Amendments Nos. 2 and 3 are alternatives to amendment No. 1 and all three may be discussed together. Deputy Michael McDowell is not present to move amendment No. 1.
SECTION 1.
Acting Chairman
Amendment No. 1 not moved.
In the absence of Deputy Michael McDowell, who tabled amendment No. 1, I move amendment No. 2:
In page 11, paragraph (b) (i), line 24, to delete '"£9,000' and '£10,200"' and substitute '"£11,000' and '£11,000"'.
My amendments Nos. 2 and 3 are in respect of the exemption limits as they apply to people aged 65 years and upwards. There is confusion here and the Minister should consider having one overall exemption limit for people aged 65 years rather than having limits for people aged 65 years, 75 years, over 80 years, etc.
When people reach these ages the exemption limits as currently applied are too low. They create difficulties for those, for example, who have a State pension and may have small pension from a former employment which they may have enjoyed. Throughout my political life I have met people of meagre means in my constituency who find it extraordinary to be assessed by the Revenue Commissioners and billed for what are small amounts of money to the rest of us but are considerable impositions on them. It is difficult to explain to them that it arises, not from their State pensions, but from their small additional pensions arising, for example, from their employment in Bord na Móna, the ESB or the local authority in County Kildare, which puts them over the relevant threshold.
A considerable amount of confusion then ensues when they move from one age category to another. The Minister advised last year that the cost of such a change would not be very high. In addition, on administrative grounds, there is no longer any reason to have these different thresholds. It has always been a principle, as if written in stone, and followed by various Administrations that, whenever thresholds or allowances are changed, they are all increased proportionately; for example, they must all move by £150 or £300. No thought is given to the idea of having one exemption limit which would allow many to get out of the tax net. On grounds of equity and fairness, when people reach these ages they are entitled to exemption limits which are higher than those for other taxpayers. I suggest £11,000 for a married couple and £5,500 for a single person. It is not an extraordinary increase.
I am informed that the original threshold was at 75 years of age. Over time there was a recognition that there were additional costs associated with the elderly. This was an attempt to address this. Various concessions over time were made at different periods.
However, we now have this multi-level set of thresholds. If we were to do what the Deputy proposes, the additional cost in 1996 would be £9.4 million amounting to £16.5 million in a full year. While Deputy Michael McDowell is not in attendance, I presume I can address the costing of the slightly different amendment in his name. It would amount to £9.7 million in 1996 and £17.7 million in a full year.
I am not in a position to accept the amendment because of the cost implications. We could look at some kind of rationalisation but I fear it would be upwards rather than downwards. To proceed on the basis suggested by the Deputy of rationalising to create a single threshold relief for the aged would be a cost for all of us.
There is a tendency, which is not the fault of the Department of Finance or the Revenue Commissioners, to impose exact increases or decreases. For example, when turnover tax was replaced by VAT in 1972, the first rates of VAT were 5.26 per cent and 16.37 per cent. Why were these figures selected? Under the turnover tax, there was a 5 per cent rate on the gross and over and a 10 per cent wholesale tax rate.
When VAT was added the exact figures were 5.26 per cent and 16.37 per cent. The VAT rates were increased subsequently and the 16.37 per cent rose to 19.37 per cent and the other rate rose to 5.5 per cent. Exact percentages were used. Nobody asked why the rates were increased in this fashion or why they were not increased to 19 or 16 per cent or 5 or 6 per cent. Somebody was doing their job efficiently and very well but nobody was looking at the broader picture.
Everybody accepted it at the time and there was no hue and cry about it. Every retailer in the country got wonderful tables and lovely charts and nobody thought about them. Now the idea now would be looked at as quite ludicrous. The same principle applies to age exemption limits. The Minister is quite right. It is a long time since these exemption limits were introduced. The rationale for applying it to those over 75 was probably that a further exemption would increase costs.
