Martin Mansergh (Fianna Fail)

The Minister is to be complimented on his decision to increase the transparency of the public finances. There is an obvious public interest in that regard, because there may be an effect on confidence if commentators get it wrong or are too gloomy. Equally, it is not desirable that such people should be too optimistic. I accept the qualifications made by the Minister. Unfortunately, I do not have the budget booklet in front of me. As I said on budget night, I am confident that he will achieve and over-achieve his revenue targets. Far from being an indictment of the Minister and his Department, that is good news for everybody because it shows that the public finances are very sound.

I do not agree that Senator Browne's amendment should be written into legislation, as it would show that the Minister is deviating. One of the first aspects of the changes in income tax that commentators examine on budget day is their impact, if any, on indexation. I do not accept there is any mystery or stealth involved. Commentators home in on this and inform the public straight away if there is a change equivalent to the rate of inflation. If it is written into the legislation, however, this effectively establishes a norm and henceforth, if the Minister makes any changes he is deviating from the norm or reneging on a commitment. All sorts of political charges are made if the Minister does less than the norm even though it may be in the public interest.

The issue being debated is whether we should make a formal benchmark of indexation. I do not believe we should. Although it was a matter of wages or social welfare rather than taxation, the Italians, when their economy was pretty ropey, had a system of exact indexation — whose name sounded quite Rossini-esque, la scala mobile — which crucified the economy. I do not believe we should go down that route, although I accept that, other things being equal, we would like to see tax credits at least increasing in line with inflation. If one takes the last seven or eight years together, we have succeeded in doing much more than that. I have no doubt that if the public finances are healthy, in further budgets the Minister will make up for any lost ground.