Joan Burton (Dublin West, Labour)
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I understand I am replying to the Minister. Will the Minister undertake in the context of the tax breaks under various headings that his Department will review the compatibility of the wide range of tax breaks for health care and nursing homes and if they link in any way to general health and welfare policy, particularly in regard to older people? I gave the Minister examples yesterday of nursing homes which are springing up in various parts of the country, some of which are good, but some are in remote locations where older people will have no chance of independent living or ever getting out because they are in rural areas with no footpaths, no access to a church, shops or the pub. Will the Minister for Finance specifically undertake to have that examined in the context of the review of tax breaks?

I do not know if the Minister saw the reports in the media last week which were fairly extensive of plans by a number of international care groups to establish in Ireland facilities for older people. They spoke about some of the sheltered housing which will be available for purchase by what was described as older "high rollers", and that the cost of each of these units of accommodation would be €1 million. In that context the tax break cost to the Minister's Department will be approximately €420,000 because these high rollers will surely have exposure to the 42% rate of tax. All I am asking for is the facts and, as with the Travers report, that we have some attempt to logically examine the issue.

According to the OECD report today Ireland has one of the narrowest tax bases. We know the infrastructure is in shambles and that people spend hours commuting. Every other European city has public transport of a high quality to most areas of its city. We have had to wait seven years for the opening of the two Luas lines. The shambles in public infrastructure is unbelievable. Are we going to give very attractive tax breaks to wealthy older people to the tune of approximately €500,000 each, while at the same time ordinary people who have worked all their lives and paid their taxes are unable to get any kind of public provision for sheltered housing? It is a simple question and we debated some of it yesterday. Who benefits? If the Minister decides to continue the tax break, the Labour Party wants the benefit to be spread widely throughout the community rather than it being exclusively available to older people who can purchase €1 million euro apartments and probably pay, from the standards that were being talked about, €1,000 a week in additional care costs on top of that. There may well be a market demand for this level of facility in this country and that is fine. However, it should not be tax subsidised when those who have worked hard all their lives are forced to rely on a degree of public provision while well-off people get all the tax breaks and benefits of the tax expenditure foregone. It is a question of justice and equity that the needs of all our older citizens should be considered in a rounded way. If State subvention or subsidies are there for the giving, they should be spread equitably among the community. As is the case with most tax breaks they should not simply go to very wealthy people who can afford legal, accounting and other expensive advice and can afford to buy into tax avoidance schemes. If this is the only outcome of tax incentivisation of the private health sector, it is very unfair. I want the Minister's assurance that if he cannot accept this amendment that this will be one of the key and critical elements of the review he has promised.

There are no figures available about the number of nursing homes or sheltered accommodation which benefit from these tax breaks because the Minister has said his Department keeps no figures. I cannot get any information from the Department of Health and Children, which does not seem to know what it is doing most of the time. Although traditionally in public administration the Department of Finance had a line management role in vetting the expenditure and policies of other Departments, when it comes to tax breaks the Department of Finance seems to have completely abdicated its role. Never mind the missing file today, there does not even seem to be a letter from the Department of Finance to the Department of Health and Children setting out what these various tax breaks are supposed to do, and the implications for health, welfare and social care policies. I ask the Minister to give the House an undertaking on this study. He did not establish a proper independent commission on taxation but is hiring his own consultants. The House should be given a guarantee that this will be a decent study and not simply a set-up to facilitate the high rollers yet again for another decade.

Joan Burton (Dublin West, Labour)
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I move amendment No. 13:

In page 13, between lines 15 and 16, to insert the following:

"4.—An approved body pursuant to section 848A of the Principal Act shall make available to the public sufficient particulars of its accounts and such other information as may be required by the Revenue Commissioners."

The purpose of this amendment is to require that charities which benefit from the range of tax breaks now available in respect of charitable donations should be at a minimum required to file and publish accounting information so donors and people who are meant to be the recipients of this charitable giving and the general public can have an idea of how this tax break is being utilised.

In the course of Committee Stage, the Minister stated there has been a considerable extension of the take-up of tax relief in respect of charitable donations. I think he said it is estimated to have cost €21 million in tax breaks in the most recent year for which he has figures. If one assumes the rate of relief is 42% for a considerable amount of the donations, this implies the donors are giving approximately €50 million on which tax relief is subsequently being claimed. It should be borne in mind that there are many people who continuously give to charities and do not claim tax relief. It is therefore a confined number of donors who are taking advantage of the very generous exemptions relating to charitable donations which the former Minister, Mr. Charlie McCreevy, introduced.

When I spoke to the former Minister about this, he referred to the scheme introduced by Deputy Quinn when he was Minister for Finance in commemoration of the Famine and which was specifically intended to assist in the aftermath of the Rwandan genocide. While Deputy McCreevy thought this scheme was good, he decided to expand it. He explained to me that he decided to expand it on foot of his experience of visiting the United States where charitable foundations and charitable giving are very much an established way of life. It is important to note that in the United States there is quite an amount of very detailed regulation at federal and at state level regarding charitable giving. There is a requirement on charitable foundations and trusts to publish accounts and to make accounting information available.

In Ireland, almost all large charities which deal with the Third World or which assist people with a disability are limited companies and therefore are required to produce accounts in accordance with company law. There are significant numbers of registered charities and also significant numbers of religious bodies which are also charities which do not file or publish any form of detailed accounting information. Although the taxpayer gave tax rebates of €21 million in recent years, we have no idea who the beneficiaries are and the use to which the donations were put. I support tax breaks for charitable giving but because there is no charity law in Ireland, I am fearful that it is capable of being abused. I say that because like many Members I have experience of working with many charitable organisations over the years. When scandals occasionally arise in the Irish charity sector they are deeply damaging to the very good work done by the reputable charity organisations which are widespread in this country.

Because public provision is so small, we need charities such as the Society of St. Vincent de Paul to address the level of need in society. Ireland is the second richest country in Europe and yet there is a great need for charitable organisations such as the Society of St. Vincent de Paul to deal with people who are poor. Charitable organisations are desperately required in the field of disability because State services are so inadequate. The country needs good operating charitable not-for-profit organisations providing a range of services because public provision is so small.

Consideration of the introduction of a charity bill is being treated like a football. I worked on it when I was in the Department of Justice, Equality and Law Reform. The heads of the Bill were ready when I left Government. It then travelled around the Departments and is currently resting with the Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív, who has promised that there will be legislation to govern charities some time soon. A full consultation process was completed and signed off in my time.

I ask the Minister to insert a requirement in the Finance Bill that those charities which benefit from the tax regime available to charities and charitable giving must produce financial accounts to show where the money comes from and where it goes to. It is very easy for the Minister to obtain advice. If, in the Minister's view, this would be too onerous on small charities, he could easily provide that they be required to file a donation statement, that is, a list of donations received and details on how they were expended, while requiring large charities to produce the standard type of accounts stipulated under the Companies Acts. It is easy to be flexible and we want a minimum of bureaucracy. We do not want to hinder those who wish to hold collections for particular events. We already have a model.

Unfortunately, the public has been left in the dark as to which charities are the beneficiaries of the tax break in question, which is valued at €21 million. If this information were published and the public could see who are the beneficiaries, it could encourage small charities to ensure donations they receive are tax efficient. Currently, the tax break tends to be the preserve of larger charities and not-for-profit organisations with a direct knowledge of this field, possibly because they have accountants or tax specialists on their boards or have designed their structures specifically to take advantage of the tax breaks. The Labour Party position is reasonable and it is unbelievable that the Government is unwilling to inform the public who are the beneficiaries of tax breaks.

Concern and Trócaire, because they are companies, provide good information in their accounts which allows one to identify what benefits they receive from the Government's tax regime. We have no idea, however, which of the 6,500 charities, some large and some small, benefit from the €21 million tax break. It is reasonable on the grounds of public accountability that this information be made available.

Paul McGrath (Westmeath, Fine Gael)
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Deputy Burton has made a worthwhile proposal and it should be acted upon in the interests of accountability. What is the uptake by schools of the tax break in question? Unfortunately, they have not sufficiently tapped into the facility by which highly tax efficient subscriptions can be made to local schools. Perhaps highlighting it will encourage members of the public to avail of it. If an individual paying tax at the 42% rate subscribes €290 to his or her local school, Revenue will provide a further €210, bringing the contribution to €500. Does the Minister have details on the uptake of this under-used facility?