I am suggesting that the Minister look at the whole area again and consider the age of 70. I accept there would be a cost involved which would be similar to last year. I am cognisant of the fact that life expectancy is increasing and that is why I suggest 70. I know that long-term costs would have to be examined but that is the way in which the Minister and the Department of Finance should approach it. It would be more rational and make more sense. It would lead to the streamlining of the system as well as removing some of the inequities which I pointed out earlier.
This rule does not really affect people with great wealth and large pensions. They do not really mind about those things because they are well above the threshold. I am sure the Minister has also encountered the people about whom I am concerned in his constituency advice clinics. I met them for many years because a large number of people in County Kildare worked in the ESB and Bord na Móna. They are getting very small pensions but it usually puts them over the threshold. I appreciate these thresholds have been increased over the years, so my suggestion to the Minister is to look at the area afresh.
I just threw out the analogy of the VAT rates and not with the intention of insulting any officials in the Department of Finance who thought them up at the time. He or she was just doing their job and nobody commented on it. The thinking that such matters must be exact is extraordinary. I ask the Minister to look at it afresh.
Officials in the Department of Finance and the Revenue Commissioners are immune to any insults. They do not hear them. The insults are confined to the political representatives.
I am informed that the full cost of this year's exemptions for the elderly, including the standard exemptions and the additional ones in the budget, will come to £25 million approximately. For Deputy McDowell's information, we calculated that the approximate cost of his amendment would be £9.7 million this year and £17.7 million in a full year. We will look at the question of rationalisation but on the clear understanding that if one is to rationalise along the basis Deputy McCreevy suggests, one would have some losers as well as some winners. However, one would have a straightforward threshold.
This is one issue on which one's mail bag does bulge. People of that age group feel very hard done by. I appreciate that money is money but it seems that for a relatively small amount of money a considerable portion of the population could be made much happier. I ask the Minister to consider for Report Stage whether he could come back to this issue and rationalise it a little further in this year's Finance Bill.
Amendment, by leave, withdrawn.
Amendment No. 3 not moved.
Section 1 agreed to.
NEW SECTION.
I move amendment No. 4:
In page 12, before section 2, to insert the following new section:
2. Section 2 of the Finance Act, 1991, is hereby amended——
(a) as respects the year of assessment 1996-97, by the substitution of the following Table for the Table to that section:
‘TABLE
Part I
|
Part of taxable income |
Rate of tax |
Desription of rate |
|
(1) |
(2) |
(3) |
|
The first £9,400 |
25 per cent |
the standard rate |
|
The remainder |
45 per cent |
the higher rate |
Part II
|
Part of taxable income |
Rate of tax |
Description of rate |
|
(1) |
(2) |
(3) |
|
The first £18,800 |
25 per cent |
the standard rate |
|
The remainder |
45 per cent |
the higher rate |
(b) as respects the year of assessment 1997-98, by the substitution of the following Table for the Table to that section:
‘TABLE
Part I
|
Part of taxable income |
Rate of tax |
Description of rate |
|
(1) |
(2) |
(3) |
|
The first £10,000 |
23 per cent |
the standard rate |
|
The remainder |
42 per cent |
the higher rate |
Part II
|
Part of taxable income |
Rate of tax |
Description of rate |
|
(1) |
(2) |
(3) |
|
The first £20,000 |
23 per cent |
the standard rate |
|
The remainder |
42 per cent |
the higher rate |
(c) as respects the year of assessment 1998-99, by the substitution of the following Table for the Table to that section:
'TABLE
Part I
|
Part of taxable income |
Rate of tax |
Description of rate |
|
(1) |
(2) |
(3) |
|
The first £12,000 |
21 per cent |
the standard rate |
|
The remainder |
40 per cent |
the higher rate |
Part II
|
Part of taxable income |
Rate of tax |
Description of rate |
|
(1) |
(2) |
(3) |
|
The first £24,000 |
21 per cent |
the standard rate |
|
The remainder |
40 per cent |
the higher rate |
(d) as respects the year of assessment 1999-2000, by the substitution of the following Table for the Table to that section:
‘TABLE
Part I
|
Part of taxable income |
Rate of tax |
