Dáil Éireann debate -
Wednesday, 2 Dec 1998

Vol. 497 No. 6

Financial Resolutions, 1998. - Financial Resolution No. 1: Value Added Tax.

The Taoiseach:

I move Financial Resolution No. 1:

(1) THAT in this Resolution—

"the Principal Act" means the Value-Added Tax Act, 1972 (No. 22 of 1972);

"the Act of 1998" means the Finance Act, 1998 (No. 3 of 1998).

(2) THAT the rate of value-added tax on the supply of livestock and live greyhounds and the hire of horses be increased from 3.6 per cent. to 4 per cent. of the taxable amount or value of such goods and services, and that, accordingly, the Principal Act be amended in subsection (1) (inserted by the Finance Act, 1992 (No. 9 of 1992)) of section 11 by the substitution in paragraph (f) of “4 per cent.” for “3.6 per cent.” (inserted by the Act of 1998).

(3) THAT the rate of flat-rate addition to prices of agricultural produce or agricultural services supplied by unregistered farmers be increased from 3.6 per cent. to 4 per cent., and that, accordingly, section 12A (inserted by the Value-Added Tax (Amendment) Act, 1978 (No. 34 of 1978)) of the Principal Act be amended by the substitution in subsection (1) of "4 per cent." for "3.6 per cent." (inserted by the Act of 1998).

(4) THAT this Resolution shall have effect as on and from the 1st day of March, 1999.

(5) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

This resolution provides an increase from 3.6 per cent to 4 per cent in the level of the flat rate farmers' refund together with a similar change in the VAT rate on livestock, live greyhounds and the hire of horses.

The flat rate scheme is a simplified and practical method of applying value added tax to farming. It compensates unregistered farmers on an overall basis for the VAT charged to them on their purchases of goods and services. This is achieved without applying the normal VAT rules on registration, record keeping and returns.

The amount of the flat rate is arrived at by calculating the VAT payable on agricultural inputs as a percentage of agricultural sales. The Revenue Commissioners have calculated on the basis of macro-economic data for the past three years that a flat rate of 4 per cent is now needed to achieve full compensation.

Traditionally the VAT rate on all livestock has been retained at the same level as the flat rate addition. This is administratively more convenient for farmers and their customers. These changes will have effect from 1 March 1999 and are worth £10.76 million in a full year.

Mr. J. Bruton:

This increase in VAT rebate will mostly benefit unregistered farmers. They are on average farmers of a lower income than the combined total of farmers, both registered and unregistered. The Government had an opportunity to recognise the serious income situation faced by these farmers in deciding the level of rebate. I am disappointed it has not chosen to grant a larger VAT rebate to the farming community given its circumstances.

The position is extremely severe across a range of products. Farmers face a situation where, in the case of beef, for example, it is not possible to make money. The only way an income can be obtained is through the cheque in the post. The product is losing money and that is not a sustainable situation. No self-respecting of group of people will want to stay in what was the self-reliant enterprise of farming when they now rely for their entire income on cheques from the Government. Current development of agriculture is turning rural Ireland into a form of Indian reservation where people are being paid to stay down on the reservation. That is the effect of the cheque in the post. It is an Indian reservation policy. That is not a very inspiring policy for any industry.

I had an opportunity in 1980 to visit an Indian reservation in Nebraska. If that is where Irish agriculture is heading, it is not where I would like to see a self-reliant community heading. At 1 o'clock in the middle of the day the streets on that reservation were deserted, but there was a sound coming from one building, which happened to be the bar. I opened the door and the place was packed. The entire population of the reservation was in the bar at 1 o'clock in the day. The place stank with the smell of people who did not have adequate sanitary facilities in their homes. That is what reservation living does to people who get a cheque in the post from Washington or Brussels and are paid to stay on the reservation. As far as agriculture is concerned, we are heading towards the creation of a reservation in rural Europe where people are being paid to be on the land. That is no way to go. Coming from that community, I can recall at time when no one was more proud of their self-reliance than farmers, but that is no longer the case.

While I do not expect it would have been possible for the Government to resolve the problems I am addressing, irrespective of what it did in respect of the higher VAT rebate with which we are dealing, an opportunity has been lost here to do something about addressing them. The Fine Gael Party will not support this resolution, not because we disagree with the thrust of it but because it is so completely inadequate in comparison to the crisis being experienced in rural Ireland at present. We have no way other than opposing this resolution to express our sense of protest at the Government's inertia in facing this very difficult income situation for people who are relying on food production from the land for their living.

Mr. Ferris:

I share Deputy Bruton's concern about the people of rural Ireland who have suffered dramatically in so many different ways in recent months. Today's budget will not have brought those people any sustenance. There is a "live horse and you'll get grass" promise of something in the small holders assistance scheme, but we must wait for the social welfare Bill to see what that will bring. There are many farming sectors where incomes are so low that they are almost insignificant and those farmers have become almost dependent on the cheque in the post. While such money is essential for them to live, it is ruining the spirit of farmers in rural Ireland who want to work. They have an instinct to work and derive satisfaction from working irrespective of the income they get. However, our policies are geared towards farmers not doing anything. People who have tried to rear pigs have become bankrupt under the present system.

The resolution mentions live greyhounds, livestock generally and the hiring of horses for riding. Those are sensitive areas because they include some of the main alternative enterprises in which farmers, who cannot produce anything else, engage. They may breed greyhounds and hire out horses to tourists. The Minister for Tourism, Sport and Recreation will realise that the south east region recently launched an equine tourism oriented enterprise, which involves the provision of horses for tourists. Any changing of the VAT rates in respect of these areas would be dangerous.

I will oppose this financial resolution on the principle of what is proposed and because of the segment of our community it will affect. We should stop and think of our responsibilities to the people of rural Ireland. We all talk about them, about how important they are, but we have done very little for them at a time of economic boom when we could have done something for them.

