I am sorry. I was just about to explain that. Perhaps before making my political point I should have developed the figures further in explanation. We faced this deficit of £20 million and we faced a number of election commitments, one of which for technical reasons was the most urgent, that relating to the rates. In order to fulfil that commitment we had to find, in addition to provision made by the previous Government in regard to the normal rise in the health charges and in housing subsidies, for which extra provision had been made, £12½ million. What we did was to prune the Estimate before us by £12½ million so that we were able to deal with this problem of the rates in such a way as not to worsen the £20 million deficit the previous Government had left to us. I think that perhaps because of the two figures of £12½ million—our pruning of the £12½ million, and the partly but not entirely coincidental £12½ million increase in the cost of our rates commitment—there has been some confusion. Therefore, we faced a deficit of £20 million when we took over, not a surplus of £30 million, as Fianna Fáil election speeches had indicated. We faced a situation £50 million worse than we had been led to believe.
Despite this, not only did we do what we had promised to do but we did 20 other good things as well over and above those points set out in our manifesto, the things we had committed ourselves to, in addition to the rates provision, which is almost forgotten. What people should be reminded of is, that the rates would have risen by amounts, depending on the particular area, of around £1 per week, whereas, in fact, the rates have either risen very little or, as in most instances, have fallen, by 29p in the case of Dublin. For the average small dwelling with a valuation of £20 to £25, the typical house in which rate-payers live, this has meant a saving for them of the order of at least 50p per week and in the case of somewhat larger houses, obviously, pro rata above that figure. Their purchasing power is increased by that amount as a result of rates remission. This is something which perhaps they are not aware of, because what we have done is largely to prevent an increase that would have taken place under the provisions of the previous Government.
Then we promised to increase the basic social welfare rates by £1 per week, which is an increase of 20 per cent on the basic rate prevailing hitherto, for example the rate of £5.15 in the case of the old age pension. That we have done. We promised to start reducing the age at which the old age pension is payable. That we have done, reducing it to 69 years. We promised to start the process of alleviating the means test. That we have done quite dramatically, and again I am not sure people realise how dramatically. To take an example, a man who previously had private means of £4 a week would have been reduced to an old age pension of £1.90 and would have had to live on total income of £5.90. Now under our provisions he is in a position where, in addition to his £4 per week, he gets the full old age pension of £6.15, so his income has been raised from £5.90 to £10.15, as a result of this alleviation of the means test, a virtual doubling of income in that instance.
Again, whereas previously no one with an income of more than about £5 per week could get any old age pension, now up to £9.50 the old age pension is payable. People up to £500 a year are able to get some benefit from the old age pension, whereas previously if they had half that figure they were cut out and got no benefit whatever. That is a very substantial alleviation of the means test, one which in some instances almost doubles the total income of the people concerned. That commitment we entered into; that commitment we have fulfilled. Let us recall that until this budget, any means whatever, no matter how small, even if the amount was only a few shillings in the year, was sufficient to reduce a person's pension. Now, unless a person has over £200 a year or £4 a week, there is no reduction whatever.
We also said we would increase the children's allowance by £1.50 per child, which in the case of the first child, involves quadrupling the existing allowance and, depending upon the child's place in the family, involves increases ranging from 100 per cent to, at the lowest, about 70 per cent. There has been some misunderstanding about one aspect of this. We felt it right not to extend the full benefit of this to the people in the higher income groups. Needing, as we did, money for many social purposes, we thought it was wrong that we should spend money by giving £2 million a year, as it would have been, to people with incomes running into a number of thousands a year who had less need of it, clearly, than those living at the poverty level. Therefore, we decided to make an adjustment to the income tax child allowance.
This has been misinterpreted. There are people who believe that in some way this provision is going to take back some of the existing children's allowances. This is not the case. In fact, everyone is at least 50p per child better off as a result of this budget. No one loses anything. Everybody gets some small sum of money and it is only those with incomes probably of £3,000 and upwards who will fail to get the full benefit of the increased children's allowances, because the provision that the income tax child allowance would be reduced in order to recover the greater part, but not all, of the increase in the children's allowance which we propose to pay, is one which relates to people who, after deducting superannuation contributions, health charges over £50, bank interest, mortgage interest, have incomes in excess of £2,500. In practice the majority of people with children who have incomes in the £2,500-£3,000 bracket will be making contributions to superannuation of at least 5 per cent or 7 per cent. In many instances they will have health expenditure sometimes over £50, will have mortgage interest payments, and in many cases will have bank interest payments and overdrafts.
