I wish to share my time with Deputies McGuinness and Killeen.
Financial Resolutions, 2002. - Financial Resolution No. 11: General (Resumed).
Debate resumed on the following motion:
THAT it is expedient to amend the law relating to inland revenue (including value-added tax and excise) and to make further provision in connection with finance.
–(Minister for Defence).
Acting Chairman
Is that agreed? Agreed.
I am glad to have this opportunity to speak today about budget 2003. Last week's budget reflects the need for consolidation and re-prioritisation of Government spending after several years of strong growth. I am happy that, in these difficult economic times, the €390 million available to my Department will enable me to maintain the thrust of State support for the Arts, Sport and Tourism areas.
The Government remains fully committed to the development and promotion of the arts and culture sectors and to the commitments set out in the programme for Government. However, support for the sector can only be advanced according to the availability of resources. In the case of the Arts Council the allocation for 2003 is €44 million. Funding for the Arts Council has been increased by 80% over the past five years rising from €26.5 million in 1997 to €47.7 million in 2002.
The Arts Council's new arts plan 2002-2006 sets out the strategic objectives identified by the council for the coming years. It proposes to continue the transformation initiated by the council in its second arts plan from being primarily a grant giving body to a body that, while continuing to disburse grant-aid, will place increasing emphasis on enhancing the long-term capacity of the arts sector to maximise self sufficiency, and strengthen the levels of management within the sector.
The significantly increased funding made available for international cultural exchanges will enable my Department to press ahead with planning for major festivals of Chinese and Irish arts and culture in Ireland and China.
Under the ACCESS scheme, which runs from 2001-2004, more than €45 million has been allocated to 44 various projects throughout the country.
The Government remains committed to the strategic development of the film industry, with the film board having the central role in that process. The reduced allocation for the board must be seen against a background in which the board's funding more than doubled over the five-year period 1997-2002.
My Department's primary cultural role is to support the national cultural institutions under its aegis through the provision of Exchequer funding on an annual basis and through a range of other policy and operational measures to assist them in developing their services to the public.
I am pleased to inform the House that, despite the constraints on the public finances, the current funding provision for the National Museum and the National Library in 2003 will be slightly above the 2002 allocation to meet the general expenses of those institutions. I was glad to be able to allocate a 63% increase required by the National Archives in connection with the proposed refurbishment of the reading room to permit universal access.
We are all aware of the necessity to reduce overall spending in 2003 and in this regard it is unfortunate that it will not be possible to provide any increase in the current allocations to the Chester Beatty Library, the Irish Museum of Modern Art and the National Concert Hall. Pru dent management of these allocations by the institutions will enable these cuts to have minimal impact.
Since 1977, when the first ever Cabinet Minister for sport was appointed there has been a huge increase in the level of Government support for sport. When the Government of 1997 took office it inherited a budget for sport at around €17 million. Let tribute be paid to Deputy Allen for his role in that department. Today the budget is €161.4 million.
Since 1997, with the significantly increased spend for sport, the sporting landscape has seen many significant changes. The following are some of the highlights in sport development of which the Government is very proud. The statutory Sports Council was established in July 1999. Funding for the council has increased by more than 100% since 2000, its first full year of operation. With increased government funding the Sports Council has been able to raise the level and quality of support to governing bodies and Ireland's top international competitors are now in receipt of the type of funding and support about which they only dreamed some years ago. A new high performance strategy is being implemented with the help of increased funding of €3 million introduced in 2002, leading to the Athens Olympics in 2004. Ireland has its first ever national anti-doping programme – one of a select group of 30 countries in the world with such programmes. Almost 3,000 sports facilities, at all levels, throughout the country, have received grants totalling more than €213 million.
Major national sports facilities have been provided or upgraded. Included here are the new 50 metre pool opened in Limerick this year, a refurbished national boxing stadium and a new national centre for rowing in Inniscarra, County Cork. In addition almost 3,000 clubs and community organisations throughout the country have been supported to the value of €213 million in providing much needed sporting and recreational facilities. Under the local authority swimming pool programme a number of pools have been built and refurbished at Arklow, Courtown, Dundalk, Ennis, Enniscorthy, Monaghan, Navan, Roscommon and Wicklow.
Despite the tight budgetary situation, the Government has attempted to ensure that the excellent work carried out between 1997 and 2002 is consolidated. In that respect I pay tribute to my predecessor Deputy McDaid. With the level of funding provided for 2003, the momentum and the commitment to sport by this Government is being sustained.
Abbotstown has not been mentioned.
The Sports Council will continue to maintain its levels of support for the wide range of programmes and initiatives in place for the development and progress of sport, from rec reational sport to top national and international teams and competitions.
Now, more than ever before, a strong and vigorous marketing strategy is vital to sustaining growth in the tourism sector. In this context, I was delighted to be in a position last Monday to unveil Tourism Ireland and Bord Fáilte's marketing programmes for 2003.
In a period of restraint in our public finances, the Exchequer allocation for the tourism marketing fund next year has increased significantly. An additional €5 million in 2003 will bring the overall provision under my Department's tourism marketing fund to €30.42 million. This is a recognition by Government of the importance of the tourism sector to the economy, whether as a contributor to employment, GNP or regional balance. It is also a recognition of marketing as an essential element in the overall mix that makes Ireland a top class tourist destination.
The tourism sector has suffered a number of heavy blows over the past two years. However, the doom and gloom scenarios, which were widely predicted earlier in the year, have not materialised. The latest CSO figures for 2002 show a continuing recovery in both visitor numbers and revenue over the first six months of the year. While we may not achieve the record heights of the year 2000, there is a growing air of confidence in the sector, which has been buoyed up by positive results in key markets such as Britain and some parts of continental Europe. The forecasts for the season as a whole are for a moderate recovery – possibly up to 2% in visitor numbers.
The marketing programmes to be rolled out by Tourism Ireland and Bord Fáilte next year are targeting a further 5% growth in visitor numbers. These targets would not be realistic without the Government's continued support and investment in this vital sector of the economy.
As this House will be aware, a process of major change in the institutional arrangements for the delivery of tourism policy is being undertaken at present. The new all-island tourism marketing body, Tourism Ireland Limited, has been up and running since early in 2002. We are building on the success of this initiative and have now advanced the change process further.
In accordance with An Agreed Programme for Government, the Government recently published the text of a Bill to establish the National Tourism Development Authority, whose remit will include the promotion of training, human resource and marketing skills development in the tourism industry and other functions currently carried out by Bord Fáilte and CERT. This Bill has been through Report Stage in the Seanad and it is hoped to present it to this House shortly.
Deputy McCreevy has a proud record of solid economic achievement behind him. He and the policies of this Government have brought unemployment to its lowest level in the history of the State. They have fostered and sustained the most dramatic period of growth in the history of the State and have brought untold economic prosperity to the citizens of this country. The same cannot be said of his critics.
The most shrill and mercurial of all Deputy McCreevy's critics is the man who refuses to occupy the front-bench seat which Deputy Quinn was recently forced to vacate, preferring instead to occupy the far left place of his colleague from the old revolutionary days – former Deputy De Rossa. The message, to all in this House who care to look, is clear. The once proud Labour Party is not alone routed, it is no more. Infiltrated beyond recognition, the leadership score board says it all: Old Labour 0; Sinn Féin – The Workers' Party 3. As far as the traditional Labour Party is concerned, it is not a case of "game on" but "game over". The foot soldiers of traditional Labour's backbenches and those former leadership aspirants who see only the cold road to the political gulag stretching ahead of them are the new conscripts to Sinn Féin – The Workers' Party. They are sad and defeated captives of the ideological fifth columnists who have colonised their party.
The annihilation of the traditional Labour Party is complete. President De Rossa, leader Rabbitte and deputy leader McManus, all enthusiastic members of Sinn Féin – The Workers' Party and all that it stood for, now reign supreme. They would have us believe that by changing their name they have gone away. To quote a phrase, "They haven't gone away, you know." Windscale did not become any less noxious or objectionable when it changed its name to Sellafield and continued its activities as before. The brand re-launch of Sinn Féin – The Workers' Party as infiltrated Labour does not make its policies or its record any more acceptable or any less disgraceful. Those who stood shoulder to shoulder in vociferous solidarity with the discredited economic policies of the former Soviet Union now chose to lecture the most successful Minister for Finance of his generation on economic propriety.
Let us examine the shambolic and shameful economic record of those who have infiltrated and captured the parliamentary Labour Party. Let us know them by the causes they espoused and the regimes they admired. But for the political endeavour of true democrats, including generations of members of the now defunct traditional Labour Party, this country, if the likes of Deputy Rabbitte, Deputy McManus and former Deputy De Rossa had their way, would have suffered the economic, social and human rights deprivations which were the hallmark of the totalitarian regimes they so admired. The fate of the regimes which inspired Deputy Rabbitte until recently stand in stark contrast to the modern economic fate of this country, brought about as it has been by the type of policy which infiltrated Labour under its new leader despises.
The modern wealth of this country is built on our success in attracting and fostering entrepreneurial initiative. Deputy Rabbitte and the current leadership of Sinn Féin – the infiltrated Labour Party spent most of their political life advocating the confiscation by the State of that class of industry. The low corporate tax and high corporate yield policy of this Government, which has succeeded in growing our economy, reducing unemployment and boosting Exchequer receipts, runs contrary to everything which Deputy Rabbitte has ever advocated. The reduction in capital gains tax brought about by this Government has succeeded in generating economic activity and boosting the amount of revenue received by the State. Deputy Rabbitte has at least been consistent in advocating confiscatory capital gains taxes.
The policies which were once reserved to the Moscow-admiring minions of Sinn Féin – The Workers' Party have become the proclaimed policies of Labour. The UK has "New Labour" but Ireland has "Infiltrated Labour." The crumbs of fiscal prudence which adhered to the old Labour Party have been discarded by infiltrated Labour. Sinn Féin – The Workers' Party has become infiltrated Labour – the borrowers' party. Borrowing is regarded as the solution to everything. Whether it is for current spending projects or simply to secure short-term popularity, the motto is to borrow anything, anywhere, anytime from anybody to secure the final goal of power. Deputy Rabbitte needs no lessons in the borrower's philosophy of taking, keeping and returning. Those who believe otherwise need only ask Frank Dunlop.
To be fair to Deputy Rabbitte, he has embraced borrowing as a political as well as an economic policy. Burned out former advisers, well recognised as being long beyond their shelf life and clinging to the keyboard-tapping profession much loved by those whom electoral acceptability eludes, are being borrowed from the remnants of former Deputy Spring's political archives. Deputy Rabbitte, in the forlorn dream of recreating former Deputy Spring's Camelot, is trying to re-inflate these punctured Rasputins.
No step will be skipped in the efforts of Deputy Rabbitte's secret army of spinners to convince the nation that he is the political re-incarnation of former Deputy Spring. Indeed, I fully expect the leader of infiltrated Labour to return to this House after the Christmas break sporting a moustache.
God forbid.
The leader of infiltrated Labour needs to understand that no matter how hard the Russian bear may diet, he will never pass for an Irish wolfhound.
This budget underpins the Government's commitment to securing continued economic growth, with a target of 3.5% for the coming year, which would be extraordinary by current standards among our European neighbours, to support high levels of employment and to achieve social progress within a stable and sus tainable budgetary framework. Over the past five years, the contribution of the PAYE sector to the Exchequer has reduced from 36% to 32%. That is very significant in an era of huge increase in the numbers employed. The corporation tax take has increased from 11% to 15%. Unemployment, which stood at 11% in 1997, is now down to about 4.5% and there are almost 400,000 additional people at work. It is very important that the Minister for Finance, in setting out his strategy in the recent Budget Statement, would continue to underpin the good work of the last few years, particularly in the area of long-term unemployment, where the number is down from over 90,000 to just 22,000. A particular objective of the budget was to copperfasten employment in a much more difficult era in international economic terms and to position the economy to grow when there are further opportunities in the not too distant future.
A budget involves making choices. One of the options frequently exercised in the past was to increase income tax. I commend the Minister on not taking that road on this occasion. Ireland attracts 20% of US investment into Europe although we have just 1% of the EU population. That is vitally important in terms of our capacity to create jobs. It is interesting to look back on budget scenarios of recent years. In 1999, much energy was being expended in preparing for the millennium and there was a great deal of concern about Y2K-friendly computer systems. Experts were employed by companies and Departments to ensure that the entire world would not come to a standstill on 1 January 2000 and that computer systems in factories, hospitals and offices would not collapse. One wonders whether those experts invoked divine intervention or whether it was a very clever scam.
The following millennium year, 2000, as well as being a year of great celebrations, recorded very considerable growth rates and a great air of confidence. However, within months of that year's budget, the foot and mouth disease crisis struck, with devastating consequences for the agricultural economy and for tourism. Some estimates have placed the cost to the national economy at well over €1 billion. Within months, the outrage of 11 September had its effects, creating further enormous difficulties in the tourism sector in particular and undermining the economic wellbeing of the entire western world. That was followed by the scams and fraudulent accounting practices in Enron and Worldcom, leading to a collapse in share values and a massive blow to employment.
I have listed those catastrophes and difficulties as the background to a situation in which, although the Irish economy suffered some damage, it managed to get through all of those situations, any one of which might well have brought the economy to its knees in previous years. It was a major achievement to get through those difficulties, all of which were outside the control of this country.
When the Minister presented the budget last December, he predicted Exchequer deficits of almost €3 billion in 2003 and €4 billion in 2004 and those in the context of the circumstances I have just outlined. Nobody could have been unaware that the country's finances needed close attention and prudent management for the next few years. I believe the Government was re-elected to do just that and this budget takes a significant step along that road.
The Minister had many options, including income tax increases and borrowing for infrastructural projects, but he chose the opposite – to chart a prudent course and take stock. Anyone who has read the report of the Independent Estimates Review Committee will have found the findings timely and instructive. There is considerable evidence to support its contentions, not least those regarding the multiplicity of agencies and schemes with overlapping roles that detract from effective service delivery. There is also evidence that, while money was plentiful, spending proceeded apace on unnecessary projects and schemes that did not give a good return.
The Minister has been well advised to provide for the pensions scheme and it is prudent to encourage people to save money, especially with historically low income tax rates and, sadly, considerable evidence of irresponsible spending on alcohol, for example, by young people. I am glad the SSIA scheme is unchanged this time but the scheme has given banks and financial institutions considerable amounts of money they may not have had otherwise. It is no harm to examine ways of ensuring that money is available for investment in infrastructure through the national development finance agency and I would like to see the Government doing so.
The Minister has been prudent on the pensions scheme and the SSIAs but perhaps there are other areas we should make provisions for, for example, costs arising from claims by unsuccessful bidders for the second mobile telephone licence. If it is likely to arise, we must address it rather than leaving it until it is too late. I welcome the €100 million per annum levy on the financial institutions for each of the next three years because it will bring in significant revenue and ensure that a sector that perhaps has not paid as much as it should have will do so. I welcome the closing off of loopholes and tax shelters which will bring in at least €10 million for the next five to eight years and the extension of young farmers' stamp duty exemption for another three years.
There has been an interesting debate on the effects of excise duty on the incidence of smoking and drinking. Massive health and absenteeism costs are involved and, although excise duties in the budget are perhaps not the appropriate way to address the issue, we must do so nonetheless.
There is no doubt this budget was framed in a time of changed economic circumstances from those we experienced over the previous five years. However, it indicated the intention of the Minister and the Department to be prudent in relation to the manner in which they collected and set about spending taxpayers' money and that must be welcomed.
A number of political and economic commentators have reflected on this budget in a way that gives the impression that assistance is not required for the marginalised or less well-off. The spend of Departments after this budget must continue to be focused on investment in, for example, the children at risk programme, community development and ensuring the less well-off re-enter the workforce through education and re-skilling. As well as that investment, the last five years has seen assistance given to families through community development. The RAPID programme has produced great benefits and needs to be enhanced and rolled out in a positive way. In allocating Departments' spend in this area, I ask the Minister to ensure that any programme which supports the marginalised or less well-off, through family support measures, RAPID, children-at-risk or community centres is given as much as possible.
