Wednesday, 15 October 2008
Financial Resolution No. 15: (General) Resumed
I welcome the opportunity of contributing to this debate on the budget both as Leader of the Green Party and as Minister for the Environment, Heritage and Local Government.
This has been an exceptionally challenging budget framed against difficult international economic circumstances. We are duty bound to take action to put the public finances on a sound footing in the interests of all the citizens of the country.
——but has looked to ensuring economic and environmental sustainability, to promoting the competitiveness of the economy so that it will be able to respond quickly when the global situation improves, and above all to protecting the most vulnerable in our society.
All of these principles are clearly seen in the estimates for my own Department. We have forensically examined all expenditure. We have had to make difficult decisions, but I believe we made the right ones.
For example, we have concentrated housing expenditure on social housing and protecting the most vulnerable. We are investing in environmental protection concerning water, waste management and the natural and built heritage. In addition, we have increased investment in the water services investment programme by a massive 19% in the interests of protecting public health, compliance with EU environment standards and supporting economic development. I will return to these issues in greater detail later.
Today, I am presenting the second annual carbon budget. When I introduced the concept last year, I explained the thinking that led to its inclusion in the Agreed Programme for Government. If climate change is to be central to Government policy-making, it must be integrated into the annual budgetary process. Our decisions on expenditure and taxation must be informed as much by the climate impact as by the financial and economic impacts.
Given the unprecedented financial backdrop to this year's budget, many might have expected climate considerations to receive little, if any, attention. That would have been a huge mistake. As Minister for the Environment, Heritage and Local Government and Leader of the Green Party, I have spoken in the House on many occasions about the environmental cost of our greenhouse gas emissions. In the context of today's debate, however, the focus must also be on their financial and economic cost. If we do not reduce our emissions, the long-term costs to the Exchequer and to the economy will be immense.
While the international negotiations on a post-Kyoto agreement have not yet concluded, we already know that Ireland will be required to reduce its emissions by 2020 to a level at least 20% below that of 2005, and probably by considerably more. As we stretch the time horizon towards 2050, the scientific consensus is that the cuts required of developed countries could be as much as 80% to 95%, if the worst effects of global warming are to be avoided.
These cuts will not be optional. They will be binding on Ireland under future EU and UN agreements and we will face hefty financial sanctions if we fail to meet them. We must, therefore, prepare the ground now for a major structural change in our economy and our society, so we can continue to develop and prosper while simultaneously reducing our greenhouse gas emissions. The Government has accepted this reality and has agreed a budget that is designed not just to restore financial stability, but also to move us further towards the necessary transition to a low-carbon economy.
I have circulated a short table which sets out the trend in Ireland's emissions, including the projections for the Kyoto period. The table includes provisional estimates of 2007 emissions, which have just been completed by the Environmental Protection Agency. The agency has done excellent work in completing its calculations two months earlier than planned. There was speculation in some media a few weeks ago that our emissions would be substantially up on the previous year, but that is not the case. The table shows a welcome fall of just over 1% in net emissions, taking account of increased sequestration though afforestation. Net emissions have fallen from 68.6 million tonnes of carbon dioxide equivalent in 2006 to 67.9 million tonnes in 2007. While the reduction in 2007 is welcome, it offers cold comfort in the context of the baseline trend for the Kyoto period. Over the past year, the Government has committed significant resources to improving the capacity to model and project emissions across the various sectors. This has enabled the EPA, with the support of relevant agencies in the various sectors, comprehensively to update projections for the Kyoto period, which were included in the national climate change strategy.
This analysis shows that, even after allowing for the implementation of the measures that have already been put in place by the Government, the baseline trend continues to rise. The most striking revision relates to transport emissions. The average level for the Kyoto period is, in advance of new measures, put at close to 2 million tonnes a year more than was projected last year. The downward trend in agriculture has also been reversed, as livestock numbers have begun to rise again.
There is a sizable fall in projected emissions in the residential sector, thanks in part to the energy efficiency measures that have been introduced in the past year, but this is overwhelmed by the baseline changes in transport and agriculture. The consequence, as shown in column D of the table, is that the Government is, in advance of new measures, projected to have a gap of 5 million tonnes a year. This must be bridged by a combination of further measures and purchasing credits under the flexible mechanisms of the Kyoto protocol.
The House is aware that, on coming into office last year, the Government established a Cabinet sub-committee on climate change and energy security, chaired by the Taoiseach. One of its main tasks has been to drive the cross-departmental effort to develop further measures to reduce emissions. The wider public sector is also contributing to this effort. Tomorrow, I will be speaking at a major conference on the way forward for local authorities in addressing climate change.
As a result of the work of the Cabinet sub-committee, this year's Estimates and budget process have given greater priority than ever before on the need for emission reductions, notwithstanding the emphasis that has inevitably been placed on financial stability in the particular circumstances of the time.
I now propose to draw together the key responses across various sectors. Some will deliver emission reductions in the short to medium term, and these are reflected in columns E and F of the table. However, the longer term is even more important. Real structural change cannot be achieved overnight, but we need to put the drivers in place if we are to get the benefit in future. Much of what I am outlining today will take time to deliver, including emission reductions, but in the long run they will have a significant effect.
One of the most effective ways of reducing our national greenhouse gas emissions is to generate as much electricity as possible from renewable sources rather than from fossil fuels. The previous Government adopted a target that 33% of electricity consumed would be from renewable sources by 2020. Today I can confirm that the Government has agreed, on the recommendation of my colleague, the Minister for Communications, Energy and Natural Resources, Deputy Ryan, to increase this target to 40%.
The target is underpinned by analysis conducted in the recent all-island grid study which found that a 40% penetration is technically feasible, subject to upgrading our electricity grid and ensuring the development of flexible generating plant on the electricity system. The study concludes that this higher level of renewable electricity would reduce our carbon emissions from electricity by 25% over the business-as-usual scenario, a saving of around 5 million tonnes.
This work was further underpinned by the new electricity grid development strategy which was published by EirGrid last week. The Government will be conducting further analysis to ensure that the higher renewable electricity target supports competitiveness, is delivered on time and at least cost to consumers and businesses, while maximising sustainable socio-economic benefits.
The decision provides a clear and strong message from Government on its commitment to ensure secure, competitive and sustainable energy sources.
I was also pleased to launch last week the stakeholder consultation paper that sets out the detailed implementation plan for the new energy efficiency standard for light bulbs and I want to record my appreciation of the support received from the lighting industry in finalising the measure.
Emission reductions in most sectors take time to achieve and transport is a case in point. In the past, an over-emphasis was placed on road transport by Governments and the public, and the result is evident in our spiralling transport emissions. However, the Government is shifting the emphasis towards public transport and is supporting and incentivising the behavioural change that will deliver a more sustainable transport future for all of us.
The new emphasis has been seen clearly in this year's budget. Despite the very difficult financial backdrop, key public transport projects are being continued to ensure continued enhancement of rail services——
——particularly to support commuters, and increased priority is being given to buses in Dublin and other cities. The critical strategic priorities in Transport 21, such as metro north and the DART interconnector, will go ahead.
The commuting experience will be significantly improved through: the removal of pinch points on quality bus corridors and other bus routes, integrated ticketing using smart card technology and real-time passenger information at bus stops and on mobile phones. Most people who stand at a bus stop experience the frustration of not knowing when the bus will come. Having this information available by mobile phone will make a difference to the attractiveness of public transport.
However, capital investment on its own is not enough. The Government must also encourage significant behavioural change by providing a clear vision of a more sustainable transport future backed up by strong policies. That vision and those policies will be set out in the sustainable travel and transport action plan, which will be published shortly by my colleague, the Minister for Transport, who earlier this morning made announcements about this.
In association with that plan, the Minister will also be developing national cycling and walking strategies to encourage emission-free modes of travel. The plan will set out to create a culture of walking and cycling, in particular, by ensuring that streets in urban areas are managed and designed so that we have safe and pleasant environments for pedestrians and cyclists. Today I can confirm that the Minister and I will be providing a special cycling package for Dublin to the tune of €5 million to include funding for work on the city centre portion of the proposed Sutton to Sandycove cycle route. The Minister for Transport and I will also be providing funding to upgrade and maintain existing cycle routes in Dublin.
In addition, my colleague the Minister for Communications, Energy and Natural Resources, together with the Minister for Transport, will announce in the coming weeks the development of a strategy to have up to 10% of our road transport fleet electrically powered by 2020. The aim is that Ireland should be among the early movers in exploiting recent international advances in electric vehicle technologies, moving from advanced plug-in hybrid vehicles to full electric vehicles which have no direct CO2 emissions.
A particular advantage of this technology is that the vehicles are typically recharged at night, when the electricity system has its lowest load demand. As we move towards increasing our renewable electricity generation, mainly by developing new wind capacity, electric vehicles would provide a useful market for night-time wind generation.
The first full year in which the major taxes on cars are based solely on their emissions will be 2009. This follows the introduction in last year's budget of CO2 based motor tax and VRT. The early indications from the first three months of the new system are of a strong trend towards lower-emission vehicles. Of the 42,000 cars which are now charged motor tax on the basis of emissions, 85% are in the three lowest bands. The increases in motor tax, which I introduced last night, maintain the strong incentive in the system to switch to lower emission cars when purchasing new vehicles, with a higher rate of increase for cars above the 2.5 litre threshold and CO2 bands E, F and G, and no increase for electric vehicles. I intend to keep the motor tax system under review, in consultation with the motor industry, to ensure that it meets the twin objectives of protecting local government funding while incentivising greener motoring in future years.
The Government's vision for the transport sector involves major structural change. This will take time to deliver and to make a significant impact on emissions. In the shorter time period of our Kyoto target, my Department has estimated that the impact of the relevant fiscal and other measures in this budget on transport emissions will average 200,000 tonnes per annum over the 2008-12 period, and this is reflected in the carbon budget table.
In terms of the role that we can expect from the residential sector in meeting our emissions reduction targets, I am determined that the public sector leads the way. I am, therefore, announcing a number of initiatives today that provide a platform for significant progress in this area.
Public housing in Ireland has a long record of achieving high quality by reference to the standards prevailing at the time of construction, but energy efficiency standards are now far higher than when much of our public housing stock was built. Remedial works and regeneration programmes, undertaken by local authorities and funded by my Department, are delivering significant energy efficiency improvements in various locations——
——but a more comprehensive programme of action is now required.
A full audit of the public housing stock will begin in 2009 to lay the foundation for a programme of retrofitting, where required——
——to deliver modern standards of energy efficiency. In addition, in parallel with this audit, €5 million will be provided next year to undertake a number of pilot retrofitting projects; the learning derived from these will play a major part in informing our approach to the wider roll-out of the programme, which will commence once the audit is completed. Not only will the ultimate national roll-out of the programme contribute in a significant way to the achievement of reductions in carbon emissions, it will also yield a vital fuel poverty dividend.
In addition to this essential need to deal with the legacy of the past, I am also determined that we look to the future and explore ways in which we can make greater progress on designing out the carbon impacts of new housing. Much has been achieved already with dwellings now required to deliver 40% greater energy efficiency on the standards applicable in 2005 and we intend to bring the improvement on the 2005 position to 60% in 2010. However, we now need to plan beyond that. We need to push the boundaries of environmental performance of housing further towards the goal of achieving zero carbon emissions.
To show further clear leadership on the part of the public sector, I have invited local authorities and voluntary/co-operative housing associations to submit proposals for the delivery of a number of demonstration projects in this area. The aim of these will be to deliver sustainable energy efficient housing developments in which homes will reach a minimum A2 building energy rating. Some €10 million will be provided next year, and again in 2010, to support these demonstration projects, which will significantly advance the knowledge and experience base in the design, construction and use of high performing energy efficient housing and promote wider awareness of the technologies involved.
I also very much welcome the additional funding provided in the budget for two schemes which are the responsibility of my colleague, the Minister for Communications, Energy and Natural Resources. The home energy saving scheme, introduced this year, provides grants to householders to improve the energy performance of their homes, while the warmer homes scheme provides energy efficiency improvements to lower-income households in the private sector.
The measures I have outlined in the residential sector, which amount to an investment of €45 million in the coming year, will support the achievement of the emission reduction targets which have already been set out in the Government's draft energy efficiency action plan and are, therefore, already quantified in the carbon budget table.
Similarly, I am not separately quantifying the impact of the expansion of accelerated capital allowances for energy efficient equipment, which was announced by the Minister for Finance yesterday, but this will reinforce the drive towards greater efficiency and reduced emissions in the commercial and industrial sector.
The importance of livestock-based agriculture and food production to Ireland's economy is unique within the EU. The scale of the sector is such that it will be impossible to meet our long-term greenhouse gas targets without significant emission reductions in agriculture. We must find ways of achieving this without undermining the economy, food security and rural communities. The Government is investing heavily in wide-ranging research on the potential for more efficient use of inputs, improved production systems and other emission-abatement measures. The considerable effort we are now devoting to the promotion of organic farming will also result in lower emissions. Similarly, promotion of biomass for energy will give multiple climate benefits.
As in other sectors, most of the benefit will come in the longer term and will be more relevant to our 2020 target than to the Kyoto period. However, the Department of Agriculture and Food has estimated emission reductions of 200,000 tonnes per annum on average in the 2008-12 period through new measures now being introduced, and this is reflected in the table I have circulated to Members. These accrue mainly from organic farming and from increasing the length of the grazing season.
The final two columns of the table show the adjustment to the projections for the Kyoto period as a result of the measures I have outlined. It is important to note that the economic growth rates underlying the EPA projections are broadly similar to the ESRI's "Benchmark" forecast which was published in its Medium-Term Review: 2008-2015 last May. It may well be the case that the projections now somewhat overstate the baseline trend for the Kyoto period, given economic developments since May. They will be revised when new forecasts for medium-term economic growth are firmed up, and I expect some further reduction in the distance to target. This also means that the requirement to purchase credits is likely to be somewhat less than the 4.6 million tonnes shown in column F of the table.
I have made my position on carbon credits very clear on several occasions. I recognise that the flexible mechanisms are an integral part of the Kyoto Protocol and I appreciate the value of promoting green investment, particularly in developing countries. I do not have a difficulty availing of the flexible mechanisms to help meet our obligations in the short term, but with one major qualification. We must not under any circumstances allow the availability of carbon credits to deflect us from taking the necessary actions to place us on a low carbon trajectory in the longer term. Over-reliance on carbon credits in the future will be a millstone which will hold back our economic development and deny us the advantages which will flow from early-mover adoption of efficient technology in transport, energy production, agriculture and in our homes and workplaces.
This year's carbon budget is a starting point but much more progress will be required in the coming year. I particularly welcome confirmation by the Minister for Finance that an announcement on the carbon levy will be included in next year's budget, taking account of the recommendations of the Commission on Taxation when it has reported. The principle of carbon pricing is accepted by virtually all economists and analysts as the most effective way to secure emission reductions. It is the basis of the EU's emission trading scheme which applies to the bigger emitters, such as power generators and industrial plants. The carbon levy will enable us to harness its benefits in the rest of the economy and will deliver a further reduction which will be reflected in next year's carbon budget table. Over the next year the Government will develop further measures to get to grips with the climate challenge, reduce our purchases of carbon credits and bring us on track for the annual average 3% reduction in emissions to which we are committed in the programme for Government.
We must also ensure that Ireland's economy adjusts to a low-carbon future. It is estimated that the green technology sector is now worth €284 billion worldwide. The European Commission estimates that eco-industry in Europe already employs more people than either car manufacturing or chemicals, and various reports have projected huge employment growth in the years ahead. Instead of merely taking technological developments from other countries, we have an opportunity to play a leading role in developing a green economy. Some years ago we harnessed the State's industrial, educational, enterprise and development resources to develop biopharmaceutical and ICT sectors in Ireland, leading to significant inward investment and highly productive employment. The Government intends to take a similar approach to the development of the green technology sector. We have already made significant steps towards embracing this growth area but, to be effective, we must take a "whole-of-Government" approach.
In this regard, the Government's Cabinet sub-committee on climate change and energy security is examining how the green economy might best be fostered. In the coming weeks a number of Ministers who have responsibility in the relevant areas will collectively announce the establishment of a high level action group to advise on the development of Ireland's green economy. The group will report to Government within four months, setting out an action plan for developing green enterprise in Ireland with a view to contributing to economic growth and providing new, quality employment opportunities in this growing sector. The group will be tasked with identifying the potential for enterprise development, how education and training might address skills deficits, necessary research and development and the potential for Irish firms to bid for public procurement opportunities throughout the EU. We are determined to guide our economic development and well-being on to a sustainable and low carbon path. By successfully developing a thriving green technology sector, we can look forward to making a significant contribution to emission reductions.
The State already plays a direct role in the economic life of the country. It directly purchases products and engages services through public procurement. The Government is currently considering how our public service can give greater consideration to environmental impacts in its procurement arrangements. This has the potential to play a significant role in giving an incentive to companies to improve their environmental performance, leading to reductions in emissions, and in assisting Irish companies in successful international public procurement competitions.
I do not under estimate the scale of the environmental challenges we face, nor am I under any illusion about the uphill struggle we have in tackling our climate change emissions. The modest steps we are taking, which are undoubtedly an improvement on what has gone before, will not be enough to achieve the type of emission reductions we require. We must be much more radical. The introduction of a carbon levy next year will be an important step, but it is only one step in what has to be a fundamental multi-faceted approach, involving all Departments.
I have been campaigning on environmental issues for all of my adult life and I know what must be done. We have very little time to do it. It is worth making the effort even if it is at times frustrating. I retain the hope that we can work together on these very important issues on a non-partisan basis.
I will now comment on some specific aspects of my Department's Estimates. I will concentrate on the principal sectors within my Department's broad remit. In 2009, my Department will continue to advance the protection of our environment and ensure compliance with EU standards with regard to water, waste and species protection. My policies and programmes will be framed against the background of the state of the environment report, Ireland's Environment, published last week. This is the most comprehensive and authoritative assessment of our environment available.
The provision of €560 million for 2009 is the highest ever for water services infrastructure, representing an increase of 19% over 2008. Against the present economic backdrop this is the clearest possible statement by the Government of the priority we are giving to preserving and protecting our water resources as a key element of our environment——
——to meeting EU standards for drinking water and waste water treatment and to providing critical infrastructure that will ensure ongoing support for the economy. Good quality water and waste water services are vital for housing, industrial and commercial development. A recent Forfás report helps to identify key locations where improved water services will be needed to capitalise on potential investment in new jobs and services in the future. The record 2009 allocation means that the resources will be available to meet these challenges and to deal with the water services requirements of smaller towns and villages up and down the country.
This Exchequer support for water services is backed up by the greatly improved supervisory structures I have put in place to ensure an optimum return from the investment, both in terms of service to the consumer and environmental protection. I have provided the Environmental Protection Agency with the resources to ensure it can effectively carry out the new supervisory functions given to it under the drinking water regulations.
The agency and local authority response to recent lead excesses in certain water supplies is evidence of the effectiveness of this new regime. It also reminds us of the fundamental necessity to ensure that the quality of our drinking water supplies meets the highest standards. In that context, I recently announced a wide range of additional measures to secure universal compliance with drinking water standards, including accelerated progress with key schemes and immediate remedial measures to respond to potential risks identified by the Environmental Protection Agency. Drinking water quality data will also soon be available on local authority websites for everyone to see, in line with the commitment in the programme for Government. On the waste water side, discharges from municipal sewage treatment plants are now subject to licensing by the Environmental Protection Agency to guarantee conformity with effluent standards and to protect the quality of the receiving waters.
The Environmental Protection Agency is central to our efforts to protect and enhance our environment. The 2008 Exchequer provision for the agency of almost €35 million, together with its income from licensing and the environment fund, positions it well to continue to carry out its very important environmental functions on our behalf.
This year has seen major advances in the development of our built heritage programme. In addition to providing ongoing support for the civic structures and architectural conservation grants schemes, I have also been in a position to progress new funding programmes such as the places of public worship fund and the INSTAR archaeological research fund. The provision of more than €25 million for built heritage in 2009 will consolidate the progress made during 2008. Next year's allocation for the Heritage Council of more than €11 million will allow the council to progress key initiatives such as the buildings-at-risk programme.
The National Parks and Wildlife Service of my Department is responsible for the provision of front-line services for the protection of nature. It enforces habitat and species protection, in addition to providing expertise and advice to Departments——
——landowners, farmers, local authorities and other stakeholders in regard to protecting sensitive sites and species.
In 2008, I gave priority to work that will enable us to meet our obligations under the EU birds and habitats directives, through measures such as the reallocation of resources to high-priority areas and through putting in place pressing conservation initiatives. This will remain my focus in 2009. Substantial funding will continue to be made available for the protection of Ireland's wildlife and habitats, necessary research, surveying and monitoring, the bog compensation scheme and agri-environmental measures to protect specific habitats and species.
However difficult the economic transition we are experiencing may be, there are certain priorities that must always remain at the top of the political agenda. That is why, in the overall financial provision for housing in 2009, our focus is on utilising the very significant resources that will be available in a way that takes account of the needs of the most vulnerable and disadvantaged groups in society.
The total Exchequer provision for housing will be almost €1.66 billion in current and capital finance. By any measure, this is a very significant sum. It will allow for the progress made in 2008, when the needs of almost 18,300 households were met through the broad range of social and affordable housing programmes, to be further built on.
The Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Finneran, will soon announce details of an expansion of the existing local authority mortgage scheme. It will be a targeted and time-limited initiative to reflect the fact that access to mortgage finance has perhaps become an even greater obstacle to house purchase for first-time buyers than affordability.
The scheme has been carefully framed to offer a line of credit to households who have made the decision to enter the market at this time but who are unable to do so because of the credit crunch.
The scheme will facilitate, and not incentivise, the home-ownership aspirations of these households to avoid any distortional impact on the correction that is under way in the housing market.
I ask the Minister to yield to a very quick question. The Minister for Defence, Deputy O'Dea, made a commitment to me today that the Minister for the Environment, Heritage and Local Government would deal with the regeneration project in Limerick.
——facing local government over the coming years resulting from the downturn in the economic cycle. In working together at central and local levels to deal responsibly with the current economic challenges, the same principles I outlined in regard to the Government's budgetary strategy apply. Local authorities will work to ensure that they are in a good position to take advantage of the opportunities presented by the economy as it recovers during the period ahead.
