Deputy De Rossa must have gone back to Brussels.
Financial Resolution No. 5: General (Resumed).
Debate resumed on the following motion:
THAT it is expedient to amend the law relating to inland revenue (including value-added tax and excise) and to make further provisions in connection with finance.
(Minister for the Environment and Local Government.)
I will not comment on the Government's earlier performance. It can run but it cannot hide. The millennium budget is clearly and tragically a budget with no social vision but with social division. It has laid the foundations for a two-tier society and widens the gap between rich and poor to a frightening extent. I will give the example of a married couple, both of whom work outside the home and earn £100,000 between them per year – a lot of money. This couple will gain £77 per week from next April. On the other hand, a disabled person will get £4 per week – £7.80 if they are married. This means that the former couple, who least need it, will receive ten times more as opposed to the latter couple which most people would agree are on the bread line.
It is clear that the budget is anti-family. It breaks the spirit and, perhaps, the letter of Article 41 of the Constitution. For example, a couple on £45,000 per year with four children where the wife works at home, will pay £34 per week more in tax from next April then a couple who both work outside the home, have no children and earn the same income. If this happened in communist China, which has an anti-child policy, we would probably report it to the UN Commission on Human Rights. The former couple will pay £34 more per week because of the stay at home wife.
The Government had billions of pounds at its disposal but has succeeded in producing a package which betrays the needy and the disabled and those who look after them. It merits the label of being anti-family, anti-women and anti-children. The Government could not have succeeded better had it deliberately set out to concoct an anti-social cocktail.
Today is an historic day in constitutional terms as summed up in The Irish Times lead article under the heading “Birth of a New Ireland”. The article states:
The representatives of the people who live on this island, nationalist and unionist, men and women of all religions and of none, have forged an understanding as to how they will live together within the territory they share .
On this day we witness nothing less than the birth of a new Ireland. It is an Ireland which rejects the simplistic and majoritarian politics of the past. It acknowledges the diversity of culture, of race, of religion, of identity which span this island.
As a footnote to that, we are debating a budget which does not unite but divides rich and poor and between and within families.
I am not a constitutional lawyer. However, the provisions of the Constitution are relevant to all legislation we pass. Article 41.1 of the Constitution clearly states:
1ºThe State recognises the Family as the natural primary and fundamental unit group of Society, and as a moral institution possessing inalienable and imprescriptible rights, antecedent and superior to all positive law.
2ºThe State, therefore guarantees to protect the Family in its constitution and authority, as the necessary basis of social order and as indispensable to the welfare of the Nation and the State.
Article 41.2.1º makes the basic law of the State clear and states:
In particular, the State recognises that by her life within the home, woman gives to the State a support without which the common good cannot be achieved.
Are the provisions of this budget in conflict with the Constitution? It further states: "The State shall, therefore, endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour to the neglect of their duties in the home.".
A family where the mother stays at home will now pay £34 extra in tax per week. If Article 26 did not specifically exclude a Money Bill, the President would be referring a Finance Bill arising from this budget to the Supreme Court to test its constitutionality. However, this does not prevent the issue being decided by the Supreme Court, as happened with the Murphy decision in the 1980 Irish Report. This budget breaches the spirit of the Constitution and it may breach the letter of the Constitution – only the Supreme Court will decide. However, that is not the basic point. It underlines the ease with which the Government is prepared to breach the underlying philosophy of the State, to which we subscribe – the importance of the family and women in Irish life. All those considerations have been cast aside by the Minister, Deputy McCreevy, and his Government in this budget.
The Government probably looked at the tax provisions for child care and steered away from that. I supported the lobby for a reasonable and decent increase in child benefit. However, the budget provision which discriminates against the family and women in the home is a way of introducing a tax based child care system through the back door – with the difference that one does not have to have children to gain from it. Irrespective of the thinking behind it, the stay-at-home spouse has been marked out and stigmatised. Many would say that in the past they have been unrecognised. We have now gone further and discriminated against them. In the process, the role of women in our society has been diminished. Is this the kind of Ireland we want?
It is too easy to think of a budget as a means of tinkering with the system. A penny off income tax for the low paid here, an increase in the old age pension there, with the Minister for Finance as a glorified puppetmaster deciding which strings he will pull, who he will help and who he will hurt – help the old a little, hit smokers a lot, juggle a few numbers and hey presto, we have a budget. However, behind this tinkering and the pulling of strings, a budget should define our society and reflect the image of the Ireland we want to create. In a budget we have to make fundamental judgments which affect the lives of every man, woman and child in the State – company directors, the unemployed, young people on CE schemes, old age pensioners, carers and their parents. Budgets are not about bar charts and calculations but about the needs of people and our responsibilities to them.
What is the Government's vision of Ireland in this budget? Will we be a better society because of Budget 2000? Will the young, the old and the carers read the newspapers this morning and be satisfied their needs are being met, or even noticed, by the Minister? There will be more people feeling left out, forgotten and even worse, patronised by some ineffectual change made by the Minister. For all the promises and expectations, this budget will not make a big difference to most people. Yesterday's provisions might have been impressive in the past when we could not afford to make big changes, but not in the era of the Celtic tiger when the Minister has so much money to play around with.
We have not come to terms with the problems emerging from prosperity. These, coupled with continuing poverty meant that we needed a seismic shift – instead we got a Band Aid. The budget will help some people a little. However, a great deal more could and should have been done. The only reasonable conclusion is that this budget was a golden opportunity missed. The Minister was in front of an open goal and kicked the ball over the bar.
I am delighted with our prosperity, but the Government has not come to terms with it and does not know how to handle it in the national interest. To do so requires a view of what is the national interest. Of course we want continuing sustainable development, which the Opposition supports. The Government cannot create this but it can create the environment in which it develops. There is a danger that it can also create an environment in which it can be damaged. This has not been addressed but hopefully it will not materialise. The main priority as regards the national interest was recently mentioned by the Leader of Fine Gael, Deputy John Bruton, when he published the Fine Gael plan for the nation. He spoke of the need for a social vision, for the quality of life to which people should aspire. This entails a rise in the standard of living and the quality of life of all people as a national objective. How does this budget contribute to this? For many in our society, the impact will be marginal.
The next priority is how we take care of our children. There has been a great deal of discussion about child care. In Ireland, State support for children is the worst in Europe, apart from Spain and Portugal. There were great expectations that this would change as a result of yesterday's budget. However, we are still at the bottom of the league. Fine Gael demanded an increase in child benefit to £25 per week for children up to the age of five years and an increase of 25% in the rate of payment for children over five years. We got a pittance of £8 a month—
That is a new one. Fine Gael forgot about the over fives until today.
—which will apply from next September. This amounts to an average annual weekly increase for next year – the millennium – of 60 pence a week. This confirms children are not a priority for this Government.
The Deputy should check his figures – I have them here.
It is not only the one million children in this country who are affected by these increases, or rather the lack of them. There is the wider issue of the obligation on the Government to ensure well managed, high quality, affordable child minding facilities are available nationally. A reasonable increase in child benefit would have been a major contribution towards this. We did not get it. The other child care measures are so marginal they will not have an impact of any consequence. Child benefit is important to working and stay-at-home parents. However, the increase will not matter to either. Child care is not a priority for this Government. I want to deal with a couple of non-fiscal matters. Many believed that, because there was plenty money available, many of the problems in society could be dealt with. While more and more money is being pumped into the health services, there are more and more problems. When the Government came into office there were approximately 30,000 people on hospital waiting lists; this has now increased to 37,000. Admittedly there was a blip as a result of the nurses' strike which increased the waiting list by a few thousand. Nevertheless, prior to the nurses' strike, the numbers on the waiting lists had increased despite extra money being made available to the health services. Therefore, I must question the Government's lack of competence and inability to manage the money being provided to the health services. The responsibility for this incompetence lies with the Government.
The same applies to the Land Registry. It is important to our economic well being to have an efficient system of registration of title, yet delays in this service have increased. This body is self-funding and can obtain a surplus turnover. Given the increased economic activity, the office needs extra staff which it cannot obtain without first applying to the Department of Justice, Equality and Law Reform. Following a wait of approximately six months, the matter is then referred to the Department of Finance which sits on it for another six months. The budget measures will not remove these roadblocks in the system which would not cost extra money. From the point of view of incompetence and bad management, the Government must be condemned and the budget will do nothing to relieve these problems.
One would have thought that the introduction of the minimum wage next April would have been a prime focus for Government activity in relation to tax measures. Surely those who receive a minimum wage should not be liable for tax. The point has been made that there are many vacancies in businesses in cities and throughout the country. Many of these positions which are low paid will have a much better chance of being filled when the minimum wage comes into effect. However, the Government is ensuring that as and from next April, which is when the minimum wage will come into effect, one-third of the modest income of those entitled to take up these low paid jobs will be taxed and this at a time when a family on £100,000 per year will gain £77 per week. The person taking up a low paid job with a minimum wage of £170 per week will pay tax on £60 of that money. This is the type of Government and budget we have. This is the thinking which underlines its tax approach. This proves the point that the budget is economically mad as well as socially unjust.
My principal criticism of the budget is that it fails to deal with the biggest blight in our society – poverty. The statistics are available, even though some of the figures may be a year or two out of date. A recent UCD study stated that one-third of children live in poverty. We should reflect on the huge amounts of money available and what might be done about that stark statistic. Other figures suggest we have the second highest rate of child poverty in the European Union. What is being done about this? The Minister for Social, Community and Family Affairs, Deputy Ahern, will proudly declare that he will give the children of Ireland an average of 60p a week extra next year from the billions of pounds surplus available to the Exchequer. In light of these facts, I cannot accept the Government is genuine in confronting poverty.
I have criticised the farm assist programme introduced last year. The statistics indicate that the entire income for 37,000 rural families totals less than £150 per week and nothing is being done for these farmers. A farmer whose wife works on the land will be penalised because she will be considered to be a stay at home wife. The Government has no policy to alleviate rural poverty or encourage social inclusion in rural Ireland. The system has been tinkered with. There are swings and roundabouts and marginal gains in relation to poverty, but there is no real advance.
I now want to refer to a group which is very close to my heart – the carers. These people devote all their time and effort to looking after others and are saving the Exchequer tens of millions of pounds because the State does not have to pay for expensive residential care. At present there are more than 100,000 people who need full-time care and attention. Some 90% of these people are not in hospitals, geriatric homes or residential homes; they are looked after by family carers. Yet there is a cruel, penny-pinching approach to these people. Most of these carers are denied any type of financial support. We apply what is more of a mean test than a means test by way of trying to find every technicality and loophole and every conceivable way of not paying them the support they need. This is economically wrong and socially unjust and unwise.
The Minister said in his press release yesterday that he has secured £400 million in the budget for social welfare increases. This creates the impression that £400 million extra will be secured for the poor next year from tax revenue. Mark Twain referred to three kinds of falsehood – lies, damn lies and statistics. He would have a view on the Minister's press release and what we will hear in a moment in relation to this alleged £400 million. This is a mirage because it does not exist for next year. The Minister is shaking his head.
The Deputy does not understand it.
Hugh Leonard had a point when he said that politicians use statistics like drunks use a lamp post – more for support than for illumination.
Hugh Leonard could do with a period in here.
This is the point I wish to make. If one examines the detail, the only additional sum which will be paid out of the Exchequer next year by way of social welfare support will be £138 million maximum. If we take the savings, control measures, reduction in unemployment and so on, the figure will be much less. The Minister had the opportunity this year, if he could have persuaded his Government colleagues, to declare war on poverty as a result of the funds available to the Exchequer. I do not know if the Minister can appreciate that point. If not, there is no point in my talking to him. Prior to the budget, I said I hoped the Minister for Social, Community and Family Affairs would be in a position to secure a decent amount of money this year to deal with the poverty issue. This has not happened. It is clear that the impact of the social welfare measures outlined in the budget will be marginal as far as alleviating poverty is concerned.
I mentioned the comparison between the £4 a week increase for a person on disability assistance and the £77 per week extra gained by a family on £100,000 per year. Matters are even worse. The increase in child benefit will not be paid until next September. Next year, those who rely on child benefit will receive four payments which will include an increase of £8 per month. The Government believes it can only afford to pay an additional £32 per child which means that it is ignoring the problem of child poverty and the importance of child benefit payments in offsetting people's child care needs. That is a travesty. It is sad, particularly given that the Government intends to squirrel away a great deal of money in the social insurance fund. This year the value of the fund, which is running in surplus, doubled from approximately £300 million to £600 million. I estimate that it will probably increase to £1 billion next year because there will be another surplus.
