Terry Leyden (Fianna Fail)

This case has certainly concentrated the mind of the leader of the Labour Party. In the words of the Minister for Finance, Deputy Cowen, there has been a conversion on the road to Damascus. Deputy Rabbitte was converted from Sinn Féin, the Workers' Party to Democratic Left, and now he is the leader of the Labour Party. He has therefore undergone three Damascene conversions, whereas St. Paul had only one.

Nothing is certain in this world except death and taxes, as Benjamin Franklin stated in 1789. Albert Einstein said that the most difficult thing in the world to understand is income tax. In the case of Deputy Rabbitte, one might quote George Bernard Shaw and state that "a government which robs Peter to pay Paul can always depend on the support of Paul".

Last Saturday's proposal from the Labour leader, the most unexpected source, came as a bolt from the blue. We had all expected the leader of the Progressive Democrats, who will address his party's annual gathering in Wexford next Saturday, to suggest further innovations regarding taxation in conjunction with the Fianna Fáil Party. Deputy Quinn has said that one cannot enjoy the same level of services as Finland, Portugal or Greece unless one has a similar level of taxation. That suggests a rise in taxation, but he also called for a reduction in taxes. He was not as active in that regard when he was Minister for Finance. Is that a coherent policy or just more empty promises?

In 1992 the top rate of tax was 48%, and the lower rate 26%. The former came down to 41% over the years, with a commitment in this year's Budget Statement to cut it to 40% next year, with a lower rate of 20%. There is no reason in the wide earthly world a new Administration of Fianna Fáil and the Progressive Democrats should not continue the success story of the past ten years with a consistent policy of reducing income tax. The electorate must decide whether it should trust the parties that delivered a reduction in income tax or a party that has opposed such reductions since its foundation. I hope a simple leaflet will be issued to every PAYE taxpayer when his or her P60 is sent out or any other information is conveyed to demonstrate the Government's proven record in that regard. What has happened can be tracked.

I welcome the opportunity to discuss the Act itself, but in a sense circumstances have directed me to highlight the situation regarding income tax, since we would not have been able to deliver this level of services without it. The Government increased income tax receipts over the years by having 2 million people at work, and that is a direct result of the Fianna Fáil and Progressive Democrats Administration. It is easy for a party which has not been in Government for more than ten years to give away money it does not have. It delivered high taxes consistently through any coalition Government of which it was a party. All of a sudden, because of the realisation of its dwindling support in the opinion polls and the unlikelihood of Opposition parties coming together to form a Government, it is trying to buy the electorate.

Ireland has in recent years achieved one of the best economic performances in the world, with economic growth since 1997 averaging 7% compared with the EU average of 1.5%. We now have the highest level of employment in the history of the State. I reiterate that 2 million people are employed. That is an enormous achievement.

When I was in Government in the mid-1980s, there was emigration, there were cutbacks and there was fiscal rectitude. All that was happening in a difficult period when I was in the then Department of Health. There were cutbacks in health and throughout the public sector to correct the economy, and we have got it correct. I, and every Member of this House who was a Member at that time, can take credit. Sacrifices were made, by the country as a whole and by individuals, but especially by politicians of Fianna Fáil who were supported at that time by the Tallaght strategy of the then Leader of the Opposition, former Deputy Alan Dukes, who was courageous enough to identify the position in which we were and who took an unselfish attitude for which he got little reward from his friends in the Fine Gael Party, who brought him down shortly afterwards.

We find ourselves in a position where the Government finances are very healthy. There is no question about that. Against this increased background of prosperity it is only right that the Government invest strongly in infrastructure, and it is investing 5% of gross national product in infrastructure — twice the European average.

In the 2007 budget the Government honoured its commitment to achieve a basic social welfare pension of €200 a week, that is, a rise of €18 a week. The Leader of the Progressive Democrats and Tánaiste, Deputy McDowell, has given a commitment that if he is returned to Government, with Fianna Fáil, the old age contributory pension would be increased to €300 during the five-year lifetime of the next Administration. I believe that commitment will be honoured. I await the discussions in the Fianna Fáil Party, where we are producing our own manifesto in this regard. Given that we achieved the €200 pension in the lifetime of this Government and we increased the pension to more than €200 in the last budget, I do not see anything too difficult to achieve in that commitment. Compare this with the meagre pension increase achieved by the rainbow Government in the bad old days, just £2.29 in 1995, when the then leader of the Democratic Left, former Deputy De Rossa, who is now a member of the Labour Party, was Minister for Social Welfare.