Financial Resolution No. 6: General (Resumed).

Debate resumed on the following motion:

THAT it is expedient to amend the law relating to inland revenue (including value-added tax and excise) and to make further provision in connection with finance.

—(Tánaiste and Minister for Justice, Equality and Law Reform).

The Taoiseach

This budget is designed to sustain the strength of the economy over the next few years, as well as making a further substantial contribution to a fairer and more socially friendly Ireland.

We are living in the midst of an astonishing period of national development. We are at last bringing about the realisation of the immense potential in the land and people of Ireland that generations of patriots hoped for and dreamed of, but which sadly they never lived to see.

This is a budget of commitments, meeting them and making them. It is a budget for workers, enterprise, pensioners and family. In the past 20 years, employment has virtually doubled to well over 2 million people. Involuntary emigration is a thing of the past. Instead fellow-EU citizens and some people of other nationalities have come to make their indispensable contribution to our economic life. We continue to have consistently the highest growth rate in the eurozone. Inflation has been held at low single figures, in line with the rest of Europe, despite much higher growth rates, and it is well controlled with the help of the social partners. From being one of the least healthy countries financially, our national debt relative to national income, after taking account of the national pension fund reserve, will be brought down to under 15% of GDP next year.

The budget is an entirely responsible one, designed not to overheat the economy and to give us a substantial safety margin if the existing environment should disimprove. External conditions permitting, uninterrupted momentum can be maintained through next year and beyond, provided our broad strategy is adhered to.

Yesterday's budget from the Minister for Finance, Deputy Cowen, marks not just another milestone towards substantial reform and development, it is, in key respects, the culmination of the coherent strategy of a series of budgets in recent years. Inevitably, public attention has concentrated on some of the specific measures announced in the budget. While these are important and worthy of comment, I want to focus this morning on the bigger picture, the results which our overall budgetary strategy is producing and the foundation which has been laid for further sustained progress in the years ahead.

I emphasise the extent to which I have always seen my Government's strategy as being at the service of our people, those who are working hard to raise their families and create the best possible future for their children, our entrepreneurs, who are building world-class businesses in the face of stiff world competition, our older people, who have seen far too many days of long struggle and hardship in the past and who now deserve comfort in their retirement, and our vulnerable and disadvantaged citizens, who badly need our support if they are to live with dignity.

There is no Government presumption in this. We know that the consistently good revenue performance of recent years is due to the new investment made in world-class projects, small and developing businesses, professional and business services, tourism ventures and farm and agribusiness across the country. It is due also to the hard work, flexibility and skill of the more than 2 million people at work in this State. We know that their efforts and those investment decisions need the right policy framework. The responsibility lies with Government to create that environment, through our economic policies, budgetary arrangements, our approach to flexible and smart regulation and our willingness to listen and respond. It is for Government to provide confidence in the future and in our capacity as a country to manage the relentless change sweeping the global economy.

Far from believing that it knows everything, the Government has been at pains to listen and to take on board what it hears. We listen to those struggling to compete in world markets, international investors who have options to locate major projects almost anywhere in the world and our universities and international research experts about how to create a new platform for knowledge-based activity. We listen to technical experts and project managers about how to get better value in our massive commitment to infrastructural improvement.

We listen in particular to the social partners. Earlier this year, we concluded a ground-breaking ten-year framework agreement with the social partners. We have continued and deepened the partnership process as the most effective way of marshalling all of our resources for the benefit of all our people. The Government knows what is required to sustain and develop this approach, which is the envy of governments and societies around the world, large and small, because they understand the critical part it has played in the Irish success story.

If there is arrogance in the Irish political system, it rests with those who think that democratic government has to be some sort of merry-go-round, where parties have an automatic entitlement to take their turn at the levers of government at regular intervals. Democracy does not involve any such entitlement that is not earned.

Mr. McCormack

Except when it is not working.

The Taoiseach

I believe that the people deserve the best in terms of reliable and experienced leadership, capacity and hard work. In this budget, the Government has shown again why it merits the people's continuing confidence in its commitment and capacity to serve them.

In framing his budget, the Minister has been aiming for an outturn which would sustain the strong performance of the economy, continue on the path of fiscal sustainability and increase the impact of positive redistribution on those in need. The remarkably strong revenue performance in the current year has led some Members opposite to make extraordinary claims. On the one hand, they argued that our strong performance showed that taxes should be lower, that the Government did not need the money because public spending was high enough and could be funded through lower taxes, and on the other hand, they argue that there should be higher public spending because the resources are now available for an unlimited spending spree, except, of course, that it would be irresponsible of the Minister to embark on such a pre-election splurge. These contradictory statements are sometimes expressed back-to-back by the same Opposition politicians.

Some, who definitely know better, choose to ignore altogether the economic effects of fiscal policy on inflation and competitiveness as if the only issue that mattered was balancing the books by spending up to the limit. Happily, we have a Minister for Finance and a Government that have a fine record of delivering what the economy requires in the present and for the future.

A targeted general Government surplus of 1.2%, a forecast debt ratio of 23%, an increase in gross current spending of 11.5% and an increase of 13% in gross capital spending are budgetary parameters which are the envy of Europe and indeed further afield. They represent a fiscal path that will underpin the future strong performance of the economy and sustain progressive real improvements in incomes and living standards, which the Government is committed to achieve in its agreement with the social partners, Towards 2016.

The budget continues the strategy of investing approximately 5% of our GNP in developing and modernising our infrastructure. Since 1997, and by the end of this year, 400 kilometres of motorway and dual carriageway will have been completed and opened. Our public transport system is being transformed through investment in buses, rail and Luas. We are doing in half a generation what other societies implemented over decades. The national development plan, which the Government will publish in January, will chart the way to fulfil our ambition to have a world-class infrastructure appropriate to our needs, developed in a timely and cost-effective way.

This budget is not just concerned with building for the future through responsible fiscal policies and ambitious investment programmes, important as they are. On the contrary, it is equally concerned with our current needs. I want to stress four key features of the budget in that regard: it completes a transition to a more equitable tax and welfare system; it maintains and deepens our strategy to reward work and enterprise; it provides real support for families with particular needs at critical stages of the life-cycle; and it provides incentives to deepen our competitiveness on a sustainable basis.

I take particular satisfaction in knowing that the Government, in this budget, is achieving, and indeed exceeding in many cases, the targets which we set to attain, a better standard of adequacy in the social welfare payments for the most vulnerable people in our society. The full year cost of the measures announced yesterday is a record €1.4 billion, and is a demonstration of our commitment to the less well-off in our society. The Government had committed to increase the old age pension to at least €200 per week and, in this budget, it has more than delivered on that commitment. By increasing the non-contributory pension by €18 per week, we are doing this, not just for recipients of contributory old age pensions, who will now receive €209 per week, but also for non-contributory pensioners.

We also committed to increasing significantly the lower rates of social welfare and agreed with the social partners a target to be achieved by 2007. In this budget, we are completing the transition to this substantially better income support for the most vulnerable in our society by increasing these rates by an unprecedented €20 per week. This means that these lowest rates have increased by over €50 a week in the last three budgets.

A particularly important measure in promoting social and gender equity is the decision announced yesterday to achieve, over three budgets, the transformation of the current qualified adult allowance for the dependants of non-contributory old age pensioners into a full pension of equal value and paid in their own right. This new entitlement recognises in particular the role of those women who, because of social conditions in the past, did not have the opportunity to qualify for a social welfare pension in their own right, but who made a major contribution to their families and communities. This is proper recognition of the role and entitlements of a most deserving group in society.

The balanced nature of this budget package is also reflected in the tax provisions. Through the increases in personal tax credits of €130 for single people and twice that for married couples, and the increase of €270 in the employee tax credit, we are continuing to ensure that those earning at the increased minimum wage level remain completely outside the tax net. That means nearly 40% of earners are protected from having to pay tax, compared to 25% of earners in 1997.

This significant achievement, despite the further increases in the rate of the national minimum wage which was introduced by this Government, will cost €657 million in a full year. In addition, the entry point for payment of employee's PRSI is being increased, as is the threshold for payment of the health levy. These changes are evidence of our commitment to maintaining a very low tax environment for those on low earnings. It has long been acknowledged by the European Commission that we have the most favourable tax conditions for the low paid, which are incentives to take up work.

By increasing the standard rate income tax band by €2,000 per year for single workers and pro rata for married earners, the Government is ensuring that those earning the average industrial wage in 2007, estimated at just over €33,000, will not be liable to pay tax at the higher rate. Accordingly, 80% of income earners will continue to pay an effective tax rate of not more than 20%, in line with our commitments to social partnership and our programme for Government.

In reducing the higher rate of tax by 1%, but increasing the health levy by half of 1% for those earning in excess of €100,000 per annum, the Government is honouring its commitments in the context of strong economic performance and recognising the importance of those who can do so making an appropriate contribution to the cost of caring for our older citizens and others in need of our support. It contributes to the balanced and well judged character of the budget in achieving equitable and sustainable outcomes.

Turning to our strategy to reward work and enterprise, I again highlight the critical importance of maintaining tax and welfare systems which reward effort and enterprise. This is particularly important when we have made such progress in achieving our goals of improved adequacy of income support for those not currently in employment. Such incentives must be substantially overhauled if higher income supports are not to turn into a poverty trap.

The substantial resources applied to exempting those on the minimum wage from the tax net and ensuring that those on average earnings do not face the higher rate of tax are very effective in achieving precisely this result. The strong employment performance reflected in last week's household survey figures, showing employment growing here at twice the rate in the rest of Europe and especially strongly for women, provides clear evidence of the continuing success of the Government's strategy in that regard.

I particularly wish to refer to one aspect of the social welfare package, namely, the decision to abolish the waiting time for the back to education allowance in the case of workers made redundant who qualify for statutory redundancy and social welfare payments. This may not impact on many individuals, but for those who face the very difficult experience of being made redundant, in this measure we are providing a direct support for the acquisition of new skills and knowledge. It is right that we should support individuals who make the effort to improve their own employability in the face of difficult employment experiences.

By increasing the incentives for investment in seed capital and venture capital targeted at small business, the Government is also increasing the availability of finance to those who take the initiative to establish their own business. The dynamism of the small business sector and especially the willingness of people to establish new ventures is a critical test of the strength of any economy. We are fortunate in having many who are willing to invest their time, talent and energy and, above all, to take risks in putting their ideas into practice in the market.

The budget shows real flair and commitment in regard to support for families at critical stages of the life cycle. This budget is good for all families. For those with child-rearing responsibilities, the further increase in child benefit of €10 per month, the significant increase in child dependant allowance for families in receipt of social welfare payments and the doubling of the back to school allowance represent important practical support for the costs of child rearing. The increase in the rate of maternity benefit in the reckonable earnings threshold for payment of that benefit and the increase in the duration of paid and unpaid maternity leave by four weeks each represent significant improvements for women at a particularly challenging time in the balancing of work and family commitments and important social progress for society as a whole.

I am particularly proud of the improvements which are being made in the supports available to those with caring responsibilities within families. In addition to increases in the level of payment of the carer's allowance and the increase in the respite care grant, the Minister for Social and Family Affairs is introducing an entitlement for recipients of other social welfare payments to be paid a half rate carer's allowance in appropriate caring circumstances. This is a major innovation which will redress what many had come to see as a serious anomaly. It will recognise and support the invaluable work done by many people around the country who have assumed great burdens in enabling older people and people with severe disabilities to remain in their own home and community, and it will be rightly welcomed for that reason.

Another critically important issue facing many families is the need to care for those with disabilities. Last month, the Minister for Finance provided an increase of 10% in planned spending on disability-related services in 2007. This has been increased in the budget by a further €100 million in support of residential, respite and day places, as well as the centrepiece of our new national disability strategy, the independent assessment of need and the provision of service statements, commencing with children under five from 1 June next. It also enables substantial progress to be made in implementing our commitment to improved mental health services, set out in A Vision for Change.

For those families with caring responsibilities in respect of older persons, there is the important provision of €255 million in full year terms to enable a total of over 5,000 comprehensive home care packages to be offered to older people and their carers to enable them to stay in their own homes. There will be increased provision of residential care places and improvements in the nursing home subvention scheme, which the Minister for Health and Children will announce next week. We will provide assurance to older people and their families about the availability of care, the standard of care and the cost of care. With a further €40 million provided in the budget for improved health and personal social services, total spending on health will reach almost €15 billion next year and provide real supports for families and individuals across the whole spectrum of need for health and social care. In that context, the increase in charges for private beds in public teaching hospitals and the small increase in excise duty on cigarettes are entirely reasonable provisions.

On the needs of families at different stages of the life cycle, I wish to refer to the very important support now being given to first-time buyers. The doubling of mortgage interest relief provides real and valuable support for those who are facing the financial pressure of mortgages taken out on first homes over the past seven years, as well as those who are about to take on that responsibility. The Government is entirely right to provide support for all those who are facing this financial pressure and not just those signing a contract after the date of the budget. Furthermore, by providing support in this way, the Minister is seeking to ensure that it benefits the purchaser and is not taken by the seller in the form of higher house prices. Taken together with the substantial provision in the Book of Estimates for social housing and the continuing strategy to increase the volume and accessibility of affordable housing, the Government is showing its determination to continue the extraordinary record of achievement in housing output and increasing the capacity of young people to buy their own homes.

Our capacity to continue to improve the quality and range of our public services depends on the strength and performance of the economy. The budget recognises that a supportive environment is critical if we are to meet that challenge. Through the significantly improved regime to support investment in research and development through the tax system, through support for investment in energy efficiency on the part of business and through the very significant improvements in administrative arrangements and in increased VAT thresholds for small business, in particular, the Minister has acted to address issues which are of concern to Irish firms of all sizes in all sectors, such as the reduction in the regulatory burden. The improved conditions applying to the BES will be particularly welcome.

In addition, through the budget's support on a joined-up basis for the development of renewable energy systems, it is providing support not only for more secure and cost effective energy supplies, but for greater environmental sustainability at this time of heightened awareness of the importance of addressing the problems of climate change. Keeping Ireland green is an ambition common to all of us, but it needs to be done in a way that enhances living standards and quality of life.

In addition to these improvements in the tax environment for all businesses, I wish to mention briefly a couple of specific initiatives, which, I know, will be widely welcome in the sectors concerned. First, the decision to allow deductibility of accommodation services for conferences is a major boost for this important and growing segment of the tourism market. This will give a major boost to a segment of activity with great potential to support employment and income in the tourism sector. The dynamism of the tourism sector, which has seen visitor numbers comfortably exceed the 7 million target this year, gives the lie to the prophets of doom. We are not losing competitiveness and market share and the economy is firing on all cylinders, not just the construction industry. Government has got definite value for money from its expenditure on market promotion in the tourism sector.

The package of measures to support developments in farming will be rightly seen as important for those facing the challenge of adaptation to the new agricultural environment. The continuation of stock relief, improvements in the conditions applying to long-term leases of farm land and new arrangements for the purchase of formerly leased land will facilitate the necessary restructuring in farming. The increase in the farmer's flat rate refund of VAT to 5.2% will benefit all farmers. These measures complement the very substantial provisions agreed with the farm bodies in the context of Towards 2016, which provide a firm basis for rural and farming development in the period ahead. Additional support for the establishment of bio-fuel crops is a welcome boost to necessary diversification at farm level. Today, the spending that supports farm income comes as much from Government as the European Union.

The various measures which I have briefly summarised represent the transition to a more equitable and sustainable tax and welfare regime. Having achieved our targets, we approach the future from a position of strength and can judge the appropriate allocation of future resources to an appropriate mix of reductions in tax burdens, where surplus to requirements, and sustainable improvements in public services. Our choices will continue to be informed by responsible fiscal policy underpinned by the competitive success which generates the resources for allocation in future budgets. The measures announced yesterday provided clear assurance that competitive success can continue as investors at home and abroad respond to the supportive conditions created by the policies of the Government.

I am proud that the Government has committed well over €5 billion to increased social welfare expenditure since 2002. In the period, real social welfare rates to those on the lowest levels of benefit have increased by approximately 25%. Payments to those in receipt of contributory old age pensions have increased by €62 and by €66 in the case of non-contributory pensions, bringing them to €103 and €110 respectively in the case of pensioner couples. Having met our benchmarks, we can commit to maintain at least these real improvements in the years ahead and have the resources to address other priorities in the social welfare area at the same time.

We will commit resources year by year to the improved infrastructure and support services which our economy and society require in line with the priorities of the national development plan to be published in January. We are focused clearly and effectively on the goals for the long-term future of society which we set out with the social partners in Towards 2016. I am confident the continued pursuit of the strategy set out in this year's budget and the qualities of leadership and effective management which the Government has displayed will ensure that together we build a society, every aspect of which we can be proud. It will be a fairer, stronger Ireland. It is possible that by the time we reach the historically resonant date of 2016, the vision and aspirations of the founders of the State will be capable of realisation. I commend the budget to the House.

Mr. Kenny

Yesterday's Budget Statement was the defining moment of the Government's attempts to win the next general election. No Minister for Finance in the history of the State has addressed the Dáil with as much financial giftware as Deputy Cowen. No previous Government has had such an opportunity to prepare our people for the future challenges which lie ahead but unlike this one no previous Government has wasted the opportunities it had.

The budget provides an opportunity each year for the Government to signal the policy directions required to address the challenges our economy and society face. Those challenges should have been the priority yesterday. It is fundamentally the job of Government to protect the structures and observe the imperatives which drive economic growth and sustainability to ensure the society we want is funded properly. What is required is the protection of the taxation and Revenue regime built up since the 1990s to allow us to sustain and develop it to ensure Ireland remains competitive and among the world's most successful economies. We need a regime in which enterprise and commercial creativity are encouraged and rewarded and an Ireland in which jobs and opportunities reflect our community and future shape of society.

It is also the Government's job to create the environment in which a successful society can prosper. We must build a new Ireland from the bottom up in which family and respect for values are fundamental and in which care for each citizen is central in the context of the correct balance of rights and responsibilities. Such a society is one in which the innocent are protected and anti-social trends and criminality are punished and dealt with. Such a society is one in which the sick, elderly, mentally ill and young are served by a well-managed, planned and effective care structure. Such a society is one in which local services and administration are reorganised to support the creation and development of real communities with amenities, access to essential services and meaningful transport systems and in which effort is directed as much to the creation of decent, stress-free lifestyles as profit.