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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I support the proposition. What is envisaged here can be turned into a positive for the charitable organisations and donors and all Deputies should commend the amendment. Greater availability of information is another element which could be added to the list of tax credits people can claim, which I recounted yesterday. More information in this regard would be of benefit to all of us. The requirement, as proposed, regarding the provision of sufficient particulars regarding the accounts of charitable bodies is appropriate and should be facilitated. I await the Minister's reply.

Brian Cowen (Laois-Offaly, Fianna Fail)
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Deputy Burton and others tabled similar amendments on Committee Stage and I am glad to reiterate the response I gave then. As Deputies are aware, section 848A provides for the scheme of income tax and corporation tax relief for donations to approved bodies, which include eligible charities, first and second level schools, as Deputy Paul McGrath noted, third level institutions, including universities, as well as other named bodies. Slightly more than 6,400 bodies currently hold the tax exemption as charitable bodies, of which 1,660 qualify as eligible charities for the purposes of the donations relief.

With regard to charities, the Revenue Commissioners impose a strict set of conditions on bodies duly granted tax exemption as charities. These include keeping a satisfactory financial record which must be available for inspection by Revenue, establishing proper controls where funds are raised by public subscription and submitting to Revenue the first year's financial accounts within 18 months of exemption being granted. A clear and transparent regulatory system is, therefore, in place to ensure the financial records are in keeping with proper methods and donations are being used for the purposes for which they are raised. In addition, given that failure to satisfy these conditions can and does result in the exemption being withdrawn, the regulatory framework is not pro forma but has teeth.

More than three quarters of charities and most approved bodies, apart from schools, are established as companies and, consequently, already have a statutory obligation under company law to lodge annual accounts with the Companies Office.

Under donations relief approved bodies receive a substantial tax benefit from the Exchequer. For this reason, it is necessary to have public confidence in the way such bodies operate, in particular in how their funds are applied. There is no divergence of opinion among Deputies on this principle, although we disagree on how public confidence can be best achieved. As I explained, however, the current framework is in large measure effective.

Deputies will be aware that the Department of Community, Rural and Gaeltacht Affairs recently concluded a public consultation process on the establishment of a modern statutory framework for charities. Unfortunately, a lengthy incubation is part of the nature of the legislative process. Nevertheless, the process is under way and the Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív, will shortly bring to Cabinet a series of legislative proposals regarding a charities regulatory regime. I fully expect that these proposals will set out a framework of accountability and transparency in terms of the activities of charities and compliance and governance generally. Modernising charities legislation, providing for greater accountability and transparency and ensuring compliance and governance will be at the forefront of the Government's policy response.

Legislation is the proper forum in which to establish an appropriate system of public accountability. Rather than using the Finance Bill in an ad hoc fashion, let the modern charities legislation due for imminent consideration by the Cabinet be the means by which we address some of the issues raised in the amendment.

On Committee Stage last week I provided for a reduction from three to two years in the waiting period for obtaining tax exemption for donations. This Bill assists this by reducing the time for which new charities can seek relief exemption on donations. The wider policy issues raised will be dealt with in the context of the modern charities legislation. Further changes would be premature given the work done by the Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív, and his Department and the current stage of those legislative proposals. For this reason, I will not accept the amendment.

Deputy Burton referred to the scheme of donations introduced in the Finance Act 1995 by the then Minister for Finance, Deputy Quinn. The scheme only related to the activities of charities in the Third World. Relief for personal donations to such charities was at the standard rate of income tax. There was a de minimis qualifying amount of £200, or €254, and an annual upper limit of £750, or €952, by any individual donor under the scheme.

The scheme for donations introduced by my immediate predecessor, Mr. McCreevy, in the Finance Act 2001 merged nearly all of the existing donation schemes into a single, simplified and extended one. For the first time, personal donations to domestic charities qualified for relief under the scheme. The relief, which is generous, is granted at the taxpayer's marginal rate of income tax. While there is a de minimis qualifying amount of €250, there is no upper limit on the amount that can be donated. As Deputy Paul McGrath pointed out, the relief is also available to second level schools, universities and other third level educational establishments.

I do not have the details the Deputy seeks but I will speak to the Revenue Commissioners about obtaining it. The figure of €21 million I gave is in respect of this extended scheme, incorporating the many other schemes from the past and its wider application to educational institutions. I would be only speculating on the figure without further information. On a previous amendment, Members spoke about keeping tax forms simple to ensure people know their entitlements. If a question in respect of everything was put on tax forms for the purposes of collating figures, it would be very long and may not serve its purpose. We will do what we can——

Paul McGrath (Westmeath, Fine Gael)
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The specific form for schools and the like could be used by Revenue to collate that information.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I will check this. I am only speculating on the figure. The €21 million relates to PAYE donations which were claimed by charities as refunds from the Revenue Commissioners in 2003. The cost of donations by self-employed earners in 2002 will become available later this year, giving additional information. No breakdown will be available on figures between charities and schools because of how the form is structured. In the case of the PAYE sector, it is the charity or the approved body that claims the relief rather than the taxpayer, allowing us to identify what each charity receives. However, for the self-employed sector, information will only be collected on the amounts donated and not on the charities concerned.

Joan Burton (Dublin West, Labour)
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I thank the Minister for his comprehensive reply. When Deputy Quinn was Minister for Finance, he proceeded with caution in this area because of the legitimate fear that, with the absence of charity legislation, it could be open to abuse. This fear remains. Members are aware of and support the fantastic work done by not-for-profit organisations in a range of activities. However, it is only right to ask about the benefits to charitable organisations under the scheme, and to which charitable organisations those in the self-employed category are donating.

Thankfully, there have been limited scandals involving charities. However, when they have occurred they usually concerned inconsistencies between the charity's objectives and actual spending. In some cases, management and administrative costs have been excessively high. With no accountability, the system is at risk of people who are expert at using tax breaks benefiting themselves and moneys being abused and removed from their original intentions.

Due to the confidentiality clause between individual taxpayers, charities and the Revenue Commissioners, no information on the reliefs is available. While the figure for the PAYE sector was €21 million, I have been informed the figure for the self-employed sector is significant. Public accountability is important in this area. I hope the Minister will keep it under review since the successful operation of the charities sector is important.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I have nothing further to add. I do not want to delay the proceedings because I would love to get to amendment No. 58.

Séamus Pattison (Carlow-Kilkenny, Labour)
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As amendments Nos. 14 and 16 are related, they will be taken together.

Joan Burton (Dublin West, Labour)
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I move amendment No. 14:

In page 13, between lines 15 and 16, to insert the following:

"4.—Where a person avails of tax relief relating to income including or consisting of rental income pursuant to the Principal Act, he or she shall furnish to the Commissioners sufficient information to demonstrate that he or she has complied with any requirement of the law regarding registration as a landlord."

The purpose of these amendments is to provide a degree of accountability and transparency in tax relief schemes, who benefits from them and what is involved. We are legitimately entitled to know if tax breaks are justified and equitable to the broader public interest. This amendment concerns tax relief on rental income for landlords. There is widespread concern that some landlords and property owners, availing of such tax breaks, are not in compliance with registration requirements with the residential tenancies board or local authorities.

Landlords renting to private tenants is a fraught area. The Government has moved away from investing in social housing. The burden of this has fallen on the private rental sector, supported by rent allowances paid by community welfare officers and the Department of Social and Family Affairs. However, there is no knowledge of how many landlords are tax compliant or registered with the residential tenancies boards. This simple amendment will close this loop, requiring landlords availing of this tax relief to be properly registered and in compliance with other legal requirements. They are asked to register with the board — formerly with local authorities — to try to ensure issues such as a fair deal for the tenant quality accommodation and that basic fire and safety regulations are dealt with. If landlords operate in residential areas, they must have some sense of social responsibility to the wider community in respect of simple things such as the property being maintained and painted and the area around the property being cleaned regularly so it does not become a nuisance.

