Dáil debates

Tuesday, 4 November 2008

Financial Resolution No. 15: General (Resumed)


Debate resumed on the following motion:

THAT it is expedient to amend the law relating to inland revenue (including value-added tax and excise) and to make further provision in connection with finance.

—(The Taoiseach).

8:00 pm

Photo of John O'MahonyJohn O'Mahony (Mayo, Fine Gael)
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I wish to share time with Deputy Clune.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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Is that agreed? Agreed.

Photo of John O'MahonyJohn O'Mahony (Mayo, Fine Gael)
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I thank the Leas-Cheann Comhairle for the opportunity to address a number of issues on a budget that obviously was rushed and so poorly thought-out that the old, the young and the farming community in particular have been forced to take to the streets to fight for their rights. The bringing forward of the budget by eight weeks was meant to demonstrate the Government was in control of significant problems in the economy and was willing and able to deal with them in a fair and equitable manner. What has emerged, rather, is a badly thought-out document, which uses as its prime target the most vulnerable, the elderly, students and farmers. As I already have spoken on the education issue, I wish to turn my attention to the cutbacks in the budget pertaining to farming.

The farming industry is a sector of the economy that has taken and survived many hits over the years. While manufacturing, construction and some service industries have come and gone, farming has managed to withstand more downturns than most. It has had its good days but these have been far outnumbered by the difficulties it has faced. Farmers have seen the prices they receive for their produce fall while the price paid by the consumer has rocketed in some cases. For example, earlier this year grain farmers were obliged to accept a large reduction in price for their barley from Diageo. Concurrently however, Diageo increased the price the same farmers were obliged to pay for a pint of Guinness for the third time within a brief period.

I wish to refer to a few of the savage cutbacks in the budget that, if implemented, will drive people from the land. If this is allowed to happen at this time, it will have far greater consequences than would have been the case a few years ago, when there were opportunities available in other sectors, such as the construction industry in particular, and young farmers had a choice. The only choice the proposed changes will leave them with is the emigrant aeroplane or ship.

First, the installation aid for young farmers, which was an incentive for the young population to get into farming, was axed. The €15,000 grant has been withdrawn just when it is most needed to provide a sustainable job. One often hears of the enormous cost of each job created in the manufacturing industry. Although such jobs now are announced only rarely, their cost far exceeds €15,000 per job. Earlier, I read a document in which the creation of every job by the IDA is estimated to cost approximately €60,000, which is far removed from the moneys needed for the installation aid.

Last week, I was visited in my clinic by a mother who last year convinced her son not to take up a job offer from Mayo County Council, in order that he might do the course to qualify for the green certificate and become a qualified farmer. Although he now has a green certificate, he is not entitled to installation aid because he had not completed all the documentation for his application and has no immediate prospect of a job outside farming. It has been suggested that this scheme merely has been suspended. However, even were the scheme to be restored, this would be of little use to the aforementioned young man who, being just within the allowable age limit at present, would be too old. Members have been told the average number of take-ups of this scheme is 800 per annum. The announcement of such a number of jobs in any other sector of the economy at present would be the cause of a national celebration. Members should remember the total cost to the Government was only €7 million, or €8,750 per young farmer, as the remainder of the cost was met by Europe.

The cuts in the disadvantaged area payment in the budget also will have detrimental effects on the smallest and weakest farmers. In my constituency of Mayo, farmers on the maximum 45 hectare limit will lose €1,300 per year. If that loss is added to the cutback in the suckler cow welfare scheme, the average farmer in Mayo will be at a loss of a minimum of €2,500. This will cost the farmers of County Mayo alone millions of euro. The budget seems intent on shutting down farming as a career in rural Ireland. Fairness and equity were promised in the budget and a strong case exists for a reversal of some of the aforementioned measures, both to support young people to take up jobs that await them and in the interests of fairness, equity and economic sense.

I will conclude by noting I already have spoken about education cutbacks. I attended a meeting last week in Claremorris of 1,500 farmers at which the anger and dejection were palpable. One must not forget that not alone are farmers losing money in the aforementioned cutbacks, as mothers and fathers they will be obliged to fork out the additional hundreds of euro for school transport, school books and all the grant aid that has been taken from them in the education cutbacks. In addition, these are the same people who will be affected by the cuts in the health budget, the home care packages and so on. I will sum up the budget by asking the reason the vulnerable have been hit to such an extent.

Photo of Deirdre CluneDeirdre Clune (Cork South Central, Fine Gael)
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Although it is late in the evening and not many Members are present, I am delighted to have the opportunity to speak for the first time on the budget. In particular, I wish to use some of my time to concentrate on the education cutbacks, which constituted a highly negative and retrograde step. I also will focus on the vulnerable in our society and those who cannot speak for themselves. Members, who were candidates during the last general election, are fully aware of the impact that reducing the pupil-teacher ratio will have on schools, on the children who are there to be educated and on the teachers, as well as of the associated stress that will spill over into family life.

This is an era in which there is supposed to be a focus on education. All one hears from the Minister and the Government is that education is extremely important and that young people must be attracted into the sciences, engineering and mathematics. They are to be encouraged not alone to finish their second level education but to participate in third level education. However, unless young people are provided with the requisite support, we will be making the job much more difficult. As children become older, they reach an age at which they should take an interest in science and in their education and should feel both challenged and confident in facing such subjects. However, if they do not receive the support they need during their primary education, they certainly will not follow through at second level.

The statistics and arguments can be read on the websites of the INTO and the ASTI. All Members are fully aware of the implications that such cutbacks and the cutback on pupil-teacher ratios in particular will have on children. This measure, combined with the capping of the number of language support teachers, certainly will increase pressure on teachers themselves. Their professional role is to instill knowledge, encourage children to develop through their education and be in a position to face State examinations. Such a negative, retrograde step as that will ensure teachers will not be able to do what their training and profession demands of them. I am confident that at some stage we will emerge from the recession, but it will take many years to reverse the cutbacks. The vote we had in this House last week underlined the Government's commitment to the cutbacks. When one leaves primary education, one does not have another opportunity to get to grips with reading, writing and arithmetic — the three Rs. Secondary school is a different scenario and is much more challenging and pupils need to be equipped with the basics. I am not a teacher, but I am a parent and I know well the value and importance of primary education in particular.

