When I woke up this morning I listened to "Morning Ireland"– I presume like many other Members. It struck me there were two stories which encapsulated quite nicely the legacy of the Minister for Finance and the job he was doing.
Finance Bill, 2002: Second Stage (Resumed).
It would take more than one programme to do that.
This one did it as concisely as it could manage. On the one hand, there was a story that SIPTU was about to ballot its members who work in the accident and emergency departments of hospitals to see if they were willing to take industrial action because of what it described as Third World conditions. On the other, there was a debate about a significant tax break being given to millionaire sportsmen. I thought to myself that one could hardly sum it up more neatly than that. If one happens to have a few bob in the bank and wants a significant tax break, then Charlie is your man, but if one happens to be an unfortunate citizen knocking on the door of an accident and emergency department, waiting for four or five hours at a time, one cannot expect reasonable conditions. Neither can one expect to get payment or investment in reasonable conditions at work if one works in the accident and emergency department of one of our hospitals. That says all one needs to know about Deputy McCreevy's tenure as Minister for Finance.
Deputy Jim Mitchell in his contribution this morning said something about the state of the economy. I do not want to dwell on that issue, but perhaps it bears some comment. The Minister for Finance projected 3.5% growth in GNP in his Budget Statement in December. The reality is that, in the past six months or so, we have had no growth at all. The Central Bank, with which I concur, estimates that the economy is currently flat. It will require a significant improvement in the second half of this year if we are to meet even the pretty limited ambitions the Minister set in his Budget Statement at the start of December. I am not yet willing to say we will not meet those targets. I sincerely hope we do and that the optimists are proved right, that the American economy recovers and that that recovery will have a spin-off effect in Europe, particularly in Ireland. I hope sectors such as the telecom one that have had such a bad time in the past year will recover. However, at this stage there are no signs of it. The Exchequer returns for January are discouraging and for the moment there is no light at the end of the tunnel. Having said that, it is too early to start pushing the panic button, but we must keep a close eye on this from month to month as the year progresses.
The Finance Bill is primarily intended to give effect to the tax changes announced on budget day. Just over two years ago when the PPF was initially negotiated between this Government and the social partners, I said the Minister for Finance was making three different types of tax commitments, which were in part incompatible and certainly could not be delivered in full. The Minister committed to completing his own pet project, tax individualisation; he committed to reducing the upper and lower rates of income tax and he committed to attempting to bring those on the national minimum wage out of the income tax net.
Unsurprisingly, the Minister succeeded in reducing the tax rates to the level he wanted and I have no doubt that as he sails off into the sunset he will probably beat his breast and consider he has done a good job on that score. As I have said many times in the past, I would not have done it in the way he has, but at least it was mandated by the people. The individualisation of tax was very much the Minister's pet project and one that benefited married couples with both partners working and therefore necessarily introduced a discrimination into the system against one income married couples. I disagreed with that and I still do. The State should be neutral as regards people's preferences as to whether both partners work and in so far as there is a bias, we should support the family in giving people the option of staying at home to look after their children.
My primary gripe is that the Minister has not fulfilled the promise to take those on the national minimum wage out of the tax net. There is a point about this that I missed on budget day. On doing the maths and reviewing the amount of money he dispensed and the amount of tax foregone on budget day, it was perfectly possible within his budgetary strategy to do it. Some €223 million was foregone on individualisation. If that had been put into taking people on the national minimum wage out of the income tax net, he could have done that. Instead he chose unsurprisingly to use that €223 million to push further his own pet project of individualisation. When the Taoiseach, Tánaiste or Minister say they would like to have gone the full way and take people on the national minimum wage out of the tax net, we should all know this possibility was open to him, but he chose not to do so and I deplore that.
The Minister reviewed his tax record during his speech today just as he did at the press conference he gave last week. He is fond of trotting out a number of figures that suggest he has been the most equitable and generous Minister for Finance ever. He has skewed his tax cuts to benefit the better off and those paying the higher rate of tax on part of their income have benefited to an unfair extent from the tax cuts introduced by the Minister. The amount of tax foregone in the past five years by the Minister comes to about €7 billion, which is not a small amount. That was broken down as follows: some 43% went on increasing personal tax credits, which benefits all taxpayers; some 16% went on cutting the standard rate of tax, which benefits everyone who pays tax and not just those who pay tax only at the standard rate; some 22% went on increasing the standard rate band, which obviously by definition only benefits those paying the higher rate; and some 11% went in reducing the upper rate which is only of benefit to those who pay the upper rate. This means one third of those total tax concessions went exclusively to people on the higher rate and of the remainder a substantial proportion was also enjoyed by those who pay tax at the higher rate.
The case is conclusive. During this Minister's five years in the Department of Finance, those on the highest rate who needed tax relief least, benefited most. I accept the income tax burden five years ago was higher than most of us find ideal and there was every justification for reducing it. However this should have been done in a much fairer way. This was not an accident and something that happened just because he was in Government with the Progressive Democrats; it was the personal choice and personal project of this Minister, which I deplore.
Public services are a matter of priority for my party and me. Over the weekend, I listened with interest to Deputy O'Malley. I have read commentaries recently to the effect that we are currently spending too much and that the increase of 20% in expenditure last year and the somewhat reduced figure this year are simply unaffordable. I understand the viewpoint of those commentators. Given an expected growth rate of 3.5% in the economy, the prospect of current expenditure increasing by a multiple of that is not very comforting. However if we do not put this into some perspective, the argument becomes badly skewed.
By European standards we are starting from a very low base of investment in current services. The level of investment in current services by Ireland in the past five, seven or eight years is one of the lowest in the European Union and one of the lowest in the OECD, bar the United States of America. For the first three years of this Government, the Minister stood fairly rigidly to his 4% target even though he may have tweaked the figures somewhat. More realistically he could be said to have stuck to a 6% year on year increase in current expenditure. At the time we were growing most we were not investing at a pace that matched growth. To put it another way, the benefits of growth at that time and for most of the period of this Government have not been going into public services. They have been going into surpluses or into people's back pockets. That was simply a wrong choice of priorities.
Much of the increase in public expenditure over the past four or five years has gone into pub lic service pay. I understand why that is the case. We need well-motivated well-paid public servants and there was no way to avoid this increase. In the health service, most of us understood and supported the case made by the nurses and the one now being made by the junior hospital doctors. Nonetheless 60% of the increased expenditure on the health service over the past four or five years has gone into pay and has not necessarily led to any significant improvement in or extension to the service provided with the money, which is regrettable. It is a well-worn theme of mine that we need to expand, improve and spend more money on services. However, we can only persuade the public to increase spending by persuading them they will get a better service for it. While we need well-motivated well-paid public servants, we also need to ensure that more money means better service and more service.
The monitoring of public expenditure by this House and in general has disimproved and has not met the standards required. I recently read an independent assessment of our public expenditure that makes it clear there has not been the political commitment to ensure we get value for money. If we are to make the case for sustained investment in public services as my party and I do, we will need much improved systems of ensuring we get value for money.
If we examine the health strategy which is probably the best case in point, we will get a clear picture of the magnitude of the task we face in seeking to improve public services over the next few years and perhaps an even clearer and somewhat frightening picture of the cost entailed in that strategy. I accept that the capacity improvements spelled out in the health strategy are, broadly speaking, in line with what is needed. There is no reason to dispute the figures. We are talking about 3,000 extra acute beds, 5,000 additional residential places, additional step-down facilities, community care facilities, primary care facilities, clinics and so on. It is a major task, having regard to only the capital side of the argument.
I am not sure whether the Department of Finance or the Department of Health and Children compiled the figures, but whoever did so calculated that the additional cost to the Exchequer of implementing the health strategy was some £10,000 million, €13,000 million, over ten years. That is in addition to the €2,500 million being provided in the context of the NDP and to the normal, no policy change, year on year increases in expenditure that will be required in any event. When that is combined, the challenge it presents to the Exchequer and to all of us in this House, if we are genuinely committed to increasing the capacity of the service in the way we say we are, is frightening and enormous.
Let there be no mistake about it, we need to increase capacity. Ten to 12 years ago we had 3,000 more acute beds within the system than we currently have. Everybody accepts we need to increase the number of beds, but that will cost money and large amounts of it. The Labour Party is committed to finding that money. If it is a participant in the next Government, I am determined that such money will be found and that we will make that investment. If we do not, we will fail the people who are putting their trust in us to improve the health service and public services generally.
The actions of the Government and the Minister for Finance, in particular, over the past three months will give many people cause for concern and cynicism. Having spent a year and a half drawing up, what is by any standards, an ambitious strategy, the Government then spent six to eight weeks tearing it up. The Minister for Finance made it crystal clear that he has no intention of financing the requirements of this strategy. The Minister for Finance, Deputy McCreevy, said in Ballymascanlon that he did not see that the need existed. When he introduced the Estimates for his Department in November, he said that he thought the health service was simply a black hole and he did not consider he was getting the necessary value for money by putting money into the service. He and his officials have made it clear on several occasions since the publication of this strategy that this is no more than a series of existing policies strung together and called a strategy. It is not; by any fair reading it is a strategy, for example, in terms of the capital needs which require the investment of a great deal of money.
The Government has made it clear that it does not intend to deliver on the requirements of the strategy. Putting it in simple terms, it spent five years not doing a great deal about the health service, finally producing a strategy to which most of us could at least subscribe in part and another four or five weeks tearing it up and making it clear that it would rot on the shelf. I refer to the health service only as an example of the demands that will be placed on the Exchequer in terms of improvements in public services over the next ten years. An enormous challenge faces us and it must be managed on a five to ten year basis. We cannot allow the budget to increase incrementally by a little now, a little more next year and a little more the year after that. If that happens, the money will be sucked into the system and bogged down in the deep black hole to which the Minister for Finance referred.
Although I have addressed the issue of the pension reserve fund on many occasions, I gave it more thought in recent months. I want to make it clear that when the reserve fund was announced two years ago, I supported it in principle. I had been talking about it for some time before the Minister made his decision. On the face of it, the idea was fair enough – if we had extra money, which we did, setting it aside for a future liability was as good an idea as any – but we have lost all sense of perspective and priority in the meantime.
It is worth considering some of the figures the Department produced when the fund was set up. The Minister commissioned Mercer consultants to carry out a study into future needs in terms of pensions. I will outline three figures as I do not want to read too many figures into the record. The cost of public service pensions and social welfare pensions is about 3.4% of GNP. That is the 1999 figure. The consultants did two projections, the first on the basis that pensions would increase in line with the CPI. They discovered that by the 2025, in a quarter of a century's time, the cost of pensions would be 2.8% of GNP, 0.6% lower than in 1999. They did a second projection based on the assumption that pensions would increase in line with average earnings and discovered that in that instance pensions would cost 5.7% of GNP, which, give or take, is 2% higher than in 1999. These figures show an increased dependency and an increase in costs, if relatively generous increases in pensions are assumed in the meantime, but this is no demographic time bomb.