I have just come from a meeting in Kilkenny which was called to support the Comerama employees following that factory's closure. Castlecomer is in a RAPID area which has experienced little development in recent years and the Comerama plant was the only real employer in north east Kilkenny. I ask the various Government Departments to establish a task force to tap into the energy of the Castlecomer enterprise groups and support the re-development of the plant so the employees can have a second chance. If every Department co-operates under its budget headings, we may find someone who will develop the plant and give fresh employment. For example, there is no reason a FÁS office could not be established in north east Kilkenny so the workforce could be re-skilled. The area is already recognised as marginalised – it is included in the RAPID programme – so it should get first preference and all Departments should fast track any applications under the social inclusion schemes and respond to them seriously. Although there is a cutback of 5,000 in the CE schemes, perhaps they could actually be increased in areas like Castlecomer for those who are unemployed at a time of year no one wants to be. If the efforts of the Departments were concentrated and drew on the energy of local people, we could find replacement jobs and a fresh impetus in the area to develop new skills and give people fresh hope.
The measure of any society is how it looks after its marginalised. We must recognise the huge amount of money being spent in the area. The commentators I have heard do not recognise the fact that huge grants are made to community resource centres for IT and development skills that encourage people to seek employment. Departments should continue their spend in that area and build on the successes of the last five years as well as taking into account the economic downturn which is impacting negatively on employment and education. I wanted to highlight these issues specifically and ask the Minister to focus on them in the coming months.
I am glad to have the opportunity of contributing to the budget debate. I am a person who tries to be constructive and if there are areas where the budget has made a contribution I will say so. For example, I notice a significant increase has been made to the housing aid for the elderly scheme, and in other areas also. As somebody who could probably afford to pay some extra tax, I have always made the point that I would be willing to do so. I find it desirable to pay additional tax to ensure services are provided to people who need them. That is where I disagree fundamentally with the Minister for Finance, Deputy McCreevy, whom I know well. The budgets he has introduced over the past six years appear to have redistributed income, but the better-off are the major beneficiaries of that redistribution.
It is important to maintain a focused view. Some commentators articulate the view that people are no longer marginalised but I am glad to hear Deputy McGuinness recognises that is not the case. Campaigners on behalf of the poor and the marginalised are described as pinko lefties, or whatever name the Minister, Deputy McCreevy, wishes to call us. Does the Minister believe, however, that the Combat Poverty Agency invents the figures that show Ireland has the highest percentage of children living in poverty in the developed world, after the USA? Does he believe that Focus Ireland has invented the homelessness statistics? Did he ever notice that within a five minute walk of this Chamber homeless people are sleeping in doorways? Does he also believe that the Society of St. Vincent de Paul is exaggerating when its figures show huge increases in the assistance it has to make available to people for basic commodities such as food, clothing and shelter? The society says that if it had the resources it could spend twice as much.
Over the coming months the Combat Poverty Agency's recent publication, "Against all odds: Family life on a low income", will be studied by all of us, including the Minister for Finance and the Minister for Social and Family Affairs. The report deals with the lives of those living on social welfare payments. Obviously that is not mere propaganda by the poverty lobby, it is important factual information garnered by the agency. It shows that there is a significant number of people who have not benefited, or made any significant gains, from the wealth created during the past six or seven years. The additional sum of €6 brings the lowest social welfare payment up to €124.80 per week, but it falls short of the PPF's commitment to bring the lowest social welfare rate to €127 during the life of that programme. The Minister argues that it is ahead of inflation but seems to be unaware that people on low incomes face higher than average costs because of their low purchasing power and lack of private transport. Those are important factors that must be taken into account.
The increases for many social welfare recipients will be clawed back by changes in rent supplements which have been condemned, rightly in my view, by housing groups and community welfare officers. Despite this, the Minister had the gall to claim that the budget protects the weaker sections of society. Perhaps he is living in a different world to the one I inhabit. At first glance, the treatment of pensioners in the budget appears to be slightly more generous than the treatment of other groups who are dependent on social welfare. However, closer examination shows that most of the increase granted to pensioners will be eroded by rises in inflation and VAT. Many elderly live in houses without adequate heating and so they will be hit by the increased VAT on fuel.
One of the problems we have in dealing with the budget is that we do not know which budget to address. At one time there was a budget every week and then it became a budget per day. As Deputy Ring said, however, it has now become a budget an hour, on the hour. We had many pre-budget increases and then the Book of Estimates delivered a blow to investment programmes by indicating significant cuts in various important programmes. After the budget we had a huge 12% increase in car tax and only yesterday a €43 increase in the television licence fee was announced. I support public service broadcasting and I understand the need for a licence fee increase, so I will not condemn it totally. However, when all these increases are fed into the system they will have an effect. Hopefully, however, the increase will not impact too much upon on a significant number of people in the television licence savings scheme and the household budget saving scheme.
VHI premia are rising by 19% and electricity prices will rise by 13%, all of which will have an added impact on the cost of living. While pensioners receive a free electricity allowance, it should be remembered that levels of electricity consumed above the allowance will have to be paid for at the higher rate.
Deputy McGuinness referred to the community employment schemes and I fundamentally disagree with the decision to cut the numbers on them. On previous occasions, I have articulated to the House the excellent value provided by CE schemes. I traced the history of their introduction and the impact they made on voluntary organisations in the community, including sports groups, literacy and numeracy classes, community development, and the recreation and leisure sector generally. Community employment schemes play an essential role, yet they will be cut by 5,000 this year and by the same amount next year. Deputy McGuinness articulated a strong case as to why the scheme should not be cut in his own area, given the job losses that were announced there recently.
The Minister for Social and Family Affairs recently confirmed that the back to work allowance scheme has virtually been abolished, except for target groups such as lone parents and people with disabilities. For those on the unemployment register, however, the period of time to qualify for the back to work scheme has been increased fourfold from 15 months to a staggering 60 months. This arose from the Book of Estimates where the financial provision for employment support services was cut. The back to work allowance scheme had been extremely successful, involving some 13,500 recipients. While a study of the scheme, commissioned by the Department, recommended a reduction in the number of places, it also recommended increased funds for better training and support for participants.
The net effect of the Minister's announcement is to abolish the scheme, which is a crude step. The scheme should instead have been developed and improved upon because it played a pivotal role in assisting people to make the transition from long-term unemployment back into the workforce. The negative impact on the back to work allowance scheme had its genesis in this budget, which contained a number of insidious cutbacks the effects of which will only become apparent over time. Such negative impacts may only become apparent during the debate on the Finance Bill when the technicalities of budgetary measures are spelled out. That is how we will discover the seriousness of the overall impact.
By any yardstick, the Minister stands indicted on the issue of social housing because local authority housing lists will continue to grow as a result of the reduction in the overall allocation for various accommodation programmes. There are approximately 50,000 households, representing about 130,000 people, on local authority housing lists and between 5,000 and 6,000 people are homeless. One homeless person is an indictment of us all. A significant number of people once in a position to buy their own homes have been priced out of the market. The Government announced a number of savage cutbacks in the housing sector in the Book of Estimates published on 21 November.
We have only to look at the reports from Focus Ireland, the Simon Community, the Society of St. Vincent de Paul and Threshold which analyse the house strategies and homeless plans drawn up by local authorities. One report concluded that 33% of new householders – 42% in urban areas – will never become homeowners. That so many people are unable to buy their own home during our greatest period of economic prosperity is a damning indictment of the Government. The report also reinforces the demands being made by the Labour Party. We are asking the Government to reverse the major cuts in housing area, namely the abolition of the first-time buyer's grant and the capping of the rent allowance announced by the Minister for Social and Family Affairs which will contribute to an increase in number of homeless people. Single people will be forced out of their homes because this cap provides landlords with an opportunity to increase rents and they will not be able to afford to pay because community welfare officers will not be in a position to pay out beyond that provided for in the secondary legislation in the form of a statutory instrument. That is a serious matter. It is important that the flexibility enjoyed by community welfare officers remains or people will be left without homes. I think the Minister for Social and Family Affairs will listen and take cognisance of such matters.
Section 266 of the Social Welfare (Consolidation) Act, 1993 states that people are entitled to a basic maintenance level of supplementary welfare allowance. If they are forced to pay additional rent they will be deprived of necessary funds to survive. What the Minister has done is possibly ultra vires the principal legislation and is something she should revisit.
The individual payment under the supplementary welfare allowance has increased from €7.80 to €12, a basic increase of €4.20 which in turn reduces the net increase of somebody in receipt of €6 down to €1.80. Taking inflation into account, people are left with a net increase of 25 cent a week. That information emanates from CORI who have carried out an evaluation of increases in this area. That is why it is important that cognisance be taken of this matter.
Home ownership is now a luxury. It is often the property speculators, investors and land speculators who win out over home buyers and tenants. We should take cognisance of the recommendations contained in the Focus Ireland report and implement them. The Government should reverse the appalling cutbacks announced in this area, otherwise people will be driven from their homes resulting in a worsening of the housing crisis. The Government must pay particular attention to this area.
The cutback in the allocation of social housing in the budget in conjunction with the 20% cutback in social housing allocation for new developments under the Planning and Development (Amendment) Bill, 2002 means integration, which was the cornerstone of Part V of the Local Government Act, 2000, introduced by the former Minister, Deputy Dempsey, is dead and buried. It will cost the Government a great deal of money to meet the commitment given by the then Minister for the Environment and Local Government, Deputy Dempsey, during his tenure in office.
The budget provided an increase in funding for the improvement of accommodation for the elderly. Of all the schemes to which one could allocate money, the housing for the elderly scheme is one of the most cost effective. Any cost benefit analysis in this area would show it has a tremendously positive impact. I urge the Government to continue to provide money in this area. That money is not shrouded in bureaucracy and is, therefore, extremely effective. Nobody in the House or involved in local authorities would deny that money spent on home improvements is very cost effective. The Government should continue to ensure those areas receive additional funding.
I also welcome the increase in the disabled person's grant and essential repairs scheme. A sum of €40 million has been provided for these two very worthwhile and essential schemes which have become more important at local authority level in particular.
In the past five years the Government has widened the gap between rich and poor. This is accentuated by the fact that the well off can access schemes such as the special savings incentive scheme while those in relative poverty are unable to do so. This widens the gap further. I can participate in the special savings scheme but a person with a lesser income may not be in a position to do so. CORI has reported that the impact of changes in pay and tax reductions means the gap between rich and poor has widened by approximately €266 in the past six years. Under this budget an unemployed couple with one child will be better off by only 25 cent a week when inflation is taken into account.
The Minister said corporation tax would decrease from 16% to 12.5% from 1 January 2003. This will cost approximately €305 million in a full year. I appreciate the importance of a low taxation environment for attracting inward investment – there is unanimous agreement it is essential – but the Government which said it was in a tight corner with respect to its financial wherewithal could have postponed this reduction for a year. The budget is about vision and choices for society. While the reduction in corporation tax will come into effect in January the increase in child benefit has been postponed.
The budget also introduced increases for widows and widowers under 66 years of age. I raised this matter with Deputy Ahern when he was Minister for Social, Community and Family Affairs. I have been Labour Party spokesperson on social and family affairs for only two weeks. The bulk of my correspondence is from widows and widowers under 66 years of age regarding availability of the free schemes. One is most vulnerable following the death of a spouse and it would be of great benefit if the provision was extended for three to five years.
As a rural Deputy and former spokesman on agriculture and food, I have a particular interest in the role of women in agriculture and the self-employed. I note that €500,000 has been allocated in the budget to the cost of the rural transport initiative in respect of free travel pass holders. One of the major problems for people living in rural areas is isolation. Transport is necessary for people living in rural areas to be able to combat social exclusion and isolation. Reduced mobility compounds social exclusion and denies members of the community access to basic services, including education, jobs and social interaction. The lack of adequate transport in rural areas impacts in particular on older people who, even with a free travel pass, cannot access transport from near their homes. Other groups who are at a disadvantage because of a lack of access to rural transport include stay at home parents without a car who cannot avail of pre-school facilities and people with disabilities who cannot access training and education facilities. The mobility needs of the rural population cannot be fulfilled by traditional transport. Current rural transport demonstration projects operate in an environment where there is an absence of clear policies or a regulatory framework for rural transport. I am pleased there is an allocation in the budget for the rural transport initiative.
The Government should consider the setting up of a rural transport authority to co-ordinate all the bodies involved. It would establish guidelines for the community transport project and social car schemes to operate without difficulty and create standardised guidelines for obtaining route licences from the Department of Enterprise, Trade and Employment. It would be beneficial to have a simple voucher system which would allow local operators to obtain full reimbursement for 3,000 pass holders from the Department of Social and Family Affairs in the context of the usage of multiple modes of transport. There should be co-ordination at regional level of Bus Éireann, private operators and local community transport services in order to ensure that all public and community transport services complement each other. This is something worth considering. While this process has begun, I urge the Government to continue along these lines and make more funding available in this regard. While very often the free pass is the first thing people receive from the Department of Social and Family Affairs, it is put on the mantelpiece or dresser and is not taken down because people do not have access to buses or trains. The setting up of the national rural transport authority would be one way of ensuring the free travel pass benefits those who receive it.
The Government has been very slow to deal with the recommendations in the report by the advisory committee in regard to the role of women in agriculture. The same principles that emanate from that report in relation to the role of women in agriculture apply to other self-employed people such as shopkeepers and so on. It is important that women working in the rural economy are recognised in both the tax and social welfare codes. There must be some mechanism whereby the value of unpaid work by women in the rural economy is recognised, particularly where it involves caring for an elderly relative or member of the community. We should ensure that the child care needs of people living in rural areas are taken into account in a national child care policy and local access to training for women should be improved. The Government should focus on these important issues.
Under the tax code the Minister for Finance is a great proponent of individualisation but the opposite view is taken under the social welfare code. I have had arguments previously with the Minister for Social and Family Affairs on this issue, and will again, because I believe there is a diversity of views in this regard. When young people reach the age of 18 they are evaluated under the household income, even though they could get married and make major decisions. Individualisation does not apply in that instance, even though it does under the tax code, and this must be examined.
An area which is very important from a constituency viewpoint – I am sure it is the same throughout the country – is the schools capital programme. As the Department of Education and Science has been very slow to implement a significant number of primary school building projects, I ask the Minister for Finance to ensure there is a considerable boost of capital expenditure so that progress is accelerated in this regard. Many children and teachers must work in substandard, damp, cold and rat infested schools. It is very important for young people to have comfort and convenience when they begin their education at primary level. The same applies to a significant number of schools in my constituency, including the Loretto in Mullingar and St. Mary's CBS. I hope the Coláiste Cionn Torc, Castlepollard, project will begin in 2003. What really annoys me about school projects is the time it takes to go through the Department's evaluation process, which involves approximately seven or eight steps. They all seem to get into a backlog system within the Department. Speed is of the essence because very often people are concerned about what is happening. There was a recent revelation that 400 primary school building projects are with the Department of Education and Science and are very slow in moving through the system. Gaelscoil an Mhuilinn in my constituency is waiting to be dealt with. Coralstown national school is in the tender process for some time. A commitment has been given that the project will be dealt with and many of us, including Deputy Cassidy, hope it will be in place by September next year.
A number of other school projects have been listed, including Tang, Ballinagore national school, Dysart national school, St. Etchen's, Kinnegad, Scoil Mhuire, Loughagar, and Sonna national school which is awaiting additional accommodation. I know that realistically all these projects cannot be carried out together but the sooner the Department of Education and Science publishes this process, which the Minister committed to, the sooner the various schools will know exactly where they stand. This will mean that Deputies will not be tabling questions every second or third weeks because the schools will know exactly where they are on the priority list and where they will stand in three to six months time. That would be a positive and constructive way forward, which will cost money.
I may differ from my colleagues in this regard, but I believe people would be prepared to pay additional tax to provide these services. The money does not fall from the sky. However, if it would mean an increase in capital gains tax, some of my colleagues might not agree with it. However, I agree with it because the disadvantaged and underprivileged are entitled to essential services such as proper school buildings and other basic necessities, whether at primary, secondary or pre-school level. The people would be prepared to ensure that those services are provided in that way.
I have spoken about carers on many occasions in this House and the time has come to establish a national carers' register, a database for all carers, so we can know the exact numbers of people who are caring for others. Various figures have been put forward at various times and it is important that we get a definitive number to help the Government to make proper provisions. We owe a great debt of gratitude to carers, who work seven days a week, 24 hours a day and 52 weeks of the year, as they have saved us billions of pounds over the years with their tremendous work. Finally, the Government should consider making similar provisions for those in institutional care.
I propose to share my time with Deputy Conor Lenihan.
