Wednesday, 24 October 2007
Pre-Budget Outlook: Motion (Resumed)
"notes the Pre-Budget Outlook incorporating Pre-Budget Estimates for Public Services 2008, published by the Tánaiste and Minister for Finance on 18 October, 2007 and having regard to the statement by the Minister that 2007 represented a turning point for the Irish economy, calls on the Government to take all necessary steps to:
The message that will come through to the ordinary man on the street from budget 2008 will be that the party is over and that it is time for one to tighten one's belt. This Government which has built its reputation of good economic management on the back of a debt fuelled property market must now face the music. The reality is that the property boom is over resulting in less taxes for the Exchequer. This is the reality of a boom which has been squandered. There is little money left in the kitty for a rainy day.
We have had high spending without public sector reform. No Minister is stepping up to the plate and taking responsibility for serious blunders as recently witnessed in the Shannon debacle and the e-voting farce. There have been big increases in bureaucracy as seen with the establishment of the HSE but with poor delivery at the frontline. The ordinary patient is, as recently stated in the Fine Gael Private Members' motion sponsored by Deputy James Reilly, suffering because of the cruel cutbacks imposed by the Minister for Health and Children. We have also witnessed incompetence in terms of preparing Ireland for a transition which is essential if we are to meet the challenges presented by globalisation, technological change and environmental deterioration.
Research published by the ESRI today has confirmed the emergence of a €5 billion black hole in the difference between the economic assumptions in the Fianna Fáil manifesto and the Minister for Finance's pre-budget forecast for the next three years. The vanishing bonanza of the property boom now reveals the harsh reality of how Fianna Fáil has managed our tax resources. It has engaged in high spending without delivering efficiency in public services.
The Department of Finance's new projection for tax in 2008 is €2.2 billion lower than predicted in the previous budget. Despite the Minister's promise to maintain a budget surplus, he is now proposing to compensate for this loss by borrowing extra money. In place of a predicted surplus of €800 million for 2008 the Minister is now proposing a deficit of €770 million. He is still planning, however, to increase current Government spending 45% faster than the rate of economic growth. This is not right and not sustainable. Borrowing should only be on a short-term basis. The Minister must avoid the temptation to use borrowing to fund day-to-day spending as a long-term strategy. The new projections show that in the next three years a gaping hole of €5 billion will emerge in the Fianna Fáil manifesto, and is likely to rise to €6 billion in the longer term. This effectively wipes out the entire programme of commitments for tax reform and spending in the manifesto, which was to have been achieved by that time.
There is something familiar about Fianna Fáil's boom and bloom attitude before the election, changing to doom and gloom shortly after. In 2002, ordinary families and small businesses bore the brunt of the cost of filling the hole in Government finances. We are familiar with the stealth taxes introduced at that time. It does not look different this time and people have a right to know which promises will be kept and which will drop off the radar. The Minister can, at best, afford 20% of his promises by 2012.
The vanishing bonanza of the property boom also reveals the harsh reality of how Fianna Fáil has managed our tax resources. The party has engaged in high spending without delivering efficiency. Current spending has consistently grown 40% faster than the rate of growth in the economy over the past seven years. This has ratcheted up the amount of tax needed to support this Government.
The Government has spurned every opportunity to deliver efficiency in favour of soft option politics. The robust system of expenditure review, initiated in 1997, might have exposed inefficiency but it was scaled down and is now almost abandoned. Benchmarking was seen as an opportunity to introduce real change in the delivery of public services. However, it came and went without anything being done.
In the face of poor delivery from health spending, the former Minister for Health and Children, Deputy Cowen, expanded the number of health boards from eight to 11. Then the Government abolished the health boards and imposed a super health executive, the HSE. As each decision was made, the bureaucracy grew. The front line has been starved of resources. No administration job was lost in the process and no economies of scale have been achieved and no one is accountable.
The September Exchequer returns signalled that the property slowdown will result in a shortfall of tax revenue of up to €1.5 billion in 2007, the year of SSIA multi billion windfalls. In the ESRI autumn quarterly commentary, GNP growth for 2008 is forecast at 2.9%, compared to the forecast of 3.7% made in June.
With falling house completions expected over the next few years and builders having asked staff not to return after the builders holidays, we face a crisis in the housing market. The ESRI estimates that every reduction of 10,000 new housing units is equivalent to 1.2% in growth. The Government collects 28% of the cost of a new home, through VAT at 13.5%. This is a surprise to many given the debate on reforming stamp duty and making it more equitable for home owners to trade up. The Central Bank forecasts GNP growth of between 3.25% and 3.5% GDP during 2008. This reflects slower domestic demand growth. This will be accompanied by easing inflationary pressures but there will be a rise in unemployment.
The HSE has been unable to live within its budget, which has increased by 16% this year. This budget overrun only came to light some weeks ago. This issue is affecting the frontline and is unacceptable. A week hardly passes without the launch of a public quango to commission reports from the consulting industry, which has received over €400 million in public sector revenue since 1997. This litany of waste is continuing, one of the latest being a planned climate change awareness publicity campaign ordered by the Minister for the Environment, Heritage and Local Government, Deputy Gormley.
There has been minimum public service reform in the decade when staff levels have increased by 100,000. After the budget the Government will receive a review of the public service from the OECD, the governmental think tank. I urge the Minister to take the report seriously and take the difficult decisions.
On 4 October the Minister for Finance, Deputy Cowen, stated that average increases of 8.9% agreed in the first benchmarking process, cannot be repeated in the recommendations of the benchmarking body, which are due at the end of this year. He stated that the body is likely to give greater weight to the value of the public service pension package when making comparisons, in view of developments in pensions across the economy in recent years. The previous benchmarking process was a failure from the outset. The public service pension terms that give any retiree the same increase as those in the grade he or she last worked in was not taken into account in comparisons with the private sector.
I welcome the publication of the pre-budget outlook statement, launched last year. Unlike other budget documents it gives a snapshot of the total budget and the additional spending proposed. There is limited ministerial accountability and output statements published by the Departments could be improved. Some Departments have not provided targets for outputs and content themselves with listing input and spending plans. The Department of Education and Science is particularly bad in this respect.
I ask that Deputies have more input into the budgetary process. Although it has been stated in the media that things look bad, I hope that will not be the case.
The pre-budget outlook sets the scene and provides context for the discussions of the next month. I am proud to be a member of the Fianna Fáil Party that has guided the economic ship over the past ten years to its current, healthy state. This is one of the best economies in Europe, if not the world. I congratulate the Taoiseach on his ten years in charge, along with Charlie McCreevy on his tenure as Minister for Finance and the current Minister, Deputy Cowen. The latter is particularly suited to today's times when there are challenges in the economy. He is ready to adapt himself to changing circumstances. The unified budget, whereby all capital and current spending and revenue projections for next year will be dealt with in one day, will bring the buzz back into the budget. This will create more suspense and greater excitement and entertainment on 5 December.
In the longer term, one issue disturbs me, namely energy supply and cost. There are many forms of energy and bio-fuels are often spoken of these days. Up to the first week of August cereal farmers were in dire trouble, afraid that crops would be left in the ground. Thankfully the weather improved in the last few weeks of August and they had a reasonably good crop. Prices increased by up to 50%, which had a knock on effect on the price of cattle feed. The price of milk increased for the consumer and the price of bread is increasing. Much of the land that was formerly used for foodstuffs is now applied to the production of bio-fuels.
There is nothing wrong with that per se but it has had a significant effect on the cost of living. There have been significant increases in the price of oil recently. We do not know whether peak oil happened last year or whether it will happen in the next few years. However, when it is recognised that peak oil has arrived, there will be significant, accelerated increases in the price of oil. That will create major problems.
In terms of alternative energy we have wind and wave, both of which are very laudable. However, the fishing village of Kilmore Quay, for example, has been visually destroyed by the windmills there. The development of wave power is very much in its infancy. The amount of energy that can be generated by wind and wave is very limited.
The question of nuclear power must be brought to the fore again. The Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan has said he wants to see a debate on nuclear power take place. I also wish to see such a debate take place. However, I do not want to see a debate take place so the issue can be buried. I wish to see a debate which forces people to realise that nuclear power is an option we must examine very seriously. We must ascertain whether the people are prepared to accept all of the nasty and bad aspects of nuclear power to obtain the energy we need for our livelihood, economy and the future of the country. It is an enormous question that must be examined closely.
There is no doubt that the development of the economy is ongoing. Inflation is an important issue and many people are pointing to the fact that our inflation rate is 5%. However, inflation is measured in two different ways in Europe. The first takes account of increases in the Consumer Price Index while the second takes account of increases in the Harmonised Index of Consumer Prices. The latter excludes mortgage interest payments. Under the HICP method, where mortgage interest payments are excluded, Ireland's inflation rate was 2.3% in August, down from 2.7% in July.
Several commentators have pointed to the fact that the number of new house starts is dropping and argue that this indicates that the economy is in dire trouble. However, a different picture emerges if one examines the progress of the economy in the first half of 2007. The Irish Exporters Association issued a first-half review of 2007 which showed that exports increased in aggregate by 7% over the equivalent period in 2006. Internationally-traded services grew by 9%. These are services which are of the mind rather than the back and are very important to our economy. According to the IEA, service exports now account for one third of all exports, which is well ahead of the EU average of one quarter. The 9% increase in internationally-traded services in the first six months of this year indicates that it is a significant economic driver, an area which is improving and a basic foundation of the economy.
Housing is definitely a problem. The number of new house starts has decreased because of high interest rates and the high cost of housing. Mortgage costs as a percentage of average earnings have risen from approximately 20% in 1996 to 37% or 38% in 2007, which is unsustainable. There must be a significant reduction in interest rates and house prices for mortgage costs to come down to a reasonable level vis-a-vis average earnings. Two factors that have contributed to this situation are 100% mortgages and the increase in mortgage duration to 40 years. Both factors have contributed to an increase in the price of houses. The Department of Finance must develop a carrot and stick approach to bring about a quantum reduction in the price of houses in the short term, rather than over the next five or six years. If we can get over the hump quickly we will ensure continued economic growth over the next few years.
I turn now to the Government's performance in the areas of health, education and welfare. With regard to welfare, Ireland had a growth rate in social protection expenditure, which includes social welfare payments, old age pensions and associated items, of 7.8% between 2000 and 2004, the last year for which figures are available. That compares with an average of 2.1% for the EU 15 countries. In that context, we are well ahead in terms of the increase in the amount we spend on social protection. However, as a percentage of GDP, our expenditure is slightly lower than the EU average. The EU countries in general spend 8% of their GDP on pensions because they have more older people than we do. This highlights the problem that will arise here in the next 20 to 30 years. As the Taoiseach pointed out this morning, the number of elderly people in our population will increase significantly. Currently, there is one senior citizen for every six people working but by 2050 there will be one senior citizen for every two people working. Expenditure on social protection must increase significantly in the future. We must ensure that people put adequate funds by for their pensions. The National Treasury Management Agency pension fund currently stands at 11% of GDP but must be increased on a regular basis.
There has been much comment on the amount of money being spent on the health service. I hear complaints about the health system from all sides of the House. St. James's Hospital, Our Lady's Hospital for Sick Children and three area health boards are all located in my constituency of Dublin South-Central. Every one of the managers in the health boards responds almost immediately to any request or query I put to them.
It is clear that this year's budget is being prepared in quite different circumstances from preceding budgets. The pattern follows that of the general election of 2002, when a Government was elected on the basis of a raft of promises that very rapidly morphed into a plethora of cutbacks. Again we see the same pattern emerge, of an economic downturn and a health service — notwithstanding Deputy Ardagh's rosy view — in crisis. That is obvious to most people. A staff freeze has led to longer waiting lists and essential services being put under severe strain. The Minister of Health and Children declared a staff freeze would not impact on patient care. She was wrong. We can see the statistical, factual and anecdotal evidence for ourselves. More importantly, even if there were no staff freeze, the unreformed health service denies many the fair and speedy access to care they need. One person spoke out about this — Susie Long. Her name will be on her headstone now but it will also be embedded in many people's minds when they listen to Ministers congratulate themselves on budget day.
A report published today, compiled by the University of Leeds and University of York, highlights the central challenge facing us in the increase in global warming. It shows that rising temperatures could trigger a massive extinction of plants and animals. It is further information adding to our store of understanding about climate change and its lethal effects worldwide. I am glad Deputy Ardagh raised the issue of peak oil which needs to be taken on. The Government keeps saying it wants a debate on nuclear energy but I see no evidence of such a debate taking place. I say bring it on. The pre-budget document does not refer to peak oil or climate change. It is silent on these central issues.
The programme for Government contains the commitment of a reduction of 3% per year in our greenhouse gas emissions. It is also committed to ensuring one third of electricity consumed in Ireland comes from renewable sources by 2020. It requires the public sector to produce 33% energy savings by 2020. It states:
We will...require the public sector to lead the way on energy efficiency with a mandatory programme of efficiency measures including the sole use of energy-efficient lighting and heating in offices, schools and hospitals and other public buildings to produce 33% energy savings by 2020.
This commitment is made when some of our schools and hospitals, apart from local authority offices, are in substandard, inefficient and inappropriate accommodation. Yet a new requirement is being placed on them which, in such circumstances, is off the wall.
These commitments were agreed by politicians of both Fianna Fáil and the Green Party. They form part of a solemn undertaking to the people. It has been salutary to discover the reality as compared to the aspiration behind this programme.
The pre-budget outlook does not refer to climate change or of introducing measures to meet the ambitious targets set in the programme for Government. I note the British Government is already pulling back on its commitment to source 20% of energy supply from renewable sources by 2020.
It is important we have a clear statement from the Taoiseach, if such a statement is possible, that he will not be ducking out of the commitment to renewables in the programme for Government. To meet this commitment requires enormous effort from the highest level of the Government. Yet there is no evidence in the pre-budget Estimates of such a shift.
