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Dáil Éireann debate -
Wednesday, 31 Jan 1996

Vol. 460 No. 7

Financial Resolutions, 1996. - Financial Resolution No. 7: General (Resumed).

Debate resumed on the following motion:
That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(Minister of State at the Department of the Taoiseach Deputy J. Higgins).

Before the debate adjourned I made the point that the net effect of the budgetary measures will be to extract £730 million from the taxpayer in 1996 over and above what was extracted in 1995. The budget was presented as a tax give-away but if that is a give-away I would like to know the Government's definition of a tax increase.

The increase in the taxation yield for 1996 over 1995 represents an 8.2 per cent increase in the total volume of taxation and is on top of a 7.5 per cent increase in 1995, in other words, in two years of high economic growth, this year and next year, the tax take will have increased by 16 per cent. That money has been and is being frittered away in public expenditure and is the reason record rates of economic growth do not translate into meaningful employment.

The only effect of the budgetary taxation and the so called PRSI concessions was to slow the rate of increase in taxation yield. The reality is the average taxpayer will pay substantially more in taxation this year than he or she did last year. The figure is £730 million in a full year, in other words, £2 million per day or £14 per week for each of the one million taxpayers.

In his speech this morning Deputy Shatter sought to take a warm bath in his own prejudices and rewrite the history of the revolving door. I wish to disabuse him of the notion that the revolving door syndrome became evident as a problem in 1987. It was evident in the 90s when the number of custodial sentences was such that we did not have sufficient prison places to accommodate offenders. The inevitable result was that offenders served a shorter proportion of their sentence. Those who were violent and dangerous often had to be released into the community in order to make places available. In 1993 the then Government decided to include a provision in the 1994 Estimates for £25 million to create 210 extra prison spaces. On coming to office the first act of the rainbow warriors was to cancel this provision. The Government that has added £1 billion to the national debt has failed, after 14 months in office, to find £25 million to honour the commitment given to the electorate by the outgoing Government. The revolving door phenomenon became evident as a problem in the early 90s and immediate action was taken to deal with it. The incoming Government cancelled the provision and 14 months later it grudingly admits the need for extra prison places.

The Taoiseach sought to put the idea across that because it delayed for 14 months the prison spaces will be available earlier. Such nonsense flies in the face of common sense. This must be the only time in recorded history when a decision to postpone action for 14 months will result in the action being taken earlier than would otherwise have been the case. Regardless of whatever spin the media machine in the Government press office wish to put on it that is the reality.

This morning the Taoiseach accused Fianna Fáil of delaying the bail issue by referring the matter to the Law Reform Commission. If he believes the commission does not have any validity or that there is no need for it he should say so clearly. As far as I recall a Fine Gaelled Government established the Law Reform Commission. It has been the practice for successive Governments of whatever hue to refer intractable legal problems to the commission. It is ironic that the Taoiseach makes such an excuse when he and the Minister for Justice justified delays in deciding on the issue of bail by saying the matter was with the Law Reform Commission. If the Taoiseach does not believe it is of use in this area or believes that the previous Government delayed matters by referring them to the Law Reform Commission why did he not take action on coming to office?

The Government's package on crime is belated, grudging, meagre and minimalist. It is badly thought out and funks the major issues such as bail, the right to silence, the move to an inquisitorial system of trying criminal cases and the introduction of different policing method used in the US for the last quarter of a century. As it is largely an instant knee-jerk reaction to get the public off the Government's back it will prove to be ineffective. Deputy Owen's term as Minister for Justice has been, is and will continue to be a smash flop. She will go down the annals of Irish history as the Minister with the "unMidas touch".

The Government announced a number of indirect tax changes that will push up the inflation rate, for example, excise duties on petrol and tobacco will be raised and stamp duty on ATM cards will be increased. While the reduction in employers' PRSI should boost profit margins in some sectors and act as a buffer against inflationary pressures, the recent announcement of an 8 per cent rise in ESB charges over the next three years could have a knock-on effect on inflation. That price increase will occur despite the Government's plans for the ESB which will enable it save £60 million per year.

The decision to raise excise duty on petrol will extract an extra £20 million and recreates the differential in price between the Republic and Northern Ireland. The price of petrol in Northern Ireland has been affected by a price war in the United Kingdom where hyper-markets are involved in selling petrol. That has spilled over to Northern Ireland, specifically Belfast. I am informed by the experts that it will create a marginal difference between petrol prices here and Northern Ireland, but that will be directly affected by the budget. I do not understand how this measure falls into the Government's grand strategy for managing the economy. It is simply a device to fill a gap and justify the increase in public expenditure.

The corporation tax reduction from 38 to 30 per cent on the first £50,000 of a company's income is welcome, but it is a scatterbrain approach. It is very poorly thought out and represents a gross waste of taxpayers' money. The maximum tax saving from this measure will be £4,000. Part of the effect of the measure will be that companies such as those I picked from the Stock Market report in alphabetical order, AIB, Avonmore, Abbey, Adare, Anglo-Irish, Bank of Ireland, Cement Roadstone, Elan Corporation and Fyffes, will benefit. Is the Minister for Finance aware that the directors of some of those companies are paid that amount every week? What will be the net effect of this measure? How will this expenditure of taxpayers' money help Irish business and industry?

This measure will cost the taxpayer £23 million, not an inconsiderable sum of money. Instead of giving £4,000 to all and sundry, including those who least need it, the measure should have been focused on the small business sector so that the amount of tax foregone would be greater and of most use in terms of maintaining and creating employment.

I believe — financial journalists and economists have made this case very well — that the overall rate of corporation tax must be steadily reduced. The net result of the budgetary measures is that our corporation tax rate is still significantly higher than that of the main overseas territories in which Ireland invests, and that creates a major disincentive. Further evidence that this is a once-off, "top-of-the-head" measure and that it has been very poorly thought out is that it is limited in ways which conflict with the reduction from 38 to 30 per cent. For example, the 40 per cent rate of capital gains tax remains in place as does the 20 per cent surcharge on undistributed investment or rental income of companies. That conflicts directly with the change in the rate from 38 to 30 per cent on the first £50,000 of income.

The standard rate of employers' PRSI is being reduced from 12.2 per cent to 12 per cent. That is, however, largely clawed back by increasing the ceiling on employers' PRSI from £25,800 to £26,800. The Government is giving money away with one hand and taking it back with the other. The reduction in the lower rate of employers' PRSI from 9 per cent to 8.5 per cent will yield a net benefit of, for example, only about £2,500 to a clothing manufacturer employing 50 people. It will be worth about £4,500 to a company employing 100 workers. It is no exaggeration to say that corporate cash flow will not be significantly affected.

Worse still — this measure has also been badly thought out — the impact is uneven depending on the income of the employee. For example, an employer will save £50 per year in PRSI on a gross wage of £10,000 and £30 per year on a gross wage of £15,000, but on a gross wage of £30,000 per year PRSI will cost the employer an additional £68. In addition, there are no transitional arrangements or marginal relief. This leads to the anomaly that even if a £1 pay rise is given to an employee earning £13,000 it will cost the employer £456. The net effect of the changes announced by the Minister on employers' PRSI is that higher earning employees will pay more PRSI and taxation because the PRSI allowance is being abolished — the cost to a person on the 48 per cent rate will be £67 per year.

The second fraud perpetrated by the Government is the implication that the budget is designed to have a significant effect on long-term unemployment. The main weapon in the Government's arsenal to deal with long-term unemployment is the infamous £80 per week subsidy designed to take 5,000 people out of the ranks of the long-term unemployed. A sum of £80 per week amounts to £4,000 per annum, yet the Government has provided £1 million to operate this subsidy, which will take 250 people out of the ranks of the long-term unemployed. If all 5,000 people whom the Government hope will be enabled to return to the labour force again apply together, the money would run out in less than a fortnight. It would cost the Exchequer £20 million to take 5,000 people out of the ranks of the long-term unemployed. Yet there is provision of only £1 million for this subsidy.

This is further financial conjuring to give the illusion that the Government is keeping within a pre-arranged spending target. If the Government is serious about this measure — I assume it is because it is the main measure to reduce long-term unemployment — it will have to add a further £19 million to current public expenditure, on top of the 6.2 per cent by which it grudgingly admits it is increasing it. It has been shown that subsidies are an abject failure. This proposal, rather than achieving an overall increase in the level of demand for workers, will probably result in a relative reduction in the cost of hiring one type of potential employee. In that case, much of the effect of the subsidy will be to increase job offers to long-term unemployed at the expense of offers to new entrants to the labour market and the short-term unemployed. That will merely shift the burden of unemployment; it will not reduce its incidence.

A further 1,000 people are to be recruited to the new pilot community employment scheme proposed by the task force on long-term unemployment. That scheme will be evaluated at the end of the three years to see if the 1,000 jobs are sustainable and if the scheme should be extended. By definition it will not be possible to establish the viability of those jobs in the short-term. Another 1,000 jobs are to go to people entering the VTOS scheme run by the Department of Education. That scheme provides second chance education, not jobs. Because it simply replaces the 1,000 places by which the VTOS scheme was reduced last year, it could be argued that it does not constitute an increase.

According to the labour force survey, if unemployment were to be eliminated by the year 2000 we would need a net gain of 412,000 jobs, in the region of 100,000 jobs per annum. The Minister for Finance predicted that jobs will increase by 31,000 in 1996, but that modest target will depend on continued growth in the economy. Even if it is reached, as the Minister admitted, unemployment will fall by only 9,000. It is, therefore, fair to conclude that the vast majority of long-term unemployed people will still be unemployed when next year's budget is presented. Nobody was surprised that the immediate reaction to the budget of the national organisation representing the unemployed, reported in The Irish Times on Wednesday, 24 January 1996, was that, with economic growth surpassing that of all our EU counterparts, it is an utter shame that the Government did not make a genuine effort to tackle the problem of the long-term unemployed. That is a damning indictment.

Another fraud was perpetrated by the Minister who sought to create the illusion that the Government was reducing public expenditure. The process of reducing public expenditure was begun by the previous Government. For the first time in more than a quarter of a century the then Minister for Finance, if he had continued in office, would have started with a current budget surplus in 1994, but that was immediately turned into a deficit by his successor. After the mammoth task of eventually making ends meet the rainbow Coalition changed the ends.

The Government's strategy appears to be to add a stimulus to the economy at a time when it is growing at a higher rate than at any time in our history. The Minister has provided for the Government to borrow £730 million this year. Current expenditure will increase by 6.2 per cent — a figure far removed from the 2 per cent target set by the Minister when the Government was formed. The general Government deficit which has fluctuated between 2 per cent and 2.5 per cent since 1990 is now at its highest level ever, 2.6 per cent. The 6.2 per cent increase in current public expenditure this year comes on top of a net increase in the order of 10 per cent last year. That does not take account of the creative accounting by which £60 million was slotted into last year's accounts to allow a tribunal to allocate payments to those affected by hepatitis C. If that £60 million is counted, the real net growth in public spending this year is likely to be in the region of 7 per cent. The increase in the deficit is 2.6 per cent of GDP compared to a little more than 2 per cent in 1995.

