Dáil Éireann debate -
Thursday, 6 Feb 1997

Vol. 474 No. 5

Financial Resolutions, 1997. - Financial Resolution No. 5: General (Resumed).

Debate resumed on the following motion:

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

—(The Taoiseach).

Mr. N. Ahern

Before the adjournment I spoke about the need for something to be done for the long-term unemployed. The budget did not address that problem and the unemployment figure has decreased by only 300 in the past year. The long-term unemployed, particularly those living in socially excluded areas of our larger suburbs, have been ignored. I am disappointed there were no measures in the budget to help these people get back to work and thereby make a contribution to their families, communities and society. A new scheme must be devised, or existing ones such as the back to work scheme and others extended, to give the long-term unemployed a reason to get up in the morning. We seem to have forgotten about them. We cannot expect these people to be good citizens if they do not have dignity and the opportunity to share some of the wealth the rest of us enjoy.

I welcome the changes made in the carer's allowance. Since the scheme was introduced less than ten years ago it has been extended almost every year but there is still room for improvement. The measure introduced this year whereby a person caring for more than one person can get a top-up payment is to be welcomed. I know of a case, however, where a person caring for two or perhaps three people was turned down for this top-up payment because the medical guideline level was not reached. I hope that aspect will be examined. Despite the income disregard figure many people do not qualify for the carer's allowance. I would like to see a payment being made, even a nominal £25 per week, to people caring for an elderly relative. That would be an indication that the Government recognises the contribution these people make.

Many private nursing homes increased their prices recently. Letters I received from my constituents refer to increases of £40. I do not know how the nursing homes can justify such an increase when inflation is only 2 per cent. Many people who previously could afford private nursing care are being driven out of the net and this is creating problems.

The whole area of housing for the elderly must be examined. We make provision for the care of the elderly but we do not appear to give much thought to the housing aspect. I hope that will be addressed in the future, perhaps by appointing a Minister or Minister of State with responsibility for the environment and health. Local authorities are responsible for housing and health boards are responsible for health issues, but never the twain shall meet. Those two strands should work together in an effort to provide services for the elderly. Many people would not have to be in nursing homes if proper care was provided in the community.

While there has been much talk about job creation, Dublin North-West is not benefiting. Even though we have a Minister in the constituency, it has been passed over for several big enterprises in the past couple of years. An international report commissioned by the EU stated that Abbotstown was the best location in Dublin for a science park. When this Government took up office and appointed a Minister from Dublin North-West, the people of the area were sure it would be located there. However, it was swept from under his nose at the Cabinet table and given to his colleague in Dublin South-West. We also lost out in respect of a site for a regional technical college on the northside. It appears the lobbying of two Ministers of State in Dublin West is more powerful than the lobbying of a Minister in Dublin North-West.

We are bounded by two constituencies in which there have been large scale developments. The Clonshaugh Industrial Estate, where a number of multinationals have located, is situated in Dublin North-Central and the new shopping centre in Blanchardstown is situated in Dublin West, but Dublin North-West has been ignored. A campaign has been launched for an industrial estate in Finglas, but the application for designated status is being held up by the general review of the urban renewal scheme. The Government has designated a special enterprise zone in Grand Canal Street, yuppie land. While I am aware that is in the Minister for Finance's constituency, how can it qualify for an enterprise zone when Finglas, with largescale unemployment, has to wait until the review of the urban renewal scheme has taken place? The issue is simply being fudged.

While everybody may have received a little in the budget, no effort was made to target deprived groups. A few bob in tax reforms has been spread here and there, but members of the public will be disappointed when they get their cheques in April. The people will cop on to this Government sooner rather than later.

Kathleen Lynch

I wish to share time with Deputy Crawford.

An Leas-Cheann Comhairle

I am sure that is agreed.

Kathleen Lynch

The annual budget provides an opportunity to reflect on what has been achieved and, more importantly, on what needs to be achieved. In recent times the details of budgets are known weeks in advance of their being introduced. A good political economist can usually make a good prediction about the details of a budget. From a political point of view, recent budgets have been no more than a social event. At one time we would look forward to the budget in the hope that we would not suffer too badly. The last two budgets have enhanced people's positions. Rather than living in dread of budgets we now live in hope of what we will receive in them.

