Seanad debates

Tuesday, 6 December 2011

3:00 pm

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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I welcome the Minister of State at the Department of Public Expenditure and Reform, Deputy Brian Hayes, to the House for statements on budget 2012. The Minister of State will commence proceedings; main speakers have eight minutes, others have five and the Minister of State will conclude no later than 7. 50 p.m.

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
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As I am sure all Senators are aware, since 2008 Ireland has faced a period of great difficulty, unprecedented in our history. When the Government entered office in March of this year, we were all too aware of the challenges facing us. Tax revenues fell from €47 billion in 2007 to just above €31 billion in 2010, a fall of one third in just three years. Measures are being taken to address this and progress has been made. The fiscal deficit is sizeable and reducing this is a vital part of economic policy. In order to achieve a reduction in this deficit difficult decisions had to be made in this budget.

This Government is committed to a policy of reform. Important measures have been implemented in order to achieve this objective. The Government established the Department of Public Expenditure and Reform under the Minster, Deputy Brendan Howlin. The budgetary process is being completely overhauled. Key changes in that respect will be bolstered by the fiscal responsibility Bill which is due to be published by the end of March 2012. The Government has made a series of announcements in this regard including a medium-term fiscal statement, a medium-term capital investment plan and the public service reform programme. The announcements made by the Government clearly show its commitment to reforming the budgetary process. Previously, this was a more secretive process but it is now being replaced by a better, more transparent system which will, in turn, promote confidence in the system and allow for better economic planning.

Our target for fiscal consolidation is €3.8 billion in 2012, with a deficit of 8.6% of GDP. The adjustment will be broken down as follows: €2.2 billion, or just less than 60%, will be on the expenditure side of the account with the remainder of the adjustment to be implemented through revenue measures. The Minister for Public Expenditure and Reform presented a comprehensive expenditure reportwhich gave details of expenditure reform measures. This method of review has been deemed a success and hence the Government has decided to implement periodical analysis in the future - approximately every three years. In addition, the Minister, Deputy Howlin, has set out expenditure envelopes for each year to 2015. These show the aggregate current spending ceilings within which Government will have to operate. A ceiling will be implemented for Vote groups for 2012 to 2015. The first half of this year saw a rebound in economic activity, with GDP expanding by 1.9% and 1.6% in the first and second quarters, respectively.

I now turn to outlining some of the various measures in budget 2012 and the rationale for each of them. The comprehensive review on expenditure provides the foundation for the measures announced yesterday. This review was undertaken over the last eight months. It was a detailed analysis, for which all Government Departments were assessed and priorities for spending and potential areas for savings were identified. As Senators will be aware, the vast majority of expenditure is focused on three key areas: health care, social protection and education. In light of this it is clear that savings cannot be made without some impact on these sectors and therefore difficult decisions had to be made. A three-pronged method was utilised in the decision making process, to involve fairness, jobs and reform. The burden of recovery must be shared equally and the most vulnerable in society protected.

Yesterday the Government published its policy statement on labour market activation, setting out the strategy to reform labour market activation policy. A total of €20 million will be allocated for a new labour market activation fund. This fund will be specifically aimed at the long-term unemployed. In addition, the Government has already undertaken a number of reforms in the public service and will continue to implement further reforms.

The public sector pay bill will be reduced by approximately €400 million in 2012. This will occur through a reduction in numbers, the 2012 pay cuts and the ongoing pension-related reductions. Against 2008 levels, staff numbers will be reduced by 37,500 by 2015, an extraordinary reduction when one considers the entire public sector in 2008 numbered 320,000. With a targeted reduction by 2015 it will comprise just over 280,000. Some 12% of the entire public sector will be replaced. That is an extraordinary change, bringing enormous challenges to all of us as we work through it.

In the area of social protection it is the aim of the Government to protect the most vulnerable in our society. In light of this the Government has not reduced any weekly rate of social welfare payments. However, the current level of expenditure on social protection is no longer sustainable and adjustments must be made. The measures announced yesterday will save €475 million in the social protection area in 2012.

The health sector is allocated a considerable portion of public sector spending. A sum of €13,644 million has been allocated for health in 2012. This year the programme for Government sets out an ambitious agenda for reform within our health services. The focus of the comprehensive review on health was to reduce negative impacts on frontm line services and implement savings in order to achieve budgetary targets and facilitate real reform of the health service. The focus of the comprehensive review on health was on reducing negative impacts on front-line services, implementing savings to achieve budgetary targets and to facilitate real reform of the health service. A total of €543 million will be achieved in net savings next year through a variety of measures including a reduction in the price of generic drugs.

Education accounts for 17% of total Government expenditure. Investment in education is a priority for the Government. The implementation of the Government's measures in education will provide a saving of €132.3 million in 2012. Although difficult choices must be made to achieve these savings, they are necessary for expenditure targets to be met and to allow new initiatives to be implemented.

Exports have been the main driver of growth in our economy this year. Foreign direct investment, FDI, is a vital component of this. The corporate tax of rate of 12.5% has been fundamental in attracting FDI to this country. Maintaining this rate is imperative. The Government is introducing several additional measures to support trade and create jobs. A special assignee relief programme and a foreign earnings deduction scheme will be introduced.

While export growth has been one of the driving forces for growth, it is not sufficient. The domestic sector is the real driver of job creation. The Government has targeted specific measures for the small and medium-sized enterprises, SME, sector while several measures will be implemented to boost the agrifood sector. The Minister for Finance earlier announced significant reductions in the transfer of property stamp duty. This will also apply to farmland. Retirement relief from capital gains tax will also be modified. Other measures to encourage farm partnerships will also be introduced.

Earlier this year a second reduced rate of VAT was introduced targeting the tourism sector. This, together with the 50% reduction of employers PRSI on jobs earning up to €356 per week, has been successful in boosting the tourism sector and increasing employment. Negotiations are ongoing between the Minister for Transport, Tourism and Sport and the airlines about the abolition of the air travel tax by the Government in return for the restoration of lost routes by the airlines.

Key objectives of this budget are to stimulate growth and to create employment. The property sector is constraining growth in the economy. At the height of the boom, construction-related activity made up 20% of gross domestic product. Now it stands at 5%. The subsequent loss of 165,000 jobs caused by this reduction in activity highlights the negative impact the property bubble had on the economy. New activity in this sector has been almost non-existent. The following measures are being announced to stimulate this sector. From midnight tonight, the stamp duty rate will be reduced from a top rate of 6% to a flat rate of 2% on commercial property transfers. A capital gains tax incentive will also be introduced between midnight tonight and the end of 2013.

The National Asset Management Agency, NAMA, has completed its loan acquisition and is concentrating on the active management of its assets. The Minister for Finance is establishing an advisory group to advise him on NAMA's strategy, as well as how to attract international capital and on the lessons that can be learned from the experience of asset management agencies in other countries. Upward-only rent reviews continue to pose a problem for businesses. We welcome the fact that NAMA has agreed to prepare a code of practice on the matter of upward-only rent reviews, which will bring some certainty to the area. Due to the difficulties of legislating in this area and the consequent compensation for significant multiple retailers, many of which are based outside the State, it was important the Minister for Finance set out the agreement with NAMA on this code of practice for tenants of NAMA properties seeking better deals in rent.

The Government acknowledges the increasing financial difficulties that mortgage arrears are causing to households and established a group to deal with this issue. It will progress with this group's recommendations, together with an assessment of other approaches. The Minister for Finance has made a commitment to have measures speedily introduced to deal with this problem. The rate of mortgage interest relief is to be increased to 30% for first-time buyers who took out mortgages between 2004 and 2008. Any new purchaser buying in 2012 will benefit from relief at 25% while non-first time buyers will benefit from relief at 15% instead of the reduced rates of 15% and 10% proposed by the last Government for 2012. Mortgage interest relief will be abolished from 2018. A property relief surcharge of 5% will be imposed on investors with an annual gross income over €100,000. This and other measures will be detailed in the Finance Bill.

A strong and fully functioning banking sector is fundamental to the economy and credit is vital for the economy to function. Without this, businesses would not be able to expand or even to survive. Restructuring of the sector has taken place, two universal pillar banks have been created from the two largest institutions and SME lending targets have been set for them for the next several years.

The general Government deficit for this year is to be about 10%, less than the 10.6% required by the EU-IMF programme. The deficit target for 2012 is 8.6% of gross domestic product. The European Commission growth forecasts state that, should the eurozone crisis recede, Ireland is among those best placed to grow quickly. However, should the eurozone crisis persist it is important that we reduce our dependence on borrowing.

Fiscal consolidation of €3.8 billion is required to improve the sustainability of the public finances in 2012. The Minister for Public Expenditure and Reform, Deputy Howlin, yesterday set out how the €2.2 billion expenditure consolidation will be implemented in his statement. Accordingly, savings of €1.6 billion have to be achieved by revenue consolidation. As the full year effect of measures already introduced is €600 million, additional new tax measures of €1 billion were announced today by the Minister for Finance.

The Government made commitments on taxation under the programme for Government. These rule out changes in income tax rates, bands or credits. There are no income tax increases in this budget. Indirect taxes have much lesser impact on jobs and economic growth and, therefore, that is where the majority of these budget adjustments have been made.

Under the programme for Government, the Government is committed to limit the standard rate of VAT to 23%. The current budget does not infringe on this commitment. With effect from 1 January 2012, the standard VAT rate will increase to 23%. Increasing indirect taxes rather than direct taxes is becoming more common in Europe. In the past four years, 20 out of the 27 EU member states have increased their VAT rate.

It should also be noted that children's clothes, oral medicines, the majority of food items and other goods and services will remain at the 0% VAT rate. Home heating oil, residential housing, labour-intensive services and general repairs and maintenance will remain at the 13.5% rate. The district heating VAT rate will be reduced from 21% to 13.5% which will bring district heating in line with the majority of energy supplies that are subject to 13.5%.

The Government undertook a review of the universal social charge implemented by the previous Administration. As a result, some changes have been made to the charge. These will mainly affect part-time and seasonal workers in the more labour intensive areas such as the farming and hospitality sectors. In line with this, the exemption level will be increased from €4,004 to €10,036 from 1 January next year. This will benefit about 330,000 people. Incomes above the €10,036 limit will be subject to the current charge. This charge will be collected on a cumulative basis and this will offset the cost.