Deputy Penrose has always been a very fair Member of the House, but listening to his dissertation on the social welfare aspects of the budget, I am reminded of the fact that the Labour Party was in Government some years ago. It promised an awful lot at that time by highlighting its socialist credentials, but its record does not stand up to objective analysis. Fianna Fáil's record in Government during the last five years can withstand any comparison with the record of the so-called socialists of the Labour Party, particularly the former Deputy, Proinsias de Rossa.
At a time when the global economic outlook is uncertain and other west European economies are suffering serious economic difficulties, the public finances face a difficult period after years of unprecedented growth. The economy is still growing but at a slower pace, which means that spending must slow too. It is the only tenable approach to the present difficulties but we know it is the right one, as it is the approach we adopted in 1987 which laid the foundations for the Celtic tiger. This is not the time to return to the politics of punitive taxation, massive borrowing and permanent deficits. We must never allow this country to return to the economic crisis of the 1980s, when Fine Gael and the Labour Party's policies led to the emigration of 40,000 young people each year, forced 250,000 workers onto the dole queues and caused Ireland to build up the highest per capita debt in the world. The Opposition parties seem to favour a return to the policies of high borrowing, high taxation and per manent deficits. They did it before and they would do it again but, thankfully, they were not given an opportunity to do so last May.
The deficits, borrowing and taxation policies of the 1980s are direct concomitants of the fiscal policies being advanced by those opposite. Fine Gael and the Labour Party pay lip service to the notion that spending must be reined in – we heard such ideas from the previous speaker, Deputy Penrose – by greeting spending cuts with apoplectic rage. Such shallow double-think plunged this country into an economic depression in the 1980s and guides Opposition policy today. Opposition parties have been challenged on television, on radio and in this Chamber to outline the cuts they would make or the taxes they would raise to ensure spending is reined in. They have shirked the questions constantly and they have avoided the issues. There is a glaring paucity of workable economic policies on the Opposition benches. While Deputy Richard Bruton says we should rein in our expenditure, his party colleagues claim that the Government is not spending enough.
This country needs a clear and definite fiscal agenda and budget 2003, which follows the commitments made by Fianna Fáil in this year's general election, provides such a programme. On 26 April, at the outset of the election campaign, I asserted that, if re-elected, Fianna Fáil would make a commitment to maintaining our annual budgets "close to balance or in surplus", in accordance with EU economic guidelines. I made clear that "our budgetary proposals are responsible and we are going to spend less, borrow less and tax the Irish people less". I also said that "we cannot go back to the era of high borrowing which only ensures a real deterioration in the national finances and contributes to economic instability". I argued, in contrast to the Labour Party's clarion cry, that "we cannot tax and spend our way to providing more employment and better services". My party's stance underlined its approach to the general election, the Estimates and the budget for 2003.
While we were advocating fiscal responsibility before, during and after the election, the parties opposite were intent upon squandering taxpayers' money by spending over €400 million compensating taxi drivers and Eircom shareholders, introducing new 30% tax rates and turning the health services over to insurance companies. Sinn Féin's general election manifesto could have been written in three words – P45s for everyone – and that party is now daring to lecture us about how to run the economy. Budget 2003 is responsible. At its core is a determination to keep taxes, borrowing and deficits down to safeguard the long-term health of the economy. It prioritises the development of infrastructure and the provision of social welfare for the less well-off. The Government's commitment to infrastructural development is highlighted by its allocation of €1.25 billion for the roads programme. This sum will continue the overhaul of our roads network that is under way.
My Department has prioritised the roll-out of broadband infrastructure to bring the Internet to towns throughout Ireland at high speed. During the next two years, my Department will provide broadband Internet infrastructure to 19 towns throughout the country at a cost of €83 million. We see a clear need to drive the information society, but the Opposition does not. When I announced just over a month ago that I planned to issue a policy direction to the Commission for Communications Regulation on flat rate Internet access, among other issues, the Fine Gael spokesperson on Communications, Marine and Natural Resources, Deputy Coveney, released a statement saying that the Government must not impose policy on the new commission. The following day, after a widespread welcome was given to my announcement, he released another statement saying that the directive should be applauded. It was a good example of Fine Gael's on the hoof approach to policy. We saw another example of the phenomenon yesterday when Fine Gael Deputies criticised the increase in RTE licence fee, despite the fact that they were clamouring for such an increase in July 2001.
The monitoring unit is paying its way.
Such reactive, unprincipled politics is the hallmark of the Opposition parties. They condemn everything, proclaim a crisis at every turn and offer nothing productive. Budget 2003 is a rejection of this predictable and short-sighted form of politics. The budget is based on a long-term policy of ensuring the ongoing health of the economy and building on the economic growth of the last six years. It maintains huge increases compared to 1997 spending levels. In my Department, expenditure has increased massively since 1997: maritime safety by 213%, energy by 296%, communications by 7,500%, maritime research by 112% and fishery harbours by 758%. In the areas of marine and natural resources, spending has increased by almost 50% since 1999.
The social welfare improvements in this year's budget will cost €530 million in a full year. This figure is in stark contrast to the €273 million spent by the rainbow Government in its last budget in 1997, the most it ever spent. I know that we have to take inflation and rises in the average industrial wage into account, but even when we do that it is clear to all that we, on this side of the House, have provided more for social welfare than the parties on the other side. The average annual percentage increase in the old age contributory pension since 1997 is more than 8%. The average rainbow Government rise was less than 3%.
That pattern is repeated across the board. For basically every social insurance and social welfare payment our annual percentage increases are double those of the Opposition. Budget 2003 con tinues that trend. In addition, budget 2003 continues the pattern established since 1997 of taking the less well-off out of the tax net altogether. Increases in tax credits and exemption limits outlined in this budget will take a further 37,400 people out of the tax net. One-third of these will be over 65. In budget 2003 we have taken the same number of people out of the tax net as the rainbow Government did in its three budgets.
The world economic downturn poses difficult questions for all Governments. It forces us to make difficult choices and set clear priorities. Budget 2003 is our answer to the downturn. We have chosen to prioritise infrastructure and the less well-off. We have chosen not to revert to punitive taxation, massive borrowing and permanent deficits. We have made the difficult decisions. I believe they will stand to us.
I thank the House for the opportunity to speak again on budgetary matters and, in particular, about the character of the Minister for Finance. He has run a very sensible economy over six years. He has a wonderful record as a Minister for Finance. This is his sixth budget and in all of those budgets, presented by the Fianna Fáil – Progressive Democrat coalition Governments now in our second term, the centrepiece has been a desire to look after the less well-off if there are choices to be made. The choice has been made deliberately and sustained over six budgets.
Many have misunderstood both the intent and the purpose of some of these budgets, including the latest one. They also misunderstood the character of the Minister who presented these budgets. He is often depicted by Members opposite as some kind of ideological right-winger or conservative. He is the least conservative or right-wing Member of the House. When you examine the record of his budgets he is profoundly left wing. He is prepared, given the resources, to redistribute that income in favour of the less well-off. That is his record. If one only looks at the tax provisions which he has made over his six budgets, they have all been redistributed in favour of the middle to lower income earners. This is on the record and is a glaring example for everyone to see. I am extremely proud of this. It is one of the main reasons that I am and continue to be a member of the party on this side of the House. All of those budgets made clear choices in favour of the less well-off.
When I campaigned from 1994 to 1996 to become a Member of the House an issue arose which was highlighted by the late Jim Mitchell through parliamentary questions. It was a wonderful device that he used to highlight the income or poverty trap, where the social welfare system interacts with the tax system. It was clear in 1995 and 1996 that one could not offer much hope to people who said that they were drawing a social welfare allowance and it was not in their interests, financial or otherwise, to work. That was the sit uation that the Government led by the Taoiseach and ably assisted by the Tánaiste faced in 1996-97. The late Jim Mitchell identified this in a very forensic way with parliamentary questions and threw up the massive anomaly at the heart of the taxation and social welfare system. The Government identified the problem, took up the challenge and rectified this huge anomaly in the system which cut into the quick of our economy. If an economy and a society does not give its citizens the right to a job then it is discriminating against its own citizens. That was our view when we came into Government in 1997.
In a painstaking and deliberate fashion, Deputy McCreevy went about rectifying this. We see the evidence today. Rates have been cut, bands widened and allowances increased. Not a man to be idle, he decided not only to cut the rates and take thousands of people out of the tax net altogether but to change the whole system of taxation, moving to the more efficient and internationally recognised system of tax credits and individualisation. These were marvellous achievements. To be able to cut taxes and bring the less well-off out of the tax net altogether is a huge achievement in its own right but to do this and reform the system is one of the greatest challenges any Minister could face. I say that even to my esteemed colleague, Deputy Ahern. The great challenge for Ministers now that we are facing more difficult times with scarce resources is to be able both to increase provision while carrying out the fundamental work of reform which is so necessary to be an effective Minister in an effective Government. Deputy McCreevy, in his budgets, has proved himself able for that challenge.
Other Ministers will have to face this in the next few years. For instance, the Minster for Health and Children will have to look at the health service and the health care business and how it is provided. I do not use the word "business" lightly. It is a business and there are consumers and patients. Irish patients and consumers are not very patient. They want to see better services. They got extra resources and services and are still hungry for more. They want the proper provision and are entitled to a level of service that is equal to the enormous wealth we now have. One of the key tasks for Deputy Martin will be to see how he can reform the health service so that it can deliver for the citizen and the patient. Clearly extra resources have been given over the past five years and we have gone from an extraordinary position where health was chronically underfunded in 1997. Our health sector was way below the European average. The actual level of funding is now on a par with the European average. We are not up there with the French who, as we all know, are fastidious in health matters and overspend on health in terms of their gross national product. Hopefully we will soon aspire to the high standards of the French hospital system.
We will have to make painful choices and take on vested interests in order to do this. Consult ants will have to learn that the health service is not there for them but for the patient. The medical profession must learn new lessons. Some of the hierarchical character of our hospital and medical system does not help the proper delivery of a patient-focused system of health care. These lessons will have to be learned. In a sense, they are matters we would have had to deal with regardless of whether there was a national downturn. Now we will have to address them against a background of a squeeze on resources.
The Minister for Health and Children, Deputy Martin, will be well able for the challenge of reducing the amount of spending or curtailing the growth in health spending and also improving the efficiency with which that money is spent. The public wants value for money: value for money is the key principle that will govern how the Government is judged at the end of its five year life. If we provide it for the patient awaiting an operation or the person who rings the local authority to get something sorted out on his or her road or in his or her community, and services are delivered effectively and efficiently, we will have succeeded as a Government.
The vital work of reform tends to be neglected during a period of plenty, rising incomes and wealth. Over the past five years spending rose, particularly in health. I do not apologise to anyone, however, for the increased levels of spending. Some of the improvements and increases were necessary. The Minister for Finance is dealing very well with the situation in which we now find ourselves, in which the revenue coming into the Exchequer is vastly reduced. Some on the benches opposite, and some rather confused economists, have tried to present this as mismanagement of the public finances. The harsh reality is that other countries, most strikingly the United Kingdom and Germany, are going through their own crises in public finances. They have been having a horrendous time trying to cope with a massive downturn in the same timeframe as the one in which we encountered these difficulties – the period from April and May 2002 to now.
All of the countries concerned have experienced a huge downturn in taxation revenues. This is not happening because of some mysterious mismanagement but because we are now on a much lower trajectory of international economic growth. We can see the difficulties being experienced by the Bush regime in the USA in trying to apply a fiscal stimulus to an economy that is clearly stagnating. There are people here who believe a pro-cyclical approach such as that exercised in the USA would be the appropriate action to take. Deputy Rabbitte, in his budget contribution, made the point that we did not borrow enough. It is a point worth debating but useful to come to a conclusion, too. We must not misunderstand the economy.
A fascinating report produced in the last week or so by the National Economic and Social Council deals with the character and nature of the economy and our levels of social provision, with the challenges we face as a society and an economy into the future. One of the key points dealt with by this report, in its first chapter, is the character of the economy. It makes a very telling point when it states the economy has all the characteristics of a regional rather than a national economy. We are subject to huge inflows and outflows of capital and investment funds. That is there for a reason – for a small country we are, according to a UN report published during the summer, one of the most competitive open economies in the world, which is remarkable.
The Taoiseach was keen to point out during the second Nice treaty referendum another key fact that we must keep in the foreground when talking about the economy. Of everything physically produced in this country, 90% goes for export. We have a very open economy which is dependent on internal investment flows and foreign direct investment. We are also exceedingly dependent on the global economy. We have one of the most competitive economies in the world in that category. No Minister for Finance, not even a fantastic one like the current Minister, can ignore the international economy. We cannot stand, Canute-like, trying to turn back the waves. The waves are not particularly helpful to us now in terms of the international outlook.
There was an expectation, not just among the Minister and his Department of Finance officials but also at an international level, especially in the USA, that there would be a recovery from mid-2002. That hope has turned out to be false. The recovery simply did not materialise. Many of the economic forecasts which underpinned the policies of this and the previous Government, before and after the general election, were predicated on a return to growth in the middle of 2002. The same mistake was made in the United Kingdom and Germany. Now, as we all know, we are €1 billion short in terms of revenue. We have €1 billion less available to the Exchequer than we expected when we framed the last budget.
The NESC report states openly – I am surprised that Deputy Rabbitte did not pick up on this point – that it is very important that we avoid a pro-cyclical approach to any public finance difficulties we might face. We cannot simply let out spending or increase borrowing to the same extent that large national economies such as those of the USA and the United Kingdom can. Their economies are far less dependent on exports and inward flows of investment and investors. They can afford to put up spending while we cannot. If we go for the pro-cyclical approach advocated by Deputy Rabbitte in his budget speech, the economy will become uncompetitive. We must remain very competitive, given the fact that 90% of our goods are exported, or else we will see a loss of jobs and investment. People invest here because our wages are competitive and remain so, but we have to be careful. We cannot treat ourselves to huge increases in wages; they will have to be pegged back. I do not envy the Minister in this task.
The budget is yesterday's news. The news today and tomorrow will be how the Minister and Government handle the next round of negotiations on the national pay deal, which will replace the deal now coming to the end of its shelf life. That will be the critical decision for the Government. If we err on the side of over-generosity on this pay deal, we will be storing up massive problems for ourselves and putting at risk all we have gained over the last ten years. The Government and we, as individuals, have lost sight of the issue of prices. We now have to watch prices rising. In the good times we took our eye off the ball. We did not watch prices or worry when we went into a shop and spotted that some item was perhaps 50% more expensive than it had been the previous week. We must crack down heavily on opportunistic price rises in the retail and services sectors.
We must also renew our commitment to providing, not just a low tax economy, but also a low inflation economy. That will be an enormous challenge for the Minister because inflation is at now 4.8% and set to hit 5% next year. The real danger, one which could put the budget off the rails, would be an inflation outturn of about 6% next year, which would have implications, not only for the pay discussions, but also for our competitiveness in the future and our ability to trade goods and services on the international market. We clearly cannot keep up our level of competitiveness if we are paying ourselves too much.
We have turned the corner in our economic expectations. We went through a dismal period – Mr. Haughey and Fianna Fáil did not play a glorious role in the handling of the public finances – but when challenged to deal with them in 1987, Mr. Haughey did so. The Ceann Comhairle knows as well as anyone the problems hard times can bring. He was in the invidious position, although it was fortunate for the State he was there, of having to make the tough decisions between 1987 and 1989, decisions which were politically unpopular but are the source of our current success. Much harder decisions were needed then than are being asked for now. We are now enjoying the gains from those focused decisions on an investment track to raise this State from a dismal to a strong economic performance.
I commend the budget to the House. I also recommend that Members read the report of the independent Estimates review committee by Dermot Quigley, Kevin Bonner and Maurice O'Connell. It is fascinating and if Members read it rather than the detailed provisions of the budget measures and the Minister's Budget Statement, they might learn something of the shape of things to come and the hard decisions we may yet have to take if, as is being forecast, recovery does not materialise in the third quarter of next year. We will then face two or three years of reduced economic growth. If that is the case, the Minister has been very wise in not borrowing at this point. It could be that in two or three years, if we are not out of the downturn, that would be the appropriate time to borrow.
We are lucky that the Minister has paid off much of the national debt. We, therefore, have freedom to manoeuvre. He has also paid into the pension reserve fund and the SSIAs. If we are facing a period of sluggish economic growth and poor consumer confidence, the savings scheme may be the release valve that will help lift the economy when and if a US recovery occurs. There is a lag of up to 15 months between a recovery in the United States and a recovery in the economy. Then, when it is clear the US economy is recovering, we might have to press the borrowing button or exercise the pro-cyclical choice.