Description of rate |
|
(1) |
(2) |
(3) |
|
The first £14,000 |
20 per cent |
the standard rate |
|
The remainder |
38 per cent |
the higher rate |
Part II
|
Part of taxable income |
Rate of tax |
Description of rate |
|
(1) |
(2) |
(3) |
|
The first £28,000 |
20 per sent |
the standard rate |
|
The remainder |
38 per cent |
the higher rate |
(e) as respects the year of assessment 2000-2001, by the substitution of the following Table for the Table to that section:
‘TABLE
Part I
|
Part of taxable income |
Rate of tax |
Description of rate |
|
(1) |
(2) |
(3) |
|
The first £15,000 |
20 per cent |
the standard rate |
|
The remainder |
35 per sent |
the higher rate |
Part II
|
Part of taxable income |
Rate of tax |
Description of rate |
|
(1) |
(2) |
(3) |
|
The first £30,000 |
20 per cent |
the standard rate |
|
The remainder |
35 per cent |
the higher rate |
We have much work to do today and I do not want to delay matters with long speeches about tax reform. I will confine myself to saying that there are a few points that are worth mentioning in the context of every year's Finance Bill. The present tax laws are there because politicians put them there and there is nothing immutable about our tax system.
New Zealand now has a top rate of tax of 33 per cent. They have also reduced unemployment dramatically from 14 per cent down to about 6 per cent. I believe in a low marginal rate of tax. I reiterate the point I made on Second Stage that it is misconceived to think that the rate of tax does not matter. I remember one member of a former Government telling me in an excited tone that the higher tax rate, the greater the incentive to work. I wondered what that person would live on.
Experience shows that low marginal rates of tax are a greater incentive to participate, to invest, to take risks, to work harder, to seek promotion and to become more productive. That is my fundamental philosophy on taxation. Tax rates do matter; they matter an awful lot. They may not matter to people whose incomes are absolutely fixed. It does not matter what calculation is done or whether half their income is wholly exempt and the other half is taxed at 80 per cent because they will just look at the bottom line. In the real world where decisions are made about whether to work overtime on Saturdays and so on these issues matter a hell of a lot.
It is essential that there should not be a successor agreement to the Programme for Competitiveness and Workunless that agreement has at its starting and end point a radical reform of our taxation system. No successor to theProgramme for Competitiveness and Work should be attempted unless it is completely integrated with a stated and measurable proposal to reform our system of taxation. There is no point in having a successor programme to Programme for Competitiveness and Workwhich is grounded on vague statements about taxation, as was the taxation element in the existing programme.
In that context the people of this country would be willing to exchange militant pursuit of growth in nominal wages for a restraint and a balance across the life of a programme if the Government came to the table with a plan that by the end of the system it will have achieved X or Y with income tax and the rates will be down to 20 per cent and 35 per cent or 20 per cent and 40 per cent. The plan could include that by the end of the period the amount of income covered would be the average industrial wage for single people and some multiple of that for married people. If that bargain was put to the unions and the people of Ireland they would say yes and, therefore an amendment of this kind is the approach that should be taken.
The people of Ireland are entitled to know what the Government proposes to achieve in terms of taxation policy over a five year period. If they understood it and signed on for it, this country would be immeasurably more productive and enterprising at the end of that period than it would be at the outset.
The principle the Deputy has just put forward is one with which I would not of necessity find myself opposed because there are some precedents for similar types of commitments. For example, the phased elimination from the top rate down to the standard rate of VHI relief and mortgage relief followed a similar path in that a multi-annual commitment was made that over a period of time these things would be taken from the top rate down to the standard rate. This year both are approaching the standard rate and we have ensured, within the context of the two agreements, that take home pay and the net tax effect would be neutral, if not positive. People would not be worse off as a result.
