Wednesday, 6 December 2006
Budget Statement 2006
As I present my third budget to this House, I am delighted to report that Ireland's economy is strong.
Growth is running at 5%, its ideal, sustainable level, and more than 2 million people are at work. We are making unprecedented investment in our infrastructure and this will enhance our competitiveness and improve our quality of life for years to come.
Our public services are being expanded, improved and reformed, and more doctors, teachers, nurses and gardaí are employed than ever before. At the same time, the public finances have never been in better shape. The success we enjoy now has been brought about by the hard work of our people, responding to the policies of this Government. The purpose of this budget is to use that success as a platform on which we will continue to build a fairer and stronger Ireland.
In 2007, our country will extend its record of outstanding economic progress. The economy will grow by 5.25%; we estimate that 72,000 new jobs will be created next year, representing a 3.5% increase in the numbers at work; unemployment will remain low at 4.4%, among the lowest in the EU; and inflation, as measured on the harmonised EU basis, will moderate from 2.7% on average in 2006, to 2.6% in 2007.
Of course these projections are subject to some degree of risk from international factors. These include a possible sharper than expected downturn in the US economy; a slower growth rate than is currently forecast in Europe; further ECB interest rate increases; and the ever present unpredictability of oil prices and exchange rates. There are also domestic risks of losing competitiveness and from unbalanced economic growth. This budget addresses those risks by taking a long-term, sustainable approach to our economic management.
The Government's primary economic aim has been to create more jobs and facilitate more business being done. The additional revenues generated by such a strong economy enable us to sustain ongoing improvements in our public services year in, year out. The success of our policies is best highlighted by the hundreds of thousands of new jobs created, and the changes to our tax policies which have rewarded work and allowed people take home a greater share of their pay. We have also been able to provide for the less well-off in ways which no Government has ever achieved before. We have built up the productive capacity of the country by investing in capital spending; thereby helping us to compete better in the long term also.
At the same time that we have been doing all this, we have more than halved the national debt burden, an example of responsible Government at work. Our strategy has been remarkably successful by any measure and is the firm foundation on which we can build in the future.
The year 2006 has been an exceptional year for the public finances. It is true that although tax revenues are well ahead, some of the buoyancy is due to one-off windfall gains. Against this backdrop, we must firstly ensure any increase in spending is used efficiently and effectively. We must continue to insist on value for money in public spending and we must be careful not to inject so much spending that we create additional inflationary pressures, and in so doing reduce the impact of additional expenditure.
I am not proposing that because we have extra resources we should spend it all now. That would be irresponsible and short-sighted. Responsible Government involves finding the balance between meeting immediate priorities and making provision for future uncertainties. Of the additional resources at my disposal this year, I am returning some to the taxpayer and committing some to additional support in the social welfare and health areas, in care of the elderly and in improving services for the disabled. I am also using some of the additional revenue to run a very substantial budget surplus. In the event of a global slowdown, we will be able to use some of this flexibility generated during the good times to protect jobs and public services at home.
For these reasons, I will provide for the following fiscal targets in 2007: a projected general Government surplus of 1.2%; an increase in gross current spending of 11.5%; an increase in capital spending of 13%; and a gross debt to GDP ratio of under 25%, one of the lowest in Europe.
Balancing responsibility with ambition has brought us to our present position of economic strength and this Government is determined to maintain that approach. It is the only means of prolonging and extending the best period of sustained economic growth in our country's history.
Regarding rewarding work, as I stated, Ireland's economic success is driven by the hard work and collective efforts of the people. There is no doubt in my mind that our national economic potential has been boosted through a transformation of our tax system generally and our income tax system in particular which has dramatically increased the rewards of work.
During our ten years in office so far, we have made our income tax system fundamentally fairer by introducing tax credits, widening tax bands and cutting tax rates. We lifted hundreds of thousands of people out of the tax net. We introduced and increased the minimum wage and ensured that people on it do not pay income tax. We cut the income tax burden on average earners by more than half. We removed the average wage from the higher tax rate. We reached our target of 80% paying an effective tax rate of no more than 20%.
We abolished many property-based and other tax relief schemes and introduced restrictions on the reliefs available to high earners as part of our continuing tax reform measures. We will continue to assess the role time-limited tax relief schemes can play in supporting public policy objectives. In short, this Government has achieved a fairer, more progressive and more rewarding income tax system. Thanks to the strength of our economic performance, we can now go further.
I wish to announce the following income tax changes to the House. Today, I am increasing the personal tax credit by €130 to €1,760 each year for single people and by €260 to €3,520 for married couples. I am increasing the employee tax credit by €270 to €1,760 per year. The entry point at which people will start paying income tax is being increased to €17,600 per year——
——equivalent to more than €8.65 per hour. The employee PRSI entry point is also being increased to that level. These measures will remove around 88,000 from the tax net altogether. Once again, in 2007 we will meet our commitment to keep those on the minimum wage completely out of the tax net.
This means that almost two out of every five earners, or 846,000 persons, will be outside the tax net in 2007 compared to one third, or 677,000 persons, in 2004 and one quarter, or 380,000 persons, when we took office in 1997. This is a highly significant development.
The cost of these measures is €501 million in 2007 and €657 million in a full year.
The 20% standard income tax band will be widened by €2,000 per year to €34,000 single and €43,000 married one earner couples. The projected average industrial wage for 2007 is just over €33,000. Again, we have ensured that workers on such earnings will not be liable to pay tax at the higher tax rate. This measure will cost €268 million in 2007 and €365 million in a full year. These increases in credits and bands mean that 80% of income earners will continue to pay an effective tax rate of no more than 20%.
I am also increasing the threshold for the payments of the health levy from €440 per week to €480 per week, or just under €25,000 per year. This means that all workers earning €480 or less per week will be exempt from the health levy.
The income tax exemption limits for senior citizens aged 65 and over are being raised from €17,000 and €34,000 to €19,000 and €38,000 per year respectively for single and married persons, removing a further 9,000 from the tax net. This means our senior citizens will be exempt from income tax if they earn less than €19,000 single or €38,000 married per year.
I propose to increase a number of other tax credits which affect certain people because of their particular circumstances. Widowed persons currently receive an additional tax credit of €500 per year. I am increasing it by 10% to €550 in 2007. A special tax credit is also given to widowed parents in each of the five years following the year of bereavement. I believe that widowed parents deserve greater support during these difficult years and I am increasing the credit by €650 in each of the five years after the year of bereavement. The increased tax credit will range from €1,750 in year five to €3,750 in year one.
A special tax credit is also given to people who care for an incapacitated child. In 2007, I am doubling this tax credit from €1,500 to €3,000 each year.
The blind person's tax credit will go up by €260 single and €520 married to €1,760 single and €3,520 married per year, respectively. Alongside the income tax age exemption limits, those aged 65 and over receive an extra tax credit. This extra tax credit will increase by 10% to €275 single and €550 married per year. These measures relating to exemptions and special credits will cost more than €88 million in a full year.
With regard to tax rates, when we came into office, we made a commitment to the Irish people to reduce the marginal rate of income tax from the then 48% to 42%. We delivered on that. We also said we would reduce the top rate further to 40% if economic circumstances permitted. We believe that the economic circumstances are sufficiently buoyant now to enable me to reduce the top rate of tax from 42% to 41% today.
This rate cut will cost a net €125 million in 2007 and a net €186 million in a full year. If this Government is returned to office, and is honoured with a further term, then on the basis of our current economic strength being maintained, it is our shared intention to complete the commitment to cut the top income tax rate to 40% in next year's budget.
I propose to increase the health levy from 2% to 2.5% on income exceeding €1,925 per week or just over €100,000 per year. This extra money will help fund services such as long-term care initiatives for the elderly. We need to act now to secure such funds and I believe it is only right that those best able to afford it make an increased contribution. This will raise €34 million in a full year.
Taken together, these changes will reward work and increase disposable income. They will help workers, most obviously those on low and middle incomes, and will, I believe, be welcomed by all. The full year cost of all these income tax measures is estimated at just over €1.25 billion.
Helping Taxpayers Claim
It is not just a matter of providing additional tax reliefs for the ordinary taxpayer. The taxpayer must also be helped by making it as easy as possible to access tax reliefs. We already made strides in this regard by giving mortgage interest relief and medical insurance relief at source via the banks, building societies and health insurers. However, there are other areas where getting access to reliefs can be improved, especially in the area of various expenses reliefs. Accordingly, the Revenue Commissioners will put in place measures specifically to help the taxpayer, in addition to the major publicity campaigns already undertaken to make taxpayers more aware of their entitlements.
In 2007, all age-related tax credits will, where possible, be credited automatically to the taxpayer, where a verified date of birth can be established through Revenue and social welfare records. Credit institutions will be enabled to operate DIRT-free accounts for those aged 65 and over and for those who are permanently incapacitated where their income falls below the relevant income tax limits. At the moment, both categories of depositor have to reclaim the DIRT paid in such cases.
In 2007, Revenue will also implement a system to credit tax relief on trade union subscriptions automatically, based on trade union membership lists, and will be engaging with the unions to make the necessary arrangements in respect of their members.
For 2008, Revenue plans to move, where possible, to automatic repayments in respect of certain hospital and other expenses that qualify for tax relief. Tax relief due on medical insurance paid by employers that has been subject to benefit-in-kind taxation will be automatically included in the employee tax credit. I have asked Revenue to progress work on applying similar procedures in due course to nursing home and other medical expenses that qualify for tax relief.
Revenue will explain the details of these simplification measures later this week. The Government is determined to make it easier for ordinary taxpayers to claim and receive their rightful entitlements.
Promoting Enterprise and Innovation
Ireland has become one of the world's most enterprising economies to the benefit of all. More jobs, better opportunities, improving prospects and greater tax resources have been the results so far. I want to see that development continuing so that the people of this country can face with confidence an increasingly competitive global marketplace. I want to see the State encouraging Irish businesses to work smarter, to pursue excellence and to invest in innovation and creativity for the future.
The budget measures I am announcing today will encourage enterprise, incentivise innovation and promote competitiveness in Irish industry. They will help position our businesses for long-term success.
Supporting growing businesses
In the past ten years, we have refocused the business expansion scheme and the seed capital scheme to ensure that they channel funds to help transform and modernise our small business sector and improve our national competitiveness. These schemes are due to expire on 31 December and have been specifically reviewed at my request. Hundreds of small businesses using these schemes were consulted and asked for data and for their views on the schemes. Many of these firms using BES are ordinary small to medium-sized manufacturing companies in every part of the country. They make a vital contribution to job creation and to maintaining our competitiveness.
On foot of this review and the suggestions of groups such as the Small Business Forum, I am announcing an extension of these schemes for a further seven years and I am raising the ceiling per company on total BES investment from €1 million to €2 million. The annual limit on BES investment per investor, which has not been increased since 1984, is being raised from €31,750 to €150,000.
In the case of the seed capital scheme, the annual investor limit is being increased to €100,000. I am increasing these limits in order to bring vital risk capital to the small business sector. As these schemes are approved State aids, their continuation and the changes proposed will require the approval of the European Commission. The full year cost of these measures is estimated at just over €25 million.
With a view to fostering new companies and entrepreneurs, during the course of this year, I approved a proposal for a new round of seed and venture capital funding announced by my colleague, the Minister for Enterprise, Trade and Employment, Deputy Martin. This will involve a €175 million State investment through Enterprise Ireland over a period of ten years.
It is often pointed out that much of the dynamism of an economy comes from small firms and there is a real need for small companies to make use of innovation and modern technology to maintain competitiveness. To help bring that about, the Minister for Enterprise, Trade and Employment has announced a provision of €5 million in 2007 for innovation vouchers, knowledge acquisition grants and ICT audits, all of which were recommended by the Small Business Forum.
Helping small businesses
Small businesses are a major source of employment and growth in this country. Small businesses are big business. There are approximately 250,000 small businesses in Ireland today, employing almost 800,000 people, or 40% of the workforce. Recognising their important contribution and their development potential, I am pleased to announce the following package of measures aimed at reducing the administrative burden on this important sector. Small companies whose corporation tax liability is currently less than €50,000 can pay preliminary tax based on their previous year's final tax liability. This removes the need for small businesses to forecast their projected full-year performance prior to the end of their accounting year. To alleviate further the burden on small business, I am increasing the small company liability threshold from €50,000 to €150,000.
Over 97% of Irish companies will have the benefit of this simpler and more straightforward system. It will help them to get on with their business without putting the State's cash flow at risk. I am also introducing measures proposed by Revenue whereby new start-up companies will not have to pay preliminary tax in respect of their first accounting period. In addition, I have asked Revenue to explore further opportunities to reduce the tax compliance burden on all firms, large and small.
