Before calling on the Minister for Finance, I remind Members that the budget documents being circulated remain confidential until the Minister has announced them. They should not be taken from the House before the conclusion of his statement. I now call on the Minister, Deputy Cowen, to make his statement.
Budget Statement 2004.
I am very honoured to introduce this my first budget to the House. In doing so I pay tribute to my predecessor, Deputy McCreevy, who made a major contribution to this country's sound budgetary position and who has left us a lasting legacy in this regard.
(Interruptions).
He was sacked.
While this is my first budget as Minister for Finance, it is not the first time I have been involved in the budgetary process. Any budget should reflect Government policy and the economic realities of the time, as well as the economic and social demands of the future. The budget is an initiative of the Government as a whole, not simply the work of the Minister for Finance.
By another measure, this is my 21st budget. I was first elected to this House in 1984 and have observed the budget from the back benches, the Opposition benches and my position in different Departments. In framing this Government's budget I have been influenced by what I have observed over that period.
I will spare the House any history lesson on the events since my first budget experience sitting on the benches opposite. Six Governments and six Ministers for Finance later, the economy has been completely transformed. With that transformation has come dramatic improvements in society. We have made great strides towards becoming a vibrant, pluralist and modern European country. This has not all been achieved by our economic growth but it is this economic progress that underpins much of what we now enjoy. All of this progress is not without challenge. The Government has a responsibility to ensure the benefits of our economic performance permeate society as a whole. Proper budgetary policy involves careful evaluation. Our task is to put together an economic model that builds a society of which we can all be proud. This is the context in which the budget is framed.
Our economic strength must be protected as it gives us the leverage to create wider social reform. I will build on the progress we have already made in this and my next two budgets in an effort to meet the needs of the people and deliver on the Government's programme. These changed times bring fresh challenges. Recent successes give us more opportunities and widen the scope for new policy approaches.
This is a budget for the people as a whole. It is a budget that will protect and increase jobs in a more competitive business environment; build up and modernise our economy through major capital programmes; distribute the fruits of growth to all our people through better services and a fairer sharing of resources; and redouble our efforts to help those most in need, particularly those with disabilities.
Good government and sound policies created these opportunities and good government will ensure we succeed in addressing the needs of all our people in the future. Good government does not mean responding blindly to headlines or being pressured into half-responses. It means sensible policies, soundly based, with realistic, achievable and prioritised targets.
A single budget cannot achieve all that we desire, nor should it try to do so. There are always risks to the economic outlook, especially in a small and open economy such as ours. Therefore, it is important to take into account the unpredictable nature of our economic environment. Ordinary taxpayers know that this makes sense. I hope they will recognise the firm resolve of the Government to secure their welfare now and for the future.
Budgetary targets
We are determined as a Government to meet the priorities we have set ourselves. To make progress in doing so we are setting the following budgetary targets for 2005: an allocation of almost €45 billion for gross spending on public services or 9.1% more than in 2004; an Exchequer borrowing requirement of just under €3 billion or 2.3% of GNP; a general Government deficit of 0.8% of GDP; and a debt ratio of 30% of GDP. These targets seek to ensure that public spending growth is correlated with growth in revenues, while keeping borrowing to a prudent level to fund priority investment needs. This approach will help contain inflationary pressures.
Economic outlook
We are part of a single currency area in which our partners will continue to keep inflation close to 2%. We cannot determine the prices we can charge for our exports — international markets do that. We must continue to compete, not just to sell our goods and services but also to continue attracting foreign direct investment and creating high quality jobs. Economic competitiveness, therefore, remains critical to our future well-being.
The prospects for the economy are fairly positive for the next few years. If international growth holds up and we do the right things, we have the potential to grow at around 5% per year in real terms and to keep inflation in the 2% to 3% range. Of course, our economic situation also contains risks. The main question mark arises from the international economic situation where answers to some questions are not so easy. For example, how will oil prices fare? Last December few would have predicted that oil prices would reach $50 per barrel during the course of this year. How will international exchange rates evolve? What will be the international policy response in terms of interest rates? The answers to these questions and the response of the world economy will have a significant influence on our prospects.
Assuming no major shocks arising from the risk factors to which I have just referred, we forecast for 2005 that the Irish economy will grow by 4.7% in GNP terms and 5.1% in GDP terms; employment will grow by approximately 35,000; unemployment will remain low at 4.4%; and price inflation will come in at 2.5%, close to the European Union average.
Making factual comparisons with our EU counterparts, it is important to point out that our rate of economic growth is more than twice the average in the eurozone area; our rate of spending increase in 2005 is three times the EU average; our rate of public investment, at nearly 5% cent of GNP, is almost twice the EU average; our unemployment rate is half the EU average; and our debt burden is among the lowest in the EU.
Naturally, there are areas in which we can do better and we will do so. We should not, however, be shy about our achievements either. I know from my time as Minister for Foreign Affairs that many of our colleagues in the European Union would love to have our record. Many have beaten a path to our door to inquire how we did it. We did not achieve all this merely by chance. The actions of Government in setting a sound economic and fiscal policy played a key role in achieving our current success.
An Irish model for continuing growth should include the following elements: a coherent and equitable approach to public services and the economy through social partnership; better skills, training and education for those in a flexible labour force; a low tax burden on activities that create and promote employment and labour; building competitiveness in all areas of the market; and an appropriate business environment that creates prosperity with the support of Government.
The reduction in the tax burden for all has formed part of this policy. This did not mean a lessening of our commitment to spending on public services. Between 1997 and 2004, economic growth generated an extra €30 billion in annual resources for the State. Two thirds of these resources, €19 billion, were used to fund additional day-to-day spending. Some €4 billion was allocated for additional public investment annually and approximately €6 billion went towards tax reductions.
These are the facts. Lower tax rates, in particular the 12.5% corporation tax rate to which the Government is committed, have meant more revenue and economic growth. It is the revenues generated by economic activity which keep public services going, rather than higher tax rates as some would have us believe.
Public spending
To demonstrate that point and to provide more public services and better infrastructure, this budget means gross voted spending of almost €45 billion in 2005. This is more than €3.7 billion more than in 2004. This increase reflects the sustainable growth in resources. However, we must maintain economic growth if we are to support our ambitions to make better provision for those in need in our society. Investing in a major capital programme increases our capacity to grow and is important if we are to continue on this path.
Infrastructural investment/capital envelopes
Last year we moved to a multi-annual programme for capital spending so as to plan more effectively for such large-scale expenditure. This year was its first year of operation. The multi-annual basis allows Departments to carry over to the next year up to 10% of the voted annual allocation to assist programme planning and delivery. The carry-over from 2004 to 2005 is €237 million or 4% of the 2004 voted capital allocation. I am providing €334 million in additional Exchequer capital for 2005. This will bring the total Exchequer cash available for capital spending next year to almost €6,300 million, 20% ahead of the 2004 cash outturn. This means that for 2005-09 we will maintain our high level of investment in infrastructure at nearly twice the European average.
The Minister will long since have gone.
Deputy McGrath may also have gone.
The Deputy should look after his own seat.
He can thank mammy for his.
Allow the Minister to continue without interruption, please.
Total investment within theenvelope over the next five years will be €36.3 billion, which is €2.7 billion more than last year's capital envelope. Further details are set out in the budget summary. I am making provision in these totals for the Government's decentralisation programme.
Shame.
This programme is moving forward. Considerable progress has been made and its implementation is well on track.
Developing capital envelopes further — transport
The 2005-09 capital envelope, as it is called, represents the total planned spend by all Departments. This includes almost €10.2 billion in respect of investment in transport infrastructure. The Government regards transport investment as particularly important for the promotion of competitiveness, sustainable economic growth and balanced regional development. We have seen many important projects coming on stream and starting to make a real difference and we know that more remains to be done.
Major capital projects in the transport sphere are multi-annual in nature, involving long planning lead times and substantial construction phases. Given this time consideration and the scale of the projects and investment involved, I have agreed in principle with the Minister for Transport that an extended capital envelope of ten years is more appropriate in the case of investment in transport. Proposals for such a ten year investment will be submitted shortly for consideration by Government. This is a necessary development in forward budgeting. It will afford the Government greater flexibility and clarity in planning and, most importantly, in delivering a 21st century transport infrastructure for a 21st century economy. This is a new initiative we must put in place if we are to position the economy to continue to grow and compete over the medium term.
Value for money for capital expenditure
I am extremely conscious of the need to optimise the value for money from the very significant levels of capital funding now in place and I am determined to take whatever action is required to bring this about. The multi-annual envelope system is designed to facilitate the objective of securing value for money through careful planning and implementation. My Department will also shortly issue to Departments revised guidelines on the appraisal and management of capital projects. Work is also continuing on changes in public sector capital project contracts to ensure that risk is transferred to those best able to manage and control it. These are practical and important steps in ensuring that the taxpayer gets better value for money in this area.
Public private partnerships
The Government is committed to developing the PPP process as a viable procurement option for appropriate projects. However, progress has been slow in some areas. The targets set last year for PPP projects funded by unitary payments from the Exchequer have been adjusted accordingly to reflect information currently available on the lead-in time required to bring projects to construction stage. This reflects the fact that, for various reasons, PPPs have been slower to get off the ground in some areas than was envisaged. We are actively examining how to resolve that issue.
Taxation policy
Ensuring a fair and balanced tax system is a priority for this Government. Our record testifies to the many key measures we have taken. These actions have greatly reduced tax on the lower paid who now pay less than 6% of the total income tax bill compared with 14% in 1997. We have eliminated unfair tax structures through the introduction of tax credits, we have closed down abusive tax loopholes and we have made sure individual reliefs focused more on their essential purpose in encouraging jobs and investment. The primary aim of our tax policy has been the use of the tax system to expand our economy, reward work and alleviate the burden on taxpayers, especially for those on lower pay. In continuing to reduce the tax burden for those on lower pay I am making the following changes. I am increasing the employee tax credit by €230 to bring it to €1,270 per year. I am also increasing the personal tax credits by €60 for a single person and €120 for a married couple to bring those to €1,580 and €3,160 per year, respectively. This will benefit all workers and will ensure that all those on the minimum wage are fully outside the tax net.
Deputies
Hear, hear.
About time.
The Government has got enough tax from them for long enough.
As a result of these increases, more than 650,000 of the 1.9 million income earners will be exempt from paying tax on their earnings. It also means that for standard rate taxpayers, an additional €1,450 per year or almost €28 per week is exempt from tax in the case of a single person and €1,750 or almost €34 per week for a married couple where one person is earning. As it was not possible to widen the standard rate band over the past two years, I am now increasing it by €1,400 per year for all earners. As a result, a single person on the average industrial wage next year will pay 14% or €11.50 per week less tax as a result of the changes in this budget. There are also increases in the band for single and widowed parents. In total, we estimate that 52,100 taxpayers will be taken off the higher rate of tax.
There are a number of specific tax reliefs in the tax system for the aged, the disabled and for widows. The income tax exemption limits for those aged 65 or over are being raised by €1,000 single and €2,000 married to bring them to €16,500 and €33,000 per year, respectively. Combined with this, the other income tax changes announced today will remove more than 66,000 income earners from the tax net. This includes 4,700 elderly who will be removed from the tax net. The tax credit for an incapacitated child is being doubled to €1,000 per year. The blind person's tax credit is being increased to €1,000 single per year. The tax credit for a widowed parent in the first five years after bereavement will be increased by €200 in each year and the widowed person's credit is being increased to €400 per year.
Health levy threshold
The 2 % health levy currently applies to those earning over €356 per week. I am providing for a substantial increase in this threshold to €400 per week which is an increase of almost 12.5%. This will be of particular benefit to the 95,200 persons concerned. The total cost of these income tax and levy changes in a full year is €682 million, more than double last year's total.
Tax reliefs
The debate on tax reliefs has attracted much comment in recent weeks. In any such debate we must be clear which reliefs we are talking about. First, many tax reliefs are in fact inherent in the tax system and others lessen the burden on taxpayers with specific payments or expenses. This is the case with mortgage interest relief, medical expenses relief and pension contributions. Second, other normal reliefs allow for the expenses of business, such as depreciation, interest and accumulated trade losses. If they did not, the real cost to business of capital investment would not be provided for and business and employment would suffer as a result. One can limit the potential for abuse of these reliefs, as this Government has done, but it is not appropriate to eliminate them. The great bulk of the €8 billion cost of the major tax reliefs generally referred to in recent public discourse falls into those categories which are used by ordinary taxpayers and businesses.
Finally, there are those reliefs included in the €8 billion which were designed to incentivise economic and social development. The annual cost of these reliefs has been tentatively estimated by the chairman of the Revenue Commissioners, in recent evidence to a Dáil committee, as in the order of €200 million per year. These include the series of property reliefs which were introduced, broadened and enhanced by Governments of all shades in the past. This was done for good reasons at the time, to regenerate the economy and the many parts of our cities and towns which were affected by recession and had poor economic prospects. Such schemes and initiatives were not the preserve of just one particular Government. We can see clear examples of where they have succeeded, particularly in regenerating town and city centres and areas in need of development. Despite supporting many of these reliefs, there are those who seem unhappy when people with the capacity to use them have done so, which is not a consistent stance to take.
