Finance Bill 2007: Report Stage (Resumed).

Debate resumed on amendment No. 8:
In page 11, to delete lines 16 and 17 and substitute the following:
"1.—In this Part—
"Principal Act" means the Taxes Consolidation Act 1997;
"special educational needs" has the meaning assigned to it by section 1 of the Education for Persons with Special Educational Needs Act 2004.".
—(Deputy Bruton).

When the debate adjourned, we were wrapping up on this group of amendments, which deals with a number of issues, including the possibility of tax relief being extended into areas of special educational need and the welcome decision by the Minister to grant medical tax relief from the very first euro of expenditure incurred by an individual or a family. I welcome the suggestion by Deputy Boyle that we should consider the totality of relief in respect of medical expenditures and medical provision.

I know the Minister is a strong defender of the tax-based schemes for developing private hospitals, private nursing homes and ancillary services. I acknowledge that in terms of getting rapid response in these areas and getting buildings built rapidly, these schemes have filled a very important gap that existed in the public service and the Minister is probably correct to state it would have taken a long time to fill that gap by other means. However, it is timely to have a proper review of these elements in the context of a health policy.

The Minister commissioned a report by Indecon last year. It has more recently been cited as a justification for the tax relief provided in the Bill, although I have not yet seen it. In previous reports Indecon assumed the medical advantages and only reviewed the level of take-up. Once it became apparent that there was a reasonable level of take-up, it deemed the scheme a success and that it should continue.

Indecon also recommended a three-year review. The Minister has built into his proposal a termination date of three years but we need a health-based assessment of the various tax schemes for developing facilities, on which the Minister did not comment on Committee Stage. Some private developers have had problems meeting standards, although I know this issue is being addressed by reforms in standards provision. However, in another change this year the Minister for Health and Children has decided that the State will effectively fund all nursing home care provision after three years. It will not provide all the funds but will be the funder of last resort. The Minister's provision means that after three years the State will pick up the residue not met by 80% of a person's income. The cost of most nursing home care is currently between €4,000 and €5,000 per month, way ahead of the pension income of many individuals who might need it. Once the 15% property threshold set by the Minister has been reached which under the scheme will typically happen within three years, the State will effectively fund the entire residue above 80% of a person's income. If the State removes the risk by underwriting the income flow in the long term, it dramatically changes the basis on which we allow tax relief at a rate of 42% for the construction of nursing homes and other facilities by private developers.

I support the call for a health-based review of the place of tax-based schemes in an evolving health policy. Such a review has been missing to date but the Minister is uniquely well placed to initiate one, having served as Minister for Health and Children, as well as Minister for Finance, and has insights not only into the contribution which tax breaks make but also their limitations. I hope he agrees that this is a good time to set up a health-based review which will go well beyond that undertaken by Indecon which involved desk-based research with virtually no contribution from the Department of Health and Children. The review should offer an opportunity to participate to advocates of public sector provision, as well as those of a tax-based model involving the private sector.

I have already spoken on this section.

The Minister did not address that point.

We have set up the Health Information and Quality Authority, HIQA, to ensure developments, whether under a tax-based scheme or otherwise, meet regulatory standards. The authority fills a gap in the monitoring process which had led to certain well known cases in which the standard of care was not what we would have expected. The response of the Minister for Health and Children was to set up the HIQA on a statutory basis. The HSE has an inspection regime and monitors standards as a matter of great importance.

The hygiene audit system in hospitals is another example of where we need to get the basics right. Many of the new-build developments were approved under the health board system and by the HSE which certified them as adequate and continued to check that standards were maintained.

The review of tax reliefs was comprehensive and my responsibility was to ensure value for money. The public system has produced 7,500 beds in the nursing home care sector alone as a result of the tax breaks introduced by my predecessor. If we had depended exclusively on public sector procurement for those beds, we would not have met the demand as quickly as by engaging the private sector.

