Finance Bill, 2002: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

I opposed the increase in excise duties on petrol and diesel. This will badly hit those totally dependent on the private car and road freight for goods transport in the region I represent where public transport is virtually non-existent.

I share the anger expressed inside and outside the House at the special tax breaks for professional career sportspeople as set out in the Bill. It is a gimmick and a stroke typical of the Government. There are amateur sportspeople in many sports, including, but not only in the GAA, who give freely of their time and effort every week with no financial reward and no desire for financial reward. Trainers and administrators of sports and youth clubs are doing tremendous work with young people, often in the most deprived communities. These same clubs must go through the demeaning annual process of applying directly to the Minister for Tourism, Sport and Recreation for sports capital grants. The sports capital grants are clearly regarded as a goody bag for distribution by the Minister.

Last year the Minister favoured his own constituency once again, though I have no doubt that all the recipients were deserving. In CavanMonaghan, the Minister's Fianna Fáil colleagues were informed of the allocations before other elected representatives. In one case a Fianna Fáil councillor told a sports club member that he was giving him the news of the club's grant, "before Ó Caoláin got the list". Such practices are an abuse of the sports capital grant scheme and can only bring it into disrepute. That is the type of thinking that dominates the allocation of sports capital grants and is also the type of thinking behind this special tax break for a tiny elite of sportspeople. It gives out the message that the elite who make it big are the ones who really matter while the people on the ground must wait for the crumbs from the table.

A report by the European Centre for Social Welfare Policy published just before the budget found this State fourth from the bottom of the 15 EU countries in terms of wealth distribution – only Greece, Spain and Portugal fared worse. That is thanks to four years of economic management, or mismanagement, by the Minister, Deputy McCreevy, and this year, the fifth, is equally flawed and inequitable. It is past the time for the Minister and his colleagues to go.

A sad attack was levelled at me earlier in this debate by Deputy Crawford whom I note has left the Chamber. His begrudgery knows no bounds. I availed of the first opportunity to host a US delegation that came to Ireland following from the Washington conference on trade and investment in the mid-1990s. I used my skills and talents to encourage, not only US industrialists but more importantly the US Department of Commerce, to take a fresh look at the opportunities the Border counties, particularly Cavan and Monaghan, had to offer US investing companies. That visit was a resounding success, so much so that they came back again but Deputy Crawford conveniently forgets the tragedy that followed.

The US Secretary of Commerce, Ron Brown and the assistant secretary, Chuck Meissner and other senior staff members were tragically killed in a air accident over Bosnia. All my invested effort and the warmth and goodwill towards Ireland and the Border counties died with those great and tragic players. They were special – may they rest in peace. I have continued my lobbying work with influential US Administration personnel in both the Clinton and Bush years. I sought and secured the assistance of key players in Washington when the interests of Cavan and Monaghan required it.

Tá áthas orm seans a fháil labhairt ar an mBille Airgeadais agus ba mhaith liom buíochas a ghabháil leis an Rialtas as an am a thabhairt dom an uair seo.

It is important to point out that this Finance Bill, one of a series, as we have heard time and again from Government spokespeople, is set against the backdrop, which cannot be overlooked, of a growing gap between rich and poor. As the previous speaker mentioned, internationally we compare badly in dealing with that gap and, rather than closing it, we have continued to widen it. Notwithstanding the very positive releases that come from the Government Press Office, that is a reality that cannot be denied. There are a number of figures also from Departments, which indicate that the priorities in this Bill are not the areas of greatest need.

The Department of Enterprise, Trade and Employment gives a figure of 13,000 heroin users. An RTE "Prime Time" programme of last year quoted an ESRI figure showing that the number of families with disabilities living in poverty has doubled to 72% of the total. In the recent debate on crime in this House it was revealed that Garda figures for 1999 showed 10,110 cases of domestic violence. The Eastern Regional Health Authority indicates that there are 5,000 methadone users in the greater Dublin area. Focus Ireland revealed an increase in the number of people on waiting lists between 1987 and 1999 of 253%, up from 18,000 to 45,578. What hope is there for people with disabilities, certainly those who are under 18, people who are marginalised, and for the wider environment when those with a vote continue to return the same type of Government time and again? That is a question that puzzles many people who study those figures.

The ESRI gives very considered advice to the Government and, indeed, much of that advice is accepted. Today the ESRI hosts a conference focusing on an area which I have a mandate to address in this House – the environment. In its press summary it talks about Ireland not yet having taken the market-based approach to environmental protection advocated by the European environment agency and the OECD. They say eco-taxes, charges for environmental services and tradeable permits to pollute are known to be effective, but their impact must be measured against the less controversial approach of public education, direct government expenditure and licensing and regulation. The national climate change strategy, published by the Department of the Environment and Local Government, announced the introduction of taxes on CO2 emissions, starting on a gradual basis in 2002, as well as emissions trading. These proposals require careful preparation and it is in the Finance Bill, 2002, that one looks for signs of this. We do not see any, instead there are measures to bolster the number in the workplace, not by simply encouraging them, but by forcing them.

I refer to the two income families which, if they had a choice, would try to live on one income. They do not have that choice and so are forced to make arrangements which do not benefit the health of their children or themselves. They are instead forced to get up earlier, go to bed later, work more hours than ever and spend more time travelling. That is the lifestyle the Bill underpins and I beg the Government to have regard to those who are sending postcards to me and I am sure to every Deputy pleading against individualisation of taxation. They are distraught at the effect reliance on two incomes has on family life and the community, in which the level of volunteerism has dropped as a result. I hope the Government will get the message. If it does not, I hope the next Government will. The individualisation of taxation may be of benefit in the short-term, but in the long-term it will seriously damage the fabric of community and family life.