Having received many e-mails last week from secondary schools, I am concerned at the impact of the education cuts on less popular subjects. In one case I had an e-mail from the principal of a girls' secondary school who is trying to encourage and foster physics and chemistry. One class had 14 students and there were 16 students in another. The school is in danger of losing one of those class teachers and that subject will be lost to the girls. I am sure a similar situation will arise in some boys' schools also. Those students will miss out on a very valuable opportunity as a result of the negative cutbacks. Primary school children will never recover from the neglect that will result from the cutbacks. Students who have become used to a range of subjects will also be affected by cutbacks and some subjects will not be available in certain schools. Every school has a different story. I am sure that as the weeks and months go by we will all become familiar with them, especially now that schools are back from the mid-term break.

I was interested to read an article in a newspaper today about partnerships sought between schools and computer firms to encourage investment in ICT. Reference was made to the Minister's longer term goal of increasing the take-up of science and engineering courses at third level in the building of Ireland's knowledge economy. We all applaud that. It is a wonderful goal, but it is not a long-term goal. It should be today's goal. We are a small country that needs to compete internationally. Our success to date has been based on our ability to attract foreign direct investment as well as investment from indigenous companies. One of our greatest assets was our young, highly educated workforce. The future would appear to be hopeless given that we have a Minister whose long-term goal is to attract young people to take up the study of science and engineering. We should have been doing that before now. The Minister's objective should be to increase the take-up of science and engineering subjects. Microsoft, Intel and other such companies that have invested here need high-level graduates in those subjects. Currently, many companies employ immigrants and that situation cannot last forever. As a country we need to create our own engineers, scientists and computer graduates to take up the jobs that already exist and those we hope to attract.

What really shocked me in the budget was the blatant nature of the cutbacks. There was no emphasis on reform or investing in our future, or no clear message as to how the Government sees us moving forward. The debacle with the medical cards for over 70s was reversed when the Government realised how unpopular it was not just with the over 70s, but with their families and friends. Young people did not want to be part of a society which made that type of statement. When the Government realised how unpopular a move it was, it turned its focus on general practitioners and expected them to bail it out. We have yet to see that happen. The removal of the medical cards from some people over 70 was a totally unnecessary step that caused huge anger.

Likewise, I was shocked to hear on the news tonight that the Minister for Health and Children has scrapped the introduction of the vaccination programme for cervical cancer, which had been outlined in September for young girls aged between 12 and 14. Such an approach has proven to be successful and would have reduced the number of deaths from cervical cancer year on year. Currently, it is estimated that 70 people per year die from the disease. That is another negative and backward step to take. The vaccination programme was a major topic of discussion during the previous election. I am very much aware of the matter and had been lobbied locally about it. I had raised the issue with the Minister and was delighted to hear the vaccination programme was being introduced. It was a positive step but now we find the programme is being scrapped, although no mention of it was made in the budget. How many more such cuts will be slipped in?

I noted the Minister's reference in his budget speech to a tax of €200 for car parking spaces in large urban areas. It is described as an environmental measure but we have yet to see how it will work. I have no objection to such a tax if there is an alternative means of public transport, but in many areas there is not. In Cork, many people work in large factory units in industrial estates on the edge of the city and such people do not have a direct bus connection. They are entirely dependent on their cars to get to work. One cannot introduce a tax of that nature until such time as an alternative means of transport is provided. Getting to work by public transport is fine if one is living on a direct bus route or if one has access to the Luas in Dublin, but in cases where one has no other means of getting to work — through a failure on the part of the State — I would not support the introduction of such a tax.

The Acting Chairman, Deputy Jan O'Sullivan, will be aware of similar areas in Limerick where a business located inside the city boundary is employing people and paying rates that are very welcome, yet a similar company located just over the city boundary in the county area with perhaps 200 car parking spaces would not be liable for the charge. Such a tax would be an incentive for an employee to move from a company located in a city area to one located in a county area with a resultant loss of revenue to the city in rates. There would also be a loss to city centre businesses and services from staff working in that area. The measure is ill-thought out. I accept that such a measure should be considered if an alternative, reliable public transport system is in place but until such time as we have that, the tax should not be introduced. The increase in VAT is unnecessary. It will contribute to inflation and discourage people from spending, especially on services. I would have thought the approach to the budget would have been to keep taxes down and seek savings where possible.

Fine Gael produced budgetary proposals prior to the budget. The budget should certainly have encouraged people to spend money and should not have discouraged them by increasing VAT rates. Fine Gael recommended savings in Departments and a very controversial proposal to freeze public sector pay for those earning over €50,000. This has met with the approval of those I have spoken to recently. Parents of children in classes of 35 next September would certainly prefer to take a pay freeze if earning over €50,000 than to have the focus on their children removed. They do not want their children neglected and subjected to negative measures that will affect them for life.

There were ways of budgeting without slashing and burning, as it has been described, and without increasing taxes and making the major cuts we have witnessed. Such measures would not have affected those in the front line or the vulnerable, who do not have a voice. I commend those over 70 because they certainly made their voice heard two weeks ago during the debate on the budget in the House. I was amazed to see at least 15,000 people turning up on the streets and making their objections known to the Government. While I would not commend the treatment of many Members and while I have heard some stories of quite unpleasant events and altercations, there was, nonetheless, a considerable silent majority that was shocked at the way the elderly were treated and at the attitude to them in the Government's announcements.

