Dáil debates

Wednesday, 7 March 2007

Finance Bill 2007: Report Stage (Resumed) and Final Stage

 

Debate resumed on amendment No. 19:

In page 21, between lines 1 and 2, to insert the following:

"14.—The Principal Act is amended in section 779 by inserting the following new subsection:

"(3) A person, none of whose taxable income is chargeable at the higher rate, who makes a pension contribution within the limit set out in this section, shall be entitled to receive a tax credit contributed to the pension scheme equivalent to relief at the higher rate.".".

—(Deputy Bruton).

5:00 pm

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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To help Deputies, could the Minister supply the House with the current figures for all of the pension funds under the small self-administered pension schemes as discussed on Committee Stage? Regarding exemption certificates, could the Minister supply the House with the figures in bands of €5 million? The €1 million to €5 million band would be the relevant one because of the legislation. For example, are there pension funds under the new or old regime in excess of, for example, €50 million? We would like to see the full picture relating to these special schemes, which are only available to the exceptionally wealthy.

Every party in the House wants to encourage people to provide for their pensions. I do not know whether the Minister's colleague, the Minister for Social and Family Affairs, is suggesting mandatory pensions, but the key objective of workers younger than 35 years of age is to provide homes for themselves. Such a worker must fund an average loan of €200,000 plus outside Dublin or €300,000 plus in the Dublin area. I do not know how the Government could make pension provisions mandatory among that age group.

Séamus Pattison (Carlow-Kilkenny, Labour)
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The Deputy has used her two minutes.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Deputy Bruton's point was that if some of the benefits received by the very wealthy through the Minister and his predecessor's schemes were made available to people on lower incomes through attractive schemes, we might start to see a higher level of desired pension provision.

Photo of Brian CowenBrian Cowen (Minister, Department of Finance; Laois-Offaly, Fianna Fail)
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The 116 funds are pre-budget 2006. We are discussing the historical position, that is, the level of the funds were recorded on budget day and they were not created thereafter. I can arrange to provide the bands information.

The SSIA scheme was an attempt to inculcate a savings culture and to determine how to develop simplified schemes. It worked well and, at the time, received the support of everyone in the House. Many people took up the offer. The SSIAs have proven successful in terms of making people aware of what is possible and their provisions were quite generous.

Having re-established saving as a part of modern life, the next step is to try to find a pension path for people who have traditionally not regarded pensions as being for them. Many had good reasons for this attitude, such as spending their limited incomes on day-to-day requirements and being unable to consider the next day. Those involved in pension provisions or who can consider them as options have a greater degree of discretionary income. It is tax relieved on the way in and the lump sump is fully taxed on the way out. It is a fair taxation mechanism. It is a good public policy objective to ensure that people are not totally dependent on State-provided pensions when they reach retirement age. As this is not the experience for more than half of the population, we must address the issue.

If I have this responsibility after the election and in the context of social partnership, the detailed work of the pensions board and ongoing work, I would be anxious to make decisions based on the available information and to have those with an interest in this matter to make their opinions known through a Green Paper process, which is the transparent way of addressing complicated matters and long-term policy issues. I have listened to Deputies, but I am not in a position to accept the amendment, given the advanced state of the work.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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I am disappointed by the Minister's attitude. None the less, we will need to return to this issue regardless of who is on that side of the House. Far-reaching decisions must be made to create a fairer and more equitable system. I do not know who will be over there to do this work, but someone must do it in the not-too-distant future.

Amendment put and declared lost.

Amendments Nos. 20 to 23, inclusive, not moved.

Photo of Dan BoyleDan Boyle (Cork South Central, Green Party)
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I move amendment No. 24:

In page 45, line 21, after "agency" to insert the following:

"Recycling cannot be taken to mean the end disposal of waste, in particular through incineration.".

I suspect this will be the last amendment we deal with before the guillotine is invoked. I did not get an opportunity to speak on this issue on Committee Stage. There was, unfortunately, conflicting business in the Chamber at the time. I was seeking a clearer definition and that recycling be included in the section relating to BES, particularly since the Minister has seen fit to include recycling companies and other types of environmental enterprises in future BES. I have a fear that is shared by many in the environmental movement that there is a need for a clear definition of recycling.