That is correct.
This is not a problem that could not be managed over a quarter of a century. If we did not contribute a single cent to this fund for the next 25 years, we would still almost certainly be able to manage it in the normal course of events in a quarter of a century's time. I want to make that absolutely clear. There is no demographic time bomb. This is a prudent measure when one has the money, but it requires us not only now, next year or the year after, but constantly to balance the needs of the future with the needs of the present. The health strategy alone will increase the percentage expenditure on health from roughly 8% now – it was 6.5% two years ago – to 12% or 13% over the course of the strategy. Those are the figures given by the Minister for Health and Children.
We are talking about, give or take, a 5% increase in GNP in the cost of the health service over a ten year period versus a potential 2% increase in GNP, the cost of pensions over 25 years. Let us balance these figures. We must get some sense of our priorities. We could say it is prudent to put away money for a quarter of a century to meet a liability when one third of our population will be dead and suffer a mediocre health service in the meantime or we could examine the needs of the health service now and perhaps to spend some more of this money now. Perhaps we need to consider redefining the purpose of this fund. We need to examine the level of contribution we make because we are contributing €1,050 million to the fund this year alone. That is enough to build Bertie's stadium in one go, but nobody seems to be debating this matter. Everybody seems to think this is an obvious choice and priority, but I say we should start the debate at this belated stage because it is not an obvious choice. We need to re-examine this measure to consider whether we are getting best value for money from it. If we can afford it and if that is the priority we want to set, by all means let us continue to make the contributions, but I, for one, have moved from a position of being slightly sceptical about it to being, as Members will probably have gathered, a little more than slightly sceptical.
The Attorney General had a few words to say about me over the weekend. He said that I and the Labour Party wanted to increase tax. He said that we wanted to coalesce or have a loose arrangement with independent Trotskyites, socialists of various colours and that a Marxist revolution was, if not inevitable, then certainly close to the turn of the corner. I understand that the Attorney General and president of the Progressive Democrats must scare the horses and suggest his party has some purpose in life.
He has to try to get elected.
Which will not be easy.
In normal circumstances I would not allow him a free run at it because I am interested in getting into a cupboard with the Progressive Democrats to beat the hell out of each other while the other parties go about getting the votes. We like to pitch ourselves a little more broadly than that. I assume the people who vote for the Progressive Democrats know what they are getting, and fair play to them.
The Minister of State left them.
I will not go into that. I will allow him to speak for himself on that issue.
I thought the Deputy was going to say I was inspired.
Or scared. I will leave it up to the Minister of State to work that one out.
Never. The Deputy knows me well enough to know that certainly was not my motivation.
The reason I comment on the Attorney General's comments is that I suspect his view is shared by others, not least his ideological buddy, the Minister for Finance. I am not in favour of high tax and I am certainly not in favour of high tax for the sake of it. Who would be? I said in the interview, which the Attorney General quoted reasonably accurately, that I am in favour of having something to show for the last seven or eight years of unprecedented economic growth. I favour using more of our national income to invest in public services.
Look at the Minister's record. I can understand why he reduced income tax; my party has no plans to increase the rates of income tax. However, I would not have reduced the higher rate of income tax to the extent the Minister reduced it. He has taken the guts out of capital acquisitions tax. Would we look at that again? We might. He has reduced the rate of capital gains tax. Would we look at that again? I am not saying we will but I will not say that we will not. He abolished betting tax and I understand his reason for doing so. He also abolished probate tax. It was a niggling tax which did not bring in much income but I still do not understand exactly why he did it. He reduced corporation tax from approximately 32% when he took office to the current rate of 16%. That is in accordance with an agreement which my party had entered into in the process of negotiating with the European Union and we have no intention of reversing it, at least for the foreseeable future.
In the last budget, however, the Minister spent €270 million reducing employers' PRSI. I would not have done that and if circumstances required greater funds in the social insurance fund, we might well reverse it. We have no plans in that regard. I am not here today to say we will increase certain taxes but, as I said on "Morning Ireland" on the day after the budget, I disagree with the way the Minister has either abolished or reduced certain taxes – I was explicit in not including income tax in that – and we might have to look at them again. I have no hesitation in repeating that. I am determined that the investment needed to ensure we have quality health services will be made by my party if it is in Government for the next four years. If we do not do that and deliver better public services, we should not be in Government and I would not wish to be party to it.
If we do not increase taxes, how do we ensure the level of investment? About two years ago my party, under my direction in this case, produced a policy document called New Directions, New Priorities. In that document we looked at where we then stood in terms of economic growth and projected the situation forward using conservative figures. By and large the figures were approved of by or replicated those of the Department of Finance. It was clear at that time that it was possible to sustain increased investment in services from the existing current budget surplus or from surpluses that were likely to arise in the future.
Since then, matters have disimproved but we still have a current budget surplus of €5.5 billion. We are far from a position where we might run a current budget deficit. I am absolutely determined that we will never return to the course on which we embarked in the 1970s, that is, borrowing for current budget purposes. However, if we have to borrow for capital purposes, we should do it. I said that six months ago and I have repeated it on a number of occasions since. There is a world of difference between borrowing for infrastructural investment, which will hopefully be productive and provide a return to the economy, and borrowing to keep going from day to day. While one would prefer to be able to finance everything from the Exchequer without the need to borrow, if we need to borrow for infrastructural and productive investment, let us do it. If we do not do it, the cost to the country in social and economic terms will be far greater than the cost of doing it.
My party can do what it wishes to do, purely in terms of infrastructural investment and investment in services, despite the disimproved circumstances in which we find ourselves. However, if is necessary to look again at CAT, CGT and employers' PRSI, I will do that. That is my personal view. My party will set out its view in a few weeks. The Attorney General can sleep comfortably at night, therefore, because my party has no plan to increase the income tax rates.
I was struck by an interview given by the Minister of State at the Department of the Environment and Local Government, Deputy Molloy, on the radio last Friday before the Progressive Democrats conference. He was being questioned on similar lines and was seeking to give similar responses to the Attorney General. He said the Progress Democrats favoured increasing indirect taxes and not increasing direct taxes. I was fascinated. It was the first time I had heard it. If it is the case, I would love to hear him say it again and explain his reasons.
It is, in fact, consistent with what this Government has done. A few weeks ago the Government increased the excise duty on petrol by the equivalent of 30 pence a gallon. By any standard, that is an enormous increase; it amounts to an increase of 20% in the rate of excise. In addition, having reduced VAT by 1% last year, the Government increased it again this year by 1%. This Government is no stranger to increasing taxes. While I understand why some members of the Government like to focus on particular types of tax, they should not do so with the holier than thou attitude they like to affect.
I will turn now to the individual provisions in the Bill. I will start with section 12, which is the newest provision in the sense that we have not had an opportunity to comment on it previously. It provides for the tax break for sportsmen. I am bewildered by the provision. I have no idea where it came from, who lobbied for it and who it is intended to benefit or who it will benefit. It defies logic. In the first instance, it is not really a tax break. My understanding of a tax break is that one pays less tax or one can write off certain things against tax while one is earning. That is not what is contained in this provision. It appears to be a lump sum benefit when one retires.
I assume the Minister is seeking to encourage people to make a decision to play sport in Ireland on the basis that they might get a lump sum, depending on their earnings in the meantime, in ten years. I am not sure it can work like that. I am not sure that a person who is trying to decide whether he or she wants to make a career in sport would have the luxury of deciding to do sot here rather than in England or elsewhere simply because, presuming there is no change in the law in the meantime, they will get a lump sum in ten years. That does not make sense.
Perhaps the Minister is focusing on its application retrospectively. Maybe he is looking back to 1990 and has particular people or groups of people in mind who he believes have made a great deal of money in the past ten years and are about to retire. If they are, it will work only if they have been living here. They cannot come back here and gain the benefit. They will not get the benefit because they have not been resident here and do not qualify. Even retrospectively, therefore, I cannot see how the provision has an incentive effect or how it encourages people, who would not otherwise have done or who are not already doing so, to play sport here.
I can only imagine this is a means of giving a few euro to guys whose careers are almost over in a way that will not affect what they do now. The Minister of State, I believe, does not have a clear vision of how his colleague is thinking on this matter. Only the Minister for Finance knows the logic behind this proposal and he needs to explain it.
Only he knows who lobbied as well.
That is also true. The Minister, however, is capable of thinking of some fairly daft ideas without any lobbying. There are Ministers whom one suspects might meet people in pubs and come away thinking, "That is a brilliant idea; I must go out and do it". In my experience, however, the Minister, Deputy McCreevy, is capable of doing something by himself.
I met a colleague who works in the Labour Party offices as I was coming to the Chamber this morning and he asked me to use this line, "We have had tax breaks for the rich from the Minister, now we have tax breaks for the rich and famous". I said I would use the line and I have. Another colleague urged me to use another analogy, although I probably should not. He said, "Let us assume the Minister is trying to give some recognition to people who work for a short period of time and give lots of pleasure. If we applied that logic, we could apply it to prostitutes because they sometimes give lots of pleasures and work for a short period of time".
I have no wish to make a joke of the provision. There are many people who work for a relatively short period of time, sometimes by choice and sometimes because it is the nature of their careers, who get no recognition. It is beyond me why the Minister should specifically pick sportsmen as an example. He is well aware by now that amateur sportsmen, particularly in the GAA, are mightily upset, and rightly so, by what they see as a gesture to others which does not benefit them. Taking the Minister's figure of €5 million as an indicator, we could have given €5,000 or €10,000 as a straight grant to every championship player who went into Croke Park last year. That might have been a better use of the money than some thing which will undoubtedly concentrate the benefits in the hands of a small amount of people, most of whom are well off already. I do not know where Deputy McCreevy got this idea. It is not particularly offensive or expensive, but I suspect he will upset more people than he makes happy.
Littered throughout this Bill, and the Minister's previous Finance Bills, are various types of tax break, particularly capital allowances. I do not object to using these to make up for a market failure. If we identify something that we want to see happening then we might give the market some help. Student accommodation, for example, was not being built because it was not sufficiently profitable and so we provided capital allowances. These did not do the job, so the Minister has decided to extend them. There are other examples such as park and ride facilities in Dublin for which capital allowances were not taken up, which is not to say that we do not need park and ride facilities, as I know because I use the DART. However, the Minister has an ideological block whereby if he sees that something is not happening, he introduces tax breaks. That is good if it does the job, but if not, then we should recognise that we need park and ride facilities and provide them. We should spend public money in doing these things rather than develop the increasingly convoluted tax breaks and capital allowances which have to be extended and for which we must send experienced officials from the Department of Finance to Brussels to negotiate clearance.
Child care is the best example of where tax breaks have not worked. There are numerous breaks, which most of us cannot follow, to ensure this vital facility is provided, but it has not been. We should not scrap the allowances, but let us acknowledge that we may have to provide child care directly, either through the State or local authorities. I will not oppose the extension of town renewal, urban renewal, student accommodation and other tax breaks, but we must recognise that some do not work and we must intervene, although the time for that has passed in some cases.