Average rents here are very high as is the average subsidy paid by community welfare officers in respect of rental properties. This costs the State a packet. On the one hand, we subsidise tax breaks for people investing in property and becoming landlords and on the other, we pay many of them rent through the community welfare officer schemes. The State is paying on the double through tax breaks and rent subsidy.

This is an entirely reasonable amendment that would bring some level of assurance to compliant taxpayers who do not usually take advantage of tax breaks that these landlords comply with registration requirements. The Minister should adopt a reasonable approach so this type of issue is sorted out.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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My amendment No. 16 is related to amendment No. 14. We are seeking the proper and full enforcement of the terms of the Private Residential Tenancies Act 2004. We must take note of the statement of the Irish Property Owners Association that there is not only an intention, but a practice of passing on the cost of registering with the Private Residential Tenancies Board, PRTB, to tenants as a further element in the overall rental demand. This is an outrageous act on the part of people in that sector who literally heap any and every responsibility on the unfortunate tenants.

This is against the backdrop where, I understand, it is "guesstimated" that there are up to 120,000 landlords who are obliged under the terms of the PRTB to register by the 1 December 2004 deadline, but who have not done so. The figure might be much greater. This clearly indicates there are major matters to be addressed.

There is a requirement on the Government to consider what measures might be taken at this time in order that these serious matters are properly addressed, that is, matters one would have to see in the context of undermining the Private Residential Tenancies Act 2004. If there is not compliance and if the registration cost is being dumped on tenants, with the landlords bearing none of the cost, that was not the intention of the introduction of the PRTB and the requirement to register by the deadline some three months past. All these matters must be addressed.

It is imperative that all the links are established, that is, in terms of tax relief relating to income, including where mortgage interest relief is sought in respect of a second property other than the registered home and place of residence. There is a responsibility on Revenue to check the status of a property in terms of its use, that is, whether it is for owner-family use, which is exempt from registration under the terms of the PRTB, or whether it is rented out under private sector arrangements. If it is the latter, in the absence of any admission, there clearly is a breach to be addressed.

Deputy Burton referred to other very important issues in regard to the upkeep and management of homes in the rental sector. Property speculators and those taking up the role of landlord have been concentrating in the main on housing schemes, particularly in rural towns, targeting homes in what would be traditionally viewed as the more affordable bracket — perhaps former council housing schemes that have been in private ownership for some years. The houses go on the market when families grow up or move on. Whatever the case, there is a change in the configuration of major housing schemes. Investors are targetting these properties and putting them outside the reach of young couples and young families looking for a home or a starter home, whatever their circumstances. They are literally being priced out of the market. If these properties are not maintained, they become a major eyesore, very much take away from the sterling efforts of home owners in the same catchment area and debase the quality of life people living there. It is an important area that needs to be factored in.

The focus of this Bill is financial but there is also the social element of all this, which cannot be erased from our consideration. It must be taken on board and I am pleased Deputy Burton referred to it also. I have raised it in the past and it is an issue that needs to be tackled head on. Property owners, whether home owner occupiers or those who operate a rental arrangement have a responsibility not only to their tenants, but to their neighbours and the community. Sadly, this is often not honoured. I commend both amendments to the Minister and I hope the critical arguments presented will find a sympathetic response.

Jerry Cowley (Mayo, Independent)
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I support this amendment. There are more ways to deal with this issue than to always use private enterprise. This is about ensuring the taxpayer gets value for money because, after all, this tax would otherwise be available to the Exchequer to be spent on things that need to be done. In the context of this amendment and the previous two, there is a need to ensure that anybody getting tax relief for charitable donations or providing accommodation gives value to the State. These amendments are a way forward.

It is one way of doing it, but would it not make more sense to direct tax reliefs towards Government policy? It is Government policy to support older people at home. It was referred to this morning. It is mentioned in the review document and in the health strategy. However, the practical application of the tax laws means that people are not encouraged to stay in their own homes or, when they can no longer stay in their own homes, to stay in their community. The Finance Act provides one way of ensuring that money is directed towards communities to allow them provide a local alternative which offers much better value for money. Even if it cost twice as much, it would be worth it because that is what people want.

Communities that support sheltered housing need support. A defined revenue funded scheme and a co-ordinated approach by the Department of Finance and other Departments are required to ensure that finance is available so that voluntary housing associations, of which there are several hundred, are able to employ sufficient staff to support people for longer in their own homes and also in sheltered housing.

The Minister might also consider introducing an alternative to the profit driven non-community nursing homes, which are essential when there is no community alternative and no public alternative. The Minister should replace the policy of supporting private enterprise by enacting Government policy and introducing a scheme to ensure that tax breaks are directed towards communities. There are hundreds of voluntary housing associations with charitable status who would be prepared to take on more sheltered housing. This would solve the problems of older people by enabling them to stay in their own homes and, when they can no longer do so, by enabling them to stay in the community. The voluntary housing associations could take on the higher support that is equivalent to nursing home care. However, for that to happen we need to make changes in legislation and in the circulars to allow capital assistance funds to be used for that purpose through the Department of the Environment, Heritage and Local Government. Changes would also have to be made to allow communities to draw down subventions in the same way as nursing homes can.

These changes could be made with a stroke of the pen. They would make a major difference to people. At the moment the budget for social housing is not sufficient to realise what the Government has set down as the essential targets. A change of emphasis is needed. I admire the Minister for Finance as a man who is capable of deciding what he wants to do. I appeal to him to examine the community alternative for supporting older people at home. I support this motion which looks for value for money for the taxpayer. More needs to be done regarding the community alternative than merely paying lip-service to it. The Tánaiste and Minister for Health and Children paid much lip-service to it in the Dáil the other day but the current state of affairs continues.

Brian Cowen (Laois-Offaly, Fianna Fail)
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We are dealing with amendments Nos. 14 and 16 together. These amendments propose to insert a new section 4 into the Bill and to make it a general condition of claiming tax relief on rental income that the person involved provides evidence to the Revenue Commissioners that he or she has registered as a landlord where this is required by law. Part 7 of the Residential Tenancies Act 2004 contains requirements for landlords regarding registration of tenancies. These requirements relate to residential tenancies of dwellings, to which I assume the amendment relates.

Apart from tax relief being available for normal letting expenses, it is also available for expenditure on the construction, refurbishment, conversion or purchase of a house for rented residential purposes in areas designated under one of the tax incentive schemes, such as the urban or rural renewal schemes. In addition tax relief is also available for interest arising on borrowings used for the purchase, improvement or repair of rented residential accommodation.

I said on Committee Stage when this amendment was first proposed that I would consider this matter between then and Report Stage. My officials and officials from the Revenue Commissioners have since met officials from the Department of the Environment, Heritage and Local Government to discuss the matter. The Residential Tenancies Act 2004 provided for the establishment of the Private Residential Tenancies Board as an independent body with a range of specific statutory functions, including responsibility for the administration of tenancy registration and dispute resolution. I understand the board is processing a large volume of applications for registration from which a statutory tenancy register will be compiled. Until this work is completed, it will not be possible for the board to provide comprehensive data. When the statutory tenancy register is completed, it will enable the board to provide a range of enhanced information relating to the private rented sector.

Various issues on linking registration to eligibility for tax incentives have been raised previously. However, it has not been possible to bring forward measures for Report Stage to deal comprehensively with these intricacies. My officials and officials from the Revenue Commissioners will continue to discuss this matter with the Department of the Environment, Heritage and Local Government and the Private Residential Tenancies Board to examine the possibilities for proposals in this area for future budgetary consideration.

Joan Burton (Dublin West, Labour)
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I thank the Minister for that reply. I do not know whether Deputy Cowley heard yesterday but in the discussion on private nursing homes, the work he has done in Mulranny was mentioned. It is an example of the type of development we should aspire to so that older people can stay in the community and have supported housing.

On Mothers' Day last Sunday, my daughter, as a surprise gift to me, took me out to the new shopping centre at Balally in Dundrum. I went along because I had no option but to accept the gift. We went there on the Luas. Dundrum is a very affluent part of south Dublin, as the Minister is aware. When we got to the Luas station at Balally, I was surprised to see hanging all over the apartments being built there banners advertising tax breaks for investors who invest in these apartments. What is the necessity for a tax break for an investor purchasing an apartment in the Dundrum area directly over a Luas stop and beside one of the best shopping centres in Ireland?

