Dáil debates
Thursday, 7 December 2006
Financial Resolution No. 6: General (Resumed)
3:00 pm
Michael Mulcahy (Dublin South Central, Fianna Fail)
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Having listened yesterday with great attention to the Budget Statement of the Minister for Finance, I appreciate the opportunity to speak on budget 2007. A Minister for Finance framing a budget is like anyone else who must sit down to present something which must be done in a balanced way. One can increase or reduce expenditure, increase taxation or play with any of many variables. It has never been an easy task for a Minister for Finance since the foundation of the State to get the balance right. It is never easy to achieve the perfect synchronisation of the various elements which must come into play. It is obviously much more difficult during a recession or when a large current budget deficit is being run, which is certainly not the case currently. There is an overwhelming responsibility on any Minister for Finance to be fiscally responsible to ensure the finances of the State are in a good and positive position and that any further problems along the road can be addressed.
In his economic preamble, the Minister made it very clear he was setting the following fiscal targets for 2007: a projected general Government surplus of 1.2%, an increase in gross current spending of 11.5%, an increase in gross capital spending of 13% and a gross debt-GDP ratio of less than 25%, one of the lowest in Europe. No Minister for Finance, no more than any other Member of the Dáil or any member of the public, knows precisely what is coming down the road in terms of the rest of the world. Interest rates are much higher in the United Kingdom and the United States than in the eurozone. Many people in the USA are talking about a slowdown in that economy. A slowdown in the US and-or British economy would normally affect Ireland because of the levels of trade between Ireland and those countries. In that context, I was very glad the debt-GDP ratio is 25% and no higher. The Minister is clearly storing up reserves of borrowing potential for the future in case that rainy comes, which is very prudent.
I draw attention to section D.15 of the Budget Statement, a table showing the trend in national debt and general Government debt. The table covers the period from 1983 to 2005. The period from 1983 to 1988 had a most alarming rise in debt as a percentage of GNP in the history of the State.
Bernard Durkan (Kildare North, Fine Gael)
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What about 1977ââ
Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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The Deputy should allow Deputy Mulcahy to speak. The Deputy will have an opportunity.
Bernard Durkan (Kildare North, Fine Gael)
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ââwhen Fianna Fáil abolished rates and statedââ
Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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The Deputy should allow Deputy Mulcahy to speak.
Bernard Durkan (Kildare North, Fine Gael)
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When history comes into it, I always get upset.
Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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The Deputy should not allow himself to get upset from what he hears in this House.
Michael Mulcahy (Dublin South Central, Fianna Fail)
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In 1983 the debt as a percentage of GNP was 95.8%. In 1984 it rose to 103.3%. In 1986 it rose to 106%. In 1986 it rose to 115.1% and in 1987 it reached a record 117.6%.
Bernard Durkan (Kildare North, Fine Gael)
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In 1980 there was no money to pay Army personnel, gardaà and teachers.
Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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The Deputy will have an opportunity to speak.
Bernard Durkan (Kildare North, Fine Gael)
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I can barely wait for it at this stage.
Michael Mulcahy (Dublin South Central, Fianna Fail)
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That was an appalling level of debt and I am glad that since 1988, principally under Fianna Fáil led Governments, the percentage has been greatly reduced. I see a Member from the Labour Party sniggering. The Labour Party was in power during the period when that debt increased so much. Before I entered this House, most of my political experience was on Dublin City Council. Throughout that period of 18 or 19 years, I witnessed the Fine Gael Party being very responsible when it came to the city finances. However, unfortunately the same cannot be said of the Labour Party. On many occasions the city manager was faced with a financial difficulty and the choice was to cut back services or introduce service charges. The Labour Party refused to support either option.
Róisín Shortall (Dublin North West, Labour)
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What about funding local government properly?
Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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The Deputy will have an opportunity.
Michael Mulcahy (Dublin South Central, Fianna Fail)
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It was not prepared to make any decisions on balancing the books, which is why the Labour Party has a long way to travel until it learns the lesson of financial responsibility.
Róisín Shortall (Dublin North West, Labour)
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The Deputy has some brass neck.
Michael Mulcahy (Dublin South Central, Fianna Fail)
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Thank God, it has not been in charge of the nation's finances to a large degree since the period from 1983 to 1988 when with Fine Gael it virtually bankrupted the State.
Róisín Shortall (Dublin North West, Labour)
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What about PPARS, electronic voting, Abbotstown and integrated ticketing?
Michael Mulcahy (Dublin South Central, Fianna Fail)
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I wish to underline the good and responsible work of the Minister for Finance, Deputy Cowen, in that regard. I am glad he is storing up future borrowing power to come back and deal with a recession in the future if it should come.
Róisín Shortall (Dublin North West, Labour)
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Why did the Government get rid of former Deputy McCreevy?
Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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The Deputy will be next to speak and will get an opportunity to make that point.
Michael Mulcahy (Dublin South Central, Fianna Fail)
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Many other aspects of the budget are worthy of support. While I would not say I was critical of other aspects, there were some I would like to have seen handled differently. For example, as I said last night, I do not believe the 50 cent increase in excise duty on a packet of cigarettes was enough to make a significant market difference in discouraging a large number of young people from smoking tobacco. I understand what the Minister said about its relationship to the consumer price index and I accept the point the Taoiseach made in the debate last night when he said that raising the price of cigarettes too much would increase the level of smuggling, which is already very high. Nevertheless, the Irish Cancer Society had proposed a â¬2 increase in excise duty on a packet of cigarettes, which would have been a good idea.
On property taxation and stamp duty, I commend the change in mortgage interest relief for first-time buyers for seven years which will have a very positive impact on hard-pressed first-time buyers. Had it been my budget â it probably never will be my budget â I would have suggested some changes in the stamp duty regime.
Bernard Durkan (Kildare North, Fine Gael)
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The Deputy should come out with it. Now is the time. He should not keep us in the dark.
Michael Mulcahy (Dublin South Central, Fianna Fail)
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The stamp duty regime is too high and inhibits people from moving house as regularly as they might otherwise wish. Obviously, from Revenue's point of view it is a very easy way to garner a significant amount of tax.
Bernard Durkan (Kildare North, Fine Gael)
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Correct. It is a lot of taxpayer's money.
Michael Mulcahy (Dublin South Central, Fianna Fail)
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The current rates of stamp duty are too high. I accept what the Minister has said. If he had cut the rates of stamp duty, sellers might have simply pocketed the difference. There is a serious problem. Nevertheless, I propose that the issue of stamp duty should be examined by a committee of the Oireachtas, perhaps over a period of years.
Tommy Broughan (Dublin North East, Labour)
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The next Government will definitely take care of it.
Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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Please allow Deputy Mulcahy to speak without interruption. Deputy Broughan will speak very shortly and will get the opportunity to comment.
Michael Mulcahy (Dublin South Central, Fianna Fail)
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It is time to reconsider the stamp duty regime. Not many other countries have such a high rate of stamp duty and it is an impediment to people's ability to move house which is not good for society.
I applaud what the Minister has done to help young families and those on social welfare. In particular, I praise the Minister for raising the contributory old age pension to â¬209.30 and the non-contributory old age pension to â¬200 per week. I commend him for ensuring the lowest social welfare rate will now be â¬185.80.
Tommy Broughan (Dublin North East, Labour)
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What about the â¬215 for senior citizens?
Michael Mulcahy (Dublin South Central, Fianna Fail)
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Many of my constituents rely on social welfare payments and will welcome the increases to which I refer. In addition, they will also welcome the other social welfare measures announced by the Minister for Finance in the budget.
I do not believe the budget is perfect. No budget can be. There are many areas in respect of which I would like to see improvements. For example, medical card eligibility should be hugely extended. More money should be made available in respect of orthodonticââ
Bernard Durkan (Kildare North, Fine Gael)
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Hear, hear. What is the Deputy doing over there? He should be on this side of the House.
Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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Deputy Mulcahy to continue without interruption.
Michael Mulcahy (Dublin South Central, Fianna Fail)
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I am trying to speak in a non-political way. That should be appreciated by Members on both sides and I should not be harangued or harassed.
Much more money should be made available in respect of orthodontic treatment. I am familiar with a number of young people who are trying to obtain and who deserve orthodontic treatment, but who cannot access it within the correct period. I make no bones about stating the level of support we are giving to young people who require such treatment is not adequate.
Michael Mulcahy (Dublin South Central, Fianna Fail)
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I intend to contact the Ministers for Finance, and Health and Children with regard to this matter.
Bernard Durkan (Kildare North, Fine Gael)
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The Deputy should have contacted them before now.
Róisín Shortall (Dublin North West, Labour)
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Everything is fine. The Deputy will have a word with the relevant Ministers.
5:00 pm
Michael Mulcahy (Dublin South Central, Fianna Fail)
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As our national budget increases substantially and we employ more civil servants and increasing numbers of staff for semi-State agencies, we must give greater consideration to the concepts of value for money and efficiency as they relate to the public service. The vast majority of public servants who are either directly employed by the State or who work for semi-State agencies are hard-working, conscientious employees who give value for money. We must, therefore, examine the management structures that obtain in the public service and in semi-State organisations. Considerable amounts of duplication and overlapping occur in many areas. Given the large amounts of money being disbursed by means of the Estimates and the budget, it is time to examine the financial structures of the State.
The Minister for Finance has stated the budget supports pensioners, young families, enterprise and the environment. Overall, it is an excellent budget. The Government should be returned to power, although I accept that this may not happen. I look forward to the Minister for Finance introducing a budget next year that will contain even further tax reductions and further benefits for society.
Bernard Durkan (Kildare North, Fine Gael)
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There is always next year.
Róisín Shortall (Dublin North West, Labour)
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I wish to share time with Deputy Broughan.
Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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Is that agreed? Agreed.
Róisín Shortall (Dublin North West, Labour)
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There are a number of provisions in the budget which, although long overdue, should be welcomed. A start is being made in respect of a number of areas in the welfare sphere and I wish to comment on these. The first relates to the recognition of people who provide caring services to family members. Until now, if these individuals were in receipt of another social welfare payment, they were precluded from receiving any recognition or thanks in respect of the important work they do. I welcome the fact that we have made a start on providing that recognition. I accept that it is only a half-rate carer's allowance but nonetheless I welcome it.
The other matter to which I wish to refer in this regard is the commencement of improvements that have been promised in the area of adult dependants. This matter has been neglected in the past and it is something about which many people, particularly women, are concerned. Having given a life of work inside or outside the home, women were angry about the fact that they were not automatically entitled to pensions in their own right. In my opinion, a great deal more could have been done but I welcome at least the start that has been made in respect of the recognition of their contribution.
In the area of tax, a number of reforms were introduced by the Minister in the budget. While long awaited, these are still to be welcomed. By any standards, however, and bearing in mind the unprecedented resources available to it, what we were presented with yesterday was the very least that people could have expected from the Government. The budget's provisions go nowhere near compensating the people of this country who have been overcharged and overtaxed in so many different ways in recent years. The so-called unexpected excesses in revenue, totalling over â¬2 billion, speak for themselves. Regardless of the route this cash has taken to the Exchequer or how it is labelled, all of that â¬2 billion originated in the pockets and purses of ordinary taxpayers.
Michael Ahern (Cork East, Fianna Fail)
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No one disagrees with the Deputy.
Róisín Shortall (Dublin North West, Labour)
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Why did the Government withhold it for so long and why has it taken so long for a small amount of it to be returned?