A number of measures have been introduced, including increasing the current rate of capital acquisitions tax from 25% to 30% and increasing DIRT from 27% to 30%. As a consequence of these and other measures, the rate of tax applying to capital, interest and earnings, through the high earners' restriction, are all aligned at 30%.

The carbon tax introduced in 2010 will be increased by €5 to €20 per tonne on fossil fuels. The increase will apply to petrol and auto-diesel with effect from midnight. As an increase in carbon tax would impact on home heating costs during the winter months, the decision has been made to postpone the increase on other fuels until 1 May 2012. Carbon tax will not be applied to solid fuels at this time.

In last year's budget, changes were made to the pension tax relief system. The pensions sectors will be contributing approximately €750 million in 2012. Earlier this year the Minister for Finance examined possible alternatives but has decided that there will be no changes to the standard rate of relief on pension contributions nor will a move to standard rate tax relief be implemented at this time. However, changes to the incentive regime for supplementary pension provision must be made. This will ensure that the pensions system will be allowed to operate on a sustainable and more equitable basis over the long term.

The Minister also made announcements today in respect of absenteeism. In addition, the Minister for Environment, Community and Local Government, Deputy Hogan, announced a household charge of €100 per dwelling. As protection of the vulnerable is of paramount importance, it is proposed to provide a waiver in respect of this charge for those on mortgage interest supplement and for those residing in certain categories of unfinished housing estates. A provision will also be made to allow payment of this charge in instalments.

The framing of budget 2012 involved the making of many difficult decisions and choices. These were necessary in order for us to return to a path of sustainable growth. This is achievable but will take time. The budget was designed with protection of the most vulnerable to the forefront. Accordingly, the Government left untouched the primary social welfare rates. The level at which the universal social charge is applied has been increased and this will provide assistance mainly to low paid or seasonal workers. Jobseeker's allowance, State pensions, family income supplement, carers' entitlements and disability allowances and support for special needs assistants in our schools and the pupil-teacher ratio in the primary sector will all remain at their current rates.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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They will not.

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
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The decisions taken, although challenging for many people, are vital to ensure that we will never again occupy the position in which we have found ourselves in recent years. We must address the fiscal deficit problem. The steps taken in this year's budget put us on the path to meeting our target of reducing the fiscal deficit to 3% by 2015.

Job creation is of fundamental importance in the context of the budget. Reducing the deficit has a number of positive implications for the economy. A reduction in the deficit will mean that credit will be available for Ireland at better rates as investor confidence increases. Cheaper credit means that business will be in a position to borrow again. The knock-on effects of this are that businesses will be able to grow and, in doing so, will be in a position to hire additional workers. This budget contains specific measures targeted at job creation.

While there is no single policy solution to the issues confronting all of us, the Government has set out a clear and coherent plan to return the economy to growth and to create jobs. While the path ahead will be difficult and will involve more hard choices, I can give an assurance on behalf of the Government that whatever must be done in the coming years will be done. What we are doing is in the best interests of the Irish people and will secure the long-term sustainability of the economy. We want to create an economy where jobs will be at core and to the fore in respect of which will be everyone's future prosperity.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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The Minister of State referred to a number of changes, on the reform side, in the context of how the budget has been presented. Those in Fine Gael should be particularly pleased about the fact that the junior partner in the Government was given responsibility for doing the dirty work. Earlier today, another man from the Labour Party went overboard. It is good to see the Labour Party Senators present in the Chamber this evening. They are obviously more solid than their colleagues in the Dáil.

Photo of John GilroyJohn Gilroy (Labour)
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We will not be found wanting.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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I hope not.

Photo of John GilroyJohn Gilroy (Labour)
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No, we will not be found wanting. We will stand by the Government.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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I would expect nothing less from Senator Gilroy.

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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Senator Darragh O'Brien, without interruption.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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I wish to begin by commenting on a number of positive measures in order to try to make my colleagues from the Labour Party somewhat more comfortable.

Photo of Tom ShehanTom Shehan (Fine Gael)
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Senator Darragh O'Brien is wasting his own time by making comments of this nature.

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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There should be no interruptions.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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I wish to cover three matters relating to the two parts of the budget introduced yesterday and today. The first of these is the fact that savings in respect of public procurement are crucial and I am glad the Government has set targets in this regard. What is required to push this through is a body with real powers, the National Procurement Agency, and I am of the view that the latter will require the support of legislation. I have referred to this matter on a continual basis for a number of years and I believe the Government can save substantial amounts of money in respect of public procurement processes. I welcome what is being done in this regard.

I also welcome the increase in the exemption relating to the universal social charge to €10,036. Most Senators will welcome that development. I am very disappointed that the implementation strategy in respect of mortgage arrears and distressed mortgages has not yet been published. On a previous occasion the Minister of State made a bold statement in the House to the effect that the strategy would be published before the budget. I accept that the matter has been taken out of his hands to some degree but I wish to impress upon him the need to have it dealt with as a matter of urgency. When introducing the budget in the Lower House, the Minister for Finance, Deputy Noonan, said the strategy would be brought forward shortly. What is it intended to do in this regard? I have criticised the Government enough in respect of this matter so it is only appropriate that I should welcome the fact that the commitment it gave to increase mortgage interest relief to 30% for those who purchased houses between 2004 and 2008 has been honoured.

Now all the positive aspects are out of the way-----

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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There are many more of them.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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I will leave it to the Leader to identify those because I am hard pressed to find them. As I stated on the Order of Business - this is a matter which the Government should address - one of the major difficulties with the budget is the proposed cut to the disability allowance, particularly in respect of younger people. The proposal in this regard cannot remain as it stands. The reduction in this regard for young people would be between €88 and €110. The Government cannot try to disguise what is being done by stating that it is trying to encourage people to become involved in training schemes, etc. A crucial mistake has been made here and that the Government has an opportunity to rectify this between now and the introduction of the social welfare Bill next week. I ask the Minister of State and my colleagues across the House to ensure that this cut - which is one of many - will not proceed.

Child benefit has been reduced in respect of third and subsequent children. Last year, the current Minister for Finance asked what the previous Government had against third children. I am obliged to ask the same question in respect of this Administration. I must also ask what it has against Protestant schools. The Minister of State referred to the pupil-teacher ratio, which is going to increase because guidance counsellors are being subsumed into the overall teaching cohort at second level. Many private secondary schools make educational provision for those of minority faiths. For Catholic post-primary schools the pupil-teacher ratio is 19:1, whereas for mainly Protestant schools it is 21:1. That is not acceptable. Any republic must ensure that the needs of minorities are catered for. The disgraceful move in this regard, which to some extent has remained under the radar, should be reconsidered.

The €750 million cut in the capital programme was easy to make. It is a once-off saving. The Government will introduce similar cuts next year and the year after. The budget also makes provision for increases in VAT and motor tax. The excise duty on cigarettes is being increased, as is the price of petrol. In respect of the latter, I do not know what will be the exact increase per litre. I accept that it will not be much. The difficulty I have is that the budget is predicated on growth rates for next year which I do not believe. I did not believe the growth rates that were supplied in respect of the previous couple of budgets either. We will not attain the growth rates that have been set down. I am concerned that the Government will be obliged to return to the well long before the introduction of the budget for 2013 at this time next year. The tax take this year will be approximately €700 million behind target, if one takes into account all of the taxes including VAT and income tax. That is a very serious differential between the stated projection and what was taken in. I do not believe the Minister for Finance's statement today that he expects there will be a 2.5% increase in nominal GDP next year. I do not think that will happen. I would ask the Minister of State on the basis of this that with a VAT increase that is supposed to take-----

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
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It is 1.6% of GDP.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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Yes, but of nominal GDP, which the Minister stated in his statement is the main aspect on which to raise revenue.

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
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That is not the major projection.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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The Minister, Deputy Noonan, mentioned it in his statement.

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
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I know.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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The Government will not get €670 million in VAT this year. Before the Government even starts it next year, no doubt it will be behind on that. We will discuss it in mid-year and see exactly what the position is.

Ironically, the increase in the student registration fee of €250 was announced by the Minister for Public Expenditure and Reform, Deputy Howlin, whose party seemed to get all the heavy lifting to do. It is the first time I have seen a Labour Minister congratulate himself on cuts in public service numbers, and that is some doing. This increase will not go to the colleges. The Government is reducing-----

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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Senator O'Brien has one minute left.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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The increase of €250 will not go to the third level sector. The Government is cutting back its allocation to the third level sector and that increase will go into the general pot as well.

The Government is closing 31 Garda stations and restricting ten others. That was announced by the Minister for Justice and Equality, Deputy Shatter, by way of press release. He did not have the decency to come in to the House to announce it.

I would make one point about the reform of the budgetary cycle which the Government has brought in. Why is it that when the Minister for Public Expenditure and Reform was making announcements in Dáil Éireann yesterday, the Minister for Social Protection, the highest spending Department, was out of the Chamber hosting a press conference in Government Buildings to announce her changes to the media? That is not acceptable. The Minister for Health, Deputy Reilly, did the same, as did all the line Ministers. These are the Houses of the Oireachtas. The Ministers should make their announcements here. If they wanted to ingratiate themselves with their friends in the media, when they open the newspapers this morning they will see it does not work. It is a serious point. Ministers should not be announcing policy decisions and taking questions from members of the media-----

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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Senator O'Brien's time is up.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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Tá mé beagnach críochnaithe.

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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Senator O'Brien's time is up. I will stick to the time today.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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Ministers should not be taking questions from the media-----

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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I have been criticised previously about this.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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-----when they are not even taking questions from their own colleagues, the elected representatives of the people of this country.

On dealing with the social welfare Bill next week in this House, I would ask the Minister to go back to Cabinet to look at the cuts on the disability allowance. The Minister should not bring in those cuts next week.

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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I thank Senator O'Brien, who was only 33 seconds over time.

Photo of Michael D'ArcyMichael D'Arcy (Fine Gael)
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It is easy to increase benefits and decrease taxes. It is not so easy to reverse them. We know that for certain.

