Dáil Éireann debate -
Thursday, 9 Feb 1995

Vol. 448 No. 8

Financial Resolution, 1995. - Financial Resolution No. 4: 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.

—(The Taoiseach.)

Mr. Martin

Before the debate was adjourned I referred to the abolition of fees for third level education and financial provision for third level institutions in the future. I referred to what happened to local authorities following the abolition of rates and expressed the hope that the same would not happen in respect of third level institutions. Rates were abolished in 1977 and Governments promised they would make up the loss in revenue to the local authorities each year by means of an index linked block grant and that, therefore, local authorities would not lose out as a result of their revenue base being taken from them. That was successful from about 1977 to 1983. Since then successive Governments, irrespective of party political colour, have not fulfilled their commitments to local authorities and block grants, taking inflation into account, were substantially reduced in subsequent years with the result that most local authorities are in dire financial straits and are finding it extremely difficult to make ends meet. There is a danger that the same could happen in respect of colleges which provide post leaving certificate courses, universities and third level institutions in general if the Government does not give a cast iron commitment and guarantee that, in line with inflation, it will adequately finance third level institutions to the end of the century.

As we are about to take away the independent revenue base enjoyed by third level institutions through the payment of fees, it is important that they are provided with an equivalent sum of money in the form of index linked block grants from Governments in future years. Anybody who knows anything about third level institutions will accept it is crucial that, as a minimum, they should be guaranteed their present level of funding, which they would argue is inadequate.

Who knows what will happen in four or five years time. If a Government is in financial crisis, it may penalise third level institutions by asking them do with less money. Most third level institutions are devoid of many facilities, equipment, books and so on. There is hardly a third level institution with an adequate supply of library books. The book fund alone for UCD this year is approximately £20,000. That is hopelessly inadequate in terms of a modern university trying to provide library facilities for thousands of students.

Many colleges providing post leaving certificate courses envolved from second level status and have been very innovative in developing a range of new courses in fashion design, horticulture, auctioneering, estate management and so on, at local level. They are market related and provide wonderful opportunities for young people who may not secure a place in a regional technical college or university. Abolishing fees for such students is a con job because their fundamental requirement is maintenance. More important, such colleges and vocational education committees urgently require capital for equipment, additional places and facilities. They evolved from a second level infrastructure and have had a rapid increase in student numbers, but do not have the facilities or equipment to meet that increase. There are now 17,500 students participating in post leaving certificate courses.

Many of the computers used in Cork colleges are obsolete. Those colleges require capital for the necessary equipment to bring their courses up to date and in line with those provided in private colleges. I welcome the provision to extend tax relief to students attending private colleges because many of them attend them because of a lack of places in other colleges. The question of how one should substitute the revenue base that will be lost to third level institutions by this provision is critical in terms of future third level education.

Many students and parents will welcome the abolition of fees. As I said last night, I was a victim of the higher education grant scheme. I am sure no Member would argue that the existing scheme is not inequitable. I was employed as a bus driver on an average wage, but because of overtime and so on I did not qualify for grant assistance and there were many more in that category.

The de Buitléir report suggested a progressive and gradual approach to deal with that issue in terms of substantially increasing the means test thresholds, bringing in marginal relief and ensuring an appeal system. If we increase the thresholds substantially there will be benefits for the middle income groups. While I accept that fees have been abolished it is important that third level education and the other sectors of education are adequately provided for. In providing additional places at third level the Minister has not dealt with that issue. There appears to be no strategic plan by the Government or the Department of Education for the expected numbers who will attend third level in the years ahead.

Some people have argued that the universities are exaggerating the numbers who will seek to attend third level in the years ahead. However, the statistics of the Department of Education bear out the reality that thousands of additional students will enrol in future. The Department estimates that an additional 48,000 students will be attending third level by 2005. Where will they get places? How can we have free access to third level education if we do not have the physical places to absorb those who wish to attend?

The Minister drew an analogy between the Donogh O'Malley announcement on free second level education in the mid-60s and hers and made the point that participation increased in the years following the Donogh O'Malley announcement by 84,000 students. The Minister did not draw the logical conclusion from that point. How in the name of God will we be in a position to absorb an extra 84,000 students in the next three or four years? Everyone knows the answer. We will not be in a position to absorb 20,000 students in the next two or three years. In this budget the Minister has made provision for only 2,000 extra third level places at regional technical college level. The Minister will have some assistance in the next year or two because of the introduction of the transitional programme at second level because there will be a fall off in one year. When that evens out there will be real problems by 1998-99. There is no indication from the Minister's contribution or from Question Time that any serious effort is being made to dramatically increase places at all third level institutions and to give extra funding to the colleges involved, the regional technical colleges and the universities, to enable them to provide the additional places.