The Minister for Arts, Sport and Tourism stated before the Ryder Cup that it would be unpatriotic for anyone to overcharge visitors to this country in any way. He condemned this practice out of hand, and rightly so. How much more unpatriotic is it, therefore, for the national Government to overcharge its hard-pressed citizens with high and sneaky charges and taxes on houses, cars, fuel and so many other necessities? In its final months, the Government, which has been in power for nine years, is at last fulfilling its long awaited promise of a payment of â¬200 per week for pensioners. How much less is that money worth now than when it was originally promised? Why did the Government leave the most vulnerable until last? That has always been the way with the Government. Vulnerable people of all kinds have been left to wait, despite the billions spent and the tens of millions wasted on projects such as electronic voting, Abbotstown, PPARS, integrated ticketing and so many others.
The latest line from Ministers and backbenchers is that we are the victims of our own success. Deputy Ellis used it in recent days when referring to traffic congestion. The Members opposite also state that the problems we face are those that relate to success. They should try telling that to the many thousands of people who spend hours sitting in gridlock on the M50, to parents whose children cannot obtain access to psychiatric services or to the many families who live in overcrowded conditions â with their parents or in-laws â and who have no chance whatsoever of obtaining social housing. The last thing the Government will do is accept responsibility. This Administration was elected to govern and to manage the country properly. According to it, however, the problems are always someone else's fault.
"Caring for the Needy" was the slogan used at the Fianna Fáil Ard-Fheis. If Fianna Fáil and the Progressive Democrats care for the needy, I would like them to answer some questions. Why is it that they illegally charged thousands of pensioners nursing home fees? Why did they wait until their final year in office to announce the renovation of 1,300 dilapidated school buildings that so many pupils have been obliged to endure for so long? Why did they force intellectually and other disabled people to resort to the courts to obtain justice?
If the Government cares, why did it tolerate a situation in private nursing homes where elderly patients were neglected and abused? Why, after nine years in office, with so much money at the Government's disposal, do we still have patients on trolleys in hospital corridors? There is precious little evidence that Fianna Fáil cares at all for the needy.
I wish to address something fundamental to the economy and the social life of this country. By and large, it was completely overlooked in yesterday's budget. The area has suffered long-term neglect from the Government. I speak of the critical role of housing in everyone's life. It is worth considering what has happened in that regard over the years. In 1967, the average house cost IR£4,000 and the average industrial wage was IR£1,000, meaning that the ratio of house prices to income was 4:1. Thirty years later, the average price of a house had risen to IR£100,000 and the average industrial wage was IR£20,000. In 30 years, the ratio had risen only slightly, to 5:1. However, a mere nine years later, in 2006, the situation is as follows. The average price of a house is â¬350,000 and the average industrial wage is â¬35,000, giving a ratio of 10:1.
That extraordinary turnaround in the basic cost of living over the last nine years has brought enormous changes to virtually every aspect of Irish life. The Government's denial of a house to hundreds of thousands of first-time buyers on single or combined annual incomes of less than â¬80,000 is the greatest setback to this country's traditional way of life ever experienced. During the Government's time in office, some 515,000 houses have been built, a mere 8% of which have been affordable. Some 92% of all houses built in that time have been unaffordable for most average-income people.
That means that average-income earners, single or married, have been denied the right to home ownership previously enjoyed in Ireland. Categories such as nurses, teachers, skilled workers and gardaà on a single income can no longer afford to buy a modest house. The great work done by the city and county councils throughout the country in the 1940s, 1950s and 1960s in building hundreds of thousands of affordable houses in many fine council estates has now been completely negated, as they are out of the reach of most people on average incomes.
In the short and long term, the increased cost of property will be borne by the sons and daughters of current homeowners, either through exorbitant prices if they are fortunate enough to be able to buy or, most unfortunately, by those who can never afford a home of their own, a life-changing experience. We have reached the stage where ordinary people on modest incomes find it impossible to aspire to home ownership. That is not progress, since we have gone backwards. It is not just that home ownership has become unattainable for those in cities and major towns, ever more people are moving out to access affordable housing, in the case of the greater Dublin area to the dormitory towns of neighbouring counties.
In many cases, their lives can only be described as unsustainable. Couples get up at 6 a.m. and drop children off at very expensive child care at 7 a.m. or 7.30 a.m. Then they face the daily commute, which for many living in Meath, Kildare or Wicklow and further afield means two or three hours. There are long journeys in the morning and evening, after which they return home exhausted, frustrated and angry to pick up their children. They get to bed only to get up for work and go through the whole process again the following day.
Many thousands of young couples are living that sort of crazy lifestyle and yesterday's budget does nothing for such individuals. We are condemning an entire generation of people to a situation where they live to work, simply to pay the mortgage and other bills. After many years of economic growth, surely people are entitled to a better quality of life. The public will not be taken in by some of the provisions made yesterday. A few bob were distributed here and there regarding the various welfare payments and a small amount was returned in tax changes. Overall, however, the story of the Government over the past nine years has been one of mismanagement and incompetence. For many people, that has meant a much lower quality of life. People will not be taken in and I believe the Government will hear their answer next year.
Tommy Broughan (Dublin North East, Labour)
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I am delighted to have this opportunity to say a few words on a remarkably flat and latterly almost boring occasion. It was a simple listing of events that had taken place in the course of the year, with no imagination, flair or real hope for people. For example, there was very little in the budget for the 20% of the population identified in the recent Deloitte and Touche report as being fuel-poor, those suffering from energy poverty. The occasion was curiously flat, and even allowing for the pre-arranged standing ovation started by Deputy Cregan and back bench colleagues including Deputy Kelly, it felt like a day in which we were going through the motions, with very little new to discuss. The Government was simply trundling on towards the general election.
Bernard Durkan (Kildare North, Fine Gael)
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It was rather like Noël Coward in "The Italian Job" when they all began to applaud. Does the Deputy remember what happened?
Michael Ahern (Cork East, Fianna Fail)
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There was a great deal to applaud.
Tommy Broughan (Dublin North East, Labour)
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Certain measures in the budget were obviously very welcome and Deputy Shortall referred to the changes affecting social welfare recipients accessing carer's allowance. Over the years we have found that a tremendous difficulty for people. The Department of Social and Family Affairs' iron rule has been that one may benefit only from a single social welfare allowance. That change certainly has to be welcomed. However, the Carers Association and the 150,000 people this evening caring for invalids want the means test to be addressed. The Government continues to rigorously enforce the means test.
Likewise, the passing of the â¬200 barrier by the State contributory pension is to be welcomed. However, the Irish Senior Citizens Parliament and a number of other senior citizens organisations were hoping that a pension of approximately â¬215 per week would have been achieved from 1 January. That was not to be. The Government did the minimum that it could, just as it did in many of its other measures in taxation, energy and elsewhere. The overall effect was flat and gave an "as you were" sensation.
There were many areas to which the Minister for Finance did not refer, such as education, health care and child care. On the "Today With Pat Kenny" radio show he said he dealt with these areas in his previous two budgets and would return to them if the Government is re-elected. Yesterday's budget lacked vision. The Government has no idea how to use the â¬9 billion overall, or â¬4 billion net, which the Minister could have put into key social policy areas.
It was interesting to compare the performance of the Minister for Finance with that of the Chancellor of the Exchequer who yesterday addressed the House of Commons, our sister parliament. The Labour Government has had a long-term strategy for energy and climate change. It has published three separate major reviews on energy. It has promoted the idea of the carbon emissions mechanism and market and has a clear energy agenda. The Chancellor of the Exchequer, probably the future British Prime Minister, laid out the way forward. By contrast, as our Green Party colleagues have already said, the Minister, Deputy Cowen's speech was simply a greenwash. It was an attempt to wrap a green, environmental flag around him while doing next to nothing.
The Government raised expectations that the budget would have at its heart serious measures to increase and support the development of renewable energy, tackle climate change and address the soaring levels of fuel and energy poverty. The Taoiseach seems to have undergone another Pauline conversion. His previous conversion was from dedicated capitalist to socialist and he has now gone from dedicated socialist to green eco-warrior. We need not have worried â the overall commitment to encouraging renewable energy and energy efficiency was uninspiring.
While the announcement of a new programme of grant aid for the production of bio-energy crops was welcome, as our Fine Gael colleagues already alluded to, there was no new thinking, vision or significant funding that would help farmers and rural communities. When one thinks of the substitution that could take place â 200,000 gallons of oil per day, most of it imported â one regrets that no significant steps were taken.
Funding for the greener homes scheme was increased by just â¬20 million. The programme has proven popular with the public but needs to be significantly enhanced to allow middle and low income families install new renewable energy technologies. I noticed that at the recent Fianna Fáil Ard-Fheis, the Minister for the Environment, Heritage and Local Government announced a tranche of micro-generation measures that the Government was going to launch. It was just like the wind that blows through windmills. It was a load of Fianna Fáil waffle.
Bernard Durkan (Kildare North, Fine Gael)
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It was the windmills of the Minister's mind.
Tommy Broughan (Dublin North East, Labour)
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The issue did not gain any impetus yesterday.
In its pre-budget submission, the Combat Poverty Agency urged the Government to taper the subvention of SEI's greener homes towards low income households to ensure that all new social housing would be fitted with alternative energy sources. The Minister for Finance took no action in this regard and neither did he take any action on the homes of the future. On RTE radio this morning, the Minister spoke with a company involved in construction. The company was deeply disappointed that the Minister ultimately responsible for social and affordable housing failed to take action on sustainable energy. Sustainable Energy Ireland itself received just â¬3 million for the development of a pilot energy efficiency programme for small and medium sized enterprises. However, there was no mention of the national energy efficiency programme.
A recent meeting of the Select Committee on Communications, Marine and Natural Resources, attended by Deputy Durkan and me, passed a budget of a single euro to permit the spending of â¬2.5 million on the "Power of One" campaign. This campaign has been nothing other than a public relations exercise. Why did the Power of One campaign not start with the Minister for Communications, Marine and Natural Resources showing leadership by using a hybrid car? We are still waiting for this to happen.
The EU has asked Ireland to embark on a monumental, 75-step process on energy conservation. It is seeking an energy reduction of 20% by 2020. The Labour Party believes this is a reasonable target and we should embark on that road. However, the Minister for Finance ignored this area in his speech yesterday. There was no additional funding for projects such as smart metering which would allow householders to determine simply and precisely how much electricity or gas they are using. Smart meters make this much easier than the complex existing meters.
I recently spoke to a manager with the Viridian Group which operates the electricity grid in Northern Ireland. He told me that because they have had a Labour government for the past ten years, they are much further down the road than us. They have installed smart and other meters to advance the green agenda. They have done this because they have a government with a sustainable energy policy. That is the fundamental difference between the two jurisdictions. Above all, they have a Prime Minister and a Chancellor of the Exchequer who have been committed to a sustainable energy strategy for well over a decade.
Perhaps our Fianna Fáil colleagues are shimmying up to the Green Party in order to create an alliance after the general election should they win fewer than 70 seats. They are throwing shapes and making eyes at the Green Party's seats and trying to winkle them out of any possible alternative government.
Bernard Durkan (Kildare North, Fine Gael)
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Fianna Fáil is looking lovingly and longingly at them.
Tommy Broughan (Dublin North East, Labour)
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If that is what Fianna Fáil was thinking, the Green Party Deputies will be able to tell them that they did not achieve the objective.