Local government has benefited greatly from the additional resources devoted to it in recent years and it is now on a considerably sounder financial footing. Local authorities will spend well some €11.5 billion in 2008 in both capital and current expenditure. Even with the necessary adjustments arising from this budget, local authorities will still be very significant economic players locally and nationally.
I will announce my local government fund allocations to local authorities shortly to allow elected members and officials the time necessary to frame productive and prudent budgets for 2009.
This Government has had to make very difficult choices——
——in framing the national budget. Local authority members will face some of the same challenges as they seek to cope with the less favourable economic and financial position in their annual budget processes. It is important that local authority members of all parties show leadership at local level and do not shy away from the difficult choices required.
The fiscal position of the Exchequer is extremely difficult. We have had to examine carefully all spending lines and all potential revenue sources. Expanding the revenue base of local authorities is a progressive step.
The announcement in yesterday's budget that a new charge is to be introduced for non-principal private residences represents a significant step in the expansion of that base. What we have done is simple and equitable. It will share the burden more broadly and serve us well for the future.
A charge of €200 per annum is being introduced for all non-principal private residences. It will be levied and collected by local authorities and, on a conservative estimate, will yield €40 million per annum. The revenue stream will be used to contribute to the Exchequer funding to local authorities for operational costs. Liability for payment of the charge will lie with property owners and not with the occupiers.
I intend to ask the Government to approve legislation to give effect to this measure in the near future so the charge can be applied from 2009 and the House will have an opportunity at that date to discuss its details.
On the wider issue of local government reform, I have just concluded a process of public consultation on the reform options set out in the Green Paper. I am very pleased with the wide range of responses received. I am now considering those responses and am working, as a key priority, to finalise policy decisions in the Government's White Paper.
The measures I have outlined show the Government has responded well in these difficult times by taking immediate action to protect the public finances while at the same time ensuring environmental and economic sustainability and protecting the most vulnerable in society.
In spite of all the spin in recent weeks about protecting the vulnerable — we heard a great deal about this today — the budget is a blatant attempt to ensure that ordinary working people will bear the brunt of clearing up the mess the Government has made of the economy.
The comments of the Minister for Finance yesterday to the effect that people should pull together and play their part according to their means are cynical in the extreme. The hallmark of the economic boom of recent years has been inequality. The past decade has seen most families working very hard just to survive. Welfare recipients were just about keeping their heads above water while the elite and high rollers were facilitated in making millions of euro hand over fist. These were the developers and landowners, bankers, financial institutions, auctioneers and professionals associated with buying and selling houses and lending money to people who could not afford to borrow it in many circumstances. I refer to all those vested interests who are so close to Fianna Fáil and who, when the going got tough, have been so well protected by that party. In many ways, this is the real legacy of the former Taoiseach Bertie Ahern and the former Minister, Charlie McCreevy. This structural inequality is so deep-rooted that the junior partners in Government are either closing their eyes to its existence or have become so used to it they are not seeing it for what it is.
The people who are protected in this budget, far from being the vulnerable, are those who have always been the friends of Fianna Fáil and who have always done well out of budgets. Over the past ten years, it has always been the rich who have got the lion's share in budgets. This is exactly what occurred yesterday. I refer to special protection, which has facilitated the creation of so many millionaires, through ensuring there is as little Government interference as possible, with the lightest kind of regulation possible and the lightest demands possible in terms of taxation. That culture continues very clearly in the current budget.
Far from everyone playing their part, the budget targets those on low and average incomes and scandalously expects them to bail out the Government. Yet again, the rich, who have done so well out of the boom, are getting away with it when it comes to contributing to the recovery. The Minister, Deputy Brian Lenihan, has a downright cheek to call ordinary people to patriotic action while he allows the rich to avoid all responsibility. What about those high rollers showing some patriotism for a change? Yet again, they have got away with it.
The Government had many options available in regard to how it would balance the budget. The fair thing would have been to ensure that those who could afford it most and who have done so well in the good times would contribute the lion's share. The Taoiseach claimed this morning that the Government had no choice but to do what it did. This is clearly untrue. The Government had choices about where the axe would fall and it chose to spare the rich and instead inflict the cuts and pain on ordinary people. Why should anybody be patriotic in the face of blatant unfairness and inequality? Why did the Minister not seek patriotism from the very people who contributed to the economy's difficulties and who could afford to make sacrifices?
There are many areas where significant savings could have been made which would not have hurt the poor, if only there was the political will to do so, and my party leader, Deputy Eamon Gilmore, has already referred to a number of these. Lies are being peddled by Government representatives who say we had no choice but to do what we had to do because we had to balance the books. There were clear choices for the Government but it opted to let better-off people off the hook in respect of their responsibilities and instead targeted those who can least afford to make the sacrifice.
I wish to highlight a few of the areas where the Minister, Deputy Gormley, and his colleagues could have directed their attention in preparation for this budget. For example, they could have decided to do something about the high level of mortgage interest tax relief for landlords, which currently stands at over €500 million. While these people have done very well, have a steady income and in some cases own umpteen properties, the Government, through its policies, has decided to continue to facilitate them to become even better off. Although the economy is in difficulty, it has been decided to leave landlords alone, as untouchables in regard to tax, and to allow them tax breaks of over €500 million a year.
Contrast that with the treatment of people at the lower end of the scale — those in part-time jobs, in community employment or on training schemes — who the Government will now tax. Almost 800,000 people who are currently outside the tax net will be brought into it while landlords are left outside with their perks.
Another example of what the Government could have done is to have abolished tax relief for super private clinics. If this had been done, €1 billion would have been saved, which would have removed the burden from people on welfare and low incomes, who the Government sacrificed through its actions yesterday.
The Government could have done something about the extraordinary pension situation where extraordinarily generous tax reliefs are provided for those who have their own pension schemes. I am not talking about ordinary workers on ordinary incomes but, again, about the high rollers and those who have self-administered schemes, who are facilitated in putting together funds of over €5.5 million. The high rollers are the untouchables when it comes to pensions.
I acknowledge the Government made some move with regard to other pension products by putting a cap on the level of tax relief allowed for PRSAs and RACs. However, why did the Minister not go further? He could have reduced that cap to a level of €100,000 so people with earnings of up to that amount, who are doing reasonably okay, could continue to make pension contributions. However, there is no justification on any grounds for the State to subsidise people earning in excess of €100,000 in their pension contributions. If the Government had done this, if it had been bold in its decisions and if it had decided to be fair in the budget, it could have raised an extra €287 million from that measure alone.
There are of course other areas. For example, the Minister could have decided to close the loophole that allows developers to avoid stamp duty on commercial property. This would have brought in another €250 million if the Government had the courage to do it and if it was driven by the principle of fairness. Unfortunately, this was not the way chosen. Clearly, the Government shied away from the difficult choices it should have made. Instead of boasting about being brave and not shying away from choices, it absolutely shied away from the choices facing it. It could have decided to target those who were better off, who have done very well in recent years and who could well afford to make sacrifices. Instead, those people were left to their own devices. The Government decided that those who have done very well, the rich, would become the untouchables and instead it took the soft option of targeting those on average incomes and on welfare.
I want to comment about the appearance of the Minister, Deputy Eamon Ryan, on the news last night. I could not believe it when I listened to his comments on the budget. In that self-satisfied manner and style he has cultivated over the past year or so, he told people he was actually proud of this budget because it had protected welfare, education and health. The Minister needs to wake up and see what is going on. I do not know whether he is too busy pursuing his own agenda to see what other people have had to contend with in terms of the provisions of this budget but he clearly does not understand the extent of the cuts that have been introduced.
For example, the social welfare budget is approximately €1.5 billion more than the projected outturn for the current year. However, when one considers the likely significant increase in the number of claims from those being made unemployed or redundant, and all of the additional payments for the back to school allowance, MABS and the other extras which will undoubtedly arise, far from there being an 8.3% increase in the social welfare budget, the real increase in the Department's budget is less than 5%. In real terms, this breaks down into increases of between 3% and 3.3%. In the context where there is a current projected rate of inflation of 4.3%, far from welfare recipients making any progress, they will not even stand still. In real terms, they will be worse off next year than they are this year. By any standards, that does not represent protection for those dependent on social welfare.
Equally, I would tell the Minister, Deputy Eamon Ryan, to wake up and see what is happening with regard to health, where there is the loss of the automatic entitlement to the medical card for those over 70, increased accident and emergency charges, the halving of tax relief on medical expenses, increases in hospital charges and long-stay charges and an increase in the threshold for the drugs refund scheme. All of these measures will impose huge hardship on people on low incomes who have health problems. There are many people in that category and they are the ones who will bear the brunt of the cuts announced in the budget.
The same is true in regard to education. What has happened on the education front is shameful. At a time when we should recognise the importance of education and ensure people continue to receive good quality education so that we strive to reach European standards, the Minister has decided to increase the pupil-teacher ratio. That is an extraordinary decision. In the light of the campaigns that ran last year in that regard I hope the INTO will now give Fianna Fáil its answer.
Funding has been reduced to primary and secondary schools that are already struggling just to pay electricity and cleaning bills. School transport costs are up. Registration fees are up by €600. On that front also I refer to the abolition of child benefit for 18 year old students because that will have a huge impact in terms of education. I do not know if Ministers understand that some teenagers struggle to stay on in school because their families are poor. The withdrawal of child benefit from 18 year old students who are in school would put enormous pressure on them at a time when they are already finding it difficult. It is criminal to abolish child benefit for people in those circumstances. We will reap the rewards of that downstream in terms of a higher level of school drop out.
The changes in the budget have all the hallmarks of a Minister for Social and Family Affairs who has little interest in her portfolio and who cares even less. Let us examine some of the things that are happening. The introduction of the new employment levy means a pensioner with an occupational pension will be taxed on the part of his or her income that does not come from social welfare. A pensioner with an income from an occupational pension of €10,000 will have to pay €100 in tax. That claws back €100 of the extra €7 per week from his or her State pension. The income of such pensioners will rise by a mere 1.2%. That will go nowhere in terms of keeping abreast of the increases in the cost of living.
A lone parent receiving a one-parent family payment and rent supplement who has a part-time job earning €70 per week will lose from the budget. While such a person will gain €6.50 per week on his or her welfare payment, €2 per week for one child and a possible €2 on fuel allowance, he or she will have to hand back immediately €5 in extra contributions to her rent supplement. Out of a welfare increase of €6.50 there is an immediate clawback leaving a net increase of €1.50. That is shameful. The overall increase for such a person is 1.5%, which is nowhere near what is needed to keep pace with the cost of living. Things get worse for lone parents with dependants aged over 18. The measures announced to compensate for the loss of child benefit will not go anywhere near compensating such a person. If one does the sums on that, one will see that those people, undoubtedly, will be worse off.
Much of the detail of the budget did not come out yesterday. One had to read the small print. Having gone through the Budget Statement, the Labour Party has identified 30 new charges, stealth taxes, cuts and reductions in services that were included in the budget, which were largely kept hidden away in the small print. We have called those the treacherous 30. Those 30 treacherous cuts, individually and cumulatively, will have an extraordinarily negative impact on ordinary working families, people on average incomes and those dependent on welfare. Those cuts are a shameful indictment of the kind of inequality pursued by the Government over many years and which continue in these hard times. All of the cuts were specifically chosen by the Government to balance the budget. They are cuts that specifically target ordinary people. They represent an extraordinary betrayal of trust and an abandonment of the weakest. Far from protecting the vulnerable they force the vulnerable and those on average incomes to carry the can and bear the brunt of the mistakes made by the Government to bail it out while the rich get away with paying little in terms of contributing to sorting out the current mess. By any standards this is a shameful budget and members of the Government should be ashamed of it.
It is quite amazing how the Minister for Finance could keep a straight face when he described the budget as a "call to patriotic action". Where were the calls to the wealthy to be patriotic during the Celtic tiger years? Many of the so-called patriots, the tycoons and multi-millionaires who were pampered by the Government, are tax exiles who pose as great Irishmen and women when they are in this country but who hide their riches away in tax havens so they do not have to pay their fair share here. For those who were not tax exiles there were massive tax breaks throughout the terms of office of Fianna Fáil-led Governments over the past decade. The wealthy were allowed to avoid tax in a myriad of different ways while ordinary PAYE workers bore the burden, as they always have. Property was God and Charlie McCreevy was the high priest, followed closely by the present Taoiseach in his years as Minister for Finance.
The tent at the Galway races has been folded up, but the fat cats have not gone away you know. As in all recessions, wealth will be less conspicuous but the wealthy will still prosper while the mass of the people pay for the greed and mismanagement of the Ministers and their friends who wined and dined in that famous tent. Fianna Fáil-led Governments and their friends, the property speculators and developers, the stock-brokers and the bankers, have created this massive economic mess. Will they own up and pay the price? Not at all. It is the people who will be made to pay the price. Yesterday the first instalments of that price were extracted in what can only be described as a shameful and disgraceful budget. It is a budget of savage cuts in public services and widespread new charges and taxes that will penalise those on low to middle incomes. Yet, the Minister urges us to be patriotic. James Connolly wrote about patriotism: "True patriotism seeks the welfare of each in the happiness of all, and is inconsistent with the selfish desire for worldly wealth which can only be gained by the exploitation of less favoured fellow-mortals."
The levy of 1% on incomes below €100,000 per annum represents a significant increase in tax for the lowest paid. Even those on incomes below the tax threshold, those who pay no income tax at present, will be hit with this levy. It is totally regressive and inequitable. The Government trumpeted the miserly half of 1% pay rise for the low paid in the recent social partnership agreement. Now they have wiped it out and taken money away from the low paid. The same low paid families will suffer disproportionately from VAT increases, health charge increases, the cut in child benefit for 18-year old children, the cut-off of child care supplement at five and half years of age and the whole range of other hidden charges and taxes arising from the budget. That is on top of rising prices for food that are hitting poorer families hardest.
On the very day of the budget one of the largest hospitals in the country, Our Lady of Lourdes in Drogheda, turned away emergency medical and surgical cases because its accident and emergency department could not cope. Then we saw the minimal increase in the health budget for 2009, which is well below inflation and will lead to massive cutbacks across the health services. I have no doubt people will suffer and die avoidable deaths as a result.
Means testing for medical cards for older people are being reintroduced, another example of the totally incoherent health policy of the Government. The automatic entitlement for the over-70s was introduced with great fanfare and now it is being taken away, causing huge confusion, anger and distress to older people. My Dáil office and those of my colleagues and our party ard oifig have been receiving telephone calls all day from older people who are incensed by this decision. Sinn Féin said when this scheme was introduced that if the principle of universal entitlement was accepted for the over 70s, it should be accepted for all, but now the Government has taken a further step away from the type of universal public health care that we desperately need. At the same time people are being forced to pay higher charges for accident and emergency visits and for medicines.
Even before this budget, the public health system was being hit hard by cuts. Hospital services are being closed for weeks on end at the end of the year to stay within HSE budgets. Home help hours have been cut. In the north-east region there have been cuts in orthopaedic services and dermatology. I learned yesterday that there is a five year waiting list for dermatology in Tallaght hospital. Surgical beds at Dundalk are to be reduced from 32 to eight from next Monday. The axe continues to fall on services at Monaghan General Hospital where all acute medical services are scheduled to transfer to Cavan General Hospital by the end of next month.
During the summer two senior doctors were let go from Dundalk hospital, in Crumlin children's hospital there was a ward closure affecting children with cystic fibrosis, in Letterkenny General Hospital a 20-bed ward was closed for the summer and there was a scaling back of day services. These are only some of the cuts. I shudder to think of what awaits us in the public health services in 2009. What now of the 2007 Green Party manifesto which said "Access to appropriate health care is a basic human right"?
Of course the fat cats will not be affected by these health cuts. They will be able to avail of the private hospitals provided for them by the Government at taxpayers' expense. The cost to the Exchequer of tax breaks to developers of private hospitals rose from €1.9 million in 2004 to €10.6 million in 2006, which is information provided by the Minister for Health and Children. The cost in 2006 alone would have funded more than 6,000 extra full medical cards for a year.
The story is the same in education. The rise in class sizes and the cut in teacher numbers is a disgrace. Once again schools in less well-off areas will suffer most.
There are no measures to address the massive child care deficit in this country. As a result of the budget there will be fewer child care places and child care services here, already the most expensive in Europe, will rise even higher. To rub salt in the wound, the Minister has cut off the early child care supplement at five and half years of age.
It is a myth that spending on public services has been too high, a myth I want to blow out of the water. Cutbacks in public services are totally unacceptable. Before the budget we were already spending the third least on public services in the European Union, followed only by Estonia and Lithuania.
We said in our budget submission in 2004 that public goods are worth financing. They should not be treated as expendable and thus the most convenient place to cut. Well managed short to medium-term investment will often yield medium to long-term savings as other direct and indirect costs are reduced. The health service is the prime example of how cuts and underfunding, which were seen as short term, have had the unintended consequence of driving up costs and significantly reducing efficiency in the longer term. Thus, value for money is complex, can only be accurately gauged in the medium to long term and cannot always be equated with spending less. That is a lesson the Government refuses to learn and it is leaving a terrible legacy for the future.
The budget is very bad news for the Border region also, apart from all the other issues, including the fact that we will suffer most from the cuts in health spending. There is a major question mark over the completion of the N2-A5 route realignment from Monaghan town to the Border, which includes the proposed bypass of Emyvale, and Monaghan military barracks is to close, removing another local source of social and economic activity.
In the past decade the inequalities in this economy have been repeatedly identified and analysed and positive policies have been promoted by the Combat Poverty Agency. The budget, which will foster further inequality and poverty, is also the budget that has tried to gag the Combat Poverty Agency, a move I can only describe as breathtaking in its arrogance. The future of the Money Advice and Budgeting Service has also been put in doubt, a service that will be needed more than ever after this budget.
I emphasise what I said outside this Chamber. This budget is a recipe for emigration and the Minister, Deputy Brian Lenihan, will be standing at the airport to take €10 flight tax out of the emigrants' pockets as they queue up to leave. Sinn Féin rejects this budget as we reject the policies which fostered inequality, which led directly to this recession and which have now spawned this monstrous budget. We will oppose the Government, defend public services and promote policies that will create employment and revive our economy based on sound foundations. We will be here to challenge the Government to the end.
The backdrop to the budget is the serious financial situation that Ireland, like many countries, finds itself in. The events of recent times are, to use a phrase used in a different context, quite bizarre. Household names in banking have gone under.
In the first instance, the Government had to secure the stability of the banking system, which is fundamental to the operation of the country. Against the economic backdrop that the Government faced, its priority was to secure the economic and social future of the country. This was foremost in our minds in all we did in framing the budget. The Government wished to ensure that where choices were made it protected, as far as it could, those most vulnerable in society.
I heard reference to health spending, which has increased in Ireland in the past ten years by, on average, 8.8%, the second highest among OECD countries. Health spending in Ireland today accounts for 9% of national income, which is on a par with OECD countries, even though 11% of the population is over 65 years, whereas in the UK the figure is 18% and in some other European countries it is more than 20%.
We have a substantial base of funding of the public health system. The challenge is not merely to invest more funds as they become available, but to reform the manner in which we provide services, which has been the focus of much of what we have done in recent years. In particular, we must ensure we provide services that are quality assured and driven by patient safety. Nowhere is that more important than the area of cancer care. The outcomes for cancer treatment in Ireland are not as good as in other European countries, with the exception of the treatment of children's cancer, in which we are top of the class worldwide. The reason we do so well in the treatment of children's cancer is that we have centralised the treatment in one hospital, even though patients can receive services in 16 different places throughout the country. The diagnosis, initial surgery and treatment are planned at one designated centre. We see significant benefits from this system with the outcomes and we seek the same for the treatment of other cancers.
The Government faced spending choices between, for example, more investment in cancer services to ensure the eight designated centres will be in place as quickly as possible and other choices. All breast cancer services will be moved into the new centres by March of next year. During next year, Professor Tom Keane will be involved in moving prostate and lung cancer, the next two priority areas, into the eight centres. Professor Keane sought funding to assist with the transition of the services and to recruit the expertise we need to provide multi-disciplinary teams of physicians in the eight cancer treatment centres, including pathologists, radiologists, surgeons, medical oncologists and so on.
The Government has approximately €454 million available in extra funding for health next year. This amounts to 3.2% year on year and when the once off payments during 2008 are factored out, such as the long-stay repayments, the figure is 4.2%. Inflation is forecast to be 2.5% next year. The position is not the same as it was in 1987 and 1988 when the Government reduced spending on health by 3.5%. Faced with these choices, the Government decided to invest in the eight cancer treatment centres for next year and to invest in the fair deal. There is more than 20,000 older people in long-term care. Approximately half of those are in publicly funded facilities and have 90% of their care costs met by the State. Those not in that situation have approximately 40% of their costs paid for by the State. That is unfair and inequitable and places a heavy burden on the older person and his or her family. It causes great distress to many older people who have had to sell their houses or whose children have had to remortgage their houses to pay for their parents' care. That is why the fair deal is so important. It will ensure, for the first time, that those in publicly funded long-stay facilities and those in privately funded facilities are treated equally. It will greatly relieve the stress older people and their families associate with going into long-term care.
There has been a great deal of debate about medical cards. There are 350,000 people over the age of 70 in Ireland. Approximately 215,000, or 60%, of them have a medical card based on an assessment of means. They will not be affected by the decision that was announced yesterday. The other 40% of this country's over-70s — some 140,000 people — have a medical card not on the basis of their means but on the basis of their age. We estimate that 14,000 or 15,000 people from within this group will get a full medical card when means tests are carried out. A further 30,000 or 35,000 people will get a doctor-only medical card. That will mean that 80% of people over the age of 70 will not have to pay to go to the doctor. Of the approximately 70,000 people not in this category, those who earn less than €650 a week, or €1,300 a week for a couple, will be able to avail of a health support payment of €400 for an individual, or €800 for a couple, to meet the cost of going to the doctor. Approximately 5% of those over the age of 70 will be outside the limit threshold and will not get any support.