In other words, the reduction to the standard rate and the equalisation accordingly would not result in a negative impact on some people's take home pay. The time is rapidly approaching when the kind of approach which Deputy Michael McDowell is proposing needs to be discussed and explored with the social partners. The costs associated with it over a period of time are quite substantial. The total cost for the timescale 1996-97 to the year 2001 would be £1,457 million. That is a lot of money over that period. The cost for 1996-97 is calculated at approximately £59.4 million; the buoyancy would be one third of that.
I will bring to Cabinet in the next couple of weeks a memorandum relating to multi-annual budgeting. In order to have a multi-annual commitment on one side of the equation, we need to understand the multi-annual obligations. To achieve this type of forward planning, which I support in principle, we need to have all the components on the table and we need to see what the extrapolated commitments are in relation to expenditure and obligations in health, education and some of the other big spenders.
If we were to legislate to reduce tax and to progressively increase it over a certain period, we would need to find some mechanism or emergency clause within the agreement — a reduction in expenditure or the postponement of the particular phasing -which the social partners could accept in the event of some kind of shock hitting the system. There is no such mechanism at present and I am not sure there is that political consensus on the necessity for such a mechanism or the shape it might take.
Recently different commentators have been talking about a successor agreement to the Programme for Competitiveness and Work and have spoken in terms of making provision for the absorption of some kind of asymmetrical or unforeseen shock as distinct from a possible downturn in the business cycle. We have outrowed the downturn in the business cycle in the rest of the European Union and the indications from the ESRI and others seem to suggest there is no domestic factor. There is likely to be a domestic downturn from foreseeable factors on the horizon. However, that is not to rule out any unforeseen induced shock which could have that effect on the economy.
Two horizon points are clearly visible. The first is 1 January 1999 and the effect which the fixing of currencies in the Euro will have on the economy, the exchange rates at which people will come in and their consequential effects; the second is the ending of the Structural Funds and the possible continued flow, reduced or otherwise, of funds after 1999. I have said there is a need for the next agreement to be able to accommodate those two foreseeable factors.
There is a commitment that taxes should be reduced. In the Programme for Economic and Social Progress and the Programme for Competitiveness and Work the trade unions, as one of the social partners, accepted that low nominal increases and a low level of wage increases combined with a low level of inflation and tax reductions was a better and more secure route in which to improve the take home pay of workers and at the same time improve the competitive position of the economy.
We have moved down part of the path which Deputy Michael McDowell signposted. I am not averse in principle to exploring it further provided we can address the two issues. There must be an understanding that in the event of some unforeseen shock hitting the system and a commitment, which was set out in the legislation, being postponed or suspended, it would not be seen as formally reneging on it. Any open or mixed economy like ours must have such a variable clause in the contract. We must have some other way of looking at the multi-annual budgeting system. I announced in the budget that we will have a multi-annual budgeting system and that we will be in a position to address this later. I am not in a position to accept it at present but I do not think Deputy Michael McDowell is pressing it from that point of view. I do not reject the principle of what is proposed. Something as clearly put down on paper as this would probably be necessary to underpin and sustain any new agreement.
There is no doubt that high tax rates reduce a person's incentive to increase their business, productivity, etc. Would it be better to reduce tax rates over a number of years or to take a chance and do it in one year? Any Minister for Finance would be reluctant to state if he would prefer to reduce tax rates gradually or to do away with a range of reliefs, allowances, etc., immediately. What would happen if the gamble did not pay off and the economy turned upside down? I am not sure if we will be allowed to continue the slow cautious approach.