Mr. Flanagan:

I join the previous speakers in saying there was very little in the budget for the farming community and the majority of my constituents. I do not wish to repeat points that were made, but I agree with the comments of my party leader, Deputy Bruton, and Deputy Ferris.

A recent survey carried out in my constituency among the farming community shows that 63 per cent of farm families in my constituency earn £10,000 a year or less. When that income figure is compared to the average industrial wage of £15,000, it sends out a message that the state of affairs is very poor among the farming community. Of that 63 per cent, 40 per cent of family farms in my constituency have an income of £5,000 or less. Nothing the Minister for Finance said this afternoon has given the farming community any confidence or hope.

A County Offaly farmer who called to my constituency clinic last week told me, and he was rather embarrassed about this, that for the first time ever Santa Claus would not be visiting his family because of the fall in farm incomes. Farmers are losing their dignity because of the manner in which agricultural policy has been totally ignored by the Government. That should have been addressed today by the Minister for Finance. He had an opportunity to offer some hope to the farming community, but he did not take it. The Minister for Agriculture and Food must stand accused of presiding over a Department that has done very little to encourage, and has very little to offer, farming. Today's budget offers nothing to the farming community and that is most regrettable.

Mr. Penrose:

I have spoken in this House on numerous occasions about a particular segment of farmers, most of whom will get an increase of 3.6 per cent to 4 per cent in the VAT refund. One must exceed an income threshold to be registered for VAT, but hardly one of our 100,000 dry stock farmers is registered for it. A method should be found to allocate additional moneys to them.

A total of 75 per cent of farmers in County Westmeath are dry stock farmers. A recent survey indicates that approximately 60 per cent of farmers earn an income of £110 a week or less. Recently a detailed survey commissioned by the IFA and carried out by Jim Phelan, a very reputable man, revealed that a total of 37,000 farmers are in danger of extinction. The budget does not offer one whit of help to any of those farmers. The Minister should not try to deceive the people. There is more for a gambler in the budget, £20 million odd, than the £15 million given to farmers.

Mr. Power:

That is rubbish.

Mr. Penrose:

A total of £15 million was distributed to a large segment of farmers. Who does the Minister think he is fooling? He is not fooling anybody. I have been talking to dry stock farmers, some of whom have told me privately they are finding it very hard to survive. That is not a bit foolish, Deputy Power.

I am delighted to see the tax on betting reduced because I go racing, but at the end of the day priorities are important. Let us take another example. Are we encouraging young people into farming? Is a miserable £2 million great encouragement for young people, or am I being fooled about that as well? Seven hundred farmers are in limbo. If one multiplies 700 by £5,600 it comes to £4 million. How many new farmers will be taken into the installation aid scheme? Where are the people who have been left in limbo or in suspension? Is that the situation or am I misleading anybody? Those facts were given to us in the Dáil.

If I was supposed to be talking nonsense on the last matter, let us see the Government repudiate this one. Seven hundred young farmers, under 35, are in limbo because they were left in a state of suspension when the installation aid was suspended. There is an extra £2 million in today's budget for them, but is that all we are going to do? Is there any extra money for them? We need £8 million immediately for installation aid.

That is accepted by the Minister. He knows that. I am speaking for young farmers and people in my constituency who want to get into farming. I explained this to the Minister who is not surprised by it. People in rural areas are in a difficult situation and I will continue to make that point, although many people might not like me doing so.

Dr. McDaid:

We will compare the Deputy's budget in a minute.

Mr. Penrose:

We did not have £4 billion. The Minister should not go back to history. The Government has been in power for 19 months and it has deserted those young people in rural Ireland.

Mr. O'Dea:

Fake indignation.

Mr. Penrose:

The Deputy would know about that. He is an expert. He will be out next Sunday night with another statement.

Mr. Byrne:

The Labour Party's record on farmers is well known.

Acting Chairman (Ms Coughlan):

May we have some order, please?

Mr. Penrose:

The Deputy was going to fill a plane full of fuel and open live markets in the Red Cow Inn on the Naas Road. He should not tell me what he has done because he never did a stroke. He cannot fool 100,000 livestock farmers. I have heard the Deputy before.

Mr. Byrne:

The president of the Deputy's party said farmers were rolling in wealth.

Acting Chairman:

Will Deputies make their comments through the Chair, please?

Mr. Penrose:

Some of the Deputy's people told us that too.

Mr. Byrne:

The Deputy should get off his JCB, the hole is big enough.

Mr. Penrose:

Some of the Deputy's people are having a telethon, so I am not too worried about what he says. That is the best he can do. I am unashamedly making a point for young farmers. The Minister knows my views, which have been made in a non political way. The budget should have given £7 million or £8 million to the installation aid scheme. I have made that view known.

Mr. Byrne:

How much support does the Deputy have from his colleagues?

Mr. Penrose:

I have lots of support from my colleagues. The Deputy is a good heckler, but I am used to meeting people like him every day of the week and in a different forum. I am making a point on behalf of young farmers. The installation aid scheme was a psychological fillip, a boost of £5,600, which is only 45 per cent of the cost of an IDA job and it is money well spent.

Minister for Agriculture and Food (Mr. Walsh):

The VAT refund will be worth an estimated £11 million to farmers in the full year, which is to be welcomed. That is on top of a Supplementary Estimate for £35 million, which I moved at 11 a.m. today. That, in turn, is on top of Estimates of £814 million, which I succeeded in gaining for farmers in the last two weeks. That is in addition to the £1,024 million that will be paid to farmers in direct income payments this year. That is an all time record.

Mr. Ferris:

The Minister knows how that is distributed.

Mr. Walsh:

The installation aid scheme for young farmers had been left in abeyance and was under-funded before Fianna Fáil came into office. I am pleased we have reopened and restored that scheme.

Mr. Neville:

The Minister abolished it.