The health reform policy has been rhetorically referred to as a process of privatisation but it is nothing of the sort. It uses private sector disciplines and expertise to complement the provision of public health care. We have traditionally relied on a mixed system of private and public health care to make sure the best possible consultant staff are attracted to the public health system. The contractual review in which we are trying to engage and which is now starting to make some headway is fundamental to changing the skills mix within the health sector in order that we will have far more consultant staff and a consultant-provided service rather than a consultant-led service, as is the case at present where the number of junior hospital doctors far exceeds what would be appropriate in a consultant-provided service.

Public private partnerships and private sector involvement are fundamental to the speedy and effective delivery of improved services through the capital investment programmes envisaged under the national development plan. That investment will be accelerated and encompass exclusively public sector provision, as well as private sector involvement, not only in private hospitals but in universally available facilities, in a way which provides value for money for the taxpayer.

The subject of the review for which the Deputy calls is within the remit of the HSE which has already taken initiatives in that regard. It is a matter for the Department of Health and Children to decide how it plays its departmental role but it is not within my remit to become a proxy Minister for Health and Children. My job is to ensure schemes requiring tax expenditure are continually monitored, not just by means of a three-year review but as a matter of budgetary policy. I will monitor their implementation throughout the year, as well as in the Estimates campaigns, to ensure they secure their objectives.

Among the reviews I will undertake will be an exercise to judge whether we secure a return on the investment to justify a scheme's existence. The Indecon draft report which I will make available on the website in due course confirms that continued tax-based investment is justified. We must ensure there is private sector involvement in developing a spectrum of care facilities, not simply residential or home-based facilities, and much investment in community-based services. Other care models are provided for in the Bill to meet an identifiable need and are justified on the basis of Indecon's findings.

Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.

I move amendment No. 9:

In page 13, between lines 25* and 26*, to insert the following:


Section 466A (home carer’s allowance)




Amendment No. 9 was also tabled on Committee Stage. However, its subject matter is of sufficient importance that it warrants a debate in the House. It relates to the tax policy we have developed in respect of families in recent years. For most families, trying to rear children is quite tough. In the majority of instances, both parents are obliged to work in order to fund the cost of a mortgage. Most parents are under pressure to work and can at best take a short break from their place of employment.

In my constituency — I am sure the position is similar in that of the Minister — parents who devote their entire child benefit and under six payments towards the cost of child care still come up approximately €145 short per week. The latter converts into a gross annual income of €13,500. If there are two children in a family, the parents must find €27,000 to fund continuing child care for them. Given that the average industrial wage is between €32,000 to €34,000, there is virtually nothing left for people who go out to work. Many parents find themselves under extreme pressure as a result and quite a number of them decide to opt for home caring. They see benefits in choosing the latter course, particularly from the point of view of being able to spend time with their children in their formative years and also in light of the economic reality of the high cost of child care.

What happens when parents consider taking the home care option for a few years in order to look after their children? They are immediately hit with a penalty on their tax credits of €990. In addition, under the terms of individualisation they lose an amount that could rise up to €5,250 on their tax bands. A massive tax penalty of €6,240 is, therefore, imposed when a person opts to give up work and become a home carer. This begs the question as to the sort of policy we are trying to develop in respect of families. Most other European countries recognise that supporting parents in the task of rearing children is of huge importance and is worthy of considerable state support. However, we appear to take a different view. We offer minimal support and we put in place tax penalties in respect of those who opt to become home carers for short periods.

The situation is even worse when one considers the way in which the tax and welfare system treats parents. It does not treat those who try to stay together and share the responsibility of parenting in an equitable way. If parents separate, they are treated much more favourably under the tax code and can qualify for four tax credits. If they remain together, they qualify for, at best, two such credits. If they are partners who are not married, they may only qualify for one tax credit. In the context of the social welfare system, we have not evolved a way of dealing with the anomalies regarding people who are single parents and those who are involved in joint parenting. We must develop new thinking in the context of how we treat families and how we might use the tax and welfare code in a more joined-up way to help parents to care for their children in an effective manner.