The Government raided it for the training fund.
Does the Deputy object to training?
I am not stating that I object to prudent management of the social insurance fund.
More than £600 million is also being squirreled away to pay for pensions. Neither do I object to that but it shows the amount of money that is currently available. Apart from the additional surplus which will come from the social insurance fund next year and the huge amount being invested in the pension fund, the Government will still have an enormous Exchequer surplus next year. God only knows what that surplus will be, it could amount to £2 billion. Every year it is under-estimated and every year more and more money is poured into the State's coffers.
That is the broad picture of which we must take account when deciding how to confront poverty. However, the budget offers only a pittance to the hundreds of thousands of people who rely on social welfare payments and the one million children in respect of whom child benefit is paid. The Minister for Finance's proposals are of no consequence and they will not make any material difference. We had the opportunity to take action but we failed to do so.
I question the philosophy of the Government. There was some excuse for prudence when we did not have any money and we were obliged to scrimp and scrape to find funding for modest increases. We are now so awash with money we hardly know what to do with it but the Government has decided not to do one thing, namely, to cater for the needs of the less well off in society such as the disabled, the long-term unemployed and the poor in rural and disadvantaged urban areas. One thing is certain, these people will remain poor.
I do not object to the extra money being given to people who reach the age of 100 during the year 2000. That is a nice gesture which will cost the Government very little. However, that is not the way to deal with poverty. More power to those who attain the age of 100 next year and I wish them all a happy birthday. However, this measure affects so few people that it is hardly worth mentioning in the context of an anti-poverty package.
I had hoped the Minister would take on board the proposals my party made prior to the budget in respect of the need for decent increases. I wanted social welfare increases to be paid in April but I suppose half a loaf is better than no bread because they will now be paid in May. If the Government was genuinely committed to reforming the system, it surely could have done so next year. However, people must wait until the following year to have their increases brought forward to April. Why? Is it because we do not have enough money? I challenge the Minister for Social, Community and Family Affairs to indicate why this was not done. The provision of an additional £20 million would have permitted the payment of the increases in April. The Government has taken a mean and miserable approach and stated "We will go halfway and let them wait another year before their increase come into line with those paid to people on fat incomes."
My party also suggested that there should be a decent increase in basic social welfare payments. I did not state that we should pay everyone £100 per week, I said we should aim towards doing so. I advocated beginning with pensioners who will be paid that amount within the next two years in any event. Why not increase their payments now while the money is available? Unfortunately, because of their age some of these people will not live to see the advent of the £100 per week payment.
We should have aimed towards the immediate introduction of a personal rate of payment of £100 per week for pensioners and moved a reasonable way towards doing the same for other social welfare recipients. I suggested an increase of £10 per week for single people and £17 per week for couples. However, the Minister only introduced increases of £4 and £3. These amounts are derisory.
I referred earlier to my interest in carers. Only 13,000 to 14,000 carers receive payments from the State. A great deal has been made of the £100 increase in the respite payment. That payment only goes to the 13,000 people who qualify for the allowance. What about the other 70,000 or 80,000 who do not receive carer's allowance or respite payments? The Government was very unwise to ignore the demands of these people. There is room for easing the means test in order that a further 10,000 people could qualify. For those who do not qualify, there is the incapacitated person's tax allowance which only 400 people are entitled to claim at present. That allowance should be extended to all those providing full-time care who do not qualify for carer's allowance.
The fuel allowance of £5 per week is important to those who are very poor. The allowance dates back to 1986 and I thought it should have been doubled this year. However, the Minister's answer has again been negative.
At one point prior to the budget I suggested that a special millennium payment should be made to pensioners. My final proposal, however, was more modest and advocated increasing the Christmas bonus from 70% to 100%. Again, however, the Minister's answer is "no".
There is one final area relating to the area on which the Minister should have focused but which has again been ignored. I saw a report that the Minister for Social, Community and Family Affairs was to make free electricity available to everyone of the age of 75, irrespective of income or household composition. Medical care is far more important to the elderly, as is the security provided by a medical card. Pensioners consult me about various problems and the one which is always uppermost in their minds is their concern about whether they will be able to obtain medical care and whether they will be able to afford it.
I referred earlier to the delays in our hospitals which have resulted in thousands of people, many of them elderly, hobbling about in pain while awaiting hip operations or living in danger while awaiting heart operations. This issue has not been dealt with. We should aim towards a situation where all pensioners over the age of 66 would automatically qualify for a medical card. This need not be done in one budget but it should be our ultimate goal. However, nothing has been done. If the Government had any real interest in the elderly, it would confront this issue.
While I will be glad to listen to the self-congratulatory remarks I anticipate from the Minister for Social, Community and Family Affairs about this miserable package, I hope he demanded three times the amount granted to his Department in the budget. If he did not, he should resign. If he did and was not allocated the amount he requested, perhaps others should consider resigning. That is the bottom line. The worst situation of all will be if the Minister stands up and trumpets achievements as if they were going to be an answer to the problem of poverty. The cold light of reality should begin to dawn on him and he should fully appreciate that this is not the case. He should fully appreciate that is not so. The budget generally has been a huge disappointment. It let down those who needed help and whose time had come and deserved better. I referred earlier to carers who struggle on low incomes. One in three young people will continue to live on the margins of the Celtic tiger next year – they could be termed the "Celtic cubs"– and their needs, requirements and rights still do not seem to matter to those in power; they deserve better. During the American Civil War a US general earned a notorious reputation because, in Abraham Lincoln's words, "he could snatch defeat from the jaws of victory". Ireland has its own such general, namely, the Minister for Finance. In time, historians will look on yesterday's budget with the awe displayed by Lincoln when he looked at that incompetent general and ask how he did it.
The Minister had thousands of millions of pounds at his disposal, something about which previous Ministers for Finance could only dream. All he had to do with his colleagues was devise a plan to use that money in a way that would fairly benefit the people, yet somehow he fluffed it and, in the process, not merely did he shock every poor person, married person working at home and social welfare recipient, he horrified and disgusted them and left them to wonder what type of Ireland he was trying to create. It is one in which people on the basic minimum wage, earning less that £4.40 per hour, will have their already miserably inadequate income taxed. If one earns more than £110 per week or £22 per day, one must pay tax in the Minister's vision for Ireland.
In this "Charlie in Wonderland" vision, the poor only deserve the proverbial crumbs from his table and that is what they got. If one is poor, in a low paid job or a community employment scheme, on social welfare or relying at the end of one's days on the State's pension system, the Minister's attitude seems to be that they did not think he would give them that much money. One can call him a Scrooge-like Minister but perhaps he is more like Fagin; at least Scrooge learnt his lesson and changed his mind according to that Christmas story.
The Minister has not changed his mind. He seems to think it is good in a wonderful, new Ireland that all mothers should be forced out of their homes and into the workplace. The gospel according to St. Charlie says that families with two parents working outside the home are so good that he rewards them with tax breaks while families with one parent working in the home are so bad that he hits them where it hurts – in their pockets – by making them pay more tax. Having tried to force parents who work at home into the workplace, he does not even have the decency to provide them with decent child care facilities. Again, what type of Ireland is he trying to create? He appears to have no understanding of the needs of the poor but then that was evident in his earlier incarnation as Minister for Social Welfare, but his lack of understanding about and concern for society is worse than his treatment of those in the bottom tier of society who desperately needed his help in the budget but got nothing worth talking about.
A budget is not merely about balancing the books. It should be about creating a society that all of us deserve to live in, one which measures its achievements not just by cold percentages in accountancy books or computer programmes but by people's lives. Money should have been put in the pockets of the poor, not simply because it makes economic sense but because social justice demands it. More money should have been allocated for old age pensions, not because it might win more votes or would be popular but because they deserve it as an acknowledgement of their contribution to the Ireland they helped to create. Above all, forcing mothers who work in the home into the marketplace is unacceptable, even if it makes economic sense.
The issue is not about playing God with economics but providing a quality of life for families. If both parents want to work outside the home, they should be supported, for example, through the provision of proper child care facilities, because it is the right thing to do. That is another of the Minister's many missed opportunities. However, if instead of working outside the home one parent decides to provide child care in the home, that should also be supported, whatever about the economic effects, because it is also the right thing to do.
That is something that could hardly be said of this millennium budget. It does nothing about creating an ideal society or moving us one miserable step down the road to creating the Ireland we deserve. Will our quality of life be enhanced by the budget? Will it help to preserve the environment? Will it promote sustainable development? Will it enable the next generation to buy homes for themselves and their families? From the minor to the major issues, the Minister missed the point completely in the budget.
I am sure the Minister might describe himself as a republican. However, republicanism is supposed to be about equality. It is not about helping the wealthy while ignoring the needs of the poor or forcing women into the workplace when they wish to stay at home to nurture their children. If yesterday was the best Fianna Fáil, the republican party, could do to promote equality, God help our Republic.
I wish to share my time with Deputy Michael D. Higgins.
Is that agreed? Agreed.
What a tangled web the Government weaves. It may have taken a few months for the public to cop on to the unfair, selfish package announced in 1997 by the Minister for Finance in his first budget, but this year is quite different. The people know already. There is an expectation that this side of the House must be critical and examine a good package to find the bad bits in order to fulfil its role in Opposition. However, in my initial remarks I will rely on external observers who carry clout and represent important constituencies.
Gráinne Healy, chairwoman of the National Women's Council of Ireland, the umbrella organisation for all women, categorised the budget in her initial response as "Nightmare Budget for Women". She stated:
The National Women's Council of Ireland is incensed at the Budget 2000 measures. Failing to address women's poverty, the childcare needs of all parents and simultaneously pushing women out to the workforce with no choices concerning the caring responsibilities, presents a clear statement on the Government's position with regard to equality for women.
The failure of the Government to deliver any support to parents to pay for childcare is utterly disgraceful. The Minister is clearly saying to parents pay for your own childcare, the state has no responsibility to you or your children. The Minister is giving his tacit approval for forcing women to make precarious, unsuitable childcare arrangements because they cannot afford quality childcare.
The Irish National Organisation of the Unemployed stated that "the biggest giveaway budget has widened the gap between rich and poor. They state that the Minister, Deputy McCreevy, will be remembered for a budget that increased social exclusion and assert that he spent most of his money on making the rich richer. This is the judgment of those reflective organisations which represent the unemployed and women.
One rarely receives instant reaction from constituents to a Budget Statement, but I received a fax yesterday before 7 o' clock. It is signed by one of my constituents and I can quote it because it is an open letter to the Minister for Finance, Deputy McCreevy. It states:
Dear Mr. McCreevy,
I am disgusted at the lack of vision in your budget and your decision to discriminate against me, my wife and son and future children should we decide to concentrate on the most important thing we will do, raise the next generation.
The final paragraph states:
My family used to vote for Fianna Fáil but I doubt if I will ever do so again after seeing the introduction of this anti-family budget. If there is any court action to attack this anti-family, anti-woman, anti-future budget, I will support it.
This is from a Fianna Fáil supporter in my constituency. In the context of having untold billions at this disposal, so much money that he had to create new edifices in which to hide it, it is mind numbing that the Minister could produce a document that is so socially divisive.
Politics can be a funny business. A few weeks ago, I participated in a "Questions and Answers" programme with the Minister for Finance during which he belittled a ministerial colleague who in the previous week advocated a more liberal position than his on asylum seekers and immigration policy. Yesterday he presented us with an assault on the position of the non-working spouse and the family, ostensibly to provide workers for the Celtic tiger economy. It appears the Government believes that forcing mothers out of the family home is preferable to dealing with the multi-cultural society that the acceptance of economic immigration would bring about. I wonder what Deputy Callely would say in explaining to non-working spouses the cost to them of our failure to allow people in this country to take up work or perhaps he is side-tracked at present dealing with the taxi drivers whom he has led up a similar garden path in recent months.
It is multi-culturalism that Fianna Fáil, the party of the idyllic and homogenous Ireland, is worried about. In response to a parliamentary question yesterday, I received a breakdown of work permits granted in Ireland to various nationalities. Surprisingly, the bulk of them came from anglophone and former British Commonwealth countries. Last year almost a quarter of all work permits issued went to citizens of the United States. It appears that is the only type of cultural exchange the Government can handle.