Mr. Walsh:

We provided £10 million for it. Some £5,700 per annum will be available to young farmers to help and encourage them into farming. That is on top of the restoration of the control of farmyard pollution scheme, which was terminated by the rainbow Government. I was glad to be in a position to restore it so that farmers could keep up to date with the very best in the EU. That scheme will cost an additional £25 million, which is in addition to the dairy hygiene scheme, which Deputies will recall was also terminated by the rainbow Government. That represents a total of £36 million for on-farm investment. I am pleased that turns around the particularly negative attitude to farmers that prevailed before I arrived on the scene.

An old sore had existed for some considerable time where farmers had been paying RSI for less than ten years. Despite the fact that representations were made to resolve that anomaly, it took the Minister for Social, Community and Family Affairs, Deputy Dermot Ahern, to resolve that difficulty in the last few weeks at a cost of £18 million. We appreciate that.

Mr. Ferris:

Fair dues to him.

Mr. Walsh:

That is on top of a £20 million fodder scheme for farmers, which acknowledges the difficulty we had with excess rainfall this year. I was pleased today to hear the president of the main farming organisation on television including the word "welcome" in his response to that range of initiatives. I expect any reasonably fair-minded person would have made the same generous response.

Along with all those measures, because of the front loading of the various headage schemes under the rainbow Coalition, the Structural Funds for headage had run out. Deputies will have noted a figure of £110 million to ensure headage was paid to the least well off — those people in disadvantaged areas, including the west.

Taken together, all those measures account for well in excess of £2,000 million, at least half of which is going directly into farmers' pockets. The remainder is for on-farm investment, schemes and assistance of various kinds. This budget will be immensely helpful to the farming community because 80,000 people will be taken out of the tax net. Medical card applicants over 70 will get an additional one third on to the guidelines to help them qualify for medical cards. Married people over 65 can earn an income of £13,000 per annum before they enter the tax net. Farmers will benefit from all those measures. As well as the general good health of the economy and low inflation, there is a considerable amount in this budget for agriculture and the farming community generally. The measures relating to on-farm investment and the restoration of the scheme of installation aid for young farmers constitute general support for the least well off.

The farm assistance scheme will be tremendously beneficial to farmers with seven or eight cows and a quota of 13,000 or 14,000 gallons who exceed their quota in September or October and have no cash flow or income until the following May. There is up to £50 million for this scheme. A farmer with two children and an income from any source, inside or outside of farming, of, say, £100 per week will get £61 per week under the farm assistance scheme, compared with only £38 per week under the old farmer's dole or unemployment assistance for smallholders. This will be of benefit to double the number of farmers who benefited under the old farmer's dole. About 7,000 farmers benefited under the small farmer's assistance scheme, but 14,000 farmers will benefit under this new scheme, and some will get double the amount. It will be skewed in favour of family farms while the smallholder's assistance scheme was more beneficial to single people living on their own. I am very pleased that an additional £15 million, on top of what was spent on smallholder's assistance, is being made available in this budget.

Taking all those measures into account, this is a good budget for farmers. It is recognised as such by the farming organisations. We will continue to do more. I will be here at 9.30 a.m. tomorrow to move a motion——

Mr. J. Bruton:

On a point of order, I have been a Member of this House for a long time, and it is not usual, in a time-limited debate on the financial resolutions on budget night, for Ministers to take up so much time. This is usually time reserved for backbenchers on both sides of the House. The Minister is setting a bad precedent. He will have ample opportunities to get publicity for his views and he should not be taking the time that is available to other Members.

Mr. Finucane:

The Minister is making a Second Stage speech.

Mr. Ring:

Neither the Tánaiste nor the Taoiseach know anything about farming. That is what is wrong.

(Interruptions.)

Mr. J. Bruton:

This has nothing to do with the merits of what the Minister has to say. It is just not fair. This is a time-limited debate.

Mr. D. Ahern:

It is obvious the Opposition do not want to hear good news.

Mr. Finucane:

The Minister was about to conclude what was a Second Stage speech. He should not be allowed to speak again.

Mr. J. Bruton:

It is not fair. This is the one night that ordinary Deputies get a chance to speak and the Minister should not hog the time.

(Interruptions.)

Mr. Martin:

I do not like the phrase "ordinary Deputies".

Mr. Finucane:

The Minister was once one of them, before he was elevated.

(Interruptions.)

Mr. Walsh:

The VAT rebate is being increased from 3.6 per cent to 4 per cent. That change in the rate will ensure that farmers continue to be compensated in full for the VAT they bear in their business inputs. This change will be worth £11 million in a full year.

As well as the VAT measures, there is stock relief for farmers and enhanced stock relief for young trained farmers, which again is an encouragement to younger people to participate in farming. General stock relief for farmers is set at 25 per cent per annum without claw-back. That was due to expire on 5 April 1999.

Mr. J. Bruton:

The Minister should sit down; this is not right.

Mr. Walsh:

I am glad that it is being renewed at the same level for a further two years to 5 April 2001.

Mr. J. Bruton:

There is only one hour for this debate.

Mr. Walsh:

Stock relief for young trained farmers, which is available at 100 per cent without claw-back for a two-year period to qualifying farmers,——

Mr. D. Carey:

The Minister is a disgrace to the House.

Mr. Walsh:

——that is, farmers with a green certificate, was to expire on 5 April 1999 and it is being renewed for a further two years to 5 April 2001.

Mr. D. Carey:

The Minister is filibustering.

Mr. Finucane:

That information was in the Minister for Finance's speech.

An Leas-Cheann Comhairle:

Deputies should allow the Minister to continue.

Mr. Walsh:

Both of these measures will cost £1.5 million. For farmers who are not fully assisted by these measures, I am pleased to be able to say that the amount of money available under the REP scheme has been increased by 21 per cent, up to a total of £176 million for the coming year. That will mean that 40,000 farmers will benefit from this scheme. Not alone will they benefit, they will be farming in an environmentally friendly way.