It was not my intention to go on so long, but I appreciate the rapt attention of the Opposition. It shows that, unlike the unruly behaviour last night, Members on the other side of the House are willing to learn. I see Deputy Healy is back in the Chamber. He is a socialist who is learning the true facts of the Government. He may yet support it in the brave work it is doing for the economy.
If there was any doubt before, we can be certain now that Christmas is upon us. There was a pantomime last night from Deputy Conor Lenihan and a fairytale tonight. There is doom and gloom, a financial crisis, a scarcity of resources and a huge downturn. This gloomy picture is being painted by Fianna Fáil and the Progressive Democrats and it is an absolute fairytale that is being swallowed hook, line and sinker by the press and media, which do not even think it worthwhile to be here. There is no crisis. There is a budget surplus on current account for 2002 of €3.4 billion. When current and capital accounts are taken into consideration, there is still a surplus. It is a fairytale.
Deputy Lenihan told us that the figures given out at election time were based on an upturn in the economy in June. Again, nothing could have been further from the truth. On 5 December 2001 the Government notified the European Union of cuts in excess of €900 million for this year. It was well aware of the situation.
I agree with Deputy Lenihan that this is not mismanagement by the Minister for Finance, the Tánaiste or the Taoiseach. It is a deliberate choice to ensure those who became even richer under the Celtic tiger hold onto those riches while the sick and the poor are left behind. There is no justification whatsoever for the spending restrictions on essential services such as health, education, housing, social welfare and local authority services, for leaving hundreds of thousands of low income families without medical cards as a result of which they have to choose between taking a child to the doctor or putting food on the table and for delaying pay rises to public service workers. This is barbarism, an ideologically driven choice, Thatcherism at its worst.
This is the most right wing Government since the foundation of the State. It acts on behalf of IBEC and is determined that the super-rich who grew even fatter in the boom will hold onto their riches and to hell with everyone else. The economic slowdown is now being used to sell off State assets at knockdown prices to the same super-rich. Everything must be privatised. Markets are everything and society and the poor nothing.
The first Free State Government took one shilling from the old age pensioner. We can compare it today with the Taoiseach, the Tánaiste and the Minister for Finance leaving those on half the minimum wage without a medical card, even though there is a Government surplus of €3.4 billion. The social democratic wing of Fianna Fáil has been routed and the free market fanatics of the Progressive Democrats have been brought into government, even though there is an overall Fianna Fáil majority in the House. Thatcherism reigns and IBEC rules in this House.
When Deputy Quinn stood up as Minister for Finance six years ago there was a surplus of £200,000 on current account. When the Minister for Finance rose to deliver the budget, there was a surplus of €3.4 billion on the same account. National production as measured by gross domestic product rose from €67 billion in 1997 to €115 billion in 2001, a rise of over 70%. Even at constant prices, the rise was over 40%. Despite that, income gaps widened and the very rich received a disproportionate share of this massive increase in wealth. They are unwilling to share it and this Government is their agent. The poor are to be left without access to doctors, to suffer a higher incidence of disease and earlier death. Ernest Blythe is not dead while Deputies McCreevy, Harney and their front-man, the Taoiseach, Deputy Ahern, remain in power. I appeal to Fianna Fáil backbenchers not to wait while others suffer. They can change this Government without a general election and should do so now. This ideology is inhumanity.
This budget in simple terms means that the rich get richer and the poor poorer. Over the past six budgets, a gap of €250 per week between rich and poor has been created. This budget means that people on the minimum wage are still in the tax net and, in addition, some €300 million will be taken from the pockets of PAYE workers in the coming year. The real touchstone for this budget is the manner in which the Government has agreed to implement the promised reduction from 16% to 12.5% in the tax on corporate profits while at the same time refusing to implement the promised increase in child benefit. Children are to suffer while the good times continue for the super rich.
In the area of health services, the budget means that there will be no radiotherapy service for cancer patients based at Waterford Regional Hospital, there will be long waiting lists and people will have to lie on trolleys in accident and emergency departments and on beds in corridors in St. Joseph's Hospital in Clonmel. Those with no medical cards will have to pay the price of a mortgage for their drugs on a monthly basis.
Children will continue to be educated in damp, rundown, rat-infested schools and with regard to housing, hundreds more will be homeless and on the streets of Dublin and cities and towns around the country. The 1,000 applicants on housing waiting lists in my constituency will have to wait up to six years.
It is an understatement that I am extremely disappointed with the budget. The failure to give medical cards to those who deserve them was a bad move. The decision to prioritise the better-off over 70s by automatically giving them medical cards was morally questionable. The ethos of the general medical services is to help poorer people. Not alone could 200,000 people who needed medical cards have got them but another 250,000 could also have got them. Government thinking is completely lopsided.
It would make more sense on a value for money basis to direct people towards the general medical services than to expensive hospital services because once in, it is hard to get out. Having worked in the system, I know that once people are in hospital they stay in, because that is the way it works. It is like having two machines, one more expensive than the other to run. A good businessman will use the less expensive machine that does the job better. The general medical services do that.
The changes to the drugs refund scheme will be the difference between getting or not getting an inhaler for an asthmatic costing perhaps €6. People will end up in hospital if they cannot buy an inhaler. So much for value for money. One day in hospital would pay for two patients' medical cards, including their drug costs, for an entire year.
Cervical screening is of proven value. A so-called pilot scheme operating for the past two or three years was supposed to roll out nationally, including a cervical smear for a GMS patient every five years at a cost of €40, but it has not happened. BreastCheck, which could cut the death rate in this area by 20%, is the greatest scandal of all. Some 650 women who die from breast cancer annually should not do so. A sum of €6 million was needed to allow this to proceed but has not been made available. That is breast apartheid of the highest order and it is worrying that it is happening, especially as it is countrywide and not just in the west. It needs to be addressed.
Deputy Lenihan spoke about consultants. It is not consultants but the lack of them that is the problem, as is the lack of a long-term view from the Department of Finance. A plan for the future is needed but there will not be one because it would cost money. The health strategy should be consigned to the dustbin. Mayo General Hospital is a good example. It is short 60 nurses and awaits orthopaedic surgeons, rheumatology consultants and urology consultants. It has 57 beds lying vacant and they cannot be used because there are not enough nurses or consultants. That includes 33 orthopaedic beds, 12 geriatric assessment beds and 12 paediatric assessment beds. It is terrible to think that 57 empty beds cannot be used while people wait on trolleys. The health service is totally illogical.
The secret is more consultants not less, but this need has been blocked by the Department of Finance. The number of consultants needed was not even mentioned in the health strategy but they are needed at the front line to give value for money. The waiting list initiative is the greatest con ever. Some 100,000 people were not included on that waiting list assessment. It takes no account of what is happening. The appointment of more consultants in local areas is needed instead of supporting private health systems at home and abroad. Why not appoint a consultant to the urology department at Mayo General Hospital in Castlebar? Many people wait five years, and must get up five times a night, before getting an operation that takes 20 minutes. There is no logic to that.
Mayo General Hospital has a department with two processors that do not work; one has been used for parts for the other, which is out-of-date and some 15 years old. Hundreds of people must travel from Mayo to Galway for barium meal examinations, a test that any hospital worth its salt could do. The staff in Mayo General Hospital are totally demoralised because of obsolete equipment. It costs €100,000 to replace a processor but it has not happened. For the past year, a machine for barium meal examinations was closed down by the Radiological Protection Institute of Ireland because it was deemed unsafe. The hospital has been waiting a year for the go ahead from the Department of Health and Children to get a new machine. The carer's allowance is still means tested. If those carers were not able to do that work, the State would be unable to take their place let alone pay for the work.
A mammogram machine is being used to process X-rays which means that mammograms cannot be processed. Women waiting for screening cannot be dealt with because there is no BreastCheck. Even those with cancer cannot get screened. It is a terrible indictment of our system.
Rheumatology will not happen either due to the embargo. People with rheumatoid arthritis and children with juvenile rheumatoid arthritis cannot get treatment. Medical knowledge says that after two weeks with arthritis, joints are irreparably damaged but people must wait four years for a first appointment. There are more rheumatologists in Croatia than here. There is just one rheumatologist for counties Mayo, Galway, Roscommon, Leitrim, Limerick and Clare. I worked in that unit 25 years ago and the only thing that has changed since then is that the consultant has retired due to overwork. It is a disgraceful situation.
I do not know how anybody can say the health services are in a proper state because they are in a shambles. The Minister for Health and Children and the Minister for Finance must answer for that. Although we have more investment in our health service than England, we have longer waiting lists. It is time to reform the health service. The duplication of health boards and their functions must be addressed, but the Government does not have the courage to do that.
Are we closer to Boston or Berlin? We are closer to Boston. In the 1980s a band, The, The, had a hit with a song called "Heartlands". The chorus had a line, "This is the 51st state of the USA", which referred to Thatcher's Britain in the 1980s. However, it could just as easily refer to the Ireland of the 2000s. We are closer to the USA than we are to Berlin. The US has many great things, but it also has the highest levels of poverty and inequality. Is that what we want? Do we want the social European model or the highs and lows of the US model? Unfortunately, the Government is wedded to outmoded Thatcherite policies. It has been in power for so long it thinks it is royalty. I hope the Minister for Finance, Bonnie Prince Charlie, is watching this debate on the monitor because I have a message for him. He is more like King Richard in "Richard III"– a horse, a horse, my budget for a horse breeder. There is more money being given to horse breeders than to pensioners. There is something wrong in our society.
The special savings investment scheme will take more money away from the Government than any investment in social welfare. There is something wrong with that. I alluded to that in my speech last night. It is an ideological problem. As Deputy Healy said, there is enough money in this country if it was invested properly. There is also a case to be made for borrowing to invest in capital infrastructure. I will make positive suggestions which may help the Government to loosen itself from the shackles of the voodoo economics it has practised in recent years. I have already accused the Taoiseach of practising voodoo economics, which means robbing from tomorrow to pay for today. There is a social and environmental cost for every activity in which the Government engages.
While the balance sheet might look healthy in some respects, society is suffering in terms of a lack of prison spaces and proper housing estates. People have shut themselves away from their communities and barricaded themselves against the riff-raff or scumbags. People from the most deprived areas must put up with the worst excesses of drug addiction, poverty and hardship. The budget follows a flawed ideological choice.
As a Green Party Member, I do not want to continue to snipe. I want to make positive suggestions about what the Minister could do this year and next year. As regards oil and energy, instead of kowtowing to oil exploration companies off the west coast, we should use the technology we have, which would be more cost-effective, to produce Ireland's electricity needs through a combination of wind and wave power. I was looking at an interesting website recently – www.aircar.com – which highlighted the development by a French entrepreneur of a car which runs on compressed air and produces clean energy. There is the potential to run environmentally clean cars in this country. The former Lord Mayor of Dublin, Deputy Gormley, asked what was the point in accepting a Volvo when a Volkswagen Golf could be run on rape seed oil produced in County Carlow. We have the potential to develop a sustainable green society by using our resources. If we produce electricity, our energy bills will be lower.
Cost is important. The multinationals to which we are kowtowing by giving them a reduction in corporation tax will leave this country as soon as eastern Europe or Asia offers them a lower cost economy. How can we achieve a lower cost economy? We can achieve it by building more affordable housing. People clamour for wage increases because they cannot afford to buy a house on an average income. A couple will struggle to buy a house. The Minister decided to abolish the first-time buyer's grant and to put VAT on building materials. However, a better way to get revenue would be to tax land speculation. It might not help Fianna Fáil, the Progressive Democrats, Fine Gael or big business donors, but it would help to get more affordable housing.
As regards the tax regime, the Green Party would like the introduction of more eco taxes to encourage a more sustainable society. In that context, does it make sense to load PRSI on employers? Employers' PRSI is a tax against job creation. VRT is a tax on the ownership, not the usage of a vehicle. Every person can own and run a car, but they should pay for the mileage, not for the privilege of owning it.
As regards the health care system, there is scope for locally based clinics to carry out procedures at a fraction of the cost to major hospitals, particularly accident and emergency departments. This is topical given what happened in Monaghan in the past 24 hours. Monaghan was designated as a hub. Many other towns could be designated as health care hubs. It would improve costs if money was taken away from the bigwigs in an inefficient and bureaucratic health care system. There are too many health boards. One efficient health board would be more beneficial to the community.
As regards investment by multinationals, we have the second lowest research and development investment in the European Union. Finland, which is of similar size to Ireland, has the highest level of investment. The Finns are on the pig's back, while Ireland depends on the largesse of multinational companies which would pull out tomorrow if it was not in their economic interest. We are better than that. This country is an economic enterprise. We should use our skills in conjunction with multinational companies. Enterprise, particularly involving the people, should be encouraged. If we do not educate and care for the most vulnerable in our society, we will pay for it in terms of our society and environment. It is cheaper to pay for it now than to pay for it in 20 years time.
The budget lacked a long-term strategy or, if it had one, it was to ensure that the poor got poorer, while the Government's friends in IBEC and the horse industry got richer. That is evident from the cuts in the budgets of Shannon Development, Enterprise Ireland and the county enterprise boards. Who will help to create jobs in the future?
We had a boom in recent years, but businesses have pocketed the profits and left a lack of funds for essential services, such as health. This attack on our health service began a number of years ago. Approximately 20% of acute beds were taken out of the system between 1987 and 1989. That trend of cuts continues today. Why is our health service in such a shambles? Is it because the so-called representative bodies are calling the shots or because it suits the Government to make it look like that? Earlier today I heard the Minister for Health and Children say in the House that we cannot ride roughshod over the consultant bodies. Surely the Government is allowing such bodies to ride roughshod over the people. The consequence is that babies are dying in places like Monaghan and Louth. The situation, rather than improving, is getting considerably worse.
All this talk about representative bodies is a smoke screen to hide the lack of will on the part of the Government to arrange for a proper health care service for the people of this State. Members opposite can be as smart as they like, but they should look at what happened in Monaghan yesterday morning. In County Louth a child died in late April because the maternity services were closed down to save money while this Government was letting IBEC and the horsey people of this world off the hook. They could easily have financed those life-saving services. Another example is of a young girl whose waters broke as she travelled by public bus 30 miles to a maternity hospital. The driver had to keep the passengers who wanted to get off the bus on it, while he passed others who were waiting by the road. He had to convert a public bus into an ambulance to deliver this young, expectant mother to the hospital in an attempt to save her child. I do not see the compassion needed to end this on the other side of the House. It is certainly not evident in this budget.
It is heart rending that the Monaghan case should happen at this particular time of year. It is reminiscent of the story of Bethlehem when Mary called at the inn, but there were no facilities for her. Over 2,000 years ago, Mary was lucky that her baby survived, but for that family in Monaghan, Christmas will be a sad time from now on. There will be no celebration of the nativity. The consequences will be felt for a long time to come.
There should be no more passing of the buck to consultants and health boards. This Parliament is charged with the responsibility of governing the State, yet the Minister for Health and Children tells us this is a difficult problem with which he cannot deal. There is a report, there is an inquiry, but there is no solution. As long as there is no solution other children will die in Louth, Monaghan and other parts of the State where cutbacks which have been made for purely financial reasons deny people the essential health services to which they are entitled. I wonder how any Member from the Government parties can be proud of a health service that was better in rural Ireland 30 years ago than it is today. Those Members will be aware of the state of the economy then and of the difficulties people had which forced them to struggle hard or to emigrate. Is that a record of which to be proud? Who is gaining from this so-called improvement of the economy? It is certainly not pregnant women in Louth and Monaghan, to name but two areas.
Throughout the 1990s and into this decade, business has got yearly tax cuts, but workers have not. Business pays the lowest tax levies in the economy, but the Government could not find the money to pay for the child benefit increases it promised. It also failed to fulfil its promise to take all of the low paid out of the tax net. People on the minimum statutory wage are still being taxed. Does that mean the minimum statutory wage is too great or too small? We were promised that they would be taken out of the tax net, but they were not. Corporation taxes—
There has been €70 per child for the last three years.
Why does the Government provide a national minimum wage with one hand and then take it back with the other?
We know what the Deputy has in each hand.
One does not have to be a mathematician to know that is a sleight of hand. It is a three card trick, but it is conning nobody.
The Deputy should not give us the benefit of his inexperience.
The Government managed to fool the voters last summer, but it will not do so again. Corporation tax is being kept at the 16% level.
What about the colleague of the Deputy who stole from social welfare? What about the Deputy's colleague who stole a medical card?