My party's spokesperson on finance stated on radio this morning that the Labour Party believes married couples should have a choice in terms of whether one member remains at home to look after children. It is a matter of basic rights and fundamental choice, and choice is a two way street. It includes facilitating people who wish to stay at home as much as providing services to those who choose to go out to work. Many couples believe it is preferable for a parent to stay at home with children particularly during the formative years. This is a choice individual couples make. It is appalling, therefore, that the Minister for Finance's tax system will be restructured in a way which imposes a financial penalty on couples who decide that one parent should remain at home to mind children during those important years. The parents of a handicapped child who decide that one of them should give up work to care full-time for their child will be particularly disadvantaged. This is outrageous and unacceptable.
They can now apply for the carer's benefit. Has the Deputy forgotten about that?
The Minister knows the current carer's allowance is means tested. We will wait and see what is promised regarding the promised carer's benefit. However, as it stands, such parents will be fundamentally discriminated against. No safety net has been promised in the Minister's appalling divisive proposals for the bulk of par ents who decide to stay at home because their children need them in their formative years.
This is not just about women and the options given to them by society. It is also about modern couples and facilitating choices they might wish to make. In an increasing number of instances, this may involve the man choosing to stay at home. It is a growing phenomenon in developed countries. Neither I nor the Labour Party wishes to be part of a crusade to keep women in the home. The workplace and the home have benefited from increased female participation in the labour force.
I do not believe that as many women today will opt as their mothers may have done for a life of full-time care in the home. That is the natural pattern of events, but the Labour Party will not be party to a crusade to force women out of the home to suit the dictates of an economy that has other sources of labour available to it. Few people would have expected that type of proposal from a Government which involves Fianna Fáil, which has trumpeted itself from its foundation as a pro-family party which allows women and men to choose to stay at home and support developing children.
If that question is relevant to Fianna Fáil, it is particularly relevant for Deputies Fox, Blaney, Gildea and Healy-Rae. In the past all of them have paid lip service to their crusade in support of the traditional vision of family life and social issues. I might normally agree with that vision. Voting against the Partnership for Peace proposals in the House may have been easy for them when they knew that their lack of support for the Government did not jeopardise the success of the motion. However, this issue is a real test for them. I formally challenge Deputies Fox, Blaney and Healy-Rae in particular who have talked about family values for a long time.
It is beyond belief, beyond imagining, that they could possibly support these proposals.
Deputy McCreevy has sought to defend his budget as radical. It is certainly that. Deputy Noonan, in his immediate response to the budget yesterday, said Pol Pot was radical. That is correct. One economic commentator referred to the budget as Thatcherite. In her own way, Baroness Thatcher was radical. In fairness to Deputy McCreevy, and in fairness to Margaret Thatcher as well, both deserve comparison, but to each other rather than to Pol Pot. Both are radical reactionaries. Both are economic zealots. It is funny how leopards do not change their spots, how people return to form. As Minister for Social Welfare, Deputy McCreevy, produced the "dirty dozen" and earned himself a certain degree of infamy. As Minister for Finance, who produced a divisive pro-rich budget, he had, we thought, changed his spots last year. However, he has returned remarkably to form in the proposals he laid before the House yesterday.
Yesterday's budget bore all the hallmarks of a man on a mission who has locked himself into the control room. In doing so he has set himself and his colleagues, including a hapless Taoiseach now contemplating the ghosts of budgets past, on a collision course with an electorate who, despite the revelations from tribunals in recent years, could scarcely have thought such callousness existed within their Government. Even Charlie Haughey would not have stood over this budget.
Are we to have no representative of the Government here? This budget will be perceived as being ideologically formed and socially divisive. Nowhere is the ideological stamp of Deputy McCreevy and his closest Cabinet ally, the Tánaiste Deputy Mary Harney, more obvious than in regard to the decision to reduce the upper tax rate by 2%. This is a move which is of no benefit to lower earners and which will benefit those who already have most. It is a change for which there was virtually no demand. The trade unions did not seek it. IBEC made it clear that it was not one of their priorities. Many economists warned against it. There was a consensus that the correct road to take was to increase tax credits and widen tax bands. Everybody, even the well paid, would benefit from that course of action. People would benefit equally. There would not be a disproportionate benefit for those who are already wealthy. As recently as September when the Fianna Fáil Parliamentary Party met in Galway, the Taoiseach said that the tax issue was not about rates but the level at which people started paying the upper rate. That is a view the Taoiseach expressed, and we would have expected that that is where his heart lay. Obviously there has been a change of mind since then. That, or the Taoiseach has been put in his place. He sat very uncomfortably yesterday in this Chamber, with the Minister for Finance on one side and the Tánaiste on the other. He is the first Taoiseach to be surrounded by Progressive Democrats. That was their view. They obviously decided the economic strategy while the Taoiseach was doing fine work for this country in Northern Ireland. He was devoting his energies to Northern Ireland, but the Tánaiste and her close ally, the Minister for Finance, were running the economy here to the benefit of the wealthy. The tax package is among the most deeply unjust put in place by any Government, and I will return to it later.
On social welfare – and the Minister for Social, Community and Family Affairs is here to hear this – Deputy McCreevy has surpassed himself. The £4 rise in the basic payment is in stark contrast to the size of the tax give-away to the wealthy. This is juxtapositioned with the fabulous tax breaks proposed for wealthy people. In some respects it is surprising, but why should we be surprised? The Minister's handling of social welfare in the past would not have lead us to be very optimistic. There are people whom both the Minister and Margaret Thatcher view with contempt. They are the powerless people who are dependent on social welfare benefits for their mere survival. They are to have no part in the Celtic tiger. Thankfully, old age pensioners have been treated somewhat better, and have been spared the bottom rung in this new order that is being established.
Children too, in the Minister's world, are little more than a drag on our successful, bullish economy. In the Minister's world they are not to be cherished and supported but rather to be resented. The £46 million pounds announced yesterday for child care is pitifully inadequate. The increases in child benefit are considerably smaller in percentage terms than those given by the previous Government. In real terms, despite the enormously different financial circumstances, the wads of money available to this Administration, they are greater by a miserable £2.50. To put it in context, this increase would not pay for an extra pint of milk a day. That is how this Government wants to support families and children. Both the child care package and the £35 million announced for people with learning disabilities represent a smaller cost to the Exchequer than the cost of the reductions announced yesterday in Capital Acquisitions Tax. The give-away in Capital Acquisitions Tax is greater than the amount of money available for child care and for children with learning disabilities. There is a sense of skewed priorities. There appears to be no further money to tackle the enormous health waiting lists, compounded by the difficulties the health services have endured in recent weeks and the first national strike by nurses. No move was announced in the budget on early childhood education. These are issues that will be revisited by Labour Party speakers later in this debate.
When one looks at how this Government is treating children and parents, it is not surprising that the Minister is so obsessed with future pension provision. By the time he is finished slashing the size of the next generation, there will be nobody left to pay the pensions which will be due to be paid in 30 or 40 years' time.
I welcome the comments made here yesterday by my colleague, Deputy McDowell, about the Minister's pension plan. They represent the most serious critique of the plan I have heard thus far. Yesterday's budget was stuffed with measures to hide money, volumes of cash. However, there is nothing more spectacular than the pension plan to meet a demographic need the OECD has suggested hardly exists. It is a classic Department of Finance ploy. It does not want to sort out people in genuine need now. This Government has obviously decided this is the tack to take. Rather, it is will create an enormous fund to look after the needs of this country in 20 or 30 years' time.
It is my understanding that the Deputy is sharing time with his colleague, Deputy Higgins.
I have not been speaking for 25 minutes.
Acting Chairman
The Deputy has two minutes remaining.
There is much to be said about this budget and much will be said about it inside and outside this House. I could say more about its income tax provisions but I will leave that to Deputy Higgins.
If Fianna Fáil votes for this budget the party will have abandoned whatever flimsy pretension they had to be the party of the family and of ordinary people. The budget and its accompanying stability programme are the most right-wing and regressive documents we have seen in this State since the current Attorney General returned to his legal practice a few years ago.
I conclude by focusing on two points made by the Minister for Finance. He said that budgets should be judged in two ways: first, against the economic circumstances in which they are set and second, on the basis of the economic strategy they set out. What can be said about the economic circumstances in which the budget is set? Awash with money, the economy was never better placed for a socially just budget. The Minister has no comprehension of the opportunities he has missed to make real this republic to which his party and its supporters have paid pious lip service. With regard to his second criterion, I am deeply concerned that the path the Minister has set out is both divisive and dangerous. I and the Labour Party are committed, to the best of our ability, to fighting this divisiveness, regression and conservatism every step of the way.
It is one of the extraordinary paradoxes of Irish politics that we have a penchant for replicating other people's mistakes just after they have corrected them themselves. In the week Minister McCreevy gave a budget which had £941 billion for disposal, the great model of the Progressive Democrats, the New Zealand Government of Prime Minister Shipley was being driven from office. It is interesting to consider the circumstances in which that happened. Those who replaced that Government had an election manifesto which promised a rise in tax.
The people voted for them. That is the difference.
When I visited New Zealand I found no one who was willing to defend the appalling social travesty that had been visited on the country during the period of extreme neo-liberal market thinking. I listened for years to Deputy Harney telling us how we must become like New Zealand, with all its misery with regard to what had happened to pensions. When I was asked about the New Zealand Government on radio and television in that country, I said I remembered a country which had the first social credit, gave a lead in the world in relation to social housing and had a wonderful attitude to welfare, and then I remembered the aberration that was visited on it by the neo-liberal right.
Even though that government is driven from office by a party promising a rise in tax, the same thinking defines the budget we listened to yesterday. When I read The Irish Times this morning and saw an editorial about an historic moment in Irish history I thought they could not be writing about Deputy McCreevy's budget already. Of course it was historic. The Minister with the largest amount to spend decided to give enhanced benefits to those who already had a great deal – I will deal with this in detail when we discuss the Finance Bill. In relation to tax, for example, those on the upper rate got the same percentage reduction as those on the standard rate. They are not the same set of beneficiaries.
Deputy Harney has been able to force an ideological position on the Government. It is the politics of anti-tax. No one seems to question her assumption that by reducing tax at all levels one creates a productive economy. Right through the entire budget this philosophy shows up in different ways. I have a file that would be too heavy to carry of pre-budget submissions made by people who expected that, at last there was an opportunity to do something. For example, the Childcare 2000 campaign put forward a proposal, which would be taxed, pitched at £20 and £10 depending on the age of children. We supported that proposal. Instead of that the Government has brought in a concept of child parking. It gives to the Irish business sector the same kind of allowances for child parking as it gives for car parking and with the same miserable thinking.
If those who watch and listen to politics being debated want to know the difference between parties or to reject the suggestion that they are all the same, they should examine this budget closely. IBEC has got everything it wanted. It is now accepted that the version of the economy that the Minister for Finance stands for is one in which the people serve the machine that is the economy rather than the economy producing benefit which might serve the economy and make it more civilised, more sustainable, more equal and more inclusive.
Minister McCreevy has the gall to suggest that we have become more European now. He has felt that for a long time, he tells us. He goes on to suggest how our society has been transformed. Has it? If he is feeling European, why has he not got a European model of child care, of education, or of spending on health and housing or any of these things? He is suggesting that it is natural to get up in the dark and drive to work, drive home in the dark, park your children and that the State will give 100% tax relief to your employers so that they can socialise all the costs of production and pay 12.5% corporation profits tax. It is a glorious time to be in business, paying nothing while the State pays all that is needed to provide you with a labour supply. Meanwhile the people are driven from the home into the workplace, leaving in the dark, going home in the dark while the business sector gets 100% concession for providing child parking facilities. It is a disgrace. It is the total subjugation of society to the demands of a neo-liberal version of the economy that is bankrupt and that has been rejected in Britain under Baroness Thatcher and in New Zealand. It represents the anti-human, anti-caring philosophy of a small group of people who are peddling the politics of greed, the Progressive Democrats. They have got their way. A couple of them could swing the great Republican Party. Do I not remember Fianna Fáil Deputies during referendums on the right to control one's fertility or the right to marry again or whatever, up on their hind legs spouting about how they were for the family and for shamrocks, leprechauns and everything that was ancient and good and green and traditional? Their version of the traditional is very interesting now. Is it not very porous? Minister McCreevy has come to the conclusion that the Europeanisation of Ireland requires that there be a differential between people who are in one income families and those who are not.
