I wish to share my time with Deputy Callely.
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.)
Is that satisfactory? Agreed.
I am glad to have an opportunity to make a brief contribution to the debate on the budget. My Fianna Fáil colleagues have highlighted the opportunities that were missed. There was a real opportunity to reform the tax system but, unfortunately, the Government did not take it. It inherited an economy which was in good shape. Fianna Fáil's record in Government between 1987 and 1994 was second to none. In early 1987 it inherited an economy in which every economic indicator was pointing in the wrong direction. By making the right decisions it turned the economy around. Thankfully, the public finances were restored to good health. Confidence in the economy was also restored both at home and abroad.
As a representative of Border counties, I am particularly anxious to ensure that the local economy is regenerated. The cessation of violence at the end of August 1994 gave a new lease of life to all the people of Ulster. For 25 years the economy of the six southern Border counties was destroyed by the political troubles on our doorstep. It was practically impossible to attract inward investment and the required investment in infrastructure in the area was not made. There was industrial decay.
The return to normality in Ulster should have produced the major investment dividend required in the six southern and six northern Border counties. In autumn 1994 the then Taoiseach, Deputy Albert Reynolds, and the then President of the European Commission, Mr. Delors, established the mechanisms to provide the substantial funding necessary to underpin the peace initiative and rectify the major infrastructural deficiencies in the six southern and six northern Border counties. I have yet to meet any person in the region who is aware of funding coming on stream.
Public representatives of all political groupings in the Border counties are frustrated at the lack of urgency shown by the Government in attracting the necessary investment. As the Minister for Enterprise and Employment indicated, there is a need for industrial infrastructure. There is a need for a modern advance factory in County Cavan. That is the basic requirement to attract a substantial project to create a few hundred jobs. Cavan town would be the ideal location as it is the county town and situated in the centre of the county. The council has a land bank of almost 17 acres which has been designated for industrial development. It would be the ideal location for an industrial project. The provision of specific funding to the relevant State agency, whether it be Forfás, IDA Ireland or Forbairt, to provide a modern advance factory would demonstrate to all the Government's commitment to the regeneration of the local economy.
When I raised this issue with the Minister for Enterprise and Employment, specifically requesting the introduction of special measures to attract inward investment, he admitted that the availability of top quality infrastructure is a constraint in many Border counties and referred to the ongoing discussions between various Government Departments, State agencies and Oireachtas representatives for the area on the deficient industrial infrastructure in the region. It is most disappointing that he did not give any indication that the necessary funding would be allocated to underpin the efforts of the public representatives and State agencies to provide the jobs required in areas such as Cavan-Monaghan.
We are all conscious and appreciative of the efforts made by the United States Administration to help advance the peace process and to develop the political track in particular and of its commitment to attract inward investment to the region, both north and south of the Border. There is a need for a follow-up conference to the Washington conference on trade and investment held last May, as mentioned by the US Secretary for Commerce, Mr. Ron Brown, while in Dublin with President Clinton. I urge the Tánaiste and Minister for Foreign Affairs to make the necessary arrangements for this conference which should be held as quickly as possible.
There is a need for highly visible projects to create meaningful employment. That is one way of underpinning the peace process. At a more difficult time, politically, the Irish and British Governments made the courageous decision to restore the Ballyconnell-Ballinamore canal, now known as the Erne-Shannon waterway, at a cost of £30 million with financial support from the European Union and the International Fund for Ireland. This decision was made by Fianna Fáil in Government and has been of great economic benefit to Counties Cavan, Fermanagh and Leitrim. It was a major cross-Border project undertaken at a time when serious political difficulties existed in that region.
Our waterways are an important natural resource and will be of major economic significance in the future. I appeal to the Minister of State to advance as quickly as possible with the tourist angling programme. More funding should be allocated under that programme to the Cavan and Monaghan areas, particularly to the upper Shannon regions of Dowra, Glangevlin and Blacklion where a major waterway has been totally neglected by the fisheries board for many years. Will the Minister provide funding for investment in that waterway?
