Michael McCarthy (Labour)

We have been able to debate these matters with the benefit of there being a good deal of money in the country. One need only look at an issue referred to in this House last week, a clip on "Morning Ireland" of Ray MacSharry delivering a budget speech in the late 1980s, which had to deal with issues such as very significant emigration, high unemployment and severe interest rates. Listening to that clip, one realises we live in a completely different Ireland today, and it is difficult to imagine that the clip is not from very many budgets ago when Governments, unfortunately, did not have the current largesse at their disposal.

That improves the conditions and circumstances under which we can deliver budgets and spend money on various areas. One should be mindful that it is not long since this country did not have such money at its disposal and decisions were therefore much more difficult. The criticism that could be levelled at various Ministers for Finance and other Departments was more strident because there was no money to introduce measures people would like to have seen.

Aspects of this budget must be welcomed, and it is particularly significant that we can welcome old-age pensions surpassing the €200 a week level. Other measures can also be welcomed but we must also consider the budget in a balanced and objective fashion. It improves in some way the lot of the poor and disadvantaged, as did the budgets from 2004 and 2005.

We must disagree with the Minister stating in his budget speech that throughout its terms in office, the Government has ensured the less well-off have shared in Ireland's growing prosperity. If the Minister for Finance has forgotten the "savage 16" or the "dirty dozen", all legacies of the former Minister for Finance, Charlie McCreevy, none of the disadvantaged, the less well-off or those who had supports cut will have done so.

From 1997 until 2004, the gap between rich and poor widened as each of seven successive budgets gave to the rich and took from the poor, making Ireland one of the most unequal countries in Europe. In 2004, CORI put it well in stating that the rich get richer while those living in poverty still have a long way to go before they ever reach the poverty line of income. Just two past budgets giving more to the poor than the rich can only go a small way to tackling the neglect of the previous seven budgets. We await the outcome of the most recent budget to see how its measures will take effect.

I question the real meaning of the Minister's boast in the budget that he is providing the biggest package of support for those on low incomes in the history of the State. There were two very clear reasons for this large package, both arising from mismanagement of the State's finances. The Government increased income inequality and worsened the situation for the poor over the first seven years of its time in office and it will take more than two or three years of higher spending on social welfare to put right the damage done over recent years.

In addition, economic commentators recently put our current inflation rate at 4%. We have not done nearly as well as our EU neighbours in keeping inflation under control, although we are facing the same international problems, with rising energy prices and the fall in the value of the dollar, etc. If doctors differ, economists can differ every bit as much and as dramatically. The Minister for Finance would have used different indicators for a naturally lower figure.

With significant inflation, the Government will spend more in absolute terms just to buy the same amount of goods and services this year as last. Any Minister for Finance presiding over an economy with significant inflation can always make the very hollow boast that he is spending more than he ever did before, which is not the same as devoting more resources to the needy.

I should make a comparison with what is being spent now and what was being spent by the rainbow Government. In 1995 and 1996, that Government's spend on social welfare was always in double figures in terms of gross domestic product, between 10.4% and 11.1%. The current Government has led social welfare expenditure to the level of 7.5% of GDP and it has remained in single figures throughout the term of the Government.

Those struggling on inadequate social welfare incomes are very sensitive to price increases, whether caused by general price inflation or Government increases in gas, electricity, transport and health care costs. What is important in disadvantage terms is the real improvement in circumstances rather than the monetary measure of changes from the previous years.

I was in the Dáil Chamber to hear the budget speech and there was a great cheer when the Minister announced that social welfare payments were at last crossing the €200 per week barrier. There was the key indication that this was helping the poor and improving the prospects of the Government in the next general election, and also that any social welfare payment of €200 solves all problems for low-income groups. Neither of these assumptions is justified.

We will see what the election produces as we have no crystal ball for this side of May. The increase in the social welfare payment was important as a pre-election commitment being fulfilled, which is good, but I dread to think what it must be like to live on €200 per week. Anybody in such circumstances would not join in the chorus of approval received by the Minister when he announced it.

There is evidence that such levels of money can still consign somebody to the breadline, so there is not much to cheer about. The minimum weekly disposable income required to avoid poverty in 2006 is €203 for one adult, €270 for an adult and child and €337 for two adults. Even with the first instalment of these improved payments, the unemployed, widows, widowers, those under 65, lone parents, carers for the disabled and many other groups are still below the poverty line.

I will comment on poverty in general before going into cases in finer detail. We must recognise that poverty levels in this country are too high and it is not good enough to hide behind fancy speeches and the manipulation of figures. There is statistical evidence to prove the levels are too high and all the references I have made to poverty have come from Central Statistics Office figures published last month. These refer to some of the indicators agreed by Ireland and other EU countries in 2001 as an appropriate means of measuring social inclusion and comparing the effectiveness with which different EU countries are handling their own problems of social inclusion and poverty.

Statistics show that Ireland has the highest poverty levels of any country in the EU except for Portugal and the Slovak Republic. We are less effective than other EU countries in reducing poverty levels through social transfers and our total transfer system only reduces poverty by 18%, compared with the EU average of 25%. The unemployed, one-parent families, the ill, the disabled and the elderly have unacceptably high poverty levels. A worrying feature is that in Ireland, up to a third of all children in the country are living in poverty.