Brian Lenihan Jnr (Dublin West, Fianna Fail)

One of the most interesting ways of discussing Ireland abroad and explaining our position is to point out the proportion of our workforce with third level qualifications, which is the second highest in the European Union after Sweden. Such qualifications only have value if the standard of the qualification is up to the mark. That is a fundamental issue that will be very important for this and the next Government. The OECD education report was very disturbing and while one can argue about methodologies in the schools chosen, the fact remains it is a warning sign to us that we should heed.

Senator Phelan mentioned tourist infrastructure and this comment was echoed by most speakers. Attention was also drawn by many speakers to the question of the travel tax. There was a very substantial reduction in this to €3, although there are some who argue it should be abolished. This is a tax base that is being resorted to by an increasing number of European governments. What is important for us is to position ourselves as a peripheral European state at the lower end of the tax rate, which we have done in the budget. In addition, the Dublin Airport Authority has made an offer in respect of Shannon, Cork and Dublin that if passenger levels exceed certain amounts, there will be free landing charges. These combined measures create the incentive for those who wish to carry passengers into the country to expand their numbers.

Senator Phelan also raised an issue close to my own heart in the funding of local government. This is an issue on which the outgoing government made quite a bit of progress. The introduction of the second home tax was a very important initiative in broadening the revenue base of local government, and the tax was introduced and made a receipt of local government without any corresponding reduction in the local government fund. Whereas there were no specific announcements on local government funding in this year's budget, the four year plan for national recovery sets out a very clear path on how to fund local government in future. The introduction of the site value tax as a residential charge which will be paid to local government is a fundamental step in that regard. The basic level of household charge will be set at €100 under the plan. An increase can then be built in based on the higher valuations of higher value properties. These measures are targeted to raise approximately €500 million under the plan during the four year period.

This is a realistic way of proceeding in relation to local government. It links the local household which receives such benefits from local government with the provision or contribution of revenue. It also has the advantage of ensuring responsibility is imposed on every householder. It is for this reason that a minimum level of charge is imposed on every household. The charge is equitable in that it can be scaled up for wealthier households to achieve the necessary revenue base. All that is required to introduce the tax is an amendment to the existing legislation dealing with second homes. This is a credible and realistic way of making a good start on local government finance.

Other areas have to be addressed, of which one is the apportionment of the local government roads fund between transport and local government. If the Opposition parties are formulating a credible plan for local government financial reform for the general election in the early to middle part of next year, they should focus on this important issue. The measure included in the four year plan for national recovery is credible in this regard. The charge is not pitched at such a level that owners of property believe they will be mugged for vast sums of money in property tax. This measure creates a highly credible funding base. It is extraordinary that such a small charge can raise a dramatic amount of funding and lessen the dependence of local government on the Exchequer. It is vital that we proceed with these measures.

Senator Phelan raised the issue of town, city and county councils. I concur with him that there is substantial scope for rationalisation in this regard and the matter should be pursued.

Senator Hanafin spoke about the property market, specifically changes in stamp duty. This aspect of the budget which has not been much commented on is of fundamental importance to future reform of the property market. Most countries that have experienced dramatic residential property bubbles similar to that in Ireland have not had a transparent pricing mechanism in place for house valuations. This was the case in Ireland. We know that the value of most private residences here turns on a matter of auctioneering and estate agency reputation. If, as has been secured since budget day, one's stamp duty base is universal and set at a low rate of 1%, stamp duty no longer operates as a distortion in the markets and facilitates the giving of information. One of the crucial elements of the Finance Bill will be the enabling powers to allow regulations to be adopted to publicise information on stamp duty collections in order that we will know the valuations of different house types throughout the country on an objective basis. This will be a substantial change in how the residential property market functions. The element of transparency is very important.

The fact that first-time buyers must pay stamp duty as a result of the budget was criticised. Stamp duty is charged at a rate of 1%. In the current market - very much a buyer's market - the seller will in all probability pocket the loss through the imposition of this taxation. Stamp duty changes in the budget effect fundamental reform in the property market. I was delighted to hear Senator Hanafin comment on this matter.

The Senator also highlighted the importance of research and development. Under the plan for national recovery, the budgets in the Department of Enterprise, Trade and Innovation for science, research and attracting industry are carefully safeguarded. This was an important issue in the formulation of the plan. In the current fiscal circumstances it is difficult to ring-fence any item of expenditure. We must, however, ring-fence the expenditures that keep open the jobs pipeline and ensure we will have sustainable job creation in the years ahead. This will lay the foundations for full economic recovery. The Senator stated we were a cork on a world ocean. I have certainly had plenty of such experience.

Senator Buttimer referred to the fairness of the budget. It is too late on an evening approaching Christmas to open that subject. However, if one examines the four budgets I have had the obligation to introduce, the balance of the adjustment has been heaviest on those who have the highest incomes and lowest on those who have the lowest. What is regrettable is that those on lower incomes can no longer be exempted. Everyone must make some contribution. This has been a difficulty in the budgets in recent years. Political parties which do not face up to this reality will not be able to provide an effective Government in the years ahead because the €19 billion gap between expenditure and receipts remains. Not one cent of this sum has anything to do with the banking sector. Irrespective of which political party finds itself in government, it will have to address the question of how one closes this gap. When one tries to do so, one discovers very quickly that the main drivers of public expenditure are salaries, welfare payments, transfer payments and agricultural subsidies. These items account for the great bulk of expenditure.

