Dáil Éireann debate -
Thursday, 10 Feb 1994

Vol. 438 No. 6

Financial Resolutions, 1994. - Financial Resolution No. 8: General (Resumed).

Debate resumed on the following motion:

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.

—(Minister for Finance.)

Mr. Flood

I wish to share my time with Deputy O'Hanlon. I warmly welcome the 1994 budget which has a great number of positive features. First, it addresses the question of tax reform which is of interest to us all, develops our caring social policy — increased funding is to be made available in this area — and promotes employment creation.

Prior to Question Time I listened to the contribution by Deputy Michael McDowell and I was surprised by some of his comments. He argued vehemently that the Progressive Democrats never favoured the introduction of a property tax. The Leader of that party, Deputy Harney, my constituency colleague, made this point repeatedly on radio in recent days but if one scrutinises the record it shows otherwise.

In 1987, at its party conference the Progressive Democrats voted in favour of a tax on what it described as "all real property" as a method of funding local government. Deputy Harney who was a Front Bench spokesperson for the party at that time must surely be aware of this.

On 11 February 1988, the then Leader of the Progressive Democrats, Deputy O'Malley stated in this House: "Our party are committed to a comprehensive property tax on buildings and land". He went on to refer to its detailed property tax proposals. To my mind "buildings" include the family home. It was argued trenchantly at the 1987 Progressive Democrats' conference that a tax on property would catch everyone, including those involved in the black economy. The Sunday Tribune of 11 October 1987 stated: “everyone has to have a place to live”. It was clear, therefore, that its proposal of a tax on property extended to the family home.

In its policy document entitled "Employment, Enterprise and Taxation" published in November 1988 the Progressive Democrats proposed, on page 46, that £125 million be raised by way of a local property charge. It stated: "More often than not, the greater the value of such a house the more likely is one's ability to pay". It went on to state that the actual amount to be collected from each household would reflect "the basic value of all services consumed by such households and also the value of the property concerned". I could not describe that as anything other than a property tax. Therefore, in relation to the statements by Deputy McDowell and the Leader of the Progressive Democrats, Deputy Harney, there is a need for clarification and an explanation. We would be delighted to receive it in view of their forceful participation in the debate on the issue of the property tax.

I welcome in particular the initiatives in the budget to promote job creation. It has been estimated that there will be a growth rate of between 4 per cent and 5 per cent this year. If that is the case it should lead to the creation of up to 21,000 net new jobs. We have, possibly for the first time, a Government which has recognised the capacity of small and medium-sized businesses to create new jobs. Having regard to the various measures in the budget, by the end of this year these businesses will have created a considerable number of new jobs.

The reduction in employers' PRSI from 12.2 per cent to 9 per cent in respect of those earning less than £9,000 per annum marks a major step forward. Despite the criticism by the Opposition parties the organisations representing the clothing and footwear industries in particular have been very positive in their comments and have made it clear that employment costs in those industries were simply too high.

This reduction in PRSI should not be taken in isolation. Having regard to the rescheduling of telephone charges, small businesses, particularly those which are export orientated, have made considerable savings in recent months. This has led to a reduction in costs for industries with high employment levels and which face keen foreign competition in marketing their goods and services. In addition, the Government has decided to simplify the documentation that has to be submitted by small businesses to the Revenue Commissioners and other State organisations. This is to be welcomed because for far too long those involved in small businesses spent too much of their valuable time dealing with unnecessary paper work. I am glad the Minister for Finance has presented this proposal.

The challenge that small and medium-sized businesses now face is to create the jobs they said they would if costs were reduced in the budget. We hope by the end of this year there will have been a considerable increase in employment in this sector.

