Alan Kelly (Labour)

I hope I do not follow the last speaker's slightly patronising tone.

This budget will be the Waterloo for this Government and for this generation of Fianna Fáil. For the past couple of months, the people of this country were led up the garden path into believing this Government would deliver a tough but fair budget. Their understanding was that this Minister for Finance was different from his predecessors, Deputies Cowen and McCreevey, and that the pain would be shared by those who gained most from the development of our bubble economy, namely, the builders, speculators and bankers and the high level earners.

That was folly because this Minister is not different and the budget is all over the place and lacks coherence. It ruthlessly targets the middle income PAYE family. It protects the benefactors of the Fianna Fáil Party and the wealthy and fails to take any significant steps to help those most in need during the sharpest downturn in our economic history. Although increasing numbers of people are signing on the live register, there is not even one good idea in the entire Budget Statement concerning job protection and the re-energising of people through training and back to work schemes. This is despite the fact that there are 80,000 more on the dole queues.

I live among the people who will suffer most from this budget, the lower and middle income families, many in their 30s, 40s and 50s. They are already under severe pressure from savage mortgages and increased overheads. They are teachers, nurses, tradesmen, factory line workers and shopworkers. They woke up this morning wondering how they will pay for it all. Hospital charges have gone up and so have medical bills. There is a return of university fees for the charges announced are fees through the back door. There are changes in child benefit and child supplement along with increases in a plethora of indirect taxes. These families will pay more in tax and must pay more for a range of public services. We learn more about this as the hours go by.

Like many colleagues and, I presume, the Minister of State, I have received many calls from constituents I will take this opportunity to tell Members about a few of them. One was from an old age pensioner who was concerned about the withdrawal of the old age medical card for those over 70 years of age. As a consequence of having received the card this person did not maintain VHI cover and now does not know what coverage he will have in case of illness, nor how long the wait must be before reclaiming a benefit from the VHI, if that membership is renewed. This person feels isolated and marooned by the Government. By all accounts this could still end up in the courts. I had to explain to this person that the Government could not negotiate a good deal with the GPs in the first place and the consequence is that such people are the ones to suffer.

Another call came from a friend who has two children in college and another doing the leaving certificate. This family has a modest income and does not get grants from the local authority. They must now face up to having to pay registration fees of up to €1,600 a year as well as paying the ancillary costs of sending children to college. They will also be hit with the reduction and withdrawal of child benefit and thereby experience a double whammy. Education is a universal right and yesterday the Minister for Finance took it away. I recently addressed 5,000 students in Cork on this issue and I can tell the Minister fo State that this is one that will return to bite.

I also took a number of calls from teachers who are irate about the cutbacks in education. It is clear the Minister is intent on looking after rich kids only. The increase in class sizes is a disgrace and one of the worst elements of the budget. School transport costs will be increased and the number of specialised teachers cut. When I was in primary school in the 1980s, parents used to substitute when teachers were off sick. Is it not unbelievable that we will return to such circumstances as a result of the Government's decision not to provide sick cover?

Ministers state that primary teachers will not lose their jobs under this scheme and will be redeployed. They should tell that to the graduates of St. Patrick's and Mary Immaculate training colleges. Only last year, the Fianna Fáil Party promised 4,000 extra teachers and a pupil-teacher ratio of 20:1. Under the budget, the pupil-teacher ratio will climb from 27:1 to 28:1. These measures are cutting back on our children's education.

I spoke to a retired person who works two days per week to supplement his income. He will now have to pay 1% tax on income from a 12-hour week. The 1% tax levy imposed indiscriminately on all incomes is scandalous. Why did the Minister not exclude from the measure those who are not currently in the tax net? I fundamentally disagree with Senator Boyle's inaccurate comments on the rainbow Government. The Minister of State should not launch into a diatribe on the levy being the most efficient administrative method of imposing the tax. It is a quick tax win imposed by the Government on the most vulnerable. Anyone on fixed social welfare or a pension who works a few hours here and there to make a few bob will have to pay part of his or her income in tax.

I listened to Ministers state that the levy was introduced because all of us must play our part. Are they seriously arguing that those in the income bracket I have described, especially retirees on fixed pensions, can afford to pay the levy? It is not widely recognised that 30% of those in poverty are in homes headed by a person in some form of employment. The proposed new tax will make their circumstances worse. Lenihan's levy is a disgrace and will define the Government's attitude towards equity. Middle income families view it as a direct income tax which, alongside the raising of the earnings ceiling for PRSI, was aimed at them. No amount of camouflage on pay packets will hide the fact that these families were the Minister's target.

