Finance Bill 2003: Second Stage (Resumed).

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

The Government will go down in history as having failed to control inflation and I have already referred to those people who will be hardest hit.

The doubling of disease levies in the budget was the final blow which drove farmers around the bend. Up to that point, farmers knew it had been a bad year with wet weather and so on, but the increased levies were the killer blow. People are only now beginning to realise the huge impact of these levies on agriculture – they will kill any spirit of enthusiasm left in farmers.

The cut in forestry grants is also regrettable because the industry was beginning to develop and people had come to accept that it had the potential to provide a living for them. At the stroke of a pen, the grants were abolished.

There are many other issues which needed to be addressed in the budget and were not. For example, the local authority in south Tipperary has applications for the disabled person's grant that would take five years to fulfil. The scheme has benefited many people who are ill or have been injured, giving them an improved quality of life, yet there was no increase in the grant.

While the Minister announced a 2% or 3% increase in roads funding, the reality is that inflation will eat up that increase. In August and September of last year in a number of counties, no money was left to pay for filling potholes. This year, that situation will be reached earlier in the year. Wages must be paid and material must be paid for, but there will be no funding left to do so.

The Department of Finance is responsible for decentralisation. Other Members have addressed the issue but Tipperary South is the only constituency that has not been given a Government office and I appeal for one tonight.

I am glad the Minister of State at the Department of Agriculture and Food is present to hear my contribution. This Government will be known for years to come as the only Government in recent history which has managed to drive the farming community out of the national partnership talks.

The Minister of State's senior Minister and the Government designed a route with malice aforethought to prise the farming community out of the partnership talks. I was sick and tired during the run-up to the last general election listening to Fianna Fáil and the Progressive Democrats talk about an inclusive society. The first chance they got after the election, they decided to ensure they would pressurise our largest industry, in which 160,000 farming families are engaged, as a result of which its members will not be involved in the partnership talks.

I genuinely believe that the Government created obstacles farmers could not overcome. I will outline three such instances. This approach had to be premeditated; it could not be a co-incidence. Between the publication of the Estimates and the introduction of the Finance Bill, the Government decided to double the disease levies. I do not have the time to outline the historical background to this. A deal was done in this House five or six years ago to the effect that if farmers paid for the first round of TB testing, the annual test, the disease levies would be halved and would remain at that level. The Minister of State knows exactly what I am talking about. The Government reneged on that promise. We now have the remarkable situation, which I have not seen in the 25 years I have been a Member of this House, that under certain conditions it costs almost €40 to sell an animal to one of the factories. I do not have time to give a breakdown of that figure, but that is the case.

The Government spent a year negotiating with the farming community to purchase land for the new roadways. A deal was done, in good faith, in respect of the roll-over relief. I will never forget the evening that deal was done. The Government shook hands on it with the farming community, but what did the Minister for Finance do? He decided to renege on that promise. The Minister of State has his ear to the ground in his community and he knows this is something the farming community will never forget. Once one takes land off a farmer, land from which farmers make their living, any deal that is welshed on in respect of land will be remembered forever. If the Minister of State wants to be re-elected in years to come, he had better do something about this issue.

The final stroke came when the Minister decided through the financing of the grant system for the only industry which is environmentally free – the planting of trees – that only half the number of hectares that were planted last year would be planted this year. We have a planting target of about 20,000 hectares. That is the target to which we aspire and which this nation should plant over the next 20 years. Farmers want to plant trees but they are not being approved grant aid for this purpose.

However, worse was to come in the Finance Bill. A decision was made about 15 years ago to help farmers overcome the psychological barriers many of them faced to devoting their land to forestry. If one uses one's land for timber production, the trees will be there for generations. Forestry is a lifelong investment. Apart from grants, successive Government decided that whatever income would accrue from such investment would be tax free, but what did the Minister for Finance do? He decided, in his own cunning, clever way, the other day that farmers would not have to pay tax on such income but would have to declare it. I do not have to tell the Minister of State that there is not a farmer who has devoted his land to forestry who is not as sick as a parrot as a result of what the Minister for Finance has done. I can guarantee that the amount of land that will be committed to forestry over the next five years will fall far short of what was committed in the past five years unless the Minister changes the headlines in respect of those two particular matters. I am not talking about the conglomerates in forestry; I am talking about farm forestry. The Government is after stabbing those engaged in forestry in the back, which is something for which many of those people will never forgive it.

As if all that was not bad enough for farmers, the Government decided to take €15 million out of the Teagasc budget in case it would be able to provide the sort of help and assistance farmers need. As in the case of forestry, the Government decided to have a go at the organic farm enterprise in Athenry. I do not know what happened at the Teagasc board today, but all I know is that the Government has had a go at anything that appeared to be a modern way of doing things. That is the reason farming organisations cannot enter the partnership talks. They could not sell what is proposed to their members. No farmer worth his or her salt would take the sort of treatment the Government is dishing out. The Government will have no trouble voting this Bill through the next night, but the day of reckoning will come and it will be based on the impact of these measures and what Government had done to the farming community.

I would like to share my time with Deputies Andrews and O'Donovan.