I have been interested in debates in this House on corporation tax. The Bill is one of the vehicles for copperfastening the levels at which that tax is paid. The Tánaiste has made the point, as I have, that research and development need to be encouraged, but a rate of corporation tax as low as ours is a disincentive. It attracts the kind of investment that does not give much priority to research and development. It is also very mobile, which moves out as quickly as it moved in when the winds of change blow internationally. I hope this point is taken by the Minister for Finance and the Government as our levels of corporation tax ought to be geared toward securing long-term, not short-term, investment. They should aim to secure investment that could become indigenous, if it is not already. It should be nationalised to become part of our economy and community development.

On the issue of helping punters, the point is made that the Minister for Finance is a keen racegoer, to which there seems to be an element of truth given his comments. This country has a problem with gambling which is widely glamorised. Winning the lottery is seen as the greatest ambition in life. This creates a hunger for a fantasy world that can only ever be enjoyed by very few. In the meantime, the issues that need to be dealt with and the valid input people can have are overlooked.

Voluntary work in the community is suffering badly and made even more difficult by provisions of the Bill. I am sure the Social Welfare Bill to follow will compound this. People are told they cannot volunteer if they are not in full-time paid employment. They must stop volunteering and find paid employment, even if the work is destructive and unhealthy or meaningless and boring. As long as it is paid, it is considered better for the economy than voluntary work involving helping other people, community development or – in a case close to my heart – helping to rehabilitate wildlife and provide employment in ecotourism which the Irish Seal Sanctuary has been trying to achieve. In spite of its appeals and the logic inherent in its work, which provides the genesis of full-time employment and a facility which Ireland, unlike other coastal European countries, does not have, it is told by the social welfare appeals officer that its activities are not in line with the Government's legislation. It is a scandal that people who are prepared to give of their time to do a job that needs to be done and which helps local authorities and the community are told they cannot do it.

The case for people like those working at the Irish Seal Sanctuary provides a barometer of how sick the economy has become. It tells people they will get no help from the State, even though they are doing valuable work. That work has been endorsed by every local authority around the coastline when faced with injured wildlife, unsuitable imported pets and exotic animals. People find and bring them to this place where they are cared for and rehabilitated. They attract many visitors and create a rewarding experience for those who volunteer there who are told their work is not valued and that they must stop and find paid employment, which will, in most cases, be less meaningful and useful. That is a scandal. I urge the Government to look again at ensuring the Irish Seal Sanctuary gets £1.5 million which, in the context of the budget and other projects discussed here, is not a huge amount of money.

The case being made that sportspersons should be given tax relief is one that will no doubt find favour among those who will benefit, but we must ask the question of whether we are focusing on the areas of greatest need. I know a number of elite sportspersons who do need help with training facilities, but that is assistance they require now. They do not need help into the future in terms of tax reliefs. I wonder if this is just another case of the Minister indulging his own interests, rather than looking at the wider picture. Certainly, there are areas of much greater need than the one on which he has focused.

The essential problem with the Government is that it fails to see the writing on the wall in terms of planning for the future. It believes that as long as GNP and GDP are increasing, somehow there will be enough money in the kitty to pay for whatever comes along and whatever problems we encounter. The difficulty, however, is that we have no idea how insurmountable the problem will be. We and insurance companies are already encountering the problem of the money required to cope with the problems of climate change. That cost involves more than the premia the insurance companies will charge because of increased storm damage and whatever other motivations they may have, such as profit which is the legitimate objective of any business. They also are encountering growing costs worldwide. I am sick of sounding that warning. If I am not believed by the Government for whatever political reason, let it at least listen to the insurance companies and take note of the growing number of claims worldwide as a result of storm damage. Year after year they are pushing up premia and making it increasingly difficult for people in areas prone to flooding to get insurance and making increasing numbers of people vulnerable to damage.

Céard faoi Oíche na Gaoithe Móire?

Tá mé ag caint mar gheall ar a fhad níos mó ná aon rud atá scríofa sa stair.

Táim, agus tá tír cheana féin imithe ar shlí na fírinne ins an Aigéan Chiúin.

Oíche chinn a dá lá dhéag, beidh cuimhne ar go héag.

Is féidir leis an Aire Stáit a rá go bhfuil an rud céanna ag tarlúint a tharla cheana féin ach tá mise ag caint faoi fíricí, faoin eolas atá ag eolaithe, ní agamsa. Tá sé á rá ag an OECD agus ag an ESRI sa tír seo chomh maith, gur gá dúinn a bheith ullamh agus nílimid ullamh.

The point I am trying to make is that there is no preparatory thought in the Bill. It simply limps from one situation to the next. Unfortunately, we will be faced with carbon trading in Ireland. That is a cost which we have never had to contemplate before, on which we cannot even put a price at present and with which this Minister does not even seem to be prepared to cope or contemplate.

In fairness to the Minister for the Environment and Local Government, Deputy Dempsey, he is also blue in the face talking about the need for the Department of Finance to take on board the reforms in taxation. Such reforms would shift the focus away from income tax, which would be wonderful, and put it on finite resources and carbon based fuels, which must be conserved for all sorts of reasons apart from their finite quantities.

The Department of Finance is blocking that matter at present. There is a perverse view that unless the amount of taxation collected can be quantified at the end of the year, it is not worth having that type of tax. Obviously, eco-taxes, by their nature, are variable because one is encouraging people to save resources and thereby save money. The only way we will be able to have a significant effect on the behaviour of people is if they are made to think twice before spending money, which is a very human instinct.

Aside from that, the Minister for Finance also must recognise that for this change towards a more sustainable economy to take place, he needs to allow – he has already done it minimally – hypothecated taxation. He needs to allow certain moneys that are collected to be used for specific targeted areas. For example, he has made a minimal concession so that the taxation generated through the cost of plastic bags will be used by the Department of the Environment and Local Government for waste related projects which can minimise waste, etc. However, that is a small and insignificant part of the overall problem of waste and energy use in Ireland. Nevertheless, it is a start and, in fairness, I want to give credit where it is due, but let that start be much more significant.

Unfortunately, the Bill misses an enormous opportunity to address the need to shift our thinking from going along with traditional GNP-GDP measurements to more sustainable and more internationally standardised taxation methods which focus on conserving the use of finite resources. That is something which, by all accounts, has been overlooked. Any talk about it being a significant part of Government is hollow and empty when one reads the Finance Bill because it does not jump out in anything here that it is a consideration in the Department of Finance. That is sad.