My aim is to seek to improve the equity of the tax system, taking into account the social and economic benefit of reliefs in delivering investment in housing, enterprise, urban and rural renewal, tourism, films and health facilities. Because of the complex nature of this issue, the interaction of such reliefs with economic activity and the unintended consequences that untimely action may have for investment, I want to take the time necessary to strike a careful and considered balance in what I do. For the successful operation of such schemes and to achieve the common good, we need to ensure the right balance is achieved between the benefit to the investor and the good of the community. The time is now right to conduct a full review of these incentive reliefs and to evaluate in detail their impact and how they are operating in practice. My preference is for a complete and comprehensive reform of the system rather than a piecemeal approach. For this reason, I have directed my Department, together with the Revenue Commissioners, to undertake a thorough evaluation of the effect of all relevant incentive reliefs and exemptions and to bring forward proposals which would achieve the balance to which I have referred.
I am now making it clear that I intend to include appropriate follow-up measures in next year's budget. Those using this particular group of reliefs should therefore realise that the concept of unlimited or unrestricted reliefs is no longer viable or acceptable to the general tax-paying public in current-day economic circumstances. I want to make sure that everyone makes an appropriate contribution to the State.
Deputies
Hear, hear.
I wish to confirm to the House that the termination dates for various schemes laid down previously in this year's Finance Act remain unchanged. I have no problem in maintaining justifiable reliefs and extending them, where appropriate, including the particular cases to which I now turn.
Stamp duty relief for first-time house buyers
I am aware of the difficulties that many first-time buyers face in their efforts to get onto the property ladder. To assist first-time buyers of secondhand houses, I am providing for a significant reduction in stamp duty for them. Full details are set out in the budget summary.
Deputies
Hear, hear.
As a result of this, there will be no stamp duty on first-time purchasers of secondhand houses up to €317,500 in value and reduced rates on such purchases up to €635,000.
Deputies
Hear, hear.
They will now have to pay €75,000 instead of €85,000.
This new exemption threshold is above the national average price for second-hand houses and above what the average first-time buyer pays for a secondhand house anywhere in the State. Examples of the savings involved are given in the budget summary.
Rent relief
I am conscious those living in private rented accommodation also face costs. A tax allowance is currently available at the standard rate for rent payments of up to €1,270 per year for a single person under 55, and €2,540 per year for those over 55, with double the amounts for widowed and married persons. I propose to increase these to €1,500 and €3,000 per year respectively for single persons and €3,000 and €6,000 for married and widowed persons. I know this substantial increase in tax relief will be welcomed by those living in rented accommodation.
Tax relief on certain third level fees
Many students are currently able to claim tax relief on their third level fees. Parents can also claim the relief on their children's behalf. The maximum limit on such qualifying fees will be increased from the current €3,175, to €5,000 per year for the academic year 2005-06. These reliefs are claimed at the standard rate of income tax in respect of certain approved colleges.
Indirect taxation
I am making no changes to the main VAT and excise rates in this budget. This decision will play a significant role in keeping consumer price inflation at the low level we have successfully brought it down to in 2004.
I propose to introduce in the Finance Bill an excise reduction for alcohol production by micro-breweries. This aims to assist the development of employment and investment in this sector and will ultimately promote more competition in the brewing industry.
Farming reliefs
The reform of the Common Agricultural Policy, the decoupling of farm supports from production, the recently agreed WTO framework agreement and the demands of environmental standards represent major challenges for the farming community. It is vital that we build up the viability and capacity of the farming sector to cope with these changes. A strong farming sector is crucial to maintaining a vibrant rural community. For these reasons, I am proposing the following tax measures which will assist in achieving that goal.
First, to help young trained farmers starting off I propose to extend their special 100% stock relief for a further two years. I also propose to extend the 25% relief for all other farmers for a similar period.
In order to assist in achieving farm consolidation, I will introduce in the Finance Bill a special stamp duty concession to ensure there is no charge for two years on exchanges of farm land of the same value for consolidation purposes.
I am also enhancing the capital allowance for expenditure on farm pollution control to assist in meeting the requirements of the EU nitrates directive. It is important environmental measures required by this directive should be put in place without delay and that we assist farmers in doing so.
The Finance Bill will also provide for measures to address the issue of income averaging in the context of the changeover to the new single farm payment system.
The rate of farmers flat rate VAT for 2005 is being increased from 4.4% to 4.8% to reimburse unregistered farmers for the VAT they pay on their inputs as calculated by the Central Statistics Office. This is worth €16 million in a full year.
Other taxation measures
There is at present a special duty of 1% on the formation of companies and in the raising of share capital. This rate is higher than that in many other EU member states and may inhibit our attractiveness to investment. In order to maintain our attraction as a location for headquarters and other enterprises, I propose to cut this duty to 0.5%. This will benefit the financial services sector, which is important to employment in this economy.
The Finance Bill will also contain measures to eliminate a double stamp duty charge on financial cards where a person is merely switching from one provider to another. This rectifies a side-effect of recent legislation and will remove a barrier to competition between financial card providers.
Social welfare
The Government's overall strategy is to secure economic growth on a sustainable basis so we can generate the resources to address the needs of society. The needs of the most disadvantaged have a particular claim on our collective resources. One of the principal means of meeting our responsibilities in that regard is through the social welfare system.
The improvements in social welfare payments that I am announcing today will amount to an additional €874 million in a full year.
Even within such a large sum, priorities must be set. This year it is right that we give special consideration to those on the lowest incomes, while still providing substantial real increases for all beneficiaries.
Old age pensions
This Government has a proud record of improving income support for pensioners. It is an area which we have concentrated on since our return to office. I am increasing the full personal rate of old age and related pensions by €12 per week which is an increase of over 7%. This will bring the old age contributory pension to €179.30 per week and means we will be well on the way to achieving the programme for Government commitment to increase the State pension to €200 per week by 2007. In 1997 the old age contributory pension was €99.04 per week. In 2005 it will be €80.26 per week higher, which is an increase of just over 80%. The new rate for the old age non-contributory pension will be €166 per week. The increased rates for old age and related pensions will help support a well-deserved improvement in the living standards of our older citizens.
Other weekly welfare payments
Unemployment assistance and all other non-old age pension personal weekly social welfare rates will be increased by €14 per week. This will bring the lowest full personal social welfare rate to €148.80 per week, an increase of over 10%, which is four times the expected rate of inflation. In 1997, the lowest full personal social welfare rate was €83.04. In 2005 it will be €65.76 per week higher, an increase of just under 80%.
The level of increase in 2005 for those in receipt of these payments reflects the fact that they have seen their living standards rise at a somewhat slower rate than other recipients of social welfare payments. Therefore, the Government believes it is appropriate to make this slightly higher provision next year for these groups.
Child benefit
In 2005, the monthly rate for the first and second child will increase by €10 to €141.60 and the rate for third and subsequent children will increase by €12 to €177.30, which represent increases of over 7% in both cases. I will complete the transition to a higher rate of child benefit in next year's budget. This Government has substantially increased the rates of child benefit. The monthly rate for the first and second child in 1997 was €38.09.
The cost of child care has increased.
In 2005 it will be €103.51 higher, an increase of more than 270%.
Other social welfare measures
The budget summary contains a range of other social welfare improvements, the full details of which will be announced by the Minister for Social and Family Affairs. Among these measures are an increase of €39 per week in the family income supplement income thresholds, improvements to the maternity benefit scheme, and improvements in the support provided to carers, particularly in the area of respite care. The respite care grant will increase to €1,000 and it is expected that over 9,000 new recipients will benefit from the grant.
The very real increases in social welfare which I have just announced are a significant step towards the implementation of our commitments in the programme for Government and in Sustaining Progress.
I am also providing a sum of €5 million for the Department of Community, Rural and Gaeltacht Affairs to support the development of community services in disadvantaged areas and to complement the contribution of workers employed for service delivery under the social economy and job initiative programmes operated by FÁS.
Disability services
On 21 September last, the Government launched the national disability strategy. This will put in place a programme of action to support and reinforce equal participation in society by people with disabilities.
While the Disability Bill, the Comhairle (Amendment) Bill and the six outline sectoral plans published by my ministerial colleagues are all essential parts of the strategy, the Government also gave a clear commitment to introducing a multi-annual funding programme for high priority disability support services.
When I published the expenditure Estimates last month, I explained that some €2.8 billion overall would be provided in 2005 specifically for people with disabilities. This represented an increase of €290 million or 11% on the 2004 figure. This level of resourcing represents significant progress over a number of years, with the 2005 provision more than three times the 1997 figure.
This €2.8 billion will fund health sector services specifically for people with an intellectual disability or autism, physical or sensory disabilities and mental illness; first, second and third level special needs education; specialised training and employment support services provided by FÁS; the cost of certain tax reliefs to assist mobility; and the adaptation of accommodation specifically for persons with disabilities. In addition to this €2.8 billion, many people with a disability receive income support, provided through the Department of Social and Family Affairs, and benefit from mainstream health services such as speech and language therapy and physiotherapy.
My colleagues, the Tánaiste and Minister for Health and Children and the Minister for Education and Science, have announced details of how the higher funding in 2005 will be used. In the case of the health sector, for example, an additional €70 million current expenditure is being allocated next year to provide a range of services, including more than 800 extra residential, respite and day places for persons with intellectual, physical or sensory disability or autism; more than 200,000 extra hours of home support and personal assistance for persons with physical or sensory disabilities, in line with the philosophy of supporting independent living; and additional community-based mental health facilities.
I am pleased to announce that this extra €70 million current spending will be underpinned by a complementary capital allocation of €60 million included in the revised capital envelopes announced today.
Deputies
Hear, hear.
The Government is spending twice as much on decentralisation.
In addition, the 2005 capital envelopes include an extra €3.7 million in respect of a once-off payment to St. Michael's House at Belcamp in Dublin towards the cost of a swimming pool for the disabled. They also include a further €500,000 payment to the Irish Wheelchair Association towards the cost of the final renovation phase at its Cuisle National Holiday Centre in Donamon, County Roscommon.
Increased investment in a systematic way over a number of years will deliver sustained service improvements. It is also important to identify priorities, to set clear targets and to put in place effective systems to monitor service improvement outcomes. The national intellectual disability database is a good example of what is required. It provides information on the numbers of persons with an intellectual disability, existing levels of service provision and current and future service needs over a five-year period.
As a former Minister for Health, I introduced the first ever three-year investment programme put in place by Government in 2000 to address the needs of persons with an intellectual disability.
We remember.
These needs had been identified in the 1999 annual report of the National Intellectual Disability Database Committee. This resulted in the provision of additional current and capital funding of €230 million between 2000 and 2002. Specific additional funding was also provided by the Government in 2003 and 2004 for services for people with disabilities. The impact of this investment is plain to see.
In 2004, nearly 24,000 people with an intellectual disability are receiving services, representing 94% of all those currently on the database, up from 89% in 1999. Key developments to note include a 45% growth in the number of people with an intellectual disability living full time in group homes within local communities; an increase in the provision of intensive residential placements designed to meet the needs of individuals with challenging behaviours, which has almost trebled to 311 places——
Will the Minister staff them?
——a 55% reduction in the number of people with an intellectual disability accommodated in psychiatric hospitals; a continued expansion in the availability of residential support services, in particular, planned or emergency centre-based respite services, which have more than quadrupled — for example, between 2001 and 2002 alone, an additional 443 people reported as being in receipt of these services; and increased provision in almost all areas of adult day services and in the level of provision of support services delivered as part of a package of day services to children and adults. This is social inclusion in practice making a difference to ordinary people's lives.
Deputies
Hear, hear.
I want to build on the experience of that success. I am pleased, therefore, to be in a position today, as Minister for Finance, to announce a special disability multi-annual funding package of close to €900 million over the years 2006-09.
Deputies
Hear, hear.
This funding is being dedicated for the period up to 2009 to ensure the delivery of these high priority disability services. This package includes guaranteed additional current spending of almost €600 million.
Most of us will be retired by then.
The Government has also agreed to allocate €300 million out of the revised capital envelopes to which I referred earlier to these high priority disability services. Further details are provided in the budget summary.
The bulk of the new funding package will go to the health sector where it will be invested in services for persons with an intellectual disability and those with autism, services for persons with physical or sensory disabilities and mental health services. It will focus, in particular, on the provision of extra residential, respite and day places, extra home support and personal assistance and extra places in community-based mental health facilities.
Together with the 2005 funding, it is estimated that by the end of 2009 more than 4,500 extra residential, respite and day places will be provided for persons with an intellectual, physical or sensory disability or autism——
Will they be staffed?