I want to refer to the regeneration of the docklands in Cork. Mention was made of Seveso sites in the budget and grant aid was provided to ensure they could be remediated. Seveso sites, such as those with liquid storage tanks and fertilizer factories, are potentially dangerous to those living near them. There are three such sites in the docklands in Cork and they must be moved, at considerable expense, if we are to ensure the development of the docklands. That they were mentioned in the budget and that supports were announced to facilitate their removal is welcome. I will have an opportunity to speak on this matter on the Adjournment so I will not dwell on it now. It was a positive move and, for the first time, the potential to regenerate and develop our docklands has been recognised.

The budget presented an opportunity for the Government to do something creative and send out a positive message although we are experiencing tough times. The problems we face are not solely the result of the global economic downturn since many of them are of the Government's making. This is because of complete over-reliance on tax revenue from the property sector, which has now collapsed. Revenue from this sector has been very much below what was expected. Poor results were reported in this regard on the news tonight.

An increasing number of people are losing jobs. Tonight we discussed a Private Members' motion, moved by Deputy Varadkar, on employment and noted people are losing jobs every day. We hear of the job losses that make the headlines but do not hear about the small and medium enterprises that are letting go one to three people. These numbers are adding up and contribute to a total of 720 job losses per week. Those who lose jobs will either be claiming social welfare payments or looking to the State to retrain them so as to gain employment.

The outlook is stark. I support the Private Members' motion before the House this week that points to the need to focus on those who have lost their jobs to ensure they can be retrained, upskilled and given the necessary qualifications to regain employment. Opportunities exist in the green energy and services sectors. It cannot be all doom and gloom but we need to recognise times have changed and that people need skills to face the jobs market. They need to be supported in this regard.

We need to send out a message that, as a country, we have been over-reliant on the property sector. We have not been investing money where we should have been over recent years. The Budget Statement and Minister's recent statement inspire no confidence in this regard. No thought has been put into making savings in the public sector or to investment in capital infrastructure to ensure we will be equipped and fighting fit when the upturn comes and that we will be in our rightful place and play our part as a strong economy, which we have the capacity to redevelop.

I do not support any of the cutbacks and am disappointed there was no imagination or optimism. There was no roadmap indicating where we are going as a country and how the Government will steer us out of this decline.

9:00 pm

I am glad to have the opportunity to speak on the budget. There is much public worry over the state of the economy. I have been talking to my constituents in Donegal and know their concern is very real. The issue is not unique to Ireland. We are in the midst of a global economic crisis but we are better equipped for it than many.

Difficult decisions had to be made by the Government to deliver its budget. The decisions are ones we would rather not have to take but they are necessary in these uncertain times. There is no credit to be derived from delivering stricter budgetary controls in respect of social welfare benefits, schools, hospitals, farmers, PAYE workers or senior citizens but these measures were necessary.

Consider some of the measures proposed by the Opposition, particularly Fine Gael. The Government announced cuts of €2 billion while Fine Gael proposed cuts of €4 billion. I would love to know the circumstances we would be in if cuts of €4 billion had been made. I wonder whether the Opposition really realises where it stands on budgets. The measures of the Government were taken to ensure the progress of the past decade will be protected and that the country will be best placed to take advantage of the inevitable upturn in the international economy when it occurs.

Our economy is much better insulated from the difficulties it will face over the coming years than it was from the difficulties it faced in the 1980s. That is the reality. We are tackling the problem head on and I am confident the Government will see Ireland though this storm. Our focus is upon generating economic growth through employment, assisting industry and enhancing economic competitiveness.

The Government's decision to guarantee deposits in Irish banks in an effort to restore confidence was courageous and was replicated in many European countries. We have led the way in times of despair and other countries are examining our movements in order to try to keep up with us. That is what this Government was elected to do, to manage the economy. That is what we are doing in this difficult time, not taking short-term decisions but looking further down the road to ensure the growth we have enjoyed can come back again.

Much was offered in the budget in terms of social welfare for those more in need. Improvements in family income supplement for low-income working families have been introduced and there have also been increases in child-related payments to those dependent on social welfare. A further 18,000 families will become eligible for the back to school clothing and footwear allowance, which is much needed by many families across the country. Much worry and anxiety have been expressed in recent days by older people in respect of the availability of medical cards. Like others, my office was inundated with calls from pensioners who were concerned they might lose their medical card. I am delighted the Taoiseach made the decision he did. It certainly shows this Government is prepared to listen to the people. We did not bring in decisions just because we liked to but we wanted to look after all concerned, particularly those in need. I believe the revisions of the scheme will satisfy the vast majority.

The closure of two Army barracks in my county has also caused much concern among staff and Army personnel in Rockhill and Lifford. Unfortunately, the running of these barracks is extremely costly and it has been decided the personnel will be facilitated at Finner Army camp in the near future. I have been told this decision was reached for two main reasons. The first is cost savings; the second is that there is less requirement for excess Army barracks along the Border because of the changed situation arising from the peace process in Northern Ireland. It is envisaged the proceeds of the sale of Rockhill and Lifford barracks will produce substantial resources for the modernisation process in the defence organisation.

At this time, it may be tempting to become negative about what we have achieved in this country over the past ten to 20 years but I wish to focus on the positive. The value of GDP increased in Ireland by over 70% between 1970 and 2006, which is well above the EU average. National debt as a percentage of GDP has fallen from over 87% in 1990 to just over 20% in 2006. This economy has been booming for many years and nobody can deny the progress made in this country over the last ten to 20 years. We have all been part of building it and we have all enjoyed it. Irish emigrants came back home on holiday and could barely recognise their home towns so great was the progress and we must not forget that. We experienced incredible growth and prosperity and the economy is now taking a hit but with proper management provided by this Government I believe things will level out. The good times will be back but at this critical point the emphasis is on damage limitation.

The economic outlook has changed. However, after the strong performance of our economy over many years this Government is in the best possible position to navigate its way through the challenges that lie ahead. That is what we intend to do and our focus must be on positioning Ireland to participate in the global upturn.