The Minister should contrast that with the case we have been making for the need to provide incentives for social housing for older people and people on the housing list. The new shopping centre is lovely. I was delighted to be there with the tens of thousands of other people who were also brought there for Mothers' Day. However, we must ask ourselves what has gone wrong when we provide tax breaks at the marginal rate of 42% with no further requirement to check anything out. If the Minister gets the opportunity, he should go and see these banners hung over the apartments.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I will probably have to wait until Fathers' Day.

Joan Burton (Dublin West, Labour)
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It is a unique opportunity and I am sure the Minister will enjoy Fathers' Day with his children. I certainly enjoyed Mothers' Day, but I could not get over the sight of these banners hung over the apartments around the Balally Luas station. The Luas station is tremendously popular and successful, as we knew it would be. This lovely shopping centre is directly across the road, and there are banners advertising tax breaks.

The people about whom Deputy Cowley and I are talking are driven into the private rented sector, very often with little security of accommodation. I dealt with a lady who had returned home approximately a year ago to retire and be near family having worked as a nurse in England up to the age of 66. As she had lived in hospital accommodation in the UK she never bought a place of her own. She has now returned to terribly expensive Ireland and is living in a converted garage or outhouse, for lack of a better word, which was the only accommodation she could find. While the landlord is very nice, the building is not of appropriate standard. I am helping her, as I am sure others are, to make an application to the local authorities in the Dublin area. However, I know the answer. This woman emigrated and gave years of service working in the UK. She lived in subsidised housing and has now exercised her right to come home to her own country. While she can get no benefit, the investor in Dundrum is being offered 42% marginal tax relief, which indicates something is wrong.

The Minister has spoken very convincingly about his sense of equity and fairness, which I accept. I accept his approach is different from that of his predecessor, Mr. McCreevy, with whom I had a very good relationship over many years even though our political approach was quite different. Mr. McCreevy told me he would turn the upper Shannon area into the Klondike for investors in housing, which he did, but what is the point of doing that if our elderly people and those in desperate need of housing get none of this benefit?

Séamus Pattison (Carlow-Kilkenny, Labour)
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I remind the Deputy that she has only two minutes.

Joan Burton (Dublin West, Labour)
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This is a small technical measure to try to get some information as to how much landlords are benefiting from the extraordinarily generous range of tax breaks. We need to consider the effect on society.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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I thank the Minister for taking on board the salient points made. I again ask him to explore the potential for including social responsibility. If it cannot come under his direct ambit, he might reflect it with one of his Cabinet colleagues so that the social responsibility of those in the private rental sector is reflected in legislation. It is absolutely essential to do so and I commend it to him.

Brian Cowen (Laois-Offaly, Fianna Fail)
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One of the principal problems with making registration a requirement for tax relief is that often no straightforward overlap exists between persons claiming tax relief and persons requiring to register. Some claimants of tax relief would have no requirement to register. Therefore, inclusion of a condition for tax relief requiring registration in those circumstances without further detailed consideration might make it very difficult to enforce effectively. The Private Residential Tenancies Board has worked hard to enable it to complete the registration process. In the past there were a considerable backlog and non-registration. Let us see the data before determining how to act to meet the basic sentiments expressed, including a way that would be legislatively effective and enforceable. We do not want to create difficulties that might not be evident immediately. Upon detailed discussion among officials in various Departments and with the Revenue Commissioners certain issues, intricacies and complexities can arise. We will see how we can progress those discussions with a view to consideration for budgetary consideration next time.

Paul McGrath (Westmeath, Fine Gael)
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I move amendment No. 17:

In page 13, between lines 29 and 30, to insert the following:

"6.—As respects the year of assessment 2005 and subsequent years of assessment section 473 of the Principal Act is amended by substituting——

(a) '€5,080' for '€2,540',

(b) '€10,160' for '€5,080', and

(c) '€2,540' for '€1,270',

wherever same shall occur.".

This amendment also relates to private rented accommodation and takes the opposite approach. I seek the increase in the tax credits available to persons who are in private rented accommodation. The thresholds for tax relief for rented property are very low. The base rate is €1,270 per annum, which is very small when considered on a weekly basis. It is not a real incentive to tenants in private rented accommodation to avail of tax relief. The Revenue Commissioners estimate that approximately 40,000 properties are covered by way of seeking tax relief on private rented accommodation. The CSO indicates that in excess of 80,000 private rented accommodations exist in the country. Deputy Burton said the Private Residential Tenancies Board indicated the figure could be as high as 120,000.

The net effect is that many people in rented accommodation are not claiming their tax credits. If it were worthwhile for them to do so, they would do so. Having claimed them, the landlords would then be brought into the loop in terms of the Exchequer getting a clawback on the tax on the profits they make. I believe this provision would be self-funding. By defining the right level of tax credit for persons in private rented accommodation, it would have the net effect of bringing into the tax net considerably more landlords, who pay no tax on their rental income. I recently came across a person who owns 65 private rented dwellings in a provincial town. To keep track of all those properties alone would be phenomenal. I wonder whether all those properties are registered for tax purposes.

If the Minister approaches the matter from the point of view of the tenants and give them reasonable tax breaks on paying their rent, they will want to claim their tax relief with the knock-on effect of being a bonus for the Exchequer. Yesterday the Minister spoke about low rates of tax that generate more activity. Increasing the benefit to the tenant as I have outlined would result in more registrations and more money into the coffers.

Joan Burton (Dublin West, Labour)
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The amendment is well worth examining. We have given the tax breaks to the construction side of the rental sector. I could have understood the argument ten years ago when the construction sector was relatively depressed, but now that sector is roaring ahead. We must ask who the breaks benefit. Like Deputy McGrath, I have met many of these relatively young landlords, who have used tax incentives to get their first property and have used it to piggyback a series of further investments. In my constituency I know several young aggressive landlords who are busy trying to convert the houses they purchased into multiple separate units. The local authorities have had many problems with them and with the standard of care and maintenance they provide in many cases. Problems often exist with tenants making noise etc.

This is a new phenomenon. Many European countries have a long tradition of people investing in property and being landlords but doing so in a socially responsible manner by upholding obligations to local authorities and community residents. In Ireland, by contrast, we have had a strong tradition until recently of owner-occupation. However, given that we now have a tax-supported private rented sector which is expanding at phenomenal speed in every housing estate, there is a strong argument to redress the balance in favour of the tenant and local authority and to oblige landlords to conduct themselves in an appropriate and fair manner vis-À-vis the community in which they operate and the local authority which provides services in that area.

In many cases, the behaviour of landlords contributes heavily to the burden on the Garda Síochána in terms of tackling anti-social behaviour. In European countries such as Italy, France and Spain, where the private rented sector has a long history, one can visit a block of apartments or a housing estate and be unable to differentiate between private rented property and that occupied by the owner. Any Member of this House could visit a local authority or private estate and be able to guess with near certainty as to whether each property is occupied by the home owner or is rented. Rented properties are often notable for the uncut grass, poor appearance, shabby paintwork and dirt and litter in the front garden. As I am sure the Minister is aware, anybody who has been canvassing in Kildare could immediately tell which properties are rented.

Paul McGrath (Westmeath, Fine Gael)
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The Minister is director of elections for Fianna Fáil. We shall soon see whether he has delivered the goods.

Joan Burton (Dublin West, Labour)
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In most European countries people have been renting for generations. I was brought up in a rented house in the centre of Dublin city. Most people in that area, which consisted of traditional, working class housing, now own their homes but that was not the case at that time. However, landlords are now buying all the properties in this area and one can immediately tell which homes are let. I am not sure if this phenomenon is so apparent in provincial towns but Dublin is leading the way in this regard.

This is a significant social phenomenon and because there has not been enough analysis of the structure of tax breaks for landlords and developments in this regard in the last seven or eight years, we are creating unnecessary social problems. We need a private rented sector that is well regulated. Perhaps in future canvassers can walk down roads without being able to identify those homes which are rented. Deputy McGrath's amendment serves to redress the balance in favour of empowering responsible private tenants and it is worthy of the Minister's detailed consideration.