——approximately 600 persons with intellectual disability or autism will be transferred out of psychiatric hospitals and other inappropriate placements; approximately 1.2 million extra hours of home support and personal assistance will be provided for persons with physical or sensory disabilities and 400 new places will be provided in community-based mental health facilities.
Why not do it instead of promising it?
The balance of the 2006-09 disability funding package is being allocated between four other Departments or offices. These resources will be used to enhance education services for adults with disabilities and expand pre-school provision; support projects which demonstrate an innovative and cost-effective approach to service provision and improve accessibility to public buildings and amenities. Details on this are set out in the budget summary.
The 2005 allocations for the four Departments or offices concerned are as follows: the allocation for the Department of Education and Science already includes an extra €5.5 million; the capital envelopes for the Department of the Environment, Heritage and Local Government and the OPW include €10 million and €5 million, respectively, and I am providing an extra €3 million for the Department of Justice, Equality and Law Reform.
I am dealing today with certain high priority services. However, I want to make it clear that other disability services will also continue to be dealt with as a normal part of the annual Estimates process and will receive extra funding as overall budgetary circumstances permit. My strong view, based on my experience as former Minister for Health, is that the disability programme was for many years at the end of the queue for resources. It did not benefit from the type of professional lobbying and support which the acute hospital and primary care programmes traditionally got from strong, organised interests in the health services. Families of people with disabilities had their hands full simply trying to cope.
Deputies
Hear, hear.
Nor did it attract the same level of public attention as issues such as waiting lists, medical cards and so on. Instead, most of the running had to be made by voluntary organisations. The national disability strategy shows a clear political focus by the Government in addressing the needs of the disability sector in a concrete and specific manner.
After seven years.
We also need to build on the existing partnership between the statutory health service structure, the voluntary service providers, people with a disability and the voluntary organisations representing them. It is absolutely essential that all those concerned work together to ensure that those most in need get the improved services they require.
Deputies
Hear, hear.
The funding package announced today and the services which will be provided as a result represent a considerable and guaranteed advance in the support available to people with a disability. The extra service capacity will meet in a very substantial way the needs which are projected to arise over those years and will make a real difference to the lives of people with a disability and their families. Today's actions give the lie to those who claim that the Government is indifferent to the needs of some of the most vulnerable members of our society.
Deputies
Hear, hear.
(Interruptions).
It is easy to draw applause.
We heard it all before. We want action.
I recall that when Minister in 1997 the total emergency provision for disability services and intellectual disability was €1 million.
That is a disgraceful——
Before concluding, I would like to comment on the budgetary process. The policy decisions we take today impact on ordinary people's lives — that much is very clear. As I said at the outset, I have seen 20 budgets in this House. There have, however, been important recent changes in how the process evolves. We now publish three year economic and fiscal programmes in the EU stability programme updates included in the budget booklet. We have moved to multi-annual capital budgets which allow us to focus more clearly on the reasons we are investing and what we expect from such investment. Every Department of Government now publishes regular statements of strategy setting out what they are seeking to do.
What is missing, in my view, is a constructive debate and examination of all this material as part of the policy formation process. I am open to considering with the House how we can make improvements in the situation, while retaining the right and duty of the Government to direct and manage the budgetary process. I hope I am taken up on this offer. There is a general consensus that Ireland has a bright future.
Hear, hear.
We can grow our economy to give us the resources we require to meet the needs and aspirations of our citizens. This requires balanced, consistent policies, seeking fairness in the distribution of resources and efficiency in the delivery of public services. This budget radically improves the funding for and delivery of services for the disabled, increases social welfare rates by well above the rate of inflation, frees those on the minimum wage from income tax, seeks to reinforce the equity of the tax system through the plan of reform I have outlined, keeps inflation low to help those on lower incomes and enhances our capital spending to improve our public services. This budget shows the clear commitment of the Government to a fairer sharing of the resources for some of the most vulnerable of our citizens. It shows our commitment to improved public services which deliver value for money services to all our citizens. It demonstrates our determination to invest in our community, infrastructure and future.
The budget, the country and its future are in safe hands with this Government.
Deputies
Hear, hear.
It would want to be.
There is more to come in the next two budgets to be presented to the House. This budget is my first instalment. I commend the budget to the House.
Deputies
Hear, hear.
(Interruptions).
They should applaud again but this time make it slower.
(Interruptions).
Follow that.
Did the Opposition make a proper assessment of what would be done for disabilities?
Look at all the socialists applauding.
The Government benches should show more enthusiasm.
I congratulate the Minister for Finance, Deputy Cowen, on the presentation of his first budget. However, I remind him that the same rapturous applause accompanied the presentation of last year's budget.
And rightly so.
However, that Minister for Finance is no longer here. A clap on the back in December turned into a knife in the back in July. The Minister should take heed. A scapegoat had to be found this year and Deputy McCreevy was that scapegoat. We will not hear any more talk about lefty pinkos. The whole scene has changed.
We are all lefties now.
This Budget Statement is crafty and cunning. It has been designed to push the right buttons. It has been designed to bury the McCreevy image.
A Deputy
Borrowing, borrowing, borrowing.
It is pushing the boundaries of Irish politics.
The spin doctors say that it lost votes in the June elections, so it must be all changed.
They can blame the poor old local authorities.
It is a budget pretending to say "Sorry, the Government messed up but everything is now changed. The Government is a reformed group."
Will the Deputy stick to the budget?
The key test is whether it will change the realities of people's lives.
Hear, hear.
That will be the standard against which this budget will be judged. Against that standard, it will not succeed. All that glisters is not gold. When this budget is rubbed, one will see the same dull, leaden surface underneath.
It is like the Deputy's rhetoric.
The real challenge of political leadership, which Deputy Roche knows little about, is to use public moneys in a way that delivers effective results.
I know more about economics than the Deputy.
(Interruptions).
Allow Deputy Bruton without interruption.
Political leadership is not about seeking scapegoats to blame for the local authority elections results or the Government's failure to deliver the housing programme. That is not what the real challenge is about. It is about being willing to take decisions and deliver results for those who need it.
Ireland can do much better. It needs a Government willing to change so that things can work better for people who matter.
Deputy Bruton should look around him.
That is why the Fine Gael Party will never be in office.
Ireland deserves a Government that can drive an agenda of reform, deliver best practice and insist on high performance.
Deputy should be worrying about his case.
Deputy Richard Bruton without interruption.
Deputy has sat around the Cabinet table. This is the eighth budget he has participated in but eight years is too long to wait for real reform. It is not adequate to hang around for ten years to see this continuous grip.
Deputies
Hear, hear.
Deputy will have to get up the pole again.
There is not a word about gardaí.
Wait until we see the release papers.
There are some welcome measures contained in the Budget Statement. It is welcome to see the minimum wage taken out of the tax bracket. However, in April it will be back into the tax bracket as the minimum wage increases. Tackling the minimum wage is long overdue. It is not an issue of great pride to take those earning €273 a week out of the income tax code. That is not an occasion for great celebration. It is something that they deserve. At the other end of the scale, 633,000 people will be on the top rate of income tax. A single person will earn €29,400. People below the average industrial wage are now deemed rich enough to pay the 42% rate while some of the super rich pay no tax at all.
They still will not be paying tax.
At the end of the year, 47% of all those paying income tax will be at the top rate. On the measures that the Minister prefers to use, how many of all those in the tax net will be on the top rate? It will be 33%. He promised 20% and he is a long way from it.
It is disappointing that the budget has barely started to undo the damage inflicted on the least well-off in our community. No mention was made of reversing the savage 16 cuts that we were told would be redressed. Pensioners will receive an extra €12 a week. However, they already have seen it spent through increases in gas, electricity, health and bin charges and bus fares, to mention a few, which have absorbed €8 of that.
Wait until the local authority rents go up.
I welcome the disability multi-annual programme but it is delivering on a long-awaited promise. It is built on a Disability Bill that is fundamentally flawed.
Seven years waiting.
It is unworkable.
Many looked to this budget to see something real done for child poverty. The last Minister made a solemn commitment that he would increase child benefit by €17.60 by 2003. Almost two years later, only €10 of that has been delivered. That is not good enough. The Government is not willing to deliver on the promises made to the children. There is unanimity that the child dependant allowance needs to be addressed. Nothing has been done to help those on this allowance. I am glad to see there is some improvement in private rented accommodation in the way of tax relief. Is 88 cent a week going to make any significant difference to many people struggling on low incomes in private rented accommodation?
Some 88 cent.
The budget exercise is fundamentally flawed. It sidesteps the real challenge and only encourages short-term opportunism. Elections are in the air and people are asked to watch the deft hands of the Minister as he shuffles the last 1% of the thousands of millions of euro of taxation and spending around the board. I agree that last 1% can be used to make life better for people. However, the real issue is what is done with the other 99% of spending which is not delivering for people. That money is neither properly spent, delivers high performance nor gives improvement in services, despite doubling in overall volume in the last seven years. The opportunity is there to be seized for a Government willing to address the issues of reform. It seems the Government is willing to drift through its ten years in office without facing these challenges. Perhaps it does not see the scope for change. God knows, it has enough advisers, consultants and reports to point the way. Perhaps it is afraid of upsetting some cosy consensus, which would not surprise me. It may simply be the case that its members have been in office for too long.
Hear, hear.
Too long.
Many families could have expected to see something in today's budget. There are young families struggling with the unaffordable cost of child care which has now reached a rate of €150 per week in Dublin. There is chaos in our traffic policy and people are struggling to make ends meet. Those seeking help for children with special needs are frustrated by the failure of the Government to deliver on its promises. People are worried they cannot afford health care. Many older family members must shoulder responsibilities they never thought they would have to face. They are raising second mortgages to help their children step onto the first rung of the home ownership ladder and acting as unpaid childminders for their grandchildren. People face growing uncertainty as to whether they will be able to obtain emergency care for grandparents.
The budget is like the bad Santa who comes into our homes. He has paid for a trip to the South Pole of Inchydoney and been given a makeover.
The Deputy has been watching too many films.
He comes in a large red coat and speaks incessantly about caring and sharing but people should beware of many of the gifts he leaves this year. They were nicked in the past two years from the very families to which they are being returned. Many of the promises on today's packaging will prove to be false. A new reindeer may be in the harness but the same bad habits remain. Many of Santa's backbench little helpers have already scattered, which is indicative of what little interest they have in the budget.
In the Deputy.
They have gone to celebrate.
They will experience the same bitterness next year as they did last week when the 53 nice packages which were to deliver 10,000 shiny, new civil servants to towns and cities ended up in wreckage on the floor. Of those packages, 29 were completely empty.
That is a bad Santa.
The Government has masqueraded for many years as a low tax Administration. Many of its members, including the Minister for Justice, Equality and Law Reform, Deputy , would love to promote this illusion. The truth is that the Government has increased its tax take massively. In 2005 taxation revenue will be an incredible €11 billion more than in 2002.
That is growth.
As a percentage of GNP, tax revenue will be far higher than in 2002.
It is high employment.
Deputy Bruton to continue without interruption.
People are paying it in tax.
Average tax paid per household will have grown to €25,325.
They used to be unemployed.
Since 2002, the great bonanza year in which the Government won the general election, the average household has paid €4,100 more in taxation to fund services which are not being delivered to people in real need.
There are more jobs.
There are more houses in Roscommon.
The Minister for Finance likes to talk about the income tax relief he is giving to some people today. While a little progress has been made, it is still a disappointing state of affairs. The Minister chooses to concentrate on one aspect of taxation. While income tax may go down a little this year, it will not be enough to match indexation or give back what the Government took in the past two years.
A different tale of the increasing burden is being told in the areas of VAT, excise duty and vehicle registration tax. Stealth taxes on utilities and new charges have increased by an incredible €2,250 for affected families each year since the great election of May 2002. We have faced increases right across the board on everything from utility bills such as gas and the ESB to the cost of sending a child to college, obtaining a passport, examination fees, drug refunds, accident and emergency charges, inpatient charges, the price of stamps and the cost of television licences. In each case, costs have increased by three times the rate of inflation.
The Government is supposedly concerned with competitiveness, efficiency and living within its means. It is by no means living within its means but is instead using back-door taxes to siphon money out of people's pockets to pay for what is being partly given back today. This has been a low tax Government if one has gained development land, owns stallions, invested in property based schemes, subscribed up to €250,000 in a pension fund or has masterpieces hanging in one's home owned by one's company. There are earners in the State who pay no income tax at all. Ireland is certainly not a low tax country if one is an ordinary PAYE worker on an average income who must keep a car on the road, buy a house, drive a van for one's company and does not have significant sums of spare cash to invest in saving schemes and pension funds. Such people pay €2,500 in tax alone to keep their car on the road and €84,000 in tax to the Minister to buy a house, as the Taoiseach admitted.
Those earning the average industrial wage are deemed on the 48% marginal tax rate to be in the same band as the super rich. There has been no Government transformation. We are being presented with the same old package dressed up a little more slickly and more cunningly.