It has been argued that the capital grant assistance per student at third level has been reduced dramatically during the past ten years. Nobody can dispute the dramatic progress at third level colleges. I am concerned that we do not have an indication of how we will absorb the increasing numbers. I am not making this up: the Minister commissioned the steering committee on third level education under the Higher Education Authority to produce a report, which was published last week indicating that we are facing real challenges up to the end of the century in terms of absorbing additional places. It also agrees that the participation rate at third level will increase dramatically. To the increased participation rates from second level one has to add mature students whose numbers are increasing dramatically, and part-time students, who also require assistance with fees, maintenance and so on. Where there are limited resources it is important that they are targeted in the most equitable manner to help as many people as possible but particularly those in the lower socio-economic groupings. I am not sure the Minister has done this in the budget. There has been a lopsided approach giving too much to one sector and not adequately catering for a number of other sectors such as pre-school, primary, the PLC sector and the post-graduate students.

The Higher Education Authority report states there will be a capital requirement to the end of the century of the order of £390 million. The only capital provision from Structural Funds is of the order of £120 million and that is earmarked for third level institutions. The Minister has not said from where she will get the remainder of that income, we are taking away certain revenue bases and not replacing them. That begs the question whether we genuinely have a policy in relation to future third level expansion. I fear we are looking at short term electoral politics. Essentially, the Minister is looking beyond the lifetime of this Government and is saying these policies will get her to the next election. We can worry about additional places or we can let some other Minister worry about future third level education and the need to provide places, facilities, equipment and so on. Some other person will be left with that headache, and believe me it will be a headache.

The Minister referred to provision for in-service training. I did not receive a complete reply to a question I asked last week in regard to the lack of planning concerning that announcement. I would appreciate if the Minister has confirmed that she intends to provide in-service training for her programme on relationships and sexuality. Teachers have clearly indicated that they require comprehensive in-service training for this programme. The Minister made the announcement more than two weeks ago yet the schools did not receive the circulars until two weeks later and they did not receive the draft guidelines. There is considerable concern and anxiety among parents and teachers. Teachers want to know if there is financial provision in the budget for that programme and if financial provision will be made for in-service training for the parents. Representatives of parents' councils made it clear to me that they want to be involved not only in a consultative role at local level but they need training. The Minister has not clarified that issue. When she made her announcement I was under the impression that it would be provided but in subsequent answers to Dáil questions it was unclear whether financial provision would be made available.

I welcome a number of measures in the budget, particularly the provision of extra psychologists at primary level, the provision of extra career guidance teachers at second level and the decision to expand the higher education grants scheme to students studying abroad in third level colleges. I would, however, ask the Minister to clarify the term "approved courses". What exactly does that mean? I hope the term "approved courses" will not end up as a restrictive clause which will essentially reduce the number of students who will benefit from a laudable initiative. Last year the Minister said she did not have the resources. We made a strong case for this in our Private Members' debate two weeks ago when we argued that students studying abroad at third level institutions should benefit from the higher education grants scheme. I am pleased the Minister listened to the points made in that debate and acted accordingly but it is regrettable that she did not act in regard to the PLCs and the post graduate students.

I note the Minister said she was retaining 340 posts in the primary education sector. I tabled a question last week which demanded considerable detail and I got an incomplete reply. Already, the information I have indicates that well over 500 primary teaching posts will be lost by next September. We need clarity in terms of what the position will be in September 1995 and more importantly, its implications for one, two and three teacher schools in rural areas and its implications for rural development and renewal. That is a question to which I intend to return when I have the complete details and information requested from the Minister. I hope the information I sought will be provided in full by the Minister at the earliest possible opportunity. I regret she has not been here for the remainder of my contribution. I expressed my concern this morning that the Minister is not prepared to make herself available for Adjournment debates and Private Members' debates, which shows very little respect for the House and particularly the Opposition spokespeople.

Mr. Deenihan

She has done a very good job and is very busy.

Minister for Agriculture, Food and Forestry (Mr. Yates)

I congratulate my colleague, the Minister for Finance, on his first budget which was put together in difficult circumstances in that the Government has been in office for only seven weeks. He showed imagination, courage, initiative and an overall grasp of tax reform and economic management for the next three budgets. This budget sets three cornerstones by which it is to be judged, to reward work, promote enterprise and strengthen social solidarity, and we will attempt to make meaningful progress in these three areas.