The Minister referred to the last three national agreements which were successful. The first was entered into by the trade unions on behalf of their members in the full knowledge that the country could not continue the way it was and that the economic situation had to be addressed. They showed a lot of common sense and leadership at that stage, which was not the tradition in any other country. The Irish trade union movement made a decision which was supported by its members. That social partnership arrangement turned the economy around. I doubted the wisdom of taking some powers of decision making from the Dáil and transferring them to another body. However, I was wrong because it had a beneficial effect. The other two agreements were also successful and we are now enjoying good growth rates.
Why is there such angst among working people if growth rates over the past number of years have been good, interest rates are low and the economy has turned around? The Minister and the trade union movement are aware that workers are becoming increasingly frustrated. I am sure there are many reasons for this, but the most important relates to taxation, particularly among workers in the private sector. The Government and the Minister for Finance must introduce another agreement.
One would imagine that private sector employees represented by unions would be most frustrated because in general they feel they have not done as well. However, in the last couple of months frustration seems to have built up more in the public sector unions. As a constituency representative, I am aware that many trade Unionists in the private sector are astounded by this turn of events because they feel that if anybody should be angry, it should be workers in the private unsheltered sector. In terms of those two matters coming together, it will be a finely balanced operation if the Government is to bring off another social partnership.
Undoubtedly, social partnership/ national wage agreements have worked successfully. One can point to the fine things which have happened over the past number of years under successive Governments; but, all things being equal, the biggest cause of frustration is taxation. Without a new bolder approach, it may not be possible to tell the trade union movement that a certain amount of relief will be given to PAYE workers in the budget each year. This aspect was built into the last two agreements, but it will not wash now. On that basis, successive Ministers for Finance may not have the luxury of taking a gradual approach and it may be necessary to take a bolder approach to taxation.
I stated previously, on behalf of my party and myself, that the level of taxation should be commensurate with the degree of public services which we as a society want. There could be a low rate of taxation if we agreed that everybody could lie on the side of the streets of Dublin, Kildare or wherever, or that hospital facilities would not be provided to people. It could be similar to the United States where if people get sick and go to hospital, it is tough luck if they do not have personal cover. I do not favour such a society, but I have been reasonable over the years in stating that, as a society, we must decide what level of services we wish to provide and then consider the level of taxation.
However, given the degree of frustration building up among trade Unionists and employees who have not benefited from the economic growth in terms of more money in their pockets — this relates directly to taxation — future Governments must take a bolder approach to tax. Over many years Deputy McDowell has advocated the big jump approach. Certain commentators have looked aghast at him and said it would not work. However, we must take a bolder approach because workers want something more. In the next agreement the Minister for Finance will not get away with saying that tax relief will be provided to PAYE workers in the next three budgets. The trade unions will not buy it and it will not work.
There is a slight difference in emphasis between myself and Deputy McCreevy in that I do not believe tax should be residual. We should not say these are the services we need and now let us pay for them. Taking into account the right of people to work and the exclusionary effects of taxation, one should consider the economy and ask what it can afford. One does not have to say the only issue is tax or services; a balanced approach can be taken.
From a political point of view, everyone is a consumer of services and a tax-payer. There is not just a group of taxpayers because they also consume services. However, to get taxpayers on side in terms of significant change in the taxation system, one must set out goals by which one's programme will be measured. This could be described as a big bang over five years — it would be a relatively big bang by any description if it was done — but, by the same token, it could have an annual implication of £200 million or £300 million for the Exchequer over that period.
I am very much of the opinion that ordinary voters, and ordinary voters in a trade union context in relation to a national understanding of any type, want fixed and firm targets. The Minister correctly asked what happens if something unforeseeable occurs and one must walk away from one's established targets. The Minister could do so in a Finance Bill, but it would be painful politically for anyone who took that action. It is similar to training for athletics. I am convinced that once a target is set, which must be met, and one commits oneself, one is less likely to abandon it than otherwise.