While I welcome today's change to the stamp duty regime for first-time buyers, we should not forget how quickly house prices have risen. The Minister for Finance admits that the average second-hand house price will still attract stamp duty in Dublin. He indicated that a second-hand house in Dublin costing €400,000 would attract the very same stamp duty tomorrow as it did yesterday. A very narrow band of home purchasers will be assisted by this concession.
First-time buyers.
The Minister of State knows the figures in his own constituency.
That is not what the figures show.
The average secondhand house price in Dublin today is €317,000.
How many first-time buyers pay €650,000? The Deputy should get a grip.
What is to stop prices increasing by €7,000 a year?
Deputy Bruton to continue without interruption.
I welcome the Taoiseach's interruption. The average house price in Dublin is €317,000.
It is €399,000.
Sorry, €399,000. The Government will not give persons paying that price any stamp duty relief. While it asserts there are first-time buyers paying less, even they will face stamp duty under this regime. The Government has failed to exempt anything like a significant number.
It may hurt and rankle with its members to hear it but the Government has constituted a significant element of the rip-off society which has developed in recent years. Between stealth and indirect taxes, it has caused 60% of the increase in the consumer price index in the past three years. As the main beneficiary of the phenomenon, it has no credibility in facing up to anti-competitive practices and rip-offs elsewhere in the economy.
It has let the speculators run riot.
Most people do not need to make a pilgrimage to Inchydoney's exclusive health spa and resort to realise that progress in recent years has created an Ireland of sharp contrasts.
Perhaps the Deputy should go there himself.
Today's budget was billed as one which would transform the approach to the less well-off but we must ask how well it fulfils this ambition. The child benefit package fails to deliver even on the commitment made in 2003 which was to be respected this year under Sustaining Progress. Of the 50,000 providing care for more than 39 hours per week, only 22,000 receive State support in the form of carer's allowance. The increased disregard of €20 per week will not bring any more carers into the support regime. At the end of this year there will still be 30,000 carers who do not get a brass farthing from the State. If the State had to fund the service provided by the people concerned, it would cost €500 per week per person.
I welcome the increase in the respite grant from €835 to €1,000 but if the Minister believes that an extra €3.50 per week will give a carer four weeks' holidays, he is living in a different world. That €1,000 will not provide respite on the scale that people who are caring on that basis are entitled to expect.
I welcome the commitments for the future in respect of disability. I am aware the Minister has a genuine and sustained commitment to this area, which is supported by the record. I hope that commitment delivers change but I give a warning. We need more than a commitment. We need fundamental change in the way we approach people with a disability if they are to have equal participation in our society. We need new thinking about independent living, training and working, education and legal rights. Many people who are concerned for people with a disability believe that the Bill the Minister is introducing is fundamentally flawed and that it will not bring about the change we need.
This budget is disappointing for people at the bottom of the scale, those on assistance. A couple on assistance living in rented accommodation who depend on a health board subvention will have just €234.50, and €16.80 for each child, as a result of this budget. It has not lived up to the billing that this was a new caring and sharing approach. What will happen to that family's rent supplement if one of them takes up a job? It will drop from 94% of their rent to zero. There will not be a brass farthing in support for that family which is trying to better itself by going out to work. Where is the caring and sharing for families like that? Many thousands of families are caught in the unemployment trap that has been created and not addressed in this budget.
One third of the children who are at risk of poverty today come from families where there is a bread winner at work but the needs of those people on low pay have again been overlooked. The increase in family income supplement is not enough but, worse still, it is not getting through to people who need it. There are only 12,000 people getting family income supplement but any survey of the income figures will show that at least three times as many should be getting it. Where is the commitment to ensuring that those families who really need it get it? Why is it not paid through the tax code where there would at least be a guarantee that it would get through? That is the sort of change I would like to have seen in the budget but it does not appear to be there.
The Government needs to look much more closely at the Ireland of contrasts we have created and build policies that can break the cycle. Those policies are not in this budget. Our economic success has seen the value of development land multiply fourfold, and these gains can be taken up with only the lowest tax rate applying. How different is the lot of people who have been caught in the backwash of our progress? Our housing policy, health system and support towards pension contributions in the tax code are inherently unfair, and nothing is being done to change those. One thousand children leave our schools every year who do not even make it to second level, and 12,000 do not sit their leaving certificate.
The Minister for Justice, Equality and Law Reform tells us that inequality is essential for our economic progress——
I never said that.
——and the Taoiseach describes himself as Ireland's last socialist, but together they stand aloof as people in real need struggle with the reality of these contrasts.
I never said it was essential for our economic progress.
What is all this doing for our competitiveness? Unfortunately, the policy of stealth tax and creeping taxation is putting our long-term job prospects in jeopardy. There is a worrying complacency in Government about the enterprise sector. Few people realise that in the past four years, employment in the exposed sector of our economy has been in sharp decline. The rate of job losses has been more than double that of the mid-90s.
We are facing a tough time in export markets. Since May 2002, export prices have fallen by15%. Companies trading and competing have had to tighten their costs by 15% but the utilities, stealth taxes, rates and all the other burdens the State puts on those companies have increased by 27%. There is no tightening of belts when it comes to those delivering those services but the companies which have to compete in export markets are feeling the squeeze. Companies are leaving these shores to go to cheaper environments.
I say to the Taoiseach that it is not enough to live off past successes and ignore the emerging challenges. There is too much complacency in the way he and his Government approach economic policy. Our low corporation tax regime is being matched by new competitors. The recent enterprise strategy found that six of the nine factors identified as being behind our surging costs are directly linked to Government action. The challenges start with the 15 people sitting around the Cabinet table. It is they who must run their show more efficiently if we are to address the competitiveness challenges we face.
Huge infrastructural gaps seriously undermine our competitiveness. Ireland is a small, open economy. We depend on foreign investment and on international trade but a recent assessment of our public capital infrastructure showed that we are second last in a class of 12 countries studied. In critical areas vital to competitiveness we lag way behind. We are 15th of 15 in respect of ports; 11th of 12 in respect of motorways; 8th of eight in respect of the speed of delivery in the capital city; 18th of 21 in respect of broadband access; 15th of 16 in respect of energy infrastructure; 11th of 15 in respect of investment in telecommunications; and 8th of ten in respect of the cost of waste disposal. On every one of these areas we are falling behind, but there is a bright spark on the horizon.
In air transport the quality of our infrastructure is up to scratch. We rank 4th of 15, but a question mark must hang over our capacity to retain that high ranking as Government indecision and outmoded statist policies have brought Aer Lingus into serious crisis.
In tourism, we face a particularly tough challenge as tourists move to look to more cost efficient locations. Let us not forget that we have the highest rates of VAT and excise on tourism products than any other country in Europe. We are making it difficult to compete in those vital markets.
I welcome the additional €569 million announced today for the public capital programme. That will go some way towards meeting the 5% GNP target. A total of €875 million was needed to meet that target. I suppose we should welcome the fact that the Minister has gone some way towards that but the target has not been met since 2002, despite the huge gaps that exist in that regard.
Focusing on spending allocation only, however, is not enough. If we examine the way this capital programme is being managed, it is not living up to what we need. The Government has not proved capable of providing a framework where private sector participation can play a part and at the same time yield value to the taxpayer. It has failed to deliver on the Taoiseach's promised strategic national infrastructure Bill that was to make it quicker and easier to deliver projects. This year, poor planning saw €450 million of health facilities lying idle, although the taxpayer had been asked to fund them. The roads programme, which was the spine of the national development plan, was found by the Comptroller and Auditor General, when he examined it three years into its currency, to have already run 125% over budget and he found that 50% of the projects would not be delivered on time.
Many hopes have been raised by new spending announcements, and I am sure press conferences will be held shortly after we leave this House by Ministers announcing that they have got a certain amount for their capital programme, but we have heard the promises before — the Cork School of Music, the National Sports Campus, the good news letters that were sent by the then Minister, Deputy Woods, to schools throughout the country.
Vision.
The Minister, Deputy Martin, failed.
They all disappeared, however, because the Government is not capable of delivering.
What about Mullingar hospital on the day he left office?
The tragedy is that no one is taking responsibility for maintaining the central coherence of the national development plan. No one is ensuring that the proper and accurate assessments of costs and benefits underpin the selection of projects. An unacceptable political "divvy out" has shunted such thinking aside and we have witnessed that again today with the capital programme held back until budget day and then announced to put the gloss on Ministers who have little else to celebrate. The trouble is the public capital programme is springing so many leaks that it is not acceptable to turn to the taxpayer to shore them all up. An urgent review of the quantity, quality and funding of key infrastructural projects is needed so that the programme can be dragged back into focus on key priorities the country badly needs.
The big question for Ireland is not what happens to the final 1% of public spending but what happens to the other 99% of the budget. Has any Government spent so much to achieve so little? The patterns of spending over the past seven years have been all wrong. Extra money and new staffing was poured in without reform. Expensive administrative structures squeezed resources for the front line, targets were obscure, analysis was perfunctory, performance was never measured and significant cost overruns were tolerated. When spending had to be reined in, the savings were meted out against people at the bottom of the pile.
We asked in our document, Who Cares?, which was published recently, what is happening to real indicators that affect people's lives. We examined the top priorities. The number of people with access to primary care declined over the seven year. The number of people who attended accident and emergency declined but they faced greater chaos. The number of hospital beds increased by a minimal 6% and the number of inpatients increased likewise, despite a trebling of the health budget.
Deputy Martin failed.
That is a superficial analysis.
Recruitment at the front line in health was a quarter the rate of administrators. I refer to crime. The detection rate of serious crime and drug seizures fell.
So did crime rates.
The detection of violent assault fell and public disorder exploded. Violent assault has increased by almost 600% since 1997.
The trends are all going the right way.
Ireland is the number one country in which to live. An objective independent assessment stated this was the best country in which to live.
Bus lanes have been freed but there are no new buses to use them.
There are no communications and there are inferior facilities.
Deputy Bruton should be allowed speak without interruption.
These are the people on whose behalf we are supposed to deliver. We are supposed to make it easier for people to access primary care and get to hospital. We are supposed to stop children from dropping out of school at such a young age, but these initiatives are not being delivered despite the massive increase in spending.
I recently asked every Minister to name the priority performance indicators within their Departments and to set out the improvements that have been made in respect of these targets. I was initially heartened. The Taoiseach responded that key performance indicators in all Departments were crucial to see whether strategies were being achieved. However, the Taoiseach did not scan the replies from his ministerial colleagues. Not one Minister set out in his or her reply details of key performance indicators nor did he or she make even one attempt to quantify any progress that had been made on any target. The Tánaiste and Minister for Health and Children said indicators were in a development stage while the Minister for Transport hoped to develop performance indicators for the future. They will not be before their time if they are developed. The Minister for Education and Science stated the details were being assembled and would arrive in a few days. That was more than a month ago and nothing has appeared.
Another broken promise.
The best indicator is the electorate.
Most Ministers ducked the question. The truth is that outcomes and performance do not drive the allocation of public money and the Minister acknowledged as much towards the end of his contribution. The House is not using the Estimates and spending process correctly. Once again, there is a long list of spending commitments this year but not one target or achievement is indicated by which Ministers will be judged at the end of the year. That is not good enough in a modern country such as ours. No business or organisation in the State would spend its money in such a slipshod way and that is not good enough for the many people who depend on the State to deliver on their needs.
There is a major difference between big announcements and real delivery. We have seen the big announcements such as decentralisation, ending hospital waiting lists in two years, ending class sizes over 30 and providing 0.7% of gross national product in overseas development aid.
We will get there. We will not compare it with the Opposition's commitments.
An additional 2,000 gardaí were to be on the street but all these announcements have crumbled to clay because they were never based on a proper foundation.
What about the €20 million for taxi drivers?
What about the additional 2,000 gardaí?
Deputy Bruton should continue without interruption.
No proper planning was undertaken to make sure they would be delivered. Real delivery must be built carefully and painfully. The tragedy is that the Government has been presented repeatedly with the opportunity for real reform and it refused to step up to the mark. Benchmarking was a golden opportunity but it was allowed to slip through the Government's fingers. The strategic management initiative in the public service has not been driven forward and the expenditure review initiative has been allowed to flop. An interesting report was published earlier this year regarding the past three years, which highlighted that virtually none of the promised reviews has been undertaken. Many have been abandoned and no serious examination of public spending is taking place within Departments. The expenditure review initiative was to be undertaken as a rolling programme with Government programmes to be studied every three years. That is not happening and I fear it will not happen under this Government.
It examines everything from a political perspective, as usual.
The message from today's budget is that this is a Government posturing as it prepares to buy people's votes by instalments with their hard-earned money. We were here before in the two budgets that preceded the general election of May 2002.
The Opposition is going there again.