Another indication of the deterioration in the underlying public finances is the fall in the primary surplus, the surplus of Government revenues over spending before interest payments on the national debt are taken into account, from 4.2 per cent of GDP in 1993 to 2.6 per cent this year.

The Minister for Finance and his Government colleagues insist on continuing to make a virtue of the fact that they are keeping, if only barely, within the terms of the Maastricht Treaty. That demonstration of financial virility is no more than a delusion. As my colleague Deputy McCreevy said on budget day, even if we qualify technically to become part of a single currency, we will be dangerously near the margins and there will be no room for slippage. If we were to qualify, that would only be the beginning. What is at issue is not only a matter of qualifying to participate in a single currency but being able to live with the economic consequences that would require us to take the opportunity to achieve unprecedented rates of economic growth and secure unprecedented financial assistance from Europe to reduce taxation and create real jobs to strengthen the economic base of this country. That can only be done by reducing public expenditure.

The left's participation, indeed at present it appears dominance, in Government will ensure that Ireland will continue to live far beyond its means. The left generally is irrevocably wedded to fiscal incontinence. It has no choice; it must adhere to its mandate. It is its raison d'être. In practice that means that while the Government remains in office the Irish people will continue to have inflicted on them a policy of unsustainable public spending leading inevitably to high tax and high unemployment.

Economic policy is being dictated by a party which got less than 3 per cent of the vote in the last general election and, I suspect, would get considerably less if one were held now. Presumably the 97 per cent of the electorate who did not vote for Democratic Left do not support its economic policies, but those are the policies being implemented. That is an abuse of democracy. If those policies were put before the people in a referendum they would be overwhelmingly rejected.

I have said very little about Fine Gael. The reality is that the left is in charge. It will continue to spend with all the gay abandon of the French aristocracy before the revolution. Fine Gael has been neutered. Members should not take my word on that. One of its prominent members, with whom many party colleagues agree, stated that Fine Gael has been castrated. Those who represent 3 per cent of the electorate are in charge. To use Marxist jargon, they have seized the commanding heights of the economy. Never since the Bolsheviks seized control of the Soviet economy in the aftermath of the 1971 revolution has so much been inflicted on so many by so few.

The budget is lack-lustre, it is directionless and downright fraudulent. The late George Orwell said that political language was designed to make lies sound truthful, murder respectable and give the appearance of solidity to wind. As a result of the difference between the rhetoric the Government used when in Opposition and its performance in Government, nobody takes politicians seriously today. All the Government has achieved in the 14 months since it came to power is the institutionalisation of cynicism about the Irish political system and process.

We look forward to that.

As a Democratic Left Minister of State, I warmly welcome the opportunity to speak on the budget debate. The debate shows the difference between parties opposite and those on this side of the House. On this side we share a common view of society where every individual matters, people are equal, have equal rights and responsibilities and should have an equal chance to contribute to society and the community to which they belong. The other approach most clearly articulated by the Progressive Democrats is based on an outworn and discredited world view that the rich must be rewarded while social supports for the poor collapse. The Fianna Fáil view is very confused and I will deal with that later.

As Deputy O'Dea referred to our support. I wish to refer to the budget report of Davy Stockbrokers, a group not renowned as Democratic Left supporters. They made an important point which will not be lost on the electorate when they come to consider the alternative to the present Government, a Fianna Fáil-Progressive Democrats alliance. Davy's analysis of the budget states that the tax packages announced in the budgets of 1990-92 positively discriminated in favour of higher earners. The higher one's gross income the bigger by a wide margin the benefits one derived from income tax changes implemented over that period. That is an indication of where the alliance developing on the other side would lead us. The rich will get richer and the poor will get poorer.

Has the Minister of State seen this report?

I will also deal with that document. Davy's go on to commend the current budget which allows for a pattern of discrimination in favour of the low paid which has become more pronounced. They, and I, acknowledge that there was a change in the last Government's approach which began the process of arriving at a fairer system. That pattern has become more pronounced as a result of this budget and is to be commended from a labour market point of view. Fianna Fáil should note the contents of that report. That party has not made a clear statement as to where it stands, but it is worth pointing out that the budget is not a victory for Democratic Left, the Labour Party or Fine Gael. It is a victory for the dispossessed in our society, the long-term unemployed, carers, low income families and those who have been struggling for years to come out of the poverty trap. They are the real winners and it is a pity there has been such an incoherent response from Fianna Fáil. I have listened for quite some time now to speeches here and on television. I suppose it would be fair to distil the two basic tenets of the Fianna Fáil position on this budget, the first that the Government is not controlling spending and, the other, that the Government is not spending enough. At present logic is not one of Fianna Fáil's strongest points because we all know the Government is maintaining a tight control on public spending and borrowing and complying fully with the Maastricht criteria. Rather than tinkering round the edges and applying a bit of sticking plaster here and there, this Government has provided for work, workers and families. I make no apologies for that. For too long social solidarity has taken a back seat to the politics of selfishness.

It would be fair to say that Deputy Michael McDowell is of the Tory-twit school of economics. He would have us believe that high and middle earners are a neglected minority. No doubt if his party is returned to power, courtesy of Fianna Fáil, he will put that attitude into practice. He would have us subscribe to the notion that tax and spending cuts equal jobs, a crude simple equation, not even new, but tried in Thatcher's Britain and Reagan's America with the consequences of which they still live, paying the price in terms of poverty, social exclusion, crime and run-down public services. I am sure Deputy Michael McDowell is not unfamiliar with research findings in the United Kingdom, showing that poverty levels spiralled since the Tories came into power and were able to implement these neo-liberal policies.

For decades, social and economic policy has failed to address the needs of two groups in society, those without work and those in low paid jobs. For example, to date, a person coming off the live register to work lost a variety of benefits. If they entered low-paid work, which was the norm, they could find themselves significantly financially worse off. This has been recognised as a problem over many years but this is the first Administration to address the issue in a practical, meaningful way.

The Progressive Democrats advocate tax reductions; it is still not clear what Fianna Fáil advocates. We in Democratic Left advocate tax reform. We see no reason to reduce the tax burden on the well off in society who can well afford to pay their way.

Do not forget to tax the farmer.

Compared with other OECD member states, the better off in our society carry a relatively light burden. We are working to reduce the burden on low paid PAYE workers who have been carrying the financial can over too many years.

As the Minister for Finance said of this budget, it is a step along that way, it is not the end of the story; it is not a spectacular budget nor does it aim to be. We have had sufficient spectacles from past Governments. What people now want is security, equality and opportunity, the hallmarks of a good Government. That is what this budget represents.

Nowhere is this commonsense approach being realised more effectively than in the housing sector. Provisional housing completion figures recently made available to me show that some 30,500 new houses were built in 1995, the highest on record and not far short double the number of new houses built in 1988. A particularly important aspect of last year's record housing completions is the fact that all elements which go to make up the total — private, local authority and voluntary housing — performed extremely well. A record level of housing completions does not happen by accident. Prudent management of the economy and public sector finances by the Government contributed to low, stable interest rates which gave people confidence to undertake a long-term borrowing. Interest rates are at their lowest level for more than 30 years and have given a major boost to the private housing sector. In addition, the Government directly finances the local authority and voluntary housing sector programmes, having significantly expanded both over recent years.

All these factors have been brought together in recent years and, under the provisions of the budget, will continue in 1996. It does not necessarily mean that the record level of new house completions will again be broken in 1996 but it means that new house completions should remain around their current record.

One of the key conclusions of the recently published ESRI study is that, for demographic and other reasons, demand for social housing is likely to remain at a high level. Therefore, it is essential that we maintain our support for the national housing programme, in particular to support a significant, sustainable local authority and voluntary housing programme. I am glad that the high priority given in the programme, A Government of Renewal, to social housing has been again reflected in the 1996 housing capital provision which amounts to almost £360 million, an increase of 11 per cent on the 1995 outturn figures.

We have now built the local authority housing programme back up to a sustainable, appropriate level from its very low levels of the early 1990s. Therefore, it is not necessary to repeat in 1996 the massive increase in the Estimates provision for local authority housing. However, the overall provision for the programme is being increased in 1996, by 2 per cent, to £158.58 million which will sustain it and even allow for a small increase to 3,950 in the number of new starts.

As recently as 1992 total capital expenditure on the programme amounted to £42 million only. At a time when the rich disproportionately benefited from the budget provisions, social housing was at an all time low. There has been an increase from those days — when provision was made for 1,300 starts — as the present programme allows for 3,950 new houses this year. There used be an adage that Fianna Fáil was good for the building industry.

Absolutely right, the social housing programme was produced by Fianna Fáil.

These figures and facts counteract that; that is a fallacy that has been well and truly buried.

The Minister of State is now taxing the farmer, Deputy Sheehan, sitting behind her.

I want to make the point in relation to an initiative I launched just before Christmas — of targeting the homeless within the Eastern Health Board area, in particular — where tremendous work is being done by the voluntary sector. My initiative very much supports that work and these new arrangements are designed to represent an effective, co-ordinated approach to the provision of accommodation and related resettlement services for homeless people in that area with the full involvement of the voluntary sector.

I have already stressed that these new arrangements are intended to work with and encourage the voluntary sector because, in one response to the budget, there was a misunderstanding in relation to this initiative. It will be an essential feature of these new arrangements that services already being provided by a voluntary body will be supported and improved. There is no question of the statutory agencies displacing any effort or service at present being provided by the voluntary sector. I have always acknowledged the crucial work and service of the voluntary sector in the interests of the homeless and am delighted to again avail of that opportunity today. We should not forget that homelessness is and often can be the result of unemployment.

The social solidarity underpinning this budget provides not just for individuals but for society as a whole. The negative effects of pure market forces are to atomise, criminalise and marginalise. Deputy Michael McDowell and Fianna Fáil may not either accept or understand this but I welcome the fact that the people have shown greater maturity, understanding and generousity than they have.

The general acceptance of the underlying philosophy of this budget is a positive sign for the future. We live in a changing world where problems exist that have no easy solutions. The recent horrific crimes are a grim reminder of the fact that social cohesion and the strength of community life are important bulwarks against crime and depravation. This budget is playing a vital part in building on those strengths and I warmly support it.

I thank the Minister of State for sharing her time with me in this important debate. The success of the fiscal monetary and incomes policy now in place is due in no small way to the magnificent performance of the Coalition Government in the first 12 months of office.