I support the extension of the BES and the seed capital scheme, although I do not understand why the significant change is introduced. The Department of Enterprise, Trade and Employment carried out a review of the BES and SCS, and was happy with the cap of €317,000. However, the Bill increases it to €750,000. I support in principal finance through these schemes for SMEs starting up since such seed capital is needed, but there is also scope for abuse and a level of tax planning that I find unacceptable. I thought the Minister accepted that argument, but he has gone back on it and increased the limits in a manner that makes no sense. I hope that he will explain this.
Yesterday, the Minister was in Brussels at an ECOFIN meeting where, after a lengthy debate, it was agreed not to accede to the Commission's request to give a formal warning to Germany and Portugal over their budget deficits. This should be discussed in more than the business pages as it could become a problem for other countries and could fundamentally affect the stability of the euro. The terms of the stability and growth pact are too strict and do not make much sense where it does not distinguish between capital investment and current spending. We could be in a position soon, along with other countries, where we have a current budget surplus but are borrowing beyond the limit allowed in the pact. That would be inequitable and should be avoided long before it arises.
Looking at Germany over the past year, should we not allow normal economic stabilisers to come into play when a large economy is close to recession? We all know that stringent financial constraints mean there is a greater danger of deflation and recession. We should allow Germany to spend its way out of recession instead of imposing restraints for the currency's sake. This is no academic argument for us as Germany is about 40% of the eurozone economy and any recession there will affect our economy. We must start the debate – I accept it is easier to start it in Opposition than in Government – because we must distinguish between capital and current spending and find a better mechanism for allowing countries such as Germany to run a certain deficit rather than the current rigid 3% figure which applies irrespective of circumstances. Fines are provided for in the pact which no one envisages being imposed and the danger is that the bluff, of the Commission and the pact, will be called leaving us worse off.
I would like to discuss other matters in more detail on Committee Stage, but the one glaring absence from the Bill and the Minister's speech was a reference to the climate change strategy. Towards the end of 2000, he announced that carbon related taxes would be introduced from 2002. That gave people time to prepare, by using less energy or more environmentally friendly energy sources. Most people who care about these issues thought that was appropriate rather than introducing major taxes overnight.
It has not happened, however. I know from the tax strategy group papers, which were supplied by the Department and are available on the Internet, that this was discussed by the Departments of the Environment and Local Government and Finance. A green tax group provided a stimulating report, under the impression that the strategy's recommendations would be acted upon. The Minister has made only negative mention of carbon taxes and has given no indication of any commitment to the Kyoto Protocol. This is not academic either as we have legally committed ourselves, as will the EU as a whole, to reducing carbon emissions to 13% from 1990. As matters stand, the figure will be 30% plus, which will involve us in serious difficulties if we do not get to grips with it soon. We are entitled to ask the Minister what happened to the national climate change strategy. What happened to the commitment to introduce carbon based taxes or the commitment to try to meet the Kyoto Protocol by some kind of tax measure, something about which many care deeply?
During the budget debate I spoke about the need to maintain spending on roads. I also mentioned it earlier. We have had a very unedifying row since then between the Minister for the Environment and Local Government and the National Roads Authority. Unfortunately, the bottom line is crystal clear: there is no money in the kitty this year to progress any new projects. This is deplorable and unnecessary. It is being done purely in order that the Minister can say he is avoiding borrowing. This is short-sighted and should not happen. I hope it is reversed soon.
The provisions regarding tonnage in the shipping industry are interesting. This has been inevitable since other EU countries introduced corporation tax on a tonnage basis. In a sense it is instructive, as it is a unique occasion for us in Ireland to find other countries effectively undercutting us in terms of corporation tax and to find ourselves obliged to move to what is effectively a lower rate. Perhaps it is no harm for the shoe to be on the other foot, as it were, and for us to realise how some of our partners feel about us when, as they see it, we undercut them in terms of corporation tax.
This is the Minister's fifth annual Finance Bill and his seventh in all. During the last five years he has done many of the things he wanted to do. I agreed with some, though not very many, and disagreed with others. I will say one thing: he has been consistent and coherent. I am sorry he is not here to hear this, but we always knew where he was coming from, even though we did not particularly share his values. While the country would be a mighty better place were he not there, I acknowledge that within his terms he has achieved a considerable amount.
I propose to share my time with Deputy Fleming.
As I must go to a funeral, I cannot stay to hear the Minister of State. It is not a discourtesy.
Fair enough. I always listen with great interest to the Deputy, but before he leaves, when he refers to the tax changes, which have been substantial and to which I will return, the one area he picked on in the social service area was the health sector, though we could also look at education. If he looks at the Government's record during the past five years, he will see a 126% increase in health spending. One cannot conceive of where he is coming from in suggesting the focus of the Minister or Government was exclusively on the area of tax reduction. There has been massive attention given to and investment in health and education. At a time when the numbers of unemployed fell dramatically, the spread and increase in spending in other areas, such as pensions and children's allowance in the Department of Social, Community and Family Affairs, have been incredible. It has not been the case that the Labour Party has not been in office or uninvolved in government for a long time; it has been. If one compares the record the Minister, the Government and I stand over and that of the Labour Party, they do not bear comparison. It is wrong to suggest the Government was not equally committed to development of and massive investment in social services.
That is not to say, however, that everything we need to achieve has been achieved. It has not, far from it. There is much more we have to do in this area. Other sectors will continue to need investment, such as those highlighted by the Deputy. I do not disagree with him in that regard. However, it is reasonable to acknowledge that whatever one's views of the way personal tax, corporation tax or any other tax is structured, there have been substantial benefits to enterprise and the economy in personal and company taxation, but an equal measure of attention was given to social services.
The point I was making about the health service was looking to create the greatest possible consensus on where we start from, in looking at the Government's strategy—
It is not appropriate to intervene at this stage. The Minister of State has the floor and the Deputy had 45 minutes to make his contribution.
We will agree to disagree, but I always listen to Deputy McDowell's contributions and felt compelled to point out what is reasonable and fair.
l am proud we have provided the State with good and effective government and our time in office has seen the creation of an economic climate which has helped all areas of our economy to flourish. It is clear there cannot be progress in other areas without the benefit of a strong economy.
We have achieved one of the best economic performances in the world in the last four years and the following figures demonstrate this point: taking the years 1998-2001 as a whole, the economy has grown, in GDP terms, by an annual average of 9.5%, while our debt-GDP ratio stood at 74% in 1996 before we came into office. At end 2001 it stood at around 36%, the second lowest in the European Union.
The Government has been very effective in its stewardship of the economy. One achievement which must stand out is that more than 300,000 new jobs have been created since 1997. As a result, unemployment has fallen from 10.3% in 1997 to an estimated average of 4% last year. Long-term unemployment has also fallen significantly.
The Government has made significant progress in many areas: taxation, social expenditure, education, health and the development of our national infrastructure. Some of the provisions of the Bill help build on our existing record of success. On the income tax front, during the last five years we have made major changes to the benefit of income earners and the economy generally: changes which continue to be provided for in this Finance Bill.
We have increased the incentive to work, and the reward for work, by reducing the overall burden of personal taxation. For example, in 1997, before the Government took office, the average tax rate, that is, tax and levies combined as a percentage of gross income, for a single person on the average industrial wage was 27%. Today, the equivalent figure is 17%. That is a real and tangible improvement. The most recent data available from the OECD indicate that for a single person on the average production wage Ireland has the lowest tax wedge in the European Union.
Tax rates have been reduced substantially, basic personal credits increased and the standard rate band widened significantly. It all means less tax to be paid and a greater incentive to work. Five years ago a person hit the top rate of tax at an income level well under the average industrial wage. Today, when the changes in this Finance Bill are taken into account, a person would have to be earning appreciably more than the average industrial wage before facing tax at the higher rate. Furthermore, the entry point to taxation was €98 per week for the single person when the Government took office. It is now €209 per week or 90% of the current minimum wage.
That is not absolutely correct.
The Government has been characterised by some as only favouring the wealthy, but the facts, painful as they may be for the Opposition, tell a different story. Of the €4.8 billion in income tax reductions, just 11% went to cut the top rate of income tax while 43% went on increasing basic tax allowances, or credits as they now are, including PAYE credits. This has distributed the fruits of economic success to all taxpayers, not just one group.
Not only has the Government reduced the personal tax burden, it has ensured a favourable business environment through its corporation tax policy. The standard rate of corporation tax on trading profits has fallen to 16% from 1 January 2002 and will fall to 12.5 % from l January 2003. This promotes the development of a strong business sector in Ireland – a keystone of our economic success. The Bill contains a range of measures designed to help Irish business whether through supporting small business through the BES and the seed capital scheme, facilitating Irish financial services competing internationally through streamlining various provisions or helping the Irish shipping industry to compete on a level playing field through a new tonnage tax regime. Those are just some of the provisions.
Two important tax based schemes which are useful to entrepreneurs are the business expansion scheme and the seed capital scheme. The business expansion scheme, which has been in existence since 1984, provides tax relief for individuals investing in unquoted companies engaged in certain qualifying trades. The seed capital scheme, which began in 1993, allows an individual who leaves employment and invests in a new business, with little or no job displacement, to claim a refund of tax paid in previous years.
The Finance Bill proposes that the business expansion scheme and the seed capital scheme be renewed for a further period of two years and that the existing company limits for each scheme be increased to €750,000 from their current level of €317,500. In the case of the seed capital scheme, investors will, subject to the annual investment limit of €31,750, be allowed to spread their investment over six years rather than the current five years. This means the amount on which they can get a refund of tax will increase from €158,750 to €190,500. These schemes have been an important source of finance for start-up companies and for the SME sector in Ireland. I understand there has been an increased level of interest and uptake in the schemes since these changes were announced in the budget.
While on the subject of business incentives, employee financial participation is important in encouraging greater partnership at the level of the firm. The alignment of the views of employees and management should help make companies more competitive and successful. The Government continues to be supportive by giving tax concessions to such schemes, for example, the approved profit sharing schemes, employee share ownership trusts and save as you earn and share option schemes.
There have been a number of requests to change the tax treatment of gainsharing schemes. Gainsharing is a simple concept which involves sharing in the benefits from any productivity gains or savings between the management of a company and the employees. However, under gainsharing schemes, employees generally receive a monetary payment rather than shares. I support the idea of gainsharing and I am aware of the benefits it has bestowed on Bausch and Lomb in Waterford in terms of increased employment and activity generally in the company. It has also increased partnership between the management and the employees of the company. It is a microcosm of national social partnership working in a private sector company and it has much to commend it. I hope we will reach a point where we will be able to consider the scheme in real tax terms.
I know there are difficulties in designing a scheme of tax relief in a way that does not lead to a generalised scheme of tax relieved remuneration and, accordingly, it is not considered feas ible at present to extend tax relief to these schemes. I acknowledge that the submissions made and the example of the scheme used in the company mentioned are helpful contributions towards framing a successful and suitable tax scheme in the gainsharing area.
