Deputy Leonard was in possession. I note Deputy Éamon Ó Cúiv now offering.
Finance Bill, 1995: Second Stage (Resumed).
Cuireann sé áthas orm deis a bheith agam labhairt ar an mBille tábhachtacht seo.
It amazes me that each year in debating the Finance Bill, irrespective of whichever Government may be in office, we talk about rationalising and rendering our taxation system more user-friendly while continuing to make it ever more complex and ridden with anomalies. Much of the public disquiet about how our taxation system operates stems from it being so complicated. It is time we dealt with it once and for all to render it simpler, capable of being understood by the ordinary taxpayer, so that he or she clearly understands what they are paying for, how they pay it and how their liability is calculated, which is not the case at present.
Many taxpayers, on receiving their certificate of tax free allowances and other documentation from the inspector of taxes are totally puzzled by their calculation. It has been my experience that many people overpay tax but are fearful of querying their tax liability in the mistaken belief that they would never be granted a refund but always be held to have underpaid. In many cases the opposite is true.
We dealt with PRSI payments under the Social Welfare Act but to the ordinary taxpayer PRSI, levies and tax are part of the tax system. It is ludicrous that people have been overpaying PRSI and while there has been some amelioration of this since the exemption of £173 on the PRSI levies was introduced. The social welfare and tax systems need to be rationalised. People find it very difficult to have overpaid money refunded.
One cannot refer to the tax system without referring to the social welfare system andvice versa. Increases in modest incomes lead to a decrease in take home pay. I drew graphs of this and it is frightening to see how people who receive substantial increases in income only marginally increase their take home pay due to the overlap between the tax system, the family income supplement system, the way in which the levies are calculated, etc. Consideration should be given to the introduction of a combined social welfare and finance Bill if this is the only way to concentrate the minds in the Departments.
Last year with very few resources I worked out how one could adjust the system in a very simple way to ensure an increase in take home pay as income increased. It does not take any great expertise to realise that if one attaches levies to either medical cards or straight cut off points there will be a regressive situation whereas if they are based on a system similar to the one I outlined during the debate on the Social Welfare Bill there will be an increase in take home pay. Under this system the first £60 would be exempt, the next £120 would be at a rate of 6 per cent and the balance would be at a rate of 9 per cent, while the levies and social welfare PRSI codes would be amalgamated.
The second major problem with the system relates to the exemption limits. Many people do not understand the exemption limits for tax. The problem does not get much airing in this House as it only affects the low paid. A taxpayer with four children on an income of £9,000 is exempt from income tax but if he goes over that magic threshold he is liable for income tax at 40 per cent. He gets the advantage of a higher tax free allowance but this is a very high rate of tax for low wage earners. Consideration must be given to increasing the basic tax free allowance to the exemption level and adjusting the tax levels upwards so that there is a continuous system.
We never seem to go the full way in any direction, we only go half of the way. There is a perception that people who are married get double the tax free allowance of single people but this is not followed through consistently. In most cases a working couple earning the same amount as a single income family are better off. For example, a working couple earning £16,000 — one may earn £10,000 and the other may earn £6,000 — are £7.62 a week of £396 a year better off than a single income family earning the same amount. The reasons for this are simple: the working couple will receive two PAYE allowances, two PRSI exemptions and two PRSI allowances. They also have the advantage of being covered for social insurance. For people on an even higher rate of income in the 48 per cent tax band the situation is worse — the difference in take home pay is £11.44 a week or £594 per year. This does not say much for the work done by full time home-makers and the need for equality between people on the same income. The objective of the tax system should be to ensure that families in similar circumstances and on similar incomes pay the same level of tax. This problem can be resolved by simply doubling the personal, PAYE and PRSI allowances and the PRSI exemption for married people. At present a severe penalty is being imposed on families where one of the spouses is a full-time homemaker.
There is another anomaly in the system regarding single parents. They are given the married tax free allowance but there is a fly in the ointment. If the children earn more than £720 per annum from, say, a holiday job the tax free allowance is reduced on a pound for pound basis for everything over £720. For example, if they earn £1,720 the tax free allowance will be reduced by £1,000. This is a particular problem for one child families, which is reasonably common among single parent families. It is easy for one child to earn more than £720 and it is wrong that they should be penalised in this ridiculous way. Another peculiarity in the system relates to the exemption limits. There is a special tax free allowance for single parents but there is no low income exemption limit for them and they are not recognised under the code for exemption limits. This is an extraordinary omission.
In this age of equality it is my understanding that widows have a tax advantage over widowers in that they get twice the amount of the married allowance in the year of their spouse's death. Widowers are not treated in the same way. I hope the Minister will address that matter on Committee Stage.
The time has come to reform our tax system, to make it more user friendly. Tax free allowance certificates should be more easily understood. I have always supported a system, even if it means adjusting the tax rates, under which a single person earning £100 or less per week or a married couple earning £200 or less per week should not pay income tax. Those figures should also be used as their basic tax free allowances, with a special allowance for children. Under such a system time would not be wasted by tax officials processing tax forms for people who cannot afford to pay tax and who must be further assisted by way of other benefits. Under the social welfare code it is recognised that people cannot live on less than £61 per week plus benefits. It is extraordinary, therefore, that our tax system includes a tax exemption limit of £3,600 per year for a single person. Most people receiving the basic social welfare rate live in rented accommodation and receive a rent allowance. Therefore, in most cases actual household income would exceed the threshold for tax payment.
An inordinate amount of time is spent dealing with tax matters for individiuals who should not be paying tax or with tax queries from people on modest incomes whose tax affairs should be easily dealt with. They should not be involved in complicated negotiations with tax officials. If this were not the case tax officials would have more time to deal with tax evasion, which is still a major problem in society.
Ar deireadh, ba mhaith liom a rá go gcreidim go bhfuil gá le leasú ar an gcóras cánach ar fad. Ba bhreá liom deis a bheith agam le dul tríd an doiciméad seo ó thus go deireadh. Tá an t-uafás le rá faoi. Tá an t-uafás le h-athrú. Bheadh súil agamsa an bhliain seo chugainn, seachas a bheith ag cur leis na contrárthachtaí ar fad atá sa gcóras cánach, go dtosódh muid faoi dheireadh ag simpliú an córas agus á dheanamh níos éifeachtaí, go mór mór dóibh siúd nach bhfuil comhairle teangmhálach ar fáil acu le déileáil lena gcúrsaí cánach. Ní ceart go mbeadh saineolas ag teastáil ag formhór an phobail nach bhfuil uatha ach a gcuid cánach a íoc agus córas simplí cánach a bheith acu le déileáil leis.
I welcome the opportunity to speak on the Finance Bill and the constructive content of the last speaker's remarks. We need ongoing reform of our taxation system to ensure employers and employees have an opportunity to create and maintain jobs. Some of the figures Deputy Ó Cuív mentioned concern Members on the Opposition and Government benches.
In his first budget, the Minister has endeavoured to improve opportunities for small business people as well as the position between those in work and those on social welfare. This is not a simple matter because those receiving social welfare payments also receive many other benefits, making it less attractive for them to take up low paid employment. For that reason, I welcome the Minister's efforts to improve tax relief for low paid workers. While it is a small improvement considered in conjunction with the PRSI relief, it is a first step forward in this Government's efforts to encourage people to return to work. The mushroom industry is under severe threat because of currency difficulties and the employment of low paid workers is part of that industry. Tax and PRSI reliefs for industries such as that will be most welcome.
The introduction of service charges has been a controversial issue for some time and for the first time, there will be tax relief on such charges. When this country was put up for auction in 1977 by abolishing rates and car tax, local government financial burdens were placed on the State. The introduction of service charges was a small step towards reintroducing some power for local authorities. This was a cause of great concern, but the introduction of tax relief for those who pay on time will ensure that some funds are available at local authority level, which will have a right to decide on what those funds can be spent. Most of the money allocated to local authorities from Government, for county and primary roads and so on, has a tag placed on it before it reaches the local authority and local authority members or personnel have little say in the way it is spent.
For many reasons the tax relief for tenants in private rented dwellings is welcome. Many young couples must live in rented accommodation until they can afford to buy a house or obtain a council house. Until now there was no such relief. That is a step in the right direction which hopefully will help students from other areas living in rented accommodation in Dublin to benefit through other means.
The tax relief on donations to Third World charities is a welcome measure. As a nation, we have shown that we are very sympathetic towards the problems of those who are less well off than ourselves. This year we are commemorating the Famine and it is important that we move in the direction of covenanting moneys on a long term basis towards this area of great need. This is a welcome measure but there are other charities which deserve similar recognition. I can think of many areas of need, including some of the smaller churches. In a Border area such as my constituency, people from north of the Border can covenant donations towards the upkeep of those churches whereas those who live south of the Border are unable to do that. This is an area where I would like to see some improvement. If people donate to their churches and to certain charities on a regular basis they should be allowed covenant those donations.
Some of the changes in the seed capital schemes are welcome. It has become clear from various studies and recent discussions during meetings of the Select Committee on Enterprise and Employment that one of the major areas of small industry where greater security is required is low interest finance. The previous Government introduced a scheme of low interest finance and I know that the present Minister will soon reintroduce that scheme. It is vital that low interest capital should be available to sustain and encourage small industries.
Tax relief on heritage buildings which provide bed and breakfast accommodation is a welcome initiative. During my short time in Dáil Éireann I have come across some extraordinary cases where heritage buildings were listed for preservation by some county councils and listed for demolition by others. In the past, no funding was provided for the preservation of such houses and it was a great burden on the owners to have the buildings listed. This initiative will encourage the owners of such houses to provide bed and breakfast, thereby obtaining some tax relief. In that way, some of these old historic buildings will be preserved for future generations.
I wish to turn now to farming, which is dear to my heart, and farm taxation. I appreciate the support of Macra na Féirme and other farm organisations in calling for measures in the budget to help young farmers, in particular. I welcome the measures that will provide for stock relief at 25 per cent for two years and 100 per cent stock relief for four years for young farmers.
With the difficulties experienced by farmers as a result of the CAP and GATT — although some people believe that farmers are reasonably well off — we must ensure that young farmers are enabled to take up farming. If we do not do that, the sector will diminish. Farming remains the most economic sector; in my county it is by far the most important sector. We produce two-thirds of the country's poultry and two-thirds of the mushroom supply. The vast majority of jobs outside the public sector are in the agricultural industry. It is important, therefore, that we not only improve the structure of our food industry but continue to improve and encourage young farmers to take up farming and remain in that sector.
A problem that caused great frustration among farmers over the past few years, particularly in my constituency, involved destocking of herds due to TB or brucellosis. Herds had to be sold off and this was done towards the end of a tax year. This caused great heartbreak for many farm families who lost herds they had built up over generations. They were also required to pay tax on moneys they never earned. Six months later many of them had to buy cattle with a depleted revenue.
I appreciate the efforts of the Minister to address that problem by giving farmers time to restock. This problem applies not only to farmers who have depopulated in total; many farmers have had to destock significantly. One farmer lost 35 out of 60 cows and because that did not represent a total depopulation he did not get the full benefits of the grant schemes in that area and he was unable to restock until his herd was cleared. In some cases that can take up to two years, depending on the seriousness of the outbreak. The Minister has taken a step in the right direction with this measure. If there are some areas remaining to be clarified, I hope that will be done on Committee and Report Stages.
The Minister has also recognised the benefits of self-assessment, not only for farmers but for everybody. He has allowed some relief for those who, for whatever reason, make a late filing of their returns. The penalties for that are now not as severe. However, if a farmer makes a small mistake filling out forms for headage payments, beef premia, etc. he may have to wait for months and, in some cases, years to get payment. There is no redress for farmers if this happens. Many of those farmers did not make any mistake in filling these forms but because somebody along the line pressed the wrong button on a computer or read the wrong number on a form, they found themselves in an embarrassing position with their bank managers or their creditors generally. When people experience such difficulties the State should be sympathetic towards them. The Minister recognises the genuine problems of the majority of people in this area and he has moved to redress them.
The initiatives for urban renewal and enterprise areas must be welcomed. In regard to my constituency — and all politics are local at the end of the day — areas such as Clones, Ballybay and Castleblayney, to mention a few, my own area and all the villages that have suffered significantly as a result of the past 25 years of troubles in Northern Ireland must come under the schemes for urban renewal to ensure they are given an opportunity to benefit. Monaghan, our major town, has been declared an urban renewal area and part of the town will benefit as a result. We must remember that other areas of the town have equally suffered as a result of the troubles. We must take the initiative and ensure those other areas are improved, it would improve the situation if we were to make areas along the Border a tax relief zone.
Exemptions for industry are welcome. However, employment grants apply only to companies that have received grant aid such as EU or State grants. Firms are refused grant aid if there are already sufficient companies in that business already. Many furniture firms in County Monaghan have been refused grant aid because of this rule, but this means they cannot benefit from the employment tax relief or rates relief. This needs to be examined. Companies set up without grant aid should be entitled to tax benefits. All companies have to apply for planning permission and the planning authority has to levy rates immediately they start business. However, if they have received grant aid, they are exempted. Those who have not received grant aid will not be exempted from rates. A company set up without grant aid should be entitled to the same benefits as a company that received grant aid.
The pilot renewal scheme for seaside resorts is welcome although, unfortunately, there is none in my constituency. The Border was closed for many years and if the Minister for Finance was able to justify — I do not question his right to do so in any way — the creation of a pilot scheme for the coastal areas, areas such as the Bragan mountains in Monaghan and others around the Border should benefit as well. The funds from INTERREG, the International Fund for Ireland and the Delors Peace Package have been used by previous Governments and, to some extent by this Government, as replacement moneys for Government expenditure. Whatever Government is in power should recognise the problems in the Border areas. Opposition Deputies have questioned the Government's commitment to the peace process and if there is to be such a commitment the areas along the Border, North and South, must be rejuvenated. There are opportunities to do this.