I hope the next Government, whatever its composition, will not just talk about this, put it in its manifesto and then pay lip-service to it, but will actually put into the Finance Bill measures which will shift the tax away from income and onto finite resources. The OECD has made these recommendations clear and if they are not implemented, the warnings are also clear to us all.

The ESRI has already looked at the effects of this type of change. Competitiveness is a word which is often on the lips of Ministers and us all. According to the ESRI, competitiveness will be enhanced if this is done in a way that suits Ireland. This is why it must be done by the Government. When the Government talks about allowing it to be an EU wide measure and that we would implement eco-taxes based on what the EU decides, it fails to appreciate that other EU member states will have their own conditions and circumstances which will favour a certain type of eco-taxation which may not suit Ireland. By not taking a unilateral position to reform our taxes in line with international standards and not bringing in eco-taxation, which is already in place in Scandinavian countries, the Netherlands and elsewhere, the Government is putting Ireland in a position where it could be disadvantaged by a convergence of taxation in the EU. If we had taken unilateral action and assisted ourselves in maintaining competitiveness, we could have argued that we had already gone the extra mile.

I make that case strongly to the Minister. When he says to me, as he does from time to time, that whenever the EU reaches agreement on this, we will go along with it, he is risking the future economic prospects of Ireland which would be much better served by taking a unilateral position. If we took up such a position, we would develop the type of economy for which we would then find a market in the future. There will be no future market for countries which do not use their energy with maximum efficiency.

Maximum efficiency is what eco-taxation is about. It is about making changes such as those which I tried to have included in the Sustainable Energy Bill. It is about creating a lean economy, which is able to provide services and is vibrant and sustainable, but which will not cause problems for itself. These problems, such as traffic congestion or pollution problems, are ones for which we must pay. We will have to not only suffer the health consequences, but also pay for them financially.

The Finance Bill, 2002, is a missed opportunity. The Taoiseach talks to me about bringing in sustainability indicators, but I hope he will do more than just talk about it. If we had sustainability indicators as well as GNP and GDP figures and quality of life indicators, we would be able hold them up, side by side, and realise that there are levels of economic growth which are not to the overall economic benefit of the country, particularly if they result in growing energy demand which means extra costs. Economists often speak about the problem of costs being greater than benefits. Our costs are currently rushing ahead of the benefits. Let us look at that kind of growth and seek growth which will improve quality of life and increase sustainability. That is the kind of growth the Green Party supports. It is important people realise that while criticising the Government the Green Party is saying there is another way. We are trying to put that alternative forward so that we can prepare for the time, which is fast coming, when we will not have the freedom to use fossil fuels in the way we now do. We will not have the same freedoms we have now in terms of large scale international transportation. These are things we will have to face up to. The Green Party wants to see a healthy economy, taking into account future conditions. In that way we will be able to look our children in the eye and tell them we are making preparations for their future, rather than just thinking of the next election.

The Finance Bill is a damp squib. It lacks interest, direction or any plan to enhance this country's future. Never before has so much money been awash in the country. Only 12 months ago the Minister for Finance, Deputy McCreevy, told us that the country was awash with money, that the Celtic tiger was roaming the country and that there would be no end to the prosperity. The day of reckoning arrived and unfortunately the country that was awash with money had not put it to good use.

In the last budget it was clearly evident that the Minister for Finance was more interested in the gambling fraternity than in poorer sections of the community. He was careless and reckless and hopelessly failed to meet the demands of the poor. Carers were treated shabbily in the budget. They are providing a valuable service to the elderly who would otherwise be forced to seek hospitalisation, if beds were available. Carers were stunned that the Government did so little for them. After four years of unprecedented economic prosperity during which so little was done for carers, they are now being told they will have to wait because of the downturn in the economy. Does the Government know what carers do? Does it understand how degrading it is to continue to subject carers to means testing?

The Government has failed to recognise the thousands of family carers across the country who provide 24 hour care for our most frail and disabled citizens. The 100,000 family carers save the State over €1.5 billion per year, yet the budget made no effort to abolish means tests. No carer in a household on an average industrial wage would qualify for the full carer's allowance. This is a shocking indictment of a careless Minister for Finance who has recklessly spent billions of euro.

On what was money recklessly spent?

There is to be the "Bertie Bowl" in Dublin that will cost billions of pounds.

Nothing has been spent on that.

What is the point in putting a grandiose bowl here in Dublin when young football and camogie teams have to tog out in sheds or in the shelter of a hedge?

Where do they do that? They do not do that in Connemara.

It is a disgrace that GAA clubs throughout the country have not got benefit from the Celtic tiger. That has not been the case in my part of the country.

It is no wonder Cork cannot win All-Ireland titles if they are still changing in the fields. We have moved on from that in Galway.

It is evident the Minister for Fin ance has ignored the plight of rural Ireland. Rural areas are being depopulated on a daily basis.

Who was the first Minister to do something about it?

Where are the decentralisation programmes for Bantry, Skibbereen, Dunmanway and Castletownbere? We have heard nothing about the decentralisation programme. The Minister of State knows that Bantry bay is the Mecca for aquaculture development and Castletownbere is the largest white fish port in Ireland. The Government has hopelessly failed to decentralise the Departments responsible for fisheries and aquaculture to west Cork. That is the place where it should be based and not on the lanes off Leeson Street in Dublin. The time of reckoning is coming. I can guarantee the Minister of State that the Government has very little time to correct anomalies that exist in the finances of the country.

Cork county, which covers one eighth of the country—

Yet it still cannot win All-Ireland titles.

—gets the country's lowest road fund grant per kilometre. I am amazed—

I cannot believe it either.

—that is the case. I remind the Minister that Cork South-West extends from Cork airport to Mizen Head, Sheep's Head and the Dursey Sound. It does not have one mile of national primary road, yet it is 120 miles from Cork airport to those three locations. That is an area which is much larger than many counties.