When one looks at the headline figures, a current expenditure reduction of €1.45 billion, a €750 million reduction in the capital programme, €1.6 billion in tax increases - €600 million agreed on last year and an additional €1 billion this year - one must look at the numbers as well. While Senator O'Brien does not believe we will make it, the GDD of 10.1% of GDP was less than the amount of 10.6% that was agreed with the troika. In itself, that was a result. Our target for 2012 is an 8.6% deficit. I think it can be achieved. If Senator O'Brien's figures are correct, the GDP will be decreased. If we even get close to it, the percentage will be achieved. It is the percentage, not the figure, that we must achieve.

I am glad we are having a more reasoned debate than what occurred yesterday, more so than today, in the other Chamber which I thought was distasteful. There was no dignity in what happened yesterday in the other Chamber, with the shouting and hooing and haaing. It does nobody any good. We can agree to disagree. We have different perspectives and different ideologies, and that is what politics and democracy is about.

The process has changed. It is not a big secret arriving in a briefcase or on a disk and there is not a significant photocall outside on the steps of Government Buildings. There is a listening process. Some of that listening process, as I saw last week, resulted in changes over the weekend and the budget being concluded on the morning of the budget, which was yesterday, and that is to be welcomed. On the pupil-teacher ratio, there was a clear indication that there would be an increase of two at primary level and perhaps an increase of one at post-primary level, and that did not happen. There was a better process to achieve the coercion - it is a coercion - for the smaller rural one, two three or four classroom schools, and that is welcome. Also, in the case of the potential decrease for the SNAs, that process was also to be welcomed.

There is something that I want to bring to the notice of the Minister of State, Deputy Brian Hayes. The measure on career guidance is a mistake. As the person who represents a town with what has been the largest school in Ireland for the best part of a decade, I speak with a little knowledge on this. The career guidance teachers were outside of quota because they were required. They were required because there was a necessity and the Minister of State will be aware of that from his time as spokesperson for education for Fine Gael. It is a mistake because I saw at first hand the difficulties, the concerns, the angst and the results. Unfortunately, the results in the school that I know best, which is Gorey Community School, ended up, where there was failure, in the suicide of children. The Government listened over the weekend. It is important that the Government listens between now and the publication of the legislation that will underpin this budget. I am hopeful that this can be altered. My recollection - I tried to put my finger on the figure - is a saving in the region of €10 million, not €10 billion. The moneys for that could be found elsewhere. I would hope that the message would come from here that the Government will find those moneys elsewhere. I am not criticising the budget. I am pointing out that we can do this in another way.

I also welcome the ring-fencing of the DEIS schools. The DEIS schools are in areas, mainly urban, of particular difficulty. We should also reconsider how the calculation for DEIS is done.

On the €250 increase in college registration, I am sure the Minister, Deputy Quinn, would have liked to do anything other than increase that. He had no choice. Perhaps he should not have signed what he signed with the students but, unfortunately, that did happen. Perhaps it was a mistake.

Some 41% of those who went to college did not pay the €2,000 in 2011. I would expect the figures to be similar and that 41% of those who will attend college will not pay the €2,250. We are getting close to 50%. To put it into context, in our closest neighbour, Northern Ireland, £3,500 is what is paid. In England and Wales, it is £9,000.

I do not want to go over the health provisions because time is tight. On the Department of Social Protection, I welcome the standardisation of the children's allowance. We have nothing against the third children. Equally, they should not get more than the first or second child.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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Talk to Labour about that one.

Photo of Michael D'ArcyMichael D'Arcy (Fine Gael)
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The reduction in cost will be in the region of €45 million out of a budget of €2.2 billion.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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Perhaps they will not touch it then.

Photo of Michael D'ArcyMichael D'Arcy (Fine Gael)
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It is €2.2 billion that comes out of the general pot. That is a considerable amount of money that must be brought in in taxation to give it back out.

I welcome the fact that there was no impact on primary social welfare rates. I agree with Senator O'Brien that it is a mistake to go after the disability payments, in particular, for those between the ages of 18 and 24. I am quite prepared to stand up here and identify areas of concern. That is what all of us, on both sides of the Chamber, get paid for. There is a few days for that matter to be reconsidered, potentially, to find those savings elsewhere.

On the Minister, Deputy Noonan's estimate relating to165,000 males and females from the construction sector, it is a colossal number of people who are mainly unemployed. I will not touch on the legacy of the tax code but rather the area of the small investor. In a quasi-investor way people invested in property. I am pleased the Minister is proposing not to impact on those in respect of tax reliefs. Instead he is differentiating between the large investor, institutional investors and the small investor. Those are farmers, gardaí, teachers and people all over the place who made unwise investments. Section 19 of the NAMA Act welcomed the banking sector in respect of €3.5 billion for both and €4 billion for the following year.

On tax exiles I would favour the carrot and stick approach. Tax exiles are welcome to participate in Ireland. We have a generous regime in order that they can come and go and pay something. However, if they are not prepared to pay I suggest they live elsewhere and be allowed to come back to Ireland on holidays for a couple of weeks per year, other than which they should not be facilitated. Given that they have a large amount of funds, they could contribute to certain areas which would be helpful.

Photo of Terry LeydenTerry Leyden (Fianna Fail)
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The Senator's time is up. I am under strict instructions to adhere to time limits.

Photo of Michael D'ArcyMichael D'Arcy (Fine Gael)
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That the threshold for the universal social charge has been increased from €4,000 to €10,000 is welcome. I wish I had another eight minutes.

Photo of Katherine ZapponeKatherine Zappone (Independent)
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Budget 2012 is the first quintessential test of this Coalition Government's ability to bring us, all of us, onto a significantly stronger foothold to generate individual and collective recovery, social and economic sustainability. Both parties are equally responsible if together they have made the wrong choices, and have lost this prime moment to balance the limited resources that we have as a nation so that each sector, interest and individual has a spark of hope for the new year. Both parties are also equally responsible if they have made the right choices.

What are some of the prime ingredients needed at the macro level, to make the right choices? There are at least three. First, that we take the right amount out of our national budget in order to adjust our way towards fiscal responsibility, strategic investment for recovery and a solid social fabric. The Government decided that budget 2012 would save €3.8 billion. While there was pressure to go higher, I think we should have stayed at the original €3.6 billion figure. This would have demonstrated our Government's determination to restructure bank debt in the long term, in order that eventually we halt the socialising of losses at the expense of privatising the gains. While we need policies of austerity up to a point, these are being distorted by inordinate efforts to save the banks at great personal cost to Irish citizens, and necessarily lead to lower output and lower tax revenues. Furthermore, while the people will have to find some way to survive this extraordinary budget adjustment for 2012, how can we possibly do this again in 2013? It is economic nonsense to believe that someday we will be able to pay it all back even if the Germans and the French insist that we do.

Second, should we spend our way out of recovery or should we cut our way out of recovery? The Government chose to cut spending on public services and capital expenditure by 58% and increase taxes by 42%. As there are extensive arguments, and evidence referenced, for both the 'cut more' formula and the 'spend more' formula, I think it is rational to conclude that the Government's choice in this regard is an ideological choice and one could question whether this choice will lead to a more inclusive as well as recovered nation. Why did not the Government opt for a 50-50 split? In the absence of irrefutable evidence surely this would have been the fairest, most sensible way to proceed.

Third, to make the right choices about this budget I think that the Government ought to ensure, through its taxation, social protection and investment decisions, that those with wealth and-or economic security share more of their resources with those experiencing poverty or economic insecurity. This is the true meaning of equality and fairness. It is also a solid formula for economic prosperity as countries such as Finland and Norway demonstrate. If fairness means only protecting the vulnerable this is not equality. Furthermore, within the current debate about closer European fiscal union, Ireland ought to bring the following message to the European table - that we will seek closer union if it means an increase in social solidarity as well as fiscal rectitude.

On the basis of evidence that more equal societies do better, and with the awareness that poverty is increasing in our society, some positive aspects of the budget are: reducing the social charge for the lower-paid; no rate cuts to primary weekly social welfare payments; maintaining State pensions for older people; maintaining the universal free pre-school year; strategic investment for job creation; targeted measures to provide a stimulus for SMEs; and all reform efforts, within each Department to cut waste and inefficiencies as long as the Government commits itself to monitoring the impact of all cuts, in order that they do not push any citizen into poverty, deeper poverty and less social protection.

The Minister for Public Expenditure and Reform, Deputy Brendan Howlin, stated that one of the main features of the new budgetary architecture was to introduce "evidence-based policy" and I welcome this. Therefore, I challenge the Government's choices to increase the VAT rate to 23%. As we have heard in the Dáil and in the news the ESRI has provided solid evidence that the current VAT system is highly regressive. Even at 21% we have evidence that lower income households pay a higher proportion of their income in VAT relative to the higher income households. An increase to 23% will hit the poorest households the worst and we can wholeheartedly say that this move will increase the regressive nature of our taxation system.

The Government could and should have reduced income tax relief on pension contributions to the standard income tax rate. This could have saved €500 million. There is very little robust rationale for why the Minister decided not to reduce it.

The cuts to child benefit have already been mentioned. This cut will impact approximately 460,000 children and SILC evidence clearly demonstrates that larger families are more at risk of poverty. Changes have been announced to the lone parent allowance. Justifying these changes with the assertion that the new rates will bring us into line with international standards is flawed when Ireland has an underdeveloped system of subsidised child care. Similar changes to the one parent family payment were mooted in 2006 but were dispensed with given the lack of employment, and training and child care supports. What has changed since 2006? There are still too many barriers for lone parents to get work that pays enough to meet their basic needs and, therefore, these cuts will be counterproductive.

The cuts to the capitation rates paid to pre-school providers and a reduction in staff-child ratios reduces even further any chance of additional training and planning time for early years educators. Numerous research studies indicate the positive connection between training and subsequent improved outcomes for children, especially those children who need it most.

One could be forgiven for being concerned that the focus of the multiple cuts that we have heard during the past two days are largely about meeting the requirements of the troika's external agenda. This focus on monetary and fiscal rectitude has to be balanced with a very clear articulation by our Government of the vision for Ireland that it has at this time. In other words, who is holding a cohesive vision of what kind of Ireland we are creating by cutting large chunks of investment in the social fibre of this land?