Brian Cowen (Laois-Offaly, Fianna Fail)
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This amendment relates to section 473 of the Taxes Consolidation Act 1997 which grants relief for rent paid by individuals in respect of private rented accommodation. The level of rent qualifying for relief is dependent on a person's age and marital status. The Bill proposes to increase the limits on which rent relief can be claimed. For those under 55, the limit is increased from €1,270 to €1,500 for single persons and from €2,540 to €3,000 for married and widowed persons. For those over 55, the limit is increased from €2,540 to €3,000 for single persons and from €5,080 to €6,000 for married and widowed persons. Relief is granted at the standard rate of income tax, 20%. The cost of Deputy McGrath's amendment is estimated to be €21.6 million in a full year, in addition to the full-year cost of €5.2 million for the changes already provided in the Bill.

During the debate on Committee Stage, Deputy Bruton indicated the purpose of the amendment was to ensure equity of relief between mortgage interest relief and tax relief on rents. Mortgage interest relief is not differentiated on age grounds but between new, up to seven years, and old mortgages. The rates are €8,000 for a married couple and €4,000 for a single person in respect of a new mortgage, and €5,080 for a married couple and €2,540 for a single person in respect of old mortgages.

Rather than introducing equity to the tax reliefs on rents, the amendment could arguably introduce bias towards those aged 55 and over as compared with first-time house purchasers. The amounts of the reliefs are different but the principle behind both is to concentrate on those most in need of them, that is, first-time buyers and elderly tenants. While I have increased the rent relief this year, I have not altered mortgage interest relief. However, as is normal practice in regard to all tax reliefs in the context of the annual budget, limits for both mortgage interest and rent reliefs are kept under review. Over the coming years, I will consider the extent to which it is desirable to have a closer alignment between the two reliefs.

Paul McGrath (Westmeath, Fine Gael)
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Perhaps the Minister will consider it opportune this year to examine the entire relief system, particularly in view of the establishment of the Private Residential Tenancies Board. This will provide the Minister with better information on the situation in this regard. Information on landlord registrations will allow the Minister to co-operate with the Revenue Commissioners in ascertaining the numbers who pay tax on properties let and so on. It would be useful to include an incentive for tenants to register themselves and seek the tax relief to which they are entitled. This will have the kick-on effect of providing more revenue to the Exchequer.

Brian O'Shea (Waterford, Labour)
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Amendment No. 18 in the name of Deputy Ó Caoláin has been ruled out of order because it involves a potential charge on the Exchequer.

Paul McGrath (Westmeath, Fine Gael)
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I move amendment No. 19:

In page 14, between lines 41 and 42, to insert the following:

"(g) Subsection (1) shall not apply to expenses incurred by the body corporate in or in connection with a medical examination for a director or employee where the director is not a proprietary director and/or the employee is not a relative, as defined by section 433(3)(a) of a proprietary director of the body corporate;".

This amendment relates to benefit-in-kind that may be chargeable to a person who receives some benefit from the company for which he or she works. For those employees with a company car, for example, the benefit-in-kind claw-back is substantial. Such a claw-back also applies for employees whose health insurance is provided by their employer.

The monetary gain to those employees whose companies provide them with regular health check-ups is small, involving perhaps €50 to €100 in each instance. In the interests of promoting good health, such arrangements should not be considered as constituting benefit-in-kind for employees. We should all encourage people to have regular check-ups to maintain good health. Deputy O'Shea and I have discussed on a number of occasions the importance of identifying potential health problems at an early stage. The old adage that a "stitch in time saves nine" is relevant in that catching a medical condition in its infancy can be of major benefit to the long-term prognosis of the sufferer and can avoid the need for expensive hospitalisation, which is to the benefit of the individual and the taxpayer.

Companies should be encouraged to have a caring attitude towards their employees. If they are prepared to fund regular medical check-ups for workers, such provision should not be deemed to be benefit-in-kind.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I pointed out on Committee Stage that I would return to this amendment. I recall that acceptance of it would require that all medical examinations undertaken by employees and directors, other than proprietary directors or connected persons, and paid for by that company would not be subject to the provisions for benefit-in-kind introduced in the 2004 Finance Bill.

The current position is that the cost of providing medical check-ups that employees are required to undergo by their employer is not regarded as a taxable benefit and is not liable to PAYE or PRSI. Routine medical check-ups paid for but not required by the employer are treated as giving rise to a taxable benefit. On reflection, I have no plans to change that position.

I have considered the Deputy's suggestion but I do not intend to widen the scope of the current provision. The current provision is reasonably generous, in that, employees are still able to claim back medical expenses against their income tax. In addition, if an employer chooses to pay for such examinations under the small benefits exemption threshold of €250, which I announced in my last budget, his or her employees would not be liable to a benefit-in-kind charge on this benefit. On that basis I am not in favour of accepting the amendment.

Paul McGrath (Westmeath, Fine Gael)
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I welcome the Minister's clarification on this matter, but I did not follow the last part of it. Is the Minister saying that if a provision costs under €250 it is not deemed to be a benefit-in-kind?

Brian Cowen (Laois-Offaly, Fianna Fail)
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Yes.

Paul McGrath (Westmeath, Fine Gael)
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The gist of what the Minister said is that if a company requires employees to have a medical check-up, it is not considered to be a benefit-in-kind and that might be the way to proceed with such a provision. If an estimated cost for such a provision is below €250 it does not count as benefit-in-kind. That is a good clarification of the position. On that basis, I withdraw my amendment.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I move amendment No. 20:

In page 15, before line 1, to insert the following:

"9.—Section 122 of the Principal Act is amended—

(a) in subsection (1)—

(i) by substituting the following for the definition of 'employee':

'"employee", in relation to an employer, means an individual employed by the employer in an employment—

(a) to which Chapter 3 of this Part applies, or

(b) the profits or gains of which are chargeable to tax under Case III of Schedule D,

including, in a case where the employer is a body corporate, a director (within the meaning of that Chapter) of the body corporate;',

and

(ii) in the definition of 'preferential loan' by substituting 'means, in relation to an individual, a loan, in respect of which no interest is payable or interest is payable at a preferential rate, made directly or indirectly to the individual' for 'means a loan, in respect of which no interest is payable or interest is payable at a preferential rate, made directly or indirectly to an individual',

and

(b) by substituting the following for subsection (2):

'(2) Where, for the whole or part of a year of assessment, there is outstanding, in relation to an individual, a preferential loan, the individual shall, subject to subsection (4), be treated for the purposes of section 112 or a charge to tax under Case III of Schedule D, as having received in that year of assessment, as a perquisite of the office or employment with the employer who made the loan, a sum equal to—

(a) if no interest is payable on the preferential loan or loans, the amount of interest which would have been payable in that year, if interest had been payable on the loan or loans at the specified rate, or

(b) if interest is paid or payable at a preferential rate or rates, the difference between the aggregate amount of interest paid or payable in that year and the amount of interest which would have been payable in that year, if interest had been payable on the loan or loans at the specified rate,

and the individual or, in the case of an individual who is a wife whose husband is chargeable to tax for the year of assessment in accordance with the provisions of section 1017, the spouse of the individual, shall be charged to tax accordingly.'.

This amendment seeks to amend section 122 of the Taxes Consolidation Act 1997 to confirm that the charge to tax under the section, in respect of the benefit-in-kind to an employee for an employer provided preferential loan, applies for each year in which there is a balance outstanding on the loan.

The issue arises as a result of an appeal commissioner hearing in which it was ruled that, as presently constructed, section 122 only imposes a tax charge for the first year in which a preferential loan is made and not for any subsequent year. The appeal commissioner based his determination on certain wording of the section that he maintains results in an ambiguity in the section.

However, the commissioner's determination is not accepted by the Revenue Commissioners, and Revenue intends to pursue the matter vigorously through the courts by way of a case stated. The charge was always intended, as has been operated since 1982, to apply to each year that a loan is outstanding.