It is very interesting and sad to think of all the lobbying organisations. I hope they all arrive on the doorstep of the Government. We were in Government and heard cases in relation to the provision of child care. The view of my party and my own view is that any care in this regard should be based on the rights of the child but that is not IBEC's view. It was IBEC's budget we got yesterday. I hope the brothers and sisters, and congress when negotiating a new agreement, will be able to look them in the eye and say to this unique group of people, is it not wonderful, you can socialise all the costs of production, privatise the profits and reduce corporation profits tax at the same time as £4 per week is given to non-pensioners on social welfare. The Government set off an alleluia on the country for giving £7 to pensioners and told those on the dependent allowance they must wait three years to obtain 70% of the main benefit. While the tax changes amount to £942 million, the Minister still cannot pay the £17 million outstanding to those who were not aware of the benefits to which they were entitled. It is an extraordinary moment that at this unique time when there is a surplus it was decided to transfer the benefits to the propertied rather than the unpropertied, to those at the top income level – and sometimes undeclared – rather than those on low income; that it would be used to establish and deepen a concept of the economy that was narrow and that took precedence over the society.
All the figures are available to show how many old people there are in Ireland, the number of children and the number dependent on social welfare. Why not express a vision in which one would say that because the economy is doing well we should no longer have deprivation that will reproduce the cycle of poverty, long waiting lists for health care and people desperately in need of housing.
The Minister, Deputy McCreevey, who is philosophical about Europe suggests we are becoming European without knowing it. He says many people are choosing to go to work. What he does not say is that many in the past five years are forced to go to work because they cannot afford to put a roof over their heads unless they have two incomes. Frequently, two incomes is insufficient.
What is the response in regard to housing? The sum of £718 million provided will not adequately address the housing issue. Those reluctant speculators who would not give up their land for roads but have now taken a wham in relation to building land can have their tax reduced from 40% to 20%. It is cheering all around in the grand old support group of Fianna Fáil, the builders, the speculators, IBEC and the PD fringe. They are the people who gained in the budget. It is an outrage. The Government say people will wander around the place saying: "Is this not the best budget we ever had?".
On the changes in inheritance, I agree with the Minister in relation to capital acquisitions tax on the family home. For those who want to leave a home to their children, it is only right that they would be able to enjoy the relief the Minister has mentioned. In regard to residency the Minister has created a wonderful situation and has lifted the tax liability from gifts – if the person is living outside the State and transferring property outside of the State he or she can do so for free. Places such as Castlemartin will be cheering for that too. One will be able to divide up all the wealth in the modern speculative economy and hand it to all the children and the relations and avoid tax, but some will have avoided their own taxes because they are not resident here.
It is time to start speaking plainly. There are a few sentences in the Minister's speech about the Department of Finance going philosophical when he said: "Our broad budgetary objectives are similar to previous years".
Acting Chairman
The Deputy has two minutes remaining.
I hope I use it well. He said also: "Rapid economic growth has transformed our society". It has indeed. The entire resources of our first huge surplus have been used to create further wedges of division between a new category: non-pensioner social welfare recipients and pensioners, social welfare and the low paid, those on low pay and those on middle incomes, those on middle incomes and on the top rate of tax, the propertied and the non-propertied, those with something to hand on and those with nothing to hand on, and those who have to get up in the dark and go home in the dark who want to look after their children.
He missed all the agenda but he did not forget those interests that will always line up between the Progressive Democrats and Fianna Fáil, those who will want a reduction from 40% to 20%, those who want to pay hardly any corporation tax while they socialise their costs. That is what this budget is about and it is a disgrace and a scandal.
I hope the hundreds of organisations which came lobbying to us on different needs will take their opposition to the budget to the public, not just to us. We will vote against it here, but let them change Prime Minister Shipley's shadow, the Tánaiste, Deputy Harney, and get her to take her ridiculous right wing lean off a Government that once pretended to be republican.
I have had to listen to a number of speeches. I categorically reject the political hype and bluster of the Opposition, particularly by Deputy Howlin who referred to the demographic situation. I challenge him to read the actuarial reviews which show that this country, like any other country in western Europe and elsewhere, will suffer from the demographic trend, for which we now have to plan. The Deputy may look at it only in the short-term but the Government looked at it in the long-term and made a strategic decision in relation to funding of pensions into the future, as Governments, mainly Fianna Fáil, in the 1950s and 1960s made a strategic decision to put money into education, of which we are now reaping the benefits. The decision on the funding of pensions is also a strategic one from which there will be benefits in the future.
A number of Deputies, particularly Deputy Howlin, referred to the various lobby groups that have been jumping up and down as they always do. I am pleased that one particular group is not jumping up and down yet. It made a gross mistake last year in that it misread the figures, and I had to correct it. That group is being a little more circumspect this year. Those outside the House and all the lobby groups, which Deputy Higgins is trying to rally around, should read properly what is involved because at the end of the day, between social welfare and tax, there is a give back to the people, in the region of £1.5 billion. Even one of the commentators this morning, who is vehemently opposed to the budget, had to acknowledge there is something in it for everyone. We must have got the balance reasonably right in that the employers, as mentioned by Deputy Michael Higgins, and the unions, particularly the ICTU, so far have been complimentary in relation to the budget. Perhaps Deputy Higgins's ranting and raving will make them think twice that they are not going the way they normally go.
This budget must be viewed as central to a comprehensive framework of policies which the Government is putting in place. These include the review of the programme, An Action Programme for the Millennium, the implementation of the Good Friday Agreement, the national development plan and more important than any of the others, apart from the Good Friday Agreement, a successor agreement to Partnership 2000. The budget is a clear demonstration of the Government's commitment to improving standards for all sectors of society. The NESC report looked at a number of issues, including economic inclusion based on full employment, social inclusion and successful and continuing adaptation to change, which is the hallmark of the budget. This vision is shared by all the social partners and I thank them for their reasoned response to the budget. We now face a daunting task in making it a reality and its realisation crucially depends on Ireland maintaining its competitiveness.
We must be ready to meet the challenges of a globalised economy where competition for foreign direct investment becomes ever stronger, especially from countries in eastern Europe. We must manage this change. The information society will affect the way we work and live. We need to position ourselves strategically for this new world. To do so we must also deal with the problems which accompany rapid economic growth. The budget acknowledges and responds to that. Above all, we must realise the full potential of all our people. Social exclusion, with its ever present companions of poverty and poor educational achievement, alienation and crime is a major constraint we must overcome if we are to realise our full potential as a people.
The budget introduced by my colleague, the Minister for Finance, will meet these challenges. It will provide radical tax reform and improve living standards for all. It also invests in social services in a big way. It will maintain a strong and stable macroeconomic position, address skill shortages and make a start to addressing the issue of child care. It will also contribute to the realisation of a socially inclusive and successful society while supporting sustained competitiveness in a globalised economy.
The budget provides for a prudent and stable medium and long-term fiscal framework. Our primary macroeconomic objective must remain sustainable economic and employment growth supported by low inflation, wage moderation and prudent budgetary policies. The budget, combined with the national development plan and other Government policies, will help to ensure continued strong economic growth, with growth in GNP expected to average 5.75% over the next three years. In addition, unemployment is expected to fall to approximately 4.5% of the labour force by 2002. The plan and the budget will provide an important step for the delivery of a new Ireland. Capital spending increased by 26% this year over last while capital spending on public and social housing has increased by 160% since 1996.
The personal tax package announced by the Minister amounts to £950 million, the biggest tax package ever in the history of the State. It takes 125,000 taxpayers out of the top rate of income tax and takes 50,000 out of the tax net altogether, including 10,000 people aged 65 years and over. We all aspire to removing as many people as possible from paying the top rate of tax. The strategy of this and the next two budgets will address that.
What about people on the bottom rate?
What about the low paid?
The budget ensures that nobody on the average industrial wage will be in the top tax bracket.
They are the supporters of the Progressive Democrats.
Some 46% of taxpayers are currently in the top tax bracket. This will fall to 37% next year and to 17% when the system is fully implemented, or 12% when those exempt from tax are taken into account. This means that in three years the number of people paying tax at the top rate will reduce from 46% of taxpayers now to 12%. That is what we are endeavouring to do, yet the Opposition criticises us.
The Government's attitude is "to hell with the low paid."
This more than fulfils the commitment in our programme for Government to get more than 80% of all taxpayers paying at the standard rate, which will be 20% when we complete the programme.
The low paid must wait.
This radical tax package will encourage more people to get into the labour market and will make it more attractive for Irish people abroad to come home and take up jobs.
The Government promised stay at home mothers a tax allowance of £2,000.
The Opposition wishes to heckle me but it appears it does not want to get as many people out of the top tax bracket as us.
The Minister is ignoring the low paid.
Acting Chairman
I am anxious to allow the Minster finish his speech. Opposition Deputies will have an opportunity to speak later.
Given the interruptions, I hope I will have more time to finish my speech. I know the truth is bitter for the Opposition.
Turning to the social welfare aspects of the budget, since I took up office I have aimed to secure the future of our older people, improve the living standards of everybody on social welfare, support people with disabilities and carers and support families and communities. The social welfare package will amount to approximately £398 million, together with an additional allocation of £5 million to my Department for child care provision and a further £15 million for the pension provisions in the forthcoming Social Wel fare Bill. This amounts to a total investment in a full year of more than £418 million, by far the biggest social welfare package in the history of the State. In my term as Minster, in each of the three budgets to which I have had an input, I have been able to say that the social welfare package is the biggest in the history of the State. I say that with pride. A sum of £316 million was provided in 1999 and £225 million in 1998. In the last budget of the previous Government, in 1997, a sum of £215 million was provided in a full year. Only three years later the allocation to social welfare has effectively doubled.
The sum of £215 million in 1997 must be compared with £225 million in 1998. Account should also be taken of the different economic circumstances.
Since I took up office an extra £1 billion has been allocated to the Social Welfare Vote – that is no mean achievement. It means more for older people, people with disabilities, carers, lone parents and the unemployed, in fact all those who are less well off.
Some of them must live on less than £80 per week.
In An Action Programme for the Millennium we promised that old age (contributory) pensions would reach £100 per week by 2002. Over the first two budgets we went further than required to meet that. We also made new commitments in the review of the programme for Government and I am delighted to continue to meet these. We are increasing all pensions to older people by £7 per week bringing the old age (contributory) pension and retirement pension to £96 per week. We are on target to more than exceed our commitment to a rate of £100 in next year's budget.
The rate of payment to widows' (contributory) pension for those aged 66 years and over increases to £89.10 per week with the old age (non-contributory) pension increasing to £85.50 per week. Both are in line to reach £100 by 2002, a new commitment set out in our review of the programme for Government. These increases of 7.9% and 8.9% are three to four times the underlying rate of inflation and are well ahead of the expected rise in average industrial earnings. When the Opposition was in Government it gave a rise of 2.5% to old age pensioners in its first budget when inflation was at the same rate. It effectively amounted to no real increase.
We did not have a current budget surplus of £3.5 billion at our disposal.
Deputy Yates was in Government at the time. Deputy Quinn claims there was a budget surplus when he left office but he did not do much with it. A sum of £28 million was provided for child benefits in that year.
This year we are providing for special increases in the qualified adult allowance as part of an overall strategy to increase qualified adult allowances. The qualified adult allowance of the old age (contributory) pension and the retirement pension is being increased by £4.7 per week giving a total of £11.70 per week to a pensioner couple on a contributory old age pension. Non-contributory pensioners will get an even bigger increase per week of £14.50.
In this the UN Year of Older People, I am delighted to make the free schemes available to all people resident in the State who are aged 75 years or over, regardless of their income or household circumstances. Everybody over the age of 75 will get the benefit of all the free schemes. An estimated 10,000 people will benefit from this measure at an annual cost of £4 million. I do not hear Deputy O'Keeffe or Deputy Higgins complimenting the Government on this. The issue of capital assessment has been raised time and again.
The Minister has done nothing for widows under the age of 66.
Will the Minister provide them with medical cards?
The truth is bitter. The Opposition will not let me speak.
If the Minister asks questions we will answer them.
They are rhetorical questions. Opposition Deputies have raised many such questions.
Acting Chairman
Minister, you have a script. I would prefer if you would adhere to it and address your remarks through the Chair. You are provoking the Opposition.
I could not provoke the Opposition.
Acting Chairman
Please get on with the business in hand.