The Government's job is also to future-proof the country by organising its planning and investment to underpin long-term sustainability. We require proper planning and identification of future needs in the medium and long terms across all sectors and social, education and economic infrastructures. Education must be placed at the very core of our sustainability planning to equip the leaders of tomorrow with the skills and capacity to succeed and the standards and ethics to make wise judgments. We require a safe, sustainable environment for all and the putting in place of structural mechanisms and processes to protect and build that environment into our economic, financial, physical and social infrastructure. The function of accountable Government is to provide an equal and sustainable Ireland for all and it is against these criteria that yesterday's budget must be measured.

I welcome two budgetary measures especially. These are the increase in the old age pension and the package for small businesses, both of which are long overdue. I wish like other Members to pay warm tribute to our pensioners who were for so long the backbone of the economy. They built the country when times were tough and jobs and money were scarce. It was a time, ironically, when keeping a family together meant fathers and mothers taking the boat to England from where they could send money home. It was a generational reality which is unimaginable for families today. Their pension increase is, therefore, welcome and deserved. Overall, however, the budget is about dealing with the incompetence of the past rather than the needs of the future.

The budget takes little account of how families are struggling and people on good incomes are finding it harder to make ends meet than before. Its context is ten years of budgets, in which time, opportunities and billions of euro were wasted, and the achievement of two Irelands, one private and one public. One of those Irelands is very successful while the other is chaotic. Private wealth is met with public waste. Ten years, ten budgets and tens of billions of euro later, people who try to access vital services find themselves tangling with a system which is hopelessly out of step with the lives they lead, the standards they expect and the taxes they pay. We have seen €1 billion after €1 billion come and go. Never has a Government had so much money or achieved so little in its spending. Maximum spend has, in many cases, brought minuscule return. In private life the world is always on while in public life it is too frequently off thanks to Government incompetence.

The Minister for Finance, Deputy Cowen, said the budget was about reform and placing the citizen at the centre of our concerns, but the Government cannot deliver the necessary reform because it lacks the courage to make tough decisions. The mindset and practice that created the problems in our public services is not the mindset that can fix them. In the ten years and ten budgets the parties opposite have not been able to figure out or understand that when a Government spends money without exercising accountability and responsibility, without expecting and demanding reform, it ends up subsidising problems and not solving them.

Real reform will require a change of Government, a better Government and above all a Government for public services, working in the public's interests. Delivering those public services entails three fundamental requirements — competence, accountability and responsibility. We need to set a new gold standard in each. Every Minister should stand up and be accountable. We can have no more disasters of accountability like e-voting and PPARS. Every Minister should know that the hard work starts when the press conference ends and not vice versa. Every Minister should be able to take the credit and blame in equal measure. Any Minister reckless with the public’s money or clearly incompetent should be dismissed. If people want to see the difference between me and the Taoiseach, that is one. He did not act, I would have done.

What have the people got for their billions? They have got the reality of public life in Ireland in 2006, namely, waiting. They are waiting in their cars for hours on the way to and from work as happened this morning — two and a half hours from Lucan. They are waiting for hospital beds on lists that were promised to have been eliminated two years ago. They are waiting four and a half years for an assessment for a child with mental illness. They are waiting for neurosurgery, and cancer and brain surgery. They are waiting on trolleys in accident and emergency units. They are waiting for criminals who are running loose to be caught. They are waiting for gardaí to show up on the beat and deal with escalating crime. They are waiting for programmes to tackle the persistent literacy and numeracy problems in our schools.

This was a budget of missed opportunities. The budget continues the reckless expansion of Government taxation and spending without the necessary public sector reforms to ensure value for money. In the period 2000 to 2007 the percentage of national income devoted to Government current spending has increased by almost 7 percentage points from less than 25% to almost 32%, hardly the record of a low-tax, low-spend Government. The total tax burden is now approaching 38% of GNP, reversing a pattern of steady decline that characterised both the former rainbow Government and the early years of the present coalition. This places Ireland in the upper third of OECD economies in terms of the size of Government, debunking the myth that the Government has offered a low-tax low-spend economic strategy. As pointed out by Deputy Bruton, of the past four Government combinations, Fianna Fáil and Progressive Democrats from 1989 to 1992, Fianna Fáil and Labour from 1992 to 1994, Fine Gael, Labour and Democratic Left from 1994 to 1997, and Fianna Fáil and Progressive Democrats from 1997 to 2006, the only Government in that period to reduce the overall tax take was the Fine Gael, Labour and Democratic Left Government from 1994 to 1997.

This money is being poured into an unreformed public sector. The public will not see any significant impact. A recent study by the European Central Bank found that Ireland ranks poorly in public sector efficiency. The Government's national competitiveness council has also reported that "the rapid rise in current and capital public spending in recent years...has sometimes reflected not an increase in the quality or quantity of public services, but instead inflation of pay and non-pay costs".

The Government has not honoured its income tax commitments to ordinary families. In delivering its final budget, the Government will be acutely aware of its failure to deliver on its most specific tax promise in the programme for government, which was to ensure that no more than 20% of income-earners pay tax at the higher rate. The Minister has changed the basis of his calculations to disguise the fact that 31% of taxpayers will pay at the higher, 41%, tax rate next year. This means that 235,000 people have been let down by a Government that has failed to honour a clear commitment. It is indicative of the Government's priorities in this area that its other specific tax promise to complete the extension of the single low 12.5% rate of corporate tax for exporters to all companies was delivered on time. The Government has kept its promise to give more profits back to banks and property developers but not its promise to ordinary families on average incomes. This means that 1.4 million income-earners, approximately 65% of the total, who are not paying tax at the higher rate, will see little if any benefit from the budget as the impact of the small increases in the credits and bands will be offset by the rising cost of living.

It was also a budget in which the Government could have taken action in a targeted way on stamp duty. It was an occasion to relieve first-time buyers in particular without any adverse interference in the housing market. This is not a budget for hardworking families. An increase of €10 euro per month or €2.50 per week in child benefit will not put any dent in the €1,000 per month child care costs — the baby mortgage. Nor will it make any dent for families with a second or third child in child care. The Taoiseach made no reference to child care in his speech. These child care costs represent the major public priority in every major city in the country and the hardship being felt by hundreds of thousands of families is not addressed in this budget. The lesson was not learned prior to and since the Meath by-election. The stay-at-home spouse is still being severely discriminated against for making that choice, which was more than likely made in the interests of rearing children and is now being punished. The allowance and extension in respect of widows and widowers is miserly in the extreme.

The Government could have faced up to the reality of climate change and given some slight hint that it was aware that we now live in a carbon-conscious world. However, the budget does nothing of the sort. It displays the short-termism and the shocking casualness that goes from the very top to the very bottom of this Administration. Even apart from living up to our international responsibilities, particularly to the poorer countries which will be hardest hit by climate change, though they contribute to it the least, there are the stark economic consequences for us at home in fines, higher costs, higher emissions and eventually greater failure. Clearly action could have been taken in respect of heavier fuel using vehicles. However, this has been put off to another day with another kite to be flown for rebalancing within the overall tax system.

We are witnessing the early stages of a transformation of the global economy, driven the by the integration of 2.5 billion low-wage Chinese and Indian workers into the international trading system, rapid improvements in information and communications technologies, declining transport costs, climate changes and environmental degradation. Many developing countries have replicated the strategies that made Ireland successful — low corporate taxes and skills availability — and can now make the goods and services that higher cost companies in Ireland make. Camouflaged by a debt-driven property boom, the impact of these changes has appeared limited to date. That will not remain the case. The competitiveness pressures facing Ireland will become more intense than anything ever experienced before.

Already, our international competitiveness has deteriorated under the Government's watch. According to both the World Economic Forum and the IMD, Ireland's competitiveness rankings have dropped seriously over the past five years, reflecting a number of negative developments. Ireland is now the most expensive country in the eurozone and prices here continue to rise faster than in most comparator countries. Our share of world trade peaked in 2002 and has since been in steady decline. While world trade grew by an average of 6%, in value terms, per year between 2002 and 2005, the value of Ireland's exports grew by an average of just 2% per annum in the same period. Our manufacturing industries have lost over 32,000 jobs since the Government entered office. As a share of total employment, manufacturing has declined from 15% to 11% and has been overtaken by the construction industry as the single largest employment sector in this country. Ireland's balance of payments with the rest of the world shifted from a surplus as recently as 1999 to a deficit of €4.2 billion — 3% of GNP — in 2005. According to the Central Bank, the latter will deteriorate to a deficit of €6.9 billion — 4.25% of GNP — in 2007. These are not the achievements of a Government that takes the competitiveness of our industry seriously.

The Minister for Finance suggested that the budget measures announced yesterday will help to restore some of the competitiveness lost over the lifetime of this Government. Some of the individual measures are helpful. I welcome them and they are to be commended. A number of them were suggested by Fine Gael in recent months and years. I welcome, for example, the tax simplification measures for small business and the incentives for the provision of risk capital for entrepreneurs and other innovative small businesses.

However, much more needs to be done. Tinkering around the edges will do little to address the cost competitiveness pressures faced by struggling Irish manufacturers and other exporters. Some of the pressures to which I refer are as follows: the escalating costs from the badly-regulated electricity, gas and waste sectors; the escalating costs of delays from an under-developed transport system; and the exorbitant costs of office space and industrial accommodation that are a result of our dysfunctional planning system. One must also consider the escalating costs that are emerging as a result of the effective privatisation of water and sewerage schemes. The latter will become a serious political issue in the near future, particularly when one considers that charges in Sligo are €5.14 per 1,000 gallons and that small businesses, ratepayers and farmers whose supplies are metered will be obliged to pay continually increasing charges going forward.

Where are the policies to control Government imposed-costs in these sectors? Where are the measures to support the retraining of those put out of work by import substitution? If anything, the budget threatens to further undermine the competitiveness of small businesses and exporters. The relentless and uncontrolled increases in current spending and taxation, the extra pressure on inflation, the further stoking of the property market and the construction sector, the failure to do anything about the dangerous rise in household debt are all bad for small businesses and exporters and they give rise to a deeper fragility in the vulnerable manufacturing and business sectors. Construction inflation has risen and productivity and exports have fallen at a time when these sectors face critical challenges.

This budget represents a missed opportunity to advance the changes in the tax system that are required to ensure Ireland plays its role in protecting the global environment. Climate change, in particular, is one of the greatest economic and environmental challenges faced by Ireland and other high-income countries. Instead of making difficult decisions, however, the Government prevaricated and delayed, and has promised to take action only after further analysis, consultation and reflection. We are another report away from action. It is as if the Government has only just realised that Ireland's energy consumption patterns are unsustainable from a competitive, environmental and security perspective. The only significant commitment the Government has made is to set aside €270 million of taxpayers' money for the fines that Ireland will be obliged to pay for this Administration's failure to meet its emissions obligations under the Kyoto Agreement. This is an appalling admission of failure on the part of the Government to honour the commitments to which it signed up in respect of that agreement.

The Minister for Finance could have implemented proposals put forward by parties on this side of the House. I refer, for example, to those contained in Fine Gael's policy document, Energy for the Future, which could have helped bring about real progress. Among our proposals are the following: the introduction of legislation to compel all fuel retailers to blend bio-fuel into fuels such as petrol, diesel and home heating oil; the removal of all excise duty on bio-fuels produced from renewable energy crops — in practice, this would mean that producers would not be obliged to pay excise duty on the bio-fuels, which they produce, with the knock-on effect being that consumers would enjoy cheaper fuel at the pump; an open public competition for capital start-up grants for the establishment and operation of bio-fuel processing plants; and a requirement that all public transport and public service vehicles to convert, where practical and feasible, to using forms of bio-fuel, whether in their pure or blended forms.

In his budget speech, the Minister did not refer to the appalling situation that obtains on the M50. I refer here to the upgrading works, the opening of the port tunnel and the development of the new terminal at Dublin Airport. This matter has not been addressed. I recently put forward a number of practical proposals to the Taoiseach but there is no reference to them in the documents relating to the budget.

Disposable incomes and private wealth are rising, but what all the new challenges to which I refer have in common is the need for competent public action across a range of areas, namely, education, health care, crime prevention, environmental protection, transport and urban planning. Addressing these challenges will require private sector enterprise, combined with political leadership and competence. However, the Government has lost the trust of the population to solve problems that require public action. Confidence in public action has bled to death from a thousand cuts. I refer here, for example, to the following: the culture of unaccountability, at official and political level, in respect of delivery; a lack of reforms to accompany benchmarking; a lack of investment in staff training and better management; the bungling of IT projects; and the shambles that is decentralisation. With regard to the latter, the Minister's Budget Statement refers to a "presence" in the locations originally chosen in respect of the movement of 10,000 public servants, on a voluntary basis, inside three years. The decentralisation project has been a complete and utter failure.

The Government is comfortable with private affluence and public inefficiency. These challenges require a relentless pursuit of efficiency across the economy, in both the public and private sectors. The people of Ireland have been playing their part but the Minister for Finance and the Government have not.

The Progressive Democrats appear to have been suffocated in the fumes given off by SUVs.

Mr. Durkan

They inhaled too much carbon.

Mr. Kenny

It seems that the Minister for Finance, Deputy Cowen, still has doubts about them and took his own advice from many years ago by leaving them out.

I understand that the prison system, which comes under the remit of the Tánaiste and Minister for Justice, Equality and Law Reform, is seriously dysfunctional. I also understand that the design capacity vis-à-vis bed capacity is completely out of proportion. Spike Island, Shanganagh and the Curragh were closed. There is one sniffer dog for the entire country and cocaine is the new recreational drug for people throughout the country. There are over 250 prisoners in Cork Prison, which was designed to cater for 150. I understand that there are 300 prisoners on early release who did not return when they should have done and many of them are running loose. That is an appalling situation. Also appalling are the number of attacks on elderly people, the most recent of which was perpetrated against a priest in County Kerry.

The Minister for Finance stated that the concerns of the individual have been placed at the centre of the budget. I hope I will not be obliged to raise again the incompetency of the Minister of State at the Department of Health and Children, Deputy Tim O'Malley, in commenting on mental health. As has been pointed out by spokesmen of the Fine Gael and Labour parties, the proportion of the health budget allocated to mental health has declined under this Government. There is no fully equipped, multi-disciplinary unit in the entire country, 20 years after one was first recommended.

It has been said that the budget places the individual at the centre of its concerns. If the Minister of State, Deputy Tim O'Malley, feels that he can act to reduce waiting lists only on the basis of representations, let him speak to the parents of Jordan Kelly and understand their frustration. Let them be a guide to the many others who suffer the same frustration, telling him face to face how all they got from the Government were boxes of pills and sheets of paper detailing how one should rear one's child. That is the situation in 2006 in the area for which Deputy Tim O'Malley is responsible, and he should be ashamed. If he wishes to make any reparation for his half-hearted apology, he should visit those parents and understand what they must deal with.

The budget has not dealt with the problems of the homeless, and the Simon Community said in a press statement that 40,000 persons on the social housing list would receive very little support from the Government. Some 5,000 families are currently homeless, 1,361 of them in this city. I sometimes have occasion to walk along streets in the vicinity of Leinster House, and those huddled in doorways on a bad night in 2006 are an indictment of policy on homeless people in this country at a time when we can spend €5 billion on the day of the budget.

I also very much regret that the budget has ignored something I view as a great challenge and opportunity for Ireland today, namely, immigration. We have special responsibility in this matter, having exported our people not by the planeload or boatload but by the generation. Now it is our turn to do our bit and live up to our responsibility to welcome the stranger. It is not merely a matter of altruism, since the harsh reality is that we now need immigrants, those men and women who make such a dynamic contribution to our economy, and we will need more workers from overseas to sustain economic growth and prosperity in the years ahead. Growth rates for the next ten years are forecast to average 4%, meaning there will be a requirement for at least 300,000 immigrants to work in the country's service industries.

The budget proves that the Government is not planning for that challenge or opportunity. Consequently, Ireland has already admitted hundreds of thousands of new residents without putting in place the services they and everyone else need to make our daily lives function. The Government has effectively already added a new county to Ireland, the equivalent of the entire population of County Kilkenny. That was completely unmanaged and unplanned. True to form, on the benches opposite there is no one in charge. For that reason, we now have the equivalent of 27 counties vying for public services already hopelessly incapable of meeting the needs of 26.

The health service is already in crisis, and schools are unable to offer children a place. It is our children, Irish and immigrant, who are paying such a high price for failures here. There is a school in Tallaght with 200 children from overseas. As Deputy Rabbitte has pointed out, many of them do not have English as a mother tongue. Those children have been granted only two additional teachers to help them with their English.

I understand basic numeracy, and according to the Department of Education and Science, if one has 14 non-national children in a school, one is allocated a language support teacher. If one has 28 non-national children, one gets two such teachers. However, if one has anything over that number, one still receives only two language support teachers. Therefore, in a school in Tallaght with 200 children from overseas, the Department of Education and Science, whose job it is to provide for education, allows only two language support teachers. As a consequence, teachers standing in front of those classes are unable to do their job, and the children are unable to reach their potential. Such archaic, inflexible and restrictive conditions imposed by the Department of Education and Science should be scrapped forthwith. If the conditions are not flexible or functional, none of the children can learn properly.

Regarding immigration, we must create a system of public services that are fair both to Irish people and to those coming to work and live here. We must ensure that living standards are protected, that our streets and roads are kept safe, and that our country remains wealthy and strong for generations to come. It must be fair to the Irish and fair to the immigrant. This budget does not achieve that, since it signally fails to recognise the reality. In that alone, it is a singular failure. I recommend to the Taoiseach that when he appoints his new Minister of State, he give that person responsibility for immigrant affairs attached to his own Department but acting cross-departmentally so that the many underlying problems can be addressed in a comprehensive and effective manner.

That is important, as we should learn from the mistakes of other countries. We are currently attempting to deal with a situation in 15 or 20 years with which the United States contended for 200. The Netherlands, once liberal, have now become introverted, and France has serious assimilation problems. Ireland can now learn and provide the world with an example, based on our Christian and Celtic heritage, of how assimilation and real social integration can take place.

At the end of the next decade, Ireland will celebrate the centenary of the 1916 Rising. Those ten years will see further great change in our country. They will also herald enormous change globally: the inexorable rise of China and India; the emergence of Russia as an energy superpower; the continuation of the problem of Israel-Palestine; and the outcome of struggles in Iran, Iraq and the Middle East generally. There will have been two further presidential elections in the United States, with changes of direction and policy determined by the will of the American people. We will have dealt with the consequences of Europe's decision on the EU constitution and on whether Turkey should join. The African population will have increased by 50%, and 40 million English-speaking Indian graduates will have emerged into the marketplace. People with a PhD or a master's degree can now be hired for relatively little in Irish terms.