Spoken from the heart.

The Government's commitment to sound public finances in general and the Maastricht criteria in particular has added greatly to the confidence in the management of the economy. Good housekeeping by this Government has brought about this position. This, along with our excellent inflation performance as well as favourable international developments, has contributed to historically low interest rates that in turn have encouraged more investment here. It also has helped to sustain continued growth in domestic demand which has encouraged business to expand employment considerably. The tax initiatives in the past two budgets have improved both incentives for employers to offer jobs and for employees to accept those jobs. The Programme for Competitiveness and Work, which has delivered wage moderation, has been central to international competitiveness in recent years and the low inflation which has transferred wage increases and tax reductions into real income growth for all workers.

While this budget will ensure that the climate for expansion in employment remains favourable, additional actions are required to ensure that the price and quality of service provided by the State sector and its costs structures compare with the best international standards. The policies and jobs now in place are at the heart of Ireland's current favourable performance. In preparation for economic and monetary union, we need to ensure that our competitiveness is maintained and improved through continued wage moderation in the context of low inflation as well as through other actions. They make all parts of the economy more efficient and the budgetary strategy continues to conform to the Maastricht criteria. This in turn will promote an economy which will maximise growth and sustain employment and social progress. From now on flexibility across the economy in both the private and public sectors will be even more critical than it has been up to now. It is in the interests of all concerned, to ensure that competitiveness and profitability are maintained, to protect the maximum number of jobs and to ensure there is an increase in the number of jobs on offer.

The year 1995 was fabulous for rapid growth in the economy, with GNP increasing by 7.25 per cent, the fastest rate of growth in the industrialised world. This is a major tribute to a Government that has been in office only 12 months and has contributed so much to the economy.

The increase in domestic demand was reflected in a large increase in total employment estimated at 45,000 extra jobs on average and a fall in unemployment, on our labour force survey, of 25,000. Despite this strong output and employment growth, the rate of inflation remains comparatively low at 2.5 per cent for the year. Exports of goods and services are estimated to have risen by 13.5 per cent in volume terms during the past year. Merchandise exports increased by over 14 per cent and industrial exports increased while agricultural exports were also buoyant. Service exports increased by about 7 per cent, helped by a good tourism performance. All those achievements bear the hallmarks of good housekeeping by the Coalition Government.

The economic prospects are that 1996 is likely to be another good year for the economy. With a consolidation of progress made over the last two years, output is likely to grow by 5.75 per cent with a further increase of over 30,000 in the numbers at work. This means that over the three-year period 1994-96, inclusive, the economy will have grown by more than one-fifth with an extra 11,5000 people at work and over the same period the average inflation rate will be less than 2.5 per cent. The current account on the balance of payments will have remained in substantial surplus and Government borrowings will be kept within moderate limits.

This Government has taken the right steps to curb the crime epidemic. It is clearly evident from the statement issued last evening by the Minister for Justice, Deputy Owen, to provide 278 prison places over the next 18 months that that is a step in the right direction to curb the crime epidemic which this country has experienced over the past decade or more.

The changing face of Irish life brought into stark focus by the recent tragic deaths and vicious attacks requires measures such as these as well as a wider response from the community and all agencies of the State. I congratulate the Minister on her wisdom in making those extra places available in Castlerea, Portlaoise, Curragh Detention Centre, St. Patrick's Institution, Limerick and Mountjoy. This move is a firm commitment by the Government to stamp out crime throughout the country. That, coupled with the Minister's announcement to step up the policing of all rural areas is a major breakthrough in this very important matter.

As a society we need a reawakening of our tradition of caring for those around us, our neighbours who are alone, the infirm and the elderly.

The Minister for Justice must be congratulated on her proposal to appoint four new Assistant Commissioners who will be in charge of four divisional areas. She also proposes to appoint an additional three Supreme Court judges, two High Court judges, seven Circuit Court judges and three District Court judges. This is an outstanding achievement by a Minister who has been in office for such a short time.

These measures have been forced on her.

The law and order system must have the co-operation of the general public if it is to be successful in tackling the major problems relating to drugs and crime. It is important that all Garda stations are manned, no further closures of stations take place and gardaí assigned to rural stations are requested to live in the locality or avail of accommodation provided in stations. The problems relating to crime and drugs must be tackled immediately and every effort must be made to ensure that criminal activity is reduced to a very low level — it would be foolish of me to state that crime can be completely stamped out. There has been crime since the beginning of time, since Cain killed his brother Abel, and it will probably be a problem until the end of time. However, it is important to ensure that it is not allowed to escalate. We must do everything possible to reduce the number of incidents to the lowest level possible.

I assure Deputies on the other side of the House that the Government is prepared to tackle all problems with which it is confronted.

That is the first bit of news we have heard all day.

It has the guts, nerve and heart to tackle the major problems confronting us and will not shy away from its responsibilities. It will ensure that the country is kept on the right track and that law and order is upheld. It has recognised the problems in all sectors and is ready, willing and able to meet the demands. I was amused to hear some Opposition Deputies trying to discuss matters which are not relevant to the economy. I have been a Member of the House for 15 years and this was the first year a budget debate was terminated at 10 p.m. on budget day. What was the reason for this?

We knew the contents beforehand.

The Opposition parties ran out of steam and had nothing to say because the budget was so good. The morning after the Minister's Budget Statement the Irish Independent reported it as a “back to work budget”, one of the few such budgets introduced during the past decade.

The Deputies opposite should be loud in their praise of the achievements of the Government over the past 12 months. When it came into office it had much work to do and while it sought to put everything in order it cannot perform miracles overnight. Ministers have exercised restraint and shown leadership in running the country and ensuring that the economy remains buoyant.

I wish to refer to agriculture.

It got little mention in the budget.

We have an excellent Minister for Agriculture, Food and Forestry and an excellent Minister of State, in Deputy Deenihan. The Minister has played his heart out to ensure that farmers get the best deal possible in Europe and he will continue to do so. The future of farmers is in sound hands. Deputy O'Keeffe is not a farmer but he may think of buying a farm in the near future given that the industry is doing so well.

I come from good farming stock.

He should have no qualms about the Minister or Minister of State, both of whom have pledged to help farmers and ensure they have a bright future.

This is one of the best budgets introduced for many years. The Opposition parties have very little to say about it——

What about the alarms?

The value of that measure will be seen in time. I am proud to be associated with the budget.

It is an out of touch budget and the alarm bells are ringing for the Government.

By the time the next year's budget is introduced we will have seen the benefits of this budget.

Fianna Fáil will be in Government at that stage.

I wish to share my time with Deputy Power.

Is that agreed? Agreed.

I hardly recognised my colleague from Cork, Deputy Sheehan, during his flight of fantasy into pure economics and high finance. Many of his constituents will not recognise him either if he continues in that train of thought.

The Deputy should not worry about my constituents. If his constituents were as loyal he would be all right.

It is in giving that one receives.

In recent months Ministers repeatedly reminded us that while the economy was never in better shape we should not expect too much in terms of tax and other concessions. However, it was discovered at the last minute that there was a pile of surplus money in the kitty. We were then treated to a daily display of the three-way tug of war between Fine Gael, Labour and Democratic Left. Most of the pulling was inevitably done by the so-called junior partners in this three-hand reel, who threatened dire consequences if they did not get what they were demanding. The man with the biggest pull was the most junior partner who gave regular press releases to tell us what he demanded in the budget. However, he was not to be outdone by the Labour Party Minister for Arts, Culture and the Gaeltacht who was reported to have virtually placed his resignation on the table as part of his argument for extra funding. In the middle of all this there was the unfortunate Taoiseach who, as Deputy O'Donoghue rightly said last night, was trying to stand on two left feet. We all know that a man with two left feet is a very poor dancer whether it is in a three-hand reel or any other dance, except perhaps in a toeing the line dance.

(Carlow-Kilkenny): He is not in “Riverdance”.

The Government is correct when it refers to the healthy state of the economy, but it failed to remind us that this was handed to it on a plate 12 months ago by my party leader, Deputy Bertie Ahern, who before he left office, had produced the first balanced budget for more than a quarter of a century. This happy state of affairs came about as a result of Fianna Fáil returning to Government in 1987 when it immediately tackled the worst financial situation in the history of the State. From a position of almost certain national bankruptcy and a national debt which had more than doubled from £12 billion in 1982 to £24 billion in four years, thanks to the Fine Gael and Labour parties, Fianna Fáil turned the economy around to such an extent that we are now only one of two countries that would qualify for membership of a European monetary union if it was to be set up now.

After the 1992 election, the Labour Party joined Fianna Fáil in Government. This was an excellent opportunity for it to serve a useful apprenticeship in Government. Apprentices are never given the job of financial controller and this was the case in that Government. However, when Deputy Bruton suddenly found himself with a chance of becoming Taoiseach, he was so determined to avail of this once in a lifetime opportunity that he gladly handed over the control of virtually every high spending Department, including the most important, to his two left wing partners. This was an unprecedented surrender by a majority partner in Government.

Fianna Fáil offered it a rotating Taoiseach.

The Deputy should speak for himself on that matter. His party was willing to give anything to get into Government at the time while Fianna Fáil stood firm on that principle.

Fianna Fáil crawled every way to get back into Government.

Deputy Sheehan had a good innings, which was practically devoid of interruption.

The result is a budget far removed from what a sensible and prudent Minister for Finance would have devised. We have already witnessed signs of revolt from Fine Gael backbenchers, which does not surprise anybody.

The budget has produced some strange results. First, the Minister made an announcement in his budget speech that elderly people living alone would receive an £800 tax allowance towards installing an alarm system in their homes. This would, of course, be regarded as hilarious if it was not such a slap in the face to senior citizens whose income is so low that they are not in the tax net and, therefore, would not benefit from this so-called imaginative gesture.

Any thoughts about the Minister's proposals being laughable vanished when we witnessed last night's "Prime Time", which showed an old man bursting into tears as he described the torture he suffered at the hands of thugs who broke into his home. When it was eventually realised by the Government that less than half of one per cent of the elderly qualify for the ill-judged allowance, the Minister's opponent, the Minister for Social Welfare, announced that he was setting up yet another task force to study how they could implement a proper scheme to protect elderly people. On this occasion, I presume that candidates for inclusion in that task force will be required to apply to the head office of Democratic Left.

Another laughable incident was the performance of the Minister for Finance in answering questions about the budget on RTE radio. When he was asked about his PRSI allowance and about whether a person earning £89 a week would only pay PRSI on £9 and not on £80, he was reported as saying: "yes, as far as I understand it". Are we to take it that the Minister does not understand his own budget and that everybody, including the highest earners in the land, are exempt from paying PRSI on the first £80 of their earnings per week? Many people are confused by this, including the Minister, it seems, and we would like it to be clarified.