The annual VAT cash accounting threshold for small firms is being raised from €635,000 to €1 million from 1 March 2007 to simplify administration and reduce working capital requirements. This allows smaller firms to pay VAT on receipt of payment rather than at the time a sale is made. The small business VAT registration turnover thresholds are being increased from €27,500 per year for services and €55,000 per year for goods to €35,000 and €70,000, respectively, from 1 March 2007. This measure could take up to 8,000 businesses out of the VAT system and will considerably reduce their administrative burden. The frequency of VAT payments for smaller firms is being reduced from six VAT returns to three each year in some cases and to two each year in other cases. This will provide a cash flow boost to firms and significantly reduce compliance costs. The transaction threshold which triggers the requirement for a tax clearance certificate is being increased from the current €6,500 to €10,000.
The details of all these measures are contained in the Summary of Budget Measures. The full year cost of these measures is €53 million, with an additional once-off cash flow cost in 2007 of €124 million. This will reduce the regulatory burden and enhance the competitiveness of companies whose well-being is critical to our continued success.
R&D tax credit
I am also enhancing the existing research and development tax credit for firms so as to promote research and development spending in our manufacturing sector. Details are in the Summary of Budget Measures. We must act now to promote as many jobs as possible in the productive sector throughout the State. Investment in research and development is a key factor in retaining our manufacturing base. The special research and development tax credit seeks to encourage this and the changes I am making will further incentivise firms to engage in research and development. These improvements will cost €70 million in a full year and will complement Government spending on science, technology and innovation, which will increase from €800 million in 2006 to €900 million in 2007.
In recent years, hotel and tourism bodies have made a strong case to introduce a VAT measure specifically for conferences, which will allow deductibility of accommodation expenses on a ring-fenced basis to be competitive in this sector. I am now bringing in such a measure which should greatly help that sector to promote growth in the important conference business and benefit the entire country. This is in recognition of the importance of tourism, one of the country's largest indigenous industries. Details of the scheme will be set out in the Finance Bill.
Sport plays a major role in all aspects of Irish life, commercial and social. In recognition of this, there are specific income tax and capital gains tax exemptions in the tax code for sporting bodies. I propose to include in the Finance Bill 2007 a similar exemption from stamp duty where such sporting bodies purchase land for the purpose of promoting sports.
Protecting the Environment
The environment is a concern for us all, but this concern is not addressed merely by announcing policies. It is a matter of practical measures, targets and actions that have a real effect. It is also a matter of achieving a balanced impact on society. Our economic success in recent years has brought with it environmental pressures through increased consumption levels, waste and energy demands. However, we have been working to minimise the impact of these measures and enhance the quality of our environment.
The recent Stern review in the UK highlighted that climate change is one of the most pressing global economic and environmental challenges we face. Ireland supports the international effort to address this challenge and is playing its part in the co-ordinated global response. We will meet our Kyoto target, mainly through reductions in greenhouse gas emissions in our economy, but also through contributing to the cost of projects to reduce emissions elsewhere in the world.
The Government has indicated its intention to purchase up to 18 million tonnes of carbon allowances in respect of the Kyoto commitment period from 2008 to 2012. I provided an initial €20 million in last year's budget and just recently the Dáil approved the investment of this money in emission-reduction projects in the emerging economies in eastern Europe.
A further €270 million will be provided to fund a programme of purchases up to 2013 and this will be reflected in the Government's medium-term investment programme to be set out in the forthcoming national development plan.
This provision will be kept under review. The purchase of carbon allowances is just one part of the overall strategy. We will shortly complete an updated version of the national climate change strategy.
In more general terms, on the environment we have made progress on many fronts, including enhancing public transport facilities under Transport 21; setting an ambitious target of 30% electricity generation from renewable sources; making rapid improvements in drinking water quality; significantly increasing high-quality waste water treatment capacity resulting in 90% compliance with EU standards this year from 25% in 2000 — as a result, pollutant loads to our waters have been reduced by 45,000 metric tonnes per year; increasing municipal waste recycling rates from 9% in 1998 to over 34%, which figure is increasing; introducing a major excise relief scheme for bio-fuels, costing in excess of €200 million over five years——
We have allocated €328 million in 2007 for the rural environment protection scheme. This includes provision for a new REPS 4 scheme, which will go to Brussels shortly for approval as part of Ireland's rural development programme for the period 2007 to 2013. The new scheme will include additional biodiversity elements and new supplementary measures designed to deliver further benefits to water quality and the wider environment. Here again, we have the opportunity to translate our concern for the environment into practical action, in partnership with farmers.
I am allocating an additional €10 million to the local government fund in 2007 in order to alleviate the pressure on certain local authorities most affected by the additional operational costs associated with new water services infrastructure.
We depend on cleaner technologies to minimise our environmental footprint. Furthermore, eco-industries are big business. They employ more than 2 million people in the European Union and comprise one of the fastest-growing sectors in the Union. Environmental protection and economic progress can go hand in hand.
I would like to mention a number of measures in the fiscal area which I am bringing forward.
In the case of vehicle registration tax, I intend to change the current rating system to relate it more closely to environmental policy objectives, in this case reducing carbon dioxide emissions. I intend that there should be some reward in the VRT system for choosing lower-emission vehicles, and that those choosing higher-emission vehicles should pay more.
For that reason, I am setting out a range of options in the budget booklet for making such a move. My Department will carry out a public consultation process on these proposals before coming back to Government. Any changes will have effect from a target date of 1 January 2008.
At the same time, my colleague, the Minister for the Environment, Heritage and Local Government will consult on his proposals for a complementary rebalancing of annual motor taxation. This would provide a further incentive through the motor tax system for the motoring public to drive cleaner cars and would impose some additional cost in respect of cars with higher carbon dioxide emission levels. This would apply to vehicles registered on or after 1 January 2008. Underpinning both of these initiatives will be a new mandatory labelling system for cars based on CO2 emission levels.
Linking consumption taxes to environmental goals requires us to discuss the details of such moves thoroughly with stakeholders if we want to get it right.
In my last budget, I announced an excise relief scheme for bio-fuels in the energy area. The relief is worth more than €200 million over five years. This initiative helps reduce our dependence on conventional fossil fuels, lowers CO2 emissions and stimulates new activity in the agriculture sector. In addition, the Government has also introduced grant schemes for new energy technologies at both the domestic and the commercial levels amounting to €65 million in the period 2006 to 2010. Building on the renewable energy package I introduced last year, I am making a number of further changes today.
The greener homes scheme has had a very positive response from the public. The scheme provides grants for the installation of new energy technologies such as bio-mass burners, heat pumps and solar panels. There have been about 10,000 applications so far. I am increasing the planned spend in this area by €20 million between now and the end of 2009.
In the commercial area, we introduced a bio-heat scheme for grant-aiding, for example, wood pellet burners. I am extending this scheme to cover the installation of other technologies such as solar panels. I am also extending it to buildings in the non-commercial sector such as community centres, and sports facilities so that they will also be able to avail of the grants. The planned additional spending for the next year is €4 million, partly funded by a reallocation of resources within the Department of Communications, Marine and Natural Resources.
Better energy efficiency and demand management and initiatives pay significant dividends for business as well as households. I am providing additional funding to Sustainable Energy Ireland of €3 million in 2007 to develop pilot programmes to support small and medium enterprises in assessing their energy usage and measures to enhance energy efficiency. Impacts of the pilot scheme will be reviewed during 2007.
On renewable energy, a scheme of tax relief is in place in the form of a deduction from a company's profits for corporate investment in renewable energy products in the solar, wind, hydro or biomass technology categories. This scheme was due to end this year. I propose to continue this corporation tax incentive for investment in renewable energy projects for a further five years, subject to EU approval.
Agriculture — energy crops
I am conscious that we are trying to establish a national bio-fuels supply chain, almost from scratch, and it is appropriate that we offer assistance at the various stages from crop establishment onwards.
The Minister for Agriculture and Food will shortly announce, subject to any necessary EU approval, grant aid for the production of energy crops in three stages from establishment to harvesting. First, establishment grants will be introduced for willow and miscanthus where costs of establishment are very high and there is a wait of several years before harvesting can begin.
Second, there will be a national top-up of €80 per hectare, in addition to the existing EU premium of €45 per hectare. Finally, there will be grant aid for the purchase of the expensive, specialised harvesting machinery needed. The cost of these three measures will rise to €6 million in 2009.
Excise on kerosene and LPG
As I announced in last year's Budget Statement, I am abolishing the excise on Kerosene and LPG used for home heating from 1 January 2007.
This will reduce the incentive to source these fuels in Northern Ireland where no excise is applied. This measure will cost €24 million in a full year.
Supporting Farming and Rural Economy
A competitive farming sector is the key to developing a sustainable rural community. It is important that as farmers are increasingly freed from the constraints of production quota and price supports, they be given the necessary assistance to enable them to invest and innovate and by so doing to be in a better position to compete in an increasingly globalised market for farming produce. It is also important that such assistance is prioritised to young farmers and to those farmers who have risen to the challenges posed by changes arising from the reform of the Common Agricultural Policy and the World Trade Organisation negotiations.
The package of rural development measures recently agreed with the farming organisations as part of Towards 2016 has been widely welcomed. It means that Government support for farming will more than double in the next rural development period compared to the present one.
This is a time of great change in farming. New schemes of aid for restructuring in the food processing sector, while not directly involving farmers, provide an essential underpinning to adapting our agriculture and food sector to the new realities in EU and world farming.
Increases of 15% in forestry premiums and 17% in REPS payments, as well as substantial support for on-farm investment to help meet the requirements of the nitrates directive, reflect our growing concerns about the environment and our awareness of the important role that farmers now play in protecting our environment.
In line with the changes announced in my previous two budgets and arising from the conclusion of the latest social partnership agreement, Towards 2016, I am renewing and extending a series of farm tax reliefs in the areas of income tax and capital taxes, at a cost of €14 million in a full year. The two farm stock reliefs are being renewed. The general stock relief allows 25% of any increase in stock values in a year to be allowed as a trading expense. For young trained farmers, the relief is set at 100%. The stamp duty relief for farm consolidation, where two farmers exchange land, will now apply where only one farmer meets the consolidation criteria.
The tax exemption for long-term leases of farmland is being increased to €20,000 per annum for leases of ten years or more in duration. An exemption from capital gains tax applies to disposals of farmland outside the immediate family on retirement. The present threshold for the exemption is €500,000 and this is being increased to €750,000 from 1 January 2007. In addition, where farmland that has been owned and worked by a farmer for over ten years is leased for fewer than five years, and is subsequently disposed of to the person leasing the land, the present retirement relief will also apply.
The last three changes are aimed in particular at encouraging the transfer of farm assets to younger and more progressive farmers. The various measures are detailed in the summary of budget measures and some will require EU state-aid approval before they are implemented.
In addition, the farmers' flat rate of VAT is being increased from 4.8% to 5.2% with effect from 1 January 2007, at a full year cost of €16 million. This flat rate is designed to recoup non-VAT registered farmers for the VAT they pay on their inputs. This increase reflects a number of changes in the method of calculating this refund rate following consultations with the farming bodies.
These consultations are ongoing.
Supporting those in Need
When it comes to supporting those in need one of the measures of a true republic is the strength of its support for those on low incomes. Throughout its term in office, the Government has ensured that the less well-off have shared in Ireland's growing prosperity and 2007 will see further, significant progress. Today, I am pleased to announce the biggest package of support for those on low incomes in the history of the State.
Helping those on low incomes
The Government does not see economic growth as an end in itself. Rather, sustainable economic growth is the only way to generate the resources required to meet society's needs. The Government is determined to ensure the fruits of that growth are used to assist those who need support. Already, of course, enormous efforts have been made by the Government in this regard and we are fully intent on continuing the progress made. I am therefore providing for a social welfare package which will cost over €1.4 billion in a full year. This will leave total social welfare expenditure in 2007 at €15.3 billion——
——substantially more than allocated for 2006.
Old Age Pensions
I want to recognise the contribution made by our pensioners. These are the people whose work built up this country at a time when conditions were much tougher.
In the good times we enjoy, we owe it to them to make their lives a little more comfortable. We had a headline commitment to raise the old age pension to at least €200 per week during our term of office. I wish to confirm today, that by raising the contributory old age pension by €16 per week and the non-contributory pension by €18 per week, we have fulfilled this commitment. The new rates will be €209.30 per week for the contributory old age pension and €200 per week——
——for the non-contributory old age pension.
Lowest social welfare rates
In the Sustaining Progress Partnership Agreement, we also undertook to increase significantly the lowest rates of social welfare. In my first budget, I increased the lowest rate by €14 a week and, in my second budget, the increase was €17. In today's budget I am happy to announce an increase of €20, bringing the lowest adult rate to €185.80 a week.