Mr. D. Carey:

The Minister believes his own myth.

An Leas-Cheann Comhairle:

Deputy Carey, allow the Minister to continue.

Mr. D. Carey:

The Minister robbed the Department of Arts, Heritage, Gaeltacht and the Islands.

Mr. Walsh:

That is £3 million per week to help farmers in this area which is tremendously important, because they are guardians of the countryside.

Mr. D. Carey:

On a point of order, can I ascertain who is taking this debate?

An Leas-Cheann Comhairle:

The debate moves from one side to the other. It is a Committee Stage debate. Members are entitled to enter it.

Mr. D. Carey:

Who is taking the debate on behalf of the Government?

Ms Harney:

I am.

Mr. J. Bruton:

There is a time limit of one hour.

An Leas-Cheann Comhairle:

There is a time limit of one hour, but it is like a Committee Stage debate and, unfortunately, the Chair has no control over the length of time——

Mr. D. Carey:

The Chair does have control.

An Leas-Cheann Comhairle:

The Chair does not have control.

Mr. D. Carey:

He has to abide by Standing Orders.

An Leas-Cheann Comhairle:

There is nothing in Standing Orders that curtails the length of time a Member can speak on Committee Stage.

A Deputy:

The Minister has an awful lot to say.

Mr. D. Carey:

He is filibustering.

Mr. Ring:

The Minister should sit down.

An Leas-Cheann Comhairle:

Deputy Carey is taking up further time. It would be my hope that the Minister would conclude as there are a number of other Deputies who wish to contribute.

Mr. J. Bruton:

In view of the fact that the Minister for Agriculture and Food has taken up the time, could the Whips meet to agree a rescheduling of the debate so as to compensate Deputies? In all of the 25 or more years I have been a Member of this House I have not seen a Minister take up the time of backbench Deputies on budget night like this. Could we have agreement from the Tánaiste that the debates will be rescheduled to compensate for time unnecessarily and unprecedentedly taken in this debate by the Minister for Agriculture and Food?

Tánaiste and Minister for Enterprise, Trade and Employment (Ms Harney):

Obviously, the order of the House is a matter for the Chair. Deputy Bruton spoke about ordinary Deputies contributing, but he contributed and he is no ordinary Deputy.

Dr. McDaid:

He is no ordinary farmer either.

Ms Harney:

Deputy Penrose asked for the Minister's response.

(Interruptions.)

Ms Harney:

I can understand why the Deputies are so upset because the budget was so wonderful, but they should let the Minister say a few words — he is leaving shortly.

Mr. Sheehan:

The procedure was laid down by the Whips this morning, but did they agree to this?

An Leas-Cheann Comhairle:

Yes, the Whips agreed to it.

Mr. Sheehan:

This is disgraceful.

Mr. Martin:

The Minister is Deputy Sheehan's constituency colleague——

Mr. Sheehan:

He sold out the farmers.

(Interruptions.)

Mr. Walsh:

With the best will in the world, I entered this debate at the request of Deputy Penrose who wanted a response from the Minister. I am concluding because I have to go on radio to tell the general public——

Mr. J. Bruton:

This is just a walk-on part here.

An Leas-Cheann Comhairle:

Deputies should allow the Minister to conclude his remarks.

Mr. Walsh:

There are two more measures to which I wish to refer. One is the Leader programme for which £40 million has been provided. This will be of tremendous help to people in rural areas. There is an allocation of £5.7 million for the Western Development Commission which, again, should be very helpful.

I would like to thank Deputy Penrose for inviting me to participate in this debate. It is not unprecedented. I am glad to have set the record straight in relation to this budget which is exceptionally helpful to the agricultural community.

Mr. Ring:

Of £148 million for Leader, £128 million is being spent on administration.

Mr. Sheehan:

The Minister failed to get Objective One status for his constituency.

Mr. Crawford:

It is the greatest disgrace since I was elected to the Dáil that a Minister, who had ample opportunity during Question Time to answer questions and refused to do so on many occasions comes, contributes and then walks out. When the Minister took office, pigs were £1.40 per kilo. They are now 40 pence a kilo. He claims the VAT in this resolution will make up for that. He is a disgrace. What about the price of cattle? In many marts they cannot be sold and heifers are not even attracting bids.

Mr. D. Moynihan:

Thing are not as bad as they were in 1974.

Mr. Crawford:

They were far better.

Mr. Sheehan:

What about 1932?

Mr. Crawford:

Farmers are going through the worst time ever. In the middle of the BSE crisis the Fianna Fáil Party, then in Opposition, said it could be resolved by a Minister getting on an airplane to Libya or some other country. Fianna Fáil told the House that the Libyan market would reopen in October——

Mr. Byrne:

The last Minister could not get in a plane because he did not know where the airport was.

Mr. Crawford:

As a result, many livestock farmers held their cattle and now they cannot sell them. Please do not lecture us, Deputy Byrne, on what the Government did. It certainly did nothing for farmers since it took office and that is clear.

Mr. J. Brady:

The Deputy did not disagree with Proinsias.

Mr. Belton:

What about Deputy McCreevy?

Mr. Crawford:

As a Minister in that Government, Deputy De Rossa agreed to give funds to farmers.

Mr. Byrne:

Then he said they were rolling in it.

Mr. Crawford:

What did Fianna Fáil do? The minute it took office it cut the funds to farmers. What have you done in this crisis?

An Leas-Cheann Comhairle:

If Deputy Crawford addressed his remarks through the Chair he might avoid interruption.

Mr. Crawford:

Nobody knows better than the Leas-Cheann Comhairle the desperation of farmers in Cavan and Monaghan. They have been left out of the fodder scheme. They have not been given a penny. My area, in the parish of Aghabog, did not benefit from the headage payments the Minister mentioned. He suggested that extra money is being given to farmers this year but all he is doing is allowing some funding to be paid in advance.