Of late, the Opposition has been playing political football with our economy. It plays the blame game concerning the economic problems faced by this country. Over ten years ago, the Opposition decided to freeze direct school funding and also proposed cutting teacher numbers. It also cut by £20 million the budget for school buildings and renovation. This is in stark contrast to the record of the current Government. During the past 11 years the Government has invested unprecedented amounts of money in building roads and schools. We must all look to our own constituencies and see the number of school buildings and extension works, the number of houses built at local authority level and the water schemes and sewage treatment plants built during this period. The Government has spent billions of euro on increased pensions, children's allowance, carer's allowance and other social welfare benefits. Spending on health, education and social welfare was increased dramatically in this budget.

Times are tougher now and everybody will feel the strain in disposable income but I wonder which of the aforementioned increases the Opposition believes should not have been given: schools, roads or pensions. The Opposition is understandably keen to remind us of the 1980s because that period was the last time their parties were returned to Government following a general election. At that time inflation was approximately 21% and personal tax rates were 40% and 65%. In 1986, the year before Fianna Fáil came back into Government, Ireland had a higher debt per head than Ethiopia and Sudan. We can never go back to the 1980s and I am confident that with Fianna Fáil at the helm we will not.

The Taoiseach has come in for much criticism from the Opposition in recent weeks and the budgets over which he presided have been held up for scrutiny. I do not think there is anything to be ashamed of in the budgets of Deputy Cowen as Minister for Finance or in the budget of the current Minister for Finance, Deputy Brian Lenihan. The old age pension was increased by €66, financial support for parents with children aged under six almost doubled, provision for special needs education was doubled and the social welfare budget increased by 40%. These are the vulnerable groups in society and the Taoiseach and the Minister for Finance, Deputy Lenihan, looked after them when we were experiencing better times. Would the Opposition prefer we had neglected them? Its members accuse this Government of reckless spending but at the same time they continually call across the floor of this Chamber for more spending. This is the same Opposition that called for 13 further quangos at the last election. In its manifesto last year it called for three further junior Ministers. There appears to be a considerable level of confusion on the other side of the House.

However, it is time all elected representatives pulled together. There has been too much finger pointing of late by the Opposition and it would be much more productive if all parties in this House got behind the Government in a joint effort to steer our economy through these more difficult times. That would benefit all of us. Framing a budget is not a popularity contest and nobody likes to impose stricter budgetary controls but we are not in the business of buying short-term popularity to put at risk all the gains of the last decade.

Photo of Brian O'SheaBrian O'Shea (Waterford, Labour)
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Ba mhaith liom mo chuid ama a roinnt leis an dTeachta Liz McManus. Ba mhaith liom déileáil ar dtús leis an dá ábhar as a bhfuil mé freagrach mar urlabhraí, an Ghaeilge agus cúrsaí cosanta. Bliain ó shin, ar an 31 Deireadh Fómhair 2007, dúirt an tAire Gnóthaí Pobail, Tuaithe agus Gaeltachta go raibh fochoiste Rialtais á chur ar bun chun déileáil le todhchaí na Gaeilge sa Ghaeltacht. Dúirt sé freisin gur chreid sé gurb í seo an chéad uair go raibh coiste den sórt seo ar bun sa Stát.

An lá céanna, foilsíodh an staidéar teangeolaíochta ar úsáid na Gaeilge sa Ghaeltacht. De réir an staidéir sin, gheobhaidh an Ghaeilge bás mar phríomh theanga na Gaeltachta taobh istigh de 20 bliain, muna gcuirtear beart raidiciúil in áit chun cosc a chur leis an meath. Dúirt an tAire Ó Cuív go n-aontódh an fochoiste plean gníomhach taobh istigh de bhliain. Bhí dhá chruinniú ag an fochoiste ó shin, ceann amháin ar 10 Aibreán agus ceann eile ar 23 Iúil. Tá súil agam go n-aontóidh an Rialtas an plean gníomhach roimh an Nollaig agus go bhfoilseofar é. Tá straitéis 20 bliain don Ghaeilge á ullmhú ag an Roinn agus deireann an tAire go bhfuil sé ag súil go mbeidh sé ag an Rialtas roimh deireadh na bliana.

Fáiltíonn Páirtí an Lucht Oibre roimh an dá bheart seo atá idir lámha ag an Rialtas. Ach, sna Meastacháin don Roinn Gnóthaí Pobail, Tuaithe agus Gaeltachta, faoin teideal Gaeltacht agus Forbairt na nOileán, tá gearradh siar i 2009 de 14%, ó €105 milliún go dtí €91 milliún. Níl aon airgead breise ar fáil chun moltaí phleananna gníomhacha don Ghaeltacht a chur i bhfeidhm, cuma cé chomh raidiciúil agus atá siad.

Cé go bhfuil méadú ó €5 milliún go dtí €9 milliún in áit eile sna Meastacháin don Ghaeilge, sin do Choiste na Gaeilge, níl aon mhéadú eile le feiscint a chabhródh le moltaí na straitéise 20 blian a chur in áit. Tá sé soiléir nach bhfuil an Rialtas i ndáiríre i dtaobh todhchaí na Gaeilge ar chor ar bith. Tá baol ann freisin go gcuirfí Údarás na Gaeltachta isteach faoi bhráid an IDA. Níl an tAire sásta a rá nach dtarlóidh seo.

The Minister for Defence will close five military establishments as part of the cost-cutting measures in the budget. The four Army barracks to be closed are in Longford, Lifford, Letterkenny and Monaghan, while St. Bricin's Hospital in Dublin is also due for closure. There could hardly be a worse time for selling these properties. Will we repeat the mistake of 1998 when the State spent £1,400 per week on private security to protect four vacant barracks? Serious questions arise as to what will be the net gain to the State from the eventual disposal of these five military establishments when one takes into consideration, among other issues, payments for relocation to which the 650 soldiers affected are entitled. At a time when the retail trade is being hit hard by the recession, the withdrawal of funding from local economies will compound the problem.