The sacrificial lamb in this budget is the middle income sector. If any group had reservations about this budget, it is this one. What was given to it in one hand was more than taken away with the other. The Minister has removed mortgage interest relief, adding £200 to the annual cost of an average mortgage and has eroded an £80 VHI tax relief. When one considers the £100 increase levied by the VHI on its premiums, one will see that anything given to that sector was more than taken away by other measures. When the imminent increase in ESB, CIE and petrol charges are taken into account, that group have again been the real losers and they must feel frustrated.

If a person earns £12,050 per annum or £230 per week — this is a little below the national average wage — after the budget, the marginal tax rate of 55.75 per cent, allowing for income tax, PRSI and the various levies and if an employer is kind enough to offer a person an extra £100 per week, the employee will get £44 and it will cost the employer £112, out of which the Government gets £68. This situation still pertains after two budgets from a Government that seeks to trumpet itself as offering tax reliefs.

Where is the tax reform about which we heard so much from this Government?

What about the children's allowance?

When the Taoiseach was leader of the Opposition, he was seen as being a reforming person.

Performing.

What about the extra £500?

Lack of performance would be more appropriate in this instance. The middle income group are annoyed at the outcome of this budget, especially when 1.5 million PAYE earners will still have to carry the main tax burden. They are especially disconcerted when they realise that an additional £160 million in tax is to be raised this year, the vast majority of which will come from them.

Rather than making the tea for the next budget, Fine Gael should be stirring the pot and ensure it does not let the electorate down as badly as it has in this budget.

It used to be good at stirring the pot.

Fianna Fáil's record is abysmal.

It is ironic to find Deputy Sheehan sharing time with a Minister from Democratic Left.

I am proud to share time with the Minister on any occasion.

That Minister's philosophy is to tax those in the higher income bracket as far as possible. However, does Fine Gael not have a fair amount of support from that sector——

Fianna Fáil's ex-Minister for Social Welfare shed crocodile tears for old age pensioners.

——and how can it reconcile those two philosophies? Fine Gael is so glad to be in Government and the Taoiseach is so happy to have the trappings of office that he will put up with anything to stay there for as long as he can. Given the way matters have gone over the last two years, he knows they will not be there after the next election.

The Deputy's party did its best to crawl back after it had thrown the baby out with the bath water.

The Deputy has made his contribution and was heard with courtesy. He should now extend the same courtesy to his colleague.

We will not succeed in increasing job numbers through schemes, but through enterprise. In this context, the reductions in PRSI are not significant. For example, the standard rate of employers' PRSI is to be reduced from 12.2 per cent to 12 per cent.

Deputy Sheehan rightly mentioned that exports have increased. However, because of the strength of the punt vis-à-vis sterling our exporters will be in major difficulty during the next 12 months. When in Government my party introduced alleviation measures to assist indigenous companies seen to be in danger.

Fianna Fáil ones in particular.

That was not the case. In reducing PRSI the Government could have been more selective. Given that the reductions are negligible it would have been far better if it had targeted export companies, particularly to the UK market with the assistance of Forbairt, to protect and maintain employment. If they lose market share, they will find themselves in serious difficulty before the end of the year.

There are 40,000 participants in various schemes, the equivalent of full-time State jobs. While these schemes provide a valuable outlet in that they boost participants' self-confidence, the emphasis should be placed on reducing employers' PRSI to create employment.

The proposal to provide 5,000 places on the jobs placement scheme is a source of concern when taken with the decision to increase the employees' PRSI allowance to £80 per week. Under the scheme, persons who are long-term unemployed will be allowed to retain secondary benefits such as their medical cards for three years. This will place employees currently in low paid employment in an invidious position. The Government will find itself in difficulty if the scheme proves successful.

Deputy Sheehan welcomed the measures announced by the Minister for Justice to tackle crime, but no thanks are due to her. Despite the efforts of the two left wing parties in Government, it was eventually forced to introduce these measures because of public pressure, brought to bear in both radio and television programmes in which it was made clear that people were living in misery and fear.

The Minister rose to the occasion.

I wish to touch on an issue which has not been mentioned so far in this debate, that is health. Provision was made for a 0.7 per cent reduction, on the 1995 outturn, in the allocations notified to health boards for this year. It appears the Minister for Health and the Government is asking the eight health boards to reduce their operating costs by in excess of £12 million. This will have adverse consequences for the acute hospitals in particular. This is one of the few sectors where savings can be made, given that decisions on various schemes, in the community care area for example, are made centrally.

The Southern Health Board has been asked to reduce its costs by £1.5 million. There was a budgetary overrun of £1 million last year. This means the board will have to make savings of £2.5 million. This has implications for the various initiatives announced to reduce waiting lists. It also means that another Fine Gael Minister has succumbed to the pressure exerted by both the Labour Party and Democratic Left to agree to major cutbacks which will have an effect on services for the elderly and the sick. Before the year is out there will be a severe shortage of beds and there will be queues at outpatient departments. This should not be allowed.

The Minister for Finance, Deputy Quinn, said last week that if there was a Nobel Prize for economic performance, Ireland would win it. If there was an Oscar for huffing and puffing and making nothing more than slight adjustments instead of reforming the taxation system and investment strategies to create more jobs and wealth, the Minister would win it by a mile. He had little cash to play with because it had already been spent.

The Government has been on a spending spree since it took office and we are paying for it now. The public sector pay and pension bill is set to increase by 5.5 per cent, an increase of 3 per cent in real terms as the insatiable appetite for big spending continues. There was little good news for middle income families in the budget and, because of that, most people have forgotten what the Minister promised. What the Government gave with one hand, it took back with the other. The further cuts in mortgage interest and VHI relief cancel out the PRSI and income tax give-aways. Irrespective of the income tax concessions, in reality the Department of Finance expects the income tax haul to increase by £160 million this year. The Minister made a song and dance of reducing corporation tax from 38 per cent to 30 per cent on the first £50,000 of taxable income. Despite this concession, corporation tax revenues are budgeted to increase by £150 million in 1996.

We are constantly told we are among the most successful economies in Europe, with a growth rate of 6 per cent to 7 per cent of GNP per annum. We do not hear anything about the fact that under current EU Structural Funds we enjoy one of the largest ever injection of funds to a country, at about 5 per cent of GNP. How much of the present growth rate was attributed to that injection, negotiated by the Fianna Fáil-Labour Government?

If the PAYE sector fared poorly last week, the farmers fared no better. I am particularly disappointed that the budget did little to encourage investment and competition in our most basic indigenous industry. The present income tax code is hostile to reinvestment of retained earnings in farm business. Stock relief, free depreciation on machinery and accelerated write-offs on farm buildings are only some of the incentives that have been withdrawn from farmers or changed in recent years. What has been the result? Successful farmers have been steered into higher risk investments, such as section 35 films, Dublin flats or the BES. Vital funds have been siphoned out of investment in primary agriculture.

The greater part of investment in commercial farms is no longer eligible for Government or EU investment aid. The farm improvement programme has been suspended since January 1995, the control of farmyard pollution scheme has been closed to new applicants since last April and we hear that the REPS may go bust before April. Who in Government is helping those in agriculture to plan and prepare for a more competitive future that is less than five years away? Farming organisations have argued for the option of being allowed to claim normal capital allowances at 15 per cent per annum or a tax credit on retained profits reinvested in farms. This would be a more logical and productive way to use farmers' resources than encouraging them to invest in Dublin flats or to support the Mel Gibsons and Marlon Brandos of this world, irrespective of how artistically talented they may be. All farms need productive investment to keep pace with the continuing need for increased productivity, but last week the Minister increased the flat rate VAT rebate from 2.5 per cent to 2.8 per cent, a measure already well justified by the increase in the prices of animal feeds, fertilisers, electricity and diesel.

This tiny concession comes at a time when cattle prices are reducing, reaching a flat 98p per pound this week, and milk in danger of decreasing by 7p per gallon or more from next April. It also comes at a time when a rift is developing between the Minister for Agriculture, Food and Forestry and the European Commission. As my colleague, Mark Killilea, pointed out, the Minister has been using undiplomatic language in Brussels in his efforts to restore cuts in beef export refunds. He has been quoted as saying, "If we start dumping our beef on the European market everyone will get it in the neck". That type of talk only serves to further sour relations with the Commission. The Minister may be displeased with the Agriculture Commissioner, Franz Fischler and we know from the Commission's reaction and its failure to restore beef export cuts that the Commission is also most displeased with the Minister and his PR antics.

The food industry, which underpins many jobs in rural areas, did not benefit from the budget. In the past two years the Irish pound strengthened by 7 per cent against the British currency, our most important market and competitor. Consquently, our meat factories import British beef for further processing here, our major mushroom companies are setting up production units in Britain and our food exports to the continent are being undercut by more competitively priced products from Britain. The budget did not recognise the problems that exist in this area. The meagre PRSI changes were no more than an acknowledgment that some influential voices had drawn attention to the problem.

The Minister, Deputy Quinn, announced the provision of £13 million for a voluntary early retirement package for the Defence Forces. This package has been promised for more than 12 months and, while I welcome the announcement, I have grave concerns about the amount provided. The need for reform in the structure and organisation of the Defence Forces is well recognised but, unfortunately, that will not be possible with only £13 million. Central to reform is a voluntary early retirement package but progress will not be possible with an underfunded scheme.

The age profile of the Defence Forces is one of the more serious problems confronting the organisation. The average age of personnel is 32, a European record of which we cannot be proud.

Our only hope of dealing with the problem is to open up recruitment and ensure that the terms of the voluntary early retirement package are attractive to older troops. As the scheme is underfunded, the aim of creating a younger, fitter and fighting force will remain but a dream.

The Government has neglected our Defence Forces, its record in that regard makes poor reading. It spent £500,000 on the Price Waterhouse review and accepted in principle its conclusions on the need for reform in the structure and organisation of the Defence Forces. The then Minister, Deputy Coveney, announced on radio that there would be barrack closures, but within 48 hours he changed his mind and stated that there would not be barrack closures during his Government's term in office. Deputy Barrett took over the Defence portfolio and the same rhetoric continued. He continued to tell us what he thought we wanted to hear. Promises were made to open up recruitment, but that did not happen. Promises were made to introduce a voluntary early retirement package last year, but that did not happen. The Government does not have the will to carry out the much needed reforms in that area.

In the past Ministers frequently refused to make difficult decisions. It is time they accepted full responsibility for their portfolios, which include making unpopular as well as popular decisions. While the Price Waterhouse report was over-critical of the Defence Forces, we all accept that reform of the forces would mean taking tough decisions. Members of the forces understand the need for change, but they do not want the process to become a penny pinching exercise, resulting in a smaller force, starved of necessary funds to remain an efficient, effective and fighting force.