Developments in this area must go beyond tax and welfare law and enter the realm of employment law, where scant regard has been paid to parents who try to get time off to deal with significant family events or issues that arise on foot of their having young children. We must engage in a fresh examination of this matter and develop a structure that is more supportive of families. The success of families in rearing their children represents what we pass on to the next generation. It is the key test as regards the measure of our legacy. There are far too many children who fall by the wayside under the current model and we do not have the systems in place to identify them. A great deal of what passes for child policy represents a mere reaction to crises. We should, rather, try to anticipate such crises and create environments in which children can succeed. Many policies are developed within rigid silos, with no thought given to the links that must be created.

It is important that we should begin to roll back on the current system. The amendment makes a simple and straightforward proposal, namely, that home carers should enjoy the same tax credits as those who opt to work outside the home. This would involve increasing the tax credit for home carers by €990. People would then be in a position to make a choice and would not be penalised for doing so. Under the amendment, if people want to be home carers for a number of years, they will be treated as workers in the home. If they opt to work outside the home, they will be treated as they are at present. People would then, at least as far as credits are concerned, enjoy the same tax treatment.

We must also consider rolling back on the impact of individualisation further up the line. Much of the drive in favour of individualisation emanated from people who, through our social partnership model, have the ear of the Government. The needs of employers, producers and the trade unions, rather than those of families and people trying to deal with the consequences of changes in tax policy, are far too much to the fore under this model.

The amendment represents a modest start in an area in respect of which it is important that we should reclaim ground by putting in place a solid, family-based policy. The State opted out of taking action in this area for a long period and regarded its main concern as ensuring that our economic model remained intact. However, the State has an important role that has been overlooked. In that context, I hope the Minister is of the view that the amendment is worthy of support.

It is appropriate that we should be debating this aspect of Fianna Fáil's budget on the eve of International Women's Day. It is important that the Minister should appreciate that the tax penalty or additional tax that will be paid by married couples where one or other spouse chooses to remain at home and care for children or an elderly relative amounts to €6,240. If a married couple decide that one spouse should remain at home, there are two penalties. The allowance for a married couple where both spouses are working is €68,000. For a single income couple, the allowance is €43,000. The latter couple must, therefore, pay a tax penalty of just over €5,000. As in previous budgets, the Minister has again widened the gap. This process began in 2000 with his predecessor, Charlie McCreevy. The amendment suggests that a home carer's credit of €770 be put in place. This compares with a PAYE tax credit of €1,760. Single income couples are obliged, therefore, to pay extra tax to the tune of €990 if one spouse remains at home to care for children, a disabled person or an elderly relative. In this regard, the Government is practising political correctness gone wrong. We all live complex lives. As I stated, it is the eve of International Women's Day. I am delighted to be the first spokesperson on finance to raise an issue which particularly concerns women because women still form the overwhelming majority of carers. However, women have diverse lives. I am a Deputy, I am an accountant, I used be a lecturer, I used to work in Africa on development programmes, but I am also a mother and I had responsibility for my father before he died. My life, like that of many women and quite a number of men is a patchwork of different responsibilities at different stages.

When the feminist movement started in America the book that became famous, and in many ways launched it, was by a woman called Betty Friedan. She started the book with the words "Is this all?". In America of the 1960s where she had the house, the home, the two children, the husband, the car and money, she asked "Is this all?" and wrote that she wanted to take part in the workforce and be out in the world of business, politics and commerce. If the women's movement is about anything, it is the right of women to have at different stages in their lives the choices that reflect their different interests and commitments. Let us be clear about this issue. For the vast majority of women that includes, for some time or for years — forever in some cases — a commitment to caring for children in the home and caring for relatives. As I stated, it is also the commitment of a significant, and growing, number of men.