I return to the experience of the FF/PD coalition from 1989-92, which had fixed targets in that period regarding tax reform. There was considerable resistance from the financial end of the Government to the achievement of the particular tax rates because it was felt it was an unnecessary constraint. However, if one does not fix constraints in a national understanding or programme for Government, one will not get performance. If taxation is not considered a residual — the item which has to be made up to pay for everything else — but rather something to which other things must be attuned, the balance is far more conducive to creating the political will to change the way the country works.
Everybody in the country wants tax reform and every individual who works wants the net element of their pay packet increased substantially. However, the basic premise is how that is undertaken. Over the last number of months I have argued with the Minister for Finance and others that we should consider reducing the 48 per cent rate to 45 per cent and the 27 per cent rate to 25 per cent as quickly as possible. They are reasonable levels. I agree that taxation will play an important role in a future programme with the social partners. It will be the crucial factor under-pinning it if it takes place.
Nevertheless, I agree with Deputy McCreevy that we have a duty to the wider public. It is time we refocused on the common good. On a selfish basis, we can individualise and say tax reductions are extremely important. At this stage, tax reform means tax reduction to people. However, we also owe a duty to the wider public and the common good and this must also underpin decisions in relation to tax reform. Deputy McDowell favours the big bang approach, but we should look across the water and consider what that approach caused there. It fostered a selfish society. I studied it and it is one to which I do not subscribe in relation to the provision of health services, etc. Perhaps it is due to my background but I have a deep commitment to the provision of services such as a local authority housing programme and a proper health system. These are fundamental matters.
Deputy McDowell argues from the perspective that tax should not be residual, but rather fundamental. This is where we differ because a level of services must be provided. We must take care of people who are not able to provide for themselves, including the old, sick, handicapped and pensioners. We cannot reduce the 48 per cent rate to 40 per cent and the 27 per cent rate to 20 per cent. What would be left for sectors which are not able to provide for themselves? There is consensus on the need examine the taxation system and about the importance of the next Programme for Competitiveness and Work or some similar programme.
We cannot ignore the huge number of people who do not work, who are not in a position to do so or who are not able to provide for themselves. They must be provided for under programmes like the local authority housing one and in the health services. People who are not able to pay for hip replacement operations should not be left on a five year waiting list, while somebody in the VHI's plan D is in the Blackrock Clinic within one week. I want low taxation but it must be done in a planned way which will not impact heavily on those who rely on us and the less well off who depend on us to ensure they get an adequate level of services in those areas.
I agree everybody supports tax reform; it is a case of how we approach it at a particular time. A few years ago we did away with the third tax rate. I always had doubts, although I cannot remember who did it and I do not want to be reminded.
We are all connected at this stage.
The figures do not seem very fair to the PAYE worker. Recently I read about a case where a single man on 80 per cent of the average industrial wage was paying the high rate of tax — the same as a building society chief or a high roller. That is extraordinary and I see merit in returning to the system of having three rates.
As regards Deputy Michael McDowell's amendment, to most PAYE workers the bands count, not the rate of tax. If a person is on £15,000 or £20,000 per annum, the rate is almost irrelevant in that it does not matter whether it is 27 per cent, 26 per cent or 25 per cent because they get very little. The high rollers benefit from the rate. While every penny counts, the rates do not significantly improve the situation for the majority of workers.
If I was to table an amendment, it would be tilted more towards the bands rather than the rate. I agree we must encourage and motivate people. Many people believe that the system at present does not provide encouragement. I agree with the last speaker who said that we need tax in order to provide services. While the rate is a symbol of reform, the bands affect more people and are much more meaningful in the long term.
I would like to correct something I said earlier in response to a question by Deputy McDowell. The cost in a full year of his proposal would not be £59.4 million, which is the cost at present. The additional cost would be £295 million gross. We calculate that the buoyancy factor would reduce that to a net cost of £221 million.