Fianna Fáil's only legacy for south-west Cork was to sell the railway tracks which ran from Cork city to Bantry and Skibbereen and the light rail service which ran from Skibbereen to Schull, to a Third World country in the 1950s. I am told the system still runs perfectly in that country. We were promised by the then Fianna Fáil Government that our road network would be brought to national primary and secondary standards, but that has not happened. There is not one mile of national primary route between Cork, Mizen Head, Dursey Sound and Sheep's Head.

They are good roads, however.

After 52 years, there is not one mile—

What did Fine Gael do in coalition?

The Minister of State's party has been in power for 17 of the past 20 years and it has neglected my constituency. The time of reck oning is coming and the Government will be judged according to its stewardship.

We will get our seat there.

Cork County Council operates a local improvement grant scheme towards which it receives a miserable contribution of about £150,000 a year from the Department of the Environment and Local Government. The purpose of the scheme is to make roads of the dirt tracks which lead to farmers' yards in parts of west Cork. That £150,000 would not be enough for three schemes and there is a ten year backlog of applications. I have constantly campaigned in the House for the past 20 years for our rightful share of the cake. Unfortunately, it has fallen on deaf ears.

The people of the area are doing very badly.

You visited the area recently—

That is right.

—and promised the people a great deal of—

Acting Chairman (Mr. O'Malley): If Deputy Sheehan directed his remarks to the Chair and not to anyone else, he would not be interrupted.

Is the Acting Chairman aware that the Minister of State interrupted me?

Acting Chairman

The Deputy is more likely to be interrupted if he addresses his remarks to the Minister of State.

There is no evidence in my constituency of the largesse the Minister of State said he would hand out.

I will visit it again.

Acting Chairman

Deputy Sheehan, without interruption.

I am amazed the Minister of State has not lived up to expectations in my constituency.

The Deputy said that when I had responsibility for the islands.

County Cork also has one of the largest housing waiting lists in the country. The most common problem I experience in my clinic is young married couples and single parent families waiting to be re-housed. We are only skimming the surface of the problem. This has been the greatest disappointment for people, especially with such a huge influx of money to the coffers. I am amazed the housing waiting lists are growing. I understand that, at the rate at which housing is being built in Cork, it will take 20 years to clear the existing backlog.

It is also evident that a huge number of national school buildings are crumbling and are unfit for human habitation. Some still have outdoor toilets. There is no progress in tackling this problem. I tabled a question two weeks ago to the Minister for Education and Science requesting the list of schools in Cork South-West scheduled for improvement this year. He answered that he was not in a position to tell me because the figures were not broken down on a constituency basis. If I had asked for a similar list for County Cork, the story would have been the same. The Minister is not capable of giving the information because he does not plan to schedule for improvement national schools in north, north-west or east Cork. This is a sad example of the lack of finance under successive Ministers for Education to tackle this serious problem.

The medical card system is also crumbling. People on a meagre income are put to the pin of their collars to qualify for medical cards. We were told 12 months ago that there would be an enhanced subvention for elderly people to defray the cost of living in nursing homes. It did not arrive and is still in the doldrums. The Minister for Health and Children does not know if he has the money to grant the enhanced subvention. I do not know if he and the Minister for Finance are on speaking terms. I am amazed it has taken so long for the Minister for Health and Children to introduce the subvention for the poor unfortunate people throughout the country who await it.

The list of patients awaiting admission to hospital is alarming. Hip operations are impossible to obtain unless one pays £6,000 or £7,000 to an orthopaedic surgeon who will do the operation quickly. The poor unfortunate person with a medical card must wait for at least three to four years before he or she can have a hip replacement.

The same applies for orthodontic treatment, a matter on which I have received many letters. Thousands of schoolchildren throughout the country await orthodontic treatment, many for five, six or seven years, yet there is no provision for them. Some of them have entered secondary education since they were diagnosed in national school as needing treatment. The list is growing, so the time has come for serious debate. If the money is not available, the Minister should say so. He should not try to fool the people who every day expect a letter informing them their children will be called for orthodontic treatment when there is no hope or light at the end of the tunnel. The Minister should try to rectify this before polling day which, I understand, will be in early May. If some progress is not made, it will be serious as far as the health of the children involved is concerned.

The Bill contains very little for farmers. The budget was only for betting enthusiasts. The farming community was provided with very little. What has the Minister done to exempt pension premia paid by the self-employed from PRSI and health contributions? A full-time farmer contributing to a private pension fund should not be prohibited from continuing to contribute to this pension on entering the EU farm retirement scheme.

A person with less than five years contributions should qualify for the special 50% contributory old age pension introduced in 1999 for those with five, but less than ten years PRSI contributions. Furthermore, those with nine years contributions receive the same special rate contributory pension as those with five years contributions. There is no equality in this. There should be a pro rata sliding scale by which a farmer or self-employed person with nine years contributions would get a larger pension than a person with five years contributions.

Farm spouses should be facilitated in establishing an individual PRSI record. It is a condition of the EU farm retirement scheme that a spouse or farmer can qualify for the pension, whichever is the younger to qualify. The woman of the house is recognised as the joint worker on the farm. A special rate of joint contribution should be paid that would allow a farmer's wife to receive the contributory old age pension at the age of 66 years.

Acting Chairman

Perhaps that topic could more relevantly be dealt with when the Social Welfare Bill is debated.

Provision for these matters should also be made in the Finance Bill, the debate on which is the only opportunity Members have to discuss these grievances.

No advance has been made since the Fine Gael led Government reduced the qualifying age for old age pensions from 70 years to 66. No further reduction has been made in the past 17 years. The Minister should consider reducing the age to 65 years.

The first £3,000 or 70% of income, whichever is the greater, should be disregarded for the purposes of farm assist. Capital expenses incurred in farm pollution control and related investments should be allowed over any period chosen by the farmer. Expenditure on farm waste management structures should attract an additional investment allowance of 20%. Young trained farmers should be given an additional capital investment allowance of 50%, subject to an overall limit of £50,000. The installation aid grant should be set at the maximum allowable of £19,689. Tax relief on the purchase of milk quotas should be put into effect immediately while expenditure incurred in their purchase should be allowable over a five year period.