When one examines the previous Government's plans for the £8.8 billion package one might question its commitment to this country, North and South, working as one unit. When my colleagues and I were in Brussels recently we were shown a map of Ireland which clearly showed that only one road, the coastal road from the North to Dublin, was allocated moneys under the Structural Fund. To travel to Letterkenny means going through Longford, then up through Sligo and Donegal town to Letterkenny. The N2, the main Dublin-Derry road, which carries the major traffic from Donegal to Dublin and the N3, the Donegal, Enniskillen and Cavan road, received no allocation. There is a great deal of talk about bringing the people of this island together but we must improve access. I appreciate that it will be difficult to rectify the damage that has been done but we must ensure that all the people on this island benefit equally.
The increase of 12p on cigarettes caused anxiety for the people of Dundalk but raising revenue in this way is a fact of life. Although no one welcomes increases, an increase on the price of petrol and diesel would be welcome provided the money is spent on county roads. There is still an opportunity to do this. Governments have failed over the past number of years to recognise the problems of those living in rural Ireland. If we do not do something about roads, people will move to cities and then we will experience housing problems and congestion in the areas around Dublin, Cork and Galway. The pressure on hospitals, raised last evening by the Opposition, will become more acute if the population moves from rural Ireland. I ask the Government to consider providing extra funds in the not too distant future to bring the county roads up to standard. The county roads are the arteries of my constituency and keep the community alive. We must do whatever is neccessary to improve the roads.
The Minister's initiative of £1,000 tax relief for cars over ten years old is welcome and will benefit the motor industry and car users. The changes in vehicle licensing are welcome and will bring about equity. Previously if a person purchased a car towards the end of the month he had to tax it from the first day of that month, now he can tax it from the beginning of the following month. I wish to clarify the position of vehicles that have been off the road for a long time. Will these vehicles not have to be back taxed to the previous date of taxation?
I know of an old age pensioner who bought a slightly damaged car in Northern Ireland. His own car was fully taxed and he drove it until his new car was ready. He sold the old car on the day his car tax expired and drove his newly purchased car to the tax office. This old age pensioner, who made every effort to purchase a car at the cheapest possible rate, was told he would have to tax his new car from the date of importation. I hope this will not happen in future.
I welcome the changes in the residential property tax. The previous Government attempted to bring in rates by the back door. None of them is present now. I welcome the changes in capital tax for business and the effort being made to encourage the hand over of family businesses to the younger generation. The farm retirement scheme is of great benefit and so is the stamp duty relief introduced by the last Government. However, there are some technicalities that the Minister should look at. In the case of the farm retirement scheme a person has some time to qualify for it but this is not so in the case of the stamp duty relief. A small number of small farmers have suffered as a result. There is also a problem with grants for farm buildings. The Minister should consider having a higher capital allowance for the first year after construction.
As regards tax collection there may be some difficulties with the Minister's proposals but under the last Government a farmer had to have a tax number before he could receive a grant if there was an outbreak of TB among his herd. If there was a major outbreak and he was eligible for a £5,000 grant he had to produce a tax free certificate. Yet we see big business getting away with millions and this was clearly shown up by the beef tribunal. I know it is difficult to bring in legislation that will not hurt somebody. However, we must ensure that everyone pays taxes on time and not just small businesses and PAYE workers.
The Finance Bill does not make up in any significant way for the shortcomings of the budget. It translates into effect the tax reductions made possible by the very favourable economic and financial conditions bequeathed to the Administration and to my successor as Minister for Finance.
Most people will be disappointed to discover how negligible the net effect of the income tax changes in the budget has been on their take home pay. I accept that the Bill also contains a number of useful and necessary adjustments to the tax code which are of importance to the sectors involved but I am not aware that there is much new and positive, which was not contained in the budget, that is of any major significance now.
Most of the result for last year are available. It was a boom year the results of which are likely to carry over into this year. Estimated growth was close to 6 per cent and resulted in a net increase in employment which is likely to be over 30,000, pushing employment to its highest levels in 40 years. Unemployment fell by 17,000 from December to December and the trend continues to be downward with redundancies showing a welcome sharp decline.
Industrial production grew by 12 per cent, the best result probably ever. New vehicle sales rose by 9 per cent. Tourist numbers grew by 10.5 per cent. Farm incomes rose again for the third year running by an estimated 6.5 per cent. Our financial performance over that period was excellent. We eliminated the current budget deficit for the first time since 1967 and the debt-GDP ratio was reduced by eight points to 83 per cent. In the light of all that, I regret that the buoyancy in the economy was not put to better use in this year's budget which immediately ran up a new current budget deficit of £310 million instead of being more ambitious and trying to eliminate it for good or leaving it at any rate within striking distance of zero. We will need a clear margin of manoeuvre when cyclical conditions deteriorate and when European funding levels off.
The Bill is mainly about giving legislative effect to the budgetary measures. After 6 April taxpayers tend to be much more aware of the real impact of changes in the budget. For a single person or a married couple without children the net gains were considerably greater in my 1994 budget. A single person with an income of £9,000 a year gained £250 last year but only £144 this year. A married couple without children with an income of £20,000 a year gained £295 last year but only £185 this year. For many much of this year's benefit will have been wiped out already by the recent rise in interest rates. The social partners expecting moderate wage rises to be supplemented by tax reductions will be disappointed. AsFinance magazine comments in its April issue:
The 1995 Budget, despite widespread publicity by the Government about tax and PRSI reductions, resulted in no more than a marginal change in the size of the Irish tax wedge compared with its closest competitor the UK.
The allowance for full PRSI contributions was partly funded by halving the existing PRSI allowance from £286 to £140. The net result is that for those on relatively low incomes there is, in many cases, almost no change in their tax free allowance compared to last year and only a few pence in some cases. It is a welcome result of Fianna Fáil's prudent management of the economy over the past eight years, in partnership with others, that it has been possible in recent budgets to reduce the burden of taxation thus underpinning social partnership agreements. While this is a welcome contrast to the experience of the early 1980s when the burden of taxation rose steeply, the scope for tax reductions has been limited by the resumed increase in public expenditure.
To put all of this in context, during the MacSharry era public expenditure was reduced from 52 per cent of GNP to under 40 per cent over a two year period contributing to one of the most remarkable transformations in any country's public finances. Then a combination of circumstances — the need to correct over-severe cutbacks in certain areas such as health, the clearing up of the backlog of deferred special claims in the public service and the recession as well as the cost of theProgramme for Economic and Social Progress commitments — contributed to driving public expenditure back by up 2.5 per cent of GNP between 1990 and 1993. It dropped back again in 1994 but should now be falling faster in an era of high growth. The year-on-year increase in current public expenditure rose to a peak of 11.4 per cent in 1992 when the Progressive Democrats were in office with us. In our partnership with Labour that dropped to 8.1 per cent in 1993 and to 6.9 per cent in 1994, excluding the amnesty.
That underlying downward trend has been reversed this year. Excluding the amnesty, current day to day expenditure has increased by 8.4 per cent this year at budget time, and by just over 10 per cent with the extra £140 million in social welfare back-payments added in. The budget booklet just published shows that the cost of servicing the public debt is rising again, after a long period of nominal stability, and will represent over 61 per cent of income tax receipts compared to 58 per cent last year.
The Government pledged, when it took office, that current spending would only increase by 6 per cent. It was including last year's amnesty as part of its base, and on that criterion kept just within it. The Minister for Defence and the Marine, Deputy Hugh Coveney, has admitted openly that the additional equality payments represent a technical breach of budget parameters. With a number of items piling up, including EU agriculture fines, compensation to blood transfusion victims, nobody believes that the Government has the stomach for the sort of expenditure control that is required to limit real growth in expenditure to 2 per cent in 1996 and 1997, given all the carry over effects from this year, or that it will not be strongly tempted to exclude this year's equality payments from the base when next year comes. For that reason, I have been examining the feasibility of an amendment to the Finance Bill, which would make it a binding legal obligation on the Government to constrain the growth of average real current public supply services expenditure to 2 per cent in 1996 and 1997. That would really help to concentrate minds on the huge increase in public expenditure in recent months. It is difficult to see how the Government would oppose its own policies.
The Government should be worried by the editorial comment in the April issue ofFinance based on the comments of leading Irish economic forecasters. This is something which our finance spokesman, Deputy McCreevy, and I have been saying for some months. It states:
Some of the gloss has gone off international assessments of the Irish economy, and its "Celtic Tiger" status of six months ago....Signs of Government complacency in the face of mounting public expenditure demands are not encouraging — the issues may not come to a head and that point may not mark a watershed for international investor confidence in the economy, let alone the currency.
The Minister has been warned. In fact I have been giving the same warning, in this House, since the day I left office. I was making the point earlier than any of these editorials but all the comments are now consistent.
Within overall expenditure, the priorities have been lopsided. The miserable social welfare increase of 2.5 per cent for the old and the young unemployed, which the Minister under pressure has now admitted was totally inadequate, was a disgrace for the parties in Government. We have exposed the cutbacks in the community employment scheme, which under our partnership programme with Labour and theProgramme for Competitiveness and Work was set at 40,000. Valuable projects around the country are being jeopardised, and the wish of young people to work is being ignored. The Minister concerned, Deputy Richard Bruton, who has made a feeble and contorted statistical defence of this, will be forced by the public outcry to reconsider. The parties in Government do not understand the importance of the county roads as evidenced in recent months. In the meantime, instead of prioritising the real needs of the country, inessential pet schemes of Ministers get full steam ahead.
Loose expenditure control has two consequences. It affects financial confidence and interest rates, and we are still not out of the woods with regard to currency turbulence. More important are the long term consequences for tax relief. Reducing borrowing and expenditure is the only route to real and lasting reduction in the tax burden. When we have growth running at between 5 per cent and 6 per cent it is the ideal time to act. Otherwise, we will find that when the economic cycle next dips, the burden of taxation will rise, and there will be a squeeze on essential services, especially when EU funding is curtailed. I ask the Government to take this point on board. When interest rates increase, as they will, it puts huge pressure on public expenditure. At a time when we have growth rates of between 5 per cent and 6 per cent and when revenue buoyancy has been holding up well for the past few years, it is time to make moves in this area. Although Deputy McCreevy has made that point frequently at Question Time, the Government fails to listen. That is the reason we are now receiving unfavourable comments in both domestic and international magazines which point out that the position which obtained six months ago has already deteriorated. The facts I have quoted are from Government statistics and from reputable Irish and European financial magazines. Although the Government would ignore anything we say in this House, perhaps it would listen to economic commentators of international standing.
One of the main features of this year's Finance Bill is the obligation placed on accountants to report a whole variety of offences, which goes far beyond the recommendations of the beef tribunal report. The beef tribunal made two recommendations which I supported. An accountant who discovers that he has unwittingly submitted fraudulent or negligent tax returns must advise his client to inform the Revenue and, failing his doing so, inform the Revenue directly. Discovery of tax evasion should be reported to the Revenue, not just to the commercial entity or the shareholders. Section 153 widens the scope to commission of any revenue offence, including failure to make returns, and keep records. One would have thought that the Revenue Commissioners themselves ought to be cognisant, without having to be specially informed, of whether a return had been made or not. This information should be available on the computer.
I believe there are very few accountants who would collude or co-operate in knowingly making false returns. Their professional reputation is at stake, as well as the mutual trust and confidence that they need to enjoy with the various tax offices for the day to day conduct of their business. Thankfully the legislative changes and the code of conduct we have built up during the past few years have resulted in a better relationship between Revenue authorities and the accountancy profession. It took some considerable time to build that trust and confidence. The changes we and the Revenue made towards a more open and user friendly organisation — if taking people's money in revenue can ever be so — were debated in the House. The position is much better now and it is acknowledged as such.
There are many grey areas in the exact application of accounting practices and conventions to particular circumstances, where a certain pragmatism is required both by accountants and tax inspectors. If wholesale evasion is discovered, of the type confirmed by the beef tribunal, there should be a duty to insist on it being corrected, and if necessary, reported. To have to report every minor discrepancy and failure to observe the letter of the tax laws is to require of each accountant that they act as proxy and policeman for the Revenue. The effect will be to destroy trust in the profession, and co-operation with it, which is vital if taxes due are to be identified and collected. The effect of the blanket powers in section 153 will be to increase tax evasion, not reduce it, as clients may no longer choose to take accountants into their confidence and discuss their problems. My belief is that we should trust in the good sense, integrity and professional ethics of the accountancy profession. By all means, impose on them an obligation to report large-scale fraud, but do not attempt to try to turn them into regular agents and informers for the State.
In referring to section 8, donations to all charities should be put on a level playing pitch. I do not see why domestic charities, which do very worthwhile work, should not be put on a par with Third World charities. The domestic charities are indignant that they should now be discriminated against in the tax code. The measure, if it is to stand, must be broadened out. In saying this, I fully support the marvellous work being done by organisations such as Trócaire, Goal and others in the Third World.
I wish to turn to covenants, sections 12 and 13 refer. My party has made it clear that we regard as ill-thought out the precipitate move to free third level education with the abolition of fees and the abolition or restriction of covenants. On Tuesday last in the educational supplement ofThe Irish Times there was an attack on it by Professor Dale Tussing, formerly of the ESRI, as “a regressive and reactionary move”.
I am mainly concerned about the anomalies that will arise. Post graduate students doing valuable research who are not otherwise funded will be left in limbo. The vast majority are very serious and highly motivated people willing to live on a very small income, and the Government clearly does not care about them or the quality of research that emanates from this country. The measure will simply encourage a braindrain to countries where Government grants are more freely available.
I am also concerned about the restriction to 5 per cent of covenants for the benefit of old people. The exception of the permanently incapacitated appears only to cover the more extreme cases where constant institutional care may be required. The 5 per cent ceiling on covenants to people over 65 is grossly inequitable. Someone on £200,000 a year will get tax relief on £10,000 of his income, whereas someone on £20,000 will only get it on £1,000. This is not the type of regressive legislation I would expect from a Labour Minister for Finance. He still has time to change that section and when he realises how regressive it is he will do so.