What we have seen already does not inspire any confidence. A relatively modest scheme managed by Sustainable Energy Ireland, SEI, to grant-aid householders in transferring to renewable sources was collapsed by the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan. He then announced a new emasculated grant scheme and a Supplementary Estimate to pay for it.
This turns out to be a complete sham. First, the Supplementary Estimate was only a token one. Presumably the Minister for Finance, Deputy Cowen, sent the Minister for Communications, Energy and Natural Resources scampering away from his door when he came looking for money. The Minister was reduced to raiding his broadband and energy research fund to allocate moneys to the renewable grant scheme. On the day of the debate on the Supplementary Estimate, it became clear the moneys were not being transferred to the new grant scheme so blithely announced by the Minister on 4 September. Instead the moneys were being used to stuff the hole left by SEI when it ran up bills across a range of existing schemes, including the defunct greener homes scheme. In reality, there are no moneys for the new scheme announced by the Minister. It is a sham.
Today, I was startled to find in reply to a parliamentary question on ministerial cars that the two Green Party Ministers each have clocked up more mileage per month than the Taoiseach. There have been many photo opportunities of Green Ministers on their bikes. While I accept a Minister's job requires car travel, it again raises the difference between the reality and rhetoric of the Government. Of the 18 ministerial cars detailed in the reply to my parliamentary question, only five cars are hybrid petrol-electronic and none is bio-fuel. Again, this questions the Government's commitment to dealing with its carbon footprint and the wider issue of reducing energy consumption by example. A government with a green tinge should set a good example. Instead, there is a feeling of being let down with no reassurance in the pre-budget outlook report.
The Estimates for the Department of the Environment, Heritage and Local Government have glaring anomalies by which I am perplexed. How can the Minister explain, for example, that in 2007 approximately €87 million was allocated for non-national roads and that only €53 million will be required in 2008? The same question applies to the 64% reduction in funding for the Irish Heritage Trust. This trend goes though many other Estimates. The Minister can reply that these are simple projections and there will be news in the budget.
However, niggling questions arise. Is it the case that in certain areas moneys were allocated for, say, non-national roads and were simply not spent? Local authorities receive a fund for these roads and it tends to climb in line with inflation. Is this simply a softening-up of public perception, a vehicle to introduce more cutbacks for next year?
The new budgetary process is impenetrable and it is difficult to find answers. I hope the Minister in his conclusion will explain how these anomalies have occurred.
As outlined by the Tánaiste and Minister for Finance, the pre-budget Estimates set out the baseline estimated cost of continuing the current level of public services in 2008. In the justice area, as in others, it is important to take stock of the scale of this expenditure, as well as the depth and breadth of services being delivered. In money terms, the pre-budget provision for the justice sector is just over €2.6 billion, an increase of 7% over 2007 and a rise of 26% since 2005. These figures sound impressive on their own, but I completely agree with the Tánaiste's emphasis on what is actually being achieved with these resources, rather than their magnitude alone. We are all striving to get value for money for the public and the only way we can maximise this is to switch our focus from inputs and outputs to the impacts and outcomes that this financial commitment actually delivers. That is the major change, one which I welcome, which this Government has made to the Estimates process.
There is plenty of evidence of the return we are getting on that investment in the justice sector. A whole spectrum of significant achievements have been made possible, notably the expansion in Garda numbers, the provision of additional prison spaces, improvement of court facilities, extensive funding in the equality sector, modernisation of land registration and mapping, and the development of immigration and asylum services.
Since the end of 2005 there has been an increase of more than 10% in the attested number of gardaí, which now stands at 13,500. The number of civilian staff in the Garda Síochána has increased by 48% over the same period, releasing gardaí for frontline duties. As the Tánaiste has indicated, Garda staffing is one of the areas where the Government is providing additional numbers above the overall limits on public service recruitment. This reflects the Government's focus on key priority needs in frontline and essential services. The combination of recruitment and civilianisation will allow for the continued implementation of high profile campaigns such as Operation Anvil. It will also enable the Commissioner to devote resources to a range of other policing needs in the community.
In overall financial terms the Garda pre-budget Estimate stands at €1.522 billion which compares with €0.9 billion just five years ago. This investment on behalf of the public has made it possible to extend and transform every aspect of the resources available to the force. The Garda fleet has been modernised, national digital radio is being rolled out and IT infrastructure enhanced. A dedicated Garda traffic corps has been put in place as a key component of the Government's road safety strategy and is on target to reach its planned strength of 1,200 in 2008.
Looking in more detail at the pre-budget figures for the Garda Vote in 2008, increased funding is being made available to support the continued programme of maintenance and improvement works at Garda stations throughout the country and to increase the provision of specialist communications equipment. The allocation for clothing and accessories is also up as anti-stab and ballistic vests are delivered to serving members for their protection in frontline duties.
In parallel with the additional resources provided in recent years, major reforms of the Garda Síochána have taken place, including the appointment of a Garda inspectorate and the work of the advisory group on Garda management and leadership development. Deputies will also be aware that a new civilian head of administration at deputy commissioner level has been appointed. All of these changes should support gardaí in dealing with the complex challenges they face and ensure that we get the best return for the public's investment in terms of effective policing in our communities.
The pre-budget Estimate for the courts is up 5% on the 2007 Estimate and again we can point to specific and important service enhancements that have been delivered by the courts. Waiting times for trials at the Central Criminal Court are less than half of what they were four or five years ago. The High Court has reduced waiting times and a new commercial court has been established in the High Court which has made it possible to reduce processing times from two years to 18 months since late 2004. These service enhancements are being reinforced in 2008 with €2 million funding provided for support staff for additional judges appointed in 2007.
On the prisons Vote, the pre-budget Estimate is up 9% over 2007 and includes a provision of €5 million for the full-year costs of a range of measures introduced in this year to combat organised criminal activities in prisons. These include an additional 178 personnel as part of an operational support group specialised in searching for illicit materials and a range of other measures to face down the threat from organised crime.
Turning to the justice Vote, a number of areas stand out in particular where the additional resources assigned in recent years are being carried forward and augmented for 2008. Funding for the Irish youth justice service, for example, is up 31% as the full-year cost of child detention schools are included, as is all youth diversion funding. The new service brings responsibility for young offenders together under one roof for the first time and we are now seeing the practical impact of this. What is under way is more that just a re-ordering of accounting responsibilities. A badly-needed programme of rejuvenation for youth detention and training facilities is under way and the number of youth diversion projects has been increased to 93, with more to come.
The probation service has also benefited in recent years from additional resources and the pre-budget outlook funding for next year is increased by 9%. A substantial programme of strategic restructuring and refocusing is under way in the probation service, with 71 additional staff being recruited.
Funding for the immigration and asylum area is up 5% in these pre-budget Estimates. While the emphasis a number of years ago was on the asylum process, and this remains important, the range of services provided in this area is now far broader as we meet the needs arising from significant increases in legal migration. As part of the establishment of the Irish Naturalisation and Immigration Service, extended services have enabled the handling of 64,000 visa applications per annum and dedicated visa offices have recently been set up in New Delhi, London, Abuja and Cairo. These are in addition to those established by the Department in Moscow and Beijing and allow for speedier and more effective processing of applications internationally.
Funding across the Department's various equality measures is increased by 13% in these pre-budget figures. This builds on the sizeable investment which has been made in promoting a more tolerant and equal society, in addressing, inter alia, specific issues in the areas of gender, disability and interculturalism. The increase for 2008 reflects in particular the substantial allocations under the NDP to promote gender equality and in the implementation of the national women's strategy.
Funding for measures to combat violence against women is among the areas to benefit considerably under the national development plan. This latter area represents another challenge requiring a whole Government approach and to achieve this objective, the National Office for the Prevention of Domestic, Sexual and Gender-based Violence, Cosc, was established in June of this year. I am very pleased to say that there is now in prospect a dedicated, resourced office at Government level with the key responsibility of ensuring the delivery of a well co-ordinated response to domestic, sexual and gender-based violence.
Turning briefly to the pre-budget Estimates for capital funding, as the Tánaiste has outlined, the overall provisions in advance of budget day decisions are broadly the same as for 2007. In the justice sector this amounts to €155.9 million and, as with the current expenditure allocation, it is important to take stock of what will be delivered with the continuation of these capital programmes. Some €29 million is allocated towards the courthouse refurbishment programme, which has seen 40 court venues refurbished around the country since 2000. The prisons capital programme is continued with funding of €31.8 million allocated for 2008. This programme has initiated the provision of 450 additional spaces over the past two years, some of which are in place, and the remainder will come on stream in the coming months. Substantial capital funding of €8 million is also provided in 2008 towards a joint project with Dublin City Council to build a state-of-the-art facility for the State pathology service.
Capital funding is included for the continued implementation of the digital mapping project in the Land Registry, which along with the other changes taking place under the aegis of the Property Registration Authority, is set to completely transform the way in which land is registered and ownership transferred. In addition to the capital projects directly funded from the justice Votes in 2008, it is also important to note the two very major PPP projects under way in the justice sector. Work began last year on the new criminal court complex with a view to it being operational in 2010. On an even larger scale is the Thornton project, on which work is intended to commence next year,
I will conclude my remarks by reiterating my intention to ensure we get the best possible return for the public's investment in the justice sector. This will require careful management of the resources allocated and a focus on value for money. However, the snapshot of justice sector activity I have outlined today should give a good indication of what can be delivered with these resources.
I am thankful for the opportunity to say a few words on the pre-budget Estimates for the public service 2008 and to touch on individual areas of interest. Listening to the speeches so far, I heard speakers from the Government side compliment the Tánaiste and Minister for Finance. One might think from their contributions that he alone had brought prosperity to the economy. It is only fair on occasions such as this when members of the Government parties compliment their former Ministers to also remember that the Tallaght strategy played a significant part in bringing prosperity to the country. What former Deputy Alan Dukes did as a politician should never be forgotten within the Houses of the Oireachtas. I should like that to be recorded because we heard a good deal of praise for Ministers and Deputies who were in situ in good times. Perhaps it was not politically wise on Deputy Dukes's part to take the initiative he did, and it did not help his political career, but it should not be forgotten on a day such as this.
Regardless of whether we like it, the parents of rural Ireland constitute the new poor. I have been listening to many Deputies from rural Ireland and they know of parents who work incredibly hard to assist their children to get a better education and build the foundations for the future. These parents are bearing the brunt of the disadvantages associated with our newly found wealth in the past ten or 20 years.
While the Government sometimes supports incredibly rich people by way of exemptions and tax reliefs, the average man and woman must work hard for his or her family. They pay PAYE tax at high rates or may be self-employed and are struggling financially every day to educate their children. The grants for college students have not risen in line with inflation and students must endanger their exam success by working in part-time jobs for longer than ever before. Accommodation costs have risen exponentially for students in cities. The lucky families who live near major universities have a considerable advantage over rural families who live far away from them. The construction industry has benefited in this regard and the money it has made in the past 15 years has been at the expense of rural families who must accommodate their university-going children. It is time for the Government to reduce the burden on such families. Both parents must work and pay PAYE tax, while the students who must also work receive small grants and no assistance in the provision of their education.
What can we do to help these working people to underpin our future economic success? The Government desperately needs to get real about the weekly cost to parents of accommodation in Dublin, Cork, Galway and Limerick. We need to develop a system whereby parents for whom it is not logistically possible to send their children to college, if those children must live at home, can be given tax credits in respect of the cost of accommodation. If students were meeting this cost themselves, they could claim it back by way of a tax credit. Why then must a parent contributing to his or her child's livelihood be penalised for doing so? The Government needs to play fairly and evenly on both sides. The problem is exerting considerable pressure on many parents who do not have houses in Dublin or Cork and cannot afford them. They must pay considerable rental costs each week for their children. In my constituency of Tipperary South parents with two or three university-going children, perhaps in different institutions, are being hurt financially. I beg the Government to look after them.
The housing aid for the elderly scheme is an extremely good and effective one and has been administered by the Health Service Executive and formerly by the health boards for many years. It has offered considerable help to many old people living alone who want to remain in their communities. It makes available grants of up to €2,000 or €3,000, which grants improve greatly the quality of life of pensioners. However, the administration of the scheme is such that the budget runs out in May or June each year, not least in my constituency. We waited the whole summer for a further allocation derived from moneys not used in other areas. Although some extra funding was made available recently, the forthcoming budget will present an ideal opportunity to fund the scheme properly. It is advantageous to so many elderly people and allows for the provision of very simple improvements, including better doors and windows. I beg the Minister to do something for older people by increasing the allocation for the scheme.
I have been a member of the Committee of Public Accounts for the past two years and surprised week in, week out by the waste of money in Departments appearing before it. In the past four years in this Parliament we have heard very real accusations about wasted money, but nothing has been done to allow the committee to investigate them and implement necessary changes such that people would be made responsible. It is time the House held to account those who are wasting funds in various areas. In this regard, I could refer to the health service, education system and other areas, in respect of which there is room to improve the way we spend public money. We read of cases every day in the newspapers but the truth of the matter, be it in respect of electronic voting or otherwise, is that we must identify, once and for all, those who waste money and punish them severely. If money were wasted in a similar fashion in the private sector, somebody somewhere would have to resign. It is time this occurred in the public sector to reduce waste, bearing in mind that we will have to tighten our belts financially. In this manner we could still retain the quality of life and services to which we have become accustomed.
I compliment my constituency colleague, Deputy Tom Hayes, on what was a very constructive and relatively non-partisan contribution to the debate. However, I disagree with him on one point in that I do not believe in scapegoating individual public servants, which is often too easy a response.
I welcome the presentation by the Tánaiste and Minister for Finance, Deputy Brian Cowen, of the pre-budget outlook for the period 2007 to 2010, incorporating the pre-budget Estimates for public services in 2008, and particularly the important reform of the budgetary process. The provisional Book of Estimates published in previous years which contained decisions on Government spending was subsequently subject to heavys adjustments and additions in the budget and post-budget Estimates, when the full details relating to the previous year's spending had become available. In the Abridged Estimates Volume for last year gross capital and current spending amounted to €54.3 billion, representing an increase of 8% on the figure for the previous year. The Revised Estimates added a sum of €2 billion giving a figure of €56.3 billion, representing an increase of 13%, except that spending in the previous year, 2006, had dropped by €500 million. If it had not, the increase would only have been 11.5%.