The Government has not planned for any of those challenges, and the budget has attempted to address only the Government's failures to care for its people, and only for now. It demonstrates yet again an inability to plan properly, target strategically, and implement successfully. We introduced individualisation and did not plan for its impact on child care. We failed to plan for the consequences of immigration, and when introducing tax systems to provide for nursing homes, no plan was put in place for a parallel system of high-dependency care that might be monitored with a degree of integrity regarding the level of decency, comfort and attention offered to the elderly.

This budget demonstrates an inability to plan effectively, target strategically and implement successfully. It does not correspond to my vision of an Ireland where the Government is accountable and there is an equal and sustainable society for all.

Mr. Rabbitte

Expectations around a budget have never been so high and the reasons for this are straightforward. The revenue yield from taxation as compared with forecasts at the time of budget 2006 were further out than a lighthouse. No Minister for Finance since independence had so many resources available to him.

The Government deliberately and calculatedly leaked its substantial contents in the days immediately preceding the budget. Different audiences were targeted day by day. The rhetoric was downbeat but the headlines were large. The pension would be increased to €208, the top tax rate would be reduced by 1%, mortgage interest relief would be increased and social welfare recipients would get an additional €20 per week. It is scarcely surprising that expectations were so high. Hard-pressed families believed they were getting the trailer. It turns out, however, that it was a matinee showing.

The end product lacks sparkle. There is no innovation, nothing novel and nothing risky. There is no imagination, just a safe targeting of interest groups that might show an electoral dividend. I welcome the positive features but I cannot help regretting what might have been achieved with €4 billion, a growth rate of more than 5% and a debt to GDP ratio of 25%. Once again, this Progressive Democrats-Fianna Fáil Government has favoured super-high earners in our economy and has failed to use the resources to relieve the strain on our society.

The Labour Party welcomes any reduction in taxation that will improve the living standards of people on low and modest incomes. Economic growth in our economy, coupled with wage and price inflation, means the tax code can and should be adjusted each year. That is the natural order of things. The question is not whether the tax code should be changed but how best to use the resources available. Fianna Fáil and the Progressive Democrats have made their choice. They have chosen to target resources at the better off and the super-wealthy. For years, they have delayed, obfuscated and delayed again in closing off tax loopholes that allow millionaires to pay no tax. In this budget, they have gone a step further by introducing tax cuts which skew resources to the better off.

Let us be clear. A 1% cut in the top rate of tax delivers more than €2,000 to a person with an annual income of €250,000. It gives nothing to someone on €32,000. The ready reckoner published by the Department costed a 1% cut at €228 million in a full year. This money is disproportionately targeted at people on high incomes. It provides some €2,000 extra for the person earning €250,000 but nothing for the person on the average industrial wage.

The budget tables tell their own story. Regrettably, the fictional families no longer have names; we all miss Duncan and Mary. Taking all the tax, PRSI and levy changes together, a married couple with one income of €30,000 gets €530 from the budget. The same couple on €200,000 gets €1,953. A married couple with two incomes on €30,000 gets €680, while the same couple on €200,000 gets €3,370. A single person on €30,000 gets €400, while a single person on €200,000 gets €1,913, almost five times more than his or her counterpart earning €30,000.

The motivation is purely political. There is no efficiency case for this cut. Where reform is needed is in the standard rate tax band, where people on or just above the average industrial wage are this year paying tax at 42%, PRSI at 4% and the health levy at 2%. Last year, a single person with a salary between €32,000 and €46,600 faced a marginal tax rate of 48%. The budget has increased the standard rate band by €2,000, or 6%, and the PRSI threshold by €2,200, or 4.7%. Wage inflation next year is forecast to be some 5.5%. This problem, therefore, remains unaddressed. The Minister's estimate for the average industrial wage for next year is €33,000. This means a person who earns only 3% more than the average industrial wage will next year again pay nearly half of any overtime or bonus in tax and PRSI.

Of the 50 stealth taxes introduced or increased by the Government after the last election, the non-indexation of the standard rate band was the greatest of them all. Psychologically, this means people have limited incentive to add to their income because almost half of any overtime or bonus is paid in tax. That is bad economics. It is a pressure point which directly results from the Government's need to hoover up money in 2003 and 2004 to pay for the last pre-election splurge. It is a pressure point which is not addressed by cutting the top rate of tax.

If cutting the top rate of tax is so important and helps to reward work, why not reduce the bottom rate also? Why was it so important to cut the top rate of tax but not the bottom rate? Why were the available resources not focused on increasing the standard rate band? One of the most striking elements of the budget is that the Government has decided to completely jettison its promise to the electorate that only 20% of taxpayers would pay tax at the higher rate. This was a promise made in the programme for Government and to the social partners in the recent partnership agreement. It has now been simply dumped. Instead, we are treated to a magnificent piece of sophistry which runs to six full pages, C23 to C28. This is fantastic stuff that merits close reading. There are two wonderful pages of dense, learned-sounding exposition and a further three pages of sums. It is complete balderdash; first-class, grade A, 18-carat balderdash. Let us reduce this to the simple arithmetic that it is. Average tax rates equate to one's tax bill divided by one's income. Marginal rates are the amount one pays on the last euro of one's earnings. The Government promised, clear as crystal, that only one in five would pay tax at the top rate. This promise was not made in terms of average tax rates, effective tax rates or anything else. It is that simple.

Before the budget, it was expected that 34% of taxpayers would pay at the top rate. Since the standard rate band increase is close to the expected rate of wage inflation, that position will not change after the budget, no matter what balderdash is cooked up for the Minister. I find it disappointing that the Department of Finance would go along with this kind of deceit. The Department has rewritten the time-honoured presentation of the different categories of taxpayer to meet a political purpose — a broken political promise.

I hope we have not reached the stage that because of one-party Government the Civil Service is beginning to feel the pressure and the need to bend the knee to every political whim of its masters. For as long as I have been a Member, the presentation was simple. There were essentially three categories of tax band — those exempt, those paying the standard rate and those at the top rate. This year the entire presentation of the tax bands in the Budget Statement has been changed. There has been a redesignation of the categories — those exempt, those paying at 20% or less and those paying at greater than 20%. The fiddling of the presentation allows the political promise that only one in five taxpayers would be paying the top rate to continue. Will a person above the average industrial earnings of €34,500 be liable to pay tax at 41%? The answer is "Yes". No amount of dividing it into income changes will alter that. If I have the wealth I can pay €50,000 to my pension scheme. What is my average tax payment? This is a fundamental misrepresentation. The Government promised only one in five taxpayers would pay at the top rate. The figure is closer to 34% or one third. The Department of Finance protects itself of course in carefully argued sophistry in the Budget Statement. For example, it states:

Based on the latest historical data ... an estimated 31.7% of income earners ... are liable to income tax at the higher rate for 2006. [That is my understanding too.] The corresponding projected figure for 2007 on a pre-budget basis is that 34.7% of income earners are liable to tax at the higher rate...

Given that the amount of increase in the standard rate tax band is approximately the same as projected price and wage inflation, about one third of taxpayers will continue to pay at the top rate. Some Members have been around long enough to remember Gene Fitzgerald and Mr. Haughey. I hope having one party permanently in office does not bring us back to the ways of the ancien régime.

One feature of the budget that has received little attention is the continuing progress of the individualisation agenda. Before individualisation, a married couple could fully transfer their tax allowances or bands to reduce their tax bill. It meant a couple could pay tax at the 20% rate, up to €68,000. Today, they pay tax at the high rate on €25,000 of their income, up from €23,000 last year. This issue is a real source of annoyance to many couples, including those with young children. Where one partner makes the decision to take time out of the workforce to care for children, they feel discriminated against by the tax system. It is, or should be, a principle of child care policy that we respect the choices of parents in how they care for their children. If a parent makes the choice to reduce their income in order to spend time with their family, the State should respect that decision.

Last year, the Minister for Finance pretended to the House that he was tackling the phenomenon of millionaires who do not pay tax, a matter which Deputy Burton raised consistently. The Budget Statement contained a heading, A Minimum and Fair Tax, in which the Minister stated:

We cannot stand over a situation in which some high-earning tax residents, through the use of incentive reliefs, can reduce their taxable income to nil. This is simply not fair...

I agree with those laudable sentiments. The Labour Party, and my colleague Deputy Burton, made the case for years. We were delighted that we had finally pressurised the Minister into acting.

It turns out, however, that he had a twin-pronged strategy to tackle the problem of millionaires who pay no tax. First, he produced a new way of presenting the data, ensuring no one could be reported as paying zero tax in future, partly by including DIRT in the calculation of income tax. Has one ever heard such a blatant contrivance? It is as if these millionaire tax avoiders were the little old widows with a few bob in the post office and were liable to DIRT. They are not paying zero tax anymore, they are paying tax on DIRT. Many of them were not paying tax on DIRT when they should have been but that is another story. Second, the Minister produced a complicated formula to restrict the extent to which individuals could avail of reliefs. The spin was that it was essentially a minimum effective tax rate on people earning €250,000. Of course, it was nothing of the sort. The formula, when the detail appeared in the Finance Bill, does not apply to all reliefs, and particularly not to the much favoured relief for super private clinics. In any case, the formula would not apply until 2007. So, once again, the super wealthy will get to pay no tax.

In that context, we should be cautious about the range of incentives being opened up by the changes to the business expansion scheme. I do not want to be in any way dismissive as there is a need to look at the available sources of venture capital, particularly for high-tech start-ups. There is a new breed of entrepreneur who has worked in the high-tech sector, perhaps in a multinational. They understand the enterprise culture of the high-tech area and are willing to make a go of it on their own. My colleague, Deputy Quinn, has been concerned for some time that there may be an issue with early seed capital for such ventures. If the Minister's proposals address that problem, then I will welcome them. However, if this is simply another way of opening up tax breaks to replace those he is talking about shutting down, then I will not.

Those fears could be simply allayed by introducing a minimum effective tax rate of 20% on incomes over €250,000. The tax code could be used in a selective way to promote socially desirable ends. It should not allow, however, individuals the chance to avail of those schemes to the point where they pay little or no tax. Equity is an important principle in taxation. The system should be fair and seen to be fair. As Fianna Fáil has systematically undermined the fairness of the tax system, we are entitled to consider the changes to BES in that light.

We also look askance at the proposals on mortgage interest relief. The further anticipated increase in interest rates today will wipe out the effect of yesterday's mortgage interest relief measures.

The Labour Party welcomes the increases in social welfare announced in the budget. Progress has been made on the adequacy of payments, which is important. However no attention has been given to reforming the social welfare system, which is badly needed. We have gone from having Deputy Dermot Ahern, whose lack of interest in the portfolio was manifest, in charge, through the savage 16 cuts of Deputy Coughlan, to Deputy Brennan. He talks a superb game and I have admired his PR for more years than anyone in the House.

Mr. Kenny

Well done.

Mr. Hayes

Well done.

Mr. Rabbitte

Mr. Rabbitte

As I said, there were welcome features in this budget, but the imagination deficit meant that the real issues which affect real people in their real lives were dodged. The budget contains few reforming measures, either of specific spending areas or the budgetary process. Once again, the budget confirms that Fianna Fáil and the PDs are determined to privatise health care. More money has been provided for home care packages, rather than for running a proper system of home helps. The Government could have used the budget to set out a new direction for the health service. It could have set useful targets for the building of new hospital beds, and new step-down facilities. It could have set out capital envelopes for these objectives and started to get on with the job. Instead, we will have to wait until January for the new national development plan, which will be a cross between Transport 21 and the last national health strategy. These were both great works of fiction, which could have been written by JRR Tolkien for all the relevance they had to the real world. Lavish promises will be made, and huge sums of money will be mentioned.

The people queuing in accident and emergency departments tonight do not need glossy plans and lavish promises. They need hospital and community care beds. This budget should contain detailed plans and funding for both. It contains neither. Instead, we are told to depend on tax-financed construction of super-private clinics on scarce public land. Once again, instead of treating health care as a community service, we will get more for-profit medicine, and more tax breaks for the wealthy. That is what Fianna Fáil now stands for.

The budget should have announced the ending of the disastrous scheme to build super-private clinics with taxpayers' money on scarce public land. It is a scheme that will fundamentally alter the nature of health care in Ireland, and for which the Minister for Health and Children sought no mandate and has no mandate.

The so-called national child care strategy stalled yesterday. There was nothing new to announce but the priority should have been pre-school education. The Labour Party is committed to universal free education at primary, secondary and third level. It should also apply at pre-school. The benefits of pre-school education for children, and for society, are well researched, well established and considerable. The Government will find no better investment than investment in our children.

Such an investment would also have made a huge impact on the problem of poverty and disadvantage. It sounds as if it could not be done but it would have cost approximately the same as cutting the top rate of tax. Eaten bread is soon forgotten, or should I say eaten cake given that the Minister has chosen to favour the wealthy few. Investment in free pre-school for all would still be paying dividends in 50 years' time but that would have required imagination. The extension of maternity leave is welcome although it was promised last year. It is a pity the Government did not see fit to bring forward proposals for a right to part-time work or to take a career break.

This budget was also silent on education. It is a sad commentary on how this Government functions that it can be committed to a knowledge economy but have nothing in the budget about education, particularly at primary level. There is no understanding of the funding crisis that faces so many primary schools. Education should be free but it cannot be cheap. Irish primary schools are run on a shoestring through a confusing system of grants. Inevitably, the energies of school principals in particular are devoted to fundraising and keeping the show on the road rather than to educational leadership. A modest amount of money, about a third or less of what was spent on cutting the top rate of tax, would have revolutionised the funding of primary education in Ireland. It would have a truly transformative effect on schools but the budget did not show that degree of imagination.

The budget was also virtually silent on transport. Is the Government ideologically hidebound or is it just disconnected from the everyday lives of people who rise at 6.30 a.m. to produce €4 billion for which the Minister for Finance expects so many plaudits by returning €1.6 billion to them? Once again the money spent on the top rate tax cut would have paid for the 500 buses that Dublin Bus needs. The Government persists in its refusal to provide buses while it waffles on about bringing in the private sector in the never never. People want to get to and from work today and, whatever the merits of Transport 21, people need buses today. We have quality bus corridors with no buses. The Government speaks of bringing in the private sector. Does it matter if the bus driver is wearing a private or public sector jersey as he tries to drive through the streets of Dublin? That is not the issue. The only immediate solution, as proposed by Roisin Shortall in the document published by the Labour Party, is more buses now. There is no reference to that in this budget. The list goes on. There is no understanding of the real needs of real people.

Issues, vulnerability and uncertainties confront the economy. There is over-reliance on construction for jobs growth and the property market is delicately poised. Growth relies on domestic demand rather than on export-led demand to a far greater degree than it did before. Inflation is too high and needs to be managed. In a small open economy in a monetary union, excess inflation means loss of competitiveness and loss of employment.

I would like to have heard the Minister for Finance address those issues. I would like to have heard a meaningful presentation on the medium-term prospects for the economy and how we can ensure more and better jobs through investment in people and infrastructure. I would like to have heard some real thinking on climate change, not just a proposal to pay for our failure to address it. I would like the Minister for Finance to address the question of economic management in anything other than a patronising manner.

Value for money is one element that he really should have addressed. In a small open economy in a globalising world, the competitiveness of the Irish economy depends on having a lean, agile Government, capable of responding to emerging needs. It means having a system of public expenditure management that can deliver value for money. Failure to do so imposes competitive costs on the economy and reduces the standard of living for our citizens. This budget made no mention of reform in this area. The Minister has disregarded the report published by the Committee of Public Accounts. The record on budgetary reform amounts to publishing the economic review and outlook in the autumn rather than in the summer and leaking the details of the budget for electoral advantage. That is regrettable, a missed opportunity and a cost to the economy.

Mr. Sargent

Tá mé ag roinnt mo chuid ama leis na Teachtaí Morgan, Cowley agus Ó Murchú. Bhí a lán daoine ag caint faoin gcáinaisnéis mar cháinaisnéis a bheadh, ar bhealach amháin nó bhealach eile, glas. It is clear we did not get a green budget. It was a half-hearted, short-sighted and profoundly conservative exercise and, given the amount of expectation, quite disappointing. Many commentators have described the budget as unimaginative. It is worse than that, it is not prudent. It lacks direction and does not address the fundamental economic and social challenges that have been staring our society in the face for many years.

There are many explanations for the Government's failure to deliver the promised green budget. Perhaps it is due to this Government's deeply rooted inability to plan ahead or because the Government has lost sight of the national interest, instead prioritising its narrow, partisan electoral interests, defined by its main backers. Perhaps the Government's failure stems from its Ministers being unwilling and unable to comprehend what it means to be ecological or think in a green way.

Green means sound economic, social and environmental policy based on solid analysis. It means securing economic development and social inclusion for children today and their children in future decades. Green means dependable, efficient public services. Green means decent services, not handouts to the most vulnerable in society. If yesterday's budget was green the Minister would have taken substantial measures to reduce the cost of child care and ended the means test on children's allowance. Green means warm well-insulated housing and high quality, accessible acute health care services. It means smart reforms of stamp duty to help first-time buyers, those who are downsizing and those with disabilities who need to move to an accessible house. Unfortunately, that has been overlooked by the Government.

It would mean progressive rather than regressive tax changes. This is not to say I do not welcome a number of aspects of the budget. Grants for planting bioenergy crops have improved, there are much-needed social welfare increases and measures to support small business and remove much bureaucracy are also very important. We depend on small businesses and I hope they will be the survivors when other economies, particularly in Asia, rob us of much of our foreign direct investment.

In addition to these specific measures, I welcome the Minister's admission after ten years in Government that environmental protection and economic progress can go hand in hand. Any economist knows that without a healthy environment or secure energy supply, a thriving economy is impossible. The Minister is at least paying lip service to this important principle.

To be clear, this budget is not green, and any attempt by the Government parties to paint it so is disingenuous and politically mischievous. In speaking about energy security and climate change, Nero would have been proud of the Minister's performance yesterday. The Minister, wrapped in a toga, should have been holding a small musical instrument, most likely a lyre from the time, while he made his speech. Climate change and energy supply are the biggest economic, social and environmental issues facing us and the Minister is, in effect, fiddling while Rome burns.

The Minister put the environment section of his speech high up in his script yesterday, but when I looked at the substance of the budget I was profoundly disappointed. The Minister spent most of his time speaking of past schemes and those which are simply being continued. Of the €300 million in new money announced yesterday relating to climate change, €270 million is being put into the carbon fund. Due to its own failures, the Government is sending the money out of the country instead of investing it in establishing a secure energy supply, creating jobs and supporting enterprise.