When we considered our options, we decided to prioritise the need to invest in cancer care and the fair deal. We are focusing on the recruitment of approximately 120 speech and language therapists for children with special needs who have been assessed as being in need of such services. We are helping the 53,000 families at the bottom of our society that avail of home help services. We are assisting the 10,000 older people who receive home care packages and medical support in their own homes. Such packages prevent them from having to go into long-term care. The decisions we had to make were not easy. I believe we made appropriate choices, in light of the resources available.
I remind those over the age of 70 who do not get a full medical card, or a doctor-only card, that they are eligible to apply for a hardship medical card. Some 70,000 people currently receive the benefit of that card. It is given to individuals on the basis of their circumstances. The hardship medical card helps people with particular illnesses or ongoing health requirements, for example. As a result of this flexible approach, 70,000 people currently avail of the hardship medical card. It will continue to be available to people over the age of 70.
Reference was made in the House this morning to the VHI. The VHI has informed me that contrary to what Deputy Gilmore said, there is no evidence that people over the age of 70 stopped subscribing to the VHI, to any great extent, when the over-70s medical card was introduced. The VHI has said that the proportion of its clients who are over the age of 70 has increased from 5.5% to 6.5% in recent years. The fact that a higher percentage of older people now have health insurance contradicts what Deputy Gilmore said in the House. There is no cross-over between the services available under the medical card and those offered by the VHI in 2001 and 2002. As the Taoiseach said this morning, the services in question were hospital-based. The only expense covered by both the VHI and the medical card was the inpatient charge, which one pays for a maximum of ten days when one is in hospital. If one has a medical card, one does not pay that charge. The VHI has told me that if anyone wishes to return to its plan P, to which approximately 25,000 people currently subscribe, they will not be subject to any kind of waiting period. It is important to clarify that the suggestion made by Deputy Gilmore this morning was incorrect.
The increase in the accident and emergency charge is one of the other health service issues mentioned during the course of today's debate. The increase will raise about €10 million per annum, which is a small amount when compared to the overall level of expenditure. It is obvious that medical card holders do not pay the charge. The purpose of the increase is to encourage many of those who come to accident and emergency departments for relatively minor matters to contact their general practitioners in the first instance. Those who are treated by GPs do not have to pay the accident and emergency charge. As I have said previously, Ireland enjoys very good working-day and out-of-hours general practitioner services. There is evidence in Ireland, unlike many other countries, to suggest that many of those who attend accident and emergency units would be better served by first going to general practitioners, who can deal with between 90% and 95% of our health needs.
I wish to speak about the charge for private beds in public facilities. It has long been Government policy that the taxpayer should not have to fund, or subsidise heavily, private beds in publicly funded facilities. Such facilities were paid for by the public purse and their staff are paid from the public purse. As insured patients have preferential access to private beds in public facilities, it is not unreasonable that the taxpayer should not be asked to subsidise such beds heavily. That is why we have been increasing the charge for such beds to private insurers over recent years. The charge is being increased by 20% this year. That will add 4% to the cost of private health insurance. Beds that are not available to everybody on the same basis cannot be heavily subsidised by the taxpayer. I do not believe anybody would regard that as being fair. The increase in the charge for long-stay care, which was mentioned in the House earlier, is in line with the increase in pensions over recent years.
The fundamental challenges this country faces are to restore the public finances and to protect employment as quickly as possible. If we do not succeed, this country's future challenges will be much greater than those we currently face. We need to prioritise the challenges I have mentioned. Fine Gael has suggested the Government did not go far enough with its proposals to reduce public spending. Deputy Bruton suggested health spending should be cut by a further €700 million next year. Quite honestly, I do not see how we could take such a level of funding away from the public health services in 2009.
The option of firing 10,000, 12,000 or 14,000 public servants is not open to us. I have said previously that I favour a redundancy plan that is based on a full analysis and assessment. In the past, we have had redundancy plans which were not based on a full analysis. If people are superfluous to requirements in one area, while shortages exist in another area, of course that will be dealt with in the context of the announcement made yesterday by the Minister for Finance. That has to be done on a planned voluntary basis. That is what will happen. Contrary to the myth that most of the new employees who have been recruited by the health service over the last three years are administrators, managers and other bureaucratic officials, over 80% of them are clinical personnel, such as doctors, nurses, physiotherapists, occupational therapists and medical social workers.
I said at the outset I wanted to share time with the Minister, Deputy Dermot Ahern. Before I give way to him, I wish to repeat that difficult decisions have to be made in the circumstances we currently face. When we make difficult choices, we have to ensure we stay in contact with those who are most affected by them. A helpline is available to the 140,000 people over the age of 70 who have an age-based medical card.
They will receive communication within the next fortnight. By the end of the 2008 calendar year, all of them will have been assessed to determine whether they get the full card, the doctor-only card or the cash payment.
They will not pay the health levy, as I said yesterday. I think the Deputy was at the press conference at which I made that clear. The Minister for Finance, Deputy Brian Lenihan, has indicated that the health levy will not apply to people over the age of 70.
I wish to make clear that the higher tax benefit at the marginal rate of tax, 41%, will apply to nursing home charges. That benefit will not be eliminated until the fair deal is in operation. When the fair deal is in operation, it would not be unreasonable to bring the tax benefit down to the standard rate of tax, in line with all other medical expenses, voluntary health insurance and mortgage interest relief etc. Those who have examined the Irish tax system from an equity point of view have said all citizens should be treated equally. Those who earn the most money should not get preferential treatment in the tax system, as far as benefits of this nature are concerned.
Deputy Ó Caoláin said the fat cats are getting too much. He went on to say everybody should be able to avail of universal benefits. That does not make sense. At a time when tough choices have to be made, we need to ensure we protect those most in need. That is what we sought to do in the health Estimates adopted by the Government for 2009.
It is hard to listen to Deputy Ó Caoláin. I read in the newspapers recently that Sinn Féin has €250 million stashed away in US banks. That has not been denied, so I suppose it is true. Perhaps the Deputy and his party could give us a bit of a hand and repatriate some of that money.
I could not believe my ears when listening to Deputy Flanagan earlier. He said that we need additional resources in the area of justice. At the time I had in front of me the pre-budget document Fine Gael published. On page 19 the party advocated freezing the voted Exchequer current spending for 2009 at 2008 levels, and then looked for 3% savings in every Department. How could we deal with the situation by introducing cuts as drastic as those advocated by Fine Gael? My Department has to live with a cut of 2%, yet Fine Gael is asking for more than 3%, even though it wants Exchequer spending frozen at 2008 levels.
As the Minister for Finance has underlined, there has been substantial investment in public services over the past ten years. This has made possible the very real improvements which have occurred in communities throughout the country. In facing up to the changed fiscal circumstances, we should not lose sight of the strong base from which we are operating. The range and depth of our public services would be the envy of many societies and contrasts dramatically with where we stood ten years ago. In the justice and equality sector, we have been able to increase resources by 8 to 10% per annum over the past four to five years. By any yardstick, this has been an unprecedented increase in the resources devoted to combating crime and addressing inequality.
The changed financial circumstances are such that this level of increase is simply no longer possible across the board. Against that backdrop, we need to renew our focus on driving value for money throughout the system, to pare back unnecessary administration or duplication and to focus on areas of greatest priority. That is what I have tried to do. Our greatest priority is the fight against crime. We need to secure the effective capacity of the organisations at the heart of that effort. That is why I have put the money where it should be. That is the choice I made, and I make no apology for it. I firmly believe that the communities we serve would expect nothing less. To govern is to make choices, to identity priorities and to implement those rational choices. In short, the funding is following the priorities.
The resources provided for the Garda Síochána in 2009 will make possible an increase in the attested strength of the force to almost 14,900, which is a full increase of 2,500 since the end of 2004. It is an increase of about 700 on this year. Notwithstanding the necessary restriction in public sector numbers generally, it is our intention to take on 400 new garda recruits during 2009, in addition to the almost 1,100 already in training. An easy option would have been to freeze recruitment, as Fine Gael did when last in Government with the Labour Party, and to compensate by increasing overtime expenditure. I rejected that option. Instead, the Government has taken a strategic view that a more desirable and sustainable approach is to build up the basic capacity and strength of the force. I am convinced that this is the right option and will be seen as such by communities who rightly demand an increase in visible policing in their neighbourhood areas.
While we have reduced the Garda Síochána overtime budget, a substantial allocation of €80 million — or 4.6 million overtime hours — is being retained. Crucially, €21 million is being ring-fenced for Operation Anvil. This will make it possible to continue with a wide range of intensive policing activity, with a particular emphasis on tackling organised gangland crime. There is no question of the Government going soft on the godfathers of crime and this level of ring-fenced funding is a clear indication of our steely resolve.
There are a number of Garda ICT projects to be rolled out, including the national digital radio service and a new major case investigations system. We are also providing €10 million to begin outsourcing the safety and speed cameras in line with the road safety strategy, and 600 of these cameras will be rolled out by the middle of next year. The budget for the Criminal Assets Bureau is up 20% and an overall allocation of €18 million is being made for State forensic and pathology services. The best possible technical and forensic insight to detect and prosecute crime is essential. This funding package supports the new legislation that I will be bringing forward in the not too distant future.
As I am sharing time, I will leave it at that. Now that Deputy Flanagan is here, I must ask how he can ask for a 3% cut in spending on top of freezing Exchequer funding at 2008 levels and then ask for more resources for the Garda out of the other side of his mouth? That is what he is at.
Deputy Bruton is in here every day calling for less spending, yet his colleagues are now calling for more spending. They are talking out of both sides of their mouths. They are hypocrites.
In what was undoubtedly going to be a very difficult budget, one of the priorities was to make sure that spending increases would be possible in social welfare, health and education. While the increases may not have been what the Minister, Deputy Harney, and the Minister, Deputy Batt O'Keeffe, had hoped for in their Departments, it was important for the Government to give a signal that those were the areas in which we wanted to prioritise any spending increases. Other Ministers, including myself, have to do whatever we can to make cuts in spending to try to facilitate that protection of crucial social services for our people.
Our Department exceeded our targeted cut in the administrative area. The overall current and capital spending reduction was around 7%. While that is not something we welcome, we now have the opportunity to provide economic development and good fiscal management. It was right for the Department to manage that reduction and to look for efficiencies in order to deliver the same level of service, while cutting our overall Vote at the same time. Around €366 million has been provided for the current side, although much of that includes money which is being transferred through the account, such as television licence fees. On the capital side, €134 million has been provided for. This still allows us to provide an important stimulus package to several crucial industrial areas in the development of our economy. I would hope that the capital amount would be augmented by a certain amount of carryover from budget overruns in sections that do not use their full allocation. That will help us in meeting our key projections for 2009.
Our own payroll budget is slightly out of line, but this is because we have had a transfer of resources from other Departments. We have taken on responsibilities that were previously in the Department of the Taoiseach. The overall administrative budget decreases by 8%. This will put pressure on the Department to manage its affairs in a way that delivers real efficiencies. The State agencies that are tasked with delivering many of the projects will find it difficult because of the tightness on the current expenditure side. However, I believe they can do it. In this respect, the Government made a strategic decision that it was better to proceed with a development of a single national fisheries authority, maintaining our regional offices and structures, but not the regional boards as they currently exist. That strategic decision is one for which I will have to legislate in the establishment of a new national fisheries authority.
One of the areas in which our Department has real potential to help us all through these difficult times is to stimulate new economic development and create new jobs. We cannot concentrate on the contraction or management of financial resources alone. We must develop a new economy which delivers new jobs and new revenue to pay for the social services that will be needed in future years. This is our central role. I regard my Ministry as a crucial economic development Ministry and I see a potential to develop new economies, particularly in the area of energy and broadband services. In that regard I was pleased that the Minister for the Environment, Heritage and Local Government, Deputy Gormley, was able to announce the Cabinet decision to increase the target we are setting for development of renewable electricity as outlined in this year's publication of the all-island grid study. It behoves all State agencies, the regulator, the sustainable energy office and other Departments to row in on a co-ordinated approach to meet those targets. The difficult economic climate and credit crisis will make it difficult to allow for capital allocations and capital spending in this area. We are facing difficulties and a significant challenge but I am committed to rising to this challenge to create new jobs in the energy industries and to provide cheaper and cleaner electricity to power our economy.
I am pleased that funding of €71 million has been made available to fund sustainable energy and energy research programmes. Sustainable Energy Ireland will be the key agency. I hope to strengthen its resources and its operational structures to allow it to deliver an ever-expanding budget. The agency has been in existence for five or six years but it needs to have strengthened structures in recognition of its increased workload. The home energy savings scheme was launched last year on a pilot basis and it appears to be proving very successful. It is very popular in the areas of the country where it has been introduced. It has been very successful in economic terms as the analysis shows that energy efficiency, in particular insulation of existing buildings, gives the quickest and best economic return. There is a return to the State in terms of lower emissions and lower fuel use but also a return to the householder in terms of cutting back household bills at a time when gas and electricity prices are very high. I am looking forward to expanding that programme and to running it in conjunction with a rapidly expanding warmer homes scheme.
We will seek an innovative approach from the public utilities to assist in the delivery of energy saving measures to low income households so that they can cut back on their bills. This has to be taken in tandem with the work being carried out by the Department of Social and Family Affairs and the Minister at that Department, Deputy Mary Hanafin, in the area of fuel poverty. We wish to help people not only in fiscal terms but also to reduce their use of electricity which is the best long-term solution to the issue of fuel poverty.
My Department's other key development in the energy area will be publication of and action taken on the national energy efficiency action plan. Particular attention will be focused by my Department, with my colleagues in other Departments, on how the State can achieve real savings in our classrooms, hospitals, prisons and Garda stations. We must lead in the efforts to save money for the State. The investment in energy insulation and efficiencies within our offices and Departments is one of the best ways of delivering efficiencies. This public sector programme, in which I hope Sustainable Energy Ireland will take a lead role, will be crucial. I will be working with my Government colleagues to see what real programmes can be delivered collectively to reduce our energy use.
I refer to continuing investment in expansion in new areas. The ocean energy unit was successfully established in Sustainable Energy Ireland this year. As part of the ten-year plan set up a number of years ago, this unit must move into the launch of prototype devices and we must expand into new areas. I appreciate the Minister for Finance has seen the sense of the capital tax supports available for businesses to help them in that regard.
The key developments in the communications area will be the delivery of our national broadband scheme and of high speed broadband to secondary schools to allow students in those schools to avail of the fastest broadband speed. I refer to the continuing work of the national digital research agency in developing Ireland as a real centre for the global knowledge economy.
Given the current spending restrictions, it will be difficult to deliver in other core areas of my responsibility. However, key projects such as the remediation of existing mine sites, the seabed survey, the provision of TG4 and the fisheries boards will continue to be provided for and are a crucial part of the work to be undertaken.
I wish to share my time with Deputy Simon Coveney.
This is a very important debate on the budget which has placed the most difficult tax burden on the people of Ireland since the foundation of the State. The Fianna Fáil part of the Government and what is left of the Progressive Democrats part of it have been in power for more than 11 years. They have been managing the affairs of the State for many years and they had prior knowledge of our economic situation but refused to act earlier. They went into a massive post-election spend which continued despite the gathering of economic storm clouds. They cannot escape the fact that under their leadership the economy has become less competitive and less efficient and that jobs are being lost left, right and centre as a result of Government policy.
There should have been no cutback on capital expenditure on transport. A well functioning, efficient and competitive transport system is the key to Ireland's economic recovery. The World Economic Forum competitiveness report published last week listed inadequate infrastructure as the most problematic factor for those doing business in Ireland. It does not make sense to cut back on expenditure on transport infrastructure. The quality of our transport infrastructure has dropped a number of places over the past year. Ireland dropped from 55th place in 2007 to 64th in 2008 out of 134 nations in the quality of overall infrastructure. The quality of roads has dropped ten places to 70, air transport infrastructure has dropped to 46th place and port infrastructure has remained unchanged at 64th place. If we want to make an economic recovery we must continue to invest in transport infrastructure. The cutbacks in this transport programme are unacceptable to everyone.
A number of significant key Transport 21 projects will be delayed. The target of 2015 for the delivery of these programmes is in doubt. We know that some of them will not be constructed. The Government must ensure that the objectives of increasing our competitiveness can only be met by an improvement in transport infrastructure.
I wish to respond to some of the issues raised in today's debate. The Minister for Health and Children, Deputy Harney, stated that Deputy Bruton has been making a claim which I know he never made. I refer to the words of Deputy Bruton when he dismissed absolutely and utterly the claims by the Minister for Health and Children. It seems the Minister has neither mandate nor party at this stage and she is lecturing us about our economic policies. The Minister for Health and Children has repeatedly claimed that Deputy Bruton wants to cut the health budget by €700 million and she equates this to the closure of three hospitals or the sacking of 10,000 people. However, that is false. What Deputy Bruton said, and Fine Gael repeats, is that we would not have sanctioned the increases of €224 million in the HSE pay bill, including the massive bonuses and perks for the underperforming HSE managers. Unlike the Government, Fine Gael would have delivered savings in the national drugs and pharmacy Bill by allowing pharmacists to substitute generic drugs for their branded equivalents. Fine Gael would have set out a concrete and specific plan to cut the number of administrators in the HSE who have been effectively redundant for four years since the amalgamation of the old health boards. Fine Gael reforms would not impact on front line services.
The Minister, Deputy Harney and the rest of the motley crew in Government have visited on the elderly of this country a most disgraceful and shameful withdrawal of rights they were given. Some years ago I was walking down a street in New York and noticed a number of senior citizens in ragged clothes begging on the streets. I thanked God that would not happen in our country because we value our senior citizens and give them a place of honour in our society which we will not take from them. That is not the case today under the Minister, Deputy Harney, Fianna Fáil and the Green Party in coalition.
What price has the Green Party paid for its carbon budget? What price are the elderly paying? Some 125,000 senior citizens aged over 70 will have their medical cards reviewed. Some 125,000 visits to homes, hospitals or nursing homes will have to be made by community welfare officers who will ask the sick and elderly what income and property they have and determine whether they are entitled to the benefit of the medical card, which most of them have had for at least seven years. That means the youngest of those who received the medical card seven years ago are aged 77. People in their late 70s, 80s, 90s and, please God, some who have lived to 100 years of age will be means tested. Many are seriously ill, extremely worried, suffer from Alzheimer's or cannot even talk. This is what the Government is doing to them and it is an appalling, shameful and disgraceful way to act.
The mark of a just and caring society is how it treats those who are coming into the world — the young — and those who are leaving it — our elderly who are seriously ill or are, unfortunately, heading that way, as we all, eventually, will. This is an important milestone in our society, that the Government is targeting the most vulnerable for these cuts. It is inexcusable. The older people who are ringing my office, and those of the Minister, Deputy Harney, and the Minister of State, Deputy Devins — if the Minister, Deputy Harney, has any staff left — are saying they will not wear it, they do not want it and that it is unacceptable. The Minister can say what she likes about the numbers of people, the 15,000 here and 20,000 there, but every old person is angry and extremely concerned about their future when we should be giving them the place of honour in our society to which they are entitled. They have paid their dues and taxes, reared their families, and the Government is robbing them. I do not know how to describe the Government. It is like Scrooge, taking money from the pockets of the poor elderly people of our society. It is an unacceptable, disgraceful and shameful situation.
That leaves us with this budget which takes €2 billion from the pockets of our taxpayers and the people over 70 who have pensions. It is easy for the Minister of State, Deputy Devins, to smirk and smile, but those people are sitting in their homes saying they were not paying tax last week but from 1 January they will pay the 1% levy. The Government is taxing those incomes again. Elderly people tend to worry a lot. We all know that, and the Minister of State, Deputy Devins, has a medical background. Elderly people would be very concerned about this and worry disproportionately. The impact on them will be much more severe than on younger and more able people. This must be reconsidered.
One of the points made about this benefit was that it was done in such a way that the medical doctors put a gun to taxpayers' heads and charged €600 per medical card for over 70s. A far better way of tackling this issue would have been to tell the doctors this is not good enough and it is costing too much, demand a reduction and negotiate those fees back down. That would have been an acceptable starting point. What the Government has done is unacceptable.
The rhetoric from the Green Party is sad because its proposal contained many good points, but also many poor elements, with which Deputy Coveney will deal in a moment. I will deal with the transport issues to which the Minister for the Environment, Heritage and Local Government, Deputy Gormley, referred. He spoke about what they will do in transport, specifically the removal of pinch points on the quality bus corridors, integrated ticketing and real time passenger information at bus stops and mobile telephones. He said: "Most people who stand at a bus stop know the frustration of not knowing when the bus will come." Dozens of buses were on the road between Dublin and Lucan and Celbridge for many years but are not coming any more. They were run by the private Circle Line. There was a very good system in place but unfair competition from the taxpayer-subsidised Dublin Bus put Circle Line out of business.
Under the Green Minister we had convoys of buses, three Dublin Bus buses in front of a Circle Line bus, three after it and three waiting at the bus stop, all by virtue of the wealth we give Dublin Bus to run an inefficient and dominant system. The quotes in the Minister's office make it clear that it has abused it dominant position in the marketplace to put out of business decent and honourable people who ran a very good bus service. It does not matter whether a Dublin Bus or a Circle Line bus comes as long as a bus comes, but if the Government does not open the bus market in Dublin to competition, the buses for which people wait will not be provided because of the Minister for the Environment, Heritage and Local Government, Deputy Gormley.
All the big ideas are there. If we have buses on the streets of Dublin we can provide people with the routes, but the Minister and the Government are prisoners of Dublin Bus and the unions. They are afraid to open the market, afraid to have competition, and the commuter suffers most of all. I challenge the Green Party to provide the buses. I challenge it to have the guts to stand up to Fianna Fáil, Dublin Bus and all the vested interests that are stopping people having a real choice.
The cuts in transport are severe and serious. Public transport is down 5% and roads are down 7%. Road safety is a critical issue but by way of thanks for the good work done by the Road Safety Authority, its budget is being cut by 9%. Regional airports are being cut by €13 million. Rural roads are being cut. It goes on and on. This is a shameful, disgraceful Government that has no guts and did not tell the truth when it could have, before the last election and immediately after it, and did not act when it could have and when it knew it had to during the summer. The Government has acted too late, tackled the wrong people and focused on those who are weakest and least able to fight. Even their health is being taken from them. As was said about former Minister Ernest Blythe in the 1930s, people will remember this budget for a long time.