I welcome the provisions of section 14 which require that automatic returns of rent subsidies be made to the Revenue Commissioners, by statutory bodies, such as health boards and local authorities, with details of the premises and its owner, so that there can be adequate cross-checking. This was something I had been working on as Minister and I welcome and support it in the legislation.
I am disappointed that the Minister for Finance has included no provision to meet the situation of cross-Border workers, who end up paying tax wherever it is highest. I also worked on that issue. I did not make the change last year because I undertook on Committee Stage of the Finance Bill to examine the question during the course of the year. Border Deputies from all sides of the House pursued this with me during September and October and we had agreed to move it forward in this year's Finance Bill. There is a good deal to be said for a system where tax is paid on income derived from one's employment where that employment is situated, the Exchequer foregoing the difference, and tax on all other income is paid where one resides. We should not discourage people from living in this jurisdiction — that is the effect of this section — as the continued prosperity of some of the Border regions, especially in Donegal, may depend on it. This applies also to Cavan, Monaghan and Leitrim. We should encourage cross-Border living and working as part of the human exchange which will bring better relations. The cost to the Exchequer of changing the system will be marginal, and the social and economic benefit disproportionate. I ask the Minister to make an amendment to this effect.
Residential property tax continues in modified form, despite the presence in Government of two parties which last year travelled the country in a road show promising that at the first available opportunity they would do away with it. They have had months to think about it and have made a few modifications, but seem happy to keep the tax. The Labour Party is deeply wedded to it as one of the last relics of socialism, a surrogate wealth tax. It is overwhelmingly a tax that hits people in the capital city where the cost of housing, and therefore of repayments, is higher. As I said in my speech on the budget, there is not much merit in tinkering further with it. For eight years we in Fianna Fáil put up with a tax in which we never greatly believed out of deference to other opinions in the House. We believe it should be scrapped because it is a nuisance and brings in very little money.
Section 29 of the Finance Bill is suspect. It undertakes to exempt from tax the foreign branch of a company that creates new employment and investment in the State. It has all the hallmarks of a cosy deal between the Government and a particular company to exempt it from the normal rules of the tax code. We should hear from the Minister what beneficiary he has in mind for which this is tailored. Our corporation tax code is already very generous to the manufacturing and international services industry. I am not sure that there is a compelling case for further lightening the burden in those circumstances. In fairness to the Minister, the House should be given more detail of what is involved when special clauses are introduced, in effect for the benefit of an individual company, so that a proper judgment can be formed. If the Minister has an answer, we will be glad to hear it.
An ongoing problem is the supply of finance for small and medium-sized firms. When in Government, my colleagues Deputies Mary O'Rourke and Séamus Brennan worked hard to assist SMEs, realising their potential for economic growth and expansion and seeing the opportunities that family business and small businesses generally bring for employment. At this time last year we expended much effort in bringing forward what were known as the section 23 reliefs to help small and medium-sized firms and family businesses.
The business expansion scheme is due to expire next year, and there is an ongoing problem that not all the schemes have a genuine job creation impact. Cheap EIB-type loans tend to be fairly limited in quantity. I do not see many serious measures in the Finance Bill that address this issue even though, as we know, it is indigenous firms that both directly and through their spin-off effects have most impact on job creation.
Shannon Aerospace managed to get £12 million without shareholder input and with the performance clause removed. While this can no doubt be justified in the circumstances and is important to Shannon, not many firms are so lucky. Only yesterday before an Oireachtas committee, the Small Firms Association castigated the budget and Finance Bill as particularly disappointing in that, unlike the 1994 legislation, they were devoid of measures to help the small business sector and ignored the recommendations of Deputy Séamus Brennan's Small Business Task Force. Ironically the present Minister for Finance was industry Minister at the time. I thought he would have followed the initiatives of both Deputies Brennan and O'Rourke in promoting those industries.
Perhaps, as in other areas, the people who helped the last Government to bring forward imaginative proposals can look forward to being told that their ideas are not wanted. I want to thank the Minister for Transport, Energy and Communications, Deputy Lowry, for his honesty. We believe he is a tough man and want to acknowledge that he was prepared to blow the whistle and say that the people who worked with us to devise schemes to save TEAM, Aer Lingus, Irish Steel, etc., are now on the wanted list — the legislation is being checked for technicalities to see if they can be dumped before their due date of disposal. Day by day the Minister, Deputy Lowry, examines not only the race card at Punchestown but the list of members of semi-State boards to see who can be picked off. What he announces today may depend on his humour and his winnings at Punchestown yesterday — he has had a fairly good week and has influenced the Minister for Finance and tried to tie the Labour Party into this. The Minister of State, Deputy Burton, would be horrified because, of all the people who would have a vested interest, one would have thought it would be two people who have a democratic mandate. The best people to have on a board are people who can be thrown out at the next election if they do something wrong. It seems if one is a councillor, particularly a Fianna Fáil councillor, the only thing one can look forward to is being shafted.
Quinn looks for more heads.
We will continue to work as best we can with those people who put forward good proposals. Unfortunately, the people who made those very good suggestions which helped to build up the Task Force on Small Business are not alone ignored but are being disposed of. My colleague, Deputy Cowen, did a tremendous job in building up and saving semi-State bodies in difficult times. Not all of the excellent people he chose were associated with my party.
It should be clarified that if one is not a member of the Fianna Fáil National Executive or a Fianna Fáil councillor but was just appointed by a Fianna Fáil Minister they might be saved. As we are all aware, the salary comes to the huge sum of £50 a year, in some cases £150 a year. The salary is obviously not the reason they are being thrown out, rather it is because they are associated with the Fianna Fáil Party or were seen walking in the streets with a Fianna Fáil Minister. It should be clarified that decent and honourable people who give of their time and service to the country will not be shafted because they were appointed by Fianna Fáil Ministers. In one week two members of the Fianna Fáil National Executive received their orders; one received them, secondhand, from the chairman of a State company while the other thought he was going to dinner.
His head was on the plate.
Ruairí wants more heads.
We will continue to try to put forward what we believe are sensible economic policies. Today I quoted independent commentators inThe Irish Times, The Economist and other finance magazines in indicating that, unfortunately, in regressive legislation the Government is making major financial mistakes which are creating uncertainty in the economy. My party's Finance spokesperson, Deputy McCreevy, will deal in more detail with the various measures in the Bill on Committee Stage when he will table a number of amendments.
Apart from some useful items this is one of the least exciting Finance Bills in the past 20 years. It will not impart any significant new dynamic to the economy additional to the budget. Unfortunately, it adds to the list of failures of the Government.
I wish to share my time with Deputy Ahearn.
I am sure that is satisfactory and agreed.
I welcome this opportunity to speak to the Finance Bill which gives legislative effect to the measures announced in the budget the aim of which is to tackle poverty, eliminate unemployment traps and to increase the incentives to work.The Irish Times- MRBI opinion poll after the budget showed that the electorate felt it was a positive budget and would lead to an increase in job opportunities. People further believed that living standards would rise as a consequence of it.
In the limited time available to me I wish to concentrate on a number of specific proposals. Section 7 provides for a tax allowance in respect of local authority service charges paid in full and on time. The maximum amount on which one will be able to qualify for relief is £150. I welcome this proposal which has been under consideration by different Governments for a number of years. However, it is only those who pay income tax who will benefit. Thousands of families throughout the country in either low income employment or in receipt of social welfare will not benefit. Perhaps this anomaly can be rectified by introducing a uniform waiver scheme.
We are all aware of the inadequate funding of local authorities. This issue has been a political hot potato during the years and has been shelved by successive Governments. If we are serious about reforming local government it must be addressed. I welcome the announcement by the Minister for the Environment, Deputy Howlin, at the Labour Party conference that he would commission a professional study on local government funding. Local government affects everyone in the community. I appeal to local community and other interested groups to make their views on this issue known.
It was reassuring to hear the Taoiseach announce at the LAMA conference held in Bray last week that a commission would be established to oversee the process of devolution. If we are serious about devolving more responsibilities to local communities which will entail further tiers of local government it is imperative that a fair and equitable system of funding be put in place. I appeal to the Opposition, Fianna Fáil and the Progressive Democrats, not to play party politics with this important issue. We should not fail the people on this occasion.
Section 5 provides for the introduction of a tax allowance for all tenants in private rented accommodation. The new rate will be 27 per cent with a maximum allowance of £1,000 for a married couple, £750 for a widowed person and £500 for a single person. I welcome this development. It is right and proper that landlords who rent property should be obliged to declare their income to the Revenue Commissioners. This section will enable tenants to place their outgoings on rent against their tax liabilities. This will lead to landlords who cheat by not declaring this income being flushed out as they will now be required to issue rent receipts. I understand that tenants when making their tax returns will be obliged to furnish their landlord's tax reference number.
There is a danger that some unscrupulous landlords will endeavour to hike up rents to compensate themselves for the extra tax they will now be required to pay. We must ensure that regulations are put in place to prohibit this and protect tenants. I ask the Minister to bring this to the attention of the relevant Minister.
Private rented accommodation has a significant role in providing accommodation for those in need of housing and on local authority waiting lists. There has been a significant change in Government policy on public housing since 1993. I welcome this. Provision was made in the budget for 3,900 local authority housing starts and acquisitions in 1995. This compares with a figure of a little over 1,000 in 1992. Notwithstanding these improvements there would be a major housing crisis were it not for the availability of private rented accommodation.
Last year the State paid out £43.4 million in rent subsidies to the various health boards. The figure for the Eastern Health Board was £26 million. This enormous sum is paid by the taxpayer to private landlords. It is only right that landlords should be required to pay their fair share of tax and this will require health boards to give details to the Revenue Commissioners.
I am pleased there is a reference in the Bill to the C45 system. Most of the recommendations of the black economy monitoring group are being implemented on an administrative basis and I hope this will bring to an end the increasing and widespread abuse of the C45 system in the building industry. The black economy has always been a problem. Over the years trade unions and reputable employers endeavoured to work together in an effort to stamp it out, but their efforts were undermined by the increased abuses of the system by a minority of employers.
Under this system workers in the building industry lost their social welfare entitlements and protection under laws such as health and safety, unfair dismissal and so on. Building workers and carpenters, people who have been working for 25 years, have come to me in despair when they were told they were to become involved in the C45 scheme. They did not want that but believed they had no alternative. I hope that position will be changed under this Bill. I compliment construction workers and trade unions for their efforts on this issue. The Minister, Deputy Quinn, who in his previous ministry took on board the views of his Labour colleagues and other public representatives, has responded in a very positive way.
The Bill provides for a pilot renewal scheme aimed at renewing and updating tourist amenities and facilities in certain seaside resorts. I hope this innovative scheme will attract a greater number of tourists to our traditional seaside resorts. We are all aware of the changes in holiday patterns in the past 20 years or so. God be with the days when, as a young entrepreneur, I sold kettles of boiling water in Portrane to hundreds of day tourists from Dublin city centre. Those days are long gone. This scheme will provide communities with the opportunity to rejuvenate seaside towns and I appeal to business people to avail of it.
I am very disappointed that by and large east coast seaside towns are not included in this scheme. Deputies, particularly those in maritime constituencies, can identify suitable towns for inclusion in the scheme. In my constituency the towns of Rush, Skerries, Loughshinny, Balbriggan, Donabate, Malahide and Portmarnock could be included. I hope the success of the pilot project will encourage the Minister to extend the scheme and that some, if not all, the towns I mentioned will be included.
I appeal to the Minister to give serious consideration to the inclusion of the town of Balbriggan in the urban renewal scheme. For some time the people of Balbriggan, through the business community, town commissioners and public representatives, have pleaded for urban renewal status. The town meets all the criteria required, originally it was the industrial capital of Fingal, but it has lost its traditional industries, with no replacements. Although it has an educated workforce there are high levels of unemployment in the area. Balbriggan and its people need a boost and I call on the Minister to use his influence in Government to have the town designated under the urban renewal scheme.
The budget and Finance Bill are about making choices and establishing priorities, first by the Minister for Finance and the Government and ultimately by the Oireachtas. Yesterday morning I had reason to visit Beaumont Hospital between 12.30 a.m. and 2 a.m. The 26 patients lying on trolleys, some for more than 12 hours, and other people who were awaiting attention had no choice. Many of them had become ill at various stages during the previous day, others were involved in accidents, and all of them were taken to the accident and emergency unit of that hospital. I speak on behalf of the patients and their relatives and friends whom I met on that occasion as well as on behalf of the 250,000 people from north Dublin who live in the catchment area of Beaumont and the Mater hospitals. The present position in accident and emergency departments is untenable.
I still recall the pleading of the two daughters and son-in-law of an 88 year old woman who had been in Beaumont Hospital for 12 hours and still lay on a trolley awaiting admission to a ward. I still see that woman's feeble, wrinkled face as she endeavoured to cope with an oxygen mask. As I left, her daughter asked me to say a prayer that her mother would not die that night on the trolley. It is not my intention to apportion blame to anybody. My sole purpose is to highlight a major problem that concerns my constituents in the north Dublin region, a problem that must be resolved.
I recognise and fully support the achievements in the health service in recent years by the Minister for Health and his predecessor. The increase in allocation for acute hospitals by £17 million this year and the waiting list initiative are major achievements, but the people to whom I spoke yesterday morning need greater assurance. They demand a resolution of this problem and deserve nothing less.
This year's budget and Finance Bill form the first part of a programme of three budgets. Major improvements and changes have taken place arising from the budget and I look forward to supporting the Minister for Finance, Deputy Quinn, and the Government in bringing about the necessary changes that will result from this Bill.
