Dan Boyle (Green Party)

Budget 2010 will be seen as pivotal. It will be ranked alongside other infamous budgets such as the Ernest Blythe budget of the 1920s, the 1969 budget which commenced the process of deficit borrowing and the 1987 budget which is probably the most comparable in terms of our attempts to restore and correct the nation's finances. It is the responsibility of any Government where public expenditure is seriously out of line to ensure it is brought back into line as quickly as possible. The onus is on the Government to ensure the country is being run in an appropriate and prudent manner. This sends signals to those whom we wish to attract to the country to invest and engage in job creation.

That is the principle underlining budget 2010. Owing to the state in which we find ourselves, we must, first and foremost, correct the public finances. We have submitted proposals to the European Commission outlining how we propose to do this by 2014. We must take appropriate, albeit unpalatable and unpopular, decisions in this regard. These are decisions members of all political parties who believe themselves to be responsible public representatives have to consider in the context of the public finances. The Government has sought to distribute the burden in the most equal manner possible. There are cuts in our capital expenditure programme and in the cost of the public service. There are also cuts in the non-pay elements of the public service. Most controversially, and for the first time in a long time, there are cuts in social welfare.

This is our third budget in 14 months. The budget of October 2008 was brought forward early in an attempt to instill confidence in reaction to the severe local and international crisis that had arisen. Bringing that budget forward led to some of its elements being ill-considered, which led to the need to introduce a budget last April. In December 2009, we are dealing with the next instalment in the budgetary situation. With this budget we have, and the Minister for Finance has striven to do this, made most of the difficult decisions that are required in this four to five year process. If these measures are successful, next year's budget should have a smaller deficit to tackle, the adjustment will be smaller and the way of dealing with the adjustment will be different.

In his Budget Statement yesterday, the Minister indicated how much of the money will be delivered in budget 2011, particularly in the taxation area. The promise to get rid of the PRSI ceiling, to take action on pensions by taxing pension pots over €200,000, to come to an adjusted standard rate of pensions, taxes on property such as a site value tax and the introduction of additional local service charges indicates the focus of the next budget will be less on public expenditure and more on taxation receipts. I believe there will be variations in the four or five budgets up to 2014 to get the balance right.

Last year we removed €8 billion from the economy. Approximately 50% of that or €4 billion was in the form of cuts to public expenditure and €4 billion was in additional taxation measures, particularly with the imposition of the income and pension levies. While they are known as levies they are obviously taxation instruments. Although the scale of what we are asking people to pay in income tax has increased enormously, we have also introduced a great deal of equity and proportionality into the income tax system that did not exist previously. There are smaller scale measures to be welcomed in the budget. There is the introduction of a minimum tax rate of 30% on the highest incomes. The Finance Bill when it is introduced next year will start the process, indicated by the Commission on Taxation, to reduce and remove many of the now unnecessary tax reliefs in the income tax system. That in itself will further increase the tax take from higher income earners.

The Minister for Finance has sought to achieve a balance and I believe he has been relatively successful in doing so. The social cost of budget 2010 must be addressed. The 4.1% cut in social welfare other than in pensions, which is welcome, and for those who are over 66 years and are carers is hard to justify, but it has unfortunately been necessary in the context of the job that must be done. If we are honest, the increase in October 2008, while given for the right reasons, cannot subsequently be seen to have been justified. The country could not afford it and what is happening now is an adjustment to the decision that was made then. However, it must be clear that for those on the lowest incomes in our society this adjustment can only be a once-off and that we are starting a process, beginning with next year's budget, that restores and works toward improving income levels for people on social welfare and in low income employment. I am confident that can and will be done.

The debate we are likely to have next week on the Social Welfare and Pensions Bill will be important in the context of how we see social protection in this country developing. There was an interesting "Prime Time" programme on RTE this week about the scale of social welfare fraud and the abuse of PPS numbers. The measures that have been particularly criticised, the lower payments for younger entrants into the job market who find themselves unemployed, require wider debate. Socially, many people would agree that, in terms of discouraging dependency, it is not proper to give young people who have not had any experience of paid employment rates of social welfare akin to the rates that are paid to people who have lost employment. This is a debate the House has not had, and a wider debate on it is necessary in society.

Questions that need to be raised about other aspects of social welfare and which require continuing public debate centre on child benefit payments. The various options that were available were examined. I believe the best way of dealing with the fact that child benefit is given to some families who do not need it financially is to provide it through an integration of the tax and social welfare system. The Government has given a commitment to bring about such an integration. However, in dealing with the current financial situation the across-the-board cut and providing compensatory payments through the child dependant allowance for those on social welfare and those dependent on family income supplement to ensure people on the lowest incomes are not affected by that change, was the best and wisest course of action open to the Minister.

I wish to comment briefly on Senator Ross's remarks about the banks. It is true that at least €7 billion of the €25 billion we are dealing with is the result of capitalisation measures undertaken by the Government, and there is uncertainty about what their future capitalisation needs will be. However, the debate we had about the National Asset Management Agency, NAMA, has missed part of the point regarding the most serious problem we are dealing with economically. If there is a catastrophic failure with the NAMA approach, I am convinced that any such loss will be fully covered by the financial institutions, and a catastrophic loss, at best, would be in the region of €10 billion to €15 billion over a ten year period. That must be put into the context of the deficit in current expenditure, which dwarfs that and occurs on an annual basis. If we do not treat the deficit as the most serious political issue in putting the nation right, we will do the country a disservice.

The budget is a sincere attempt to meet our immediate needs in correcting our public finances. However, subsequent budgets must address the other side of the balance sheet and ensure further additional taxation measures, which have been flagged by the Minister, are adopted as quickly as possible and that the burden is borne by all in society.