When there was a crisis in farming in 1985 the then Government got half as much headage and paid it out as an addition. This Government has done nothing. It missed an opportunity today of agreeing——

Mr. Byrne:

Your Government had a Minister who told farmers they were rolling in it.

An Leas-Cheann Comhairle:

Allow Deputy Crawford to continue without interruption.

Mr. Crawford:

You had your opportunity. When the Minister could not go to Libya, you should have gone.

An Leas-Cheann Comhairle:

I remind the Deputy to address his remarks through the Chair.

Mr. Crawford:

The Government missed its two best opportunities today. The first was the chance to give FIS to farmers now and not social welfare in six months. The second opportunity was to increase the VAT refund to a realistic level as has been done in other European countries to compensate for the serious crisis in farming. The Government failed to take both opportunities. It has no interest in farming and proved it tonight.

The Minister also proved his lack of interest by coming to the House to waffle about installation aid which he promised 18 months ago and still has not delivered. He also promised the control of farmyard pollution and hygiene grants but when I asked him in the House a few days ago when the forms would be sent out he said he still had to negotiate with farmers before going to the European Commission. When, if ever, will the forms be sent?

Mr. O'Dea:

Given my widely known respect for Deputy Bruton's point of view, I will defer to one of my ordinary colleagues if they wish to contribute.

An Leas-Cheann Comhairle:

I call Deputy Joe Higgins.

Mr. Higgins

(Dublin West): I was afraid the socialist voice would be squeezed out again——

Mr. O'Dea:

On a point of order, a Leas-Cheann Comhairle, I was deferring in favour of one if my colleagues if they wished to contribute.

(Interruptions.)

Mr. O'Dea:

I did not give way. If one of my colleagues does not wish to contribute, I will speak on the resolution.

Mr. Ring:

Well done, Willie.

(Interruptions.)

Mr. O'Dea:

I listened with amazement to the fake indignation expressed in the Chamber, particularly by the Labour Party and Deputy Penrose, its spokesperson on agriculture. It is well known that Deputy Rabbitte is about to join the Labour Party and will probably be appointed vice-president. I listened to Deputy Rabbitte's speech on the budget and the first item he criticised was the £15 million allocation for social welfare payments for farmers in difficulty. How does Deputy Penrose reconcile his indignation with the clearly expressed views of a significant new member of his party?

Mr. Neville:

The Deputy would understand. He is in the same position in his own party.

Mr. O'Dea:

How does the Labour Party spokesman on agriculture reconcile his stated indignation with the statement——

Mr. D. Carey:

Is the Minister of State saying £15 million is enough?

Mr. O'Dea:

I will deal with that and then I will let the Deputy make his sentimental contribution.

Mr. Ferris:

On a point of order, what has the Minister of State's contribution to do with the resolution before the House? Nothing.

Mr. O'Dea:

The question is what does the Labour Party intend to do with the resolution. I also wish to know how the Labour Party can reconcile its indignation over small farmers and young farmers with the statement of its new president, Deputy De Rossa, that the farmers are rolling in it.

Deputy Bruton says his party will vote against this financial resolution. The resolution increases by more than 10 per cent the rate of VAT repayable to unregistered farmers, from 3.6 per cent to 4 per cent.

Mr. J. Bruton:

It is not enough.

Mr. O'Dea:

It is £11 million in a full year but it is not enough so Fine Gael will vote against it. If Deputy Bruton votes against the resolution and it falls, it will mean the farmers will get nothing.

Mr. J. Bruton:

It will mean a change of Government.

Mr. O'Dea:

Does Deputy Bruton prefer that farmers get nothing because what they are getting is not enough?

Mr. J. Bruton:

I want to relieve the people of the burden of this Government.

Mr. O'Dea:

The Minister for Agriculture and Food outlined the full amount of direct payments to agriculture which now exceeds £2 billion. This resolution provides for £11 million by way of tax refund while £15 million is provided for farmers in the budget. Did I hear a different Budget Statement today? That £15 million will enable greater social welfare provision for farmers in difficulty. A sum of £25 million is provided for on farm investment, a grant system which was frozen by Deputy Bruton's Government.

Mr. Browne

(Carlow-Kilkenny): That is European Union money.

Mr. O'Dea:

A sum of £110 million is provided for headage payments in 1999.

Mr. Crawford:

When will the farmers get it?

Mr. O'Dea:

Provision has been made to restore installation aid to young farmers, something which was demanded by farming organisations for the past two and a half years. Their pleas fell on deaf ears when the Opposition parties were in Government.

(Interruptions.)

Mr. Sheehan:

That scheme was frozen by your Government.

Mr. O'Dea:

Farming is a business and there are peaks and valleys in any business.

Mr. Browne

(Carlow-Kilkenny): It is dying under this Minister.

Mr. O'Dea:

It is not a matter for the State to ensure that a business continues to remain viable for all time or that people will enjoy the same income they would have enjoyed if business was booming.

Mr. Ferris:

That is a terrible statement.

Mr. Browne

(Carlow-Kilkenny): Let them eat cake.

Mr. D. Ahern:

What did your Minister do?

Mr. O'Dea:

This Government has spared no effort to assist farming by way of direct aids, grants, tax rebates, installation aid and increases in social welfare provision, measures which the last Government failed to take despite repeated pleas from the farming organisations.

(Interruptions.)

An Leas-Cheann Comhairle:

I ask Deputy O'Dea to give way to the Chair.

Mr. O'Dea:

Deputy Bruton will excuse me if I cannot take his indignation too seriously.

An Leas-Cheann Comhairle:

I ask Members to refrain from interrupting. This is a limited debate——

Mr. Belton:

The Chair is right; it is limited.

An Leas-Cheann Comhairle:

——which must conclude at 9.37 p.m. A great deal of time is being lost because of interruptions. If Members on both sides of the House addressed their remarks through the Chair rather than across the floor, the number of interruptions might be reduced. It is too much to expect that there would not be interruptions.