Income from a farmland lease between related persons for the purposes of the early retirement scheme should qualify for the same exemption from income tax as is currently available on non-family transactions. A 100% stock relief facility should be available to all farmers. All repay ments, capital and interest, in borrowings by full-time farmers for the purchase of agricultural land to obtain a viable holding should be tax deductible where a tax liability is being incurred. Where no income tax liability occurs, the repayment should be aggregated and carried forward to offset against future income tax liabilities.

Stamp duty relief for the transfer of a site from a parent to a child, introduced in the Finance Act, 2001, should be extended to include grandchildren, brothers and sisters. This would facilitate childless couples transferring property to their grandchildren, brothers or sisters.

Acting Chairman

Perhaps the Deputy could explain the phenomenon of a childless couple transferring a farm to their grandchild?

How a grandparent could transfer a farm to a grandchild? Surely be to Heaven that is not asking too much of the Minister?

Feasibility grants of at least £15,000 should be made available for small, medium and community based alternative energy projects. Capital allowance measures similar to those available for farm pollution control should be introduced by the Minister for Finance for small and medium-scale alternative energy projects while the existing tax exemption of income from the leasing of farmland should be extended to all individuals who make land available by way of lease for alternative energy programmes.

Small industries need an incentive to keep going. Tourism related industries suffered severely during the foot and mouth disease and BSE crises of last year. Some relief must be given to rural businesses which suffered severely due to the absence of tourists. The Minister should give small industrial units a chance to survive. He should give a 50% reduction in rates for one year to tourism related industries.

Much more must be done for the fishing industry. Agriculture, fishing and tourism are our three main natural industries. Every step taken to promote them is a step in the right direction. This is something the Minister should consider.

The time has come for the Minister to take decisive action with regard to the economy. Approximately 12 months ago the Minister told us the country was awash with money. Unfortunately, the tide went out and the money is not available. Rural Ireland is not experiencing a bonanza. I invite the Minister to my constituency of Cork South-West and I will show him the condition of the roads and schools and the length of the hospital waiting lists. All this amounts to bad management somewhere along the line. It is not too late for the Minister to clean the slate and begin again. Until such time as there are incentives to live in rural Ireland and an industrial revolution begins in parts of the country, the prosperity will not be divided equally among the people of Ireland.

It does not matter whether one lives in Ballydehob or Ballsbridge, as citizens of this country, people should have equal rights. Down through the years successive Governments have failed hopelessly to honour that promise. I ask the Minister, before it is too late, to retract his steps and put the country back on a level footing. There is only a limited time left to do so until the electorate give their answer.

(Dublin West): The Finance Bill following from the budget in December outlines and enshrines the priorities of the Fianna Fáil-Progressive Democrats Government, a Government which rules overwhelmingly on behalf of the wealthy and the corporate sector in our society. This is nowhere more clear than in the hugely favourable tax treatment afforded to corporations and employers in this State. The Minister indicates the groups to which his party is beholden by again this year cutting the rate of corporation tax to 16%. His figures indicate that in a full year he will hand back €329 million to the corporate sector as a result of that tax cut. This is a corporate sector which has enjoyed for several years a massive bonanza in terms of profits beyond its wildest dreams, yet the Minister for Finance gives a further hand-out to a sector which has been hugely favoured over decades by contrast with PAYE workers. As a result of cuts in PRSI he is giving back a further €347 million in a full year to the employers sector. In one fell swoop, the Minister is handing back a massive €676 million to a sector which is already hugely profitable and wealthy. At the same time his corporation and county council colleagues are imposing local service charges on householders. They are increasing the charges that already exist with the cry that local authorities need the funds to maintain or improve services.

The Fianna Fáil Party cannot have it both ways. The Minister, on the one hand, is making great play of cutting the level of personal taxation to PAYE workers while, on the other, his local authority colleagues are taking it back in a dishonest fashion. In the case of the local authority on which I serve, as a result of the actions of the Minister's colleagues in Fianna Fáil, Fine Gael, the Progressive Democrats, the Green Party and some Independents, householders face a local taxation charge of €260 for this year. This is a new charge levied under the guise of an environmental charge, in effect, a bin tax. This is happening throughout the country. Let me say to the Minister that the residents of the greater Dublin area are not at all impressed or taken in by his coming in here on budget day and, with a flourish, making some cuts in personal taxation and taking some low paid people out of the tax net – many more should have been taken out – while at the same time imposing a local tax, through his colleagues at local level, on the very same people. Householders and residents see through this. I hope when the Minister and his colleagues call to people's homes during the general election campaign they will hear this quite clearly.

We have the spectacle, therefore, of the Minister giving back huge amounts to the corporate sector while local authorities chase and relent lessly pursue those who still fund the huge bulk of the taxation system. I understand that dozens of decent householders and taxpayers in Drogheda will be dragged before the courts next week because of their opposition to such a local charge. I would like the Minister to comment on his thinking on local taxation and whether he agrees with the suggestion which seems to be coming from elements within the Department of Finance that a parallel taxation regime under the cover of charges for services to the tune or €600 or €700 per annum may be encouraged by this Administration. Where does the Minister stand on this issue?

On the financing of local authorities, if the €676 million the Minister is putting into the pockets of the rich and super rich in a full tax year were committed to the improvement of local authority services not only would these local taxes not be enacted but the level of services could be hugely improved. On the issue of the environment and waste management, and the putting in place of meaningful and effective measures in terms of reducing waste, recycling programmes and so on, a massive amount could be done with such investment. However, the Minister is putting his political priorities and that minority of society which his party favours before such social considerations.