Anybody listening to the contribution of the Leader of the main Opposition party should be able to ascertain the priorities of his party by the length of time or emphasis he places on issues. I was alarmed that he devoted more than five minutes of his contribution to the proposal that two of his local councillors should be removed from the board of the ACC. I find that extraordinary as surely it is not a major issue that will affect the national economic position and it will hardly affect our national or international image. Yet he saw fit to devote up to six minutes of his contribution on a major debate to deal with what is basically a trivial matter. He devoted 50 seconds to what will be a major issue, the compensation to be paid to blood transfusion victims. He referred to the further expenditure involved and the burden on our national finances. I consider it a serious matter that he could only devote half a minute to that major tragedy, during which he emphasised the cost it will involve for the Exchequer. He did not express a word of comfort for the victims or mention the cost in human suffering and family trauma for those affected. Anybody who chooses to make reference to that tragedy should at least express words of comfort for the victims and to call for proper consolation, support and compensation. I feel strongly about this issue. We do not know who is to blame or where the fault lies. The buck has stopped nowhere except in the homes and personal lives of those affected. Money has been spent on tribunals on the beef industry and other investigations and inquiries. There should be an inquiry into the running of the Blood Transfusion Service Board and an indepth examination to ascertain why this major tragedy occurred. People deserve that as this is a matter of life and death. Irrespective of what impact it will have on the national finances, it is something we have a duty to do.
The Finance Bill is the most important legislation debated in this House in any year. Because it gives legislative shape to measures announced in the budget it affects everybody, those who work, the unemployed, the old and the young and those with and without resources. Like all previous Finance Bills, some parts please and others hurt, some go too far and others not far enough. By its nature it can never meet the needs and aspirations of everyone. I commend the Minister for Finance and the Government for trying to make the best use of scarce resources. As everybody is aware, it involves choosing options and the decisions are made with the intention of trying to improve the quality of life for as many as possible.
I would like to comment on several sections. Section B relates to tax relief for donations to Third World charities. I welcome that measure and any that encourages, enables and promotes such donations. We have a proud record in that regard. I believe that charity begins at home and it is unfair that this relief has not been extended to donations for home charities. Many Members have received numerous calls expressing concern, anger and frustration from people involved in home charities, such as the Society of St. Vincent de Paul and other organisations caring for people with disabilities and the mentally handicapped. They have a justified fear that this section of the Finance Bill will entice people away from giving financial subscriptions to their charities. I take this opportunity to commend the work of all those who do voluntary and other work in charitable organisations. The burden of responsibility for those on the margins of society would have to be shouldered to a far greater extent by the Government were it not for the tremendous work carried out by those involved in voluntary organisations. We have a proud record of community support not only for those trapped in the lower income groups, but for those who suffer any disability.
I find it hard to understand why tax relief does not also apply to a contribution for a home charity. I urge the Minister to reconsider this section on Committee Stage. He should give serious and generous consideration to the inclusion of home charities in this section. Their role in society needs to be encouraged and supported. Their work must be recognised and appreciated. Their exclusion from this section is a deep rebuke considering the work they do. They rightly and justifiably consider it a regressive step which will hinder their power to raise funds. I speak on their behalf because I am a great admirer of the work they do. They have made strong appeals to me to put this point to the Minister for Finance during this debate. I look forward to following up this point on Committee Stage.
I, like Deputy Ryan, welcome the tax relief provision on the payment of service charges. However, that area of local authority fundraising must be organised on a basis that will be fair to all. This is a major issue of debate in many local authorities and for many it is an election issue in that some local authority members promise the electorate that if elected there will be free water and refuse services. Water at any price is cheap as one only has to have the service cut off to realise how essential it is for our well-being. However, we must have a standardised charge. At present charges vary greatly among local authorities and some do not impose charges. It must be accepted that the people who pay for such charges will rightly conclude that they are being unfairly treated.
There should be a standard charge for essential water and refuse services which would eliminate feelings of discrimination among people where some pay higher charges than others. I would not support the argument that such services be provided free. While that tax relief is welcome, in that it gives recognition to those who pay their full service charges, it warrants further examination. I am delighted to note that the Minister for the Environment is undertaking a review of this.
I welcome the rent subsidy allowance for tenants for private sector dwellings which, while viewed by many as little more than a method of paying tenants to rat on tax-evading landlords — by offering them a tax deductible incentive — recognises large expenditure by people who cannot afford to purchase their homes. It also recognises the difficulties of many rural dwellers who, because of the overall employment scene, cannot obtain employment locally and have to seek accommodation away from home to take up employment. We have a proud record of home ownership, an aspiration of almost everybody in our society, which is why any incentive that enables people to purchase their homes is to be welcomed. Although this relief is minimal it is welcome. There is one aspect of this provision with which I have difficulty, the stipulation that tax relief will apply only to tenants in employment with earnings, no such relief being granted to students or the unemployed, whereas many unemployed find themselves in rented accommodation. Like any measure, it has its advantages and disadvantages. That students will not be entitled to tax relief may well encourage many landlords to make additional accommodation available to them. I always have sympathy for students in their endeavours to find accommodation in our cities. One would think they had a bad record, so many landlords are unwilling to allow them to be accommodated inside their properties. We must remember that the cost of rented accommodation is a major factor for many rural families sending their children to third-level colleges. Therefore, it is regrettable that this expenditure does not qualify for the tax relief applicable to earners seeking similar accommodation. I hope the Minister will re-examine this issue.
For the first time today we heard clearly the Fianna Fáil Party view on the elimination of fees for third-level students. When a Private Members' motion on the subject was debated here — and on budget day it was almost impossible to detect the position of that party — it appeared they were for it, then against it, wanted it implemented but did not want to support the proposal; it appeared they did not know what they wanted. Today, the Leader of the Fianna Fáil Party, Deputy Bertie Ahern, described it as having been ill-thought out, regressive and reactionary. At least it is something to know where his party stands on the issue but it is most surprising they appear to be unaware of the tremendous burden the costs of third-level education impose on many families.
Like many other Members I hoped additional resources would be made available in this Bill. While welcoming the additional allocation of between £180 million and £220 million for the community employment scheme, I am sure many other Members are witnessing severe cutbacks on this scheme within their constituencies. This is a very serious issue in that so many people who want to work have no option but to join the unemployment queues and collect the dole. This is another issue the Minister for Finance will have to examine because, in the case of many constituencies, these cutbacks are the equivalent of two major industries being closed down; I am thinking in particular of south Tipperary. I hope the Minister for Enterprise and Employment, Deputy Richard Bruton, will devise some method of ensuring that this community employment scheme will be reinstated somewhat to its 1994 level.
I shall refer to a number of issues ranging from the overall question of the banks and financial services, to the unemployment position, to section 153 and to Northern Ireland although, if time permitted, I should like to deal with others.
I noted that Deputy Theresa Ahearn criticised my party leader for not having dwelt sufficiently long on some issues. Within the time available, it is impossible to deal with all of the vital issues warranting discussion. For example, I would be happy today to deal with Beaumont Hospital, an issue raised by Deputy Seán Ryan. I hope the Minister for Health listened carefully to what Deputy Seán Ryan had to say because it was my firm impression that we were not listened to when we raised this issue in Private Members' time on Tuesday and Wednesday evenings.
In 1987, in theProgramme for National Recovery, Fianna Fáil recognised that our financial services sector had considerable growth and employment potential. The Fianna Fáil election manifesto of January 1987 and the Programme for National Recovery agreed by the Government and social partners later that year stated that Ireland is ideally placed to build up a strong international financial services centre based on our first-class, computer-literate workforce, advanced telecommunications network and an advantageous geographic location between the time zone of the American and European continents.
The development of the International Financial Services Centre at the Custom House Docks in Dublin and the promotion of internationally-traded financial and professional services on a wider basis nationwide was aimed primarily at providing high quality employment in terms of skills requirements and levels of pay.
The inclusion of section 56 — providing that a bank levy payment can be set off against a bank's corporation tax liability — and of section 125 which continues the imposition of the levy, affords me an opportunity of commenting on more fundamental issues relating to the operations of the banks. I will concentrate on issues of considerable importance, directly relevant to the general community, more especially to the labour market. Here I speak as my party spokesman on labour affairs.
Notwithstanding the success of the International Financial Services Centre and the prestige of some high-level financial services jobs, the reality for the approximate 16,000 members of the Irish Bank Officials' Association and for young people who aspire to secure employment in the banks is that conditions of service for rank and file employees of banks are rapidly deteriorating in absolute and relative terms. This is a matter of grave concern not only to those who work, or who aspire to work, in any of the 664 branch offices of the main associated banks nationwide but also to employees, and potential employees of all other financial institutions for whom the associated banks effectively act as trend leaders. We could be talking about some 210,000 people who work in the wider professional services sector, for whom banking and financial services set a headline in terms of pay and conditions of service. Our banking sector earns a high level of profit primarily from the general community, corporate and personal. Those profits, in some cases, accrue to the benefit of a very small number of highly-paid executives while young people are recruited to lowlypaid, insecure, temporary jobs.
At the other end of the age profile, many employees over 50 years of age are being squeezed out into early retirement, the net result being that advances in communications technology are being used to create a bank structure with two extremes. At one end of the scale there are the tiny elite who earn almost 50 times the average industrial wage — some of them earn more — while at the other end of the scale there is the large and growing number of employees recruited at a rate which is not much more than two-thirds the average industrial wage and for whom there are few prospects.
The time has come for the Government to review all aspects of the operation of banks from both a social and economic viewpoint so as to ensure that the community benefits from the high quality employment opportunities which should be available in this sector and which were envisaged in may party's policies in 1987. It is not acceptable that large profits earned from the general community should continue to benefit a small elite. It is ironic that the first Labour Party Minister for Finance in the history of the State should make a significant move towards abolishing the bank levy in circumstances where the major banks are mainly benefiting a small elite who award themselves a salary which is 50 times the average industrial wage or higher and almost 100 times the starting wage of their most junior clerical staff. It is important to say that those figures are not exaggerated.
Today'sThe Irish Times reports that Mr. Jim Culliton, chairman of the AIB Group, defended the sharp rise in fees paid to top executives at the bank in the face of fierce criticism at yesterday's annual general meeting in Dublin. He claimed that the AIB was not out of line on directors pay and was well served by its executive directors, one of whom was paid £1.7 million last year. The article goes on to state:
We are not leading the market when it comes to average remuneration for executive directors", he said. The five executive directors of AIB cost the bank £3 million between pay, performance-related bonuses and pensions, an average of £600,000 a man in 1994, its annual report has shown.
That level of pay is immoral especially at a time of such high unemployment and the Government and the banks should look at this very serious issue. I have specifically referred to the glaring contradictions between the massive levels of salaries paid to the top elite and the very poor wages paid to people working in the lower levels in the banking sector.
Mr. Culliton went on to say that the bank will be taking on 300 new permanent employees by the end of May, who will be recruited from its temporary and part-time employees. Obviously I welcome this announcement. He said that these employees will start on a salary of £9,210 which could rise to £16,334 over 15 years. The figures speak for themselves; all is not well within the banking sector.
In 1987 Fianna Fáil stressed the importance of the financial services sector for the creation of decent, sustainable and high quality jobs. We did not envisage that the banking sector would be used as a means of creating low wage, temporary or part-time jobs. When one looks at the huge differences between the salaries paid to those at the top and those paid to the people at the bottom one realises that something has gone very wrong in the banking sector. The recent strong growth in banking profits has been startling and it is wrong that this should be of benefit to a small elite.
A number of my colleagues have referred to section 153. The beef tribunal exposed huge tax evasion, which at that time was specific to company auditors. We all agree that if an auditor is aware of major fraud then the Revenue Commissioners should be informed. The tribunal showed that money was being paid under the counter with no PAYE or tax deductions. Everyone agrees that this practice is totally unacceptable and that the issue of tax evasion needs to be addressed. However, the Minister's proposal amounts to using a sledge hammer to kill a wasp; he is putting in place a type ofsecuritat regime similar to the one in Ceausescu's Romania where people were coerced to inform on their neighbours. We should not be too surprised that the parties in Government are doing this as one of them, Democratic Left, had a close association with the communist parties of Central and Eastern Europe in the not too distant past. They would like to forget about this association and would like all of us to forget about it, but it is proper to remind the House about it.
Having listened to the contribution of Deputy Dukes, I am convinced that the Fine Gael Party is not satisfied with this new measure. Given their associations with and knowledge of the business sector I am equally convinced that the Minister for Finance, Deputy Quinn, and the Tánaiste and Minister for Foreign Affairs, Deputy Spring, are not totally comfortable with this new proposal which, in effect, amounts to an infringement of civil liberties and will make the work of accountants and tax advisers virtually impossible. To date there has been good co-operation between tax consultants and the Revenue Commissioners and tax consultants have played a major role in bringing people into the tax net. This measure will lead to the irretrievable breakdown of the ongoing rapport between tax consultants and their clients. Legitimate businesses pursue legitimate means and this measure presumes that all businesses are corrupt. In this context it is a very mean and negative measure which says much about the Government.
The Government purports to be open, democratic and fair but, regardless of how often they repeat these words, I am not convinced that this is the case. This proposal has all the hallmarks of a totalitarian, begrudging, rigid and mean regime and it will result in the breakdown of self assessment, trust, communications, co-operation and transparency, all of which currently exist within the system. The reality is that the Revenue Commissioners already have adequate powers to deal with the issues the Minister is attempting to address in this section. Some of these powers have not been used and at this 11th hour the Minister for Finance, who has been presented in the media and in particular in the financial supplements of newspapers as someone who understands business and is not really a left wing socialist, should show us his true colours. If he introduces this stupid measure he will clearly demonstrate that he has become a prisoner of Democratic Left-The Workers' Party and that the three parties in Government have decided they will stick together simply for the sake of staying in power.