On capital assessment, I am pleased to be in a position to respond positively to the representations which have been made by Deputies on all sides of the House, the Joint Committee on Family, Community and Social Affairs, and many members of my parliamentary party. The new arrangements will provide that the first £10,000 of capital will be completely disregarded for a single person. For a couple, this figure will obviously be £20,000. In effect, a huge number of people will be affected positively by this. I give details in the script of the tapering in that respect. This will cost £5 million in a full year. A survey of pensioners found that 88% had capital of less than £10,000. These new arrangements will apply to all means tested payments with the exception of UA and SWA.
Last year in my budget speech, I announced that my Department would carry out a review of the qualifying conditions for the retirement and old age contributory pensions. I am pleased to be able to report that the first phase of this review is almost completed and during the debate on the Social Welfare Bill I hope to be in a position to outline the proposals of this review. The review is also looking closely at the operation of the current yearly average test, which has caused problems over the years, and the implications of moving to a "total contributions" approach. The current structure of the contributory rates bands is also being examined and, in this regard, I plan to bring forward some rationalisation proposals in the Social Welfare Bill which will benefit an estimated 38,000 pensioners.
Regarding contributions paid prior to 1953, as Deputies will be aware such contributions are already taken into account in assessing title to retirement and old age contributory pensions to the extent that they can be used to satisfy the "total number of contributions paid" requirement. However, certain people with pre-1953 insurance have failed to qualify for pensions because their contributions are not fully taken into account under the existing "yearly average" test. My Department has examined ways in which further recognition can be given to pre-1953 contributions and I will bring forward proposals in this respect to an estimated value of £15 million. This will cure many problems experienced by people who had work records prior to 1953.
I will also be bringing forward a comprehensive occupational pensions Bill as early as possible next year in order to make the issue of personal occupations pensions much more widespread. One of the main recommendations of the NPPI report will be the introduction of a PRSA and that will be taken care of in the Bill.
One other issue which I raised last year in my budget speech and also with my officials and the Pensions Board was the integration of social welfare pensions, about which Members on all sides of the House are worried. This is an issue on which I made some changes in last year's Social Welfare Bill and I propose to make another amendment in the forthcoming Social Welfare Bill to continue this process.
My second key objective is to improve the living standards of everybody on social welfare. We hear a great deal about the booming economy, but we must ensure that we have a booming society where everybody benefits from social and economic growth. Employment certainly is the key to the booming economy and a decent job is the best route out of poverty. The live register has fallen by over 80,000 or one-third since we took up office. Some 200,000 jobs have been created since we came into office.
With regard to the live register, I am trying to make more people employable. The proportion of money spent in active policies to help people get back to work and education reached the 20% target I set last year. In this coming year, over one-quarter of all social welfare spending on employment and unemployment will go on active measures to help people in this respect. I am announcing a further increase of 5,000 places in the back to work scheme, bringing the number of places available under the scheme to 34,000.
Two other aspects of the welfare system which caused great disincentives to employment are still in evidence and I have looked at these. The first relates to the tapering of rent and mortgage interest supplements. Under the current system, people can retain secondary benefits subject to two key limitations – their gross weekly household income must not exceed £250 and the maximum rent supplement they can receive is £250 per month. The latter has become a particular problem with rising rent levels in recent years.
I am introducing a number of key changes to the arrangements for retaining rent and mortgage supplements on taking up work under these schemes. The weekly limit will now be calculated net of any back to work allowance payments and family income supplement payments. This will ensure that families with children will be better positioned to qualify for retention of the supplement.
Second, I am abolishing the £250 "cheque limit" on retaining rent and mortgage interest supplements in favour of a tapered withdrawal of this payment over a four year period. These payments will be paid at the rate of 75% of the previous entitlement in the first year and at a rate of 50%, 25% and 25% again in the second, third and fourth years. This will ensure that families with children who are facing high rental costs will see a substantial improvement in their household income, particularly in the critical first years of the transition from unemployment into employment. Some 2,750 people and their families are expected to be supported by this initiative.
I am also taking steps to improve the treatment of people on rent supplement who take up part-time or casual work. From April, a £25 income disregard will be introduced to ensure that there is a positive return from work for those who avail of part-time work opportunities.
I am also providing for a disregard of additional income arising from participation in training courses, such as FÁS skills training courses, for people in receipt of rent supplement. Some 2,500 people are expected to benefit from this measure which will come into effect in April next.
The problem regarding the tapered qualified adult allowance has been around for many years. My predecessor made some changes regarding the tapering arrangements and I continued that over the past number of years. I recently met a delegation of women employed in the contract cleaning industry and their SIPTU representatives who brought home to me again the difficulties in the current arrangements.
The measures I am introducing in this budget will improve the position by addressing all the elements which contribute to the disincentive impacts of the current scheme. First, the income disregard applied to the spouse's earnings from employment is being increased from £45 to £60 and this will include any travel costs incurred in going to and from work. That is something which the delegation to which I referred ask me to do. Second, the income range to which the current tapering arrangements apply is set at £60 to £105. I am adjusting this income range so that the lower bound is set at £70 and the upper bound is set at £135. Third, again this is something which will be welcomed, I am improving the withdrawal rate so that where income of the spouse is between £70 and £90, the qualified adult allowance is reduced by £2.50 for each additional £5 of earnings and where the spouse's earnings are between £90 and £135, the QAA will be withdrawn at a rate of £3.50 for each additional £5. At present, the allowance is withdrawn at a rate of £4.50 for every additional £5 earned.
Fourth, the rate of child dependant allowance is currently halved once the income of the claimant's spouse exceeds £60. I am providing in this budget that this measure will not come into effect until the earnings of the spouse exceed the upper bound of the revised income range, that is, £135.
These measures will be introduced with effect from April 2000 in tandem with the introduction of the national minimum wage. The combined effect of all of these measures will be very significant. A family with two children, where the spouse has earnings of £90 per week, for instance, will be better off by some £35 from April of next year by comparison with the current system.
I am also providing in the budget for the extension of the tapered qualified adult allowance to invalidity pensioners from April 2000, and to retirement pensioners and old age contributory pensioners from October 2000. I expect that 3,000 families will gain from the introduction of these measures.
The family income supplement threshold has been increased by £13 at each point. This will provide weekly increases of some £8 for all recipients of this payment.
It is too long.
Earlier I stated that the budget provides for a £4 increase in general social welfare rates. It is too long because it is the biggest social welfare package in the history of the State.
A sum of £400 million. It is an illusion.
Acting Chairman
Deputy Kenny, I ask you to desist, please.
This represents an increase of 5.2% and 5.6%, more than double the underlying expected rate of inflation and in line with expected increases in average industrial earnings. This is something which no Government, of which the Deputy was a member, ever did.
It would not buy a pint of milk a day.
Acting Chairman
The Minister without interruption, please Deputy Yates.
I would ask to be given some consideration at the end of this period due to the constant interruptions from Members of the Opposition who do not like to hear the truth.
May I ask the Minister to give way?
Acting Chairman
Yes, the Minister has agreed to give way.
The sum of £4 a week is a pretty disgraceful, mean and ungenerous gesture by the Minister. Why did he not go with the 50% of median income, which we thought he was going to do?
The £4 increase in general social welfare rates represents an increase of between 5.2% and 5.6%, which is more than double the underlying rate of inflation and in line with the expected increases in average industrial earnings. It is something the Deputy and others have called for over the last two years, and nothing their parties have done in Government compares to it. Following these increases, all social welfare payments will be at least £2.90 a week above the minimum rates recommended by the Commission on Social Welfare.
I referred earlier to the qualified adult allowance and I will be moving over the next three years – as most of the lobby groups have requested – to increase the QAA to 70% of the main rate. This budget starts to deliver on this commitment with a minimum increase of £3.80 in the general QAA rate. Other QAA rates. especially those which are below 60% of the relevant personal rates, will receive higher increases. The combination of personal and QAA increases means that couples will receive a weekly increase of £7.80 – an increase of almost 7%.
I want to refer briefly to a decision which has been taken at EU level in respect of the butter voucher scheme. Deputies will be aware that people getting long-term means tested payments have been able to purchase butter at subsidised rates for some time. This benefit was provided under an EU scheme within the Common Agriculture Policy. I have been advised by my colleague, the Minister for Agriculture, Food and Rural Development, that the EU Agricultural Council has decided, on foot of a proposal from the EU Commission, to end the EU butter scheme at the end of this year.
Disgraceful.
The subsidy is currently worth 36p a month or less than 9p a week. I have ensured that the financial benefits provided for in this year's budget will more than compensate those affected by this loss of subsidy.
Let them eat margarine.
They are actually. That is the reality. Deputies on all sides of the House are keenly aware of the valuable work undertaken by carers in our society. The number of carers in receipt of carer's allowance is up by over 50%, from 9,200 when we took office, to 13,850 at the end of October this year. We need to do more, however
Hear, hear.
Last year I extended a number of free schemes to carers and I am continuing this process in the current budget by extending the free electricity and free television allowances to this group, regardless of their household composition. In other words, anyone on a carer's allowance will be entitled to all the free schemes. That has been achieved in two years. Last year, I also introduced a new respite care grant of £200 for anyone on a carer's allowance, which was much lauded. This has now been increased by £100 to £300. I am also giving the benefit of the back to education allowance under certain conditions to allow carers, who have finished their caring, to qualify for the scheme.
My colleague, the Minister for Health and Children, has announced that the domiciliary care allowance scheme will be extended to children under two years of age from 1 January 2000. Because of this I have agreed to extend the carer's allowance to carers of this group, at an additional cost of £1 million.
Many of us are very familiar with the difficulties and stresses experienced by those who are working and caring full time. Deputy Howlin, who has now left the Chamber, was interested to hear the details of the carer's benefit. It is a pity he did not wait to hear the details, but perhaps he did not want to hear any more good news.
The Minister has taken the butter off the bread. He should be ashamed of himself. It is a millionaire's budget.
It is the Deputy's proposal but he did nothing about it. This Government is a government of action. The Deputy's party might propose it, but we do it. Following the review of the carer's allowance, which recommended the development of a carer's benefit, I established an interdepartmental group to examine the issues. I have decided to introduce a radical and innovative benefit scheme to enable carers to give up work temporarily to care full-time while still retaining their employment rights. This new scheme, called the carer's benefit, will involve two central elements, both of which are regarded as essential to the recipient. The first of these is a weekly income support payment to be operated and paid by my Department. Unlike the carer's allowance, this will be social insurance benefit and will, therefore, not be means tested. It will be paid provided the relevant PRSI contribution conditions have been met. The second entitlement is the protection of the carer's employment rights for the duration of the caring period. This will require the introduction of legislation by my colleague, the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Tom Kitt.
I will outline briefly the social welfare details of this new scheme. The benefit will be based on a person's PRSI contributions and the maximum claim duration will be set at 12 months. This time period should be sufficient to facilitate carers who have to leave the workforce temporarily to care for an elderly or infirm person or to make long-term arrangements. In addition, it will allow for the protection of the carer's employment rights, which is a key feature of the scheme. In the event of the carer's benefit expiring, the carer will be able to apply for the carer's allowance. Although it will not be means tested, the new scheme will be closely linked to the means tested carer's allowance in relation to other conditions. The same medical criteria, full-time care requirements, residency and part-time working conditions will apply. All PRSI contribution classes will be included for the purpose of the carer's benefit scheme, except for the self-employed, class S, and those earning less than £30, class J.
The scheme will be available to employees who have at least three years contributions and who are employed for a minimum of 19 hours per week prior to commencing full-time caring duties. In addition, the PRSI qualifying conditions will be as flexible as possible to ensure that workers with atypical work patterns or an irregular work history will be in a position to qualify for this scheme. The weekly rate of payment will be £88.50 and additional increases for child dependants will be payable where appropriate. I am pleased to inform the House that this scheme will be fully funded from the social insurance fund and will not give rise to an increase in the PRSI contribution rate.
It is estimated that when the scheme reaches maturity there could be in the region of 6,600 claimants for this benefit. This new scheme will become operational from October 2000, following the introduction of the necessary legislation by the Minister of State, Deputy Kitt. The measures I have outlined are clearly indicative of the Government's support for carers. We recognise the value of carers in our society. We support them and we care about them. We know that by helping carers, we are also helping the people for whom they care. We recognise that carers have their own special social, economic and health needs. This Government's objective is to support those diverse needs and to ensure that carers maintain their individual rights. The measures I have introduced today are an affirmation of the value we place on carers in our society.