The net point is that the earlier slimmer volume represented more and more simply the opening move in the budget process. It is preferable to recognise this reality and simply to provide as accurate as possible a benchmark against which can be measured the actual spending decisions and levels for next year. As a consequence, the budget debate will be a much more holistic exercise, uniting the decisions on expenditure, taxation and borrowing, than considering spending, in particular, in partial isolation from the other two aspects of budget-making. It should be borne in mind that there have been large increases in most areas of Government spending in recent years. In many areas, the challenge may be to secure and consolidate the progress that has been made and to make the best use of the resources that have been provided.
During this year's election campaign, the Minister, Deputy Cowen, placed a great deal of emphasis on two points, the maintenance of sound public finances as the foundation of economic progress and the prioritisation of public investment through the national development plan. I wholly concur with those priorities. With these objectives, the Minister also emphasised the maintenance of the relatively low tax regime we have established and the development of further measures to improve the quality of public services and social inclusion.
Ireland is in a remarkably strong financial position. The general Government borrowing and debt ratio normally quoted is the gross one, estimated at 24.25% this year. If the national pensions reserve fund is taken into account, however, it is down to 14%. While I am not comparing like with like, it makes a pleasant contrast to a national debt-GNP ratio peak of 118% approximately 20 years ago. The Minister's pre-budget outlook envisages a marginal increase, of between 1% and 2%, in gross Government borrowing over the next three years, assuming there is a moderate downturn in growth. Such a margin of manoeuvre would enable us to cope reasonably well, even with a diminution much more severe than that at present anticipated. I share the ambition to drive down the net rate of borrowing to closer to 0% in positive economic conditions.
The benefits of the national development plan can be felt everywhere. A new dual carriageway section of the N8 between Cashel and Cahir was opened last week, in conjunction with the N24 Cahir bypass, both of which will make a big difference to travel times across south Tipperary and will increase the attractiveness of the county to further investment. I noticed in this morning's newspapers an advertisement relating to the construction of a new road bridge near New Ross that will eliminate a bottleneck on the N25 and N30 routes within a few years and speed up travel times in the south-east corner of Ireland. If the Tánaiste has any marginal discretion in his budget, I remind him that road and public transport improvements provide a good return and could be accelerated. There is an urgent need to upgrade to N24 route, which connects the two gateway cities of Limerick and Waterford. As the route is the spine of south Tipperary, it is a vital corridor between the two cities and all places in between. In addition to developing our county and local roads, it is also important to improve the country's water supply and waste treatment systems. While such services are not politically glamorous, they deserve a high priority in view of global warming and other environmental considerations.
In his speech, the Tánaiste invited suggestions. I suggest that he should increase investment in primary, secondary and vocational schools so that learning, including remedial learning, can take place in better and less cramped surroundings. New schools and school spaces are needed in areas which have seen major increases in population. While a great deal has been done to address educational disadvantage, such endeavours demand extra space. Renewed efforts must be made to lower the pupil-teacher ratio in primary schools. There may be more scope to leverage philanthropic gestures in third level education by offering matching finance, as happened in response to the interest shown by Mr. Chuck Feeney in promoting local scientific research and development.
I would like to see Ireland honour its commitments to the Third World, even in the present, slightly more difficult, financial circumstances.
When I visited the house of a deceased woman last week, her widower pressed my hands and was eager to tell me about the wonderful care his wife had received in hospital from doctors and nurses during her short illness. The relentless public negativity about the health services must be profoundly depressing for those who work in those services and intimidating for many of those who need to go into hospital. The critics to whom I refer do not acknowledge the improvements in hospital and medical care that have taken place, or admit that people now enjoy greater life expectancy. Many people legitimately wish to highlight the service deficiencies that exist, particularly the delays in accessing services. Those with other motives think that relentless criticism is the surest way of inflicting political damage on the Government, but recent elections have not borne that out. The HSE is not short of managers inherited from the health boards. It is reasonable in the context of annually increasing budgets to expect, barring pandemics, that those managers should live within those budgets over the year as a whole.
One of the things of which I am proudest is the improvement in social welfare payments over the past 25 years. The increases in pensions, child benefits and early child payments are worth examining.
The justice system would benefit from the expansion of Garda resources. We need to make changes in the law, policing and judicial processes. If ruthless criminals can evade justice by deterring witnesses, intimidating juries and shooting enemies, the State must respond with equal ruthlessness within the law to protect society and dispel any misleading impression of impotence. We have done this previously when dealing with illegal organisations and the seizure of criminal assets.
The presence in the Chair of the Ceann Comhairle reminds me to mention in passing that the State's expenditure on arts and sport in recent years has been exceptionally worthwhile and has made a great difference to communities throughout the country. I hope to see that sustained.
Ireland's general economic prospects remain relatively good. The commentary of the Central Bank is broadly positive, though it warns of the erosion of our competitiveness. The Tánaiste has enacted the promised stamp duty changes. The rest of the programme for Government will be fulfilled over five years. It will not all be achieved at once — even if it were, certain people would object to it. The desire for continued economic progress had a far more important influence on people's voting patterns than any detailed manifesto proposals. The mandate of the Government parties is to maintain a strong economy, as near as possible to full employment. Notwithstanding anything that may have been said in this debate, people inside and outside the State have confidence in the ability of this country and the Government, including the Taoiseach, the Tánaiste and their colleagues, to deliver a strong economy over the next five budgets. That remains the bottom line.
Although I am speaking in a political forum, I do not wish to be overly political when I say that the pre-budget outlook that has been presented to the House represents an abandonment of the pre-election promises of the Government parties. Before the recent general election, Fianna Fáil promised to increase the old age pension to €300, to cut the standard rate of tax to 18%, to cut the top rate of tax by 1% and to halve PRSI from 4% to 2%. It was agreed at Cabinet level that 100 additional gardaí would be deployed in the Limerick East area, but we have not seen the extra gardaí. It was suggested that the Criminal Assets Bureau would be established in Limerick, but that has not happened.
The Tánaiste and Minister for Finance is talking down the economy, in effect. When the new Dáil met for the first time at the end of June, the Government introduced a Bill relating to stamp duty. The Tánaiste suggested at that time that Fine Gael was talking down the economy, but he is doing likewise at present. Deputy Mansergh argued that the Minister's stamp duty changes have worked, but they have been an absolute disaster. They have assisted just 2,000 first-time buyers and failed to reform stamp duty in the manner that is necessary. Ministers for Finance are charged with instilling confidence in the economy. In the previous Government, the then Minister for Justice, Equality and Law Reform, former Deputy Michael McDowell, stuck his head out and spoke about stamp duty reform. However he put his head back down and then every so often stuck his head out again when he thought it might be of political benefit but nothing was done. This created a lack of confidence in the market. When the opportunity arose for the Minister, Deputy Cowen, to amend the stamp duty legislation in order to make it equitable for families wishing to trade up and move house because of an increase in family size, the Minister ignored the opportunity. Stamp duty as it stands is an unfair tax and needs to be reformed. Whether the Government admits it or not, the housing market is stagnant. The Minister needs to step up to the plate and reform stamp duty.
This pre-budget outlook shows that the Government has relied too much on the boom in the residential housing sector for the growth in tax revenues and has neglected exports which are projected to increase in 2008 by only 6%. The pre-budget outlook refers to lack of competitiveness as having a significant effect on exports and there is a decline in manufacturing industry. We became too reliant on the construction industry bubble. The pre-budget outlook bases an increase of €2 million in tax revenues in 2008, which is an increase of 4.2%, on a total of 60,000 houses being completed in 2008. If the number of house completions is 50,000 or as low as 40,000, as predicted by some experts, this reduction of 10,000 completions will make a difference of €10 billion in revenue. This affects the amount of stamp duty, VAT and capital gains tax raised from the housing sector. Based on what was projected, stamp duty returns are down €400 million and this is having a significant impact.
The role of the Minister for Finance is to instil confidence in the economy but Deputy Cowen has not done this. He has failed to reform stamp duty and this was critical for the construction industry. Deputy Ardagh in his contribution stated he would like to see a short, sharp reduction in the number of houses being completed rather than this being carried out over a sustained period. I suggest Deputy Ardagh tell that to the young people whose houses will become negative equity overnight. A mechanism must be found to stabilise house prices so that young people can afford to buy houses. The last thing we want is a massive reduction in the number of houses and negative equity kicking in. This should not be allowed to happen.
I refer to table six of the pre-budget outlook on page A17 which shows an entry headed, Indicative Unallocated Provisions, which means contingencies. A total of €1.5 billion for 2008 is shown, the same figure as for 2007. This is to increase to €2.5 billion in 2009 and will increase again to €3.5 billion in 2010, an increase of €1 billion each year. The total in 2010 will be 2.3 times what it was in 2007 yet the overall Government expenditure has only increased by 4%, 1.4 times. This contingency — call it what one wishes — will be used by Fianna Fáil as a war chest nearer the time of an election. This contingency seems to be increasing every year as an overall percentage. There must be some control imposed in this area. The Minister has made a provision for unallocated capital and this is to be welcomed. He is making full provision for what is being provided by the NDP. I note his commitment made prior to the election that he would properly fund the NDP. I support that commitment but I have a problem with the level of the contingencies.
On the issue of value for money, the Minister proposes to increase health expenditure by 7%, €1.1 billion extra, making a total of €14.7 billion. I refer to the Comptroller and Auditor General's report for 2007, pages 136 and 141. The Comptroller and Auditor General is highly critical of the accounting and reporting systems in the HSE. Furthermore, this is endorsed by one of the Minister's officials, an Accounting Officer in the Department of Finance, who states that the system is grossly inadequate. Has the Minister gone to all the various Departments and asked about their accounting and reporting systems? The cutbacks in the health service are as a result of the shortfall of €200 million. This should not have happened and should have been highlighted months ago. The Government's job is to secure value for money for the taxpayer. Does the Government know whether the money it is doling out is being expended on administrative rather than on frontline staff? The reporting systems in all Departments must be adequate.
The accounting system in the HSE is no better than that in a corner shop. I mean no disrespect to corner shops which do not require such a sophisticated system as is required in the HSE. Money is being squandered by the HSE in various administrative areas. I predict that come late December, telephone calls will be made to the regional divisions of the HSE from HSE corporate headquarters telling them to spend any unexpended moneys. This has happened every year to date and I see no reason it will not happen this year. We are now in the month of October and elderly people are facing into the winter months but cutbacks have been announced across the health service and the effects are seen in the accident and emergency departments, in the speech therapy service and in the disability sector even though the 2005 disability Act provided for an assessment of needs.
I ask the Minister for Finance to reintroduce roll-over relief on capital gains tax which is an important issue and to carry out proper reform of stamp duty. I remind him that pension reform is vital. Older people should be entitled to receive their pensions on time and he should ensure proper pension provision for the future.
I read with interest the pre-budget outlook document. I commend this approach which was also adopted last year and I look forward next year to a unified budget and Estimates on the same day. If the Irish economy were a patient going to visit a doctor, the doctor would diagnose it as being in rude good health. Growth rates this year are 4.75% and next year will be 3.25%. The unemployment rate is between 4.5% and 5.5%; inflation is lower than 2%; total national debt is approximately 25% of GDP; approximately €17 billion is in the pension reserve fund. By any international comparison, the state of the Irish economy is very sound indeed.
If it was all rosy in the garden, there would be no point in listening to the constructive suggestions that it is to be hoped will come from both sides of the House. I acknowledge that more needs to be done.
I am glad to see no sign of ministerial complacency in the document. In the Minister's summary, he states, "For a small, trading nation such as Ireland, long-term sustainable increases in living standards can only be attained through supplying goods and services to the global economy." He also states:
The challenge will continue to be the re-positioning of the economy in the production of knowledge-intensive goods and services. In addition, increased costs in the domestic economy have reduced competitiveness. It is vital that costs across the economy, including pay costs, are curtailed.
The Minister sets out in a clear manner the fact that the future of the Irish economy will depend on our competitiveness which, in turn, will depend on controlling our cost base. The total budget proposed for next year is approximately €58 billion, an extremely large sum. The tax revenue for this year will fall slightly short and some commentators suggest we should make up the difference by increasing taxation. As somebody who has been in politics since 1985 and who lived through an era of high taxation and low growth, I believe this would be entirely the wrong path to follow. We should maintain a dynamic and growth-oriented economy. The best way to do this and the key to success is to keep taxes low and to reward hard work and enterprise.
We are part of a world economy and as was referred to by Deputy Kieran O'Donnell we cannot ignore winds of change blowing across the world. If the price of oil experiences a large spike or the US experiences a recession it has a knock-on effect on the Irish economy. People will recall the sharp downturn after the attacks on 11 September 2001. Because the Government cut back it was able to rebound in 2003, 2004 and 2005. Only by being prudent did we come through this period and keep the economy on a sound footing. If another such downturn occurs, and the stock markets have experienced major volatility during recent months, the Minister should be prudent and err on the side of caution.
In the pre-budget outlook, the Minister states a key item with regard to competitiveness is wage costs. I will highlight other costs. The cost of land in Ireland is prohibitively expensive because we failed to implement a proper land use policy. The IDA and other such agencies seem to believe that Ireland consists of Dublin and the greater Dublin region. Ireland consists of far more than this and we need to develop more seriously and dynamically other regions where land is significantly cheaper and where people can buy homes and live more cheaply. This will have an effect on the cost of labour.
The cost of services is prohibitive. The cost of telephones, broadcasting and energy are all extremely high by international standards. The major work of the Government during this Dáil session must be to radically tackle the lack of real competition in these sectors. Why do we have a limit on the number of radio and television stations and mobile phone operators? Why do we maintain these false economies? As in other sectors, it should be open to every properly and professionally organised company to enter any of these industries without putting a cap on the number of operators. It is time we had a real competitive agenda in this regard.