The River Erne project, which takes in Belturbet, Killykeen, Killeshandra and Lough Gowna, would complement the Ballyconnell-Ballinamore Canal. The River Erne, north of Belturbet, is predominantly in County Fermanagh and has been a major cruising area for many years. The river southwards, from Belturbet to Killykeen and Killeshandra, needs to be made navigable for cruiser traffic. During the lifetime of the previous Government the necessary preliminary engineering report was carried out which confirmed that there are not any insurmountable problems in making that stretch of waterway navigable for cruising purposes. Unfortunately, this Government — the Minister for Arts, Culture and the Gaeltacht, in particular — delayed the preparation of the environmental impact study on that project. After continuous questioning in the House, I am pleased the Minister has at last made a commitment to prepare such a study and I hope similar delays will not occur in preparing the detailed design of the scheme. It is an obvious cross-Border project that would have immense economic benefits for Counties Cavan and Fermanagh and should be supported by the present Structural Funds or the Delors package.
I concur with most of Deputy Nealon's comments, particularly those about rural depopulation. He referred to an issue frequently highlighted by Members from Counties Cavan, Monaghan, Leitrim and Sligo, namely, the need to make better use of our housing stock. Public representatives, from rural areas in particular, are conscious of the large number of basically sound houses that are uninhabited. A relatively small financial incentive in the form of a house reconstruction grant would provide the necessary impetus to have those houses upgraded. Such a move, at a small cost, would at least help to stabilise the population in rural areas.
Unfortunately, large numbers of people live in unsatisfactory housing accommodation that lacks basic sanitary facilities and comforts. Many of the occupants cannot afford the cost of carrying out the necessary remedial work. In many cases the people involved are hard workers and do not draw benefit from the State or qualify for the limited housing aid schemes. They would benefit greatly from a house improvement grants scheme. I appeal to the Government to introduce a limited house reconstruction grant scheme that would be available to people within a specific income limit and confined to a person's principal place of residence.
The budget was remarkable for its scant attention to agriculture. I thought the Government would have grasped the opportunity to provide the necessary additional resources to allow the on-farm investment schemes proceed without delay. I requested the Minister on a number of occasions to adopt whatever measures are necessary to process and approve, where appropriate, all the applications under the control of farm-yard pollution scheme in County Cavan. In response to a parliamentary question on 30 January last, the Minister informed me that only 403 approvals out of a total of 1,058 applications had issued in County Cavan. Many of those applications were submitted to his Department at the end of 1994. This figure does not take account of the fact that applications have not been accepted since April 1995 which means that many farmers cannot even apply for the scheme, not to mention get approval to proceed with work. In reply to a parliamentary question yesterday the Minister stated that there are no plans to reopen the scheme at this stage. That scheme is crucial in County Cavan. The development of agriculture and the control of pollution at source will be seriously hindered by the Government's decision.
The suspension of the scheme and the inordinate delay in processing applications will impact severely on the farming community in County Cavan. The majority of farmers want to control farm waste that contributes to pollution. That makes sense from a farming, environmental and financial point of view. The scheme is not a handout for farmers. It provides necessary assistance for large-scale expenditure. The majority of farmers cannot develop the necessary pollution control facilities without financial support. A large number of farmers could be forced out of farming because of pollution problems. I appeal to the Minister to review the scheme and to issue the necessary approvals without delay. Apart from providing the facilities on farms to cope adequately with the regulations that are in place, it would also generate employment. When the farmer is making money it is reinvested in the local economy to the benefit of rural Ireland.
Deputy Smith outlined the state of the economy since 1987. I am sure all Members would agree that from the early 1970s to the late 1980s our economy went through a rather turbulent period. During that time Members asked the public to bear with us until we came out of the recession and in 1987 further tightening up measures were adopted. In the late 1980s there was some light at the end of the tunnel and in the early 1990s we appeared to be back on the rails, we had come out of recession.
Having regard to that record and the opportunities that prevailed in 1996 the budget can only be described as disappointing, a non-event. The public were expecting light at the end of the tunnel because that is what they were told to expect by Members of the House. In essence, the budget has not benefited anyone. The comments of a broad spectrum of the population, including the unemployed, workers, single and married persons and those separated or widowed have been reported in the newspapers and the clear message is that they are disappointed with the 1996 budget. How could it be otherwise? The Minister for Finance was in a tricky position. It is difficult to satisfy three parties that are politically poles apart. They were prepared to come together simply to be in Government. This Government is made up of a combination of political parties from the far left to the far right and its motto seems to be, "Let's stick together whatever the cost". If that is this Government's motto, it has cost implications. Prior to the budget, we had contradictory statements, some of which were purposely set up, about an area that warrants special attention, namely, the young unemployed. The Minister for Enterprise and Employment made a statement; some days later the leader of the Labour Party commented on present Government policy and, within a few hours of that, a Democratic Left Minister of State gave a totally opposing view. That was followed by some political play on the part of the spin doctors, we heard about Pat on his high chair wanting to make a little bit of noise with his rattle and other remarks about the Tánaiste, Deputy Spring, being the high king of Ireland. The Minister of State, Deputy Gilmore, is laughing and this whole issue would be funny were it not so serious. We are talking about a serious problem and the political players should not engage in game playing with an issue such as this.