The modernising of our Army, Air Corps and Naval Service is vital. This process will require major changes affecting personnel and their families. The Defence Forces have been great ambassadors for this country and we are proud of the way they have carried out their overseas duties. The least they deserve is to be told where their future lies and the Minister should spell out clearly their future role.

(Carlow-Kilkenny): I wish to share time with Deputy Ring.

Time sharing is provided for in this debate.

(Carlow-Kilkenny): Tréaslaím leis an Aire Airgeadais gur éirigh leis cáináisnéis a thabhairt os ar gcomhair a thug cothrom na Féinne do gach éinne cé nach bhfuair éinne an iomarca. Bhí ráflaí uafásacha le cloisint agus le léamh maidir leis na deacrachtaí a bhí aige. Bhí daoine ag rá go mbeadh an caiteachas ró-ard agus tá cuid de na daoine céanna sin ag rá anois nar chaith sé go leor. Fiú amháin bhí daoine ag rá go mbeadh toghchán ann go luath. Ach ní mar a shíltear bítear buíochas mór le Dia.

When I listened to the debate on the budget I wondered was it time the whole thing was changed and a task force set up to study the insanity that seems to creep in when people are awaiting the budget. That holds for the Opposition who go out of their way to pretend that Democratic Left is a dangerous species to have in government, and that poor Deputy John Bruton is being thrown around because he has views that any normal politician should have. It holds also for the self-appointed experts who write such colourful pieces in the Sunday papers — I am not referring to the genuine political contributors but to those who write special articles. Some of what they write is unbelievable. In the Sunday Independent of 21 January was an article headed by, of all headlines, “The Castration of Fine Gael”, which surely must have been the unkindest cut of all, surreptitious, without anaesthetic.

The article stated:

Four weeks ago the battle of the Estimates was fought between two Ministers of the left — Mr. Quinn and Mr. De Rossa. Fine Gael Ministers were hardly involved, merely irrelevant onlookers. De Rossa won. Fine Gael complied. Its single boast, that of being the only party in Government which restricted public spending, was exposed as a sham, a piece of shallow rhetoric.

The Deputy is attacking one of his own.

(Carlow-Kilkenny): The word “shallow” is a very important word and it applies to the whole article, not just this quotation. It says “Fine Gael is denying its traditional instincts for the sole purpose of sitting in power”. As a member of the party of the just society I would like to think there is no politician worthy of the name, who would think giving a 3 per cent increase to a widow or to a person on disability benefit living on about £64.50 without a living alone allowance, was anything other than common sense. The pity is that we cannot give much more than 3 per cent, but to accuse parties of the left of going wild in giving a 3 per cent increase to social welfare recipients is so absurd that I do not know why people are not embarrassed to say it and, more important, to be paid for writing it. It is incredible. The article continues:

He (John Bruton) placed long-term unemployment before tax cuts. Decoded, he means that the taxpayer will again subsidise unemployment. In turn, this means smaller Budget reductions in taxation on Tuesday.

Who spoke more eloquently than Deputy John Bruton in Opposition, about the way we taxed work and did everything to ensure that employers did not take people on? Surely it is the consistency of the Taoiseach that should be written about. The Opposition said that the tail was wagging the dog. The article continues: "Fine Gael ministers at cabinet will look on hopelessly, political eunuchs caught in the arm lock of the double left wing veto". Perhaps it is a question of half a loaf being better than no bread — the writer is improving as he goes along. On the following Sunday when the same writer had a chance of saying he had made a hames of it, had got it wrong and was out of touch on how the money was to be spent, he blamed it on the fact that he got two diaries.

The Department of Social Welfare diaries are very useful. They contain much information and all the telephone numbers people might want. I am quite sure it is a good investment for the Department of Social Welfare because people do not have to ring it looking for information. The writer goes on to talk about the moral high ground etc. In an article in the same Sunday paper on 28 January he said:

The Department of Waste and Welfare and the sanctimonious Left is doing far too LITTLE for the poor — the mentally handicapped, the blind, the old, the disabled, the genuinely sick and those incapable of participation in society. These groups are treated to derisory sums of money by the conscience-stricken Left. Why? Because there are not enough of them to muster many seats at a general election.

How can he have it two ways? Surely looking after the mentally handicapped and the blind is a job we should all do. Now they do not seem to have got enough. The Sunday before the budget the tail was wagging the dog and we were madly spending money. He writes also about bleeding hearts and so on. It is desperate rubbish. He goes on to say: "There is an alternative. We could cut Corporation Taxes, Income Taxes, abolish Residential Property Tax, Capital Gains Taxes etc." The people affected by those taxes would be happy. While the left are accused of buying votes I suppose the right would not be accused of buying votes by cutting all those taxes. It would be a marvellous world if we could cut taxes. Obivously the people paying taxes are paying too much, but we have to try to get a balance. He says he knows healthy people drawing sickness benefit, employed people drawing the dole, able bodied people taking disability benefit, people working in the black economy receiving rent subsidies, etc. and that the Department of Social Welfare had let him down because when he reported these abuses it did nothing about it. I expected the next article on the following Sunday to explain how the Department of Social Welfare did not deal with people who were reported. It is so easy to exaggerate. The people who abuse the system do no credit to the system or to those of us who have a genuine care for people in need. If someone who is an expert knows these people he has a duty as a decent citizen, to report them.

In an article in the Sunday Independent dated 21 January, the most vicious of all that I have seen, it is stated:

One would like to imagine that Mr. Bruton conceded powers to the Left only after a stuggle, that he is lying wounded but vengeful in some corner of Government Buildings plotting a counter coup. But no, there is no evidence of that. Mr. Bruton is grinning and content to say whatever the socialists thinks he ought to say: though every syllable is a perversion of what Fine Gael ought to stand for.

There is the criticism of spending, of the financial arrangements of the budget, of giving 3 per cent to social welfare recipients and it is suggested that Deputy Bruton, as Taoiseach, should oppose that. I am glad he did not. I am sorry we could not give more. The column continues:

Fine Gael... has no reason to be in public life except to fight socialism. Fine Gael exists — if it is to exist with a moral purpose — to represent business interests.

Would that not be a nice party to be a member of, representing one group of society only? I could read much more. One lecturer who wrote in the Sunday Independent of 28 January said that Ministers like to claim credit for the GNP growth in the Irish economy as if they caused it, that they like to claim credit for keeping borrowing within the Maastricht guidelines as if they had also caused this. Is it not strange that if the budget had spent more than we could afford, the Minister for Finance would be blamed for upsetting the balance.

In the Dáil Deputy Michael McDowell gave us a laugh when he, in good humour, welcomed an absentee Deputy to the House for the occasion of the budget. Deputy McDowell is not altogether in the first line of attenders himself. He said in the Sunday Independent of January 28 that the see-through budget, despite all the hype and the credulous media reaction to it, was a transparent rip-off. He has the advantage of being able to write things in the newspapers if he does not get a chance to say them here. He seems to think that the media are being fooled. Mr. Paul Tansey wrote in the Sunday Tribune on 28 January that the Minister for Finance did not do a bad job and that the initiatives on PRSI, corporation tax for small companies and long-term unemployment, while thin, at least pointed in the right direction.

It is easy to criticise budgets. There is no budget that cannot be criticised because people will never be given enough, no matter what tax or social welfare breaks are introduced. Those who are paid to write in newspapers should try to present common sense. While beautiful English reads well, content is important.

I am glad, as a west of Ireland Deputy, to speak on the budget. In my constituency last weekend people did not say the budget was great but neither did they say it was bad; they described it as neutral.

This Government cares for those who do not have jobs and depend on social welfare. I will make no apologies to Deputy Michael McDowell or anybody else who would be critical of any Minister who makes just payments to those who need them. Every scheme which has been introduced since the foundation of the State has probably been abused by a small number of people and Deputies will highlight this abuse. If Deputy McDowell and journalists in the Sunday Independent know people who are paid money to which they are not entitled, they should inform the Department of Social Welfare, which will deal with the problem.

I wish to address my remarks to the Minister for Social Welfare, Proinsias De Rossa, and the Minister of State at that Department, Deputy Durkan. In the west we have many dealings with the Department. It is caring, has learned a great deal about PR and is well equipped to deal with people's problems. I hope the Taoiseach and the Government will attempt to ensure that the same applies in other Departments. Some Departments have a great deal to learn about PR and dealings with people's problems.

Two provisions in the budget upset me. One of them relates to the carer's allowance and I have spoken about this in my constituency and at length in the Dáil on one occasion. What the Taoiseach, the Government and the Minister for Social Welfare are doing to people looking after elderly relatives is not fair. There should be no means test for people looking after elderly people at home for payments of up to £50, £60 or £70 a week. If sufficient resources were available, this limit should be a great deal more. People who care for elderly relatives save the State a great deal of money. If these relatives had to go into a home or a hospital, it would cost much more than £50 a week to maintain them; in some cases it could cost up to £300 a week.

A lady came to my clinic a few weeks ago. She had to leave her husband and family in England to come home to look after her elderly mother. Her application for the carer's allowance was refused on the basis of the means test. Her husband's income was taken into consideration because he lived outside the State, but he is providing for an elderly person in this country. The Government will have to deal with this and I will raise it at every opportunity. It is time something was done about this injustice. We should look after our old people and sons or daughters who care for them should be rewarded in a small way for this.

Ministers and the Civil Service should realise that the west is experiencing depopulation. The same criteria which are applied in Dublin, Galway, Waterford or Cork should not be applied in the rural west of Ireland. I never hear Members criticise the subsidies paid to the DART or the new rail link which was announced a few weeks ago. The people of the west do not begrudge these to the people in Dublin. However, there seems to be begrudgery in Dublin 4 towards the west. It is felt that people in the west are always drawing off the State. This is incorrect. Some 1,000 people in Westport are employed in manufacturing. They pay taxes and PRSI and are entitled to the same standard of living as anybody else.

A relative of mine who is seriously ill has to travel to Dublin by train to attend St. Luke's Hospital. A constituent from Rossport visited my clinic last week. There are probably people in Dublin who never heard of this place which is near Belmullet. People from there who have to travel to Dublin must first go to Ballina, a journey of 60 to 70 miles, to catch a train to Dublin. They have to leave home at 3 a.m. or 4 a.m. to be on time for the train. They cannot be sure if the train journey will take four or five hours. On a few occasions during Christmas it took five hours. When they arrive in Dublin they must travel by taxi to whatever hospitals they are attending. This is wrong and these people should be looked after. Another constituent had to travel to St. Luke's Hospital. He is entitled to free travel. At Ballina railway station he was given a single ticket. He received treatment in hospital during the day. Any illness for which people must attend St. Luke's must be serious. That evening he had to queue for nearly an hour at Heuston Station for a single ticket back to Ballina. He became nervous because he thought he would miss the train.