The paltry â¬4 increase in the fuel allowance was another disappointing aspect of the budget. Everyone expected the Minister for Finance to grant a fuel allowance of at least â¬25. Despite the increases in fuel costs, this allowance is still means tested. The Irish Senior Citizens Parliament, which does important work in representing senior citizens and State pensioners, campaigned for a minimum increase of â¬25. The Minister for Finance, however, has granted only a miserable increase of â¬4. Moreover, he did not enlighten us as to the quantity of electricity to which pensioners and others on benefit will be eligible this winter. Despite the recent reductions in the projected increases in the cost of electricity and gas, this remains a serious issue. Gas prices increased by 34% three months ago and there is a forthcoming electricity price increase of 13%. The last two winters were among the coldest of recent decades and senior citizens and other persons on low incomes now face into another cold winter with the prospect of high energy costs.
Tommy Broughan (Dublin North East, Labour)
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It is shameful. I am sure even the Deputies sitting opposite me, who probably had no input into this measure, are ashamed of it.
Earlier this year, I made representations on behalf of some constituents in respect of the insulation grants that are awarded by the Health Service Executive. I discovered, to my horror, that the HSE north-eastern area had exhausted its annual funding for this initiative by April. I have since raised this issue on the Adjournment. The HSE north-eastern area was told by the Ministers for Health and Children, and Finance, and by the Taoiseach, that it would not receive any more funding for the scheme in 2006.
Bernard Durkan (Kildare North, Fine Gael)
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It is like Old Mother Hubbard's cupboard.
Tommy Broughan (Dublin North East, Labour)
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The Minister for Finance, Deputy Cowen, made little reference to this yesterday.
This may be the Government's last budget. On what is perhaps the key issue facing humanity, the need to secure and sustain energy supply, the Minister for Finance had little or nothing to say. The budget contributed nothing to the issues of energy policy and climate change; there was merely a sense of flat disappointment. This represents a total failure to meet the challenges of our times. The budget is a damp squib in this respect.
A significant proportion of the population, perhaps as much as 20%, is hopelessly badly served in terms of the availability of broadband. Wireless services are available in some locations but they are incredibly expensive. I recently addressed a public meeting in Stamullen, in Deputy Johnny Brady's constituency, where I heard that nobody in the vicinity has access to broadband. This is also the constituency of the Minister for Communications, Marine and Natural Resources. The main incumbent seeks at least â¬200 million to extend broadband availability to the entire country. The Estimates provide â¬10 million for this purpose, leaving a deficit of â¬190 million. The Minister for Finance, however, has allocated zilch for this critical infrastructural development.
In general, yesterday was a disappointing, flat day in respect of the communications, marine and natural resources portfolio. It may be the last time this Administration will have the opportunity to allocate resources in this or any other area.
Michael Ahern (Cork East, Fianna Fail)
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I propose to share time with Deputies O'Connor, Johnny Brady and Callely.
Pat Carey (Dublin North West, Fianna Fail)
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Is that agreed? Agreed.
Michael Ahern (Cork East, Fianna Fail)
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I am pleased to have the opportunity to speak on the third budget of the Minister for Finance, Deputy Cowen. It is a well balanced budget, which includes significant increases in pensions and social welfare allowances and generous tax incentives. It also provides comprehensive measures to safeguard our environment and to ensure continuing economic growth. The budget is clearly sculpted to ensure an equitable distribution of the wealth created by workers in our economy. It will also ensure the economy does not overheat and that there is something left in the kitty should the economic environment deteriorate.
I wish to focus on the importance of small businesses to the economy. Each year, the global entrepreneurship monitor, GEM, benchmarks Ireland as one of the most entrepreneurial economies in Europe. Entrepreneurs and small and medium enterprises, SMEs, have emerged as the engine of economic and social development throughout the State. SMEs and the businessmen and businesswomen who establish and drive enterprise continue to play a central role in our economic miracle. These companies make invaluable contributions to many local economies, providing employment prospects where few existed and delivering new and innovative products to customers both at home and in overseas markets. Their ambition, creativity and the contribution they make to the lives of people throughout the State should not be underestimated.
Enterprise Ireland has primary responsibility for the development of indigenous SMEs in the manufacturing and internationally traded services sectors. It offers a range of supports aimed at assisting client companies to expand and compete in the international marketplace. Enterprise Ireland client companies, which are mainly indigenous SMEs, employ more than 140,000 people. They also invest a total of â¬17 billion annually in payroll, raw materials and services, thereby boosting their local economies.
Small firms face challenging new realities, not least the changing structure of the Irish enterprise base. Ten years ago, for example, exports of software by indigenous companies amounted to â¬57 million. Today, exports in this sector by Enterprise Ireland client companies amount to more than â¬1.3 billion. As a country with a relatively limited domestic market for both products and services, it is imperative that small Irish companies with ambitions to grow continue to seek opportunities in overseas markets.
Future economic success, both domestically and internationally, will be greatly influenced by several factors. Companies must be in a position to undertake sophisticated research, development and innovation, and they must be able to identify the training needs of staff. In its strategy, Transforming Irish Industry, Enterprise Ireland focused on how best to accelerate the development and internationalisation of Irish owned business as a priority for future economic development.
This budget represents a milestone in improving the environment for small business. It will further incentivise research and development and protect our competitiveness. The budget will provide a significant boost to the 250,000 small businesses operating in Ireland and the 800,000 people they employ. The measures announced will continue to support and develop the spirit of entrepreneurship.
I welcome the extension to 2013 and the radical enhancement of the business expansion and seed capital schemes at a cost of â¬25 million in a full year. The almost fivefold increase in the business expansion scheme investor limit to â¬150,000 and the doubling of the company limit to â¬2 million will significantly enhance the attractiveness of the scheme. These changes will tackle the difficulties faced by small businesses in raising capital to pursue entrepreneurial risk-taking. Fostering the growth of wealth-creating enterprises is of central importance if Ireland's economic success is to be sustained in the long term. These changes will incentivise people to invest in start-up companies rather than investing in property abroad.
I also welcome the increase in the VAT registration threshold to â¬70,000 for goods and â¬35,000 for services. Of benefit also will be the increase in the cash basis threshold to â¬1 million. These measures will greatly encourage early-stage entrepreneurial activity and will support small business development into the future. They will also greatly reduce compliance costs and remove 8,000 businesses from the VAT net. This is testament to the Government's commitment to reducing administrative burdens on business, particularly small businesses.
The trebling of the small business threshold for the payment of preliminary corporation tax from â¬50,000 to â¬150,000 is welcome, as are the provisions for new companies. This new simplified system will further ease the administrative and accounting burden for the 97% of companies to which it will apply. The substantial income tax relief package will further incentivise employment, reduce labour costs and reward workers. Ireland has the second lowest tax wedge in the OECD. The enhancements of the budget will further reduce the tax wedge and incentivise work. Ensuring those on the minimum wage stay out of the tax net will also assist those who are unemployed to transfer to the active labour market. The budget delivers for business, workers and sustainable prosperity.
I welcome the improvements to the research and development tax credit estimated at â¬70 million in a full year. The increase from three to six years for tax benefit for incremental research and development will not only enhance the value of the incentive but provide critical longer-term certainty for both indigenous and foreign direct investment companies, making key strategic decisions to invest in or locate research and development activities in Ireland. It sends a clear signal to business that the Government is supporting their efforts to develop new products and win new markets. The wealth created by these industries can then be redistributed to other areas of the economy such as the health services and social welfare.
Charlie O'Connor (Dublin South West, Fianna Fail)
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I thank the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Michael Ahern, for sharing time. It is good to see senior Opposition Members in the Chamber to hear me speak. Deputy Ferris may like to tell his constituents in County Kerry that this evening's Evening Herald suggests that RTE believes Sinn Féin is the real Opposition.
Bernard Durkan (Kildare North, Fine Gael)
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If Deputy O'Connor gets re-elected, Sinn Féin will be part of the Government.
Charlie O'Connor (Dublin South West, Fianna Fail)
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By the wayââ
Charlie O'Connor (Dublin South West, Fianna Fail)
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Absolutely. I am glad previous Fianna Fáil speakers stuck to that rigid directive.
I am disappointed Deputy Broughan is not in the Chamber. He spoke of being bored yesterday during the Minister's Budget Statement. I was happy to applaud the efforts of Deputy Cowen. In my four years as a Member, I have never seen a standing ovation for a Labour Party leader.
Bernard Durkan (Kildare North, Fine Gael)
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It was like Noël Coward in "The Italian Job".
Charlie O'Connor (Dublin South West, Fianna Fail)
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The Taoiseach's speech this morning impressed me greatly. Deputy Ned O'Keeffe summed the budget up very well as it is all give and no take. As we are 200 days away from the general election, the Opposition Members are getting panicky, as they should. However, not being political, if one takes this budget objectively there is much for many. If the Evening Herald, not a great supporter of Fianna Fáil, claims the Minister for Finance delivered a fair budget, we must be on the right track.
I represent a constituency with a large urban population. For those Members who cannot remember, I represent Dublin South-West, which embraces Tallaght, Firhouse, Templeogue, Greenhills, Brittas and Bohernabreena. As a backbench Fianna Fáil Member I believe in representing the concerns of my constituents to the party leadership. While the economy is doing well, we should be looking after the vulnerable and senior citizens. The Government has shown its caring side in the packages announced in yesterday's budget. As the Taoiseach recently said we must be mindful that a rising tide may not automatically lift all boats. The little boats need that little extra attention. I am glad to be a Member for a party that has done this.
The Taoiseach described the budget as one of commitments â making them and meeting them. He pointed out it is a budget for enterprise, workers, pensioners and family. Many Opposition Members have broadened the discussion which is why the Chair had to issue its warning. However, it is important to remind ourselves of the progress we have made.
The Tallaght I moved to â I am not originally from Tallaght but had to move there with an employer â is a different place today from what it was then.
Bernard Durkan (Kildare North, Fine Gael)
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Mohammed and the mountain.
Charlie O'Connor (Dublin South West, Fianna Fail)
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Tallaght has the population of a city but the status of a village. In 1984 I was involved in the Get Tallaght Working initiative. It was a drive to get the major facilities, such as The Square and the hospital, required by a major town. While a lot has been done, there is more to do. I am glad there has been progress in job creation. The budget gives opportunities and assistance to those who want to create jobs. It is also important to remind the Minister for Social and Family Affairs that we need to look after those who are vulnerable.
I am not going to take lectures from Opposition Members on what Fianna Fáil does for the elderly.
Bernard Durkan (Kildare North, Fine Gael)
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It might be no harm.
Charlie O'Connor (Dublin South West, Fianna Fail)
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The record proves what we have done. Deputy Durkan blushed with embarrassment when the rainbow coalition gave miserly sums to the elderly.
Bernard Durkan (Kildare North, Fine Gael)
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Fianna Fáil has much blushing to do.
Charlie O'Connor (Dublin South West, Fianna Fail)
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Thank God those days are gone.
Bernard Durkan (Kildare North, Fine Gael)
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In 1977 Fianna Fáil ruined the country to win the election and get power.
Charlie O'Connor (Dublin South West, Fianna Fail)
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It is unbelievable to hear Opposition Members claim the Government's promises were not achieved yesterday. They were and we will not take lectures about what we are doing for the elderly.
Bernard Durkan (Kildare North, Fine Gael)
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In 1977 Fianna Fáil ruined the country. It has never apologised for bankrupting us.