We can forget about the ideologies, the policies, the philosophies and the programmes for Government. The public finances are in a crisis and major problems are looming, but the Minister will ignore them and trundle on. If he takes this course of action it will have devastating effects for the country and do serious damage to our young educated workforce. It will send out a wrong signal about the open society we want to create. I ask the Minister not to take this course of action, but I am sure he will not take my advice. If he proceeds along those lines he will sound his death-knell politically. I want to see the end of this stagnant Government that is lacking in innovation and initiative. It will probably trundle on for some time, but eventually it will come to an end and nobody will remember it because it lacks spirit and character. Itsraison d'être is purely survival.
Deputy Crawford referred to the peace process as being the most central issue facing us. We can talk about Finance Bills and all our other problems, but the most important development in recent times has been the peace process which must be handled with care. For that reason, I was concerned to hear the Taoiseach's gaffe when speaking recently on a Cork radio station. I tried to raise this matter by way of parliamentary question, but it was ruled out of order. The Taoiseach stated on that programme that he was sick of answering questions about the peace process. Those are very disturbing comments, not because of the language used but because of their underlying message. The Taoiseach has been in office for a mere four months and has not been troubled significantly by interviews, having been carefully handled and coached by his media experts. To say he is sick of answering questions about the peace process is a grave insult to people such as John Hume, who has had to answer the same questions repeatedly for a number of years. The Taoiseach's frustration expressed in this outburst is chilling after such a short period in office. Will he assure us that there will not be a repetition of such behaviour? The peace process demands delicate and sensitive handling and I trust the Taoiseach will bear that in mind in his statements in the next few months. Like his predecessor, Deputy Reynolds, John Hume and many other politicians, he must realise that he will have to answer the same questions repeatedly. That is part of the evolving process which must be gently eased along.
Yesterday I raised a very important question with the Minister of State at the Department of the Taoiseach, Deputy Mitchell, in regard to his role in the area of unemployment and the local development fund, for which he has responsibility, and which will bring £89 million to this country. I raised with him a matter relating to the community employment scheme, which 40,000 long term unemployed people took advantage of last year. This scheme benefits those employed on it in many worthwhile projects and I am sure all Members are aware of its importance to the country. There has been a major cutback in funding for the scheme for 1995 and 7,000 people will be turned down. I asked the Minister of State if he would correct the mistake made by the Government in not allocating adequate resources to the scheme this year, but he told me it was not his responsibility. That is a frightening statement from a Minister of State who has spoken at length about unemployment. However, when one examines the matter, one discovers that there are at least four Ministers in this Government with responsibility for the area of unemployment, namely, the Minister, Deputy Bruton, and the Ministers of State, Deputies Fitzgerald, Rabbitte and Mitchell. The Minister of State, Deputy Mitchell, has £89 million to spend on providing jobs for the long term unemployed in the next few years.
Who is in charge of unemployment and co-ordinating the various schemes? The Minister for Social Welfare told us yesterday that he is also involved in tackling certain aspects of the unemployment crisis, and I welcome his efforts. I am concerned that Ministers are establishing little fiefdoms, attending to their own agendas and nobody is in charge of co-ordination. There are many announcements about what is happening, but there is no cohesive plan behind those announcements. The effectiveness of such an approach is questionable.
The number of schemes that has been set up is a cause of major concern. There are 36 State agencies dealing with unemployment in the west and this makes it very difficult for the small business person trying to get a FÁS trainee or an unemployed person trying to secure a job. There are the larger agencies such as FÁS, IDA Ireland, Forbairt and Údarás na Gaeltachta and smaller ones such as county enterprise boards, Leader I, Leader II, integrated rural development companies, area partnership, local area partnership schemes, local authorities, regional authorities, county strategy groups and the new European Union schemes. While I welcome the establishment of such schemes, I am concerned that a Minister has not been charged with responsibility for co-ordinating those agencies.
The Minister of State at the Department of the Taoiseach, Deputy Gay Mitchell, has taken responsibility for this particular EU local development scheme which involves an amount of £89 million. That is a lot of money but the promise is that we will have 8,000 jobs as a result of this scheme. Yet, when I asked the Minister yesterday if he could in some way reverse the announcement made by the Minister for Enterprise and Employment, Deputy Bruton, to cut back the 7,000 from the community employment scheme, he said it was not his responsibility. That is totally unacceptable.
I ask the Minister, Deputy Bruton, to sit down with his Ministers of State to devise a national plan with regard to unemployment. This is a serious matter. In his two page press release which he issued on 15 March, the Minister of State, Deputy Mitchell stated: "Community employment, which is intended to act as a bridge between long term unemployment and eventual re-entry into the labour market, may be extended from one to three years for certain participants". Obviously he admits that community employment is part of his brief and, therefore, a matter which he should address.
The whole purpose behind community employment schemes is that, according to experts we will have unemployment up to the year 2005. We accepted that fact when we were in Government and this Administration admits it also. We have a duty, therefore, not just to provide long term and sustainable employment but also to give those people who wish to participate in community projects the option to do so in a voluntary capacity. Nobody has ever suggested — and I certainly do not do so — that we should coerce people to participate in these schemes.
The strength of community employment schemes is that they have provided opportunities for individuals. They respect dignity of people while providing valuable work for individual communities. As public representatives we have all been approached by various project leaders asking us to raise this issue. I raised it on a number of previous occasions as has my colleague, Deputy O'Rourke.
I ask the Government and the Ministers of State to address this issue. Minister Deenihan, in particular, is involved in one aspect of this, the Leader programme. Will the Minister of State raise this matter with his colleagues and ensure that the community employment schemes are opened up to those people who wish to participate in them?
In response to Deputy Kitt and his reference to the Taoiseach's interview with a Cork local radio station, the Taoiseach had agreed to be interviewed on local issues only. He was quite specific about that before the interview took place. The interview was extended to cover other issues for no apparent reason.
I am sure Deputy Kitt and others on that side of the House acknowledge the contribution the Taoiseach has made to the Northern Ireland peace process and his responsible approach to it during delicate circumstances. Even those people in the North who were critical of him in the past are now acknowledging the responsible approach he has taken to this sensitive issue.
Some of the statements in this House may not be helpful to the process. We should be very careful, as the Taoiseach was in Opposition, about criticising the Taoiseach and his approach to the Northern question. We must be careful about what we say in this House because the whole peace process will continue to be a sensitive issue until a final settlement is reached. I am a little disappointed by the approach Deputy Kitt has taken in regard to the Taoiseach's statement.
It is the truth.
With regard to the community employment schemes, I agree with Deputy Kitt that this has been a successful initiative. However, the allocation this year has been increased considerably over last year. This scheme has been very successful and popular. The Government is currently reviewing it and it is hoped that additional places will be provided before the end of the year.
The Deputy referred to the multiplicity of schemes and I agree with him in that regard but it must be acknowledged that all these schemes were put in place by Deputy Kitt's party when it was in Government——
We want them brought together.
——without any effort to co-ordinate them or ensure that there would not be any overlap. We have been in Government for a little over four months and we are doing our best to ensure that there will not be any overlap or waste of scarce resources. Despite the large amounts of funding we are getting from Europe, there will be a scarcity of funding in most of the programmes.
This year's Finance Bill includes some amendments to the Budget Statement to which I will refer in my speech. However, before considering the main components of the Finance Bill as it affects farmers I want to consider it in the context of the performance of the national economy and the agri-food sector.
The indications are that the domestic economy performed well in 1994. The economy grew in GDP terms by 6 per cent; consumer spending was up by 5 per cent; exports increased by 10.5 per cent; employment increased by 36,000 and unemployment declined by 12,000 and inflation remained at 2.4 per cent.
The favourable growth rate stems from a strong recovery in domestic consumption and investment spending as well as a good export performance. The recovery in the domestic economy helped employment to fall through 1994 and, despite the growth in consumer spending, inflation remained moderate for the year at 2.4 per cent.
This year looks like being another year of strong growth in the economy. The relatively low interest rate regime in place over the past few years has helped to fuel consumer spending and this trend should be continued into 1995. The early indications are that the economy will grow by 6.25 per cent this year, employment should rise by 31,000 and inflation is likely to average 2.5 per cent. Most significantly, unemployment should continue to decline with a further reduction in the live register of about 16,000.
The budget, by reducing the cost of providing jobs for employers, and at the same time increasing employee take home pay through tax cuts, will provide the necessary framework for economic growth and employment this year and beyond.
In common with the economy as a whole the agricultural sector also performed well in 1994. Despite the fall in agricultural output, farm income increased by 6.4 per cent in 1994 following increases in 1993 and 1992. Over the last three years agricultural income has increased by 30 per cent, or 40 per cent when account is taken of interest paid by farmers. The good performance of the sector should be viewed against the background of poor weather conditions in the spring which impacted on cereal production and increased feed costs for livestock owners.
The increase in agricultural incomes was helped considerably by the significant increase in the level of direct payments to farmers in 1994. These payments, which amounted to £670 million last year, are in the main intended to compensate farmers for the reduction in market supports and set aside requirements under the reform of the Common Agricultural Policy. The further increase in compensation payment rates this year combined with payments under the Common Agricultural Policy accómpanying measures — rural environment protection scheme and forestry premiums — will ensure that direct payments make a significant contribution to farm incomes in 1995.
CAP reforms, GATT commitments in agriculture as well as the future eastern enlargement will exert increased pressure on the Irish agricultural sector. The sector will have to become even more competitive to withstand the pressure from a more liberalised trading regime under GATT. Equally, there is the need to maintain viable rural communities. These two policy objectives underlie the measures in my Department's Operational Programme for Agriculture-Rural Development and Forestry which is now being implemented. The programme includes measures to improve the structure of agriculture, to encourage on farm investment as well as compensatory payments to farmers in less favoured areas.
In addition to the range of Structural Fund measures already mentioned, the Leader II initiative recently approved by the Commission, will continue to encourage local groups to influence the development of their areas in the medium-term.
Measures to support and strengthen the food industry have also been put in place. The food sub programme approved late last year covers four main areas — capital investment, research and development, marketing and promotion as well as training. A total of £283 million of public expenditure will be made available to implement the programme and it is expected that this will attract a further £358 million in private expenditure.
The provisions for farmers in the Finance Bill incorporate not only the improvements announced at budget time but go further to include a number of significant amendments to the Budget Statement. These amendments, together with the budget provisions and the range of policies mentioned already are intended to improve the competitiveness and viability of the agri-food sectors.
Farmers along with other taxpayers will benefit from the increase in personal allowances and in the standard rate band. In addition, farmers have benefited from the increase in the car value threshold from £13,000 to £14,000.
The reduction in the standard rate of corporation tax from 40 per cent to 38 per cent will be of benefit to co-operatives, food companies and farms which are set up as corporations.
On capital acquisitions tax the rate of relief on business, other than land and buildings, increased from 25 per cent to 50 per cent and the rate of relief applying to the value of land and buildings over the threshold increased from 30 per cent to 50 per cent.
In addition to these improvements the Finance Bill incorporates a number of other changes intended to remove a number of anomalies. Quick succession relief applies a tax exemption for cases where property which has been given to a child then reverts to a parent following the death of the child within five years of receiving the property. Business relief for incorporated farm business allows relief at 50 per cent for incorporated farms. The advantage of this measure is that where ownership of all or part of a farm — which is incorporated into a limited company — is transferred it will now qualify for business relief. This change will be of particular benefit to farmers in intensive production sectors such as mushrooms and pigs.
The removal of the residence requirements for agricultural relief is intended to allow a returning emigrant to avail of agricultural relief provided he or she remains resident in the State for the three years after the year of assessment in which the gift or inheritance is received.
On capital gains tax the budget announced that a form of roll over tax is to apply to farmland bought under a compulsory purchase order for road improvement. This was to apply only where a farmer used the proceeds of the compulsory purchase order to re-invest in land or in farm buildings. I am pleased the Finance Bill has extended this to include reinvestment in other farm assets — plant and machinery.
The new provision for stock relief, increased to 100 per cent, to apply to all young trained farmers who have become liable to tax on farming profits in the previous two years is very welcome. The subsequent relaxation of the requirement that the relief be confined to young farmers who qualify for the scheme of installation aid for young farmers will mean that the change will benefit a greater number of young farmers.
The budget addressed a number of the tax problems that can arise when a farmer is forced to destock for disease eradication purposes. Clearly, the main problem is that the compensation paid to farmers and the subsequent restocking can result in artificial profits. The change allowing stock relief for farmers reinvesting the paper profits that can arise where all the cattle herd is slaughtered for disease control purposes has been included in the budget.
One of the most important innovations in this year's budget as far as I am concerned was the provision of £5 million to establish a Charter of Rights for Farmers. This is absolutely essential to ensure that farmers get the full benefit of CAP reform by receiving the payments on time. In the past few years Irish farmers, like their counterparts in other EU member states, have been experiencing the effects of the CAP reform shift from market support to direct income support. As we all know the implementation of these complex measures placed a great burden on the resources of the Department of Agriculture, Food and Forestry. The size of the task is evidenced by the fact that in the period 1991-94 a total of £1,745 million was paid to farmers. These direct payments to farmers are expected to reach £750 million alone in 1995, and of course they make up a very significant proportion of farmers incomes.
The Department was initially unable to deliver the kind of service to farmers that would have been desirable. This was caused by the increased number and complexity of these new schemes and the speed with which they were introduced, combined with inadequate structures, technology and accommodation in the Department, which inhibited the ability of the Department to process applications promptly. While services have been improving there is a need for greater efficiency in the delivery of them.
Since Deputy Ivan Yates and I arrived at the Department of Agriculture, Food and Forestry we have been exploring every means possible of improving the payment system for headage and premia to farmers. We and the Department staff have progressed the Charter of Rights for Farmers at a remarkable speed by any Civil Service standards, involving, as it did wide ranging discussions with the farm organisations and in the Department.