As I mentioned earlier, the Irish shipping industry will benefit significantly from a tax measure introduced in this year's Finance Bill – the tonnage tax. A tonnage tax regime is an alternative method for shipping companies to calculate their profits for corporation tax purposes. The tonnage tax profits are calculated by reference to the tonnage or weight of ships operated by a company. The tonnage tax is optional. Companies may remain subject to the normal corporation tax rules for calculation of profits. The introduction of this provision will help the Government protect the long-term future of the Irish shipping industry and help secure jobs both ashore and at sea. Arklow Shipping has already added a new ship to the Irish fleet on foot of this Government initiative.
The tax measure is particularly important for those coastal communities which provide the majority of our seafarers. Our shipping industry and its skilled workforce have played a major part in the country's success as a trading nation. I hope the sector will enjoy significant growth in the coming years, backed by both domestic and EU initiatives. The tonnage tax follows earlier Government initiatives for the sector, such as the unique seafarers' income tax allowance. Coming from the maritime constituency of Waterford where there is major shipping and fishing in Dunmore East, I welcome this imaginative initiative. The measure is subject to clearance by the European Commission from a state aid perspective and when this is achieved the necessary commencement order will be made.
In line with the Government commitment to the targeted use of tax reliefs to assist in the regeneration and rejuvenation of the core areas of our urban areas, the Bill provides for a two year extension to the 31 December 2002 deadline of both the urban renewal scheme and the relief for multi-storey car parks. The urban renewal scheme is aimed primarily at towns with populations in excess of 6,000 and a total of 49 areas in the State have been designated for a range of targeted reliefs under this scheme since 1999. In my own county both Dungarvan and Waterford city have had areas designated for relief under the scheme. While I am aware that the initial take-up of the scheme has been less that originally anticipated, I have been informed that a significant number of projects are currently in the planning process. I am confident this extension will enable the majority of these projects to avail of the generous reliefs available under this scheme.
The Bill also provides for a further measure which extends the number of sites that can avail of the rented residential or section 23 type relief under both the urban renewal scheme and the town renewal scheme. When sites and sub-areas were originally selected for designation for relief under both schemes, only a limited number of sites were selected for rented residential relief. Overall, rented residential relief will now be available in respect of a total of 1,785 sites in the areas designated under both schemes. This measure will provide for an additional boost in the housing supply, particularly in the provision of rental accommodation, as well as further stimulating the programme of regeneration in towns and cities throughout the country.
There will also be a two year extension to the 31 December 2002 deadline of the rural renewal scheme. This is a pilot scheme whereby the types of reliefs normally available for the regeneration of inner city areas have been applied to the upper Shannon area. The aims of the scheme are simple – to encourage more people to stay in the area and to move into the area, as well as stimulating economic activity generally. The scheme has been in operation since 1998 and has proved to be successful in stimulating an increase in investment primarily in owner occupier residential property. Some of the areas designated under the scheme have seen increases in the order of 200% in the number of planning applications in the recent past. This two year extension will allow us to build on the success of the scheme to date and help to arrest once and for all population decline in the upper Shannon area.
The Bill provides for the restoration of interest relief as a deductible expense in calculating tax on rental income from residential property. The interest in question is interest on borrowed moneys employed in the purchase, improvement or repair of such property by an individual, partnership or company and which accrues on or after 1 January 2002.
As regards the change in interest relief and the changes in the treatment of stamp duty introduced in the budget for investors in housing, we recognised that circumstances in the property market were much changed. There was a significant downturn in the house building industry due to weakening in demand in the property market against a background of a slowdown in economic activity generally. This would have serious consequences for activity and employment in the house building sector, for housing supply for purchasers and for the supply of property for rent if it continued. These considerations were instrumental in the decision to adjust the rates of stamp duty for investors to align them with those for owner occupiers, other than first-time buyers purchasing second hand houses. The effect of the changes is that an investor purchasing a new house or a second hand house will pay the same rate of stamp duty as an owner occupier, other than a first time buyer who purchases a second hand property. This change will hopefully help to maintain and increase housing supply while safeguarding employment in a vital sector of the economy. The expected increase in supply of rented property should also assist in stabilising the levels of rent.
The Government believes in using tax reliefs and incentives to promote and help desirable social change in health and to develop sports and sporting activities. In the context of changes to health, I want to mention one measure which is provided for in the Bill, namely, the proposed extension of the relief for reimbursed medical expenses. As the House will be aware, the relief is being widened so that claims may be made for reimbursed expenses incurred for a wider range of relatives and for relatives or non-relatives aged 65 or over or for those who are permanently incapacitated. I am not in any doubt that this measure will be of help, particularly to the elderly in the context of their long-term care needs.
The Bill also provides a new relief from income tax in respect of the direct sports earnings of certain sportspersons, such as athletes, badminton, squash and tennis players, boxers, cyclists, footballers, golfers, jockeys, motor racing drivers, rugby players and swimmers. The earnings to which the relief applies are earnings deriving from actual participation in the sport concerned, such as prize money, performance fees and so on. Other earnings, such as sponsorship fees, endorsements and so on are not included. The relief takes the form of a deduction from earnings equal to 40% of those earnings for up to any ten years of assessment back to and including the tax year 1990-91 for which years the sportsperson was tax resident in the State. The relief will be given by way of repayment of tax and is to be claimed in the year in which the sportsperson ceases permanently to be engaged in that sport provided he or she is tax resident in the State in that year.
I am pleased the Minister for Finance has decided to introduce the scheme. Sportspersons play an important part in our society. They motivate and encourage people of all ages to attend or to participate in sporting activities. We are all aware of the need to encourage people of all ages to lead more active lives and if this measure can help to achieve this, it would be a positive result for all our people.
Another measure designed to support the valuable role sport plays in the lives of many people is the extension to sports bodies of tax relief on donations. This measure was proposed last year and I am pleased to note that the Minister for Finance has been able to follow through on last year's commitment to examine the proposal.
The introduction of a new scheme to allow tax relief on donations for capital sports projects is welcome news for sports bodies all around the country which may be planning refurbishment of their facilities or, indeed, construction of new facilities. The Government wants to support sports bodies which provide the means for people to enjoy healthy and fulfilling leisure activities and contribute to the cultural life of the nation. That is why, subject to the approval of the Mini ster for Tourism, Sport and Recreation, projects costing up to €40 million will be eligible for inclusion in this scheme.
As I emphasised earlier, the key to Irish development across all fronts is economic growth. Our taxation policy which has encouraged work and promoted employment has been central to our record economic achievement in our time in office. It is with great pride that I commend this Finance Bill to the House.
I am grateful for the opportunity to speak on the Second Stage of the Finance Bill, 2002. As has already been indicated, this is the fifth Finance Bill introduced by the Minister for Finance, Deputy McCreevy, and is a further testament to his continuing good work to improve the economy. I participated in Committee Stage debates on this Bill in previous years and look forward to doing so in future.
As a result of measures taken by this Government in recent times, we now have a minimum wage which was set at a very high level compared to some European countries. Some 90% of the current minimum wage, when employee tax credit is taken into account, will be free from tax at £165 per week. I hope we will be back in Government after the next general election—
God help Ireland.
—and we can take the final step to remove people on the minimum wage from the tax net entirely.
Tom Parlon may have something to say about that.
People thought small businesses would grind to a halt with the introduction of the minimum wage but this has not happened. People are now paid a minimum wage which would not have been achieved but for the Government's actions. We are 90% of the way to excluding that minimum wage from the tax net and I look forward to completing that task next year.
Does the Deputy think it unfair that they should be taxed?
For single income couples in receipt of carer's credit, the exemption will be €443 per week, which is a tremendous boost. The minimum wage should be totally exempt from income tax. If we had taken the view proposed by other parties a lower minimum wage would have been introduced, in the first place, which would have been outside the tax net. When we brought in such a generous minimum wage we encountered the problem which we are now resolving.
The Minister for Finance has been consistent in recent years in allowing tax credit for mortgage holders. This is a remarkable situation which I regard as one of the most important things we have done for people on low wages. People on low wages, for example, a combination of a part-time job and social welfare, and paying a mortgage to a financial institution or their local authority saw others receiving this benefit for many years. Through the introduction of the tax credit system, they are now getting a reduction on their mortgage. From 1 January this year, their mortgage payments will have reduced. I do not think this point has been made sufficiently strongly. I hope everyone is checking the reduction their mortgage payments in January. If the reductions did not occur, they should immediately contact the tax office to ensure they get their full tax credit.
Last Friday I attended a meeting in Abbeyleix arranged by the Laois Chamber of Commerce. Representatives were in attendance from the county enterprise board, the Leader programme and other State bodies. I was very pleased to hear the tremendous praise from local businesses in regard to the major increase up to a level of €650,000 in the limit for the business expansion schemes. They said this will give practical benefit to small businesses throughout the country. I will go by what they say, although some may not consider their opinion as important as that of the Department of Finance. The previous limit of €317,000, approximately £250,000, was not sufficient. Setting up a business, acquiring premises, going through the planning process and all that is involved in a new enterprise was not possible under the previous limits. Business people are delighted that the scheme will attract considerable additional investment into their businesses. There has been criticism of that increase in this House in the last hour and I want to emphasise that there is another side to the story.
Deputy McDowell used a funny phrase about Germany being allowed to spend its way out of a recession. That epitomises, more than anything else, the fundamental difference between this Government and what is being proposed by the Opposition which wants to spend its way out of the recession while our approach is to work our way out of it by providing incentives to businesses to create jobs and by providing incentives to people to go out and work by reducing their income tax rates. There is a fundamental difference between these approaches to getting out of a difficult economic situation.
I welcome the extension of the deadline of the town renewal schemes to 31 December 2004. This is very welcome and I would like a progress report on this scheme, possibly on Committee Stage. I tabled parliamentary questions on this matter to the Minister for the Environment and Local Government, as the level of take-up is very disappointing. I recognise the necessity for these schemes to be cleared by Europe, but we intro duced a new level of paperwork into the scheme which I believe will result in its strangulation by red tape. This scheme has the potential to be the most beneficial of its kind ever introduced. The refurbishment of old buildings is in question and, for a person to obtain approval, an outline plan and accurate estimate is required before work commences. This is creating serious difficulties for people who would otherwise be interested in the scheme. How many sites have been designated in recent years and how many have been completed? Judging by the Minister's answer to my parliamentary question, the figure is very disappointing.