The articulation of this vision for a new Ireland could include a call, a voluntary call, on those who have enough or who have plenty at this time, to share with those who have least. For those who have few financial resources at this time, do we hear a vision that empowers and motivates communities, even in the most disadvantaged areas, to a sense that building meitheal often calls on human qualities of resilience that have so often marked the history of our people in difficult times past? Therefore, I ask the Government to start speaking of an ethical vision that stresses values and that demonstrates that behind all these facts, figures, cuts and investments for jobs that someone is holding a cohesive vision as to what a new Ireland will look like.

Photo of John GilroyJohn Gilroy (Labour)
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I wish I were welcoming the Minister to the House in different circumstances. This is a terrible day for our country, the 90th anniversary of the treaty overshadowed by the first recognition of the real consequences of the economic situation and consequences that will be felt in every household. If we are to take a similar amount of money out of the economy again next year, and the year after, and the year after, the repercussions are truly awful.

The previous Government constantly congratulated itself by saying it was making the hard decisions - but it is not the decisions that are hard - it is the consequences borne by the people that are hard. Therefore, we dare not congratulate ourselves on making these decisions. These decisions are not a matter of pride but of shame, shame over a political system that has let down and broken the trust of the people we serve. We must strive to restore this trust. I could stand here and blame others for the circumstances we are in. Perhaps I should but there is nothing to be gained from this. We need to move on from that game. If we are to ask people to make a huge and terrible sacrifice – a sacrifice that means no less than rescuing our country – we need to ask ourselves something and to be honest. I could try to deflect some of the blame for the decisions we are making but there is nothing to be gained from that either. We can and will take responsibility for our decisions and it is right that we do so. The Opposition will be critical of us and it is right that it be so. That is its job but it must be honest also.

I congratulate and commend Senator Darragh O'Brien on his usual temperate and considered remarks.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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I am not sure how to take that.

Photo of John GilroyJohn Gilroy (Labour)
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Did we make certain pledges before the election? We did. Did we make them in good faith? We did. Should we be criticised for making these pledges before the election? We should. We should be criticised strongly for doing so and we need to acknowledge this.

This budget is fairly brutal. We cannot take €3.8 billion out of the economy, on top of €20 billion in expenditure and revenue adjustments since 2008, and not feel the heavy hand of its impact. The low-hanging fruit is long gone. We cannot expect to close the gap in the public accounts unless we seek to make reductions in the largest spending programmes. We are loth to do so but we have no choice. As social protection involves the greatest expenditure, we found savings amounting to approximately 2% of its Vote. No matter where the reductions fall, they will be unpalatable. The Department of Social Protection, by definition, exists to offer protection. We have managed to protect the primary rates of social welfare and would have liked to have extended this protection to all areas, but this was just not possible. Where it was not possible, we offset some of the reductions by increases in other areas. For instance, we increased the age of entitlement to the disability allowance to 18. In parallel, we offset this by increasing the age limit for receipt of the domiciliary care allowance to protect household incomes of affected families. However, measures can sometimes be too blunt in their implementation and scope. As a public representative, I am very unhappy with this one. It is an important duty of a public representative to listen to what people say. There needs to be a mechanism by which this element can be reviewed. I will be asking the Minister to reflect on this. I am confident that he can and will do so.

Senator D'Arcy referred to career guidance teachers and I agree totally with him thereon. It is Senators' duty to point out areas in respect of which we are unhappy.

All reductions are unpalatable but we have managed to protect the most vulnerable. The jobseeker's allowance and benefit remain unchanged. The payment to carers will be maintained and child benefit for the first two children will remain unchanged. In these extraordinarily difficult times, we have achieved a fair measure of success.

In the area of health, €35 million has been found for mental health services. This will support suicide prevention strategies, which are vital. We are committed to building the national children's hospital and we have made significant moves towards reforming our entire health system. The special delivery unit is tackling pressures in emergency departments and in respect of hospital waiting lists.

We have managed to protect education provision for those who are disadvantaged. The pupil-teacher ratio in this sector remains unchanged. Unfortunately, as I stated, it was necessary to increase the student contribution, but we have managed to keep this increase to €250.

Core social welfare payments have been protected and low-income tax increases will take place. These are two very important points. The universal social charge has been reviewed and the threshold has been raised from €4,000 to over €10,000. Some 330,000 people will no longer be liable for the charge.

All in all, this is a very difficult budget and it will place great strain on many people. We have achieved most of what we have set out to achieve. There are some things we wish to do, others that we cannot do and others that we will do. One should remember this is the first in a series of budgets. Decisions taken today, while difficult, will restore our economic independence, maintain jobs and create new ones. It will be a difficult journey. What is needed now is political courage and honesty. The temptation to use the many unpalatable decisions for party-political gain will be great, but I hope it is resisted. We live in very difficult times.

Photo of Sean BarrettSean Barrett (Independent)
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I echo what other Senators have been saying, namely, this is a difficult time. The table on page D.18 of the documentation attached to the Minister for Finance's presentation in the Dáil this afternoon shows that tax revenue will rise from €34 billion in 2011 to €43 billion in 2015. This amounts to €9 billion over the five-year period. As Senator Gilroy said, these burdens will come year after year.

I echo the tributes paid yesterday by the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, and today by the Minister for Finance, Deputy Noonan, to the late Brian Lenihan, who had to cope in tragic circumstances with the problem we are facing.

There is an immense burden. My estimate, based on the Minister for Finance's figures, is that the adjustment on current expenditure will be about one fifth of the increase associated with taxation. Current expenditure is due to decrease by €1.7 billion from approximately €48 billion to approximately €46 billion but the tax increases are to yield €9 billion over the same five-year period, or approximately five times as much. This is important to note because, in Ireland, every area of public expenditure seems to attract a lobbyist, and taxpayers are bearing five times the adjustment based on the figures in page D.18, as presented by the Minister for Finance, Deputy Noonan, this afternoon.

On the capital side, I was disappointed to hear the Taoiseach say on television that the metro represented a very good project and that he regretted not going ahead with it. There was never any public analysis and there are many Ministers who feel the project would lose money every year. We are now beginning to have capital expenditure analysed properly. It is a matter of having independent published analysis carried out in advance to determine the benefits and how they compare with the costs. It is a matter of determining the discount rate. Let us have this information discussed as a prospectus before rushing into projects. The metro project was rushed into and we spent a lot of money before it was to be sanctioned by the last Cabinet. I do not believe it has ever been sanctioned. Money was spent in advance.

The Minister for Public Expenditure and Reform, Deputy Howlin, noted some days ago that Irish engineers much prefer to design new dams than to fix leaks. We may have to become less grandiose in our capital projects. We had a capital programme whose GDP share was approximately twice that of any other country. It has now been adjusted to a much more normal figure.

The same applies to current expenditure. I look forward to reading the detailed document we got on the comprehensive public expenditure review. Programmes that are too costly, involve too much bureaucracy and do not satisfy targets must be kept under pressure. I welcome the statement of the Minister for Public Expenditure and Reform that he hopes that the Parliament will be involved in this. Discretion in respect of such programmes seems to be in the hands of lobby groups. I welcome the registration of those under promised legislation. I refer to lobby groups determining policy. There was an insider-outsider model of determining policy and the Seanad was definitely on the outside. We want to be on the inside and hope we are not subject to public expenditure cuts next year.

Agencies spend considerable sums on their own marketing and PR. This is counterproductive. In the past week, Ministers have been seeking extra money for projects. When we pointed out that they really must justify them, they agreed in principle. However, legislation should be coming to the House with a statement as to what one gets for the money. It should not be said that the benefits are obvious. In the case of tourism, the benefit was not obvious. As I pointed out, our tourism receipts were down by 31% and the number of tourists had decreased by 24%. Some 40,000 jobs were lost.

The Science Foundation Ireland lobby is equally reticent in producing evidence of its results. We are spending approximately €250 million per year. As the innovation report and an bord snip showed, it is time for these people to produce results. We need results and are trying to deal with unemployment. Of course, the beneficiaries of the scheme will always say it is a good idea. However, they are not showing us that they are useful and turning the inputs into outputs. When Ministers come before us seeking to spend money, they must refer to what the Comptroller and Auditor General, an bord snip and the comprehensive expenditure review have said about the proposals. They cannot just pretend it is obvious that proposed expenditure is worthwhile. When one proceeds on this basis, one ends up with the kind of debt mountain that we have.

The tax expenditure of €12 billion has not been addressed, which is a pity. I hope it will be addressed in the next budget. This sneaks into the system and is not published on budget day. However, it does cost the Exchequer quite an amount of money. There is a need to increase the economic expertise in the public sector. As we prepare for the Brussels summit, we have to point out it was not entirely our fault. As Mr. Delors has noted, the euro was defective. It did not have an exit mechanism, there was a one size fits all interest rate and there was no protection for countries like Ireland when huge capital flows from Germany and other large countries wrecked the property market. I hope the Government will do some burden sharing with people in mainland Europe when we redesign the euro, as well as take on board the criticisms about the way it was designed and implemented expressed by no less a personage than Mr. Delors.

We know that heavy borrowing produces debts for future generations. It is a King Herod type of economic policy. I do not know why that is sometimes described as being socially progressive. I am glad that the Government plans to reduce the powerful bureaucracy by 37,000. It had grown too big.

However, the banking system, which does nothing except lend money for governments and mortgages, has not yet been reformed. The accountancy profession has not reported to the Minister for Finance or the Minister for Public Expenditure and Reform on how it could be that accounts were prepared for banks in a way that made them appear solvent. We cannot impose the burdens of adjustment on ordinary people while allowing accountants and bankers to escape the consequences of their mistakes.

I like the new atmosphere I experienced in the Dáil yesterday and in this Chamber today because we have to work together to tackle our incredible borrowing mountain, as the debt to GDP ratio climbs above 120%, so that we do not pass that burden to the next generation. We must also address the problem of unemployment and involve the Parliament in the work of replacing institutions that have failed in the bureaucracy, the lobbies and the expenditures that were never properly assessed. This is an important day in Ireland's efforts to get to grips with the problems that arose over the last decade.