I wrote to the Minister to ask why such people cannot be given return tickets. I am asking him this again now. I rang Iarnród Éireann in my constituency to find out how much it was to travel to Dublin on the day in question. A return ticket was £14 and a single was £16. Iarnród Éireann are paid by the State for two single fares instead of for a return fare. It is sufficiently subsidised by the taxpayers without being subsidised further. The Minister should not talk to Iarnród Éireann, he should direct it to issue a return ticket to people from the west and other areas of the country. That is not too much to ask and if there are any complaints he can instruct it to deduct the cost from the subsidy it is already getting from the State. I call on the Minister to deal with this problem as a matter of urgency.

I welcome the reference to the elderly in the budget and the need for house alarms. I highlighted this problem in my constituency in the past few months and, therefore, I was disappointed with the measure giving tax relief up to £800 for people over the age of 65 who wish to install an alarm. We all know that most people of that age do not pay tax. I am sure the person who came up with this idea had good intentions but he or she obviously knows nothing about rural Ireland.

I have asked the Minister for Social Welfare to consider this matter and I have some suggestions in that regard. He should consider giving the £800 tax relief to a son, daughter or other relative of an elderly person. Ideally everybody over the age of 65 should be given an alarm free of charge but I realise that would not be practical because the money would have to be paid by the taxpayer, but in the past we had grants for houses, hotels and industry and I do not see why we cannot give elderly people over the age of 65 a grant of £250 or £300 to install alarms in their homes.

I appeal to the Minister to consider this matter and put a proposal before the House which will benefit all elderly people.

I welcome the increase in the allocation to the Department of Justice and the measures announced yesterday by the Minister, Deputy Owen. Last year in this House I spoke about the problem of crime and I called on the Minister to return power to the provinces. Every country should have its own police authority — the county police authority like the county health authority — which would give back power to the people rather than having all the power based in Dublin. A chief superintendent or superintendent should be based in Mayo to deal with crime in that area. That person could be asked to attend county council meetings so that councillors could outline the action they would like to see in the fight against crime. There is little point in such a person, who has probably never been in the west other than for a month by way of promotion, being based in the Phoenix Park. In my own town of Westport we have had three superintendents in the past 15 months, all of whom have now been transferred back to the Phoenix Park. I welcome the initiative to transfer personnel to the regions and Assistant Commissioner Joe Long, who will be in charge of the western region, has my full support and that of the people of the west. I hope he will be able to tackle the serious crime we have been experiencing in the past number of months.

That reminds me of a question I tabled last year calling for checkpoints to be set up in the west — and I received the usual Civil Service servant reply to the effect that it could not and will not be done. They have now been set up so somebody must have listened to me. Those checkpoints have two objectives: first, they give elderly people in the west a sense of security which enables them to go to bed at night feeling safe and, second, they enable the gardaí to monitor people travelling to and from the province. I welcome this move and I am glad I played a small part in relation to it. Now that these checkpoints have been set up I hope they will remain in place.

The Minister for Justice, Deputy Owen, is a caring person and a very good Minister. She has been severely criticised in the media in the past few weeks. Deputies referred to the media in relation to the budget and certain Sunday newspapers having a go at the left and the right. This was a balanced budget and the measures announced yesterday by the Minister for Justice are an appropriate response to the problem of crime. I and the people in the west have confidence in this Minister. The media has a lot to answer for because it went overboard in the past few weeks in relation to the level of crime which resulted in people becoming even more frightened. We do have a crime problem — I cannot deny that — and people will continue to be concerned until the people carrying out these crimes are put behind bars.

I compliment the Garda Síochána who have responded well to this problem in the past number of months. I have no doubt the current crime wave can and will be got under control. It is not a problem that arose yesterday or today; it has been building up for the past ten years but it is being dealt with and I welcome the move on the part of the Minister of Justice to appoint an assistant commissioner in the region. However, there is little point in appointing assistant commissioners to the regions if they do not intend to reside there. They must be based in the regions and I hope that will be the case.

I welcome the grant to parents of twins. I dealt with a constituent of mine who had a problem in this regard last week. We would welcome many twins in the west because of our declining population. This measure will be an incentive to people to increase the population and I am glad the Minister, in his wisdom, was in a position to provide such a grant.

What about the twin Ministers?

I have that problem in my constituency but I must deal with it myself and I will look at the twins.

I welcome the budget and I am happy to be part of a caring Government. The social welfare increase of 3 per cent is welcome because it is in line with inflation and social welfare recipients need such an increase to keep them in line with the cost of living. The Government is working well and, judging by its reaction to the Minister's Budget Statement, the Opposition realises this was a good budget. It is the job of the Opposition to oppose but there was not any major disturbance in the House following Minister Quinn's announcement. I believe the Minister said we will have two more budgets before a general election and that is to be welcomed. Other issues will have to be addressed in those budgets such as the problems being experienced by PAYE workers but that will be done in time. The economy is healthy, there have been major decreases in mortgage payments and people are happy. The one issue which must and is being dealt with is crime.

Deputy Browne outlined some of the writings of our colleague from the other House, Senator Shane Ross, in the Sunday Independent. I assure Deputy Browne that this side of the House does not subscribe to Senator Ross's economic philosophy. If we were to implement his policies there would be a revolution because he is concerned exclusively with one particular sector at the expense of other sectors in a zero sum game. We need not be too concerned, therefore, about his rantings in the Sunday Independent because he is playing a completely different game. I assure Deputy Ring also that not all Dublin people subscribe to the Dublin 4 philosophy, there are different types of people in Dublin. I subscribe to the Dublin 5 philosophy which is different from the Dublin 4 philosophy. Many Dublin people have a great affinity with people in the west. It is not a zero sum game and Fianna Fáil takes a national approach with which I am sure Deputy Ring agrees.

This budget has not been greeted enthusiastically by many people. It has been described as a neutral, unimaginative budget giving a little here and there and tinkering with the system, similar to using a watering can around the place in the hope that something will grow. These words have rightly been used to describe the budget.

The budget was a non event, a steady as you go budget. That was unfortunate because on this occasion the Minister had opportunities which former Ministers for Finance had not, but he opted for the cautious approach.

I believe in social partnership. Social partnership has been responsible for the transformation of this economy particularly since 1987 and consensus building in terms of our economic affairs has served this country extremely well. The Fianna Fáil Party pioneered successive partnership programmes, the Programme for National Recovery, the Programme for Economic and Social Progress, and the Programme for Competitiveness and Work were all Fianna Fáil led initiatives. The economy was pulled from the brink of disaster by engaging in social partnership and pay agreements and the bringing together of all the social partners in a national effort to bring about economic recovery. That has been the case certainly since 1987. Ireland could be held up as an example of social consensus and partnership between Government, the trade unions, business and farmers. That is the key to our success. Social partnership and social consensus have been applied in other countries in the European Union. I met recently with the Prime Minister of Finland as part of a European Union delegation. The Finnish Prime Minister has brought together all the parties in a very ambitious programme to bring Finland forward in terms of economic development. How not to do things can be seen from what has been happening in Paris, where confrontation was the order of the day and there was no consultation or discussion. There is no tradition of social consensus and partnership in the United Kingdom where it always seems to be one sector trying to outdo another in a zero sum game.

The Fine Gael Leader, Deputy John Bruton, did not always subscribe to this economic philosophy before he became Taoiseach but it remains to be seen as we come to the end of the Programme for Competitiveness and Work if his attitude has changed. The Taoiseach probably has done a U-turn on that issue and sees the benefit of pay agreements and social consensus. It would be one of the biggest political changes in the country if the Fine Gael Party were to come to that view.

This budget is the first step in the unravelling of the social partnership, painstakingly built up over so many years, particularly since 1987. This is evident from recent statements by the national executive council of SIPTU which has issued warnings that future pay deals are in jeopardy and that key commitments have been reneged on, with particular reference to the 1996 budget. The national executive council has more or less suggested that partnership has been sabotaged. That is very serious and unless rectified will manifest itself during the final year of this Government and in the years to come. In its statement, SIPTU referred, in particular, to the levels of personal taxation levied on low paid workers. It stated that after this budget workers on modest rates of income will be paying the top rate of tax. They have arrived at the view that partnership is coming to an end as they believe key commitments in regard to income tax have been reneged on. The three parties in Government should seek to address this before engaging in further economic planning.

One would have expected that a Government comprising three parties from across the political spectrum would get the balance right, but unfortunately in this budget this was not the case. It is generally accepted by all concerned, not only by Senator Shane Ross, that the budget was a triumph of Democratic Left over the Fine Gael Party and I suggest the Labour Party was left in the middle twiddling its thumbs. The Fine Gael Party has caved in on many issues, in particular on income tax cuts. The economy is booming and there was a very real expectation of income tax cuts. Many people have been waiting for such cuts but in the national interest they were prepared to wait until the economy was put right and the economic indicators were good. For the first time ever the Minister for Finance had a real opportunity to tackle income tax bands but alas he tinkered with the system and engaged in tokenism and nothing happened in this regard.

This budget will be remembered as one that did not do anything for middle income families, the so-called coping class. There was no reference to tax reform, property tax, VHI or mortgage interest relief in the Minister's speech. That was not surprising as it has been estimated that the budget will add £200 to the annual cost of an average mortgage by chipping away further at interest relief.

The reduction in tax relief on VHI will result in an extra £80 being extracted from the average income earner. When one considers the proposed increased electricity charges, ATM charges and television licence fee together with the reduction in tax relief the middle class did not gain anything. The Department of Finance stated that income tax for this year will increase by £160 million. One commentator stated that a person earning £30,000 with mortgage and VHI commitments will be better off by £1 per week. It is a shame the budget introduced low reward for work. The Government's strategy should be to widen the gap between a worker's take home pay and the benefit he or she will receive if unemployed.

It is unacceptable to cut back on benefits. This Government must look after the old, sick and handicapped as did previous Governments. However, there must be an incentive to work and it could have been achieved through taxation cuts but unfortunately that did not happen.

Many speakers mentioned the tax relief for installing burglar alarms. That measure was rightly criticised. A few years ago I suggested that fitting an approved alarm system should be tax deductible regardless of all other home improvement tax allowances. The provision falls far short of that and is tokenism. As it applies only to single people it discriminates against married couples. In any event the people affected probably do not pay income tax so it will not be of any benefit to them.

At a time of escalating crime a miserable £3.75 million extra is provided for prisons. The cost of building Castlerea prison as originally envisaged is £20 million. The negligible provision in the budget might build a palisade fence around that prison.