Coincidentally, I have tabled a motion in my own local authority regarding the efforts being taken at local authority level to promote this scheme. When local authorities were drawing up the area plans, many of them hired consultants for a period of months who went out to look at every property in the town which was making submissions. They photographed the properties and spoke to the owners regarding their submissions. Temporary staff were at times employed to assist with this work but there was no progression beyond submissions. In each of the four provincial towns in County Laois between 20 and 50 sites are designated. There has been no promotion and the owners of the properties and the auctioneers are not being brought in to tell people about the benefits of the scheme. I would like to see the scheme promoted because people have not fully understood what it is about. They thought it was a grants scheme and they do not understand some of the intricacies of its tax incentive aspect. It is important that there is departmental co-ordination on this. The scheme does not just involve planning and building, it involves tax incentives and financial management. The required expertise in tax advice does not exist in any local authority and that is a gap in the system which needs to be filled.
I welcome section 29 of the Bill, which expands the definition of the "qualifying quota" which will qualify for relief under the scheme of capital announced for the purchase of milk quotas. This relief will be available in respect of any other milk quota purchased by active producers on or after 1 April 2000. I look forward to that being of benefit.
I am a member of the Select Committee on Finance and the Public Service and I look forward to robust discussion of this Bill on Committee Stage and to the urgent enactment of the legislation.
I propose to share ten minutes of my time with Deputy Deenihan. Perhaps the Chair will remind me of that.
I am glad to have the opportunity to speak on the Finance Bill, 2002. Before the Minister of State at the Department of Finance, Deputy Cullen, leaves, there are a couple of points I have to make relating to part of what he said earlier. He said:
The Government believes in using tax reliefs and incentives to promote and help desirable social change in health and to develop sports and sporting activities. In the context of changes to health, I want to mention one measure which is provided for in the Bill, namely, the proposed extension of the relief for reimbursed medical expenses.
The Minister of State went on to talk about what that extension will do. That reads beautifully if you approach it as somebody who comes in from outside. The Government proposes to classify desirable medical relief as something for which a tax incentive will be designated, but it gets away from the law of this land. The law, as defined in the 1970 Act and clarified by the Ombudsman, says that medical expenses incurred by elderly people should be paid for by the State. The Ombudsman has said that on a number of occasions, and that nursing home care should be paid for by the State. We have had no response from the State on that. The Government has said in the Finance Bill, 2002, that these medical expenses are tax allowable. That is to go only part of the way towards what is the law of the land. Perhaps the Minister of State at the Department of Education and Science, Deputy O'Dea, will have a look at the Ombudsman's report on nursing homes and see what was said. It was stated very clearly and reiterated before a committee of this House. The Ombudsman is bringing forward another report setting out again his clear view that nursing home care should be paid for by the State. What is being provided in this Bill does not satisfy the many people who incur huge bills for maintaining elderly people in nursing homes. It is unsatisfactory that they should be treated in this way.
One looks at what this Government has delivered in recent years and at what the Minister for Finance, Deputy McCreevy, has done. The Minister has promoted himself as the great innovator who has changed the whole taxation base and put more money back into people's pockets. The reality is somewhat different. What the Minister has been engaged in has been, to a great extent, sleight of hand. He has reduced the rates and broadened bands, but the net effect on people's incomes, particularly at the lower end of the scale, has not been great. I refer the House to a report entitled "Changing Incomes, Unchanged Taxation" by Eunan King of NCB Stockbrokers. One of the points he makes which is worth noting is that since income tax rates have been reduced, tax bands widened and allowances increased, there is a public perception that the Government's income tax policies in the 1990s have been stimulatory. However, the changes to allowances, tax bands and tax rates of recent years have done no more than offset the rise in the average tax rate which the progressive structure of the tax system would have brought about as income rose. Bands had to be kept moving to keep abreast of what was happening and reduce rates to keep people out of the top rate of tax. Mr. King con cluded that the overall income tax burden did not fall to any extent during the 1990s. The average proportion of income paid in tax remained at around 21% throughout the decade. Budgetary tax changes did no more than off-set the tendency for the average tax rate to rise in a progressive tax system. Mr. King does not have an axe to grind with anybody and it is a very interesting report. I am sure there will be some response from the Minister to it. It points to what has happened.
Despite the change in rates, a lot of money does not seem to have been put back into people's pockets, particularly the pockets of the average income earner. Of course, many at the top end have done very well and have gained significantly. Simple mathematics shows that the tax incentives given to single people earning more than €60,000 in recent years amount to almost €1 billion. These are well-off single people who are earning significant sums of money and the Government has concentrated many of the tax reliefs on them. Compare that to what has happened to those at the lower end of the scale who earn the minimum wage. The Minister for Finance told us that he could not afford to take those on the minimum wage out of the tax net, yet he could do what I mentioned for the well off. In the same period he was able to provide hundreds of millions of pounds to reduce betting tax.
The Deputy is simplifying what has been done.
In the new budget he has added a special incentive for sports people, a subject I will come back to in a few minutes. Despite that, he was not able to find any money to take those on the minimum wage out of the tax net.
In his five years as Minister, this great pioneer has failed to look at some of the anomalies and difficulties within the taxation system. The Revenue Commissioners agree the level of income of an individual taxpayer and issue a certificate to him or her. If that taxpayer then goes to the Department of Social, Community and Family Affairs with that certificate, it will not be accepted as a legitimate statement of their income. If it was a taxpayer who is a self-employed person with a low income would be entitled to request family income supplement. If you are self-employed, you are not allowed family income supplement simply because the Department of Social, Community and Family Affairs does not trust the figures certified by the Revenue Commissioners. The Minister for Finance has done nothing about that. It leads to injustice. In the case of two householders living side by side with the same commitments and family size, one being in the PAYE sector and the other operating a small post office, shop or farm, the former is entitled to a top-up from the Department of Social, Community and Family Affairs and the latter, with an income certified by the Revenue Commissioners as being the same as that of his or her neighbour, is not. It is not fair that the Minister should preside over that in his period in office.
If, for example, a taxi owner, whose income of €19,000 is certified by the Revenue Commissioners, applies to the Department of Education and Science or through its agent, the local authority, for a higher education grant for his two children, the Department will say it wants to see his or her accounts. If the person has in those accounts, a legitimate expense such as a lease agreement for a car which is necessary for work, that is added to the person's income. The person's income, in those circumstances, can exceed the limit and the child will not qualify for the grant. That is not fair.
The Minister of State, Deputy O'Dea, has a particular soft spot for the taxi men as we all know from a recording by local radio. Would he be content to see a taxi owner, who has a clean bill of health in terms of a tax certificate from the Revenue Commissioners, refused a higher education grant for his child for that reason? That is unfair. Why should it happen? Why should one discriminate against anybody who has a lease agreement for a car which he or she uses for business purposes? This should be looked at. In other words, the Department of Education and Science is saying to the Revenue Commissioners, "We do not trust the work you have done. We do not trust the figures you have approved."
Individualisation is another injustice on the taxation front. Let us look at two households anywhere in the country whose gross income is €56,000. In the first household there is one earner on €56,000 and in the second there are two earners with a combined income of €56,000. They have similar mortgages and similar houses. How are they treated? The State says to the earner in the single income family, "You must pay an additional €80 a week because your spouse does not work." Is it fair, where the spouse, for her own reasons, has decided not to work outside the home, that we should treat her in that way? This is another injustice which is presided over by this Minister. It is an injustice brought in by this Minister and he continues doggedly to see it through. That provision is grossly unfair and should not be in the system.
We hear the Government talk about the marvellous job it has done. It has provided money, here, there and everywhere. I will acknowledge that it has spent more in some areas. In the health services it has spent a good deal of money. It has increased expenditure and we all agree that nurses, junior doctors, etc., should have got more, but what has happened within the health services and why are the people not happy with them? I suggest that the Government has failed to manage the health services properly.
Management in many areas within the health services leaves much to be desired. I have seen this in a hospital in my area, where we increased the number of consultants, surgeons and theatres. When we questioned the lack of increase in outputs, the response was, "We do not have beds for patients when we operate on them and therefore the outputs have not increased." Who then made the decisions for increases in expenditure in all these areas which would not result in increased outputs? It is absolutely ridiculous and that is where this Government has failed so miserably in carrying through on those.
In education there is a lack of psychological services around the country, but the issue in this area I particularly want to talk about is the schools buildings programme. It is disgraceful. There are in the region of 800 schools waiting for approval for major capital projects.
In my area there are a number of schools in the process of looking for major capital funding. There is a vocational school to be built in Castlepollard in County Westmeath. Lo and behold, we saw in the local newspaper a few months ago that the Taoiseach was coming to cut the sod. That was great news, the Taoiseach would cut the sod and get on with the building of the school.
(Wexford): Senator Cassidy will look after that.
However, a problem arose. It was a very windy day and the sod-cutting, we were told, had to be abandoned because they could not go out on the field on a windy wet day.
Maybe Senator Cassidy was concerned.
I do not know why that was put forward as an excuse because the real reason the sod was not cut was the Department of Education and Science said, "We have not approved this school yet. It is still at stages 4 and 5, and we have not given approval for stage 6, which is the tender process", and one cannot cut a sod until the tender process is completed.
At CBS Mullingar, for example, stages 4 and 5 are with the Department since last May and there has been no progress. There is a Gaelscoil in Mullingar at the same stage, waiting to be approved. Planning permission and everything else is in order but there has been no progress.
There is to be a new school for Coralstown in County Westmeath. A Senator, not Senator Cassidy but Senator Glynn, stood up at a public meeting in March 1998 and said, "This school is approved. It is written in stone. You will be in your new school in September of next year.", that is, September 1999. Not only has a sod not been turned but we have not even got to the stage of thinking about turning the sod, but I am sure in the run up to the election there will be flurry of activity.
The Deputy should not give them ideas.
I ask the Minister of State, Deputy O'Dea, to look at the capital projects within his Department. If we can enter into PPPs to provide the infrastructure for roads, surely we should also be able to do so for schools. There is one project in place for five schools in County Cork. Why not extend it to try and clear this log-jam? This is a major problem and we must do something about it.
There was some talk earlier about the pension fund. Why not invest the pension fund in those schools and those infrastructure projects? We are putting aside this huge amount of money and it will be needed at some stage, but why not use it now for worthwhile infrastructural projects like schools?
I will briefly address the issue of tax relief for sports persons. I do not know from where this idea came, who looked for it or who will benefit from it, but it certainly seems to be one of those ideas conceived out of the blue. Why does this relief apply only to some sports people? Incidentally, it is a retrospective relief. If they have been living here for the past ten years and are about to retire from their chosen careers, they can avail of this relief. If they decide to play golf, tennis, squash, badminton or become boxers and remain resident in Ireland, they will be able to claw back some of the tax they paid in Ireland.
What about the people who play sport day in, day out up and down the country? What about our great national games, where sports people such as Deputy Deenihan, who entertained us for years, go out on a weekly basis and entertain the public without receiving any remuneration? What benefit will they derive from this relief?
The Minister rather glibly stated that it does not matter, it is only a small amount of money. He said in his speech:
The relief can be claimed in the year in which the sports person ceases to be permanently engaged in that sport, provided the individual is resident for tax in that year, and will begin by way of repayment of tax. The cost of this measure is not estimated to be very significant – it is unlikely to exceed €5 million a year on average on an ongoing basis. It does not matter, it is only €5 million and we can throw that around.