The Estimates amount to approximately €58 billion, an increase of approximately 30% on the 2005 figure. By any stretch of the imagination this is a large increase. Next year, the allocation for health will be €1 billion more than the 2007 allocation and the allocation for education will be €500 million more than the 2007 allocation. This does not allow room for criticism. The Garda Síochána will receive an 8% increase over the 2007 allocation. The Government has made clear the fight against crime and the resourcing of gardaí is a top priority.
The allocation for international co-operation, a subhead of foreign affairs, amounts to €730 million, a large figure I wish to bring to the attention of the House. We all support this figure because we all agree that by 2012, Ireland should reach the UN target of providing 0.7% of GDP in foreign aid. However, it is worth noting the figure for international aid is almost the same as the figure for total capital spending in education and science for the same year. I do not criticise this. I strongly believe in achieving the UN target. I simply state it is a large sum of money.
I am not satisfied that these amounts are properly or adequately scrutinised by the relevant Oireachtas committees. I accept the Committee of Public Accounts does an excellent job when it examines particular issues from time to time. When one has such large amounts of money a strong case can be made for beefing up the expertise on all of these committees so they can scrutinise with a greater level of detail the expenditure of their corresponding Departments. The figure for international aid will be scrutinised by the Joint Oireachtas Committee on Foreign Affairs. A strong case could have been made to establish a committee on foreign aid to scrutinise what is becoming a large sum of money.
I support the drive for a more competitive economy. The Tánaiste and Minister for Finance, Deputy Cowen, will proceed with great caution and prudence. In the long term this is the best way to go. However, we need greater scrutiny of all expenditure and the programme of the 30th Dáil should concentrate on bringing a more dynamic and competitive aspect to all of the costs in the economy.
I welcome the opportunity to participate in this debate. I reassure Deputy Mulcahy I do not intend to be entirely negative in my contribution. I want to be positive about the Irish economy and the way in which we spend our money. As Deputy Mulcahy stated, we expect to continue to have a growth rate, albeit not as large as in recent years. I believe the figure for the next year is 3.25%.
As Deputy Mulcahy also stated, we have become dependent on growth based on property as opposed to growth based on production and export. This problem developed under those in Government at present. Ten years ago it was not the case to the extent it is now and it is a cause for concern. A couple of other issues also give cause for concern. Before the 2002 election, a splurge was followed by serious cutbacks in several critical areas, including foreign aid as referred to by Deputy Mulcahy. We do not want the same pattern to emerge following some bright promises before the election and warnings by the Minister for Finance, Deputy Cowen, that we can expect some hard medicine this year and into the future. Certainly the issues raised by my party leader this morning in regard to the social insurance fund and concerns about payment for pensions are genuine concerns. While there is money in the fund at present there is a real concern that into the future a much higher proportion of our people will be dependent on the economy as opposed to being productive within the economy. This matter was raised also by some of the Fianna Fáil Members earlier. That is a reality we have to face.
In regard to the proposal for a cut in PRSI before the election, the questions raised by my party leader this morning were genuine questions about affordability and information that would have been available to the Government before the election when those promises were made. There is a need for serious debate on where the money will come from, and what exactly will be delivered. We do not need the type of stop-start dealing with the economy that took place before the last election. I hope the economy will continue to grow and that we will look after the money prudently. The sum of money spent is not inconsiderable.
In the remainder of the time available to me I will address the health area where very sizeable sums of money are spent. We want to ensure it is well spent. The health budget is increasing but not at the same level as in recent years. I am concerned that it may not keep pace with wage costs and medical inflation which are the two big factors in health spending. I seriously question the operation of the HSE, and agree with Deputy O'Donnell in that regard, as to how it operates in terms of its accountancy systems and how money is spent. I note from one of the free newspapers that it was decided and approved at Cabinet yesterday that a consultant will be hired by the Government to study two diverse accounting systems operating within the health service. The appointment of former Secretary General of the Department of Finance, Tom Considine, was approved yesterday by the Cabinet. It appears the Government also has concerns about how the HSE does its sums, as does the Comptroller and Auditor General and the Committee of Public Accounts.
During questions to the Minister last week we raised the issue of the increased number of higher level managerial staff within the HSE. The Minister said she had put a system in place from December 2006 that would control that issue and that approval had to be given by her Department wherever people were being upgraded or appointed at senior management level. Yet she said the level had exceeded the expected number. Clearly there is not that level of control and yet there are regular meetings on behalf of the Taoiseach's Department and on behalf of the Minister for Health and Children with the HSE. There is a real problem with the HSE and how the money is spent.
The blunt instrument used in recent months in regard to the embargo is not the way to deal with it. I urge the Government to come to grips with the way in which the health money is being spent. The HSE will be three years in place in January. From my perspective and I have not been the spokesperson on health for very long and from the perspective of the various people I have had the opportunity to speak with in recent weeks, it appears the money is not properly controlled. There are a series of organisations within the health service, including HIQA, the National Hospitals Office, the primary and community care section and there is no proper governance system in regard to interaction between these bodies. That affects how money is spent. It appears the HSE was not properly planned from the beginning. The Minister referred to the possibility of voluntary redundancies. Three years later there is an attempt to put some kind of governance and order on the HSE but this should have been done before it was set up. We are trying to solve problems in systems already set up. That is one of the big issues the Government needs to address in terms of the health service, the sick, how money is spent, quality assurance, financial control and value for money.
The result of the embargo is that people in the National Rehabilitation Hospital were not able to go back into their communities due to a lack of care programmes. It makes no sense that people are occupying special beds, which are needed for other special patients, when they could be in the community. The Minister told the House last week that issue was being addressed. However, I received an e-mail today from the son of a patient concerned who was supposed to be discharged but was not discharged until today. The e-mail indicated that only three patients have been discharged with the extra care packages. Since we raised the issue last week the impression was given that the problem had been addressed, but I believe it has not been fully addressed. That is an example of the craziness of such an embargo across the health service. In other situations expensive equipment will lie idle because staff could not be allowed work overtime. This is not logical and patients are hurting.
Maybe this is not the place to argue for the ending of the embargo but it is the place to argue about the spending of the money and control of the budgets throughout the year rather than coming in with a sledge hammer at the end of the year and cutting services. There are a number of other aspects to the health budget. For example, the HSE gave back money last year, while this year it has considerably exceeded its budget, which does not smack of controlled accounting.
There is also the money which has been set aside for nursing home repayments. I presume the Minister will respond to this debate later. A sum of €360 million was allocated last year and only €150 million for next year. I want to know if the money that was not spent this year will go back into the budget to be spent next year. There are many other areas I could touch on. I agree the NDP money should be spent on rail, road and various projects, including the schools that need to be built.
One of the points included in the amendment tabled by Deputy Joan Burton on behalf of my party is that we preserve the NDP and spending on health and education. There is a need to get value for money and to protect essential services and the most vulnerable in society.
I welcome the opportunity to make a brief contribution to this important debate. I am pleased you are in the Chair, a Cheann Comhairle, because you will remind me not to stray from the subject. Deputy Tom Hayes actually mentioned Tallaght earlier, which is very reassuring, and Deputy Mansergh mentioned Wexford so I assume there will be a little leeway. I ask Deputy Seán Barrett to tell Deputy Hayes some day that the Tallaght strategy speech by that good man Alan Dukes was actually made in Templeogue. However, I do not want to change history and perhaps I should not have told him that.
It was, but it was in Templeogue and I was there. I also welcome the presence of my friend, colleague and running mate, the Minister of State, Deputy Conor Lenihan. I believe this is the first time since the general election that I have had the opportunity to speak in the Dáil in his presence. I wish him well in the great job he is doing.
I have listened carefully to the debate. It is interesting that we have all taken different views and taken the opportunity to talk about the remits of various Departments. In my speech I will restrict myself to the responsibilities of a few Ministers. I attended two separate functions in Tallaght last night — I slipped out of the Dáil for a while. I mention this in the context of some of the gloomy speeches we are hearing. In my constituency in Tallaght where I live, I went to a function in Scoil Íosa where the STAY Garda diversion project was celebrating ten years with a concert by the Garda band. I also went to one of the local schools, Knockmore, where a new building was being shown off to the community. I use these as two examples of good Government spending at work. Knockmore school has done a great job with other local schools in a community that has been challenged by disadvantage in the past. The STAY project, one of several Garda diversion projects in Tallaght is clearly well worth funding and I hope we will continue to do so.
It gives me the opportunity to refer to the speech of the Minister for Justice, Equality and Law Reform, Deputy Brian Lenihan, and compliment him on funding another Garda diversion project in Brookfield in Tallaght in recent times. In the general election 160 days ago the people took a decision that they wanted a Government to continue to run the economy as it was run, which is why we have another Fianna Fáil-led Government. I am very confident that the Tánaiste and Minister for Finance, Deputy Cowen, will continue to do that job. If things are going to be difficult and challenging, we need to consider the areas that need funding. As Deputy Mansergh said, we must continue to fund sports complexes etc. to ensure we are laying the foundations for looking after communities and young people in particular so that in time we do not need to spend as much money on Garda diversion projects and on prison places. I know that case will always need to be made.
It is important for the education budget to remain as strong as possible. In all our communities, whether in Dún Laoghaire, Kerry or Dublin South-West, there are always schools that need redevelopment and renovations. There are always places that need new schools and certain places in my constituency have particular challenges in that regard for which moneys need to be made available. If things are tight we need to continue that.
I am sorry that the Minister of State, Deputy Noel Ahern, left. I welcome his appointment in the Office of Public Works. I have dealings with his office at the moment because it is important to proceed as soon as possible with the redevelopment of the Garda station in Tallaght. Tallaght has the third largest population centre in the country. I have often made the point that my constituency, which I share with the Minister of State, Deputy Conor Lenihan, has only one Garda station and it is time that was reviewed. I hope the Minister of State, Deputy Noel Ahern, will understand the need to proceed with the redevelopment of the Garda station in Tallaght. If that took place we could then concentrate on the bigger picture as far as policing in our communities is concerned. While every area will always seek more gardaí, the case for Tallaght is particularly strong and I am not afraid to say so.
A number of colleagues have made the important point that we need to support what the Minister for Health and Children, Deputy Harney, is doing. I heard Deputy Ardagh praising St. James's Hospital, which I would be happy to do. However, I am very proud of my local hospital in Tallaght which opened almost ten years ago. It has had particular difficulties and challenges, and has been in the news frequently. While I do not want to labour the point about the size of that community, the catchment area of that hospital stretches all the way down to Carnew, through Wicklow and parts of Kildare etc. It is important for us to continue to keep pressure on. Much has been said in recent weeks about the HSE. As somebody with considerable background in a health board — I was the founding chairman of the South Western Area Health Board — I have not been afraid to say that what the Government is trying to achieve in ensuring value for money from the HSE is important. However, we also need to get the message across that the HSE needs to inform us as to what is going on and needs to continue to provide services. Members of the public do not want hear us say that, at approximately €15 billion, more money than ever is going into the health services when people still cannot get services as quickly as they should and cannot get them when they need them. From all benches across the House we should not be afraid to continue to make that point.
I wish to speak about social welfare. I was glad to be nominated as vice chairman of the Joint Committee on Social and Family Affairs in recent days. I look forward to the challenges it will bring me under its chairman, whose name I had better not say — I will let somebody else announce that. Throughout my political career, bearing in mind my background and remembering as I often do a Dublin of a bygone age, it is important that we continue to support families and communities that need it.
I will not make a political point because I do not want to upset Deputy Seán Barrett. However, I was glad the Taoiseach corrected the Labour Party leader this morning and pointed out that Fianna Fáil does not take lectures on social welfare payments because the record through successive Ministers is there to be seen. I am proud of what we have achieved and we need to continue to do that, certainly as far as the elderly, the disabled and the vulnerable in our communities are concerned. The Minister for Social and Family Affairs, Deputy Martin Cullen, should understand the support he has from all parties when considering the Green Paper on pensions. I am glad the Minister has made it clear that he welcomes public consultation and the responses he will get. We are all concerned about that situation. On the way to the House this morning I had some business at the community centre in Firhouse, where somebody pointed out the pressure that it brings on all families. I note that Tallaght Welfare Society in its pre-budget submission, which I read during the week, made a specific point about the importance of the Government considering pensions in the long term. Even though it is not an issue that rolls off the tongue every day as I go about my business, people understand it needs to be addressed as they realise it is a problem. The former Minister for Social and Family Affairs, Deputy Brennan, looked at it and I believe the new Minister, Deputy Cullen, is determined to consider the matter in a particular way.
I welcome the Government announcement that consumer rights will again be protected. I welcome the allocation of more than €10 million to the National Consumer Agency. I wish the Tánaiste and Minister for Finance, Deputy Brian Cowen, well. I look forward to 5 December. I have no doubt my annual budget leaflet will be just as informative and exciting as in any other year. I am sorry if some of the Opposition spokespersons seem to believe otherwise.
Listening to the Minister's opening address on the motion, I began to wonder whether I was living in the same country as I was in April and May of this same year. Prior to the general election we can recall that anyone who dared to talk about the economy, particularly the Opposition which endeavoured to give accurate information to the public about the delicate line we were walking because of our major dependency on the construction industry, was accused of engaging in sabotage. I have heard it again today. Anybody who criticises the manner in which the economy has been managed over the past ten years in the House is unpatriotic according to Government Members. Unfortunately, the truth is out and the days of waste and irresponsible government are staring us all in the face. In case Deputy O'Connor or anybody else thinks I exaggerate, I refer to the latest edition of the Sunday Independent, which is not anti-Government. Under the headline "Cases of Government Failures and Mismanagement", the newspaper listed the various projects that have cost the taxpayer billions. For example, it highlighted unplanned spending of €150 million on the Dublin Port tunnel and €3.25 billion on the roads programme. A sum of €52 million was spent on e-voting machines, which are still in storage. The Government fails to understand that they will never be used, yet, as taxpayers, we are paying vast sums to store these God damn machines. It is about time hard decisions were taken. The Government should not engage in cutting services without carrying out a proper audit of spending and questioning the number of quangos built up in recent years.