I am glad of this opportunity to speak and I thank my colleague for a few extra minutes. I want first to make some general comments on the budget. I struggle to understand the Government's logic in what it is trying to do in this budget. Surely the primary objective in a budget in a time of real difficulty and crisis is to try to address the cause of that crisis. Surely the primary objective in a budget is to try to address the problem which has led us into this position. Despite the fact that Minister after Minister stands up and makes the direct link between the credit crunch, the banking crisis, world economic woes and the recession in Ireland, other European countries which face the same conditions are not in recession and are certainly not in the kind of debt to which we are signing up this year. We are borrowing €13 billion to stay afloat this year, for a country that spends just over €50 billion per year on current expenditure. The Government is far too expensive and we can no longer afford it. What did the Government do to address that issue? It increased current expenditure by 3.5% and slashed key capital expenditure that could have ensured future prosperity in Ireland in terms of driving innovation and competitiveness and stimulating economic activity. The Government is going to pay for the excess expenditure by taxing people at every turn. Whether one is a parent putting one's child on a school bus, a worker parking at one's place of work, buying petrol or going to hospital, one is charged at every turn.
We have heard a lot of nonsense from the Government that this budget is primarily about protecting the weak, that is, those on low incomes. Can the Government explain how increasing the VAT rate or introducing a 1% levy on all income, no matter how small, except social welfare payments, protects people on low incomes and those who are struggling? How does imposing an air travel tax on families who save up to go on holidays protect families on low incomes?
This is a budget that has no new thinking behind it. It is about a Government bailing itself out for its irresponsible over-spending on the back of a construction boom that could not last forever. Where is the new thinking in this so-called radical budget?
The Government built it up for weeks beforehand. It was brought forward by seven or eight weeks. We were expecting some new initiatives or ideas yesterday that would give people hope that the Government was doing something definite to create jobs and slow down the unemployment snowball that is growing by the week. However, none of that is here. Instead, the Government is damaging economic activity. This budget will reduce what people spend. They will have less money in their pockets because they are paying more taxes. The Government is damaging the potential future for many small businesses and is adding to inflation and the overall cost of living in Ireland.
How does the Government think our marketplace looks to a foreign company considering Ireland as a potential place in which to invest and create employment? Does the Government think Ireland is more attractive in the wake of this budget? I do not think so. Ireland's success in the past two decades has been based primarily on competitiveness, a high quality education system and low tax rates but all of those elements are now being undermined by a budget which is purely a money-grabbing exercise. Families across the country are being asked to bail out the Government for its disastrous economic management in the past three years in particular, if not before then.
I am particularly interested in the carbon budget, of which the Government makes a big play. It is held up as an example of the green side of Government, about which we have heard from the Ministers, Deputies John Gormley and Eamon Ryan, today. However, if one compares last year's carbon budget figures to this year's figures, one sees immediately that the numbers do not tally. In both carbon budgets, the figures provided for 2006 are different, despite the fact that 2006 was a year for which we had hard and fast figures. In areas such as carbon sinks, which includes, for example, the contribution of forestry to reducing our greenhouse gas emissions, the figures do not tally. I seek an explanation from the Government on that issue.
What is blatantly obvious from the carbon budget is that the country is going in the wrong direction, and dramatically so. The projections in last year's carbon budget indicated that by the end of 2012 we would have net carbon emissions of just over 65 million tonnes. That figure is now over 69 million tonnes. The whole point of setting up a carbon budget was to examine directional trends in terms of us meeting our climate change and emissions commitments. Unfortunately for the Government, the structure it set up is proof that the national climate change strategy is not working. The Government's commitment to reducing greenhouse gas emissions by 3% per year is a joke at the moment.
The Minister said there has been press coverage to the effect that Ireland's greenhouse gas emissions have increased in the past year. Our emissions have increased but the Minister tries to massage the figures by introducing increases in forestry in Ireland, which do not even count yet in terms of the targets we face under our Kyoto Protocol commitments and those made to the European Union. Let us be honest with people. We are failing the climate change challenge at the moment.
I agree with much of what the Minister said earlier. He outlined the longer term strategy for meeting the challenge of reducing our emissions. It is important to say, at this point, that this is not a voluntary exercise. We are obliged to meet the commitments we make in Brussels and elsewhere. If we do not meet those commitments, we are fined. In this budget, the Government has set aside €50 million next year to pay fines for not meeting our emissions targets. That equates to almost €1 million per week from taxpayers because we are not meeting our targets. This is not just about a green agenda or something about which only environmentalists should be concerned. The fact that our climate change strategy is not working is costing every taxpayer in the country money. This is despite the fact that we supposedly have a green tinge to Government, with two key Ministries held by Green Party Deputies.
I wish to focus on a number of areas to which the carbon budget refers, particularly energy. I have a lot of time for the vision of the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, in terms of where he wants to take Ireland from an energy point of view. I welcome the fact that the Government has made a new commitment to 40% of our energy coming from renewable resources by 2020. It will be a tough task to achieve, but I welcome the ambitious thinking. The ESB is providing real leadership in this area, which should be acknowledged.
However, progress in the energy sector alone will not enable us to meet our international commitments because this is the traded sector in the European Union in terms of emissions targets. That sector has nothing to do with the Government vis-À-vis the commitments it makes. Post 2012, the large energy generators will have to purchase carbon allowances, which is what will drive their change in behaviour. In that context, we do not need to worry about the energy sector, apart from our overall responsibility to encourage change. That sector is not relevant in terms of meeting our commitments and avoiding fines. Even if 80% of our energy was generated from renewable sources, that would not solve our fundamental problems. It is the non-traded sector for which the Government has responsibility. Transport, residential, small industry and agriculture are the major areas where we need big ideas and those ideas are not coming forward. Let us not kid ourselves that the big idea from Government, led by the Minister for Communications, Marine and Natural Resources, Deputy Eamon Ryan, in terms of building turbines onshore and off-shore and creating energy and emissions efficient generation solves our climate change commitment problem although it is a good thing. We need to hammer this home and make it much clearer in our carbon budget. The carbon budget is about measuring the Government's performance as well as the country's performance in terms of emissions. We need far greater focus on the non-traded sector.
Transport is a major problem area, but it is a big area of opportunity if we had really ambitious thinking from Government on it. A target was set in the carbon budget this year that by 2020 10% of our road fleet would be made up of electric vehicles. Will the Government examine what other countries are doing? A target of 10% by 2020 is miserable in terms of making the switch from petrol, diesel and biodiesel run vehicles to electric vehicles. Let us get serious about promoting electric vehicles in Ireland.
Look at what they are doing in Israel. They are trying to switch an entire transportation system from carbon based fuels to electricity. They are doing it for political reasons as well as economic reasons because they do not want to rely on oil. Israel is not the only country doing this. Denmark is also doing it. Because Ireland is an island, it is an ideal place for this. For the first time, companies are offering viable solutions. Let us embrace these ideas and technology and make it happen. Whether it is a 5% or a 7% biofuel mix will not make the dramatic change we need in the transport sector to meet the commitments we have made. We need far more radical thinking in terms of our responsibilities, merging the transport and energy areas.
The energy by-product, if one wants to call it that, of a transport sector heavily reliant on electric vehicles is that if everyone in the entire country plugs a car in at 12 o'clock at night to recharge it we will have significant demand for electricity at 4 o'clock in the morning which we do not have at present. The big problem for energy generators in Ireland at present is the huge spike early in the morning when people get up and have showers. It then dies down, picks up again at lunch time, dies down and picks up again when people go home after work.
It is difficult to integrate inconsistent wind energy, and wind energy is inconsistent because it only blows approximately 40% of the time, often when we do not need the power. We need to find a way of storing electricity we can use later in the day or in the evening. One way to do so is to link transportation to electricity so people plug their vehicles in at night, in the afternoon or late in the morning when there is not a high demand for electricity. This would balance the curve of electricity demand which would be of major benefit to EirGrid which has responsibility to manage the electricity grid and to everybody proposing to build a wind farm, a tidal turbine or wave bob. Let us have more ambitious thinking which is what we need but which is not at all evident in the carbon budget or in yesterday's budget.
I agree with a great deal of what my ministerial counterpart has to say on energy. However, I am hugely critical of his and his Government's performance in terms of the IT sector. How many times have we heard Ministers state that they want to create a knowledge economy in Ireland on the back of a world class information technology infrastructure? What is the Government's response? A 25% cut in the money it plans to spend on information and communications technology programmes. This is a reduction from €53 million to €40 million. The Minister expects us to take him seriously when he states he will put high speed broadband into schools throughout the country. He has no credibility on this issue.
We are cutting back in the most crucial infrastructural area for IT and knowledge economy development in Ireland in a dramatic way in this budget. This is a major mistake in terms of the type of jobs we want to create over the next one, two or five years. We will regret it. It reflects the lack of priority, broad thinking and understanding of what the economy needs to reignite.
I wish to share time with Deputy Brendan Smith.
Social welfare has been prioritised in this budget because next year total funding for the Department of Social and Family Affairs will be €19.6 billion. This represents an increase of €2.6 billion or 15.5% over the Estimates allocation for 2008. More than 1.7 million people and their dependents will benefit from this expenditure, including 440,000 pensioners, 345,000 ill and disabled people, more than 80,000 carers, 30,000 low income working families availing of the family income supplement and more than 580,000 families that receive child benefit payments.
The budget includes provision for an average live register figure of, unfortunately, 290,000 next year. This compares with an average of just under 210,000 in the nine months to the end of September this year and an expected average of 220,000 for 2008 as a whole. The Government is doing everything it can to keep unemployment as low as possible but it is prudent in the current economic environment to set aside funding in case it continues to rise.
Providing for the expected increase in the live register alone accounts for €1.25 billion of the planned increase in spending next year. In addition to this, provision has been made for €515 million worth of improvements in social welfare rates and qualifying conditions. At a time when it is essential that public expenditure be strictly controlled in the national interest, this increased provision for social welfare is an unambiguous statement of the Government's intent to protect the vulnerable and less well-off in society.
As Deputies will appreciate, there was no easy way to achieve the required savings. Consideration had to be given to a wide range of changes and very difficult decisions had to be made. Neither I nor the Government have taken these decisions lightly. In total, the new expenditure control measures contained in the social welfare budget will amount to net savings——
——of €124.9 million next year when compensatory measures are taken into account. Of this, €72.7 million is accounted for by changes to the social insurance system.
As Members know, Ireland's social welfare system is based on two quite different types of entitlement, a social insurance system for people who have paid sufficient PRSI contributions and a social assistance system for people without adequate contributions who have little or no household means of their own.
Social insurance is intended both to enable people to insure themselves against adverse life events such as illness or unemployment and to provide for their State pensions and other benefits, through contributions to the national social insurance fund. Social insurance benefits are not means-tested. Instead, entitlement depends on having paid the required number of PRSI contributions relevant to the benefit one wishes to claim.
For the past 11 years, the social insurance fund has been in surplus, with more than sufficient income to the fund to cover the payments being made from it each year, without the State having to provide a subsidy. However, that is changing. As a result of further increases in the live register, expenditure is expected to exceed income to the fund by over €200 million this year and approximately €900 million next year. Although these current deficits can be met from the accumulated surplus, it looks likely that the Exchequer may yet again have to subsidise expenditure from the social insurance fund within a few years. In that context, it is appropriate to look at some of the instances where people with a very limited or distant contribution record have been able to qualify for very significant benefits, regardless of their household income.
Currently, people who have paid just 52 contributions in total can qualify for jobseeker's benefit, illness benefit and health and safety benefit. This means, for example, that migrants or young workers who have only worked here for one year are entitled to claim jobseeker's payments for 12 months, without having to satisfy a means test. This will change from next January, when the number of required paid contributions will be doubled to 104 contributions for new claimants.
A further anomaly that exists at present is that some people, who were previously working part-time, can receive a higher rate of payment from these schemes than what they were actually earning while at work. Again, this is considered to be inappropriate and a disincentive to employment. Therefore, from next January, this situation will be addressed by increasing the earnings thresholds which apply to the reduced or graduated rates of payment from €150 to €300 per week.
At present, it is necessary to have made 13 paid contributions in the relevant tax year to qualify for illness benefit. However, this condition does not exist for jobseeker's benefit, with the result that people who may not have paid PRSI contributions in the past number of years can qualify. Again, it is considered that this position does not adequately reflect the contribution-based rationale for social insurance. Therefore, from next January, new claimants for jobseeker's benefit will be required to satisfy the same conditions as those on illness benefit and must have paid 13 contributions in the relevant tax year.
The other two changes being made to jobseeker's benefit relate to the duration of the payment. At present, people who have 260 or more paid social insurance contributions can receive jobseeker's benefit for up to 15 months. As of today, this is being limited to 12 months for current claimants with less than six months duration on the scheme, as well as for all new claimants.
Where the claimant has less than 260 paid contributions, the maximum duration of jobseeker's benefit will be nine months, instead of 12 months, if the claimant currently has been in receipt of benefit for less than three months and in respect of all new claimants.
New claimants for jobseeker's benefit will in future have to have paid a total of at least 104 contributions to the social insurance fund, with at least 13 of these paid in the relevant tax year. The rate of payment will more closely reflect what the individual was earning prior to becoming unemployed and the duration of the payment will be either 12 or nine months depending on the number of social insurance contributions they have made in the past. Taken together, these changes to jobseeker's, illness and health and safety benefits are expected to generate €72.7 million in savings next year and €119 million a year from 2010 on.
Those who will be affected by these changes will be able to claim jobseeker's allowance or supplementary welfare allowance instead if they have limited means.
The maximum rate of these two schemes is paid at the same rate as jobseeker's benefit.
The final social insurance change involves a new limit on the duration of illness benefit payments. Illness benefit was intended to provide income replacement for insured persons during short spells of incapacity or illness, while other payments are available to people who cannot work long term because of a disability or a medical condition. However, there is no limit on the amount of time for which illness benefit can be paid to people who have more than 260 social insurance contributions. Over 28,000 persons have been receiving the payment for more than two years. As a forthcoming OECD review notes, "paying sickness benefit without time limitation is very unusual across the OECD, for good reasons". The report points out that there is a great risk that people in such circumstances will never return to the labour market.
Accordingly, the Government has decided to confine entitlement to illness benefit to two years', 624 days, duration for claims arising after 5 January 2009. Persons currently in receipt of illness benefit will not be affected by the change. Some 8,500 persons on illness benefit pass the threshold of two years' duration on illness benefit each year and such persons are likely to be affected by the proposed ceiling on duration.
Approximately two thirds of these will satisfy the medical criteria to access either invalidity pension or, subject to a means test, disability allowance. Medical criteria for both of these schemes require certification that the condition is likely to last for a further 12 months. This measure will not result in any savings in 2009 or 2010, but should save up to €101 million in a full year after the two-year rule has fully come into effect, which will not be for a number of years.
Changes will also be made to the disability allowance. Currently this can be paid from age 16 to young people with a disability and is worth approximately €200 per week. Domiciliary care allowance is a payment to the parents of children who have a severe disability requiring continuous care and attention which is substantially in excess of that normally required by a child of the same age. It is worth approximately €300 per month.
The National Federation of Voluntary Bodies is an umbrella organisation for 63 voluntary agencies who provide direct services to people with intellectual disabilities. Its members account for in excess of 85% of the country's direct service provision to people with intellectual disabilities. Its submission to the Department's review of the disability allowance argued:
At present the age for receipt of disability allowance is 16 years. We deem this to be too young. This does not give an incentive for a child to pursue work or education options. Subsequently a child may fall into the dependency trap too early. Instead parents should receive the domiciliary care allowance for the child until they are 18 years old.
The Government has decided to implement this change. The age of eligibility for entitlement to disability allowance is being increased from 16 years to 18 years for new claimants. This change will not affect existing 16 and 17 year olds on disability allowance.
As an alleviating measure, the age for entitlement to the domiciliary care allowance is being increased from 16 years to 18 years. It is estimated that a weekly average of 539 persons will be affected by this measure in 2009 and 2,115 in a full year. These changes are expected to save €5.6 million in 2009 and €16.6 million a year from 2010.
The changes being made this year to illness benefit and disability allowance are intended as only the first steps in the modernisation of the illness and disability schemes. A comprehensive approach will be developed when the reports of the current review of the disability allowance scheme and the OECD review are finalised and the Department has had the opportunity to assess them fully.
The final expenditure control measure relates to the rent and mortgage interest supplements. All recipients of these payments are expected to make a personal contribution towards their accommodation costs from their own resources. The minimum level of this contribution is currently set at €13 per week. This rate has not been increased since January 2004, despite the fact the lowest rate of social welfare payment has risen by nearly €70 per week since then. It is also significantly less than the minimum rent paid by local authority tenants which, for example, is €24.87 in Dublin city and €26 in County Limerick.
As of 1 January 2009, the minimum personal contribution to rent and mortgage interest supplement is being increased by €5 to €18 per week. With some 72,000 people in receipt of rent and mortgage interest supplements, this measure is expected to generate €19 million per annum from 2009 onwards.
Yesterday, the Minister for Finance announced the Government decided that from now on child benefit will no longer be paid in respect of those who are 18 years old. At that age they are effectively treated as adults in most respects. This change will be phased in gradually. A half payment will be made in respect of existing and future qualifying children from January 2009. From January 2010, the payment will cease from the 18th birthday.
Special alleviating measures are being introduced for young people in social welfare dependent and low-income families, with a special increase of €15 per week in the qualified child payment for those aged 18 years. It is expected that some 10,000 young people will benefit from this measure. In addition, the back to school clothing and footwear allowance will be increased by €215 to €520 per annum for eligible 18 year olds. Recipients of family income supplement will receive additional payments of up to €15 per week for each dependant aged 18 years where they are not otherwise being compensated. These transitional measures will cease in January 2011. The net savings from this change to child benefit entitlements is expected to be €27.6 million in 2009, €67.2 million in 2010 and €79 million per annum from 2011 onwards.
Even in these difficult economic times, the Government has prioritised delivering real increases in social welfare payments. Some Opposition spokespersons have referred to the fact that the 2009 social welfare increases are below this year's inflation rate. That is not the point.
The 2008 social welfare increases far exceeded the increase in the consumer price index in the current year. As the Minister for Finance announced yesterday, the projected rate of inflation for 2009 is 2.5%.
The budget provides for increases of between 3% and 3.8% in the basic payment rates next year. These increases are also in line with the wage rises agreed by the social partners in the second phase of the national pay agreement.
The maximum personal rates of payment for the State contributory and non-contributory pensions and State pension transition are being increased by €7 per week from the start of January 2009. State pensioners will also receive an extra €6.30 per week for a qualified adult dependant such as spouse aged over 66 years and an extra €4.70 per week for contributory qualified adults under 66 years.
The price of fuel is an issue of major concern for many people, but especially the elderly and the ill. I am pleased to announce the value of the fuel allowance is being increased by €2 to €20 per week, an 11% increase, with effect from January. The duration of the fuel season is also being extended — which is what many people asked for — by another two weeks from April 2009, bringing it to 32 weeks in total.
The maximum personal rate of payment for all working age schemes is being increased by €6.50 per week with effect from the first week of January 2009, with proportionate increases applying to people on reduced rates. The rates of qualified adult payments are also being increased on all schemes by €4.30 except for the invalidity pension scheme where a €4.60 increase will apply.
Social welfare-dependent parents currently receive an extra €24 per week for each child on top of their basic social welfare payments, through what is termed the "qualified child increase". This is being increased by €2 to €26, or 8.3%, per child with effect from January 2009. In the case of qualifying children of 18 years of age, the total rate will come to €41 per week, including the special payment in lieu of child benefit.
Improvements are also being made to the family income supplement, which is paid to low income working families. Income limits for the FIS are being increased by €10 per week in respect of each child, giving an average extra payment of €6 per child per week.
The income thresholds for entitlement to back-to-school clothing and footwear allowance are also being increased to enable 18,000 more families to benefit from the scheme. These increases are in addition to the special measures already mentioned for 18 year old children. In addition to these improvements in social welfare schemes, the budget also provides an extra €500,000 for the Family Support Agency to support programmes to promote positive parenting skills.
I now want to address the future of the Combat Poverty Agency and the Money Advice and Budgeting Service. A review of the Combat Poverty Agency was undertaken on foot of a Government decision on 6 June 2007. The purpose of the review was to examine the role of the agency in light of the emergence, since 1986, of comprehensive strategies and new institutional arrangements to promote social inclusion. These include the Cabinet committee on social inclusion, the Office for Social Inclusion and the voluntary pillar in social partnership.
Having considered the review report, the Government has decided to integrate the Combat Poverty Agency with the Office for Social Inclusion. I do not intend that the Combat Poverty Agency will simply be absorbed into the Office for Social Inclusion in its existing form. Rather, a new strengthened division will be created, which will make the best use of the considerable experience and expertise of the staff of both existing bodies and will seek to address the weaknesses identified by the review in relation to both.
This new division can provide a stronger voice for those affected by poverty and social inclusion issues. I am conscious of the concerns about the need for independent scrutiny of public policy that have been expressed by some interest groups. I agree that independent critique is very important and this move is not intended to reduce the scope for such work. As the review report notes, the function of independent reporting on poverty is no longer as dependent on the Combat Poverty Agency as it was in earlier years. This is due, for example, to the emergence of other independent data sources, such as the statistics on poverty reported by the CSO, and independent analyses by bodies such as the ESRI and NESC, and on the international front by the EU and OECD.
Ireland is well served by the social partners and a wide range of NGOs and other groups who have a strong voice in public debate about poverty and related issues. I intend to prioritise putting in place procedures to ensure that the views of these and other stakeholders, including people experiencing poverty, continue to be available to Government in developing and monitoring the social inclusion strategies. The Department is currently finalising proposals as to how this might be achieved.
Another body the Government examined as part of the review of State agencies was the Money Advice and Budgeting Service. MABS staff provide a highly valued service to people who are over-indebted and need help and advice in coping with debt problems. However, it has been recognised for some time that the service needs a proper legislative basis and structure. It has been decided that this can best be achieved by placing MABS with the Citizens Information Board. The MABS and citizens information centres complement each other as both are involved in providing information, advice and advocacy services to the public. In addition, the CIB has a long association with the MABS at both national and local level and was involved in establishing some of the original MABS pilot projects. I stress that there will be no change in the status of the 53 independent MABS companies, nor in the employment status of their 240 employees.
