John Dardis (Progressive Democrats)

I move:

That Seanad Éireann,

—notes the Government's commitment to keeping the public finances in a healthy condition and keeping down personal and business taxes in order to strengthen and maintain the competitive position of the Irish economy;

—supports the primary aim of current tax policy to expand our economy, reward work and alleviate the burden on taxpayers especially for those on lower pay;

—commends the Government on creating the most generous tax and welfare system in the world for single income families on the average industrial wage;

—notes that over 656,500 income earners are now out of the tax net compared with 380,000 in 1997;

—recognises that the Government parties have delivered dramatic reductions in taxation over the last eight years, a policy that has helped to generate unprecedented growth in the Irish economy, a spectacular increase in the number of people at work and the effective elimination of long-term unemployment;

—welcomes the announcement last December of a thorough evaluation of the effect of all relevant incentive reliefs and exemptions and the intention to bring forward proposals, which would achieve the correct balance between the benefit to the investor and the good of the community;

—notes the intention of the Minister for Finance to include appropriate follow-up measures in the upcoming budget; and

—asks the Minister for Finance to examine measures to preclude some of the wealthiest individuals in Irish society from availing of property and other tax incentives so as to avoid paying any income tax while at the same time enjoying facilities and services provided by the State, and to consider capping the total allowances a person can claim from property and other relevant tax incentives.

It would be tempting to move the motion and then just sit down and see what might happen. I know that has happened in the past. I welcome the Minister of State at the Department of Finance, Deputy Parlon, and I hope his colleague, the Minister for Finance, Deputy Cowen, can join us at some stage.

I am delighted to move this motion. Virtually every topic discussed in this House, certainly in recent years, can be reduced to the issue of choices or priorities. What priority do we place on health spending above education, above social welfare, above child care, above infrastructure and many other competing issues?

The former US President Bill Clinton is famously said to have had a sign in his office reading "It's the economy, stupid". It may be debatable whether all politics boils down economics, but I doubt anyone in this House would disagree that the distribution of limited resources, by which I mean Exchequer funds, is at the heart of most political debate. It is also at the heart of this motion.

Under this Government, two fundamental things have happened, namely, the spectacular increase in the number of people at work and the effective elimination of long-term unemployment; and, consequently, the resources available to the Exchequer are not as limited as they otherwise might have been.

Among the explicit commitments in An Agreed Programme for Government between the Progressive Democrats and Fianna Fáil, is the one outlined at the beginning of this motion. This commitment is to "keeping the public finances in a healthy condition and keeping down personal and business taxes in order to strengthen and maintain the competitive position of the Irish economy".

From the public's point of view this must look like an odd commitment for a Government to make, or have to make. Should it be considered a given that the Government of the day would work to keep the public finances in a healthy condition? Why would there be a need for an express commitment? The answer is simple. As I stated, the resources currently available to the Exchequer are not as limited as they might have been, thus allowing us greater choice. This is a result of the careful and efficient management of the economy by the Progressive Democrats and Fianna Fáil in Government. The explicit commitment is in An Agreed Programme for Government, and is not considered a given because careful and efficient management of the economy by certain parties in Government cannot be always taken for granted.

Since 1970, there have been just five years when Ireland saw real income per head go backwards. Coincidentally, the Government parties in those five years were Fine Gael and the Labour Party. At the last general election, just one party proposed to increase public spending more than anyone else, and it is not widely recognised that this party is Fine Gael. The party planned in 2002 to spend €130 billion, €7 billion more than the planned spending under the 2005 budget. Today, however, Fine Gael talks about curbs on Government spending, without identifying a single specific area where it would cut spending. The Labour Party on the other hand wants to increase public spending.

These types of innate, inherent and irresolvable differences between the Opposition parties have led in the past to careless and inefficient management of the economy. That is why we have the explicit commitment in An Agreed Programme for Government. The record shows that careful and efficient management of the economy cannot be taken as a given when the parties in Opposition are in office.

In contrast, the years in which the Progressive Democrats have been in Government have been periods of unprecedented growth, coupled with tough steps to contain Government spending. This is unique to the Progressive Democrats. Establishing the Health Service Executive, ending prison overtime and disposing of surplus State assets are just some examples of measures we have taken to carefully manage Exchequer spending. One can compare this with the Labour Party's panacea of simply spending more money.

The Government correctly employs tax policy to expand our economy, reward work and alleviate the burden on taxpayers, especially those on lower pay. While parties opposite refuse even to say what exactly their tax polices would be, the record is clear. We have significantly cut tax rates. In 1997 the top income tax rate was 48%, today it is 42%. The standard income tax rate eight years ago was 26%, now it is 20%. The respective 1997 and 2005 figures for capital gains tax rate are 40% and 20%.

It is because of careful and efficient management of the economy that we have had the resources to do more for the vulnerable in our society. Spending on health has tripled while spending on education and social welfare has more than doubled. Notwithstanding these increases, the Progressive Democrats continue to argue that the best defence against poverty is a job. Government taxation policy over the past eight years has helped to generate unprecedented growth in the Irish economy, a spectacular increase in the number of people at work and the effective elimination of long-term unemployment.

While the Irish economy merely goes backward only under Fine Gael and the Labour Party ——