Photo of Tom ShehanTom Shehan (Fine Gael)
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If I may borrow a comment from Professor Brendan Walsh on last night's "Prime Time", this had to be done. No Government takes pleasure in implementing cuts of the nature announced today. I want to address, and commend, several aspects of the Budget Statement. I do not recall a previous budget which focused so much on agriculture. This is a positive outcome because, when one considers Harvest 2020 and the way the Minister for Agriculture, Food and the Marine has protected and enhanced the products grown in this country, agriculture can make a significant contribution to society and the Exchequer. The measures on transferring property will offer an incentive for dynamic young farmers to remain in a sector on which our economy is reliant. Agriculture is indigenous and, as my father always said, farmers will spend money when they have it. This budget will benefit the entire economy.

One might ask how the measures on commercial property transfers and the reduction in the rate of stamp duty from 6% to 2% will benefit the Exchequer or the economy. The measures offer incentives for foreign direct investment and indigenous entrepreneurs, who may decide to purchase rather than rent commercial property. The restoration of the rate of interest relief for those who purchased homes between 2004 and 2008 will be welcomed by couples in every corner of the country. I anticipate young couples will be going out to view properties this weekend as a result of the changes to mortgage interest relief for first-time buyers. I urge people to grasp the incentive they have been offered by the Minister for Finance. However, this initiative will be futile if the banks do not offer loans to first-time buyers.

On VAT, let us not forget that food, clothes and oral medicines are not subject to VAT. The majority of the money held by the less well-off in society is spent on these products. The exemption to the universal social charge will increase from €4,000 to €10,000, which is welcome. The budget sets out to protect the weakest and most vulnerable. Over the last two weeks I have been calling for an evaluation of who the weakest and most vulnerable are in society. To that end, special needs assistants have been retained, the pupil-teacher ratio has been maintained and the carer's allowance and the old-age pension have not been reduced.

The Minister must be commended on his prudent management of the economy given that the deficit will be 10.1% at the end of the year, compared to a projected 10.6%.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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I am delighted to accept Senator Sheahan's compliments regarding the 10.1% deficit figure because it obviously relates to last year's budget. It is a major about-turn if he is describing last year's budget as prudent management but it is welcome nonetheless.

Photo of Tom ShehanTom Shehan (Fine Gael)
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It was the €1 billion that was not spent. Prudent management achieved these savings.

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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Senator Byrne without interruption.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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The savings were announced last year.

Photo of Tom ShehanTom Shehan (Fine Gael)
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Do not twist it. The Minister achieved €1 billion in savings. The Senator is wasting his time.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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Fianna Fáil supports the decision to achieve an 8.6% deficit target in 2012. We are delighted that we apparently will reach a deficit of 10.1% this year. We are hoping to achieve a 2.9% deficit over the period of the plan by making savings of €3.8 billion next year. Most rational political parties, if they are not solely motivated by political gain, accept this basic necessity.

However, Fianna Fáil does not believe the Ministers for Finance and Public Expenditure and Reform have made all the right choices. We will not oppose for the sake of political opportunism because certain elements of the budget are positive and should be welcomed. The decision not to increase taxes on income was correct. Substantial increases in income taxes have played an important role in reducing the deficit to 10.1%, as Senator Sheahan noted, but they have also placed a significant burden on ordinary working people. As that well is now dry, it is welcome that the Government is turning to other sources even if we do not agree with all of them.

The Minister, Deputy Noonan, listened to our recent pre-budget submission in which we called for changes to the universal social charge for low earners. That is the right thing to do and we commend him on his initiative. However, it will make little or no difference for the vast majority of workers who are hit by the charge. We should reflect on whether we went too far on the USC in last year's budget . It turns out we would have hit a 10.6% deficit, probably without a lot of the USC receipts coming in. We went a little too far last year, although it must be said it was for the benefit of the country. It was certainly a cost to ordinary families but hopefully was in their better interests in the long term.

The immediate VAT increase proposed by the Government will cost jobs. Let us be clear and upfront about this. It will cost jobs in every county and every town and village in this country, particularly around the Border areas. A number of years ago, the parties that are now in Government railed against a 0.5% increase, which the Government then reversed because of the severe impact it had, particularly on cross-Border trade. I predict today that this will not be the last VAT increase, because in the figures that the Minister has given, we are looking at a rise in taxes of €8 billion over the next three to four years. I do not know where the Government will get that unless it keeps going back to the VAT well, as I predict it will. When we see Hungary's VAT rate of 27%, we can see there is nothing to stop us going to those high levels if the Government is to stick to its pre-budget commitments on income tax.

Increases in VAT affect people in different ways. For those on lower incomes it has a massive effect on their disposable income. For pensioners, the disabled and carers, who have seen many of their benefits cut by this Government, the VAT increase represents a double or triple whammy. We committed to the VAT increase over a longer period because we felt it was the right thing to do and that when consumer confidence returned we could then go and seek more VAT, but to do it in one year will have a damaging effect on jobs and business.

The Government has said it expects to bring in €670 million from this 2% increase. Let us see whether that happens and whether demand falls. As my colleague Deputy Michael McGrath said in the Dáil today, anyone who has studied economics will know that an increase in price results in a reduction in demand. This has not been taken into account by the Department.

We have seen a lot of sneaky things in this budget. I will acknowledge that we have not had hits across the board, but particular sectors have been hit, including the young disabled, pensioners and the fuel-poor. Rural schools, contrary to what we were told this morning, have been hit with a pupil-teacher ratio increase and have been told to consider merging or closing. Rural and urban Garda stations will close. The pupil-teacher ratio in secondary schools has been increased, with the removal of guidance counsellors. There are 27 schools in County Meath with fewer than 86 pupils. Those schools were told last night to consider their futures because of Government decisions. This is wrong, and it is about time some pressure was put on the Government by the rural Deputies and Senators who came in here today to welcome the education cuts without knowing what they consisted of. Many non-Catholic schools will struggle to stay open as a result of this change.

I warn the Government that this was the easy budget. Where will it get €8 billion in taxes over the next few years? How will it implement the cuts that are required and still achieve an increase in growth? We wish the Government the best of luck with it, but it will be difficult.

Photo of John GilroyJohn Gilroy (Labour)
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Will the Senator support us?

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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We will support the Government as best we can, but its members will have to stick together, because every one of them that drops off the ship is another damaging blow to the stability of this country.

Photo of Susan O'KeeffeSusan O'Keeffe (Labour)
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How dare the Senator wish us luck.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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I do wish the Government luck.

Photo of John KellyJohn Kelly (Labour)
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May I share my time with Senator Moloney?

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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Is that agreed? Agreed.

Photo of John KellyJohn Kelly (Labour)
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We would like four minutes each, if the Cathaoirleach will allow us.

Photo of Paddy BurkePaddy Burke (Cathaoirleach of Seanad; Fine Gael)
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Four and one, is it?

Photo of John KellyJohn Kelly (Labour)
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How much time do I have? Five minutes? Then we will take three minutes and two minutes.

I thought it was interesting, when Senator O'Brien was speaking, that it appeared to be such a struggle for him to find enough fault with the budget that he spent the first few minutes of his eight cracking a few jokes. He had little to say.

We are all concerned about the disability allowance. It is important to point out, however, that this applies only to new applicants and not to existing recipients of the allowance. People who are afraid of what they have heard do not realise this is the case. With regard to the proposal for the future of the allowance, I do see merit, to a degree, in considering the situation of 16 to 18 year olds. In my own experience through the years, I have seen 16 year old students with mild to moderate disabilities receiving disability allowance in fifth and sixth year of secondary school and bringing the allowance with them when they move on to third level. In a way, this is an anomaly, because the allowance is supposed to be paid to people who have no long-term prospect of ever getting a job, yet we see these 16 to 18 year olds going on to third level education, qualifying and securing employment. This must be examined.

However, I do have a problem with the blunt-instrument way of dealing with severely disabled people who will never be in that position. The Minister of State should say this to his Cabinet colleagues. Much anger has been expressed about this in the Seanad and other forums today. In cases in which a person will not ever have the prospect of a job or training, maybe the full disability allowance should be considered.

Photo of Tom ShehanTom Shehan (Fine Gael)
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Hear, hear.

Photo of John KellyJohn Kelly (Labour)
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I was listening to a lady on the radio today who had Parkinson's disease. She was a very positive woman, and she made the point that people with a disability should focus on their ability rather than their disability. That might be a way of moving forward in a lot of cases.

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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Is that how the Senator justifies the cuts?

Photo of John KellyJohn Kelly (Labour)
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I have worn a path to the door of the office of the Minister for Social Protection, Deputy Burton, asking that there be no cuts either to the basic-rate or half-rate carer's allowance or to the respite care grant. In fairness, she has honoured that. This is an acceptance of the great work that carers do, and I am delighted about it.

We in Government have protected the basic rates of social welfare. We have given free GP services to those with long-term illnesses. There have been no SNA cuts, and the universal social charge will no longer affect low-paid workers. There are many positives in this, despite the fact that across the floor they would like to point out the negatives.

Photo of Marie MoloneyMarie Moloney (Labour)
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As spokesperson on social welfare, I cannot let this go without speaking about this aspect of the budget. I know we will be discussing it in more detail next week. However, we are where we are today. Unfortunately, cuts have to be made, and social welfare payments represent 40% of Exchequer outgoings. When cuts are made to social welfare, somebody is hurt, because by its nature social welfare is there to help people in need. People are going to be hurt, be they carers, the elderly or the disabled.

I must speak on behalf of carers, who are dear to my heart. By retaining the basic-rate and half-rate carer's allowance, the Minister has acknowledged the valuable contribution carers make to this society. I hope she will continue to retain this allowance over the coming years.

I cannot leave the cuts to the disability allowance unmentioned. I understand where the Minister is coming from and I understand her thinking on this. I understand that people with disabilities, in many cases - certainly in cases of mild to moderate disability - like to be considered on a par with those without disabilities and prefer to be judged on that basis. I have spoken to many parents who are in favour of the payment of the domiciliary care allowance up to the age of 18, when the child becomes an adult. This is a non-means-tested payment and it is there to help parents who have children with special needs and so on. I understand this and I agree that the domiciliary care allowance should be extended to the age of 18.