These are the main elements of the financial and other changes incorporated in the social and family affairs part of budget 2009. With extra funding of €2.6 billion next year, a range of improvements will be made in social welfare schemes, including €7 extra per week for State pensioners; €6.50 extra per week for welfare recipients of working age, such as jobseekers and those on illness benefit; an extra €2 per week on the fuel allowance, with payment also being made for an additional two weeks; increases in child-related payments to those dependent on social welfare and improvements in the family income supplement for low income working families; and 18,000 more families becoming eligible for the back-to-school clothing and footwear allowance.
To fund these improvements along with making payments to increasing numbers of people on the live register, it has been necessary to make savings in some areas.
However, we have kept these expenditure control measures to an absolute minimum. I have confidence that, given the circumstances, we have done our best to protect those on social welfare who are most in need.
In preparing the 2009 Estimates for the Department of Agriculture, Fisheries and Food, my approach has been to focus available resources on measures that allow us to maintain and grow the productive capacity of the agri-food sector. That involved making choices, some of them difficult, but the choices I have made will facilitate the continued strategic development of the agri-food sector.
Notwithstanding the current economic difficulties, the total expenditure by the Department in 2009, in support of the agriculture, fisheries, food and forestry sectors will be more than €3.2 billion. This high level of investment reflects my commitment and that of the Government to the bio-sector and our recognition of it as one of the most important indigenous manufacturing elements in our economy, both from an employment point of view and as a major contributor to regional development.
In addition to the significant amounts of money that are continuing to be invested in agriculture by the Government in 2009, I am particularly pleased that the Minister for Finance has recognised the value of several tax reliefs to the sector and that he has renewed these measures, notwithstanding the pressures on him. The renewal of these measures is further evidence of the Government's commitment to the development of a competitive agri-food sector at a time when it can play a pivotal role in helping to address global food security concerns.
It is perhaps ironic that at this time of global economic downturn, the prospects for agricultural commodities on world markets are good. Currently, prices for a wide range of commodities, particularly dairy and some cereals, are higher than they have been for many years and there is general agreement that in the medium term, at least, prices are unlikely to return to their historically low levels.
As Ireland is a major food producing and exporting economy, this is good news for the agriculture and food sector and presents us with opportunities into the future. It is precisely for this reason that I have targeted my Department's resources in 2009 at the most productive elements of the sector to ensure that it continues to prosper and continues towards achievement of its full potential.
The Department operates a wide range of schemes and services, all of which came under scrutiny in the preparation of next year's Estimates. I undertook a thorough review of all such schemes before choosing those for which I could prioritise funding. The Department's single biggest and, perhaps, flagship scheme is the Rural Environmental Protection Scheme, REPS, which has some 60,000 participants. I place a particular value on this scheme that meets environmental imperatives and consumer demands. Accordingly, I decided to maintain the scheme in full and have provided additional funding that brings next year's expenditure to €355 million, an increase of 7%. Between 2000 and 2009, the Department will have invested €2.25 billion in funding to REPS participants. This additional funding ensures full payment to those already contracted under both REPS 2 and 3, who opt to see out their existing contracts, as well as those new applicants to REPS 4, who undertake new five-year commitments, and those transferring from REPS 2 and 3. REPS 4 payments include a 17% increase in payment rates.
I have also ensured that commitment entered into in partnership to spend €250 million on a suckler welfare scheme is fully honoured. Such was the success of the scheme that the levels of participation exceeded all expectation. This year's level of participation, at a premium rate of €80 per head, will cost the Department €77 million. It will be necessary to correct the premium rate over the remaining four years of the scheme, but I am committed to the payment of the remaining €173 million over the remaining life of the scheme. The premium rate in the remaining years will depend on the participation rate and at current levels, the premium may have to be reduced by up to half. In respect of 2009, all payments that would ordinarily fall to be paid in late November 2009 will be delayed slightly until early January 2010.
Forestry is a particularly important sector, not least in providing important income to farmers and employment in rural areas as well as contributing significantly to meeting the challenge of climate change. The 2009 Estimate provides €127.7 million for the sector. While, more than €80 million will be directed to payments of premia, mostly to farmers, there will also be generous support for planting and support schemes. The level of funding provided should allow planting to be maintained close to this year's level.
I have also restated my commitment and that of the Government to support the Irish fishing sector through the provision of €30 million, which does not include the funding provided to Bord lascaigh Mhara, with particular prioritised investment in fish processing, aquaculture development and fishery harbours.
Unfortunately, my commitment to the schemes to which I have referred must come at some price and I have, therefore, reluctantly decided to reduce expenditure under the scheme of area-based compensatory payments. The provision for that scheme next year is being reduced to €220.4 million. However, this reduction will be targeted through reducing the maximum hectarage limit on which payments are to be made from 45 to 34 hectares and through a modest increase in the stocking density requirement, a requirement which has been advocated by some farm representatives for some time. Based simply on the reduction in the maximum hectarage to 34 hectares, some 67,000 of the 102,000 participants will experience no reduction in their payments. The modest increase in the stocking density requirement will have an impact on a further small number of scheme participants.
I have also chosen to temporarily suspend entry to both the early retirement and young farmer installation schemes with immediate effect.
While there have been a healthy number of applications under the installation scheme this year, applications for the early retirement scheme are relatively modest. However, it is worth making the point that all current participants in the scheme will be paid and applications received to date will be processed and next year almost €57 million is being provided to meet current commitments.
In his budget speech yesterday, the Minister for Finance specifically referred to the renewal of several tax reliefs of benefit to the farming sector. Several reliefs specifically targeted at new entrants are particularly welcome, especially given the notable increase in the number of young people entering agricultural college over the past two years and renewed optimism in the sector. Of particular value is the extension of young trained farmers' stamp duty relief for four years until the end of 2012. This was a significant component of Macra na Feirme's pre-budget submission and is aimed at bringing about a level of stability and security to families planning and organising early farm transfers. This relief is estimated to be worth €53 million in a full year.
The top rate of stamp duty on agricultural land transactions has been reduced from 9% to 6% on agricultural land transactions above €80,000. This should help reduce the purchase cost for buyers and make transactions more affordable.
Also of benefit to young farmers is the renewal of the 100% rate of stock relief which is useful for young farmers building up the value of their herds. The general 25% rate of stock relief for all farmers was also renewed. Both these reliefs were renewed for a period of two years until 31 December 2010 at an estimated cost of €2 million per year.
Stamp duty relief for farm consolidation is renewed for a two-year period until the end of June 2011. The relief is aimed at farmers reducing their farm fragmentation through the purchase and sale of parcels of land in accordance with the appropriate guidelines. The accelerated rate of capital allowances has also been renewed for a further two years allowing a write-off period of three years and a floating allowance of the lesser of 50% of qualifying expenditure or €31,750 in any one year. This measure is estimated to be worth €10 million in a full year. This broad range of budget measures are aimed at supporting improvements in farm structures by encouraging new entrants, farm consolidation and mobility. Combined, these cost-efficient measures are estimated to be worth more than €65 million in total in a full year.
There has been much comment over the past 24 hours on public service reform, much of it uninformed and incorrect. The public service is not immune from the decisions that have to be taken at this time. The grants-in-aid to the State bodies under the Department's aegis, namely Teagasc, Bord Bia, Bord Iascaigh Mhara, Marine Institute and the SFPA, are being reduced to take account, in particular, of the need to achieve payroll and other efficiency savings. These savings must be seen against what was a significant increase in funding to these organisations in recent years. Next year, I will provide €235 million to them to support agricultural, fisheries, food and forestry activities and I will ask them to prioritise their activities in the light of the current budgetary position and having regard to overall policy for the sector.
In addition, the salaries provision for my Department will require a further fall in staff numbers of 150 by the end of next year. This is in addition to a reduction of almost 500 in recent years and my Department is engaged actively in a programme of reviews aimed at improving the efficiency and effectiveness with which we provide such a wide range of services to all our stakeholders. It is no more than the taxpayer deserves.
The agri-food sector is of central importance to our economy. Success will be achieved by reliance on quality, innovative and sustainable food production. We have many natural advantages in food production and have developed a sophisticated food industry. The opportunities now emerging for us as a food producing country are there to be grasped. I assure the House that, for its part, the Government realises the potential of the sector.
Notwithstanding the severe budgetary pressures, through Exchequer and EU funding, the Department of Agriculture, Fisheries and Food will invest €3.2 billion in support of the agriculture, fisheries, food and forestry sectors next year. In addition, the Minister for Finance has also committed to the renewal of tax relief worth €65 million for a further period of two years in most cases and four years in one case to which I earlier referred which was made at the request of Macra na Feirme. I am also particularly pleased that the Minister has confirmed that the possibility of further measures specifically targeted at young farmers will be considered in the context of the forthcoming Finance Bill.
Despite suggestions to the contrary, the Government's level of commitment to and investment in agriculture is significant and recognises the role the sector has to play and the enormous contribution it makes to the Irish economy. My approach is targeted at the specific intention of protecting the sector's most productive elements and ensuring that it continues to prosper. That approach requires choices to be made and a balance to be struck. I am satisfied that the choices I have made are the right ones and in the best interests of the Irish agri-food sector at this time.
I welcome the opportunity to speak on this budget. I speak for most people in the country, certainly for this side of the House, when I say there was readiness to take some bad news and hardship if we felt it was to some purpose. What has been most disappointing is that such will not be the case. We, and most commentators expect us to be back here with cuts at least as bad this time next year, if not sooner.
The truth is what was needed was not done. We cut capital spending and borrowed to continue with current spending. Some €4.7 billion is to be borrowed, and God knows to what that will grow as the year progresses. Far from correcting a nose-dive in the economy, this can only make matters worse. Where there was spending, there was no attempt to produce long-term reform to deal with the problems so that we could be in a position to capitalise on any later upturn in the global economy.
FÁS is a case in point. Never will it be more important to be able to up-skill and retrain our workforce, and yet there is a budget of almost €1 billion, largely money contributed by the private sector, that is completely unfocused, hardly relevant and inefficiently spent, and there has been no attempt to reform that organisation.
The investment in infrastructure, particularly in public transport, has been tragically cut again. That means Transport 21 is out the door, probably for another generation or maybe even two. The history of this Government has been a failure of planning and of delivery. There has been no mention of metro. I heard last night that it will remain in the planning stage. It has been in planning for ten years. It will probably be another ten, maybe 20, years before we hear any more about it. The result of all this is that people are even more dependent on their cars, and the Government's solution is to introduce a car parking tax. One could understand this tax if it would make people use public transport, but the reality is it will end up only as a tax on work.
The Government failed to make difficult decisions. It made things difficult for people, but the difficult decisions which only the Government can make were not made.
I will speak about my area of responsibility, arts, sports and tourism, but I am conscious I must say something about the sick, the disabled and the elderly, the easy targets who undoubtedly will be the really big suffers as a result of this budget. These are easy targets because they are not a cohesive group. In any battle for scarce resources they will be the ones the Government can pick off one by one, and it could not resist the opportunity to do so.
Many of my colleagues have spoken eloquently about the removal of entitlement to medical cards from the over 70s. I do not want to go into it, except to state it is the most mean-minded and damaging economy I have ever heard of a government attempting to introduce. It was despicable to hear the Minister for Health and Children try to defend it on the grounds that it was costing a great deal of money, with the money going to doctors. The reason for that is the Government did a bad deal with the doctors. The Government announced the measure before it reached a deal with the doctors, and taxpayers ended up paying more than they should. The Government's solution is to ask old and sick people, who have worked all their lives, contributed to the economy and made the Celtic tiger, to pay for the Government's mistake by the withdrawal of their medical cards.
Thousands of middle income families in my constituency and throughout the country are being targeted in the budget, specifically in the area of health. One measure which has not received a great deal of attention, except in respect of nursing homes, is the decision to reduce tax relief from the marginal rate to the standard rate for medical expenses. This measure is aimed specifically at families who have always paid their own way. They pay for their general practitioner, medicines — for which they will now pay €100 per month — health insurance, the dentist, hospital tests, scans, physiotherapists and every other medical expense. Overnight, the cost of medicine for those families has increased by 20%.
When there are children in a family it is impossible to avoid medical expenses. For most families there are sometimes exceptional medical expenses in respect of at least one member of the family. A number of families contacted me about this measure today, particularly families whose children require orthodontic treatment. For them, the cost of that treatment has increased by 20%. Everybody knows that State-provided orthodontic treatment scarcely exists. The treatment is hugely expensive so a 20% increase will run to thousands of euro. For many families it will no longer be an option. I am not talking about orthodontic treatment for cosmetic purposes but treatment that is essential for psychological or medical reasons. That will no longer be an option. This is one of the measures that has slipped under the carpet but it will emerge as the months pass.
The Taoiseach spoke about the relief for medical expenses this morning as if it was only relevant to nursing homes. All medical expenses will be affected for middle income earners who do not have a medical card. Everybody will be affected. Indeed, the Taoiseach suggested that when the fair deal is introduced it will not be relevant because it will not be required by people going into nursing homes. Nothing could be further from the truth. The reality is that if one has been prudent and saved for one's old age, if one has savings in the bank or under the mattress or if one has dividends, shares or a painting on the wall, everything must be spent before one will even become eligible for the fair deal. The fair deal is only relevant to some people, and it is clear that it will not be fair to everybody.
These are the hidden costs of the budget. The Ministers glibly spoke last night about a percentage here and a percentage there but each of these percentages is bitterly felt by families. They will be bitterly felt over the coming months, particularly when added to other taxes, charges and cuts. I warn the Government, and I hope it acts before it happens, that people will die as a result of this. They will forgo medicine and visiting the doctor. It will not be a saving in the long run.
I congratulate the Minister for Arts, Sport and Tourism, Deputy Martin Cullen. He distinguished himself as the only Minister who saw a reduction in every budget line for his Department. He is not long in the Department but he has become extremely creative. His press statement yesterday would warrant a prize for creativity. He managed to be the only Minister who compared his Department's allocations for 2009 to those for 2000 to show that somehow there was an increase when, in fact, there was a decrease in each of his Department's budget lines.
Yes, these are hard times and we understood there would be a reduction in spending, but why an all-out assault on the tourism industry? This is incomprehensible. We will require this industry to provide growth in employment and income in the future. It is a service industry. We will not see growth in many other industries such as manufacturing and so forth, which are dying industries to an extent. The service industry is where we must generate growth and foreign exchange. However, a departure tax is purely a revenue raising tax. It has zero policy content. It will not just apply to Irish people leaving the country but people who come to this country, who will be charged when they leave. We should be incentivising people to come to this country, not picking their pockets as they leave.
This will also impact on the aviation sector, which is already a marginal industry with operators barely keeping their heads above water. Ryanair has threatened to pull out of Shannon Airport because its fares will effectively double as a result of this charge. It is the whammy Aer Lingus certainly did not need. The Government is trying to persuade people to vote for the EU and says the Union is based on the fundamental tenet of free movement of people, but I do not know if this tax is legal within the EU. When one combines transport costs, VAT, holiday home taxes and 50 cent on a bottle of wine with reduced marketing, it is hard to believe the Government has an appreciation of the importance of the tourism industry. Watch the holiday home tax. This year it is €200, next year it will be €400 and, mark my words, the year after it will be on all homes.
The Minister tried to tell us there is a minuscule reduction in funding for the Arts Council, scarcely 1%. In fact, the reduction is 12%. Jobs will be lost. Jobs in the arts are marginal anyway and they will go. This will impact not only on the indigenous industry, but also on tourism as festivals and performances are hit. Sport is affected in every budget line and crucial funding for the Sports Council has also been savaged. In the area of capital spending, all the investment in the cultural institutions, which are already on the bread line, has been cut to ribbons. Many of these institutions are in such a condition that we will be lucky if they do not burn to the ground in the next couple of years.
Funding for the national sports campus has been reduced by one third, despite the massive expansion that was announced by successive Ministers. That appears to have evaporated into the ether, along with the former Taoiseach whose legacy and monument it was to be. All one can see out there is a couple of offices. This has been a budget of cuts, taxes and charges, with no strategy, tactic or policy content. It is just a holding exercise until the next swingeing budget.
I welcome the opportunity to comment on the budget. Lest the public consider our contributions unjustified criticism from a party that has not nailed its colours to the mast, Fine Gael has published its alternative policy approach to the difficult financial time the country faces. We have identified, for example, that there is a price worth paying in respect of the security that civil and public service employment provides by proposing a pay pause for that sector. We have identified savings across all Departments and sought the elimination of the multiplicity of quangos that have been created. We have presented an alternative view.
Today we have an opportunity to provide a critique of the Government's policy and approach. While there is an international dimension to what is happening in this country, by international comparison the situation here is far worse due to the successive policy decisions of the current Taoiseach when he was Minister for Finance over the last four budgets. The infatuation with the construction industry at the expense of the exposed trading sector of the economy, which was the original driver of the Celtic tiger economy, has cost an enormous price. Alone among EU countries, Ireland has rapidly rising unemployment, the single greatest barometer of economic failure.
I will deal with several issues concerning my area of responsibility, that is, agriculture, fisheries and food. I am disappointed the Minister has left the Chamber because it is obvious he is now clearly the weakest link in Cabinet. He has sacrificed the industry with the potential to drive the economic recovery. It is not an option for farmers to relocate to eastern Europe or Asia as their future is rooted in the Irish economy. There are more than 100,000 employed directly in the industry and perhaps as many more employed indirectly in the food and associated service industries.
The agriculture industry has considerable untapped potential but it has been betrayed. One of the main structural problems facing the industry is that 92% of farms are run by farmers over 35. In recent years, there has been a three-pronged approach to encouraging mobility such that highly qualified, young trained farmers could have access to the means of food production, thereby driving the agriculture and food industries. The three prongs are the early retirement scheme, the installation aid scheme and the stamp duty exemption scheme.
The Minister lauds the fact that the stamp duty exemption scheme has not been abolished but the reality is that, in 12 months, there will be a significant decline in the number availing of the stamp duty exemption for young qualified farmers simply because their parents will not hand over their land-holdings because of the abolition of the early retirement scheme. Young farmers will not be encouraged to take the batons from their parents because the €15,000 installation aid grant, traditionally paid directly into the pockets of young qualified farmers, will not be available. Shame on the Minister. It is a vote of "no confidence" by the Minister in the new generation that the industry desperately requires to be involved. It is unforgivable of the Minister to behave in this fashion.
There has been a significant reduction in payments in two other areas under the agriculture budget, the suckler cow welfare scheme and the disadvantaged areas scheme. In this regard, I refer to a press release of 14 December 2007 by the former Minister for Agriculture, Fisheries and Food, Deputy Mary Coughlan, when announcing the suckler cow welfare scheme, which was to run until 2012 and result in an annual payment of €80 per cow, or €82 for every cow if an application was made on-line. She stated, "Ireland is a food trading country, and our beef industry which has a self-sufficiency of 820%, serves a huge number of customers throughout Europe and the world." She added, "we have adopted a structured approach to the beef sector, the overall aim of which is to equip it to meet the challenges and exploit the opportunities available in the coming years." She concluded by stating, "I am confident the scheme will be a success, and will contribute over the next five years and beyond to the continued improvement in the quality of Irish beef, so vital if we are to improve our share of the lucrative European market." This statement was made less than 12 months ago, yet the scheme is now being butchered significantly.
This is a variation on a theme that is becoming quite common under the Government and the Department of Agriculture, Fisheries and Food. Only last October, the farm investment scheme was suspended. It was launched the previous July and was expected to run for five years. What is clearly emerging is a form of political leadership in the Department that makes decisions on the hoof and has no strategic long-term plan for the industry. It betrays the new generation that is committed to agriculture and attending agriculture colleges throughout the country to obtain the young farmer qualification known as the "green certificate". This generation wishes to take the baton but now finds the door to the industry has been closed by the abolition of the early retirement scheme and installation aid. It is unforgivable.
In addition to these cuts, one must consider the cuts affecting Bord Bia, Teagasc and Bord Iascaigh Mhara. I will not criticise these cuts excessively until I know their exact impact. I do not believe any organisation is beyond becoming more efficient but the percentages across the bodies in question — 8%, 9% and 10% — are on the high side. The research and development potential of Teagasc should not be compromised. It is by innovation that we will make progress and develop new products that will give the industry opportunities for the future.
I am particularly concerned about the transfer of the marketing role of Bord Iascaigh Mhara to Bord Bia. Within Bord Bia, which does a fine job promoting Irish food, the budget for the seafood sector should be ring-fenced. I am concerned that the seafood industry will lose its identity. It is extremely important that it have ring-fenced funds within Bord Bia comparable to those made available to it to date under Bord Iascaigh Mhara. I am concerned because I have been unable to trace any line in the budget following up on the commitment the Minister made last year that the funding for decommissioning the whitefish fleet would be made available again this year. It is unavailable.
The abolition of installation aid and the early retirement scheme, the butchering of the suckler cow scheme, which will probably result in the promised payment of €82 being reduced to approximately €40, and the significant curtailment of disadvantaged area payments for claimants with more than 35 hectares constitute a real betrayal of the agriculture sector, which has the potential to lead us out of the difficulties we face.
I will comment on aspects of the budget that do not pertain to agriculture. Many speakers referred to the most unkind cut of all, that is, the withdrawal of the medical card from those over 70. Despite the best efforts of the Government to spin this issue, 125,000 of the 139,000 who hold a medical card today will not retain one after the new means test. This, allied with hospital charges, general practitioner visits, accident and emergency charges and drug refund scheme changes, will have an enormous impact on their financial well-being. Their mental well-being will also be affected because they will fear becoming sick and not being able to afford to see a general practitioner.
Added to this is the fact that in recent years many elderly people, because of the security of having a medical card, surrendered their medical insurance policies. Such people may now be obliged to pay for medical insurance again but will find they will have to wait a defined period before being covered by any health insurance company. This, allied to the fact that many of them will be liable not only to the Lenihan levy of 1% on their incomes but also to a 2% health levy, is alarming. Losing the medical card may constitute a single whammy but all the other charges result in a multiple whammy for the elderly. The Government should reconsider these cuts in the health sector.
