Derek McDowell (Labour)

We must approach this matter from two angles. One involves what these incentives and reliefs sought to achieve. The other concerns the reason we stood back and examined them at this time, which is their effect on particularly high-earning taxpayers or non-taxpayers in some cases.

I wish to start with the second angle. The scheme that the Minister and the Department have come up with in section 17 is a good one, which has been ingeniously worked out. I have one problem with it in that I am not convinced we should allow a roll-over in the fashion that is set out in the section. That is a quibble, however, and the scheme generally is a good one.

I would counsel against looking even now to produce exceptions. It is always tempting to say that this particular type of investment or donation should not actually be part of the cap. For reasons I perfectly understand, Senator Henry sought to make exactly that case only a short time ago. If we are insisting that high earners must pay at least or approximately 20% in tax annually, then we must adhere to that principle irrespective of the merits of the investment or donation which people might otherwise make. Let us not go down the road of putting in place what I think is a decent provision but then immediately dilute it by making an exception, however reasonable that exception may seem to be.

Looking at it from the other angle, in some sense it is a relief to find that the consultants endorsed the major expenditure, which has been the urban renewal scheme. They said that approximately 74% of the total cost to the Exchequer went in the property-based urban renewal schemes, which is a good thing because all parties in this House supported them. The results are there to be seen in the centre of Dublin where previously there had been a market failure, dereliction and a lack of commercial and construction activity of any kind. It is crystal clear that without the benefit of tax reliefs and incentives that market failure would not have been corrected. Unfortunately, however, as we went through the 1990s and the first few years of this century, we started adding on reliefs, sometimes for no good reason at all or for misguided reasons. That happened sometimes because we thought something was a good idea. Some of those good ideas proved not to be so good, however, while others did not work out.

The two Ministers who were responsible for most of these reliefs — Deputy Quinn and the former Deputy McCreevy — came at the matter from totally different philosophical angles, although the effect was the same. The former Minister for Finance, Deputy Quinn, identified a market failure and decided this was a way the State could become involved in solving it.

The former Deputy and Minister for Finance, Mr. McCreevy, did exactly the opposite. He stated that the private sector should be allowed to sort out this market failure. The end result was exactly the same — we ended up subsidising the private sector to do something we were not prepared to do ourselves. It was a remarkable philosophical difference in that both Ministers could stand by what they did in their own terms without apparently being able to see the other side of the story. We must take a number of measures, including a cost-benefit analysis to know what we seek to achieve. In one way, that is stating the obvious. The Minister of State at the Department of Finance, Deputy Parlon, and the Minister for Finance are blue in the face stating they carry out cost-benefit analyses. We discovered that perhaps this is not the case in one major scheme which will continue, namely the private hospital scheme, as all that is required is HSE certification that the conditions in the Act have been met.

We must ask two preliminary questions before we go any further. The first is whether an area of activity is one in which the State should be involved. Examining the range of incentives provided, we must be careful about getting involved in what I broadly term the commercial sector. With the benefit of hindsight, I cannot see the provision of hotel rooms and holiday cottages as a matter in which the State should have been involved. It was virtually certain that over time the market would have made available those hotel beds in so far as tourists were ready to take them up. We must consider carefully before we go down the commercial or semi-commercial road again.

The second question is whether only the State should take action. The issue of park and ride facilities was mentioned earlier. The argument was made in Dublin five, six or seven years ago that park and ride facilities were required at DART stations and the former Minister for Finance, Mr. McCreevy, introduced a specific section in a Finance Bill to encourage it. It did not work and he subsequently amended it in order that a park and ride facility could include other property developments. It still did not work. We should have asked whether it was in the public interest to have this facility and, if so, either do it directly or finance a local authority or State company to do it.

Another example of where the issue might arise is in the increasing privatisation of leisure facilities. We have fewer and fewer local authority swimming pools. We had community and voluntary facilities, often run by football clubs or the GAA but now a huge number of people are members of gyms. Whether they use them or not is another matter. I am surprised that nobody has come up with the bright idea of giving tax incentives for such leisure facilities. I am sure it will cross the Minister's desk sooner or later. This is exactly what we should not do. We should tell local authorities, as happens in every other country including the UK and Northern Ireland, that they are expected to provide a certain amount of publicly-funded facilities and run them on the basis that they will be available to everybody within the area.

