Dan Boyle (Green Party)

I accept what Senator Ross says in terms of taking a strategic approach in terms of whether one accepts or rejects what is proposed in this budget. That is preferable to the usual knee-jerk reaction that accompanies debates like this. Senator Ross's contribution was based on a particular economic view of how we should be proceeding. I do not claim to be an expert on Marx but a Marxist slogan goes, "From each according to his ability, to each according to his need". I refer to this in the context of the levy proposal.

We have had levies before and there is a debate as to whether they are an effective instrument. When levies were introduced by the rainbow Government, there was no minimum wage, full PRSI was paid on wages and those on the lowest wages were fully in the tax net. That rate of approximately 30% was an effective tax rate for people at that time, little more than ten years ago.

We must acknowledge the difference between the introduction of a levy then and the introduction of a 1% levy now. Of the workforce, 36% are not in the tax net, 44% are at the standard level and 20% are at the highest level. The levy does not apply to social welfare recipients. We should debate whether those on the lowest wage levels, which are unacceptably low, have a capability and whether we should have this principle of contribution. We should also debate whether an appropriate contribution is being given by those at the highest level. This is where I disagree with Senator Ross. Raising capital gains tax in order to assert the principle that people should pay the same tax on income they receive from capital as they do from income on work should be an intrinsic part of our taxation system.

I welcome the standardisation of tax relief in respect of medical expenses. People were getting higher benefit from the tax system by having a higher income yet they were receiving the same medical treatment. That was an injustice in our tax system and we had to get rid of it. I welcome the moves towards pensions relief being brought down in respect of the kind of contribution that people can put in and from which they can receive benefit. It is not acceptable that this State continues to forgo more in tax by subsidising private pensions than we pay in the State pension. That is not social justice.

I can accept that the taxation measures may not have been thought out in a strategic way but it is a start and will be added to when we have the report next year from the Commission on Taxation. We must be honest and admit that this is only one of similar budgets that will be introduced in years to come. We are talking about a climate where the economy is estimated to have shrunk by 1.5% this year with an estimate that it will shrink by a further 0.75% next year. This means we will have a similar budget then, with further difficult and unpopular decisions. It is the business of Government to make those decisions.

The second point concerns the removal of medical cards from people over 70 years of age. This measure was introduced with the best of intentions, albeit with an eye towards achieving a certain political advantage. It was brought in on a rushed basis with no particular knowledge of what the cost might be or its proper social effect. There was a need to re-adjust that. I am not too sure whether it has been done properly but at least we know that people over 70 years of age with incomes of €650 per week will still be in receipt of either a full medical card, a doctor-only medical card or a €400 grant towards their medical costs in a year. If anyone in the Opposition would like to argue that someone aged over 70 with an income in excess of €650 per week should receive some type of support from the State I would like to hear that argument.

Some of us would like to have a universal health system but we have neither the means nor the resources. There are some of us who would like to see a universal medical insurance system in place but that will not happen in a budget like this one. We must make short-term difficult decisions and run the risk of the unpopularity that follows. As a member of a Government, I have made that choice, my party has made it and so has the Government in which we serve. How it falls out and whether it may be adjusted in future legislation is something we will discover.

I have always argued, even as an Opposition spokesperson, that we placed too heavy a reliance on the construction industry over the past ten years, in terms of our economic strength. If the 2007 level of construction were to be maintained in 2008 we would have an economic growth rate of 2.5% this year and 3.5% next year. The reality is that we were never going to build 90,000 houses year in, year out. We need a diversified economy. Circumstances will force us to bring about that outcome and there will be economic pain. In the long term, however, that is not a bad thing if we can diversify the economy and make sure there is a sustained and sustainable approach to economics in the future.

There are a number of measures that the Opposition have claimed amount to support for the construction industry. They are nothing of the sort. The housing finance agency loan scheme from which I benefited in purchasing my house in 1987 to the tune of IR£17,500, has been increased to offer €285,000. That is a 92% grant, offering the possibility of buying a house worth €310,000 to €315,000, a below average house price. The equity release scheme is a combination of already existing schemes and will allow people who are purchasing through shared ownership to do so in terms of affordable housing. This scheme is not moving as it is and is causing a capital drain for local authorities.

Measures have been taken in the budget to allow public resources be used in a more effective and socially just way. I hope members of the Opposition will look at the budget in a less peevish and churlish way, that they stop concentrating on knee-jerk newspaper headlines, look at the details and see where such balance is being achieved.