However, like my colleagues on both sides of the Houses, I have grave reservations about the effect of these changes on those with profound or severe and ongoing disabilities. Even today, I started the ball rolling on this by going, as my colleagues will know, to the party leader and telling him of my concerns. We have two years in which to deal with this issue because, once the domiciliary care allowance is extended to the age of 18, it will be two years before those receiving it apply for the disability allowance. We must work hard on getting this amended before those two years are up so that when those children become adults they will not be affected by the cut.

I would like to speak about lots of things, but I can see the Cathaoirleach is getting cross.

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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When I was speaking earlier this morning, I should have wished a happy St. Nicholas day to my colleagues in the Netherlands, for whom today is gift-giving day. I do not think the same can be said for here. I can understand now what people mean when they say that something was a game of two halves. There are many aspects of the budget about which we can speak positively, and there are some good initiatives, but due to the time constraints I am going to highlight the areas in which I have concerns and which I feel need more considered attention. Also on the subject of the time constraints, we need to consider having a debate in which Senators have an opportunity to make statements, because in this debate, the Minister, whom I greatly admire, took up a quarter of the time Senators had to give their statements.

The Minister for Public Expenditure and Reform, Deputy Howlin, said yesterday in the Chamber that we need to ensure the burden of our economic recovery is shared fairly. Sometimes I wonder about this. We talk of Ireland having experienced four years of hardship, which conjures up a notion that before that, everything was all right. Unfortunately, it was not. For many of the groups we are discussing today things were not just fine. The painful process of adjustment that the Minister for Public Expenditure and Reform spoke about yesterday impacts overwhelmingly and disproportionately on those who are and were already vulnerable. At the same time, there remain significant numbers of Irish citizens who are insulated and largely unscathed by this afternoon's and yesterday's announcements.

I understand it is unrealistic to expect that everybody should have the same standard of living, but we should be striving for greater equality of opportunity. The foundation for that must be protection from poverty, hardship and despair. Can the Minister confirm that the VAT increase of 2%, which will absorb 1% of the disposable income of the bottom 10% of earners but only 0.35% of the disposable income of the top 10% of earners, is an example of every effort being made to ensure that the burden of economic recovery is being shared fairly?

The budget was announced in two segments but it is actually split into multiple pieces. We still have a situation where each Minister is producing statements and I am still trying to work through all the details. Reducing the back-to-school clothing and footwear allowance has a severe impact on families. The Minister for Education and Skills hinted that he might examine directly off-setting that towards school uniforms or books. I would have liked that announcement to have been made. I also urge caution to my colleagues and the Minister for Social Protection. Yesterday, she compared child benefit rates with those in other countries. If one wishes to compare, one must compare like with like. While child benefit rates in Ireland are high, other countries provide free child care, free school books, free uniforms and free health care, so we should compare like with like.

Photo of Trevor Ó ClochartaighTrevor Ó Clochartaigh (Sinn Fein)
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Hear, hear.

Photo of Jillian van TurnhoutJillian van Turnhout (Independent)
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This morning I raised the issue of the disability allowance for young people. The rationale is that we do not want young people with disabilities to be dependent on an allowance. However, many of these young people have profound and multiple disabilities. They are not going into training schemes or work placements, irrespective of their desire to integrate and participate fully in society. I realise that many people are getting allowances which might be questionable, but I am referring to the people with multiple and profound disabilities. There is no rationale for this and I urge that it be reconsidered. In addition, there is confusion about to whom the cut in disability allowance will apply. Will the Minister of State confirm that nobody currently in receipt of the allowance will have the payment reduced?

On the Order of Business this morning I took the opportunity to raise a number of questions and I am disappointed that I received no answers in the Minister of State's opening statement today. Lone parents are very fearful at present. I talked to a number of them today. The budget introduces a number of measures which will have a severe impact on parents. There were a number of measures last year and they expected more, but they did not expect the drastic changes to come upon them so quickly. I looked at the figures in an attempt to justify the decisions, because I am trying to consider these decisions and their justifications fairly. I cannot find the rationale for this. We put questions to the Department of Social Protection but there are no figures to justify the decision. Again, there is a lack of clarity about how the cuts are to be implemented and what the transitional arrangements will be.

Budgets are about choices. The Minister can say it is easy for me to make these remarks but the Government decision to keep excise duty on alcohol at the same slashed levels as previous Governments, for example, means it has lost the opportunity to generate €178 million. If it had generated that amount, it would not have been necessary to make the changes to the lone parent, disability and fuel allowances or to student fees.

Photo of Deirdre CluneDeirdre Clune (Fine Gael)
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This budget is about getting the country to a position where the economy can recover. We have seen the difficulties the Government has had in the attempt to take €3.8 billion out of the economy. Next year there will be further attempts to rectify the fiscal situation.

I will focus on jobs and job creation and how they are dealt with in the budget. We need to get people back working. Only then will we be in a situation where we can move towards recovery. I am glad the Minister of State with responsibility for small enterprises is present for this debate. The importance of the 12.5% rate of corporation tax should never be underestimated. It is very important and there is a commitment in the programme for Government that it will be retained. The Minister for Finance, Deputy Michael Noonan, mentioned its importance in his Budget Statement today. It is very important for the multinational sector and many Members would have been lobbied about it, particularly those who have representatives of that sector in our constituencies. I welcome the renewed commitment to it. Indeed, when the Taoiseach addressed the country last Sunday night, he restated the importance of the 12.5% corporation tax rate for investment in this country.

There is also the proposal today to introduce the special assignee relief programme which will allow multinationals and indigenous companies to attract key personnel to facilitate development of their businesses. That was a proposal from both the multinational and indigenous sector and I am glad it has been addressed in the budget. Companies which wish to export to Brazil, Russia, India and China, or the BRIC countries, and South Africa were also mentioned today and a facility has been developed whereby an Irish-based company that spends 60 days developing markets for Irish products in those countries will get additional tax relief.

The International Financial Services Centre is also important. The Taoiseach launched a strategy statement on that last summer. We should not underestimate its contribution to the Irish economy in terms of the €1 billion taxes that are paid and the 30,000 people who are employed there. It is a strong part of our economy and continues to perform very well, but it must be protected.

Indigenous industry should not be neglected; the economy is not all about foreign investment. Last week, the Minister of State, Deputy John Perry, produced a report which I hope we will get an opportunity to discuss in this House. The loan guarantee, the fund that was announced last week and the changes in the research and development tax credit will be very important. Targeting credits at research and development has generated a very positive response, as I am aware from the sectors involved. The corporate tax exemption for new start-up companies has been extended to 2014. These are all small measures to ensure that we protect small business and encourage the development of more business. Of course, there was also the jobs initiative announced in the summer which saw the VAT rate and PRSI contributions reduced. That initiative has been acknowledged by the tourism sector as being very important in attracting business to this country.

The agrifood sector is one of the shining lights in the economy and the Minister, Deputy Noonan, announced various measures today to facilitate the transfer of land to the next generation to encourage and tie-in the young people who are involved in the agriculture sector. It is well known that agricultural colleges are inundated with applications and do not have enough places for applicants.

There are positive aspects for the jobs market. The funding for the IDA and for community enterprises has been maintained. The property activation measures are very important. The mortgage tax relief measures will be phased out from the end of 2012 so if people do not buy next year, they will not benefit from mortgage interest relief. It is a very clever initiative and is welcome. I hope it will be a kick start in terms of getting us to the point where there is a floor for the property market so it can move to recovery.

Photo of Kathryn ReillyKathryn Reilly (Sinn Fein)
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This is not a growth or jobs budget, but a budget like the last four budgets which the Government parties previously voted down. It is a budget for more of the same. It is hurting but not working. Nobody voted for this deficit plan, least of all the voters who were told that there would be no increase in student college contributions, no cuts in social welfare and no cuts in child benefit. Next year, over 1 million low income families will be down over €1,000 a year. The Government should be ashamed of its broken promises.

Photo of Trevor Ó ClochartaighTrevor Ó Clochartaigh (Sinn Fein)
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Hear, hear.

Photo of Kathryn ReillyKathryn Reilly (Sinn Fein)
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It should be ashamed of the cost of living crisis it is imposing on the low and middle income families in this State.

We were also promised falling levels of unemployment but what has happened since the Government announced the Jobs initiative in May of this year? More than 5,000 additional people are looking for work, thousands more have emigrated, and last week we were told that an additional 22,000 people will become unemployed next year while 40,000 will emigrate.

For this Government, like the previous one, unemployment appears to be a price worth paying. As a result, many people will begin to wonder what planet this Minister is on. In each electoral division in the State 12 people are getting ready to emigrate. One in five young people are looking for work. Communities are seeing Garda stations, Army barracks and accident and emergency departments close. Families are seeing their living standards being squeezed, and not just this year but for the next four years under this Government.

As the Minister of State, Deputy Hayes, mentioned earlier, this budget was presented on the basis of three guiding principles: fairness, jobs and reform. We agree there was no easy way out of this crisis but there was a fair way, and the fair way would have been to introduce progressive taxation to tax wealth. It was not fair to cut disability payments to young people, cut the fuel allowance season, make third level education unaffordable for swathes of young people and increase VAT.

Senator Van Turnhout mentioned earlier that it was a budget of two halves, and I agree with that. It is a budget of the "haves" and "have nots". Reform would have been leading by example.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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Hear, hear.

Photo of Kathryn ReillyKathryn Reilly (Sinn Fein)
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Reform would have been across the board pay cuts for the Minister and his ministerial colleagues-----

Photo of Trevor Ó ClochartaighTrevor Ó Clochartaigh (Sinn Fein)
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Hear, hear.

Photo of Kathryn ReillyKathryn Reilly (Sinn Fein)
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-----and for those at the top level in the civil and public service-----

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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Shame.

Photo of Kathryn ReillyKathryn Reilly (Sinn Fein)
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-----but this Government slapped reform in the face when it broke its own pay ceilings for ministerial advisers on 14 occasions and when the Taoiseach insisted on a €37,000 salary hike for Fine Gael's former director of communications.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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Shocking.

Photo of Trevor Ó ClochartaighTrevor Ó Clochartaigh (Sinn Fein)
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Disgraceful.