Charlie O'Connor (Dublin South West, Fianna Fail)
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We are proud of our senior citizens. Fianna Fáil in Government will continue to look after the elderly.
The people will make up their own minds and will see what the Government has achieved is good for them. Whatever the Opposition believes about the people, I believe people will make up their own minds and see yesterday as a positive step.
I congratulate the Minister for Finance on the budget. I thank the Chair for his courtesy. I wish Deputy Durkan a happy Christmas.
Bernard Durkan (Kildare North, Fine Gael)
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I wish Deputy O'Connor a happy Christmas despite everything.
Johnny Brady (Meath, Fianna Fail)
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I compliment the Minister for Finance on a marvellous budget. It provides a massive boost for rural areas and hard-pressed farmers. I welcome the renewal and extension of a series of farm tax reliefs, income tax relief and capital gains tax relief at a cost of â¬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 amount of the tax exemption for long-term lease of farmland is being increased to â¬20,000 per annum for leases of a duration of ten years or longer. An exemption from capital gains tax applies to disposals of farm land outside the immediate family on retirement. The present threshold for the exemption is â¬500,000 and this is being increased to â¬750,000 from 1 January 2007. Where farmland that has been owned and worked by a farmer for over ten years is leased for less 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 will require EU state-aid approval before they are implemented. 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 â¬16 million. This flat rate is designed to reimburse 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.
A competitive farming sector is the key to developing a sustainable rural community. Speaking to the leaders of different farming organisations and people from the farming community in general here yesterday they were pleased with the Minister, Deputy Cowen's provisions for rural Ireland in this budget. It is important that, as farmers are increasingly freed from the constraints of production quota and price supports, they are 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 WTO negotiations. The package of rural development measures recently agreed with the farming organisations as part of Towards 2016 has been widely welcomed. It means Government support for farming will more than double in the next rural development period compared with 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 farmers play in protecting our environment.
I welcome the extra â¬100 million for health-related disability and mental health services announced in the budget. This continues and expands the Government's â¬900 million multi-annual investment programme announced in budget 2005. This extra â¬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 year. The funding will also support the continued implementation of the plan for mental health services, A Vision for Change. This builds on the national disability strategy which 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. The budget acknowledges and reinforces this valuable work. In 2006, we allocated â¬3.3 billion for disability-specific services across Departments. This has been increased by another 10% for 2007.
I am delighted that the budget will make it easier for ordinary taxpayers to claim and receive their rightful entitlements. Claiming reliefs must be made simpler and easier.
6:00 pm
Ivor Callely (Dublin North Central, Fianna Fail)
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I welcome this opportunity to participate in this budget debate and I support the third budget of my friend, the Minister for Finance, Deputy Cowen. The measures announced in yesterday's budget build on the sound economic policies which have been consistently pursued by the Government since 1997. This country has made remarkable economic and social progress during that time and the majority of Irish people acknowledge this progress. We have come a long way and witnessed a major transformation of our great country. The nature and scale of the transformation is one of which we can all be proud. The budget for 2007 aims to consolidate, sustain and promote growth in our economy while rewarding work by continuing to reduce tax to ensure that all workers will be better off. Budget 2007 helps those on low incomes with a spend of â¬15 billion in the Department of Social and Family Affairs. As my colleague, Deputy Johnny Brady, said, we will have the opportunity to discuss each of those areas in the social welfare debate next week.
Budget 2007 also supports young families and helps first-time house buyers and rural and urban economies. Like all previous budgets introduced by this Fianna Fáil-led Administration, this budget strikes an appropriate balance between the competing demands any Minister for Finance must address. I support the budget strategy and priorities. Our economic and social success is due not to one particular budget but to tough decisions, sound strategies, ambitious targets, vision and determination over a long period of time. It was with great interest that I heard on our national radio, as many people did, the comments on the 1987 budget by the then Minister for Finance, Mr. Ray MacSharry. Although he was sharply criticised by the Opposition in this House, it has been proven that he took the correct course of action. He was one of the good Fianna Fáil Ministers for Finance who helped to achieve what we enjoy today.
This Government's policies, strategies and ambitious targets are right and a well educated population worked hard to turn this country around. As a small, open economy, our fortunes are determined to a large extent by developments in the global market. I highlight the important contribution our membership of the EU makes to our national well-being. Ireland has achieved success beyond measure and beyond the capacity of a nation our size. Since our entry to the EU, we have diversified the economy and gained a reputation abroad for skill, determination and the manner in which we adapt to changing markets. Ireland is the envy of many larger European nations.
For a person of my age, who used to see Germany and the United States as strong countries, it is interesting that Ireland, a small dot in the Atlantic Ocean, is in a far stronger position than those two countries.
Bernard Durkan (Kildare North, Fine Gael)
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Deputy Callely's tie is affecting his judgment.
Ivor Callely (Dublin North Central, Fianna Fail)
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Ireland can be proud of its role in Europe and its achievements. We are in a position to address the ills in our society. We can sustain and protect our progress to date. Every person wishes to see the good times continue and if global forces impact on our position, safety measures must be in place. We wish to see our children enjoy quality of life, with opportunities in abundance. We want our parents cared for in old age with dignity. People with disabilities must be appropriately accommodated. We want employment opportunities, good salaries, disposable income and foreign holidays to continue. We can do this if the progress of recent years is maintained and built on.
The Minister of State at the Department of Enterprise, Trade and Employment, Deputy Michael Ahern, has done much work on the development of our economy and economic policy. Europe has been a catalyst for change in economic policy. It has given guaranteed access to the European markets, attracting overseas companies because of EU membership, our domestic policies and the work of the Minister and Ministers of State at the Department.
The adoption of the euro by Ireland, the first English speaking state in the eurozone to do so, provided unique opportunities. The structural supports and investment received turned around our competitiveness and put us on the international market map. The overall outlook is positive but we must remain vigilant and our domestic policies must be sound. The economic background to the budget is very good. Our GDP and GNP remain strong and our ability to create jobs continues, with job creation set to reach 72,000 jobs, or 1,400 new jobs every week. The total number of people in employment is over 2 million, a remarkable performance.
Ivor Callely (Dublin North Central, Fianna Fail)
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The two principal budgetary aims of promoting enterprise and rewarding work are welcome as is the â¬300 million package for small business research and development. A number of measures have been identified as priorities by the Minister for Enterprise, Trade and Employment, the Minister of State and the small business forum. Delivering on these will foster the growth of wealth creating enterprises, of central importance to Ireland's long-term success.
I welcome the â¬15 billion social welfare package, the priority to help those on low incomes, and honouring the Government commitment on State pensions. Over 1 million social welfare recipients will receive a substantial increaseââ
Ivor Callely (Dublin North Central, Fianna Fail)
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ââwith a focus on child poverty, supporting carers and enhancing the income of older people. Is my time concluded?
Bernard Durkan (Kildare North, Fine Gael)
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I told him the tie was distracting his attention.
Eamon Ryan (Dublin South, Green Party)
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Not since I switched my record player from 33 rpm to 45 rpm did I hear such a change in pace as Deputy Callely showed in his wide historical gaze across the international arena.
Eamon Ryan (Dublin South, Green Party)
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I hope I can use my ten minutes as well as him. I propose to share time with Deputies Ferris and Catherine Murphy.
Our task is to be aware of where we can go from here. No one denies or laments the major economic success of this country. As politicians, we should not preen ourselves and be blinded by self-righteousness in taking credit for how we got here. Rather, we should examine where we want to go from here and the values underpinning how we spend our money. That job remains undone. The political question is what to do with our economic success. These values can be determined by how we care for the weakest in society and whether we value caring, such as a someone raising children or a child caring for an elderly person. This Government did not value such work in the budget.
We must maintain the economic prosperity that we are fortunate to experience. As a Member who shadows the Minister for Enterprise, Trade and Employment, I am concerned by the statistics of the past ten years regarding output and exports from the indigenous services and manufacturing sector. There is a worrying decline. I welcome the proposals to encourage such enterprise, particularly the extension of the business expansion scheme, BES, and the increase in the amount one can invest in it. I also welcome measures that encourage small business, such as alterations to the VAT threshold and easing the regulations.
The Government has decided, with the support of the Opposition, to invest in research and development. Why has this not led to increased licences, product development or exports from the indigenous sector? This should be the primary concern for any politician. We should amend policies to ensure we receive a return on our investment. There is no sense of that in the budget. No change is planned in Enterprise Ireland or elsewhere to signal concern at evolving trends. We have failed to develop an enterprise economy. I do not take pride or pleasure in this fact; it is the reality based on these statistics. We have had a property economy based on the tax breaks provided over the past ten years. The concern is that property growth could put the economy under pressure if it decreases.
I regret that there was no reform of the stamp duty regime. I do not refer to the fundamental reform sought by the Tánaiste and Minister for Justice, Equality and Law Reform, Deputy McDowell, regarding the abolition of stamp duty. However, the system could have been amended to allow a more functional property market with social benefits. The Green Party has proposed the amendment of the property system to allow those trading from a larger to smaller property to avail of a lower rate of stamp duty. I have yet to hear a strong argument from the Department of Finance or the Minister as to why this would not work. I do not believe it would lead to any inflationary pressures in the housing market as it would only bring about an increased supply of those types of family houses abundant in my constituency, close to shops, bus routes and schools, but which do not have young families in them. They are very expensive.
Anything that would free up the supply in that end of the housing market, which would be the consequence of the move I have outlined, would have significant benefits and take some of the heat from the property market. There is an over-reliance on that market as a wealth-generating sector, and to take some of the heat from it would be fundamentally beneficial to the development of our economy.
The other long-term threat glaringly clear to anybody with any sense of analysis of the next ten, 20 or 30 years relates to the future energy scenario for this country. Two factors require action from any reasonable and responsible Government. The first is the simple and clear realisation, the geological certainty that we are facing a peak in global oil production which will be followed by a steady 2% to 3% per annum reduction in oil supplies. As this country relies on oil for 60% of its energy needs, this is a fundamental priority that should be addressed.
The US Department of Energy commissioned a report which stated clearly that such a peak should be addressed two decades in advance in order to change the economy's infrastructure to suit this new post-peak oil production. There is nothing in the Government's budget, the Green Paper on sustainable energy or any of the strategies being prepared by the Government that recognises such a reality. I note with interest that the budget is able to include provisions for pensions going forward to 2050, which I laud. It should be equally possible for us to look forward to an energy future to 2050 and to begin extrapolating budgetary policy to address it.
Possibly a more profound energy change facing us is the way in which our current burning of such fossil fuels is changing the climate on which we all depend. The Irish perspective may be that a rise of a degree or two in temperature might not be too bad, but that is only until one's house is flooded or we see people starving in Africa. There are 150,000 dying each year, as calculated by the World Health Organisation, because of that climate change which we, among other developed countries, are causing.
The Government is not being honest with the Irish people on what is needed in this area. As part of the European Union it has signed up in recent climate change negotiations to at least a 15% reduction in 1990 emission levels by 2020. I can only describe the Minister for Finance's environmental section of the budget as honest, and it is clear that rather than reducing emissions we are continuing to let them increase and trying to buy our way out of the problem. Such an approach is morally bankrupt, with the country on the one hand committing to cut emissions by 15% below 1990 levels by 2020 and on the other hand following policies which we know will lead us 30% above those levels in 2010. These are simple bald statistics about what we are committing to, what is right to do and what is actually being done. They put the Irish people in a morally impossible and financially reckless position.