That we had by Easter launched a comprehensive Charter of Rights for Farmers covering all of the services and payments available from the Department of Agriculture, Food and Forestry to farmers is ample testimony to the energy and dedication applied in putting the charter in place. Given the wide application of the charter throughout the Department I compliment especially all the staff of the Department of Agriculture, Food and Forestry on their ability to produce this charter in such a period and to make arrangements to deliver the type of user friendly top quality service it sets out.
It is commendable that so soon after the publication in March of the National Economic and Social Forum report on "Quality Delivery of Social Services" we now have a Department putting in place a charter of rights and "one stop shops" which provide the kind of customer rights and services envisaged in that report.
There is at present a greater awareness within the public service of the need to provide a service which is customer focused and responsive to the needs of the customer and where the impact of the service provided feeds back into policy making.
It is clear that one of the issues which farmers perceive does not provide them with the type of service they require was the restricted taking of telephone calls. I am therefore pleased that we have now returned to a full telephone service. I am also glad that from 1 September 1995, all the Department offices will be open to clients during the hours 9.30 a.m.-12.30 p.m. and 2 p.m.-5 p.m. In the interim period, personal visits can be arranged by appointment.
A further important innovation is the establishment of an appeals unit to deal initially with appeals under the headage and premia schemes. This will provide a formal procedure of redress for farmers.
The launch of this charter could not be more timely. The Government is focusing attention on the provision of public services in a more user-friendly manner geared towards the needs of the sector involved. The new charter of rights for farmers must be seen in the context of the Government's commitments in the programme,A Government of Renewal. Reform of the public service is a priority. Specific responsibility for the development of the strategic management initiative and for ensuring that the interests of the consumer are paramount in all dealings with public services has been assigned to my colleague, Deputy Doyle, Minister of State at the Departments of the Taoiseach and Finance. The primary objective of the initiative which is currently under way across all Departments and offices is to put in place a management process that is focused on ensuring continuous improvements in the performance of the civil and wider public service.
This Government is of the view that the interests of the client or the customer must be paramount in the delivery of services by all public bodies. That the charter of rights for farmers includes a provision for its review is significant in that it can be adapted to changing needs and further improved if the need is perceived.
Improvements have already been made in the service of the Department of Agriculture, Food and Forestry and the Government is committed to further improving accessibility to services through upgrading its offices, better signposting, extended opening hours and better co-ordination of the delivery of its various services in one stop shop arrangements.
The realistic targets which have been set in the charter will ensure the delivery of the highest quality service to farmers. The delivery of a top quality, effective and efficient service in an atmosphere which respects privacy and confidentiality is the minimum to which farmers are entitled. I am glad to say that, after such a short time in Government, we have succeeded in putting mechanisms in place to ensure farmers will be given a top quality service during the implementation of the charter.
I am satisfied that the Bill as framed is a significant step towards the Government's overall aim in the tax area as set out inA Government of Renewal. I am confident that it will benefit all farmers and should encourage restructuring by reducing the transfer and income tax burden on young farmers.
Hopefully the pilot scheme for seaside areas will ensure the survival and revival of these traditional resorts, many of which have fallen into decline. The tax incentives available in designated areas under the urban renewal scheme have been successful in promoting the renewal and revitalisation of cities and towns and have encouraged development in areas where it would not otherwise have taken place. It is recognised that certain resorts also need renewal. If these areas are to appeal to domestic and foreign tourists it is essential that accommodation and other tourist facilities are improved extensively to meet the demands of the modern holidaymaker. The provision of additional tourist facilities, where appropriate to the character of the resort, could bring a new and growing tourism trade to many areas. I welcome the scheme and am confident it will have the desired effect.
The scheme will apply from 1 July 1995 for three years and if successful I am sure will be extended to other resorts which are suffering the same decline. The Finance Bill provides that all Bord Fáilte registered and approved visitor accommodation such as hotels, guesthouses, caravan and camping sites, holiday hostels, bed and breakfast establishments and so on together with any tourism building or structure as may be approved for the purposes of the relief by the Minister for Tourism and Trade, in consultation with the Minister for Finance, may benefit under this scheme. While the list of approved tourism buildings and structures has yet to be finalised it is envisaged it will include leisure, sport, entertainment, heritage, dining and other facilities used by tourists and visitors.
The capital allowances, double rent allowance and rent of residential accommodation relief are incentives for people to invest in these resorts. I welcome the initiative, particularly as Ballybunion is included. It was a popular tourist resort but time has overtaken it. Many of those who went to Ballybunion in the past now go to resorts in the Canaries and other parts of the world. If we invest in indoor leisure facilities, which are essential in order to come to terms with our bad weather conditions, we can attract people back to our traditional tourist resorts and will be in a position to lengthen the season which at present is restricted to five or six weeks in the summer. I hope this scheme will be as beneficial to tourist resorts as the urban renewal scheme is to cities and towns.
The Bill is welcome from the point of view of farmers. It contains a number of important provisions which will be welcomed by young farmers particularly, the farming organisations such as the IFA, ICMSA and Macra na Feirme have welcomed it. I hope we will continue the progress towards making it attractive for young farmers to take over the family farm business.
I congratulate the Minister of State at the Department of Agriculture, Food and Forestry for making a speech on the Finance Bill without once mentioning a sheep, a cow, a goat or a pig. It is quite clear that the Department is more interested in structures and charters — I thought for a moment we were launching a ship — rather than getting down to the nitty gritty of the incentives and help being given in the tax and expenditure regime of this Government to promote farm viability, its plans to deal with the major changes as CAP reform comes under attack and the extent to which the Government is prepared to prioritise its resources to target schemes which farmers apply for.
The launch of the infamous charter of rights was like launching a thousand ships with so many Taoisigh, Ministers and Ministers of State involved. Its object is to provide a quality service to farmers in respect of the services provided by the Department of Agriculture, Food and Forestry. We all adhere to the need for quality service; good quality management is what it is all about.
We are moving into consumer sophistication in terms of a food industry that has become more professional, more market orientated, more consumer friendly — providing a whole range of products for the most sophisticated consumer palate, i.e. the 300 million people in the European Union who may be interested in buying Irish products. We are talking about capitalising on the green image that a grassland based agriculture provides, the need to sell Ireland as a place in which primary agricultural products can be grown in as natural an environment as possible. What is the reality? In the past five years £400 million has been provided for on-farm investment schemes such as the control of farmyard pollution scheme. The huge take-up by farmers of that scheme is indicative of their awareness of the importance of environmentally friendly agriculture and the realisation that they — not the Government — are the protectors of the rural environment. They have an interest in meeting that demand and providing the platform from which an Irish food industry can prosper in the marketplace and demand that resources be made available for that purpose. However, the Government is about to suspend the control of farmyard pollution scheme. Between that scheme and the dairy hygiene scheme in excess of 17,000 applications, 20,000 in total have been made since 1 September 1994 to enable them to put in place modern pollution controls in their farmyards to ensure they continue to provide quality products to the agri-business sector which can subsequently promote that product abroad and create wealth and employment for this country. Instead, the Government's priority is to suspend that scheme because it does not have the administrative ability to deal with the demand. Only 4,200 approvals have been granted in the past six months.
The Minister for the Environment will say his first priority is green issues and to ensure we have an environment of which we can be proud. However, farmers and farm families protect that environment and are prepared to make an investment in doing so. Under that scheme they are seeking grant aid to augment their own private resources but the Department is more interested in going to County Meath to launch a charter of rights where tea and sandwiches would be served. They will then go home and say: "that is another job well done, another photo opportunity that has not been missed". That is the commitment from the Department of Agriculture, Food and Forestry on that central issue which is of fundamental importance.
The Minister of State at the Department of Health, Deputy O'Shea, who is a former Minister of State at the Department of Agriculture, Food and Forestry, will be aware of the importance of this issue. He will be aware that this is coming from the ground up from the farming community themselves, but the Government is not prepared to make the resources available. Apart from the resources, £100 million is available but it does not have the capacity to deal with the necessary approvals; to carry out the inspections, to validate these applications and allow people to get on with the work. We are very far from having a charter of rights, we have a charter of suspension and closure.
On the eve of the budget, the farm improvement scheme was suspended. The Minister for Agriculture, Food and Forestry, Deputy Yates, said the reason was that he was putting them all under the control of the farmyard pollution scheme where there are higher grants. He gave a commitment that those 3,000 people would be looked after. What about the 17,000 people who are waiting to hear from the Department or the local farm development office as to when an inspection will be carried out to allow them get on with the job of providing quality livestock and produce to the agri-business sector? This is what running a Department is about. It is not about going off to Drumree, having a bash, mouthing platitudes and putting their objectives on paper. How many more offices, including the one announced by the Minister in Enniscorthy, will the £5 million budget allocation provide? What is the point in all these good offices if we do not provide the personnel and the in-service training to speak to the farmer and the agri-business sector who are running the farm industry? That is what we want from the Department of Agriculture, Food and Forestry.
We are all in favour of a charter of rights. The Department has obligations to meet apart from espousing the rights of farmers and one is to provide resources, service and personnel so that farmers can run their own business. This is the issue I want to deal with in my contribution.
The idea being promulgated by every Minister in the Government is that they will see the people right, that their intervention is required to get on and make a living. They will spend taxpayers' money for the next five years in proving it because they will increase public expenditure. If the Government wants to help farmers and business people it must show it is prepared to do what they must do to stay in business: balance its books, choose its priorities, set out its objectives and put a programme for work into operation.
There are many articulate Ministers and Ministers of State. If they were involved in the tree felling industry in providing press releases and publicity stunts we would have cleared the Amazon forest in the first three months of this Government taking office. We want decisions, a programme that works and a Government which governs, allows people to run their own lives and provides the incentives and encouragement to do that and to employ more people.
The only direct interventionist approach by this Government in creating new jobs has been its first Bill which increased — from 15 to 17 — the number of Ministers of State. The Government inherited the most favourable economic environment in a quarter of a century. When its members were in Opposition and Fianna Fáil was in Government, sometimes in a minority Government from 1987 to 1989 when we cut the level of expenditure from 52 per cent to 40 per cent of GNP, we were prepared to take the flak, to decide the priorities and to realise that some programmes had to go in the interests of long term sustainable employment creation.
Many were saying it was terrible that more and more young people were long term unemployed, that there was a flight from the land, that we did not have an economic climate which would bring in investment and create jobs, and that there were record levels of receivership and liquidation during the mid-1980s. It was terrible, but what were the Governments of the time prepared to do about it? Nothing, except mortgage the future to stay in office until the end of their term in 1987. When we came into Government we made decisions and set out priorities — the parties which joined us in Government since can testify to that. The proof of the pudding is in the eating.
I am ten or 11 years a Member of this House and I remember when there was no credibility in the tax collection system, when there were hundreds of thousands of people on the streets demanding some form of competence on the part of the Government of the time. Fianna Fáil came into office, and nobody can deny that we now have a far better tax system than we had then. We have quadrupled the corporation tax take. We have brought in self-assessment and now have a far more tax compliant self-employed sector because we have removed the heavy burden of the State and allowed the people to get on with their business. Of course we must have regulation and compliance. However, the people who cribbed about the amnesty are those who allowed the tax accounts to build up over many years to the point where even the tax collectors did not know what was or was not owed.
We have reached a stage where we have a most benign international economic climate. We had 6 per cent growth last year and balanced our books for the first time in 27 years. Now, when we are at the top of the cycle, we make the same mistakes that were made in the past by previous Governments, including Fianna Fáil Governments. We let it rip and go for more expenditure and when there is a dip in the cycle essential services will again be affected, personal taxation will have to be increased and we will lose our competitiveness, which is what every trade unionist, let alone every politician, is talking about at the moment.
What does competitiveness mean? It means the ability to provide jobs and services, products and communication services of every kind that enable one to make more money than the people one is competing with, and that is the bottom line. Every part of one's policy must be directed towards achieving that objective. Unless we do that we will be having the dialogue of the deaf, with Deputies discussing how rates were a little higher when one Government was in power and lower when another Government was in power. We need a long term policy-making process. Having got over the hump and having climbed to the top of the hill, having suffered so much in doing so in that many people had to be targeted for taxation in the interests of sustaining levels of services into the future, we play the old game which involves short term policies. An example is equality payments which amount to £60 million and which were to be paid over four years. There were complaints about the 2.5 per cent increase to social welfare recipients, so the Government decided to spend another £140 million and pay the £60 million in one year. The budget goes out the door immediately, as does the whole Government programme. A 6 per cent increase in spending would not have been acceptable to a Finna Fáil Government. We would, perhaps, have agreed to a 4.5 per cent increase for 1995 in the interests of forming a coalition Government. The Government juggled the figures and excluded the amnesty figure and the increase still came in at 6 per cent. When social welfare payments are taken into account we find that in the first four months in office there has been a 10 per cent increase in expenditure. Does anyone really believe the Government can maintain economic growth by letting public expenditure get out of control? Have we not learned the fundamental lessons of the past 25 years or are we to see another generation heading for the Bronx, San Francisco or London? Will the people who promulgate these policies be asking me in four or five years time what I am doing about emigration and joblessness? The seeds of future problems are being planted now because the Government has too many hostages to fortune, too many ideological bents to straighten out and too many people to keep happy. That is the problem. Having worked in two coalition Governments. I realise it is never the ideal, but the Government is going about things the wrong way, with the result that investor confidence in the economy will once again be sapped, as anyone vaguely familiar with international economic commentaries can see.
There is little in the Finance Bill for the agricultural community. The stock relief of 25 per cent, extended for two years, is welcome. I note that the 100 per cent stock relief is only available to herds which have been wholly depopulated — that applies to 300 farmers and is a major achievement, announced by the Minister for Agriculture, Food and Forestry, Deputy Yates, on the night of the budget. The 100 per cent stock relief scheme for young farmers is very much welcome as is the fact that it is no longer linked to the installation aid scheme. However, this is restricted to those in the tax net for the first time since 1993-94. I intend tabling an amendment to widen the scope of that section to enable young farmers to go into the business. The capital tax relief of up to 50 per cent is also welcome. That is all that is in the Finance Bill for a business that represents 40 per cent of total national output.