The budget savages those who need health services. The changeover to the standard rate for tax relief on medical expenses will hit middle income families hard because they fall between two stools. They are not rich and need to use this relief to claw back some of the substantial health care costs for families. Not only has tax relief on medical expenses been slashed, the minimum threshold for the drug payment scheme has increased by €10 to €100 per month and the qualifying age for disability allowance has been raised from 16 years to 18 years for new claimants. This latter measure was an example of pure savagery.

The duration of the illness benefit scheme is to be limited to two years and the number of contributions required increased from 52 to 104. The list of such measures goes on. For example, insane charges are being imposed across public hospitals. Accident and emergency charges will increase from €66 to €100. Health professionals inform me that they struggle to secure payment of the €66 charge. How will they get people to pay the €100 charge? I question this Government's understanding of the internal ramifications of the increased charge and the internal politics of health. I predict the general practitioner co-operatives we are encouraging members of the public to use to stop clogging up accident and emergency departments will increase their prices with the result that savings will not be made and the taxpayer will be ripped off again.

Hospital in-charges are to increase from €66 to €75, while long-stay charges are to increase by €31.44 per week. These measures are being taken by a Government which has shown it does not have a long-term strategy for public hospitals and refuses to support to them. The increases in hospital charges will prevent people from accessing the medical care they need.

Vulnerable people have been dealt a major blow by the Government. They face significant increases in the cost of food and energy and while the Minister provided a modest increase in the fuel allowance, he must know people are suffering greatly from food poverty. Increases in social welfare payments do not match inflation and the plethora of new, indirect taxes and excise duties will wipe away whatever meagre gains were given. The increase in pensions is also derisory. It should be noted that VAT accounts for 14.5% of income among the bottom 10% of earners, whereas it accounts for only 6.8% of the income of those in the top 10% income bracket. The increase in VAT to 21.5% will accentuate this disparity.

One of the greatest examples of waste during the so-called Celtic tiger years was the failure of the Government to address the child care issue by establishing a proper child care system. In Ireland families pay up to 26% of their household income on child care, whereas the figure in many other European Union countries is as low as 5%. What has the Minister done? He reduced the upper age threshold for early child care supplement, one of the few benefits available to families, from six years to five and a half years. The Minister for Finance was the Minister of State with responsibility for children when the supplement was introduced. How did he arrive at the new threshold of five and a half years? He was simply seeking another quick tax win.

As I indicated, the budget includes few measures to protect jobs. It seems the Government wants us to return to the era of having long-term unemployed. The budget attacks those seeking to return to work by reducing the period for which jobseeker's benefit is paid from 12 months to nine months for those with fewer than 260 contributions and from 15 months to 12 months for those with 260 or more contributions. The number of social welfare contributions needed for jobseeker's benefit is to increase from 52 to 104.

I have spoken on many occasions in the House about the need to stimulate the economy in the area of high value jobs. Again, the Government has not gone far enough. Where are the incentives and strategies for the development of high-tech industry or to facilitate the development of small and medium size enterprises into larger exporting companies? This sector is being strangled.

Why, in the name of God, has the Government not made proper provision in the national development plan for next generation broadband? How will we ever re-stimulate the economy while we remain the laughing stock of Europe in this area? The Government should have made provision to address this key infrastructural issue which has been strangling the development of business for years.

The budget confirms the failure of the decentralisation policy. In addition, the Government has not produced any new measures in the area of public sector reform. I hope the Health Service Executive redundancy programme will not be based, even in part, on the unpublished Teamwork reports into acute care. The voluntary early retirement programme must not be applied to front-line staff and needs to be targeted at middle management.

Consistency is required in carrying out public sector reform and we do not need change for the sake of it. Reform must be top down, which will require examining the layer of boards and top level management in the public service and scrutinising the work done for the ridiculous salaries some individuals receive. I learned recently that a small number of top earning public servants received €3 million in bonuses this year, an insane figure. The performance management and development system, PMDS, applied in the public service, to which I have alluded in the House on a number of occasions, should also be reviewed.

I ask the Minister to reconsider or amend the €10 euro departure tax proposed for air travel. The levy will have a significant impact on tourism at a time when it is facing an uphill battle to maintain the visitor numbers and revenue to which we have become accustomed. It will also have a detrimental impact on airports, especially regional airports. If, as it appears, the proposed levy will discriminate against Shannon, Cork and Kerry airports as a result of the distance criteria applied to the two proposed rates, it should be reviewed. Shannon and Cork airports have suffered enough blows this year.

This is a dreadful budget which will enter the annals for the severity of the cuts it imposes on families in the PAYE sector, its lack of protection for the vulnerable and lack of investment in children's future, its decimation of the health system and the absence of focus on the need to develop indigenous industry in parallel with inward investment in high value services. In short, it has no coherence. The Minister stated he wanted to get the country moving again. Unfortunately, I worry he will stall it.