Tax reform means tax reduction. We should get away from the fiction that tax reform means somebody else pays more and you pay less. That is basically what brought thousands of people onto the streets in 1979. As Deputy Penrose said, we would all like to pay less tax. The question is from where do we start. The Progressive Democrats has a party philosophical position with which I do not agree but I respect the clarity with which it is enunciated and the origins from which it derives its conclusions. Like Deputy McCreevy and Deputy Penrose, I believe we should set out the type of society we want and then see how we set about paying for it. One can differ with that approach and argue that countries like New Zealand have carried out reforms. I never visited the country but I listened to its Finance Minister who recently visited here and read a lot material about the reforms which were carried out by different administrations. The "Big Bang" was led by New Zealand's Labour Party because it addressed the problem of that society at the time.
As regards Deputy McCreevy's comments, it is preferable to manage change over a four or five year period rather than adopt the "Big Bang" approach because there would be unforeseen circumstances in such an approach. It may not be amenable to correction once we have gone into it in that way. As to the reasons for present discontent and concern over taxation, which the Deputy accurately described, I suggest many people in the private sector have not got the benefits of the Programme for Competitiveness and Work, which provided for a series of percentages, approximately 8.5 per cent, over its duration. In the estimation of many in the private sector, they were lucky to hold onto their jobs. Those who have held onto their jobs have had to work harder, do more things or work in a different pattern than was previously the case because of the process of change being imposed on companies by outside competition.
Many Members will have attended presentations of ISO 9000 and 1900 certificates to companies in their constituencies. It will come as a surprise to most people in the public sector that all of those upgradings of standards and performance did not involve a single increase in payment. The changes in performance, practices and quality to which that process relates were negotiated by companies with their work-forces on the clear understanding that if the companies, including the work-forces, did not adapt to new standards they would lose business and possibly employment. A multinational may only take supplies from companies which meet these standards. For example, a company supplying the electronics industry must reach these standards and its workforce must co-operate in reaching it.
While I do not want to comment adversely on negotiations, which are at a delicate stage at present, changes in the public service, including improving output, are seen as things which must be bought as distinct from negotiated. To answer or to add to Deputy McCreevy's observation, there has been a difference in performance in the private sector. Some people have been lucky to keep their jobs, while others are doing very well because labour shortages are emerging in some areas of the private sector and employers are paying over the odds; but that is in the nature of individual companies and the way in which they are prepared to respond.
Taxation will be high on the agenda of the negotiators from the social partners in the next programme, not only on the trade union side but also on that of employers. For employers to maintain competitiveness, they will not be able to increase their nominal wage roll costs, and the only way they can address the legitimate demands of people working in those companies for extra money is through a guarantee of extra take home pay via tax cuts rather than extra take home pay via wage increases. In relation to the UK market, we are finding ourselves in an increasingly non-competitive position as regards wage roll costs, as Deputy McDowell and others stated.
The concept of this proposal is timely and it will not go away. We already received commitments regarding certain other aspects of multi-annual planning. Multi-annual budgeting will provide a background unavailable to previous Ministers for Finance who as a result could not engage in commitments on this scale. If the multi-annual budgeting process is put in place, the logic and discipline pertaining to it will carry through into the area of expenditure. Deputy McDowell stated that I am doing this wrong way round, but it is the starting point from which we must commence.
If we establish a multi-annual frame-work within which we can begin to address commitments on one side of the equation, it is logical that such commitments can be addressed on the other side of the equation. I have quite a different view with regard to rates and the process of establishment, but that is secondary to the concept. This concept will not go away and will be high on the agenda of negotiations for a future agreement, if there is to be one. I am not optimistic in this regard, for the reasons to which Deputy McCreevy and others referred.
Acting Chairman
Is the amendment being pressed?
Yes.
Acting Chairman
I am putting the question: "That the amendment be made".
Question put.
Acting Chairman
I think the question is lost. Would Members wishing to have their dissent from this decision recorded in the official proceedings of the committee please raise their hands?
Deputies Noel Ahern, McCreevy, Michael McDowell and O’Hanlon dissented.
Amendment declared lost.
Section 2 agreed to.