That is agreed.

I am delighted to have the opportunity to speak on this Bill. It is a principle of our society that those who are well off contribute, through the Exchequer, to helping to look after those who are less well off. In that regard, I commend the Minister, Deputy McCreevy, on his budget last December and on this Bill. The money that has been gathered by this exercise will go, in no small way, to ensuring that the economic success the State has enjoyed during the past five years will continue. This success has been based, to no small extent, on low personal rates of tax. To make sure that happens, it is important that there should be a broad base of tax.

I wish to briefly allude, in general terms, to the Bill, the thrust of which is to close off a considerable number of loopholes in our tax system. It is no secret that many wealthy individuals pay virtually no tax. An industry has been created by accountants and skilled financial experts purely to drive the income tax of certain individuals down to a very low level. This Bill seeks to close off 11 or 12 of those loopholes, something I welcome.

I also welcome the fact that the State will refund in full those individuals who have paid more tax than they should have – a considerable number of people – and, in addition, will pay the interest which such tax would have accrued. That is a fair and just move by the Minister.

I also welcome the moves he has made in relation to land used by sporting organisations. The GAA, the FAI and the IRFU, through their various clubs and communities, own land throughout the country which in recent years has become infinitely more valuable than the price for which it was purchased many years ago. It is an asset which is lying there and which, in this current economic climate, they should be allowed to use. The fact that the Minister is now letting them sell that land and the money accruing from such sales will not be subject to capital gains tax is a measure I warmly welcome. On a national level, that measure will help the IRFU and the FAI to look forward to the building of a national stadium.

I had the honour many years ago of representing my province as a schoolboy. I took part in the successful "save the Connacht rugby team" appeal. I am glad the IRFU took the time to listen to the people when they spoke. One of the arguments put forward by the IRFU was that it had a financial crisis. This move by the Minister will make it realise that the assets it holds can now be used in a much more positive way than that in which they were used in the past.

I would like to briefly allude to a number of sections. In section 2, I welcome the fact that the exemption limit for people who are over the age of 65 has been increased to €15,000 per annum. This again is a reflection of the Government's commitment to looking after those who are most vulnerable in our society. In section 3, the PAYE tax credit has been extended to €800 per annum. This again recognises that those who pay PAYE are, by and large, earning salaries at the lower range. Section 5 deals with short-time workers, to whom special exemption has been extended until December 2004. This is recognition that most people in this sector are earning low levels of income.

Section 9 deals with the first-time buyer's grant, and we can all reflect back to budget day and the howls of derision that emanated from the Opposition benches. The Minister promised, and is now delivering on that promise, that the benefits of the first-time buyer's grant would actually go to first-time buyers and not to developers. In the past, the grant simply went into the pockets of the developers and pushed up the price of houses. Now, first-time buyers will instead get tax relief, not just for five years but for seven years. In addition, the ceiling upon which that tax relief will be available has been increased to €4,000 per person. The net effect is that first-time buyers will be better off as a result of the Finance Bill 2003.

I particularly welcome section 23, in which the Minister extends until December 2004 the tax benefits which will accrue to those who invest in hotels. In the west and north-west, we have a fledgling tourism industry. It is nothing compared to that which exists in the south and east coasts. There are signs that the tourism industry is beginning to develop, and developers in my county have sought planning permission for at least three major hotel and tourist developments. They would have been in severe difficulty had this exemption not been applied, and I am glad the Minister has listened and brought that in.

Section 24 of the Bill deals with student accommodation. The Minister brings the definitive date for the closure of that tax loophole back to December 2004. That is a very worthwhile development. I had the pleasure of being chairman of the Sligo Institute of Technology over recent years, and we have seen a huge growth in high quality student accommodation in the town. The benefits of the tax allowance have been realised and the student accommodation that is available, not just in Sligo but in most towns that have institutes of technology, is on a par with that which pertains in towns that had a university previously.

There are three specific requests I ask the Minister to consider as the Bill goes through the House. The first is in relation to the roll-over relief which applies to farmers. Where land is sold to a person who is engaged in farming, I ask the Minister to consider allowing the roll-over to exist for two years. It is important that farming, which has been undergoing a very difficult time over recent years, is allowed this break.

On the taxation of new cars, a couple of constituents have told me that they purchased new cars on 1 January but were not issued with their tax certification for three or, in once case, four weeks. Given the new laws in relation to penalty points in particular, those people could have been stopped at any time and fined or possibly had penalty points put on their licence for not having a tax disc displayed. I am not sure who is at fault, whether it is the local tax office or the insurance companies, but I ask the Minister to look at this and ensure that once people purchase a new car, they are issued with a tax certificate immediately, not three to four weeks later.

On student accommodation, it has been traditional in universities to have student accommodation on campus. Many of the institutes of technology have high quality student accommodation, as I have said, but in most cases it is off campus. I ask the Minister to look at the possibility of some financial incentive to encourage the development of on-campus student accommodation. I commend the Bill to the House.