Let me consider two other issues. Great political capital was derived in my constituency because of the proposed decentralisation of some 100 laboratory jobs in the Department of Agriculture, Fisheries and Food to Macroom and of 80 jobs in the Office of Public Works to Kanturk. This proves to have been a political charade played out at the expense not only of those employed in those offices but also of those locals who legitimately expected secure employment to be delivered to their towns. This is particularly the case because the towns are reeling at present due to increases in unemployment rates of more than 50% in the past 12 months. The Government has a considerable case to answer regarding these commitments and how it misled people over a prolonged period.
I will now address the education cuts. Solemn commitments with regard to class sizes were given at public meetings I attended in the lead-up to the last general election. Now we will have the largest class sizes in the OECD. We must take into account that many of the OECD countries are not nearly as wealthy as this country, yet we are failing to provide the passport for young people into secure employment by virtue of education provision, which is unforgivable. Added to this is the cowardice of the Minister for Education and Science, who during the summer flew the kite to reintroduce college fees by the back door but who has not got the political bottle to stand up and announce that it is effectively college fees by another name.
There is an overall assumption in the budget that the worst of the downturn has become apparent and that there will be an upturn in a year or two. The problem is that while there may be an improvement, it cannot be assumed that the conditions of recent years will return. However, the Government in its budget is content that reducing the deficit a little and pencilling in a 7% deficit for next year is fine as the economy will improve thereafter and there is little need for further action. This is very optimistic.
The budget is optimistic in assuming that inflation will fall to 2.5%, which may happen but is towards the lower end of expectations. As a result, while capital expenditure is not cut too much in nominal terms, if inflation is high then there will be real cuts in this area. Also, the current expenditure assumptions will come under severe strain. Forecasts for current expenditure of 4.5% in 2010 and 2.8% in 2011 which are contained in the tables in the appendix on the Department's website also look optimistic.
The result is that this must be seen as a stopgap enabling budget. It is action of a sort in response to the greatly changed circumstances but the assumption that an upturn will be highly beneficial in the near future means that another tough budget is on the cards within a year. We must not forget this is the second budget in ten months.
Most likely. If this is not the case, next year's budget will have to be much harder than the current year's.
While I do not have much time, I wish to address several issues. The 1% employment levy can only be described as the most inequitable in the history of the State. We are taxing students earning a few euro to try to get through college and pensioners trying to boost existing pensions which have fallen significantly. Such people may be adding €5,000 or €10,000 to their annual income but we are taxing them at the same rate as those earning €95,000. It has never happened before that we have taken such an incredibly retrograde step.
The issue of medical cards has been dealt with so I will address the issue of business. There is nothing in the budget that could be characterised as providing anything in the way of a long-term impetus for business in this State. The Government seems to be clapping itself on the back because corporation tax remains at the current rate. However, it did not have an option to raise it. If it had done so, it would have benefited the countries throughout Europe who are currently wiping our eye, such as Switzerland, which offers zero corporation tax if one locates in certain cantons. Other countries have 3% to 5% corporation tax for one reason only, namely, they are happy to get business into their country to earn social insurance levies and income tax from the people employed.
The corporation tax rate was set by the rainbow Government of which the Leas-Cheann Comhairle and Deputy Quinn were members. From what I am told, many of the mandarins in the Department of Finance almost had nosebleeds at the idea of reducing and rationalising the rates, but Deputy Quinn did it. Another man who took bolder steps than we have seen for many years is the former Minister, Mr. McCreevy, who reduced capital gains tax from 40% to 20%. What does this Government do but reverse that trend and bring it up to 22%, a 10% increase, which is large by any standard? To advise the Government Members opposite, perhaps they should bringing back Mr. McCreevy in the way Gordon Brown brought back Peter Mandelson. Dublin South has a by-election in a few months. He could be bunged in there to see how he does and perhaps he could then be bunged back into the Department of Finance.
VAT will increase from 21% to 21.5%, which is another tax on business. Capital spending cuts are widespread. Overall, capital expenditure falls by 9% and if we assume inflation remains close to 5%, this is a very large reduction. Much of this, however, is taken up by cuts in agencies and quangos. If waste is eliminated, that is fine, but it is far more likely that front line delivery will be cut to balance budgets in these agencies.
The figures presented last year by the Taoiseach, Deputy Cowen, the then Minister for Finance, showed that our national debt ratio versus GDP stood at 25% at that time. Today, we are predicting a deficit of approximately 0.9% of GDP, which translates as €11 billion. How can the Government have got these figures so wrong? I have a major concern with regard to this year's GDP ratio, which the Department of Finance is pitching at 43%, a colossal 18% increase which almost doubles the national debt in a very short period without factoring in billions of euros that will be needed down the line to bail out the banks. We are in dire straits and in perhaps the worst economic crisis in the history of the State.
A total of €551 million has been allocated to the Department of Arts, Sport and Tourism for 2009, which includes €405 million for current spending and €146 million for capital projects. This figure represents a substantial investment by the Government in the arts, sport and tourism sectors and must be seen against the background of significant expenditure that has taken place in recent years.
While there has been a substantial reduction in the allocation for capital expenditure from €277 million in 2008 to €146 million this year, this relates to the fact that the 2008 budget made provision for large once-off projects in the sports and arts areas, including Lansdowne Road, which received €93 million last year, the Gate Theatre, the new Opera House in Wexford — which I have seen and look forward to seeing again tomorrow, and which is one of the most fabulous opera houses anywhere in the world — the new Lighthouse Cinema in Smithfield, the Carlow Arts Centre and the Everyman Theatre. The Government commitment to these projects is now almost complete and they account for €113 million in the Department's capital allocation in 2009. When those once-off projects are taken into account, the underlying upward trend in the capital available to the Department of Arts, Sport and Tourism is maintained.
I will deal now with the individual sectors under my responsibility. The maintenance of a significant allocation for tourism services in 2009 reflects the Government's continuing commitment to the development of tourism as an important economic sector which contributes some €5 billion in foreign revenue earnings, 250,000 jobs and €2.3 billion in estimated tax receipts. The tourism sector has made major progress over the past ten years, with overseas visitor numbers doubling to 8 million and foreign revenue earnings increasing by a factor of 2.5 to €5 billion. This impressive performance was driven by a clear Government development strategy, in partnership with the industry, and by a range of supporting programmes and initiatives in the areas of marketing, product development and training.
There is no doubt that the current domestic and international environment is very challenging for tourism worldwide and in Ireland. Increased fuel costs and a global economic downturn, with adverse trends in exchange rates, are affecting business. Current indications are that Ireland is maintaining its market share in Europe and many competitors are faring less well. Latest figures from the Central Statistics Office show that, notwithstanding the difficult global environment, the number of overseas visitors for the first six months of 2008 was up by 2.6% on the same period in 2007. The strongest growth was in the mainland European and long-haul markets, reflecting the broader economic trends.
There was a 1.3% increase in revenue from overseas visitors in the first half of this year. In actual terms, expenditure from overseas visitors for the first six months was more than €2 billion. Figures since July are less positive and mirror trends across Europe, where the year started positively but saw a downturn in monthly figures from May onwards. However, the strategic approach taken to tourism in recent years by both the public and private sectors has given the sector the capacity to withstand such cyclical external challenges and sustain its performance in coming years. The Irish Tourist Industry Confederation has stated that the fundamentals of the industry remain strong and Irish tourism is better positioned to withstand any downturn than in the past. As our overseas tourism business has diversified across a wider range of markets in recent years, that has given it the capacity to better withstand pressures on particular markets. The total allocation for tourism in 2009 is approximately €160.5 million. The amount secured is a very positive outcome in the challenging circumstances facing the country and is recognition of the importance of tourism as an economic sector. Our investment in front-line international tourism marketing is being maintained. The allocation for the tourism marketing fund, TMF, for 2009 is €48.5 million. Although that is a reduction of €1.5 million there will be no reduction in the amount available for front-line marketing activities. That is because, in 2008, Tourism Ireland invested on a once-off basis on renewing the Ireland tourism brand, including the development of new promotional material. In the five years from 2004 to 2009, the tourism marketing fund will have increased by more than 50% from €31 million in 2004 to €48.5 million in 2009.
Within the overall tourism marketing fund, the allocation for 2009 will enable the tourism agencies, in partnership with industry interests, to maintain the super regions campaign — for which an identical amount to 2008, €3.15 million, is being provided. As in 2008, €3 million has been provided also to allow for the continuation of Discover Ireland's wonderful west campaign, for the wider Shannon Airport catchment area, in line with the commitment given in the Shannon Airport catchment area economic and tourism development plan.
Given the overall economic situation, the tourism agencies should also be in a position to negotiate better value in terms of advertising and marketing space, because there is a real reduction in available spend across the business world in terms of accessing media. A total of approximately €19.4 million has been provided for the administration and general expenses of Tourism Ireland. The slight reduction on the 2008 figure will be achieved through reductions in administrative expenditure, non-programme advertising and consultancy spending. That represents a very positive outcome and demonstrates the Government's commitment, in co-operation with the Northern Ireland Executive, to marketing the island of Ireland overseas. While we are obviously in a particularly difficult time, maintaining the front-line overseas marketing allocation, as I have done, will allow Tourism Ireland to play its part in helping the sector to manage the current challenges and to return to sustainable growth in the medium term.
The budget provided to Fáilte Ireland is €80.791 million, a reduction of just 2.5% over the 2008 provision. Fáilte Ireland should be able to achieve these savings without any impact on front-line services to the industry. It is expected that the bulk of the savings can be made in administration, non-programme advertising and consultancy spending. That figure includes our commitment to the Irish stop-over in Galway of the Volvo Ocean Yacht Race 2008-2009, which will provide an economic bonus of €44 million to the west of Ireland region and for Ireland as a whole. It also includes contributions to Ireland's hosting of the Solheim Cup — the ladies Ryder Cup equivalent — in Meath in 2011, and the contribution towards hosting the World Rally Championship in the north west in January 2009. Both of those events will have significant spin-off economic benefits for their regions.
In 2009 capital funding of €11 million is being provided to support investment in key tourism infrastructure, attractions and visitor activity facilities that are in need of upgrading and development, and to bring on-stream new products and experiences to meet the sophisticated needs of a more discerning international visitor. Although lower than the 2008 figure, the allocation in 2009 reflects a careful assessment of the range and quality of applications under Fáilte Ireland's tourism capital investment programme as well as the anticipated drawdown of funds in 2009.
Following the Government decision regarding State agencies, my officials are in discussion with the affected agencies to ensure that the transition and necessary changes are achieved in the most efficient manner possible.
The huge social and economic benefits of sport are acknowledged by the Government and are reflected in the unprecedented level of Government funding for sport in recent years. As a result of our investment in sporting facilities in the past ten years people now have more opportunities to play and compete in a vast array of sports than ever before. The provision of approximately €204 million for sport in budget 2009 is a significant investment and will enable the Department to meet its commitments in 2009.
A total of €56 million has been provided for the sports capital programme to meet costs from existing allocations in 2009. That will bring to €780 million Government expenditure on sports facilities at local, regional and national level in the past ten years and underlines the Government's ongoing commitment to the provision of sports facilities. The allocation for the local authority swimming pool programme next year is €18 million. The current round of the programme provides for 57 swimming pool projects. Of those, 37 projects have been completed and opened to the public, eight other pools are under construction and another 12 are at various stages of development. The total amount invested by Government in this programme in the past eight years is approximately €123 million.
The Irish Sports Council, ISC, will receive an allocation of just over €53 million for 2009. While the 2008 allocation was €57.6 million, the 2009 funding is still significant and represents an increase of more than 300% on the 2000 funding level of €13 million. I am confident that allocation will be sufficient to support the work of the ISC in maintaining existing programmes and to build on recent significant progress in all areas including local sports partnerships, Buntús, women in sport, older people and sport, youth field sports and the high performance programme.
I am pleased to confirm the Lansdowne Road stadium project continues to be on target to open in 2010 and that at the end of this year, the Government will have delivered on its commitment to make a contribution of €191 million towards the project. Lansdowne will be a world-class stadium and a suitable national venue for major rugby and soccer games.
Under the legislatively-based funding arrangements for the horse racing and greyhound sectors, the horse and greyhound fund would have expected an amount of approximately €80 million for 2009. However taking into account budgetary difficulties, an amount of almost €70 million is being provided. A review of the fund is currently under way in my Department. The rationale of the fund has been that the horse and greyhound racing industries needed certainty in their funding support on a multi-annual basis and that such funding to develop the industries should be derived from the duty generated from off-course betting. The increase in off-course betting tax from 1% to 2% will serve to significantly reduce, if not virtually eliminate in 2009, the amount of direct Exchequer subvention required.
The arts are a vibrant and vital sector of our economy, an important part of our community and the wellspring of many of our creative and innovative enterprises. The arts are primary economic contributors, real businesses and enduring employers of more than 45,000 people. Next year alone, my Department will invest approximately €200 million in the arts and culture sector and creative industries. In 2008 and 2009, combined investment by the Government in those sectors will be approximately €450 million. It is not too long ago since the Arts Council's annual allocation was one tenth of that sum. That is real, tangible investment in the real economy, in real people and in real jobs. It is also investment that enhances the productive and creative capacity of our country.
The arts, cultural and creative sectors have achieved much in recent years. Many museums and the National Library have won awards in recent years. I will continue to allocate funds under the existing ACCESS programmes. I hope to complete them in the next year. Notwithstanding the difficult circumstances in which we find ourselves, we can still look forward to continued substantial investment, rightly so, in the tourism, arts and sport area.
John Moloney (Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Laois-Offaly, Fianna Fail)
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I am pleased to have an opportunity to speak on the budget debate. I do so from the perspective of my position as Minister of State at the Department of Health and Children with responsibility for equality, disability issues and mental health.
I reassure people that even though we are in a tight budgetary situation the commitments given by the Government under the programme for Government and the multi-annual investment programme will be honoured. While it is not relevant to recall what commitments have been delivered to date, nevertheless, it is important to remind the House of what has been achieved under the disability strategy in the multi-annual programme and to reaffirm the Government's commitment to continue that strategy.
I refer to the multi-annual investment programme in terms of the services provided to date and more importantly the funding for the future. I will also deal with the EPSEN programme and clarify the matter contained in the budget statement regarding the efficiency saving of the 1% reduction in funding towards voluntary groups.
To date, under the multi-annual programme 980 residential places have been secured, and 313 new respite places and 2,500 new day places were created. I am the first to acknowledge that speaking about what happened in the past is not good enough in terms of what will happen in the future. I reassure the House that I am not trying to make a big deal of the fact that we are announcing a €20 million investment programme, €10 million to the Department of Health and Children and €10 million to the Department of Education and Science. I recognise the huge demand on existing services.
I reassure the House, as this issue has cropped up in recent debates, that the funding to which I refer will be ring-fenced specifically for use by the Department of Health and Children in the area of disability and mental health services. There has been some negative comment suggesting funding approved by the Government for these services goes into what is often referred to as the HSE black hole. I assure the House and those interested in this area that the €10 million allocations for health and education will be used specifically to fund new posts. Not alone is the funding ring-fenced but, more importantly, the positions agreed have been agreed with the HSE. Unlike what happened last year, the advertisements for the recruitment of 125 additional therapy posts in the disability and mental health areas will begin immediately. I do not say this to gloat over the €20 million that has been allocated. I am reasonably assured on this matter, but obviously the funding for the multi-annual programme is not in the package this year.
The funding agreed will take into account the commitments made for education for persons with special needs. Within the present budgetary constraints education for persons with special educational needs, EPSEN, cannot be funded. However, the €20 million allocated for therapy positions represent EPSEN under another name. The benefit of this additional funding will include much needed therapy posts which will be allocated within the disability sector and will include speech and language therapists, occupational therapists and physiotherapists for children's disability services.
I refer to the 35 additional posts for child and adolescent mental health services. This will include clinical psychologists, occupational therapists, speech and language therapists and social workers. There will be some new additions to the existing multidisciplinary teams and rather than have groups worrying about the commitment to ring-fencing funding, as was the case last year, staffing levels will remain intact.
I refer to additional funding under the mental health budget allocation. Some €1.75 million has been allocated for suicide prevention. Regrettably, the incidence of suicide is on the increase and the figures for this year will demonstrate this. It is opportune, timely and proper to further invest in suicide prevention and I look forward to an early meeting with Mr. Geoff Day of the National Suicide Prevention Office to discuss how we can optimise the level of spending in this area.
The commitments under A Vision for Change must be speeded up. We are moving from the old structure to the new community-based structures in psychiatric services. This is typified by what is happening throughout the State with the new acute psychiatric units. I commit, as I have previously, to beginning the process of meeting with the 12 psychiatric hospitals in the State. We expect to have closure plans in place before the end of this year. The funding secured from the sale of these properties will be ring-fenced.
The efficiency saving of 1% in funding of non-statutory services requires clarification and I wish to allay fears that may exist concerning this funding. Some €1 billion goes towards the voluntary sector and non-statutory groups each year. I have met with some of these groups in recent weeks. I have assured them that I do not wish to force an amalgamation. The proposal is an efficiency measure made in the hope that we can discuss the matter with these groups in the coming weeks and arrive at a conclusion where groups may share front-of-office facilities, back-up facilities or whatever else. The important point is that we will, hopefully, secure the services of an independent chairperson who will examine the process of seeking the efficiency measure. We will invite people from the disability and mental health services sectors to sit on the commission that will seek the efficiencies. I have no difficulty backing up the statement that the process is about efficiency, not about reducing the level of commitment in that sector. More important, it is not about forced amalgamations. This will not be a dead of night process, it will be an open, transparent campaign where all the people involved will have the opportunity to provide input. The relevant groups will receive support as they investigate the process of amalgamation.
I refer to the estimated cost of implementing the recommendations in A Vision for Change. I do so not in the context of taking funding from the disability sector or other support services in that area. A Vision for Change proposed funding amounting to €150 million for a seven to ten year programme. It is dependent to a great extent on the re-modelling of the existing resources. There is some doubt outside the House about how we can, on the one hand, commit to a change in the delivery of mental health services and, on the other hand, divide scarce resources in the budget. I make the commitment that at present the HSE is preparing an audit value of the existing properties. The process will be transparent. The resulting figure will be completed by the end of this year. The closure plans have now begun. I called to the constituency of the Leas-Cheann Comhairle a fortnight ago and met with the staff of St. Senan's Hospital. I am pleased to say to the House it has moved far more quickly than any other facility and has its closure plan agreed. I intend with all the energy I possess to deliver similar closure plans with the help of the hospitals involved, as was the case with St. Senan's Hospital, and to return to the House early in the new year to explain how A Vision for Change can become a reality with the use of the assets.
Seán Haughey (Minister of State, Department of Education and Science; Minister of State, Department of Enterprise, Trade and Employment; Dublin North Central, Fianna Fail)
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In working with the Minister for Education and Science, Deputy Batt O'Keeffe, and the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Mary Coughlan, there have been many challenges in the finalisation of the 2009 Estimates process in the areas for which I have responsibility. Difficult choices on priorities for investment had to be made to control public expenditure and to ensure sustainability in the long run.
My areas of responsibility are lifelong learning across the Department of Education and Science and the Department of Enterprise, Trade and Employment, and social inclusion and school transport in the Department of Education and Science. I have responsibility for overseeing the effective co-ordination of lifelong learning across the two Departments. In this capacity, I am the chair of the interdepartmental committee on the implementation of the national skills strategy. This committee has responsibility for drafting and implementing a plan to realise the targets and objectives contained in the national skills strategy. It is my intention that this plan will examine the existing provision of education and training to ensure a co-ordinated and efficient provision between the respective education and training sectors. The implementation plan will also determine the key areas and initiatives that will require continued priority focus to achieve the objectives of the national skills strategy. It is my intention that this implementation plan will be completed by early next year.
It has been necessary to have a prioritised approach to the 2009 Estimates. While the provision for further and adult education in 2009 shows a small increase on the outturn for 2008, nevertheless it will involve very careful management of the available resources and a reduction in the number of places being funded. This reduction is of approximately 500 places in the back to education initiative, BTEI, and 100 places in senior traveller training centres and will mean the number of places in the BTEI returns to 2007 levels. I shall endeavour in the context of the 2009 provision to safeguard the position of adult literacy, the vocational training opportunities scheme and Youthreach. Allowances to participants in the vocational training opportunities scheme, the Youthreach scheme and the senior Traveller training centres will be increased in line with the appropriate social welfare rates or FÁS trainee allowances. We will continue to provide over 30,000 places in the post-leaving certificate sector.
FÁS and Skillnets, which are the Department of Enterprise, Trade and Employment's two key training providers, have increased their focus on the provision of training to the low skilled in response to the national skills strategy. As a result of the current economic difficulties, particularly the rising unemployment rate, the Government has prioritised the provision of the necessary support services to assist people who have been made redundant and are unemployed. This focus, which will continue in 2009, will be a central part of the delivery of the vision outlined in the national skills strategy. This lifelong learning objective is important. I am pleased to note the three qualifications agencies are to merge as a single body. This was one of the rationalisations of agencies announced in the budget.
Since I was appointed as Minister of State in the Department of Education and Science, I have worked closely with the Further Education and Training Awards Council. The council has been effective in developing a broad range of awards for all learners across further education and training. It is responsible for levels 1 to 6 of the national framework of qualifications. Progression arrangements are being enhanced by this set of new awards, together with the work of the Further Education and Training Awards Council. The merging of the three organisations as a single agency will enhance the lifelong learning approach and ensure the benefits of the councils' work over the past seven years will be realised. The new organisation will build on the leading quality assurance role Ireland has played throughout Europe in the further education and training and higher education sectors. Ireland has made a real difference on the international stage in this regard. The qualifications bodies have ensured we play a lead role in policy development and implementation. I am delighted the lifelong learning approach to qualifications and quality assurance, which is embodied in the national framework of qualifications, is fully reflected in a single strong agency that prioritises the needs of learners.