Mr. D. Carey:

Can I ask the Minister of State a question?

An Leas-Cheann Comhairle:

No, we are on Committee Stage. A number of the Deputy's colleagues are listed ahead of him. In fairness to them we must take them in order.

Mr. O'Dea:

In addition, the Minister for Agriculture and Food adverted to a £35 million Supplementary Estimate for agriculture and £13 million gained in the past two to three weeks. He has also announced the provision of finance to establish the Western Development Commission on a statutory basis. Deputy Carey, who has interrupted repeatedly, was once Minister of State with responsibility for the west. Not many people are aware of that.

Mr. D. Carey:

I am glad the Minister of State has reminded us.

Mr. O'Dea:

I am one of the few people who know that, given that his impact made little difference. The reality is that it is not the function of Government to make business viable.

Mr. Ring:

Deputy Carey succeeded in having Clare included in the Western Development Commission.

Mr. O'Dea:

Farming is suffering all over the western world. I doubt if any Government in western Europe or in the EU has made such efforts to sustain farming as a viable business or to keep as many farmers on the land as has this Government in the past 18 months.

Mr. Crawford:

On a point of order. When we were in Government——

An Leas-Cheann Comhairle:

That is not a point of order. Allow the Minister to continue.

Mr. O'Dea:

Deputy Crawford and his colleagues can give but they cannot take. The facts are there.

Mr. Finucane:

On a point of order, when is the debate due to finish on this resolution?

An Leas-Cheann Comhairle:

The debate is due to conclude at 9.37 p.m. It is my intention to allow the Tánaiste an opportunity to speak at about 9.30 p.m.

Mr. J. Bruton:

Two Ministers have already hogged the debate.

Mr. Finucane:

How many speakers are still on the schedule?

An Leas-Cheann Comhairle:

There are four.

Mr. Finucane:

Do you consider it useful to democracy that two Ministers have hogged the entire debate so far?

An Leas-Cheann Comhairle:

I have no control over——

Mr. Finucane:

You have control. As far as you are concerned the Minister of State can continue prattling on until 9.37 p.m.

Mr. J. Bruton:

We will not agree to allocation of time motions again in these instances. This is shortsighted of the Government.

Mr. Finucane:

The Government is filibustering the debate.

Mr. O'Dea:

I am not trying to filibuster. A number of allegations have been made and it is incumbent on me to reply.

Mr. J. Bruton:

Why should we agree to allocation of time motions at all?

Mr. Neville:

Will the Minister of State review the operation in Limerick tomorrow?

Mr. O'Dea:

The Deputy should stick to suicide.

Mr. J. Bruton:

Will the Tánaiste ask the Minister of State to sit down and allow other Deputies to speak? This is a complete abuse of budget night, it has not happened before. It is not right and the Minister of State should sit down.

Mr. Neville:

I ask the Minister of State to withdraw his statement.

Mr. O'Dea:

I withdraw it. Is the Deputy happy?

Mr. Neville:

I am not happy; it should not have been said. It is too serious a subject to be flippant about.

Mr. O'Dea:

I watched for two and a half years the Government led by Deputy Bruton and its abysmal performance in agriculture. I heard Deputy De Rossa say farmers were rolling in it. I heard Deputy Rabbitte attack farmers and the £15 million to increase social welfare payments for them.

Mr. D. Ahern:

The Minister gave them a good package.

Mr. O'Dea:

Deputy Bruton will excuse me if I do not take his protestations too seriously.

Mr. Higgins

(Dublin West): I am happy the socialist voice has not been drowned out by the spat between the two wings of the big farmers organisations. I am opposing this measure because it is contemptible. It reflects the utterly cynical approach of the Government to the whole question of taxation, including farmer taxation. There is an important issue concerning farmer taxation. The nub of the issue is that for decades a minority elite of the farming community — the big farmers, the ranchers — have skimmed the fat from the Brussels gravy train with virtually no comeback to the taxpayer and the Exchequer while, for some time, small farmers have suffered. I am not surprised the Minister for Agriculture and Food could say the farming organisations welcome some of the measures implemented, given that those organisations represent the wealthy farmers. They do not represent the small farmers in west Kerry, Connemara, Wicklow, etc. The issue of farmer taxation, which is that the ranchers should be required to pay their due share, is not addressed in the budget nor in this contemptible resolution.

The reality is that this budget has the Progressive Democrats mark written all over it. Already tonight on Radio na Gaeltachta, where I sat beside a Progressive Democrats Minister of State, Deputy Molloy, he boasted about the gap opened up between those on social welfare and those at work. What a shameful approach by a Minister of State. The £3 per week crumb to the unemployed person by contrast with some modest measures which were overdue to the low paid and middle income worker was boasted by a Minister of State. That is contemptible but is in line with the Progressive Democrats philosophy whereby the

Tánaiste, presiding over this debate, has stood over and engineered the policy of morally intimidating people on the dole, out to work or at cheap labour to satisfy the call from the corporate whingers and the small firms association in the west that they do not have enough people to work for starvation wages. That is what is at stake. What the Minister of State, Deputy Molloy meant, was that the level of wages and social welfare is deliberately kept at respectively low levels so that people will be forced to work for slave wages. That is what is behind this budget. It is shameful.

Issues on farmer taxation and the horse industry are barely referred to in this motion. There are real issues that should be addressed. For example, why did the budget in its alleged desire for taxation justice——

An Leas-Cheann Comhairle:

It is not appropriate to dwell on issues the Deputy would like to see addressed.

Mr. Higgins

(Dublin West): Why did the Government not shift the VAT burden to that section of the horse industry, the stud farm industry which is tax free? How can a horse such as Sadlers Wells earn about £15 million per year in cover fees without a penny being paid in tax? There is no reference to that in the budget. A lady in my constituency who has to clean at night and earns £120 per week must pay every penny of taxation due. That is shameful.