According to the most recent figures available, 7,817 people were on the live register in for County Waterford on 30 September 2008. The comparable figures for 2007 and 2006 were 5,303 and 5319, respectively. The number on the live register increased by 47% or 2,500 people in the year to the end of September. Unfortunately, all the indications are that the October figure will be considerably worse than the figure for the previous month.

This brings me to my major criticism of the budget. Following the September returns by the Department of Finance, it was projected that the shortfall in tax revenue for the year would be €6.5 billion. This is probably an optimistic forecast because it is probable that we will have another budget in the new year. It has been suggested, for example, that the shortfall could be as much as €9 billion. In such circumstances, it is vital that we plan and prepare for the eventual upturn in the global economy.

Under the rainbow coalition, which has been written out of history by Deputies on the benches opposite, the economy enjoyed good growth and, more important, it was export based. The problem we are experiencing is that the traditional industrial manufacturing base is being eroded, the construction industry is in serious decline and the tourism sector is experiencing difficulties. The questions no one is addressing are from where new employment will come and on what areas we must focus to move ahead.

Henry Ford once said that thinking is the hardest work which is probably the reason so few people do it. Thinking and vision are lacking in the budget. We need to apply ourselves to the future and make investment decisions in order to be prepared when the upturn takes place. In that context, nothing is more important than education. All relevant studies show that those who are educated do best, earn most and enjoy the best opportunities. Upskilling is, therefore, a key issue.

In my constituency and all the constituencies in the south east, including that of the Minister of State, Deputy John McGuinness, the issue of greatest concern is the need to establish a university in the region. This issue was not addressed in the budget. In answer to a parliamentary question tabled a few weeks ago, the Minister indicated a decision would be made in the coming weeks on applications submitted by three institutes of technology in Dublin, Cork and Waterford to have their status upgraded to that of university. The absence of a university in the south east is holding back the region, which continues to suffer from the loss of traditional industrial jobs. Unless the south east has the capacity to develop jobs in the knowledge economy based on top class research and development, its future will be bleak.

The university of the south east being sought by my region differs from that being sought in Cork and Dublin. The concept is based on a hub campus in Waterford with satellite campuses throughout the region. While this is a novel proposal, it will undoubtedly work. There is a general conviction throughout the south east that a university, above everything else, is what it needs to prosper.

On any given day when the universities are in full session, 7,000 students from the south east are attending colleges outside the region. This causes a brain drain because students who graduate tend to take up employment within a radius of approximately 60 miles of the institution they attended. In addition, those making inward investment decisions will consider areas with an educational establishment which produces graduates who can play a part in the knowledge economy — the emerging economy — and, most important, in the areas in which Ireland can compete. The low cost countries are attracting the traditional manufacturing sectors which provided jobs here for so many and so long.

The south east is experiencing a brain drain and the erosion of traditional industry. The Government, in the budget, offered nothing to County Waterford and other counties in the region to enhance its readiness to advance when the potential exists to do so. It is not necessary to wait for an economic turnaround because the creativity and entrepreneurship which develops from an institution such as a university enables people to see opportunities, even at the worst of times. We must provide a base and capacity in the south east to ensure this objective is realised.

The budget is about balancing the books. While this is a necessary exercise, the Government took the wrong options in many areas.

It cannot be all negativity, however, a case of throwing in the towel and saying matters are just terrible. We must look at the major positive aspects that will bring about change.

The decentralisation programme in my area has now been put back until 2011. Some 225 jobs from the Department of the Environment, Heritage and Local Government were to come to Waterford and part of that project was the provision of an additional court chamber, which is very badly needed. Not alone are we losing the decentralised Department, but also that very important project which would have an enormous effect on the efficient use of the courts system in Waterford. The town of Dungarvan, which has suffered a number of serous industrial blows, was to get 206 jobs from Ordnance Survey Ireland, but that has been put back to 2011, at the very earliest. I never believed this particular decentralisation project was anything more than something the former Minister for Finance, Deputy McCreevy, made up on the back of a cigarette box, because there was neither planning nor consultation with the unions, and it was very pat. However, it was promised to Waterford repeatedly by Government representatives. I always felt the promises were hollow, but now we have this definite statement to the effect that nothing will happen before 2011.

In terms of injecting additional moneys into economies, something that can be lost sight of is the bad situation that exists for the retail sector at the moment. This sector employs a great many more people than many of us realise. Its lifeblood is the circulation of money in local communities and economies. That is not happening sufficiently at the moment and there are ways to redress this. For example, in terms of planning and agriculture, the early retirement scheme has been withdrawn. That existed to ensure that farms were handed over as early as possible. Also, the installation grant has been withdrawn. This involved providing €15,000 to help people aged under 35 get started on their farm careers. In my view, the removal of these payments is very short-sighted. I have a great deal more to say about the budget, but I will yield to my colleague, Deputy McManus.

Photo of Liz McManusLiz McManus (Wicklow, Labour)
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There was a certain expectation beforehand that it would be a tough budget but a fair one. There was a certain amount of confidence that the new Taoiseach was a safe pair of hands. That increased the sense of bewilderment when the budget was published because in the public's eye its two characteristics were ineptitude and unfairness. Confidence in the trio at the top of the Government, the Taoiseach, the Tánaiste and the Minister for Finance, was replaced by the lack of confidence among the public in terms of its perception not just of the economic difficulties we face, but the issue of governance. The Government set out in its budget "to safeguard key public services, protect the vulnerable, refocus spending to enhance our productive capacity, regain export competitiveness, reskill our labour force, retain the substantial gains already made and continue our work in building a fair Ireland". That is what the statement said, but the reality was the complete opposite. None of those particular objectives was progressive and what was remarkable was the universal criticism the budget received. Nobody seemed happy with it. I am not just talking about the people directly affected by cutbacks, but commentators — the heads on the television who comment on these matters, sometimes with great erudition and sometimes not.