In his budget speech the Minister lauded the so-called public private partnerships and indicated this is the way the Government will go to fund public infrastructure in the future. The Government has been responsible for the privatisation of more public services than any Government in the history of the State. There have been shameful privatisations where very effective public services, whether small banks that were performing a service or telecom industries, have been handed over to big business, multinational corporations and international capital to become playthings of speculators, with no reference to the common good. There was certainly no reference to the ordinary working people of this country who were badly burned in the case of telecoms, but the Minister plans to continue along these lines, allegedly as a way forward to provide infrastructure for the State in the future.

Perhaps the earliest version of public-private partnership happened some time ago in my constituency in the form of the West Link toll bridge. That particular adventure is turning out to be an unmitigated disaster for the residents of the greater Dublin area, commuters in particular. A private company was given a virtual gold mine across the River Liffey in terms of being allowed to charge a toll. It is currently making huge profits. A further redevelopment and extension of the service are envisaged, part of which may have to be funded by the public purse. However, the private company will continue to rake in a huge amount of funds. On any working day the cost of this example of public-private partnership is that hard-pressed workers trying to get home from work have to sit in queues of cars from the toll bridge over the Liffey back up to Finglas and beyond. The greatest single barrier to traffic in the greater Dublin area is evident from this particular example, which the Minister wants replicated around the country according to his budget speech. I think he wants to create 11 other such developments. He is essentially handing out the risk free sectors of infrastructure to private companies in order that they can make a fortune. This is not the way forward.

Another area of major concern, the effects of which I see every day, is the housing sector. The zig-zag policy of the Government with regard to the private rented sector and the manner in which the so-called investors – speculators in reality – are treated are mind-boggling. One year, disincentives are put in the way of speculators, the next they are removed and new incentives put back. The result of this mishmash is a disaster for tens of thousands of ordinary working people and young people throughout the country waiting on the housing lists. I refer, in particular, to the tens of thousands at the mercy of private landlords – the very speculators who priced the ordinary working people and young people out of the market and now hold them to ransom for rents that one would imagine should be sufficient to rent a castle rather that a modest three bedroom semi-detached house or small apartment in this city. That is the result of the Government's housing policy. Unfortunately, all we have in this particular Finance Bill is a further continuation of the process.

I would like to ask the Minister, in particular, if he will provide any relief for one group of householders currently in a terrible bind with regard to their mortgage repayments. He is probably aware that questions have been addressed to the Minister for the Environment and Local Government in recent times regarding householders who purchased their homes with Housing Finance Agency loans and are now forced to pay a very high interest rate – a cripplingly high interest rate that has given rise, in some cases, to the most incredible anomalies. Will he make some provision in the Bill to overcome this grave difficulty for working people?

One particular household bought a home in 1985 for £26,000. By 1995, although having made all their repayments, the amount outstanding was £37,000 – I am using round figures. By 2001, the amount outstanding was £42,000. The Minister for the Environment and Local Government said in a reply that in this bind there were about 44,000 households, and some more of which he was made aware thereafter, and that it would cost about £11 million to the Exchequer to resolve the problem. Will the Minister make this change and free the people concerned from the shackles in which they are bound due to massively high interest rates? This is really unjust in comparison with the way things are operating.

I heard the Minister refer to a particular body with which I was involved and to which I offered assistance over many years – the Irish Seal Sanctuary. The Department of the Taoiseach promised to be quite helpful in this regard. The sanctuary is providing a very important service for vulnerable wildlife, and was not favoured with a once-off grant in the budget. Will the Minister lend his hand to this very worthwhile project, which is performing a very important function making people sensitive to the needs of vulnerable wildlife and awakening an appreciation of wildlife among young people and wider sections of our society?

Da bhrí sin, mar chríoch, cuireann sé an-díoma orm, mar Theachta ón bPáirtí Sóisialach, an dóigh ina bhfuil an Rialtas tar éis déileáil leis an mbuiséad áirithe seo agus é ag teacht chun cinn leis an mBille Airgeadais seo. Measaim sa mbuiséad agus sa mBille go bhfeicfimid Fianna Fáil agus na Daonlathaigh ag cur chun cinn i ndáiríre nithe atá ar mhaithe leis an mionlach sin inár sochaí a thugann tacaíocht do na páirtithe úd agus gurb iad gnáthduine, lucht PAYE, atá thíos leis an bpolosaí seo. Tá mé ag iarraidh ón Aire gan dul chun cinn leis an ngearradh siar ar cháin do na corporáidí móra ach an t-airgead sin a chur isteach sna húdaráis áitiúla agus deireadh a chur le gearradh siar ar sheirbhísí áitiúla atá de dhíth ar ghnáthdaoine agus lucht íochta PAYE.

Minister for Finance (Mr. McCreevy): I thank the Deputies who contributed to the debate on the Bill yesterday and today. Many comments focused on general economic and budgetary issues. Concern was voiced by Deputy Mitchell that I did not refer to economic circumstances. Deputy Mitchell and others painted an unfavourable picture of the Government's handling of the economy. I am very proud of the record of the Government in successfully managing the Irish economy in its term in office. Between 1997 and 2001 real GDP in Ireland rose at an average rate of 9.7% per annum; Irish income levels and living standards improved significantly; total employment rose by over 300,000; unemployment fell to an estimated average of 4% last year; long-term unemployment has fallen to around 1.2%; and involuntary emigration has been eliminated.

This country's future economic outlook is bright. There is a consensus among economic commentators on this. To secure this future outlook in the longer term, I have taken steps to improve the long-term sustainability of the public finances by putting 1% of GNP by law each year into the National Pensions Reserve Fund on a statutory basis. Deputy McDowell expressed his scepticism and doubts as to whether this provision was necessary and whether we genuinely faced a demographic time bomb. I have no doubt that we must provide now to meet the certain increase in liabilities we will face as the population ages.

Let us consider the facts. There are about 430,000 people aged 65 and over today. Given the numbers now aged 40 and over in our population, we know there will be about 730,000 people aged 65 and over in 2025. The number will be somewhere above 1.1 million in 2050. There are about four workers today for everybody of pension age. The prospect is that there will be fewer than three people at work per person of pension age in 2025. By 2050 there will be fewer than two people at work per person of pension age.