Where is the cost-benefit analysis on this expenditure? Like so many other elements of this Government's expenditure, there is none. For example, there was no cost-benefit analysis on the runway plan for Dublin Airport either. The €270 million being sent out of the country can be juxtaposed with the budget from 1987 when the then Minister for Finance, Ray MacSharry, was declaring how scandalous, regressive and objectionable it was for money to leave the country. The current Minister is boasting about sending €270 million out of the country, which is scandalous.

This is precisely the type of ex post facto expenditure referred to by the Stern Review on the Economics of Climate Change. It is too late and too much, with no economic, social or environmental return. I note the Government will attempt to shoehorn the Carbon Fund Bill into next week’s Dáil schedule, pushing it through without any serious debate. Our Ministers are so embarrassed by this policy failure that they would not have any substantial debate on the floor of the House.

I should make the Green Party's position on this legislation very clear. It is a symbol of the Government's complete failure on climate change policy. The Government's figures predict a 35 million tonne overshoot for the five-year Kyoto commitment period from 2008 to 2012, and while the EU is meant to cut transport emissions by 5% on 1990 levels, Ireland's transport emissions have increased by 150%.

We must invest money in combating climate change in Ireland. We should invest money in warm and well-insulated houses for first-time buyers, and we should also transform the Carlow and Mallow sugar factories into ethanol-producing plants that would give us some fuel security, as well as helping our Kyoto commitments. Dr. Mike Hopkins of Dublin City University has pointed to several alternatives, stating for example that more money could have been invested in biofuels, bringing savings in reducing heating and wastage.

The investment of €20 million in the greener homes scheme is spectacularly underwhelming. In a €60 billion budget and a country falling short of its Kyoto target by 35 million tonnes of CO2 equivalent, it is a drop in the ocean. To be honest, it is spin and nothing short of fraud.

The Minister's promises to consult on VRT and motor tax show a distinct political weakness. Is the Minister afraid to take his courage in his hands and make a decision before consulting the motor industry? The Minister's so-called environmental measures even fail the green-wash test. Responding to yesterday's budget, Friends of the Earth observed that the Government's cop-out is complete. If Deputy Brian Cowen was meant to be Santa Claus, the Irish people must be wondering what they have done wrong, as all he has given future generations is quite literally a lump of coal. The Government pays lip service to "the polluter pays" principle but the taxpayer is footing the bill in a completely irrational and unjust way.

The tax measures introduced are typically regressive, giving €150 to a single person earning €150,000 but only €35 to those earning €20,000 per year. This budget is exacerbating inequality and is failing to assist the working poor. The Government's attempt to obscure that it has broken its promise that middle-income earners would not pay tax at the higher marginal rate is desperate, transparent and pathetic. The promise was made on the basis of nominal rather than effective tax rates and I urge the Deputies opposite to stand and acknowledge that the Government has broken this promise to voters.

The would-be first-time buyer, those on social housing waiting lists and the hard-pressed young family trying to keep up with spiralling mortgage repayments are being squeezed by this Government's failures. I agree with Focus Ireland in its comments that the budget has failed to create a fair society. I see nothing in it for the 43,000 households on social housing waiting lists and I do not see the Government implementing the National Economic and Social Council's recommendations to build 10,000 social housing units each year from 2007 to 2013. While the extension of mortgage interest relief is welcome, it is simply necessary as the European Central Bank's probable decision to raise interest rates today will negate any value from the announced relief.

Measures to help parents providing care for their children were conspicuous by their absence, and the Minister announced the extension of what is effectively a failed scheme. We were waiting for some reference to education as we have the second-highest class sizes in primary school in OECD countries and the worst campus accommodation in Europe for third-level students, but we got nothing. The M50 again came to a standstill this morning with just one accident, and the indications are there that the Government is living in a parallel universe when it comes to people's daily lives.

I note the Minister for Health and Children is planning to spend €15 billion next year but with all this money being spent it is amazing the Government is getting it so wrong. My father told me somebody rang him out of the blue saying they were raising funds for a major children's hospital in order to purchase a scanner. My father asked me how after paying years of tax, he as a retired man was being phoned to be asked to pay for basic facilities in a hospital. There are 13,000 people on waiting lists. Why is the Government not implementing the national carers' strategy and why is there is no national positive aging strategy? We have documents but no action.

The Carers Association has observed that the budget does not go far enough, and full-time carers who do not receive the carers' allowance due to the means test are still left without any financial reward after the budget. I have no doubt we will continue to get representations in this area.

Why is the budget conducted in this way? Why is there no debate in the Chamber in the months leading up to the Estimates and budget, as that is when the Government would get some level of awareness of what is happening beyond the rarefied confines of Government Buildings. It would get an idea of long-term thinking, particularly from the Green Party, of how we need to plan ahead. The Government would also hopefully see the point of our climate change targets Bill, which would set down what needs to be done if we are to ensure our economic well-being, quality of life and survival. We could then plan around our limitations living on a finite planet. The Government seems to think it can buy its way out of every problem but that will not continue. The Stern report stated that unless 1% of global GDP is targeted at climate change, the world will face a recession on a scale that would put the First and Second World Wars in the shade. Is that what the Government wants?

Mr. Morgan

A budget is not about winning elections. It is not even about making everybody happy nor is it about satisfying the tiny minority of privileged individuals who support the Progressive Democrats. It should be about understanding what is needed and meeting those needs where the revenue is available to do so, prioritising the least well off and ensuring high quality accessible public services to meet the needs of the population. Is that what the budget does? Does it prioritise the least well off? Do those on low and average incomes gain most? Is delivering public services a priority? Does the budget set down a marker to address the deficiencies in health care and housing? The answer is a resounding "No" to all these questions.

Many aspects of the budget involve smoke and mirrors. The Government is attempting to give the impression that it is doing things it is not. The Government parties would like us to think that those on low incomes are the main beneficiaries of the budget. While the lowest rates of social welfare, pensions and the minimum wage will increase, these are all long standing commitments, which were made before recent increases in the cost of living. They are, therefore, not sufficient to keep people out of poverty. Above all, these are deserved and overdue increases.

Top earners do not deserve the windfall that will result from the reduction in the top rate of income tax. Have they been paying more than their fair share of taxation? The Government has tried to wrap this measure up and present it to us as "rewarding work". Do those who are more than well rewarded deserve more than hard working people on low and middle incomes? High income earners will share a €1.25 billion personal tax package. They will receive the cumulative benefit of the increase in personal tax credits, the benefit of the widening of the standard tax band and they are the beneficiaries of the 1% reduction in the top rate. High income earners will gain the highest increases in weekly pay as a result of this budget. As IMPACT stated yesterday, they are "three-time winners" and if that is not enough, the Minister made a commitment to further reduce the top rate next year if returned to Government.

As my colleague Deputy Ó Caoláin said last night, a remarkable feature of the budget is that those earning the average industrial wage — €30,000 per annum — gain least per week from the budget. Workers on €30,000 per annum gain €8 per week compared to gains of at least twice as much per week by those earning more than €35,000. This budget clearly increases inequality between the low paid and the high paid. While those on the minimum wage are being taken out of the tax net, the key question is the increase in the minimum wage. ICTU had argued for a minimum wage of €9.03 while Sinn Féin had put forward a proposal for €9.30. The minimum wage will only be increased to €8.65 and this will be staggered in two instalments in January and July.

It is disappointing that the Minister did not increase the restrictions on the use of specified tax reliefs for high income individuals. Restrictions announced in last year's budget did not go far enough. Ensuring that high income individuals pay their fair share of taxation demands that such restrictions be significantly increased. No high income individual should be able to write off more than 10% of his or her earnings through such exemptions. The Minister seems to think he has done enough on this matter but he has not.

I welcome the introduction of the higher rate health levy of 2.5% for high income individuals earning more than €100,000. It is an acknowledgment that high income earners do not pay their fair share. That is not their fault because Government policy is the problem. Sinn Féin has long argued for the introduction of a higher rate of income tax for earners on or above €100,000. It is surprising that the Minister would choose to increase the health levy for higher income earners while failing to remove the PRSI ceiling. The PRSI ceiling is fundamentally unjust, as it means that those whose income exceeds the ceiling pay a smaller proportion of gross income in PRSI than those earning less than the ceiling. The increase in the health levy will raise €34 million a year whereas the abolition of the PRSI ceiling would raise €282 million. This money would have augmented the social insurance fund and funded more significant increases in welfare rates or pensions. It could have been used to ensure better redundancy entitlements for workers in vulnerable sectors whose jobs are increasingly moving to low cost economies.

Another astounding feature of this budget is that it fails to help those hurt by increasing prices, particularly low income families who can least absorb these increases. The €4 increase in the fuel allowance is paltry. At a time of unprecedented energy price hikes, those struggling to afford to heat their homes will be shocked by this minuscule increase. While the Minister announced an increase of €20 million for the greener homes residential renewable energy scheme, no specific measures were introduced to help low income families move to renewable energy systems. Sinn Féin has called for full cost renewable energy grants for those on low incomes. The costs involved in installing renewable energy systems remain prohibitive for those on low incomes while these grants cover only a small proportion of the cost.

The Minister made no announcement yesterday regarding the warmer homes scheme, which provides funding for insulation and other energy efficiency measures in approximately 2,000 eligible homes each year. Sinn Féin proposed additional funding to enable the scheme to meet the needs of 10,000 homes a year, which would have cost only €8.45million. It would have reduced heating costs for low incomes families suffering as a result of ESB and gas price hikes and reduced energy wastage but the Minister chose to do nothing. A total of 62,000 families live in persistent fuel poverty and the Minister has utterly failed them.

He was at pains to give the impression that the environment is a priority for the Government. The Minister tried to convince us that the purchase of a further €270 million worth of carbon allowances is an environmental measure but that is a stunt. Taxpayers should not have to bear this cost. Had the Government acted to reduce emissions, it would not be forced to purchase these allowances. Ireland should aim beyond the Kyoto Agreement, which merely represents a minimum level with which all states should comply.

At first the changes in VRT sounded promising. Sinn Féin has long demanded that VRT be based on emissions output. However, the Government will instead engage in consultation on this and it will not do anything. The higher rate of motor tax announced for high emitting vehicles will not be introduced for more than a year and, even then, it will apply to vehicles registered after January 2008. Why is the Government purposely giving people a year's notice of this measure? It amounts to giving people a year to purchase their SUV and face no penalty in increased motor tax, which is ludicrous.

Lest Sinn Féin be accused of being entirely negative, the Government has done much for small business and indigenous business in the budget, which is welcome. Sinn Féin has consistently argued for the Government to shift the focus from foreign direct investment to supporting the development and expansion of indigenous industry. It is clear that there is a need to develop indigenous industry. The economy has become dangerously over reliant on both FDI and sectors such a construction, which cannot continue indefinitely. We welcome the increased focus on research and development. The levels of research and development in Irish industry have not been what they should have been. However, if the Government was serious about supporting small business, as it pretends to be, it would not allow the disgraceful way that the agenda of liberalising the energy market is damaging small business. ESB prices are being pushed up to entice others into the market to compete with the ESB. Prices are being pushed up to bring in competition, supposedly to bring prices down. It does not make sense. The increases announced by the ESB will hit low-income people hardest. The increases demonstrate that the regulator is not upholding its duty to take into account the needs of rural customers, the disadvantaged and the elderly. The Commission for Energy Regulation is not serving the interest of the people or of business.

Before I conclude, I will make an important point in respect of spending in the health service. The Minister announced record spending of €14.3 billion on health next year. We have had record spending every year during the lifetime of this Government, but it has failed miserably to deliver efficient and equitable health care services to the people. Money is being poured into a two-tier system that discriminates against the patient dependent on the public hospital system. The health strategy has been binned. The Minister for Health and Children's silly and illogical private hospital collocation plan is starting to unravel with the news that the proposed hospitals at Letterkenny and Galway will not go ahead. The Government and the HSE cannot agree how many additional hospital beds we need. Public money should be spent in the public system only, with equal access for all based on need alone.

I hope the Government will recognise the shortcomings it announced with yesterday's budget. I look forward to a change of Government this time next year when, hopefully, those low-income families can be prioritised and we can get some more equality into the system.

Dr. Cowley

I know there are some good things in this budget, but it lacks other things. The opportunity to do so much for our people who are suffering has been squandered. These are the people whom it was said the budget was aimed at. However, compared to what is still undone, this budget has failed in this regard.

I am very concerned because there are so many things to be done. The greatest question of all concerns the billions of euro that were there to be spent. Why was this money not used to good effect up to now? Will the Government direct the money to where it is really needed?

I am very concerned about older people in my constituency who must borrow money, maybe several hundred euro, to go to a basic hospital appointment. It might be an older person who has nothing except a pension, yet he or she must borrow possibly €110 each way to go from Achill Island to Galway to have a pacemaker checked, which is absolutely ludicrous. It does not make sense. Yet, this person has nothing else. This Government is failing this older person and so many others. I asked a question in this House as to why this was happening. I was told by the Minister for Health and Children that this was the responsibility of the HSE. After questioning the HSE and receiving information from it, it was very clear it is not getting enough money to be able to provide the necessary transport. Transport is limited to a number of categories, such as people receiving treatment for cancer, people with severe ischaemia of their lower limbs and dialysis cases. These are very deserving cases, but even allowing for the transport of those in these categories, others do not have transport when they need it because provision for the categories I mentioned have eaten so much into the budget provided. The pie is limited and even acute services are being jeopardised.

How can we come out of a budget like this with such glaring inequities in our system? A section of the population of older people must go into nursing homes. Yet, the terrible position is that they will not have enough money to support themselves in a private nursing home, having been refused a place in a public facility because there are not enough public facilities. This Government has managed to abdicate its responsibility to older people. Therefore, they must search for a room at the inn in a private nursing home towards which the State will not give them adequate funds. I welcome the increase in the subvention rate, but if it is not sufficient to cover the cost, what is the point? Those people still face a glaring deficiency in their ability to even exist so this is a major problem.

Older people waiting for five years simply to be called for an urology appointment and who maybe get up five times a night need an operation that would take 20 minutes. It does not make sense. This would be sorted out by the appointment of a urologist at Mayo General Hospital, which is not going to happen. Neither do we do have a rheumatologist so people have to become completely crippled and miss that two-year window of opportunity to get the treatment they need to prevent them becoming totally seized up in the case of rheumatoid arthritis. This is unacceptable.

I do not know how the budget will address these issues. I raised the position regarding psychiatric services in Mayo in this House. Children there must wait for two years for a psychiatric appointment because there is only one child psychiatrist in Mayo, which is a massive county, the third largest in Ireland, with a population of over 110,000 people. Yet, it has only one child psychiatrist. Surely, all the billions of euro available could have been used to provide those services. It is a question of prevention. We saw this on television over the past few days. Prevention is better than cure. Older people and, above all, children who have their whole lives ahead of them but whose lives may be jeopardised or even prematurely ended by suicide, must wait for services. These children urgently need to be seen by someone. It is completely unacceptable and I ask the Minister to examine these issues.

The recruitment embargo is continuing, despite all the billions of euro. The embargo means that not enough staff can be employed to ensure, for example, the beds we need are available. I questioned the Minister about this and received word about the transit lounge being set up in Mayo General Hospital where 15 beds will be provided. However, this is just pending transfer to the ward. In other words, transit lounges in our hospitals are the answer to the deficiencies there, which is unacceptable.

I welcome transit lounges to the extent they are better than the totally inhumane situations found in accident and emergency departments where I have seen older people cry out of sheer desperation. I once met a man of over 90 years of age in a hospital who was crying. When I asked him what the problem was, he replied it was his birthday yet he was on a hospital trolley. It would certainly have been better for him to have been in some kind of transit lounge, but he deserved to be in a hospital bed, which will not be there for him even after this budget. I am very concerned about that.

There is a major missed opportunity here. Helicopter emergency medical service are so important and every other country in Europe has them. Yet, children have died gasping for breath from diseases like meningitis trying to get from peripheral hospitals to the centres of excellence on the east coast for essential life-saving operations. They cannot get there in time because of the lack of helicopter emergency medical services. These are glaring deficiencies.

I reiterate the call I made to the Minister for Finance after the last budget for some kind of tax incentive scheme to help businesses in the west in particular. These businesses are struggling with such a short season, particularly the tourism season. I asked that some consideration be given to VAT-free conferences in Ireland and I am glad this is happening and that concessions are available. I am glad to see the improvements in the business expansion schemes, namely, the €2 million ceiling per company, which is much better, and possibly €180,000 per individual. It helps smaller industries, which is good because the Government is very much regarded as a Government that favours big business. The west deserves these measures.

There is a total underspend in the BMW region, bearing in mind the €500 million allocation for roads. According to the Minister for Finance, the deficit will not be made up until 2008 although the national development plan is to expire at the end of this month. Between now and 2008, the east and south will continue to surge ahead, as they have done. We must wait until 2008 for an even playing pitch, but even then the south and east will have moved on and 60% of graduates from the west will still have to go to the greater Dublin area to find their first job. This could easily be sorted out if the Government put its money where its mouth is and supported very worthwhile initiatives in the west to ensure its competitiveness. The west should be provided with the necessary road and rail infrastructure, broadband, etc.

Coastal fishermen are receiving a pittance in compensation for the rest of their lives, amounting to approximately €2,000. In the United Kingdom, drift-net fishermen were similarly compensated but at least they received an equitable amount. This must be borne in mind.

Post offices in rural areas depend so much on the Department of Social and Family Affairs. I recognise that efforts were made to improve postmasters' incomes. However, EU competition law is such that their services will be put out to tender and this will seriously jeopardise their incomes. The Government should consider how it can help in this regard.

I welcome the 5,000 home care packages. The defined revenue funding scheme for sheltered housing has great potential to keep people at home and out of hospitals and nursing homes, yet less than €1 million was allocated for the scheme last year to help people remain in their communities. The ongoing revenue cost should be subject to support so that people could be employed to help the elderly stay at home or in sheltered housing in their communities for a longer period. However, I heard no reference to this in the budget speech and I hope it will be considered because it is necessary. It is a very important issue.

The Government has totally destroyed the very clear vision of former Minister of State, Bobby Molloy, that 20% of all houses be made available to those in need of social or affordable housing. The former Minister's vision was very equitable but we see in the newspapers that it is being watered down all the time.

The need for social housing has increased as never before and there are 48,000 people on the waiting list. Those who are making money are making more than ever before. While private housing is thriving, social housing is in the doldrums. House prices are such that one requires ten times the average industrial wage to reach the entry point for housing. This is a terrifying statistic but indicates the current reality. The recommendations in the NESC's report are being ignored. Local authorities require resources and voluntary housing associations need sites on which to build houses. They would build them if they could get the sites.