The Finance Bill is always the cornerstone of any Government's policy and the standard by which it is tested. It is the policy core of any Government, and it is clear to anybody assessing it that the cornerstone of this Government, and of our economic success in recent years, has been a policy of low taxation, both in income tax and corporation tax. Another cornerstone has been a policy of budgetary stability and sustainability. Those policies have been carried through in the Finance Bill 2003, and I commend the Bill to the House for those reasons.

A lot of the criticisms attracted by budgetary measures are comparative criticisms. They are based upon comparisons of what has gone before and what is the case at the moment. A lot of the context is lost in those criticisms, and the context for this extraordinary economy that we all live and work in is that it is the most open economy in the world. Some 93% of our produce is exported, which is an extraordinary figure. That context is hardly ever referred to in criticism and debate on the performance of the economy, but it is the crucial factor.

Some of the statistics over the past few years are very impressive. Expenditure on social welfare has almost doubled since 1997. Old age pensions have increased, to the surprise of many, and few economies have laid such solid groundwork in terms of pension provision into the future. These pension funds will not accrue political benefits to the Government. The Minister, Deputy McCreevy, will not be able to boast to the people who receive the benefits of this fund that he created it for them because by the time the fund is paid out, I am sure the Minister will be in receipt of a pension and, I hope, in full health – I might even be in receipt of a pension myself by that time. This is forward-thinking by the Government, and the Opposition should be generous enough to recognise that the Government does not always do things for short-term political gain and sometimes has its eye on future issues.

The average increase in the old age pension year-on-year is four times higher than was the case prior to 1997, and it opens up the whole debate about public expenditure. The Opposition is naturally critical of our failure to control public expenditure, but at the same time, it wants spending increases and a reduction in the disease levy. I do not know a whole lot about agriculture. I am from Dún Laoghaire, where we have a lot of big gardens but no farms—

The people who should know do not know, that is the problem.

Deputy Connaughton will forgive my failure to be fully informed on that particular area, but the Opposition is always looking for increases in spending, whether on schools, hospitals or wherever. This is all very worthy and noble, but on the other hand, out of the other side of their mouths, the Opposition criticises increases in public expenditure. There has to be recognition of the Government's difficulty. The Government has addressed this and has controlled public expenditure in 2002 so that we ended up with a surplus at the end of the year of €95 million. It would be an opportune moment for the Opposition to be generous enough to acknowledge that this has been done.

The other question concerns what we are going to do in 2003. It is clear that the Government has committed itself to managing expenditure as well as it can. For example, each Department will have to provide a monthly spending profile to ensure that spending trends are controlled. It is an effective way of controlling and monitoring spending, and I hope it will serve the benefit of the entire community. The Minister for Finance also proposes the introduction of monthly expenditure management reports to be delivered to Government to ensure that spending trends are kept within the targets set by him in the Estimates. A range of measures are to be introduced, such as risk assessment measures in new Government spending proposals. There is a tighter management of demand-led schemes, particularly in health care. Departments are provided with incentives to improve efficiency. These things provide the value for money that all taxpayers rightly insist on. The Government has control of this vital area and the Opposition does not have a leg to stand on in the criticism it provides.

Child benefit payments have increased by €105 million. In 1997, child benefit was €38 for the first and second children, but that has more than trebled to €125 since the Rainbow Government disappeared. A further 37,000 people have been taken out of the tax net making a total of 417,000 since 1997. I agree that Fianna Fáil is not entirely responsible for the benefits that have accrued to this economy.

Of course it is.

I will be generous enough to say that Fine Gael had something to do with it too. Fine Gael cannot come along afterwards and say that it would have done things differently; it was doing the same things while in Government prior to 1997.

Fianna Fáil was always critical of us when we were in power.

Fine Gael is only sorry that it was not in power from 1997 to 2002. It is trying to have its cake and eat it.

The question of low taxation has been raised in the debate. Members have asked whether we should increase taxes or if stealth taxes have been introduced. A full-page advertisement was taken out in a New York newspaper by 300 economists, including some Nobel laureates, saying that Bush's tax cuts are wrong. A few days later 105 economists, including other Nobel laureates, took out an advertisement with an opposing view. It is very difficult for economists to agree on anything. We do not know if low taxation is serving this economy well or if it would be better served by an increase in taxation. We know the evidence of the past few years has told us that low taxation has served the economy well. Other countries aspire to having an economy like ours and are trying to reduce their level of corporation tax to compete with us. Our low corporation tax is a decisive element in the high level of foreign direct investment here.

The Minister's proposals regarding benefits in kind are to be broadly welcomed. There are some who will pay more, but the simplification of the system has been broadly welcomed. There was an article inThe Irish Times today that acknowledged some people would suffer but the simplification is welcomed.

I understand young farmers are affected by a two-thirds reduction in stamp duty.

There are not too many around anymore to be affected.

That may be the case. There is no equivalent provision for young people in urban areas to purchase property in a similar way. I would like to see the Minister work on this. Hopefully he will provide some relief for young people trying to enter the housing market. It is crippling for any young person to buy a house in Dún Laoghaire. I hope this problem will be reflected in a stamp duties consolidation Bill.