While everyone will find a number of items that are welcome, these should not be seen as a series of concessions but considered in the overall context. The prospects for the economy are very good. Economic growth is buoyant, consumer spending is resurgent and exports are expected to increase by more than 10 per cent this year. Employment increased by 36,000 last year and will, at a minimum, increase by more than 30,000 this year, while inflation remains at 2.5 per cent. The Minister for Finance projected that employment would grow by 6.25 per cent. The balance of payments, from which ultimate income is created, will remain in strong surplus and inflation is not expected to rise this year. It is expected that unemployment will decline by 16,000 in 1995.

The point was made by some that more should have been done to control public spending. As a former Fine Gael spokesman on Finance in Opposition I was one of the most severe critics of the explosion in the growth in public spending in recent years. In two and a half years public spending increased by 40 per cent. It increased on average each year for the last four years by 9.6 per cent. In this year's budget we have provided for spending at 5.8 per cent. That is financially prudent and represents sound economic management.

The Opposition, particularly the Leader of the Opposition, made great play of the fact that a current budget surplus was achieved in 1994, but he did not target for a current budget surplus. It was an accident due to a massive overshoot of revenue well in excess of £200 million.

Mr. Martin

It was good financial management.

Mr. Yates

It was an underestimate of revenue buoyancy and growth. To say it was planned is not true. The targets in this budget are narrower than was the case a year ago. Comparing like with like, we are in firm control of economic management and there is the prospect, if an accident were to recur in terms of an overshoot of revenue, of a current budget surplus again this year.

Included in the economic management principles set out in the Maastricht criteria was that we would live within a 3 per cent Exchequer borrowing requirement. The 2.4 per cent target, which may be surpassed if there is revenue sbuoyancy, is extremely prudent. This budget meets the requirements and has the support of brokers and economists who are very vigilant in this area. I strongly endorse this Maastricht criterion and am pleased it is being kept under rigid control.

The last Government did not succeed in implementing meaningful tax reform. In this budget we have embarked on substantial tax reform which deserves acknowledgement and credit. Of all taxes, the most regressive is PRSI, which applied heretofore from the first pound in income. A millionaire paid less in PRSI than a person on a low level of income. The Minister for Finance has introduced an allowance whereby the first £50 is exempt from PRSI. That is a very progressive step. This measure will be introduced without raising the PRSI ceiling, which would be very unpopular in middle class areas. For the first time in many years the Minister has reduced the PRSI ceiling for employers PRSI which is a significant step forward. He has reduced employers PRSI to 9 per cent for a greater number of low paid jobs. Heretofore if an employer paid an employee £173 or less they benefited not from 12.2 per cent but 9 per cent PRSI. The figure has been raised for all employees to £12,000. These two measures amount to the most radical PRSI reform ever. It is a first step in dealing with the regressive elements of PRSI as it impacts so harshly on low paid people, without in any way diminishing the the benefits of those workers. For full rate contributors that is a meaninful change.

The big problem, particularly for single people, is that they pay the top level of tax or a low rate of income. In this budget we have secured the largest ever widening of the standard rate of tax, with allowances of £700 for a single person and £1,400 for a married couple. Many people will be taken out of the top rate of tax and will now pay at the 27 per cent rate. Two-thirds of all taxpayers will pay tax at the standard rate, with only one-third on the top rate. That is a significant improvement.

On income tax exemption, which is another way of targeting money for the low paid, the change in the personal allowance and the exemption limit will take 10,000 taxpayers out of the tax net, another meaningful step forward. The increase in personal allowance by £150 for a single person and £300 for a married couple compares very favourably with the changes made in the last three budgets. All in all we have introduced a package of measures on tax and PRSI that are very beneficial.

I wish to refer to my area of responsibility. According to figures released yesterday by the Central Statistics Office, there was healthy growth of 6.4 per cent in agricultural incomes in 1994, the third consecutive year of growth in this area. This means that during the past three years farm incomes have increased by 30 per cent or, if one takes interest payments into account, by 40 per cent. It should be remembered that the 1994 performance was achieved despite the appalling bad weather last spring, in which the previous Government provided no support, and which caused so many problems for cereal and tillage farmers and increased livestock feed costs for farmers.