These rate changes are all significantly higher than inflation and show that the Government has met its commitments in the programme for Government and the social partnership agreements. The total cost of all the increases in the social welfare rates that I have just announced is €973 million in a full year.
Other social welfare measures
In addition to providing for these very substantial general increases, the Government is introducing a wide range of other social welfare improvements, the full details of which will be announced by the Minister for Social and Family Affairs.
To recognise the role of carers in our society in helping the old and infirm within their own homes, I have agreed to pay a half rate carer's allowance to certain recipients of other social welfare payments.
I am also increasing the annual respite care grant by €300 to €1,500. We are increasing the back to school clothing and footwear allowance to €180 and €285. We are increasing the free fuel allowance to €18 per week and increasing the income threshold for eligibility to €100 per week. This means we will have doubled this allowance in the past two years.
For people of working age, the reckonable earnings threshold for maternity benefit will be increased to €350, and we are improving the position of qualified adults of pension age. These are mainly women who, because of their commitment to home-making, may not have a record of social insurance contribution. Accordingly, I am raising the rate for the qualified adult payment to €173 per week.
The Government's national disability strategy is a comprehensive and wide-ranging approach to improve the quality of life for disabled persons and to underpin their participation in society. The strategy, backed by considerable levels of investment, also promotes greater co-operation between Departments in the planning and delivery of services for the disabled.
Today's budget acknowledges and reinforces this valuable work. I have already announced tax measures to assist certain disabled persons and their families. In 2006, we allocated €3.3 billion for disability-specific services across Departments. In the 2007 Estimates, I announced an increase of 10% on the current year. Most of this money is already allocated to the health sector.
Today, I am providing a further €100 million for health-related disability and mental health services. This continues and expands the Government's €900 million multi-annual investment programme which I announced in budget 2005. This extra €100 million will provide additional residential, respite and day places, and other service improvements. The funding will also support the introduction of Part 2 of the Disability Act, which provides for assessments of need and service statements for people with disabilities. These important provisions will start for children under five years with effect from 1 June next. The funding will also support the continued implementation of the plan for mental health services, A Vision for Change.
Special Olympics Ireland
I am announcing a number of grants for organisations working for the benefit of communities throughout Ireland, including the disabled. The package includes a once-off grant of €2 million for Special Olympics Ireland. Details of the other grants are set out in the summary of budget measures.
Care services for older persons
The Government is investing to improve the level and quality of services for older people. Last year, I allocated €150 million for service improvements in this area. Today I am announcing an additional €255 million in full year terms to augment that enhanced spend next year. The measures include 2,000 more home care packages, providing a total of over 5,000 packages, further increases in home help hours, and an increase in the number of day and respite places. There will also be improvements in palliative care. The Government is also funding an increase in the number of residential care places.
There will be significant improvements to the nursing home subvention scheme to improve the basic level of support provided and to tackle anomalies in the scheme. Details of these various measures will be announced by the Minister for Health and Children. The Government's care policy will continue to focus on helping older people to stay in their own homes for as long as possible. For those who can no longer live at home, we will progressively improve long-stay residential services.
The number of elderly citizens is increasing and we must prepare for this. The Government has already given considerable thought to how people needing long-term residential care should be supported. The Minister for Health and Children will be announcing plans in the very near future which will build on the measures I have announced today.
This increase is in line with Government policy since 1999, that the full economic costs of private beds should be charged and will raise €50 million in a full year. As I stated earlier, the proceeds of the 0.5% increase in the health levy on earnings over €100,000 will also contribute to the cost of these service improvements in the care of our elderly.
Social inclusion/primary care
Furthermore, in the health area, I am allocating funds for the further development of primary care teams, where health professionals work together to provide an integrated service for the community. Where these have already been established, they are making a real difference in terms of the availability of quality, around the clock services. There will also be a range of measures to improve the health and personal social services available to certain marginalised groups in our society. The Minister for Health and Children will announce the detailed initiatives, which will cost €40 million in full year terms.
On top of the €14.6 billion already allocated for next year, the extra funding I am providing today will bring overall spending in the Department of Health and Children to almost €15 billion next year. This is an unequivocal demonstration of the Government's commitment to improving the health status of our population. Equally, however, the Government, on behalf of the taxpayer, will be insistent that full value for money be received for this unprecedented level of investment and we will be seeking positive co-operation from all sides in achieving our health reform programme.
Indirect taxes on tobacco
Smoking is one of the biggest contributors to ill health in our country. Consequently, I am raising from midnight tonight the excise duty on cigarettes by 50 cent per packet of 20——
——inclusive of VAT and by corresponding amounts on other tobacco products. This increase serves to underline the desire of us all to curtail the consumption of tobacco, particularly among young people where price sensitivities are greatest. It will raise €112 million in a full year.
I believe we should plan for further increases in tobacco excises for a period ahead so as to keep the level of tax increasing in real terms. I am discussing such a formula with the Minister for Health and Children. These steps are being taken as a health promotion measure and it would be helpful if in that spirit the social partners were to agree to discount some or all of the effect of such price increases in fixing on the relevant inflation benchmark.
Ireland has led the world by successfully introducing the workplace ban on smoking and it is important to build on this. The Minister for Health and Children will announce measures in the near future to restrict the sale of cigarette pack sizes containing less than 20 cigarettes.
Helping Young Families
I am acutely aware of the pressures on young families today. Families are the core of our society. Our policies must offer them firm support as they build homes and bring up children.
In 2007, I want to see additional support going to those who have bought, or are trying to buy, a home for the first time.
Assisting first-time home buyers
In the current market situation, any stamp duty cuts would, more likely than not, be incorporated into the sale price and so end up in the pocket of the seller.
The best way to do this is by way of mortgage interest relief. The Government therefore proposes to double the ceiling on mortgage interest relief for first-time buyers from €4,000 per year for single people and €8,000 per year for married or widowed people to €8,000 and €16,000, respectively.
This increased support will be available to all those currently in receipt of first-time buyer's relief who are in the first seven years of their mortgage. About 125,000 first-time buyers will benefit directly as a result of this measure, at a cost of €60 million in a full year.
As a result of this initiative for first-time buyers, a couple with a joint mortgage of up to €379,000 over 33 years, at an interest rate of 4.25%, will be able to claim interest relief on the full amount of the interest on their loan. Such a couple will now gain up to €1,600 extra per year, or €133 per month, in mortgage interest relief directly credited against their mortgage bill.
Single people will gain up to €800 per year, or over €66 each month. This will help existing first-time buyers who are already in their first home, as well as potential first-time buyers, without acting to inflate house prices further.
I am also raising the ceiling on interest relief for non-first-time buyers from €2,540 for single people and €5,080 for married people to €3,000 and €6,000, respectively. In addition, I propose to increase the rent relief for those living in private rented accommodation by more than the rate of inflation to assist those facing increased rental costs. The total cost of all these measures together is €74 million in a full year.
In recent years, the Government has channelled considerable resources into child income support and child care generally. This is highlighted by the fact that the monthly rate of child benefit for the first two children, which in 1997 was €38 per child, now stands at €150, or nearly four times higher. Today, I am announcing a further increase in child benefit of €10 per month for all children.
While this increase will benefit all children, I want to see additional support being given to those most in need. That is why I have agreed with the Minister for Social and Family Affairs to increase the back to school clothing and footwear allowance payments and to replace the existing three rates of child dependant allowance by a new standard rate of €22 per child per week. This is targeted at all families with children who depend on social welfare for support. The total cost of the child related increases will be almost €244 million in a full year.
In last year's budget, I announced a major new Government child care strategy. Since then, investment in child care facilities has intensified. The EU co-funded equal opportunities child care programme has exceeded all targets and has generated over 56,500 child care places to date. More than 32,000 new places have been created and a further 24,500 places have been supported with grant aid allocations amounting to almost €500 million over the past six years.
There has also been a strong response to the new five-year national child care investment programme which I announced as part of the strategy last year and which is funded exclusively by the Exchequer. To date, over 900 capital grant applications, amounting to more than €170 million, have been received.
As part of the Government's strategy to increase the supply of child care, I introduced an income tax exemption last year for income of up to €10,000 per year from childminding where individuals mind up to three children, who are not their own, in the minder's own home.
In response to recent representations received from the childminding sector and indications from the Office of the Minister for Children that the uptake of the scheme may be slow, I have decided to increase the exemption limit in 2007 from €10,000 to €15,000 per year.
This brings the total amount of paid maternity leave to 26 weeks. Unpaid leave is also being increased by four weeks, to 16 weeks. With the changes in maternity benefit I announced earlier, these changes will help to ease the burden on working families.
Another key element of the child care strategy was the introduction of the early child care supplement of €250 per quarter for all children under six years. This benefits more than 280,000 families. This year, I have provided an additional €100 million to cover the full-year cost of the payment, bringing the funding for this payment to almost €400 million in 2007. I am also allocating €1 million per year on an ongoing basis to support young parents through the teen parent support programme.
The early child care supplement, together with increased child benefit payments, means that families with two children aged under six years will receive direct, tax free payments of €5,780 in 2007.
These payments are designed to assist parents in the choices they make for the care of their children in the early years. When we came to office, a family in similar circumstances received direct payments from the Exchequer of €914 in a full year.
This increase is clear evidence of the Government's support for young families.
Spending on services
When account is taken of expenditure additions I am providing for today, gross current expenditure in 2007 will be €48.5 billion or 11.5% over the projected 2006 outturn.
Since we came into office, those adjustments have been made automatically.
The composition of this amount reflects the priority attached by the Government to social welfare, health and education. These three areas comprise 77% of the 2007 current expenditure provision. The allocation for social welfare is €15.3 billion, for health it is €14.3 billion and for education it is €7.9 billion.
We make no apology for attaching priority to these areas. The cumulative investment we have made has brought real improvements in the well-being of so many of our citizens. When account is taken of the social welfare increases I am announcing today we will have provided increases since 2002 of 42% in social insurance pensions, 56% in the lowest social welfare rate and 36% in child benefit at a time when the rate of inflation in the same period was 17%.
We are making provision for a gross capital spend of €7.6 billion next year, an increase of 13% over 2006. This will enable further roll-out of our ambitious investment programme currently running at about twice the European average. The medium-term investment envelope will be presented in the National Development Plan 2007-2013, to be published next month.
The national development plan will set out the strategic direction for investment in this country for the next seven years. It will be founded on a commitment to social justice and economic development that is both environmentally sustainable and internationally competitive. The best way of meeting the key social challenges ahead is by putting the individual citizen at the centre of our concerns where the common good must come first, above and beyond strong organisational interests.
We must also maintain a sound budgetary position that supports stable economic growth and be able to meet future expenditure needs even in times of lower economic growth.
I am satisfied that, in present economic circumstances, this budget is fiscally sustainable, economically appropriate and socially responsible.
We are trying to let some air out of the windbag.
It positions our country for the future. It is a major step forward in the building of a fairer and stronger Ireland. I commend the budget to the House.
——and the people gave their verdict in the European elections of 2004. They will give their verdict on today's cheers in a few months time.
In many ways these are the best of times, but they are the worst of times too. It is a tale of two Irelands. It is the worst of times for many people for whom the Government should have cared. So many people have been left behind in the onward march by the Government. It has created an Ireland of private wealth and public waiting — waiting for health, waiting for care, waiting for transport.
This is the Government's tenth year in power. During the past five years, it has raised and spent €258,000 million. The Minister wants us to focus on the last 1% of that which he is spending today. He does not want us to look back at the other 99% and how it was spent. The Irish voter does not have such a short memory. What people are asking is why a Government that has made so many promises and that has had so much money has still let down so many who depended on it.
We were promised zero tolerance but instead criminal gangs have got the upper hand in this society. They are a prey on our young people. They are confident in the knowledge that their chances of being caught are low and diminishing.
We were promised that our children would be in classes of under 20 pupils. What is the reality? Instead, our weakest pupils are struggling to learn and are falling further behind as the Comptroller and Auditor General recently showed us.
A childhood blighted and, perhaps, a whole life blighted. We were promised a metro by 2007 and a modern transport system for our capital city. Instead, we have day long congestion on the M50 and a bus service that has not seen a single new bus in five years.
We were promised affordable homes in sustainable communities. Instead, we have had the inept policies that have abandoned first-time buyers to hopeless lotteries for the so-called affordable homes that have barely arrived and long commutes from distant green field sites where no facilities exist. This is the legacy of ten years. These are not the problems of success; they are the problems of failure of vision, of courage, to plan, to reform and to manage. That will be the epitaph on this Government's tomb.
