I listened as Deputy Cullen trotted out the old mantra which we have come to expect from Fianna Fáil regarding the incredible levels of public spending in recent years. Once again this evening we heard there has been a 20 per cent increase in public spending and only a 6 per cent rise in inflation. The so-called economists on the far side constantly draw this comparison between the inflation rate on the one hand and the levels of public expenditure on the other. However, in recent years, the growth in our economy has been truly spectacular. We have had cumulative growth rates of the order of 30-35 per cent which is unparalleled in Irish history. Is it not fair that a significant portion of that 30-35 per cent should be spent on our people, to reduce hospital waiting lists, to provide extra facilities for people with learning disability, and on education? Nobody in this Government will ever apologise for trying to do something about the terrible school buildings that served to accommodate primary and second level pupils over many years and about which Fianna Fáil Governments did nothing. We have increased public expenditure, particularly in health and education, and we do not apologise for it. Why should we? We have taken a relatively small portion out of the massive growth in the economy and applied it to useful developments for our people. Surely that is what a Government is for.
Deputies Cullen, McCreevy and others are, in Deputy Rabbitte's famous phrase, "the PD cuckoos in the Fianna Fáil nest." They are trying to create a situation whereby a "slash and burn" Fianna Fáil-Progressive Democrats Government will return us, as my party leader, Deputy Spring, said the other day, "to the misery years of 1989-92" when the social services were decimated by this harsh, conservative, relentless cost-cutting Government which left so many people — among them constituents and friends of mine — waiting for heart by-pass operations. Terrible damage was done during those years to our social infrastructure. There is no way we can allow our country to be returned to that, particularly after the wonderful progress we have made in recent years.
I commend the Minister for Finance, Deputy Quinn, on introducing his third Finance Bill. It is an historic development for the Labour Party and the left wing of Irish politics that at the helm of our financial affairs is a man steeped in the history and traditions of the Labour movement. Given his outstanding record he must be the best Finance Minister since the foundation of our State. It has to be hoped that he will be asked by the people to continue in this rainbow coalition after the forthcoming election, whether it happens sooner or later this year. Our overall growth rates are incredibly impressive. We have just passed out the United Kingdom in terms of incomeper capita, and our economists tell us that over the next four or five years, if we sustain this development, and I believe we will, we will approach German levels of GDP per capita.
There will be difficulties in the coming years in regard to the timetable for economic and monetary union. Members on the Opposition benches lamented how little we have done to prepare for it. However, Deputies get endless invitations to seminars organised by IBEC, the banks, ISME and other groups in the business area who are providing information in an effort to get people as ready as possible by 1 January in two years' time when the locking procedure will start to come into play. The Minister has led an important and general information drive throughout Irish business and the workforce to get us ready for this important development. It may well suit us best if, despite recent developments in the election campaign and despite what commentators say, a new Labour government does lead Britain into economic and monetary union beside us. It certainly would make things easier for our exporters, particularly those involved in the food area, some of whom I know will be concerned about the possibility of a deviation between our currency and the British currency.
In the early sections of this Bill the Minister has translated into effect a very responsible package of tax cutting measures. He has attempted in a very prudent way to redistribute, by way of taxation measures, the benefits of our economic growth and development to the broadest possible section of our people, particularly the lowest paid. Most people in this House would commend him for that and support him. The reduction in the standard rate of tax to 26 per cent is an important development as is the raising of exemption limits to £8,000 per annum for a married couple. At one stage in its history my party implemented a 20 per cent basic rate of income tax. As our growth continues we could look at keener rates of personal taxation. That is something we must keep in mind as time moves on. However, we cannot do it at the expense of devastating the social infrastructure. The Labour Party will never support such an approach. I commend the Minister for his moves on personal taxation.
Deputy Bertie Ahern referred earlier to an informal all-party committee which meets to deal with the problems of our senior citizens and which I had the honour to chair for a number of years. This committee, with the trade union retired workers' group, put forward a major programme of tax reform particularly for our senior citizens. I commend the Minister for listening to Mr. Mattie Merrigan and his friends on that committee, as he has done over the past three years. The doubling of the age allowance, which was static for many years under Fianna Fáil Governments, is a testament to his concern. I also welcome the moves to ease the taxation provisions in unemployment and disability benefit.
It is important that many of the measures introduced during the ill-fated 1989-92 Government, encapsulated in Deputy McCreevy famous dirty dozen cutbacks, are unravelled. I am heartened that in this Bill we have taken another step forward in doing so. This has also happened with the Social Welfare Bill where Deputy De Rossa introduced a sickness allowance. It is one of the most important reforms of the past four and a half years.