A number of commentators have pointed out that gross agricultural output from the sector declined last year and that the increase in incomes was as a result of direct income aids provided by my Department and the EU. This is a direct result of the 1992 CAP reforms which envisaged a decline in commodity prices with producers being compensated through direct income aids, which are commonly known as the cheque in the post. This has clearly been to the benefit of the agricultural community who have seen a substantial growth in income since the reforms were agreed.

The improvement in income was also due in no small part to the significant improvements made in our overall competitive position, for example, low inflation, etc. The agricultural sector is more competitive now than at any time in the past. Nevertheless, I am determined that more progress will be made in this area. The recently launched operational programme for agriculture, rural development and forestry, together with the environmental protection, forestry and early retirement schemes which accompanied CAP reform, will go a long way towards improving both farmers' incomes and our competitive position.

I wish to deal in detail with some of the specific measures which will be of significant benefit to farmers and farm families. This year expenditure will increase to £556 million, of which £270 million will come directly from the Exchequer after the appropriations-inaid. My Department processes approximately £2 billion each year. I am glad to say that I was able to secure new funding for An Bord Bia and an extra £3 million for Teagasc which will create an additional 250 jobs. Teagasc needs new graduates to carry out research as more than 60 per cent of its research staff are over 55 years of age and less than 15 per cent of them are under 40 years of age. Teagasc has been butchered in recent years — there has been a 40 per cent reduction in staff numbers since 1987. I have set out a new programme for the revitalisation and renewal of Teagasc and targeted areas where farm incomes can be improved through the research and advisory service and training schemes. Teagasc can look forward to a secure future under my Ministry. I am also glad to say that I secured increased funding for An Bord Glas and the horticultural sector which will enable them to implement their five year development plan.

I am particularly pleased that there was a number of significant expenditure items in the budget. Since taking up office I have repeatedly said I am not satisfied with the level of service to clients in terms of the payment of direct income aids. It is unsatisfactory that it should take so long to process applications, that payments should be delayed, that office opening hours are restricted and that phones are not always manned. Having visited a number of departmental offices I am very concerned about the working conditions for many of the staff. I quickly concluded that what was needed was a package of measures which would improve information technology and computerisation, update office accommodation and working conditions for staff, increase the number of staff and ensure necessary training. I am pleased to say that the Government has recognised this requirement.

In addition to the 3 per cent increase for administration, I have secured an extra £5 million for the charter of rights for farmers which the Taoiseach will publish. This charter will transform the delivery of services by my Department which has received more than 620,000 applications for premia and headage payments. This is evidence of my commitment to this sector, and I will consult with the farm organisations, staff unions, etc. An additional 70 staff have already been appointed and I look forward to implementing a programme which will update accommodation and improve technology, thus transforming the delivery of services to farmers.

The second area of expenditure relates to the damage caused by the recent floods. Members of the Opposition shed crocodile tears about this matter. During the flooding in 1993 and 1994, which caused severe damage, the then Government provided no mainline support for farmers. I have secured approval from the Department of Finance for the introduction of a fodder and livestock scheme of compensation of £2 million. I want to put this in a proper context. The total amount made available under the last compensation scheme in 1990 was £700,000. The sum of £2 million will be more than adequate to meet the needs of farmers, and the scheme will be modelled on the previous one. Farmers should contact the farm development service and Teagasc which will independently validate their losses. Obviously this will take time but given that the floods are receding this matter will be given the utmost priority. We will be working with a number of other Departments in co-ordinating our efforts. I wish to put on record my appreciation of the prompt response by the Minister for Finance on this issue.

I inherited enormous difficulties from the previous administration in the area of on-farm development. The previous Fianna Fáil minority Government signed Estimates for my Department which reduced the money for the farm improvement programme from £22 million last year to £2 million this year. This meant that no new applications were received between 8-12 December, a few days before I took up office. This arose as a result of the shrinking billions. There was not enough money in the agricultural envelope of the Structural Funds. I am glad to say that we have been able, with the co-operation of the Department of Finance, to allocate funds for the farm improvement programme and that grant payments for all existing plans will be fully honoured. However, it was not possible to maintain the four investment schemes in the on-farm investment area. I have, therefore, had to endorse the decision of my predecessor to suspend the farm improvement programme.

I am pleased to say that the FIP for horticulture will be reintroduced. I am seeking Commission approval for a topup payment of 25 per cent for the control of farmyard pollution scheme. In my review of the on-farm investment schemes I found that 95 per cent of people who have farm improvement plans are eligible for aid under the control of farmyard pollution scheme. The good news is that instead of receiving a 30 per cent grant farmers will be released from FIP plans and will be eligible for a 60 per cent grant on approved expenditure up to £22,500. This means many farmers will be much better off under the new scheme.