Many Members contributed to the debate on the budget and I do not intend to focus on a particular aspect of it, we are all affected by the budget regardless of the sector of society to which we belong. We all pay tax but the reality is that the PAYE workers, and indeed the person paying tax through any of the other corporate systems, has gained little or nothing from this budget. We can all play with figures but the one bandied about fairly glibly concerns the single person earning £10,000 per annum who is approximately 40p better off as a result of this budget.
Is the Government seriously telling single people who have had to tighten their belts for a number of years that they will be a few pence better off as a result of this budget? If those people drive vehicles or smoke cigarettes, however, they are actually worse off as a result of indirect taxation. The figure bandied about for a married person earning £12,500 per annum is a variance of £1.67 per week. I use the word "variance" because they are not actually better off; in net terms they are worse off.
On the question of tax reform, I do not intend reading into the record the contributions of members of the Government when they were in Opposition, but I invite anybody to read the contributions of the Minister of State, Deputy Gilmore, when he spoke about the innovative changes he and his party would make if they were in power. Democratic Left, the Labour Party and Fine Gael consider it innovative to give a single person an increase of 40p and a married person an increase of £1.67 per week. That is what they call change.
In regard to changes in PRSI, my party can proudly say it reduced the 12.2 per cent rate by 0.2 per cent, while the 9 per cent rate has been reduced to 8.5 per cent. I did not come up with the phrase "tinkering with the system" but the people who use that type of language frequently are now in Government. However, when they were on this side of the House they often spoke about tinkering with the system.
What has happened in regard to real tax reform? When they were on this side of the House the members of the rainbow Government parties philosophised about the great changes they would make. At a time when public finances are in check, we should be innovative and avail of existing opportunities. We have low inflation, keen interest rates and buoyant tax revenues — the economy is looking good.
I and other Members of this House are disappointed with the sea change in regard to members of the Government parties who held a particular line when they were on this side of the House but who changed like the tide when they crossed the floor to the other side. As soon as they availed of their mercs and perks they shredded the clothes they wore in Opposition, that brings me back to my point about the cost implications — which are now clearly evident — of keeping three parties in Government.
I want to refer to a number of issues affecting my constituency, including residential property tax. A number of people in my constituency, including myself, are being treated unfairly in that we must pay tax on our properties. I have frequently brought this matter to the attention of the Minister and indeed did so today. I asked him if he would consider abolishing residential property tax and I was told the matter has been referred to a study group — I would be interested to know the number of studies taking place under this Government. I asked the Minister if he was aware of the imbalance between Dublin and the rest of the country in relation to residential property tax and was told that the matter has been referred to the Minister for the Environment for yet another study. I asked him a question on the value and location of residential property tax returns received on 1 October 1995 and was told that out of a total of 19,500 paying this tax nationally, 14,325 — approximately 70 per cent — live in Dublin. The total property tax paid by people in Dublin was £7,381,344 out of a total national figure of £9,531,559. That imbalance must be addressed, if the Labour Party Members were on this side of the House they would be screaming to high heaven about it and Democratic Left Members would be calling for it to be addressed.
When the Minister for Finance was asked to address this imbalance, he said the matter had to be referred to a study group — he was not prepared to do anything about it. When the Minister who spoke so much about openness, transparency and accountability was asked about the tendering procedure, he replied that it has not been the practice under successive Governments to address that. He has no intention of doing anything about it.
In my constituency of Dublin North-Central the Mater and Beaumont Hospitals are barely able to survive; they are sitting on a time bomb. They do not have sufficient beds, elective procedures are being cancelled, patients are left lying on trolleys, people with disabilities cannot be placed and there is no orthodontic treatment. There is a waiting list of 16,000 for orthdontic treatment and approximately 1,200 people are awaiting residential places. Yet the Government funded 28 places only.