I welcome the moves by the Minister for Finance to assist second chance education at third level. In section 6 he introduces tax reliefs to assist people who wish to continue on to third level. As one who took advantage of second chance education through distance learning, I am heartened by this attempt to respond to older people who did not have a chance to complete second level education. I urge the Minister in subsequent budgets, over which I am sure he will preside, to develop this measure and assist mature students in terms of tax relief. It will give them encouragement and support in their studies.
The Minister's approach is responsible and prudent when contrasted with the erratic, greedy, crazy and ludicrous taxation proposals of the Progressive Democrats Party, especially in recent weeks. Not alone does its figures not add up, but it puts forward proposals to levy a new series of taxes. I was proud as leader of the Labour group on Dublin City Council over the years to staunchly and bitterly oppose the imposition of service charges. I introduced, with the assistance of the Minister who was on the council at the time, the last six budgets and did not include service charges. We did not agree with double taxation. We felt that working people who had paid for vital services should not be subjected to an additional charge. In Howth, Sutton and Baldoyle in my constituency, there has been a massive struggle against these vicious service charges imposed by Fingal County Council. The vast majority of people objected to the unfair nature of the tax. The Progressive Democrats Party demands that the people of Howth, Sutton and Baldoyle pay service charges. It is an appalling and disgraceful development and has to be condemned. That party is telling the people of Donaghmeade, Raheny, Kilbarrack, Airfield, Darndale-Belcamp, Priorswood, Bonnybrook and Coolock that they will also pay service charges. It wants to burden the working people with another new massive tax.
Over the past week, Fianna Fáil has been hiding behind the skirts of Deputy Harney. It should tell us whether it also agrees with the reimposition of such charges and tell people in rural areas whether the assistance which the Minister for the Environment, Deputy Howlin, has proposed with the support of the Government will be whipped away from them and whether it will go along with the Progressive Democrats Party in an unholy alliance to impose these dreadful charges. The campaign against service charges was led from urban areas, especially Dublin, but Deputy Howlin's recent moves tried to encompass the country's entire water supply. The Progressive Democrats Party is divided and it is remarkable how Deputy Molloy could possibly support the ludicrous and crazy proposals upon which Deputy Harney has embarked.
The people of Dublin and their public representatives will never agree to the reimposition of service charges. Recent debate has shown the real agenda of the Progressive Democrats, which is to privatise the water supply. The best model they use for comparison is the United Kingdom where a series of water supply systems were privatised. Key management teams received huge increases in salary and additional moneys, very little of which was translated into reinvestment in the water system. The result is that an average English family in the Midlands receives a bill for £1,000 per annum. In the north of England, there are water tankers on the streets, a ludicrous denouement of a crazy policy.
The Progressive Democrats Party is at least consistent in its taxation policy. It is clear increased development is part of its belief in low wage, non-unionised, socially divided societies with all public services privatised. When one reads the notorious document "Tax and Spend" drafted by Deputy McDowell, there is a gap of £2,000 million to be made up and this will be done through the sale of all public sector companies and the public service itself. It is no wonder the leader of the party eulogises about economies such as Hong Kong where people are low paid. This is the society Deputy Harney wants here, where workers would be on short-term contracts without trade union support. People would be on low pay and liable to be dismissed or hired at a moment's notice.
The document also refers to the New Zealand model where the Government introduced the type of reforms which Deputies McDowell and Harney wish to inflict on us. The fundamental development there has been the translation of that society from a high income economy with almost total employment to a low salary, insecure, service economy with the highest proportion of millionairesper capita in the world but where the New Zealand churches say that one-third of children live in poverty. While investment income rises steadily, wages have been cut by £2,000 billion since 1991 and its economy has the highest level of debt in the developed world. I hope that is not a road down which Fianna Fáil would want to lead this country in conjunction with the Progressive Democrats Party. It is a crazy, socially divisive road and one which will end with tears.
I welcome the Minister's moves to assist business, particularly small and medium sized enterprises. His cut in the levels of corporation tax in section 33 must be welcomed. It is part of an ongoing programme which he intends to pursue. His continuance of the 10 per cent rate of manufacturing corporation tax is also to be commended. I welcome the reduction from 30 to 28 per cent in the levels of corporation tax for those businesses with under £50,000 profit. Three years ago the Minister, Deputy Quinn, set out to strengthen enterprise and to create work and social partnership. The many interesting and innovative measures introduced in the Bill to assist business are typical of his policies. In drafting section 12 he listened carefully to the comments of business interests and trade unions regarding companies that need to restructure and, as a result, exempted from income tax lump sum payments made to employees in return for extra efficiency. In sections 19 and 21 he increased the thresholds for capital allowances.