The private rental housing subsidy serves as a blank cheque for private developers and really operates at the expense of the homeless and destitute. We need more social housing targeted at low-income groups and vulnerable people, such as the elderly, homeless and disabled. Ireland has the smallest social rental housing stock in Europe, with the exception of tiny Luxembourg. I do not know what the Government is doing in this regard, given that it claims to look after those who really need help.

This country has been asset-stripped of social housing and this process is continuing. If the Government agrees with the NESC's targets, it must provide adequate resources. The targets were identified in the National Development Plan, 2000-2006, which is to expire at the end of this month, but they have not been achieved. I hope the Government is prepared to avail of the great opportunities that exist. It has a major responsibility in this regard but has abdicated it.

I do not recognise the difference between older people requiring high-dependency care in a nursing home and requiring care in a hospital. I do not know why the former should not be entitled to free care. The Government should consider this aspect.

The provision of free medical cards to those over 70 years was very important, even though there are millionaires with medical cards. Older people who are totally disabled and require high-dependency care should be looked after at the State's expense. It is their legal right in any case. I hope this is taken on board.

Not-for-profit housing enterprises should be supported very much by the Government, and much more so than at present. While I welcome the home care packages, the defined revenue funding scheme really needs to be examined.

The Government needs to reconsider the housing targets and complete 73,000 new social rental homes by 2012. Part V of the Planning and Development Act 2002 should be re-examined. These matters should all be addressed before the need to consider land swaps or cash payments in lieu of complete housing units arises. The Government should undertake to provide building sites for social housing to local authorities and housing associations. The Government needs to adopt a housing-first policy to resolve the homelessness problem. Housing should be provided before the associated services pertaining to health, education and training.

Significant additional revenue should be provided by the Government for housing associations to provide on-site care and support services in sheltered accommodation projects for the elderly. This is extremely important. So much more needs to be done and I ask the Government to consider the areas about which I have spoken. The people deserve more.

Minister for Social and Family Affairs (Mr. Brennan)

By any standards, this was a fairly historic budget. With a package of over €1.4 billion, it delivers the largest increase in social welfare spending in the history of the State. It is also a reforming welfare budget with a number of significant and fundamental reforms of social policy at its core. Total social welfare expenditure next year will be €15.3 billion, or €1 in every €3 of day-to-day spending by the State. Next year, this funding will directly support and benefit 1.5 million people.

This budget is also about delivery and in that regard we have delivered on our commitments in the programme for Government by increasing the basic State pension to €200 per week and realising the 2007 target for the lowest social welfare rates. The contributory pension has increased by €16 per week to €209.30 and other social welfare rates by €20 a week to €185.80. A couple receiving the contributory pension will be almost €40 per week better off.

The lowest rate of social welfare payment has increased by 12.1%, which is approximately three times the expected rate of inflation. We are delivering on the pledge to tackle any remaining child poverty, which is simply unacceptable in the Ireland of the 21st century. Reforms in this area include combining three rates of child dependant payments into a new single high-rate qualified child allowance of €22 per week, which will benefit over 340,000 children of families on social welfare. This is in addition to increases of €10 in child benefit to over 1 million children, thus increasing the universal support available to at least €160 per month. The back to school clothing and footwear allowance has been increased by 50%. The measures taken by me, and my colleague the Minister for Health and Children, in respect of carers have laid the foundations for a sustainable long-term care strategy.

I have introduced reforms designed to make the social welfare code fairer to women and to bring about greater social gender equality. It is only right that women should have a social welfare entitlement of their own and I have initiated several reforms to address this situation and also to facilitate them in entering the workforce.

As well as massive income support improvements of over €970 million, another €430 million, or nearly one third of the total package, is being directed to support a range of reform measures. These measures are, in particular, being shaped and aimed at confronting and tackling remaining child poverty, at recognising and supporting carers, increasing income supports for all pensioners and increasing the status and incomes of women pensioners.

Everyone is entitled to a basic standard of living. I have repeatedly stated my conviction that this generation will be judged on how it used the fruits of the economic miracle of recent years to help those most vulnerable in society, those most deserving of our support. We have a responsibility to assist those who for reasons of age, health or other circumstances need the financial lifeline that is welfare support to help them through bad times and to offer hope and encouragement towards better times. The principles of social solidarity underpin our social welfare system, and the programme of this Government which has committed itself to delivering a number of specific and ambitious improvements in social welfare rates by 2007. At the core of these pledges was the commitment to bring the basic State pension to €200 a week. I am pleased to have been able to deliver on that promise by increasing the non-contributory pension by €18 a week to €200 with effect from next January, and the contributory pension to over €209.

The needs of older people have been, and will remain, a priority for this Government. That has been repeatedly demonstrated by the numerous initiatives which have been taken over the years in the area of pensions, supports for carers and household benefits such as free electricity, gas and telephones. For instance, since 1996, and including increases granted in the current year, pensions have increased by almost 119%, or approximately 57% in real terms, far ahead of both price and wages growth over the period.

All the more recent indicators, including the latest EU survey on income and living conditions for 2005, show that progress is being made in significantly improving the well being of older people. The survey found that consistent poverty rates for older people were at approximately 3.7%, and that was before the many benefits flowing from budget 2006 were taken into account, and the significant increases and improvements announced in yesterday's budget.

I am also making significant progress on the Government's commitment to increase the level of the non-contributory State pension, the qualified adult allowance, QAA, for the spouses and partners of contributory pensioners. The budget increase of €23.70 per week in the qualified adult payment will benefit some 35,500 couples. These increases will bring the rate of qualified adult allowance payments for those aged 66 and over to 86.5% of the target rate contained in the Government commitment.

There is now a €60 million commitment to reach that target rate inside the coming three years. I also intend to introduce legislation in the spring which will provide for the qualified adults entitlement to the QAA for the duration of the entitlement of the State pensioner. As most qualified adults are women, this decision will be of substantial benefit to them and will, in most cases, transform the QAA into what in effect is a woman's pension in her own right, as distinct from being a dependant. I have also decided to include in the upcoming Social Welfare Bill the decision to have the payment made directly to the qualified adult. It will, of course, remain open to any qualified adult to continue to have her portion of the pension paid jointly with the personal portion of the pension, if she so wishes.

In budget 2006, for the first time in many years, I increased the basic income disregard for the purposes of the means test for non-contributory pensions to €20 per week. At the same time I introduced incentives for pensioners on means-tested payments, who may wish to earn extra income to continue in employment, with €100 per week earnings disregard. I am happy to be able to build on these improvements by increasing the basic means disregard to €30 per week, and at the same time building on the employment incentives provided this year by increasing the earnings disregard to €200 per week. These measures will benefit approximately 26,000 pensioners a week who are in receipt of a reduced rate of pension. As a consequence, for them the additional increases in the personal rate will be up to €10 per week while the qualified adult rate will further increase by up to €6.60 per week.

These pensioners will also benefit from the general €18 per week increase in the personal rate of payment and, where relevant, the €11.90 increase in the QAA rate. In other words, some non-contributory pensioner couples will gain by over €46 from these combined measures, with effect from next January.

Over the past few years several improvements have been made to the household benefits package for older people and I have been pleased to be able to introduce further enhancements in this budget which, for instance, take account of changing trends in society and technological advances.

With effect from next April, it will be possible for pensioners and others who qualify to have the free telephone allowance paid in respect of mobile telephones as well as fixed landlines. This will allow older people to have more flexibility. In all, over 320,000 people benefit from the telephone allowance this year. Lest there be any confusion about this, the allowance is paid either for the mobile telephone or the fixed line, not for both.

I am also extending the automatic entitlement to a free travel companion pass to pensioners aged under 75 who are medically unfit to travel unaccompanied. I am also pleased to confirm that early 2007 will see the start of the introduction of all-Ireland free travel which will allow all Irish pensioners to travel throughout Northern Ireland free of charge on public transport, while Northern pensioners will be able to do likewise here.

The Government is concerned about retirement income in general, now and in the future. I do not need to remind the House of the demographic pressures our pensions system will face but while we face a pensions problem, many other countries with less favourable demographics, face a crisis. It is important that we use the time we have available to act now to find the solutions for tomorrow.

Everyone is entitled to adequate income, dignity and security in his or her retirement. I am determined that we work towards delivering adequate retirement income to all our citizens which does not place an unsustainable burden on future taxpayers. In this regard, the two reports published by the Pensions Board over the past year, The National Pensions Review and Savings for Retirement, require serious debate and analysis before we decide finally on the type of retirement income we want for our older people and the contribution we will make during our working lives to that future.

I was very pleased at the prominence afforded to pensions in the social partnership negotiations for Towards 2016, and the final agreement features several commitments in this area. As part of the agreement, the Government is committed to publishing a Green Paper on pensions by next March outlining the major policy choices, the challenges in this area and the views of the social partners. After a consultation process, the Government will develop a framework for comprehensively addressing the pensions agenda over the long term. This is the end of a process, commenced over two years ago, and I am confident that it will deliver a system that will command broad acceptance and provide the way for people to accumulate adequate resources for their retirement.

Before I leave the whole area of older people, I would like to refer briefly to an issue about which I have received many representations, namely, the difficulties confronting people, especially older people, in adequately heating their homes in an era of rising energy prices. Last year, I increased the fuel allowance by €5 a week to €14 and this year I am increasing it by a further €4 to €18 a week. This means that the level of the fuel allowance, which had not moved for many years and is paid to 274,000 recipients, will have doubled in the past two years. I am also taking the opportunity virtually to double the means test from €51 to €100, the disregard taken into account before one is refused the means test.

This is not the only measure being taken to address fuel poverty and to alleviate the worries of elderly people. As the Taoiseach announced last September, and as and from next January, the number of free units of electricity and gas paid under the household benefits scheme will increase by 600 units a year to 2,400 units at a cost of €50 million.

I am particularly keen to reform the social welfare system so that it reflects the changes in our society in recent years and keeps pace with the changed nature of working and living conditions that we have witnessed. In this regard, the social welfare system should be responsive to the changing nature of the role of women in society. Many women, because they do not have a history of social insurance contributions or a recent attachment to the labour market, are not entitled to a social welfare payment in their own right. Rather, their position is recognised by way of the qualified adult allowance or increase which is added to their husband's or partner's payment. Some modernisation has already taken place. Since 2002, couples can apply to have the qualified allowance paid directly to the spouse or partner rather than as part of the primary payment. There is already full entitlement in terms of the non-contributory State pension where, subject to meeting the means test, both partners may receive a pension in their own right. As I previously indicated, I intend to establish the qualified adult's entitlement to the QAA for the duration of a pensioner's entitlement and to have the QAA paid directly to the qualified adult.

I also propose to significantly reform the manner in which spouses and partners are assessed as qualified adults across a range of social assistance schemes and, in particular, the treatment of part-time and low-paid work undertaken by qualified adults. The proposed reform involves assessing both members of a couple in a similar manner, with common disregards and assessments applying to both. Additionally, I will be removing the poverty traps that are present in the current method of assessment. For example, currently, at certain income levels if a woman increases her income from part-time employment to over €100 per week, her spouse or partner can lose €1.20 from his jobseeker's allowance for every €1 she earns in excess of the disregard. Clearly, this situation has no place in a modern system of employment supports.

Under the proposed reforms, increases in labour market participation will instead be rewarded and this will facilitate women to move beyond the occupational cul-de-sac of indefinite part-time employment with earnings kept below €100 per week. Both partners will now be able to claim jobseekers allowance in their own right, although subject to certain conditions. This will also facilitate women, in particular, to access the range of employment supports and training opportunities that go with receipt of the jobseeker's allowance. I am confident these proposals will significantly reduce the complexity in the present system while recognising and rewarding increased labour market participation, especially by women.

I have taken the opportunity presented by the budget to address an issue raised with me recently by several Members in regard to the earnings thresholds for recipients of deserted wife's benefit, DWB. In response to these representations, I considered it appropriate to introduce a new single earnings limit of €20,000 gross earnings, even though the scheme has been closed to new applicants since January 1997. In addition, once claimants' earnings go over this limit, they will now be entitled to a new half-rate, transitional payment for six months to ease the impact of losing entitlement to the payment. Over 2,300 DWB claimants will benefit from these revisions to the scheme which will bring it more into line with other social welfare schemes.

Finally, I am pleased to be able to introduce two small but beneficial measures which will assist widows and widowers at a particularly difficult time in their lives, in the immediate aftermath of the death of their spouse. Financial worries add to the stresses experienced at such times. Not only do widows and widowers have to cover the cost of a funeral but often they also have to cope with the loss of an income as well as deal with the personal trauma. The six weeks after-death payment paid to the survivors of social welfare recipients are intended to ease this financial strain. In addition, my Department makes once-off payments to assist with immediate costs. I am pleased to be in a position to announce two significant improvements with effect from today. The widowed parent grant will be increased by €1,300 to €4,000 while the bereavement grant will be increased by €215 to €850. I hope these increases will help in some way.

Carers play a valuable, and much valued, role in our society. It is important that we support and care for them. Since taking office in 1997, the Government has been committed to supporting care in the community to the maximum extent possible. Over that period, weekly payment rates to carers have been greatly increased, qualifying conditions for carer's allowance have been significantly eased, coverage of the scheme has been extended and new schemes such as carer's benefit and the respite care grant have been introduced and extended.

As a result of these improvements there are now almost 28,500 carers in receipt of either carer's allowance or carer's benefit. These carers also receive a respite care grant, as do over 8,300 other carers who do not qualify for carer payments. Our commitment to carers has been further reinforced in the new national partnership agreement, Towards 2016, which includes significant commitments in the area of caring.

In particular, the development of a national carer's strategy has been identified as a priority action in terms of supporting people with caring responsibilities. This strategy, which will focus on supporting informal and family carers in the community, will be developed by the end of 2007. While social welfare supports for carers will clearly be a key issue in the strategy, other issues such as access to respite and other services, education, training and employment will also feature strongly.

Co-operation between relevant Departments and agencies is essential if the provision of services, supports and entitlements for carers is to be fully addressed. For that reason, all relevant Departments and agencies will be involved in the strategy and there will be appropriate consultation with the social partners. This type of cross co-operation is also reflected in the Towards 2016 commitment that my Department lead a structured consultation process involving all relevant Departments and agencies as well as carer representative groups. This process is to involve an annual meeting of these stakeholders. I am pleased that the first such meeting has already been held and that the issues raised there have informed the package of measures for carers which I am announcing today.

In 2005, my colleague the Minister for Health and Children and I established a working group on long-term care which was chaired by the Department of the Taoiseach and comprised senior officials from the Departments of Finance, Health and Children and my Department. The task of the working group was to identify policy options for a financially sustainable system of long-term care. I am pleased that the role and needs of family carers were recognised in that group's work and this influenced not only last year's budget package but also the commitments in Towards 2016 and this year's budget package.

In the context of continued developments in areas such as needs assessment and home care packages which are designed to facilitate people in being cared for in their own homes for as long as possible, I am delighted to announce further improvements to the income supports available to carers which build on the significant improvements made in recent years. As I stated on many occasions, the primary objective of the social welfare system is to provide income support. As a general rule, only one weekly social welfare payment is payable to an individual. The rule has been that people qualifying for two social welfare payments always receive the higher payment to which they are entitled. I am aware this has been a cause of particular concern to people in receipt of one social welfare payment when they become carers. The Joint Committee on Social and Family Affairs made very specific recommendations in this regard.

Accordingly, I am delighted to announce the introduction of fundamental structural reforms in this area. In future, people in receipt of another social welfare payment, who are also providing full-time care and attention to a person, will be able to retain their main welfare payment and receive another payment, equivalent to a half-rate carer's allowance. The precise details of this arrangement are currently being examined by my Department and will be set out in legislation next year.

Abolishing the old rule that one cannot receive two welfare payments means that, for the first time, people who are caring can have some real recognition of their caring duties. I thank the joint committee for its unanimous recommendation along these lines which I am pleased to accept. Under this new dual payment system we will start to recognise the carer's allowance less as a welfare payment and more as a support for caring duties. I consider this reform to be an important step forward and I am determined to press ahead with other needed reforms in this area.

As in previous years I am also increasing the rates of payments for carers so that, with effect from next January, the rate of carer's allowance will increase to €200 for carers under age 66 and to €218 for carers over 66; and the rate of carer's benefit will increase by €20 to €200.70 per week. In addition, I am pleased to announce an increase of €300 in the rate of the respite care grant to €1,500 from June next year. This will allow up to 40,000 carers to have a well-deserved break from their caring duties. I have also increased the level of income disregards for carer's allowance to €320 per week for a single person and to €640 per week for a couple. This means a couple with two children can earn up to €36,240 and still receive the maximum rate of carer's allowance as well as the associated free travel and household benefits.

This measure surpasses the commitment in Towards 2016 to ensure that those on average industrial earnings can continue to qualify for a full carer's allowance. Similarly, I have increased the level of the income threshold for carer's benefit to €320 per week. These improvements in the income supports available from my Department, together with the improvements in home care and related services announced by the Minister for Health and Children, represent a further realisation of our vision of a co-ordinated approach to services and supports for carers in the community. The full package of measures I am announcing for carers will cost in excess of €107 million in a full year and are further evidence of the Government's commitment in this area.

On various occasions I have described child poverty as an unacceptable blight on society. Childhood deprivation can leave lasting marks on children by stunting their development and limiting their life chances. It is not just the child who suffers — society also loses, for its children are its wealth.

Since my first days in this portfolio I have been determined to make a lasting impact on child poverty. It is a complex area that does not lend itself to easy solutions. Overall, it requires an integrated, whole-of-Government response as envisaged in Towards 2016 which lays out an ambitious programme of priority actions over the years. However, in the meantime, I am committed to an even stronger and more focused campaign in an all-out commitment to end child poverty in 21st century Ireland.

In recent years we have lifted more than 100,000 children out of poverty and now we must strive to complete the task. I have long held the view that implementing a second tier of payment for children in low income and welfare families is the most effective method of targeting child poverty. I see this improved and targeted allowance as representing a substantial move in that direction and that is why in this budget I have deliberately taken the decision to focus increased child supports in this area.

In recent years, resources have been directed towards alleviating child poverty via substantial increases in child benefit, CB, which, as the House knows, is paid right across the board, rather than through the other mechanism of child dependant allowances, CDA, which are paid to recipients of social welfare payments. While these have not been increased since 1994, the combined value of child benefit and CDA has increased over that period by more than three times the rate of inflation.