Deputy McDowell need not take my word for it. The EU Economic Policy Committee in its 2001 report on this issue projects that demographic changes will lead to an increase in public spending on pensions in Ireland from 4.6% of GNP in 2000 to 9% in 2050. The National Pension Reserve Fund is a prudent policy, which I believe we should see through to completion for all our sakes. I am concerned to protect the operation of the fund and let it seek the best return on its assets to provide for our future. I believe that is Deputy Mitchell's position too.

Deputy Mitchell claimed that budget 2002 is off the rails on the basis of developments since the budget. On the contrary, the economic outlook has improved since budget time, helped to an extent by the measures in the budget. As far as expenditure and revenue are concerned, it is obviously difficult to make a judgment based on one month's figures. Last year's January revenue figures were very good compared to the outturn for the rest of 2001. This shows the problems in making forecasts on limited data. The forecasts are based as normal on projections regarding economic growth, tax elasticities and changes in tax rates and tax collection procedures. They are not politically inspired as the Deputy sought to make out.

I do not share Deputy Mitchell's characterisation of the Central Bank nor the doubts he expressed over its independence in analysis and views on certain issues. The new legislation on financial regulation is complex but it is being progressed with a view to publishing the Bill this session.

Deputy McDowell paid me the compliment of saying that I have been consistent and coherent in my approach and I thank him for that. However, I have some difficulties in ascertaining a consistency and coherence in some of the criticisms being made of the Government's policies.

Deputies Mitchell, McGrath and others seem to suggest that my changes in income tax have both excessively targeted the better off and not reduced the tax burden. At the same time Fine Gael is suggesting a middle tax rate of 30%, effectively a 12% cut in the top rate of tax, which helps higher income earners.

Deputies McDowell, Rabbitte and Higgins referred to the figures I used which show that over 40% of tax cuts I made since 1997 went on personal allowances and credits which help all taxpayers, especially the lower paid. However, by their reckoning one third of benefits went to those on the higher rate because of the widening of the standard rate band and the reduction in the top rate. In Deputy McDowell's words, those on the highest rate who needed tax relief least benefited most, but whom are we talking about when we mention the higher tax rate and widening the tax bands? We are talking about many middle income earners, workers on the average industrial wage. In 1997, a single person on 89% of the average industrial wage was liable for tax at the higher rate. The Government sought to address that issue and did so successfully. Is Deputy McDowell seriously suggesting that such taxpayers should not have benefited from the tax reform?

Deputy McDowell suggested yesterday that the €223 million which I used to widen the standard rate bands in budget 2002 could have gone the full way to exempt those on the minimum wage from the tax net. The approach which I took in the budget was a reasonable one that sought to make progress on a number of issues within the limits of available resources. I would refer the Deputy to the ESRI analysis of the budget as quoted in The Irish Times, which concluded: “the impact of budget 2002 is highly progressive, favouring those with the lowest incomes”. The Irish Times is not noted for being favourably disposed towards me. That article by the ESRI said the budget was the most socially progressive of the last 15 at least.

In the course of the debate yesterday, Deputy Jim Mitchell made a comment on the effect of the Government's policy of widening the standard rate band. The Deputy suggested that as a result we are now in a position where if one spouse of a two earner married couple were to lose his or her job, the couple would end up paying more income tax. I indicated that this could not happen in so far as our calculations are concerned. Take an example of a two income couple, one spouse with income of €45,000 and the other with income of €24,500, in or around the current average industrial wage. Let us assume also that the couple splits their credits equally so that each has the benefit of a personal and a PAYE credit. The net tax liability of the couple, assuming post-budget 2002 credits and bands, is €12,510. If the spouse with the lower income loses his or her job, there is no income attributable to that spouse on which income tax may be charged. However, the income tax position of the other spouse may not remain the same as before. Instead, that person may avail of a wider standard band – the married one-earner band. He or she may also avail of the married personal tax credit. The net result is that the tax liability of the couple would fall to €7,060. In this example the couple's income drops by 35%, but the net income tax liability drops by 44%. I am prepared to look at the case to which the Deputy referred and, if he would like to send me the details, I will have it examined before Committee Stage.

If the Deputy is referring to the position of married one-income couples relative to married two-income couples on the same income, that is a different question and we have been down that road many times before.

Will the Minister change it?

No. While I am happy to hear that Deputy McDowell's party will not be reversing the various income tax reductions of the Government, he indicated he would consider the case for an increase in the rate of capital gains tax from its existing 20% rate apparently in order to increase the yield. I would like to point out that the reduction in the CGT rate from 40% to 20% was followed by a large increase in yield from the tax, from about £130 million in 1997 to about £690 million in 2001.

I am convinced that many persons who own assets would have no objection to paying CGT at 20% on the gains arising on their disposal but would find difficulty in paying CGT at 40%. Instead, they would prefer to hold on to the assets until later. If they hold on to the assets until their death, no CGT arises because death is not a disposal for CGT purposes. Thus a reversal to the 1997 position of a 40% CGT rate could lead to a decrease in the yield, which is not what the Deputy wants.

Reflecting again on the lack of consistency from the Opposition, on the one hand I am criticised for letting current expenditure increase, on the other hand I am criticised for not having expanded the public services in a way that would require increased public expenditure. I first challenge the criticisms of some Deputies in relation to spending control. In 2002, voted current spending is projected at 22.6% of GNP. This compares with current spending at 23.5% of GNP in 1996. The Government is planning public spending effectively within an overall medium-term fiscal framework, taking into account revenue projections and the key issues which need to addressed in our economy. We are committed to managing competing demands for increased public expenditure, with a focus on effectiveness of spending.

Deputies Mitchell, Durkan, Belton and others restated the case they see in social justice for compensating Eircom shareholders. I do not see that case, nor do many commentators. As for an independent body setting flotation prices in future, as suggested by Deputy Mitchell, I do not agree. The Minister for Finance has a responsibility to protect the Exchequer and account to the House for this responsibility. I do not see that devolving this responsibility to some non-accountable body is the appropriate way to proceed. The Government elected by the people acting through its Ministers is the appropriate and democratic way to safeguard the overall public interest.

