Martin Mansergh (Fianna Fail)

The other aspect indicating a strong economy is the social welfare package of €874 million and the tax package of €682 million which comes to between €1.5 billion and €1.6 billion. To be able deliver such a package is a sign of how well the economy is now going again. We have come through two difficult years with our basic economic strength intact.

From a strategic point of view, while the details have not yet been fully announced, the €6.3 billion for capital investment, representing a 20% increase on what will be spent this year, is important. The IMF identified such investment as a strategic need for the economy at this stage. It will go into the areas of transport, health and environment, which will see increases of €140 million, €40 million and €60 million, respectively. The Minister referred to the €70 million that has been put aside for decentralisation and which was debated here yesterday. I am glad the Minister has confirmed that is motoring ahead and people around the country will also be pleased.

The next significant aspect of the budget is the social package. Old age pensions have increased by 7%, or €12 per week, which is well on track to achieving the target of €200 per week by 2007. Significantly, an even greater increase has been given to the lowest rates of social welfare payments, for example, a 10% increase in unemployment assistance. Child benefit will again increase by a substantial amount. I accept the criticism that can be made that this increase will not quite achieve the targets. However, it is more than €100 per month more than it was in 1997, which represents an incredible increase in that period. In the coming year many people, including the social partners, will debate whether the rationale for the freeze on child dependant allowance, made by the rainbow coalition which felt that was creating a poverty trap, is still valid.

The most important and significant aspect of the budget is the €2.8 billion spending on disability and a multi-annual programme of investment in the health services, education, employment support, adapting accommodation and providing 800 residential places. This is being expanded as fast as we are realistically able to do. A major emphasis has been placed on this area, which is very welcome. As a society we are deficient in what we are doing in that regard. We have a long way to go and we need to take quite large steps from here on in.

I welcome the tax measures in the budget. This is probably the first budget in which no tax increases of any kind have been made. While the employee PRSI ceiling has been raised, PRSI is not strictly taxation as it is a social welfare contribution. For the sake of competitiveness and to keep inflation down it was important not to increase taxation. To remove those on the minimum wage from the tax net is a major achievement and was rightly applauded in the Dáil. The Minister was faced with two possible choices of priorities. He could either have done as he did or provide full indexation of the tax bands back to 2002. I have no doubt that the Government made the right choice and it can do more on the tax bands next year. If some people now on the minimum wage fall back into the tax net again in a few months time, further corrections can be made. The principle has now been established that those on the minimum wage will not and should not be in the tax net.

The widening of the band represents significant progress. In the limited coverage I have heard since the Minister's speech, this has been welcomed by employers. This is part of the thinking behind several social partnership agreements. The feeling is that the combination of tax relief and the agreed wage rises will reduce pressure on employers. This is a good budget for business and farming partly for that reason. The 0.5% reduction in stamp duty has also been welcomed.