The Minister has endeavoured to close tax loopholes in this Bill. Criticisms have been made of him claiming this is the first time he has addressed this issue. Anti-avoidance measures have been a constant theme of the Minister's budgets. A raft of anti-avoidance measures is included in the Taxes Consolidation Act 1997 and elsewhere. For example, section 806 of the Taxes Consolidation Act 1997 deals with the transfer of assets abroad. Friendly societies must show their bona fides and bond washing has been dealt with in previous Acts. Limited partnerships that were taking advantage by setting off losses now have to prove that the losses are not avoidance measures. The Revenue Commissioners can form a view that a transaction has been carried out for the purpose of tax avoidance and the burden is on the person carrying out the transaction to show this is not the case. The Revenue Commissioners have a range of powers that allows them to require the production of documents. Those powers show that anti-avoidance did not come down in the last shower.

I commend the Bill to the House.

I welcome this Bill and I am glad to be here to lend my support to it. When this Bill was before the House last year I was sitting behind the railing looking on with hopeful eyes. Sometimes one wonders if one is better inside than outside.

The Deputy will be here for a long time, please God.

I hope Deputy Connaughton is right. I remember returning to Ireland in the early 1980s to set up a business. At that time there was a high level of emigration; many of my generation had emigrated to England or America. The income tax rate was 68%, while bank interest rates were up to 19%. Investment in Ireland was minimal. Many things have changed since then. The establishment of the CLÁR programme has done wonders for rural areas that have suffered population decline.

I was disappointed that roll-over relief for farmers and small to medium size business was abolished. It could have an adverse affect on compulsory acquisitions of land for road building and other purposes. I urge the Minister to look at this area again. It was very useful, for example, for a person with a small garage who wanted to expand his business. That this relief has been discontinued will be a disincentive for such a move.

Others have spoken about the huge benefits the elderly have received in the past six years. While I was canvassing on the peninsulas and islands of west Cork the elderly appreciated the significant increases they received and I hope the increases continue.

I feel the top rate of stamp duty of 9% is very severe.

Hear, hear.

It is the highest such rate in Europe. My worry is that the rate will not encourage people to invest in commercial or other businesses. It may lead to people looking at investing in properties in Britain and elsewhere. It would be a pity if that were to happen. While I accept the decision has probably been made on the 9% rate, I hope the Minister will look at this on an annual basis.

Capital allowances on hotels have been increased from seven years to 25 years. The western part of my constituency does not have too many hotels. I urge the Minister to revisit this for hotels in CLÁR areas. In the interests of encouraging tourism, a lifeline for these areas, perhaps the Minister for Finance will review the position on this soon.

When the Minister was brave enough some years ago to reduce the rate of capital gains tax from 40% to 20%, he did so on the basis that land for building houses and other developments would be freed up to come on the market. It was a resounding success and, instead of the tax yield being reduced, it increased five-fold. That speaks volumes.

The Minister promised that this tax would be kept under review. I would have had no difficulty if on this occasion he had increased the rate to 25% or 27.5%. The turnover of property, which has been on a roll in recent years, would have continued and the Exchequer would have received an additional benefit, something with which I would not have had a problem.

I am aware that public private partnerships are subject to a European ruling which may affect the scope the Minister and his Department may have for taking decisions in this area. Without PPPs, the development of infrastructural projects such as schools, roads, sewerage systems and sports complexes will slow considerably. If public private partnerships are not allowed to continue or develop, many of the projects that were envisaged would be developed in peripheral areas with small populations will not take place. That is a serious issue and I hope the Minister examines it positively and sympathetically.

A number of Members referred to decentralisation, which is a major issue. The Minister should proceed with the roll-out of this. We have discussed it for the past 20 years and it is time it was put into action. Soon, almost two thirds of the population will live within 20 to 30 miles of Dublin which will place a great strain on the infrastructure and public transport and result in social and housing problems. It is time we realistically tackled the decentralisation issue and relocated Departments to the regions and not 30 to 50 miles from Dublin. In my constituency of Cork South-West, Dunmanway has been starved of jobs for years and is ripe for decentralisation, as are Skibbereen, Bantry and other towns in the west, south-west and north-west. These towns deserve a boost.

Significant sums of money have been invested in recent years in assisting the intellectually and physically disadvantaged, and it is right that this should have been done. The Minister must ensure that funding for such people is ring-fenced. Many voluntary organisations, such as Co-Action West Cork in my town of Bantry, have done wonderful work in this area over the past ten to 20 years. Such organisations and the intellectually and physically disadvantaged need significantly more funding. Whatever else happens in this or future Finance Bills, funding for these people should be protected and enhanced. Parents, siblings, friends and neighbours have assisted for decades those with physical and mental disadvantages and there should be no let-up in spending on them. We have done a great deal in the previous ten years, but much more remains to be done and not before time.