The Book of Estimates provides for €58 billion in spending and a 1% saving is equivalent to €580 million. I refer to the administration subhead in the health Vote. Through a parliamentary question, I discovered that the Department of Health and Children employs 593 people, despite the fact that the HSE has taken over the running of the health service. The salaries of staff in the Department amount to €37 million this year, which equates to €69,000 per year per individual. However, under subhead A8, €50,000 is provided for value for money and policy reviews while incidental expenses in the same Vote amount to €2.6 million. These commitments are supposed to provide value for money to the public.
Anybody who merged 11 health boards without a plan for a proper management structure in the private sector would not be long in business. If 11 companies were brought together under one umbrella, one would first carry out a study to make sure a proper management structure was in place. Prior to the election the Minister for Health and Children denied categorically there were proposals for redundancies in the HSE. Subsequently, we learned from a leaked memorandum that provision was being made for 1,000 redundancies. It also recently emerged a study is being carried out on the management structure needed in the organisation. However, the unfortunate taxpayer who depends on these services suffers while all this is happening. I make no apology for highlighting that before services are cut, it is urgent and necessary to carry out a complete audit on the number of quangos and on what people do in the public service.
I refer to the education Estimate. There is a crisis in the provision of primary and post-primary school buildings. Anybody with two eyes in his or her head and a brain between his or her ears will be aware of the massive population increase as a result of immigration, including the Minister of State with responsibility for immigration who is present. That should have rung warning bells regarding the need for advance planning to provide appropriate school places for children. There is no point in attempting to blame the Roman Catholic Church or any other church for giving preference to children of their faith in the primary schools they run. It should have been obvious to the Minister of Education and Science that additional school places would be needed. However, no planning took place. Under the capital services subhead in the Department's Estimate, spending on buildings, equipment and furnishings of national schools in 2008 will reduce by 4% compared with this year while the allocation for building grants and capital costs for second level schools will reduce by 11%. We sympathise with people who have to queue outside schools this month as they worry about a place for their children next September but, according to the Book of Estimates, capital funding for such schools will reduce by 4% next year, even though the population is increasing.
I debated this issue with the Minister on radio and she stated 50,000 additional primary school places would be needed over the next five years as a result of an increase in our population but no planning has taken place. I am sorry if the Opposition, whose job is to point out these issues, stands up and highlights them. We are not being negative for the sake of it. We are calling the Government to account for its failure in advanced planning and in dealing with such issues. When the Minister for Education and Science contributes, I would like her to outline what provision is being made for additional buildings and school places at both primary and post-primary levels. Unless my Book of Estimates is different from everyone else's, capital funding for both will reduce by 4% and 11%, respectively, next year.
Housing construction faces a downturn and the number of houses being built will reduce. The Government has depended on the private sector to provide social and affordable housing in new developments. If fewer houses are built, fewer social and affordable houses will be available. How will the Minister for the Environment, Heritage and Local Government address this shortfall? The Acting Chairman, Deputy Brady, comes from a Meath constituency with an increasing population and he knows as well as I do that the demand for social and affordable housing is increasing, yet the Government has depended on the private sector to provide a percentage of what it builds for such housing. This will create untold problems unless funding in the Estimates is increased to provide adequate social and affordable housing. Otherwise we will face an even worse crisis in the housing sector.
I welcome the opportunity to address the House on the pre-budget outlook. The Department of Transport Vote will provide for all capital expenditure on roads, public transport, maritime transport and regional airports.
Of this amount, more than €1.5 billion is allocated for national roads investment. This will allow the pace and momentum achieved in the national roads programme to continue. In particular, it will provide for the continued on-schedule delivery of the major inter-urban routes linking the country's main regional cities to Dublin, as well as important progress on other key national routes. This level of funding means progress will continue in 2008 with the completion of the Kilbeggan-Athlone scheme on the N6 and the Carlow bypass on the N9. Further progress will be made on the N6 Galway to Ballinasloe and Athlone to Ballinasloe scheme, the N7 Nenagh to Limerick scheme, the Limerick tunnel, the M7-M8 Portlaoise to Culahill-Castletown route, the N8 Cashel to Mitchelstown and Culahill to Cashel scheme, and the N9 Waterford to Knocktopher route. More than 70% of major inter-urban routes are either open to traffic or at construction, and all projects have completed statutory procedures.
On the M50, work will be completed on phases one and three of the upgrade project, and work will advance on phase two during 2008. Barrier-free tolling will also be introduced in 2008. This, together with the increased capacity brought about by the ongoing upgrade, should mean road users begin to see an improved service on the M50 during the year. The entire project is very much on target for full completion by 2010 and should deliver a 50% increase in capacity, leading to reduced traffic congestion as traffic flows more freely at higher average speeds.
Other major schemes that will be brought to completion will include the N4 Dromod-Rooskey scheme and the N51 Navan inner relief road. Work will continue on the M3 Clonee to north of Kells scheme and the N25 Waterford city bypass. Schemes that will commence during 2008 include the N7 Newlands Cross, N7 Castletown to Nenagh, N8 Mitchelstown to Fermoy, N9 Carlow to Knocktopher and N9 Kilcullen to Carlow.
Overall, the National Roads Authority, NRA, is overseeing the construction of 23 national roads projects, 21 of which are due to finish on or ahead of time. An example of the exceptional delivery now being achieved by the NRA is that of the five major road projects completed so far in 2007, all have come in on budget and on or ahead of time. For example, the N6 Tyrellspass to Kilbeggan scheme opened in May 2007 on budget and six months ahead of schedule. With more than €7 billion invested in national roads since 2002, long-standing bottlenecks have been eliminated, including in Kildare, Monasterevin, Ennis, Cashel, Loughrea and Drogheda, thus delivering substantial journey time savings and greater journey time certainty.
With regard to public transport, there will be continued progress on expanding the Luas network. Construction work will continue on the Cherrywood and Docklands extensions, while construction work will commence, subject to the granting of a railway order by An Bord Pleanála, on the Citywest extension. Public consultation and planning work will continue on the planned Luas lines to Lucan, Liffey Junction and the Bray area. Capacity enhancements will also be advanced on the two existing Luas lines.
Planning and design work and the procurement process will continue on metro north. Under Transport 21, metro north will be delivered through the public private partnership funding model. In 2008, the focus will be on progressing work on planning, design and contracts, and this is reflected in the 2008 Estimates. Public consultation and design and planning work will continue on metro west.
On heavy rail, the Portlaoise train care depot will be completed, construction work will continue on the Kildare route project and phase one of the western rail corridor, and will begin on the Cork-Midleton rail line. The railway safety programme will continue with safety improvements on the Iarnród Éireann network. The gradual introduction of the 183 railcars that will transform the inter-city service will continue. Planning and design work will continue on the Navan rail line and detailed design work will begin on the interconnector. There will also be significant work done on preparing for greater electrification of the greater Dublin rail network.
Bus capacity will continue to be enhanced with the introduction by Dublin Bus and Bus Éireann of additional buses to their fleets. Further bus priority measures will be introduced with an expansion of the quality bus corridor network in Dublin and the introduction of new measures in other cities. The 2008 existing level of service, ELS, allocation will also provide for a continuation of public transport accessibility improvements in accordance with the Department's sectoral plan under the Disability Act 2005.
More than €28 million is being provided for the regional airports. This includes funding for the annual subvention of operational expenditure on core airport services and continued support for essential air links between these airports and the Dublin Airport international gateway. It will also facilitate further progress on the roll-out of the €86 million multiannual capital grant programme for these airports, which was approved by the Government under the Transport 21 framework earlier this year. This programme aims to enhance safety and security standards at the regional airports and to assist them in providing the infrastructure necessary to cater for projected growth in the sector.
The maritime sector will be in receipt of more than €47 million in 2008. The Irish Coast Guard and maritime safety sector will receive the bulk of this sum, some €43 million. This funding will ensure the continuation of vital work related to the Irish Coast Guard and maritime safety generally. The Irish Coast Guard has responsibility for search and rescue in addition to marine pollution and salvage response. The 2008 capital funding provides for the continued investment in the station house building programme in addition to providing for the upgrading and expansion of the Irish Coast Guard's radio communications network.
One of the key aspects of the maritime safety function is accident prevention through an appropriate combination of regulation, heightening of safety awareness, and enforcement. The 2008 pre-budget Estimates will continue to provide for a grant to the Commissioners of Irish Lights and the Royal National Lifeboat Institution.
The Department will also continue to fund works that aim to protect the fabric of our regional harbours. The resources available have been concentrated on essential remedial works pending the transfer of the harbours to local control. The 2008 amount will provide continued funding at several regional harbours.
The Transport 21 infrastructural investment programme for 2006 to 2015 is delivering significant progress. Investment will be €34.4 billion in the lifetime of the programme, which provides for €26 billion in Exchequer funding, with the balance to be delivered by means of public private partnerships and toll-based financing. This continued level of heightened investment, as supported by the 2008 pre-budget Estimates, demonstrates our commitment to the ongoing transformation of our national road network and public transport infrastructure. The high-quality transport network being put in place is contributing significantly to supporting our national competitiveness and job creation and to the achievement of more balanced regional development. It will also deliver a positive road safety dividend as upgraded roads, particularly motorway or dual carriageway standard roads, provide a much safer driving environment.
The Road Safety Authority, RSA, has also developed a new road safety strategy. This is Ireland's third road safety strategy and it runs for a six-year period from 2007 to 2012. The strategy outlines the strategic approach to be taken for achieving a safer environment on Ireland's roads. Its primary aim is to reduce collisions, deaths and injuries the roads by 30%. This new strategy was approved by the Cabinet on 16 October 2007 and will be launched by the Taoiseach, myself and the Minister for Justice, Equality and Law Reform tomorrow. The pre-budget outlook has seen continued investment in road safety to ensure the continued success of efforts to reduce drink driving. We are providing an extra €1.8 million for the Medical Bureau of Road Safety to help meet an increased workload arising from new mandatory alcohol testing.
Apart from these increases, current funding on an existing level of service basis will continue to fund the important work of the Road Safety Authority, which reduced driver test waiting lists in 2007 from a national average of 33 weeks to 20 weeks and will strive during 2008 to arrive at a target six week waiting time nationally, in addition to continuing to deliver on road safety. The expansion of the rural transport programme in the second part of 2007 is on course to provide 1 million passenger journeys in 2007, an increase of approximately 25% on 2006. The allocation in 2008 will support this expansion and maintain coverage levels already achieved to date. I commend the pre-budget Estimates to the House, particularly the transport Estimate.
Listening to the previous speaker, one would swear everything in the country was in order. He gave a glowing example of what he is doing with the western corridor. I would describe the western corridor as the central corridor in Ireland but the west has been completely neglected and forgotten. The western corridor will not even touch County Cork, with an eighth of the total area of the Irish republic and the longest coastline of any county.
Surely the Minister in his sense and wisdom could see the western corridor, if properly planned, should go via Limerick, Tralee, Killarney, Glengarriff, Bantry, the Old Head of Kinsale and back up the east coast. I have never heard of parts of counties Limerick, Tipperary and Waterford being described as the western corridor.
I hope the Minister will bear in mind that the people at the extreme ends of County Cork must live as well. We do not have one mile of national primary route in my constituency of Cork South-West. We had to suffer our railway system being taken away by a Fianna Fáil Government in the late 1950s and 1960s. It was scrapped and sold to a country in Africa where, I have heard, the track is still running supremely. Trains are running on the track taken from west Cork and sold to a Third World country in Africa.
How long can this Government ignore the plight of the people of Cork South-West and County Cork as a whole? It is ignoring south Kerry also. I am amazed my friend, Deputy Healy-Rae, is not present to hear the Minister speaking about new drink-driving laws which are to be introduced. The Minister for Transport has left his seat but I wonder if he has consulted Deputy Healy-Rae on the issue. Judging by the newspapers, the Deputy seems to be resisting such measures, indicating they will herald the death knell of rural Ireland and the countrypub.
It seems autobahns are being created all over the country but there is not one mile of national primary route in south-west Cork. Baltimore Harbour is crying out for development, and there was a promise before the election that it would be done within six months. The election is over six months and there is no evidence that anything is being done for Baltimore yet. I hope the Minister will not forget it in his budget speech.
When my party had a say in power and former Deputy Alan Dukes was Minister for Finance in 1982, he announced funding of £1 million for the pier in Schull. Within three months I delivered the money, work started and Schull pier was extended.
Darby's Point was the 20th pier. It is in Achill Island and its building resulted in Deputy Michael Ring winning a seat in Dáil Éireann in a 1994 by-election. Since that time, nothing has been done for the area and it has been completely neglected.
The onus is now on me to try to impress on the Government the necessity to act before it is too late. I hope the Minister for Finance will consider that where joint ownership of family farms is dissolved and jointly-owned assets are divided, no charge from capital gains tax should be applied. In other words, the roll-over relief abolished in 2002 should be reintroduced.
I trust the Minister will bear in mind that all taxpayers should benefit equally from increases in personal tax credits in the forthcoming budget. Farmers and other self-employed taxpayers have been denied significant increases in personal tax credits available to employees and others whose income goes through the PAYE system. Everybody should be treated equally.
I hope the Minister will consider a substantial increase in stamp duty rate bands for farm land to take account of inflation in values over the past five years. I trust he will consider legislating for no capital gains tax to arise from the disposal of farm land to a local authority for road building or road-widening purposes, provided the proceeds or compensation are reinvested in farm business assets.
I hope that where an individual exceeds the threshold mainly from income from harvesting of forestry, which may exceed €250,000 in a particular year, he or she would be exempt from tax relief restrictions introduced in the 2006 budget up to the €250,000 limit. Anything over this limit in relief should not be taxed as forestry farms, such as those with conifer plantings, take 40 years to mature. The sum of €250,000 divided over 40 years leaves a pittance that should not be taxed by any responsible Minister for Finance.