An Leas-Cheann Comhairle
Order, please.
Good man, Deputy Brady.
An Leas-Cheann Comhairle
Deputy Morgan to conclude.
The problem the Deputies opposite fail to recognise is that if they were doing their job as a Government, they would have put a proper health service in place for everybody.
The Deputy's people have cost the health services a lot of money here and in Northern Ireland.
The Government should have put a proper health service in place to look after Members of this House as well as people who had no work. That is not what the Government did.
An Leas-Cheann Comhairle
The Deputy to conclude.
It chose to work with its friends and the filthy rich, which is most unfortunate. I look forward to the day a good Sinn Féin Government delivers for the real people of Ireland.
I propose to share time with Deputies Keaveney, Dennehy and Johnny Brady.
An Leas-Cheann Comhairle
Is that agreed? Agreed.
I ask the Chair to let me know when I have utilised ten minutes of my time.
In light of what has been said, I offer my sympathy as Minister of State at the Department of Health and Children, to the mother and the family concerned on the tragic loss of the baby in Monaghan this morning.
I came to the House to make a constructive contribution to the budget debate and I have listened with interest to Deputies Morgan, Gogarty, Healy and Cowley. When contributing over the years to budget debates, I have always tried to be constructive in my contribution and have never come to this House and said something I knew to be incorrect. I say that with my hand on my heart. I am not sure the four previous speakers can say the same.
The Minister of State should be constructive on the subject of elderly people and the health services, rather than utter this pious nonsense.
It is obvious Deputy Cowley is not long in the House if he is saying that in regard to the elderly.
I will be constructive. I congratulate my colleague, the Minister for Finance, on what can only be described as a sound and practical budget which has been compiled on the basis of a three year span. It has three pillars which we should all support. It is a responsible financial exercise which reflects the current economic climate. Deputy Cowley should be aware that we in Government value our older people.
How about a defined funding scheme?
We place particular emphasis on the full contribution our older people have made and continue to make.
Why did the Minister of State not support it then?
My approach aims to provide high quality support to reflect needs. I am satisfied that advances are being made in living standards while quality of life is improving for all generations, older people in particular.
Where is the funding scheme?
My party's commitment to improving the lives of older people is demonstrated clearly in the considerable additional resources this Government has allocated to services for them. Deputy Cowley may have been able to avail of the funds which were put into those services over the past number of years.
There needs to be a running scheme to maintain them.
If the Deputy wishes to keep moving the goal posts I will answer his tactic.
An Leas-Cheann Comhairle
Speakers should address the Chair.
Despite well documented financial difficulties, I have been able to obtain funding for the ongoing improvement of services for older people in 2003. The funding will be used to meet the increased costs of the extra number of applicants to the nursing home subvention scheme. It will also help to increase the level of home help services and provide for the operation of new day care centres. Increased funding will be provided to voluntary organisations which play an invaluable role in supporting older people and the specialty-led services will be enhanced. There will be improved services nationally for dementia and Alzheimer's patients and the recommendations contained in Protecting our Future, the report of the working group on abuse of the elderly, will be implemented.
This report, which I launched last week, outlines the minimum infrastructure and training requirements as well as legislative changes needed to address the issue of abuse of the elderly. I am particularly pleased that I am able to indicate to the House that I have secured over €800,000, just short of €1 million, in funding to commence the implementation of this report in 2003. When I telephoned one of the medical personnel involved today to advise him, he was pleased and somewhat surprised that the funding was being provided so soon as the report was launched last month.
I regard the foregoing as a significant contribution towards the improvement of services for older people. These steps represent a practical demonstration of the Government's commitment in this regard. Supporting older people must continue to be a core priority of Government. The Fianna Fáil led Government has delivered record increases in pensions and there has also been much progress in developing new care services and extending entitlement to free GP care and other free schemes for those of 70 years of age and over.
It is stated in the Programme for Government that we will implement a co-ordinated programme of measures so that the full range of issues of concern to older people are addressed. Progress is being made across the range of Government Departments. To allow for the maximum impact to be achieved across the range of the Department and service providers, I established an interdepartmental working group to develop an action plan to increase accessibility to services. I have entered into a comprehensive consultation process on the impact of policy and on the lives of older people. The stakeholders concerned acknowledge and welcome the progress being made in a relatively short period. I will use this process in conjunction with the working group to develop an older person's strategy, a document in which older people can have a sense of shared ownership.
I listened with interest to what the four previous speakers had to say about our health services. I will put a few matters on record because I believe no other Government in the history of the State can match our record. Let us look at one figure alone. This year we will have spent approximately €8.2 billion on health services. When Members of the Opposition had the opportunity to put the money where their mouth is, they spent less than £3 billion. Were they innovative and creative? Did they invest in a treatment purchase fund? No.
Was it ever put in before?
Did they do anything that was in any way innovative? Would they have put money into the system? The answer is "no". I want to compare the record of the parties opposite so that we can see how they failed when they had the opportunity to improve the lives of older people. The average pension increase under the rainbow Government was €3, under Fianna Fáil it is just over €10. The rainbow Government increased pensions in percentage terms by 4% above inflation. Between 1997 and this budget, pensions have increased by almost 40% above inflation.
In terms of health services it is clear the rainbow Government failed older people. It spent a mere €12.7 million.
The rainbow Government paid its way and did not leave a gap in the economy when it went out the door.
Let us see the comparison. The figure for 2003 will be €200 million.
I am surprised at the Minister of State, Deputy Callely.
The people spoke in the summer of this year and when they returned this Government—
The Government did not tell them the truth. It conned the people but it will not con them again.
The people know that this Government will deliver. I intend to build on the progress made.
(Interruptions).
I will play my part in improving the lot of older people. A lot has been done and there is still a lot more to do. I intend to ensure that the basic State pension will be increased to a minimum of €200 by 2007 with high increases for pension couples. I want a homemaker pension introduced and a new care allowance introduced.
Deputies
Hear, hear.
There are over 77,000 taxpayers who have been taken out of the tax net. I want to improve on that number and take even more out of the tax net.
What about the carer's allowance?
An Leas-Cheann Comhairle
Order, please.
I want to help older people live in dignity and provide for them to receive care at home if that is what they prefer. I want older people to be active participants in our community and in the workplace, if they so desire. I want older people to have a voice in all such fundamental decisions and policy making.
Keep them off the trolleys.
Our commitments are set out in the Programme for Government and we are prepared to be judged on our record. This budget builds on the progress we have made. It improves pensions and health provisions. It is a sound and practical budget that reflects the current economic climate. I say, "well done, Minister".
The Minister did not smile once.
I welcome the opportunity to contribute to this debate. Listening to Deputy Gogarty trying to turn this Chamber into a clown's house he should have been ashamed of himself. He cannot sing. We all know the comedian Mr. Bean – he would not even stand beside Mr. Bean as a stupid comedian.
Will the Deputy give us a bar?
Deputy Brady is the comedian in the health service.
If Deputy Cowley stands for what that Deputy said and what he tried to do here this evening, God help our parliament.
I am just talking about the health service.
Deputy Morgan spoke about social welfare. One of his own men got his wife to draw money for a long period after becoming a Member while the other Deputy illegally used a medical card for a while until the media got to hear about it. They have some interest in the less well-off sector of society. The Minister's Budget Statement has ended but it appears the Opposition want to keep the memory lingering on. It must be aware that it is only good housekeeping to spend what you can afford or what is available to spend. To take any other course would have returned this country to the days when prudence was needed and when the Fine Gael and Labour Government doubled the national debt in four short years.
It only took Fianna Fáil two years to do it.
We are all aware of the effects that wrong budgetary policies of the 1970s and 1980s had on our country.
We are not blaming the Deputy, he was a new Member.
I was here then.
An Leas-Cheann Comhairle
Order, please.
Ireland is an island but our economy is affected by global events for job creation, economic growth, competitiveness and social justice and we must manage it n a prudent way. We now have changed economic circumstances at home, an ongoing slowdown and uncertainty abroad but the budget of 2003 has taken all these realities into account. The budgets of the Minister for Finance, Deputy McCreevy, from 1997 to 2001 have ensured that Ireland has become the envy of Europe. This budget will consolidate the gains made during those years and provide the foundation for future gain.
We have the fastest growing economy in the EU, unemployment is at an all time low, people have more money in their pockets and emigration has been eliminated. This Government has done more than any other in the history of the State to support the disadvantaged and to promote social inclusion.
It does no harm to remind ourselves of the situation from 1983 to 1987 when a Fine Gael Minister last brought in a budget to the House. Under his stewardship we had a top income tax rate of 65%. Today, the top rate is 42%. The standard rate then was 35% but today it is 20%. We had an income tax levy of 1% which has been abolished. We also had corporation tax of 50%. During that period 50,000 people left the country in despair each year. The outlook for the country was bleak and the only answer was to borrow and spend. Virtually all income tax receipts went towards serving the national debt and Government policies had increased unemployment from 170,000 to 240,000.
I have listened with interest to comments from the other side of the House but they have not offered any proposals as to how to divide the financial cake other than suggest that we should borrow more and increase the national debt. Some future Government would have to inflict more taxation on the people to pay that.
The objectives of this budget are to secure stable public finances, to invest for return to better growth and to protect the weaker sections of society. No Government likes to have to make unpopular decisions. However, we all know that at the present time the nations of the world are all suffering a downturn in their economies. Here in Ireland we are no different. The major thrust of our programme is to try and maintain the great strides of the past five years. This is one of six budgets introduced by the Minister for Finance, Deputy McCreevy. To get a clear picture of where we are coming from and our plans for the future growth of the nation all six must be taken together.
In the social area, the old, the young, taxpayers and others have benefited from the actions and plans of this Administration. Progress can be seen in every city, town and street across the country and we now find ourselves among the better off nations of the world. This has come about over the short period since we achieved nationhood. Many of our social achievements are taken for granted, for example, free travel, free telephone rental and free television licences. These are benefits for those who over the years helped to build a nation that is the envy of many larger nations.
As a former music teacher, I am delighted Deputy Gogarty managed to do something I have not succeeded in doing. I managed to get music mentioned in every debate I contributed to on the education committee but I never managed to get music into the Chamber. I congratulate the Deputy, perhaps not on his singing, but on his effort to raise the issue of the arts in the Chamber.
However, what I hear on this debate is something between "Hey Big Spender" and "Oliver – never before has a boy wanted more." I came to the House at the time of the rainbow coalition. At the time one did not expect to get anything and one got nothing. People are complaining now about the increase of €8 a month for child benefit. At that time £1 a month was given, and even at that stage it would not have bought a Mars bar. Perhaps the medical people here might say we should not be buying Mars bars.
People's expectations grow when there is proper investment in people and services, as has been happening through reductions in taxation and the injection of cash into child benefit. With the growth in expectations delivery becomes important. We are at that point now. We have had increases of £25 and €30 but now like Oliver people want more. However, €8 compared to £1 is quite a substantial increase. We must continue to deliver on our policy.
The first year the Minister for Finance, Deputy McCreevy, delivered his budget he was laughed at when he said it was the first of five. The laugh was not as loud on the second and even less loud on the third. By the time he delivered the fourth and fifth budgets the Opposition had nothing to laugh at. Again, this is the first of five. People have come out with the same old rhetoric and talk about lies and promises reneged on but let them look back at the beginning of the last five years. Then, the programmes we proposed for three to five year cycles were derided. People did not believe in them. Let those people point now to what was not delivered. They will find little at which to point.
At a time when global economies are slowing down it is important that we cut our cloth to the measure. One of the important matters, besides the health services, that must be dealt with is the value for money aspect of what we spend. I doubt any country puts as much money into the health services as we do. People need to see a return for that money and that issue must be addressed.
The Opposition wants to spend more and more but does not say from where the money is to come. However, when the matter of creating revenue is raised all it can say is, "No." This spend/save double talk is impossible. We cannot compensate anybody and everybody and at the same time expect to have money over to deal with priorities. The priorities for the Opposition were not the elderly or the less well-off but Eircom shareholders, taxi men and other generic groups.
A comment was made about the elderly. Over the period of the election people said to me, "Life begins at 70." That attitude was created by the last Government and by the support it gave to the elderly. It put money directly where people deserved it. The elderly and the less well-off remain our priority.
I could go through the aspects of the budget which I welcome. I welcome the fact that petrol prices did not increase. That is particularly important in my constituency. Like most Border counties we have a better situation on one side of the Border than on the other. I want our petrol stations to be competitive and I do not want petrol prices to rise or consumers to be penalised through price increases. Even though petrol taxes have not gone up, they did go up in some stations. I commend those stations that have brought their petrol prices down to almost a national average.
That the dormant account money is to be put into projects focusing on children with learning disabilities is important. I welcome the measures regarding broadband as it is important to invest in infrastructure. Investment in infrastructure creates a better environment for job creation. I am disappointed I have not enough time to discuss the good elements of this budget. Some aspects of it may offend people but in this climate it is impossible to please everybody.
Budget time is the time for looking ahead but it is also time for looking at the record of the Minister over the past year. The record of the Minister for Finance, Deputy McCreevy, is most impressive. The Opposition seems to be making a convoluted criticism. It accepts without argument the economic success of the country over the past five years but insists that the Minister had nothing to do with it. Although it now accepts there is a downturn internationally, it blames the Minister for Ireland's position. The fact is that the Minister's policies were the cornerstone of our success over the past five years. The Minister, Deputy McCreevy, was first in taking a multi-annual approach to national budgeting, which was central to our success. Previous Ministers confined themselves to worrying about the 12 months to come. It is essential to take an orderly, long-term approach on major issues such as taxation. The €5 billion which was given back to taxpayers was part of a properly orchestrated plan over a five year period of Government. The same positive, logical approach was also followed on all other issues.
On many occasions over a four year period as Government Whip on the Oireachtas Committee on Finance and the Public Service, I heard the Minister very ably outlining and defending his long-term objectives in debate with a battery of Opposition finance spokespersons, including the late Deputy Jim Mitchell. In the final outcome, he was always proven right in taking the long-term view and demonstrating the logic of that position on many issues, such as the level at which the Irish punt should be pitched in relation to the euro. When left without any effective ammunition, Opposition spokespersons fell back on the assertion that Deputy McCreevy was just lucky as a Minister. I am reminded of a famous golfer who retorted to a similar comment by remarking that the more he practised, the luckier he became. The secret of Deputy McCreevy's success as Minister for Finance is sheer hard work, commitment and long-term vision.
The economic assumptions underlying the budget are cautious but realistic. That is appropriate, reflecting the Minister's belief that economic circumstances have become more difficult, especially for those in the more exposed sectors. Clearly, this budget was framed with a social partnership arrangement in mind. I welcome the positive approach of trade union executives in their initial discussions about entering negotiations on such an agreement. Ireland has benefited greatly from the partnership approach and long may that continue if an agreement can be reached. No doubt there will be a campaign against a partnership agreement by certain militants and dissident groups who pursue a different agenda from that of the majority of Irish people. I recall anti-tourist slogans being painted on roads some years ago and I believe civil disruption and unemployment were also part of that agenda. I hope the case for a national partnership agreement will prevail. A Fianna Fáil led Government introduced the first such agreement and I hope that approach will continue. According to a recent article in Business and Finance, the average Irish household will spend approximately €1,400 in the run up to Christmas. That gives the lie to the pessimists who claimed that the gloom over a cooling economy would damage the retail trade beyond recovery.
Our educational system is among the best in the world. The Government's commitment to primary education services is without parallel. Since 1997, 2,900 additional teaching posts have been created in primary schools. In the special educational needs area, the Government's ongoing commitment is evidenced by the fact that the number of special resource teachers supporting children with special needs in ordinary primary schools will have grown from approximately 100 at the end of 1998 to over 2,200 by the end of this year. Those facts and figures have not been as well publicised as they should be. The number of special needs assistants in the primary schools system will have increased from 300 to 3,800 full time and a further 1,000 part-time assistants over the same period. Since 1998, the number of learning support remedial teachers has increased from 1,302 to 1,531 and related funding has increased from €5 million to €19 million.
Some €43 million is allocated to special transport services, of which €4.4 million is for the employment of escorts in special schools. I recall campaigning in the mid 1980s for a very small number of escorts on buses for children with special needs. At that time, the basic concept was not accepted, the State would not pay for it and it was left to volunteers to look after those children. Funding for special equipment for children with special needs has risen from €635,000 to €3.2 mill ion. I am glad those improvements have been provided from the largesse which this country has enjoyed over the past five years. I commend the budget and compliment the Minister for Finance on the excellent job he has done over those years. I expect he will continue in that mode over the next five years.