Having answered those preliminary questions and deciding that an area is one in which the market has failed and it is appropriate for the State to get involved, we should then apply the sensible and important criteria mentioned by Goodbodys. They state we should take into account any genuine development potential in an area. Harsh though it may sound, the evidence now suggests that the area covered by the rural renewal scheme in County Leitrim simply did not have the development potential we would have liked. For that simple reason, the scheme did not work. The consultants are clear in stating that no such similar scheme should be contemplated. We must ensure the potential is there to fill the market gap as it appears. The other eight or nine criteria set out by Goodbodys are good and sensible and we should also take them into account.

I will speak specifically on the one major scheme not being terminated, namely the hospital beds scheme. It is by no means clear to me what it seeks to do. However, it seems likely it seeks to make good on the Government's commitment in the health strategy to provide an extra 3,000 beds notwithstanding the large amount of resiling from that commitment during the four or five years since it was made.

I do not have a problem in principle with the notion of providing incentives for the provision of private beds. The important matters are how access to those beds is decided and the standard and nature of care people receive. It is crucial to have joint waiting lists and that people receive access to hospital beds, whether private or public, on the basis of their medical needs and not on the amount of money they have in their back pockets. This is a complicated problem. I am convinced the policy articulated by my party at the last election, namely a universal insurance scheme, is the best way to introduce a market mechanism to give choice while at the same time ensuring access is based on need. That is a debate for another day.

I am genuinely unclear as to where this is going. We seem to be intervening in and interfering with the private-public mix in a way that does not make any sense and is not coherent within the overall health policy of the Government. The Government discusses having consultants on public-only contracts. I presume those consultants would not be facilitated, or working, in private hospitals. The Government seeks to encourage consultants to provide more of their time in public hospitals while at the same time seeking to construct more private beds.

We must go one of two ways. As I stated, I believe access controlled through a health insurance scheme is the best way. However, if we do not do so, we must make a strict delineation between public and private so they exist on two separate levels. Private should mean a facility built and run with private money for profit where people pay for the facility and the treatment they receive.

While I agree with the thrust of the pension provisions in the Bill, they do not go far enough. A few months ago, the Pensions Board produced an interesting report with a number of recommendations, most of which I agree with although they do not go far enough either. My view is that we must provide for compulsory contributions over and above what people now pay through PRSI. A voluntary system will not work because too many people are on too low an income and the choice is too distant for them. Many people will not be in a position to make genuine proper provision in the future.

That aside, we must deal with the scandal of people abusing the provisions introduced for pension provision in order to avoid income and inheritance tax. The Minister sought to do so through introducing caps which are too low. Provision for lump-sum payments of €1.25 million is not necessary. It should be much less than that. We should not tolerate a situation where people can have pensions of up to €5 million which can then accumulate. I assume €5 million is the total cap including accumulation and increase of assets retained in the fund. Those numbers are far too high. While I am not an actuary, I believe a pension fund of that nature allows for an annual annuity of much higher than what people can reasonably claim they need to live. When the PRSI scheme was introduced many years ago, a cap was introduced which is now approximately €40,000. We should go down the same route here. The State should seek to provide assistance on an EET basis to provide for a proper pension. However, beyond a certain level people are well able to look after themselves and do not need tax incentives or benefits.

I agree with what has been done on the artists' exemption scheme. We hope the relatively small number of people, amounting to a couple of dozen, seriously impacted by the measure will stay. If they do not do so it will not be a loss to the Exchequer as they do not pay anything in the first place. I approve of the provisions made.

In the nine or ten years in which I have spoken on Finance Bills, this is the first occasion I have chosen not to mention income or corporation tax. The reason is that after ten or 12 years of changing income and corporation tax rates and a great deal of debate, we must be open and honest and state we have reached a time when no serious party argues for an increase in rates. By any objective examination of where the economy stands, we do not need an increase in tax income to bring about the social progress and improvement in public services for which parties such as mine argue. Choosing to ignore these issues is a signal to the Minister that we will not play that game.