The budget presented last month was the third in a package of three presented by this Government. Changes were deliberately targeted at those on low incomes, whether on social welfare or in low paid employment. The benefits of this budget have been outlined to the House at some length, not only by the Minister for Finance but by the Minister for Social Welfare and other Ministers, Ministers of State and backbenchers.

The budget is over, but the Finance Bill has yet to be presented. This is an ideal opportunity to tidy up loose ends left over from the budget. In other words, what we did not get in the budget we hope to get in the Finance Bill. One of those loose ends concerns the tax status of corporate donations to charities. This is not a new issue. I am not the first person to speak about it and I am sure I will not be the last.

As demands on charities increase, pressure on their resources also increases. Charitable organisations carry out work that Governments cannot do. Irrespective of the buoyancy in an economy or the work of a Government, there are certain areas of society it will not touch through the allocation of finances. We all know people who live in persistent poverty. Many factors give rise to poverty, it is not simply caused by a lack of money where charities fill the gap left by Government.

I have addressed this House four times on this matter, yet we appear to be no nearer a solution. At a time of buoyant tax receipts, the Minister should make a gesture in the direction of charitable organisations, such as the Society of St. Vincent de Paul, which frequently picks up the pieces on behalf of the Government. A cogent argument has been made by the Irish Charities Tax Reform Group for relief on corporate donations from £100 to £10,000. If the Minister for Finance believes £10,000 is too high, it is willing to discuss the matter. According to that group's calculations such an initiative, which could be introduced on a pilot basis initially, would increase corporate donations to charities by between £7 million and £11 million, while costing the Exchequer approximately £3 million. The amount of money donated by individuals far outweighs corporate or Government donations. We should make it worthwhile for corporations to donate more money to charities. If they can get tax relief for donating money to certain organisations, surely the same should apply to charitable organisations.

Mr. N. Ahern

Is the Deputy speaking on behalf of the corporations or the charities?

Kathleen Lynch

Given that charities benefit from Revenue exemptions and corporations obtain tax relief on a variety of headings, I see no practical obstacle to introducing such a measure, with a built in review after, say, three or four years. The group making this argument takes a flexible approach. It researched matters because there were no figures to illustrate how much would be lost to the Revenue or how much it was possible to receive in donations. The Finance Bill provides the Minister with the opportunity to address this issue.

The budget provides an opportunity to reflect on what still needs to be done, as well as what has been achieved. Deputy Noel Ahern said nothing was done for the long-term unemployed.

Mr. N. Ahern

What was done?

Kathleen Lynch

I represent a constituency similar to the Deputy's in that there is generational unemployment, lack of opportunity and a lack of perception that education provides a way out. I have always maintained that the only way to tackle the huge problems within these areas is to target resources, yet I am consistently told this is not possible because other sections of society have competing demands. Given the generations of neglect that have afflicted my constituency, I fail to understand how members of the party that has governed this country for most of the past 75 years can talk about this problem without embarrassment.

Incentives are no longer the issue for the long-term unemployed. The jobstart scheme is available to those who have been unemployed for more than three years. FÁS will not only advertise jobs and obtain CVs but will ascertain if those qualifying for the scheme are also qualified for the job on offer. In addition, the enterprise allowance allows those who are long-term unemployed to retain their social welfare benefits and work with, for example, small community industries. This, and the back to work allowance are further examples of schemes and incentives specifically geared towards the long-term unemployed.

Mr. N. Ahern

Why are there still problems?

Kathleen Lynch

If the Deputy considered the problem in detail he would realise solutions are more concerned with getting people ready for work rather than providing incentives. This is a long-term problem that will not be resolved by this or the next Government. It is a matter of providing people with the necessary skills to ensure they are ready to work.

Mr. N. Ahern

Does the Deputy advocate that we should bypass this generation and educate children while ignoring their parents?