Photo of Kathryn ReillyKathryn Reilly (Sinn Fein)
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Fragile consumer and business confidence will be crushed by the rise in VAT and the anticipated fall in public sector demand, and the reality of falling incomes, will depress job creation. The economy has been starved of investment in recent years, and we cannot begin the process of recovery in the absence of significant investment. Without consumer demand and the ability to spend, and without investment, jobs will not materialise.

Before the election we said, along with every other party, that we had to reduce our deficit and that that meant tough decisions. It was not an argument about whether we must see the deficit reduced but a practical one about how we can best make that happen. We said the National Pensions Reserve Fund should be used for a stimulus programme in that the remaining €5.3 billion in the fund should be invested in job creation and not pumped into banks yet again. We said additional money should be drawn down from the European Investment Bank. We set out the real benefits of a €7 billion stimulus plan over three years where such investment could protect almost 100,000 jobs and create an additional 60,000 jobs.

Of course, the Government thought we were wrong. It still believes we are wrong but the figures speak for themselves. The Government's Jobs initiative fell far short of the stimulus shock that was required to get the economy moving again. Overall growth is being held back by the scale of shrinking domestic demand, and that has had a chilling effect on our economy. At this stage growth should be powering ahead. Unemployment should be falling fast but every month when unemployment is higher than it should be stores up long-term damage. Every month when growth is lower than it should be it hits the future potential of our economy but instead of admitting that the Government refuses to change course. Is it not far better to change course and have a credible deficit reduction plan based on higher growth and employment than a failing plan based on low growth and high unemployment?

Photo of Trevor Ó ClochartaighTrevor Ó Clochartaigh (Sinn Fein)
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Hear, hear.

Photo of Kathryn ReillyKathryn Reilly (Sinn Fein)
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Since 2009 the underlying deficit has shrunk by less than 2%, falling from 11.8% to just over 10%. More cuts in the same vein as those introduced in the past two days affecting the same people will not lead to a better outcome.

We needed a budget today and yesterday that changed the direction of economic policy. We needed a budget that prevented the experience of a lost generation. We needed a budget that changed course on cutting too far and too fast. This is not that budget.

Photo of Susan O'KeeffeSusan O'Keeffe (Labour)
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I wish to share my time with Senator Bacik.

Photo of Marie MoloneyMarie Moloney (Labour)
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Is that agreed?

Photo of Jim WalshJim Walsh (Fianna Fail)
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No.

Photo of Jim WalshJim Walsh (Fianna Fail)
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I am serious. A number of us sat here from the start of the debate hoping to make a contribution but it now looks as if we will not get that opportunity. We disagree with the sharing of time, and we are happy to vote on that if the House so wishes. Unless the Leader agrees to extend the time to at least another hour to allow those who have been here-----

Photo of Ivana BacikIvana Bacik (Independent)
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On a point of order, I was here-----

Photo of Marie MoloneyMarie Moloney (Labour)
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Senator, it will be the same amount of time.

Photo of Jim WalshJim Walsh (Fianna Fail)
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On a point of order-----

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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There was a vote on the Order of Business.

Photo of Jim WalshJim Walsh (Fianna Fail)
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-----this is the most important debate we have in the year. People are depending on us to handle our business properly yet we want to finish at 8 p.m. To do what? Go to the bar or somewhere else?

Photo of Marie MoloneyMarie Moloney (Labour)
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It will be the same amount of time, Senator.

Photo of Jim WalshJim Walsh (Fianna Fail)
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I am happy to work here until 10 o'clock or 11 o'clock if needs be.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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Hear, hear. All those who want to speak should be allowed to speak. The Senator is right.

Photo of Jim WalshJim Walsh (Fianna Fail)
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I am asking the Leader to do that. If not, I will object to the request to share time.

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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The Order of Business was agreed this morning.

Photo of Jim WalshJim Walsh (Fianna Fail)
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In that case I object to the sharing of time. If needs be that can be contested.

Photo of Ivana BacikIvana Bacik (Independent)
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On a point of order, I was here at 6 o'clock for the entirety of the Minister's contribution, unlike other Senators.

Photo of Jim WalshJim Walsh (Fianna Fail)
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I am objecting to the proposal put by the Senator.

Photo of Susan O'KeeffeSusan O'Keeffe (Labour)
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How long have we spent on this? I do not understand. We wish to share the time. I will not exceed it.

Photo of Jim WalshJim Walsh (Fianna Fail)
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The Senator can only share time if there is agreement. I am saying "No". If the Senator wants to put it to a vote I am happy to do that.

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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Time is wasted again.

Photo of Marie MoloneyMarie Moloney (Labour)
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Senator O'Keeffe has five minutes.

Photo of Susan O'KeeffeSusan O'Keeffe (Labour)
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As agriculture spokesperson, I welcome what is a creative proposal in this budget that reflects the desires among the farming community and those in agriculture to support younger farmers. Many criticisms have been expressed in the House of many aspects of the budget and one I have observed is that there is nothing creative in this budget but one knows that is not the case when one sits down with people in farming communities and observes the community, as this Minister has done. He has listened carefully and understood that young farmers need to be supported in more creative ways, and one can see that he has sought ways in which to do that.

I welcome the modifying of the retirement relief for capital gains tax to encourage transfer of farms, the enhanced 50% stock relief for all registered farm partnerships, and the 100% stock relief for young farmers who are trained and who will form partnerships. Those measures are not the whole of all the answers this sector needs but they are welcome. The Minister, Deputy Coveney, came into the House on a number of occasions and I believe he is genuinely committed to the future of farming and agriculture, and the food industry. That is evidenced in this budget.

I welcome the commitment today on the part of the Minister, Deputy Noonan, to The Gathering and funding for that event. It is the type of idea that sometimes comes about on the back of an envelope or at a meeting and then disappears in the fog of enthusiasm without action being taken. For him to commit in the budget to the funding for that will be welcomed on many levels. It is not just about tourism, generating beds and bums on seats, if the Members will excuse the expression. It is about generating a recognition of our culture, arts and all the areas in which we excel. It will bring about a regeneration and a connection with people in the communities to come together to take part in a year long series of activities that will assist businesses in an unprecedented and creative way. People continue to criticise that is lacking in this Government but I do not believe so.

I welcome also the changes in the universal social charge. It is a small change but it is significant. It was in the programme for Government and is something for which the Labour Party stood. Many of us were told by people on the doorsteps that the universal social charge was too harsh, something which the Opposition has acknowledged. This measure is a rectifying of that harshness.

Regarding the back to school clothing allowance, I understand the Minister for Social Protection will continue to try to bring about improvements to the way in which the back to school clothing allowance will be applied into the future with many other creative ways being used in terms of direct payments. There are many measures in this budget that we will see built upon in the next year, and I believe the Minister will proceed to do that.

Along with others I, too, am very concerned about the potential changes in the disability payments, particularly for those people who are profoundly disabled. Many of us will engage in conversation with the Minister and this Government to seek change to this measure because it is clear it is something that is difficult to understand and accept.

Photo of Mary WhiteMary White (Fianna Fail)
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I am delighted to welcome the Minister of State, Deputy Perry, to the House. I would first like to say that the Labour Party has no clout in this Government. I do not know what the Labour Party stands for, having listened to what its members in here had to say and in supporting the Government's budget. The major flaw in this budget is that its impact is not progressive and it is seriously socially regressive. The budget will further increase inequality in Irish society. On 30 November, the CSO published preliminary results of the 2010 survey on income and living conditions and its main findings were that people earning the most in 2010 received five times the income of those earning the lowest. This compares with a 4.3 differential the year earlier, and shows an increased income inequality in this country. Average disposable income per household decreased by 5%. The "at risk of poverty" rate was 15.8% in 2010, compared to 14.1% a year earlier.

This budget is anti-family, anti-women, attacks widows, is anti-rural dwellers, attacks pensioners, attacks disability payments, attacks employers, attacks higher education and attacks rural schools. There is no vision in the budget or no big ideas for employment. Unemployment is the elephant in the room with this Government. If I was a Minister in the Government, unemployment reduction would be my first priority. Everyone knows that the unemployment rate is currently 14.6%. Male unemployment is 17.3%, while unemployment among men aged 20-24 years is 32%. Every day, 110 people are leaving this country. We all know there has been a sharp increase in Irish nationals leaving, with around 40,000 people expected to emigrate this year.

Working families and families dependent on welfare will be the hardest hit. I hope the Labour Party Members present are listening to me. Let us take the example of a working family with four children. They will lose €430 on child benefit. They will pay at least €400 extra on VAT. They will pay €144 extra for the drug payment scheme. They will pay €100 for the household charge. They will pay a minimum of €100 for motor tax, excise duty and carbon tax. If they are fortunate enough to have private health insurance, the VHI has stated that a typical €3,000 premium will now cost at least an extra €1,000. In spite of what we have heard this evening, this typical working family will lose €2,176 next year, excluding increases in school transport charges.

I am amazed at the Labour Party. No wonder it is going down in the polls and no wonder we are gaining.

Photo of John GilroyJohn Gilroy (Labour)
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Polls do not affect us. We will do the right thing for the country.

Photo of Mary WhiteMary White (Fianna Fail)
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There is no idealism left in the Labour Party. How can it go along with the tax on disability? The taxes being imposed on young people with disabilities are deeply unfair, heartless and cruel. Cutting up to €88 per week on people with disabilities who are aged between 18 and 22,-----

Photo of Marie MoloneyMarie Moloney (Labour)
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Your time is up Senator.

Photo of Mary WhiteMary White (Fianna Fail)
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-----many of whom have severe and profound disability, is totally unforgivable.

I would like to say finally that I was listening to the-----

Photo of Marie MoloneyMarie Moloney (Labour)
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I call on Senator Cummins.

Photo of Mary WhiteMary White (Fianna Fail)
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I would like to finish with one sentence.

Photo of Marie MoloneyMarie Moloney (Labour)
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Your time is up.

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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I would like to share my time with Senator Burke.

Photo of Marie MoloneyMarie Moloney (Labour)
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Is that agreed? Agreed.

Photo of Jim WalshJim Walsh (Fianna Fail)
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That is not agreed.

