Dan Boyle (Green Party)

The budget was an exercise entered into reluctantly because of the economic circumstances in which we find ourselves. Nationally, it is meant to explain where we are going as a country under the leadership of the Government. Much of the uncertainty which has existed from recent interventions has passed because of the action taken by the Government this week.

Prior to discussing individual issues I want to speak about the need for this budget in the context of the wider international audience. I was struck by some statements made in the immediate aftermath, such as that made by the EU Commission on the degree of action being taken, which was unremittingly positive. Stephanie Flanders, the economics editor of the BBC, stated there was method in the madness of the Minister for Finance's actions, particularly with regard to the proposal for a national asset management agency, and that the UK could learn lessons from this. This puts a context on the nature of the debate we are having which goes beyond the narrow definitions and knee-jerk politics we have had since the budget speech on Tuesday. There are encouraging signs that there is a degree of realism on where we stand economically in terms of how we are viewed internationally. If this was the intent of the budget we can be encouraged that things are going in the right direction.

The options taken have been criticised. The first criticism is on whether enough action is being taken with regard to a €3.25 billion package. It is generally accepted that to take out more would have created too much tension and brought the economy to a standstill. We then consider whether appropriate amounts of additional taxes were levied and an appropriate amount of public expenditure was curbed. I cannot understand the contributors who stated additional taxation was three quarters and the public expenditure element was one quarter. From what I can see, the ratio is 1.8 to 1.5 which is approximately 60% to 40%.

Suggesting that the public expenditure element should have been greater is a legitimate point of view but my view is that to have taken more out of public expenditure than was taken on this occasion for a period of eight months of this calendar would be to deprive the economy of the only engine of spending in the economy at present. An onus is on the Government to keep a critical level of public expenditure going. The decisions were made in this context.

With regard to the level of additional taxation, difficulties arose because the changes and reforms which should happen to income tax are not possible in the middle of a tax year and so the levy vehicle which was introduced last October was made more progressive. My party argued for this and is more satisfied that the system of 2% and 4% and 6% is more progressive. I admit I would like to see a higher rate again for the higher income. I would like to see it applied at €150,000 rather than at €175,000 but these are measures which can be looked at in the future.

There has been a degree of public and political disagreement over individual items of public expenditure cuts and much of this centres around decisions on the social welfare budget. This is now a budget of €21 billion amounting to 40% of public expenditure. While it is directed for the most part towards people in real need in society and therefore needs to be protected, there are elements of that €21 billion which are universally given to many in society who already have sufficient income. For instance, the decisions on rent supplement and on other secondary benefits were the right ones to take and they point out a possible direction for future reform of social welfare.

The obvious and most disappointing aspect is with regard to the Christmas bonus but if the choice is between the Christmas bonus — which is not given to all categories of social welfare but only to the long-term unemployed and pensioners — and the option of reducing the 3% increase from last October, then I am not going to make any apologies and however unpalatable it was, it was still the better choice. There is some chink of light that if the anti-fraud measures being instituted this year towards enhancing the cost effectiveness of the €21 billion spend in that Department achieves more than is anticipated, the decision on the Christmas bonus might be looked at again and I would be hopeful in that regard.

There were other disappointing decisions relating to the reduction in overseas development aid. We live in a climate where more people in our society are talking about the need to look after our own citizens first. However, despite our recent travails, we are still a very rich country and we still have responsibility for meeting the needs of those without on this planet. The reduction when added to the previous reduction is generally in line with the size of our economy and our commitments in terms of gross national product, GNP. My hope would be that we can still achieve the 0.7% target by 2012 and this is a goal we should strive for.

The issue which the Opposition parties have taken most time on since the budget speech last Tuesday seems not to be about the budget at all——