In terms of tackling work disincentives, the shift towards child benefit has been significant, from a position in 1994 where it represented only 27% of the combined CB and CDA payment for a four-child family to today where child benefit now accounts for almost 70%. In other words, a family now loses only 30% of its child income support through loss of child dependant allowances when a welfare recipient moves into full-time employment.

In this budget I am increasing child benefit rates by €10 per month. This increase will apply to all children, benefiting over 560,000 families in respect of approximately 1.1 million children, and will be effective from April 2007. While child benefit remains the main support for families with children, I recognise that the labour market has changed greatly since 1994 and that other supports to low income families have also been brought to bear. The introduction of the national minimum wage in 2000, allied with the refocusing of family income supplement last January, has served to further reduce the impact of the loss of CDAs in the decision to take up full-time employment. Also, the introduction of the national employment action plan in 1998 has greatly assisted unemployed persons in making the transition to work and education.

In this context, I now propose to simplify the present system by standardising for all children on the highest of the current three CDA rates a new single child dependant allowance of €22 per week that will now apply to all social welfare schemes. For those on the current lower rates of €16.80 and €19.30 per week, this represents a substantial improvement.

These are not the only measures being taken to address the position of children in low income households. The back to school clothing and footwear allowance provides additional income support for the poorest families and is highly targeted. With this in mind, I am increasing the allowance by €60 for children aged between 2 and 11 and by €95 for children aged between 12 and 22, bringing the rates of payment to €180 and €285 respectively. As a result of the past two budgets, this allowance has nearly doubled in value. My Department will advertise the scheme widely in a publicity campaign to begin in July 2007 so as to maximise take-up.

Family income supplement, or FIS, is designed to provide cash support for employees on low earnings with families and provides an incentive to enter or remain in employment. I am pleased with the impact of this year's FIS improvements and the response to the awareness campaign undertaken by my Department which resulted in an increase of more than 20% to 21,400 families receiving FIS. As research has shown that poverty is more likely to be concentrated in larger families, last year's budget refocused the FIS weekly earnings thresholds in favour of such families. I have followed this approach again this year. Consequently, average payments per child will increase to nearly €50. It is also anticipated that the changes in the thresholds will entitle approximately 5,600 additional families to the payment.

Before I leave the subject of child income support and child poverty, I will comment briefly on the one parent family payment. Last March I launched the Government discussion paper, Proposals for Supporting Lone Parents, which put forward proposals for the expanded availability and range of education and training opportunities for lone parents, the extension of the national employment action plan to focus on lone parents, focused provision of child care, improved information services for lone parents, the introduction of a new social assistance payment for low income families with young children and the co-habitation rule.

One of the proposals in the report was that the upper limit for the new social assistance payment should be set at €400 per week. In budget 2006, I increased the upper income limits on the one parent family payment from €293 to €375 per week, moving a substantial way towards this limit, and this year I am completing this element of the proposal by increasing the upper income limit for the one parent family payment to €400 per week.

The new social assistance payment, currently being developed by officials in my Department, will have the long-term aim of assisting people to achieve financial independence through supporting them to enter employment, because employment offers the best route out of poverty. Once I am convinced that all of the issues have been fully worked out I propose to bring legislation to the Dáil.

I fully realise that the proposed new payment cannot be introduced without co-ordinated supports and services being put in place by other Departments and agencies. Accordingly, the Government has instructed the senior officials group on social inclusion to draw up an implementation plan to progress the non-income recommendations in tandem with the development of the legislation required in my Department to introduce the new payment scheme to replace the lone parent allowance.

I have outlined in some detail the principal elements of my budget package but a range of other measures are also being taken, which are listed in the budget fact sheet published yesterday. I am taking a number of steps to further encourage social welfare recipients to take up employment, education or training. There are improvements in the back to work allowance, the back to education allowance and rent and mortgage interest supplements.

The means test for rent and mortgage interest supplement is being reformed so that recipients retain at least half of any extra income they get from employment, education or training allowances, subject to a limit of €200 in extra income. This means that they may be better off by up to €100 per week by availing of such opportunities. These arrangements will also apply to people on rent supplement who take up full-time employment while they are awaiting transfer to the rental accommodation scheme run by the local authorities.

I have also been able to achieve one of the principal commitments in my Department's disability sectoral plan. People in residential care prior to August 1999, or those who entered residential care subsequent to that date without an entitlement to disability allowance, are disqualified from receipt of the allowance solely because of their residency. This situation was partially addressed in budget 2005 when I introduced a new disability allowance, a personal expense rate currently payable at €35 per week, to 2,700 people in residential care who qualified for this payment. This payment replaced the pocket money spending allowances that had previously been paid to some of these residents by the Health Service Executive but at a standardised and higher rate. I am pleased to announce that I am now making these people eligible for full disability allowance as a matter of right, subject only to the same conditions as apply to others. This will ensure that all persons with disability in residential care have an entitlement to an income maintenance payment and are treated in the same way as other social welfare recipients.

As with other social assistance payments, capital held by a client in receipt of disability allowance is assessed with a disregard of the first €20,000. However, I recognise that persons in receipt of disability allowance may not have had the opportunity to accumulate savings or other income through participation in employment and that disability may, in some cases, hamper a person's ability to live independently.

I am also aware that in such circumstances families may wish to make future financial provision for a child or sibling but are concerned that such provision might adversely affect their entitlement to disability allowance. Similarly, in cases where a compensation award has been made to a client as a result of accident or injury, he or she may be concerned about a reduction or loss of payment of disability allowance and secondary benefits. I am therefore introducing a higher threshold of €50,000 as the capital disregard specifically for the disability allowance scheme. This means a client with disability may hold this amount of capital, or provision can be made for the client up to this amount, and still retain full payment of disability allowance. This measure is designed to address, to some extent, the issue of future financial provision for some of our most vulnerable citizens, particularly by parents or other family members. Approximately 500 people are currently in receipt of a reduced rate of disability allowance who will benefit from the proposed increase in the disregard level immediately.

As Deputies will be aware, the Citizens Information Bill 2006, which is currently being debated by the House, lays the statutory foundation for the provision of a personal advocacy service to people with disabilities. I am providing for a further €1.9 million to Comhairle, soon to be known as the citizens information board, assuming the legislation is accepted, to continue the development of this and related services next year.

As our welfare system matures, considerable efforts will be made to ensure our social insurance system is inclusive and that it remains relevant to the lives and needs of workers. More than 2.8 million people are now insured, an increase of 1 million over the past ten years. While social insurance contribution rates have fallen over the past decade, the benefits paid on foot of these contributions have risen. Social insurance payments now account for almost half of all social welfare payments. Over the next decade, we must continue to ensure the social insurance system continues to be relevant, flexible and affordable, while also continuing to serve our wider economic circumstances. In this context, two important reports will be published next year, the Green Paper on pensions policy and the actuarial review of the social insurance fund. These reports will be critical to mapping the future direction for social insurance and will assist in defining our national policy of sustainable incomes for all. In the meantime, I am prepared to consider certain necessary measures to ensure the system remains responsive to emerging situations.

Ms Enright

I wish to share time with Deputy Naughten.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Ms Enright

I welcome the opportunity to speak on the budget and intend to address several key issues. I will begin where the last Minister for Finance, Mr. McCreevy, left off three years ago when he was banished to Brussels. Yesterday, we reached the three year deadline for his promise to decentralise 10,000 civil servants. When he made his promise, he said the Government would be judged on the delivery of that commitment, and so it will. The Government subsequently announced that the original timeframe was overly ambitious and it extended the deadline by an extra year. However, when asked about what has happened to that second deadline, the Government claims that decentralising Departments and offices will have a presence in a total of 29 new locations around the country by the end of 2007. It is anyone's guess, however, how "presence" is defined. In my home town of Birr, the presence consists of two FÁS staff, enticingly described as an advance party. We have been promised that the presence in Birr will be increased in the new year to 20 in an office the responsible Minister hailed as having capacity for 30 people. The site purchase arrangements are unclear, with the owner having returned FÁS its deposit in order to sell the site to another developer. We have been told the latter developer will sell the site to FÁS but we do not know whether that is a contractual obligation. Long after we were promised that the entire headquarters of 400 staff would be moved to Birr, staff numbers have reached 5% of the target. The Minister for Finance might outline for the House what he means when he claims to have put in place plans for decentralisation. In the case of State agencies, a more individualised approach has been recommended by the decentralisation implementation group. What will that approach involve, when will we know more about it and when will it be delivered? These are legitimate questions that need to be answered.

I regret the Government failed to use budget 2007 to overhaul vital psychological services in the education system. Figures released to me today by the Minister for Education and Science confirm that the number of primary schools lacking access to services provided by the National Educational Psychological Service increased by 160 between February 2005 and December 2006. These schools have dropped off the NEPS radar because of the failure by this Government to live up to a promise it made almost eight years ago. When NEPS was established in 1999, a target was set to have 184 psychologists working within the service by 2004, by which time all schools were supposed to be able to access the service. However, the Government is short of its target by 60 posts and the fact that the number of primary schools covered by the service is declining is an indictment of the Government's failure to keeps its word. The figures released to me confirm that 51% of primary schools are not covered by the service. In County Longford, 82% of primary schools remain outside the service, which is the worst record in the country. In counties Carlow, Donegal and south Tipperary, 74% of primary schools lack cover. Some 71% of primary schools in County Laois, which I represent, and County Westmeath are not covered by NEPS. I acknowledge that increases were announced in the Estimates but these will be insufficient to address the scale of the problem, particularly given that the service only received an additional €2,000 last year. As the Education for Persons with Special Educational Needs Act 2004 begins the process of implementation and the multi-disciplinary meetings to which the Act commits are established, the workload of NEPS psychologists is becoming even more demanding in terms of meeting parents and schools.

I want to addresses the claims made by the Taoiseach that schools have access to private assessment. He is correct only in so far as they have access for no more than two children. Parents will judge that for themselves, as will the school principals who are left to try to decide who most needs the service. I have spoken to principals who have had little choice but to find the extra money needed to allow access for more children through fundraising, juggling their budgets or even dipping into capitation grants. Therefore, when the Taoiseach refers to access, we know he means to say "access for two — tough luck to everybody else". The second assessment these children will need before they leave the primary system must also be met from the limit of two. That, according to Fianna Fáil and the Progressive Democrats, is access, so it is no wonder the Taoiseach was shouted down when he made his claims earlier this week. I presume he deliberately confuses psychologists with psychiatrists, whose services are also under funded.

The Government should stop pretending the matter is all right. It is not all right that a child cannot get an assessment because his or her parents cannot afford it and children who are not assessed cannot get the dedicated services they need. An additional allocation of €5 million in 2007, along with the amount set aside in the Estimates, would at least provide funding to cover every school by NEPS. Such funding is needed immediately because access to the service is vital for children and young people with special educational needs.

It is a pity the Government did not use the budget to underpin the development of Ireland's knowledge economy by supporting mathematics, science and information technology in the education system. This Government constantly refers to the amount of money being spent by each Department and in each area but never mentions the outcome. The continued growth of the economy must be enabled. The Government of 2006 must plan for our needs in 2016 and beyond. There is universal agreement in this House that Ireland must move in the direction of developing a knowledge economy. We must recognise that scientific and mathematical understanding will play a significant role, as will developments in information technology. I am concerned that the Government consistently undervalues the role of post-primary education in setting the foundations for these subjects. As matters stand, 14% of junior certificate students do not take science. This year, 12% of students failed ordinary level mathematics. More than a third of our secondary schools fail to offer all science subjects to leaving certificate level and 5,500 school computers are beyond repair, not to mention the substandard science facilities provided in many schools.

The seeds of scientific development are sown at an early age, so the Minister for Finance should have made a clear policy decision to underpin science mathematics and information technology at secondary level by focusing budget resources on these subjects from 2007. He should have begun by auditing and completely overhauling the science infrastructure in all schools and allowing for the recruitment of laboratory technicians on a cluster basis. He should have ensured that the full complement of science subjects is offered at leaving certificate level in all schools and that science is made a core subject at junior certificate level. He should radically improve the information technology equipment in schools and establish an agenda whereby all secondary schools and teachers have access to laptop computers. He should instigate a process of reform of curricular content and development and teacher training, a need which is borne out in reports in today's newspapers that leaving certificate examiners have noted a decline in standards among those taking ordinary level science papers. One of the problems identified by examiners was poor mathematical abilities in pupils who took the combined physics and chemistry paper in 2005, with weaker students unable to complete the required number of questions. The ordinary level standard was lower than in previous levels and there was a strong tendency among candidates at both levels to avoid questions on specific areas, such as electricity and organic chemistry. According to the reports, the examiners stressed the need to improve basic mathematical skills and the understanding of basic chemistry and physics. However, such improvements will not occur by accident.

Yesterday's budget effectively ignored education. I welcome the increase in the back-to-school clothing and footwear allowance, which was badly needed. Every year, I am approached by families who simply cannot afford to kit out their children for school. The thresholds for these allowances need to be investigated because many families in genuine need are refused, advised to apply for exceptional needs payments, which they are also frequently refused, or given amounts so paltry as to make them irrelevant.

Some 30% of children from disadvantaged backgrounds have serious literacy problems and almost one in five young people leave school without a qualification. An unacceptable number of buildings are substandard, with exceptionally poor science labs, computer facilities and sports infrastructure. Absenteeism is rife, with 7,000 children missing more than 20 days per year, which is equivalent to a full year of school during the primary cycle. Some 111,000 primary school children are in classes of 30 pupils or more despite promises to the contrary.

This is not just a matter of spending money. Budget 2007 should have set out priorities in education for the coming year and funded them accordingly, such as improving literacy, keeping children in school and equipping young people with the knowledge and skills they will need as adults. Instead, education is overlooked, showing where the real priorities lie.

It was interesting to hear the Government recommit to Transport 21, which is behind schedule in its first year. Transport 21 ignores some of the most important roads, including in my constituency, which I share with the Minister for Finance and the Minister of State at the Department of Finance. At a committee meeting last month, I raised the issue of the conditions of the N52, N62, N80, the Laois orbital route and the Tullamore bypass with the National Roads Authority. The development of those routes is vital to the opening up of counties Offaly and Laois to investment and new and better opportunities. The NRA stated clearly that it must work within the remit of Government policy, which effectively begins and ends with Transport 21.

The CEO of the NRA stated: "Given that we have been set certain objectives which we will achieve, there is a limit to the funds available to pursue other projects at the same time." Regardless of the position of Athlone-Mullingar-Tullamore as a regional gateway town in the national spatial strategy or of Portlaoise's designation as an inland port, we must wait. We do not know for how long we must wait, but the date will be after 2010 at the earliest due to Government policy. The CEO also stated: "If more money is made available, we will gladly take it and do more".

I cannot stress enough how important the upgrading and improvement of those major secondary routes are to the development of the midlands as a whole and not just my constituency. The N52, N62 and N80 are the main links to the N6, N7 and N8 national primaries. The major towns on those routes are being hampered by the lack of progress. Likewise, the lack of progress in respect of the Tullamore bypass and the Portlaoise orbital route are affecting the development of towns.

I wish to impress on the Government the need to develop our rail infrastructure, which is part of Transport 21. All stations in my constituency need more car parking facilities. While some are receiving necessary improvements, others such as Tullamore are not. It is beyond belief that several train stations do not provide proper disability access for customers of Iarnród Éireann. How much is it to ask to support the basic right to use a train service with dignity and ease? When one of the Ministers present or the Minister of State is next in my constituency, I ask them to watch how someone in a wheelchair must get on and off a train. The situation is disgraceful and disgusting in this day and age.

I remain disappointed by the Government's attitude towards farmers whose lands have been compulsorily acquired by the NRA for the building of our national road network. No farmer wants to see the NRA call to his or her door because it wants his or her farm and, sometimes, home. While the improvement and upgrading of roads is part of life, the abolition of roll-over relief in the first budget after the last general election was a considerable blow to many farmers.

The reality of life under the CPO system is that one is deprived of the use of one's land and of one's livelihood, but one does not receive compensation for a considerable period thereafter. One is compensated at the value of the land when notice to treat is served, not when the money is received, which is several years later in a number of cases, and one pays capital gains tax of 20%. If one is lucky enough to find replacement land, one has lost 20% of the amount one can spend and must pay stamp duty of up to 9% on the new piece of land. Consequently, one cannot buy a parcel of land of the same size without losing 29% of the compensation. It is a financial impossibility.

It is a pity that a farmer cannot set himself or herself up as a company like National Toll Roads and treat his or her payment as profits, thus avoiding capital gains tax or being able to opt for the lesser corporation tax rate of 12.5%. Allowing farmers to avail of farm consolidation, which was improved somewhat by the budget, would have been a good start.

The Government has failed to understand the problem of child care and seems to believe that last year's token gesture was sufficient, but it was and is not. Increasing the income disregard might encourage a few more people to care for children in the home, which I hope will be the case, but that is all it will do. Increasing maternity leave by four weeks will be welcomed by some, but many women cannot afford to take the full entitlement. Their mortgages and other costs are so high that they cannot meet them if they stay out on maternity leave. For many women in that position, the extra four weeks, although sounding lovely, will be of no use.

The increase of €2.50 per week in the child benefit payment can only be described as paltry and does not recognise rising costs across the board. Hard-pressed families will remain so. It is difficult to believe that the Government ignored the under 18-year-olds who, despite being children, care for their parents. It would be difficult to find a more vulnerable group and children deprived of real childhoods due to family illnesses need special attention.

The Minister for Social and Family Affairs stated that he is committed to an even stronger and more focused campaign in an all-out commitment to end child poverty in 21st century Ireland. Effectively, he is committed to a commitment. It is a pity that he did not press himself to name a year in the 21st century because there are 93 years to go. After listening to a representative of the Society of St. Vincent de Paul last night, I worry about how long we must wait.

The Government missed an opportunity to do something imaginative in respect of stamp duty. The Tánaiste, who is present, has not spoken about much else in recent months. Perhaps he did not want to be denied the opportunity of running a single-issue campaign in the next general election. The Government has had ten budgets in office, but if it has not done something to date, no one will believe that it will do it next time, which is hopefully a long time away.

Mr. Naughten

I thank my colleague for sharing her time with me. Yesterday, the Minister for Finance's announcement on the budget received much fanfare in the Chamber. While matters are good for the majority of people, they could be much better for everyone if we managed our economy better and ensured that money collected via hard-earned taxes was properly spent rather than wasted, which is occurring left, right and centre in every Department and State agency.

Like all Deputies who are going hither and thither around the country, I have travelled a considerable amount in recent weeks, but it is often frustrating to see local authorities resurfacing roads while it is raining. They would be better off not spending the money rather than wasting it in that way. However, if they do not spend it now, they will be denied money next year, which is typical of the mismanagement of taxes.