I am particularly pleased that the question of the debts of the health boards and hospitals has been addressed in a forceful fashion. This matter is of great significance to the suppliers of goods and services, many of whom can ill afford to wait for payment of moneys due to them by these establishments. Now the slate will be cleaned and the onus will rest with health boards and hospitals not to again get heavily into debt by overspending their budgets with resultant failure on their part to meet their legitimate commitment to their suppliers. Small businesses have been under tremendous pressure and some have gone out of business through not being paid on time. This issue has been addressed by the Minister of State, Deputy Séamus Brennan, who is anxious to ensure that payments are made to suppliers by statutory organisations within a specified period of time. A further way in which the Minister can make a contribution to the development of small businesses and the well-being of existing businesses would be to give the right to suppliers of goods and services in these circumstances to levy a penalty in the event of late payment as happens in regard to late payment to the Revenue Commissioners. This would be a considerable contribution to the development and well-being of small industries.

I welcome the recent conclusion of a new national programme by the Taoiseach, the Government and the social partners. As shown since 1987 the best way forward is by way of consensus, not confrontation. Through the excellent programmes begun in 1987 there has been a dramatic fall in the loss of work days through strikes and other interruptions to production. That has probably been the single most constructive contribution to the tremendous growth in exports, we have been able to show we can meet delivery deadlines, possibly for the first time, without serious interruption of supplies. That has been a most important contribution to the development of our exports which, it is hoped, will continue to thrust forward and thereby make a contribution towards the creation of employment.

I commend the Taoiseach's continued and relentless search for peace on this island. When achieved it will have a major impact on further development, socially and economically. Imagine the ease with which we will be able to sell this island as a whole in terms of economic production and tourism when it is shown that we have at last achieved peace. I urge the Taoiseach to continue his strong efforts to achieve the goal we all desire and for which the world waits.

One or two comments were made about specific aspects of the budget which I want to refute. The first was a dismissive comment by Deputy McDowell about the £5 million which is to be given to Croke Park for its further development. The GAA has made an enormous contribution to social development. Any Saturday or Sunday morning or weekend evening one sees hundreds of thousands of young people and adults productively engaged in sporting activities. That type of input from the GAA could not be purchased for any sum. Therefore, it is good to invest in the GAA and help it develop its headquarters to international standards because it is part of our heritage and history.

This year of the family is throwing up a number of difficulties. It is with great sadness that we note the two recent incidents of babies found in tragic circumstances. I am glad that additional moneys are being provided in the area of marriage counselling. However, moneys should be expended on pre-marriage counselling for young people, because I am concerned at the numbers who, for a variety of reasons, rush into marriage without making adequate preparation socially or economically. That is something we must address to try to ensure that young people understand their responsibilities if they decide to get married, particularly at an early age.

The budget concentrates on continuing to develop the climate for sound job creation and the social and caring aspect of recent Government policy. In that regard it should be commended to the House.

Dr. O'Hanlon

I thank my colleague, Deputy Flood, for sharing his time with me. I welcome this budget for a number of reasons. First, it maintains the financial discipline to which we have become accustomed, it brings about tax reform which will be beneficial to employers and employees like, it protects those who depend on social welfare for their income and provides extra funding for essential services and development.

On financial discipline, the Fianna Fáil Government of 1987 commenced a programme of restoring the finances of this State to a healthy position and I am glad that each year since then the Government has been successful in addressing that issue. This year the budget deficit will be less than 1 per cent, something on which we should compliment the Government. Interest and inflation rates are at an all time low and although the Government has done an excellent job in creating an environment in which jobs should be created, we are all disappointed that has not happened.

Tax reform is welcome. Again it is important to point out that in a country as small as ours where the tax base is also small it is a great achievement to be able to shift the burden of taxation towards the creation of employment and remove many of the tax penalties from the employers and employees. There are so many beneficial changes in the budget that I do not have time to mention them all. The removal of the 1 per cent levy is welcome and the improvement in the tax bands and the tax free allowances is worthwhile. Of particular importance is the reduction in PRSI, especially in the context of employers' liability. The farmers' organisations and the Irish Countrywomen's Association were concerned about aspects of the probate tax, the Minister took that into account and removed probate tax from the transfer of property from spouse to spouse, which will be generally welcomed.