My constitutency colleague, Deputy Derek McDowell, knows there is a totally inadequate water supply in Dublin North-Central. As requested, we made a submission to the Department of Finance but it has been left on a shelf there for two years. Hundreds of tonnes of untreated sewage are being pumped into Dublin Bay. When we ask for an additional set of traffic lights to deal with the traffic chaos we are told there is insufficient funding. The Garda have stated clearly they do not have sufficient personnel to man cars or motorbikes and when they seek replacement bikes or cars they get no response.
Tonight I will attend a fund raising function for Belgrove School in Clontarf. Deputy McDowell does not attend too many of these functions but he is welcome to attend this one. Like all the other schools in my constituency, this school is crying out for funding and it has no secretarial staff or caretaker.
How can we provide extra funding and cut spending at the same time?
This week I visited a school which does not have a caretaker, where the boys clean the corridors and yard and empty the bins. The pupil teacher ratio is appalling and no remedial teachers are available. The voluntary sector cannot obtain funding and is not given any recognition for the good work it does. The only lucky organisations are located in a Dublin constituency where there seems to be an abuse of EU funding.
Members on this side of the House and the public are very concerned about unemployment, drugs and crime. Last night I asked the Minister for Justice if she would send a clear message to the perpetrators of crime that they will go to prison and stay there until they have paid their debt to society, to make an example of them to others of like mind. She replied: "I have no doubt but the public interest is best served when a range of effective alternatives to custody are employed to the full and prisons are used only as a last resort". I would love to see the Minister stand in front of the public and ask them what they think of that answer.
Does the Deputy agree with it?
No, and neither do I agree with providing a wide range of recreational facilities for prisoners, such as fully equipped gyms, outdoor exercise areas, group and individual facilities, qualified instructors, basketball and netball facilities, videos, televisions, computers, sewing machines, fully stocked libraries and educational programmes. Recent recreational initiatives for female prisoners include swimming lessons on a weekly basis in a community pool. Hundreds of thousands of people cannot afford these comforts yet prisoners are being given them at their expense. There are 2,489 prison officers and 2,174 prison places. The Government thinks this is the right way to spend taxpayers' money.
The public has lost confidence in the Government which tells us funding is not available because of budget constraints. In March 1993 Deputy De Rossa said: "The sense of public disappointment has been compounded by the apparent occupation of members of the Government and, unfortunately, Labour Ministers, with appointing extra advisers and staff drawn, in the case of Labour, from party supporters or family circles". He went on to say that this practice was disgraceful.
The Deputy's time is exhausted.
Yet as Minister for Social Welfare he advertised in the vacancy column of the Forum for a number of staff for his Department.
Displays of literature are disorderly.
In response to a question from me about the employment of 17 assistants in his ministerial office he said: "In order to support my role as party leader in Government a small research unit has recently been established to provide me...". When the matter was raised today this supposed Minister for Social Welfare in a most unbecoming, disgraceful, cold faced and tense manner abused some members of the Opposition.
I will reply to many of the provocative remarks made by my constituency colleague. Deputy Callely and I will be on the same ballot paper at the next election and we must ask ourselves if we are offering people a choice and, if so, the nature of it. I agree with the points made by him about the health and education services in our constituency.
If that is the case the Deputy should do something about it, he is in Government now. He should not give us his party's two handed approach.
The Deputy in possession without interruption.
I agree with the points made by the Deputy about social services in our constituency and elsewhere. We will go to public meetings and agree on these matters. However, unlike the Deputy I will outline how we will pay for these social services — we will borrow money we can afford and spend it on them. We will be honest with people and say that——
The Deputy's party is doing nothing about them.
Unlike Fianna Fáil we will not say we should not run a current budget deficit——
The Deputy's party is spending the money on people like Fergus Finlay and special advisers.
Deputy Callely will cease interrupting the Member in possession.
The Deputy's party is doing nothing at all.
I did not interrupt the Deputy. I will not say to people that we should not run a current budget deficit, cut back on spending or use a unique opportunity to pay off bits of the national debt. I will say to them honestly that we will spend money on necessary social services in my constituency and elsewhere. I will be proud to stand over the record of my party in this Government and the previous Government with Fianna Fáil.
If the Deputy cannot hear me he should read my lips.
We have not turned our backs on that record but apparently the Deputy's party has. We spent money——
The Deputy should talk to the people in Beaumont Hospital.