Land reclamation and drainage were effectively abandoned some years ago. Despite the impossible situation which I inherited in terms of the shortfall in Structural Funds, which I cannot increase — the amount is set in cement — I have been able to review the schemes for which we are seeking EU approval so as to enable the farmers to carry out important capital works.

The forestry sector will receive priority during my term of office. It has been a Cinderella department and having been coupled with the Department of Energy it was joined with the Department of Agriculture and Food two years ago. In the macro-economy forestry is one of the most important areas with significant potential for development in the years ahead. By the middle of this year I hope to present to Cabinet a 20 year strategic plan to the year 2015 for this sector.

We are talking about meeting the demands currently met by imported timber. There is a serious deficit in Europe of hardwoods and softwoods. The needs of the building industry, the furniture industry, and, more particularly, the paper milling industry are such that we need to increase planting levels. I envisage somewhere between 2,000 and 3,000 extra jobs being created downstream during the next five years. I would like to see an increase in planting levels between 25,000 to 30,000 hectares each year to make a meaningful contribution, in terms of job creation, to the economy. Unlike most other sectors of the agriculture industry, there is no ceiling on production and plenty of scope to eliminate the deficit.

We have one of the best climates in Europe for forestry production. Only 7 per cent of Irish land is, however, under afforestation. I would like to see this figure increased to 10 per cent, given that the European average is 22 per cent. On the Continent it is quite common on 50 acre farms to have eight to ten acres under forestry. There is a need for a cultural change and I am seeking to secure it. In the Estimates forestry development receives a major boost with an injection of almost £50 million, an indication of my commitment to this area.

I have provided additional funding for horse racing and greyhound racing. When we complete our investment in Shelbourne Park we will have one of the best greyhound stadiums in Europe. I hope to provide top class night time entertainment facilities so that those who are not particularly interested in dog racing can have a night out in Shelbourne Park. I hope to complete the project before the year is out. I look forward to developing fantastic facilities at Mallow racecourse and, in the long term, a new racecourse in Limerick to attract more punters and customers in the province of Munster.

I turn now to the tax provisions relating to agriculture, which are substantial. I have been lobbied strongly about stock relief. These provisions were due to end on 6 April this year but, in conjunction with my Government colleagues, I have secured one of the best packages under this heading. For the first four years after installation young farmers will be able to avail of stock relief at 100 per cent. It will mean they will be able to increase their stock levels without attracting large income tax bills. The general provision of stock relief at 25 per cent is being retained. For the first time those with huge paper profits, who were devastated by the depopulation of their herds as a result of TB or brucellosis, will not have to face a tax bill for two years. This is a substantial package and I record my appreciation.

There have been many complaints about the punitive effects of capital acquisitions tax. We have increased agricultural relief on land and buildings over the threshold of £300,000 from 30 per cent to 50 per cent and relief on other assets from 25 per cent to 50 per cent. I will give some examples. A person with total assets worth £420,000 will not pay capital acquisitions tax on a gift. This is a significant step forward. A person with total assets worth £525,000 will have their tax bill reduced from approximately £12,000 to £100 approximately. A person with total assets in excess of £600,000 will have their tax bill halved. This is meaningful for family farms in particular with medium to large size quotas.

In regard to capital gains tax farmers who have had land acquired through a compulsory purchase order by a local authority, the Department of the Environment or the National Roads Authority have encountered problems whereby they have had to pay a penal amount. We have obtained roll-over relief to ensure that these farmers will not have to face huge tax bills.

These provisions are on top of the general income tax provisions from which farmers, with all other sectors will benefit. Apart from the removal of anomalies in a number of areas about which I have spoken, taking the stock relief, capital acquisitions tax, capital gains tax and the general provisions together a substantial package has been obtained for the farming community.

I have to take some of the criticism expressed by the Opposition in regard to these provisions with a pinch of salt. I have only been in the Department for seven weeks; they were in Government for seven years. What did they do to resolve these issues? The problems did not arise during the past seven weeks. I have made significant progress in all these areas. I have no doubt when the farming organisations reflect on the figures of £5 million which I have obtained to launch the new charter, £2 million to alleviate the consequences of the recent flooding and the extra £9 million secured in the Book of Estimates they will see that the Department of Agriculture, Food and Forestry is committed to securing a better deal for farmers. In this regard I appreciate the efforts made by the Minister for Finance and my Government colleagues.