As befits the start of the pantomime season, the name of the game is makeover. The aim is not to reform the poor delivery but to reshape the image. Promises that have not been completely discredited are being reheated while many solemn promises such as that on ODA have been abandoned in such a way that they are kept carefully away from the newly choreographed Taoiseach posing as Prince Charming.
He is posing as Karl Marx.
However, the people see through that. The big bad wolf has been sent to Europe and the Taoiseach plans to pass off the new Minister for Finance as Little Red Riding Hood. On and off the stage we will see the same characters move in — the ostrich who cannot see rip offs in this country and the Minister for police who sees no crime.
What about the snails?
However, the Government should heed the old pantomime warning, "Look out behind you". That is the warning people should look for when examining this festive budget. Inspect the goods, mind the wallet in one's back pocket, read the small print, do not give one's credit card details, look carefully at this festive budget and, remember, the value of promises may fall as well as rise. This Government is not regulated by the Irish Financial Services Regulatory Authority but by the electoral cycle. Beware the bad Santa.
The Budget Statement opened with a tribute to the former Deputy McCreevy and ended with the longest apology to the people in the history of budgets. It is a case of the Government did wrong but Mr. McCreevy is to blame. The Minister for Finance may have praised him but he came to bury him. That is not much of an apology to the people wronged and hurt in the McCreevy years, especially over the past two years. It used to be that a firm purpose of intent was required in regard to contrition. I do not know whether Fr. Seán Healy was hearing political confessions in Inchydoney nor do I know whether he will be satisfied now because the legacy of Mr. McCreevy runs throughout the budget. The stallions will rest easy tonight, as will the millionaires who pay no tax, because there has been no fundamental change.
The Taoiseach paid good attention to Fr. Healy. One of the principal challenges he set for the Taoiseach was to reform payments to the poorest families with children, in particular, the child dependant allowance as opposed to child benefit.
As I see no mention of child dependant allowance anywhere, I can only assume it remains as it was. That is one down as far as Fr. Healy's wish list was concerned.
No general absolution.
Despite the welcome expansion in the standard income tax band — the tables are set out in C22 — next year there will still be 25,000 more people paying tax at the top rate. It is important to focus on this. In his kind reply to a question I put in the Dáil two weeks ago the Minister said that there were 614,000, or 32.6%, of taxpayers paying tax at the higher rate in 2004. Despite this, the table provided in the Budget Statement indicates that on a post-budget basis taking the reliefs into account, some 633,740 taxpayers will pay tax at the higher rate. I have calculated on the back of an envelope, because we are not allowed calculators, this to be approximately 19,000 extra taxpayers in terms of the Minister's post-budget scenario on the tables. More than 50% of all taxpayers who pay tax — leave out those exempted as we are very happy about the change with regard to the minimum wage — will pay at the top rate. The percentage figure is 33.2% whereas the estimated outcome was 32.6% for 2004. It is some budget that has produced 0.4% of a difference. It almost sounds like the miserable changes that did not happen with regard to the overseas development aid target. The Minister promised that only 20% of taxpayers would pay tax at the top rate, but his budget does not make any significant change in the numbers who pay at that rate. Taxpayers will welcome a number of the innovations that the Minister is making, but this failure will count as the big black mark against the Government.
This is a budget of goodies, but not of strategies. It is a populist budget. It is not visionary or reforming. It is an attempt to undo some of the damage of the past, but does not go nearly far enough. It backs away, to some extent, from the unfairness over which this Government has presided, unfairness of which some of its Members are rather proud, but not, I accept, the Botanic Gardens socialist, the Taoiseach.
Mr. Finlay wrote this article two days ago.
Only someone schooled from birth in Fianna Fáil arrogance would dare to suggest that this is a reforming budget. This is a Government that has presided over the creation of tax break after tax break for the better off. There are dozens of them, including 30 that are completely uncosted. Like the 30 pieces of silver in the Bible — back to Fr. Healy — they represent a source of shame for any Government that claims an interest in tax justice.
This is yet another budget of half measures. The proposals announced today are no way adequate as a response to the renewed opportunities of economic growth or the social inequities and inequalities that face the country at this time. An immense amount of damage was done in the past two budgets. We might reasonably have expected the new Minister to repair that damage, restore justice to the tax code and ensure a genuine shift of resources to people who have been neglected through all the years of our prosperity. I hoped also there would be a new commitment the capital investment programme to overcome the legacy of missed opportunities that have plagued progress in this area for close to three years.
There were three simple objectives for the budget, tax justice, social justice with no family or child left behind — everyone in the House shares that objective — and economic competence, namely, competence about a long-term investment strategy that would see us catch up on infrastructure. Everything the Minister has announced today has been timid and half-hearted. His budget will leave a sour taste of disappointment in a country that expected a lot more from a new agenda.
This budget will offer once again, as every budget introduced by the former Minister, Mr. McCreevy, did, a greater advantage to the better off. It is quite minimalist in its tax reforms and social measures. Its hesitant, timid approach to capital investment will not do much to boost our national competitiveness. The one headline I expected today was the restoration of tax justice. I thought the Minister would recognise that he must restore to ordinary taxpayers the full amount of the windfall stealth tax extracted from them by the former Minister's refusal over two budgets to index the standard band. He did not do so today, but chose instead to offer limited partial compensation that just about keeps a huge tranche of additional taxpayers out of the higher rate.
For the information of the Minister for Justice, Equality and Law Reform, the single person's allowance band rises today by €1,400 to €29,400. At the end of the term, what were the figures published with regard to the average industrial income? They were approximately €400 short of €30,000. Deputy McDowell should bear in mind that the new band allowance does not even cover the average industrial wage.
It must make the Deputy sick that the average industrial wage has risen so fast.
I am delighted. Unlike the Deputy, I am in favour of workers getting proper incomes.
It has gone up by €11,000.
We had a very welcome adjustment to tax credits and the standard bands today, but a full proper adjustment to fully restore the value of both would have brought the 20% band to far more than was announced today.
We will have more taxpayers in the top band in the coming year than was the case years ago. The Government's target was 20% but in the book today it is estimated to 33.2% in 2005 as opposed to the 2004 outcome of 32.6%.
A lot more to do.
Let me take the examples of Elaine and Stephen lurking at the back of the budget book. Elaine and Stephen are neighbours or cousins of Duncan and Mary, so beloved of the former Minister. Elaine and Stephen are on an income of €40,000. One of them is working and they have two children. They gain approximately €658. If we look at examples 2 and 3 in the earlier tables, we see that a married couple with one income and two children will get a benefit on €35,000 of income of 1.7% and 1.6% in the budget. However, let us look at example 3. This is the legacy of the former Minister and I recognise the current Minister may not be able to address it yet. Example 3 is a married couple with two incomes and two children. When they have an income of €30,000 and €35,000, they get a gain of 3.7% and 2.2%. Many one-income families — Deputy McDowell might not know many of them but I am sure Deputy Cowen and the Taoiseach do — are only on an income of €30,000 or €35,000. They are the people who are not particularly well off. They end up living far from their place of work and one spouse often has to make a choice not to go to work because the child care cost is the same as the cost of a second mortgage. The Minister has not done much for them and in this respect, the example at the back of the budget book of Elaine and Stephen is dishonest.
The budget is deeply disappointing if we are serious about the dilemma that industry faces in regard to child care but particularly if we are serious about the dilemma that families and the children in those families face. Other than the €10 increase in child benefit, which is very welcome, I see nothing about child care except that, relatively speaking, the position of those one-income families has got relatively worse. It is all about relativity. The Minister is fond of talking about relative poverty as opposed to absolute poverty. Let me talk about relative tax relativities as opposed to absolute tax figures. The situation of one-income families has got relatively worse. Those people did not do as well as people with two incomes.
I waited in vain to hear the Minister acknowledge that things have got out of hand regarding tax breaks. He will recall that a few weeks ago he gave me information about the fortunate 41 people on incomes of €500,000 plus who paid no tax. Eleven of these were millionaires. Nothing has changed for those people. Instead the Minister, stand-by of the former Minister for Health and Children, Deputy Martin, in all his years in the Department, and of half a dozen of his colleagues who have since left, promised a review. We may get the results of the review in time for next year's budget.
I am disappointed with the budget. I agree with the Taoiseach who is a Botanic Gardens socialist. I grew up beside the Botanic Gardens and near the Phoenix Park. We all know what it is to enjoy public assets in the city of Dublin. That has influenced socialism in all of us. I would have thought the Botanic Gardens socialist would have addressed the grotesque injustice of some well off people who make no contribution? It is my considered view that somebody who is bright enough and brave enough, who inherits enough to earn a lot of money should be required to pay tax. There are a number of ways of proceeding, such as a minimum effective rate of tax. If that is not good enough the Minister could cap the allowances at a certain level. It was done for BES, film relief and in regard to certain other reliefs but, as I said, there are 33 reliefs and in the report of the Revenue Commissioners from two years ago the 400 top taxpayers surveyed got €70 million in tax breaks between them.
The Minister did nothing to address those fundamental inequalities. How does he explain this to the worker on the average industrial wage, who by the time he or she gets the national wage agreement in the middle of next year will be pushing for overtime to be taxed back at the 42% rate? How can he expect the tax system to be respected with integrity when such a person will have another year of some people having a tax free holiday. Roll on the review. It cannot happen soon enough.
I now turn to issues of current spending. The title for this budget should be "Some damage undone, a lot more damage to undo." Every headline improvement in public services and social welfare is welcome and will be a relief to many families. I welcome the increases announced by the Minister and the package he announced on disability. However, it is less impressive when set against the glaring needs of many sectors of society.
Organisations like the Vincentian Partnership have developed a set of budget standards to relate the headline figure to its actual value to those in need. What we have on offer today only goes half way to meet those standards.
I remind the House, including the Minister, that the national anti-poverty strategy commits the Government to increasing the lowest rate of social welfare to €150 per week in 2002 terms, by 2007. To achieve that end, the increase of €14, which I welcome, is the minimum increase required to keep that promise alive.
People in need look for co-ordinated and joined-up support across every heading, not just the narrow headline of cash support. Some benefits which are good for headlines, when combined with other effects, may even result in an overall loss for low income groups. The Minister gave some increases in social welfare payments but the recipients may well lose their medical cards and so could be worse off than before. It is not possible to work this out from the details given by the Minister. We must wait for the full detail to emerge from the Tánaiste.
Some people who are entitled to family income support will not get any help with medical costs or rental costs. A limited increase in tax credits was announced but the Minister failed to support working parents in ways that would be most effective, with child care costs and extra paid maternity and parental leave.
The Minister gave a modest increase in the payment to carers. I welcome the package on disability. However, he indicated that only 16,000 carers will benefit from the package when the reports have identified more than 100,000 people who would have hoped to benefit.
Today's budget does not show the other side of the coin. We do not know who will lose a medical card or whose rent will increase. Even though the tax break is welcome, there is no control over how it will impact in terms of landlords raising rents. We do not know who will not be eligible for social housing as a result of today's budget. We do not see that essential accounting item, particularly for poor people, the bottom line. I want a significantly improved bottom line for low income families, which I do not see today.
We know how little weight the Government attaches to promises. This budget, and the Book of Estimates that preceded it, demonstrate clearly that the Government has no intention of honouring its pre-election commitments. We need only look to the issue of medical cards. At the time of the last election, the Government promised 200,000 additional medical cards. During its first term in office, the Government allowed medical card coverage to decline with the result that 100,000 people lost their medical cards. To stand still, the Minister would have had to provide a further 300,000 extra medical cards. Instead, only 30,000 additional full medical cards have been provided, which is only 10% of what was promised, and a further 200,000 "yellow pack", doctor-only cards. I accept the Tánaiste was being kind last week when she said many people only go to the doctor for consultation purposes, for advice and reassurance. That is true in some cases.
I am currently dealing with a family who is appealing for the restoration of their medical card. The father works in a low income job in a high-tech industry in Blanchardstown. He is a severe asthmatic and he also has an injury. His son, who is aged 16 and is due to sit his junior certificate examination, has a severe back problem together with a severe form of asthma. The mother, who is in receipt of a disability payment, is on HRT and she is also on another form of medication. Their medical card has just been withdrawn and they will now have to pay the increased threshold in regard to the refund of medical costs, which is €85 per month or €21 per week. That is a great deal of money for a low income family where the income is in the region of €400 after tax. The doctor-only medical card will not meet the needs of that family.
I hope that because of the exceptional medical circumstances their medical card may be restored. This is a good illustration of the problem faced by many families who want to stay in the workforce although they have severe medical problems. Such conditions often run in families and the choices they have to make are very difficult. I had hoped some of these issues would be addressed.
It is disappointing that the needs of the 25% of all children who are taught in classes of 30 pupils or more do not seem to be addressed. We did not hear much detail from the Minister for Finance about the "savage 16" cuts, although he stated that the qualifying period for the back to education allowance, which Mr. McCreevy increased to 15 months last year, would be reduced to 12 months, which is welcome. However, before the qualifying period was increased to 15 months, it was six months, therefore, it will now be twice as long. Is that a reversal of one of the "savage 16" cuts or is it just a bit of tinkering? It is not a reversal. Many of the "savage 16" cuts have not been spelled out in the Minister's statement. I suppose we are waiting on that other great socialist, the Minister for Social and Family Affairs, Deputy Brennan, to outline them in detail tomorrow.