We had a rather plaintive cry from the Minister for Finance, who described it as a call for patriotic action. The action he got can be described as patriotic, but it was not exactly what he was expecting. The level of uncertainty and fear engendered by the Government's failure to prepare people for what has happened regarding the changes on the economic landscape and the sense of a very sudden plummeting from boom to bust over a very short period have undermined people's sense of security in ways not recognised by the Government. It was interesting to read the former Taoiseach, Deputy Bertie Ahern, in yesterday's Evening Herald, stating that everything was all right when he left office in June and matters just went wrong after he left. However, the Taoiseach, Deputy Cowen, said a few days ago that we are battling the most severe economic and financial conditions for a century. That certainly did not happen overnight.

The truth is that the danger signs have been there for much longer, unemployment has been rising over a lengthy timespan and the property bubble has been bursting over a very lengthy period. However, Fianna Fáil had an election to win and the former Taoiseach was able to predict suicide for anybody who threatened the pretty picture that had been painted by the Government about the economic situation.

Now it is estimated that up to 200,000 home owners are likely to face negative equity by the end of 2009. Currently, some 140,000 are already doing so, equivalent effectively to one in three, trapped houses worth less than the loans obtained to buy them. Unemployment is expected to spiral to 8% in 2009 and it is interesting listening to Deputy Blaney in this regard. Fianna Fáil loves to rewrite history, but the Government comprising Fine Gael and the Labour Party from 1994 onwards was very effective. It oversaw the creation of approximately 1,000 jobs a week, as against almost the same now in terms of job losses. This is the record the Government is now trying to defend. The losses are largely in the construction sector and, as we look forward, even more construction jobs are likely to go, perhaps somewhere in the region of 150,000. The effect this type of unemployment has on an economy and on individual families is staggering.

We do not know how many repossessions are occurring or in the pipeline, but we know they have started to build up in relation to the number of individual families that cannot cope with the repayments and who were exploited by very unscrupulous mortgage companies who gave out money willy-nilly, regardless of people's ability to pay. Some of us had hoped the budget would contain an economic stimulus package in recognition of all those construction workers and their capacity to be productive if they were put to work. The Labour Party argued for a school building programme in every constituency. For example, in my constituency, some schools are sub-standard in terms of health and safety and students are being accommodated in buildings that are at times dangerous. A national insulation programme is another potential area for developing jobs and also ensuring the overall energy bill for the country may be reduced and brought under some type of control.

We have argued for upskilling, education and training for those people who cannot get work. Other countries have done this. It is not as if we are arguing for some kind of idealistic and unrealistic approach. Other countries have taken this approach because they recognise the capacity within their populations and know that leaving people to languish on the dole is not a good use of human potential, nor does it ensure taxes get paid.

We appreciate there is a significant gap between Revenue and expenditure. However, what action does the budget propose to deal with the issue of tax breaks for the wealthy, or with tax evasion? Why is it the elderly and the young are the prime target for cutbacks? It is difficult to understand this. It appears that a deep cynicism and conservatism underpin this budget.

The reform of the public service is an issue that has been raised many times. If the Government wants to reform the public service, it should, with all due respects to Deputy McGuinness, start with the Ministers of State. We have never seen so many people with so many titles using up——

Photo of Denis NaughtenDenis Naughten (Roscommon-South Leitrim, Fine Gael)
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And so little to do.

Photo of Liz McManusLiz McManus (Wicklow, Labour)
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And so little to show for it. It is difficult to know the titles of all the Ministers of State because there is no evidence of productivity from them.

Photo of John McGuinnessJohn McGuinness (Minister of State with special responsibility for Trade and Commerce, Department of Enterprise, Trade and Employment; Carlow-Kilkenny, Fianna Fail)
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The Deputy ignores what is being done.

Photo of Liz McManusLiz McManus (Wicklow, Labour)
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I am not saying there should not be Ministers of State. I was a Minister of State, had devolved powers and introduced legislation. I dealt, for example, with drug dealing in local authority estates, instituted a task force on Traveller accommodation and introduced a village renewal scheme. I stand over my record. However, we now have too many Ministers of State spread among the various Departments. I instituted the homelessness initiative when only two and a half years in Government. I can stand over my record. If Ministers of State have devolved powers, they can be very productive. However, the kind of pay off that has developed because we had a Government that threw money at everything is no longer justifiable, if it ever was.

Photo of John McGuinnessJohn McGuinness (Minister of State with special responsibility for Trade and Commerce, Department of Enterprise, Trade and Employment; Carlow-Kilkenny, Fianna Fail)
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The Deputy should ask them to come in and account for themselves.

Photo of Liz McManusLiz McManus (Wicklow, Labour)
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We are now seeing education as the target, with increased class sizes. This is happening at a time when education should be reinforced if we are to be competitive at this time of global difficulties. It is not that long ago, 40 years, since a Fianna Fáil Minister understood this. Times were tougher then, but he understood we needed universal, well-resourced education. When Donogh O'Malley introduced free second level education, he understood how valuable that investment was.

It is interesting to note the attack now being made on the idea of universal entitlement. Donogh O'Malley had no problem with universal entitlement because he understood that was the way forward. Another Fianna Fáil Minister, Erskine Childers, introduced the GMS, which was based on the idea of universal entitlement to access to a GP. This is the kind of thinking Fianna Fáil has jettisoned totally. Instead, we now have a kind of ideological warfare directed at the principle of universal entitlements.

In the health area we have seen a reintroduction of means testing in a most inefficient way in order to find a possible 5% of our population of over 70s who should not be getting free medical cards. This results in an unnecessary and costly administrative apparatus, to what end? We also now have a situation where we will have tax breaks with regard to private health insurance payments because of a court judgment on risk equalisation. These two measures reinforce more than anything the justification to move to a universal health insurance system where everybody will pay health insurance according to his or her means, everybody will receive cover and we will have free access to primary care. This will keep people out of hospital and enable us carry out the preventative work that is so valuable.

