Brendan Ryan (Labour)

We should not get involved in a nonsensical debate about whether this is an election budget. Every budget prior to an election, from all parties, has been an election budget, although none has been as generous as this one. If my party was in Government and in the same position as the current Administration, it would, without a shadow of doubt, introduce an election budget. Whether it would be directed at the same areas is the question I propose to discuss. Allusions to gloriously detached macroeconomic management are but pretences and should be ignored.

In political terms, the Government's handling of the budget was poor because it released in advance details on most of the measures, including some of the most dramatic initiatives, one could expect. We knew a dramatic measure would be introduced to address the issue of first-time buyers and that the old age pension would increase to the magic figure of €200. We also knew the Progressive Democrats would get a 1% reduction in the top rate of tax because they would not get their way on stamp duty. I find it hard to find a reason for that party's obsession with reducing the top rate of tax without attributing motives which Deputy Dardis could not possibly share because he is far too decent a man. I cannot see the obsession with the top rate of tax per se as distinct from those who pay it.

One of the considerable achievements of the budget is the extraordinarily complicated muddying of the waters that has emerged. This began with a Government amendment in this House to a Fine Gael Party motion on stamp duty in which it tried to rewrite the way in which the proportion of those paying tax is calculated by using the effective amount of tax people pay as opposed to the number of people paying specific tax rates. An argument could be made for using this methodology because it would show that the effective amount of tax paid by rich people is minuscule. Its use, however, is a classic example of spoiled child behaviour, that is, when one is losing the game, one changes the rules halfway through to ensure one wins the second half. I thought adults behaved differently.

I will address the great boast made in the budget. After ten years of unprecedented prosperity, the minimum adult rate of social welfare is €186 per week. The Minister was triumphal about this figure which is regarded as one of the crowning achievements of the budget. Do political leaders live in two different worlds, one in which they listen to the advice of prominent economists and public servants on what is an acceptable minimum income and another in which they meet real people? An adult is expected to be able to live on a weekly income of €186, less than the price of a meal for two reviewed in many newspapers at weekends. Twenty years ago, in times of hardship, it may have been possible to argue we could not afford to pay satisfactory social welfare rates. Stating that €186 per week is the acceptable income on which an adult is deemed to be able to live is a statement of belief about how our society is organised, as the fact that the Government believes it is great to have come this far.

When I think of the Fianna Fáil Governments of the 1930s, it calls to mind the introduction of dramatic measures such as public housing and wet time payment for workers who had previously received nothing. Incidentally, the former initiative was described by an academic associated with Senator John Paul Phelan's party as the first sign of Bolshevism but Fine Gael, like all parties, has changed. It was dramatic changes such as these which characterised Fianna Fáil when it still had a feel for the needs of ordinary people. Its approach has transformed into econometrics with the party believing some of the nonsense spoken by economists.

Senator Mansergh gets a little excited about the issue of Ireland's world ranking in terms of income. Regardless of whether it is first, second, third or fourth in the table, this is one of the richest countries in the world. It is pathetic that Government backbench Deputies in the other House stood up and cheered when the figure of €186 per week was announced. Social welfare rates may be better than they used to be — I am familiar with the figures — but Ireland is spectacularly richer than it was ten years ago. I thought the purpose of getting rich was to look after those who are less well off. We did a little better for this group than we did in the past but the figure of €186 sets itself up.

I am intrigued by the confused logic applied to the issue of first-time buyers. Who would object to the change?

However, that is not the nub of the country's housing crisis, which is based on a number of factors, among them the inadequate provision of social housing and the failure of the Government to manage. The Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Noel Ahern, stated in the House a few weeks ago that money was not the problem. I have given him the benefit of the doubt. The problem is the inability to strategically manage everything involved, including land, building, planning and organisation, to provide the numbers and quality in terms of social housing. There is nothing at all to change this.

The same situation applies to affordable housing. We know it is not about money but the Government is still living in the past in terms of a particular kind of Ireland and it has not learned how to put together institutions, organisation and plans. The first-time buyer's mortgage interest relief is most welcome but it will not solve the fundamental problem that housing is too dear and if we do not watch it, most people will not be able to afford to buy their own house. The fundamental problem is one of excess demand because investing in housing is the easiest place in Ireland to make money. Rent from property is simply a way of getting somebody to pay for the privilege of keeping one's property secure. The real benefits are capital gains, which are taxed at the rate of 20%.

Do we want a country that says this is a great way of encouraging enterprise by making property the best place to put money with virtually zero risk and with no problems? If a person is honest they will pay a good deal of tax on their income — unfortunately, many people do not seem to be honest — but they will have a capital gain of 10% to 15%, perhaps more, and they will pay a level of taxation on it which is offensive to the sort of person who earns €45,000 a year earns another €5,000 and pays income tax at a rate of 41% instead of 42%. The Government boasts about the 1% reduction in the rate.