Kathleen Lynch

I do not. A skills based area has been placed in every constituency, whether it comprises of Leader, FÁS, enterprise partnerships, co-operatives or whatever, but there has been no consideration of the skills requirement in each constituency and how they may be delivered. However, while we may be able to take action and do something worthwhile for the long-term unemployed if we work together, nobody is interested in pursuing this because it is a long-term solution and there are no votes in it. Nevertheless, it would ultimately ensure we do not continue for another two generations to have persisting unemployment.

The budget is different to the kind Deputy Michael McDowell would present, even after his latest transformation from Rottweiler to Labrador. The Progressive Democrats and the Deputy McCreevy wing of Fianna Fáil have a clear vision. In fairness, they would probably grant tax relief on charitable donations to corporations. Indeed this would be necessary, because private charities would have to plug increasing gaps in the brave new Ireland envisaged by Deputies Harney, Michael McDowell and McCreevy.

Those who wonder what the Progressive Democrats and Fianna Fáil would offer need only cast their minds back to the 1989-92 Administration. That "temporary little arrangement" had long lasting consequences, including the infamous social welfare cuts introduced by the then Minister for Social Welfare, Deputy McCreevy. The Administration was also plagued by instability, with Deputy Michael McDowell prowling outside the gates of Government Buildings to ensure his colleagues inside did the right thing. It is little wonder that Deputy Dermot Ahern and other members of Fianna Fáil display signs of nervousness at the impending betrothal between themselves and the Progressive Democrats. Given that the 1989-92 experience was not a happy one for the party, some Fianna Fáil Deputies would have to be dragged into any new arrangement.

It was an even less happy experience for this country. Some 50,000 people were added to the live register. Mortgage rates spiralled to approximately 15 per cent, forcing hard pressed PAYE workers to find, on average, £80 extra per month, while their average tax bill increased by 17 per cent.

Mr. N. Ahern

Those are selective figures.

Kathleen Lynch

New housing grants fell to their lowest level in decades, as did local authority dwelling completions. Cork Corporation built one house in 1990, despite a housing list of over 2,000. By contrast, under this Government, 100,000 new jobs have been created. Interest rates are at their lowest ever, child benefit has almost doubled, social welfare payments are finally approaching the minimum recommended by the Commission on Social Welfare and there has been a general climate of economic and investor confidence.

Despite this, and a looming general election, I was astonished to hear Deputy Harney outline her vision of Ireland. Referring to the Asian economies she recently said that workers "are not rich, but they're happy". I remember as a child hearing the saying that money does not make one happy and the poor always seem to be happier than the rich. I thought we had moved on from sentiments of that kind. They are similar to the lines in the hymn "All Creatures Great and Small": "the rich man in his castle; the poor man at his gate". This is the Progressive Democrats vision of Ireland. I hope it always remains a vision without substance.

Mr. Crawford

This has been the most progressive budget in a long time. I do not say this merely as a Fine Gael Party backbencher. Despite the rhetoric of the Opposition, the public can see that most people will have gained something from a budget produced by the Minister for Finance and overseen by the Taoiseach. The Government could easily have used the budget for election purposes but it did not. It made sure to treat the different sections as equally as possible with the available resources.

Deputy Bertie Ahern, who intends to be the next Taoiseach, said that he would have produced the same Book of Estimates this year as he did when he was Minister for Finance in 1994. What would this mean for my constituency and others? There would be no work on roads because he would have provided grants of approximately £2.3 million less than the sums provided by the Government for County Monaghan this year. The budget cannot be taken on its own because it is part of the annual process of letting people know what is happening. The level of grants for the roads in counties Cavan, Monaghan and other areas has vastly improved over the past two years as a result of the realistic approach of the Government. The roads were ignored for ten years but Opposition Deputies are attending road meetings and claiming the potholes are our fault. People will not be satisfied until their roads are upgraded but their best chance of having the work done is the current Government.

Water charges have been a major issue over the years and I am delighted they have been abolished for urban dwellers and users of council run group water schemes. However, there are many privately run group water schemes in my constituency and this issue will not go away. It must be treated seriously. Many groups were established at enormous personal cost to the members of the committees involved. For example, the Stranoodan group water scheme, in which I was involved in saving from collapse, had to provide an extra £100,000 in personal contributions from its members.