Statistics show that a properly installed burglar alarm considerably reduces the risk of a break in. Given the serious spate of attacks on the elderly the Minister should have introduced a grant to enable people install a burglar alarm system. There have been many home improvement grants over the years. I understand the incoming Government in 1987 faced a bill of £200 million for home improvement grants on foot of commitments given by the outgoing Government. Perhaps the Minister will consider such a measure when introducing the Finance Bill. We will table an amendment to enable grants to be made instead of allowing tax relief.

Many Members referred to the ranting and raving of Senator Ross on community employment schemes. Those who subscribe to his philosophy do not believe in them and say they do not create wealth. However, I believe they contribute a vast amount to local communities. At a time when we are trying to foster community development and a sense of neighbourliness the scheme should be encouraged and I welcome the provisions in the budget in that regard. I do not know the original objectives of the scheme but from the point of view of fostering community development and participation by young people, it should be part and parcel of the fight against unemployment.

A proposal was made recently on unemployment assistance for those aged 18 and 19 by the Minister for Enterprise and Employment. I do not know the status of that high flying exercise, but it was badly greeted in some Dublin working areas, particularly in the Minister's constituency of Dublin North Central. A group of people who are probably most under pressure and in need of assistance were callously disregarded. The social welfare system needs to be reformed but the Government should not zone in on one group. He should reassure his constituents and those involved in employment action groups.

In 1991 area partnerships were set up under the Programme for Economic and Social Progress operational programme for local, urban and rural development. The north side partnership is an employment organisation on the north side of the city. It does tremendous work tackling unemployment in many different ways. Recently it was allocated £2.9 million by the area development management company but that fell far short of what was envisaged. The area has expanded into Dublin North East, presumably because there are two Labour Deputies there. As the cost of its new action plan is £9.8 million, the sum of £2.9 million is hopelessly inadequate. I appeal to the Taoiseach, who, in association with the Minister of State, Deputy Gay Mitchell, oversees this area, to reassess the role of partnership boards and adequately fund them. It would not be throwing money into a bottomless pit. The statistics are there to show that educational qualifications are improving and much community activity and development has been fostered by the boards. It is a shame that finance is not adequate in this area.

The budget has not received a very warm welcome. From the point of view of the economy as a whole the emphasis in the budget was misplaced. We are going back to a budget deficit, which probably would not be necessary if there was a better balance of priorities. We are coming to the end of European Structural and Cohesion Funds, and future growth in the economy may slow down. We have not been particularly prudent regarding the overall macro-economic position. Since times are good, measures such as income tax cuts should have been introduced. They would be self-financing and would boost the economy.

We are not looking to the future in terms of a long-term economic strategy. it is evident to everyone that the reason for that is the need to keep the Coalition partners satisfied. The question of income tax cuts was put aside because it probably was not the priority of some of the parties in Government. I hope we will not suffer as a result.

There is no measure in the budget to tackle the currency crisis which seriously affects business and jobs. Many businesses who are struggling because of the ongoing currency difficulties are disappointed that nothing was done to help them.

Despite all the Government's talk about long-term unemployment, the average monthly long-term unemployment figure is £12,000 more than last year's budget target and £5,000 more than that at the end of the previous year. The budget makes no serious impact on long-term unemployment.

The budget was not particularly welcomed by anyone. The adjectives used include neutral, unimaginative, a little bit here and a little bit there, opportunities missed, tinkering, tokenism and the watering can effect. That is not good enough in 1996 when the economy is booming. Everybody hoped for a little more imagination. The Minister for Finance was envied by many of his predecessors who believed that were they in that position they could have done much more. While the social welfare increase of 3 per cent across the board — our party has been pursuing a similar policy for many years — is welcome, many other measures could have been introduced which would have had a greater impact in that area.

Unfortunately income tax cuts in the budget are negligible. The coping classes, who were prepared to wait for several years, believed that some measure would be introduced in the budget to assist them, but unfortunately that was not the case, and that is the tragedy of the budget.

I wish to share my time with Deputy Flaherty.

Is that agreed? Agreed.

I am a great believer in remembering where you came from and being realistic about your background and history. I find it very difficult therefore to listen to Opposition Deputies, particularly the last speaker from Fianna Fáil, whose speeches have been along similar lines, mostly that the budget is a scatterbrain measure but the main theme being that Democratic Left was the driving force behind it. Last year the thrust of their attack was that Democratic Left had absolutely nothing to do with it.

I am a member of what Deputy Haughey and numerous journalists have called the coping classes. However, when Deputy Haughey's party was in Government I found it extremely difficult to cope. The slogan then was that we must all tighten our belts, and we did so to such an extent that we nearly killed ourselves. There were health cuts, social welfare cuts and cuts in education — I travelled on buses to Athlone in the company of parents who were very concerned about their children's education. The same party now says that this is a terrible budget because we have not made sufficient tax cuts. Fianna Fáil and the Progressive Democrats would make all the tax cuts possible, and it is very easy to reduce public spending and cut taxes, but what about the people who are suffering? Are they to be ignored? Are people under the mistaken illusion that they never vote anyway and therefore it does not matter if they are ignored. The people towards whom this budget is directed are those who have been neglected for more than 70 years under Fianna Fáil led Governments. For the first time we have a Government of three parties which is concentrating financial resources on alleviating suffering for everybody.

In the past two weeks Democratic Left has received much unpaid publicity. Last year we were told we made no input into the budget while this year we are supposed to have framed it entirely, neither of which is true. One-third of Fianna Fáil budget broadcasts have been devoted to our party, to the extent that one of my children said she did not know that Deputy Charlie McCreevy is now a member of the Democratic Left and asked when had he joined. He spoke about little else but our party. Deputy Brennan informed us last night that Democratic Left is in the driving seat, but he is aware that there are three capable and determined parties in this Government. That is probably what grates most.

The economy is in sound hands. That is reflected in the markets, of which I was never a great admirer. It is also reflected in the economy and everyone recognises that to be the case. That must also grate on Fianna Fáil.

Bringing the dispossessed in from the margins is a matter of simple morality, but it is also one of self-preservation, something else Fianna Fáil has not grasped. No matter how cocooned or isolated one is from reality, one must realise that a society cannot carry the burden of permanent long-term unemployment and survive.

The back to work budget announced last week will benefit all sections of society in the short and long-term. That is why Democratic Left together with our coalition partners, Fine Gael and the Labour Party, made a deliberate decision to focus resources on the long-term unemployed and on those in work on the poverty line barely eking out a living. That was a three party decision. No one, no matter how naive or foolish, could possibly believe that one small party in Government could be so overwhelming in its persuasive powers that it could bring Fine Gael, a party of very strong convictions, and the Labour Party, a party of equally strong convictions, along with it. This Government is about consensus. It is regrettable that there was not consensus in the last Government, otherwise it would probably be in office still.

For years we have heard about poverty traps. The Progressive Democrats more than any other party have spoken about disincentives to work and the difficulty of making the transition from the dole to the work place. It was usually referred to in the context of social welfare expenditure being too high, not the way I would view the problem. This Government is the first Administration to stop talking about that problem and to start acting.

Last night my ministerial colleague, Deputy Gilmore, outlined some of the consequences of high unemployment over a long period. They should be well known to all Members, but I am sure Deputies opposite benefited from the refresher course. Those who have been long-term unemployed need to be re-educated for the world of work in the same way that we would need to be if we were out of this sphere for a long period. At the same time employers need to be encouraged or cajoled to pick new staff from the ranks of the long-term unemployed. Fifteen thousand new places have been provided on three programmes, £5,000 for the back to work allowance, an £80 per week subsidy for employers and a new work trial scheme will be introduced. It is generally recognised that the older the unemployed person and the longer he or she has been unemployed, the less chance he or she will have of making the transition back into the work place. For this reason 1,000 places on community employment schemes are being reserved for people over 35 years of age who have been unemployed for five or more years. I do not subscribe to the theory that once one is over 30 one is unemployable. Any society that subscribes to that is on the slippery slope to self-destruction.

These measures will help the long-term unemployed gain a toe hold back into the world of work from which I hope they will be able to make the transition into conventional employment. That transition is being made easier by the provisions in the budget. Until now people coming off the dole to take up work sacrificed a variety of crucial benefits. In many cases they would have been worse off in employment than on social welfare. Rather than promoting employment, for too long the system militated against work and workers. The measures announced in last week's budget do not represent a magic wand which will instantly dispel unemployment. Unlike the parties opposite, we are not in the business of creating illusions. The provisions in the budget are not a short-term solution to a long-term problem. Fianna Fáil and the Progressive Democrats keep forgetting that long-term unemployment did not become a problem overnight nor is it likely to be solved in that time.

The budget is designed to lay solid foundations for job creation and job maintenance. It is also designed to make work and to enable people take up work. In future the long-term unemployed will be able to retain their medical cards for three years and their child dependant allowances for 13 weeks after taking up employment. Those provisions will make a significant difference to those making the transition from dole to work and will ensure that people are not deterred from taking up employment because of financial constraints.

It is not good enough simply to provide work; people in work must be assured of an income sufficient to maintain an adequate standard of living. Nothing must be as disheartening as being worse off financially having worked five or six days than while unemployed. Unfortunately, many workers are trapped in low paid jobs and many women, in particular, are relegated to part-time work. The numbers in part-time work have increased from 91,000 in 1990 to 134,000 in 1994. Twenty-two per cent of women at work are in part-time jobs compared to 5 per cent of their male colleagues. That above all else highlights the changes taking place in relation to work in society and our need to adjust to them.

In that regard I welcome the measures introduced in relation to job sharers as well as those geared towards the lower paid. The family income supplement scheme designed for the low paid has been improved while the tax burden on the lower paid has been reduced. Single people earning below £75 per week, which Members will agree is not an enormous salary, or married couples earning below £150 per week will no longer be liable for tax. PRSI will not be payable on the first £80 of weekly income. Those measures are far from ideal, but they are a start in the right direction.

I have listened carefully to the contributions from Fianna Fáil and the Progressive Democrats in the run-up to the budget and during the present debate. The Progressive Democrats have the merit of being consistent. Their trickle down philosophy espouses tax cuts for the well off in society on the premise that the benefits will filter down at some unspecified future time. Their naïve faith in the discredited theory of Reaganomics and Thatcherism is rather touching, surely the ultimate triumph of optimism over experience. As my ministerial colleague, Deputy Rabbitte, pointed out in the House last week, at least the Progressive Democrats are consistent, while Fianna Fáil seems to be muddled. If I understand that party correctly, which at times is difficult, it wants across the board tax cuts, increased public spending and more stringent spending curbs, although I do not know what that means.