The â¬270 million committed in the budget for us to buy out carbon emissions to 2012 is actually a fraction of what the final bill could be. The figure is based on a hypothesis that the climate change policies of the Minister for the Environment and Local Government and the Minister for Communications, Marine and Natural Resource will achieve something, but nothing has been achieved in the past ten years.
Eamon Ryan (Dublin South, Green Party)
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It is based on the hypothesis that the market price for carbon will remain low, when at the same time the European Commission is doing everything it can to put that price up. The â¬270 million figure could be doubled.
After 2012 there will be a new environment where that will only be a first step. Further large fines are possible if this fundamental and crucial issue is to be addressed. The approach of this Government to climate change is fundamentally dishonest, although that is difficult to get across to the electorate because we are dealing with figures and complex issues of science. The bare reality of the dishonesty becomes clearer by the day.
There are other issues in the environment area again showing a lack of ambition or vision. When I read in the Sunday papers that there would be a green budget I thought to myself it would be interesting. I was slightly apprehensive of the Government parties taking some of our agenda. When I saw what came in I realised there is nothing new in it.
Bernard Durkan (Kildare North, Fine Gael)
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There is nothing green about it.
Eamon Ryan (Dublin South, Green Party)
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There is not a single additional provision, except for VRT, which the Government has been talking about amending for ten years. The first climate change strategy suggested amending it to suit our climate change ambitions, but it is the same annual chestnut that the Government will do something about it, but we have to wait another year.
Eamon Ryan (Dublin South, Green Party)
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That is on top of a transport capital budget in 2006 which is spending six times more on roads than public transport, and it shows the direction in which this country is going. It shows a lack of ambition and vision, and it is indicative of a Government that is not wise to where we need to go as a country. Instead it is looking backwards at how well we the people have done in bringing all this economic prosperity.
Martin Ferris (Kerry North, Sinn Fein)
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This Government has been in power for nearly a decade and must be judged at election time, not on this budget alone but also on all its previous failures to eradicate poverty in this State. In a period of unprecedented economic growth, the Government has failed miserably to redistribute the State's wealth to all those who helped generate it and who need it most.
I watched in disgust yesterday as Fianna Fáil and Progressive Democrats Deputies cheered the Minister for Finance and patted themselves on the back, giving the impression that in this extremely wealthy state in which there is no poverty. I listened to the Tánaiste give us a lesson on the Constitution earlier this afternoon, reminding us there is a constitutional obligation on the State to provide for the disadvantaged in Irish society. One hopes that he will one day take a break from his rhetorical pontificating to set about discharging this obligation.
The reality is this Government continues to reward higher earners and widen the gap between the hundreds of thousands of Irish workers who produce the wealth of this economy and the thousands who profit from it. The headline in this morning's edition of The Irish Times accurately sums it up â "Highest Earners Biggest Winners". A flurry of social welfare increases, which in the context of such a massive surplus cannot be described as anything other than minimalist, is not enough and many major issues were ignored completely.
There was nothing in the budget to deal with food poverty, for example. In 2004 Combat Poverty, Crosscare and the Society of St. Vincent de Paul published a report entitled Food Poverty and Policy, the findings of which suggest food poverty is a real and significant issue for low-income households. Based on 2003 data, up to 10% of the population in this State, 375,000 people, can be considered at risk of food poverty. This increases to 15% of children, 125,000 of the most vulnerable people in our society. There was no mention of increased funding for meals on wheels, despite the findings of recent research that almost one in five older people admitted to hospital are undernourished.
Another area ignored by this budget was the plight of some of our newest arrivals to Ireland. I am particularly disappointed the budget did not abolish the habitual residency requirement for child benefit. The poverty experienced by the low-paid migrant workers who are increasingly crucial to this economy, as well as refugee families, has been exacerbated by the introduction in May 2004 of the habitual residency conditions which deny child benefit payments to newly-arrived asylum seekers. The requirement is a disgrace. While higher-income families get child benefit, some of those who most need it are prevented from getting it.
Refugee families were noticeable by their absence from the budget yesterday. Asylum seekers are forced to depend entirely on the direct provision system, which is hostel accommodation, full board and a weekly payment of â¬19.10 for adults and â¬9.60 for children. Most galling of all for those people in receipt of direct provision is that they are willing to work but are not permitted to do so. Many are educated or skilled people forced to leave their home countries, yet the Government insists on seeing them as an unpalatable burden, to be thrown a few coppers and kept in hostels instead of allowing them to work and contribute to this society while a determination is made on their case. This discriminatory system has been described as leading to physical, economic and psychological marginalisation of refugee families. It results in these families experiencing poverty and having to cope with difficulties clothing and feeding themselves and their children.
Earlier, the Minister for Community, Rural and Gaeltacht Affairs, Deputy à CuÃv, spoke eloquently about how much this budget delivered for carers reminding the Opposition, when I suggest it is the Government which needs reminding, of the importance of carers to Irish society. While the increase in carer's allowance and the respite care grant must be welcomed, the reality is that full-time carers who do not receive the carer's allowance due to the means test are no better off today than they were before the Minister for Finance, Deputy Cowen, stood up. Ireland's carers, who provide 3.5 million unpaid hours of care every week and contribute more than â¬2.1 billion to the social economy, have campaigned for an end to the means test for years. They were left bitterly disappointed again by this Government.
Michael Ahern (Cork East, Fianna Fail)
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Who brought it in the first day and increased it?
Martin Ferris (Kerry North, Sinn Fein)
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While pensioners reliant on the non-contributory pension get inadequate increases, the better off continue to be able to avail of excessively generous tax breaks for private pensions. Just think what could be done for those pensioners living in poverty if the will existed. The money frittered away on pension tax breaks which disproportionately benefit the wealthy, and amounted to â¬2.75 billion in 2002, could be redirected into the provision of a basic State pension for all. A basic State pension system would also deliver equality for women, who are badly serviced by the present system.
Michael Ahern (Cork East, Fianna Fail)
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There is a basic State pension.
Martin Ferris (Kerry North, Sinn Fein)
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The increase of â¬16 which brings the non-contributory pension to â¬200 merely means the Government complied with its commitment in the national anti-poverty strategy. It would have been surprising and appalling had it not done so. The Government can boast about nothing in this increase. During the next two months any non-contributory pensioner living in local authority housing will receive an increase from the local authorities in his or her weekly payment.
Michael Ahern (Cork East, Fianna Fail)
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It was restricted to 15% for the first time ever.
Martin Ferris (Kerry North, Sinn Fein)
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Fuel costs rose during the past 12 months and the Government provided a miserable â¬16 more per week. That is the cost of the four pints the Minister of State might drink tonight. The increase is lost in inflation and increases in rent and fuel costs.
The Minister of State, Deputy Batt O'Keeffe, stated today the Government plays its part in tackling climate change. It was a frightening thing to state. If this is the Government playing its part, I would hate to see what it would look like if it sat on its hands. This State faces penalties of â¬120 million per annum because of the failure to achieve our Kyoto targets. Yet the Government's main environmental proposal in this budget and the solution to the monumental problem of climate change proposed by the Minister for Finance, Deputy Cowen, is to spend â¬270 million buying carbon allowances. He seeks to buy the right to generate more pollution for Irish industry. The industrialised north will buy its way out of its commitments to reduce emissions and the expense will be passed on to the consumer. This is a form of environmental imperialism.
Martin Ferris (Kerry North, Sinn Fein)
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Carbon trading is not the answer to climate change. A recently published analysis of carbon trading, Carbon Trading: A Critical Conversation on Climate Change, Privatisation and Power, argues that carbon trading slows the social and technological change needed to cope with global warming by unnecessarily prolonging the world's dependence on oil, coal and gas.
Martin Ferris (Kerry North, Sinn Fein)
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As many environmental justice organisations point out, carbon trading is nothing more than the proliferation of the free market into environmental policy making.
We welcome the belated conversion of the Government to the importance of biofuels, especially when we are so dependent on imported oil and gas. This Government is determined to hand our oil and gas rights over to multinational corporations such as in the Corrib gas field.
The increase in grants for growing energy crops is welcome. It was proposed by Sinn Féin and others four years ago as a means to attract more farmers to this area. We are disappointed at the small size and limited vision of the proposals on bio-energy crop production. It is a missed opportunity.
If the political will existed, the closure of the sugar factories in Mallow and Carlow was an ideal opportunity to divert to biofuel production. Despite this golden opportunity, the Government's attitude is to adopt a hands-off approach, ignoring the possibility of the State becoming not just a producer of ethanol based bio-fuels but, given time, a net exporter of a valuable source of energy. It is another missed opportunity in a budget of missed opportunities from a Government which will be remembered by future generations as having had the resources to end poverty in Ireland and build a more equal and sustainable society and failing to do so. This budget creates the perception of being a good budget. The reality in most cases is quite different. Higher earners are the bigger winners. That is what this budget is about.
Catherine Murphy (Kildare North, Independent)
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As I read and listened to the Budget Statement yesterday I waited to see where the vision was. The budget was about making sure everybody got a little bit of something but no particular group requiring attention received a big gain. Some matters were incredibly disappointing, including child care which was one of the key features of last year's budget. We were told a great deal of catching up had to be done and that it needed to be done over a number of budgets. An expectation existed that this budget would contain something but sadly it was a disappointment in that respect.
The Minister for Finance gave an election commitment to reduce the top rate of tax to 40% should the Government be returned to power next year. No similar commitment was given on child care. The Government was caught off guard by the strength of feeling on this issue in the by-elections in Meath and Kildare North in 2005. I expect it to be a dominant issue in many other constituencies, including the two I mentioned, when the general election is called. Nothing is more sobering than knocking on a few thousand doors and hearing the same issue constantly arising. Opinion polls rapidly go out the window when one meets real people with real concerns.
People tell me the amount they pay for child care is the same as a second mortgage. Try and take that on board given the type of mortgages people have at present. It does not seem to be a problem for people to take on board the necessity of mortgage relief. However, the same level of concern does not exist for two people in a household who must work because house prices are so high, or for a single parent who works and must pay child care. This major issue required courage which I am afraid was sadly lacking. The issue is not confined to children under the age of five. Often, children over the age of six must be dropped off to a child minder at 7 a.m. and collected in the evening. The parents who pay are those who work and drive the economy.
I was extremely critical of the â¬10,000 tax exemption for child minders which was substantially below the minimum wage. Those who mind up to three children in their own homes do not have holiday pay or worker protection. The amount of â¬10,000 was a downright insult. Although the increase to â¬15,000 will not produce a stampede, it is welcome.
Pre-school is the research and development ground of the educational system but we saw nothing on it, which is disappointing. I welcome the increase in paid maternity leave. Many cannot afford to take the unpaid element. Child care places for babies are particularly expensive and some child care providers will not accept babies under one year old because of the ratio of staff to children and the expense involved. This is becoming a serious problem.
There were some very interesting proposals from the National Children's Nurseries Association, which carried out a very good survey on this issue which discussed issues like VAT and commercial rates. These are serious areas to examine in terms of dealing with the cost of child care. The association also sought a reassessment of the capital allowance scheme. Simply increasing the supply of child care facilities does not address the affordability of child care. There is much that can be done in the community and voluntary sector in this respect which would not be expensive. Part V of the Planning and Development Act 2000 could be used in this respect. A considerable amount that is not hugely expensive can be done, but there was little or no imagination in the budget in this respect.