Let us take the instance of a man earning £3,000 a year, who is paying a 5 per cent superannuation contribution and who has a house mortgage loan of £3,500—at the present time this amount is no more than a fraction of the cost of a house. Such a man would benefit from the full children's allowance and none of the increase would be removed. This is an important point and I hope it will be taken up. I do not think it is properly understood; in fact, some people think they will be less well off, but this is not the case. Everyone will be better off with the children's allowances and anyone with £3,000 per year will get the full benefit without any reduction of the increased children's allowances.
In addition to fulfilling the obligations to which we committed ourselves in our manifesto, we have done many other things which, when accumulated, add up to a social welfare budget, a budget of social progress of which any government in the world could be proud. This budget has concentrated on the problems of the weaker sections of the community; of families, above all one-parent families, in the social welfare bracket, of poor people, deserted wives and unmarried mothers.
Let us take some examples. Had we extended to the child dependant in the social welfare code the same pro rata percentage increase as that given in the basic allowance, we would have been giving 25p per child, in proportion to the £1 per week given in the basic allowance. However, we doubled that and increased the children's allowance by 40 per cent, namely, by 50p. In the case of one-parent families, a further 15p is given. The result is that a deserted wife with five children—in my constituency I have come across a number of such cases—will find her social welfare payments have increased from £13.90 to £19.90.
Under another provision that has only become apparent in the detailed setting out of these benefits by the Tánaiste today, if the deserted wife is working for her living—as many are forced to do—if there is a question of a social welfare payment she will get the benefit, as a widow will do, of no longer having to make that contribution and she will be £1 per week better off on that account. A deserted wife with five children is better off to the extent of £6 per week, and if she is working she will be £7 better off as a result of this budget. That is a dramatic increase of the order of 50 per cent per income and is something of which this Government can be proud.
We made no promise or commitment to extend the children's allowance beyond the age of 16 years because, in our caution in Opposition and not being sure of the position, we committed ourselves only to those things of which we could be certain. In fact, we have extended the allowance to 18 years in respect of any child who is in full-time education, who is apprenticed, or is incapacitated. This is a long overdue reform because the child allowance in the income tax code—which is available only to those sufficiently well off to pay income tax—is extended beyond the age of 16. In my view it was socially unjust to make such a distinction, not to give the children's allowance to families where the children were continuing in education, in apprenticeship or were incapacitated. I am very glad this reform was undertaken because I have felt very strongly about it for some time.
Not merely have we reduced the age at which the old age pension is paid, we have extended the free television licence, travel and electricity provisions to people aged 69 years. We did not commit ourselves to this in our pre-election statement but we have made this provision in the budget. We promised to move towards eliminating the means test for old age pensioners but, in fact, we have done this also for widows and deserted wives. With regard to disabled people, there is a means test under which the means of relatives are taken into account in determining the disabled person's allowance. This means test is being discontinued; again, this is something we did not promise in our pre-election statement.
Prior to the election we did not make any specific references to the question of home care or domiciliary welfare but in the budget we have provided £1 million per year to give additional funds to voluntary bodies undertaking services like meals on wheels. This sum is also for the purpose of employing professional social workers to provide the services that are necessary socially, and which will be economically advantageous by minimising the pressure on institutions, many of which have people who could have remained at home and who would have preferred to do so had there been provision made for them. For this purpose trained social workers will be employed—workers against whom the former Government seemed to have had some unaccountable bias. There was an extraordinary failure to employ the numbers of trained social workers becoming available from courses carried on in our universities and many of them had to emigrate. In the last ten years many of these workers had to emigrate to Northern Ireland or to Britain but now at last they are being given a chance to do good work in their own part of the country.
Although we did not make a promise about a constant attendance allowance for young people up to the age of 16 who are completly handicapped, that is now being given at a cost of almost £1 million per year, and without a means test. Apparently this was something the previous Government did not contemplate. This provision is made on the recommendation of the Council on Mental Health.
We listened to the recommendations of groups such as the CARE group who are concerned with the problems of deprived children. Deputies in my party and the Labour Party, with Fianna Fáil Deputies, met representatives of CARE in this House not long before the election and listened to what they had to say. The meeting was attended by a high proportion of Deputies and Senators and, as a result of that meeting and the many contacts which Deputies on this side of the House have had with CARE since its establishment, we decided that the recommendations made should be implemented and that a child welfare service should be provided. This involves the training of child welfare officers, the employment of social work supervisors, the provision of community centres, play groups and youth facilities. A beginning has been made in this area by way of the provision in the budget. We must pay tribute to the work done by CARE and the other voluntary groups who drew the attention of Deputies to particular social problems and thus ensured that they were tackled.