One of the most progressive elements of the Programme for Government is the proposed reform of child benefit. When I was in Opposition I was critical of the fact that people in employment with large families found themselves in a poverty trap. If they were on social welfare they would have received more for each child whereas an employer was not in a position to do this. By switching to a child benefit supplement people will receive payment irrespective of whether they are in employment. That is a novel way of ensuring that the disincentive to work is removed. I welcome in particular the increase of £7 per month in child benefit and the decision of the Minister for Social Welfare to pay the increases in social welfare in mid-June. I understand that it is his intention to make further progress in this regard next year.

I appreciate the increases in the carer's allowance and the back-to-school school clothing allowance. I also support the changes in relation to third-level fees. As we are all aware, hard pressed middle income earners in the PAYE sector have been denied grants because they were just above the income limit. We are now moving towards the position where there will be free fees. If parents have two or more children attending third-level it is very costly. On average people are paying between £1,000 and £1,500. The introduction of free third-level education is a significant and historic achievement for this Government.

The decision to provide tax relief for tenants living in private rented accommodation is novel and valuable. I know of people paying exorbitant rent. This relief of up to £1,000 for a married couple will be of enormous benefit for those who could never afford to own their own home. I also know many young people on unemployment assistance who have been means tested on their parents' income. They will now receive a minimum payment of £25 per week, a significant step forward.

Apart from the reform of PRSI about which I have spoken, this is the first Government for many years to set about reducing the standard rate of corporation profits tax. This should be welcomed. The capital acquisitions tax changes must also be supported. When the Taoiseach was formerly Minister for Finance, he espoused the cause of employee profit sharing. The massive increase in profit sharing schemes for employers and employees from £2,000 to £10,000 puts into action a tangible commitment to meet the needs of those people.

This is one of the best budgets in living memory. It sets out on a serious programme of radical tax reform and simultaneously adopts a prudent approach to economic management. It seeks also to curtail the worst excesses of expenditure growth and to achieve a balance between meeting the legitimate need to improve public services and to maintain the steady part of economic growth in the context of revenue, output and employment.

This Government has got off to an excellent start. It has set out its priorities in the programme and is now giving practical implementation to that. The Government parties are working well together and the interaction between them is extremely satisfactory. I have no doubt that we will serve our full term. The prospects for job seekers, the agricultural economy and those at work is now very positive. I hope the negative and carping criticism, particularly from Fianna Fáil — I realise it has a lot of adjusting to do in its present plight — will be replaced by a recognition that this Government, in an open, transparent and accountable way, is dealing with the real problems of the economy. I look forward to two and a half years of successful Government in the future.

Mr. S. Brennan

To talk about the plight of Fianna Fáil on a day when we have had a ministerial resignation is an interesting analysis. It is an interesting analysis also on a day when the Government has given £12 million to the banks by reducing corporation profits tax on the top 200 companies while giving pensioners an increase that is less than the rate of inflation. To talk about the plight of Fianna Fáil on this particular day is courageous indeed.

Mr. Noonan

(Limerick East): Seven years.

Mr. S. Brennan

I select that item from the budget because I cannot think of anything more substantive to focus on before I commence my main budget address——

Mr. Yates

Start with the PRSI reform.

Mr. S. Brennan

——which the Minister will have to sit through next Tuesday. I can do no better than select that focal point which underlines the tensions and divisions inherent in this Government. I put it to the Minister of State, Deputy Rabbitte, on a television programme yesterday evening that it took the arrival of a Democratic Left element in Government for a decision to be made not to give an inflation increase to pensioners, of whom there are many thousands, and on the same day to allow a 2 per cent cut in corporation tax to our top financial institutions. No doubt Pat the Banker, as he is now being called, will be more popular in the plush corridors of the banking fraternity but I doubt whether Fine Gael will be popular in the areas where pensioners reside.

I want to deal with a number of items in the budget but that will be difficult in the time remaining to me. I intended to deal, as I will on Tuesday, with the reckless nature of the financial strategy of the budget.

Mr. Yates

I thought Deputy Brennan was looking for more social welfare spending.

Mr. S. Brennan

I can tell the Minister where to get the 0.5 per cent and it is not from additional spending. If the Government had not given that money to the banking institutions today, it could have given it to social welfare. That would have made up the 0.5 per cent. To have made that simple decision would not have increased public expenditure. The reason I focus on this is that it genuinely underlines the priorities of the Government, particularly of Democratic Left in Government.

Debate adjourned.