The second element of the budget on which I wish to focus is the disgraceful way of dealing with commitments under the Kyoto Agreement. A total of â¬270 million has been committed up to 2012, which is basically investment in other countries. There was a line in the budget about keeping Ireland green, which is the biggest joke ever. Instead of investing in things like buses and dealing with the transportation sector, which is one of the biggest areas where our commitments are not being met, we are investing in Second and Third World economies to buy our way out. It is a cheap way and we can do much better than that. We have a particular genius for building infrastructure in half the countries in the world, yet we cannot deal with something like our obligations under the Kyoto Protocol. This is hugely disappointing and we can do much better. This area needs to be revisited. I do not know what kind of example is being set for ordinary householders when one asks them to separate waste and modify their behaviour when the Government is showing that we can buy our way out. Imperialism is the right terminology to use in this respect.
The Minister for the Environment, Heritage and Local Government recently announced that he intended to introduce new measures to improve value for money relating to local authority budgets of â¬9 billion. The fact there will be some control over these extensive budgets is very welcome. Critical services are provided by local authorities, however, a â¬4.5 billion capital and current debt has been accumulated by them. This information was contained in a reply to a parliamentary question last week. It is not just a question of looking at budget controls; it involves looking at the ability of local authorities to provide services.
The issue of value for money must be taken on board by the Government. There is a considerable amount of outsourcing of Government, whether it is the HSE or a huge number of organisations. It is only at times when the Government runs into financial difficulty that these matters get the attention they require. If there had been a serious examination of the waste currently taking place, there would have been considerably more money to spend on areas like carers and extending limits, disability services and child care. The funding announced in the budget in respect of the Disability Act 2005 only covers a very important commitment that relates to children under the age of five. All it provides for is an assessment when we know there is a critical shortage of some of the services required to address issues identified in this assessment.
The final area on which I will focus is waste. I know there will be an announcement in respect of money that is being spent in the health services. We were told a few years ago that the problem with the health boards resulted from local public representatives being members of them. When these representatives were taken off the health boards, the problem got significantly worse. One cannot even get an intelligible reply from the HSE. While I have regard for individuals who work in the HSE, we have a serious problem with that organisation which we must address. It is not a question of just throwing money at the health care issue. It is a question of understanding what kind of return we are going to get from this. We are doing very poorly in this regard. Health is one of the most inequitable services in the country. One sees wide variations in the quality of services provided, depending on the part of the country in which one lives. Areas that have experienced rapid population growth are some of the worst areas in terms of waiting lists and difficulties. It is only a matter of time before there is a serious debate on and a vote of no confidence in that organisation, such is the reaction from people who interact with it.
Séamus Pattison (Carlow-Kilkenny, Labour)
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The Deputy should conclude.
Catherine Murphy (Kildare North, Independent)
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Obviously, there were positive things in the budget. I have focused on some areas about which I have concerns. It would have been quite difficult for a budget not to have positive elements when there was so much taxpayers' money to be redistributed, but it lacks vision and courage.
John O'Donoghue (Kerry South, Fianna Fail)
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With the permission of the House, I wish to share time with Deputy Carty, the Minister of State at the Department of Foreign Affairs, Deputy Treacy, and the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Killeen.
I am delighted with the continued support of the Government for arts, sport and tourism. The overall budget for these areas is â¬698.6 million for 2007, an increase of 17.6% over 2006. This includes â¬216.56 million for arts and culture, an increase of 8.65% over 2006; â¬316.87 million for sport, an increase of 30% on 2006; and â¬153.7 million for tourism, an increase of 9% on 2006. The total capital allocation for 2007 is â¬298.842 million, an increase of just over 32% on 2006. The total current allocation for 2007 is over â¬399.759 million, an increase of 8.6% on 2006. It is important to view these increases in the context of exceptional growth in recent years in these areas. The arts, sport and tourism sectors have received unprecedented tangible support from the Government in terms of significantly increased financial allocations.
No one can doubt the Government's commitment to the arts. The Arts Council is the main vehicle through which the State supports the arts. The Government's ongoing commitment to the arts sector is demonstrated with an allocation of â¬80 million to the Arts Council in 2007. I am also very pleased the Government has again been able to provide a substantial increase for the national cultural institutions.
Overall funding of â¬19.7 million will be allocated to the Irish Film Board in 2007. This increase will enable the board to continue with its essential role in developing and supporting indigenous Irish industry. The increased current allocation will facilitate the board in marketing Ireland as a film location and, in particular, will assist the work of the newly appointed official in Los Angeles in raising the profile of the Irish audiovisual industry abroad.
I am also delighted that a 50% increase in funding has been secured for Culture Ireland to ensure Irish art is promoted at home and abroad. Taken together with the 50% increase secured in 2006, this represents unprecedented Government support for the arts.
This year's budget provides further evidence of the Government's commitment to providing practical support for sporting bodies seeking to develop their facilities. These bodies already benefit from specific income tax and capital gains tax exemptions and can all look forward to benefiting from an exemption from stamp duty on lands purchased for the purpose of promoting sports, to be provided for under the Finance Bill 2007. This will complement the support provided under my Department's annual sports capital programme for the provision of improved sporting facilities at local, regional and national level.
I am delighted the Minister has included additional funding of â¬2 million in the 2007 budget for Special Olympics Ireland. The Government holds the Special Olympics organisation in high regard and this is recognised by its commitment to funding. The programmes implemented by the organisation for people with intellectual disabilities have a profound and positive impact on families and communities. The organisation now has 11,000 affiliated members in 402 clubs countrywide, with a network of 101 communities supporting these clubs. The additional funding of â¬2 million provided in this year's budget will help Special Olympics Ireland to meet its extensive financial commitments next year, with the world games being held in Shanghai where some 200 athletes and coaches will represent Ireland. These measures should be placed in the context of the highest ever budget for sport, which is â¬316.87 million. If one compares this with the amount spent when sport became an issue at the Cabinet table in 1997, namely â¬17 million, one will note there has been an unprecedented increase. The allocation will enable us to press ahead with our ambitious plans to transform sports infrastructure, including the delivery of two major projects that are vital to our national sports profile.
The Government has made a considerable effort to bring our sports infrastructure into line with best international standards. This includes the provision of â¬87.8 million towards improving sports infrastructure at local and regional levels, â¬76 towards the redevelopment of Lansdowne Road, â¬30 million towards the development of phase 1 of the sports campus at Abbotstown and over â¬71 million for the horse and greyhound industries.
The 2007 budget for the Irish Sports Council has been increased from â¬40.9 million to â¬49.025 million, which is an increase of 20%. This increase will help to ensure the council can continue to deliver its various programmes and initiatives aimed at increasing participation by people of all ages in healthy sport and physical recreation, and at raising standards in competitive and elite sport.
The major issue facing Irish tourism is competitiveness. Budget 2007, with its emphasis on sustaining order in the public finances, minimising inflation, reducing income tax and avoiding increases in indirect taxes and excise duties on food, drink, accommodation and petrol will support the tourism industry in delivering value for money and withstanding international competition.
The decision in budget 2007 to allow for the deduction of VAT on certain expenses incurred in attending business conferences will give a major boost to Ireland's position as an attractive international destination for business tourism. I warmly welcome the announcement by the Minister for Finance that he intends to provide for the removal of the block on recoupment of VAT on certain conference-related expenses in the forthcoming Finance Bill. Ireland is one of the few EU countries at the higher end of the VAT scale that does not provide for deductibility. This has been eroding Ireland's competitive position in attracting conference-related business.
I strongly pursued the issue of VAT deductibility with the Minister for Finance in recent months. It was one of the key budget proposals sought by the major tourism representative bodies, including the Irish Tourist Industry Confederation and the Irish Hotels Federation. It has also been supported by the business tourism forum established by Fáilte Ireland and the tourism strategy implementation group.
The international conference market is very lucrative â it is estimated to be worth approximately â¬40 billion annually. Although we have made some advances in recent years, there is great potential for Ireland to grow its share in this market in line with our overall dramatic progress in tourism generally. Yesterday's decision, together with the imminent decision by the Government, which it is hoped will give the go-ahead for the construction of a national conference centre in Dublin, should position Ireland at the top end of the international conference market.
The increase in the VAT exemption limit for small service businesses from â¬27,500 to â¬35,000 will benefit small accommodation providers, including bed and breakfast owners, who have been under some pressure in recent years due to changes in lifestyle and consumer taste. This increase is further evidence of a listening Minister for Finance who understands Irish business.
For 2007, I have secured a record amount of Exchequer resources for tourism services. The sum amounts to â¬154 million, which represents an increase of 9% on this year's allocation. This includes an increase of 13% in the tourism marketing fund, which amounts to â¬45 million. It will enable the tourism agencies, Fáilte Ireland and Tourism Ireland, to deliver ambitious marketing and development plans.
The budget has come at the end of a good year for tourism. Conference numbers are rising, the number of overseas visitors in the first nine months of the year has increased by 11% and the number of holidaymakers is growing. We are gaining market share in global and European terms and the domestic tourism business is strong as Irish people take an increasing number of short breaks, many of which are spent in the country.
Over the past four and a half years, the Government has put in place a programme of total reform in respect of tourism. It has embraced the reform of all our tourism agencies, both national and regional, and of all our major tourism strategies in the fields of marketing, product development and human resources. This programme of reform is now paying dividends.
Tourism is no longer the Cinderella of Irish industry. It comprises our largest internationally trading indigenous service industry. Last year it was worth in excess of â¬4.2 billion in foreign revenue and in excess of â¬1.5 billion in domestic revenue. This year, 2006, has been one of the best ever for overseas visits to Ireland and I look forward to even better developments in the years ahead.
John Carty (Mayo, Fianna Fail)
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I congratulate the Minister for Finance on his very prudent and good budget, which covers the full spectrum of society. I compliment him on the way money is allocated to the various Departments for spending. As a member of the Oireachtas Committee on Social and Family Affairs, I congratulate him on the amount he allocated to the Minister for Social and Family Affairs, whom I congratulate on what has rightly been described as the best social welfare budget in the history of the State. The budget has used the country's economic success not to make the rich richer, as has been said, but as a targeted and focused approach to help the less well-off in society.
The Minister has brought the pensions debate to the forefront of Government policy. In this regard, the budget aims to assist in three very important areas: it outstrips the Government's commitment to increase the old age pension to â¬200, it improves the lot of those who have generated the prosperity the country now enjoys and it has initiated a process to give women greater pension entitlements.
The budget makes great strides in giving more support to carers, who have, through their compassion and dedication, supported society by caring for those in need of constant attention. Widows who were previously unable to work as carers in their communities because they stood to lose their non-contributory pensions received good news through the budget yesterday in that they can now do so. This will mean a lot to widows in Mayo and elsewhere who wanted to serve their communities by looking after their neighbours but who were unable to do so because they stood to lose their main source of income.
The Minister for Finance confirmed today that, from September 2007 a new payment, equivalent to half the carer's allowance, will be provided for certain people receiving another social welfare entitlement. The Minister for Social and Family Affairs will ensure that it will be allocated in an equitable way. For the first time, widows who wish to work in their communities as carers will be able to receive more than one social welfare entitlement. The Government has committed â¬31.15 million for 2007 and â¬75.62 million thereafter. This represents a good investment in communities and I welcome it wholeheartedly.
