuts to material and training and her child care is provided by another community employment scheme that is also under threat. That is a choice this Government has made. It decided to take €4,500 off a single mother trying to raise four children while another person who lives a few miles down the road who earns €150,000 will have €100 taken off him for the household charge. Why? It is because the chapter of the book Ministers read said that under no circumstances should labour be taxed.

I have spoken to and respect many people in Fine Gael but some weird, right wing, incompetent cabal has taken over the party. This is not the action of the party of Garrett FitzGerald. What is the Government doing taking €100 from a high earner while taking €4,562 from a single parent? To the Deputies and the leaders the Labour Party, whom I know personally and admire and respect, I must ask what they are at. They were put in Government to stop Fine Gael from doing this sort of thing to our people. Where are they? They must stand up to these people.

That is what the Finance Bill is doing but there are alternatives. I appreciate that it is easy for me to stand on this side of the House and shout and say what the Government is doing is unfair so I will offer a few ideas. Increments should be frozen; that would save €250 million. The top increment should be reduced by one, saving €350 million. Higher end pay should be further reduced, saving another €200 million. Already we have €800 million. We should introduce a time-bound emergency tax, which would find several hundred million euro and cut waste further.

I cannot understand how the Government can stand over this. It is morally abhorrent and cowardly.

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