The vested interests have won again, represented by the Fianna Fáil Government. This despicable motion does not address that issue and therefore I will oppose it.

Mr. Finucane:

I was disappointed the budget did not address the fodder problem. The Minister for Agriculture and Food did not have an opportunity to visit west Limerick. In fairness, his Minister of State, Deputy Ned O'Keeffe, visited the area and could see at first hand the tragedy arising from the fodder crisis. Many people regarded the Minister's response of approximately £300 per farmer as a derisory attempt at assisting them. I had anticipated there would have been a more positive response in the budget. I come from a constituency where the Government has almost introduced a form of apartheid. Limerick did not satisfy the criteria for Objective One status. I respect the Minister of State, Deputy O'Dea, who spoke on this issue initially and indicated his disappointment. Subsequently we heard a different side of the story from the Minister. It is a tragedy that Limerick was bypassed as it is contiguous to Kerry and Clare.

If the Government thinks it is codding the people of west Limerick, it is not. They know the Government's attitude and its approach to date. It was bad enough that the whole area of west Limerick, from Newcastlewest to Abbeyfeale and all the surrounding areas suffered during the summer and now has a fodder crisis. We got a further kick in the teeth in regard to Objective One status.

An Leas-Cheann Comhairle:

The Deputy is wandering from the debate on the resolution.

Mr. Finucane:

I am not wandering, the points I am raising are pertinent to the area the Minister of State at the Department of Education and Science and I represent.

Mr. D. Ahern:

The Deputy is taking us on the scenic route.

Mr. Neville:

He is not taking the scenic route, he is right.

Mr. Finucane:

Those on the Government benches made reference to the £2 million for installation aid and my party welcomes the introduction of that scheme. However, if they want an indication of people's thoughts on farming and the Government's action in respect of it they should discuss this matter with the Teagasc officials who are dealing with the situation on the ground and the people who have finished their three year certificate programmes and consider the progression for the future and the number of people who will complete their farm certificates and enter a career in farming. If they believe this budget addresses the issues which are pertinent to those involved in farming, they are making a sad mistake.

If they were present, my colleagues from west Limerick——

Mr. J. Bruton:

They are in the visitor's Gallery.

Mr. Finucane:

——would echo my disappointment at the way the Government has kicked us in the teeth with its strategy and recent actions, not only in terms of farming but also in respect of future industrial development in our area. An authority has been established to oversee the Shannon Estuary. After the year 2000, will its responsibilities lie only in Counties Kerry and Clare and will it ignore the vast area in County Limerick which is strategically situated on the Shannon Estuary? That would be farcical.

Mr. D. Ahern:

The Deputy should keep going because he is impressing his party leader.

Mr. Finucane:

In the budget the Government should have addressed the pertinent issues which appertain to the community represented by Deputies Collins, Neville and myself. That is why I am disappointed with the budget.

(Interruptions.)

Mr. Power:

The Minister had read 12 pages of his budget script before a murmur emanated from the Opposition. That is the first occasion on which that has happened in the House on budget day.

When one considers the decisions the Government was obliged to make in drafting the budget, it is obvious they involved trying to strike a balance. Deputy Donal Carey asked whether we thought farmers "got enough" from the budget. No sector, be it education, justice or another area, got enough because the Government was intent on striking a balance.

Mr. D. Carey:

I asked if they got enough to feed themselves?

Mr. Power:

It is wrong to state that farming has been neglected. I accept that farming has undergone a difficult period, but Opposition Deputies should acknowledge that many of the problems it has encountered were not caused by the Government. However, be it the fodder crisis or the provision of installation aid, the Minister has not neglected farming.

Mr. Flanagan:

The Deputy must not have visited Athy recently.

Mr. Power:

Deputy Penrose suggested that we are giving money to the punters which could have been given to farmers but nothing could be further from the truth. The Minister made a decision on betting tax to secure the revenue the Government receives and existing jobs in the betting industry because tax-free betting has been made available to Irish punters in the past 12 months.

An Leas-Cheann Comhairle:

I ask Deputy Power to give way to a member of the Government in order that we might conclude the debate.

Tánaiste and Minister for Enterprise, Trade and Employment (Ms Harney):

I thank Deputy Power and the other Deputies who contributed to the debate. I was amused when Deputy Carey questioned my credentials to respond to the debate. I grew up on a 39 acre farm in County Dublin — which is still run by my brother — and I have some experience of agriculture, particularly in terms of small farmers. Deputy John Bruton is smiling at me but——

Mr. J. Bruton:

I am smiling in support of the Minister.

Mr. D. Ahern:

Fine Gael does not hold a monopoly on farming.

Ms Harney:

——I am telling the truth.

(Interruptions.)

Ms Harney:

I do not like placing my personal history on record. However, given that my credentials are being questioned, I believe I must do so.

Mr. Sheehan:

What would the Minister say to a person who operates a 20 acre farm in west Cork?

The Taoiseach:

The people of west Cork were in great form at the weekend.

Mr. Martin:

West Cork has done very well since the Minister for Agriculture and Food, Deputy Walsh, entered office.

Ms Harney:

Unlike Deputy Sheehan, my family did not have a booming shop to subsidise our farm.

Mr. Sheehan:

It is a great shop.

Mr. J. Bruton:

One can get everything one wants in it.

Ms Harney:

Other than the normal things which are said in the budget debate about regionalisation and other issues——

Mr. Belton:

Does the Minister intend to make any comments about agriculture?

An Leas-Cheann Comhairle:

The Tánaiste has two minutes to reply and I ask Deputy Belton to show some courtesy by allowing her to conclude without interruption.