I wish to share time with Deputies O'Dowd and Breen. I confirm Deputy Dennehy's experience regarding difficulties in securing support for children with special needs in the mid 1980s. That was one of the consequences of his party's 1977 budget which sold this country down the Swanee. Fianna Fáil has four or five spin-doctors or press officers in each Department. Deputy Dennehy will be conscious of having to compete with his constituency colleague, the Minister for Education and Science, Deputy Martin, who has five or six people working in his constituency office. Deputy Callanan has to contend with a similar situation in the constituency office of the Minister of State at the Department of Agriculture and Food, Deputy Treacy. I assume the Minister of State at the Department of Finance also has constituency office staff.
Just one.
Perhaps that is a reflection of the Minister's personal efforts in his constituency. Some of the comments from the Government side in this debate indicated a state of collective amnesia. Deputy Keaveney spoke of silence from the Opposition in relation to recent budgets. In contrast to the noisy support on the Government side, we realised that the Minister for Finance was in the process of frittering away a surplus of €4.8 billion. I recall the scenes on the plinth opposite Leinster House on budget nights. The individualisation issue created a stir. Earlier this year, the term "rudderless" was bandied about and the Minister, Deputy McCreevy, was brought to Killarney to set him back on the straight and narrow. However, all of that now appears to have been forgotten. In 1997, when the rainbow Government had the opportunity to do what the Fianna Fáil led Government did in 2002 by selling the country down the Swanee, it chose not to do so. Perhaps if that course had been taken in 1997, we would be sitting on the other side of the House today but, as usual, we put the country first, an approach which is often politically unprofitable.
When I first stood for election in 1997, I did an interview with East Coast Radio in Rocky Valley, Bray. On the same occasion, the then Senator Roche, now Minister of State, Deputy Roche, announced his proposed amendment to the Finance Bill to designate Bray in terms of seaside resort status. He delivered a vitriolic lecture on the failure of Deputies from the then Government parties to do anything about that matter. I am not quite sure how many budgets the present Minister for Finance, Deputy McCreevy, has introduced since then—
A Deputy
Five.
—but I still await, with bated breath, the seaside status designation for Bray. I admire the flamboyance of this Government, especially Fianna Fáil, in launching documents and projecting an air of confidence. It is very good at talking about doing things. I will quote one interesting statistic. The national development plan which was launched almost three years ago is 62% over budgeted cost and running two years behind time. A national spatial strategy was recently launched, a year too late. There is no provision for it in the budget and, clearly, it will not be implemented.
I want to raise a number of points on agriculture with the Minister of State at the Department of Finance, Deputy Parlon. I am sure the Minister for Finance will introduce a replacement for the stock relief which runs out for farmers on 31 December 2002. He did not allude to it in the budget but I am sure it will be in the Finance Bill as a pay-off. Deputy Parlon knows how important it is to put tax incentives in place for farmers leasing land. One of the difficulties with farming is the lack of land available for farmers who want to expand. While there is a tax incentive scheme, it is not attractive enough with the band allowances and age limits to entice people to lease their land. I hope the Minister of State will address it because it will not ultimately cost the Exchequer as land is mostly under-utilised.
I have been having a go at the Minister of State in recent days about roll-over tax relief. He built his reputation on it so I do not know what he is going to do now. There is a great deal on his shoulders but I expect him to secure an exemption for people who are subject to compulsory purchase orders. I have no difficulty with capital gains tax for people who willingly dispose of an asset but those who do not should get compensation for their inconvenience. I do not know how the Minister of State will do this but I am sure his special relationship with the Minister for Finance will see him through.
The 20% rate is attractive.
Can we quote the Minister of State that he is happy with 20%? I understood from today's Irish Farmers' Journal that he was trying to disassociate himself from the policy. It is good to see he is backing it.
That is the Deputy's spin on it.
At least we know where he stands on the matter.
The Deputy is spinning himself in circles.
If the Deputy addresses his remarks through the Chair, he will not provoke the Minister of State.
He is easy to provoke this evening. I am glad he has nailed his colours to the mast that he is happy with 20% capital gains tax. I admire him for taking that position.
I have a certain admiration for the Minister for Finance but I listened to Deputy Lenihan describe him as having left-wing policies. The reason Fianna Fáil did so well in the general election – although Deputy Michael D. Higgins may not like to hear it – is that Deputy McCreevy had many right-wing policies which appealed to the electorate. It is amazing that the Government can espouse left-wing rhetoric while implementing right-wing policies.
I am glad the overall personal tax take, which was 45% in 1997, has been reduced to 40% in 2002 and the discretionary tax taken from that has increased by an almost equal level. That is good but I have difficulties with the Government doing so by stealth. It decides to retain the 20% and 40% tax rates and 20% capital gains tax but, in order to do so, it has to put levies on houses in local authority areas, increase car tax and every other relief for people is taken away. That is the price we have to pay. I have no difficulty with the road the Government is taking but I find the policy dishonest because the tax rates are presented without elaborating on the commensurate difficulties people experience through local authorities as a result.
Deputy Dennehy spoke about the economy being in difficult times. We have never said this in Fine Gael. The economy is not going as well as it was but it is not in difficult times. Our difficulty is the way the public finances have been managed – for self-promotion, self-gain and self-advancement among the electorate at the cost of the State. Where has the surplus of €4.8 billion in 2000 gone? Some 50,000 extra people have been taken on in the public service which is acceptable if people can see a commensurate improvement in works and services. We are continually told about funding in health having been trebled but it has only improved services in some areas. In areas in which I have experience, such as orthodontic treatment and waiting lists, it has not improved. I do not want to be a kill-joy with constant negative comments, but that is a fact of life.
The Minister for Finance spoke yesterday about a new fiscal management which I hope he implements rigidly. I want to see money that is allocated to Departments and local authorities being returned if it is not spent within a certain timeframe on specific projects. I do not know what happens to money allocated for specific projects. The Government says it will invest in infrastructure and the concept of public private partnership. The second Bacon report drove investors out of the market and a great deal of money that had been invested in property at home was moved abroad. Policy was changed after the third Bacon report and the money came back in but I want to see if an incentive could be created to use that money to get the investor out of the housing market and let them invest in infrastructural projects as opposed to housing.
I echo Deputy Penrose's comments about widows and widowers under 66 having been totally neglected. We also need to follow up on the loss of film industry tax relief which has been so important to Bray and County Wicklow and I am sure Deputy Higgins will speak about it.
A budget is a time to reflect on what has happened and will happen. It is a drawing together of the wisdom of the Government, their views and how people should be treated in the years ahead. In the light of this budget, we must examine how sectors of our community will benefit or, as I believe, be worse off in the next 12 months.
Deputy Callely spoke about older people and made great play of the Government's plans for the elderly but the reality is that many of our older people are in nursing homes which need more attention from the Government and the Department of Health and Children. To really look after older people in nursing homes – an increasing number of them will be housed there – we need dedicated staff who will form an inspectorate to include public health doctors and nurses which could examine what is happening in our nursing homes day after day. The vast majority of them are excellent but a significant minority of them are not. If the Minister for Finance really wants to care for the elderly he should introduce legislation to provide for an inspectorate, separate from the health boards, to investigate conditions in all these premises.
Will more people be eligible for medical cards as a result of this budget or fewer? It is a deep injustice that people who are ill in the North-Eastern Health Board area and are unfortunate enough to suffer from cancer, do not have an automatic entitlement to a medical card.
Hear, hear.
If this Government cared for people, it would provide medical cards to people with long-term illnesses. Cancer is the most serious disease to fight, yet patients in Counties Louth, Meath, Cavan and Monaghan receiving treatment do not have an automatic entitlement to a medical card and this puts a great strain on people. I believe they are entitled to it and that it is a fundamental right. They do not have that right under this Government, which is a shame and a disgrace.
If a person's income is such that they cannot benefit from a medical card, they now have to pay €70 under the refund of drugs scheme after the Government introduced a dreadful increase on the eve of the budget. A few years ago the figure was £42 but now, under Deputy McCreevy, it is €70. People who are not on the list of long- term illnesses will pay more. The sicker they are, the more frequently they must visit the doctor and receive prescriptions for medicine. Under Fianna Fáil they will pay more because it is effectively a tax on illness. The sicker the person the more they must pay, but where is the justice, fairness, equity and balance in that? There is none.
The local authority housing lists comprise many people who cannot afford to buy their own homes. Since 1997, when Fine Gael was last in Government, house prices have doubled or trebled. Married couples with no children are almost totally committed financially to repaying their mortgages. Under this Government there is no price control on housing and worse still is the fact that the poor cannot obtain local authority housing. In a year's time there will be a lot more people on the local authority housing list in the Minister's constituency. That is because the Government is cutting back on housing. The local government Estimates, which have been presented to the House, contain a significant cutback on the housing allocation. The Government is making poor people pay for what they are doing. People with two or three children who are entitled to a house will wait longer to get the home they need.
During the past year, Louth County Council has abolished the disabled person's grant. Disabled people who require a downstairs bedroom or an extension due to arthritis or heart disease cannot apply for the relevant grant because the necessary funding has not been provided. The Government is making sick, elderly and disabled people pay for their policies. It is shameful that such a situation has been allowed to arise.
A low income couple wishing to buy a home in Drogheda can not obtain a loan under the shared ownership scheme because it has been discontinued. I have brought that matter to the attention of the Minister.
It is an absolute disgrace.
While the decision to discontinue the scheme was not political, it is nonetheless disgraceful and unacceptable. It makes a mockery of the pomposity and arrogance we are hearing from the Government benches.
Social welfare increases are welcome, particularly the Government's commitment to increase the old age pension, which is an honourable policy. However, according to figures provided by Drogheda Corporation poor people cannot obtain local authority housing. Five years ago, when the previous Government took office, there were 300 people on the corporation's housing list. Some 600 families are on the list today and the waiting time is increasing.
This Government is capping rent allowances so poor people will be living in worse accommodation conditions. Some accommodation is rat infested and does not have proper toilet and bathroom facilities, or even hot water. By failing to provide adequate rent allowances, the Govern ment is condemning poor people to live in unacceptably low standards of housing and hygiene.
Much has been said about assisting people to avail of education and remedial teachers, such as Deputy Keaveney, have contributed to the debate. I am a remedial teacher and taught for many years in a school. I rang that school today to ask how things were going and I was told that the main issue is the social needs of deprived children from economically disadvantaged backgrounds. They are not getting the attention and support they need. Wonderful work has been done through community employment schemes in Drogheda, including a breakfast club for children on their way to school. They can get lunch later in the day and also have a homework study club in the evenings. Unfortunately, however, the FÁS community employment schemes that have been providing those essential first-class facilities are being cut to ribbons by the Government which is scrapping them.
There are more people on community employment than are unemployed at the moment. We are running out of people.
The Society of St. Vincent de Paul's housing aid scheme in Drogheda – designed to help the elderly maintain their homes – is being disbanded because the Government is not providing the resources to keep it in place. That is a shameful fact.
It is being reduced in line with the reduction in long-term unemployment.
The Government is treating sick, elderly and deprived people in a shameful manner. The budget is leaving the country in tatters. It is utterly reprehensible.
This year will be remembered for two things: the budgets and the famous lines. The first line came from the Minister for Finance, Deputy McCreevy, in a letter to the former leader of Fine Gael, Deputy Noonan, when he stated, "There will be no cuts this year." The second famous line was, "A lot done, more to do."
That is true, all right.
That is exactly what has happened.
There were slight changes over here, but major changes in the Fine Gael leadership.
Fine Gael nearly disappeared.
It is not too long ago since we discussed the Book of Estimates, from which I will cite a few details in case my colleagues opposite have forgotten. Registration fees for education are up 70% and VHI charges went up 18%.
It is disgraceful.
There have been problems with hospitals.
How can the Minister countenance that?
Five or six years ago, an extension was promised for Ennis General Hospital. The last I heard was that it was going to design stage but when I raised it with the Minister he said it will depend on the funding available. He will know early in the new year. It looks as if that may not go ahead.
Earlier today, we heard about a serious problem that occurred last night at Monaghan General Hospital when a young expectant mother was transferred to Cavan Hospital. The child was born en route but died at Cavan Hospital shortly afterwards. We have a similar situation in Clare where the maternity hospital was closed in the 1980s. Expectant mothers from west Clare now have to travel up to 90 miles to Limerick to give birth. The Mid-Western Health Board, however, is closing down the maternity hospital in Limerick and is building a new extension in Dooradoyle where the centre of excellence is located. Therefore, expectant mothers from Clare will have to cross Limerick city making their journey even more difficult.
Funding for non-national road infrastructure has been cut back 27% and public transport charges have risen by 15%. All those dramatic cuts were contained in the Estimates, which have put further pressure on families. The National Development Plan, 2001-2006, is currently 62% over budget and running two years behind schedule. It is estimated that road building projects that were supposed to cost over €9 billion during the life of the plan, will cost €15.9 billion. The Ennis bypass is a casualty of that. Last year it was estimated to cost €140 million, but current estimates put the cost at €150 million. When will work on it commence? The Government should have borrowed money for infrastructure which is important. The Ennis by-pass is a key project for the development of Shannon Airport and the west coast. It is estimated that the cost involved will run to €200 million by the time the project starts. If it had commenced it could have been provided for in the current budget. The Minister said in his budget speech that PPPs are the way forward so it seems tolling of our roads will also be the way forward.
For whom the bell tolls.
It tolls not for thee.
Tolling is a form of tax. There are toll roads in France but the people do not pay road tax. Irish people will be faced with a double tax. I will speak about that issue later.
Fine Gael proposed the doubling of mortgage relief for first-time buyer's following the abolition of the first time buyer's grant. That would amount to approximately €12,500 in five years. Under this budget, first time buyers will get about €330 per year amounting to approximately €2,300 in seven years. There was also a 1% increase in VAT which takes away any benefit for first time buyer's.
I collected petitions in Ennis on the Saturday before the budget was announced. Supporters of Fianna Fáil and the Progressive Democrats were willing to sign the petition to demonstrate that this is the wrong way of doing things.
Hear, hear.
The waiting list for local authority houses continues to rise. It rose by 24% between March 1999 and March 2000. There are now more than 48,000 people waiting for social housing. My colleague, Deputy Timmins, touched on the issue of farming. Farmers have been badly affected by this budget.
Things are getting worse.
Stamp duty on land has risen from 6% to 9%.
It is disgraceful.
The Minister of State, Deputy Parlon, is aware that the roll-over relief which provided farmers with 20% tax relief has also been abolished. This, along with the construction of the Ennis by-pass, will affect many of my constituents. It will affect CPOs and those farmers who would like to purchase land in substitution for the land acquired for the Ennis by-pass.
That are getting a fair price for it.
It has not been agreed yet. Disease levies have been doubled.
I do not believe that. That could not be true, the Progressive Democrats must have been asleep.
Pressure is being placed on agricultural contractors as a result of the difficult year faced by farmers. The 3 cent rise in diesel prices and the VAT increase affected many agricultural contractors.
How will local authorities pass on the €50 million needed to pay the 4% wage increases? Who will pay for it? Householders will. Local authority charges will increase. It all comes back to the householder. Deputy O'Dowd referred to the disabled person's grant. Clare County Council have no money for disabled people wishing to install showers, replace windows and repair roofs.
Hear, hear.
The public service sector, which has risen by 50,000 in the past five years, is to be cut-back by 5,000 in the next few years.
That was before the election.
We have a huge shortage of speech therapists. We have no remedial teachers and no nurses in our hospitals.
The changes in stamp duty will affect many businesses. There are increased charges on cheques, ATM and laser cards with an extra €100 million put on the banks. Who will pay that €100 million?
That was PD policy.
It will not be the banks but people like us who will incur these charges. We know from the way the banks operate that this is what will happen. We were told by the banks that plastic cards were the way forward for security and other reasons. Now when people are using them they are to be taxed for doing so.
More people done and more to do.
Yes, more to do.
It is an option, not a tax.
In recent days, Ministers have been at war with difficulties between Deputy McCreevy and Deputy Cullen over who should announce the car tax increases.
That was difficult.
Nobody here tonight mentioned the cost of car insurance. Yesterday, a TV licence increase of €40 was announced. That is a massive increase. While Fine Gael welcomes the TV licence increase it was too high. The Minister could have opted for a €20 rise this year and increased it again the following year when RTE7 had implemented its proposals. The Government opted for one big increase just before Christmas.