Democratic Left is committed to fundamental tax reform rather than arbitrary reductions for sectional interests. Job creation is crucial to tax reform. Until we have reduced the numbers on the live register and helped people to make the transition from a social welfare income to a waged income, our tax burden will remain unacceptably high.

The muted howls of protest from the Opposition benches come as no surprise. It is not long since Fianna Fáil and the Progressive Democrats entered a temporary little arrangement, and that is most interesting. According to an analysis in a report by Davy Stockbrokers, that Administration positively discriminated in favour of higher earners. That report is well worth reading. It states that the higher one's gross income the bigger, by a wide margin, the benefits one derives from income tax changes implemented during the period in which Fianna Fáil and the Progressive Democrats were in Government. That report highlights the truth about what we heard during the past few weeks, that of 17 developed countries Ireland came second to America in terms of the gap between the rich and the poor. Fianna Fáil and the Progressive Democrats contributed to widening that gap. That is what they mean by tax reform. Democratic Left does not believe the politics of greed should be allowed triumph over the politics of solidarity. I do not believe for one moment the majority of our working electorate agree with that philosophy. Instead, they would much prefer to see a balanced society in which they could live in safety and comfort.

In addition to aiming budgetary changes at the unwaged and low-waged this Government has consciously directed resources to families. The family is the fundamental unit of society; that cannot be repeated too often or too loudly. Its centrality was re-emphasised by all parties in the course of the recent referendum on reversing the prohibition on divorce. Families and the need to protect them are given priority in our Constitution yet, in the past, we failed to cherish all of the children equally since unemployment, poverty and social exclusion often placed families under intolerable stress.

Democratic Left is not in Government to apply illusory quick fixes but rather to develop and implement practical, cohesive responses to the very real problems confronting our society. Last year my party colleague, the Minister for Social Welfare, took a conscious, courageous decision to concentrate the bulk of the extra resources at his disposal on increasing child benefit, thus striking at the very heart of child poverty. He has consolidated that policy in this year's budget by increasing child benefit by an additional £2. Child benefit is of very real benefit to those in low-paid jobs. The Minister for Social Welfare made the correct decision and benefits of increased child benefit is now widely acknowledged. Of course, there are different kinds of families. Many an elderly, sick or disabled relative is cared for by a family member. Whereas the role of such carers was ignored or played down in the past, I am delighted at the decision to reform and substantially increase the carer's allowance.

This budget is the second of three over the lifetime of this Government. Each budget will build on the previous year's budget. Short-term policies have failed the State and, more importantly, those dependent on it for their well being. In the course of a recent television debate it was put to me that this was not the real budget, and next year we were likely to see a give-away one in advance of a general election. Rather than being rooted in the pre-election fantasies which dominate Fianna Fáil and Progressive Democrats responses, this budget is a very positive response to the problems of poverty, unemployment and education. Next year's budget will consolidate the gains made during the life of this Government and, once again, help to bring those on the margins into the political centre where they should be. If that is not done we shall all live to regret it.

It is always refreshing to listen to Deputy Kathleen Lynch but it was rather strange to hear such soothing noises emanate from Democratic Left, reassuring the Fine Gael Party that it had had an influence in framing the budget, thus reassuring our party members nationwide. Deputy Kathleen Lynch said she is always conscious of her roots. That too is a fundamental of my political involvement. I come from the north west of Dublin city, from a large, working class area where these budgetary provisions will impact significantly on the lives of all its inhabitants, an area in which there is a high level of dependence on social welfare, a great need for employment and for budgetary provisions offering a future.

When I spoke last week on the Private Members' Bill providing votes for the disabled, I began from that premise also. It is for those reasons I welcome this budget which, as other Members have said, is a "steady as she goes" one; the ship of State floating steadily, performing very well within a European economy when other countries are not doing so well. Recently I read of German economic difficulties resulting from budgetary demands arising from a high level of unemployment and discovered that our economy, almost alone within the European Union, is performing at a level easily permitting us to comply with the Maastricht criteria. Why not adhere to the old adage: if something works why fix it?

The complaints of those who argued for radical new departures must be viewed somewhat cautiously. Steady progress on the lines of agreed policies, succeeding without radical changes in the world economy, does not justify radical shifts or dramatic changes. The only dramatic shift in which I am interested is that advocated by the Conference of Religious in Ireland, a hugely radical one for debate in the future to which I will revert later.

At present the future of this country is bright, underpinned by the policies of this Government. Many of the fundamentally favourable factors — apart from economic ones and the huge growth in unemployment — experienced over the past decade continue to be favourable. From next year the growth in new entrants to the labour force will reduce steadily, leading to a general improvement in employment. While the long-term unemployed will remain with us, I hope we shall not witness the levels of growth in unemployment that have been a feature of the past decade.

The Minister and the Government were right to target employment in this budget. One of my difficulties with the Progressive Democrats' analysis of our approach to economics, is their attitude to various forms of social spending and employment schemes. It is all very fine for those within the high-earning, middle income bracket to bear the squeeze, perhaps for a short while scrapping their second annual holiday or acquiring a smaller second car but it must be remembered that many people in my constituency live in a flat in Ballymun or a terraced house in Finglas and have to survive on social welfare. Whereas the benefits of such a squeeze may be felt ten years hence, in the interim poor people will have reared their families in that ten years in excruciating difficulty and poverty.

We need programmes targeted at the most needy in our society which is why the merits or demerits of the community employment, the VTOS or other schemes have been the subject of analysis and depending on where one stands within the political spectrum, some people support them and some oppose them.

In the context of representing my constituency, I stress that community employment is enormously important in the short-term and since people have one life only, this intervention may be critical for them, giving them and their families their sole experience in a decade of having a family member in employment. Because community employment schemes contain more developmental elements and last longer, often leading to people establishing contacts and finding more continuous employment, their impact on families where one or sometimes two breadwinners are involved can be very significant. Like the previous speaker, the politics I support would not encourage a society to turn their backs on those because they do not make economic sense and they will not gain from the boom.

There are steady and measured changes in the tax and social welfare elements of the budget. It would have been nice for me, as I represent a constituency which is largely dependent on social welfare, if I could have heralded a 5 per cent, 6 per cent or 7 per cent increase. The biggest problem experienced by most of those people, other than pensioners who have completed their working life, is the trap of social welfare. Even with the positive changes made in that area last year and this year, the poverty traps and disincentives still exist to a significant degree.

Last Monday, after attending my advice centre in Ballymun, I sat around a table with a housewife in Ballymun who has one child and whose husband is long-term unemployed. She examined the opportunities she might have for employment, what she could afford to take up, what she could not afford to take up and whether, if she took up employment, her family would lose all its benefits. Because of the way in which our tax and welfare systems interact there is still a very real problem despite the reforms last year and this year. What are the elements in this budget, continuing from last year, that are most helpful and that need to be speeded up? We are moving towards child benefit for the support of all children. One of the critical elements in trapping people in social welfare is the issue of payments for children. Those in receipt of social welfare receive a payment for children whereas those at work do not. Neither is there a tax allowance for those at work, there is a small allowance in respect of property tax if one is in the net but that is the only concession. Support for children is a huge problem. Therefore, the move towards child support being included in child benefit is welcome.

The slow growth in social welfare incomes is essential if we are not to further exacerbate the poverty traps. They should not be allowed to increase at rates higher than wages or substantially higher than the rate of inflation as that would make it less attractive to work. Like last year, the emphasis in this budget is correct in respect of the balance between tax improvements for employment, concentration on the lower tax area, and in the context of social welfare, the support for children being equal, regardless of whether people are at work. Those are two very important related improvements. We look forward to further developments as the various studies on the integration of tax and social welfare are made available amid the more radical changes.

The Conference of Religious in Ireland was unhappy with this budget and rightly identified that we have a fairly well developed system of taxation and social welfare. To change it radically would be revolutionary. It has sought the most radical change: a basic income. That would transform everything and to a degree would require something you never get in politics, a blank page as if one was starting from a new sheet. That type of radical reform is not a realistic option. Many of the elements of its approach, while valuable, remain to be tested in the economy. Short of that, our present reforms are moving steadily in a direction that tries to give us a basic income for children, which would be available regardless of whether people are at work.

The next major reform the social welfare system needs to set itself — this is one of the reasons my constituent wondered whether she could take up employment and what effect it would have on her husband and child — relates to the concept of dependency on the social welfare system. It would be hugely expensive to move away from that system but we should begin to plan for it as the numbers of unemployed are reducing and will reduce further over the next decade. It would be much easier to reform our system, it would be much healthier for all involved and it would remove a number of major problems in social welfare. There are problems in relation to persons living apart and joining up as a couple. There is a disincentive to live together as man and wife. Indeed, there are incentives in the opposite direction, to be deserted and to live on a one-parent allowance. These incentives would be largely removed if every adult was entitled to a similar individual payment and children, on the basis of their maturity, equally so. It would be very expensive but we should plan for it. I look forward to debating this matter with the Minister on the Social Welfare Bill in the Select Committee on Social Affairs. It is an argument that has yet to be won with the Department of Social Welfare but I hope it is one we will keep coming back to.

I welcome the additional places being provided in the VTOS. I would have liked to see a commitment to a project in my constituency — a project with which the Minister of State, Deputy Allen, is familiar — the international swimming pool for the Dublin area and the country as a whole. This is a project for which we in Dublin have been campaigning. Unfortunately, we have not got the good news yet but we are still making representations to the Minister for Finance on one of the unfortunate omissions from the budget. I, too, would have liked more funds for the health area and I remain concerned about waiting lists despite a large improvement.

With those few qualifications I welcome this budget and commend it to the House.

I, too, welcome the imminent announcement of an international 50 metre pool. Deputy Flaherty has indicated we can look forward to such an announcement. I will be the first to congratulate the Minister of State when that happens.

Tongue in cheek.

Having listened to the previous two speakers I am pleased that everything is cosy and compatible in the rainbow Coalition. However, I warn my colleagues in Fine Gael that some of their supporters on the ground would not express that view: they see it as a case of the tail wagging the dog.

Deputy Lynch referred, somewhat critically, to Fianna Fáil-led Governments and particularly to the Fianna Fáil Government of 1987-89. Of all Governments since I became a Member, that minority Government was the most successful and it did much for the economy. That is the reason this economy has had the outstanding performance it has had over the past number of years. That was handed on to a Government that was given a mandate to do much for the silent majority.

It was anticipated that this budget would be a good one. There were the usual leaks to the media and the various slants being put on the Government. Most of us looked forward to significant tax concessions in the budget and we were justified in expecting them. Certainly, a serious attempt should be made to reform the PAYE system. Unfortunately, the Government did not see fit to do this.

Sometimes debates on budgets are a futile exercise as all that happens is members of the Government praise it while members of the Opposition find fault with it.

Debate adjourned.
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