Ms Harney:

——it must be remembered that this refund is worth £92 million per year to farmers and today's decision will mean an additional £11 million. Deputy John Bruton asked why this could not be calculated on the previous year's data. I would have no problem with that but, unfortunately, under the sixth VAT directive we are precluded from doing so. Part III of that directive states that such percentages shall be based on macroeconomic statistics for flat rate farmers alone for the preceding three years only. Clearly it cannot be calculated on the basis of the previous year's data.

Mr. Byrne:

I am surprised Deputy Bruton was not aware of that.

Ms Harney:

If it could be calculated in that way, the Government would have done so. We have done everything possible to assist farmers during this difficult period. As already stated, it is worth £92 million which means farmers will receive an additional £11 million.

Deputy Joe Higgins is in a unique position because he and Deputy John Bruton seem to be the only party leaders who do not support reducing the top rate of tax. I congratulate Deputy Higgins on converting Deputy Bruton to his policies. He obviously has not yet converted him to his views on agriculture. That will be the challenge he faces during the coming year.

An Leas-Cheann Comhairle:

As the time permitted for this debate has expired, I am required to put the following question in accordance with an Order of the Dáil of this day: "That Financial Motion No. 1 is hereby agreed to."

Mr. J. Bruton:

No, it is not agreed to.

The Taoiseach:

If the Opposition wins this vote, it will deprive farmers of £11 million they badly need.

Mr. J. Bruton:

If the Opposition wins it will deprive the country of the Taoiseach's services.

(Interruptions.)

Question put.

The Dáil divided: Tá, 79; Níl, 71.

Tá

• Ahern, Bertie.
• Kelleher, Billy.
• Ahern, Dermot.
• Kenneally, Brendan.
• Ahern, Michael.
• Kirk, Séamus.
• Ahern, Noel.
• Kitt, Michael.
• Ardagh, Seán.
• Kitt, Tom.
• Aylward, Liam.
• Lawlor, Liam.
• Blaney, Harry.
• Lenihan, Brian.
• Brady, Johnny.
• Lenihan, Conor.
• Brady, Martin.
• McDaid, James.
• Brennan, Matt.
• McGennis, Marian.
• Brennan, Séamus.
• McGuinness, John.
• Briscoe, Ben.
• Martin, Micheál.
• Browne, John (Wexford).
• Moffatt, Thomas.
• Byrne, Hugh.
• Molloy, Robert.
• Callely, Ivor.
• Moloney, John.
• Carey, Pat.
• Moynihan, Donal.
• Collins, Michael.
• Moynihan, Michael.
• Cooper-Flynn, Beverley.
• Ó Cuív, Éamon.
• Coughlan, Mary.
• O'Dea, Willie.
• Cowen, Brian.
• O'Donnell, Liz.
• Cullen, Martin.
• O'Donoghue, John.
• Daly, Brendan.
• O'Flynn, Noel.
• Davern, Noel.
• O'Hanlon, Rory.
• Dempsey, Noel.
• O'Keeffe, Batt.
• Dennehy, John.
• O'Keeffe, Ned.
• Doherty, Seán.
• O'Kennedy, Michael.
• O'Malley, Desmond.
• Ellis, John.
• O'Rourke, Mary.
• Fahey, Frank.
• Power, Seán.
• Fleming, Seán.
• Roche, Dick.
• Flood, Chris.
• Ryan, Eoin.
• Foley, Denis.
• Smith, Brendan.
• Fox, Mildred.
• Smith, Michael.
• Gildea, Thomas.
• Treacy, Noel.
• Hanafin, Mary.
• Wade, Eddie.
• Harney, Mary.
• Wallace, Dan.
• Haughey, Seán.
• Wallace, Mary.
• Healy-Rae, Jackie.
• Walsh, Joe.
• Jacob, Joe.
• Woods, Michael.
• Keaveney, Cecilia.
• Wright, G. V.

Níl

• Allen, Bernard.
• De Rossa, Proinsias.
• Barnes, Monica.
• Deasy, Austin.
• Barrett, Seán.
• Deenihan, Jimmy.
• Bell, Michael.
• Durkan, Bernard.
• Belton, Louis.
• Enright, Thomas.
• Boylan, Andrew.
• Ferris, Michael.
• Bradford, Paul.
• Finucane, Michael.
• Broughan, Thomas.
• Fitzgerald, Frances.
• Browne, John (Carlow-Kilkenny).
• Flanagan, Charles.
• Bruton, John.
• Gregory, Tony.
• Bruton, Richard.
• Hayes, Brian.
• Burke, Liam.
• Higgins, Jim.
• Burke, Ulick.
• Higgins, Joe.
• Carey, Donal.
• Higgins, Michael.
• Clune, Deirdre.
• Hogan, Philip.
• Howlin, Brendan.
• Connaughton, Paul.
• Kenny, Enda.
• Cosgrave, Michael.
• McCormack, Pádraic.
• Coveney, Simon.
• McDowell, Derek.
• Crawford, Seymour.
• McGahon, Brendan.
• Creed, Michael.
• McGinley, Dinny.
• Currie, Austin.
• McGrath, Paul.
• Quinn, Ruairí.
• McManus, Liz.
• Rabbitte, Pat.
• Mitchell, Gay.
• Reynolds, Gerard.
• Mitchell, Jim.
• Ring, Michael.
• Mitchell, Olivia.
• Ryan, Seán.
• Moynihan-Cronin, Breeda.
• Sargent, Trevor.
• Naughten, Denis.
• Shatter, Alan.
• Neville, Dan.
• Sheehan, Patrick.
• O'Keeffe, Jim.
• Shortall, Róisín.
• Stagg, Emmet.
• O'Shea, Brian.
• Stanton, David.
• O'Sullivan, Jan.
• Timmins, Billy.
• Owen, Nora.
• Upton, Pat.
• Penrose, William.
• Wall, Jack.
• Perry, John.
• Yates, Ivan.

Tellers: Tá, Deputies S. Brennan and Power; Níl, Deputies Barrett and Stagg.

Question declared carried.