The motor trade benefited from reductions in taxation. Capital taxes have been reduced and, of particular importance in my own constituency, the urban renewal programme was introduced. I am particularly pleased that Monaghan town has been included in that programme. During the short time I was Minister for the Environment I asked officials in the Department to go to Monaghan to look at a project suitable for urban renewal. I am glad the Government included Monaghan town in its first urban renewal programme since then.

We must all welcome the fact that the needs of those depending on social welfare payments are protected, with a 3 per cent increase for those on social welfare assistance and a 4 per cent increase for those on disability and unemployment benefits. There have been many other welcome improvements in that area. For example, when a husband in receipt of an old age pension and certain benefits dies his widow will now be entitled to retain those benefits, whereas formerly those entitlements were taken from her if she had not reached the age of 66 years. That is a very humane approach and I compliment the Ministers for Finance and Social Welfare for introducing that provision. The children's allowance will be increased and the regulations in respect of the carer's allowance have been amended. It will now be easier for people to receive that allowance. While I welcome the fact that the first £100 of income will be excluded, the Minister should examine the degree of incapacity of the person being cared for so that the people, mainly women, who care for those who are severely incapacitated might receive an allowance irrespective of income. Many carers are completely home-bound as a result of the incapacity of the person for whom they are caring and that must be recognised. They are making a great contribution, first, to the person needing care and, second, to the State.

In the context of the Social Welfare Bill, will the Minister for Social Welfare examine the contribution conditions for disability benefit? Some years ago a change was made whereby a person could no longer claim disability benefit if he or she only had credits in the contribution year. In other words, one would have to have worked for 13 weeks in the contribution year in order to qualify for disability benefit in the year in which one required benefit. For example, if a person had a serious heart complaint or had to undergo surgery in 1992-93, returned to work as soon as possible thereafter, but becomes ill this year he or she will be entitled to only £25 per week disability benefit. That anomaly should be addressed because people can become ill through no fault of their own. People should not be penalised for becoming ill in the year following the contribution year.

The creation of jobs is a major challenge for all of us. In the past I called on all State agencies, Departments of State, local authorities and health boards to focus on job creation and the maintenance of jobs. That is essential. We are all aware of cases where regulations are not implemented, or indeed are implemented too rigidly, leading to the loss of jobs or preventing the creation of new jobs. There must be a sense of urgency in the planning process and account must be taken of the job content and what people will do when they receive planning permission. The building of a wall at the back of one's house is job creation, as somebody must build the wall, make the blocks and so on. The planning authorities have a major role to play in the creation and retention of jobs. Departments of State and agencies should focus on job creation. It was brought to my notice recently that because of a delay in making a decision on the implementation of an EC directive by the Department of Agriculture, Food and Forestry and the Revenue Commissioners, a major contract for the export of beefburgers to South Africa was lost. That should not happen.

The county enterprise boards have been established and should be flexible in making decisions. We all know people with good ideas for starting up small industries or services, and county enterprise boards must take risks on their behalf. If a person has a worthwhile project which may create jobs, county enterprises boards should not look for gilt edge security from the person involved and in the process prevent him or her from proceeding. I look forward to seeing those boards taking risks and giving people encouragement and an opportunity to start up small industries or services which will create jobs. I also welcome the announcement of the community employment programme in the budget.

I want to refer now to some specific issues, one of which is of major importance in my constituency, namely, non-national roads. I welcome the Government's decision to provide an extra £15 million for those roads which is in addition to the £86.9 million announced in the Estimate. That is a total of £101.9 million, an increase of 36 per cent on the previous year. I am sure the Minister is aware of the particular difficulties in Counties Cavan and Monaghan, the many reasons for those difficulties, and that in allocating funds he will take account of them. During my time as Minister for the Environment I was pleased to substantially increase the allocation to both those counties and to introduce novel programmes such as the pilot scheme for county roads. Under that scheme the local community carry out work such as cutting hedges and cleaning drains to keep the water off the roads, and the councils carry out work on the hard core surface. That scheme has been very successful.