I welcome the fact we are now having this ideological debate. I remember, not long ago, Fukiama spoke about the end of history where somehow we all ended up in the middle so there was no longer to be any conflict. Looking at recent events, sure as hell, there is conflict now. Even the debate on the election in the US demonstrates there is an ideological battle going on. I welcome the fact this is in the open again because it raises issues about the role of the state.

We have had this debate here with regard to the bank bail-out, which has been rightly described as socialism for capitalists. If the State is there to protect bankers, is it there to protect those who are even more worthy? If we have reckless bankers who have over-lent to developers, why are they considered worthy of protection while mortgage payers are not? What about mortgage payers who are unable to pay their mortgage of €1,500 or €2,000 per month? Will they be given priority when the demand arises to recapitalise the banks that have been so reckless?

What is the State's role in this regard? Has it a role for example in taking back the telecommunications infrastructure that Eircom has not developed as it should have in the interest of ensuring Ireland is to the forefront of the industry? We are the eighth worst country in the OECD with regard to broadband delivery. This is a shameful record. I remember a time when a Minister said we would be to the forefront of the telecommunications revolution. That promise was never delivered.

On the issue of fuel poverty, an increase of €2 in the allowance and provision for two extra weeks' payment is pathetic. Some people facing the winter cannot afford to stay warm. Thousands of people live in fuel poverty. When I asked the Minister of State to tell me how many there were, he could not tell me. The energy document published made all sorts of commitments on fuel poverty, but the Minister of State does not even know how many are living in fuel poverty. We are dependent on organisations like Combat Poverty to tell us, but that organisation is to be done away with, or at the least emasculated so that it will no longer be able to do that kind of job effectively.

We have a serious situation with regard to how we can support families and elderly people to keep warm this winter. This is not being done and the budget has not delivered in this area. I remind the Government that it is estimated that thousands of elderly people die each year as a result of not being able to keep warm in winter. The health implications in this regard are significant. We have one of the highest levels of this kind of death in Europe. The extra €2 for an additional two works is, in effect, worth nothing, considering the price of coal, electricity and gas. This is worrying and disappointing and people are justifiably angry.

10:00 pm

Photo of Denis NaughtenDenis Naughten (Roscommon-South Leitrim, Fine Gael)
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I welcome the opportunity to speak on the budget. While the disadvantage of having the budget earlier this year is that the Government did not have a clue what it was talking about, the one advantage is that Members have the opportunity to debate it. Traditionally this was the practice when budgets were published and announced in January, but since they moved to December this was no longer possible. It is important that all Members get the opportunity to discuss and debate budgets. It is important also that the Government is openminded with regard to suggestions from the Opposition.

It should not come into this House knocking the Opposition and praising its own achievements while claiming that circumstances were very different when Fine Gael, the Labour Party and Democratic Left handed over the economy in 1997. Circumstances were indeed different in 1997, a year in which 1,000 jobs were being created per week. The country is at present losing a job every ten minutes. The coalition that left office in 1997 was the first Government in many years to pass over the public finances in the black rather than the red. At the end of 2006, the Taoiseach, as Minister for Finance, could count on €4 billion in the bank, whereas the projection for next year is a deficit of €12 billion. That is some change given the brevity of the intervening period. The EU believes the deficit will reach €14 billion by the end of 2010. The Taoiseach admitted we will have to face another difficult budget and that the additional €5 billion deficit highlighted by the EU will have to be brought forward in next year's budget or in a mini-budget.

In the past 12 months, 3,000 jobs have been lost in my constituency of Roscommon-South Leitrim and its surrounding towns. For a small rural based economy, this is a huge blow. I ask the Minister of State at the Department of Enterprise, Trade and Employment, Deputy McGuinness, to raise the issue of Elan Corporation with the Minister for Enterprise, Trade and Employment. It was announced prior to the last election that 500 new jobs were to be created in a new development in Athlone. Elan, which is the biggest employer in my constituency, now indicates that it will instead create these jobs in Dublin. The company was originally founded in Athlone and its headquarters were based in the town for a number of years. I hope the Government will get its act together before a final decision is made. Athlone Institute of Technology put forward a proposal for a national bio-processing research facility to be based in the town but, because Wyeth flexed its muscles, this facility was ultimately established in Dublin, with the result that Elan doubts the Government's interest in supporting the midlands. Why should Elan invest in the region when the Government is not prepared to support such a valuable research facility for Athlone?

A number of contributors have pointed out that the cause of our financial predicament is not the international credit crunch, although this has given a fig leaf to a Government which put all its eggs into one basket in terms of the construction industry. Yesterday in Brussels, the Minister for Finance put the blame on the European Central Bank for selling money too cheaply. However, the housing bubble developed because the Government appointed Financial Regulator failed to police properly the doling out of money by banks. The crazy situation arose whereby 110% mortgages were issued to people who now find themselves in serious financial difficulties. The Department of Finance also turned a blind eye to this practice. Furthermore, the Government actively encouraged the housing bubble through a variety of tax incentives. Low interest rates were undoubtedly a contributing factor to the bubble but they also contributed to the expansion of our economy during the Celtic tiger years.

Our mistake was to take our eyes of the ball in respect of competitiveness. Ireland is now stuck in 22nd place in the World Economic Forum's competitiveness rankings. The Department of Enterprise, Trade and Employment is supposed to be responsible for this area but the former Minister for Enterprise, Trade and Employment, Deputy Martin, and his predecessor, Deputy Harney, failed to address the bottlenecks in our economy. They should have lowered taxes and cut through the bureaucracy and red tape that surrounds business. Unlike the majority of EU member states, Ireland has addressed none of these issues.