The budget produces some balm to conceal the symptoms of the problems that it has passed up the opportunity to do anything serious about for ten years. As far as the Government is concerned, this is as good as it gets. It claims that it alone has the competence to manage this economy. It suffers from a well-known delusion of believing its own rhetoric. It has come to believe that what it says is right because it has forgotten what it takes to succeed in a small open economy such as ours, what it is to be alert and quick to move to spot opportunities. We have a private sector that is alert and quick to move and spot opportunities but a Government that is sluggish, slow, flabby and unable to keep up and reform and unable to deliver to those who need it most.
In many ways, this budget is a fitting end to a Government that has become totally absorbed in its celebrity appearances and its focus group research. Make-up teams show it how to look, wordsmiths tell it what to say, choreographers tell it how to get a good photo shoot but as the spinners become more professional, the Government has grown more out of touch. It no longer sees the real problems that people suffer as it is whisked through sanitised corridors instead of seeing the reality that people have to deal with day to day. It stays in its own comfort zone treading water, refusing to reform, refusing to lead, or to be subject to any scrutiny or evaluation.
In ancient Rome the emperors knew that when people were discontent, they had to provide a distraction. They laid on bread and circuses. It was designed to distract, to produce a flashy appearance while the reality was so different. That is what we have in today's budget — an attempt to produce a flashy appearance that is so different from the reality.
When the hype surrounding the budget has faded away, the reality for many of the people we were elected to serve will not have changed — the family on €342 per week with two children, who is deemed too wealthy to get a medical card; the young single worker on 80% of the average wage who has to pay tax at the top rate, the same as the multimillionaire; the elderly infirm person who, on €430 per week and in need of nursing home care, is told he or she is too wealthy to get support with such care that is likely to cost €1,000 per week; and the pensioner on €260 per week who is told he or she is too wealthy to get the fuel allowance. That is what will be left after the budget is complete. That is the reality for many. That is the big gulf between appearances and the reality.
Nowhere have we come to see the gulf between reality and appearances more clearly than in the area of taxation. For three years in a row, the Minister said he would reduce the tax burden. Each year when the figures were counted, he collected more than he said and more than people's income. This Government has seen the tax burden rise to the highest level ever.
This Government has several firsts on its record. This Government is the first ever to make more people pay at the top rate of tax than at the standard rate. This is the first Government to raise more in VAT than in income tax, because it relies on people who are on low incomes to pay tax. Through its tax policies, it is the first to put an average home beyond the reach of ordinary families. Every family must now pay €27,000 in tax. The lion's share of the 55% increase in just four years came from those families on modest incomes. When these families go to a shop they pay a 20% tax rate. When they buy a house, if they can afford it, they pay a 33% tax rate. When they go to the pub they pay a 50% tax rate. When they buy a car they pay a 65% tax rate and when they fill it with petrol they pay 130% in tax. These are the people who have been the backbone of the country, paying to keep the Government's spending machine rolling. They have been let down because the money they gave has not been used to deliver the improvements we ought to have seen. Every single category of tax has increased as a proportion of family income. In just four years it has increased by 7 percentage points from 31% of income. Now €39 of every €100 of family income goes in tax.
What of the commitment that only one in five was to pay at the 42% rate? Today's budget attempts to conceal what has happened here. The Taoiseach's spinners have a new dispensation to try to conceal what the Government has not delivered. When the figures are stripped out, they show that next year 31.5% of people will pay at the top rate of tax. The Government will have reneged on commitments to 255,000 taxpayers who were to pay not at 42% or at 41%, but at 20%. The Government kept its promises to bankers, developers and the wealthy who wanted tax shelters. However, it did not deliver for the ordinary taxpayers and reneged on its promises to them.
The Tánaiste and his Progressive Democrats Party have made much play of tax and their belief on tax. Only one Government in the past four has reduced the proportion of income spent on tax. I will give Members a clue: it did not contain the Progressive Democrats or Fianna Fáil. The one Government that reduced the tax burden comprised Fine Gael, Labour and the Democratic Left.
What of personal taxation? The Government is supposed to have presented something fair to ordinary families who pay tax. Where is the reform in today's package? The reform, such as it is, is a sum total on personal credits of €2.50 per week. What happened to home carers? They get nothing out of the proposed PAYE increase. Home carers who stay at home and look after families get the same tax relief as they got five years ago. In that time those who went out to work have seen an increase of more than €900 in their allowances under the PAYE code, but the home carer has been denied that benefit. What sort of policy for families is that? Not only are they caught on individualisation with a penalty that could cost up to €5,000, but year after year the Government has tightened the screw on the family with one spouse staying at home. They are now losing €950 on those credits that the Government has denied them. That is the reality of the Government's family policy.
Last year we were told there would be a five-year plan for child care. The five-year plan only lasted for one year. Having searched high and low all I can find for child care is €2.30 per week on child benefit. How is that to cope with the growing cost of child care? It now costs a family €18,000 in pre-tax income to look after just one child. How is a family with two or three children to cope? The sum total of the five-year plan was one year and a payment of €1,000. It is a very disappointing return for families struggling to get by. They have already had to cope with huge increases in mortgage repayments and energy prices, and today the Minister announced another turn of the screw, a 25% increase in hospital charges which will see the VHI charge, which has already increased by 25% in 15 months, increase again. Ordinary families struggling to get by will need to bear all these burdens. I do not know where the spinners were when those changes were being delivered for those who form the backbone of the country.
The Minister has proposed to increase tax relief for mortgages from €4,000 for a single person to €8,000, if he or she is a first-time buyer and just for the first seven years. While I welcome the change, it needs to be put into context. The extra €15 per week will be wiped out tomorrow. Tomorrow interest rates will increase and it will cost the same person on an average mortgage €15 per week. It will not even last one day. This increase must be set against the Government's record. In the past five years what has the Government done for first-time buyers? It abolished the €3,800 grant. It put an additional 1% VAT on the new house price, costing €3,000. It increased the development charge that people buying new houses must pay by an average of €5,000. In the past few years the Government has placed an additional €12,000 burden on first-time house buyers. This €15 per week given back now is a very small compensation.
What of stamp duty? The stamp duty regime was to be reformed — the Tánaiste told us the Government did not need this money. It was too wealthy and was flathúlach. It could get rid of this money. Sadly something went wrong with the Tánaiste's great plan and the cash cow is still there. The reality is the Government's housing policy has collapsed, a grim reality facing most people struggling to buy a house. The Central Bank recently informed us that half of all families cannot afford to buy a house. This does not come from the Opposition, but from the Central Bank. This has happened because of the collapse of the Government's strategy. We were to have social housing. At the end of five years the Government has delivered exactly 4% of the social houses it promised. We were to have affordable housing. It has delivered less than 40% of the affordable houses it promised. There is a shortfall of 9,000 houses per year which should be occupied by families. Each year for the past five years the Government has failed to deliver for people on low income needing housing. No one on the Government side is taking responsibility and hanging his or her head in shame. It has not delivered on that fundamental promise.
The Government's policies have not been inspired by the needs of young families, but by the needs of developers who have dominated the Government's thinking on housing development with the cheapest option of sprawling relentlessly out to far-flung towns and villages becoming the norm where young families cannot get child care, transport or facilities. That is the reality of the Government's housing policy and €15 per week in respect of mortgage payments will not alter it.
This is the last in a series of budgets that have followed a remarkable pattern. They began in 2001 when the Government launched its first pre-election spending spree. The budget before us comes from the same stable. The Government is increasing spending at a rate 50% faster than the growth of national income. Taxes are rising as a result. This year, the Government is continuing the trend by budgeting to increase spending by 11.5%. To put this in perspective, an ordinary worker will be lucky to obtain an increase of4%. The surplus has been cut back at a time when the economy is experiencing pressure on the prices front and when SSIAs are coming on stream. Spending is increasing far faster than national income and tax revenues and this is posing a threat. Many commentators warned the Government about inflation before the budget was put together and I believe they will now be of the opinion that we are on dangerous ground.
The Government has doubled its dependence on the construction sector to support its revenue. A total of 25% of every tax euro spent by the Government comes from the construction sector. We are not in a strong position; we are, in fact, in a vulnerable position.
The real question is whether the Government has done enough to build the capability of the economy to withstand the real pressures under which it is about to come. Those pressures do not merely revolve around the possible slowdown in the housing market; they relate to the relentless march of competition that is coming our way. Our competitiveness has declined in each of the past five years. In the same period, our share of export markets and the level of manufacturing employment have fallen. Some 50% of the jobs that existed in IDA Ireland and Enterprise Ireland industries five years ago have disappeared.
We are facing serious challenges and the issue of competence on the part of the Government is important. I agree with Ministers who state that we cannot take economic management for granted. Nor can we take for granted the way the Government manages important frameworks used within the economy. I ask people watching these proceedings and asking where lies competence to consider how the Government has managed critical frameworks that are important to the long-term prosperity of the country.
Has the planning system been efficiently managed or have we repeated the worst excesses of urban sprawl seen in the United States in its darkest times? Any fair-minded person examining our planning system would state that we have repeated the dreadful mistakes made in the US. We are using resources ineffectively and making our families suffer. We do not have a proper planning system.
Is our regulatory system efficient? The regulators have increased prices in respect of energy and utilities across the board and faster than has been the case in any other country in Europe. Our utilities are 50% less efficient than those in Europe, but the regulators are increasing the prices that businesses and consumers are obliged to pay. Is that competent management on the part of the Government?
Is the management of our infrastructural investment competent? The OECD states that Ireland has fallen to 28th in respect of port infrastructure, 26th in respect of traffic infrastructure, 26th in respect of energy infrastructure and 25th in respect of broadband infrastructure. In short, the Government is bottom of the class when it comes to planning and delivering infrastructures to meet the country's needs. Is that competence?
Is the Government delivering the public service reform required to make the public sector efficient and quick to deal with consumers' needs or has it been sluggish and obtained poor outcomes for taxpayers' money? Again, any fair-minded person would say that the Government, particularly in the context of the way in which it dealt with benchmarking, has not displayed competence in critical areas. Ireland will not be successful and maintain its prosperity unless it has a government that recognises the threats facing it and makes plans in respect of them.
We have been presented with Estimates and spending budgets amounting to €64 billion. However, not a shred of evaluation will have been carried out in respect of the programmes to which this money relates. Multi-millions of euro will be committed to projects without any costings or evaluations being carried out. We are being asked to perform an act of faith in respect of the judgment of the Minister for Transport, Deputy Cullen, in respect of transport and the Minister for the Environment, Heritage and Local Government, Deputy Roche, on planning, and we are to hope that the Minister for Enterprise, Trade and Employment, Deputy Martin, will read his briefs on this occasion.
The public will not accept it. That is not the way in which multi-millions in public moneys should be spent. The legacy of the Government will revolve around opportunities presented and not seized.
I welcome some of the measures relating to health. These are the product of a health policy that does not treat seriously the needs of older people and that has allowed the grass grow under our feet in respect of the huge challenges we face in dealing with those needs. Although the changes relating to home-care and nursing home packages are welcome, they will merely deal with the symptoms of a system that is not able to cope rather than changing that system. Home-care packages are already almost exclusively available to people who are, as the euphemism has it, "blocking beds" in our hospitals. Such packages are not available to people who need support in order to remain independent. It is only when the system breaks down and these people become ill, present at an accident and emergency department and are transferred to a hospital bed that the possibility of a home-care package being offered arises. I welcome that additional packages are being provided. However, this is not a serious policy designed to deal with the issue of care.
I also welcome the enhanced nursing home subvention. Let us not forget, however, that the Government regards an old person on €420 per week as too wealthy to receive even one cent in nursing home subvention. That is not equity. The people to whom I refer will occupy beds in nursing homes — side by side with those who will pay €120 for their beds — and will be obliged to pay €1,000 for the privilege and, perhaps, sell their homes. That is not caring equally for the children of this nation. It seems that when people grow old, they do not receive equity of treatment.
People will welcome the €16 and €18 increases per week in pension payments. However, let us be blunt and honest. Increases in VHI and doctors' fees will account for approximately €4 of these increases, as will the increases in energy prices. In addition, the tax take will account for another €3 of the remainder. There will not be much left for old people to spend on luxuries.
The Minister has introduced a small increase in the free fuel allowance to acknowledge the huge burdens with which families must cope. Let us not forget, however, that only one in seven of all social welfare recipients qualify for the allowance and that only 7% of contributory pensioners are entitled to it. In the aftermath of the budget, many older people will experience little change in their circumstances.
This was billed as a green budget. I have sought in vain for evidence of a serious effort to green the budget. It was St. Augustine who said "O Lord make me virtuous, but not yet". That is what is happening here.
The Government is tricking around with the idea of changing VRT and adjusting it to reward those who purchase lower-emission vehicles. However, it cannot quite make the commitment in that regard and is intent on awaiting the findings of a few more consultation groups or the compilation of further reports. The Government is putting off until tomorrow the decision it is not prepared to make today. It does not want to rock the boat or worry any voters.