I welcome the thrust of the Bill and am glad of the opportunity to speak on it. There are many other areas with which I would like to have dealt. Deputy Connaughton referred to the problems facing farmers and I am aware that they have experienced certain difficulties. He referred specifically to the doubling of bovine disease levies. Since I was a child growing up on a rural farm we have spoken about the need for TB eradication and the cost involved. Some 40 years later, money is still being spent on it and it has never been more prevalent, certainly in my area. We are getting nowhere. Perhaps it is time for a public inquiry to discover where the money has gone over the years given that we have not had the expected results. If it were invested in another area, there would have been an outcry and uproar. I do not wish to appear to criticise my good friend, the Minister of State, Deputy Aylward, but something has gone radically wrong given the amount of money that is obviously being misspent. Despite this, money continues to be allocated to this area. We have not succeeded in eradicating TB in my area, and I imagine that is typical of rural areas in general. We have not won the war and, instead, appear to be regressing.

I wish to share my time with Deputy Hogan.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

I will not be hypocritical. The budget introduced by the Minister for Finance, Deputy McCreevy, some weeks ago has been roundly and justifiably condemned by many people and organisations for its inequitable and unjust provisions, especially in so far as they affect the poorest people, namely, the unemployed, the underprivileged and the socially excluded. These are fellow citizens who are the most in need and deserving of social support.

The Minister, when in opposition in 1997, criticised the rainbow coalition Government budget strategy and said that when cutbacks in Government spending are necessary, it is always the poorest who suffer most. He has amply demonstrated his belief and perhaps even his commitment to that principle. The Minister for Social and Family Affairs, Deputy Coughlan, has the job of introducing the social welfare provisions of the budget. These will spell out in detail the extent of the injustice being inflicted by the Government on the weaker and disadvantaged sections of society.

It was interesting to note the paper presented to the tax strategy group which effectively highlighted the extent of the Government's broken promises. It vindicated some of the points we have made, which have been contradicted. It is a pity some of the Fianna Fáil backbenchers are not present to hear the facts. The paper, presented to the tax strategy group by the Department of Social and Family Affairs, detailed the increases in social welfare required to meet the Government's many commitments under the programme for Government, the revised national antipoverty strategy and the Programme for Prosperity and Fairness.

Comparisons of these figures with the increases announced in the budget show the full extent of the Government's breach of faith. The Department of Social and Family Affairs calculated that the weekly increase for old age pensioners that would have been necessary to have met the Fianna Fáil-Progressive Democrats promise was €13.20. The weekly increase granted was €10, which was the smallest breach in that the extent of the broken promise was about 24%. The increases in the lowest rate of supplementary welfare payment would have to have been between €10.10 and €15.40. The weekly rise granted was €6, which meant the extent of the broken promise was 41% to 61%. The increase in child benefit that would have been necessary to fulfil the commitment and promises given by the Government was €31.59. A weekly increase of €8 was given, which is a breach of promise to the extent of 75%.

These are the facts, the Government's figures, and I do not make them up. The contrast is stark and proves what we have said since budget day and what I said during the debate on the Social Welfare Bill on 10 December 2002, that the Government was making the poor pay for its economic mismanagement, and shows that the revised NAPS, like all the Government's promises, is a dead duck. This is the Government's internal position.

A EUROSTAT document published last week shows Ireland at the bottom of the European Union league in terms of social protection. It states that Ireland's spending on social protection as a share of national income, at 60% of the EU average, is one of the lowest in the EU. If we are at the bottom of the league for caring, we must be at to top of the league for meanness. We live in what is supposed to be one of the richest countries in the world, but I am afraid the old Celtic tiger, in which I never had much faith, was battered to death by the Minister, Deputy McCreevy. Our Government spent the least in Europe on social protection even at the height of the boom. The Government will probably now put a tighter squeeze on social spending. It blends in with the view of the Minister, Deputy McCreevy and the Tánaiste, Deputy Harney, that centre right axis of the Government.

I see the results of the Government's actions every week at my clinic. A widow, who has been caring for her handicapped son for 30 years, rang me today. Her husband died a few years ago and she is getting a pension. As she is in receipt of a widow's pension she cannot get the respite care grant. We have to change the bureaucratic thinking. She should be able to get the respite care grant. Neither can she get the carer's allowance. I heard the Taoiseach this morning spouting on about the carer's allowance. Does he know what it is? Does he know the eligibility criteria to qualify? It would be easier to get a camel through the eye of a needle than get carer's allowance of €129. It is an absolute scandal and is a great indictment of us all in this House.

Those people are saving millions for this country and we do not recognise it. Many carers are providing 24-hour care for loved ones in the home where they want to be cared for and eventually die. Many people give up work to look after an elderly uncle, aunt or parent. However we want to means test them. We do not provide the necessary homes. The nursing home subvention is in absolute chaos. We will not give them the €129 that would at least give recognition to the carers. We do not even know how many of them are in the country because we do not want to know. The way we have treated them for the past two decades is a shame on us all over and it annoys me. Prosperous country be damned.

If Labour was in Government and did not do something for the carers, I would vote against it and people in the party know that. Maybe that is why they are a bit worried about me. Every day I see the work those people do and yet only 20,000 of them qualify out of about 120,000 and there could be 150,000; we do not know. Figures were gathered at the last census and I hope the Government will act on them. I do not make this as a political point but as one for us all to deliver on. Let us pull together to cut out the bureaucracy that states it is not possible to get two payments. Let us reduce the payments and give some recognition to the carers. There is no use talking about things like income disregards as a way of dealing with it.