It is disappointing that the budget is not family-friendly. There was a significant opportunity to provide supports to young families who are under considerable financial pressure in terms of mortgages and child cares costs, but an increase of €2.30 will not address those costs. The challenge is not one of spending money, which the Government is well able to do, but of how to spend wisely, a concept the Government cannot understand. It could have abolished stamp duty, which the Tánaiste advocated in respect of first-time buyers, but it did not. This is another empty promise. It is disappointing that stay-at-home parents were again ignored by the Minister for Finance in the budget.

Regarding the agricultural sector and yesterday's announcements on income tax, a farmer or another self-employed person on an income of €30,000 per annum and with two children will benefit to the tune of €18 per week. However, when one takes the rate of inflation of 3.9% into account, which equates to a cost of €22.50, that person will lose €4.50 per week.

The Minister increased the PAYE tax credit by €440 to €3,520, increasing the gap between the self-employed and PAYE workers. This is an additional tax of €68 per week on the take home pay of the self-employed. This is blatant discrimination. Many self-employed people are under huge financial pressure because of the 45 stealth taxes introduced or increased by the Government in the past five years. It is wrong that they are not given the recognition they deserve.

Home carers and farm families were ignored in the budget. Not one additional cent has been given to them. The tax credit of €770 has not been increased, nor was it increased last year. The budget gives no recognition to the mother who stays at home to take care of her children or to those who care for the elderly in their own homes. The tax system ignores these people. We do not recognise women who work in the home or on farms, mainly in rural Ireland. Many of these women work in partnership with their husbands, in some cases owning land, but because of the tax and PRSI system they are paid by their husbands and no recognition is given to them in the social welfare system. This is wrong and needs to be examined. It is disappointing the budget grants no recognition to these people, mostly women.

I welcome the announcement regarding energy crops and bio-fuels, which Fine Gael called for in our policy document published earlier this year. I welcome the increase of €80 per hectare under the energy crop scheme. However, there is no point encouraging farmers to grow renewable energy or bio-fuel crops when there is no market for them. This illustrates the lack of joined up thinking in the Government. No incentive is given for the production of blended bio-fuels. There are no plans to legislate to ensure blended bio-fuels replace petrol and diesel, no proposals for the extension of the removal of excise duty on bio-fuels, no plans to open a public competition for capital start-up grants for bio-fuel processing plants, no plans to require public transport and other public service vehicles to convert where feasible to bio-fuels and no proposal to make a major capital allocation to bio-fuels instead of wasting money buying carbon credits. There is an appalling lack of joined up thinking. This is why the Minister said yesterday that by 2009 there will be an uptake of only €6 million on grants in this area. There will not be an uptake if there is no market.

The Government has focused on bio-fuels because our sugar industry was wiped out last year. This was not mentioned in the Minster's speech yesterday. Farmers who will receive their compensation payments next June will be liable for the full rate of tax on those payments. Greencore workers are arguing that they are not being paid the correct rate of redundancy but they will not be treated as badly as farmers, who are also to be given a redundancy package. The Minister for Agriculture and Food promised that farmers would be treated in a sympathetic manner but no recognition has been given to them in the budget. The Government closed the sugar industry, made a half-hearted proposal to put some other sector in its place and made sure farmers will receive a reduced redundancy package because the Minister for Agriculture and Food decided to give the lion's share of the compensation to Greencore. Furthermore, the vast majority of the reduced compensation package will come back to the State in tax because no provision has been made to reduce the rate of tax to be paid on it.

In recent years we have heard much about the need for farm consolidation. The Government continually calls for greater efficiency in farming and business. Farm consolidation would lead to much greater efficiency. Approximately one third of Irish farms are in four or more parcels of land. Farming organisations have made submission after submission for a scheme to facilitate the purchase, sale or transfer of land in order to consolidate farms and improve efficiency. The sale of land carries a tax of 20%, the purchase of land carries a tax of 9% and there are other associated costs. The change announced yesterday regarding land swaps will help a handful of farmers but does not address the principal issue of farm fragmentation.

The Government has, in fact, introduced a tax on farm fragmentation with the introduction of water metering, mainly in the west. Farmers will have to pay for individual water meters on every parcel of land. One farmer told a public meeting on Monday last that he has 13 separate parcels of land on his 40 acre farm. He will be charged €80 for each meter even before water goes through it. He will also have to pay one fifth more for water to pay for leakage in the public water main on the public road. The Minister for Finance provided €10 million for water metering. Will this deal with the cost of putting the infrastructure in place? We do not know.

Deputy Enright raised the issue of the compulsory purchase of land. It is morally wrong to force farmers to sell land and tax the sale at 30%. Until four years ago farmers could avail of relief if they re-invested the payment for land compulsorily purchased in replacing the land. That relief was removed by the then Minister for Finance, Mr. McCreevy, and his Minister of State, Deputy Parlon. Farmers who are forced to sell their land are taxed at the rate of 30% on the price of the land sold. The legislation covering compulsory purchase states that no one who compulsorily sells land should be worse off at the end of the process than he or she was beforehand. That is not the current position and I am sure someone will challenge it in the courts. It is not morally right.

Even before his appointment as Minister of State, Deputy Parlon spoke of the need to address the problem of flooding in the Shannon basin. He has produced a report on this, which has been presented for consultation, and there have been round table talks. However, nothing practical has been done to address the issue of flooding in the Shannon basin, especially south of Athlone. Homes are threatened with flooding, communities are isolated but not one cent of funding has been provided to carry out maintenance on the River Shannon or to raise roads to maintain access to those homes. An elderly man suffered a heart attack some years ago. The only way he could be brought to the hospital was on two bales of straw tied to a buckrake on the back of a tractor. It is unacceptable in an economy such as this that any human being should have to be transferred in such a manner. The Minister has produced lovely maps showing that certain areas are prone to flooding. However, little has been done to alleviate the problem at local level.

The nitrates directive has been smothered under layers of bureaucracy. The Minister for Agriculture and Food, her Department and Teagasc have all contradicted each other on the interpretation of the rules and regulations. How can we expect farmers to implement the nitrates directive when the three agents of the State cannot agree on definitions?

During the Estimates process we discovered that the Minister for Health and Children handed back €300 million in unspent moneys to the Minister for Finance. On a per capita basis, that €300 million could have provided 4,300 additional medical cards for families in Roscommon-South Leitrim. It could have provided my constituents with 400 additional inpatient operations in local hospitals. It could have provided 76,000 additional hours of home help in every parish throughout the constituency of Roscommon-South Leitrim. Some 400 children who have been waiting years for orthodontic procedures could have received treatment; it could also have addressed the problem of school bullying and children’s self-esteem issues. Instead, the Minister for Health and Children returned that money unspent to the Department of Finance.

All this highlights that this is not a family-friendly budget. While money is flowing into the coffers, the Government does not know how to spend it in a manner that delivers for the public. Money can be put in place by Government to employ additional administrators and we have seen what has happened with the Health Service Executive. However, when it comes to delivery on the ground, whether it is for psychological services, overcrowding in schools, or on health services, the Government cannot deliver.

Tánaiste and Minister for Justice, Equality and Law Reform (Mr. McDowell)

I wish to share time with the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Mr. McDowell

An interesting piece of archival material, Ray MacSharry's budget speech of early 1987, was played on the radio yesterday morning. I recall the occasion vividly as it was the first year I was elected to this House. In what was effectively my first contribution, it fell to me to reply to that speech. Then an Opposition Member, I remember being in the odd position of having to agree that what he was saying about the national finances was fundamentally correct. He said the time had come for Ministers for Finance to say "no" and make the requisite changes in how Ireland was being run.

I reflected on that speech and the different circumstances which now obtain in modern Ireland. I wondered how many people listening to that radio broadcast thought it sounded like something from the 1940s or 1950s. We are grateful that our young people have never seen a recession or slump. That generation did not see the circumstances that forced the State to embark on a new course which brought us to yesterday's budget.

The transformation has been far-reaching and total. In the 1980s the country suffered from mass unemployment, mass emigration, colossal taxation, little enterprise, and State domination of virtually every industry of note; there were State-run insurance companies, banks, shipping lines, energy and telecommunications companies. We have come to a different position now.

In overall terms, the dominant political outlook in Ireland has changed to one liberating the talents and innate capacity of the people to deliver. For the first time since the State was established, we have reached a point where the talents and capacities of the people can be freely expressed. The people are free to achieve what the men and women who founded the State could only have dreamed of. They would have dreamed that the State could be successful and thrive economically, that it could provide an example to other states and be populated by people with a sense of self-confidence, an abhorrence of failure and an impatience to do better.

All this has come to pass for a variety of reasons, starting with Ray MacSharry's speech. He said that the previous Administration's incapacity to deal with the fundamental macro-economic problem had to come to an end that afternoon. We began to examine the major obstacles that stood in the way of unleashing the people's potential. One of those was the question of how we taxed enterprise and work. Until then, it was done in such a way that it effectively drove work out of the economy and drove risk-taking underground. It drove the brightest and best youngsters out of our society.

It is difficult for some people to now realise that the first taxable pound of earnings was then taxed at 35% plus 7.5% PRSI. That meant that 42.5p was taken from the most modest pound paid to the least well off workers. By the time a single worker earned the average industrial wage, he or she was paying 50%-60% of their marginal earnings to the Exchequer. These are figures which some people have ceased to remember. However, those are the circumstances which Ray MacSharry was dealing with in 1987.

Even though the battle is long over, the ideological argument that tax rates and the structure of our tax system does not matter still lingers. Whether one takes a small fraction or a large fraction of a worker's earnings certainly matters. When Fianna Fáil and the Progressive Democrats came to power in 1997, a single worker on the average industrial wage paid 27% of earnings in taxes and social insurance. That has now been reduced to less than 15%. It was interesting to look at the graphs in the budget booklet. They demonstrated that while the tax burden has gone down since 1997, the number of people working here has increased hugely. Charlie McCreevy's famous decision to cut capital gains tax from 40% to 20% was described, by someone no longer a Member of this House, as a fiscal obscenity. However, the decision increased the number of taxable capital gains transactions so much that the Exchequer earned more than five times as much tax at the 20% rate that it had at the 40% rate.

Tax rates are important because they determine people's attitude to further work, such as whether it is worthwhile doing overtime, seeking promotion, making an investment or taking a risk. These things are determined as much by rates as by the overall tax burden. This is why it is important we never lose track of what has succeeded for Ireland. It is why we should never give up on the fundamentals — the sound economics Ray MacSharry stood for and a pro-enterprise and pro-work system of taxation.

It was a remarkable state of affairs yesterday that when Deputy Cowen stood up, he had a budget surplus of 1.2%. It represented a great achievement in a relatively short period. In the same budget, the Minister provided for growth of 11.5% in current expenditure and 13% in capital expenditure, while 5% of our gross national product is each year committed to infrastructural projects.

While all the above took place, the House was also presented with what Fr. Seán Healy welcomed on radio today as an historic breakthrough. That breakthrough is a welfare package which means that the fruits of the prosperity, sound economics and good government have brought to Ireland will be provided, as the Constitution requires, to those who need it most. While Members sometimes fail to look up the rule book, Article 45 of the Constitution sets out the duty of the State to look after those who are less well off. While it is a matter for the Oireachtas rather than the courts to ensure, the duty of the State is to ensure that private enterprise is favoured but does not abuse its position and that every man and woman has the right to a livelihood to sustain a decent standard of life. The Constitution is clear which is why I am strongly of the view that pro-employment social, taxation and economic policies are the keys to a prosperous and decent society. There is no unleashing of the potential of individuals if they are denied access to employment and a meaningful role in the economic life of the State.

There are many things we must do now. The mere fact that we have arrived at the current stage of economic success where a significant surplus can be run, social welfare package put before the House and tax reform put in place, does not mean we can rest on our laurels and suggest we will plateau on the broad, sunlit uplands of economic success where nothing further needs to be done. We live in a competitive, globalised economy in which there is a great deal for Ireland to do. Ireland must make up its significant infrastructural deficit. Over decades of economic failure, we fell behind many member states of the European Union in our transport infrastructure, broadband, etc. Now is the time for us to catch up.

As has been pointed out by commentators, now is the time to ensure the record levels of resources available to the State are employed on a value-for-money basis for a decent return. Achieving this goal will require a different approach to administration. We must improve the ways we manage and control expenditure to ensure that projects come in on time. While it has become a byword to say that everything is too late and expensive, we must remember that of the last 20 major transport infrastructural projects, 19 came in on time and within budget. During the week we saw that west of Kinnegad a significant motorway will open well ahead of schedule and within budget. If we get our act together in managing our expenditure, we can achieve many things.

The Government committed in 2002 to a number of targets, one of which was to ensure that the minimum wage, which was established in the lifetime of the previous Government, would be completely free from taxation. As a result of yesterday's budget, almost 38% of Irish earners have been removed from the tax net altogether. The Government also said it would ensure that 80% of people paying tax would pay at the standard rate while only 20% would pay at the top rate. While there has been controversy about the matter, I do not wish to get involved in a highly theoretical argument. I listened to George Lee on the radio today and understood that it is being said that we have not achieved our target and should give up saying we have because of the difference in approach between tax allowances and tax credits. If someone is liable for tax at the higher rate but the liability is extinguished by a tax credit, he or she is not paying tax at the higher rate. If we had stayed with the system of allowances, which was unfair, the fact would be abundantly clear. However, because the tax credit system operates on a slightly different mathematical formula, it is contended that someone who would, but for his or her tax credits, pay at the higher rate is a higher-rate taxpayer. I do not accept that for one minute.

To determine who is liable for tax at the higher rate, one must take into account tax credits to the same extent as one takes into account tax allowances. The Government's commitment, therefore, has been delivered in full. Some of my colleagues have referred to an "effective rate of tax". The danger of such references is that people take it to mean an "average rate of tax" which is not what is at issue in this context. At issue is whether people are liable for a higher rate of tax on the basis of tax credits when they would not be so liable under the equivalent system of tax allowances. The Government has delivered in that area.

We agreed at the outset of the Government's term of office that if economic circumstances permitted, we would reduce the 42% income tax rate to 40%. As the Minister, Deputy Cowen, indicated yesterday, we intend to make half the reduction in the current budget and to complete the process in the next if we are favoured with re-election by the Irish people. While it would have been possible, given the surplus at Deputy Cowen's disposal, to make the full reduction in one year, it would not have been prudent. Given the substantial tax reliefs granted by the widening of the bands, the removal of minimum wage earners from the tax system and the social welfare packages put in place, a full reduction of the higher rate could well have endangered the stability of the economy and ignited inflation. It is prudent and reasonable to implement the measure in two stages. I make no bones about my gladness that it is being done that way.

When the dust settles at the end of the budget debate, the real issues will be whether Ireland's prosperity has been guaranteed and the State has put in place a system of taxes, welfare and support which makes Ireland a fairer, more decent, hardworking and successful society. Having listened to reaction from outside rather than within the House, where I expect adversarial responses, it is clear that yesterday's budget was, by any standard, a spectacular success. I pay tribute to Deputy Cowen for the amazing achievements over which he has presided as Minister for Finance. I acknowledge his prudence, concern for the less well off and capacity to deliver and sustain a positive future for the younger generation of Irish people.

Minister for Communications, Marine and Natural Resources (Mr. N. Dempsey)

Like Deputy McDowell, I was first elected to the House in 1987, for which reason alone that year's election sticks in my mind. It sticks in my mind for other reasons too. The Minister, Deputy McDowell, clearly described the economic situation in the country, with economic parameters based on inflation and employment levels etc. During the 1987 election campaign no house in the constituency we called to was without an unemployed person or a member of the household who had emigrated, or a combination of both. Within 12 months of being elected, I had a four-drawer filing cabinet full of CVs from people seeking employment. Some 40,000 to 50,000 left our shores every year because of the economic situation.

I believe I made my maiden speech during the budget debate. I had come across a letter in the sadly now defunct and out of circulation The Irish Press written from Boston by a young man from Kilkenny. The letter he wrote castigated politicians of all parties for the fact he was in Boston where he did not want to be. He wanted to be working at home and to bring up a family here. However, he could not do so because, he said, of the failure of successive generations of Irish politicians. I said that day in the House that I hoped that as long as I was in politics I would never need to see a letter written by an Irish person living abroad castigating politicians. As a new Deputy, I pledged myself to try to ensure I would make decisions that I felt were in the best interests of the country rather than based on political expediency.

In a sense in the past 20 years that is what successive Governments have done, mainly involving Fianna Fáil, but also other parties. I have given credit to the two Governments between 1987 and 1992, the Fianna Fáil and Progressive Democrats Government from 1989 to 1992 and the Fianna Fáil Government from 1987 to 1989. I also gave credit to former Deputy Alan Dukes who was Leader of the Opposition at the time and instituted the Tallaght strategy which helped the then Government to make decisions that might not have been made previously. In many respects this is a very happy day for Members on all sides of the House, although they might not admit it. We are debating how we should spend the huge sums of money generated by the people's work and facilitated by successful Government policies.

As the Minister with responsibility for communications, the marine and natural resources, I wish to focus on the energy element of my brief as it pertains to the budget. The budget has confirmed and demonstrated the Government's commitment to a clean, clever and competitive energy sector. It clearly demonstrates our support for the concept that better energy efficiency and demand management initiatives pay significant dividends for citizens. The allocation of an additional €20 million under the greener homes domestic grants scheme almost doubles the funding provided last year for the programme. Funding of €47 million is now available for greener homes. This represents a clear recognition by the Government of the enthusiasm with which the public has embraced the programme. Since March almost 10,000 applications have been received for grant aid toward the purchase of wood pellet boilers and stoves, solar panels and heat pumps. The level of interest in the scheme has been very encouraging and a strong endorsement of the Government's policy to increase the deployment of renewable energy sources across all sectors of the economy.

Building on this policy and to ensure every individual, group or business can access cheaper and cleaner energy, we are also extending the €22 million bio-heat programme which I launched last June. Our focus so far has been on wood pellet and wood chip heating systems for the commercial sector. An additional €4 million will now be provided for the programme in the period to 2008, allowing us to widen its scope and increase the choice and flexibility in the technologies best suited to people's needs. Critically, we will now include the non-commercial sector in the grants programme.