I want to address the issue of the investment in capital spending. I tabled a question to the Minister for Finance last week about the fact that the National Pensions Reserve Fund had €1.4 billion in cash or its equivalent. Mr. McCreevy's favoured brain-wave in the run up to the last election was the National Development Finance Agency. While the National Pensions Reserve Fund was sitting on €1.4 billion, we rushed through legislation for the National Development Finance Agency. However, the agency, which was established to look after big projects in excess of €20 million, has not yet financed a single project. Rather, it has advised on approximately 60 road projects. The Minister for Finance has not found a mechanism by which to address the crazy anomaly of placing money in a pension fund and investing it from Hong Kong to New York in companies such as Halliburton and the Philip Morris cigarette company when a mechanism cannot be found to place some of it in good targeted projects which would help to produce vital infrastructure at home.
This vital infrastructure is essential to our continued competitiveness. The global competitiveness survey launched in Davos now ranks Ireland 30th in its table, which is a huge disimprovement over a couple of years. Every family in the country knows what the lack of competitiveness means in terms of the cost of services and the cost of living and businesses know what it means when they come to pay for services. Investing successfully in infrastructure was one of the big challenges which faced this Government after it won the 2002 general election. However, the money which the Minister is now promising for transport is in a ten rather than a five year envelope, although it is welcome if it allows for longer, calmer planning.
This year the Minister under-spent on the capital side by just under €300 million, that is, it could not be spent. This means that schools could not be built and various other projects could not be pursued because the Government could not undertake the necessary project management. When the Dublin Port tunnel is completed and when the Luas was completed, the project management teams which worked on them go away. No one in the Government is responsible for the overall co-ordination of project management.
Last year's big idea, along with decentralisation, was the public private partnerships. However, the Minister confessed again today that €600 million of PPP projects, which were planned for, did not happen. In regard to those that were progressed, Jarvis is touting around Europe — perhaps around the world — to try to sell off the bundle of PPPs it acquired in Ireland because the whole structure of the PPP business has changed. Even though the Minister is new to his post, I fault him and the Government for a complete lack of imagination in respect of the management of the capital programme. The fact that this is reannounced today in a five year envelope — with ten a ten year envelope for transport — is unimpressive and I will wait to see delivery of the projects.
I am disappointed that there has been no major announcement today for capital spending on public transport. This budget has not addressed the concerns of people who will travel home this evening, perhaps sitting in tailbacks caused by damage to the bridge at Rathcoole, and has pathetically little to say to them to end their traffic misery. All it can say is that the Government under-spent in capital investment by €1 billion. It planned to spend roughly €1 billion but was unable to do so. This capital spending on infrastructure is vital to maintain our competitiveness and the standard of living that people expect. It does not say very much that we will spread this spending over the next five years and, over the next couple of days, all the Ministers will do is to reannounce it.
My assessment is that the budget has nothing to say on child dependant allowances or child care. There is a €10 per month increase in child benefit. However, I remind the Government that, in order to honour its promises made prior to the general election, there should have been at least an €18 increase. The figure of €10 is welcome, but it is only half the promise which should have been delivered upon two years ago.
There is not enough in the tax package for workers to make up for the failure of Mr. McCreevy to index link tax bands in his last two budgets — that was the biggest stealth tax of all. The change in the numbers of people who pay tax at the top rate is minimal. At the same time, the Budget Statement says nothing about stallion fees — all we have is a promise of a review. When I asked the Chairman of the Revenue Commissioners in the Committee of Public Accounts if he could identify the cost of various tax breaks and the beneficiaries, he informed me that following last year's budget, the design of the forms was being changed so that in 2005 people will have to fill in forms setting out how they are benefiting from the various range of allowances from car parks to seaside cottages and so on. This will only become available some time in 2006 which will not be in time for the 2006 budget, although perhaps the review which has been announced will speed it up.
If I am correct, it means it will be 2007 before this absolute inequity in the tax system is addressed. It involves people who, if they can employ one of the army of tax advisers who are prospering so much in this country, can totally legitimately pay little or no tax while the rest of us pay it. Most people who earn money are happy to pay their taxes. It is a select few who decide they do not want a low-tax regime for themselves but rather they want a no-tax regime. That is the crux of the problem.
The Revenue Commissioners did a very neat and fast job in regard to shareholders in First Active, for which I commend them. These were people who for the most part had already invested in Eircom, in regard to which they had been badly misled by the Government. Free shares in First Active arrived in the post and life brightened for many people, including probably many in this Chamber. They were allowed to buy extra shares which they probably did. What happened? The Revenue Commissioners accessed the database — quite properly — and sent them forms. The money flooded in because these are the compliant taxpayers. Before one could click one's fingers, they had paid €34 million in tax.
Were their Eircom losses of use to them? Sadly, they were not. For various technical tax reasons which I will not go into now they did not have any realised losses. Therefore, they did not get a tax break on the Eircom losses. One might say there is nothing wrong with this. However, contrast it with the situation of the approximately 30,000 people who enjoy the bulk of the tax breaks. Are we getting value for money from how we have spread the tax breaks around? The former Minister, former Deputy McCreevy, explained to the House on a couple of occasions that a doctor in his constituency had written to him about tax breaks for private hospitals and sports injury clinics. He thought it was a good idea and it was included in the Finance Act. Every year, however, representatives of the Society of St. Vincent de Paul traipse to Kildare Street and do a wonderful job in explaining in detail why certain items such as child dependant allowances should be changed. Are they heeded? They are not.
The Labour Party has proposed a tax reform commission whereby all these issues could be discussed in the open. We could examine the cost and value of these tax breaks. I am consistently surprised, as the Taoiseach probably is, by the quality of some of the buildings built in parts of the city centre under the tax designation schemes. Many of my relatives are bricklayers and tradesmen. If my father was alive, he would scream at the bad workmanship in some of these buildings. The same applies to some of the student residences. Questions must be asked about whether these tax breaks represent value for money.
This year the tax position was exceptionally buoyant because of the work done by the Revenue Commissioners on overseas non-resident accounts. Last year the then Minister, former Deputy McCreevy, pencilled in €200 million in revenue from this work. To date, a total of €800 million has been collected. Part two of the story will come next year when the Revenue Commissioners begin examining the single premium insurance policies. If only 6% of the single premium insurance policy business arose from funds not subject to tax and using the same basis of calculation as that applied to the overseas non-resident accounts, the tax benefit to the Exchequer will probably be approximately €1 billion. However, in today's Budget Statement only €200 million is factored in.
The situation, therefore, is extremely buoyant. The vast majority involved in the single premium insurance policies made totally legitimate investments and there is no problem with them. However, a percentage of the investments originate from funds not subject to tax in the first place. Those concerned are now in the last chance saloon for a fourth time. They had the first two tax amnesties. Many would have also been overseas non-resident account holders. Now, they will get another letter from the Revenue Commissioners suggesting that they settle for 15% or so. I heard about how the Department of Justice, Equality and Law Reform had pursued the fine imposed on the lady in Limerick who had no licence for a dog. Then one looks at the small but important percentage of people who have evaded tax and are in the last chance saloon for the fourth time. How can one wonder that people have no confidence in the tax system?
I asked if there had been a row back on the savage 16 cuts. I have heard nothing from the Government benches. There are one or two small changes in some areas. The Minister promised on radio to review the rent allowance. I assume he will honour this promise and address the issue tomorrow. The fact that people had to be renting accommodation for six months before qualifying for a rent allowance was causing hardship. The applicable period for the opportunity to return to education was 15 months. It is now down to 12 but the original period was six months.
There is a row back on decentralisation. Decentralisation was the feature of the budget last year. It was introduced for political expediency, although a good idea in itself. I was a Minister of State in the then Department of Social Welfare when the successful decentralisation took place to Sligo, Letterkenny and Longford. However, it took place over a planned and lengthy period. I hope the announcement of the row back a few days ago will result in a more successful decentralisation programme that is not just about politically smart moves and in which people will not be forced to leave Dublin.
My colleague, Deputy Bruton, spoke about the expenditure review initiative regarding how Departments are performing. People are fond of saying we are spending huge amounts of additional money but in many cases there is no real benchmark against which to judge whether we are getting value for money. I looked through the expenditure review initiative in the budget booklet. It nearly gave me migraine it was so difficult to read. It states most Departments are not in a position to say what the expenditure review process has shown in terms of value for money in various schemes.
In July I examined in detail the review of spending on the child care initiative under the national development plan. Buried in that review was an incredible amount of money spent, not on the provision of child care places or the training of child care workers but on administration. ADM Limited alone spend €8 million. When talking about the Government's stewardship of the economy, we are talking about the desire to continue economic progress while, at the same time, looking after people who are less well off. In particular, it is about bringing fairness, equity and justice into the tax system and seeing no child or family left behind.
By these standards, today's budget is a set of half measures. If there is a ghost haunting the budget, it is that of Charlie McCreevy. Like the ghost of Christmas, it appears he is being airbrushed out of Fianna Fáil's and the Government's history. Nonetheless, the Government has not yet been able to recover from the legacy of unfairness that was his hallmark.
I wish to share time with Deputies Morgan and Healy. I will begin by passing fraternal greetings to the Minister for Finance and the Government from the people's republic of Cork where people have been living in fevered anticipation of the arrival of a worker's paradise. Their expectations have been raised by our socialist Taoiseach and our socially caring Tánaiste. The hope was that today the ragged trousered philantrophist, the Minister for Finance, would come through on many of the fantastic promises. However, in terms of Russian history, this is more of a February revolution than an October one.
The Minister promised much but needed to promise more. At least, he had the good grace to admit that while this was his first budget, he had been involved in the budgetary process since 1997. A half dozen of today's budget would be required before the Government would even begin to repair the damage done by the previous seven.
The Combat Poverty Agency carried out an analysis of the seven budgets introduced by former Deputy McCreevy. The first five, from 1997 to 2001, unashamedly favoured the better-off in our society, the sixth was relatively neutral and the seventh only marginally favoured the less well-off. While the Minister for Finance has at least introduced a budget which moves in the right direction, there is a great deal of catching up to be done. This is not a bread and roses budget. At best, it contains a few strategically placed sweets aimed at those in society who the Government has damaged most since 1997. The budget does not even begin to repair that damage.
It is obvious that the Minister has engaged in the budget in making disability his decentralisation. Everyone in the House recognises the shortfall in funding during the years in this area. However, even with the multi-annual funding the Minister is promising in additional years, we will be nowhere close to meeting the conditions of the Commission on the Status of People with Disabilities which produced its report ten years ago. There must be a suspicion that the Government is cynically using the disability sector and offering what amounts to a bribe — those in the sector should already be entitled to the money being provided — in respect of the passage of the flawed legislation that is the Disability Bill.
When one considers what is not included in the budget and the passing references to the National Intellectual Disability Database, the fact that there is no costed disability payment provided and that there is no additional hours approach to personal needs assistance, it is clear that it falls short in meeting what are currently recognised as the needs of people with disabilities. Regardless of this, the Government is seeking plaudits for merely helping the country to recover from the damage it inflicted.
The Minister indicated in his pre-budget statements that he wished to shine light on the margins in society. What he seems to forget is that he and the Government are responsible for creating those margins and pushing people into them. It will be at least 2012 — the year in which the Minister for Arts, Sport and Tourism promises Ireland will win another Olympic medal — before we come even close to the level of equality and fairness that previously obtained in poorer times.
It has also been stated the Government which likes to present itself as caring and sharing has matched its concentration on the disability issue with similar concentration on its treatment of children. It ended universal child benefit. There are children born in this country who are not entitled to child benefits because of who are their parents. The increase in child benefit does not even reach the level the Government promised last year. All we have been presented with is a vague promise to the effect that the original commitment will be met next year.
The Government has not increased child dependant allowances which have been frozen since 1994 and on which the very poorest in society depend. It has done nothing in respect of one of the worst cuts in last year's budget, namely, that relating to the crèche supplement. It has also done nothing in putting in place additional measures in respect of how child care services can be improved to meet the needs of family life, not those of employers and IBEC. It continues to ignore these very real needs.
If one considers the increase relating to the disability sector which will be paid over a multi-annual funding period of three years, it seems that it is less than that which the Government wants to put forward in respect of its flawed decentralisation programme. Last year decentralisation was the mainstay of the budget and we know what happened to it. Is the Government engaged in another exercise of smoke and mirrors? When we return for next year's budget, will all the promises made to the disability sector have gone the way of decentralisation? There is that concern because the Government has inculcated such cynicism among the people.