The living alone allowance should be increased to €16 per person, as it is now only €7.70. It has remained at that point for a number of years, a pure pittance compared to today's cost of living. Fuel allowances for old-age pensioners should also be increased to meet the steep increase in the price of fuel. Small business people trying to survive in small towns and rural areas should receive a 50% increase in rate allowances applicable to rates on premises, in view of the serious decline in incomes brought about by lack of business.
I need not remind the Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív, that every second rural pub in the south west is closing because of a lack of business. Small shops in the towns and villages throughout south-west Cork are closing because they are being squeezed out by multiples which have opened in centres 25 or 30 miles away. Their normal customer is leaving them behind. Unless the Minister takes a bold step and addresses the serious situation evident in rural Ireland, we will be heading down the road to a collapse in rural life. It is sad to think people are being deprived of living where they were born and bred due to a lack of consideration from Government officials and Departments.
How long can small business people exist when they are forced by county councils to pay for water in and water out? This has never happened before, even going back to penal times. The Minister for Finance should think of the issues I have outlined to him this evening when compiling his budget for the first week of December.
I do not know if the Celtic tiger is healthy at the moment.
It is always a pleasure to listen to Deputies P. J. Sheehan and Ring. They always make lively and knowledgeable contributions to debates. I congratulate Deputy P. J. Sheehan on his contribution, to which I listened with great interest.
The Deputy referred to the Celtic tiger. If he had examined the pre-budget Estimates he would have seen that the amount of money we are to spend will increase over the next two years. It is clear, however, that it cannot continue to increase at the rate which obtained previously. A driver may increase driving speed from 30 km/h to 40 km/h to 50 km/h and finally to 60 km/h, at which pace his speed remains constant; the car will not get slower but it also will not increase speed at the same rate as previously.
There are many good and positive things hidden away in the small print. I will not have the opportunity to comment on all of the matters relating to my Department. There are, however, a number of aspects I wish to highlight.
The first issue to which I wish to refer, namely, the need to press ahead with the decentralisation process, will have great resonance with Deputies Ring and P. J. Sheehan. I know they will agree that we took the correct approach when we decided to decentralise not only to gateway cities but to smaller places such as Charlestown and other small towns and villages.
It was important to help Deputy Ring. He and I are good friends and we live just across the county border from one another.
I was bitterly disappointed that the planning application for what I thought was a prestige building on an excellent site on the road to Knock Airport was refused. However, my attitude is that if one is not successful when approaching a matter from one direction, one should come at it from another. I am sure the people of Mayo will welcome the decision to move rapidly and proceed with both the construction of this building and decentralisation. The good news is that by the end of this year or the beginning of next year 100 people will have been decentralised to the west.
There has been some ill-informed comment in the newspapers in recent times. Those responsible for it have counted up the jobs we created and then examined the position of people who have made inter-regional transfers. These individuals seem not to understand that 30% of the people working in my Department's office at Tubbercurry came from within the region. Vacancies must be filled from the region and they are eventually filled by people who would otherwise have been in Dublin if the jobs had remained here. The argument regarding from where people initially come is spurious. If one moves 100 extra jobs that were originally in Dublin to a region, this means that eventually there will be that number of additional jobs in said region. My two colleagues opposite will agree that this is how it works and that the decentralisation programme should proceed.
On Waterways Ireland, two major steps forward are being taken in this regard. In the first instance, I held a historic meeting with my colleague, the Northern Ireland Minister for Culture, Arts and Leisure, Mr. Edwin Poots, and a decision was made to proceed with the planning of the Ulster Canal. We are doing this on a phased basis. The first phase will be totally funded by the Exchequer and will take approximately six years to complete. Dá fhad é an bóthar, caithfear tosú áit éigean — no matter how long the road is, one must start somewhere. I am delighted that this landmark project will finally proceed. I do not doubt that it will be a major success and that it will lead to further successes in the future.
We are providing €77 million under the national development plan for the development of Waterways Ireland. Included in this is the completion of the Royal Canal from Dublin through the Acting Chairman's constituency and all the way to the Shannon. Completion of this major project in 2009 will mean that people will be able to travel from the Shannon, via the canal, to Dublin. This will be of great benefit to everyone who lives along the waterway.
As the Minister for Transport, Deputy Dempsey, stated, we are proceeding with the western rail corridor. There were many doubting Thomases who thought that this was merely a promise. The great news is — and I have photographic evidence to support it — that the track is being laid on the first phase of the western rail corridor, which stretches from Ennis to Athenry and which is on schedule to be completed next year and opened in 2009. This will be the biggest opening of a railway system in the history of the country and it will happen in the western region, which was under developed in the past.
I have to hand it to an tAthair Micheál MacGréil and his colleagues. They refused to lie down; they preserved the line and they provided people like me and my colleagues, the Ministers for Transport and Social and Family Affairs, Deputies Dempsey and Cullen, with the opportunity to deliver on this project.
Having already spent €5 million — the sum will be fully expended by the end of the year — we have asked Iarnród Éireann to come forward with further projects relating to the preservation of the line in the CLÁR area north of Tuam so that works can continue there. This is of vital importance because the preservation of the right of way has been the key to this project, which, I have no doubt, will bring great benefits to the west in the future.
The Estimates also highlight our continued commitment to social inclusion, particularly in the form of the increased level of funding provided in respect of the drugs problem, a major scourge on society. Diversion from drugs and rehabilitation are extremely important. My Department is focused on this issue and is trying to deal with what can, at times, appear to be an intractable problem. In addition, we are bringing the local development social inclusion programme on to a new plane by extending it nationwide. In respect of Deputy P. J. Sheehan's constituency, I was lobbied by him and other Deputies and Senators over many years to extend the partnership programme to the area west of Bantry and to the Beara and Sheep's Head peninsulas. The good news is that, as far as this matter goes, the Deputy is a winner today because the local development social inclusion programme is going to be extended to the whole of west Cork. I am sure he will agree that this will prove to be of major benefit.
I cannot do everything for the Deputy.
It is fair to state that the rural social scheme has been a resounding success. The only complaints I have received are to the effect that there are not enough places on the scheme. The programme for Government contains a promise in this regard. There were many who were sceptical when the scheme commenced. However, people in every parish are availing of the rural social scheme, which relates to the provision of community services, income adequacy and social interaction. The scheme has been extremely successful and there is a commitment in the Estimates to continue with it.
On its introduction, the CLÁR programme was also derided as being of no great merit. However, it has disbursed money in all directions. Under the group water schemes, a total of 3,500 households, home to approximately 10,000 people, now have water, or will have it in the near future. It would not have been possible for this water to be provided at a reasonable price were it not for the CLÁR programme. In the region of 1,000 projects relating to LIS roads have been approved and we are in the process of approving another tranche of these. The programme will continue into the future. I have asked local authorities to prioritise what they perceive to be the major issues. Many communities throughout the country have benefited from the programme.
Spending on the islands stands at an all-time high. Mayo has benefited greatly in recent years from funding provided in this regard. New piers were built on Clare Island and Inishturk. Between island and Gaeltacht funding, my Department and the Department of the Environment, Heritage and Local Government are providing a swing-bridge to Achill Island. There are regular ferry services to Inishbiggle — a matter that caused people much grief for a long period — and new piers have been built there in order that better services might be provided. Again, we are involved in the biggest ever islands programme. Having dealt with Cork in its early years, Donegal and Mayo, we have eventually moved into Galway where there are major works ongoing.
There is a pier to be built in Cape Clear and we will get to that. D'fhéadfainn dul ar aghaidh ar feadh an tráthnóna mar tá go leor a bhféadfainn a rá. Is léir go bhfuil an leibhéal ardghníomhaíochta a shroich muid i mbliana ar an leibhéal is airde riamh agus is léir, ós rud é go bhfuil an t-ollmhéad a tháinig ar chaiteachas na Roinne le leanacht sna blianta beaga romhainn, go bhfuil go leor oibre ar bun. Mar a dúirt pairtí poilitíochta ag pointe amháin, tá go leor déanta, ach tá go leor fós le déanamh.
In its programme for Government in 2002, the Government claimed "We will keep the public finances in a healthy condition". Interestingly, no such commitment appears in the new programme for Government, which is an interesting omission. With lower growth projected for the years ahead, the focus now needs to be put on what is required to ensure that public finances are kept in a healthy condition to enable the State to meet its obligations in terms of the delivery of public services and social protections.
We need to ensure that we do not go further down the road of a low tax and low public services model that will inevitably result in the downgrading and dismantling of public services and social protections. The proposed commission on taxation must examine these issues in detail and focus on the need to create a fairer taxation system. The explosion in stealth taxes and charges in recent years must be addressed.
Yesterday, Dr. Alan Barrett of the ESRI put forward the view that limited tax increases "would not be economically damaging" and would provide the Minister for Finance with "wriggle room" on the expenditure side in December's budget. Dr. Barrett is right to initiate a debate on these matters because we now face crucial decisions on the direction this State is taking. Government decisions to raise or reduce overall taxation revenue must be made on the basis of what is needed to meet social goals and other spending demands. The reduction in tax receipts as a consequence of the slowdown in the property and construction sector means that the tax base needs to be looked at.
Key vulnerability in the economy was evident in advance of the general election. Chief among these was the implication for tax receipts of a widely predicted decline in the construction and property sectors. The tax strategy papers prepared in advance of the last budget show that there was a clear awareness of this within the Department of Finance. The argument made by Sinn Féin in the run-up to the election, that with the slowdown in economic growth and the developments in property and construction, the Government cannot afford to cut taxes and maintain, let alone improve public services, has been shown to be correct.
The Government was wrong to cut the higher tax rate from 42% to 41% last year. This resulted in high-income individuals getting the highest increases in weekly income as a result of budget 2007. It was wrong to promise to cut the top rate by another 1% this year. I welcome the fact that Dr. Barrett also echoed Sinn Féin's position in saying that he was "not entirely convinced" that the proposed reduction in the top rate of income tax from 41% to 40% was the most pressing change required in the tax code. Of course, it is not the most pressing change. There are many other places where this revenue would be better directed, including improving public services and social protections. It is incredible that the Government is now proposing to proceed with further cuts and, in particular, the additional cut in the top rate of tax, given a projection for tax collection in 2008 which is €2.2 billion lower than that predicted last year at budget time. This morning, the Taoiseach in this House was still insisting that the Government will implement its tax and PRSI-cutting proposals despite the evidence that these are not viable.
Sinn Féin would like to see a number of specific tax measures included in budget 2008. We are calling on the Minister to increase the restrictions on the use of specified tax reliefs to ensure that high-income individuals pay their fair share of taxation. No high-income individual should be able to write off more than 5% or, at best, 10% of their income through such exemptions. Another minimal step that needs to be taken is the standard rating of discretionary tax expenditures, many of which will have to be examined by the commission on taxation to assess whether they play any useful role.
I will deal in some detail with the proposed cuts in PRSI as they have far-reaching implications. The main conclusion of the latest actuarial review of the social insurance fund published last week is that the fund's net cash-flow position is projected to decline rapidly after 2010 and that the surplus is projected to be exhausted by 2016. The programme for Government commits the Government to cutting employee PRSI from 4% to 2% and cutting PRSI for the self-employed from 3% to 2%. When these proposals were first mooted in advance of the election, my party pointed out that they were being made without any consideration as to whether the social insurance fund was sufficient to meet current and future demands.
Sinn Féin highlighted the fact that there were already serious concerns about the adequacy of the social insurance fund based on the findings of the first actuarial review. The latest review has reinforced these concerns and has found that contribution rates would need to increase substantially if the fund's income is to be adequate to support the benefits being paid from the fund going forward. The situation would be much worse if the Fianna Fáil proposals to cut PRSI contributions were implemented. The fund is set to face additional demands in the immediate term as unemployment is predicted to rise next year from 4.5% to 5.5% — that is about another 10,000 people. This has significant implications for the social insurance fund and is a further reason the PRSI cuts are a non-runner.
Tighter finances will be a real test of this Government. Cutbacks in public services — either obvious cutbacks such as those in budget 2003 or more discreet cutbacks, as is more likely to be the case this time around — cannot be tolerated. Neither do we want to see key infrastructural projects under the national development plan tactically delayed to reduce costs in a given year, with those costs being pushed forward to a future budget. A much more sensible approach would be to borrow for these projects and ensure their early delivery to help improve our competitiveness, which is currently negatively impacted by our infrastructure deficiencies.
On the health issue, there is nothing in this pre-budget outlook to show that the Government is doing anything to avoid the disgraceful situation where end-of-year budget over-runs have seen the HSE imposing cuts in services to patients. The claims by the Minister for Health and Children, Deputy Harney and the chief executive officer of the HSE, Professor Brendan Drumm, that the so-called saving measures would not and should not affect patient care have proved to be totally worthless. Even if they believed their claims in the first place, neither the Minister nor Professor Drumm did anything to ensure that the so-called savings would not be at the cost of patient care.
In my region, the latest fallout from HSE cuts is that there will be no elective surgery in Louth County Hospital in Dundalk in December. All of the staff will be employed there. The nurses will be there and the administrative staff will be on hand, as will all of the surgeons so where are the savings? We have already seen medical and general surgical elective work postponed at Our Lady's Hospital in Navan and the planned closure of its orthopaedic unit for an entire month. Up to eight operations per day have had to be cancelled at Cavan General Hospital and many patients requiring rehabilitation after serious accidents and-or major surgery are being denied admission to the National Rehabilitation Hospital in Dún Laoghaire because of these cutbacks — so much for the commitments from the Minister and Professor Drumm.