From May next year and as part of the process of progressively extending payment of the disability allowance to people in residential care, I am providing that full-rate disability allowance will be payable to those who are currently in residential care and who are currently in receipt of half-rate payments. This measure will extend full-rate payments to 370 people at a full year cost of £700,000.
We have made substantial progress in recent years in developing supports available to people with disabilities to encourage them to become more self-reliant. One of the measures introduced was to extend access to the back-to-work allowance to claimants of disability allowance and blind person's pension. From April next year, I am extending access to this scheme to recipients of the invalidity pension and unemployability supplement. I am also extending access to the back-to-education allowance to these categories. Last year I increased the rehabilitative earnings disregard from £35 to £50. It is now being increased to £75 with effect from next April. Almost 900 people will benefit from this measure at a full year cost of £1.1 million.
My Department is currently undertaking a review of the various income maintenance schemes for people who are ill and people with disabilities. Notwithstanding the improvements introduced in recent years in this area, it is widely recognised that the current system is complex and in need of rationalisation. The review will therefore examine the roles and effectiveness of the range of income maintenance payments provided by my Department and also by the health boards. It will take into account the recommendations contained in the report of the Commission on the Status of People with Disabilities.
The value of the child benefit scheme as an effective tool for tackling child poverty is further underlined in the budget through a full year investment in the scheme of £105 million, representing an increase of 25% in the cost of the overall scheme. That is not an inconsiderable sum. From September 2000, child benefit rates will be increased by £8 per month in respect of the first and second children and by £10 per month in respect of the third and subsequent children. This means that a family with three children will now receive £141 per month – an increase of £26. I will comment on a number of the issues that were raised, particularly Fine Gael's muddled policy on child benefit. Fine Gael's Leader, Deputy John Bruton, promised in his Ard-Fheis speech in February that when Fine Gael got back into Government it would increase child benefit by £20 per week for children under five. Deputy Noonan announced a couple of months later that he was reiterating the commitment made by Deputy Bruton in his Ard-Fheis speech to increase child benefit—
I am glad the Minister listened to it.
—not by £20, but by £25.
It was up to £25.
Either Deputy Noonan did not remember what Deputy Bruton had said a couple of months earlier in his Ard-Fheis speech—
That is nonsense.
—or Deputy Bruton did not listen to Deputy Noonan's latter announcement.
It was for children under five years.
One might say that £5 is only a small amount of money, but in all it costs £35 million. I pointed out that I did not favour stopping the child benefit increase to children under five years of age, because it would mean that families at the cut off point, particularly those with children aged three, four and five, would lose substantial amounts of household income over a three year period, at the time when they probably need it most. When I pointed out the problems inherent in the Fine Gael proposal, it gave a nod in this direction in its subsequent tax document a few weeks ago, saying it would do something for children over five years, but did not specify what. Deputy O'Keeffe, with the typical muddled thinking of Fine Gael, is now saying it will give £25 to children under five years and also some new variation. I cannot remember what he said – it was probably off the top of his head.
In 1997 the previous Government gave in its last budget, child benefit increases valued at £28 million. This year, we are giving £105 million, which is a very substantial increase. In 1996, the previous Government gave £2—
The National Women's Council does not think so.
Acting Chairman
Deputy Broughan must allow the Minister to speak.
—for the first two children, and £2 for each subsequent child. We are giving £8 and £10, respectively. In 1997, the previous Government gave £1 for the first two children and £5 for each subsequent child. Fine Gael should not come in here craw-thumping about child benefit.
The Government has a current budget surplus of—
Last year, this Government gave £40 million in child benefit.
Acting Chairman
The Minister, without interruption.
This year, £105 million is being given. That is a substantial increase.
The reality is somewhat different.
I would like to think that, as I continue in this office, I will continue to give further large increases in child benefit
The Minister should wait until he meets the National Women's Council.
In relation to the back-to-school clothing and footwear scheme—
Acting Chairman
The Minister, without interruption.
What does the Minister mean by further increases? He has just introduced a new budget.
Acting Chairman
Deputy Kenny will have an opportunity in a couple of minutes.
The Minister has run out of material so he is bluffing. The material is so thin he could not stretch it over 40 minutes.
(Interruptions).
Acting Chairman
I ask Deputies to restrain themselves.
The so-called liberals are becoming illiberal, which is typical.
There are no liberals over here – we are socialists.
Acting Chairman
The Minister, without interruption.
The back-to-school—
The Minister is finished.
I am not finished by a long shot.
Acting Chairman
I remind the Minister he has approximately four minutes remaining to him, including injury time.
The Minister is deliberately wasting time.
The back-to-school clothing and footwear scheme will be increased, at a cost of £4 million, by £20 at each level, bringing the payments to £63 for children aged between two and 11 years, and to £78 for older children.
If they qualify.
I am also bringing forward out of school hours services in areas of disadvantage, at a cost of £5 million. I envisage that these ser vices will be provided through the expanding network of community development projects and family resources centres, which are supported by my Department. It is envisaged that this increase in funding will support the provision of low-cost out of school hours child care for parents in the paid labour market, to promote parental and community involvement in engaging young people in school and community life and to provide additional community based services for families.
An issue which has been very much to the fore in recent years is that the death of a family member or friend can be very difficult for everyone involved. I hope Members will compliment the Government for very radically changing the death grant from £100 to £500 – a 500% increase – with a major injection of capital of about £10 million, bringing the cost of the scheme to £11 million from £1 million in one year.
It is an incentive to die.
Deputy Yates said it is an incentive to die. It is showing the caring aspect of this Government which is increasing the bereavement grant.
Come die with me in Ireland.
I am sure the dead constituents will be glad to hear that.
Acting Chairman
The Minister, without interruption.
However, I am not satisfied with increasing the bereavement grant by 500%; I am going further this year by giving an additional once-off grant for newly widowed persons with dependent children.
The Minister will be giving grants to undertakers next.
Is the Deputy going to vote against it? I am surprised he does not want us to give a grant to widowed persons.
Widows under 66 years of age should get decent fringe benefits.
This grant will be a once-off payment of £1,000 payable in respect of deaths which occur on or after 1 December 1999, and will be on top of the £500 bereavement grant.
Further large increases.
This budget will underpin the current negotiations on a social partnership agreement. As we all know, social partnership has been the engine that has driven this economy over the past 12 years.
It broke down yesterday.
Some Members of this House, particularly on the other side, were against social partnership. The economy—
We negotiated Partnership 2000, which the Government inherited.
ICTU and IBEC have welcomed the budget.
Baroness Thatcher is back.
Acting Chairman
The Minister, without interruption.
The economy has grown by almost 6%. Total employment in the economy has grown by 2% per annum, twice the OECD average and six times the EU average. Between 1993 and 1998, the number of people at work increased by 290,000 and will increase by a further 60,000 by the end of this year.
Housewives are being forced to return to the labour market.
Over the same period, the unemployment rate has fallen from 16% to less than 6%. That transformation was brought about by a Fianna Fáil-led Government.
There is no leadership.
The stories which these statistics tell are as diverse as they are positive.
We have had to listen to this for 40 minutes.
I am blinded by figures.
There is restored self-esteem for the long-term unemployed person, strengthened family relationships through the return of an emigrant son and new life for communities where emigration was once inevitable.
Negotiations on a new social partnership agreement are now under way. Each social partner brings its own priorities and concerns to the negotiating table. However, the unions and the employers gave a broad welcome yesterday to the budget. One person – who did not represent the employers – said the Government did what they had asked for. I believe a robust appreciation exists—
They are rowing back today.
The Deputy must allow the Minister to conclude.
Like Deputy Higgins, the Deputy is trying to cause some ruaille buaille about this. However, the unions and employers came out in support of what we were endeavouring to do in this and the next two budgets. I am confident that, as with previous agreements, a consensus will emerge this time which will see the continuation of social partnership and will launch the process into the new millennium.
The tax measures provide for a significant real increase in take-home pay, focused on those hitting the higher rates at relatively low income levels, as well as the costs faced by two-earner couples. The strategy which the Minister for Finance outlined for the next three years will ensure that workers on modest incomes will no longer be faced with the disincentive of high marginal tax rates.
We are at a truly historic time for the people.
We are.
I am not sure, Deputy Kenny, if any of us properly realise this. We now have a real opportunity to implement the Good Friday Agreement, to copperfasten peace and to achieve a new dispensation for our island. We have a real opportunity to build a new country for all the people of this island, a genuinely inclusive society—
The Government failed to do that yesterday.
—a society in which everybody can contribute to the wealth of the nation and can share in the benefits of social and economic development. This budget contributes in a very significant way to those objectives.
It is an anti-family budget.
I more than commend this budget to the House.
Unite the North and divide the South.
I propose to share my time with Deputy Kenny.
Is that agreed? Agreed.
I want to say to the Minister for Social, Community and Family Affairs, before he runs out to another photo opportunity that—
The Deputy was not too bad at those himself.
—this budget has its merits, provided one dies and gets the death grant of £500, or lives to be 100 years of age next year and gets £2,000. However, the budget is a bitter and divisive disappointment for the rest of us who do not fit into either category. "Charlie McGreedy", as he is now being renamed across the country—
Minister, Deputy.
The Minister, "Charlie McGreedy", has brought about a situation whereby stay-at-home parents and the low paid have been given a kick in the teeth and a kick in the groin, respectively, by the Government. Never before has our tax code included a provision which so patently and deliberately discriminates between parents in the home and parents at work in the context of single and dual income families with the same income and expenses.
Would the Deputy give way?
Yes.
Would the Deputy not accept that the figures given by the Minister show that, at the end of the three year period, if he continues in this direction, only 12% of taxpayers will pay tax at the higher rate? Does the Deputy accept those figures?
I accept that the Minister's figures indicate that the difference in the take home pay between single and dual income families on £50,000 will be £6,000 per year.
It is £1,200 per year on £50,000.
Does the Deputy accept the figures?
During the last election Fianna Fáil promised an extra £2,000 tax allowance for stay-at-home mothers, but they have not given such people extra money. My answering machine broke down this morning under pressure from the number of callers who were distraught at this direct attack on women in the home. If people choose to work they should be encouraged to do so. However, if they wish to provide full-time care for their children they should also be supported. It is absurd that the difference will be £1,300 in take home pay this year, but, as the Minister indicated, this will get worse over three years and will rise to £6,000. The Supreme Court could not view this as anything other than a direct infringement of Article 41 of the Constitution and it will be unsustainable.
Bad as this provision is, the most important element of the tax code which required change is that people start to pay tax once they earn £100 per week. The secondary problem is that people hit the top rate at £14,100 but the biggest problem is that they start paying tax at £100 per week. If we are to have a minimum wage the figure will be nearer £5 per hour, whatever about the legalities. Every shop seeks part-time and full-time staff. People cannot get staff and the minimum effective rate of pay is £5 per hour to get anyone to do anything in this country. On a 40-hour week that totals £200. Given the largesse and the fact that we can put more than £600 million into a mythical pension fund—
Mythical?
Given the current budget surplus of £3.5 billion, I cannot understand how we can increase the basic income tax personal allowance by £10 per week to £110. This is appalling for the low paid. We have had many lectures from the Minister for Social, Community and Family Affairs about moving people from welfare to work but this measure prevents people from moving. This disincentive is incredible because we are telling employers that they must pay workers £170 per week while telling employees that we will take that money out of their pockets. It is incredible that a budget which gave away an unprecedented £942 million has also angered the low paid and spouses working in the home in such a socially divisive way.
When I listen to the rhetoric of Ministers I am reminded of the second last American presidential election. During the campaign the incumbent President, George Bush, outlined all his achievements in the Gulf War and in foreign policy. However, Bill Clinton had a simple slogan – it was not about foreign policy –"It's the economy, stupid". The slogan in the next election in this country will be slightly different –"It's the people, stupid". We have had many measures for the economy and IBEC's approach to the budget. However, what about the people who get up at 6.50 a.m. to commute to work, who cannot get child care—
They will be looked after.
What about families in which both parents must work to pay the mortgage because of the housing crisis and the lack of the Government's supply measures? What about those who cannot afford child care?
They will also be looked after.
People are suffering. The stress and erosion of the quality of life for ordinary people has never been worse. It is disappointing that, not only did the Government fail to honour its pre-election promise, but it is totally regressive in abandoning stay-at-home parents.