The Government will be glad to discover that the increase of €14 per week in social welfare payments conforms with what Fr. Seán Healy and CORI requested. However, this increase merely meets the Government's stated goal in Sustaining Progress. If such increases are continued up to 2007, those living on social welfare will reach the dizzying heights of obtaining 50% of average household income. That is the level of poverty about which we are concerned.
One must welcome, after seven years, the fact that those on the minimum wage and similar low wage levels are being taken out of the tax net. They have been funding the tax breaks of the rich in our society during that period. That is the reality.
The Tánaiste is leaving the Chamber.
The Government has engaged in reinvention and refers to itself as a caring and sharing Administration. The Tánaiste who is departing the House referred to it as a new Government after the recent reshuffle.
Rebranding.
This is no new Government and this is no new budget.
The Tánaiste cannot stand to listen to the truth.
Goodbye, Tánaiste.
She cannot stand the heat.
She should get out of the Cabinet.
As regards other aspects of social welfare, we have not even been provided with vague assurances in respect of the cuts made last year. A total of 48 organisations have stated these cuts caused tremendous damage in our society. I refer to the rent supplement, the crèche supplement, the dietary supplementary, etc. The Government would prefer to think it is targeting those groups from which it will eventually reap the greatest potential political benefits. That is hardly the behaviour of a Government of all the people.
The money being set aside through the Department of Community, Rural and Gaeltacht Affairs which seems to have been taken from the Minister for Enterprise, Trade and Employment's budget for social employment and job initiative schemes represents a departure.
No, the Deputy is wrong. It is incremental and additional and I urged that it be provided.
It represents a departure.
It is being done through the right Department.
In a sense, I agree with the Minister.
The Minister is now on his own.
Community employment schemes should be removed from the Minister's Department altogether.
Not community employment schemes, these are——
They are not a tool to provide employment; they meet the social needs of many communities. The Minister is all smoke and mirrors in respect of the Book of Estimates. The fact that the numbers on community employment schemes are not being increased at all means that the cuts implemented in the past two or three years will remain in effect and many communities will continue to suffer to the same degree.
The Minister is on his own.
Change is happening.
The Minister should watch his back.
I now wish to comment on tax reliefs. The addition in respect of tax credits is welcome. I even welcome the increase in the bands, even if this does not go anywhere near index-linking what has happened over the period of the past three budgets. I am disappointed that the Minister for Finance missed the opportunity to introduce index-linking in all future budgets in order that we would not have this type of charade every year and the Government would not need to claw back money from people through inflation.
Some of the tax reliefs left in place are obscene. The Minister used weasel words and stated there would be an in-depth review of tax reliefs, the existence of which cannot be morally justified. I refer to tax relief on the use of fuel for private jets and boats and tax incentives for the building of car parks and holiday homes. The Minister did not even take the small step of rowing back on the two year extension former Deputy McCreevy introduced in last year's budget. That is the measure of the Government and the level of its sincerity. In seeking to placate those who have suffered most under its policies, the Government has not touched those most subsidised by it through corporate welfare for the rich. The people concerned will remain in the same tax environment, continue to pay the same proportion of tax and still contribute less in paying for the country's social services and meeting its social needs. The Government has nothing to boast about.
The Minister, as is probably his wont, took the opportunity to state this was the first of three budgets he hoped to introduce before the next general election. One could call it a type of Lord of the Rings trilogy. We must ask whether the Minister will end up as Gollum or the ineffectual Bilbo Baggins. Despite the moneys he has dispensed to categories which, we all accept, need them, he has begun his reign in a cautious way. He has failed to take the final steps towards introducing real reform. That is the most disappointing aspect of the budget. The Minister has only been in office for a number of weeks but he already seems to have gone native. The mandarins in the Department of Finance have told him that he can go so far and not much further. This does not give rise to much confidence that the next two budgets will be the type of reforming instruments we require.
My party has indicated the measures required to bring about the reform to which I refer. We have attracted support in that regard from agencies outside the House. The Chambers of Commerce in Ireland have, like the Green Party, argued that a site value tax should be introduced instead of commercial rates.
The most pernicious decision made by the outgoing Minister for Finance had to do with a carbon tax. The country must pay a bill of €1.1 billion which has to be met out of general taxation. A carbon tax would help to raise this sum in a socially equitable way. It is a tax approved by the Combat Poverty Agency, yet former Deputy McCreevy and the new Minister stated the excuse for its non-introduction was its effect on the most needy in society. This is nonsense.
It is. The coffers are full.
Is the Minister implying the Combat Poverty Agency was not telling the truth?
The impact on the wider economy would be severe.
Better than the Government's economics.
There would be an increase in petrol prices and inflationary pressure.
There have to be instruments available to meet the bill.
Without qualification of need.
We will see where the bill is being met. It is being met through stealth taxes. VAT returns will rise in the next year by the best part of €1 billion. Who pays most VAT?
The poor.
Those on the lowest incomes who buy goods and services pay proportionately more. At the other end of the scale, what is the anticipated rise in capital gains tax for next year from those who earn their income and wealth through the ownership of capital? The anticipated increase is €10 million. That is the consistency shown by the Government. Almost €1 billion extra in VAT will be raised from the poorest in our society and only €10 million from the richest.
On the question of tax reliefs, I do not understand why the Minister is not even venturing down a road where it is known 11 people who earned more than €1 million in 2001 paid no tax whatsoever. Why does he not at least introduce the concept of maximum tax relief, by which every individual citizen could only claim back a set amount and no more and pay tax on the remainder of his or her income? It is a simple idea which would be easy to administer and introduce a degree of equity that is still missing from our system.
The Government has played another trick on the people in respect of the capital expenditure programme. The Book of Estimates published a number of weeks ago showed a 4% rise in capital expenditure. The Estimates now reveal it will rise by 11%. The Government wanted to give an even better gloss to the budget. If it was an honest Government, it would have produced the figures in the Book of Estimates but it is a Government of spin and perception rather than social justice and reality.
The squashing of the multi-annual envelopes is another deceit. At the end of last year the Government managed not to spend €300 million which it had allocated in capital expenditure. This €300 million could have been used to build schools, open the hospital wards that have been built and remain unopened. It could have been used to introduce much needed environmental infrastructure to deal with waste, wastewater and sewage. This is an area in which the Government is most shamed. This is a Government which dumps upon our environment as well as many electors. It is a Government which has played the percentage game. It has decided who is most likely to vote for it because it received a severe shock when many deserted it in the June local elections. It decided to put together a package that would entice as many of them as possible back into the fold. However, I do not believe this policy will work. It is a seven year cycle — now an eight year cycle — of ongoing cynicism. It is a repeat pattern of moneys being cut back and brought forward.
The Government has deserted its duty in terms of sound economic management. We should have a steady ship and an appropriate level of funding, given out in an equitable manner to the areas that need it. This is a Government which wants to play games and deceive. On these grounds, while there are many welcome catch-up elements which will start a process that will not finish for a long time, this is a Government which will only continue to play games but the country needs more. As a result my party does not have confidence in it to put through the necessary reforms to bring about real social justice and equity. We look forward to the day when the electorate is given a proper choice as to how a socially just and equitable budget and system of government can be achieved.
My first instinctive response to this budget is to say, "Well done". I am definitely not saying "Well done" to the Fianna Fáil-Progressive Democrats coalition; I am saying "Well done" to those voters who scared the living daylights out of it last summer by sending the message that they, the people, would no longer accept the wanton, right-wing gallop that was widening the gap between the rich and the 20% living in poverty.
We got more votes than Sinn Féin.
I urge them to keep voting for Sinn Féin because it is working. This is the proof. We have at least forced the Government away from the Progressive Democrats path that it has been following for the past six years.
There are some good measures in the budget but there are also failures. One of the significant announcements in last year's budget was the relocation or misnamed decentralisation issue. Only last week Phil Flynn pronounced that only 3,500 people would be relocated, instead of the 10,300 announced last year. We see how budget announcements are not always what they seem. People will remember that the decentralisation programme was to be delivered by 2007. That date is now 2008. The Minister said today that we were well on track. Who is he fooling? I assure him it is only himself. Everyone knows this is a complete catastrophe created by the Fianna Fáil-Progressive Democrats coalition. It is a complete mess.
The budget should focus primarily on improving the lot of the disadvantaged and the low paid while seeking to make the wealthy pay their fair share. When the former Minister for Finance, former Deputy McCreevy, introduced his first budget in 1997, he said he would be judged not on one budget but on all of them. That judgment has been delivered by the Government. This budget represents a belated admission that the budgets since 1997 have failed to address gross inequality; to eliminate poverty; to protect the disadvantaged and people with special needs. If some of these issues are now being addressed, it is to be welcomed but this could and should have been done from day one, in 1997.
Contrary to what the Minister for Finance stated, the Government was indifferent to the plight of the disadvantaged until the reality of the electoral repercussions of its neglect of the most needy sections of society started to bite and the prospect of massive seat losses began to loom. Seven years of "McCreevyite" economics have deepened the inequalities in society. Instead of using unprecedented resources to redistribute wealth and close the poverty gap, the Government has worsened social and economic inequality in every budget since 1997.
The Living in Ireland survey of 2001 estimated levels of poverty in the State. By its reckoning, over 700,000 people had incomes so inadequate that they were deemed to be living in poverty. Of these, over 250,000 were children. All the front line agencies agree that while there have been some improvements, this level of disadvantage and inequality persists in 2004.
Capital funding increases are to be welcomed but one should not forget that we are playing catch-up. The failure of the Government to allocate adequate funding to social housing, child care facilities and the development of public transport infrastructure has had a negative impact on the economic competitiveness of the State. There will be severe repercussions for the economy if these policies continue to be pursued.
Sinn Féin has called on the Government to address the State's social provision and infrastructure deficits, specifically through measures on child care, housing and health. Government inaction on housing and the provision of affordable child care has the inevitable effect of driving up wage demands. Workers who are forced to pay extortionate prices for houses and child care need wage increases to pay for these necessities. The Government is pursuing a policy of wage restraint in exchange for tax cuts, while ignoring the root causes of wage demands, such as the lack of affordability for such essential items as housing and child care.
In the case of social spending, well managed short to medium-term investment will often yield medium to long-term savings as other direct and indirect costs are reduced. To invest in health, education, transport, infrastructure and housing is to plan for the future. The underlying problem is that the State is not raising enough taxation to pay for the public services which need to be delivered.
Public expenditure has fallen from 39.1% of GDP in 1990 to 30.1% in 2004. How can this be justified? The tax model in place is not adequate to provide European norms of public service, yet this is supposedly the richest state in Europe. Low levels of public sector provision is heavily subsidised by high VAT rates, which hit the poorest sections of society hardest. It is the policy of the Government to rely heavily on high indirect taxes as the major source of revenue, with almost half of all taxation revenue raised from expenditure taxes. At 21%, VAT is high compared to Britain where the rate is 17.5%. Our high rates pay for the low corporation tax rate.
The use of the term "giveaway budget" in reference to any budget which gives even a little to the less well-off is misleading and invariably accompanied by the suggestion that the less well-off should be grateful for whatever small increases they receive in welfare, etc. While one budget cannot be expected to undo the damage done during Mr. McCreevy's seven years at the helm of the Department of Finance, it should have been used as a starting point for reforming the taxation system to create an equitable and fair system in which the wealthy and businesses pay their fair share of tax, one which is used as a tool to create an equitable society.
Budget day is all about presentation. We must ask ourselves if the average citizen is really much better off when one considers the rate of increase in the numerous stealth taxes people are forced to pay, for example, waste charges, tolls and so forth. Deputies will be aware of many other examples. At every turn, one finds massive increases in charges, which are being introduced on a weekly or daily basis.
Sinn Féin welcomes the fact that the Minister has increased tax credits. This was necessary to address the plight of the low paid and is a belated attempt by the Government to live up to its promise to take those on the minimum wage out of the tax net. Increasing credits benefits all taxpayers but gives the highest proportional benefit to the less well-off. The widening of the lower tax band is welcome. It is right that those on the average industrial wage should pay tax only at the standard rate.
The number of people being pulled into the higher 42% rate has been increasing. In 2002, 26.7% of taxpayers had part of their income taxed at 42%, with the rest liable at the standard 20% rate. By last year, the percentage caught in the higher rate had risen to 32.6% or one third of taxpayers. It is not acceptable that many people struggling on wages just above the minimum wage will continue to pay income tax. Sinn Féin would have preferred the Minister to place greater emphasis on these people, rather than splitting the benefits of tax changes by increasing tax credits and expanding the tax bands. We must ensure that those who are most disadvantaged derive the greatest benefits from the budget.
The Minister's statement that he has closed down tax loopholes is incorrect. For years, Sinn Féin has called for a review of a number of reliefs but the Government has refused to establish one. Let there be no confusion on this issue: Sinn Féin is not referring to tax reliefs for ordinary citizens, such as mortgage relief, but those to which Deputy Boyle alluded, namely, reliefs which have massively benefited speculators and others, while providing virtually no benefit to society in general.