The most fundamental issue regarding health spending is not how much is spent but how it is spent. I hope Government backbenchers will appreciate the crisis in the health service and raise their voices to demand a better, more caring service. We see that the easiest option is exercised at all times by the Government in respect of health services. The savings are minuscule because, as I pointed out, professional and administrative staff must still be on hand. The knock-on effect of more people on waiting lists resulting from the closure of facilities will take until early summer to clear. People who need these elective procedures will still need them in January, February or March of next year. The waiting list for such procedures will lengthen or else those patients will be diverted for treatment under the National Treatment Purchase Fund, in which case private hospitals will pick up the tab. These procedures will still have to be paid for. Where are the savings in that arrangement? It does not make sense. I ask the Government backbenchers to raise their voices with the Minister for Health and Children and other Cabinet members to ensure that this daftness does not continue.
I welcome the opportunity to speak on the pre-budget Estimates for the public services and to compliment the Tánaiste and Minister for Finance, Deputy Cowen, and the Government on bringing forward a new format for the Book of Estimates, the budget and the delivery of that €58 billion budget in a more transparent manner in terms of the spending of taxpayers' money. That must be a positive development. One important step in that new format is the development of further innovations, on which I compliment the Minister.
Much debate has taken place in recent times on the standing of this country vis-À-vis its growth in economic terms. We must all accept that the hazy days of high economic growth of the past five or six years have passed but it is predicted that the growth rate for 2007 will be 4.75% and for 2008 to 2010 it will be 3.5%. By any standards, whether international or more particularly European, our growth rate is at the top of the league. This country has benefited from that enormous growth in recent years, as is evident from the position in the different services provided in that period.
I will concentrate on the level of investment in the constituency I represent of Roscommon-South Leitrim, previously Longford-Roscommon. Some €30 million was invested in school development in County Roscommon in the past six years; more than €10 million was invested in child care facilities; and new Government offices were developed. Investment was made in hospitals and other health services in the region, the difficulties experienced in which I hope to address later. Work is taking place on the N6 and by 2009 a dual carriageway will run from Dublin city to Galway city through the bottom half of my county and constituency of Roscommon. That artery through south Roscommon will bring enormous benefits and opportunities for further developments. I was pleased that a decision was taken to sanction the Ballaghaderreen bypass some months ago. It will benefit not only County Roscommon but will be another important artery on the N5 from Dublin to the west and will eradicate the gridlock experienced by motorists on that route.
Transport 21 is innovative. I was glad to hear from the Tánaiste and those in Government circles that the national development plan is to be implemented, even given the restrictions being placed on the public finances. That is important. In the past when the economy was not is such good shape the first casualty was always the capital budget. That was a cheap short-term decision. The Government decision to proceed with all the infrastructural development under the national development plan is to be welcomed, and I compliment the Tánaiste on saying that is to be the case.
The Minister, Deputy Éamon Ó Cuív, spoke about decentralisation. Having served as a former member of the Committee on Finance and Public Service for the past five years, I heard comments denigrating decentralisation, saying that it would not work. Perhaps it will not work at the pace initially expected and too much was expected in a short timeframe, but I assure the House that it is working. An advance party of up to 90 staff of the Land Registry will be based in Roscommon by Christmas and a new building is to be constructed starting in 2008. Further decentralisation of offices to Carrick-on-Shannon, Charlestown and other areas is taking place. All of that is beneficial to the development of the region.
People in the west have believed for far too long that they were not getting their fair share of the benefits of the national cake, so to speak, but recently the Tánaiste, together with the Minister for Transport and the Minister with responsibility for rural affairs, have concentrated on issues important to us and have responded in a positive way. The development of the western rail corridor was left to be addressed for many years. I spoke to the county manager of Mayo County Council on Monday and he informed me that in the next three years, €45 million will be invested in the Knock Airport development, almost €28 million of which is taxpayers' money provided by the Government. That is a welcome development for the people of Roscommon, Mayo, north Galway, Sligo and other areas in the region. I do not want to ignore the difficulties being experienced in Shannon. We support Shannon in its attempt to maintain services it considers important but we too must look to our future and I believe our future in our region is with Knock Airport.
We are now no longer a low cost economy and we must examine other opportunities that will allow us create employment and wealth. One area in which we can do that is through tourism. Recently, the Tánaiste announced a new tax corridor on the lower Shannon. There are great opportunities there for people to invest in tourism projects and to attract more people to the region. The opportunities for angling, boating and tourism generally in the Shannon basin are enormous and much of it is untapped. I look forward to the roll out of that scheme for the lower Shannon.
Another issue is that of pension provision. For too long, our elderly were not looked after but that has changed. The previous Government indicated it would increase the pension to €200 per week and it has said it will increase it to €300 during the term of this Government. I was glad to hear the Taoiseach say on the Order of Business this morning that the Government intends to honour that commitment.
It is important that everybody aged 70 years gets a medical card, which is not generally the policy elsewhere. My relatives in America believe that is an innovative measure because there is no such scheme in that wealthy country. Elderly people are being well cared for. They are the people who built up this country and it is only right that we should give some return to them and make their lives comfortable.
I have a proposal for Government on the Industrial Development Authority. After all this time I believe that authority is east coast orientated and I am not happy with the level of job opportunities being presented to us in the west. The IDA is not concentrating on the county towns and rural towns in the west. I could count on one hand the numbers of jobs that have been created in some towns and regions. The Government will have to instruct the IDA to look outside the Pale and the south and to look west. Counties Roscommon, Mayo, Leitrim and Sligo also need jobs. We are entitled to our fair share of the cake in terms of job creation. I read of announcement after announcement of jobs for areas, but they are not for the west. I hope during the term of this Government the IDA will be directed to have regard to its responsibility for all parts of the country, including the area from which I come.
The contribution of Deputy Éamon Ó Cuív has been positive for the west of Ireland. He highlights issues and introduces schemes that are important to us, such as the CLÁR scheme or the rural social scheme. He supported areas that had a low population. Without this support and such schemes, many of the services needed, such as rural transport, water and sewerage or three-phase electricity, would not have been brought forward. I compliment the Minister on the pre-budget outlook and the new format. He will deal with the people of this nation with an even hand in the budget in a few weeks.
I support Deputy Finneran on the projects in the west of Ireland. I hope he will lobby the Minister for Transport, who has let us down to date, on the N5 from Longford to Charlestown. It is the biggest disgrace in the country. It is a disgrace that when I go on that road tomorrow afternoon there is not room for two cars to pass. When travelling from the west, I do not mind the rest of the journey from Longford to Dublin. When I am returning from Dublin, if I get caught behind a lorry at Longford, it will take me two and a half hours to get to the west. It is time the necessary funding was put in place for the N5. We have talked about it for 30 years. It is the most important infrastructure project to get goods in and out of the west of Ireland. Factories in Westport, such as Allergan and Baxter Healthcare, have lobbied the Minister, complaining that goods transported from the west are damaged because of the condition of the road.
The Minister referred to the western rail corridor, which I welcome. I was disappointed that it was not continued to Claremorris. It is important to us. Other speakers referred to the Shannon stopover. What happened is a disgrace. It is a disgrace that the Government allowed the removal of infrastructure that is important to business people coming in and out of Shannon, Galway and Mayo. The service brought a critical number of people, including those in the business sector, in to the west.
I agree with Deputy Finneran that we have been let down by the IDA, which thinks that Dublin is Ireland. It forgets about rural Ireland. It forgets that people in the west of Ireland need jobs and the same commitment it shows to the east coast. I have nothing against Dublin. I love coming to Dublin but I love to get out if one can get in or out. That is the biggest problem in this city. It has great roads but people cannot drive anywhere because they are caught in traffic. God help the people who live in this city because they spend more time in cars than in homes, trying to travel one mile across the city. They spend hours trying to get home in the evening, which is wrong. That is a matter of basic planning for the Government. What it has planned in this city and the whole country has been a mess.
The past 15 years have been great for this country and at the first sign of a downturn we must borrow to meet Exchequer figures. Before the election I heard there were no worries about funding. People were told the economy was in safe hands and everything would be okay. That election did not take place 15 years ago. It took place four months ago.
I heard the Tánaiste and Minister for Finance predict growth of 5.5-7%. Now he has revised it to 3.5% and one can be assured that it will be even lower. There is a downturn but when we had it good in this country we squandered it. Previous speakers referred to squandering money on roads. We never spent more money on hospitals yet we never had a worse health service.
The biggest issue is whether we have a public service. We have never spent so much money or given so much money, through benchmarking, to the public service. If one phones the health board, the local authority or the Department of Social and Family Affairs one only gets through to Mr. and Mrs. Voicemail. The likes of Mr. and Mrs. Voicemail now dominate the public service. One cannot get a civil servant to answer in any Department even though we never spent so much money on the public service as we do now.
It is time the Tánaiste and Minister for Finance and the Government tackled the inefficient public service. I hear about it every day. People are sick and tired and would not come to us as politicians if public services worked. We must deal with health boards, county councils and Departments. We are paying them enough and it is time they served the people paying them, namely the taxpayer. They should give us commitment and do the job they are paid to do, which they are not doing.
There is a downturn but I urge the Minister for Finance not to attack people on social welfare. It is easy to give money when things are going well but this year represents a test for the Government. I want to make sure the elderly, pensioners and those on social welfare are protected in this budget. Food, fuel and costs of day-to-day living are increasing and people on low incomes are the first to be affected.
Now that the Green Party is in Government we may be faced with carbon taxes. If that happens the Minister must protect the elderly, the weak and those on low incomes to ensure they do not suffer. If he must attack one group of people he should tax those who live outside the country, who fly in for the All-Ireland and race meetings but pay very little tax because they live outside the State. These are the people we should target to ensure they pay their fair share; we should spread it around and ensure we can invest revenue in the health service and roads.
The town in which I live, Westport, is one of the fastest growing towns in the country. We depend on our tourist industry, with 12 hotels. The greatest problem is getting people in and out of Westport. When Fine Gael was in Government in 1997, a long time ago, the N5 was to be the next project to receive funding from the NRA and the Government. Ten years later it has not happened. I ask the Minister to provide funding for the N5.
A breast cancer service is currently available in Mayo General Hospital but it will be removed to a centre of excellence in Galway. A protest march is planned in Mayo for next Sunday. The people will march and tell the Government they are satisfied with the current service. There is a centre of excellence in Castlebar, with an excellent surgeon and all the backup staff required. Some 2,500 people used the service last year. Some 70 women were diagnosed with breast cancer and 66 were operated on in Mayo General Hospital. The service is working and we want to maintain it. Perhaps the centres of excellence are good but I visited a man in hospital in Galway recently and one cannot park the car or get an appointment because of overcrowding. Now the HSE wants to add to that by closing down the centres in Sligo and Mayo and moving the services to Galway. That is not decentralisation but the exact opposite. We are happy with the service we have in Mayo and want to retain it. I ask the Minister to talk to his colleagues in Government and to make a political decision to ensure the service is maintained.
In the west we have been let down for many years with regard to infrastructure. We badly need roads. Take the N26, the road along which the gas will be transported from north Mayo. It is one of the worst roads in Ireland. We are extracting gas that will do the State and the community good but we do not have a proper road. It is time the funding was put in place to ensure that the road from Castlebar to Belmullet is improved.
I welcome the opportunity to address the House in this debate on the pre-budget outlook. Before I deal with the spending profile of my Department, I wish to acknowledge the new and innovative approach of the Tánaiste and Minister for Finance, Deputy Cowen, in publishing, before budget day announcements, expenditure profiles based on existing levels of service. This provides greater transparency on how public spending for 2008 is related to the overall budgetary process and how expenditure increases will be financed. In this way, the budget day announcements by the Tánaiste and Minister for Finance will give a full elaboration of all aspects of our public finances both in terms of revenues raised and the public services that are funded by taxpayers.
The published pre-budget Estimate of my Department provides for €2.8 billion, comprising capital spending of €1.978 billion and current spending of €888 million. This is a very substantial amount of public expenditure and provides a very robust foundation for the wide range of programmes for which my Department is responsible for delivering in 2008. However, the provisions published now are not the end product for 2008. It is important that financial resources meet public service demands arising from economic growth and demographic change.
Since coming into office I have placed great emphasis on the achievement of the highest environmental standards through partnership with the local authorities and other agencies within my remit. I have also placed strong emphasis on monitoring performance and promoting best practice to maximise the benefits of the considerable resources being made available.
I now turn to the main aspects of my Department's activities, the first of which is in the area of the environment. This Government is committed to a policy framework that will protect and enhance our environment now and into the future. Integrating environmental considerations into all policies and programmes is the key to achieving sustainable development. Public expenditure is one means by which we will embed the principle of high environmental performance into our policies and delivery mechanisms and make it a reality.
Our environmental objectives bear upon all the environmental media but climate change is now widely recognised as the most critical global challenge we face. It affects everyone on the planet and for many, their very survival at stake. Their homes, livelihoods, the food they eat and their very existence are threatened. The international community must act quickly if we are to maintain control over climate change and avoid its worst consequences. We must act globally and locally because climate change is everyone's problem. That is why the Government strongly supports the European Union target of minimising global warming to 2° Celsius or less. This Government, along with the other European governments, unanimously agreed to reduce total greenhouse gas emissions in the EU by at least 20% by 2020, compared with 1990 levels. The Government is committed to an ambitious and binding international agreement to succeed the Kyoto Protocol from the beginning of 2013.
The current programme for Government emphasises the national commitment to comply with our adherence to international agreements and to go a step further in this critical area. In addition to emissions reductions, which will be delivered through the implementation of the national climate change strategy, the programme for Government proposes a challenging target of a 3% reduction per year, on average, in our greenhouse gas emissions. In addition to complying with the Kyoto Protocol, we will put ourselves in a very strong position to meet the challenge of the more demanding targets we face in the post 2012 period.
The programme for Government commits us to setting a new ambitious waste management target, with maximum re-use and recycling as well as very modern waste treatment, to ensure we match the best international performance in the EU for recycling. The objective is that only 10% of waste, or less, is consigned to landfill, down from the current level of 66%. The programme also includes measures to broaden our approach to managing residual waste, with an increased emphasis on alternative technologies, including methods for the mechanical and biological treatment of waste, known as MBT. My Department is commissioning a major review of waste management planning, as provided for in the programme for Government. We want to reduce the amount of waste substantially, with 50% of it being recycled; after MBT approximately only 400,000 tonnes of waste would have to be dealt with annually. Those targets are achievable. We will meet the landfill directive and the target of 400,000 tonnes by 2016.