I wish to bring Members' attention to the fact that something is being provided for in the small print. We are being asked to provide funding in respect of a €270 million fine for failing to meet our Kyoto commitments. Why are we failing to meet those commitments? First, we allowed 500,000 houses to be built without insisting that they be constructed to the highest standard. We have locked the planning system into the worst form of urban sprawl that is causing families hardship in terms of paying for transport. The environment is being damaged by the carbon emissions to which this gives rise.
Ireland made commitments regarding the introduction of renewables in respect of which it has not delivered. We are bottom of the renewables league because we failed to make the crucial investment of installing an interconnector so that we might introduce more renewables into the electricity grid on a viable basis. The Government was not serious about greening the tax code, for which opportunities exist.
We should relate vehicle registration tax, VRT, to CO2 emissions. We should also consider housing development charges to relate them to the intensity of a house's energy use. We should examine the stamp-duty code to ensure that when houses change hands, the highest environmental standards are applied. We should remove artificial quotas for bio-fuels so that people might at least develop the product. We should make blending compulsory to provide opportunities to use bio-fuels instead of oil-based products.
If the Minister were serious about greening the tax code, he might do many things. However, it was a suitable spin to put out in the knowledge that green voters were expressing concern and that a soft vote existed. We need action on this serious business. Irish emissions are costing €6,000 million every year in environmental damage to the world, some €700 million over the Kyoto limits. It is against that record that we should be judged. We must take a lead in the area, and the Government is not willing to do so, only being willing to follow.
A bitter taste has been left for many, since the Government has not confronted reform. We have had neither a serious expenditure review process nor Estimates based on measurable performance targets. We have had Estimates with no programme evaluation. Multi-million euro projects are committed to without any scrutiny.
Those are not the arcane concerns of someone with a sharp pencil and a calculator, as the Tánaiste described me. Things might be better if those on the Government benches had a sharp pencil and used it in some other creative way. That way, we might have achieved value for money. All the Government's big announcements and ambitions, such as decentralisation, e-voting, zero tolerance and zero waiting lists, have failed for one reason — it has failed to recognise that reform is not about courting the flash bulbs or finding the best soundbite to impress a focus group. Rather it is about long hours, planning, persuading, evaluating options, testing performance, responding to shortcomings, trying again, changing work practices, and taking responsibility for failures. It is about hard work, making decisions and relentless commitment to implementation.
That is what has been so lacking from the Government, whose thinking has been dominated by the celebrity appearance rather than the serious job of reform. The greatest threat to this country's economic progress is the arrogant swagger of a Government that thinks itself invincible and irreplaceable. It is so intoxicated with its own rhetoric that it fails to recognise the serious challenges approaching. So much tax revenue over so many years represents a wasted opportunity. There have been too many dud and pet projects and white elephants. There have been too few competent Ministers driven by reform or a desire to deliver front-line services. The fear is that the Ministers' political epitaph at the end of this year will be that they were a bunch of wasters.
When I saw the Fianna Fáil Deputies jumping up and down there — Deputy Tim O'Malley was a notable exception — I wondered if the Taoiseach had borrowed some of the meters used by the American on "The Week in Politics" to measure how well the Minister, Deputy Cowen, was doing. Perhaps the person who received the highest rating might have a chance at a junior Ministry. The Taoiseach wishes to allocate one before Christmas.
Today's show is all to do with floating voters and how they turn the dial. The Minister is like King Croesus, his pockets bulging with the people's money, earned through hard work. The budget's measure is how fair he has been in distributing the people's own money among them. Fair is fair, and when I heard him commit himself to significant improvements in old-age pensions, I recognised that they were well deserved, since it was the pensioners who made this country what it is today. They need the extra money to meet our very high and inflationary cost of living, not least the cost of heat, gas and electricity, not to mention the VAT of 21% that they pay on almost everything.
A dependent pensioner, usually the married woman, is worth a great deal less than her husband in pension terms. The husband will receive €209 per week, on which I congratulate the Minister, but the dependent woman is worth only €173 a week. I thought that the Minister might have reformed that, and I am sorry that he has not taken the chance offered by the vast sums of money flying around to address the issue. I welcome the increase in the fuel allowance of €4 to the princely sum of €18 a week. It is approximately the cost of a bag of coal and half a packet of fire-lighters but welcome for all that.
I want to mention something about a group more or less forgotten in today's budget but whom Deputy Bruton mentioned earlier. The position of a married, one-income family, usually where the mother, but nowadays increasingly the father, remains at home to look after the children, has worsened considerably under the Government. It was one of former Deputy McCreevy's policy changes when Minister for Finance to individualise the tax regime. More than 75,000 such households now pay tax at a marginal rate of 41% because of the Government's individualisation.
For the most part, they are families with children where one parent has opted to stay at home to take care of children or other family members. The economist Jim O'Leary wrote a very thoughtful piece on the subject in The Irish Times last week. They have lost out and would need an increase of almost €11,700 before today or €13,700 afterwards to return to the relative position they occupied in 2000, before former Deputy McCreevy acted to their disadvantage. That is how far back they have fallen. It is important, as we celebrate the gains for the high rollers from the cut in the top rate, that we think of the single-income families who did not share to the same extent in the largesse the Minister offered today. It is worth pointing that out.
When I heard the Minister speak of prudence, I thought of John Lennon's son Julian, who said that his father's favourite Beatles song had been the one with the chorus "Dear Prudence"——
It seems that she did not want to play, and so the Minister's flirtation with Ms Prudence has proven rather shortlived. He decided that he had an election to win, and so prudence was left on the shelf. When I hear Fianna Fáil Ministers assure us that they will be prudent in an election year, I inject a dose of scepticism. In my bones, I know the opposite to be true. One cannot get a leopard to change its spots; when Fianna Fáil sees an election around the corner, its first instinct is to buy it.
This budget is not as crude as that for the election year of 2002, but when the sums are done, one sees that it is not that far out. This is the fifth budget from the Government since the last general election, and we are entitled to consider its overall record and not simply the measures announced today. The plain truth is that the tax justice agenda was stalled for the first three budgets since the last election. There was no reduction in tax rates in four successive budgets, only increases in VAT that were paid for the most part by families on modest and lower incomes. It is curious that this period of zero reductions in tax rates coincided with the arrival of the Minister for Justice, Equality and Law Reform, Deputy McDowell, as a full member of Cabinet. It is an amazing legacy for somebody who talks endlessly about tax cuts that he failed to secure a single one in four years.
Instead of tax cuts in those four years, most working taxpayers had to pay more. The standard rate band was frozen in value for two years and more workers than ever — almost a third, or 666,000 — paid tax at the higher marginal rate. This amounted to an effective tax increase for such persons. Today's reductions are no more than delayed compensation for the punitive measures imposed in three budgets, as well as the unjust and unfair increase in the VAT rate, which has still not been rescinded.
I thank the Minister for today's reductions but he should not expect people to cheer too much. He built up the reserves to pay for these cuts by a vicious regime of hidden increases, stealth taxes and charges in the last four years.
Many of the 52% of taxpayers who pay for private health insurance are on modest incomes. For these ordinary, hard-working and hard-pressed families, the increase in the cost of private beds in public hospitals will mean another round of insurance increases.
It says much about this Government that it cuts the top rate of income tax but not the lower one, and that it pays for this reduction by reducing the scope of other tax reductions. We have always argued that a wider standard rate band and additional tax credits are the best way to achieve tax justice. I am aware the Minister shares this view because he has said so on several occasions, as has the Taoiseach. I am sure Mr. Seamus Mallon will forgive me for using his famous phrase in a different context. What we have today is tax reform for slow learners. On the way, serious injustice was done to people who were forced to pay tax at 42%, as well as PRSI, on modest overtime payments, bonuses or wage increases.
This is a typical Fianna Fáil-Progressive Democrats budget, one that benefits the wealthy few rather than the hard-working many. The headline reductions in taxation will be welcomed by hard-pressed families. It remains the secret of our tax code, however, that tax is often only for the little people and is generally most onerous for them. In 2006, a single worker who earns €32,000 per year and €1,000 in overtime pays tax at 42%, plus up to a further 4% in PRSI. After today's budget, a single worker earning €34,000 will pay tax at 41% and PRSI on any overtime earnings or bonuses he or she receives.
It is not surprising that people in such circumstances wonder at a Minister who facilitates a situation where more than 1,000 of the most wealthy citizens, including 32 millionaire earners, pay an effective tax rate of between 0% and 5%. The Minister supplied these figures for 2003 in a reply less than ten days ago. No amount of massaging the figures, Enron style, can deny that dysfunction in our tax system. The point about lower taxes is that for tax justice to work, and to allow us to fund schools, hospitals and other public services, everyone must pay their fair share.
A reduction of 1% in the top rate of tax is worth zilch to a person earning less than €34,000 per annum. The Minister's tables indicate there are 1.7 million workers who pay tax at 20% or less. The reduction in the higher rate of tax is worth nothing to them. By his own account, only some 400,000 people will benefit from it. For a worker earning €84,000, the value of the cut is some €520; for those on €168,000, it is worth approximately €1,360; and it is worth €1,903 to those earning €250,000.
This budget is an example of Enron economics and Humpty Dumpty accounting. I am particularly interested in the tables set out in the Budget Statement. The table on page C22, for example, shows the numbers paying tax at the various rates. I asked my colleague and party leader, Deputy Rabbitte, to bring a copy of last year's Budget Statement for comparison purposes. Last year, we were told that 658,000, or 31.9%, of taxpayers paid tax at the higher rate. In another example of Enron accounting, the Minister has performed magic by suggest that only 19%, or 438,000, will pay at the higher rate following the changes in the budget. The smile on the Minister's face indicates he knows this is a good stroke. Some 250,000 workers have disappeared from the cohort of those paying the higher tax rate. I believe it was Tommy Cooper who used to say "Just like that". Just like that, 250,000 workers have disappeared. It is a good trick and the Minister has done well.
According to the Minister, 1.75 million workers will now pay tax at 20% or less. In other words, they will pay a higher rate of VAT than income tax. That is some achievement in terms of tax justice. The reality, however, is different. At the recent Fianna Fáil Ard-Fheis, I heard both the Minister for Finance and the Taoiseach proclaim that this reclassification would allow the Government to claim it had met its promise that only 20% of workers would pay tax at the top rate. All this happened in the blink of an eye. In late September, on the first day following the summer recess, I received a table that was calculated in the original format. Some of the Minister's handlers have since been to work to recast the table.
In Alice's Adventures in Wonderland, Humpty Dumpty said in a scornful voice that when he used any particular word, "it means just what I choose it to mean, neither more nor less". Likewise, when the Minister for Finance produces a table showing table rates, it means whatever he chooses it to mean, no more nor less. If he is to acknowledge the rules to the slightest degree, he must explain why he has undertaken this fix. It is an Enron-style massaging of the figures. If the Government wishes to restate the figures, it should follow the rules and explain exactly what it is doing, instead of trying to pull a fast one.
I will put forward a simple test for the Minister's consideration and I ask him to tell me whether I am right in my conclusion. Should a person earning more than €34,000 be offered an overtime or bonus package of €1,000 in the weeks before Christmas, what will be the effect on his or her pay packet? Will the tax be deducted at 20%? Absolutely not. It will be deducted at41%, in addition to some 4% in PRSI. If a nurse, married to a garda, earns €1,000 for an extra long weekend's work, when she examines her payslip, she will not see a 20% tax deduction but a 41% one plus PRSI. People will know the answer when they check their wage packets.
For some time I requested that budgetary tables be included in the statement and today they have been restated without so much as a blush. I suppose it is about the election.
After five years of this Government, it is time to take stock of what has been achieved. In the five years, the Government's spending programme has been awesome. The shortcomings on the delivery side have been no less striking. If the Tánaiste were in the Chamber, he would be asking the Minister for Finance if he got away with it. Despite the glowing promises made before the last election and the unprecedented tax revenues the Government has enjoyed, improvements in public services have not been delivered. We are still waiting for the promised increases in hospital beds, the promised reduction in class sizes to 20 for children of nine years and under and the promised levels of social and affordable housing for young people to start out on the property ladder.
While the package for care in the community is welcome, it is but a sticking plaster measure that will go nowhere near the core of the problems in our health care system. The headline figure for health spending is a large increase but it is still a lower percentage of national wealth when compared to other European countries. Sweden, for example, spends 60 cent on long-term care for every euro spent on health care while Ireland continues to spend only 12 cent. The effect of this massive underspend is seen in the trauma of overcrowded accident and emergency departments.