We hear much talk, for instance, of recycling targets being met. However, much of our recycling material is exported in enormous quantities to countries such as China with a consequent large carbon footprint. It is also of concern that waste management companies which present themselves as recycling concerns are, in effect, waste disposal companies. If the Minister is willing to include companies engaged in the practice of recycling, then we need to be very clear as to what that practice involves. One particular loose interpretation of recycling refers to incineration.

It is Government policy to set up a chain of at least eight incinerators around the country and the Environmental Protection Agency, of all bodies, describes incineration as "waste to energy". There was a recent vote in the European Parliament on the current draft waste directive. This reclassifies incineration not as a recovery method, in which case it might be termed recycling, and wants instead to have it defined as a disposal method. That is the trend of thinking at European Parliament level at least, although some officials in the Department of the Environment, Heritage and Local Government believe this is a mistake which might be corrected before the eventual directive is formally agreed upon. Nonetheless, our legislation should also reflect the essence of recycling being material that is taken out of the waste stream but not disposed of in other ways.

The wording of the amendment is fairly modest and, as such, the Minister should be inclined to accept it. I have put on record my support for BES and their continuation. However, there is a need to refine the initiative more and the recent study did not tell us half of what we need to know about their effectiveness. As a means of encouraging indigenous industry, it is as good a fiscal measure as any that exists. I know of no better instrument that may be introduced, at least in the short term. If, out of all the environmental initiatives that exist, recycling industries are to be brought into that genre, I would like "recycling" properly defined and I hope the Minister is inclined towards accepting a wording of this type.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Restrictions on the amount of the capital sums, as regards BES, came as a surprise. One of the problems for small to medium sized business, SMEs, is the lack of capitalisation. I do not know whether it is a matter of the capital a company will get or whether the Minister is more attracted by the personal tax relief for investors, but I was struck by the fact that he included recycling under the BES heading and there were references to environmentally efficient projects. There is a category of people in Ireland who do installations of various products that lead either to reduced carbon usage or improvements in relation to areas such as solar heating systems, wind energy and so on. However, the scheme as it is designed cuts out a number of people who have been working in this area but still fall outside its remit. I find this surprising because the key issue for these small and medium-sized businesses is for them to get a great deal more capital in order to grow.

The Minister will appreciate that administration costs for BES charged by firms of accountants and solicitors who sell them are extremely high. It is akin to insurance products in this country. The cost of many of the tax-based schemes in terms of the middlemen, accountants, tax lawyers and so on who provide them, are very high. I wonder what type of survey the Minister did. Even the chambers of commerce were rather surprised by what he introduced. Rather than seeking to grow the capital fund, he seemed to dwell more on the personal tax attractiveness of the schemes he put forward for people who might be investing. As we did not have an opportunity on Committee Stage, perhaps this is an opportunity for the House to explore the Minister's thinking in this regard and for him to explain who precisely he was targeting. I meet a good many business people involved in the provision and installation of more efficient and new types of energy services. As far as I can make out, however, they seem to be outside the remit of this scheme. I am interested in the Minister's comments.

Photo of Brian CowenBrian Cowen (Minister, Department of Finance; Laois-Offaly, Fianna Fail)
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The background to the decisions we made as regards BES and the seed capital scheme that was up for renewal was the Small Business Forum and much of the work it undertook under the chairmanship of Mr. Joe Macri. The forum came forward with very specific recommendations which were discussed with me and the Department of Enterprise, Trade and Employment. I was broadly supportive of the recommendations from that Department. We were anxious to facilitate the directing of capital funds and private capital to these specific areas of building and growing SMEs. It is in line with our industrial policy, makes eminent sense and was in line with the recommendations of groups set up for the purposes of advising Government as to how we might be able to assist small business in a whole range of areas. I am glad to say all those recommendations are in the process of being implemented.

What was put forward was an À la carte list of demands from every possible source. A very detailed internal dialogue took place within the Small Business Forum to focus on what specific strategic issues could be addressed by Government in assisting the forum to develop its businesses and propel the economy forward in terms of the supplying of products and services, while providing job creation opportunities for the future.