Clearly, those who play an active and positive role in shaping the society in which we live must be encouraged and rewarded for their efforts. In particular, those who do so on a voluntary basis need to be recognised. Following the budget, the community, sports and voluntary sector which makes a very significant contribution to all of our lives will now be able to avail of the scheme. These initiatives, including bio-heat, biofuel, the greener homes grant scheme, etc. are helping to reduce our dependence on conventional fossil fuels, lowering CO2 emissions and will assist business, householders and community and voluntary groups in accessing cheaper and cleaner fuels. The new measures build on last year's budget package of €65 million over five years for renewable energy initiatives by providing an additional €24 million in funding.

The Minister for Finance also announced his intention to continue the corporation tax incentive for investment in renewable energy projects for a further five years, subject to EU approval. This practical and successful scheme provides tax relief for corporate investment in renewable energy products in the solar, wind, hydro or biomass technology categories and will be very important in the future. By extending the length and capacity of existing schemes, including new technologies and increasing access to funding, we will reap many benefits by reducing CO2 emissions; cutting energy costs; contributing to security of energy supply by diversifying the energy technologies and sources; and contributing to the development of a vibrant renewable energy sector. These measures are engaging all members of society in the debate on a cleaner greener society.

We are broadening the scope of and changing people's attitudes and behaviour, an example of which is the recently launched Power of One campaign which aims to encourage a reduction in energy demand. The budget further emphasised the importance of energy efficiency, with an additional €3 million provided for Sustainable Energy Ireland to develop pilot programmes to support small and medium enterprises. These will allow for the introduction of energy audits in the sector. They will assess SME energy usage and measures to enhance energy efficiency. The impact of the pilot scheme will be reviewed during 2007. It will assist SME energy usage and increase energy efficiency in the sector generally.

Despite the criticism from some Members across the floor, the budget introduces a number of measures to support the agriculture sector in growing and harvesting energy crops. It is critical that all elements of the supply chain are in place if we are to develop a robust renewable energy market that meets the needs of consumers and industry and supports the rural economy. This is another piece in the jigsaw of developing renewable energy initiatives.

The ministerial task force on bio-energy comprises seven Ministers from key Departments involved in the development of renewable energy resources. As part of the work of the task force, I intend to publish a national biomass action plan shortly. Some of the measures in the budget which I welcome anticipate that plan.

The announcements in respect of vehicle registration and motor tax will help to deliver further projects in the bio-fuels area. Deputy Naughten referred to a range of items not announced yesterday in the Budget Statement. It is clear the Deputy has been reading my Department's Green Paper because all of the matters he raised, about which he wanted the Minister for Finance to speak in connection with the budget, are covered therein. They will be finalised in the White Paper we intend to publish early in the new year.

The Government's energy policy is designed to ensure Ireland can develop sustainable sources of energy, increase its energy efficiency and improve the security of its energy supply. An area of importance in the context of energy is that of research and development, on which the Government is focused.

The budget reflects what the Government has done during the past nine years. Yesterday, we again underlined our commitment to an inclusive society. The record social welfare package of €1.4 billion is a demonstration of our commitment to the less well-off in society. The Government had committed to increase the old age pension to at least €200 per week and in the budget we have more than delivered on that commitment. We are doing this by increasing the non-contributory pension by €18 to €200 per week. In addition, those in receipt of contributory old age pensions will receive €209 per week.

The Government is listening and taking on board what it hears. The budget is not just about building for the future through responsible fiscal policies and ambitious investment programmes which are important, it also revolves around dealing with the needs of the individual and those issues people face on a daily basis. We have set about addressing these issues in four main ways: first, as the Tánaiste stated, we have completed a transition to a more equitable tax and welfare system; second, the budget maintains and deepens our strategy to reward work and enterprise; third, it provides real support for families with particular needs at critical stages of the life cycle to improve the lives of all the people; and, fourth, it provides incentives to deepen our competitiveness on a sustainable basis.

The Government's achievements during the past five years and the partnership's achievements during the past ten have set a sound basis for the future. I am confident that the direction set out in the budget will provide a cohesive basis on which to positively shape the future of the country.

Dr. Twomey

I wish to share time with Deputy Neville.

Acting Chairman (Dr. Cowley)

Is that agreed? Agreed.

Dr. Twomey

We must acknowledge that there were many good points in the budget. When one considers that it is a pre-election budget, one would expect it would contain some benefits for the people. However, today's newspaper headlines should have stated the past three budgets represented a deliberate fraud visited upon the people. In 2004 the budget surplus was €2.1 billion, in 2005 it was €2.4 billion and this year it is close to €4 billion. This means that a total of €7 billion has been taken from hardworking taxpayers by the Government during the past three years. This money will be used for nothing more than buying next year's general election.

Government representatives will try to explain this fraud by referring to nonsense such as the level of growth exceeding expectations, the buoyant economy and projected returns being greater than expected. However, one hard fact remains.

Dr. Twomey

Time will tell, particularly when the people have had an opportunity to consider the position.

The three budgets introduced by the Minister for Finance, Deputy Cowen, represent an attempt to buy the general election.

Mr. Parlon

The three budgets to which the Deputy refers were neither scams nor frauds. His comments are unfair.

Dr. Twomey

We will let the people decide, once they have had an opportunity to consider the position. It is an insult to the electorate that the Government cannot get its figures right and that its calculations were out by over €2 billion in each of the past three years.

Acting Chairman

If the Deputy addresses his remarks through the Chair, they might prove less inflammatory.

Mr. Neville

Will the Minister of State do likewise?

The Minister of State understands exactly what I am talking about, having admitted as much. The Government has failed to meet its promises. It cannot even take direction from the Supreme Court to arrange repayments to those elderly people whom it effectively robbed. Some €400 million was put aside in last year's budget to make those repayments, but it managed to repay only €80 million. It has failed to protect patients regarding legislation across a range of issues.

Let us consider the sorts of promises made five months before the last election. A social services inspectorate was promised, and that might have saved lives at Leas Cross if the Government had been prepared to spend the €2 million now going on its establishment. It was promised five years ago but not delivered, and the cost today is €2 million out of a surplus of €4 billion. Legislation was promised on the quality and standard of nursing homes, but again the Government failed to deliver. Legislation was promised on eligibility. Not only has the Government not delivered on such legislation; last night it voted through legislation to take elderly people's homes if they require private nursing home care.

Mr. Parlon

I do not think that the Opposition even bothered calling a vote last night.

Dr. Twomey

I apologise; it was on Tuesday night, on the Health (Nursing Homes) (Amendment) Bill 2006.

The establishment of 100 primary care teams was announced in last year's budget, and this year the Government has trawled through the matter and announced it again. The Minister for Health and Children, Deputy Harney, has announced that she will set up an extra 100 teams. To the best of my knowledge, the first 100 primary care teams announced in last year's budget have not yet been set up. In my constituency, I could expect three such teams, but there is none.

The Government made announcements in last year's budget that were not implemented in 2006 and makes exactly the same announcements for 2007. It has lost credibility when it comes to delivering on its promises. Not only has it not delivered on promises from five years ago; it has not even delivered on the contents of last year's budget. Some 300 additional front-line staff were to be appointed in the area of primary care in 2006 but some of those jobs will not be advertised until February 2007. A full year has gone by and the Government cannot even deliver front-line staff to the areas under greatest pressure in the health service. Last year's budget included the provision of €80 million for IT projects in the health service. These were small projects mainly dealing with value for money issues and patient care. None of them has been delivered. This is typical of the type of service we receive.

At last week's meeting of the Joint Committee on Health and Children, Health Service Executive officials admitted that even though the executive was established two years ago under the Health Act 2004, the complaints procedure has still not been approved by the Minister. The Government is spending more than €10 billion per year on the health service but the reform programme is not working. It is unacceptable that the Government is walking away from its commitment to public health services. Health reforms are failing, the HSE is in crisis and the Government is too tired or incompetent to take on board the important job that must be done to reform the public health care system.

The Minister's announcements regarding care of the elderly suggest the Government is trying to find solutions to short-term problems in the private sector. The Minister for Health and Children's collocation plans, whereby private hospitals will be built on the grounds of public hospitals, seem to have been devised on the back of a beer mat. It is clear that even some of those investors who were initially interested in such projects are withdrawing at a dramatic rate because they know this type of arrangement will not work.

The comments of the Minister, Deputy Harney, and the Minister of State, Deputy Seán Power, during Question Time on Tuesday show they have no idea of the impact this policy will have on patients, particularly those with private health insurance. It is clear the entire process is beginning to unravel. This is typical of the approach taken by the Government. The economy is strong and has been so for more than a decade but the Government is proceeding blindly without considering potential difficulties that may cause problems in two or three years' time. It has failed dramatically to implement the most basic promises it made before the last general election. It cannot even deliver the commitments it made in last year's budget. The Minister for Community, Rural and Gaeltacht Affairs should, rather than shouting at the Opposition, acknowledge that the Government is failing the public.

Mr. Neville

I welcome the opportunity to speak on the budget provisions. The Minister for Finance announced an additional €25 million for the delivery of psychiatric services under A Vision for Change. This figure will only allow services to be maintained at existing levels, with 7.3% of the total health budget devoted to psychiatric services in 2006. Next year, according to the Minister's figures, 7.2% of the overall budget will be allocated to these services. There is no effective increase in funding at a time when there is greater recognition and understanding of the need to roll back the neglect of decades. If there is a commitment to such action on the part of the Government, it is not evident in this budget.

The Mental Health Commission has stated that "underfunding is reflected in the prevalence of mental disorder and generally negative and stigmatised attitudes towards mental illness". For three or four years, questions to the Minister about the development of the psychiatric service were met with the response that we must await the report of the commission. That report was published last January but we all had a good idea of what it would recommend. The requirements in this area were outlined clearly in 1984 in the Department's Planning for the Future document. All of us were aware of the need for multidisciplinary, community-based psychiatric services and increased provision of child and adolescent psychiatric services. We knew of the negative effects of excessive waiting lists for psychiatric assessment and services, especially in the case of children and adolescents for whom a mild condition could become chronic during the waiting period.

This budget does not meet our expectations and hopes that a corner had been turned. The Government should immediately double the moneys allocated. The standard of patient care in large mental institutions was severely criticised by the Inspector of Mental Health Services in his 2005 report. Many of the wards in mental health institutions have little or no therapeutic activity, multidisciplinary input, regular physical or psychiatric assessments, or care plans for patients. Community residences for former long-stay patients were found by the inspector to be an exercise in relocation rather than part of a rehabilitation programme.

We must urgently address the shortage of psychiatrists, psychotherapists, community nurses, occupational therapists and family therapists to provide for the needs of those who suffer from a psychiatric condition. Approximately 5% of people over 65 years of age suffer from some form of dementia, and a further 15% to 20% suffer other mental problems such as depression and anxiety. People with intellectual disabilities have a higher than average risk of developing a mental illness. Only two units are approved for inpatient care; the other units in which patients receive care are not subject to inspection and are outside the legal framework that protects patients' rights.

We are all aware of what happened at Leas Cross nursing home. There must be an effective system of inspection of those facilities where people with intellectual disabilities receive inpatient care. We must be confident the service they receive complements their dignity. People with mental health difficulties sometimes find themselves homeless and their problems then become more chronic. It is unacceptable that psychiatric patients are being discharged from hospital onto the streets. There is an urgent need for a hostel-type step-down facility from psychiatric institutions. Local authorities should be obliged to provide for the housing needs of such persons.

Child and adolescent psychiatric services account for only 5% to 10% of spending on mental health services but cater for 23% of the population. This under-investment has resulted in a service that is at best sporadic and at worst non-existent. The key to dealing with psychiatric conditions is to have a large input into the development of child and adolescent psychiatric services. Early intervention, experts claim, gives a 90% chance of a full recovery. A delay in intervention makes a condition chronic, with over 70% recidivism where people return to psychiatric hospital on a regular basis. Early intervention is crucial in that fewer people will be in need of care in their adult lives and, as such, that will have a knock-on effect on adult psychiatric services.

It will also have an effect on suicide rates. Up to 80% of people who take their own lives suffer from a psychiatric condition. In excess of 200,000 children have a mental or behavioural problem at any one time, with one in ten having a disabling problem. More than 1,900 children under the age of 18 years sought addiction treatment in Dublin, which amounted to 20% of all new attendances. Suicide accounts for 30% of all deaths for the 15 to 24 years age group. In 2004, 11,200 adolescents presented at accident and emergency departments after causing self-harm. Approximately, 5,330 children and adolescents have autism spectrum disorder. Eating disorders are rising every year. Will the Minister for Health and Children examine funding in this area? While it may not have been dealt with in last Monday's "Prime Time" programme, the levels of death from suicide and other disorders are the highest of all psychiatric conditions.

Last year the National Office for Suicide Prevention received funding of €1.2 million. There was no statement in the budget for next year's funding. In Scotland, where inroads have been made into reducing suicides, its suicide prevention office receives an annual budget of Stg£10 million. In the context of the amount of moneys flowing into the Exchequer, it is not unreasonable that the National Office for Suicide Prevention be allocated €10 million.

Minister for Community, Rural and Gaeltacht Affairs (Éamon Ó Cuív)

Ba mhaith liom an t-am atá agam a roinnt leis an Aire Stáit ag an Roinn Comhshaoil, Oidhreachta agus Rialtais Áitiúil, an Teachta Batt O'Keeffe, agus an Teachta Mulcahy.

Listening to Deputy Twomey's contribution, I received a good exposition as to why I fear the Fine Gael Party getting into power. His main concern was about total national personal indebtedness. He did not deal with the issues that governments must worry about. There is no doubt that some people, as always happens, have borrowed beyond their means. Deputy Twomey claimed that society as a whole had borrowed beyond its means. He more or less said if Fine Gael was in government, it would stop people borrowing money. It is the function of the Central Bank to ensure credit policy is run correctly. Its obligation is to ensure lending institutions do not lend money beyond people's means to repay. Market forces will also dictate that. If banks were reckless in their lending policies, their business would be in jeopardy.

In a strong economy many people have the borrowing capacity and can afford to repay loans. Thirty years ago when people bought a house, they paid it off and did not borrow again. People now have higher aspirations. Many home owners have bought a second property in Ireland or abroad and they do not face any pressure with such borrowing. Those under pressure are the first-time buyers. One has to identify where the problem might be and deal with it. That was the reason one change made in the budget related to a particular group which faced the most pressure, the first-time buyer with a loan.

Some first-time buyers are in the fortunate position to already have the full cost of a house. They will not benefit from the budget because they do not face any pressure in repayments. The Government has, in a clinical way, made sure that those under pressure, due to the rising price of an essential commodity, the first home, have been given a leg up.

Fine Gael complains about borrowing levels. When we introduced the SSIA scheme to cool the economy and create a habit of saving, we were scarified by the Opposition for encouraging this type of saving. The cap on the SSIA proved it was very much the ordinary person's saving vehicle. It has proved to be a huge success, helping many people to learn about saving.

It is extraordinary to hear Fine Gael on national finances, the area in which we have total control. It is interesting to compare this year's figures with those from 1987, the last time a Fine Gael-Labour coalition had a long run at it. In 1987 the interest bill on the national debt was £2.7 billion per annum, 33% of the tax take. Despite the growth in the economy, in 2006 we paid only €2.4 billion, 5% of the tax take. That is good management of the funds that we are directly charged to manage. In 1987, the Fine Gael-Labour Government borrowed £1.5 billion on the current account, spending only £770 million on capital projects. In 2006, the account is in surplus of €8.9 billion, allowing us to spend €7 billion on capital projects, almost ten times the 1987 figure.

There is a similar trend in our total national debt. It is amazing to think that the national debt doubled between 1983 and 1987 to €30 billion. Today it is only €38 billion in an economy, as I have illustrated in the figures, up to ten times larger. We are getting the fundamentals right. We have a strong, confident economy and growing employment, which have created the stability we need for growth. Our second task is to ensure money is spent wisely. In my limited time I will focus on two issues, the first of which is carers.

We all know from personal experience that those who care for other people in their homes contribute, in a quiet way, much to society. Traditionally, our social welfare code has not allowed people to claim two social welfare payments at once. In an innovative move we have changed that for carers in recognition that they are providing a service, both to the person for whom they care and to society. After the change in this budget, a carer aged over 66 years who has a contributory pension will be €125 per week better off. It is adding virtually 50% to their income and is an overdue recognition of their contribution. It is a real recognition by this Government of the significant contribution these people make to society and the heavy burden they carry. It follows on from a series of improvements that have been made for carers in recent years.

I would also like to focus on the additional €100 million that has been provided for disability and mental health services. One must take this in the context of the money provided two years ago in a rolling programme for the improvement of services for people with disabilities and the 10% increase in the recent Estimates. We all know from dealing with the disability services that there is a need for extra investment. I hope this €100 million, which has been given for residential, respite and day places and other service improvements, will lead to an incremental improvement in services to the most vulnerable in our society.

Our attitude in Government has always been that one cannot spend what one does not make. We must first, therefore, ensure we have a sound and growing economy that is buoyant and brings in revenue so we can provide better services to our people. Without doing that there would be no largesse. We would return to 1987 when there was no surplus funding and could be no improvement in services. No matter how much money one has, one must then decide in a focused way where priorities lie. I am delighted social welfare increases accounted for over half of the extra expenditure in this budget. This shows the Government is focused on those least well off in society. It is also focused on young people trying to get their first house. This is a budget with a vision and a mission to help those who need it most. I am delighted to have been able to say these few words and commend this budget.

Minister of State at the Department of the Environment, Heritage and Local Government (Mr. B. O’Keeffe)

I welcome the 2007 budget, particularly the commitment to maintaining high levels of provision for the wide range of essential public services and for its deliberate focus on those who most need the assistance of the State. I am pleased to note that it reflects the most comprehensive package of environmental measures ever announced in a budget. This package cuts across all major economic sectors and shows that the environment, particularly climate change, is a matter not just for my Department but extends across the full breadth of the Government.

Ireland supports the international efforts to tackle climate change and plays its part in the co-ordinated global response. We will meet our Kyoto target mainly through reductions in greenhouse gas emissions in our economy. We will also meet it through contributing to the cost of projects to reduce emissions elsewhere in the world, as allowed for under the protocol. The Government has announced its commitment to invest 18 million tonnes of carbon allowances during the Kyoto commitment period of 2008-12. I welcome the provision of a further €270 million to fund a programme of purchases up to 2018. This budgetary commitment underpins our support for the Kyoto Protocol and for developing countries and will allow us to meet our targets under the protocol without damaging the economy.

Reducing emissions from the transport sector remains one of the key challenges on climate change and these measures along with those related to bio-fuels and other alternative energies announced yesterday will make a major contribution in this regard.

Debate adjourned.

Dáil Éireann debate - Thursday, 7 Dec 2006