An extra €100 million package has been announced for health-related disability and mental health services. All Members were touched by Monday's "Prime Time" programme on mental health services for children and the desperation experienced by parents. Of this extra package, €75 million is for disability while €25 million is for the programme on mental health, A Vision for Change. The waiting list in Deputy Moynihan-Cronin's constituency for mental health services for children is four years. The €25 million will only see to the needs of counties Kerry, Kilkenny and Carlow, such is the level of need. Again, we say "thanks" but it is a very limited increase for a particularly needy area.
The health services employ more than 100,000 people, but the majority of employees feel they work hard and do not get due recognition. This is because of the bungling by the Minister for Health and Children and top management and poor organisation.
The biggest health policy change in the Government's lifetime is the loss of direct accountability. Professor Brendan Drumm has become the Minister for Health and Children while Deputy Harney is just for decoration. A sceptical nation was told that the abolition of the health boards and the formation of the HSE was designed to give us a more efficient health service. It is now obvious that the objective of the Minister's expensive reorganisation of the health services was not to improve service to the public, but to establish structures and processes to enable her to avoid having to answer for her actions and responsibilities either to the Dáil or the media.
There are now more than 3,000 people waiting at least one year for hospital treatments. Figures provided by the Minister last week show that 256 people are waiting for neurosurgery in Beaumont Hospital, 117 of whom have been waiting for over a year. In St. Vincent's hospital, 175 are waiting for pain relief, 65 of whom have been waiting for over a year. In Crumlin children's hospital, 674 children are on the surgery list, 199 of whom have been on the list for over a year. The national health strategy in 2001 promised that by the end of 2004, no patient would wait longer than three months. That is the reality in delivery.
It is even more shocking when we see the money it costs for this poor delivery of service. It is no wonder that an opinion poll yesterday showed that 58% of all voters and 60% of Progressive Democrats voters believe nothing has got better since Deputy Harney took over as Minister for Health and Children.
The Government backbenchers listened anxiously to what the Minister for Finance would do for first-time buyers and I am not sure they were impressed. They must know that every move made by the coalition in the housing market has ended in tears with no discernible improvement for first-time buyers. Ministers need to tread carefully when they try to use tax measures that appear to offer relief but end up boosting prices, as has happened more than once. It is a treacherous minefield and I see little genuine benefit in what has been announced in the budget. There is an urgent need to refocus policy to help the first-time buyer. The Government's legacy in housing is a mixed bag. Fortunes for some, massive house construction activity but frustration and anger among many whose dreams of home ownership are perpetually stopped by rising prices and the collapse of affordability. Nothing symbolises the failure of the Government to manage and distribute the gains of the Celtic tiger more than the current housing situation.
Let us take a representative young couple. John is a teacher and Niamh is a nurse, both in their late 20s and earning over €35,000 every year. They rent an apartment for €1,100 a month in Ongar, west Dublin, a community highlighted in last Saturday's The Irish Times. They would like to get married in four years and start a family but before this, they would like to buy a home within a reasonable commuting distance of their jobs. It seems incredible that this young and ostensibly affluent couple cannot buy a home of their own. Their parents, when they married 40 years ago, could buy a home and settle down within a reasonable distance of their work. John's older brother married in 1996 when the Celtic tiger was just beginning to roar and managed to buy a house.
John and Niamh want to know why the Government has rebalanced the property market and the chance of home ownership against them and in favour of a motley crew of landlords and investors. The Government's housing statistics on record construction levels do not speak to John and Niamh. They are locked out from buying their own home. Tonight when they do the sums after the budget, they are unlikely to feel much more confident than they were last week, particularly when interest rates will increase by 0.25% tomorrow. For the average starter mortgage in the Dublin area, €330,000, this increase will cost €63 a month, wiping out the gains in the Minister's increases.
The Minister did not say much on stamp duty. I was disappointed he did not include a left wing Fianna Fáil tax reform approach in the mix. He could have closed the loophole whereby those who bought the site of the Irish Glass Bottle Company in Ringsend saved €30 million in stamp duty. While the Minister did not want to tinker with stamp duty, he could have closed some of the loopholes. I am glad he is promising an exemption on sporting bodies. I have raised this several times through parliamentary questions and the media. I hope this will benefit the Cork GAA club which first raised it, because it deserves a break.
One of the people I am trying to assist is from the Taoiseach's constituency. She is 34 years old. Let us call her Una. She has a 12 year old daughter, Mia. She has been parenting alone since Mia was born, has a good job in a State-funded body and earns just under €39,000 per year. She would like to buy an apartment from Dublin City Council for herself and Mia for between €210,000 and €240,000, but she has a continuous affordability gap of between €50,000 and €100,000.
If her parents could give her this amount she would be all right. She could then pay €12,000 per year for her mortgage and another €1,800 to €2,400 in management company fees for the apartment she wants. I have known this woman for a number of years and she is always just that little distance away. She cannot make it. She is one of the 6,000 people on Dublin City Council's waiting list and is in the draw for affordable housing three times a year. As the Taoiseach knows, there is a draw for affordable housing in the city and 300 to 350 lucky people win the right to buy a home. That says it all.
Why has the affordability gap for people trying to buy a home constantly widened? I do not know if the Taoiseach appreciates that the average mortgage in Dublin is approximately €330,000. In the past 18 months the average repayment in Dublin has increased from €1,453 to €2,167 per month. That means buying a home in Dublin will cost between €12,000 and €24,000 per year, and one has to eat after paying that. To be in the market a single person probably needs an income of over €45,000 while a couple needs over €75,000. These large increases in mortgage repayments, high child care costs and increasing travel costs and travel times put a great financial strain on many families. They erode the quality of family life and people's ability to sustain marriages and relationships.
The Taoiseach talks much about community and he values it greatly. The heart of a community is people in relationships or marriages and having children. The strain is too much with the kind of structure the Government has allowed to evolve in the housing market. It is pitted against the best and brightest young people who have good education and jobs. Although they are working hard and doing it right, they are not getting there. There was not much attention to them in today's budget. The Americans call this phenomenon "toxic debt". This occurs when families and individuals buckle under the strain of buying and furnishing a house and having some quality of personal life. This Government, due to its incredible pandering to its friends the developers, builders and landlords is poisoning the opportunity to own a home for many of our best young people.
I read that this country has the longest waiting list for private helicopters and jets outside the United States. This is a mark of incredible affluence within a generation, and more power to them.
However, as we go up in the ratings for owning private jets and helicopters, the parties opposite seem to accept that owning one's own home will not be a legitimate part of the Celtic dream for up to 25% of our working population. That is an incredible change in philosophy in the parties opposite.
I could talk about social housing and the poverty trap of rent allowance. Rent allowance costs the Government €400 million per year and I do not need to tell the parties opposite that when a person receives rent allowance his or her right to work is heavily restricted. If one is on social welfare one is put into a poverty trap and a property trap. One cannot work because one loses euro for euro, and because of this one will never be able to buy one's own home, not even a social house rented from one's local authority. People on rent supplement face insecurity as tenants. The majority of them are in buildings that have never been inspected for basic facilities and safety. Extra rent is unofficially gouged out of them by landlords on a widespread scale. If they begin to earn anything they are immediately cut off from rent supplement. This would never have happened if Ministers cared about disadvantaged families and the poverty traps they face. This is not a problem for just a few families. Some 60,000 households receive rent supplement, which costs the taxpayer €400 million per year, and that goes straight into the pockets of our new landlord class.
I want to talk about the environment and the spectre that is haunting the economic and financial plans of every advanced country, namely, the consequence of climate change. For all the attention this budget gives to it one would think our country has some natural exemption and that the Crossmolina floods did not happen. St. Patrick banished the snakes and the Minister, Deputy Cowen, has banished global warming as if it does not exist.
This is the first budget to contain a sweetheart letter. This is from our good friend, the Minister, Deputy Roche:
Mr. Dick Roche, TD, Minister for the Environment, Heritage and Local Government, invites interested parties to make submissions in relation to the rebalancing of annual motor taxes to provide an alternative through the motor tax system for the motoring public to drive cleaner cars and to impose penalties in respect of cars with higher CO2 emission levels. [Deputy Treacy did not have the chance to read this lovely little letter.] This invitation will be published on my website ... submissions received will also be published on the website. [So what I say to him will be up there.] Submissions may be e-mailed to firstname.lastname@example.org or posted. [This is the good part.] All submissions should be received at the latest by 1 March 2007.
This is what the Government intends. The Government's record on preparing our country for climate change is lamentable. I never thought the day would come when Irish public servants, who prided themselves on never being caught at anything by Brussels, would be willing to pay billions of euro in fines under the Kyoto Agreement rather than make some of the simple changes.
There was a culture among Irish public servants that we did not pay unnecessarily. However, today the Minister said he is allocating more funds for carbon purchases in Kazakhstan. When Borat hears about this he will come and visit us.
It is a pollute now, pay later policy. It is environmentally irresponsible nationally and internationally. Why should a rich country like Ireland add to the problem of global warming by increasing greenhouse gas emissions and leave the bill for future generations to pay? That is irresponsible politics and would be addressed by an alternative Government.
I am surprised that simple things have not been done, such as rigorous energy standards in the construction industry and major products under the national plan to be carbon-proofed. Large-scale schemes are needed to convert existing buildings to meet energy efficiency standards. Generous grant schemes to insulate the houses of older people would be beneficial and would keep them out of nursing homes such as Leas Cross. The ways to ensure an older person does not end up in a nursing home are sufficient income, a warm, dry house and mobility aid.
I commend the Minister for one part of the education section of the budget, the commitment to the so-called fourth level, investment in research and development through higher education institutes and universities. This will reap dividends if properly spent and will generate a culture of innovation and enterprise.
The Minister is less sure-footed in his approach to policy and investment at the other end of the educational spectrum, the early childhood years. Policy is woefully inadequate and confused but the evidence of its importance is overwhelming. This can be examined in respect of economic returns aside from social considerations. The National Competitiveness Council returns to this theme in many reports, citing evidence from high performing economies of the valuable role early childhood education plays in securing the best results at later stages.
The 1% reduction in the income tax rate is estimated at €228 million for one year. This figure could start a pre-school education system. The Minister chose to give it to top earners. It would have been better spent on our children to create proper pre-school education. On education, we are as far from Boston as from Berlin. It is not a question of low taxes or better public services. Low taxes are sustained by economic growth when one invests in education at every level.
The Minister emphasised prosperity and economic growth but the secret enemy of continued prosperity is inflation. No amount of heroic cheers can distract from the real dangers of high levels of inflation. For years we accepted a high level of inflation because of stealth taxes and charges generated by the Government, with little regard for long-term consequences. We can no longer pretend there is no downside. The Minister does not wish to refer to it but this week, as with every week, the country faces a record number of job losses. Factories are closing around the country. Workers at the gates of Leinster House today were from Castlemahon and lost out to cheap imports and cheaper labour thousands of miles away. As Fianna Fáil celebrates the budget in robust fashion, there are anxious meetings around family tables about what to do now that the spectre of redundancy is looming. If one is over 45 years of age, it is difficult to get a replacement job.
The smallest part of the budget speech was reserved for decentralisation. We could hardly read it. It is, at most, a long paragraph. If decentralisation was correctly managed, as was done by Labour in coalition with Fianna Fáil and in the rainbow coalition, more people would now be working in decentralised locations than is the case due to the political stroke Charlie McCreevy pulled here three years ago.
Stroke politics ruled the Minister's predecessor but, clever as Charlie McCreevy was, his stroke of political genius was his political nemesis. One year later the Taoiseach threw him overboard at Inchydoheny and told him to swim to Brussels.
I advise the Minister to beware of hubris and nemesis. He should not celebrate too much saving up the people's money for today's splurge. What about those who are making a two hour trek to a very expensive house, those paying high child care bills and the unfortunate people on trolleys at accident and emergency units at the weekend? Excuse me if they do not share in the jollification and meter clapping today. When election time comes they might reach for their meter and they might bite back.
A story teller in Cork city would tell his audience about his humble beginnings. He would say that his family had nothing growing up and the neighbours had nothing but there seemed to be an awful lot of nothing to share. Despite him not being a particularly useful storyteller, he might have made a good economist. If one changes the story to refer to a man who has it all, a Minister for Finance who has it all and a Government that has it all, one gets to the heart of this Government's economic performance. Never has there been a Government with such resources that has used them so wastefully.
There are many indicators of Ireland's economic performance in the past 15 years. There are many more in respect of Ireland's social performance. The 30 OECD countries have several indicators of how Ireland is performing poorly. We are at the bottom of the table in terms of how much we spend on education. We are fifth from the bottom in terms of how many people leave before completing secondary education. Our health expenditure remains below the EU 25 average. Over the past ten years, the Government has had the opportunity to provide a fairer, better Ireland, a slogan heard at the recent Fianna Fáil Ard-Fheis but one that seems no closer to coming into being.