Broadband is an issue with which every Deputy from a rural constituency must contend on a daily basis. Why can we not get our act together on broadband? At least four, if not five, State owned fibre optic cables are located within half a mile of Elan's front door, servicing the metropolitan area network, An Bord Gáis, Iarnród Éireann, the ESB and, perhaps, Bord na Móna, but they are not connected to each other. Why can we not establish a semi-State agency with a commercial mandate to make use of these fibre optic cables, which are of no use to anyone at present, so that broadband reaches every part of the country? That in itself would open up competition, not only in broadband but also in telephone services, and would help to address some of the competitiveness issues we currently face. We are told that services will be the major growth area in the future but there will be no growth without access to broadband.

My colleague, Deputy Bruton, spoke about the challenges that existed in advance of the budget. He highlighted areas in which savings could be made, such as a recruitment ban on non-frontline services, a pay freeze across the public service, a better deal for the taxpayer from the bank guarantee scheme and a carbon windfall tax. However, his proposals were ignored by the Government. Other issues in the Government's control, such as opening access to the electricity grid to ensure competition, have not been addressed. The energy and enthusiasm to deal with these issues are lacking. The cost of utilities has gone through the roof in recent years, with repercussions for families as well as businesses. Small businesses are facing serious problems in accessing capital, even where they have good ideas and sound business plans.

From the point of view of Opposition Members, it is frustrating the Government failed to acknowledge its mistakes. It has ensured the most vulnerable people in our society will foot the bill. Those targeted are the elderly over 70, people who are sick and ill, those on social welfare payments and young people in our education system.

The most vulnerable people in the disadvantaged areas in the farming community were the main focus of the attack. It was hypocritical of the Taoiseach to state that cutbacks needed to be made but that he would not target the weak and the vulnerable. The budget did exactly that and the impact has been on the weak and the vulnerable.

The typical young family, with an income of €60,000, is paying an extra €3,200 annually as a result of the budget. The cost of mortgage payments, utilities and services has increased and will increase over the coming months and it will be difficult for them to make repayments on mortgages. Something needs to be done in that area to put a structure in place. While some of the financial institutions are prepared to be reasonable and work with people to allow them to work themselves out of the situation, the vast majority are extremely ruthless and are looking to jump on people at the first available opportunity. However, those who owe substantial amounts of money, such as developers, are treated with kid gloves. The banks are like vultures over young families who are struggling to keep their heads above water, waiting for them to slip up so that they can penalise them.

It was frustrating to see elderly people come to Leinster House the week after the budget. People were there on Zimmer frames, in wheelchairs and with oxygen masks because of the fear that had been spread about the withdrawal of the medical card. People came to rely on it. Many on this side of the House were critical of the scheme when it was introduced, but it had been an effective measure in improving the health of elderly people since it was introduced. What was sickening was that in the resolution, the savings made amount to €7 per week per elderly person. In total, it amounts to one quarter of the cost of the electronic voting machines rotting in a field in County Meath as we speak, which are still costing us money. Elderly people are asking themselves what will be next. Will it be free travel?

The universal provision in respect of children's allowance has been withdrawn, a mantra that has been broken. This has not received the coverage it should but the principle has been broken in respect of the introduction of a means test. While this only applies to those over 18 at present, we can be sure that this will be clawed back to apply to 16 year olds, 12 year olds and ten year olds, based on what the Taoiseach said this afternoon.

Coming from a rural community, it is frustrating to see those in the poorest areas of land in the country being targeted. Some €2,000 each will be taken off many farmers in the west. In total, €34 million will be saved, a sum equal to half of what was squandered on electronic voting machines. The Government does not care about the vulnerable elements in our society. I refer to the cutback in the suckler cow scheme. In fact, the money for that is ring-fenced and the changes in the budget have only drawn out that payment over a longer period of time to keep civil servants in jobs at the Department of Agriculture, Forestry and Food. Consistently, one can see that the budget was drafted by civil servants on the basis of ensuring their jobs are secured and that the most vulnerable are being penalised as a result.

The HSE website has a blank page, with no information, on the over 70s medical card. There is no information on the announcement made by the Taoiseach and the Cabinet last Tuesday week. The fear persists and there is a lack of information being provided to elderly people on this issue.

The immigration services budget for 2009 has been cut again. What is frustrating is that this is a false economy. At present, it takes eight years to process an asylum application. It costs €1.4 million to process each application, based on social welfare and accommodation costs alone. It makes more sense to speed up the process and give people a decision more quickly. This would benefit the applicants and the taxpayer. I cannot understand why these are not fast-tracked, instead of the situation where one in five posts in the immigration services that deal with asylum applications are vacant.

I discussed the Refugee Appeals Tribunal with the Minister for Justice, Equality and Law Reform last week. It costs €180 million per annum to process applications and appeals. Of that, €11 million is spent on legal fees. If we streamlined the process, significant savings could be made in the area, yet that issue was ignored. The Minister of State, Deputy Lenihan, is turning out to be a comedian but he has seen his budget slashed by one quarter. His budget is now less than €7 million and the administrative costs of his office are more than the money he can distribute. The budget of the Minister of State is being cut at a time when racism is on the increase in this country and fear about an immigrant taking someone's job is increasing. This is a time when we should spend more money in that area to deal with the concerns about racism and to promote greater integration, but we are pulling back in respect of such investment.

The same applies to the budget for language teaching for those from outside the country in the Department of Education and Science. At a time when we must ensure these people integrate in our schools and communities, to reduce the levels of resentment and racism, we are cutting back the funding available. It is a false economy.

The Minister of State, Deputy McGuinness, was frustrated when Members referred to curbing the number of Ministers of State. The website of the Department of Education and Science refers to the Minister of State, Deputy Devins, as having responsibility for disability, five months after he was appointed as Minister of State with responsibility for science and technology. He is the Minister of State with responsibility for science and technology and for disability issues. If the Department of Education and Science does not know what is the responsibility of the Minister of State, how in God's name are members of the public to know? Surely we need to streamline this area.

Debate adjourned.