I hope the Minister for Finance and his officials will be conscious of the needs of Border areas in the context of the INTERREG programme which will be coming on stream shortly. I would be opposed to any proposal to disburse that money to maritime frontiers in Europe; in other words, areas along the coast of Ireland would benefit from the money. That would be acceptable if sufficient money is provided, but the allocation will be useless if it is diluted to the extent that areas do not benefit adequately from it. The INTERREG programme was originally established for Border areas and should be maintained for those areas until the roads, in particular, are developed to a standard similar to that in other parts of the country.

I welcome the Minister's decision to build 100 houses in my constituency. The farming community will be assisted in a number of ways by the budget proposals including those on capital and probate taxes and by the announcement that premiums which are so important, particularly for small farmers, will issue more promptly.

I welcome the Minister's decision to provide £5 million to the GAA for the development of Croke Park. I hope some Ministers will consider providing a contribution from available funds, particularly those for Border regions, towards the development of the GAA football pitch in Clones which has been designated as the main pitch for the nine counties of Ulster. An allocation should be made to develop those grounds.

Deputies from Border constituencies should recognise the great contribution made by the International Fund for Ireland to social and economic development and tourism in that area. That organisation's annual report is published today. I compliment William McCarter and the International Fund for Ireland for the good work they have done. I ask the Minister of State at the Department of Foreign Affairs, Deputy Kitt, to convey to the International Fund for Ireland and those countries who subscribe to it the appreciation of those living in the Border regions.

I compliment the Taoiseach and the Government on an excellent budget which will benefit the people of this country.

Miss de Valera

I wish to share my time with Deputy Foxe. I will concentrate on the social aspects of the budget. I acknowledge the special assistance to persons with disabilities and the handicapped. The provision of £500,000 through the Department of the Environment towards pilot projects aimed at improving access for people with disability, especially those in wheelchairs, to outdoor amenities and facilities is welcome and only underlines the importance of the full implementation of the recent EU directive on accessibility. The £100,000 provided through the Department of Health to assist voluntary organisations to improve transport arrangements, particularly by adapting vehicles, is an advance. However, access to such facilities as Telecom Éireann telephone boxes causes tremendous difficulty for those who have a physical handicap. This might seem a minor point but it constitutes a real difficulty for the disabled.

I note the allocation of £2 million for sheltered employment of people with disability in viable business projects, but I emphasise that there is a great need for sheltered workshops for the mentally handicapped. There is a need for such workshops in my constituency of County Clare, particularly in the Kilrush area. I am aware that the Minister for Health is doing all he can to support this necessary and worthwhile project. The provision of £100,000 through the Department of Education to allow the employment of escorts on school buses for handicapped children, in certain circumstances, will alleviate much stress.

The commitments in the budget to social housing should be highlighted. While there is a commitment to the allocation of a further £12 million for local authority housing, that allocation will provide only an additional 75 houses in my constituency. Obviously those 75 houses are welcome but they will not be sufficient to deal with the housing needs in County Clare. The provision of £4 million in 1994 for the installation of bathrooms in local authority houses will provide a fundamental facility. The remedial works programme is commendable and should have an immediate positive effect on the quality of local authority housing, particularly for our elderly.

I note there will be a 3 per cent increase in social welfare payments from July, which in effect will mean that payments will be kept just above the rate of inflation. Among the many payments involved is the increased rate for child benefit. The budget recognises widowers in that they will qualify for a contributory pension from October 1994 and from that date all new widowers and widows will qualify for pensions 12 months after widowhood without an earnings limit.

I am pleased that there have been improvements in the family income supplement scheme. The increase in benefit will mean on average an additional £6 per week for recipients. The increase in the eligibility limit by £10 will go someway towards alleviating the financial difficulties faced by many people.

I welcome the help this budget gives to women, not least under the welfare code by improvements and increases announced under the lone parent scheme which will encourage many women back into the workforce. Women of 60 and over whose husbands die at pensionable age will continue to benefit from certain free schemes provided they satisfy the other conditions of the scheme. The retention of those benefits by widows is a measure all Members will welcome. Through our clinics we have heard of the hardship suffered by a number of widows and I am glad this measure will alleviate some of that hardship.