The Delivering Equality of Opportunity in Schools, DEIS, action plan is the central element of the Department's social inclusion strategy, which promotes equality of educational opportunity for all. A key part of the strategy involves focusing the additional resources which are available on the areas of greatest need. Schools which have been identified as disadvantaged will continue to be fully supported. When the DEIS initiative commenced, it provided for concessionary measures, to last for the duration of the programme, whereby continuing funding would be provided to schools which were no longer classified as disadvantaged. In prioritising expenditure in 2009, it is necessary to cease such concessionary measures. This means that additional posts will be withdrawn from schools which were included in previous disadvantaged schemes but are not included in the DEIS initiative. Similarly, the top-up capitation funding provided to such schools, as well as the dispersed disadvantage funding given to schools not included in DEIS, will be withdrawn. This withdrawal is in line with the broad thrust of the recommendations of the Office of the Comptroller and Auditor General in its 2006 report on primary disadvantage. The office suggested a more focused approach to prioritising expenditure should be put in place.
The 2009 Estimates recognise the importance of the school transport scheme in supporting school access and attendance, particularly in rural communities. The Estimates provide for an increase of 12% in the 2009 allocation, when compared to the initial allocation for 2008. This will enable the provision of school transport for over 136,000 children, including approximately 9,000 children with special needs. The additional funding is particularly important in light of the increase in the number of children in schools, the establishment of new schools and the expanding number of children identified as having special educational needs. I have prioritised funding for school transport to ensure their needs are met. The increase also reflects some of the cost pressures which are relevant to school transport. In particular, the allocation allows for a compensatory allowance to be paid to private contractors who can avail of a fuel rebate scheme until the end of this month.
To meet current demands, payments of post-primary transport charges are being increased with effect from next summer. A single payment of €300 will be payable for each child. The maximum individual family charge payable will increase to €650. Eligible children in families that have a medical card, or children with special needs, will continue to be exempt from the charges. The single payment system is a new departure. It will mean that planning can be undertaken more efficiently for a full school year by Bus Éireann. It will ensure that concessionary transport will be confirmed on the basis of a full school year, rather than on a term-to-term basis. I am aware the term-by-term allocation has caused difficulties for many children and their families. Post-primary transport charges will meet approximately 20% of the cost of post-primary transport in 2009.
Many difficult decisions have had to be made in considering the 2009 Estimates for my areas of responsibility. A commitment has been demonstrated to prioritising investment in difficult economic circumstances. I am confident the steps being taken will ensure the available resources are appropriately used to have the most effective impact in these areas. They will provide for sustainability in the long run.
My office, like the offices of all my colleagues in this House, has been inundated today with calls from people concerned about the impact of this budget on the over 70s. Such people previously qualified for a medical card automatically, without a means test, but they are now subject to such a test. As this day has gone on, we have learned more and more about the nasty aspects of this budget. Perhaps the nastiest development was the posting this afternoon of a notice on the HSE website about the means testing for medical cards of people over the age of 70. Up to now, such people were not means tested unless they had a spouse under the age of 70. In such cases, the threshold for eligibility for a medical card was set at €596.50 for a couple. That threshold has been halved for all people over the age of 70. All couples over that age are now subject to a means test threshold of €298 per couple. The threshold for couples over the age of 70 has been halved, in effect. The means test threshold for a single person over the age of 70 has been set at €201.50. If a single person of that age wants to get a full medical card, he or she must not have an income in excess of €201.50. The relevant threshold for a married couple is €298. That means, in effect, that a person with a relatively small occupational pension will be ineligible for a medical card. This development is shocking and worrying for those in the over-70 age category. I cannot emphasise enough the number of people who are concerned about this. There is a real fear among elderly people that they will not be able to pay for their health charges.
We got a lecture from the Minister for Finance, Deputy Brian Lenihan, yesterday. He told us we should be patriotic. The elderly people of this country, who have paid their taxes and worked hard over their lifetimes, often on small incomes, do not need a lecture on patriotism. They need fair play and an opportunity to have their health care needs looked after at this stage in their lives. It seems the opportunity they were given in that regard is to be taken from them, which is absolutely shocking. The manner in which the means test for medical cards operated before now was relatively progressive. The threshold for a single person under the age of 65 was €164 and the threshold for a single person between the ages of 66 and 69 was €173.50. The threshold for a couple under the age of 65 was €266.50 and the threshold for a couple between the ages of 65 and 69 was €298. The threshold for a couple between the ages of 70 and 79 was €598.50 and the threshold for a couple over the age of 80 was €627. That progression has gone completely. The threshold for those over the age of 70 has been reduced to the level applying to those between the ages of 66 and 69. This nasty little piece of work has been revealed on the HSE website. It was not announced in this Chamber by the Minister for Health and Children when she spoke earlier in this debate. It is a huge cause for worry among elderly people throughout the community.
People are concerned that they will not be able to pay for their medical treatment. Deputy Hoctor is the Minister of State with responsibility for the elderly, but I am not sure if she is aware that the means test has been slashed in this way. The threshold has been halved, where previously it was €596.50 for a couple. This puts fear into the hearts of people who are concerned for their health and it makes them wonder whether they will be able to get the kind of treatment they need. We know that elderly people need to go to the doctor regularly and that it was a great comfort to them when the free medical card was introduced. There were arguments about it at the time, and our party expressed concerns about introducing for everybody, regardless of income. However, it was introduced a year before a general election in order to win that election, but was taken away a year after another general election. That is highly cynical and damaging to the people concerned.
My party leader raised a point this morning about people who gave up their voluntary health insurance because they felt they did not need it following the introduction of free medical cards. Those people are now trying to go back into an insurance system in order to cover health costs. The point made this morning was that if people had an existing condition, then they would not be covered for a number of years if they went back into a voluntary health insurance scheme. Since risk equalisation has been struck down by the courts, elderly people who broke their insurance cover and who wish to go back are in a very uncertain situation.
I want to address some of the other issues that relate to health in this budget, especially the charges that have been introduced. The increase from €66 to €100 for a visit to an accident and emergency department is a huge burden on people who are sick. When Fianna Fáil went into Government back in 1997, that charge was £12, so there has been an 800% increase. There have been increases in charges for hospital beds. The threshold for the drug repayment scheme has been raised to €100 per month per family, which is up from €90. These charges impose huge hardship on families.
The reason the health sector is suffering these increased charges, which are estimated to come to €100 million, is largely due to the complete failure to reform the health services. When the HSE was formed in January 2005, the Minister stated that it would provide efficiencies, save money, cut down on administration and provide funds for the patient at the coal face. It has done precisely the opposite and the Minister for Finance admitted yesterday that there has been an increase of 1,900 administrative staff since it was set up. That is hardly a reduction in the burden of administration. The formation of the HSE was rushed for political reasons so that it could be put in place by 1 January 2005, but it was destined to fail. It was designed simply to stick 11 health boards together and put another layer on top. It was designed to be a centralised dinosaur, with very little power to make decisions at the patient level. As a result of that, it has understandably failed to work. There has been an increase in the budget, but the money has not produced any better results for patients. Bureaucracy has been increased and has made it difficult for people who are directly looking after patients to make decisions in the interests of those patients.
The Labour Party put forward a plan on how the HSE should be reformed. I am glad to see that a little bit of it is being taken on board, as there is an effort to thin out the layers of administration at the higher levels. However, we really need more power for those who are directly working with the patients so that they can control their budgets and decide how those budgets are spent. That has not happened. As a result of the lack of reform, there has instead been a chopping at the edge of the budgets, which will only hurt the patients. It has been admitted that services to patients will be affected by this. The 2% increase given to the HSE will not enable it to cope with the extra demand or with wage agreements that have already been signed. Nor will it enable the HSE to cope with consultants' payments, which have also been increased by agreement. It will not deal with medical inflation, which is probably higher than general inflation.
This winter, we will see more people on trolleys and waiting lists. The Taoiseach made the point this morning that those over 70 who are to lose their medical cards will be all right because they are entitled to free care in the hospitals. They will be so entitled, but how long will they have to wait? We all remember Susie Long, who died on a waiting list because she was a public patient. Are the people who are now losing their medical cards going to have to wait on lists that will grow longer? I understand that health workers in the north east have already been told that their budgets will be cut back by 10-12% in hospitals, and we all know what is going on in Drogheda at the moment.
The health sector has been deeply damaged by this budget, and the vulnerable people in our society, the old, the sick and the disabled are those who will suffer most. They are taking the brunt of it and that is not how it should be. We were told in this budget that the Government was going to protect the vulnerable, but it has done everything except protect the vulnerable. The Government has exposed people to worries that they might not be able to look after themselves when sick.
The leader of Fine Gael raised the issue of the "fair deal" and the ability for someone to offset health expenses against tax. The reply was that it would not come in at the lower rate until the fair deal was in place, so things were fine because people would be covered by it. However, we need to read the small print of the fair deal. To qualify for the fair deal, one has to be assessed as being in a state of maximum dependancy. There are many elderly people who have to leave acute hospitals and go to nursing homes because they do not have enough support to go home, but who are classified as being of medium dependency. From reading the legislation on the fair deal, I believe that such people will not qualify on the basis of the medical assessment. I accept that there is a social assessment as well, but I have no doubt that many in nursing homes will not qualify for this new scheme. Therefore, the families of those people will be affected by the change in the rate of tax that can be written off against medical expenses and expenses for long-term care.
There are many aspects to the budget that will affect sick people. It is a very sorry day for the health services. It will take a long time to recover, yet we still do not know what allocation the HSE will get next year. I have no doubt those figures will have a serious impact on health services in hospitals and in the community. I support the Government's wish that where possible people should be cared for in their own community. I predict we will see cuts in home help hours and in the many other kinds of home supports needed if people are to stay out of hospital.
This is a sorry day for the health services. I wished to highlight the manner in which the over-70s have been treated and how they will now be means tested for medical cards. Many of them are very worried tonight.
Most of the points about the health effects of this budget have been well covered by my colleagues. They highlighted how the budget has imposed numerous stealth taxes and cuts. Deputy Shortall has outlined the so-called treacherous 30. A rational analysis of this budget would leave one in no doubt but that every single citizen will be adversely affected. The Taoiseach yesterday called the nation to patriotic action. In a later deposition, for want of a better word, the Taoiseach stated this Government is predicated on a philosophy of republican egalitarianism. When the Minister for Finance finished his speech yesterday and the backbenchers rose to applaud him, I thought they were going to spontaneously burst into a rendition of "Wrap the Green Flag Round Me". From where I stand as a republican and as somebody who subscribes to those republican ideals and those ideals of egalitarianism, this budget is far from that. If I was an elderly person today, or if I was somebody who was surviving on a low income or if I was unemployed and I was seeking some solace from this budget, none would be found. There is nothing in this budget that covers those people who would subscribe to those same ideals, namely, every single citizen.
If it was an egalitarian budget, it would not have introduced a levy of 1% on all income. If we subscribe to the notion that taxation must be equitable and fair and it must abide by the canons of taxation, then the tax rates would have been increased and the Minister would not have increased taxation on all income. I wish to nail the lie that this is somehow a progressive measure. What it seeks to do is further decrease take-home pay and real income. The people most affected will be those on the margins or in the low-income bracket. If this is coupled with the increases in stamp duty, the increased charges for third level registration, increases in VAT and in DIRT, no matter what way, such people will be caught on all sides. These are not the actions of a Government that cares about levelling taxation in a truly egalitarian manner.
I had a call today from a lady from Cloyne in my constituency of Cork East. This lady is married, there are two incomes coming into the family and she has four children. This is a person who is rational in her assessment of the current climate. She and her husband have lived through the 1970s and 1980s and had begun to raise a family in those times when her husband and herself were paying 50 pence in the pound and possibly more in taxation. She has a 22-year old son and she is now actively encouraging him to emigrate. She told me she can see no hope for him in the present climate in this country. She is telling him his best chance of getting a good job and surviving in this world would be to get out of here. There is nothing that she could see in the current climate that would give her or her family any hope. She told me that her husband is near retirement age and that they both worked hard for every single penny they earned. They never asked for anything from the State. They never had medical cards. They paid the high rates of tax in the 1970s and 1980s. They sent their kids to college but they never qualified for third level grants. That family is representative of thousands of families who today will have to pay the price of the profligacy of the past seven or eight years. They will have to pay the cost of that deficit of approximately €12 billion, if the figures are to be believed. As her public representative, what am I to say to her to give her any hope for the future? I do not blame her for the cynicism that she expresses about the political system. When I hear the Government wrapping the language of this budget in patriotic fervour and republican egalitarianism, it sticks in my craw a little bit. The Government, notwithstanding the external forces we hear so much about, must take some level of political responsibility. If we were on that side of the House, we would have to take political responsibility if the cards were stacked in the same way. This is what the people want, particularly those who are on low to middle incomes. They do not want always to be forced to pay the price of Government profligacy. This is not what they have subscribed to. They are, by their nature, always PAYE workers and they are the people that work the hardest, put their children through college and do not expect a lot from the State but they do not expect to be punished by the State either and that is what this budget has done to those people. If we are talking about egalitarianism and about equity in the system, then I call on the Government to reverse some of those measures to at least release the real income or let them claw back some of that real income they have lost through these measures. This would be equitable and fair and there would be a greater share of the burden of responsibility. As a high-income earner, I would be happy to take on a greater burden if necessary.
It is often said that the true mark of an egalitarian society is how older people are treated. This budget has clawed back the medical card for the over-70s and this is nothing short of a disgrace. I will not use superlatives or come out with a soundbite but it is unfair on those people. We had created expectations and put in place a system that people had become familiar with. When they came to the autumn years of their lives they had the peace of mind of knowing they could go to the GP when they wanted to and had that little entitlement when inflation and the cost of living were increasing. They no longer have that little cushion. I call on the Government to reverse that as an egalitarian and truly republican measure. If the Government subscribes to those ideals it will reverse this measure.
Listening to Deputy Sherlock speak and recalling how the Government tried to wrap the green flag around itself one is reminded that "patriotism is the last refuge of a scoundrel." This Government has behaved like a scoundrel. Over the past couple of days we have had an example of what happens when the entire future of a country is invested in a pyramid scheme. The Government invested everybody's hopes, aspirations and financial future in a housing bubble. Like every other pyramid scheme, that bubble collapsed, leaving ordinary people, as with every financial rip-off, carrying the can. I would like to talk about some of those people, but before I do that I will digress.
A couple of years ago I heard an old Chinese fable and I could not make sense of it until the past couple of days. It is about a scorpion during a flood seeking a lift across a river from a frog. The frog refuses, saying if he lets the scorpion on to his back the scorpion will sting and kill him. The scorpion replies that if he does that they will both drown in the river. The frog sees the logic, allows the scorpion on to his back and sets off across the river. Half way across the scorpion stings the frog and they both begin to drown. When the frog asks the scorpion why he did it, the scorpion replies that it is in his nature and he cannot help it. Such is the type of Government we get from Fianna Fáil. It is in the party's nature and it cannot help it. Fianna Fáil cannot help ripping off the small guy and looking after the developers. While the Galway Races tent is packed up in a Barna shed somewhere, the mentality is still alive.
The Government told the public it was mending the roof and the country. That is easy to do when the sun is shining. When it started to rain we found out it was doing nothing. I looked at the Visitors Gallery today and saw 18 year old children. For the past 18 years those children have been coming here and they would have seen a remarkable change in our country. Where are they? A child born in 1989 is no better off in 2008 because, as Deputy Shortall pointed out today, developments such as third level education are being undermined. The children's allowance that allows children to continue in the education system has been taken away. Even illness benefit for a child is not paid until he or she is 18 years old. Undermining, undermining, undermining. One must ask why, when there is a downturn in the economy, one which was signalled for a number of years, the most vulnerable and the weakest are the first to be hit. How does it make sense that taking a medical card from a 70 year old or an 80 year old will give somebody a job sooner? It will not provide a single job.
Before the budget, the Labour Party gave the Government a road map because this budget has no strategy. We needed a budget that would create a job strategy with managing public finances. This budget has done neither. We should have got a very clear strategy that would have given the public confidence that there is a way out of the morass it caused. The Government can blame international finances until the cows come home, but with its buddies it created this property bubble, and it has fallen on top of all of us. The Government could have redirected or restimulated the housing sector and the Labour Party put forward many options. It could have provided educational and training options for people who are losing their jobs. It could have made the social welfare system more flexible so that people are not waiting for 12 or 18 months to requalify to return to employment options.
Last Saturday morning I heard the Minister, Deputy Brian Lenihan, trying to pretend he is Roosevelt, talking about a "new deal" and saying we have nothing to fear but fear itself. To use a Roosevelt term, he has pulled the social contract out from under people in this country. People who have been paying social welfare contributions find from this morning they have to pay twice the contributions they paid yesterday and they are entitled to only half the benefit. For the past ten years we have had developer-led Government. What we need is Government-led development. That is an entirely different concept. Like the scorpion on the frog's back, we will never get Government-led development from Fianna Fáil.
Tá mise ag roinnt mo chuid ama leis an Aire Stáit, an Teachta Curran. Time and again the Opposition states the money was wasted in the past ten years, but the record is very different. In the past ten years we reduced the national debt, which was extraordinarily high after the 1983-87 coalition of Fine Gael and Labour. We dramatically reduced that until we had the lowest debt to GDP ratio among Europe 15, other than Luxembourg. We went further. We put a huge amount of money into the pension reserve fund, putting money aside for the future because we were aware that the rate at which money was coming into the Exchequer could not continue indefinitely. We put money aside for the rainy day. We spent money on improving services. In every school in the country one can find a large number of staff who would not have been there five, ten, 15 or 20 years ago. I remember when a three-teacher school was literally a three-teacher school. There was no support or ancillary staff. That has all changed dramatically.
We are involved in the greatest ever investment in infrastructure in this country. When we came to power €320 million was being spent on national roads. The budget for 2009 is €1.9 billion. We were spending something paltry like €12 million on railways, but now we are making major investment in light and heavy rail throughout the country. We have provided our citizens with one of the best social welfare systems and pension rates anywhere in the developed world. Anybody who is used to dealing with people from other jurisdictions, when he or she examines what people get, realises how good our social welfare system is. That is where the money was spent and if that is what the Opposition Members consider wasting money, let them stand on their record. We were right to invest the money in these different ways and it was prudent.
I also recognise this budget was difficult for people. In the past ten years we have had the luxury of unprecedented economic growth. Year after year on budget day we could give more and more and were always able to give more than we took away. However, no matter how high the mountain, people want to go one step higher. It is a human desire. Therefore, I fully accept it was a shock to people this year that in the difficult budget we had to announce yesterday we had to ask the taxpayer for more than we could give. That was necessary to protect into the long-term, distant future the quality of the services we have developed and, particularly, to protect the vulnerable.
The Deputy is trying to create a fear factor.
Virtually all reputable economists agree it was necessary for us to take the steps we took to consolidate the gains we have made and to make sure they last into the future. However, when one examines all the decisions made collectively, it is clear there were a number of basic aims. The first was to protect those on social welfare, with a €500 million package. The second was to protect those on lower incomes by putting a greater proportion of the burden on those with higher incomes while at the same time not creating a disincentive for employment and development. The third aim was to continue with the vast majority of the investment outlined in the national development plan, including in schools and our road and rail networks.
There are those who believe all our problems can be solved by reductions in cost of the public service. Indeed, the Government has built in significant savings in the cost of the public service for next year. However, it is insulting and grossly inaccurate for people to infer that most public service workers are either unproductive or underemployed. Having worked with public servants for many years I wish to state that my experience has been that many of them go way beyond the call of duty. Any time I have asked public servants to attend meetings at night, they have done so without question and with no additional remuneration. Of course there are people in the public service who do not deliver but that is true in all situations where thousands are employed. There will always be a few who are not pulling their weight. However, I have met many public servants who go way beyond the call of duty and who more than make up for those who might be less than productive.
The Government is making radical changes and I have announced a number in my own Department. There is no question that all of us can create efficiencies. In the past three years I have set about amalgamating the Leader and partnership companies. It was a slow process and I thank some Opposition Deputies for their enormous support in this regard. The amalgamation was necessary because there was duplication of effort between the two organisations. Likewise, I amalgamated Bord na Gaeilge with Foras na Gaeilge because there was no need for a free-standing board in that case.
I have no doubt that in the coming months, however, as decisions are made by the Government and put into action in the wider public service, despite present calls for even more radical action, we will be inundated with representations from Opposition Deputies to preserve the jobs and conditions of employment of those in the public service. I hope I am wrong and that the Opposition shows consistency in this case and supports the necessary measures we will take to ensure we have the best public service in the world.
There has been a well-orchestrated campaign in the last few weeks to convince people that decentralisation is at an end, with references by the Labour Party to phantom civil servants and so forth. Even last night, certain media headlines were claiming the programme had been abandoned. Like Mark Twain, the rumours of the demise of decentralisation were greatly exaggerated and the facts speak for themselves. To date, 2,500 people have already decentralised and progress will be made immediately with the decentralisation of another 3,500 people, making this by far the most ambitious decentralisation programme ever, with the headquarters of numerous Departments relocating to various parts of the country.
I recognise we have deferred the relocation of the final 4,000 posts for reconsideration in 2011. In the current circumstances, this was a wise decision. However, this should not detract from what has been achieved and the benefits it has brought to many communities around the country. It is interesting to note that one of the happiest campers in the Dáil yesterday evening was an Opposition Deputy who has seen at first hand the benefits of decentralisation, not too far from Deputy Devins's part of the world. He said to me "Fair play — you are providing the jobs", and I am.
Based on the realities, my Department could not have expected to receive the same money in 2009 as it received in 2008, and therefore, I had to make some difficult decisions. That was inevitable.
I gcoinne na cinnití sin, tá cinneadh déanta againn na seirbhísí atá ar fáil don ghnáth-phobail a chosaint, chomh fada agus is féidir. Déanfaimid é sin trí chinntiú, chomh fada agus is féidir, go ndéanfar an tsábháil trí laghdú a dhéanamh ar na costais, nó forchostais, a bhaineann leis na scéimeanna a riaradh. Tá sé ráite agam le lá anuas go ndéanfaimid gearradh siar ar na forchostais sin. Déanfaimid cinnte de go leanfaimid ag cur seirbhísí idirghabhála ar fáil do chuid de na pobail is leochailí agus is tábhachtaí sa tír. Déanfar laghdú iomlán de 6% ar Vóta na Roinne. Beidh laghdú de 5% ar mhaoiniú reatha agus laghdú de 8.5% ar mhaoiniú caipitil.