On the surface, there seems very little the Minister could have done wrong. Unfortunately, he missed the opportunity to put better measures in place. The headline figure is the reduction of the top rate of income tax from 42% to 41%. This will not benefit the majority of workers at all and will be on a sliding scale for those who pay tax at this rate.
The 1% reduction may be a sop to the Progressive Democrats or perhaps a "so long and thanks for knowing you" present on behalf of Fianna Fáil. What has not been noticed is that the Progressive Democrats has managed to achieve the same 1% reduction in income tax in the second term of Government with Fianna Fáil as the rainbow Government achieved in its two and half years of existence.
The sting in the tail is the introduction of a new form of taxation for higher earners. I am not sure if the Progressive Democrats approved it or read the fine print, but the increase in the health levy from 2% to 2.5% for people with incomes over €1,900 a week means most of the benefit of the 1% decrease in the tax rate is being taken away almost immediately. That is not bad in itself, but it is the ultimate confidence trick from the Minister and the Progressive Democrats. An increased health levy was the one item they could take out of this budget, taking into account the 1% tax rate decrease, to mask that nothing has been achieved on the stamp duty issue. The shortfall is immediately ameliorated by introducing what is, in effect, an additional tax on high-income earners.
The increase in the tax bands and credits are to be welcomed, but the index linking from when bands and particularly credits were introduced means taxpayers are more or less paying the same proportion as when they were introduced. There is no real additional money being given to taxpayers and that is the reason we see the net increase year on year in most tax receipts of the Government.
The 1% decrease in the 42% tax rate will cost approximately €230 million. There are arguments that the money could have been used to further increase the tax credits or bands or, in particular, to reduce the taxes which have most effect on the majority of our citizens. The highest tax we collect in Ireland is not income tax, corporation tax or even stamp duty, but value added tax. Value added tax is very indiscriminate in its effect, as it is a tax on every citizen's spending, regardless of where their income is coming from.
The Government proclaims to have a social justice agenda and would have been far better served in ensuring the VAT bands were altered so people who have the least in our society would end up paying less tax.
We know the money will come from that source when we see next year's receipts.
The Government speaks about helping small businesses and my party has been promoting this agenda for several years. Several measures proposed today may see the light of day. I have to put in a qualification as we have seen many recent budget speeches where the Minister for Finance has announced initiatives that have yet to or will never see the light of day. It should be of some help if these measures are followed through, and they are necessary.
Our economy is far too dependent on the construction sector and our national wealth is far too dependent on the ownership of property and capital. We need small businesses to be vital. The reality is that in areas such as research and development we are far below the levels we need to be at. These measures should be welcomed if they help.
The Minister spoke about protecting the environment. If this was meant to be a seduction of the Green Party by the Minister for Finance, he should brush up on his seduction techniques. The environmental measures do not even pass as a green-wash. In my house we are considering repainting one of the rooms and exposing ourselves to the many colour charts one looks at when choosing a paint. There are many different versions of colours. Apparently one can get emerald green, pea green or olive green, none of which apply to this Government.
With regard to environmental measures, it is a turquoise budget. It does not come close to tackling the environment needs in this country and the measures we should take. There are approximately €300 million in expenditure measures in the budget, committed to by the Government, and 10% of the money, €30 million, will be spent on either existing or new initiatives to meet many of our environmental responsibilities. Some 90% of the money will be going out of this country as environmental fines as a result of the failure of ongoing Government policies on the environment.
Despite what the Minister for Finance stated about 2 million jobs in the eco-industries in the EU, we could be producing jobs. We could have considered recycling and energy technology industries. Instead, the Minister is choosing to pay the fines rather than work within the country to improve our environment and society's involvement in that work. The Government is introducing measures such as that in the Dáil last week which put in place a "Borat buyout". We are prepared to help projects in Kazakhstan, Kyrgyzstan and Uzbekistan or anywhere but here.
That is particularly true with regard to measures we must take on transport. The Government has put on the long finger measures to change VRT and motor taxation, the ultimate in cynicism. It has sent out a letter and by 2008, after the next general election, the measures might be put in place.
The Government is sending out signals to people who care about the environment that it is prepared to do something for it, but more particularly it is looking over its shoulder to friends and supporters to ensure nothing happens at all. If that will be a continuation of business as usual, the Minister and Government can keep it.
The measures in social welfare must be welcomed as the increases are more or less in line with what many NGOs and my own party had been looking for in pre-budget statements. This should also be put in context. In 2005, the EU-SILC survey indicated the poverty level for an individual Irish citizen was €192.74 per week. That was in 2005, so we can take it for granted the level is above €200 in 2006. One social welfare payment is above that level after the Government's changes today, the contributory old-age pension at €209.
The Government is boasting about expenditure on social protection but it remains one of the lowest levels in Europe. There were fairly mealy-mouthed words from the Minister for Finance about recognising and protecting the elderly in society. We must recognise that €209 is barely above income maintenance levels in our society, and we spend less as a proportion of our national income on pensioners than any other European country. We would need to up the level of the State pension by at least another 50% before we would be in line with other European countries and the levels at which elderly people deserve to be living.
The Government tends to speak about flagship initiatives in each budget. Unfortunately, it seems to then either drop them, forget about them or give a derisory mention. Last year the issue was child care, the year before it was disability. Rather than adding on each year the Government goes to the next fad or item which is politically sexy.
With regard to the issues I mentioned, the measures in this budget are fairly insulting to people affected by both. The additional expenditure towards disability benefit is not new, but expenditure the Government is obliged to put in place because of sections of the Disability Act coming into being from June. If the Government really wanted to promote this agenda, it would provide additional resources for opening up new areas. That is not the case.
The same is true of child care which even last year the Government got wrong. It failed to recognise child care is not about what happens with children when their parents are at work. Child care must be about a broader agenda. It is about child development. No measures were introduced last year and none was introduced this year on how we can truly cherish the children of this nation. If the Government is still serious about a constitutional amendment on children's rights, it could start showing it by providing resources in areas where they are needed.
The role of carers continues to be treated in a derisory way. The increase in the respite grant is welcome. However, the reality is the Government fails to recognise the carer's payment only goes to 15,000 carers out of a probable group of 125,000 people who care for a family member or close friend. When we add to that the fact that more than 50% of those involved in caring are over 60 years of age, we see nothing but a state of stasis from this Government on how the role of carers can be properly recognised and resourced.
The next section is called "helping young families" and deals with assisting first-time home buyers. The Minister for Finance made the fairly bald statement, which many of us made previously, that a cut in stamp duty across the board would merely be added to house purchase prices and the benefit would go to the house seller and developers. I appreciate the leader of the Progressive Democrats and the Tánaiste would not be happy with that statement.
However, one measure hidden in the bowels of the budget deals with stamp duty relief. It is a measure for €20 million on the contract aspect of the mortgage. The only problem with it is that it is a small measure which benefits all house purchasers, speculators as well as first-time buyers. If the Government was serious about getting young people into housing, it would adopt measures we proposed, including exempting from stamp duty people who downsize, such as elderly people, and allowing the vacated properties to be bought by first-time buyers.
If the Minister wishes to think imaginatively and act differently he should listen to this side of the House. If he wishes to carry on as usual and cause further problems in the future, this budget will only exacerbate it.
The Fianna Fáil-Progressive Democrats coalition will be ten years in office next year. It needs to be judged not on this pre-election budget but on its record over the past decade. After ten years we have a health system still mired in crisis, housing is unaffordable for many thousands of families and inequality and poverty are still with us despite the Celtic tiger.
For more than a decade, the Government has had massive resources at its disposal to transform our health and education systems, to provide housing at an affordable level and to take senior citizens and those on low incomes out of poverty. In the past five years, it has had Exchequer surpluses of almost €40 billion. In November alone, it took in €1.7 billion more in taxes than was expected.
Despite all of this, the gap between rich and poor has widened. We now have one of the most unequal societies in the developed world, with those reliant on social welfare and the minimum wage hit hardest by rising costs. Many families, even those on two incomes, struggle to get by due to crippling mortgages and increases in the cost of essential items such as electricity, gas and food. All of these have recorded increases far in excess of inflation.
Huge problems exist across our public services, particularly in health care and education provision. A total of 44,000 families are on housing waiting lists. Every day, hundreds are left on trolleys in hospital accident and emergency units. Families are left waiting for years to have their children assessed.
I emphasise it is children who suffer most. Unlike most developed states, we have no system of State-provided pre-schools and no provision in this budget addresses that clear need. In our pre-budget submission, and consistently in all our previous pre-budget submissions over the past nine years, Sinn Féin argued for measures targeted at those who need help the most. We set out clear and detailed strategies for addressing the crisis in the health service, supporting families with children, ensuring all senior citizens have a decent standard of living and ensuring the needs of young families are put ahead of the property speculators who force house prices through the roof and out of reach of ordinary citizens.
Yesterday, I called on the Minister for Finance, Deputy Cowen, to be bold and imaginative and use today's budget to make a real, immediate and significant impact on the lives of those struggling to survive. I welcome the decision of the Minister to direct his attention towards workers on low wages, senior citizens and those who rely on social welfare. The increases he set out are to be commended. However, he could have done much more and he clearly chose not to do so. He made a political and bad choice. He had the opportunity and resources to lift many citizens out of poverty but stopped far short of what was possible and, with respect, what was required.
In my view and in that of many people not only in this House, to appease Fianna Fáil's partner in Government, the Minister took poor decisions which will help those on the higher end of the income scale when those resources could have been used to help those in our society in desperate need. The Government decided to reduce the top rate of tax by 1% at a cost, to cite the Minister's qualified figure, of €186 million. For that same money, the Government could have dramatically improved the welfare of senior citizens by increasing the State pension by €34.80 per week. That is the type of sum necessary to really address the issue instead of the €16 and €18 announced today. The Minister could have addressed the issue of the living alone allowance and doubled it to €15.40 per week. Instead, we find no mention of this allowance in today's budget.
As we proposed on many occasions, he could have examined, and gone a great distance towards, providing a full medical card to every child under the age of 18 years. This measure would transform access to medical care for thousands of families. I know well this measure is not focused on need alone. However, I am also convinced it would certainly work for those who need it most and therefore is a worthwhile measure. It should have and could have been done today. It would have made a real and fundamental difference to many families who struggle to meet the needs of their children, first and foremost their health care needs.
The Government had the resources to do all of this but it did not have the political will. The biggest problem with today's budget is that once again the Government has shown it has absolutely no strategy to address the core needs of ordinary people whether in health, education or housing. The budget has no vision of a different type of society based on equality and ensuring the needs of every person in this island are met. It has no appreciation of the unique opportunities squandered by the Government with monotonous regularity.
Many people who listened today to the Minister for Finance, Deputy Cowen, will ask a number of important questions. Will poorer families be substantially better off after today's budget? Will it be easier for someone to access emergency hospital care? Will the families who spoke on "Prime Time Investigates" on Monday still have to wait up to five years for their children to be assessed? Will the people of Monaghan, Nenagh, Ennis, Roscommon or anywhere else be assured of essential hospital services? Will home ownership now be a real option for young couples and will countless others get a house at all? Will it be easier to get to work or will thousands of people continue to commute huge distances every day with gridlock now a reality in all our major towns and cities? I fear the answer to all those questions is a very certain "No".
Today's budget will have little or no impact in any of these core areas of people's lives. In relation to specific measures introduced by the Minister in today's budget, while there has been some advance, the fact is that those who were in poverty this morning will remain in poverty this evening.
Sinn Féin wants to see every senior citizen in this State with enough money for a decent standard of living. We called for the pension to be increased in this budget by €34.80, the living alone allowance to be doubled to €15.40 and the fuel allowance increased to €25, not the miserly increase of €4, which is marginally more than the cost of a bale of briquettes.
There is no acceptable reason in this day and age for any person to be forced to live out his or her life in poverty. There is no reason our pensioners, who created the foundation for the economic success we now enjoy, whose sacrifices gave their children the opportunities they never had, should be forced to choose between paying the rent and heating their homes. While I welcome the increase in the State pension, the Government had the opportunity to ensure that senior citizens in this State would not be forced to live in poverty ever again, but it did not do that. In government, we in Sinn Féin would ensure that every senior citizen has a decent standard of living.
Just under 1 million people, almost one in four members of the population, are in receipt of a weekly social welfare payment of one kind or another. Many of these people are living in or at risk of poverty. The decision to increase social welfare payments is welcome, but much more should and could have been done. While people have a little more money in their pockets, €20 per week will soon be eaten up by ESB and gas bills and cost of living increases. That is the reality. Current increases across the board will gobble that up in next to no time whatsoever and there will be no appreciable change in people's circumstances.