While I welcome the fact that an evaluation of all reliefs and incentives is to be undertaken and that follow-up measures will be included in next year's budget, we should not have to wait so long for such measures to be introduced. In addition, a number of unjustifiable tax loopholes should have been closed in the budget. I specifically have in mind those available to the horseracing industry, which one reasonably have expected to end with the departure of Mr. McCreevy.
The Minister for Finance and the Revenue Commissioners are still not able to tell us the cost of a whole range of tax giveaways for which this Government is responsible, including tax breaks for holiday home developments, hotels, multi-storey car parks, sports injury clinics and a number of others itemised by other speakers. We will probably never know how much has been lost through these scams which only benefit profit wealthy speculators.
Why has the Minister not introduced measures to establish a base line of taxation to ensure that where justifiable tax incentives are available, they cannot be exploited by the wealthy for tax avoidance purposes? Capital gains tax should be increased for speculative owners of multiple dwellings. For far too long, the Government has promoted investment in property at the expense of ordinary workers trying to secure a home. This is unacceptable.
Sinn Féin called for child benefit to be increased to €150 per month for the first and second child and €185.50 for third and subsequent children. Child benefit is recognised as the single most effective social welfare measure for addressing the needs of children. While increases are welcome, they are not adequate if this benefit remains the Government's stated preferred method for assisting families with child care costs. Sinn Féin called for a child care supplement to be paid to top up child benefit for children under five years. This budget will do little to address the difficulties faced by parents in securing affordable child care. This will have repercussions on the economy and competitiveness in terms of the failure to attract young mothers into the workforce.
The provisions on funding for social housing are disgraceful and inexplicable. Approximately 60,000 households are on local authority waiting lists. This budget will mean little to this group of people, primarily low income families who have no hope of ever being able to buy their own home. The changes in the area of stamp duty will mean nothing to them.
Sinn Féin has called for adequate funding to be made available to increase the total social housing rental stock in the State by 30% to ensure appropriate accommodation is built for differing sizes of families and the needs of single people are adequately catered for. We have also called for a target to be set for the elimination of waiting lists by local authorities, with an immediate target of 70% of applicant units to be provided with suitable accommodation within two years of being added to the list. Surely this is reasonable.
In recent days, the Government's attitude to social housing was flagged up by the Minister for the Environment, Heritage and Local Government when he attempted to place the full blame for poor delivery in the construction of new social housing units on local authorities. This is not good enough. For several years, one of the most incompetent Ministers of State for a long time has been telling us that there is no problem with regard to the number of social housing units being constructed. He has persistently cited the overall figures for the construction of housing units to hide the low level of construction of social housing. It is clear that some local authorities wish to withdraw fully from providing social housing. The Government has not taken on board the severe difficulties faced by cash-strapped local authorities which are attempting to secure land for the construction of housing. If the Minister is committed to this issue, he will reintroduce the original Part V provisions of the Planning and Development Act 2000, which were repealed by his predecessor. Tenants in rented accommodation will welcome the tax relief, but in the absence of rent control, this amounts to the Government subsidising rack-renting landlords, the vast majority of whom have failed to register with the private residential tenancies board. That is most unfortunate.
The positive measures introduced in the budget are not attributable to the Government. They are attributable entirely to those very clever people who voted against the Government last summer and who scared the daylights out of it. Long may they continue in ever greater numbers to support parties like my own, because that is how change will be brought about.
I thank my independent colleagues for allowing me the opportunity to respond to this budget debate. This is the eighth budget of this coalition Government and it must be seen in that context. There is a little more spending on human services and social supports, but the fundamental right-wing orientation of the Government remains unchanged.
The background to the budget is a deeply divided society, with inequality greater than any other country in the world, except the US. Writing in Working Notes after the last budget, Robin Hannon of the European anti-poverty network summed up the situation as follows: “Ireland has the lowest overall tax rates, the lowest spending on social provision and the highest poverty rates in the European Union. This is not a coincidence; it is the result of political decisions.” As a result of those political decisions, we have a deeply divided society. The gap between rich and poor has widened each year until it now stands at €294 per week, or €15,288 per annum. Of our children, 66,000 now live in consistent poverty and a further 237,000 live in relative poverty and 700,000 people are at risk of poverty.
Relative poverty has been on the increase steadily over the last seven budgets. Child poverty is a scandal, particularly when there is so much wealth in our society. It is a scandal not only because it has a major impact on the current quality of life of children, but also because it can shape their future lives. Children who experience poverty are likely to have high mortality rates, develop literacy problems, leave school early and without qualifications, become involved in drug and alcohol abuse and anti-social behaviour, experience unemployment and ultimately die young. Their lives are blighted.
There is strong reason to believe that relative poverty is at the root of much ill-health and anti-social behaviour and violence in our society. The greater the relative poverty, the more people affected feel rejected by society generally. Though consistent poverty has lessened during the boom, relative poverty has increased and this budget is not sufficiently generous to reverse that trend. Pursuit of inequality by the Government over the past seven years has widened the gap between rich and poor and is responsible for the worsening incidence of anti-social behaviour in our society. The economic growth that we have experienced over those years has been created by hard-pressed PAYE tax-payers who have invested in this country, together with the self-sacrifice of parents and the diligence of students.
Sadly, while PAYE workers invested in this country, the rich and powerful ripped off the country through bogus non-resident accounts, off-shore accounts and planning corruption. That growth has been unequally distributed. The gap between the income of employees and that of big business has also widened. According to the Central Statistics Office, employee share of national income has decreased by 13% over the last ten years, while the income of big business has raced ahead. This is a result of conscious political decisions by the Government. Workers were persuaded to restrain their incomes under the so-called partnership agreements in return for tax-reductions, but the Government gave huge tax relief to business over and above PAYE workers, even while they had restrained their legitimate demands. Employees have done relatively very badly out of the economic growth. We now have the growing phenomenon of the working poor.
To cap it all, tax concessions to PAYE workers are now being clawed back through stealth taxes of all kinds, such as bin charges, utility charges and the failure to index income tax bands. It calls to mind the decision made this week by Dublin City Council, supported by all the political parties, to introduce and connive at the introduction of a €340 bin tax, almost double the current figure. Hundreds of thousands of working poor are living in areas blighted by anti-social behaviour and lacking in human services. Calls to the Society of St. Vincent de Paul have risen from 6,096 to 10,907 in the nine months to September 2004. The society claims that an increasing number of those calls are from those in work, but on low pay.
Growth in the economy in money terms for 2005 will be approximately 8%. The increase in income will be something more than this. The lower projection set out in the budget is fictitious, as was the projection last year. Today's budget will have little distributive effect. The share of national income going to the poor, middle and low income families will remain largely unchanged.
What we have here today reminds me of an attempt at a three card trick. Arriving at the square in Thurles on Munster final day, one will inevitably find the man with the table and the three cards. We have an attempt to create an illusion of dramatic and substantial change in Government social policy. It is a cynical attempt to trick the public into thinking that this Government cares. We have a Government which has created huge inequality in our society. It was found out in the recent local and European elections. It is now engaged in a cynical ploy, a smoke screen to try to project a new social conscience and a so-called caring image. Any analysis of this budget shows that the rich and powerful in society continue to call the shots.
That is the context within which we must view this budget. Having squandered the wealth of the Celtic tiger years and created a super-rich class, many of whom do not pay tax, having perpetrated the two-tier health service with instant health care for those who can afford it and trolleys in corridors for those who cannot, having ignored the educational needs of primary and secondary students, the most needy of our children and having demoralised and ignored until now people with disabilities and their families, the plan is now to give the impression that this new caring Government is prepared to undo the wrongs and injustices of our society, wrongs introduced by the Government in the first place.
Following years of neglect with surpluses of billions of euro, this budget amounts to crumbs from the rich man's table. This will not reverse the inequality produced by Fianna Fáil and the Progressive Democrats, nor will it change our status from being the most unequal society in the European Union. There is no evidence in the budget of any strategy to redistribute wealth and create a fairer, more equal society. There is no evidence of a genuine attempt to tackle the huge inequalities of the two tier health and education systems, or anti-social behaviour and urban deprivation.
The additional funding for disability services is most welcome, but it is only a first step in addressing the needs that have built up over years of neglect and discrimination. In page 16 of the Budget Statement, there is an assertion made that 800 additional residential respite and day-care places will be put in place. This is a misleading figure when it is placed against the 3,000 people who are waiting for these places. A little done, a lot more to do for the need for a rights based disability legislation.
Hear, hear.
There is no evidence of any attempt to tackle the inequality of the two tier health system. We have an instant service for those who can afford it, but those who cannot must wait. In 1997, 37% of the population had medical cards as opposed to 26% today. There are 200,000 fewer people entitled to medical cards now than in 1997. The level of coverage has been reduced on grounds of income alone. The exclusion of many low-income families is unique in Europe and has contributed to Ireland's stark health inequalities between the haves and have nots. The second-rate doctor-only medical card introduces further inequity into the system. The Government has again reneged on its promise to grant 200,000 additional medical cards. This yellow pack medical card, as it were, is a cynical ploy to undermine the entire medical card system. In a short few years it will become the majority card. At renewal time applicants will be told their last card was granted on compassionate and medical grounds. They will get the all-new second-rate doctor-only card and will have to pay for medicines, the prices of which have also been increased in the budget.
The budget does not tackle the apartheid of the health system. We continue to have an income based system with health services for the wealthy haves and waiting lists for the have nots. There is also a geographical based apartheid. Cancer patients in counties such as Waterford, Limerick and Sligo are being deprived life-saving radiotherapy services. BreastCheck is still not available in the south or the west, despite 65 women dying annually from breast cancer in these areas. The small amount of additional capital funding will I hope be used to ensure general hospitals such as those in Monaghan, Ennis, Mayo, Tuam and Cashel are looked after.
The most despicable part of the budget is how it deals with children. There has not been an increase in the child dependant allowance since 1994. The Society of St. Vincent de Paul proposed that it be brought up to current standards with an increase of €11.20 per week. Not a single cent has been allocated in the budget. With regard to children's allowance, the Government target of €150 per child for the first and second child needed an increase of €18.30 per week, while the Government target of €185.40 for third and subsequent children needed an increase of €20.10 per week. Approximately half these amounts have been provided.
There is no provision in the budget for child care, not even a mention. Some 66,000 of our children live in consistent poverty, another 237,000 in relative poverty. Shame on the Government.
The issue of carers is another which has not been addressed. Their situation remains unchanged by the budget. A carer will get approximately 82c per hour for caring on a 24 hour basis. There are 149,000 carers, of whom one in six receives carer's allowance. If one falls into one of the social welfare categories, one loses one's social welfare payment also. There has been no attempt to deal with this issue which has been raised repeatedly by the National Carer's Association. Carers save the State approximately €1.6 billion per year. Today's increase of €14 is the same as other social welfare increases and gives a carer an extra €4.80 per week to look after a family member who is ill. This amount is shameful and must be increased.
The social welfare increases will be commented upon in the media. National anti-poverty strategy proposals have not been met in the budget. The Society of St. Vincent de Paul whose members work at the coalface recommended an increase in basic social welfare payments of €20 per week. It said a minimum of €15 was necessary. A sum of €14 has been provided in the budget which is less than the target and what the society seeks.
Pensioners have done worse. They have only received an extra €12 per week when they needed a minimum of €14 per week to meet the targets set by the national anti-poverty strategy. Widowed pensioners under 66 years of age have done even worse. They must live on €154.30 per week. If one is in receipt of a non-contributory pension, one must live on €148.80 per week. I invite any politician in this House to live on this amount. The social welfare increases do not meet the minimum amounts required as laid out by the national anti-poverty strategy and the Society of St. Vincent de Paul to begin to address the issue of poverty.
The small increases in employee tax credits ensure that while the minimum wage will be removed from the tax net, it will be back by the middle of next year. The 42% rate has again not been index linked. It would have required an increase of an additional €4,500 in the tax band. The Minister has only taken an additional €1,400. The PAYE worker is again being short-changed.
I could address many other areas such as housing, decentralisation and a reduction in moneys for flood relief measures. There is a current budget surplus of €5.5 billion which has been largely invested in physical infrastructure such as roads and broadband. This will serve many future generations. It is normal in most EU countries to borrow for such purposes and would allow for large increases in health, education and social services. By increasing health, education and welfare budgets by little more than expected growth rates, the Government is saying patients, pupils and the poor must continue to suffer now in order that future generations can enjoy free infrastructure. The priority given to infrastructure over people is economic nonsense and seriously endangers the future of the country. In a modern world the most important infrastructure is a healthy and well educated population. We have not heard of a serious investment programme in health and education. The goals of a knowledge society and world class service are mere verbiage.
The budget indicates no real change in the orientation of the Government. The shots are still called by the rich while the front men mouth about socialism.
Sitting suspended at 6.40 p.m. and resumed at 7.10 p.m.