One of the most important innovations in the Bill is contained in sections 7, 8 27 and 51. Those sections provide important reliefs for access to BES for DCM companies. I hope the Stock Exchange supports this move because up to now many small companies were unable to get assistance from the Stock Exchange. The Bill in an important development in that regard.
Sections 16 to 18 contain many important provisions for the farming community. The Minister listened carefully to the representations of farming interests so that he could make their enterprises more efficient. I welcome in particular section 23 which extends the deadline for the urban renewal scheme to 31 July 1998, with a specific extension to the Custom House Docks area. We are all aware of the great success of the IFSC in creating hi-tech jobs in the financial services area. The provisions in section 24 will be an important development to the north bank of the Liffey which, until recently, was one of the most deprived areas in Europe. It is now the nucleus of an important earning capacity for this economy and has contributed enormously to our success rate in recent years.
I was amused to hear Deputy Cullen refer to problems in the regions. FÁS recently published a report on regional trends in the labour market in the late 1980s and early 1990s, a fundamental conclusion of which is that the east region lost out heavily in terms of job creation up to 1996. While we did well in terms of services, we fared worse than other parts in terms of manufacturing. The east region is made up of Counties Dublin, Meath, Wicklow and Kildare. Up to 1996 the industrial base of that region increased by only 6.6 per cent compared to an average growth rate of 10.2 per cent across the country. In some areas, such as the west and the midlands, the overall growth rate in manufacturing was approximately 16.8 per cent. There has been a great deal of comment in the newspapers, particularly in the midlands and the west, about the number of jobs that have been created in the Dublin area. They have been created mainly on the northside and in the Blanchardstown area, which were starved of jobs for many years. The Government has tried to redress the imbalance in job creation. I welcome the findings of this report. While the east region is still not getting its just deserts, we are faring a little better in recent years.
I welcome the provisions in section 26 to assist the film industry. Even though nearly every time one visits an historical building in this city — such as Dublin Castle last Friday — a film is being made, the major developments of the past few years have slowed somewhat. The increases in the threshold for corporate investment from £7.5 million to £15 million and from £2 million to £3 million are welcome. Because of the success of our writers and film makers in recent years, the House should continue to give a lead in this area and, in this regard, the Minister has obviously listened to the Minister for Arts, Culture and the Gaeltacht and film industry.
I also welcome the Minister's move in section 57 in regard to excise charges and penalties for the sale of illegal cigarettes. The large scale sale of illegal cigarettes on our streets is very annoying when we know the Exchequer is being defrauded. Also, as evident from recent Garda reports, some of the people pushing the sale of these cigarettes have close connections with serious drug related crimes. I also welcome section 65 which empowers the Garda to seize those cigarettes.
Some time agoThe Economist reported that the majority of illegal cigarette imports to Europe was produced by American tobacco companies, who are experiencing difficulties selling their product in America. Consequently, they are illegally pushing massive quantities of cigarettes into Europe. Is it possible for the Government to discuss this matter with the American Government? As evident from recent news reports from America, the American public is concerned about the hazards of smoking and is making life difficult for cigarette manufacturers who have lied repeatedly to the public about the danger to health of cigarette smoking. If the report in The Economist is correct, that problem is now being inflicted on us. The American Government should take some responsibility for the sale of this tobacco here.
I welcome the provision to reduce capital gains tax and the Minister's attempt in section 83 to clarify the position in regard to commercial child minding. He has made a fair attempt to exempt registered childminders and créches from VAT and that is to be commended.
I also welcome the Minister's attempt to close the loopholes which defrauded us of revenue in the past. I welcome in particular the provisions in sections 9 and 11 regarding scholarship payments and C2 and C45 certificates, respectively. However, he should re-examine the position regarding C2 certificates because many building workers are still not satisfied with the position. Section 22 deals with the abuse of capital allowances for hotels.
Section 101 finally abolishes the residential property tax, an unfair tax imposed primarily on Dublin householders. Deputy McDowell spoke about increases in stamp duty. Auctioneers have claimed that has had a dampening effect on the huge explosion in house prices but, unlike the residential property tax, it will not be ruthlessly applied. I am pleased the RPT has been abolished.
I welcome the Finance Bill and hope it is the third of many Bills the Minister delivers to the House. He has been a good steward and guardian of the nation's finances. I look forward to that continuing in this rainbow Government and I hope we do not go down the Progressive Democrats road which would destroy our economy and turn us into another New Zealand case, which would be detrimental to the interests of Irish workers.