Without prejudice to the proposed court action by the Revenue Commissioners, it seems appropriate to ensure that the intent of section 122 is copperfastened, and that a charge to tax under the section on an employee clearly applies for each year in which the employee has a preferential loan outstanding.

Therefore, I recommend the amendment to the House.

Dan Boyle (Cork South Central, Green Party)
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I move amendment No. 21:

In page 16, between lines 9 and 10, to insert the following:

"10.—Tax relief shall be extended in respect of all monthly travel passes related to travelling to and from work."

On Committee Stage the Minister introduced an amendment, which was accepted and on which there was largely agreement, providing for the extension of this relief in terms of employers granting travel passes for use on ferries and, I imagine all, water-borne vessels.

My amendment proposes that the relief should be further extended to provide such relief for employees whose working arrangements is not as regular as those of employees who work year in year out with the same employer. I refer to employees in casual employment or contract-base employment. The relief should be applied for the several months or longer periods while such persons are in employment or on such contracts. The Minister did not see fit to accept a similar amendment on Committee Stage, but I hope he has had an opportunity to reconsider this proposal in the interim.

The Minister asked me on Committee Stage whether I proposed that such tax relief should be extended to the employee. While that was not my intention, it is not a bad idea. A tax system that favours public transport over private transport is a matter to which we need to give serious consideration. If such a tax relief existed, it would increase the use of public transport services throughout the country and have an effect of increasing demand for them, especially in areas where none exists. If the Minister is inclined to think along those lines in the future, he will have my support and that of the Green Party.

This amendment relates strictly to tax relief as it applies to employers giving payment for travel expenses and requesting that it be applied more frequently than on a annual basis for the benefit of many employees whose employment conditions are less regular than those of the regular employee.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The amendment proposes to exempt from tax all monthly travel passes for travel to and from work. To encourage the use of public transport, my predecessor, Charlie McCreevy, introduced legislation in 1999 to exempt from a charge to tax the resultant benefit-in-kind where an employer provides a free monthly or annual bus or rail pass for an employee. The bus or rail pass must be issued by CIE or its subsidiaries, a private bus operator or a person who provides a passenger transport service in accordance with the Transport Act 1950. In last year's Bill the exemption was extended to cover the Luas and other light rail or metro services. In this year's Bill I am extending the exemption further to cover ferry services within the State.

On the Committee Stage debate the Deputy appeared to be concerned that in order for the exemption to apply, employees had to be given annual travel passes and, therefore, the exemption would not be available to seasonal workers. As I already indicated, the exemption applies to a monthly or annual travel pass, but to qualify for the exemption the employer must incur the expense of the pass. It is not, however, sufficient for an employer to purchase a pass and recover the cost from the employee — in such circumstances the expense will have to be incurred by the employee. However, Revenue accepts, subject to conditions, that where an employee renegotiates his or her remuneration package, taking a travel pass in exchange for a reduction in salary, the employer can be regarded in that instance as having borne the cost of the travel pass and the exemption will apply.

Revenue requires the following conditions to be satisfied. There must be a bona fide and enforceable alternation to the terms and conditions of employment, exercising a choice of benefit instead of salary. The alteration must not be retrospective and must be evidenced in writing. There must be no entitlement to exchange the benefit for cash. The choice exercised, that is, the benefit instead of cash, cannot be made more frequently than once a year and then only with the consent of the employer.

The current system works well and seems to cover the scenario for which the Deputy wants to cater. There is no prohibition in the legislation on an employer giving an employee a monthly travel pass, once the employer and not the employee bears the cost. Accordingly, I do not see any need for the amendment and I am not in a position nor do I propose to accept it.

The advantages of the scheme, as it stands, are that it is subject to control, it is easily administered and reasonably well targeted. Widening of the exemption in the manner suggested would dilute these advantages and go significantly beyond the original policy intention of the scheme. It would also be much more costly than the existing scheme and would need to be fully considered in a budgetary context.

Dan Boyle (Cork South Central, Green Party)
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I thank the Minister for that clarification which I am sure will be helpful for people who need to access this relief in the future. However, I am disappointed with the second part of his reply. I encourage him to examine the costings that might be involved in such an extension of the relief. If such a cost benefit analysis were done, although it has not been done in regard to other tax reliefs, and if there was a greater take up of public transport and such a tax incentive existed, we might see economic benefits with the relaxation of gridlock on many roadways throughout the country. Towards the end of his reply the Minister indicated that such an extension of the exemption would require an examination. Will he indicate whether he would be prepared to engage in such an examination and report to the House on what it might cost? That would leave the House better informed on whether such a extension of the relief could be pursued as a policy goal.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The travel pass tax relief scheme was introduced on the basis that employers would incur its cost and employees would accept a reduction in salary to allow it to work and to show its transparency and enforceability. The scheme involves people using the public transport system rather than organising private transport. An application form for benefit-in-kind in respect of bus and train passes is available from the Revenue Commissioners.

I am extending the remit of the scheme today to cover people living on islands who need to get to work on the mainland. As I said, I propose to extend the scheme to take into account the proposed Dublin city ferry service, which will be along the lines of similar services in other cities. I am trying to ensure that such an innovative idea can compete with established modes of transport by being the subject of benefit-in-kind provisions in the same way.

It has been suggested that I should extend the scheme so that people can receive a benefit-in-kind by having a travel pass, in addition to their existing salary levels. The cost of such a provision would be borne by the taxpayer rather than by employers. We would have to consider the suggestion carefully before being in a position to agree to it.

The best way to get more people to use the public transport system is to provide quality public transport facilities. While we did not invest sufficiently in such facilities in the past, the current Government's record is second to none.

Paul McGrath (Westmeath, Fine Gael)
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What about buses?

Dan Boyle (Cork South Central, Green Party)
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The size of the bus fleet has not increased.

Brian Cowen (Laois-Offaly, Fianna Fail)
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Our record is second to none.

Dan Boyle (Cork South Central, Green Party)
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The bus fleet is the same size as it was when the Government came to power.

Brian Cowen (Laois-Offaly, Fianna Fail)
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We need to put in place a railway safety programme before we can improve rail services. There has been a history of under-investment in this country's railway system over the past 60 years. The railway safety programme that is necessary to facilitate improved rail services costs hundreds of millions of euro, although it is a good investment. The Luas system has been brought on stream successfully. The Government has further ideas for the integration of the transport system. I have indicated to the Minister for Transport that I am prepared to examine the provision of a ten-year capital envelope for transport to allow the Government to plan the phased development of the network. One third of the Government's enhanced capital programme is devoted to the transport sector. Members may have concerns about so much of it being spent on roads rather than rail——

Dan Boyle (Cork South Central, Green Party)
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The proportion of the funds being spent on the road network is too big.

Brian Cowen (Laois-Offaly, Fianna Fail)
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No, we need interurban road networks as well. It is not one or the other. We need to provide for all forms of public transport within realistic budgetary parameters. We need to make clear that we are sanctioning certain projects and then proceed to develop them. Everyone has a wish list and a vision of how things should develop, but we have to set priorities and recognise that there is a need for all modes of transport, particularly in urban areas like Dublin. I believe that the debate about the competing merits of rail and road services will intensify. The Government has given a commitment to examine how it can provide improved public transport. It understands that encouraging the greater use of public transport relates not only to the tax system, but also to the quality of investment.

Paul McGrath (Westmeath, Fine Gael)
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I move amendment No. 22:

In page 17, between lines 7 and 8, to insert the following:

"11.—As respects the year of assessment 2005 and subsequent years of assessment the Principal Act is amended by the insertion of a new section 473B:

'473B.—(1) In this section—

"approved child minding services" means an institution which is registered by the Department of Social and Family Affairs on such terms and conditions as the Minister for Social and Family Affairs determined by regulation;

"approved child minding" means a full or part-time child minding service provided by an approved child minding service provider;

"qualifying expenses" means the amount of fees or charges chargeable in respect of approved child minding.

(2) Subject to this section where an individual for a year of assessment proves that he/she on his or her own behalf or on behalf of his or her dependant made a payment to an approved child minding service provider in respect of approved child minding for a child who is the child of the person making the payment, or in respect of whom the parent making such a payment is in loco parentis or is an adoptive parent or the child is a child of a dependant of the person making such payment, relief from income tax at the standard rate shall apply on such payment up to a maximum of €7,000. The income of such person to be charged income tax for the year of assessment shall be reduced by the amount which is the lesser of—

(a) an amount equal to the payments so made,

(b) €7,000, or

(c) The amount which reduces the chargeable income of such person to nil.'.".