What will happen next year? Will third level education fees be re-introduced? We will have to wait and see. Budget 2003 can be described as unfair, unjust and unacceptable with the weakest in our society affected once again.
I wish to share time with Deputies Mulcahy, Callanan and Cassidy.
Is that agreed? Agreed.
Deputy Breen spoke about the year of the lion and the budget, I thought it was the year of Enda. It was nearly the year of the end of Fine Gael.
A lot done, more to do.
I am not surprised as it can only see the negative. The glass is always half empty.
The Minister of State is the watchdog.
Deputy Breen was running out of negatives towards the end of his contribution.
In order to bring balance to this debate, I will remind Deputies of the facts. This was Deputy McCreevy's sixth budget. There is no doubt but that difficult choices had to be taken but fair choices were made.
Where were the watchdogs when this was happening?
We can talk pie in the sky about everything we should have but we have to work within the resources available. The overriding objective of the budget was to consolidate the massive gains made in recent years.
Hear, hear.
It is important that we do not undermine the future prospects of our society. That is why we took tough but fair decisions. Deputies can ignore the realities, domestically and internationally, but the budget was drawn up against some difficult economic situations. Like elsewhere in Europe, the Government is facing budgetary pressures on a number of fronts.
Since the mid-1990s, our economy has experienced successive years of strong growth, exceptional by any standards in the world. The people who say we were hood-winked and so on were so naive to think we could continue to grow at 10% forever more. They have received a slight dose of reality.
That is a peculiar allegation about the unfortunate electorate.
The electorate voted with their feet and put this Government back in office. That is the reality with which the Deputy will have to live for another five or six years.
The international climate is tough with many economies doing little more than treading water. The European Commission now estimates that GDP growth in the euro area will be no more than 0.8% this year and that economies such as Germany will register only marginal positive growth.
It is against this background that our performance must be judged. Real GNP will be modest this year and is estimated to expand by 1.8%. Similar to other countries, the slower than expected growth has had an impact on our budgetary position.
Going forward, unfortunately the prospects on the international markets do not look so wonderful. The general view is that we will begin to pick-up in the second half of 2003 but even that is far from certain. Euro area growth of 1.8% is expected and the US is forecast to grow by 2.3%. Against this climate, Ireland is forecast to grow modestly next year. Real GDP is forecast to expand by 3.5%, with the prospects improving over the following years. The economy is forecast to grow at 5% in GDP terms by 2005 and GNP is forecast to grow by 2.25% next year, picking up to 3.75% by 2005. With good policies we can build the economy slowly and get back on track rather than going down hill.
The wagon could sink if the Minister of State is not careful.
We have lost competitiveness in recent years. Our priority must be to halt this slide and regain our position. Competitiveness creates jobs and wealth and generates the resources needed to build the type of society we all want. There was a lot of talk by the last three Deputies about what would be wonderful about society and the difficulties in regard to poverty that still exists. The greatest antidote to poverty is a real job. The fact that our unemployment rate is almost the lowest in Europe and one of the lowest throughout the world is the answer to poverty, which is the direction in which we must keep going.
Clearly the need to moderate our cost base to ensure we do not suffer further is a task for all the social partners. The Government will endeavour to reach the best possible outcome in the current negotiations for a successor to the national pay agreement and on the implementation of the recommendations of the public service benchmarking body. In regard that body, the Minister has sensibly provided for the cost of the implementation of the first phase, should agreement be achieved. This will cost €565 million.
Over the past five years, the Government parties have demonstrated their commitment to improving public services, and are continuing to do so. Since 1997, and taking account of what the Minister is planning for 2003, total gross spending, capital and current, will have increased from under €19 billion to more than €38 billion, an increase of 102%. In that time, total health spending will have increased by €5.2 billion to €8.9 billion; total education spending will have increased by €2.5 billion to €5.6 billion; social welfare spending will have increased by €4.5 billion to €10.2 billion, which has been recognised by some Opposition Deputies; and spending on infrastructure will have increased by €2 billion to almost €5.6 billion. The Government is continuing to provide substantial funding in 2003 for these key priority areas. As everyone knows, we must keep spending consistent with available resources, of which there is a limited pool. This means we must prioritise and, if one sector receives more, others must receive less.
We committed ourselves in the Agreed Programme for Government to implementing a wide range of social inclusion policies aimed at supporting the most vulnerable in society. Despite the greater pressures on public finances this year, we must direct resources to those most in need. I would like to remind Deputies of a few important changes in terms of pensions. The old age and related pensions will increase by €10 per week. We have heard much about what the €10 will mean per day and per week, but it amounts to €157 per week. The old age non-contributory pension has increased to €144 per week. This is the first step in honouring our commitment to increase this amount of €200.
It is not an increase when VAT is taken into account.
If the same rate of increase is maintained for the lifetime of the Government we will reach the rate of €200 per week referred to when the Government took office in 1997, which was Utopia as far as most pensioners were concerned.
In keeping with the spirit of protecting the less well off, this year's budget has also provided for a special increase in widow's and widower's contributory pension. The weekly rate of payment in 2003 will rise by €11, bringing the rate to €156 and €162 per week for those aged 80 and over. We have continued to make progress in child benefit by directing support towards parents with dependent children.
Some 3 cent per day.
The level of payment is being increased by €8 per month for the first and second children to €125.60. The Deputy can put that in his pipe and smoke it. They did not get it from the rainbow Government. There will be an increase of €10 per month for third and subsequent children, bringing the new rate to €157.30 per month, which is not to be scoffed at. While the Government would have liked to increase these payments by more at this stage, it is the intention to complete the planned increase in child benefit over 2004 and 2005. Other full rate social welfare payments are being increased from next month by €6 per week. The overall social welfare improvements announced in the budget will cost €530 million. The Deputy can talk about the amount per day but the Government has put aside €530 million for the increases in social welfare payments.
The strength of our economy in recent years is as a result of a number of international and domestic factors. One key factor in all of this is the fundamental reform that has been made to taxation. The measures taken in recent budgets have given more people a greater say in the amount of income they enjoy. Because people are bringing home more pay, they are prepared to work longer and harder.
Fiscal policy is required to help create a just and fair society without hindering the development of a modern and vibrant economy. This was not a budget for taking quick fixes or postponing agreed tax measures. We have entered into a number of commitments which are being honoured. In other areas, however, the Government has sought a contribution and while people may not be happy with it, they can agree it is required for the common good. Personal tax changes, while more limited than in previous years, will take 37,400 taxpayers out of the tax net. The changes in mortgage interest tax relief will benefit over 45,000 first-time buyers this year.
Smoking is a terrible social blight and I welcome the increase of 50 cent on a pack of cigarettes. I am aware that its contribution to inflation was a key element in preventing a higher increase in dreaded cigarettes.
A couple of years ago, the phased introduction of the new 12.5% rate of corporation tax was enshrined in legislation. The Government is committed to maintaining an attractive climate for enterprise and for this reason I welcome the reduction in the standard rate of corporation tax to 12.5% from 1 January next as planned. This is what will keep the jobs in place. This decrease has not been introduced to benefit the rich or industrialists but to help create highly paid jobs and to keep people off the dole.
Other countries increase taxes when there is an economic downturn, we decrease them.
Difficult choices were faced on the issue of capital gains tax. The reduction in the rate in recent years from 40% to 20% has been a huge success and has seen the yield increase by over five-fold in recent years. The Minister was correct to resist the urge to increase the rate. It would have been a retrograde step back into the dark ages if we increased the rate. The changes made to the payment dates will result in a once-off gain of €250 million for the Exchequer in 2003. It will mean that the financial burden is placed earlier on people, but it is a better alternative than reverting to a 40% rate.
The tax package is also challenging for farmers. A number of Opposition Deputies have claimed to be very concerned about farmers. While I welcome the fact that the existing exemption from stamp duty for the transfer of land to young trained farmers will continue for a further three years, I would be a hypocrite if I said I was not disappointed at the abolition of roll over relief for people wishing to reinvest in land.
Why not stop it?
Since the budget it has been well highlighted in this House that the provision challenges a deal I negotiated. I have raised this mat ter with the Minister. Tomorrow night, I will be explaining the position to 144 farmers in County Laois who have their deals done between Monasterevin and Portlaoise.
I wish the Minister of State luck.
I have absolutely no problem going down there. While I was disappointed with the provision, I am a pragmatist and I know the Minister, Deputy McCreevy, had tough decisions to make. Since the budget, I have been in contact with many farmers – I will meet them again tonight – and I am satisfied that the majority of them will still receive maximum benefit from what is a very fair compensation package for the roads programme.
The emphasis in this year's budget is very much based on ensuring the weaker sections of society are protected, while at the same time securing sound public finances. This budget builds on the very real gains made over the last number of years. Given the current subdued economic climate in which we find ourselves, I believe the budget measures represent a balanced and prudent approach.
I support the budget which has been a reasonable response to the small slowdown in our economy. Despite what some commentators might say, this is a reflection of an international downturn.
Blame the internationals.
Anyone who believes 11 September 2001, the bursting of the dot.com bubble and the Enron and WorldCom scandals did not have an effect on our economy is living in a very unreal world. It is predicted that growth in Europe next year will be 1.8%, growth in the US will be 2.3% and growth in our economy will be 3%, a very healthy situation. It is important to consider the budget in the overall context of the national finances. Many young people will be reassured to know that Ireland has the second lowest national debt ratio within the eurozone, at 34%.
They need to be reassured as they cannot afford to buy a house.
Luxembourg is the only country that has a lower national debt ratio. Unemployment has climbed a little to 5.25% – I hope it will decrease again – and inflation is at 4.8%. The national pensions reserve fund contains about €8 billion and between €1.1 billion and €1.3 billion will be put into it this year.
We have lost €1.5 billion.
In any discussion of the budget, it is important to examine the importance of the national pensions reserve fund.
We might not live long enough to take advantage of it.
Before I came to the House tonight, I read in detail the speeches made by Deputies Richard Bruton and Burton, the finance spokespersons of the two largest Opposition parties. I believe that both Deputies made poor contributions as they displayed a complete paucity and bankruptcy of ideas about what should be done with the economy. I intend to quote from parts of their speeches to support my proposition. Deputy Bruton seemed to be critical of the SSIA scheme, without declaring whether he would limit the scheme or scrap it altogether. Most people support the Government's commitment to long-term savers and the benefit of its approach will become evident as the years go by.
Will the Deputy keep that opinion for the next year?
Deputy Bruton went on to make some ambiguous comments about benchmarking, but he did not mention whether he would pay the recommended awards in full. The Government has provided €565 million to start payments under the benchmarking process.
The payments are required as a result of poor Government actions.
Public servants have welcomed the provision. The Labour Party's finance spokesperson, Deputy Burton, seemed to query whether the international economic downturn has affected Ireland. She said that it is time to stop blaming external factors such as the downturn in the United States and Germany.
Yes.
Everybody knows that difficulties in the two largest economies in the world, the US and Germany, are bound to have an impact on the Irish economy.
No.
It shows great naiveté and a lack of knowledge on the part of Deputy Burton that she did not acknowledge such a simple fact in her contribution.
They are not the two largest economies.
Can the Deputy defend his assertion by reference to trade statistics? The Deputy should give the source of his comments.
I have given the statistics.
They are not the two largest economies.
He should outline the trade statistics.
They are the largest and third largest economies.
Deputy Mulcahy without interruption, please.
She said that it is time to stop blaming external factors such as the downturn in America and Germany.
How has Ireland's trade with Germany been affected?
The fact of the matter is that the largest international investor in Ireland in terms of factories, by a long way, is the United States. Deputy Burton also seemed to raise questions about cutbacks in the public service. She did not acknowledge that 50,000 people have been recruited to the public service in the past five years.
We should be increasing it now.
It is quite obvious that when one is spending a smaller amount of capital money, one will need fewer employees to administer the public service.
We should not let them go now.
I fully support the Minister's decision to cap public service recruitment and reduce numbers in the public service by 5,000 over three years. Nobody suggests that the reduction should be achieved on anything other than a voluntary basis, such as retirements. One must be living in cloud cuckoo land to suggest that we should retain or increase the number of public servants at a time when the economy is slowing down.
I am getting worried about the Government's philosophy.
Deputy Durkan is all rhetoric.
That is why I return to the—
I am a lot more worried than I was before.
Get off the fence.
—bankruptcy of ideas in the Labour Party.
Deputy Durkan is neither up nor down.
Deputy Mulcahy has used a third of his time.
He has tested the patience of the House.
Deputies Bruton and Burton mentioned the national pensions reserve fund, which is administered by independent trustees.
It is just as well.
It is not up to the Government to raid the piggy bank.
It is just as well.
This was not mentioned in the Deputies' speeches.
Deputy Durkan does not know if he is in favour of it or not.
I welcome the budget and congratulate the Minister for Finance, Deputy McCreevy, on his fair proposals. He mentioned three key objectives: to protect the weak in society; to invest in the future to position ourselves for a return to better growth levels; and to secure stable public finances to safeguard the gains we have made. He has protected the less well-off by imposing social welfare increases at a cost of €530 million, bringing the total social welfare budget to €10.2 billion, an increase of €4.5 billion since 1997. As Deputy Parlon has said, health spending has increased from €5.2 billion to €8.9 billion since 1997 and education expenditure has gone up by €2.5 billion to €5.6 billion. The funding allocated to infrastructure has been augmented by €2 billion to nearly €5.6 billion.
I welcome the additional allocation of €209 million for the national roads programme, meaning that the Exchequer will invest €1.25 billion in the programme next year. This funding, together with public private partnership schemes, will ensure that the necessary road developments will continue. I hope that the Loughrea bypass will be included in the roads programme. As Deputy Michael D. Higgins and others are aware, the worst bottleneck between Dublin and Galway is in Loughrea, particularly on Friday evenings when traffic in the town comes to a halt. I hope the bypass will be funded next year.
As Deputy Parlon said, the continuation for a further three years of the stamp duty exemption for the transfer of land to young, trained farmers is to be welcomed as it is very important. I also welcome the provisions made for additional mortgage interest relief for first time house buyers, which will assist 45,000 people. The prudent budget announced by the Minister, Deputy McCreevy, last week will help the country to grow. The Minister could have borrowed a great deal of money to satisfy everyone's needs, but that would have brought the country back into debt and nobody wants to see that happen again. I commend the budget.
I have been a member of the Oireachtas for over 20 years and it is a great honour and privilege for me to say a few words about this budget, the first to be presented to the House since I was elected to it. The greatest priorities in this budget were maintaining the current levels of employment and, as Deputy Parlon has said, keeping us competitive. We have to stay competitive at all costs. As we all know, 20% of US investment in Europe is in Ireland. It is crucially important that we maintain such levels and keep Ireland as an attractive base for multi-nationals such as US investors. Deputies remember when interest rates were 18%. The song "Flight of Earls" by Liam Reilly summed up the plight of our young people, 50,000 of whom emigrated each year. It is wonderful to discuss a budget in the context of the return of many of the emigrants I have mentioned. Their return has added to the expertise, work ethic and skills pool of the Irish people.
This budget takes the global economic climate into account. We all know that the world's economy has gone soft. The United States has an unemployment rate of 6% and interest rates are at an all-time low across Europe. Who would ever have thought that the cost of funds, before banks charge their margins, would be less than 3% in Europe and less than 2% in the US? It is a good time for people to invest, create jobs and invest in property. We see what has happened in the insurance sector and in the stock market where stocks may decrease by 10% or 20% overnight.
People are turning to property and this is one of the opportunities to maintain jobs in Ireland to get us over the difficult global period in the US, Europe and other markets. I ask the Minister of State to suggest to the Minster for Finance that the CE schemes, if possible, should be maintained at the same level in the CLÁR area. Deputy Ó Cuív has been doing a magnificent job fighting the cause of the people in rural Ireland where populations have declined. My area in Westmeath is one of those areas and his CLÁR programmes are of the utmost importance in bringing infrastructure like sewerage to little villages and towns which would otherwise not have a chance of getting this investment. I ask the Minister of State to request the Government to hold the CE schemes at the same level in the CLÁR area for the next two years at least.
It was refreshing to see on television a few nights ago what the PPP did for the new school in Tubbercurry. There is a Deputy from the area in the House. The situation is the same in every constituency, in that 400 to 500 primary schools are in urgent need of development, whether it is refurbishment or building new schools. Surely the Tubbercurry experience has to be commended and the Government should implement PPP schemes for these schools. Members from all constituencies, and the Deputy from Kildare is no different, would know of ten or 12 schools in which this could happen over the next two or three years.