The Minister of State at the Department of Agriculture, Food and Forestry, Deputy Deenihan, mentioned that he would look at the question of changing the value of the car in the context of travelling salesmen.
We have just begun developing the food business in a real sense. In 1987 we set up the office of food and we have seen the benefits of it. Much more has to be done, including rationalising in the industry and the co-op movement but in the Finance Bill we are only giving 10p here and 10p there. That is not the way to deal with a multi-million pound industry if we are serious about rural renewal and maintaining rural communities, about enticing intelligent, educated and willing young people to see farming as a career option. People are not interested in going back to the land because there is no incentive or attachment. We, as policymakers have taken away the dynamic force which was an essential part of rural Ireland, regardless of the stereotypical views about farmers and farm families. They were to the forefront of community development and renewal when these were not hip words in the European Union or in urban Ireland. Muintir na Tíre, Muintir na Tuaithe and Foróige are rural-based organisations which have done good work but we as legislators have not capitalised on their work.
There are opportunities now in the areas of cottage industries, environmental protection programmes, REPS etc. Under REPS, £250 million is available over the next five years from the European Union for environmentally friendly farms. One of the prerequisites for getting that money is the control of farmyard pollution. However, this week the control of farmyard pollution scheme is being suspended so we will not be able to get the REPS money. We are robbing Peter to pay Paul. The Minister for the Environment, Deputy Howlin, says that the green agenda is top of the list. Rural pollution is something we can do something about, but the Minister is suspending the scheme and is not interested.
We have informed the people interested in investing to prevent pollution — those who have inherited the land and are more attached to it than anyone in this House — that the relevant scheme has been suspended because there is no money available, although we have invested £400 million in the past five years of which £170 million was provided by the State. The only reason there is no money available is that we are not prepared to give it priority. It is the same old story: thousands of millions of pounds have been divided between the Government Front Bench but we cannot decide on priorities because they all want their own little bit and do their own thing.
We had a Government prepared to prioritise but now expenditure is out of control. The figure for the first four months of the year is 10 per cent. I am sure the Minister of State, Deputy Rabbitte, who is now meeting a few businessmen throughout the country, knows that this is not on, not only from their point of view but also from his own if he wants to be able to speak at the Cabinet table the next time a Government is formed.
Although I am no longer my party's spokesperson on the semi-State bodies I feel obliged to make a number of points. In the past few days I have been reading press reports about macho tough men and women in the Cabinet — the stilletto in the cloak. We can all be macho but the problems in the semi-State bodies need to be addressed and the social partners are more anxious to deal with them than some politicians across the floor. They have adopted an enlightened approach, understand the marketplace and the international competitive environment in which they have to operate. What they require is political leadership and direction but they are not getting it. As anyone even vaguely acquainted with the challenges knows, some of the companies are being weakened because of delays. It will be far better if the Government deal with those issues rather than get involved in the petty activity we have witnessed in the past week as this only creates turbulence and problems and sends all the wrong signals to members of State boards who were appointed to implement Government policy.
I have not heard it suggested that there was disagreement on a policy issue. The Government has received the full co-operation of chairpersons and members of boards. When I was Minister it did not matter to me that some of them had been appointed by my predecessors; all that mattered was that they did the job and fulfilled the mandate given to them by the Government as shareholder. It is a retrograde step to change this policy. It will not do anyone, including the Government and the companies concerned, any good because it will create unnecessary confusion, turbulence and difficulties.
In the case of CIE, for example, during a successful ten year term as executive chairman Mr. Conlon managed to greatly strengthen its finances. With others in the outgoing board he was in favour of splitting the executive and non-executive functions within the company. This is normal procedure — a non-executive chairman and a strong executive management board to carry out the decisions of the chairman and the board who, in turn, are answerable to the Government. This is the chain of command which works. No adequate reason has been given why this should be changed. It is important that we move away from the position where we regard members of State boards as being subservient to anyone other than the Minister. If anyone is in dereliction of their duty at any time, he should go——
——but this should not happen where there is no disagreement on a policy issue and no indication of incompetence. In the case of CIE, the opposite is the case. Its financial performance continues to improve. Its subsidy from the State has been referred to. For many years there was historic under-investment but this is now being addressed under the operational programmes, particularly in the railway company. If one ignores the reducing subsidy in respect of the company's public service obligations, one will see that its operating profits are increasing. The bus company no longer requires a subsidy as a result of a successful reorganisation.
There is no room for complacency and we need to improve performance targets all the time, but it is wrong to arbitrarily replace members if they enjoy the full confidence of the board concerned, and the financial performance of the company is improving in compliance with ministerial policy. That was the position up to the time the change was made. It is therefore unjustifiable and wrong and goes against the recommendations of the Culliton report, in terms of independent commercial mandates, and those of the Moriarty task force.
What happened yesterday in relation to the ACC was pitiful. As I watched the Labour Party conference on television Minister after Minister spoke about the need for empowerment and decentralisation and mentioned that they could trust the people and would garner their potential with the result that the Labour Party would become the biggest party in the State in the next decade.
The Minister for Finance has said that an auditor, an accountant, a farmer, a zookeeper, someone who makes bicycle chains——
——a solicitor, a barrister, and an auctioneer——
——may be appointed as a member of a State board but that we should not dare allow a democratically elected local councillor to be nominated. It should be remembered that they were elected by the people who are the shareholders. It seems that anyone can be nominated except an elected councillor.
Members of the Oireachtas cannot be members of State boards. The banks were set up under Acts of the Oireachtas and the reason we excluded Members, long before an Ethics in Public Office Bill was introduced, was that we realised there could be a conflict of interest. It is argued that councillors cannot be members either. That was not the intention of this House. If the Minister wants to change the categories eligible to be appointed to State boards he must, as a democrat, introduce amending legislation and see if he can get his backbenchers, many of whom are councillors, to say their colleagues are not fit to be members. In the unlikely event that he will be defeated in Galway West in the next general election, I am sure that Deputy McCormack like Jimmy Curtis and Michael Smith would be well able to serve as a member of the board of ACC Bank should a position become vacant.
However the Government says it believes this because its programme managers, politically correct officers or someone else in the system told it so. If Deputy Ruairí Quinn lost a quota and a half at the next election and was not reelected to this House and if as a result of a change of Government I was appointed Minister, the first person I would contact for appointment to a State board would be Councillor Ruairí Quinn of Dublin Corporation. As a former Minister for Finance he would be the best man for that position, and the fact that he may be a councillor would not disqualify him. That is the sort of politically correct nonsense going on in regard to State boards. It is a charade. It is naked political opportunism. I remind people that to be a member of a political party is not a crime and certainly should not be a disadvantage in terms of one's ability to serve the public on a State board or elsewhere.
I wish to share my time with Deputy Nealon and Deputy Frances Fitzgerald.
I am sure that is agreed.
I thank Deputy Cowen for his confidence in my ability to serve on a State board although I hope the occasion will not arise for a while.
If the Deputy was appointed he would die from shock.
His comments may have something to do with the limerick I wrote about him recently——
It rhymed too.
——but I do not know what they have to do with the Finance Bill. I wish to deal with measures in the Bill that are of benefit to the people we represent. In the social welfare area child benefit is being increased by £7, the back to school clothing and footwear allowance is being increased, and there is also an increase in an area about which I am very concerned, the carer's allowance. This measure has been improved to include non-social welfare recipients over 65 years.
When the former Minister for Social Welfare, Deputy Woods, introduced this scheme I praised it strongly. I said at the time that I hoped it would not be restrictive but it proved so for the first two or three years in that of 60,000 to 80,000 carers, only 1,600 qualified for the allowance. Due to the efforts of successive Ministers for Social Welfare improvements have been made and in this Bill the earning capacity of the spouse of the carer is being raised to £150 per week. That is a significant improvement in that the husband or wife of the person who is caring full time for a person in their home can earn £150 per week without any effect on the allowance. This measure has brought many more people into the scheme.
The best means of judging a Finance Bill is the effect the measures will have in one's constituency. I welcome the extra £18 million for handicap services. I thank the Minister for that provision which will be very welcome in Galway city and county. I also thank him for a provision for which we have campaigned for about ten years, that is the allocation for phase 1 of the extension to University College Hospital, Galway, which will cost £5 million to £6 million. The Minister recently visited my constituency and at a press conference he was asked about the £12 million he allocated to Limerick. In reply he said it would be very strange if a Minister was not in a position to allocate money to a needy hospital in his own constituency. He wondered why Ministers from Galway in the last three Governments did not ensure provision was made for University College Hospital. Even though this Government has been in power for only four months it has made the first step in providing finance for that hospital, and the money for phase 1 will be made available next year.
A beneficial provision in the Bill is the increase in grants to group water schemes. This is the first increase in this area for seven years. The amount is being increased from £700 to £1,600 per house and from £500 to £1,200 for land connections. This measure renders several hundred group water schemes, including 18 in County Galway, eligible to start work. The projects were given the go-ahead this week. No group water schemes were sanctioned in County Galway in the last seven years because the money was not provided by the three previous administrations. In my county alone this measure will amount to £1,640,175.
Another welcome provision relates to the new designated areas. I will not repeat the performance of my colleague, Deputy Sheehan, who mentioned every seaside resort in his constituency, but there are more than 25 seaside towns and villages in west Galway, stretching from Kinvara on the southern end to Galway city, Connemara and Leenane on the northern end. I will not make a case for the inclusion of all resorts in Galway but the major seaside resort of Salthill, and possibly Spiddal and Roundstone, would welcome designated area status. The committee, Salthill 2000, produced a four-year plan at a cost of £50,000 for the development of that resort. Despite negative and unconstructive comments by other Deputies concerning this matter, I had a positive meeting last week with the Minister for Tourism and Trade, Deputy Enda Kenny. I am confident that Salthill and possibly one or two other places about which I have made representations will be included in the next revision of designated resorts.
I welcome the provision for flooding relief for farmers and householders in the south Galway area. A sum of £2 million has been provided by the Department of Agriculture, Food and Forestry for stock, fodder and land drainage, and I welcome the fact that this money was issued very quickly. I compliment my colleague, Deputy Jim Higgins, the Minister with responsibility for the Office of Public Works, who in the three months he has been in office has done more to alleviate the problem of flooding in south Galway than was done by previous administrations in the last ten years.
Had geology nothing to do with it?
I helped in organising an emergency relief drainage scheme in the Kiltiernan to Ballindereen area. The Office of Public Works considered this matter——
Where is the arterial drainage Bill?
——and very useful work is being done in alleviating flooding of a national school, five roads and a nursing home. I compliment the Minister, Deputy Jim Higgins, on getting a scheme off the ground in Belclare. Unfortunately from the rumours I heard recently I may not represent that area for much longer because the area of south Galway is to be included as part of the Galway East constituency. However I wish the best of luck to whoever will represent the area — in the meantime, I will continue to represent it.
The anti-rainfall candidate for County Galway.
It annoys people like Deputy Cowen——
I am not annoyed, I am amused.
——when measures we have put into place in the four months we have been in Government have beneficial effects on the ground.
I am trying to inject some humour into the debate.
That is the way I measure the impact of a Finance Bill and budget. I am not ashamed to go back to my constituents and defend the provisions in the Finance Bill.
We had a good budget and this is a good Finance Bill to give it effect. I congratulate Deputy Quinn on both. He is the first Labour Minister for Finance and, despite predictions, the financial markets have not exploded or imploded. I am aware that the Minister has good sense and good partners in Government.
I contribute to this debate not to deal with the general principles and provisions which have been fully covered by the relevant Ministers, but to deal with a number of specific issues that directly affect my constituency. The Bill makes important adjustments to revenue aspects of the urban renewal schemes which are the direct responsibility of the Minister for Finance, but the Minister has made no provision to alleviate a difficulty that has arisen with the urban renewal scheme in Sligo town. The Minister is conversant with the problem following approaches made by me and many others. Despite the best efforts of the developers and best endeavours of Sligo Corporation, one important major project — the flagship project because of its location — remained unfinished when the time limit expired for the old scheme on 31 December last. I am aware there have been many extensions to the deadline and that 31 December 1994 was the last of a series of deadlines. Plenty of warning was given, but the reality on the ground in Sligo is that there is an unfinished scheme, particularly the central block which is the focal point of it. There must be some solution to the problem and the easiest one would appear to be an extension of the time limit, despite all the arguments advanced against it. While I am speaking specifically for Sligo, I am aware difficulties have arisen regarding schemes in other cities.
The area involved in Sligo is Rockwood Parade, the type of place for which urban renewal schemes must have been invented. It is in the middle of the town, along the Garavogue River, which brings the waters of Lough Gill to the sea. It will, when and if completed, convert back gardens into an attractive, slightly continental riverside development with a good mixture of commercial and residential enterprises. A ha'penny bridge has even been added across the Garavogue. I am talking about an area which even in its derelict form inspired Yeats. The total investment in this project is approximately £12 million with perhaps an investment of £1 million by the local authority by way of funds and other endeavours. I am aware the Minister visited the area. He must have admired the location and the concept of the development and seen its potential. I ask him to extend the deadline of 31 December 1994 which he can do by way of an amendment to the Bill or by some other mechanism to ensure the work on the project is completed.