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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I will continue now and I thank the Senator.

Photo of Jim WalshJim Walsh (Fianna Fail)
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I think the Leader-----

Photo of Mary WhiteMary White (Fianna Fail)
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I want to say finally-----

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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How much time do I have?

Photo of Marie MoloneyMarie Moloney (Labour)
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You have five minutes.

Photo of Mary WhiteMary White (Fianna Fail)
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I do not know why this Government is getting excited about not increasing income tax.

Photo of Marie MoloneyMarie Moloney (Labour)
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Senator, you have had your time.

Photo of Mary WhiteMary White (Fianna Fail)
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Talking about high social standards in other countries where they have a very high rate of income tax------

Photo of Marie MoloneyMarie Moloney (Labour)
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There are other people who want to contribute to the debate and your time is up. I call on Senator Cummins.

Photo of Mary WhiteMary White (Fianna Fail)
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People earning over €90,000 per year should be paying higher income tax, end of story.

Photo of Jim WalshJim Walsh (Fianna Fail)
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On a point of order, Senator Cummins takes the floor, but he should extend the time. He is trying to bury this House. I do not know why, but it is not serving the interests of the people there who are depending on us-----

Photo of Marie MoloneyMarie Moloney (Labour)
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That is not a point of order.

Photo of Jim WalshJim Walsh (Fianna Fail)
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-----to have an opportunity to have an input into the debate. That surely is a point of order. If that was not a point of order, there would be no points of order.

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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I thank the Acting Chairman. Taking €3.8 billion out of the public finances and out of the economy is not an easy task for any government. Difficult decisions had to be made and difficult decisions have been made. The decisions are being taken because this Government was elected to sort out the financial situation in this country. That is the reason why we were elected; to sort out the mess that had been left for us by the previous Government.

Photo of Jim WalshJim Walsh (Fianna Fail)
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Just like the Government did between 1982 and 1987.

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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In order to do that, we have started to solve the problem with our four year strategy to give us back our economic sovereignty.

On many occasions over the last few weeks, we have been taunted from the other side of the House for not keeping the promise on mortgage interest relief for people who purchased their houses between 2004 and 2008. At the very first possible opportunity, we have delivered on that promise. I listened to people on the other side of the House say that this was the reason many people voted for the Government and that we failed to honour the promise. We have now delivered on that promise and it is in a significant area. It will help those who are in mortgage difficulties. I acknowledge the comment of the leader of Fianna Fáil in the House that we have delivered on a significant area, for which he himself had been pressing over the last few months. I received calls from my own constituency in Waterford castigating me over the last few months for not honouring our pledge on mortgage relief. Thankfully, three of them telephoned me today and told me that their votes were vindicated and that they were glad that the mortgage interest relief has been delivered.

The last Leader of the House advocated that people should buy houses when the market was falling. It has fallen a lot since he gave that advice. It has fallen at least 50% since then. However, I would suggest that now is the right time for first-time buyers to buy and get into the market, following the mortgage interest relief and stamp duty changes announced by the Minister for Finance in the budget. The banks will have to play their part in that regard. They will have to provide the loans for young people who wish to purchase their own homes. Senator Sheahan made a very important point. We have people who are renting houses for €750 and €800 per month. They will now see that this is the best possible time and opportunity to get to own a house given the mortgage interest relief that the Minister announced today. I urge young people to go and purchase. This is the right time for people and the market has probably bottomed out at this stage.

The question of proposed changes to social welfare was raised.

Photo of Marie MoloneyMarie Moloney (Labour)
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I am sorry to interrupt but it is 7.50 p.m. now and I must call the Minister of State.

Photo of Mary Ann O'BrienMary Ann O'Brien (Independent)
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I apologise to the Minister of State, Deputy Perry, for my rudeness but can we have an extension please after the Minister has spoken?

Photo of Marie MoloneyMarie Moloney (Labour)
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That is a matter for the Leader.

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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We agreed the Order of Business this morning and I cannot extend the time.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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Other speakers wish to come in.

Photo of Jim WalshJim Walsh (Fianna Fail)
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On a point of order, if Senator Mary Ann O'Brien proposes an amendment to the Order of Business and it is seconded, will it be accepted?

Photo of Jim WalshJim Walsh (Fianna Fail)
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When I say "accepted", I mean will it be accepted by the Chair? I believe the Chair is obliged to accept a motion put by Senator Mary Ann O'Brien to extend the time – I suggest by one hour – and I would be pleased to second it.

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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The Order of Business must be amended at the Order of Business stage in the morning.

Photo of Jim WalshJim Walsh (Fianna Fail)
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No. I believe that it can be amended here and that we can extend this debate.

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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I do not believe we can do so.

Photo of Jim WalshJim Walsh (Fianna Fail)
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If the Seanad is in session, the Senator is entitled to put an amendment and if she does so there is nothing to prevent it under Standing Orders. I am pleased to second it.

Photo of Marie MoloneyMarie Moloney (Labour)
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My information is that it cannot be accepted.

Photo of Jim WalshJim Walsh (Fianna Fail)
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I believe it can be accepted.

Photo of Marie MoloneyMarie Moloney (Labour)
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We cannot accept it at this stage.

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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I understand the amendment must come during the Order of Business.

Photo of Jim WalshJim Walsh (Fianna Fail)
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Will Senator Mary Ann O'Brien put the amendment?

Photo of Mary Ann O'BrienMary Ann O'Brien (Independent)
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Yes.

Photo of Jim WalshJim Walsh (Fianna Fail)
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I second the proposal that we extend the sitting for one hour to 9 p.m.

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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I do not believe that is in order.

Photo of Marie MoloneyMarie Moloney (Labour)
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I cannot accept that. It must be done on the Order of Business.

Photo of Jim WalshJim Walsh (Fianna Fail)
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Is the Acting Chairman ruling it out?

Photo of Marie MoloneyMarie Moloney (Labour)
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I am ruling it out. I am sorry. I call the Minister of State.

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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In presenting the statement on the 2012 Estimates and today's Budget Statement 2012 the Minister for Public Expenditure and Reform and the Minister for Finance have asked the people to make considerable sacrifices in the year to come. An adjustment of €3.8 billion in the public finances, through cutting public spending by €2.2 billion and raising €1.6 billion in extra taxes, cannot be achieved other than through sacrifices. We cannot take refuge in simply stating that this burden will be borne collectively by Irish society because we know that it will be borne by each individual member of our society in a million different ways. The scale of this adjustment reflects the scale of the crisis that we face. The Taoiseach described this crisis as an exceptional challenge. It can also be described as a great test and, to echo the title of a book edited many years ago by the late Francis Mc Manus, these are the years of the great test, a test which we cannot and will not fail.

We must get our economy back to health again so that we can create enough jobs to get rid of mass unemployment, to enable our children to have a future here and to create enough resources to look after the most vulnerable people in our society and not to have to rely on whatever we can borrow to support them. Now, however, the State is spending €16 billion a year more than it is taking in and this is why it is imperative to close the gap between spending and saving by € 3.8 billion in the budget for 2012.

While this budget is the most important step that has been taken by the Government to stem the crisis, it is not the first such step. From the moment it came into office, the Government began to prepare and then implement policies and initiatives to support the economy and tackle the public finances. We have made considerable progress in stabilising our banking system and, importantly, we have recapitalised the remaining pillar banks at a lower cost than expected. Last May, a jobs initiative was introduced that cut VAT from 13.5% to 9% to support tourism and employment. It cut the lower rate of employers' PRSI for lower-paid workers earning below €356 a week. It created more than 20,000 new job and training placements and it brought in a new loan scheme for small and medium-sized enterprises.

The Government secured a lower rate of interest on the country's borrowings that will save us €10 billion over time. We have met our commitments to the EU and the IMF in full and on schedule. As a result, Ireland has regained a good deal of the international confidence that it had lost and it has achieved credibility that others have not. The scale of the crisis is such that efforts must continue to be made for a further three years after 2012. Nevertheless, we have achieved substantial progress in dealing with the crisis in a short time. The process of stabilising the public finances is well under way and exports crucial to underpinning our economic recovery are growing. We have laid the foundations of recovery and the expenditure and taxation measures which were introduced yesterday and today will build on those well-placed foundations.

Although the budget measures for 2012 had to be difficult, it is unavoidable if we are to achieve our target of a deficit of 3% of our GDP by 2015. Despite these unavoidable consolidation measures, a key aim of the budget and of the Government's four-year strategy is to support employment creation. Although we may appear to be a long way from returning to the rate of employment growth that we need, the increase in the total at work of some 17,000 in the second quarter of this year, although largely seasonal, is encouraging. Cutting expenditure and increasing taxes may not seem to be the right way to support employment. However, by making serious steps to restore our public finances to a sound footing and as our deficit moves to sustainable levels, investors will start regaining confidence in Ireland and credit will be made available at better rates. This means that businesses will be able to start borrowing, expanding and hiring again. As I have stated, international confidence in Ireland's economy is returning already and it will continue to grow if we keep on our present course.

The budget also supports jobs in that it includes a series of targeted measures specifically designed to create employment and to get the unemployed back to work. These measures include, among others, a new system of loan guarantees that will enable banks to resume lending and a new micro-finance scheme that will help people to start their own businesses. Uncertainty has added to the problems in the economy. For this reason, budget 2012 leaves income tax untouched. Instead, €1.6 billion of extra taxes that Ireland needs will be raised mainly through indirect taxes although we acknowledge that no tax increase is easy for our citizens. As well as supporting employment creation, the budget reflects the Government's commitment to do all it can to protect the most vulnerable in our communities, including our decision to invest in important health and education infrastructure.

The budget is a hard but necessary step on our four-year path to stability, recovery and a return to full normality. If the Government had the choice of easier options it would have taken them willingly, but it did not and all that was open to it was a set of difficult decisions. Undoubtedly, we will have to make other hard decisions but the reward of our sacrifices will be great within a few years and it will be measured in strong sustained economic growth, falling unemployment, a good future at home for our young people and a decent life for the vulnerable in society.

Photo of Marie MoloneyMarie Moloney (Labour)
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When is it proposed to sit again?

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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Ag 10.30 a.m. maidin amárach.