I commend what has been done for carers, but it is not enough. More should be done for carers, who are the backbone of our society. I ask the Government to make a special case in the near future so that carers are looked after better than at present.
On the issue of decentralisation, I hope the Government will give an office to each region. There is a region in the north midlands where the only town which has not been favoured is Mullingar. I want to make the case because there is a Minister in the House who is influential in this regard. We are entitled to the same share as other towns in the north midlands. We look forward to the road construction starting from Kilcock to Athlone and Kinnegad to Mullingar. I do not want to repeat the various comments made by other speakers except to say that it is good that we are debating the budget and the progress which has been made over the past five years. Everyone knows that a little correction was needed and we will benefit from it in the future.
Having listened to the speeches from the other side, Deputy Cassidy need not worry about the Minister for Finance and property. Deputy McCreevy has looked after property speculators very well, not only in this budget but in every one of his budgets. He has assisted them in tearing the heart out of the economy. He did it in his abysmal approach to capital gains tax where he threatened to deal with land holding by increasing this tax and then backed off. We see it in relation to social housing. The Minister for the Environment and Local Government announced today how he would bend his knee to that section of the Construction Industry Federation that went on strike against social housing.
It is interesting when Fianna Fáil, in its most recent form of being captured by the Progressive Democrats, has to deal with questions like who must wait and who must not be kept waiting. The people who must not be kept waiting are exactly the people Deputy Cassidy has been describing, those who want to invest in property or speculate in land. I am interested to also look at who must wait. One must wait for an increase in child benefit or the fuel allowance, or for any real benefit in relation to care of the elderly. There is a derisory paragraph in the budget speech in relation to the disabled. The Deputies have a cheek to speak about carers because they did not figure in the budget speech at all.
I will deal with some of the economic assumptions on which Deputy McCreevy operates. They are consistent in this respect. He represents, as Minister for Finance, the same callous indifference to the distribution of wealth and to care of people on a general basis at home as he does abroad. Before the budget, in the context of the Estimates, at a time when 30 million people in the Horn of Africa are faced with starvation, he announced cuts in overseas development aid, humanitarian relief and emergency food aid. In these countries, such as Malawi, which pays €88 million servicing debt while education and health combined are €54 million, 1% of GDP spent on education rather than debt would save the lives of 19,000 children a day. The Minister goes to the International Monetary Fund and represents us at international institutions and does not speak about wiping out the debts of these heavily indebted poorer counties. He would not do so because of his finely-contaminated and well-marinaded influence from the Progressive Democrats who have represented, since they arrived in Irish politics, a consistent, deep politics of greed. I accept that they believe it. They believe that if one never takes tax off even the most wealthy—
There are 10,000 asylum seekers taken in every month.
I will come back to that. I do not mind dealing with it. I would be more interested, now that I have been interrupted by the Minister of State, if he had given us a Progressive Democrats speech rather than recycled versions of Deputy McCreevy's speech. There was an uncanny similarity between sections of the speeches distributed and the earlier speech by the Minister for Finance.
They are the facts.
The Progressive Democrats should tell us where the evidence is that it is their suggestion of lowering tax that has created the numbers of jobs. It is interesting again to ask about their attitude towards housing. Now that the Minister of State has reminded me, I recall that when the first version of the Estimates came out and it was announced that the first-time buyer's grant was to be abolished, the new Deputy, Deputy Grealish, closely followed by Alderman McDonnell, were first to the newspapers claiming that they would have it reversed. They suggested that they would not vote for it and would lead the rebels. Then the budget came and the tax credit substitution whereby a married couple might claw back €350 was meekly accepted by them. They find nothing wrong, not only on that issue, but on every issue relating to housing.
There were people who owned five or ten houses in Galway city. Today they own 20 and 25. The Progressive Democrats believe in that. They believe that one should be allowed to speculate on a basic need such as housing. They believe that one should not put capital gains tax at the highest level on such activity. They believe in land hoarding and they are first to suggest at the same time, as we heard this evening, that there must be wage restraint.
Let us calmly and unemotionally look at the economic assumptions behind the budget. The way to look at the six budgets is to look at the process of capital accumulation alongside the increase in wages. It has, by and large under social partnership, not been that far off the CPI index. At the same time if one looks at the capital distribution one will notice that the value of the property held by people in increasingly tax-exempt areas has massively increased. One can interpret that in all sorts of ways and others have done it. It means our society is becoming deeply unequal. How would one test it going the other way, irrespective of who was in Government? One would have taken—
We could go back to 20% unemployment.
I would like to make my speech, but if the Deputy likes I will engage in debate. I did not create 20% unemployment. If the Deputy wants to go back, it was before he was heard of—
There was 20% unemployment when the rainbow coalition was in power.
—that the largest number of people left this country in 1955, when 55,000 people left because of the miserable state of the economy. The Deputy should not try to tell me that the Government's economics of greed and tax exemptions for the rich and its attitude towards public housing—
It is no coincidence.
The speech I am giving is one prepared by me, not a recycled one borrowed from his senior Minister by this new Minister of State. Maybe when the Deputy is here a little longer he will get as far as writing a speech himself. I hope he does.
The Deputy said earlier that it was not a recycled speech.
I said it was. Does the Deputy want me to repeat it? It is.
The Deputy said it was not. He can check the transcript.
Deputy Nolan has time for that.
The Minister has merely swapped the paragraphs around.
I want to deal with the assumptions that guided the budget. It is interesting that all the speeches we have heard so far justifying the budget have contained statements of gross figures of expenditure. Allow me to suggest a position that is rejected by the Minister for Finance when he attends the meetings of the IMF and others. We could deal with these countries that are seeking to avoid famine by having a basic needs approach in which health, water and food are placed across a line and the performance of the economy for poverty adjustment is calculated outside these measures. This has been rejected internationally. At home, if we wanted to do the same we would specify what we wanted to spend on basic public health, water, sewerage, housing and so on, and protect people before moving to deal with features of the economy as though people did not exist.
I have listened very carefully to the debate and what we got was a version of a "depeopled" economy, an economy described in terms of its indicators but not broken across categories of the population. For example, if we take the gross domestic product and divide it by population over the years we will find out the distribution effect. Let us be honest: there are parties who believe that we should be working consistently towards equality in good times and bad, and there are other parties who believe that it is only when we have removed every possible restraint by way of taxation and growth is completely untrammelled and presumed to be infinite, that gradually everybody's boat will rise. Those who are of the latter view must accept the consequences and justify the approach. It is inconsistent for these people to suggest that they are somehow following an egalitarian agenda while they are asking the most vulnerable to wait and telling those who have most to give that they must not be kept waiting.
This is what is happening in a number of key areas; I have given an example in housing already. If I am to be proved wrong in this, I challenge the Government to have a national property survey to identify who owns what. It will find, as Deputy Cassidy said, that throughout the last six budgets it has been possible under the section 23 and section 50 provisions to recycle rental income into the housing market, driving house prices up and making it more even more difficult for people to buy a home. That is not the worst problem we have with housing, however. Leaving aside those people for whom so many have spoken in relation to the first time buyer's grant, let us look at the book of Estimates from the point of view of public and social housing and the allocations given to local authorities, which have been massively cut back. The latest legislation will allow people who own land banks back into the market, making it impossible for local authorities to purchase land that may be used as a site for public housing, which has itself been cut. The Government cannot tell us that the poor have been protected.
When we come to rental income we are dealing with the most vulnerable of all. Perhaps the Minister of State will bring this point of view to the Cabinet.
I do not sit at the Cabinet table.
I know that, but I am sure the Deputy meets his senior Minister occasionally. Even in Fianna Fáil that is good practice, except when the hard-riding little squire from the suburbs was here. He did not meet his junior Ministers very often; he took them for granted. Then again, the builders always knew where to go. They did not call to us: they called to that crowd over there.
The rainbow Government did not build anything.
I would like an answer to my point about rent allowance, which has now been capped. In Galway city, with which Deputy Grealish will become familiar in time, in every advertisement for accommodation people are looking for professional couples. It is impossible for a single person on rent allowance to find accommodation. Now, with no restraint on speculative activity in housing, rents will increase. If the rent goes over a certain amount one cannot, since 25 November, subsidise it oneself. The Western Health Board had a ceiling of €115. If one rented a bedsitter in Galway for €120, until now, one could pay the extra €5 oneself. Now, if the rent is €120 one loses all of one's rent allowance. That is monstrous. The most vulnerable of our people in the rental sector are being put at risk.
There is even less opportunity for those who are hoping for social housing, who wait five years in the Galway Corporation area if they are a family and even longer if they are single. It is impossible for people to buy a house because of the abolition of the first time buyer's grant and the increase in VAT, which adds more than €2,000 to the price of a house for a young couple. Yet all the time, more people are owning more houses and benefiting from capital accumulation at a time when there is no tax on windfall profits in land and no attempt to claw back any of that accumulation by way of capital gains. That is the colour of the Government and of the Minister's budget.
I listened with great care to what people said about health care. There are many good people on all sides of the House who want better health care. At University Hospital, Galway, a radiotherapy unit will be ready next July. How does it make sense to have proceeded with that and now place a cap on the staffing necessary to bring this vital unit into use for cancer patients? Because of Deputy McCreevy's last five budgets, people have been investing in the private sickness industry. He gave them tax breaks to go into competition with the public service, poach consultants' services, break contracts that exist with the public service and make public health and accessibility to it impossible. Again, this is the colour of the Government.
We could be talking about overseas development aid and our attitude to famine relief or issues at home such as the poor, housing, health or public transport. More and more people are using public transport and this is to be welcomed, but while there is a reference in the budget to the roads programme, there is none to any deflection from the NDP towards vital bus and rail resources. This tells us again the thinking of the Government. I believe it has no mandate for this. The case has also been well made in the Estimates regarding the number of schools left in a state that is dangerous and unhealthy.
Deputy McCreevy, the genius of six budgets, then appointed a three-man team to advise him on how to find another €900 million should it be necessary. They came up with a shopping list which can be found on page ten of the report of the independent estimates review committee. That raises the interesting question of whether the Department of Finance is losing its nerve because in the past it was always able to produce good, old fashioned, right wing rubbish internally. It has contracted that job out now to pensioners from the Department.
The Labour Party brought in lots of advisors. Labour Ministers all had one.
I never had a public relations person like the Minister of State. If he goes through his own party he will see a small army of them.
I do not have any such thing.
The Minister of State should check how many his own Ministers have and then check how many I had.
I reject the accusation the Deputy makes, I do not have a personal relations person.
I take back the remark and the Minister of State should withdraw his remark because I did not have a squad of people. I had two people.
I said the Labour Party had a squad.
I had one adviser. The Minister of State might need one himself. I will table a question next week and give the Minister of State the opportunity to say how many each Minister has.
The Deputy might find out the facts then and not throw out loose accusations.
I am not throwing out loose accusations.
An Leas-Cheann Comhairle
We must proceed.
I would like to proceed and I would like the same protection in this House that every other Member has had, including the Minister of State. If he wants to go down that road, however, so will I. I remember the circumstances of how this Government was formed and the one previous to that.
The review group's recommendations include reduced numbers in the Defence Forces, a review of pupil-teacher ratios, reduced compensatory allowances for farmers, further increases in third level fees, a review of the universality of child benefit and so on. In fairness to the Government, and to be accurate, it did not accept all of these, but accepted some of them.
It is not clear yet what it rejected because the report suggests that if there is a further deterioration in the public finances, this sort of list is necessary. It then suggests a review of transport with the phasing of capital programmes over a longer period, the introduction of water charges in 2003, a reduction in the allocation for child care initiatives, a reduction in allocation for housing and further increase in the drugs refund threshold. This plan was not put into the public domain by a bleeding heart organisation, the Labour Party or Fine Gael, it is in the report of the three wise men to the Department of Finance.
I listened interestingly to the notion that this is all good economics. The Minister is abolishing film relief. I was the Minister who recast the scheme in 1993. The gross spend on films in 1992 was £11.4 million. By 1996 it was £184.6 million and it had created 4,100 full-time job equivalents. Today there are 3,100 full-time job equivalents. I listened to what people had to say about making sense of investment and attracting foreign investment for job creation. The way section 481 works differs according to different categories. There is a difference between projects that come through the Irish Film Board, which the three wise men suggested should be abolished, and projects that are sold into the international market by bodies such as Ardmore Studios. In the case of the latter, taking "Reign of Fire" as an example, there was a budget of €100 million. The tax foregone was €8 million while the amount paid directly in PRSI was €12.5 million. There was a net gain immediately through section 481 on projects like that of about €4.5 million. Added to that figure is the VAT and the indirect spend. This has been tested by different bodies, including consultants to the Department of Finance who produced a report suggesting the indirect multiplier was more than 3:1.
It is a huge industry, capable of development and creating jobs. When the budget of a film is over €2 million, 50 skills are involved. We have crushed it when other countries are building on the Irish model. In Britain there is a sale and lease back system for films and some people use the Irish system for the early stage of production and the British for post-production and between the two systems we were getting an enormous amount of business. That is just one component. Culturally, small film makers were getting investment to enable them to establish a niche.
I discussed this on radio this morning with Deputy Roche and he suggested there were breaches of the tax codes. The Revenue Com missioners regard the film incentive scheme as being more tax compliant than any other. Its view of the scheme was positive. I cannot understand why the three wise men suggested the abolition of the Irish Film Board. The increase in VAT in budget also puts 1% on the price of cinema tickets and section 481 is being abolished within two years without anything to replace it.
That VAT increase was the meanest thing of all. Changing the basic rate of VAT by 1% brings in €245 million, although without an advisor I could be wrong – I have to rely on my own memory. It is an easy way to raise €245 million but the fundamental principle is that indirect taxation is regressive. It affects the poor and those who have to spend a much greater percentage of their income than those who are able to save from it and invest it in any one of the schemes still available or, worse still, invest it in speculative gain in property.
Indirect taxation has a wide take so 1% can yield this large sum but it affects coal, gas and electricity. An older person who must provide himself with fuel for the winter must now deal with a 4.8% increase of the measly allowance. He may be facing a rent increase from the local authority and, having dealt with that, will note that there will be a cap on the rent allowance while there will also be no increase in the fuel allowance. To suggest one is caring about older people by giving them as much care as one gives the single housing applicant is ludicrous.
Social welfare has increased by €4.5 billion since 1997.
Here we go again with the gross figures. How much has the cost of a house risen and who has benefited and who has suffered? This is the question about gross figures. I would be happy if people were consistent about it but I have never heard in the last six years any Minister with responsibility for housing deal with the question of the rise in house prices. It was regarded by some, and probably most of those in Deputy Parlon's party, as a good thing to live in a €500,000 house. It did not seem to matter that it was driving thousands of people away from ever having a home.
They are not emigrating anymore.
The Progressive Democrats have the fantasy of everyone in the country living in a €500,000 house and never paying tax. They will tell them it is their money. That is why we are the country with the second lowest level of social protection in Europe.
We also have the second lowest unemployment.
We call ourselves a republic but there is nothing as anti-republican as what is being proposed by the Minister for Finance in this and the previous five budgets. There are coun tries that do not call themselves a republic with good health services, public transport services, proper control of the rental sector, public housing and public parks. They do not go around telling people that the highest moral value is to hold on to your own money and to fork that money into property if its value increases and to hell with your neighbour.
Transcendent greed is at the core of the party that has taken over Fianna Fáil. There are many decent people in Fianna Fáil who quietly say they do not want to have anything much to do with this, who are very unhappy about it and would have liked some form of increase in capital gains tax. Is it not interesting how stallions can generate millions of euro for an individual yet survive the gaze of the Minister for Finance, Deputy McCreevy? At the same time, many other people have to pay and wait. The budget is all about those who have been asked to wait and those on housing lists.
What of the 380,000 extra jobs?
Some others have been told they need never wait just as the party always knew when the man was down at the gate with the envelope. They knew they would not be kept waiting long. The people who have benefited from every one of the Minister for Finance's budgets during his period of captivity by the Progressive Democrats are the speculative, greedy people who are destroying our society and have torn the heart out of the economy.
They have given jobs to everybody.
Those who have suffered are those who are further away than ever from having a house and still waiting for a decent health service.
They have given jobs to 50,000 people who have come to Ireland to work.
I can see why the ICMSA was so popular.
Debate adjourned.