There is also a problem in Sligo regarding the new scheme. That scheme is good as far as it goes and I believe it will be successful, but the area it covers should be extended. I am aware that is primarily a matter for the Minister of State at the Department of the Environment rather than the Minister for Finance and I am delighted that the Minister of State with responsibility for that area is now present. Across the road from the boundary of the renewal scheme area as currently outlined a major hotel project with full planning permission and financial backing is ready to proceed and a major international hotel chain is ready to take over once the building is completed. That project would create a badly needed addition to the middle cost hotel rooms in Sligo, provide 50 jobs and transform a derelict site along the main thoroughfare in the Yeats country into an attractive addition to the gateway. Yet, that desirable project cannot proceed because it is literally on the wrong side of the road in terms of the area designated under the urban renewal scheme. Nearby there are a number of other projects of considerable importance in terms of employment which are ready to proceed provided the area designated under the scheme is extended. I cannot get a positive response to my endeavours or those of others to secure a relatively minor extension to the area designated under the urban renewal scheme. The local authority has put its full backing behind this and surely it should have the main say on this matter. I ask the Minister for Finance not to consider an extension of the scheme as a loss, but as a gain in revenue that will accrue in due course. I ask the Minister of State to reconsider this matter.
The Minister announced in the budget a new renewal scheme for traditional seaside resorts. This scheme is a bright idea. It provides capital allowances, double rent allowances and rented residential accommodation relief, precisely what is needed for the old seaside resorts where traditional holiday traffic has virtually disappeared. Time has moved on for them and habits and leisure patterns have changed through easy transport to all parts of the world, particularly to places where sunshine is guaranteed. Those resorts have valuable infrastructure built up in the past and they have the tradition of holiday centres which has not been wiped out by changes over the years. Many of them have fought back with alternative attractions to the Mediterranean sunshine, but they need help and the Minister is providing that with the renewal scheme for traditional seaside resorts, one of the biggest initiatives in tourism.
Sadly, none of the great and famous resorts of County Sligo like Enniscrone, Strandhill, Rosses Point and Mullaghmore has been included in the pilot scheme. Those names are famous as seaside resorts, North and South. I do not understand why they did not feature in the Minister's scheme. Inevitably there will be an extension to the scheme because it is a good idea and will, without doubt, be a runaway success. I am relying on the Minister for Tourism and Trade, Deputy Kenny, who has enjoyed the facilities in those areas in the past to respond to their needs. All those resorts have active local development groups which are disappointed they did not figure in the original plans. I am aware the Minister has met some of them and I appreciate the encouraging reception he gave them. I hope this will bring results in the near future.
I wish to refer to rural renewal and I am disappointed there were not further provisions in the budget to support the work and endeavours of my colleague, Deputy Carey, in his role as the new Minister for the west. I challenge the Minister for Finance to match the imaginative urban renewal schemes that now exist for cities and towns with a scheme to save the many thousands of excellent rural dwellings being deserted annually, almost in equal numbers, through death or emigration. I am not referring to derelict houses, but the best shutting on those houses daily in the west through the death of occupants or emigrants. Nothing deteriorates so fast and devastatingly as a deserted house. It is as if the forces of nature know there is no one to protect the house and it falls asunder or may be converted for farmyard purposes.
It should be possible to introduce a scheme for rural renewal parallel to the urban renewal one which would ensure that those houses, which are in good shape, are retained for housing purposes. All those houses are located in areas with the existing infrastructure of a school, a shop, a church and a pub, but that infrastructure is collapsing because of the dwindling population. The Government should seriously consider introducing some incentives to facilitate the purchase of those houses so that they could be allocated to people on the housing lists of various local authorities. That cannot be done compulsorily, but could be done through incentives such as offering the legal owners of the premises 50 per cent more than the normal price expected for such houses. They could then be offered to people on the housing lists and this would avoid the need to build new houses in towns. The end result might be a net gain to the Exchequer and the local authority.
It would also be a major gain in terms of retaining population in rural parishes.
Distance from work would not be a major obstacle. For example, it would take no longer, and would be a much more pleasant drive, to cover the 25 miles from Aclare to Sligo town than it would to travel from Terenure to Dublin city centre during rush hour. Something new and imaginative is needed to retain the population structure in rural parishes, preserving deserted houses is a most important first step.
Deputy Cowen raged on, as only he can, about the control of farmyard pollution — I do not know the exact position on that — but what he conveniently omitted to mention was that his Government and Minister for Agriculture, Food and Fisheries, Deputy Joe Walsh, organised and negotiated the operational programme and funds for the farm improvement programme and dairy hygiene. Deputy Cowen also omitted to mention that all those funds have been virtually exhausted.
The rainbow Coalition has been in office some five months now and must take responsibility. It will not get away with that kind of nonsense.
I thank my colleagues for affording me the opportunity to contribute to this debate.
It is very clear that the Minister for Tourism and Trade, Deputy Enda Kenny, realises there is endless potential in the development of the new seaside resorts scheme. Here it would be remiss of me not to mention Sandymount and Ringsend.
Section 153 of the Finance Bill generated useful discussion. There is a need to continuously debate our taxation system. The public want to be reassured by this Government that there is a fair taxation system, that it is clearly seen that everybody pays their fair share of taxation and that the types of excesses and abuses highlighted by the report of the Tribunal of Inquiry into the Beef Processing Industry do not recur. Ultimately it appears the ordinary taxpayer will have to bear the cost of the fines to be imposed by the European Commission.
Within that context the provisions of section 153 must be discussed. The message must go out from this House loudly and clearly that this Government is committed to ensure that, whenever tax is owed, it is paid, that there is no fraud within our system, that there is no sense in which, because of the size of a company, its contacts or supports, it does not pay its fair share.
During the proceedings of the Tribunal of Inquiry into the Beef Processing Industry I read with dismay pages listing fines imposed on and paid by various companies over a long period. Somebody somewhere knew what was happening, yet, for a whole range of reasons outlined in the report of that tribunal, it was not brought to the attention of the appropriate authorities and dealt with properly at an early stage.
The principle of a fair taxation system justly implemented is critical, thereby encouraging a stringent, rigid climate and culture in relation to the payment of tax, essential to the development of our economy, to a sense of fairness in society and social justice, particularly in a country with our rates of unemployment. Therefore, to describe this revision as draft, as the Opposition spokesman on Finance, Deputy McCreevy, did, is to go too far and not correct. The public have had enough of evasion, of what is seen as the big guns getting away with it, and want to be reassured there is an inherent fairness for everybody in the payment of tax.
There is another principle which we must take into account, that professional staff advising companies, auditors, solicitors or others, can provide appropriate advice without undue interference in their relationships with their clients since the bulk of their advice clearly outlines liabilities and moneys that must be paid. We should ensure that such advisers, in their professional capacity, are allowed to perform their task in a reasonable way.
I noted in today's press reports of suggested recruitment of auditors from other countries, or opening offices in the North of Ireland. These must be taken seriously and examined. We must strike a reasonable balance, ensuring that there is a fair taxation system in place with one that allows professional auditors, taxation specialists, solicitors and others to perform their tasks without interference, at the same time making it absolutely clear that, wherever there is fraud, it is reported. Section 153 embodies that principle but there may be room for amendments to ensure that does not become unduly intrusive. The Minister might examine that aspect. For example, there may be room for amendments to ensure a fair balance between the rights of citizens and professionals while, at the same time, fraud is detected, reported and dealt with in the appropriate manner.
I should have begun by congratulating the Minister for Finance, Deputy Quinn, my constituency colleague, on his first budget and Finance Bill which will effect a differencevis-à-vis job creation, in that they address the issue of making it easier for employers to recruit people, breaking down some of the barriers to employment, which is essential if we want to create jobs, particularly in the services area. In addition, this Bill attempts to address the issue of social cohesion.
I want to deal now with the treatment of widows and widowers within our taxation code, at a very difficult time, when they must cope not only with emotional difficulties but very often with extreme financial pressure. Our taxation system deals with widows and widowers in an appallingly harsh manner. More allowances should be granted to them, particularly to those with children. The reduction in a single person's allowance immediately on the demise of a spouse does not take sufficient account of the special difficulties facing such people.
While this Bill contains many welcome provisions I question the approach taken to covenants, which will, in future, be restricted to a much greater extent than previously. There has been a tax incentive to families to covenant for the care of family members who were ill and I am concerned that the revised guidelines on covenants are so strict. This will mean that the State may very well ultimately have to assume greater responsibility for sick, dependent individuals, as opposed to families having been encouraged to provide support for members of their immediate and extended families. Will the Minister please re-examine that provision, to see whether there is any scope to ensure it is more inclusive?
I want now to comment on the national finances we inherited and the present demands on them and our economy. These include, first, the legacy of the Tribunal of Inquiry into the Beef Processing Industry; second, the demands to be made on our health service resulting from the hepatitis C contracted by the many hundreds of women and men who will need comprehensive health care over a long period; third, payment of the equality arrears, on which this Government has taken a firm decision, so that married women will now receive them and, fourth, the position in relation to community employment. I mention the last in particular because this Government has been the subject of extreme criticism because of recent decisions. Let us be clear: this Government reversed the Fianna Fáil decision to reduce the number of participants on community employment schemes to 26,000. We inherited an extremely difficult position, uncaring decisions were taken by the previous administration — a cut of 14,000 participants was envisaged by Fianna Fáil in office. At the same time it appears that FÁS and other agencies were encouraged to believe that community employment schemes would be developed. The Minister for Enterprise and Employment, Deputy Richard Bruton, is attempting to grapple with this serious problem and to ensure their continuation. It is a very difficult position for him, with considerable financial implications. Having discussed the matter with the Minister in recent days I and my colleagues are aware that he is extremely concerned to resolve the matter. We are all aware how crucial it is to resolve our long term unemployment problem, of which the community employment schemes are an important component.
Because of the financial position we inherited and the four demands I enumerated, it will clearly be seen that there are extra demands on our economy. Therefore, I was delighted to hear the Taoiseach, the Minister for Finance and other Ministers comment on the need to monitor public spending. This Government is concerned about public spending and wants to ensure that our people benefit from the present fruits of economic growth. However, we must recognise that there is a difficult, changing economic scenario, with ever-varying interest rates and currency values, constituting an additional reason for our public finances being carefully monitored in ensuring months. The unpredictability of the currency and international markets means we have to pay stringent attention to the way we manage the economy.
I have already welcomed the scheme for the development of tourism areas and seaside resorts. Deputy Nealon referred to the crisis in many seaside resorts which have been by-passed in recent years. There is a genuine concern about seaside resorts and the public is in favour of their development in the way envisaged under the scheme.
I wish to refer to the salaries paid to AIB directors. We have a high level of unemployment and the banks must recognise their public role and the importance of exemplary corporate behaviour in a society struggling with poverty and unemployment. It would be wise of the banks to exercise restraint; otherwise, as happened in other countries, they will create a level of public outrage which will eventually require a Government response. Given the gap in our society between the "haves" and the ‘have nots" it is not only the people with whom section 153 deals that we have to watch. We have to consider the general behaviour by all groups in our society.
This Bill is a dangerous document as it further extends the relaxation of discipline in regard to the national finances. In recent weeks a number of independent bodies have voiced their concern about the indefensible trend in the public finances. As late as yesterday the employers' confederation, IBEC, said that because of emerging pressures on the Exchequer it is now clear that the underlying trend in the rate of increase is more than 10 per cent, almost double the projection in the Budget Statement.
I say this is a dangerous document because during the 1980s the previous Fine Gael-led Government engaged in the same irresponsible management of the national finances, which led to doubling the national debt and created extreme pressure for the most marginalised in our society. Eventually it threw in the towel and refused to introduce a budget in early 1987 — the situation was so bad it could not agree on a budget. In spite of the lessons learned, the belt tightening and the hair shirt discipline of the late 1980s and early 1990s we are now faced with a similar potentially dangerous situation.
For the first time in almost a quarter of a century there was a surplus in the balance of payments last year. It is very regrettable that this trend has not continued. The Government in its first budget embarked on the dangerous policy of borrowing. It is not only I and other members of the Opposition who have made this point; eminent financial people in both Ireland and other European countries have also made it while yesterday IBEC cautioned against such a policy. We must be able to pay our way in Europe and ensure that we have prudent policies and priorities.
It makes me sick when I hear members of the Government refer to a lack of finance and the poor state of the national finances when they come into office. The facts are different and they should not try to mislead the public. On the question of setting priorities, the Government had no problem in appointing extra Ministers of State, programme managers, special advisers and consultants. Their salaries are not too far behind those of the AIB directors about which there was so much crawthumping today. Special arrangements were made for some programme managers who are paid almost treble what Members of this House earn. If people do not believe me then they only have to look at the replies to parliamentary questions in recent months. If the Government wants to be transparent and honest then it should examine its conscience in relation to the expenditure of taxpayers' money and funding from Europe. We have secured substantial Structural Funding and it would be a pity if this money was frittered away.
Government Deputies have complained about the lack of funding for resorts in their constituencies. Why did Enniscrone and Sandymount not get a few quid?
What about Bray?
Barley Cove in west Cork did not get a few quid because Deputies Jim O'Keeffe and Paddy Sheehan are not "in" with the Taoiseach — they have been ostracised and kicked to the back benches. It is a pity the Government decided to operate such a system.
Government Deputies who appear on current affairs programmes continually complain about Fianna Fáil. The Government has been in office for six months and it is about time it started taking its responsibilities seriously and stopped diverting the attention to other topics. Management of the national finances requires discipline and responsibility and financial researchers have clearly indicated that from early 1987 to the end of the last year Governments had discipline and managed the economy prudently; they brought the economy back from the brink of disaster, restored order and brought about a surplus in the balance of payments. It is extremely imprudent of the Government not to continue with that disciplined management of the national finances. We are a part of Europe and it is essential that our firms, producers and marketers are in a position to make a profit. If our economy is put at a disadvantage workers will suffer and will not thank the Government for embarking on a campaign of spending money we do not have. On the previous occasion we had to pay interest on borrowed money which was not well spent. Sooner or later the matter must be rectified. It was a fundamental mistake in economic management to allow that to happen. This borrowing policy was started in the budget and given legislative shape in the Finance Bill.
In February the Minister, Deputy Quinn, introduced what he called a radical budget, which would reward work, promote enterprise and strengthen social solidarity.