Under the previous Government an unmarried mother who kept her child got the magnificent sum of 12p per week for the purpose. She could get home assistance but all she was entitled to as of right was 12p weekly —that is, 50p per month for the first child under the children's allowance scheme. We have remedied that situation. If such a mother decides to keep her child—and it is only proper that a mother should be able to to do so if she wishes—she will have just under £8 a week as against 12p a week under the previous Government.
In the case of deserted wives, as well as vastly increasing the benefits—in many cases they will be up 50 per cent better off—we have also eased the conditions on which these benefits are paid which were unduly rigid, stringent, harsh and, indeed, humiliating. As well as that, we have eliminated the absured provision which the previous Government insisted on so meticulously, that any deserted wife divorced by her husband in England should thereby cease to benefit as a deserted wife in this country from our social welfare provisions. That was the recognition in this country of divorce in a most peculiar way: the only recognition divorce had here was to deprive deserted wives of the benefits they were entitled to if their husbands went to Britain and divorced them, with or without telling them they were doing so. It was something which was raised frequently in this House and we had Deputy Joe Brennan, as Minister for Labour and Social Welfare, stonewalling us, telling us it could not be done. The cost of doing it is minimal, the cases are very few, it can be done, there is no legal problem whatever, as we discovered when we got in. It was just the obstinacy of the previous Government which was responsible for not effecting this simple, inexpensive social reform in the cause of social justice.
We have also implemented a number of the recommendations in the report on the status of women. The provisions under which women in domestic service and agriculture had special eligibility clauses which prevented them from benefiting and the 10 year rule in the matter of their contributions have been removed and they are put on an equal footing with other social welfare insurance beneficiaries. There is also the provision in regard to women's entitlement to benefits after marriage. The condition forcing them to re-entitle themselves and denying them the right to carry forward the entitlement they had earned by their contributions before marriage has been reformed by this Government.
Again, in regard to the whole system of social insurance, we have decided that it is wrong that the burden should be more or less equally shared between employer and worker, something which is not the practice in the EEC countries on the Continent. This is part of the code under which a greater share of the burden will be carried by the employer. The employer here is being helped to carry the additional burden by virtue of the fact that he will benefit substantially from the rates remission provision. The benefits he will get under that will enable him to recoup the larger share he will have to pay towards the social insurance stamp. This, again, is a reform in the interests of the weaker sections of the community at the expense of the stronger sections, part of the Robin Hood element of this budget which Deputy Haughey so conspicuously failed to notice in his analysis of its provision.
These are some, by no means all, of the social welfare provisions of this Government which have not, perhaps, attracted sufficient interest so far. In working on this budget, may I say personally the deep pleasure it has given me to have been associated with those reforms? It has been worth while to have spent eight years in Opposition waiting for the opportunity to get into office to do the things that the previous Government refused to do, things which they could have done, in some cases inexpensive things which did not require much money but which, in the conditions in which they found themselves at the end of 16 years in office, they could not bring themselves to do because their advisers advised against them and they were not prepared to overrule their advisers. To have been able to contribute to this and to be able, with a clear conscience, to say that we after a couple of months in office have done something really worthwhile towards social progress in this country, justifies the efforts of many years—I have been a much shorter time in Opposition than many of the others who spent the full 16 years in Opposition—and gives one a sense of pride at having survived that debilitating period in such good shape as to be able to come into Government and replace with vigour a Government which had failed in the closing years of their period in office to do their duty by the country, and to have been able to show the kind of reforms that could be carried through by a Government determined to push through their reforms and not to be frustrated by any opposition or by any obstacles.
We have also carried out other reforms that we had promised. The VAT on food has been removed. We listened to some nonsensical arguments on this. Deputy Colley, in particular, seems to have a genius for finding nonsensical arguments on the subject, though I must say Deputy Lynch came close to him with his concern for two items of the household budget—why he picked on these I could not fathom, but he seemed to think they were of extreme importance—bandages for cut fingers and football boots.
On this side of the House we are much more concerned with the food our people must buy every day of the week than with the pair of football boots bought a couple of times in the lifetime of a child or the small expenditure on bandages for cuts. The Fianna Fáil attitude to the removal of VAT from food has been very typical of attitudes of Governments at the end of a long period in office.