The carer's allowance has been welcomed but much criticism has been levelled at it. That scheme has great potential but because of certain restrictions only a small number of people are in a position to benefit. I am glad that those restrictions have been recognised and that there will be a relaxation of the rules affecting assessment of income. This will be of benefit to carers — the majority of whom are women — whose spouses are employed.

In the educational sector the budget recognises and pledges to address issues of equal opportunity and disadvantage. This Department has received an 11 per cent increase compared with that for 1993. I am pleased the Minister has made a direct link between early school leavers and the long term unemployed. The Minister is acting on the priorities highlighted by the recent convention emphasising equity and access to qualifications. I welcome the provision for additional expenditure of £7 million in the educational area by the Minister for Finance. I was delighted with the Minister for Education's commitment to examine and produce a pre-school programme. The cost of school books will be addressed and an increase in funds for the book scheme will be forthcoming. The reduction in the pupil-teacher ratio will be welcomed by pupils, parents and teachers.

I am pleased with the commitment to an increase in remedial school teachers. Cloughleigh national school has campaigned for some time for a remedial teacher. The national schools of Cooraclare, Crec, Lacken, Clohanes and Liscannor have requested a shared remedial teacher. I hope the national schools of Ballybrohen, Cooraclare and Knockanane can now look forward to their projects being fully addressed and completed now that increases for the capital programme in the primary school sector have been approved. I am disappointed about the lack of reference to the need for psychological services in schools, particularly at primary school level. I have outlined on many occasions in this House the great necessity for such psychological services. I would like to see an increase in pilot studies for such schemes so that in the not too distant future every national school will be provided with such services.

I am pleased with the emphasis on the need for career guidance teachers. Due to the commitment by the Minister for Education there will be more career guidance teachers in our schools. These teachers are needed to help young people in choosing their careers and for counselling particularly at second level. The Minister's commitment to adult learning programmes is also encouraging and I welcome the increase in provision for the adult literacy scheme.

I wish to briefly refer to the agriculture sector as it is provided for in this budget. I am pleased that spouses will be fully exempt from probate tax and that 30 per cent relief will be provided for farmland and buildings. Both changes, designed to assist farmers and spouses, are retrospective to 18 June 1993. Many people in my constituency will be pleased with that measure. I welcome the improvement in capital acquisitions tax which includes a relief for livestock and machinery, thereby facilitating the transfer of lands.

I am sure that Members who represent rural constituencies will realise that delays in payment of headage and reactor grants cause great difficulty and hardship for many farmers. The farming community is very anxious that all headage entitlements be paid in the year in which farmers apply for them. This matter was discussed in the Programme for Economic and Social Progress negotiations. The question of the exemption from stamp duty on transfer of farms to young trained farmers needs immediate attention.

I welcome the increased funding for non-national roads in the National Development Plan and the provision of £86.9 million in the 1994 Estimates. The additional £15 million in the budget for road maintenance is to be welcomed. However, a greater amount of money is needed for non-national roads. This week I attended a meeting in north Clare where there is a lack of funding for this purpose. This is a serious matter, not only for those who live in the area but it also impacts negatively on tourism.

As regards arts and culture, I am aware of a very active group, led by Frank Whelan and others, in my constituency who hope to receive from the Minister for Arts, Culture and the Gaeltacht, Deputy Higgins, funding for archives for Comhaltas Ceoltóirí Éireann. This work would be done voluntarily. Not only should we support our national sports but the Minister, I hope, will also demonstrate his interest in our national musical traditions by supporting a worthwhile project such as this.

The budget has contributed in many ways to improving the lives of people in my constituency and throughout the country.

Mr. T. Foxe

I thank my independent colleague, Deputy de Valera, for agreeing to share her time with me. There are many commendable — and undesirable — aspects to this budget. I welcome the extra relief in terms of capital acquisitions tax and the extra farm relief for livestock and machinery. I also welcome the exemption for spouses from probate tax. We must bear in mind that this tax was introduced only 12 months ago. Apparently the Government realised the folly of this proposal and has brought about a change in the tax in this budget. I hope the Minister for Finance will go one step further next year and abolish probate tax.