Deputy Callely may not have heard what I said but he will hear me this time. There will be no further interruptions. If the Deputy in possession addressed his remarks through the Chair perhaps they would be less provocative.
He is inviting interruptions.
We did not say we would not spend money and we do not say now that it is wrong to run a current budget deficit. We are honest with people and, like the previous Government, we spend money in a prudent and sensible way on social services. We spend it on reducing hospital waiting lists. Deputy Callely knows the figures as well as I do and while they are still too high, they have been reduced substantially in recent years.
That is rubbish.
We spend money on local authority houses in the Dublin area.
That is inaccurate.
We built 600 houses last year and 500 during the previous two years. The Deputies should compare this with the record of Fianna Fáil during the previous five years when not one local authority house was built in Dublin.
Dream on honey.
We are doing these things. We are spending money, and we are making no apology for doing so. We are doing it at a time when interest rates and inflation are low, when the current budget deficit is in double figures in millions of pounds and, with any luck, will not be there next year.
What about the people awaiting residential care?
We are doing it in a sensible targeted way. We are not trying to have it both ways, as Fianna Fáil has been trying to do since the budget was introduced.
What about the 16,000 on the orthodontic waiting lists?
Fianna Fáil are saying that we should cut spending, reduce the national debt——
No, just be prudent.
At the same time they try to pretend——
Deputy Callely cannot disregard the Chair. The Deputy in possession must be allowed to speak without interruption.
He is inviting interruptions.
There is no such thing as inviting interruptions.
I am simply responding to some of the points so eloquently made by my constituency colleague. Let us be clear about the choices. I am prepared to defend the record of my party in Government with Fianna Fáil for two years and in this current Government. There is continuity. Let me go back to my script.
Was this written for you?
I wrote this myself. At least we are offering a choice. Perhaps our little contretempts today will give the lie to those who believe there is no difference between the parties. It does not look like that from where I stand.
The budget offers continuation of policies implemented by the Labour Party in coalition previously with Fianna Fáil and now in coalition with Fine Gael and Democratic Left. The Minister has continued to reduce tax on personal income and to target the benefit of those reductions at people on low pay. The Progressive Democrats/Fianna Fáil Government in power from 1989 to 1992 reduced the overall rates of tax. This, of course, gives disproportionate benefit to those on higher pay. By contrast Governments of which the Labour Party has been a part since 1992 have looked to target the benefit of reduced taxes at those on the lower end of the pay scale. This has been done by widening the standard rate bands, increasing the exemption limits and, above all, by the introduction of differential rates of PRSI.
We were told in 1992 that it was not administratively possible to introduce differential rates of PRSI. We did not accept this, and with the support of the then Minister, Deputy Bertie Ahern, we won the case and established a precedent which has been followed several times since by the current Minister. It is worth reflecting — and I have not picked the best possible example — that a worker on £100 a week was paying £7.75 in PRSI in 1993 and the same worker is now paying less than £1.
I very much welcome the continuing progress in relation to the PRSI exemption limits, and I hope the Minister will be in a position to pursue this matter further in years to come. PRSI rates have also been reduced for employers in relation to workers on lower pay, and IBEC has been gracious enough to accept that this has made a significant difference to many firms at the competitive edge of our economy. There is no doubt, for example, that firms such as those in the clothing industry have benefited significantly from these improvements. I hope the Minister will be in a position to continue this progress in years to come.
The budget also sees a continuation of support for small industry and business. We have once more reduced the rate of corporation tax for firms with modest levels of profit. I hope we can also reduce the amount of administrative work that causes so much difficulty for people who carry on small businesses.
This budget also sees a continuation of our efforts at tax reform. We are continuing the process of standardising the rate at which relief can be claimed for mortgage interest and VHI relief. The previous position was entirely unjustifable on grounds of equity, and this is a reform which I fully support. Tax reform is one of those things which everybody favours but, if we are to be frank, the phrase has become entirely devalued as the years have progressed. For most people tax reform means tax reduction. Most political parties have long since abandoned any notion of widening the tax base. We have confined ourselves to deploring our high rates of personal taxes while failing to acknowledge the fact that our overall rate of tax is quite low by OECD standards. The difference lies in the fact that other EU countries have higher rates of tax on property, profits and capital acquisitions. By contrast our tax base relies hugely on income and consumer taxes.
Debate adjourned.