Ainneoin sin, tá na príomh-chláir ag dul ar aghaidh go láidir i gcónaí. Ní bheidh aon laghdú ar an líon daoine — 2,600 i láthair na huaire — fostaithe faoin scéim shóisialta tuaithe, mar shampla. Tá an scéim ag déanamh an-leas don dream atá ag glacadh páirt inti. Freisin, tá sé ag déanamh an-leas dos na pobail tuaithe. Déanfar a thuilleadh forbartha ar an gclár sheirbhísí pobail. Faoi láthair, tá 355 tionscadal á mhaoiniú faoin gclár, agus thart ar 1,800 duine ag obair iontu. Méadófar na figiúrí sin go dtí thart ar 2,100 duine agus 440 tionscadal. Déanfaimid é sin trí bhainistíocht chúramach a dhéanamh ar an airgead. Ar ndóigh, beidh na scéimeanna sin á riaradh an bhliain seo chugainn.
Cuireann mo Roinn airgead ar fáil le haghaidh infreastruchtúr i gcuid de na ceantair is mó faoi mhíbhuntáiste sa tír. Táimid ag caint mar gheall ar mhíbhuntáiste tíreolaíochta i gcás na gceantar tuaithe, agus míbhuntáiste eacnamaíochta agus sóisialta i gcás na gceantar RAPID. Tá maoiniú ar fáil arís i 2009. Mar shampla, tá €24.5 milliún ar fáil le haghaidh infreastruchtúr faoi CLÁR agus RAPID. Ar ndóigh, bíonn na scéimeanna sin in ann an-chuid airgid eile a tharraingt chucu chun déanamh cinnte de go gcuirfí bun-infreastruchtúr ar fáil sna ceantair éagsúla.
Idir infreastruchtúr Gaeltachta agus oileáin, tá €35 milliún — an méid is mó airgead a chuireadh ar fáil le bliain nó dhó anuas — ar fáil. Leanfar le chuid dos na tionscadail mhóra atá ar bun. I mbliana, táimid ag críochnú na hoibre ollmhóire, idir aerstráiceanna, céanna agus dreideáil, a bhí ar bun ar Inis Bó Finne. Tá an cé nua a thógadh ar Inis Meáin le n-oscailt i gceann míosa. Tá an tionscadal is mó Gaeltachta agus oileánda riamh — leathnú na céibhe ar Inis Mór Árainn — tosnaithe. Is tionscadal gur fiú €40 milliún é.
Tá sé sin go h-ard ar na buaiceanna againn, a luaithe agus go mbeidh an ceannach éigeantach déanta. Tá sé ráite agam arís agus arís eile, agus dúirt mé é ar Raidió na Gaeltachta inniu, go bhfuil Oileán Thóraí agus Inis Oírr ar an dá chéad rud eile ar an gclár. Tá €25 mhilliún de chaipitil d'airgead oileánda an chéad bhliain eile. Bhí siad i gcónaí chun dul ag titim i mbliana mar go bhfuil cuid mhaith de na tionscadail móra curtha i gcrích. Aisteach go leor, ní hiad na haerstráicí is costaisí le tógáil. Tógann aerstráice €4 mhilliún nó €5 mhilliún, ach tá na céibheanna i bhfad níos daoire mar is eol don Teachta.
Tá súil agam go mbeidh, agus táim ag cur brú an t-am ar fad ar Chomhairle Chontae Thír Chonaill dul ar aghaidh agus an cheannach éigeantach a dhéanamh.
Ba mhaith liom a lua freisin nach mbainfidh an dleacht €2 a fógraíodh do thurais eitleán leis na seirbhísí aeir go dtí na h-oileáin, mar ar ndóigh, is riachtanais iad na seirbhísí sin, seachas sóláistí. Sílim go bhfuil sin cothrom.
Maidir le hÚdarás na Gaeltachta agus an Ghaeilge sa Ghaeltacht, beidh laghdú substaintiúl i mbuiséad riaracháin an údaráis. Creidim go mbeidh an údarás in ann sin a sheasamh. Beidh cinnití agus sábháiltí le déanamh acu, ach má chuireann siad chuige, beidh siad in ann iad a sheasamh. Beidh mé ag casadh le príomh fheidhmeannach agus cathaoirleach an údaráis len é sin a phlé amárach. Maidir leis an gclár caipitil, séard atá gheallta don údarás thar an dá bhliain, ná €45 milliún. Tá sé i gceist anois €2 mhilliún breise a chur le hairgead na bliana seo agus tá laghdú €1.5 milliún don bhliain seo chugainn. Ciallaíonn sin go mbeidh €0.5 milliún níos mó á fháil ag an údarás thar an dá bhliain le haghaidh caiteachas reatha.
Baineann gné shubstaintiúil d'obair mo Roinne le cúrsaí Thuaidh-Theas. Tá áthas orm a fhógairt anseo tráthnóna, ó thaobh An Foras Teanga agus Uiscebhealaí Éireann, go mbeidh an méid céanna airgid á chur ar fáil an bhliain seo chugainn agus a bhí ar fáil i mbliana. Nuair a tháinig mise isteach sa Roinn sa bhliain 2003, an chéad bhliain iomlán don Roinn Gnóthaí Pobail, Tuaithe agus Gaeltachta, más buan mo chuimhne thart ar €230 milliún nó €240 milliún a bhí ag an Roinn. Séard a bhéas ann an bhliain seo chugainn ná €520 milliún. Fiú ag tógáil boilscithe san áireamh, taispeánann sin an méid ollmhór atá tagtha ar chaiteachas na Roinne.
It is amazing how people forget the way it was in the past. When I came into the Department in 1997, the total capital allocation for the islands was €1 million. This year, despite a slight decrease, it is €25 million. In 2003, the budget of the Department was less than half of what it is today. There will not be as much money available next year and there will be a small reduction. However, when it is put in the context of how far we have gone so fast, I believe with careful management of the money we can achieve great benefits next year.
The rural development programme to be announced in the coming weeks will be the largest rural development programme ever and will involve an investment of €425 million. It will be almost three times the size of the programme which ran from 2000 to 2006. The programme will be rolled out between 2009 and 2013. Within this programme are major opportunities for people to develop rural areas and overcome some of the challenges they face at present.
As Minister, I will continue to focus on urban deprivation in which we face major challenges, some financial and some social. I will continue to make a major commitment in time and effort to the RAPID programme which is slowly but surely acquiring the confidence of the people in the communities affected. We will continue to roll out the programme as vigorously as ever.
The Department of Community, Rural and Gaeltacht Affairs has always been focused on helping disadvantaged people by supporting communities throughout the country. This disadvantage, whether in urban or rural areas, can come in a range of forms from social exclusion to communities damaged by drugs problems.
I remain committed to the local development social inclusion programme and the community development programme and to the communities they serve. The range of social inclusion programmes, including the local development social inclusion and the community development programme have made a considerable contribution to the tasks of countering disadvantage and in promoting equality and social and economic inclusion.
The high numbers of communities and individuals supported by the programmes since their inception is the result of the hard work, commitment and co-operation not only of the personnel of partnerships but of the boards of partnerships and the boards of the community development projects and their inclusive representation in many cases from the State, social partners, elected representatives and, perhaps most important of all, the community sector. The key to the success of many social inclusion programmes is due in no small part to the input and commitment from individuals and community groups from all over the country.
Active citizenship is the key to success with each resident considering what he or she can do to bring about the changes needed to access opportunities and to enhance community life. This is at the core of the principle underpinning all social inclusion programmes and initiatives. Community and voluntary activity is at the centre of a vibrant and inclusive society and the Government recognizes the invaluable role it plays. The Government is committed to the principles underpinning the relationship between the State and the sector as set out in the White Paper on supporting voluntary activity, as well as taking on board the work of the task force on active citizenship. By building on our experience of community consultation and participation, we can continue to improve the delivery of necessary supports to local communities.
However, in a vastly altered and ever-changing economic and social environment, the concept and reality of "community" are not what they were when this and other programmes started out. Our society, our family unit and by extension, our communities are now much more diverse. Programmes such as this, need to adapt to this new diversity and to new and emerging trends in as full and inclusive a way as possible. In the current economic environment, there is an ongoing need to ensure that resources are directed in a targeted and effective manner and that we constantly subject our activities to critical appraisal. In this way we can continue to ensure that those we work to assist will receive the maximum benefit.
I pay a special tribute to the countless volunteer members of local boards of management of community projects. Often working with limited resources, they put in many hours of voluntary effort for the good of the people in their neighbourhoods. We need to cherish the values that inform and drive those who have taken upon themselves the responsibility for the development of their community, their locality, and the promotion of social inclusion. We are entering a difficult period, but with prudent management of our scarce resources, I look forward with confidence to the further successes that the local and community development programmes will bring over the next year.
There will be continued support for the elderly through the community support to older people scheme. This scheme has been successful in supporting community groups to provide essential security items for older people living at home. Funds are made available for socially monitored alarms; smoke alarms; door and window security; emergency external lighting and a range of other personal security equipment. Last week, I was in Kerry where Muintir na Tíre held a community awareness week. I was asked about the scheme and I stated the scheme of grants in place would remain in place. It could easily have been withdrawn but I have seen its benefits first hand.
I have increased the provision to €3.5 million for 2009 in line with the level of demand evident in recent years. This scheme is modest in the overall context of the budget and even in the context of the broad range of funding provided for the community and voluntary sector. However, it is one area that clearly delivers front line services to those older people in our urban and rural communities most in need of reassurances and protection in their homes.
My Department, through its funding to voluntary and community groups, also supports a growing variety of opportunities for citizens to get involved in a task or organisation that appeals to them. Yesterday, I had a very useful discussion in the Seanad on the role of volunteering in Ireland. During this discussion, the immense contribution of volunteers to society was highlighted on all sides of the House.
I recently attended a number of "Give It A Swirl Day" events, an initiative promoted by Volunteer Centres Ireland through its members around the country, and it is a great example of an innovative approach to encouraging people of all ages and from all walks of life, individuals, families, community groups and businesses, to get involved for just a few hours, in a hands-on volunteer project in their local community. The events held throughout the country include activities such as community clean-ups, tree planting, decorating homes for the elderly and painting murals. Other initiatives assist sporting organisations like the GAA to develop opportunities for volunteers in local clubs and to engage with other voluntary groups to achieve wider community objectives.
This network of volunteer centres across the country is funded by my Department and now provides annual funding of approximately €2.5 million to 20 such centres located throughout the country. So far this year, these volunteer centres have registered more than 5,660 volunteers and more than 800 volunteer-involving organisations. It should also be noted that 56% of registered volunteers had never volunteered before and 70% are aged 35 years and under. We often roll out new initiatives and let them off. However, we took the view in the Department that this initiative needs to be critically monitored and evaluated from an early stage to achieve best practice, high standards and the roll-out of volunteer centres on a national basis.
I am aware that in the current economic climate difficult decisions need to be made and compromise is required. However, this does not signal in any way an end to progress in the implementation of the national drugs strategy. Rather, it means that all involved will have to continue to build on the progress made to date and be innovative in our response to the ever-changing patterns of drug misuse.
The partnership approach, which underpins the strategy, involves statutory agencies working together with the community and voluntary sectors to combat the problems associated with substance misuse in our communities. Collaboration, a key element in our achievements so far, has made a significant contribution to the roll-out and effective running of drugs programmes. I am confident that together we can continue to build on these achievements.
Investment is set to continue and over €61 million has been allocated in the Department's Vote for 2009. However, this represents only part of an overall allocation of over €200 million, provided by the Government across several Departments and agencies, to tackle the drugs problem this year. As I keep pointing out, tackling drug misuse requires a multi-agency, partnership approach and we must not lose sight of this with the publication of the 2009 Estimates. The Department of Community, Rural and Gaeltacht Affairs does not work in isolation and the Government is continuing to invest in the drugs strategy across the relevant Departments and agencies.
Funding from my Department is provided annually for the projects operating in the local and regional drugs taskforce areas under their respective plans, including those under the emerging needs fund. Funding will continue in 2009 for projects targeting services for particular communities and areas of need ranging from treatment, rehabilitation and prevention to supply reduction, education and research. In 2009, funding will also continue to be targeted at initiatives introduced in 2008. This will cover new responses to cocaine misuse across the taskforce areas. It will also cover measures to strengthen and deepen existing cocaine specific projects, as well as others aimed at polydrug-cocaine use in taskforce areas. Cocaine remains a significant problem that touches all levels of society but has a disproportionate effect on areas of disadvantage. I am delighted, therefore, that my Department is investing in this initiative.
I am also making funding available in 2009 under the rehabilitation initiative introduced in 2008. This measure, which is also taskforce led, will assist recovering drug misusers to regain their capacity for daily life, allowing them to reintegrate into their families and communities and begin to lead more meaningful lives again. It also represents a step towards the implementation of the recommendations in the report of the working group on drugs rehabilitation, published last year. It made a series of recommendations for the development of a comprehensive rehabilitation pillar under the drugs strategy.
The Health Service Executive will take the lead role in the implementation of these recommendations. A national drugs rehabilitation implementation committee is in the process of being put in place to dovetail with the appointment by the Health Service Executive of a senior rehabilitation co-ordinator who will chair it. The first meeting of the committee will be held on 6 November. It is envisaged the working group recommendations will be implemented over several years, depending in part on the funding available.
With regard to the young people's facilities and services fund, my Department is progressing arrangements to transfer the functions and duties relating to the fund to the Office of the Minister for Children and Youth Affairs. The fund's integration into that office will provide a cohesive and comprehensive response to the needs of all young people, including those at risk of drug misuse.
My Department has also addressed the needs of young people in the areas not covered by the young people's facilities and services fund. Under the regional youth initiative, capital funding of over €2 million will be provided for the development of 16 dedicated youth facilities where the young people's facilities and services fund does not operate.
My Department has also made provision in 2009 for the valuable work of the national advisory committee on drugs, the research arm of the drugs strategy. I expect to continue to provide a grant to support the work of the national drug documentation centre which operates under the aegis of the alcohol and drug research unit of the Health Research Board.
The period covered by the current national drugs strategy comes to a close at the end of this year. My Department, aided by a steering group made up of representatives of the various interested parties, is working on the development of the new strategy for 2009 to 2016. It is vital to get the new strategy right and to have relevant targets, demanding but achievable, with the optimum structures in place to facilitate their implementation.
While I am aware of the current economic climate, I intend to strive to ensure that as many as possible of the concerns voiced during the comprehensive consultation process undertaken by my Department, particularly at the 15 public meetings held around the country, are taken on board. I will also be placing great emphasis on ensuring that addressing the problem of substance misuse remains a priority for all key Departments and agencies involved in the delivery of the new strategy, which I hope to launch in early 2009.
While recognising that reduced funding is available to my Department, it is my objective to ensure maximum funding is directed to frontline services. To achieve this, my Department will not be entering into new contracts to provide support services to community development projects. These supports will now be provided directly by staff in my Department. Further efficiencies will be achieved by reducing our Department's dependence on the use of outside agencies. Specifically some work being carried out by Pobal on behalf of the Department will revert to the Department. Maximum funding will be provided to frontline services such as partnerships, community development programmes and drugs taskforces. Savings will be made in administration through the Department.
This is a rough budget. It is rough on the vulnerable, the poor, children, their parents and teachers. It is particularly rough on the elderly where many of the supports they had come to rely on are being removed without notice. It is also rough in its construction, showing all the signs of a hastily produced document. Many Ministers, even those with a certain competence in economic matters, were not able to explain details of the budget in either last night's or today's debates on the financial resolutions. There have been four different explanations as to how nursing home fees will be treated for tax purposes in the future, with no satisfactory explanation yet. In the late afternoon, the Minister for Health and Children, Deputy Mary Harney, was forced to back down on the 2% health levy which would now apply to the over 70s who are no longer exempt because they possess a medical card. It is a rough budget in every respect.
One reason it is rough is that its date was conceived as a public relations stunt. There is very little in it which will come into effect until 1 January 2009. There was no reason, therefore, for bringing the date forward. We could easily be debating this budget in the first week in December and it would make no difference to the fiscal position. However, after a period of inactivity since the Taoiseach was elected and throughout the summer, the Government needed to show it was in charge, in command, busy about the nation's business. So we had this public relations stroke to bring the budget forward. The stroke went sour because the budget date more or less coincided with both the domestic and international financial and banking crises. That must have put enormous pressure on the key officials, particularly those in the Department of Finance, and the key Ministers. As a consequence, we have had a roughly hewn document which was not subjected to the normal proofing and scrutiny that would apply if the budget was delivered at the normal time.
Another problem with the budget, which is based on a fallacy, is the suggestion that somehow or other the crisis is connected to the banking and financial crisis, which it is not. If the banks were as sound as the Bank of Ireland used to be in the olden days and if there was no problem in any international bank and no liquidity or credit problems anywhere in the world, Ireland would still have a major fiscal problem because revenue receipts no longer match expenditure and the gap is widening. It is a separate matter, yet Ministers have tried to wrap both issues together. They have tried to excuse their incompetence over the years by pretending that this budget and the problems it deems to address were a by-product of a wider financial crisis. They are not. This is a stand-alone crisis.
Another fallacy is that nobody saw this coming and that suddenly, in July, the ground opened under Ministers' feet and they had to introduce emergency measures before the summer recess, cutting expenditure by €400 million to balance the books for 2008. There was another cataclysm after the summer when they saw things were going wrong for 2009 so they had to advance the budget date. That is all bogus, however, because this situation was well flagged. It was flagged in this House and by economists. The then Minister for Finance, who is now the Taoiseach, did not take action because he had a political agenda within the Fianna Fáil Party. He did not want to be the Minister for Finance who had to deal with these issues, but the issue was there over 12 months ago. When the former Minister for Finance came into this House on 27 June 2007 and introduced the Finance (No. 2) Bill 2007, we told him there was an emerging deficit that needed to be bridged. The Bill contained the paltry measures he took on stamp duty after the election. I stood here on that day and saw the Minister for Defence, Deputy O'Dea, sitting beside the then Minister for Finance. I told him that the figures from the Cental Statistics Office were out and that housing starts for each month from the start of the year were down dramatically. As night follows day, if housing starts are down in 2007, housing completions will be down in 2008. I told him, and he knew, the rule of thumb was that for every 10,000 fewer housing completions, €1 billion less comes into the Exchequer. The figure was falling from 90,000 houses and was heading down to approximately 45,000. It is heading down to 25,000 for 2009. The Minister of State can do the calculations for himself.
I asked the former Minister for Finance to introduce a White Paper in the autumn to show how he would bridge the emerging fiscal deficit. In his reply, he dismissed me in the way he always treats intellectual inferiors. Of course, that would not upset anyone because in the Taoiseach's world everybody from the Fastnet to the Cliffs of Moher and up to the Giant's Causeway is an intellectual inferior so we were part of a fairly large group. The Taoiseach knew, however. He is shrewd and understands finances. He knew what I and other Deputies were talking about, but he chose not to deal with it because he was running a different political agenda.
Like all Ministers for Finance, the current Minister had three choices to bridge the gap between receipts and expenditure. He could tax, borrow or cut expenditure, and they are all connected. In my view and that of many people outside this House, he is borrowing and taxing too much, while not cutting enough. It is as simple as that. One may ask where the Minister could make more cuts, but what he is doing now is unsustainable because he is driving the country further into recession. There is no chance that we can tax, cut and borrow our way out of this problem. The only way out of this problem is to grow our way out of it. As the country goes back on a growth path, the revenue will be yielded once more that will match the expenditure we desire to make. That is the only way out of this. It was the only way out of it in the 1980s and it is the lesson of the 1990s. Unless we get the country back on that growth path again we will have no chance. Instead of going back on that growth path, however, the Minister is making things worse. In simple economic terms, if one takes €2 billion of spending power, which is the tax imposition of this budget, out of consumers' pockets and transfers it to the Government, there is a problem. That money will not be spent by consumers, which will deepen the recession. That is the difficulty the Minister is facing.
We had two phases of the Celtic tiger. The first phase was the genuine Irish fairy story, the real success story, whereby the model was based on a competitive society. Labour costs were low, there was great output and productivity by Irish workers and the cost of utilities and other facilities was competitive. We had export-led growth and were successful in manufacturing industry and internationally traded services. Our employment rate increased from about 1.1 million to over 2 million.
We then had the false model whereby we became uncompetitive and the Government drove the country by over-stimulating the building industry. That bubble has now burst so we must get back to the path of growth, which yielded results in revenue, employment and living standards which we all enjoyed. Without a strategy for growth, however, we will go nowhere. There is no such strategy in this budget, apart from one item, an increase in the provision for research and development in industry, whereby the tax credit goes from 20% to 25%. That is welcome but it stands out like a lighthouse in a bog as the single item to encourage industry back to the path of the 1990s when we had a really competitive economy based on internationally traded goods and services. That is where we have to get back to, but we are not going there with this budget. Far too much — €2 billion — is being raised in taxes and there is far too much borrowing. The borrowing levels are frightening. Over 16 months the position has deteriorated by about €20 billion, which is scary. Just because the Minister receives a standing ovation for introducing a budget, it does not mean the trajectory is stopping.
The trend is downwards, while borrowing is rising, but the budget will not stop it. It collects €2 billion extra and gives the Minister permission to borrow, but he will be borrowing about €12.5 billion in 2009. This is crazy stuff. The GDP-debt ratio was approximately 25% this year and it will be 43% next year, which is some jump. The year after it will get worse. Anybody on the Fianna Fáil backbenches who thinks this is a once-off story should think again. For reference, they might examine the Taoiseach's speech this morning in which he stated that he wants to:
establish a long-term sustainable path, whereby day-to-day expenditure corresponds to tax receipts. As tax revenues are 10% less than expected for this year, with little improvement in that position assumed for next year, that can only be done progressively over time.
The Taoiseach wants to bring the budget back into balance and suggests he will do so by taxing, making up the 10% gap by further taxes. It is in his speech that we will not have this big gap forever, but that is for the lads in Europe.