The social advantage of removing VAT from food is self-evident to everybody in the country except, apparently, Fianna Fáil. I think that, perhaps, many of them saw it but they went to their advisers, their advisers said no, that it would complicate the position, it would mean an additional rate of VAT very difficult to administer. There was a moment last summer when Deputy Colley, then Minister for Finance, showed himself interested in making this reform. He told us in the Special Committee that he would be interested in carrying it through if we could show him how it could be done, but he came back a week later, having been brain-washed by his advisers, and told us it could not be done. He then produced arguments one of which was that the removal of VAT from food would mean cheaper caviar, as if this was a serious objection to it. The fact that he introduced such a level of triviality into his arguments showed how bankrupt of argument he was. It showed that he had to accept the advice offered to him because the Government at that stage of their career were no longer capable of thinking for themselves and Deputy Colley had to invent whatever extraordinary arguments entered his head to cover up the fact that he was simply doing what he had been told by his advisers.
We in this Government believe that arguments of administrative inconvenience, while certainly to be considered, especially if they carry implications of cost, are not the determining factors in matters of social policy. Although naturally we received the same advice as the previous Government got about administrative complications, we took our own decisions rather than accepting the decisions offered to us by advisers. That is what a Government are for. It is right that the advisers to any Government should advise it about the difficulties and problems of any proposal the Government might make. That is their function. It is right that the Government should consider these seriously and, having considered them, should then take their decision in the light of the overall social, political and economic considerations. We took our responsibilities in this matter where the previous Government failed to take their responsibilities. To attempt to cover up the weakness and the bankruptcy of ideas of the previous Government by talking about caviar, football boots and bandages for cut fingers does not cut any ice. One has only to quote the speeches of Deputies Colley and Lynch outside this House to produce hilarity and laughter on the part of anybody they are put to. Any Opposition which are reduced to putting arguments which are so absurd as to make people laugh should look again at their methods of opposition.
Let us be clear on this. Families living on old age pensions spend 40 per cent of their incomes on food. If one can reduce the cost of that by 5 per cent while increasing the other 60 per cent by a much smaller proportion, one succeeds in shifting the burden of the cost from poorer families to richer families who spend only 20 per cent of their incomes on food and a proportion of their incomes on cars, yachts and so on, at a very high tax rate—Deputy Haughey referred to it as 36 per cent. Of course they will pay more. That is the whole purpose of the exercise. This is part of the "Robin Hood element" in the budget which Deputy Haughey has so notably failed to detect in his analysis of the budget and its provisions.
Deputy Haughey suggested that this would have to be rectified. There is a kind of threat there that if and when —and it is "if and when"—Fianna Fáil returned to power, the 5 per cent would go back on food. Those are the words Deputy Haughey used on behalf of his party, this removal of VAT off food "would have to be rectified". I hope those words will appear in the newspapers tomorrow morning and in the radio commentaries tonight so that the people will know where Fianna Fáil stand in this matter and the intentions of Fianna Fáil, should that party return to power. It is their intention to reintroduce that 5 per cent tax on food. That is the proposal and attitude of the Fianna Fáil Party and I am glad it has been put on the record of this House and I hope that record will be promulgated throughout the country.
I come now to the estate duties concessions. In this regard Deputy Haughey did say that the Minister for Finance in his budget speech had said merely that he would give consideration to the abolition of estate duty, implying in some way that he was going back on the commitment entered into in the manifesto issued by the National Coalition. I quote from the Minister's speech:
The Government before taking office undertook to abolish estate duty and to replace it with a new form of taxation of capital. This commitment will be honoured.
The Minister then went on to say that this would require detailed consideration and consultation because some of the interests concerned who are anxious to have this changeover have, even since our election to Government, asked us to be consulted. Some of them had asked us beforehand to consult them on this matter, and clearly any shift of taxation of this kind in the sensitive areas is one that requires consultation. It is necessary that this consultation should take place. This will be done by publishing the White Paper which will set out proposals arrived at after further consideration of the views put to us. That White Paper will then be commented on by the various interested groups and then our proposals for the new system of taxation of capital will be formulated. This is designed to replace the estate duties.
Recognising that this could not be done in this budget, and nobody ever thought that it could in view of the complexity of it, but that the estate duty problem had reached serious dimensions, we did in the budget do what we had not in fact promised to do. We went beyond our promises in this respect. We made concessions in regard to estate duty by increasing the exemption limit from £7,500 to £10,000, by doubling the abatements, by arranging for the first £7,500 of life insurance benefits to be exempted, by increasing the artificial valuation of land so that net valuations of up to £3,000 rather than £2,000 would be exempt. All these concessions were made although none had been promised. All we promised to do was as soon as practicable, to replace estate duty by another tax. We have gone beyond this to alleviate estate duty in the meantime, something which we did not commit ourselves to and which goes beyond the commitments we entered into during the campaign. Here, as elsewhere, we have done more than we promised and in no case have we done less.