As regards the reduction in income tax rates, the very wealthy should pay a top rate of tax. To deal with this problem we have advocated a new middle rate of 35p which would mean that only the super rich pay the top rate and middle income earners pay a middle rate as their top rate. That is a more focused way of addressing the middle income problem. The budget confers the benefits to the very wealthy disproportionately by the reduction in rates. This has always been PD policy and I regret that Fianna Fáil has been sucked into going in that direction.
Child care is a fundamental issue, not just for IBEC which has its concerns, but also for parents and potential parents. This is a budget for contraception. The Government's message is that it does not want children, it wants people at work and it wants to penalise parents. In response to the Child Care 2000 campaign last year, the Minister for Finance said that he did not have enough information and that he needed more study groups, more task forces, more working group reports and that he would deal with child care this year. Expectations were raised and there was no shortage of analysis of this issue. The Child Care 2000 campaign put forward a well-reasoned call for £543 million in investment. However, it only got £46 million – less than one tenth of what is required. There is no sign of the establishment of a child care framework or a three year plan on this issue. The budget's small print indicates that only creches with up to 20 children will get grants. However, a creche cannot operate economically unless it has at least 25 children.
Tax breaks have been introduced but they are totally inappropriate. The corporate sector is not investing in child care – it is a case of people who are not liable for corporation tax converting part of their homes. I regret that a meaningful attempt has not been made to deal with child benefit for children under five who are not in the formal education system. The proposals include an £8 increase per month which would not buy the smallest carton of milk available per day. The increase is so derisory as to be worthless. There is no point in Ministers trying to confuse Fine Gael's proposals. We have proposed that child benefit be increased to £25 per week for children under five. This would address the issue but there is nothing in capitation grants.
My three major concerns with the budget are that it is a kick in the teeth for the low paid, it is appallingly discriminatory against stay-at-home parents and it is almost negligent as regards the supply side of the child care issue. These issues remain unaddressed.
Some of the submissions we received have been totally ignored in the budget. At 2 o'clock the Centre for Independent Living will meet the Joint Oireachtas Committee on Public Enterprise. Nothing has been done for them in this budget. Vantastic, which provides a client-based approach from Baldoyle to Bray for 400 disabled people and looked for £350,000 per year to develop the service, got nothing, let alone franchising the operation across the country. Much lip service has been paid to the fact that credit unions are the banks for ordinary people but nothing has been done concerning the working group report and implementing its recommendations on DIRT and disclosure. All Members have been inundated with letters about allowing donations to charities in Ireland to be allowable as a tax expense, as is the case with donations to charities overseas. The issue of VAT refunds has been ignored again, despite representations.
The Minister for Social, Community and Family Affairs spoke about a budget for social inclusion which is an attack on poverty. Some of my constituents are permanently disabled, living alone in their 30s and 40s and in receipt of disability allowance of £73.50 per week. Are they expected to clap the Minister on the back for an extra £4? It will not make any meaningful difference to their quality of life. I could not live on £80 a week – why should they be expected to live on less?
There are 100,000 carers in this country for whom little or nothing has been done. We asked for the means test to be changed and a disregard of £120 a week. We asked for the carer's income, regardless of the income of his or her spouse, to be taken into consideration. All these requests were ignored. A carer's benefit will be available to those paying PRSI. However, women working full-time in the home, minding their children and elderly or dependent relatives, do not pay PRSI so the carer's benefit is useless to them. I cannot understand why the Carers' Association has been so wilfully disregarded when the average cost of care in a private nursing home is £250 a week, a long-stay health board geriatric bed costs £350 a week and an acute general hospital bed £550 a week. The Minister will not give carers a lousy £75 when they are saving the Exchequer a fortune by providing care in the community and the home at the lowest possible cost.
The last Government decentralised a great number of jobs to my constituency. About 400 jobs were decentralised to Johnstown Castle, through the Department of Agriculture, Food and Rural Development, the EPA and other bodies. "Enigmatic" is the kindest description I can give to the provision for decentralisation in this budget. I want to see specifics about my constituency rather than a general paragraph about how decentralisation will be bigger and better than ever before, with no State bodies named.
Something imaginative could have been done as regards a Christmas or millennium social welfare bonus. There was no imagination in this budget. It was an IBEC budget – written by and for IBEC. There were no political touches. Even the change in travel tax was forced on the Government by the EU. I expected a millennium bonus or an extension of the duration of free fuel or its increase to £10 per week. Imagination could have been shown in this budget. Instead we have a budget in which the Government dispensed its largesse. However, any Government would have that to dispense. It is not an achievement for the Government to return the peoples' money. That money is there because of the surplus resulting from growth in the workforce and the increase in revenue. However, there were no changes where they were most necessary for economic and social policy – for the low paid, child care and the support of parents, particularly those minding children in the home. The shortcomings in this budget have been woefully exposed. The initial frothy spin and hype will not be sustainable until Christmas when people will realise the budget falls short of their requirements.
I remember when Ed Begley, the cowboy actor, came to a small town in the west with a reputation of largesse. He stood at the top of the town and threw sweets to the children. This budget is similar and the expectation was that the Minister, Deputy McCreevy, would throw his largesse around the country and everyone would be happy. It is an illusion in many respects. The biggest flaw of this Government is that it is not clear about where the country is going. It is a reactive leadership which manages crises daily. Nobody is saying where we will be in five years and how we will get there. This budget projects expenditure of over £900 million. The budget contains some good measures and many people will be better off as a consequence. However, the money could have spent to better effect without creating the divisions now emerging.
The film industry was provided for in the budget with an extension of section 481 for another five years. At first glance, the retention of this statutory measure is welcome. However, it ignores two fundamental points. First, a Government established think-tank recommended the relief should be increased to 100% – it will remain at 80% for the next five years. Second, the industry required an investment of at least £8 million and it received £5.3 million. The Irish film industry, which should be seen as a strategic instrument of development in which creative young people can become involved and generate economic growth, is being dissipated. It will be difficult to get people to invest in film as long as section 481 operates in its current form. They would be better investing in an apartment in Temple Bar or anywhere else rather than in film where the relief is 80% and the marginal rate continues to be reduced. Section 481 is an illusion in terms of its real benefit. The recommendation in the think-tank report that the relief should be increased to 100% was not heeded by the Government.
I am appalled at the hurt and division created by the discrimination against wives in the home. It is the right of every married couple to decide whether they go to work and put their children in crèches to be reared by someone else. I am not coming down on any side as to which is the better method – that is an ongoing debate. However, it is wrong that when the option is given to a person to either stay at home or go to work, the person who chooses to stay at home is penalised. Article 41 of the Constitution is clear on this. I do not understand why it has been presented in this fashion. Perhaps it relates to the attitude of the Department of Justice, Equality and Law Reform on people coming here to work. Perhaps it is an extension of the Minister, Deputy O'Donoghue's zero tolerance policy – zero allowance for wives at home. Perhaps the Government realises that it needs to fill 70,000 jobs in the next few years and it will do so, not by giving working visas to people from abroad, but by driving wives out into the labour force by virtue of these penalties. This is a grossly discriminatory and wrong measure which will be strongly opposed in this House. Organisations, groups and individuals will rise against the Government. I do not understand why the Cabinet arrived at this decision.
The remaining 1% pay increase to the public service under the partnership agreement is due on 1 April. However, this 1% is minus 44% income tax and 7% PRSI. This is an increase of 0.5% for every public servant in the country. The Minister for Finance expects that because of this lousy payment people should immediately accept any pay proposals put to them. This is a 1% payment, minus a 44% taxation rate, minus a 7% PRSI payment. In reality this amounts to a 0.5% increase. Thousands of public servants throughout the country are expected to accept this. There will be a different attitude when the detail of the budget leaks out.
The budget proposals will not alleviate hospital waiting lists to any great extent. I believe politics is about people and that decisions taken by Government affect people's lives. Yet thousands of people are confined to misery, darkness and pain because the public health service is not performing as it should. People are awaiting cataract and orthopaedic operations. Many of these people cannot watch television, read their local papers or books or in many instances walk around the vicinity of their homes. They are confined to the inner sanctums of their homes and to darkness and misery during their later years. I do not understand why the Government did not give relief, hope and courage in this the year of the elderly to thousands of people. It is a case of "live horse and you'll get grass"; reach the age of 75 and you will get a free telephone allowance; reach the age of 75 and you will get free electricity and so on.
On 30 June this year, 706 patients were awaiting admission for cataract operations in the Western Health Board area. There are three ophthalmologists working in the Western Health Board region. This operation takes between 20 and 30 minutes. I know consultants must perform other tasks but the operation takes 20 to 30 minutes. On 30 June this year, there were 706 patients who could not see, read clearly, look at television or walk in the vicinity of their homes due to blindness. These people must await operations for two and a half years or more. The budget has done nothing for these people. They listen to the radio and hear this blinding illusion of money being spent left, right and centre; they are given the impression that people are making a fortune.
The society the Minister, Deputy McCreevy, spoke about this morning is becoming increasingly litigation conscious and greedy. The individ ualising of the income tax code will drive people and families apart and create a great deal of aggression. I resent this. The Government in its collective wisdom could have spent the money much more wisely without creating these divisions. It is disgraceful as we enter the new millennium, with more money than we ever had, with £680 million put aside for a pension fund – I agree with this in principle – for a crisis that will not arise until 2040, that these hospital waiting lists still remain. Right now these people are being told that they will have their hip operation carried out in two years, their heart operation will be carried out some time next year and they will have their cataract operation carried out when they are completely blind. This is appalling treatment of thousands of people who deserve better.
The future of this country depends on the brain power of our young people. It depends on their creativity, imaginative skills and human potential. The Tánaiste said recently that this is not about money, it is about imagination. I am pleased the Minister of State at the Department of Education and Science, Deputy O'Dea, is present. There are three bases in County Mayo where there are groups of seven primary schools for remedial purposes. It is physically, educationally and mentally impossible for these remedial teachers, with the greatest of respect to them, given the distances they must travel to these schools, to give the children in these groups of schools the help they need if they are to have any chance of realising their full potential. Each day the remedial teacher does not attend these schools as a result of the long distances they must travel. These children are being disadvantaged. It is a disgrace that these children will be disadvantaged in the future because they are not receiving the hope and encouragement they deserve as a result of lumping together schools spread over huge distances. They are not being given the resources to realise their human potential and to become part of a young, vibrant and modern country.
I would like to think the words of Government would ring true. The national plan was published recently. This created an illusion that everything would be rosy in the garden. An area west of Athlone known as the Border, midlands and western region, the BMW region, was given Objective One status and the Western Development Commission was set up. However, in two and a half years no money has been released despite the words of the Taoiseach on the steps of Dillon House in Ballaghaderreen. There have been no rail improvements of significance. We are on the hind tit again from Athlone to Westport and Ballina. A sum of £10 million was included in the national plan for regional airports over a six year period. There is no commitment from the Government to the proper development of Knock airport, yet £300 million is being spent on Dublin, Cork and Shannon airports. There is a Bord Gáis proposal to extend the pipeline from Dublin through Athlone to Galway. Points west and north-west are not mentioned. There is a second application for an interconnector from Scotland despite the fact that in the Corrib field, 35 miles off Achill Head, 1.3 trillion cubic metres of natural gas is just sitting there awaiting commercialisation. In an attempt to satisfy the Minister, Deputy O'Rourke, Bord Gáis has ignored all points west and north-west. There is no major road from Derry through Letterkenny to Sligo or Galway. This region is ignored despite the fact that the Minister, Deputy McDaid, brought the ladies golf championship to Letterkenny in the middle of a storm.
This budget has been cobbled together. There is no leadership, it is reactionary. I am surprised at the way in which the budget has been concocted in Government and presented to the nation. It is a zero wives at home budget; it is a zero allowance at home budget; it is an illusion. Ed Begley has gone on his way forever to his mortal reward but his ghost is alive and well in the Minister, Deputy McCreevy. He, too, came with the reputation of largesse; he, too, came with the reputation of endless wealth; he, too, came with the reputation of goodies for everybody. He is not a man for all seasons. When the detail of this budget is studied, it will be seen as anti-family, anti-people and very bad politics.
I wish to share time with the Minister of State at the Department of Justice, Equality and Law Reform, Deputy O'Dea, and the Minister for Agriculture, Food and Rural Development, Deputy Walsh.
Is that agreed? Agreed.
The budget contains many elements which impact positively on the work of my Department. Foremost among these would be support for the supply of child care facilities but there are other significant issues also to which I will refer briefly.