Since caring is not monetarised in our economy, it has no economic value for the State. There is an element of political correctness gone wrong in what this says to a young family. As I stated to the Minister previously, the problem does not arise when the first baby is born because often people can cope. They can afford the €200 a week in crèche fees for one child and get him or her out to a child minder or a crèche at half past seven in the morning, commute to work, come back at 5 o'clock or 6 o'clock to collect the baby and then settle down for the evening. The difficulty arises when people have two or three children, particularly if, because of our astronomical house prices, they work in the Dublin area but live as far away as, for example, Tullamore in the Minister's constituency, Kinnegad or Enniscorthy. There are large numbers of people now living in the greater Dublin region and the Leinster region who are commuting to jobs in the Dublin area. When such a family has two or three children, how will they afford to pay €600 a week in child care — crèche fees, after-school services and pre-school services? A person would need to earn double the average industrial wage of approximately €34,000, which, incidentally, most women do not earn, to pay the cost of all the child care that would enable the person to work full-time.

One of the benefits of the partnership process has been bringing forward arrangements that allow public servants to take various amounts of time off in recognition of their caring duties. However, by and large, the private sector does not acknowledge this development. There is an absolute ceiling for women in the private sector. Employers are fools to believe that if a woman starts her working life at 20 years of age and retires aged 60 or 65, it amounts potentially to a productive working life of between 40 and 45 years. Many employers will not acknowledge that for five to ten years of that period many women will be heavily involved with the care of a child or children and for many people some of the period will involve the care of elderly relatives. If taking parental leave was compulsory for men and if in our firms of solicitors and accountants the men who have children also had to take a little time out, which many men would welcome, we would see a revolution in employers' attitudes.

On Second Stage, the Minister responded by stating that I was decrying the effect of individualisation. I was doing so. My party has put forward detailed recommendations for a commission on taxation to look on a rolling basis at these issues in the tax system. Perhaps when Charlie McCreevy brought in individualisation, as the Minister stated in his reply, the weakness of our income tax system at that time was how heavily it bore on single people because in order to improve their position we had to give double increases to married one-earners and this used up scarce tax resources. People might say that the Minister's predecessor had a point in terms of debating tax policy for 2000, but this is 2007. Following seven years of much prosperity, the extra tax the married one-earner must shell out if he or she earns over €68,000 is now €6,000, which is a significant penalty.

The Minister further stated on Second Stage that if we want to go back on individualised tax bands, we will inevitably raise the relative burden on single earners for a given amount of tax relief and while he accepts that people may make life choices at different times in their lives, he is not sure if we can turn the clock back at this stage. It harks back to the Maggie Thatcher question — are we living in a society or in an economy? I live in a society. I want women and their partners or husbands not only to have children, but to have the time to enjoy being with and raising their families. We have heard the example of one of our scarce female colleagues in this House. Approximately one third of the Labour Party's parliamentary representation is female. The Progressive Democrats' female representation is approximately the same. Of the other parties, the Greens and Sinn Féin have no female Members and Fianna Fáil and Fine Gael have a couple of female Members each. This is a woman-free zone, to all intents and purposes, as regards modern Ireland.

I am not saying the answer is easy, but the proposal being put to the Minister is a start. In that regard, there are two principles. The first is that he should not make the gap any bigger, which he has been doing without thinking about it and without realising the impact on women and on families with children.

Second, why not just raise the income tax credit for home carers? It has been frozen since it was introduced. That should be done. The Minister will possibly address it in his party's election manifesto. It should be in this Finance Bill, not saved up as an election goody.

The strains on families are enormous. The worst part of all of this shows again how fossilised thinking on taxation becomes when it is caught in that rarefied group of social partnership. Social partnership does not involve the Opposition in the Dáil.

Deputy Burton is making a Second Stage speech.

No. I am speaking about the amendment.

Acting Chairman

The Deputy is giving a Second Stage speech and should speak to the amendment.

The amendment indicates that the credit for a worker paying income tax is €1,760, whereas the home carer's allowance is €770 for a single family in which a carer, usually the mother, stays at home. Most of us would not like the marriages of our friends and families to break up but if a married couple was to separate while retaining joint custody of their children, which is easily arranged in the courts, they would each receive a separated parents allowance of €1,760, in addition to a PAYE tax credit if they were in the labour force. Justice cuts both ways and given that the focus of the partnership process is on having women enter the paid work force, it is right for me, as a woman Deputy, to speak for the women and men who want an acknowledgement in our tax code of the care they give to their children.