When we listen to the carers' association and CORI's report yesterday, it is clear we have not done a good job. The way we make social welfare decisions affecting families, children and older people is not just an abstract matter to be discussed in the sheltered environment of Leinster House. It bears on the lives of ordinary people and particularly the poor and disadvantaged. When we hear of cases such as the one I just mentioned, we realise the importance of ensuring they are protected and recognised for the excellent work they do. They need respite grants, which are very important. A widow who looks after somebody all day, should not be refused the respite grant because of some technical regulation. The attitude should be how can we help, not how can we stop or inhibit the person from getting help. If somebody is looking for something, the first thing we do is to raise the bar instead of lowering it to see if they can be included. This is bureaucratic thinking that should be shaken out for once and for all.

I had to suffer a wry smile when I heard Deputy Andrews because he is right in saying the Minister should do something to help people get houses. I was spokesperson on the environment for a couple of months. There are 50,000 families who will never get a house. That represents about 300,000 people. The Deputy spoke about stamp duties etc., which is all very well, but where was he when the Minister scrapped the first-time house buyer's grant? Taxation relief of €350 given in the budget is not the same as the £3,500 which is about €4,700. Considering the 1% VAT increase, the average house price has increased by €6,000 or €7,000.

Deputy Andrews quite fairly and correctly said that people in his constituency in Dún Laoghaire, particularly young people, some with dual incomes, are not able to buy a house. Deputy Cassidy can confirm it is the same in Westmeath and throughout the country. If we want to help those people the Minister will need to put the money where his mouth is. It was a retrograde step to abolish the first-time house buyer's grant. I know the Government argued that the builders were able to subsume it and it was not as high a percentage of the purchase price as when it was introduced some years ago. It is difficult to tell that to young people, who are trying to buy houses in affordable housing schemes involving local authorities.

The grant often represented a critical deposit to participate in a scheme. I know of people in my county whose names went off that list as soon as that grant was abolished. Those people now go on to the local authority housing list directly and increase the number thereon, reducing the chances of getting a house for everybody. The Minister, Deputy McCreevy, should reconsider that. I applaud the Minister for having his own mind, but he saved peanuts by abolishing that grant.

Deputy Cassidy is a businessman involved in the tourism sector, who knows much more about the area than I do. The 1% increase in VAT seems to have an impact on tourism, hotels and food. It also feeds into inflation. Tourism is very important for the midlands. Westmeath is the lake county of the midlands and we invite everybody to send people there. We hope to have more attractions in the future. Deputy Cassidy lives beside Fore, one of the most beautiful places in the country. We have Clonmacnoise to the south, Belvedere, which we are very proud of as a tourist centre in Mullingar, brilliant equestrian centres, golf clubs and lakes for fishing.

There were 173,000 anglers of all types in 1994. At a time when we are trying to bring tourists in for angling, this has reduced to about 81,000 in 2002. It is critical to develop the angling product, but the Shannon Regional Fisheries Board, which has among its aims to support and develop the angling product and enhance fish stocks, should realise that the customer is king. The information I am getting is there will be a reduction in the numbers of customers coming for course fishing. We need them for our hotels, guesthouses, and bed and breakfasts. Deputy Cassidy is very familiar with Finea. This is critical income. The Deputy shares my view on this matter. Why was a compulsory €30 levy imposed?

It is a disgrace.

It is one of the biggest own goals in our sport fishing history. The levy will cover pike and coarse angling on certain designated coarse fisheries and will, therefore, affect tourism operators. The peculiar aspect of this decision, about which Deputy Cassidy whose constituency is also in the heart of the BMW region will be aware, is that most, if not all the waters for which a fee will be necessary are located within the BMW region, an area designated by the European Union as severely disadvantaged in economic development and infrastructural investment, compared to the rest of the country and the EU. It is an unjust and unwise decision which amounts to a fishing licence in all but name. I call on the Shannon Regional Fisheries Board to reconsider the levy. The issue has received considerable media attention and is being raised with Deputy Cassidy and myself every day.

Wisdom must prevail in tourism. Agriculture is under threat in all areas. We have to expand into agri-tourism, fisheries and angling tourism, areas which would supplement incomes and keep people in rural areas. Rural Ireland is under threat. The country does not end at the Pale or Leixlip. If they are to survive, rural areas must receive a fair share of resources.

The decision to operate post offices on an agency basis marks a further withdrawal by An Post from rural Ireland. The poor, unfortunate people who were running rural post offices until now received a pittance. It could not be described as a wage as one could not live on it. Having worked long hours for the company, it has decided to change their status to one of agents. The next step will be to open post offices on Friday only to pay pensions. That would suit the agenda of An Post which has shown no interest in rural Ireland. Every measure it takes marks another step towards complete withdrawal from rural Ireland. We have to resist this kind of culture before it entirely pervades economic thinking here.