In the interim I am considering using my powers under section 60 of the Waste Management Act to ensure a policy direction regarding the involvement of local authorities in put-or-pay arrangements in the context of public private partnerships in respect of incinerators and landfills. This is currently the subject of a regulatory impact analysis, which should be concluded shortly.
The Government's commitment to the sustained improvement and expansion of national water services infrastructure is reflected in the €4.7 billion detailed in the National Development Plan 2007-2013, an increase of 27% on the €3.7 billion spent under its predecessor. The national development plan sets out a series of environmental and economic objectives for the water services sector that will provide the primary backdrop to investment decisions over the next few years. The priority will be to meet the environmental goals and objectives that are enshrined in the programme for Government, while also facilitating strategic economic and other development. Specific objectives include meeting in full our obligations under national and EU law on higher drinking water standards and the protection of our rivers, lakes, groundwater, estuaries and marine water through improved disposal of waste water. The recently announced water services investment programme from 2007 to 2009 outlines the schemes being undertaken in the period ahead to meet these objectives.
There has been a remarkable transformation in the quality and coverage of our water services infrastructure in recent years. Our compliance rate with EU secondary waste water treatment requirements stands at 90%, compared to 25% as recently as 2000. This has involved the provision of additional waste water treatment capacity equivalent to the needs of a population of 3.1 million. In environmental terms, this has meant that the pollutant load from municipal discharges to rivers, lakes and the sea has been reduced by approximately 45,000 tonnes per annum. On the water supply side we have, since 1997, provided additional drinking water capacity for a population equivalent of over 1 million. We must build on this success in the coming years by continuing to invest in schemes that will deliver the high standards to which we aspire.
As my title suggests, heritage is an integral and extremely important part of the work of my Department. My Department performs its work in the heritage area in close liaison with the Heritage Council, the Irish Heritage Trust and a network of conservation officers and heritage officers operating at grassroots level in the various local authorities. The importance that the Government attaches to heritage is evident from the number of objectives contained in our agreed programme for Government relating to heritage policy. The programme sets out 14 objectives in this important area including the completion of the national survey of our built heritage, strengthening the role and operation of the Heritage Council, supporting the newly formed Irish Heritage Trust and introducing a national landscape strategy. I announced how the latter will evolve while in Kilkenny last week.
I now turn to housing. The Exchequer provision for housing in 2008 of almost €1.5 billion will allow us to consolidate the progress made in recent years under social and affordable housing programmes. Significant progress has been made. More than 13,000 social housing units have been completed since 2005 to mid-year 2007. Work will continue in 2008 on the redevelopment of Ballymun and other regeneration activities. Finance for private housing grants will continue to fund house improvements for groups with special needs under a new regime recently announced by the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Batt O'Keeffe. Funding will be maintained for the provision of homeless and Traveller accommodation. Households will benefit from ongoing implementation of the rental accommodation scheme, RAS. Support will be made available to voluntary and co-operative housing bodies, including a revised capital assistance scheme which will make 100% funding available to the sector.
The commitment to the provision of assistance to low-income households to acquire affordable accommodation in the private sector will also be maintained. Exchequer funding in this area focuses on the provision of subsidies including site subsidy, mortgage allowances and affordable housing subsidies to make homes more affordable. Other expenditure relates to the funding of mortgages by means of loans raised through the Housing Finance Agency.
Significant Exchequer finance has been made available to housing. In the previous national development plan it came to €10 billion and some €18 billion was committed in the recent plan. Investment on this scale comes with a responsibility to ensure moneys are spent wisely and to best effect. The commitment to multi-annual capital programmes and local authority action plans for housing provides a strong strategic framework for the major investment programme in progress.
The Government remains committed to supporting policies to boost the supply of housing and improve affordability. It will also continue to assist low-income groups and those with special housing needs through a range of targeted social and affordable housing programmes, for which substantial levels of funding have been approved. I am confident that with these significant levels of investment announced and with local authority action plans in place to support delivery, real benefits will be seen in the output and quality of social and affordable housing provision in 2008.
The publication of the pre-budget outlook demonstrates the commitment of my party and the Government to greater transparency in the consideration and priorities of public expenditure. The pre-budget Estimates demonstrate the Government's commitment to the wide range of activities, services, investment programmes, the local government and heritage sectors of the Department of the Environment, Heritage and Local Government. I look forward to presenting my detailed spending Estimates in due course.
I thank the House for the wide range of statements and analyses made on the pre-budget outlook. I see this process of debate as a large part of budget reform, as set out in my opening speech.
Several points were made during the course of the debate about forecasts for the economy and how they have changed. Before reminding the House of the forecasts contained in the pre-budget outlook, it is no harm to focus on the changes in the economic environment this year.
Last December on budget day, I set out the Department's three-year growth forecasts for 2007 to 2009. At that stage GDP growth was forecast to grow on average by 4.7% with growth of 5.3% for 2007. I also forecast taxes would grow by 7.8% in 2007 and that on a cash basis the Exchequer would have a deficit of €546 million. The general Government balance was forecast to remain in surplus at 1.2% of GDP.
At the time, others took the view that my tax forecasts were somewhat prudent. The ESRI in its winter quarterly economic commentary forecast an Exchequer surplus of over €1 billion and a general Government balance of 2% of GDP. At the time its view for growth in GDP at 5.4% was no different from mine. Likewise, the Central Bank forecast GDP growth of 5.5% in its January 2007 quarterly bulletin. This general consensus lasted through the first six months of the year, but circumstances have now changed.
The pre-budget outlook is my updated forecast, but others such as the ESRI and the Central Bank produce quarterly forecasts. The ESRI still expected GDP growth of 5.4% for this year in its spring quarterly forecast but by its summer quarterly forecast it had revised growth down to 4.9% for this year. Most institutions that produce regular forecasts for the economy revised down their outlook over the summer and autumn. The economic environment has changed and the forecasts published in the pre-budget outlook reflect this.
Growth now is expected to be lower for the next several years with GDP expected to average 3.5% over the period to 2010. My forecasts for this year and next, are broadly in line with others that have produced forecasts over recent months. I reject any contentions to the contrary.
Deputy Bruton referred to the debt-driven property boom which completely misses the point. First, the level of new housing output has been ramped up in recent years in order to achieve greater balance between housing demand and supply. Had this large increase in house completions not occurred, first-time buyers and others would have been excluded from the market.
Second, while all Members are aware of the rise in personal indebtedness, less attention is given to developments on the asset side of the household balance sheet. Between 2001 and 2005, the ratio of net household assets to GDP has been on a rising trend. It is also worthwhile to note the age structure of the population, being younger than most other EU countries, is such that a relatively large proportion of the population is at the life cycle stage of borrowing to acquire real assets.
Deputy Bruton suggested the Government had become overly dependent on revenues from the property market, squandering the extra tax receipts from that area. While we undoubtedly benefited from the extra resources arising from the buoyancy in the property market, we have not staked all on them. We prudently used these receipts as a bonus to reduce debt levels while new services were not based on them.
Care has been taken not to plan the public finances around the assumption that tax receipts from the property and wider construction sector would continue to grow as they did in the recent past. It is important to put the increased contribution from stamp duty and capital gains tax in context. The budget forecast of the yields from stamp duty and capital gains tax combined, in 2007, represents about 15% of tax revenues overall. In contrast the big four taxes — VAT, income tax, corporation tax and excise duty — were expected to account for close to 85% of total tax revenues this year.
As in previous years, the Department adopted a cautionary approach and factored in an easing in property market activity this year when making its budget day economic and fiscal projections. This was reflected in the forecast rates of increase for stamp duty and capital gains tax, far below the growth rates experienced in recent years. The actual slowdown will be greater than initially anticipated, however. This is reflected in the performance of stamp duty and capital gains tax so far this year.
Property-related taxes are not the only taxes which have been growing strongly. Between 2001 and 2006 income tax increased by just over €3 billion and corporation tax by just over €2.5 billion, indications of a strong economy with more people in work and more companies returning healthy profits.
Several Members referred to the tax and PRSI commitments in the programme for Government. It is a five-year programme which states clearly all commitments are subject to the economic and fiscal framework. It is our intention to operate a responsible fiscal policy characterised by broad budget balance.
Some Members referred to the unallocated provision in table 6 of the pre-budget outlook as some sort of a war chest for the Government. This is a misrepresentation of the position, perhaps by some for political mischief. Table 6 sets out an illustrative budgetary position for the coming years. The inclusion of the unallocated provision is not new; last year's pre-budget outlook included a similar provision. This provision is indicative at this stage and I will be setting out in full detail on budget day my budgetary measures for both taxation and spending.
Some on the other side of the House refuse to be pleased with the spending information provided last week in the pre-budget outlook. Despite the considerable increase in data and information in the outlook, it still falls short of their expectations. Both Deputies Bruton and Burton want to determine the budget from the Opposition benches, deciding the priorities and what to spend moneys on exclusively on the basis of proposals and choices presented by them to me. This would usurp the role of the Government and is not consistent with the democratic process.
The purpose of the pre-budget Estimates is to provide a clear outline of the starting position for the information of all sides of the House. The Estimates show what moneys are needed to maintain existing services next year. From that starting position on an existing level of services basis, we can have a debate about where the existing priorities lie and where new priorities should be. A debate, however, by its nature, involves more than just one point of view. If anyone wants to know mine and the Government's priorities, I will be happy to point them out.
My core priority is the continued economic and social development of the country on the basis spelled out in the National Development Plan 2007-2013. The programme for Government and the Towards 2016 partnership agreement also set out priorities and proposals to be delivered upon as resources allow over the lifetime of the Government.
The Government remains open to reviewing the budgetary process to encourage a more constructive and relevant examination of how the State's finances are run. Yesterday, I referred to the positive role of the new annual output statements, under which Ministers must outline to the Dáil the public service targets they expect to deliver with the public moneys allocated to them. I look forward to examining points made by Members on all sides of the House.
The key point is that this Government has gone further than any other in opening up the budgetary process, reforming it and providing greater opportunities for engagement and input from all sides of the House. The annual output statements comprise one such initiative. The pre-budget Estimates as part of the unified budget is another and it is up to all Members of the House, including Opposition Deputies, to avail of the opportunities being provided to make them better and make them work. We can only provide that opportunity, but we cannot fulfil the role of every Member of the House.
The pre-budget outlook and the pre-budget Estimates are a major and positive development, in my view, both in terms of the very high level of existing public services they embody and the reformed and more transparent approach to policy making which they represent. I am therefore pleased to commend them to the House.
The Dail Divided:
For the motion: 77 (Dermot Ahern, Michael Ahern, Noel Ahern, Barry Andrews, Chris Andrews, Seán Ardagh, Bobby Aylward, Joe Behan, Niall Blaney, Áine Brady, Cyprian Brady, Johnny Brady, John Browne, Thomas Byrne, Pat Carey, Niall Collins, Margaret Conlon, Seán Connick, Mary Coughlan, Brian Cowen, John Cregan, Ciarán Cuffe, Martin Cullen, John Curran, Noel Dempsey, Jimmy Devins, Timmy Dooley, Michael Finneran, Michael Fitzpatrick, Seán Fleming, Beverley Flynn, Pat Gallagher, Paul Gogarty, John Gormley, Noel Grealish, Seán Haughey, Jackie Healy-Rae, Máire Hoctor, Billy Kelleher, Peter Kelly, Brendan Kenneally, Michael Kennedy, Tony Killeen, Séamus Kirk, Tom Kitt, Brian Lenihan Jnr, Conor Lenihan, Michael Lowry, Martin Mansergh, Jim McDaid, Tom McEllistrim, Finian McGrath, Mattie McGrath, Michael McGrath, John Moloney, Michael Moynihan, Michael Mulcahy, M J Nolan, Seán Ó Fearghaíl, Darragh O'Brien, Charlie O'Connor, Willie O'Dea, Noel O'Flynn, Rory O'Hanlon, Batt O'Keeffe, Ned O'Keeffe, Mary O'Rourke, Christy O'Sullivan, Dick Roche, Eamon Ryan, Trevor Sargent, Eamon Scanlon, Brendan Smith, Noel Treacy, Mary Wallace, Mary White, Michael Woods)
Against the motion: 67 (James Bannon, Seán Barrett, Tommy Broughan, Richard Bruton, Ulick Burke, Joan Burton, Catherine Byrne, Joe Carey, Deirdre Clune, Paul Connaughton, Noel Coonan, Joe Costello, Simon Coveney, Seymour Crawford, Michael Creed, Lucinda Creighton, Michael D'Arcy, John Deasy, Jimmy Deenihan, Andrew Doyle, Bernard Durkan, Olwyn Enright, Frank Feighan, Charles Flanagan, Terence Flanagan, Eamon Gilmore, Tony Gregory, Brian Hayes, Tom Hayes, Michael D Higgins, Phil Hogan, Brendan Howlin, Paul Kehoe, Enda Kenny, Ciarán Lynch, Pádraic McCormack, Shane McEntee, Dinny McGinley, Joe McHugh, Liz McManus, Olivia Mitchell, Arthur Morgan, Denis Naughten, Dan Neville, Aengus Ó Snodaigh, Kieran O'Donnell, Fergus O'Dowd, Jim O'Keeffe, John O'Mahony, Brian O'Shea, Jan O'Sullivan, Willie Penrose, John Perry, Pat Rabbitte, James Reilly, Michael Ring, Alan Shatter, Tom Sheahan, P J Sheehan, Seán Sherlock, Róisín Shortall, Emmet Stagg, David Stanton, Billy Timmins, Joanna Tuffy, Mary Upton, Leo Varadkar)
Tellers: Tá, Deputies Tom Kitt and John Curran; Níl, Deputies Emmet Stagg and Paul Kehoe.
Question declared carried.