It was announced in the Budget Statement that respite care grants will be increased by â¬300 to â¬1,500 from June 2007. This is also welcome. I welcome it in particular because carers deserve to receive a respite grant given the difficult task they have been doing over the years.
The budget has prioritised addressing the scandal of child poverty and has introduced a package to provide more income and supports, such as the back to school clothing and footwear allowance, which will contribute to helping children take their place in society and build an even better Ireland in the future. The budget will revolutionise social policy. It has set out a framework and strategy by which we can wipe out poverty completely once and for all and make the country one of the greatest nations in the world.
I compliment the Minister for Finance on two initiatives, both of which affect my constituency. He has allocated â¬1 million for addiction services. Hope House in Foxford will benefit, in addition to two other organisations. Hope House does tremendous work for those with drug and alcohol problems and I thank the Minister sincerely for allocating money to it.
The No Name Club will share a package worth â¬1.5 million. I am delighted money has been allocated to it because it runs alcohol-free clubs for young people between 15 and 17 years. I compliment the people in my town, Claremorris, on the work they do with people of that age to keep them out of trouble. The response from the young people is tremendous. I thank the Minister for Finance for announcing those measures in the budget.
Small business received a major boost in the budget. In County Mayo there are many small indigenous companies that have worked hard over recent years to build their businesses and they do extremely well at providing employment for many people. The measures the Minister introduced in the budget will help them to work more smartly, pursue excellence and invest in innovation and creativity.
The 250,000 small businesses in the country are a major source of employment and growth, employing almost 800,000 people, or four out of every ten workers. It is vital that the Government does everything it can to help them, and budget 2007 does so. I compliment the Minister for Finance on recognising that and bringing in different parts of this scheme to benefit small businesses. I congratulate him on a prudent budget that will have far-reaching effects. I have no doubt that the next budget he presents will be even better.
Noel Treacy (Galway East, Fianna Fail)
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Is cúis mhór áthais domsa cúpla abairt mholta a rá faoin cháinaisnéis iontach a chuir mo chomhghleacaà Rialtais, an tAire Airgeadais, faoi bhráid na Dála agus an chaoi agus na slite cothroma inar chuir sé i measc mhuintir na hÃireann é.
This is the tenth successive budget presented by this Fianna Fáil-led Government and the third by my esteemed colleague and our Minister for Finance, Deputy Cowen.
It is the last budget of the 29th Dáil and I have no doubt that the first budget of the 30th Dáil, this time next year, will also be presented by a Fianna Fáil-led Administration. Since 1997, a deliberate and focused strategy has underpinned this Government's budget policy. This has resulted in record economic growth, a doubling of the number of people at work to over 2 million, fundamental tax reform, redistribution of wealth, major increases in social services and a massive programme of investment in infrastructure.
As the Taoiseach said here this morning, we live in an astonishing period of national development. We have succeeded in delivering an Ireland which is closer than ever to the one of which our forefathers dreamed. It is not a perfect republic, but under this Fianna Fáil-Progressive Democrats Government, Ireland is a better country to live in than ever before.
Over these ten budgets, a clear and focused strategy has been followed, which has made our modern republic one that is looked up to all over the world. This has all the more significance because not so long ago the opposite was the case. As Minister of State with responsibility for European Affairs, I am continually struck by the extraordinary journey which our country has travelled. Fewer than two decades ago, it was one of the Cinderellas of the EU. Today it is at the top of the 25 member states and as traditionally powerful states, such as France and Germany experience sluggish economic growth, Ireland continues to drive forward.
For the new member states, and for those about to accede to the European Union on 1 January 2007, Ireland is a perfect role model which they seek to emulate. This budget is a generous, responsible and focused set of provisions, which will sustain economic progress while improving the quality of life for all our people. Underlying all that this Government does is a genuine desire to spread our continuing prosperity as evenly as possible, and to ensure that policies of fairness and equality are always pursued.
This is one of the fairest and most socially progressive budgets ever produced by an Irish Government. We have generated the means, through prudent economic management and now we are setting about using it. Previous speakers have already outlined the extraordinary array of benefits across almost every area of public policy which this Government has initiated in this last budget of the 29th Dáil.
This budget rewards workers, promotes enterprise and protects the vulnerable, such as older people, those on welfare and people with disabilities. It also gives a real boost to first time home buyers with a doubling of mortgage interest relief, and further increases in child care benefit and funding for child care places, for hard-pressed working families.
In this budget the Government has given back more money to the people than ever before. It has been in a position to do this, because of its sound management of our economy, over the past nine years, which has allowed the largest ever increases in public spending and cuts in taxes. The Opposition is battling valiantly to pick holes in budget 2007. It is a hard station in which it has become very well practised. It knows in its heart that there is good news for everyone in this budget and that the vulnerable in our society have been especially well catered for.
It knows that the word on the streets about this budget is very positive and that the people are in no mood to risk their future economic and social management with any other than a Fianna Fáil-led Administration. It is my pleasure to commend this wonderful budget to the House and I salute Deputy Cowen on the outstanding leadership he has given, the work he has done and the excellent support he has received from his Government colleagues, led by an outstanding Taoiseach on behalf of the people.
Bernard Durkan (Kildare North, Fine Gael)
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I thought the Minister of State would speak for much longer.
7:00 pm
Tony Killeen (Clare, Fianna Fail)
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Tá áthas orm freisin go bhfuil deis agam caint ar an mbuiséad anseo anocht. This budget is responsible and sustainable and addresses the essential strategies required to ensure competitiveness. I am pleased that it addresses the regulatory and administrative burdens that posed a major problem for people in the small business sector. Some significant improvements have been made in that area.
The budget puts in place strategies that ensure our competitiveness. This year the extension and enhancement of the business expansion and seed capital schemes will cost â¬25 million in a full year and will contribute to developments in these areas. These schemes are a vital source of seed capital which is the lifeblood of start-up companies. They foster the development and growth of many small and medium sized enterprises, leading to the creation of quality employment opportunities.
There are also changes in the VAT registration threshold and corporation tax liability which will reduce the administrative and regulatory burden on the small business sector. The Government recognises the importance of research and development, and the enhancement of the research and development tax credit, estimated to cost â¬70 million a year, will further incentivise companies to engage in research and development. It will also encourage foreign direct investors to consider Ireland a good location for their research and development facilities and activities. The Government has invested quite significantly in this area in recent years although historically we had not grappled with it successfully. The emphasis for many years was on encouraging foreign direct investment and its attendant jobs which was welcome and successful. A total of 93,000 jobs are in foreign direct investment companies.
It is important for the future, however, that we have an indigenous research and development sector, all the more so if we can achieve it at multi-national level. They are increasingly showing a willingness to base some of their key research and development facilities here. The tie-up with third level institutions has been of critical importance in this area. Some previous speakers said that has not been as effective as it might be but the lead-in period from research and development is quite long and the benefits will be reaped between three and five years from now, or even further into the future, when Ireland's credibility as a location for research and development is properly established. That is a strategy we need to pursue if we are to be successful in this area.
As Minister of State with responsibility for labour affairs I am pleased that the changes in income tax will remove some 88,000 people from the tax net and help those who are unemployed to transfer to the active labour market. In a short period we have moved from having just under 1.1 million people in employment to just over 2 million.
That is the most dramatic increase in the workforce among our OECD partners. A critical factor in that achievement is the low level of tax on income. Ireland enjoys the second lowest tax wedge of all OECD countries. In this budget the increased credits, the widened bands and the rate cut to 41% will contribute to ensuring that we continue to move in that direction. Historically, we have learned that widened bands and much increased credits contribute substantially and much more dramatically to reducing the tax burden on workers to ensure that work pays. That is one of the critical strategies we need to embrace as we progress.
I am pleased the Minister guaranteed that if the national minimum wage is raised to the level recommended by the Labour Court, it too will remain outside the tax net, which is important for people working at that level. One of the claims made against the economy is that it makes the rich richer and the poor poorer. I was pleased to hear the results from the Irish Taxation Institute earlier which indicated that the benefits from the budget for the top 20% of earners averaged 2.5% while the benefits for the bottom 20% of earners was 9.5% on average. This confirms that the budget is strongly skewed in favour of those on lower incomes which is important in terms of ensuring parity across the workforce.
Interestingly, a recent European study showed that the top 20% of wealth owners in this country have just under five times as much wealth as those in the bottom 20%. The European average is 4.8%. We are moving quickly towards that point. Ten years ago, the top 20% were more than 5.2 times as wealthy as the bottom 20%. The difference is gradually being reduced and is coming close to the European average. This runs counter to what one would believe on reading commentary in this area which invariably suggests that wealth is gradually being repositioned in favour of those in the top 20%. That allegation is not borne out by recent research. The effect of the budget will be positive in this regard.
One of the areas to which people look in assessing a budget is that of social welfare payments. The Minister for Social and Family Affairs, Deputy Brennan, has a budget of over â¬15.3 billion. I cannot remember how much it was when Deputy Durkan was a Minister of State in that Department.
Bernard Durkan (Kildare North, Fine Gael)
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I can, and I know why it was that way too.
Tony Killeen (Clare, Fianna Fail)
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I have no doubt it was a good bit less.
Bernard Durkan (Kildare North, Fine Gael)
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It was because of the bad management beforehand.
Tony Killeen (Clare, Fianna Fail)
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In any event, it has enabled the Minister on this occasion to deliver on pension commitments many people said five years ago could not be delivered in ten years, let alone five years. That is something about which we are very pleased. It acknowledges the tremendous work done by old age pensioners both currently and historically.
As Deputy Carty stated, there is improved provision for carers, which is to be welcomed also. This enables some people who were debarred in a rather unfair manner to benefit from payments in that area. The respite care grant, which is important, has been dramatically improved also. People on the lowest rate of social welfare will receive an additional â¬20 per week. This is a significant increase. There has been a fivefold increase in the Department's Vote in ten years.
One of the most welcome measures, to which few speakers have referred, is the improvements in preventing child poverty. That is one of the areas where we need to continue to direct resources. One could be forgiven for thinking that just increasing payments is sufficient to address issues relating to child poverty, but a much wider provision is necessary in that area to support families. While the payments announced in the budget are of considerable importance, there are other critical areas of support for families to ensure that children are moved out of poverty and benefit from the wealth of the State. It is a hugely challenging area because it involves providing facilities to ensure people have real access to food, education, etc.
The provision of child care is also critical in terms of enabling women, in particular, to be active members of the workforce. There have been significant increases in the number of women participating in the workforce in the past two years. Some of them may have been among the ranks of the unemployed but many were from the inactive element of the population who were previously not encouraged to work outside the home. They have made a contribution to the quality and flexibility of the workforce and its capacity to deliver. One of the critical factors in enabling lone parents and mothers generally to go to work is the provision of affordable child care. That is one of the areas which was non-existent previously.
One of the resources which could be more significant arises from the tax credit provided to those who provide childminding services in their homes. On this occasion the Minister has increased that by 50%. I have no doubt this will impact on the number of child care places available and the corresponding increase in child care places will have a substantial impact on the affordability of child care, which is a considerable obstacle to some people who wish to participate in the workforce.
Another area of concern prior to the budget was first-time buyers and the difficulty experienced by young people getting on the property ladder. The budget increase in mortgage interest relief for first-time buyers is significant and will impact favourably on the capacity of young people to acquire their own homes. We have a tradition of home ownership that appears to be deeply ingrained. It is to the benefit of society as a whole that this is the case. The budget acknowledges and makes provision for this and will help to get people on that important first rung of the ladder.