This amendment proposes a system of tax relief for child care expenses, an issue that has provoked a great deal of discussion in recent times. Many people are aggrieved because they do not receive enough help with the child care costs they are incurring. I recently spoke to a young couple with two children and they commute to work not from County Westmeath but from County Meath, on the main road.

Joan Burton (Dublin West, Labour)
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I knew the story would relate to County Kildare or County Meath.

Paul McGrath (Westmeath, Fine Gael)
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They said their child care costs are approximately €1,500 per month. It is as if they have to pay another huge mortgage on top of their mortgage. The payment of such large sums of money for child care is an enormous burden on young people. I assume they somehow manage to pay for child care as long as the money is flowing. They know that the period of time when they have to pay for such care will come to an end. I shudder at the thought that people in such circumstances will be made redundant, become ill and unable to work or encounter financial pressure, for example if their calculations go wrong. We would then see the consequences of the pressure that is placed on young couples.

We discussed yesterday the taxation disadvantages faced by single-income families compared to double-income families. The issue of child care costs is related because such expenses are often incurred by double-income families. Such families may enjoy financial benefits in terms of tax relief by reverting to being single-income families, who are being discriminated against at present. I cited yesterday the example of two families living side by side, each with an overall income of €56,000, but one of which is a single-income household while the other is a double-income household. The family with one income pays €7,000 more per annum —€140 per week — in income tax to the Revenue Commissioners for the privilege of being a single-income family. We may have differences of opinion in this regard, but that is wrong.

Perhaps I am spoiled because I was reared in a single-income household and, just like the Minister, I now live in such a household. We may have to pay the price for the privilege of having somebody at home to look after our children. I am worried that we are narrowing the options available to young people. Mortgages are at an all-time high when considered as a percentage of income. When I got married, the mortgage on my house was £28 per month. It seemed like a substantial proportion of my income, but within three or four years my weekly wage had increased by more than my monthly mortgage. Young people who have committed themselves to enormous and frightening mortgages do not have as a real option the possibility of setting up single-income households.

I spoke about the taxation problems of such people yesterday. Will the Minister try to do something about the child care costs faced by those who cannot choose to be part of a single-income family because they cannot afford to do so? He will tell me that the Government is using the child benefit system to help people with their child care costs, but the monthly payment the State makes to families would not pay for a week's care of a single child. The payments offered by the Government are grossly short of what is needed. The Minister has argued that if he were to offer tax relief as I have suggested, he would distort the level of equality in the system. He is correct to state that my proposal would not benefit families with low incomes and welfare incomes, but other child care options are open to the Government to assist such households.

If the Minister is to examine this matter seriously, I suggest he should consider the merits of the Australian system. Under that system, everybody is entitled to vouchers for child care, regardless of whether one is employed or in receipt of social welfare.

There is an income threshold such that the well-off about whom the Minister spoke would not qualify. However, the voucher system is very fair. Anybody, be he or she unemployed or otherwise, can cash in his or her voucher for child care.

Although I am suggesting one model, it does not represent the end of the story. The Minster, in his new portfolio, may want to consider it. I know he is prepared to examine proposals and make up his own mind thereon. I do not know how many options he has had the opportunity to consider, but I encourage him to examine the Australian system which I believe worked particularly well. There are registered crèches throughout that country.

The Australian system also regularised the sector, which is very important. Ireland has problems at present in that many child care facilities are not in the system or regularised. They need to be regularised such that standards will be set and people will know that if they avail of a particular child care facility, it will be registered and meet those standards. The system I propose would achieve this.

The Minister will probably not accept my amendment, as on Committee Stage, but he should agree to study the various types of facilities available and the options that exist. Child benefit is not the only option that should be available.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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I support Deputy Paul McGrath's amendment enthusiastically. He has reflected the factual circumstances in which the greater number of parents find themselves. I am one of those parents who are directly affected by childminding costs. We have heard it said many times that such costs comprise the second mortgage. However, in the greater number of cases, including in my experience, childminding costs exceed the monthly mortgage commitment depending on the number of children and the opportunities available. In the cases of some families, including mine, children are attending more than one service provider daily.

There is a great responsibility to recognise the importance of addressing this area. I indicated prior to my making my pre-budget submission to the Minister for Finance that this was the single most important issue that needed to be addressed in his first budget. It is sad that he was unable to address this and related needs in respect of children's requirements on this occasion. It is therefore all the more important to impress on him the importance of prioritising the need to address this area for the budget for 2006.

Deputy Paul McGrath is quite right that child benefit, as the Government's preferred approach, comprises an erroneous response. I hope it is not the answer the Minister will offer because child benefit since its inception was never intended for this particular area. This is by and large a new growth area in terms of the changing reality of society whereby both parents or a single parent are in the workplace of necessity because of many reasons I and other colleagues have articulated during the course of our debate on this Bill.

We must also bear in mind that the system as it stands is a disincentive to people to have more children. There are no additional supports and certain people, particularly women who may have engaged in training or education, perhaps at third level, and who may have a career or profession, are quite rightly anxious to maintain their involvement in the workplace. The reality for many is that the greater part of what they earn is expended on childminding costs, particularly during their children's early and critical years. This is a considerable disincentive that is contrary to the interests of society and the economy, especially given the concerns over who will fund future pension provisions because of our depleting native workforce and our growing dependency on labour from overseas.

There is a need to take a holistic view of this matter and consider the by-products, deficiencies and negatives that arise from the system as it operates. I know many couples who would not consider having more children simply because of the affordability issue. Therefore, there is a bounden need to grapple with this issue and a responsibility on the Government to recognise the considerable scale and growth of the child care sector. One way by which the matter can be addressed, without detracting in any way from the Government's responsibility to provide safe, funded child-minding facilities, is to have preschool provision. This is not the direct responsibility of the Minister for Finance but the collective responsibility of the Cabinet. There is a considerable deficiency and a need for consistency and regulation in this sector, which is currently inadequately provided for.

On the Minister's direct responsibility, the proposition contained in Deputy Paul McGrath's amendment is worthy of his adoption. If in the budget for 2006 he addresses the serious need to extend relief to parents, whether they be single or in couples, he will have made a great contribution to the daily reality of ordinary people who grapple with the constraints of the demands they face. I commend the amendment to him and look forward to hearing his reply.

Joan Burton (Dublin West, Labour)
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The first principle of the Labour Party's approach to child care is to offer families, irrespective of whether they involve one or two parents, choices regarding how they wish to bring up their children. The current child care model focuses excessively on the needs of employers who want to have both parents in the workforce. While this is justifiable economically, we as legislators also need to consider the needs of parents and their children and the generational effect.

I spoke yesterday about the different kinds of crèches. Given the concentration of tax breaks on building facilities and the concentration of the Minister for Justice, Equality and Law Reform's equal opportunities child care programme 2000-2006 on built facilities in the private sector and, to a lesser extent, the community sector, we are, for the reasons I outlined yesterday, losing sight of what this matter is about. It is about how our children are brought up. I hope this is with the love, care and attention of their families. Babies are left in crèches when their parents, if they live in the commuter belt around Dublin, leave home before 7 a.m. A child care place for a baby for a week in most crèches is more than €200 because it is expensive to care for a small baby. The parents may not return home until 6.30 p.m. or 7 p.m. The Minister's children are probably young enough for him to know that many crèches charge a penalty if the parent arrives late. A crèche is a professional business operation which is very tough on young parents.

Ireland is said to be the second richest country in Europe but most other European countries allow one or both parents to be at home on maternity, paternity or a combination of leave for most of the first year of a baby's life. In this way the baby experiences a loving family environment.

The equal opportunities child care programme run by the Department of Justice, Equality and Law Reform has failed. Ireland has a long and good tradition of some child care being available through the extended family and neighbourhood. A grandmother, sister, cousin or woman down the road might take on the job. Some women who have reared their children or whose children are in school all day decide to mind a baby or two children.