It is critical to the survival of rural Ireland that we invest to attract more tourists to hotels, bed and breakfast accommodation and guesthouses in the midlands and into the west. This is the reason the railway structure is so important. The opening of the link between Mullingar and Athlone is critical to developing connections and interchange between the capital town of the county and its educational centre with its thriving institute of technology. The Athlone Institute of Technology provides opportunities for young people to acquire the educational skills which constitute such a strong selling point for this country abroad.

I was confident decentralisation would logically follow the announcements on spatial strategy and the gateway towns. Mullingar has still not been selected for decentralisation. We salute the surrounding towns which received gateway and hub status and are delighted to see them surviving. Everyone in the midlands is trying to pull together. Bord na Móna, one of our great employers, has shed jobs and now the ESB is under pressure with jobs being lost. These industries are vital to the survival of our rural hinterlands and shops and businesses.

People living in rural areas are sometimes condemned for their attitude to rural housing. We need rural housing to survive and ordinary people, farmers' sons and daughters, who have been reared in the countryside should be given an opportunity to remain in it. We now have technical advances and environmental ways of dealing with sewage disposal. We should ensure they are developed in the countryside to facilitate people to live in rural areas and become part of the community. Many old people who do not have transport need to have people around them to bring them to church or to a doctor. We must be clear on our policy on rural housing and we, in Westmeath, have strongly articulated our view on the issue.

Agricultural incomes fell by 8% or 9% last year. The Minister foolishly abandoned roll-over relief on CPOs, which was fundamental to efforts to get on board those farmers who did not want their lands interfered with by building new roads. Having worked out a deal after considerable hard bargaining and negotiation, the Minister has decided to withdraw roll-over relief. This is a stupid mistake, akin to throwing petrol on a fire. He should honour the deal the Government made. People place their trust in Government and expect it to honour its commitments.

It is ludicrous to impose additional levies at a time when economic circumstances are tight. Agriculture here is still strangled by bureaucracy. The other day I read an article in the newspaper about people who moved to Canada to buy land, some of them from the midlands. They were able to buy several thousand acres because it costs just €500 an acre. Their motivation for leaving this country was the bureaucracy that surrounds farming here. It is bad enough trying to survive in farming without red tape. The Minister has failed to minimise bureaucracy.

I thank Deputy Penrose for sharing time on this important Finance Bill. I agree with most of his remarks on rural Ireland. Many of the issues he touched on are raised in all constituencies which have a strong base in agricultural tourism and fishing. He made some solid points which the Government should consider in the context of amendments on Committee Stage, particularly with regard to the €30 fee being charged to anglers and the 1% VAT imposed on tourism. The latter measure was a retrograde step as hotels have already set their price lists and completed their marketing job for 2003. It was poor timing to levy an increase in VAT of 1% at the end of 2002 as it will effectively remove 1% from the tourism sector's bottom line.

I welcome the provision to extend the urban renewal incentives from June 2004 to December 2004. It is essential to develop the integrated areas which benefited from the urban renewal incentives, many of which are derelict sites for which investment and investors have been lacking. The goal must be to tidy them up and generate economic activity on them that would ultimately create employment.

Kilkenny city has a very important integrated area around the railway station site, consisting of 14 acres of land. Its status of integrated area was sanctioned by the former Minister of State, Robert Molloy. Now that the decision has been made to extend the urban renewal scheme to December 2004, it is important that the site is developed.

We should be hard and fast on this issue. Before the next Finance Bill is introduced in 2004, the Minister should seek to establish, through a report, what progress is being made in the integrated areas. It is important the areas covered by the scheme are developed. If this requires extending it for a further six months to ensure the job is done, the Minister should do so in the next Finance Bill.

The national spatial strategy was an important announcement by the Minster for the Environment and Local Government, which identified gateways and hubs around the country. I agree with Deputy Penrose that one would have expected that there would be an early announcement about decentralisation. There have been studies over a long period and certain areas might have been upset if they were not the beneficiaries of some largesse coming up to the general election. That is understandable in politics but since the election there has been much toing and froing in regard to when the announcement will be made about the centres that will benefit from decentralisation.

I welcome the recent announcement of a Teagasc office for Carlow town but I want to put a case to the Minister and the Government in relation to Kilkenny city. We have a number of important sites in Kilkenny and we have made a number of submissions to the Government over the years to have a Department, or part of a Department, decentralised to Kilkenny. I hope the Minister will look favourably on that application. I am aware he is under pressure to keep everyone happy. That is not possible but the sooner he makes the decision, the sooner we will have certainty about these matters.

On the general fiscal position, it is well established now that there was a great deal of misinformation given out before the last general election about the state of the nation's finances. Since then, we have had a budget a week by way of stealth taxes which all add up to make employment more expensive and lessen an employee's disposable income. The 1% VAT increase will cost a typical household an extra €182 per year. Motor tax on an average car has increased by €30. Hospital charges are up €133 for a typical family. The drug refund scheme threshold is up a massive 31%. VHI is up 18%. Cigarettes and alcohol are up 15%. In respect of bank charges, €83 is the extra cost to a typical household. Bin charges and commercial rates have also increased. ESB bills are up 13%. TV licences are up 40%. That all adds up to an 18% increase in the costs that accrue to a typical family. For every worker in the country that is an average of €35 a week.

