John Paul Phelan (Fine Gael)

I second the Fine Gael motion that has been proposed by Senator Bradford and welcome the Minister of State to the House.

On Monday night I attended a meeting organised by the IFA in my area of Carlow-Kilkenny at which approximately 700 farmers from counties Kilkenny and Carlow gathered to express their frustration and anger at the cutbacks in agriculture announced in the budget. I know from that and other meetings throughout the country that several Government backbenchers have indicated their support for the issues raised by farming organisations with regard to the cutbacks, which leads me to hope that Senators on the Government side will consider supporting this motion.

The motion refers in particular to the suspension of the installation aid and early retirement schemes. It is being suggested in Government circles that they may be reintroduced next year but I do not buy that argument. Anybody who looks at the economic situation which the country faces would have to question whether we will be in a position to reverse these decisions by next year. I am also wary of the word "suspension" given that Fianna Fáil suspended rates on housing in 1977. Although I hope the suspension of rates is never lifted, I would like to see a reconsideration of the suspension of the farming grants.

It is not long ago that I was in school with people who are now transferring lands or taking out leases to establish themselves as farmers in their own right. I have received a number of inquiries from people regarding the installation aid scheme and the early retirement scheme which provides a level of financial security to retiring farmers. The decision to suspend these schemes is strange given the small amount of money that will be saved. The European Union provided 42 cent in every euro paid into the farm retirement scheme.

The Government has rightly stated its intention to spread the burden to every sector of society as we try to return to economic growth. However, it is clear that the budget has singled out agriculture for unfair treatment. Farmers will be particularly affected by the 1% income levy because it is taken from gross income. Anybody with an understanding of agriculture will be aware that farms may have substantial levels of gross income but, because of depreciation and the high costs incurred by farmers, the net income is relatively small. I understand that Fianna Fáil backbenchers are exploring ways of changing that requirement in advance of the introduction of the Finance Bill 2008. I hope that can happen.

I refer to the point made by Senator Bradford about the legitimate expectation in respect of the installation aid scheme. He is correct. I have come across a number of cases involving the transfer of land or property, which is a lengthy process and can take up to 12 months when solicitors and the Land Registry are involved. A neighbour and friend, who I went to school with, received final transference on 10 October. He did not submit his installation aid application because the budget announcement was a bolt from the blue, as Senator Bradford pointed out. Like hundreds of others, he finds himself in an awkward and uncertain situation because no guidelines have been issued by the Department of Agriculture, Fisheries and Food on where the cut-off point will apply. Usually, when a scheme is suspended we are told it will apply from 1 January and that there will be a lead-in time for people to get their applications in. That is not the case in this suspension, which took effect at 12 midnight after the budget announcement. Perhaps the Minister of State will clarify that.

The suckler welfare scheme is a particular issue in my part of the world, where many farmers are involved in suckler and sheep farming. These two sectors have not been doing well over the past few years, particularly the sheep sector. The suckler welfare scheme was designed to give a payment of €80 per cow to suckler farmers. Many farmers entered the scheme in good faith and made financial commitments on the basis that this payment would be made. These promises were made in advance of the last general election. I am not trying to be overly political but these were two more election gimmicks held out to the electorate. As soon as the election is over and the economy goes through a rocky patch, the schemes are drastically cut in the case of the suckler welfare scheme and possibly never will be implemented in the case of the proposed sheep scheme. Farmers made investments and commitments on the back of the suckler welfare scheme being introduced. For the Government to cut the funding in half before making the first payment is particularly wrong and unjustifiable. I hope the Government reviews that.

I have much empathy for young farmers. I urge the Government to reintroduce the installation aid scheme and the early retirement scheme. We were told that every sector would have to share the burden in order for us to return to economic success. It is clear that farmers are being asked to shoulder a disproportionately large part of the burden. A number of discussions have outlined the areas affected in the budget and I hope the Minister of State and Government Senators are in a position to support the Fine Gael motion to ensure these schemes are reintroduced. Only 9% of the farming population is under 35 years of age. I have two brothers who are farmers and all my life I have heard people saying we should be encouraging young people to get involved in agriculture. These two schemes were specifically aimed at encouraging more young people into agriculture at a time when agricultural colleges are bursting at the seams with people applying for places on courses and when the only safe jobs in rural Ireland over the past few years were in farming and construction. Construction jobs are disappearing and young people from farming backgrounds are looking at agriculture as a viable future. At such a time, the Government has the bare-faced cheek to remove the two schemes that would give the most benefit to people to get into agriculture and would provide an incentive to older people to transfer land to younger people. It is an absolute disgrace and I hope the Government will reconsider it as soon as possible.