If €5 million were available for last year's football championship, and Westmeath, which had a fantastic run and entertained us all so well, got even a small proportion of that, then we would not have to be involved in fund-raising efforts to cover the costs of those players' involvement. The county board deficit is around £200,000 for last year. Why can this sum which the Minister calls "not very significant" not be made available to teams like that? This measure is anti-Gaelic games. A few people will benefit from this provision and I question the value of giving it to them. If the Minister wants to take an interest in sport then he should give sport what it is due. The Minister should look at our national games and think of a way of making a return to those.
Deputy McGrath has provided a good introduction to my contribution. Before dealing with the provision for professional sports people, I will briefly refer to the Bill and the economic circumstances we are now experiencing. I am sure the Minister of State, Deputy O'Dea, took cognisance of the speech made by Deputy O'Malley at last weekend's Progressive Democrats conference. Deputy O'Malley is someone to whom I would certainly listen. It was his last conference and one would think that he would be going out in glory and looking back at the achievements of the Progressive Democrats. He emphasised one aspect of current financial strategy, namely, spending. The alarm bells should be ringing at this stage because spending has gone out of control.
That would not be the fault of Fine Gael.
The rainbow Government, which was highly criticised, was very disciplined in its spending. If it had been more flaithiúil with its spending it would probably still be in Government. The few spending proposals Fine Gael would have if it were to get into office are minuscule compared to some of the provisions—
What about the Eircom proposal?
The Eircom provision is very fair. When Deputy Power knocks on doors, he will hear all about the scam pulled on the people. The taxpayer netted £4.3 billion from the Eircom debacle. Fine Gael's proposal would return €80 million, at most, to those people who were duped into buying shares by an unprecedented publicity campaign led by the Minister for Public Enterprise, Deputy O'Rourke. People are bitter about this. Fianna Fáil organised a very good campaign in the media with people telephoning radio stations; it obviously has a very good system of getting its supporters to do that. The plan worked, but the day of reckoning will come and Fianna Fáil will have to answer to the people.
Deputy Jim Mitchell pointed out that the Minister for Finance has presided over a 22% increase in current expenditure without taking corrective action, while revenue has only increased by 2%. That is quite alarming. I agree with Deputy O'Malley that spending is now spiralling. If the Government does not take corrective action then the next Minister for Finance will have a very difficult job in next year's budget. The Minister for Finance has already recognised there will be a deficit of approximately £3 billion. If spending has gone out of control, it is reasonable to forecast that could rise to anything up to £5 billion.
Some very wealthy people in this society have benefited a great deal over the past five years. As I said previously, when the Government came into office it was like taking over a team such as Manchester United. Everything was set up for them. My Government was creating 1,000 jobs a week at that time.
The electorate is very foolish, is it not?
That was five years ago. Some people Deputy Power would know very well from accompanying them to the races have gained substantially, but many others have not. Deputy Power will encounter a lot of bitterness when he goes to those doors. People are not as happy as the Deputy thinks they are.
Those of us who talk to teachers, whose morale the Government has deliberately attacked, know that they, more than any other group of people, shape the future sports people of this country. Many will not do so in the future as a result of the attack people like Deputy Power made on their profession. The election is in a few months time and there will be people—
The Deputy has made an allegation, I want him to substantiate what he has just said.
People like the Deputy have attacked teachers.
On a point of order, a Member cannot come into this House and make allegations.
These are political—
I have been accused of making an attack on teachers. There is no substance whatsoever to that remark and I ask the Deputy to withdraw it.
An allegation which is without foundation has been made against me and I ask the Deputy to withdraw it.
I said "people like the Deputy". That is on the record.
The Deputy did not say people like me.
I do not have to withdraw the remark.
That may be all right at a Fine Gael Ard Fheis but when a Deputy comes in here and says such things he must withdraw them.
I do not have to withdraw anything. I said "people like the Deputy", when the Deputy and his colleagues go to the doors of the 18,000 teachers, they will find out what they really feel about them after the way they have been treated.
Section 12 makes provision for relief from income tax in respect of certain earnings of sports persons listed in schedule 23(a). The various sports persons mentioned are athletes, badminton players, boxers, cyclists, footballers, golfers, jockeys, motor racing drivers, rugby players, squash players, swimmers and tennis players. There are approximately 75 national umbrella sporting organisations and the list excludes many of those. In the weeks ahead, we will hear from many of those sports organisations. While I welcome the provision, it is not fair in its application. By virtue of their exclusion, people will be discriminated against and hurt by this provision. If the Minister was going to introduce this measure, he should have done so properly. He should have ensured that there were no victims and that nobody would be excluded. The additional numbers which would have been involved may not be numerous.
The Minister for Finance mentioned that these tax breaks are similar to those enjoyed by artists. No differentiation is made between artists in the provision which applies to them so why are distinctions being drawn between sports people? The Minister said it was a way of rewarding sportsmen and women for the prestige they bring to Ireland. Many more sports people bring prestige to Ireland in addition to those in the categories outlined.
I know Deputy Power is an ardent Gaelic football follower and he can see the efforts put in by Kildare in recent years to try to win glory for that county. This has been one of the greatest ever kicks in the teeth for Gaelic players who have been totally isolated. There is no comparison between the revenue earning capacity of Gaelic football and hurling and that of all other sports combined. Gaelic games are played in every corner of every parish in every town in the country. While I am delighted players in other codes, such as soccer and rugby, are rewarded and recognised in this provision, those codes do not have the widespread earning capacity the GAA has. I am not surprised the players' representative association is very annoyed by this provision. A head of steam is building up on this issue and I have begun to receive phone calls on it already.
Tom Humphries wrote an appropriate article in The Irish Times on Monday in which he compared Pádraig Harrington, who is a fine sportsman, with Dessie Farrell and asked why one should be favoured over the other. It sums up this issue and I advise Deputy Power and the Minister of State, Deputy O'Dea, to read the article. This is a flawed provision. Some system of credits should be devised between now and Committee Stage for inter-county Gaelic footballers. I will advise the Minister or his officials on it.
I am not too sure how far back Deputy Deenihan wants the scheme to apply.
The Deputy should do the best he can.
It will be seen as the Bill progresses through the House. I wish to share my time with Deputy Browne (Wexford).
Is that agreed? Agreed.
This is the last Finance Bill before the general election. As a backbench member of the main party in Government, I believe we can be proud of much of what we have achieved in the past five years and we can maintain that pride as we head into the general election. We have created more than 300,000 jobs, reduced unemployment and made major changes to the tax system. Most people are better off as a result of measures taken by the Government. That is not to say it was not difficult. Certainly moneys were available to the Government which afforded it a luxury that previous Administrations did not have. By and large, the money was spent wisely and this has put the country in a good position.
Nonetheless, we would be foolish to pretend to the electorate that everything was rosy in the garden. The country still faces many problems and it is important that parties draw up policies to tackle these. I have in mind roads, traffic problems, housing problems and the ongoing problems in the health service, despite the fact that the moneys made available to it have been more than doubled. The Minister for Health and Children outlined these problems when he published his health strategy recently. Despite the fact that there has been a huge increase in capital expenditure under the Department of Education and Science, we cannot deny that there are still schools in every constituency in need of repair or, in some cases, replacement. I know they will be anxious to make their point as loudly and clearly as possible between now and the general election. The population in Kildare continues to grow and, rather than have empty classrooms, we need extra ones.
The Government introduced certain measures in its lifetime which gave us particular satisfaction, such as the huge increases in social welfare payments, especially the old age pension. We promised in the beginning that we would increase that to £100 and were told at the time by many economic forecasters that it was not possible. We achieved that objective long before people thought it could be done. The huge increases in children's allowance has given families greater comfort. While there has been much criticism of child care provision and there are no easy solutions to it, given all the studies which have been conducted, one of the best ways of helping people to help themselves in this regard is through the children's allowance. The measures taken by the Government have been well received throughout the country.
I acknowledge the tremendous contribution the Minister, Deputy McCreevy, has made. He has been pilloried inside and outside the House, often unnecessarily and unfairly. He will be seen as someone who had a vision of what he wanted to achieve when he came into office and who had his own ideas about how to go about it. One of the first decisions he made was to change the rate of capital gains tax, for which he was lacerated, particularly by the Labour Party. However, as he predicted, it was a self-financing tax reduction and one which, in a short time, succeeded in bringing in more revenue. The Minister for Finance, Deputy McCreevy, has been a reforming Minister. I know Deputy Durkan will agree with me when I say that he has not neglected Kildare during his term in charge of the purse strings, and we thank him for that.
I fully support that.
(Wexford): Not too much.
We are fortunate in that we have a Minister for Agriculture, Food and Rural Development and a Minister for Finance who have been very much involved and in love with the horse racing and greyhound industries. Both industries have received much attention from the Government. To a large extent, their future funding has been guaranteed. This and the establishment of a new racing authority has allowed for long-term strategies to be put in place for the greyhound and horse racing industries. Tremendous progress has been made in that facilities at tracks have been greatly improved. Punters are, to a large extent, very happy and pleased with these new facilities.
The most important people in the racing industry are stable staff. Last year, 2,816 such people were employed in the industry. Many of them must travel to race courses to lead out racehorses. It may appear to be a lovely job in summer to lead horses around a parade ring but, unfortunately, given the weather here, these people must often work in very cold and damp conditions. Some of the facilities at race tracks are disgraceful. The majority of race tracks would not pass the health and safety standards we have laid down. It is important this matter is addressed. I realise it does not make economic sense to spend money on race tracks where meetings are only held a few times a year. However, at other race tracks where meetings are held regularly, facilities which any other industry would demand should be afforded to stable staff. They are the neglected and forgotten people in the racing industry.
I welcome the fact that the Minister, Deputy Walsh, in establishing the new board, agreed to appoint to the board a representative of the stable staff, Mr. Dan Kirwan. I wish him well in his efforts. Much work must be done and I hope we will see some short-term measures taken to rectify the huge wrong which exists at present.
RACE, which was established more than 20 years ago and is located at the edge of the Curragh, has been a tremendous success. Such small successes often do not get the headlines they deserve. The thinking behind its establishment was to educate young people in the widest sense in the racing industry while also covering other subjects they would learn in school. In the past many people entered the racing industry at a very young age with very little education. RACE was intended to provide them with a basic education and a wider knowledge of racing in order that those who would not become top jockeys would find employment elsewhere in the industry. The centre has succeeded in finding employment for almost all of its former pupils. Visitors from Japan have visited and sought expertise from it. There are six Turkish students there at present.
Tremendous progress has been made in the racing industry. The Minister has been criticised for the commitments he has made to it, but anyone who has a knowledge of racing, particularly the betting industry, will realise that the tax reductions were necessary if the industry was to remain competitive in an open market where Internet betting facilities were available.