The fact that the measure is backdated for up to seven years is also an acknowledgement that some people have managed to get their feet on the property ladder, despite the difficulties we are led to believe have existed in that area. In some parts of the country these difficulties were not all due to the economy or the rise in house prices. I refer to matters such as planning permission and other ancillary issues which have been negative in their impact on affordability, especially in rural areas. That may not be something which can be addressed by the budget but does need to be examined generally.
A number of measures are designed to assist farmers. Tax relief on stamp duty, capital gains tax and the leasing income arrangements are all much improved. The farmers' flat rate of VAT has been increased to 5.2%, which is worth an extra â¬16 million for farmers. Perhaps, more importantly, will be the introduction of REPS 4 which will come into effect during the year. I believe it will have two important impacts. It will clearly improve environmental matters and assist farmers to ensure the environment is protected and enhanced to the best extent possible. It will also have a significant impact on farmers' incomes. That will help to make them more sustainable. A number of issues arise in that regard, not least that of crops in terms of fossil fuels, etc, which are addressed in this budget and which are becoming more of a challenge not just for this country, but for all of western Europe and much of the developed world. The Minister has made considerable advancements in this area in the previous two budgets and it will undoubtedly be of future benefit.
Bernard Durkan (Kildare North, Fine Gael)
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I was intrigued when Deputy O'Connor referred to the fact that he has never seen the Opposition give a standing ovation to the Minister for Finance. Perhaps we are not so emotional. I will agree that there was a general upswelling of emotion which resulted in what can only be regarded as an orgy of emotion when the Minister finished his speech last evening. That can only be compared to a scene from the film, "The Italian Job", which Members will recall.
The mastermind in the film was played by Noël Coward, who organised a heist from prison. When word got back to him that the job had been pulled off and the thieves were speeding away with the loot through the various escape roads in a mountainous area of Italy, there was a celebration back in the prison. Noël Coward descended slowly from the top of the staircase to the ground floor to the tumultuous applause of everybody. He got a standing ovation. Considering the film further, one recalls that the getaway truck was at this point perched precariously over the side of a precipice with the golden loot slipping around as it see-sawed back and forth. In the middle of it all, Michael Caine said "Hang on a moment, I've got a plan". There is a certain similarity between "The Italian Job" and what we have seen in the past 24 hours.
While I am on the issue of applause at budget time, I remind the Members opposite that on an occasion not so long ago, my poor old friend and colleague, former Deputy McCreevy, presented a budget in which he made a famous announcement on decentralisation. There was loud and prolonged applause from the audience on the other side of the House who rose to their feet and stomped and pawed the ground, but when the mountain laboured, it brought forth the usual mouse. I hope Members on the other side of the House do not lose the run of themselves but instead evaluate the budget in the proper way.
The first question which comes to mind is prompted by an inimitable Member opposite who said the budget was all give and no take. We must ask why it was all give. The answer, simply, is that what should have been given before was not. A quick look at the various groups in our society provides an adequate explanation as to why there was so much money in the coffers. If one considers the much vaunted housing situation, one finds there are still between 50,000 and 60,000 families on housing lists. Supplementary welfare is being paid to appease them because they cannot be housed. The problem could have been solved simply by spending money to build houses specifically for them, as used to be done once upon a time. That has not been done, however. Hospital waiting lists are another explanation for the amount of money which has been saved up. There is a lack of adequate health and psychiatric services, including child psychiatric services, and long waiting lists for services of every hue. The lists have been growing for the last ten years, but they have not been attended to. If one wants to know how the Government has so much money to spend, examining how much it should have spent already on health services will give one food for thought.
In the education sector, one must ask how many schools are dilapidated or in need of extension. How many new schools are required and how long have we been waiting for action? How long have we been waiting for a reduction in class sizes while we continue to have one of the worst pupil-teacher ratios in the world? Why in five years has no one on the Government benches risen up in rebellion to demand that education be made a priority? Nothing has been done. A mother came to see me last Saturday whose child needs speech and language therapy. Her child was diagnosed two years ago, but there is still no sign of treatment, nor will there be in the next 12 months. They may have to wait a further two years. Early detection and treatment is important if a child is not to lag behind in his or her academic progress in later years. The failure to provide the services that child needs is another reason money has been saved up to be given away in a blatant attempt to buy votes in the next general election.
The people are alert to the Government's tactic. They might have bought it a few years ago as they bought the famous gimmick in 1977 when the motto was "Put more money in people's pockets", despite the fact that Europe had just emerged from an oil crisis. The Opposition of the day, whose party now sits on the Government side, decided it would go all out and abolished car tax. The result was potholes and plenty of them. The entire local government finance system and national road network were ruined, but as if that did not suffice, Fianna Fáil decided also that it would abolish rates. Why not go the whole hog and abolish everything? The result was more broken down services and a local authority system which could not meet its payments. After four very difficult years for the people of this country who had been told there was a better way and that more money in people's pockets would be the order of the day, the incoming Government elected in June 1981 had to produce a supplementary budget within 28 days of taking office. There was no money to pay civil servants, teachers or Garda or Army wages. When I hear the Members opposite crowing about how well they have done in the last couple of years and taking credit for addressing the economy, I have to smile.
For my sins, I spent a great deal of time as a member of the Committee on European Affairs where my attention was caught in the early days by the Common Fisheries Policy and its likely effect on Ireland. When I joined the committee, we had a fairly healthy fishing industry. It may do no good to say that various domestic interests undermined the industry to the extent that it has almost disappeared, but the fact is that we no longer have a coastal fishing sector. It has almost completely closed down. One can travel around the coast from Killybegs to Carlingford and find that it is closing. In a few years, we will no longer be able to get the famous Irish delicacy smoked salmon as we used to know it, which will be a terrible thing for the socialists on the Government side. We can blame who we like, but the people on the other side of the House were part and parcel of the negotiations at European level which allowed this to happen. The Common Fisheries Policy was a matter for them. It is no good to say that stocks are down when the question is why that has happened.
Reference has been made in this debate to agriculture. Among the claims which emerged from the last reform of the CAP was that there was great hope for Irish agriculture, but when I heard the phrase "rural development programme", I knew we were coming to the end. The reality for agriculture, on which the Members opposite have been negotiating for years, in Ireland and in Europe is that we will increasingly import food into a food producing country. We will import our food from Australia, New Zealand, Africa and Latin America, which will do a great deal for the ozone layer and carbon emissions. We will not produce food here because it will not be profitable. The sugar beet industry provides the classic example of how something can be allowed to slip away. How totally negligent the Government was to allow that to happen while at the same time other countries in Europe were considering how to convert the industry to produce something else that is now required, such as bio-fuels. An agreement was reached on the compensatory package, a huge amount of which went to the food processing company involved. It will move out of the country at the first opportunity and sell off the property assets it has here, which it got from the State, from the Irish Sugar Company. If producers continued to produce sugar, they would get no compensation, which is extraordinary.
There are two food producing areas that are critical to this country which has a climate eminently suited to food production. It is amazing that we should let them be negotiated away from us in the context of CAP reform, which the Minister for the Environment, Heritage and Local Government, Deputy Roche, mentioned in a laudatory fashion of his efforts to the effect that CAP reform was very beneficial to the environment. I am sure the Minister of State sitting opposite is saying to himself "What the hell did he do that for?" I presume he thought fewer animals would mean less methane gas generation from the national herd, which would be beneficial to the ozone layer and the reduction in carbon emissions. I ask somebody to do the calculations when compared with the carbon emissions from all the imports that will be needed as a result. That applies not only to this country but also to the rest of Europe. However, the sugar beet industry in France has not disappeared. Miraculously it kept it on board. In parts of Britain it has also been retained because those countries are wise. Our negotiators did not do such a great job there.
The supply of health services is an emotive issue. People need to get treatment when it is required. There is no sense in promising treatment in a year or even six months. There may not be time to wait. It may be necessary and urgent that the treatment be provided now. During the stewardship of the Government 35,000 extra employees have been brought into the delivery of health services. While I do not know whose idea that was, it took place immediately after the former Minister for Health and Children said that he had identified a problem with the health boards which were wasting the money. We now have a single health board for the entire country which cannot and will not work, as Members opposite who were members of local authorities will know. It is impossible to administer on the ground to an area that is as widely dispersed as our health board area now is from Donegal to Kerry to Wexford and up again to Carlingford. I suppose that on examination at some future time it will mend its ways. That is why Deputy Ned O'Keeffe said it was all give â everything had been taken beforehand.
I wish to discuss the communications area of my portfolio. If as much money was floating around the country as is professed, why, in God's name, was nothing done to keep us at the leading edge of modern telecommunications and technology? We were either first or second in the European league. We are now either second last or last in a bigger group in the European league. While that took considerable imagination, effort and neglect, we have arrived at that point regardless of whether we like it. Sadly when we are trying to attract business and industry to the country and when we are trying to pretend we are at the leading edge in technology, we have allowed this to happen. Needless to say we had our flirtation with electronic voting. While I know the population has increased, I did not think it had increased by so much that we could no longer count the people's votes manually at election time. The Government decided to get rid of almost â¬60 million in the daftest idea I have ever heard. Anybody who spends time in this House could think of many other ways in which the money could be used.
I wish to mention what was the subject matter of the Private Members' debate this week. During the same term of stewardship, we have seen the demise of at least 500 post offices which were the backbone of the postal service network and which provided more ancillary services to the local rural and urban communities than anyone has yet assessed. Sadly the Government had originally intended to allow the postal services to wither on the vine and perhaps we would have replaced them with something else. There will be a change of Government some time and we will address that issue.
The energy area is also in the portfolio for which I am responsible. Amazing things have happened in this area which are amusing. To contradict everybody else in the world we decided to increase gas and electricity prices in the past six months. All the indicators were that it should have gone in the opposite direction and there was absolute silence from Government while the Opposition raised questions. We could not raise questions in the House because it was a matter exclusively for the regulator. Lo and behold, when the Minister went to Hanoi he must have spoken on a tannoy because it was reported that the Minister, Deputy Noel Dempsey, had recently met the chairmen and chief executives of both the ESB and Bord Gáis Ãireann when the proposed tariff increases were announced by the regulator, and that he had urged both to review the need for the increases being proposed and to explore ways of minimising them in the interests of the consumers.
John CurranBernard Durkan (Kildare North, Fine Gael)
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What a great thought. What a pity he kept it so secret. What a pity he did not come out publicly and tell the people what he was trying to do because, God love him, it took him a long time to do it. Both companies indicated a willingness to do so subject to the regulatory system. Lo and behold, despite all the regulation and all the obstacles in their way, it came to pass that it was possible to reduce the increase that had already been granted. Between them, they attempted to pull off the greatest con of all time. The increase now appears to have been a decrease. I know there is considerable confusion on the matter on the opposite side of the House. The difference is as follows. The Minister should go back to the various executives to whom he spoke before and ask them to restore the prices that prevailed before the original increase was granted. There was no basis or grounds for an increase and that is still the case.
Séamus Pattison (Carlow-Kilkenny, Labour)
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I ask the Deputy to move the Adjournment.
Bernard Durkan (Kildare North, Fine Gael)
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How much time will I have the next day so that I can rev myself up in the meantime?
Bernard Durkan (Kildare North, Fine Gael)
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That could be very important the next day.