It received a major grant from European funds for upgrading but such schemes cannot be ignored. They must be dealt with in a realistic manner. The county councils in counties Monaghan and Cavan cannot take over the groups and bring them up to European standards. The Ministers for Finance and the Environment must find a way to deal with this issue. A simple shortterm solution would be to give a contribution to each household in such groups until finance becomes available to upgrade them and allow the councils to take them over indefinitely.

The BSE issue, which has cost the Government much money recently, must be addressed. Provision for extra intervention payments has been expensive but this is perhaps the one area in which the budget failed. The Minister for Finance and his colleagues must ensure that extra money is made available for increased compensation for those who have been so badly hit by this disease which is outside their control.

I welcome the Government's commitment to education. Many schools, particularly in the northern part of County Monaghan, have been ignored for many years. I thank the Minister for Education, Deputy Bhreathnach, for providing money from the £6.5 million she was allocated in the budget for Urbleshanny national school. However, there are at least four more schools on the Minister's list which need major repairs or complete restructuring, including schools in the Scotshouse, Corcaghan, Carrickroe and Ballyocean areas. I thank the Minister for providing funds for the vocational education committee and the other secondary school in Castleblayney this week but there is still a long way to go.

It was interesting to read a report today which stated that more money must be spent in the education area on restructuring schools and providing facilities. The Fianna Fáil Party, according to its literature, plans to hand a computer to each school. It is unfortunate that the party did not find money when it was in Government to provide toilets and other basic necessities. The Government will continue in office and ensure schools which were overlooked in the past are properly restored.

One of the main issues in the budget is the improvement in take home pay. The 1 per cent reductions in the standard tax rate and employers' contributions are a move in the right direction. It may not have been done as quickly as the Progressive Democrats and Fianna Fáil claim they would have done it, but they were in office previously and we know what happened. Most importantly, they could not agree among themselves so it is unlikely they will be able to do so in their new marriage which, apparently, will take place soon.

The important issue for many people is tax rates. The increased allowances and the other measures in the budget will mean that a married couple could have up to £1,000 extra in their pockets at the end of the year. This is a major achievement in addition to the fact that for the first time the children of such couples will receive free college education this year. However, there are still anomalies in the maintenance grant system for students living away from home. This is particularly relevant for students who are not from Dublin or the area in which the college is situated. All the children from counties Cavan and Monaghan must have residential places in Dublin, Sligo, Galway and elsewhere. Those counties have the third lowest ratio of students at third level and it is wrong that such issues are not taken into account in the Estimates. This matter must be examined and I have been in contact with the Minister about it.

Enterprise is most important and constituencies such as mine depend on self help rather than the IDA or inward investment. Corporation tax for small businesses with profits up to £50,000 has been reduced from 40 per cent two years ago to 28 per cent this year. Special relief regarding capital acquisitions tax is also important and the reduction in the rate of capital gains tax payable on the disposal of shares in small and medium-sized business from 27 per cent to 26 per cent is a step forward. I welcome these and the social welfare changes. The gap between the lower level of income and social welfare is too narrow. Those on social welfare automatically get a medical card and can avail of the free bus service, free health service and so on. A justifiable income structure should be introduced for people on low income. In that regard I welcome the change in FIS, which must be highlighted if people are to utilise it in full. Unfortunately, many people still do not know about it and many employers do not encourage people to avail of it.

There have been generous improvements in social welfare. On the one hand Deputy Bertie Ahern and Deputy McCreevy said that we must reduce pay-outs while on the other they said that an increase of £3 in social welfare is of little use. We all accept that more should be done, but some of the benefits available to the elderly are not available in many other countries.

The improvement in carer's allowance is very welcome, but again in rural Ireland there is an anomaly. I have raised this matter with the Minister for Social Welfare and I understand the costs involved in applying the allowance on a national basis. In rural areas where a son or daughter of an elderly person builds a house near a parent to look after him or her in old age, they should be entitled to carer's allowance even though they do not live with the parent. The argument may be made that that should also apply to elderly people living in a town or village, but it is easier for those people to get assistance since there are other houses close by. That matter must be seriously considered. I know cases in my county where one spouse has to stay at home to look after an elderly parent. In one case a person living in an extension of the elderly person's house receives carer's allowance whereas another person who lives ten yards from the house of the elderly parent does not receive it.