I am pleased that £9.5 million has been allocated to Teagasc, £5.5 million of which will be directed towards rationalisation and research. People may say that a small country should not waste valuable funds on research. However, if we do not carry out research, we will have to rely on other countries to do so and, bearing in mind that we are in competition with those countries in the marketplace, they will not give us up-to-date information. We have a noble record in research, in animal and plant breeding, machinery design and disease prevention and it would be regrettable if research was allowed to flounder due to lack of funds. I welcome the provision of £5.5 million in the budget for this purpose.

Of the £9.5 million provided for Teagasc, £2 million has been earmarked for a free advisory service to small farmers. In the region of 14,000 farmers benefited from this measure last year. At a time of high unemployment, scarce resources and cutbacks in agricultural production, it is desirable that such a service be provided to small farmers free of charge. There is much talk about preserving rural Ireland and keeping people in the countryside. This is one way to ensure that people remain on the land. I welcome the £2 million for the administration of schemes. In the past, farmers had to wait six, eight or nine months to benefit from certain headage and premia payments. I hope, with the provision of this extra money, the backlogs will be eliminated.

I am pleased that £10 million has been provided to help to eliminate hospital waiting lists. Last year £20 million was provided in this area, thereby relieving much suffering. A sum of £20 million should have been provided again this year, with a portion going towards dental care, an aspect of our health service which has been neglected. There are regulations whereby some children, irrespective of the state of decay of their teeth, will not receive attention until they move to another class. Such dreadful regulations should be done away with.

I welcome the allocation of £100 million to the eight health boards. The fact that this funding comes from the tax amnesty will not bother the chief executive officers very much. It is dreadful to think that many businesses refused to do business with health boards because, due to a lack of funding, they had not paid their bills for perhaps up to 12 months. This did not give our health service a very good image. Hopefully the allocation of £100 million will go a long way towards easing the problems of the health boards.

I am delighted that a sum of £5 million has been earmarked for a building fund for second level schools. Unfortunately, there has been no increase in funding for the building and upkeep of national schools, the most important of our educational centres. National schools are more important than second level schools and third level institutions in that all pupils attend national schools but not all pupils finish second level education or go on to third level education. We are told that parents have the greatest influence on young children. If that is the case then national schools come in a very close second. I would welcome the allocation of funding for the upkeep of national schools, some of which are in an excellent condition but more of which are in a dreadful condition and have been described by the health boards as unsuitable for the education of young children.

I welcome the increased allocation of £3 million for sport and recreational facilities and the allocation of £5 million to Croke Park. Any moneys spent on sport are exceedingly well spent and will be recouped many times over in a reduced demand on our health services. Years ago the Romans used to say mens sana in corpore sano, a healthy mind in a healthy body. If we adopt a similar approach we will have a much healthier nation and there will be a reduced reliance on our health services.

In this context I want to refer to the scheme introduced in late 1992 early 1993 by the Minister of State at the Department of Education, Deputy Aylward, under which all boxing clubs received a grant of up to £1,000 for the purchase of equipment. This scheme was extremely well implemented — not one penny of the funds went astray. Perhaps the Minister would reconsider the introduction of a similar scheme this year. The Olympic Games will take place in just over two years time and if one is to go on tradition we will have to rely on our boxers to come up trumps so far as the winning of medals is concerned.

I welcome the provision of £2 million for sheltered employment for the disabled. Since the advent of national lottery, funding for such organisations has been very hard to come by. The traditional ways of raising funds such as running lotteries and selling tickets are no longer open to such groups — the money they used to get is now being taken up by the national lottery. Any funding allocated by the Minister to this very worthy group of people is very welcome.

The allocation of £10 million for the vocational training opportunity schemes is very welcome. It is estimated that this allocation will benefit up to 2,500 people. The people most affected by these schemes are the long term unemployed and anything which can be done to benefit them is most welcome and very desirable.

Debate adjourned.