In recent months we have seen attempts by An Taisce to object to grants of planning permission for one-off houses in rural areas. This has caused enormous problems in County Kildare and other parts of the country. Kildare County Council invited An Taisce to come and explain its actions, but despite the appeals of councillors the organisation's policy does not seem to have changed. An Taisce's objections give no consideration to the merits of applicants for planning permission. A neighbour of mine sought permission to build a house on the family farm where she was born and reared. She qualifies as a suitable applicant under the terms of the county development plan and Kildare County Council granted her and her husband planning permission. However, An Taisce objected. Ordinary people like my neighbour are frustrated by the actions of groups such as An Taisce when they behave in such a despicable fashion. Hundreds of people have been treated in a similar manner by An Taisce.
Some weeks ago the Minister for the Environment and Local Government announced the list of towns to be included in the RAPID programme. Athy was fortunate enough to be included. The purpose of the programme is to generate economic activity and development and provide opportunities for communities which have not benefited from economic progress to the same extent as others. A developer lodged an application with Kildare County Council to build a hotel in Athy, a basic facility which the town does not have. The county council granted planning permission, but Dúchas lodged an objection with An Bord Pleanála. The objection was accepted and the hotel will not now be allowed.
As a public representative for south Kildare, I find it fustrating that while Kildare County Council, Enterprise Ireland and other bodies are doing their best to facilitate development in Athy, a town which is the unemployment black spot of County Kildare, groups such as Dúchas are going out of their way to ensure that progress is stopped. I ask the Taoiseach and the Minister for Arts, Heritage, Gaeltacht and the Islands to become involved in this problem and make Dúchas and An Taisce account for their actions. As long as these bodies continue with their present policies, their funding should be withdrawn. Their behaviour shows an ignorance of rural life and the needs of communities.
When in opposition the Minister for Justice, Equality and Law Reform brought forward a number of anti-crime policies which appealed to the electorate. He has implemented a number of them. The number of gardaí has been increased from 10,800 in 1997 to more than 11,700 at present. By the end of the year the figure will have reached 12,000. Despite this, the number of violent incidents outside places of entertainment, particularly food outlets, has grown and become a worry in many parts of the country. The Criminal Justice (Public Order Enforcement) Bill will help to solve this problem, but we must reconsider the opening hours of fast food outlets where people congregate when they are full of alcohol and looking for trouble. I hope we can deal with this situation quickly.
(Wexford): I welcome the speech of the Minister for Finance on Second Stage of the Finance Bill, in which he outlined the many achievements of the past year and his proposals for the future. He has introduced his fifth budget and improved the country's finances and the financial circumstances of all its citizens. He made decisions and stuck to his guns, even when he was criticised by members of his own party. Many changes have taken place which have benefited communities throughout the country. Taxes have been reduced and there is now an incentive to work. There are now 300,000 more people at work than in 1997. The economic difficulties of recent months are short-term and I hope people will continue to have an opportunity to work in Ireland. We remember the early 1990s when many of our young people were working in Boston, London and throughout the world. In recent weeks when Deputies have been canvassing for the forthcoming general election we find that many young people have returned home and are working, earning a good living and are not subject to the high tax rates of the past.
It is right that old age pensioners should receive a substantial increase in pension payments when times are good. In the 1980s and early 1990s they were given miserable increases of 1%, 2% and 3%.
In fairness to the previous Government, efforts were being made to increase social welfare payments, particularly old age pensions, disability allowances, invalidity pensions and children's allowances, which were increased substantially.
I compliment the Minister for Finance on the substantial increases allocated to widows in recent years. This is something all Deputies sought for some time but previous Ministers for Finance and Ministers for Social Welfare did not take the matter on board. I compliment the Mini ster for Finance, Deputy McCreevy, and the Minister for Social, Community and Family Affairs, Deputy Ahern, in this regard. Widows were living on a very small allowance up to a couple of years ago and I hope the Minister will continue to increase this allowance. My mother was a widow with eight children at a very young age. At 18 years of age I was the oldest of the family. Social welfare payments at the time were very small. It was a major culture shock when the breadwinner died and one found oneself going from an income to a very small social welfare payment. After becoming Minister for Finance I recall Deputy McCreevy saying he would do something to improve the lot of widows and widowers, which I recognise today.
Many Deputies on the other side of the House are making great play about what Deputy O'Malley said at the Progressive Democrats Árd Fheis, which is that we are spending too much. Perhaps it was a bowing out speech.
He reprimanded the Government.
(Wexford): On the other hand, we would all like the Minister for Finance to allocate more money to our constituencies. We are all critical that schools and hospitals in our areas have not been built and that other developments are not taking place. We cannot have it both ways. If we want the Minister to spend money we cannot come in here and say Deputy O'Malley was correct. I do not think Deputy O'Malley was correct but I think the Minister, Deputy McCreevy, is getting it right. I hope where there is a need he will continue to allocate money for projects in constituencies throughout the country.
I welcome the changes in regard to the section 23 relief under both the urban renewal scheme and the town renewal scheme. The fact that section 23 relief was not included meant it was not very lucrative for developers to get involved. This major change must be welcomed. Ten years ago Enniscorthy town was on its knees but it received urban renewal status in 1993. Over the past seven or eight years two new hotels, a swimming pool, cinemas, shops, apartments and other developments resulted from receiving urban renewal status. I would like the Minister to revisit some of the towns which had urban renewal status in the early 1990s. These were success stories, but much work still needs to be done. I ask him to consider seriously returning to towns such as Wexford, Enniscorthy and so on which have benefited in the past but need further incentives for developers to complete the job, so to speak.
I am a little concerned about the rural renewal scheme in counties such as Wexford. Towns such as Gorey, Bunclody and Taghmon were designated under the scheme. It is slow to get off the ground because investors do not seem to be as interested in smaller towns. I believe that local authorities are not putting the same emphasis on driving the rural renewal scheme to the same extent as the urban renewal scheme. Perhaps the Minister for the Environment and Local Government will consider telling county managers to push for the development of towns in rural areas. This is a very worthwhile scheme but the uptake seems to be slow at present.
The tax relief for sportspersons is drumming up a certain amount of debate and heat. I welcome this measure. As the Minister said the other day, these people only earn income for a short period. However, I have serious concerns about GAA players. I accept it is difficult to give tax relief to people who do not receive payment. It may take some ingenuity on the part of the Minister for Finance to get around this matter. Certainly amateur GAA players, including most county and club players – I am more involved in the GAA than in other areas – and other amateur players train four or five nights a week. They play games on Sunday and become involved in meetings and team talks which means that a lot of their time is taken up with the game. The Minister must seriously consider tax relief for sponsorship, appearance fees and endorsements. County boards must now buy their way to success by taking on county team managers. In Wexford it costs approximately £150,000 to train a team. Westmeath was successful in senior football last year but I read somewhere that it cost approximately £200,000 to train a team which did not win anything – neither did Wexford win anything.
You might win the election.
(Wexford): We will win three seats in the general election. However, we were not successful on the playing field other than getting to an All-Ireland hurling semi-final, which I suppose is success in itself.
Members of the GAA who are involved on a voluntary basis are the unpaid social workers of this country. As Deputies Deenihan and Power said, there is a GAA club in every parish. People are involved on a voluntary basis looking after thousands of young people throughout the country. They use their cars and give up endless hours keeping young people off the streets, for which there should be recognition. The Minister was criticised for putting a lot of money into Croke Park, for which he should make no apology. Why should the GAA not receive lottery funds the same as everyone else? However, I would ask him to consider some way of recognising the role of GAA players. He made it very clear during the week that if one is not being paid he cannot give tax relief, which I accept is a difficulty, but he should consider what other reliefs can be made available.
The Minister dealt briefly with farmer taxation. He is extending the definition of "qualifying quota" to qualify for relief under the capital allowance scheme for the purchase of milk quota. There is also a demand for relief for farmers who purchase beet quota. I am sure there are many beet growers in Deputy Durkan's constituency and the IFA and beet growers have probably been in touch with him, as they have been with a number of Deputies in the south-east. I ask the Minister to make similar provision for farmers who purchase beet quota as is the case with milk quota. I believe it has been introduced in the UK. Perhaps the Revenue Commissioners, together with the Minister, will look at the system in the UK to see what is available to farmers.
Last year the Minister promised to consider the issue of inheritance tax in respect of caravan park owners, which is more relevant to coastal counties. There are many caravan park owners along the coastline, including in the Minister of State, Deputy Coughlan's, area. When a young person takes over the family business of a caravan park he or she is not allowed business relief, which is a crazy decision. It is the only business I know of which has been excluded from relief in the business area. For some reason, the Revenue Commissioners have always refused to allow business relief in this area. The majority of caravan park owners in County Carlow – I am sure it is the same in every other county – run family businesses. They are run by the father, mother and a son or two. If the parents want to pass on the business to a son or daughter, they are taxed out of existence. In some areas, the caravan parks include a bar and shop. The owners are allowed business relief on the bar and shop, but when it comes to leaving the caravan park business to the son or daughter, they are not allowed to claim the business relief on tax. Will the Minister examine this because people will not be in a position to leave their caravan park businesses to their sons or daughters because they will not be able to pay the tax? They will have to sell the businesses. That is a crazy system.
I compliment the Minister, Deputy McCreevy, on his work in the past five years. I am sure he will be returned to that position after the general election in May and he will have another five years to continue the excellent work he has been doing.
I would not like to figure out what the electorate might do, but we will do our best. I wish to share my time with Deputy Belton, who wishes to be allowed ten minutes.
Is that agreed? Agreed. There are 30 minutes in the slot.
There are some positive aspects to the Finance Bill, the legislation which gives statutory effect to the budget. It has been talked about almost constantly since the budget, along with the budget's implications and impact.
There are a couple of matters that stretch my imagination. It is important to realise how the public feels now compared to five years ago. Deputy O'Malley's speech at the Árd Fheis at the weekend seems to confirm this. Obviously, the Government made a decision to cut expenditure on housing, health, education, orthodontics and all the services that are crucial as far as the general public is concerned. It is true that there was a lot of money to spend. I am not saying the use to which the money was put was wrong but there is no doubt a conscious decision was made. Whatever the cause or whoever the driving force, I do not know.
For almost three years in a row, we had extraordinary budgetary surpluses – bigger than any in the nation's history. That was seen as a positive thing, and it was, but that happened only because there were shortages under the other main headings to which I referred. Therefore, it was easy to have surpluses because the money was not being spent in the areas in which it should have been.
Every time a Minister makes an announcement – be it the Minister for Social, Community and Family Affairs or anybody else – that a certain sum of money is the largest ever presented since the foundation of the State, of course he or she is correct. Unless the Minister is a lunatic, he or she would not come into the House and propose a cut under any heading because he or she would not get away with it. When there is so much money to spend, what else could be expected but expenditure above and beyond anything ever experienced in the State?