I welcome the health initiatives taken in this budget. The provision of £10 million towards mental handicap services in addition to the £2 million made available in the Book of Estimates is a major step forward. We all welcome help for those who are less well off than ourselves, physically and mentally. There is also provision for an extra £6 million for the cancer strategy, £5 million for child care and £4 million to reduce waiting lists.

This is a progressive budget. In the past two years the number of jobs increased by 100,000, unemployment fell by more than 30,000, or 14 per cent, GNP increased in real terms by more than 14 per cent and investment increased by about 20 per cent. I am, however, disappointed a greater effort was not made to encourage investment in areas outside Dublin. The Government must generate a policy to ensure incentives are given to business people to set up in rural areas. Otherwise there will be further decline in those areas.

In the past three years child benefit has been increased by a massive amount, exports have increased, interest rates are low, and the inflation rate is 2 per cent. This budget will allow the country to progress and will allow the Government to return to office after the next election.

Mr. Sargent

Tá áthas orm seans a bheith labhairt ar an gcáinaisnéis. From the Green Party's point of view I have a number of things to say. The general media response to this budget was informed by some of the most articulate Government spokespersons, spin doctors and lobbyists, and credit is due to them for succeeding in presenting a tantalising package which makes people believe they will be better off. They were persuaded that the budget had something to offer most people. There is need to reveal the propaganda and to seriously consider what the Conference of Religious of Ireland has referred to as a budget which did nothing to narrow the gap between rich and poor — it succeeded in widening it further. That was the biggest challenge facing the Government, but it failed in that regard.

It is not for a malicious reason that I feel angry at this budget. Immense opportunities were missed. Even though the Minister boasted about a net gain of 45,000 jobs last year, the number unemployed in 1996 was 14,000 greater than in 1990. Under the current system of economics we would need a net gain of 400,000 jobs over the present number in order to eliminate unemployment by 2002. I do not know if that is the Government's target, but economists would agree that is not possible based on current economics.

There is a certain psychology underlying current economics in that all the parties seem to regard people as a drug trafficker regards an addict. Both are told to stay loyal, not to cause trouble and they will be looked after if they bear with it. The opportunity was there at the time of the budget for a radical shift in economic thinking and the Government squandered it. It claims to be riding the "Celtic Tiger" and that everything will be fine if we bear with it. The money was there to replace the social welfare system with a radical and appropriate post-industrial guaranteed basic income scheme. That was spoken of by parties now in Government as being a progressive and logical step forward but it was ignored.

That guaranteed basic income payment largely replaces social welfare payments and the tax-free allowance payments so it relates both to the employed and unemployed. The costings have been done by various independent bodies. Although we would have differences with the Conference of Religious of Ireland in relation to the way it proposes to introduce guaranteed basic income, it proved one can go a long way towards bringing that system in and not disrupt the economy. The Economic and Social Research Institute has also done a study that shows this is a very realistic and timely option that could be worked on if the Government had the courage to do so.

The room to manoeuvre in removing the burden of tax from human labour was also squandered. It should be put on finite resources such as land — land speculation has been at the root of many of our rezoning scandals — and energy, which we have to import in large measure and pay for dearly. The ESRI has reported that such a shift in taxation would enhance Ireland's competitiveness internationally. What is annoying is that the last budget mooted such a radical change in tax but the Government, which should deliver on its ideas, failed to grasp the nettle and build a sustainable and equitable society around these changes.

When I made these points in the budget debate it was shocking to hear the Minister for Transport, Energy and Communications say a shift in taxation away from human labour and on to carbon, energy and other finite resources was not on and would ruin us. I ask the Minister to read carefully the research from the European Commission and the ESRI and to realise they are saying that Ireland, above all others in the EU, has the ability and structures to bring in an "ecotax" or carbon tax and shift tax away from human labour, where it is a disincentive to employment.

That ability is there because our development as an economy is not primarily dominated by heavy industry. Ours is a country with light industry and a vast surplus of human labour. Research has proven it to be possible for Ireland to radically reform its taxation system but the Government has failed to do so.

Debate adjourned.