The reason for that is the 40% increase in the public expenditure bill in 2001 and 2002 in order to win the election. When we look back on the nation's finances, the biggest difficulty that arose in 2001 was the foot and mouth disease outbreak which was unfortunate because had that not occurred, we might have had the election out of the way in 2001, the country would be in a better financial position and many of these extra charges would not have been necessary.

I was disappointed that the Minister for Finance, Deputy McCreevy, the Tánaiste, Deputy Harney, and the Attorney General, who was sitting at the Cabinet table at the time and who had many opinions on various matters, particularly relating to the economy, allowed us as a nation to squander the boom and allowed these additional charges to be levied on people. We have had a tax and spend Government over the past number of years and that has to change if we want to have an enterprising economy and workers in jobs. We are correcting the nation's finances at the expense of employment and that is a retrograde step.

By increasing the cost pressures in the economy, the Government is now directly causing job losses. In the past two years, while the binge on expenditure was going on, more than one in five jobs in the companies backed by the IDA and Enterprise Ireland was lost. That is a significant amount of the core productive base of our economy. The Government has forgotten the basic lesson about a small, open economy. It cannot plough on with tax and spend policies and believe it will not have an impact on the enterprise sector. Surely the Government learned that lesson in the past. It is now time to redress and reverse in this Finance Bill some of the decisions taken that will mitigate against investment and small businesses.

I would like to make a number of suggestions. The reversal of the roll-over relief, which was mentioned earlier, was a retrograde step, and not just for those engaged in the CPO process for land building. It is also important for capital investment in small business in that people were able to roll over the relief and get significant investment, construction and employment in many sectors, particularly in tourism and the commercial sector generally.

We must invest in broadband infrastructure and alleviate the bottlenecks in the economy if we want to remain competitive. On the stamp duty increase, I agreed with Deputy O'Donovan earlier when he said that would have a serious impact on investment in housing and in commercial activity both inside and outside of Dublin. Deputy O'Donovan mentioned his own constituency of west Cork where the 6% to 9% increase in stamp duty will have a slowing effect on the level of activity in housing and in commercial property. There are two million square feet of commercial property lying vacant or not committed in the general Dublin region. That is a great deal of property that has yet to be taken up by investors and if they want to purchase that property, the additional 3% stamp duty will make them sit up and think. I have found already, as I declare my interest in the auctioneering business, that people are having second thoughts about investments they might have considered in 2003. They are having a rethink because of the imposition of this additional stamp duty.

The Government has contributed enormously to inflation but it must now publish its strategy on the anti-inflation measures it promised. It could start by freezing all charges and fees on public utilities such as electricity, gas, waste and telecommunications until a programme of greater competition is introduced. It is only through greater competition that prices will stabilise or reduce but it is not fair on the private sector that the Government can impose, willy-nilly, large increases on the public utilities. That will have an impact on our competitiveness and will ultimately contribute to job losses.

Small businesses are under pressure. The VAT threshold for small businesses is too low at €50,000. That should be increased to €100,000. Also, in the context of the audit and accountancy Bill published recently, the Minster should assist many small firms which now have a very low rate of turnover while they are subject to audit. With the impositions on businesses arising from the new companies Act that will come into effect this year, the level of turnover, where companies are exempt from audit, should be increased to €1 million.

The Finance Bill is the implementation of a much different financial picture than was the case 12 months ago. The Government has created this problem and is now trying to solve it by way of stealth taxes and reductions in expenditure at a time when the economy needs a boost. The imposition of additional taxes on enterprise is not the way to boost economic activity and employment at a time when the economy is under pressure due to increased costs.

I wish to share my time with Deputy Seán Fleming.

An Leas-Cheann Comhairle

Agreed.

I welcome the opportunity to contribute to this debate and I also welcome the Bill. I want to address a number of points in the few minutes remaining tonight and hope to continue my contribution tomorrow morning. In any financial measure that comes before this House, there will be shortfalls and room for criticism but there are many good measures in this Bill. The measures I particularly welcome are the tax incentives to encourage people to contribute to their local sporting organisations and bodies which have charitable status. As I understand it, if one contributes a certain amount it can be off-set against one's tax liability.

The amount of work being done throughout the country by sporting organisations and community groups which have charitable status is enormous, and they must be congratulated on that. This measure will make it somewhat easier for those bodies to raise voluntary funds. I am aware from my own involvement and from listening to other people that one of the most difficult tasks facing any committee member of any organisation or community group is to raise funds for development or even to keep the show on the road. In the old days we could sell tickets for £1 but now they can cost €20, which can be difficult. I hope this measure will make it easier to ensure the sporting organisations can raise funds more easily. I also welcome the initiative from the Minister regarding young farmers' stock relief which applies for certain young farmers up to 31 December 2004, extending the life of the scheme. When it was not mentioned in the budget many young farmers were worried it would be dropped and they would be unable to continue. I welcome anything we can do to encourage more people into farming.

Debate adjourned.