It is easy for an Opposition - I am not making a partisan point - to talk about administrative efficiencies and public sector reform. When one translates this into practical fiscal reform, public sector reform means one does not pay doctors €64,000 per annum for having 100 elderly patients on their medical card list and that one assesses class sizes to ascertain whether one is obtaining value for money. While public sector reform is a mantra that has entered debate, I sense a reluctance in the political system to translate this mantra into the reality of what it represents.

Senator Buttimer also discussed the political system. There has been very little social unrest and people have shown an extraordinary degree of patience, courtesy, restraint and common feeling in addressing the effects of the recession. The Senator noted that we needed a smaller, cheaper and better Government service. These objectives are not always consistent with each other. One feature of the current public debate that I deplore is the constant harking towards an imaginary state, people or republic. This is a republic for which many generations made deep sacrifices to secure. Ireland is a republic with representative institutions. Representative democracy is the foundation of our democracy. It is the foundation of the debates in this and the other House and the authority of the Government deriving from the other House. Representative democracy is important. This particular plant did not grow automatically on Irish soil. It took generations of Irish Nationalist politicians who for many years had to sit in an imperial parliament in Westminster and later participated in the Free State and republic. I believe a denigration of representative democracy is in progress when I hear panellists on programmes state they would not contest a Dáil election but believe the country should be ruled by citizen assemblies. These Houses are the representative institutions of the State and if we have failings, let us reform them. Members have taken substantial pay adjustments in recent years. The take home pay of the Taoiseach is less than €100,000 per annum. Few top executives in any company are on this kind of take home pay figure. I know the Taoiseach does not resent this. We have to protect representative democracy and respect it as a system. If changes are needed in the composition of the Seanad, the size of the Dáil or the accountability of Ministers, let us consider them. Let us examine how we can bring better people into public life. Let us ascertain how we can attract - I do not like the word "incentivise" - the best and the most talented, idealistic and patriotic into public life. We should devote ourselves to this task when we consider the subject of political reform because reform that simply reduces the political class to a collection of road sweepers will not work.

In regard to the gateway innovation fund, Senator Buttimer made an even more eloquent contribution. I introduced a tax relief on this subject some years ago and I am aware of the swing bridges needed in Cork. This is an issue that can be developed.

The Senator also referred to social partnership, about which I wish to say a few things. I am very much in favour of a public service wage agreement, which is what we have. It is only common sense for an employer to have such an agreement with his or her employees. In regard to social partnership, the expert group which looked at the Department of Finance made the point that although the process in itself was not wrong both social partnership and programmes for Government negotiated by parties after elections involved entering unsustainable financial promises, took the focus from the need for proper financial discipline and focused instead on a system of delivering results which became detached from fiscal realities. It is an important point and a lesson we have had to learn the hard way.

I admire the confidence of Senator White and thank her for her kind wishes to me. Her main point was the importance of marketing Ireland abroad. I discussed this with the NTMA which has stepped up its media presence around the world. The current director general has been most insistent on that. I do not know about the entertainment budget but it has stepped up its involvement with foreign media. A consistent report one receives from the foreign media is that most bad news about Ireland comes out of the country from the Irish media. This is copied abroad and does not originate in the foreign media as we are inclined to think, being a small country.

Senator Bradford spoke about marketing Ireland abroad and suggested that former politicians be appointed to ambassadorial roles. Given the current state of opinion polls that suggestion should come from this side of the House. I have no ambition to be an ambassador and wish to reassure my constituents in that regard. The Department of Foreign Affairs provides a very competent service and represents the country well abroad but it is important that we evaluate its work in the current situation. The focus of Irish diplomacy was very much on political objectives in the better years. Economic and commercial objectives should predominate in whatever arrangements we may have.

I believe all parties should perform a stronger role on St. Patrick's Day. I tire of the endless abuse concerning the annual St. Patrick's Day visits. It is a very important opportunity to sell Ireland and there is a case for having an all-party approach to that issue.

In regard to educational expenditure and school building projects which were referred to by Senator Bradford, we have always insisted on value for money. Some schools built in recent years were built to a fantastic design and quality which must be commended.

Concerning public expenditure control, Senator Bradford mentioned there had been a joint Oireachtas committee on public expenditure. He referred also to social partnership. The Joint Committee on Finance and the Public Service examined this issue recently and produced a report, elements of which are in the plan for national recovery. In the area of public expenditure it is very important to focus the debate on what can be secured with the expenditure we have at our disposal and that we do not assume automatically that expenditure should take place. Under the plan, from next year Ministers will have to observe cash ceilings in their expenditure which will have very dramatic results. It will mean, for example, that if any Minister does not have enough cash he or she will not be able to pay a certain line of grant assistance. In order to implement that the Department will be forced to make an accurate forecast of its likely expenditure on the grant in the coming year. It may have to reduce in overall terms the amount of any particular grant available as a result. That measure is in the four year plan. It is real public sector reform because it forces those who manage Departments and accounting bodies to manage within their budgets.