Nearly 100,000 children live in consistent poverty in this State at a time when the Government has massive resources at its disposal. This is totally unacceptable. The vast majority of these children are in families reliant on social welfare or living on very low incomes. If the Government is serious about eliminating child poverty, it needs to substantially increase child income support, increase the minimum wage and address the spiralling costs in electricity, gas and food, all the essentials that families need and depend upon.
I particularly welcome the decision, however overdue, by the Government to increase the child dependant allowance. This has been a demand of children's poverty groups and a feature of Sinn Féin's pre-budget proposals for almost a decade. For ten years, the value of this allowance aimed at those children most in need has been allowed to decline. There was no increase and, with inflation, it steadily declined in value year after year. A succession of Ministers stood in this House and fatuously claimed that the allowance, €16 per week, needed to be kept low to prevent it becoming a disincentive to work. That was a shameless position to take for the ten years of this Government's term in office. It is very late in the day for the Minister to open his eyes to the need to increase that allowance.
In its pre-budget submission to the Minister, Deputy Cowen, Sinn Féin has called for a raft of areas to be addressed. It called for an increase in the minimum wage to €9.30 and for all those on this increased wage to be kept out of the tax net. I can identify nothing in the budget that meets this need. Sinn Féin also called for all those on the average industrial wage to be kept within the standard rate band of 20% for 2007. I accept the Minister has made this commitment but not at the required minimum wage level for which we have argued and which the Minister will find is argued for by many other social commentators. We wanted the child dependant allowance to be increased to €30 for all recipients, after a decade of non-address of that measure. Yet what did we get? It has been met in part, but still falls far short, at only €22, which was announced today. This is one area where the Minister could have made a difference for those children who are on the very lowest levels of income dependency. Those are the families most in need and those children deserved a better effort than €22, and they certainly deserved a better effort in each of the preceding nine budgets of this Government since 1997.
The increase of €10 in child benefit coincides with our argument and I am glad that the Minister, Deputy Cowen, is listening. What about reversing the announced cost hikes in electricity and other energy supplies? These matters have not been addressed. The energy regulator's intervention has resulted in reduced increases in 2007. It is akin to saying that instead of penalising people too much, we will only penalise them to a certain extent. These are not welcome increases, they are punitive increases that will affect the poorest families in our society most.
Having a job is not a guarantee that a family will be able to live free from poverty. Nearly 14% of households in poverty are headed by someone with a job, many of them, according to the Society of St. Vincent de Paul, driven there by double taxes and stealth charges by a Government that claims to be a low tax administration while inflicting regressive taxes on working-class people. Yet there is little focus on addressing the plight of the working poor in this budget. The one significant measure to tackle low pay that was introduced in recent years is — I give credit where it is due — the minimum wage. When it was first introduced in 2000, it represented 54% of average industrial earnings. By June 2006, it represented just over 50%. We in Sinn Féin have called for the minimum wage to be increased to €9.30 from January 2007 so that it represents 60% of average industrial earnings and for everyone on and below the minimum wage to be kept out of the tax net. We also called for those on or below the average industrial wage to be kept in the standard rate tax band of 20%.
These measures would have had a major impact and would have helped those families cope with rising costs. Unfortunately, while the Minister kept those on the minimum wage out of the tax net, his failure to act boldly and decisively has ensured that more than 100,000 people will remain in poverty for yet another year. In examining the Minister's figures, I noted a striking feature, that those just below the average industrial wage, people on €30,000 per annum, gain least from this budget. Workers on €30,000 per annum will gain €8 per week, compared to gains of at least twice that per week for those on or above €35,000. This is another example of this warped thinking. We are not looking seriously at those most in need. The Minister is rewarding everyone across the board instead of focusing, as he should, on trying to eradicate poverty in our midst and giving young people, in particular, their right to reach their full potential in this life.
I believe there is widespread support across the island for putting the needs of those who are most vulnerable in our society first, our senior citizens, children and those on low incomes. Perhaps it is idealistic of me, but I have great faith in the Irish people. I believe the vast majority of people on this island who are doing well and have benefited from the economic boom also possess a strong social conscience. Certainly, the greater number of them have not lost that. Many people who have climbed the ladder of success have not sought to haul that ladder up after them. They may have been forced to take out private health insurance, but they feel ashamed when they see their fellow citizens on hospital trolleys and they may be able to ensure their children can attend university, but they feel sick at the sight of school children in need.
They may be sure of a safe and secure retirement but they were horrified by the revelations concerning Leas Cross. These are the realities and the Sinn Féin voices in Opposition want to see a different society, a society of equals. The Government has failed once again to grasp that point. Its members are but sticking-plaster operators responding to a raft of different demands. They are not people of vision and have failed once again to use a golden opportunity to make a critical difference in the lives of those who depend on them most. Shame on them for that.
Ba mhaith liom buíochas a ghabháil leis na Teachtaí Neamhspleácha as an deis a thabhairt dom labhairt faoin gcáinaisnéis anocht. The Independent Deputies wish to restate their commitment to the effect that they will always side with working people and the disadvantaged in society. That is our mandate and will be our priority in this House. We will do so as voices from the backbenches, as we are today, or, in the future, as a group of Independents in a more strategic position to influence Government policy.
It is our objective to try to achieve a fairer society. To achieve this aim, the budget should be used as a mechanism to redistribute the wealth of the country to benefit those most in need, including the elderly, sick, disabled and disadvantaged, and the carers and working people who struggle to survive on low incomes.
If we examine the budgets of the Fianna Fáil-Progressive Democrats Governments for the past nine years, we see clearly that the vast majority of budgetary measures have consistently benefited the better-off much more than those most in need. This is a matter of record and has resulted in an increasingly unequal society. The creation of such inequality is the very opposite to the pursuit of fairness. We stand for fairness and equality.
There are undoubtedly positive measures in today's budget, some perhaps motivated by the impending general election. In the past nine years, when Ireland's economy became one of the strongest through the labour of its workers, the same Fianna Fáil-Progressive Democrats Government, through arrogant mismanagement, left our hospitals in crisis. Elderly people have been left on trolleys night after night and people on waiting lists have been denied hospital treatment in a two-tier system in which access to health care is based on ability to pay rather than the urgency of one's medical needs.
Some aspects of the health service provided by the Government were labelled the shame of Europe when Ireland was listed a shameful 25th out of 26 countries in a European health consumer survey. The Independent Members, including Deputy Connolly in Cavan-Monaghan, Deputy James Breen in Ennis and Deputy McHugh in Tuam, have championed the cause of addressing the requirement to have modern local hospital services available to all in need. These Deputies, with the full support of their Independent colleagues, have tirelessly focused attention on the health care needs of their communities, but the Government continues to fail to provide the hospital services so urgently needed.
The budget proposes to double the ceiling on mortgage interest relief for first-time buyers. This is welcome in itself but rising interest rates will neutralise this measure. It should not be permitted to obscure the fact that owing a home of one's own has become unattainable for many. For many more, the only way they can achieve this basic human right is to take on crippling life-long mortgages. The Government failed to take action to control the price of building land, the only measure that would have kept house prices down. The Government capitulated to its builder-developer friends and reneged on the provision of thousands of social and affordable homes. Many families could now be in such homes had Fianna Fáil and the Progressive Democrats stood firm against the cartel of builders, but they let the people down, which is a shame. Had they stood firm, the common good would have been pitted against vested and organisational interests, which the Minister bragged about today. However, they failed to do so.
In my constituency, Dublin Central, the average price of a house is in excess of €420,000. Young people from Cabra, East Wall and Drumcondra are being forced out of their communities by unaffordable prices and many must leave Dublin to buy an affordable home. This is a direct result of the actions of the friends of Fianna Fáil, the builder-developers' corrupt rezoning of land and control of the supply of building land, thereby forcing a price increase.
Deputies Catherine Murphy and Joe Higgins recently highlighted a new housing scandal whereby private management companies are being imposed on residents in new housing estates. This is another rip-off whereby developers extort management fees from hard-pressed householders to earn millions for themselves.
So far the Government has failed to act.
No matter what the opinion polls suggest, I simply do not believe the people will have confidence in Fianna Fáil, a political party that failed to take any action to control the price of building land to provide sufficient affordable homes. This will be one of the most important issues before the electorate next May and nothing in this budget will obscure it.
The biggest con of the budget is the constant boast of the Progressive Democrats and Fianna Fáil that they keep taxes down.
——deliberately to necessitate local taxes such as the bin tax. It is incredible, but true, that at the very same time as working class people in Cabra, East Wall and Ballybough were organising themselves to combat bin charges, the super rich who earned over €1 million each paid less than 5% tax. Some paid none at all.
When Fianna Fáil was squeezing stealth taxes and bin charges from people on low incomes, the report of the Revenue Commissioners showed a marked increase in the level of tax avoidance by the super rich. The elderly, those living alone and those on low incomes bear the brunt of such inequitable taxation the most.
The Independent Members very much welcome the pension increases for the elderly, which are long overdue. Nobody deserves worthwhile increases more than elderly citizens, but they have never been given their fair share. Deputy Harkin points out that Ireland is way behind most European countries in the provision of care for the elderly and in social provision generally. In the European OECD countries, the average pension is 68% of the average industrial wage. Until now in Ireland, it was a mere 34%. Our elderly deserve better and much more. Some of the pension increases will be eroded by gas and electricity price rises, thus reminding us of the sell-out of our own natural resources in the Corrib gas field despite the Trojan work of Deputy Cowley and the small community in Rossport who oppose the multinational oil company, Shell.
Is it any wonder that prices dramatically increase when our own natural resources are handed over to multinationals for free?
Despite the surplus of billions of euro, there remains a great deal of social injustice which has received little more than lip service from the Government. A recent report ranked Ireland as 29th worst out of 30 countries for investment in education. Just as we have a two-tier health system so we also have a two-tier education system. In central Dublin, where the office of the Minister for Education and Science is located, many of the children have the least chance of getting a university education. Some overcome great obstacles, through their own efforts and those of their parents and teachers, and achieve great things but most never reach third level, whereas in more affluent areas the reverse is the case. This is inequality at its worst.
The small rural and inner city schools must constantly campaign to achieve even the most basic of resources to help the children overcome disadvantage. Deputy Healy has stated that in South Tipperary over half of the national school pupils are in overcrowded classrooms. This budget will do nothing to address these issues. The State has again failed, and continues to fail, to provide the pre-schools that could make such a difference to these children.
People with disabilities must also continually campaign for basic human rights. Despite years of struggle there are still unacceptable waiting lists for respite and residential care. Deputy Finian McGrath has campaigned ceaselessly here for the rights of all those with a disability. He recently highlighted here that there are nearly 4,000 people with intellectual disabilities on waiting lists for residential and respite services. We Independent Deputies regard this as one of the most important challenges facing us.
Mental health problems are a major social issue that has never been given the priority it deserves on the political agenda. This Government in the past few days shamefully tried to divert attention from its responsibilities on this issue. The truth is that during nine years of Fianna Fáil-Progressive Democrats misgovernment, when so many millions of euro were squandered by incompetence and arrogance on electronic voting machines and the like, with no accountability whatsoever, funding for mental health services was reduced. It decreased despite the great need of a sector that deserves and demands our highest priority, yet there was not a single mention of this sector in today's budget.
These are just some of the issues and priorities that we as Independent Deputies have sought to highlight over the past five years. Had we been in the position of influence held by the Progressive Democrats, the 2% party, we would have ensured those issues had the highest priority on the Government agenda and that the necessary action be taken.
As we face a general election we will continue to fight for the rights of working people and of the most disadvantaged sectors. That is our commitment and priority.
Some of my Independent colleagues represent constituencies along the west coast, an area neglected by successive Governments. Independents such as Deputies James Breen, Harkin, McHugh and Cowley have been the strongest voices in this House for the major issues in the west, whether the urgent need for infrastructural investment or the hospital projects in Tuam and Ennis championed by Deputies McHugh and James Breen. Deputy Connolly has fought for basic lifesaving hospital services in Monaghan General Hospital. Deputy Cowley fearlessly supports a small community against the multinational Shell Oil. Deputy Healy has focused national attention on the need for greater investment in job creation projects in Tipperary pointing out that unemployment levels in Carrick-on-Suir are six times the national average. Deputy Catherine Murphy by her election put child care on the political agenda and the early child care supplement was last year's budget response to that, but there was no increase in this budget, ensuring this will remain an election issue.
Deputy Finian McGrath has been a powerhouse in support of people with disabilities and educational disadvantage in Dublin North-Central. With Independent Deputies like these who have energy, commitment and determination we can help build a modern, progressive but most of all more humane, equal and caring society.