Many speakers in the debate referred to the proposed new tax relief for sportspersons. I welcome the supportive comments made by some. However, the suggestions from Deputies Deenihan, McGrath and others that the relief is anti-GAA are based on a misconception. This is not, as some Deputies seem to believe, a scheme designed to provide grant-type support for sportspersons. It is based on an approach that income earned from direct sporting activities should have a treatment that recognises the particular challenges and achievements that arise in earning that income and the short earning career involved. Of its nature, it can apply only where sports earnings are involved. Deputy Browne recognised this point. In this context, Deputy Deenihan made the comparison with artists' tax relief which applies only to earnings from the artistic work, not any other earnings.

While the Opposition was quick to criticise the tax relief for retiring sportspersons, there was little comment from them on a measure in the Bill that can benefit every club and organisation in the country, including those involved in promoting our national games. Section 39 is aimed at providing support for the construction and refurbishment of sports facilities, the improvement of playing pitches and the purchase of permanently based equipment. I am confident that this relief will be of immense benefit to organisations throughout the country and provide for an improvement in the standard of sports facilities nationwide.

Some Deputies questioned the reason for the reduction in the betting tax rate. As many Deputies will be aware, the United Kingdom abolished its consumer betting tax in October 2001 and replaced it with a 15% gross profits tax. This change, allied with the growth in telephone and Internet betting, would have seen reduced business and betting tax revenues in this country. Accordingly, the rate is being reduced to one which will keep the industry competitive and keep jobs and revenue here.

Deputy McDowell asked about carbon taxes and the climate change strategy. As he indicated, considerable work has been undertaken led by the Department of the Environment and Local Government to assess and develop a range of measures dealing with this problem. He will also know from the tax strategy group papers that considerable further detailed assessment is necessary if we are to develop measures that take into account the effect on Ireland's international competitiveness and the effect that the imposition of such taxes may have on the consumer price index and the less well off members of our community. As the Deputy knows, I announced excise increases on petrol and auto diesel which took effect from budget night, which are consistent with this strategy, though I note he seems to be criticising these increases.

It is interesting to note that there have been calls to abolish VRT while, on the other hand, there have been calls for further environmental taxes. In my December 1998 budget I restructured VRT to favour smaller cars by raising VRT on larger cars. At the time I said that the increases in VRT would yield a contribution from the motoring sector to meet additional road use and environmental damage arising from the unprecedented growth in private car usage in the State. VRT is an important source of revenue for the Exchequer, especially given the Government's strategy of reducing income tax and corporation tax. It brings in around €800 million to the Exchequer. To recover around €800 million in revenue would require, for example, a 36 cent excise duty increase in the price of petrol per litre, or an increase in the standard rate of income tax of over two percentage points.

Deputy McDowell asked the reason I increased the BES company limit from its current level when the Department of Enterprise, Trade and Employment review of the scheme did not suggest it. I point out, however, that economic circumstances are somewhat different from those that obtained when the review was carried out last year. A number of companies and groups made the case for an increase in the limit to facili tate investment. As the limit had not been increased since December 1997, I was satisfied that an increase was merited. As regards the scope for tax planning in relation to BES schemes, I point out that I did not change the investor limit from €31,750.

Deputy Browne raised the issue of the introduction of tax relief for sugar beet growers for the cost of sugar beet growing contracts. I regret that I do not believe there are sufficient grounds for the introduction of such a relief. Growers who purchase sugar beet growing contract nominations are not actually purchasing a quota as is the case with dairy farmers who purchase additional milk quota. While I am aware that a sugar beet restructuring scheme was put in place in the year 2000 as a result of an agreement between Irish Sugar plc. and the Irish Farmers' Association, this scheme does not involve the transfer of sugar beet quota as there is no such quota at farm level as is the case with milk quota.

I would also like to address the suggestions made during the debate that our record on housing was poor. Only last week my colleague, the Minister of State at the Department of Environment and Local Government, Deputy Molloy, announced the fifth record year for housing output. Some 52,602 new residences were completed last year. We are building houses at a rate of over 13 per 1,000 population, by far the highest rate of house building in Europe. In terms of social housing, over 5,000 local authority houses were completed or acquired last year, the highest level of output for over 15 years. Output under the voluntary housing programmes in 2001 was some 1,200 units, the highest level ever achieved by the sector. I expect that the output for 2002 will be higher again due to the impact of the measures introduced in my budget to stimulate housing construction.

Deputy O'Keeffe raised concerns about the approved share option scheme introduced last year. This scheme was introduced following extensive consultation. I understood from relevant agencies and industry representative bodies that it would meet the objectives sought. Representations have been made to me to change the terms and extensive discussions have taken place.

How many schemes has the Minister approved?

I do not approve schemes.

Only two out of 50 odd applications were approved. That shows how successful the Minister was in that regard.

The Minister for Finance does not approve any schemes; they are approved by the Revenue Commissioners. For the Deputy's information, I understand the figure is seven. The changes proposed are complex giving rise, as they do, to significant issues of policy and practical difficulties in terms of application of any proposed amended rules. Having reflected fully on the matter, I have decided against making any fundamental change to the scheme at this time.

Deputy Roche raised the issue of the anti-avoidance changes I announced in the budget in relation to the relief available in respect of expenditure on the repair, maintenance or restoration of certain buildings by the owner or occupier of buildings of significant interest. His concerns are met by the transitional arrangements included in the Bill.

Many other Deputies made informed and valuable contributions to the debate and can be assured that their positions have been noted. Due to time constraints I am unable to comment on all the points made and look forward to further discussion in committee.

(Dublin West): Will the Minister consider the Housing Finance Agency proposals?

I will look at them.

Question put.
A division being demanded, the taking of the division was postponed until after the Order of Business on Tuesday, 19 February 2002.