It is frequently stated that huge sums of money are being spent on the health services. While fairly substantial amounts of money are being spent in that area, it must be noted that it is more expensive to run a service for a bigger community. There are more people in the country and more calls on the service. One could not run the health services with the kind of structure that existed in the 1950s. The population has almost doubled since then. There are major differences since then which very few people have recognised. In the past eight or nine years the Administration has failed to recognise that as the economy and population grow competing demands also grow. If one does not allow one area of the economy to progress and allows the rest go forward, there is a price to be paid. In my own constituency there are approximately 2,500 families on housing waiting lists. There are another 1,000 or 1,500 families with an income of up to £50,000 per annum who cannot buy houses. Neither group can buy houses. The latter group is now converging on the housing list as well as everybody else. They are desperate – it is as simple as that. The normal criterion for obtaining a housing loan is that the applicant is entitled to 2.5 times his or her gross income. Two and a half times £50,000 – which is a reasonable salary for a one income household – will entitle the applicant to £125,000. One cannot buy a house in my constituency for £125,000. The cheapest is about £135,000. If a first-time buyer opts for a house in need of repair, he or she will be lucky to get it for £125,000. The maximum loan available from the local authority is £100,000. One might as well give the people nothing. There is total and abject neglect.
The needs of a particularly large group of people – 2,500 families on one side and 1,500 on the other – are at stake. This number of people corresponds to a seat in most constituencies. At the end of another five years, if we continue as we are, the people who are now living in hope will have lost all hope and there will be nothing for them. They will have to emigrate to get a house. That is crazy. I cannot understand why the Government has not tried to do something about it.
The Government has opted out of housing. It is presumed a plethora of voluntary agencies will take up the slack and provide for people. The Government has responsibility for the public housing programme. That was always the case. Opting out and saying voluntary agencies can do X, Y, and Z is wrong. They cannot; it must be driven by Government. If it is not driven by Government it will not happen. In 1988, the housing programme was abolished A programme that was able to deliver a ready number of houses per annum in most counties was abolished and nothing was delivered. Every increase on nothing was 100%. When there were only ten houses built, it was easy to increase that by 100%.
Five years ago in this House I said the economic policy being pursued would lead to naught, that it would certainly crush a lot of people and that it had not worked in any country in which it was tried. The only place of which we had direct knowledge and a vision was our next door neighbour, where Margaret Thatcher tried a similar economic policy for a number of years and it failed. In 1977 there was a general election and the major Government party at that time said there was mismanagement and bad decisions, that the economy was in tatters, that there was not really an unemployment problem and that the oil crisis did not happen. Deputy Roche would have been very familiar with the scripts at that time. He was part of the think tank.
That came afterwards.
Perhaps the Deputy was not thinking at the time. In any event in June 1977 it was alleged that with proper management this country could be put on its feet again, as the slogan stated. After 18 months everything fell flat and expenditure went through the roof. The same tactics are being employed now and unfortunately the same end product will emerge. The people paid then and they will pay again only this time they are paying much more quickly. The hospital services have not been delivered and the people who are not getting those services are paying now. The people without houses at present are paying. The children who have sought orthodontic treatment for four years have been neglected and are paying now.
During the late 1970s inflation went dramatically upwards to 22%. There was a change of leadership in the Government party, but nothing happened and it continued to increase. In 1981 the people shouted stop, said they could not tolerate any more and threw that Government out of office. It took four years of giving to the people based on the slogan of putting more money in the people's pockets—
Fine Gael would take it out of their pockets.
We should ask the Eircom investors how much money was put in their pockets, who put it there and to whom was it given when it was taken out. The Government spent £78 million in promoting the Eircom share flotation. It was a great idea, it said. It was not possible to pay too much for a national institution like that. The people patriotically wanted to invest in a national institution and be seen to support the nation. They took the Government's cue and accepted what was said to them. They went to the post offices and withdrew savings. They brought their children in by the hands and told them to invest in this in order to have something when they reached 21 years of age. Old age pensioners who never had a bob before borrowed money from their banks to invest in a national asset, believing it would be valuable when they eventually got to sign it over.
What happened? They got a letter in the post instructing them to sell their shares at approximately two thirds of the amount they had paid. This was not mentioned in the £78 million campaign advertising the flotation. When those on the Government benches decide to criticise other parties for attempting to at least make some amends for it, they should not forget what happened to those people. Some 7,000 people have paid a great price for that massive debacle. The final insult was that the people not merely bought something on the marketplace, they bought something they owned already. The Government sold the people something they owned already. The £78 million was spent to make the people feel good when they were investing.
I do not know what it is like on that side of the House at present.
It is better than on Deputy Durkan's side.
I would not like to know what it will be like when they go knocking on the doors. They will arrive outside and hear the dog barking inside. They should be very cagey about pushing the door unnecessarily and they should not rap the knocker too hard.
At least we will be able to get to the door. The Fine Gael canvassers will hardly get to the gate.
I have a feeling that the people will be inside waiting for them. It will be no good for Deputy Roche to say he was part of a think tank in 1977. That will not be regarded as a defence.
Let us consider education. Of course education requires significant funding, but if it does not receive it, we are not doing our jobs. It is a major investment and a vital part of the jigsaw. If there is not sufficient investment in education, at some stage in the future we will pay a heavy price for it. The manner and methodology used by the Government in dealing with the education system and teachers' disputes in recent years have resulted in it becoming unstuck. Unless something is done as a matter of urgency to heal those wounds and look after the educational system in the shortest time there will be a serious problem. I do not mind what the electorate will do to the Government parties. However, irreparable damage will be done to the whole teaching structure and the danger is that it will no longer be an attractive profession and people will leave it as they are already doing. If that continues some future Government will have to tackle the resultant problems, which will be serious.
I would never have thought at times of unprecedented budgetary surpluses for a succession of years that somebody would suddenly say there was a problem and there would be a deficit the following year. However, true to form, the Government is full of surprises and has told us that next year there will be a fairly substantial deficit. I would not like to be in the shoes of whoever is sitting on the other side of the House after the election and who has to tell the people that at the end of the next year they will have to pay for the Government policies of the past five years. That will be a sticky wicket and I wish them all the best with it.
The National Roads Authority has announced that it has run out of money for new road programmes. That is the strangest thing I have ever heard at a time when it is clear the infrastructure in this country is substandard by comparison with most other European countries, some of which did not even have a democracy until recently. Given the economic advantages of the Celtic tiger roaring up every hill and valley for the past five years, it is extraordinary that the National Roads Authority has run out of money for new roads projects. That will have a major impact over the next four years.
When people look back at the taxation policies of the Government they will ask why things were done that way and what was the Government thinking of. They will ask why the Government left the country in such a way that one year after leaving office there will be a major deficit of probably about €3 billion. I wish the two Government parties the very best of luck. I recommend that Members on the Government side wear strong leather leggings because when they meet the public they will find the dogs are trained to bite regularly. I advise them to bring protection.
Will that be the Fine Gael election slogan?
There will be no need for them to train for the Olympics because they will get plenty of practice as they run from the doors.
I want to mention people with disabilities. Like others, I would have thought that at a time when there was unlimited money available, it would have been simple for the Government to ensure that people with disabilities would have no worries in the future. The Bill is a disappointment. It does not address the needs of people with disabilities who are back where they started four years ago.
My colleagues mentioned the value of amateur sports. When recognition is being given, amateur sportspersons are as entitled to tax concessions as anybody else. I cannot understand why that is not a central part of the Government's strategy.
I congratulate the Minister on introducing his fifth budget and Finance Bill, but extend my deepest sympathy to the people opposite because the Government has made such a mess of handling so much money in such a short space of time and left many people disappointed. Many people employed public relations consultants to get across as solemn and solid a message as possible and failed to do it, but the Government has done it successfully and satisfactorily. It thinks it is going to the country with a light heart, but it should beware. The public have not spoken yet, but they soon will.
I welcome the opportunity to speak on the Bill. One of the issues that hit the headlines in recent days is the tax concession that will be given to sportspeople. I do not know from where the demand to introduce that concession came. I would like the Minister to explain to the House and to the people the urgent demand for it. We can all think of matters that would rank higher in priority than this one.
On the 6 o'clock news it was announced that nurses in eight to ten hospitals, including Longford-Westmeath General Hospital in Mullingar in which I am interested, will take industrial action. A building in that hospital has been left untouched and empty for the past four and a half years. It is a monument to the Government that is interested in giving tax concessions to sportspeople.
Many people are annoyed about this measure, including every member of the GAA throughout the length and breadth of the country. The Government has turned against the GAA and all those associated with it. Deputy Roche may laugh, but I know many people whose sports careers were cut short through injury at a very early stage. They did not get, nor did they expect, any concession. If the Minister was genuinely interested in doing something for sport, which seems to be what he is talking about, there are many other ways he could have done so. I hope he will explain this measure. It appears to have been introduced to suit a certain select few. That does not represent good government.
I tabled three questions to the Minister for Education and Science regarding Ballymahon school, Lanesboro school and Clontumpher national school. I was advised the cases are being examined and they will be addressed under the programme, but nothing is happening. That is more evidence of the Government's poor record.
When the Government came into power, the Celtic tiger was in tip top form across the length and breadth of the country. The Government inherited an economy that was in good stead, which nobody can deny. When the Minister for Finance spun the cards on the table and said at a Fianna Fáil Parliamentary Party meeting that the game was up and that they would have to face the facts, there was uproar and panic. Instead of doing what the Minister did before when the members walked out on the plinth and took him on, he decided on this occasion, because an election was coming up, to get out the bandages, plaster over things as best he could as there was only a few months to go, put a good face on it and everything would be grand. That is exactly what happened.
A sum of £1.8 billion went missing last year. The Minister had budgeted for that amount, but the money was not there. It disappeared. What happened to it? Is that the record of a responsible Minister of Finance and Government that is asking the people to put them back into power? I do not think so. I do not think the people will put them back into power.
The rural renewal scheme gave a major boost to the midlands. I am glad the Minister extended the scheme for another two years. Areas throughout the country, such as County Longford and parts of Roscommon, needed an extra boost and the scheme helped uplift economic life in those areas.
My party has a genuine reason to give Eircom shareholders back some of the money they lost on their share investment. All kinds of snide remarks were made to the effect that if one backed a horse, one cannot expect to get one's money back. If the Government wrote to everyone in the country and spent, as Deputy Durkan said, £78 million, telling people to back Florida Pearl in the Gold Cup and if Florida Pearl did not win, I guarantee that the people would say they wanted their money back because the Government wrote and told them to back Florida Pearl. That is what would happen and that is what happened in this case. My party is saying that the shareholders are entitled to some of their money back because that share purchase was not an ordinary case of gambling on the Stock Exchange. The people were asked to invest in Government stock at the request of the Government. The hype will always be remembered by the people. The Taoiseach, the Minister and the former Minister appeared on the plinth and stated: "Happy days are here again, roll on, roll on, roll on." The day people bought those shares was a sad day, which the people will not forget. When they go to the polls, they will give the Deputies opposite their answer in no uncertain fashion.