The programme does not provide for that traditional type of service which many parents love because the children are nearby or with a relative. They are not fined if they are five minutes late to collect the child. In addition, the child sees the minder at holiday times and the minder may even occasionally take the baby overnight. When we move to a social worker-determined model, we should not throw out our traditional family values. I hope the Minister will have influence over the debate.

The county child care committees are very expensive to operate. They correctly focus on levels of training but love and care are more important for a baby. It does not matter if one has a degree in babyminding and so on. The quality of the love, care and attention given to the baby is essential. Registration, training and the quality of the premises are important too. We have, however, closed down the informal sector.

The Minister's predecessor introduced a tax break for letting a room to the value of €6,000. I have often wondered whether this was a good or bad initiative. There are many black economy childminders, some good, some not. Surely it is not beyond our imagination to devise a scheme to bring some of these good, traditional family-based childminders into the system. It may be difficult because there are many other attractive employment options available. We should not choose a model for large-scale private sector provision in a small community.

In many ways the Child Care Act 1991 opted for a Rolls Royce legislative model when there were not enough resources or people for that model. It was right in theory but has not worked out well in practice. Some of the people working in the former health boards were more interested in covering their backs. The situation resembles that of a lady selling apple tarts who is hounded by the environmental protection officer when in most other European countries people would be waving a flag to advertise her baking and she would be selling to the local hotel and so on.

There is another side to that and one does not want the guests in the hotel to suffer class one food poisoning. There ought, however, to be a balanced model of regulation which recognises some of our positive traditions in this respect. Deputy Paul McGrath said there is more than one model of child care. In Ireland, traditionally, there are four models, all of which should be considered.

What is being done for parents who have teenage children, particularly boys? After school, services exist but often teenagers at different stages in their lives need access to the presence of their parents. They do not want their parents to talk to them but they need their parents while they go through the experience of growing up. Within the Civil Service there has been a positive development on job-sharing and on the facility to take leave.

A woman may start to work at approximately the age of 23 or 25, having graduated and qualified and maybe taken a master's degree. If she is to work until she is 65, why not acknowledge that for five to seven years of that period she and her partner may have important home and family commitments? It is wonderful that many fathers are interested in spending time with their children and sharing the fun and the exasperation of child care.

I hope the Minister can bring some imagination to this debate and that it is not simply driven by the needs of employers who want women workers. While that is a justifiable economic demand, it should not be the exclusive determinant of what we do about child care provision. The Minister yesterday mentioned child benefit. When I was Minister of State in the then Department of Social Welfare and Deputy Woods was the senior Minister, I brought forward the idea that the child benefit payment was the way to avoid a poverty trap. Everybody, including the present Minister for Finance, followed this.

A report on that subject, chaired by Peter Malone, a prominent employer in the hotel trade at the time, was designed to overcome the poverty traps which then existed if people on a social welfare income took up work. Other countries offer refundable child credits. Deputy Paul McGrath mentioned countries with voucher systems. Something similar should be possible here and that is one of the reasons to examine the technical capacity of the Revenue Commissioners' information technology system.

The take-up and targeting of the family income supplement is a mess. Public sector employers are the most likely to avail of this because they are prepared to deal with the paperwork. Several models exist and perhaps the Oireachtas Joint Committee on Finance and the Public Service should consider these to decide what works and what fits with our cultural traditions regarding children.

I have followed with close attention the history of institutional care and the very sad situation that existed for many people. Now, on the basis of tax breaks, we are creating large-scale crèches, particularly for young babies. What will be the effect of those in 25 years' time? Would it not be better if we balanced that tax break with a greater possibility for either or both parents to be with their baby for longer and to use that time for caring? Children are babies for just a short period. Time passes and then they are teenagers who will not even speak to their parents.

Instead of being led by the nose by social policy experts, some of us in this House should have confidence in what we believe is good or bad and we should leave the choice to individual parents and families. The Minister said he will examine the issue, in which I wish him well. There will be tremendous support from parties across the House if he is able to open up the situation.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am pleased we have reached the end of the debate and that finally there is something on which I can agree with Deputy Burton. Her sentiments are close to mine on the question of ensuring that we do not end up with an institutionalised setting for child rearing. Obviously crèches and child minding services have a role to play, but it is not an exclusive place. There is a need to examine pragmatically and practically what can be done in regard to providing family support. Making the situation more complicated than it is already would be a point of departure for me in terms of how one might go about solving the problem. It is just part of the problem. People must be able to make choices. There is not one uniform way of dealing with the issue. The tax system is not the only way to deal with the matter. As Deputy McGrath said, there is a basic problem in that those who most need child care facilities, including low income families, would not be able to avail of such a tax credit. The basic issue is how to deal with this problem.

Child benefit was not designed to deal with this issue. At least it has a universal element in that it provides support for families with children. Thankfully, the changes in tax policy reduced the tax wedge in that people are moving out of poverty. People now have more opportunities and more jobs are being created in the service industries. Non-Irish people are now taking up many of the jobs in traditional service industries, which is an indication of how people are changing their views on the type of trade or profession they would like to take up.

Significant sums of money are being spent on capital allowances for employers, child benefit, which amounts to almost €2 billion, and the programme to which the Deputy referred. However, more needs to be done on the supply side. More than €330 million has been spent on the capital budget for 2005-09 under the equal opportunities programme. This provides for an additional 17,000 places. There must be flexibility. We should not try to complicate the issue further when trying to devise a method whereby people can deal with the issue of child rearing services. We are all aware of the high cost of this service. Child benefit was not introduced to replace or supplement this cost, but it is extra money available to families. Interest rates are low, even though property prices have increased. This has resulted in higher mortgage repayments. Higher wages and more labour friendly tax policies have enabled people to deal with these issues. People are spending a great deal of money for some of these services, but they are in a position to do so. It would be unthinkable 20 years ago when salaries were so low.

Paul McGrath (Westmeath, Fine Gael)
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There is no margin for error.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy referred to the difference in treatment of one earner or two earner families. The difference might be closer to five and seven, but that is beside the point. More often high child care costs apply to two income families rather than to one income families. Unless there is such a discrepancy, families would not have the ability to deal with these additional costs. That is not to draw a distinction between the quality of parenting in either household; it is just a social fact of life, because one cannot be in two places at the one time. The difference in treatment takes account of that social change. Unfortunately, because the equal treatment of families was dealt with previously, regardless of whether these were one earner families or two earner families, people interpreted it as diminishing the role of motherhood in the home and so on, which is not the case. One must explain as best one can what is behind this provision.

The increase in participation of women in the workforce — their role is not restricted to that of motherhood in the home — has brought about the need for the tax policy to reflect that social reality. Maintaining the equal treatment policy would mean that two income earner families would not have feasible options. Real choice sometimes requires different approaches for different sets of circumstances rather than saying this is the way the tax system must work for everyone. People are beginning to understand what was behind the policy, rather than the unfavourable comments that initially met the former Minister, Deputy McCreevy's, introduction of the policy. It was ameliorated by the home carer's credit, which people saw as a sudden break with the established way of dealing with matters.

I am not claiming that we are approaching a comprehensive solution to the problem. Neither do I believe the tax policy is the means by which one can compensate in full families for the cost of child care. That would be a wrong message to send out. It is a question of ensuring that there is available to households sufficient disposable income to enable them to make choices that would have an additional cost compared to someone in different circumstances. One cannot socially plan for everyone to carry an equal burden in respect of the expenses they incur in view of what they choose to do, where they want to work, how long it takes them to get to work, the crèches available to them and so on. However, we must broaden the options for child care. It is not simply a question of providing more crèches or boosting the programme by hundreds of millions of euro. As has been said in this debate, it is a question of this House, on an all-party basis or through the Joint Committee on Finance and the Public Service if necessary, seeing what it can do to achieve a pragmatic solution of the child care issue.

Brian O'Shea (Waterford, Labour)
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I am now required to put the following question in accordance with an order of the Dáil of this day: "That each of the amendments set down by the Minister of Finance and not disposed of are hereby made to the Bill, that Report Stage is hereby completed and the Bill is hereby passed."