As announced in the budget by the Minister for Finance, annual funding of £46.4 million is being provided for the implementation of the supports for child care service provision recommended by the interdepartmental committee on child care. As a result, my Department will have a budget for child care of over £250 million, including a provision from the national development plan, over the next seven years. This is a significant budget which will facilitate action to support objectives such as providing diverse child care which meets the needs of the child, increasing the number of trained personnel working in child care and improving the co-ordination and delivery of child care.
One of the driving forces of the remarkable performance of the economy in recent years has been the increase in the number of women participating in the workforce. Historically, women have been the primary child carers, principally by working full time in the home. The increase in the number of women opting to combine work and family life has meant that this historical situation no longer applies. There is a growing demand for child care and this situation has been exacerbated by a reduction in the number of child care places available.
I have been aware, as indeed has the Government, of the difficulties relating to child care provision. It is a complex and diverse area which required careful research and consideration. I am pleased to say that the Government fully supports the recommendations on the interdepartmental committee on child care in relation to supporting child care service providers and stimulating further supply.
Child care has been highlighted as a priority for investment in the national development plan which is providing £250 million to support the provision of child care in the voluntary, community and private sectors over the next seven years. This represents the most significant investment by the State to date. The allocation of £250 million in the NDP will support measures which will have both a social inclusion and equal opportunities focus.
Wednesday's budget announcement also provides for accelerated capital allowances for expenditure on child care and the allocation of funding to the Departments of Health and Children, Social, Community and Family Affairs and Education and Science. The allocation of funding to these three Departments will assist the development of out of school services by community groups, the development of after school services by the school management and the development of an advisory service by the health boards.
The £250 million in the national development plan will support the recommendations of the interdepartmental committee on child care in relation to funding child care service delivery, including the expansion of the equal opportunities child care programme; funding towards the development of local child care network initiatives and a new capital grant scheme for child care providers caring for up to 20 children. To this end, my Department will shortly be promoting a number of child care initiatives designed to achieve these goals. We will be expanding the equal opportunities child care programme to include a number of strands including capital infrastructure and support for staffing costs for community based child care facilities in disadvantaged areas, development support for national voluntary child care organisations and expanding and improving the provision of child care training and support for innovative projects in the child care area. In addition, this funding will be used to encourage and enable people involved in child care to form networks, thereby reducing isolation, increasing quality through the dissemination of information and providing mutual support.
A further element of my Department's programme will be the introduction of a capital grant scheme for child care providers, including private providers who cater for up to 20 children. The purpose of this scheme will be to assist child care providers to upgrade their facilities thus helping them to provide a safe environment for the children under their care.
The provision of £20.475 million in my Department's Estimate for the year 2000 includes the first tranche of funding – £13.7 million – from the national development plan and marks a 416% increase on the allocation for 1999. My Department has already commenced the drawing up of measures designed to achieve the objectives set out in the national development plan and is consulting with the relevant bodies. It is my intention that promotion of the new measures will commence shortly and that the application system devised will be open, clear and accessible to all potential applicants.
It has been decided that the challenge of and responsibility for co-ordinating child care services will be assigned to my Department and I intend to establish a structure which will have three separate but interlinking co-ordination roles, namely, an interdepartmental committee on child care, a national co-ordinating child care committee and county child care committees. I will announce details of these committees tomorrow.
Funding of over £25 million is being allocated to my Department in the national development plan for the establishment of an equal opportunities technical support unit within the Department and funding for positive action measures, approximately £4 million, is for the promotion of family friendly policies.
In addition to the funding allocated to my Department in the national development plan for child care and positive action measures, over £86 million is also being made available in the plan for social inclusion initiatives being undertaken by the Department. This will enable it to undertake new policy developments in the social inclusion area with a preventive and rehabilitative focus. It will fund a range of initiatives to prevent the involvement of young people aged ten to 18 in crime under a Garda youth diversion programme, provide pre-employment training and personal development courses for individuals who come to the attention of the criminal justice system under the Probation and Welfare Service and offer ex-offenders labour market relevant training while in prison with the objective of breaking the cycle of crime and reducing the rate of recidivism.
The groups being targeted by this funding are among the most socially excluded in society. They exhibit classic characteristics of marginalisation, including low literacy levels, lack of labour market skills, substance abuse, addiction and homelessness. A large proportion of the people in these groups come from socially deprived areas and the Department of Justice, Equality and Law Reform is specially placed to interact with them.
An allocation of £1 million was made in 1999 to develop a further series of new and innovative programmes to be operated by the Probation and Welfare Service in association with community groups, businesses and other statutory agencies. These programmes target areas where no appropriate programmes for young offenders exist and there is the possibility of those at risk being taken into custody and they will aim to build on the expertise and best practice models already identified by the service.
The initiative to which I refer will incorporate new "outward bound" programmes which will facilitate the monitoring of these young people at evening time and during weekends. New approaches are also being developed by introducing evening programmes for parents or spouses of offenders in training and apprenticeship or employment. It will give them opportunities and support in understanding adolescent and teenage development. It has been put in place with a view to giving new opportunities to young offenders under the age of 18 years who are either on probation or who will be released from detention under supervision. The objective is to reduce their offending and provide stability in their lifestyles. Apprenticeships and employment opportunities are central to achieving this objective and the intention is to bring employers together to identify and provide employment opportunities.
When I entered office over two years ago, there were 12 Garda youth diversion projects in operation. I am pleased to say that this year my Department is funding 29 such projects at an annual cost of well over £1 million. Garda youth diversion projects play an invaluable role in the context of the Garda Síochána's liaisons with individual communities, in socially reintegrating disadvantaged youths in acutely disadvantaged areas and in making communities safer. The additional £16 million allocated over the life of the national development plan is clear proof of the Government's determination to ensure that the benefits of our national economic success are shared by all sections of the community and that the invaluable but unsung work being done throughout the country by voluntary bodies is recognised in a practical way.
I was particularly pleased to recently have the opportunity to acknowledge the positive and imaginative way the Kerry diocesan youth service has responded to the changing needs of the county by formally launching the "Connect 7" project, in respect of which I was glad to make £50,000 funding available earlier this year. I also allocated £250,000 to the Killarney youth centre through the Probation and Welfare Service.
What about fear an chaipín? Did he claim any of that?
This grant will go towards the renovation of the Franciscan friary in the town. The Kerry diocesan youth service, which now runs the friary, has also received £100,000 from the millennium committee and £50,000 under the scheme of grants to voluntary organisations. I am pleased to welcome the further budget allocation to the service.
Well done.
The Kerry diocesan youth service has established a good working relationship with the Probation and Welfare Service in Kerry. The youth service will provide a place where young people can become involved in constructive activities in an informal atmosphere. The grant for this excellent initiative will contribute to crime prevention, enable alienated young people to play an active part in altering their own conditions and accommodate a variety of programmes concerned with meeting the development needs of young people. The centre will prove to be a worthwhile resource to the local community in Killarney.
I turn now to the special provision of £350,000 in the budget to support the operations of the transport organisation know as Vantastic. This organisation has provided a door-to-door transport service for people with disabilities in the Dublin area since 1994 as a way of addressing inadequacies in the availability of accessible public transport. It is a form of "dial-a-ride" for people with disabilities who are registered with the service. These funds will be made available to Vantastic in instalments during 2000, subject to the normal conditions that apply to the allocation of Exchequer funds.
As I have often indicated, supporting victims of crime is a priority for the Government and in addition to the £655,000 for Victim Support contained in the Abridged Estimates, a further £200,000 is to be allocated to the group. This will allow it to complete its plans to establish a nationwide structure for the delivery of its services. It also provides funding to assist in the training needs of the restorative justice process from a victim's perspective and to explore the potential for co-operative initiatives by the agencies involved in the general area of victim support.
The position of asylum seekers in Ireland has acquired greater significance with the increase in the number of asylum applications being made. It presented us with a challenge as it focused attention on the procedures and resources in place to process asylum applications. My officials are committed to processing applications for refugee status in accordance with our international obligations and domestic rules and procedures, with a view to providing the best service to all applicants.
It is important to confirm, as I have in the House on several occasions in recent weeks, that the Government is committed to providing and administering an immigration and asylum system which assures protection for refugees, respects and upholds the rights of all immigrants and provides open, fair and effective procedures. In an effort to meet the current demands placed on my Department by the unprecedented number of arrivals in recent months we must be committed to providing the resources to meet them and the care that these people deserve. A cost attaches to providing an effective service, one which will meet the needs of that vulnerable group who seek the protection of the State. The Government has agreed to make an additional 120 staff available to my Department to meet these challenges at a cost of £6.5 million over three years.
I congratulate the Minister for Finance and the Government for their recognition of and provision for two areas which come under my remit, namely adult education and youth services. The provision for literacy services in the budget means that I will have almost ten times the allocation to adult literacy than when I took office. This will enable me to increase the throughput of people who avail of such services – it has already doubled from 5,000 to 10,000 per annum; arrange for the provision of services in more humane locations; provide flexible delivery times; continue to work on professionalising the service; establish an adult guidance service; progress work in providing literacy tuition over the airwaves and undertake a number of useful projects which will ensure that the money is well spent and maximum value is obtained for it.
I wish to put this issue in context. In 1995 the OECD carried out a survey of 15 member countries on the question of adult literacy. It was made available to the previous Government, which neglected to publish it. When I began to read files in my Department on assuming office, I was absolutely gobsmacked to discover that the annual provision for the relief of adult illiteracy was £850,000. I was further dumbstruck when I discovered a number of letters on file to then Minister, Niamh Breathnach, from organisations and various people working in the field, such as the National Adult Literacy Organisation, highlighting the results of the OECD survey and requesting increased funding.
I was appalled at the tone of the then Minister's reply. She more or less regarded this as a Cinderella area, which was an adjunct to the Department and did not merit proper funding and support.
I doubt that the Minister of State has quoted the former Minister accurately.
The 1997 allocation for adult literacy services was increased by £60,000 over the 1996 figure. This was spread over 38 VEC areas, with approximately £1,700 provided for each. The OECD survey also demonstrated that people with literacy problems tended to be among the most marginalised and at the lower end of the income spectrum. They swelled the ranks of the long-term unemployed and the contribution of a party and a Minister who travelled the country masquerading as socialists before that most disad vantaged and deprived group was an increase of £60,000.
The leader of the Labour Party, who was then Minister for Finance and had it within his power to allocate funding, made disparaging remarks about my record in this regard in the House last week.
Now I understand.
My record is available for consideration alongside Deputy Quinn's and the former Minister, Niamh Breathnach's in this regard for any objective observer to analyse. I have always been consistent and transparent. I never felt the need to re-invent or transform myself as others have.
The Minister of State could do with a bit of it. It is nothing to brag about.
Unfortunately, the leader of the Labour Party has been transformed from Superman to Clark Kent.
The increased allocation which I secured from the Minister for Finance will enable me to expand the literacy service. Almost £74 million has been allocated to such services in the NDP. This will allow us to put 110,000 people through the system during the lifetime of the plan. This complements the doubling of the number being educated currently. These measures, in addition to those taken by my colleague, the Minister for Education and Science, will ensure that the number of students leaving primary and secondary levels with literacy and numeracy difficulties is reduced annually. A substantial impact will be made on the adult literacy problem during the lifetime of the plan.
However, adult education is about more than literacy. If people do not have the necessary literacy and numeracy skills, they will get nowhere. Increased funding for adult education generally will allow us to sweep away many barriers that obstruct people as they re-enter the education system, those who are not sufficiently educated to participate to the fullest extent in the information society. The implementation of an adult guidance system has begun. Specific provision has been made for child care in the education system, apart from the provisions made by the Ministers for Finance and Justice, Equality and Law Reform.
The greatest barrier for people re-entering the education system is the difficulty of combining education with work or domestic responsibilities. To overcome that problem, we have begun to provide Youthreach courses, VTOS and other schemes through which people traditionally return to the education system on a flexible, part-time basis whereby people can do one or two modules at a time, thus transforming the sector. It will be further transformed with the allocation of more than £74 million in the NDP, from the Cinderella that it traditionally has been into the mainstream education system.
The same applies to the provision of youth services. The allocation in this area has been increased by 28% over last year. It gives us the opportunity to introduce new schemes, such as the one I initiated which allocates grants directly to youth clubs, and to improve such services in many different, imaginative ways to ensure the best value for money in this sector. The youth services and people involved in adult education can be assured that their future is secure and that their interests will be properly considered under the stewardship of the Government.
Debate adjourned.