Deputy Boyle's amendment relates to one of the proposed changes being made to the BES and related seed capital schemes in section 19 of the Bill, whereby certain recycling activities are being brought within the scope of the schemes. It seeks to ensure that the end disposal of waste, in particular such as by way of incineration, will not qualify. As I pointed out, when responding to this proposal at the Select Committee on Finance and the Public Service, the activity mentioned in the amendment, that is, the end disposal of waste, and whether the disposal is done by way of incineration or otherwise, is outside the ambit of what is being provided for in section 19. The amendment is, in our opinion, therefore, unnecessary.

Section 19 spells out what the term "recycling activities in relation to waste material" means. A key requirement is that the waste material must be treated or processed in a way that results in the production of value-added material that is reusable. The section goes on to list various types of waste material that may be processed. The measure is specifically and solely targeted at recycling of waste and not its disposal. As I have indicated, it requires the recycling process to produce from the waste resultant material that is of more value and is capable of being reused. Waste disposal, obviously, cannot qualify.

Séamus Pattison (Carlow-Kilkenny, Labour)
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As it is now 5.30 p.m., I am required to put the following question in accordance with an order of the Dáil of this day: "That the amendments set down by the Minister for Finance and not disposed of, including those in respect of which recommittal would in the normal course be required, are hereby made to the Bill, that Fourth Stage is hereby completed and that the Bill is hereby passed."

Question put.

The Dail Divided:

For the motion: 65 (Dermot Ahern, Noel Ahern, Barry Andrews, Seán Ardagh, Niall Blaney, Johnny Brady, Martin Brady, Séamus Brennan, Joe Callanan, Pat Carey, John Carty, Donie Cassidy, Beverley Flynn, Mary Coughlan, Brian Cowen, Martin Cullen, John Curran, Noel Davern, Síle de Valera, John Dennehy, Jimmy Devins, John Ellis, Frank Fahey, Michael Finneran, Dermot Fitzpatrick, Seán Fleming, Jim Glennon, Noel Grealish, Mary Hanafin, Mary Harney, Joe Jacob, Cecilia Keaveney, Billy Kelleher, Peter Kelly, Tony Killeen, Séamus Kirk, Tom Kitt, Brian Lenihan Jnr, Michael McDowell, Tom McEllistrim, John McGuinness, Micheál Martin, John Moloney, Michael Moynihan, Michael Mulcahy, M J Nolan, Éamon Ó Cuív, Seán Ó Fearghaíl, Willie O'Dea, Liz O'Donnell, Denis O'Donovan, Noel O'Flynn, Batt O'Keeffe, Fiona O'Malley, Tim O'Malley, Tom Parlon, Peter Power, Dick Roche, Mae Sexton, Brendan Smith, Michael Smith, Noel Treacy, Dan Wallace, Ollie Wilkinson, Michael Woods)

Against the motion: 49 (Bernard Allen, Dan Boyle, Pat Breen, Richard Bruton, Joan Burton, Simon Coveney, Seymour Crawford, Ciarán Cuffe, John Deasy, Jimmy Deenihan, Damien English, Olwyn Enright, Paul Gogarty, John Gormley, Tom Hayes, Séamus Healy, Phil Hogan, Brendan Howlin, Paul Kehoe, Enda Kenny, Kathleen Lynch, Pádraic McCormack, Shane McEntee, Dinny McGinley, Finian McGrath, Paul McGrath, Liz McManus, Olivia Mitchell, Breeda Moynihan-Cronin, Catherine Murphy, Gerard Murphy, Denis Naughten, Dan Neville, Michael Noonan, Fergus O'Dowd, Jim O'Keeffe, Brian O'Shea, Jan O'Sullivan, Séamus Pattison, John Perry, Ruairi Quinn, Michael Ring, Eamon Ryan, Joe Sherlock, Róisín Shortall, Emmet Stagg, David Stanton, Mary Upton, Jack Wall)

Tellers: Tá, Deputies Kitt and Kelleher; Níl, Deputies Kehoe and Stagg.

Question declared carried.