When the Minister said on Second Stage there would be no turning the clock back on this amendment, he was wrong. He should reconsider the issue because there are options for reform. The Labour Party has put forward detailed proposals in that regard and this amendment would go some distance towards righting the balance in favour of families with children. If we are not in a position to nurture children, all the economic benefits in the world will be of no avail. I hope the Minister has had an opportunity to reconsider his refusal to turn the clock back in terms of giving families with one spouse at home a second chance. He should at least put them in the same position as separated parents. Why should a married couple which stays together to care for children not receive the same tax advantages as a separated couple?

I understand why circumstances may have been different 20 years ago but time has progressed and we are in 2007. There are 300,000 single income families in this country, at least a third of whom are negatively affected by the Minister's tax rules. I hope, therefore, he will take the opportunity presented by this amendment to rectify the issue.

The previous Minister for Finance heralded the introduction of tax individualisation as a great leap forward in his fiscal revolution but he failed to take account of the social implications of his decision. There is a history of failing to deal with women equitably in the taxation code. I have only to mention a former Fianna Fáil Minister for Finance who referred to women complaining about their treatment at the hands of the tax system as well-heeled and articulate. Not a lot has changed in the Government's attitude to the role of women in society or their treatment as economic instruments.

Tax individualisation has resulted in a large number of women entering the work force but the growth of service sector jobs with low pay and anti-social hours has also had implications for society. Many communities have seen the return of latch-key kids as a result of households which need to earn more than one income and a taxation system which tells couples they will be better treated if both partners work. Individualisation would make sense if we also integrated the tax and social welfare systems or if tax credits were refundable where discrepancies arose. That would allow a balancing mechanism for people who are treated differently. At the end of the day, the effect of making a distinction between those who work at home in an important social context and full blown economic actors is that we make different value judgments as a society.

The way individualisation was introduced by the then Minister, Mr. McCreevy, the resources provided to the policy and the gap that has since been allowed to increase has meant the problem cannot be resolved in one attempt. I favour the approach taken by Deputy Bruton of ameliorating the effects of the policy, at least in the short-term. However, I would like to go further because there is an onus on us to put in place a timetable for granting equality to those who perform an important social role and a consequent economic function for the State in terms of caring for children and family members. The ways by which those who are not part of the taxation system offer their labour on a day-to-day basis constitutes an alternative economy which goes unrecognised in the Bill before us. Given the Finance Bill is one of the more important matters of legislation this House has to pass in a given year, this non-recognition represents a tremendous failure. Thousands of people are being dealt with in an inequitable manner because they are not visible in a traditional economic sense and the system would prefer they did not exist. We have a responsibility to acknowledge that they play an important role and to introduce taxation and social welfare systems which properly recognise them.

This is clearly an issue that mainly affects women, although it also affects men who chose to act as full-time carers or who would like that option if the taxation and social welfare systems were more equitable. The consequence of not acting will be the distribution of expenditure from the Department of Finance to other Departments in order to deal with social repercussions such as disadvantages in health and education. A measure of social justice is needed in our taxation code, along with an admission that a measure which was originally seen as a bold stroke has largely failed society. With regard to bringing women into the work force, those concerned have not benefitted because the accompanying supports, such as additional training, recognition of previous work experience and protective measures for families, have not been put in place. I fully support the aim of Deputy Bruton's amendment and hope that whoever is responsible for next year's budget will start the process of reversing the taxation system so that it properly recognises the role of full-time home carers.

This amendment concerns the home carer tax credit of €770, which under section 466A of the Taxes Consolidation Act 1997 is granted to married couples where one spouse works at home to care for children, the aged or incapacitated persons. We discussed an identical amendment on Committee Stage which proposed that the home carer credit should be increased to €1,760, or the same as the maximum employee tax credit, commonly known as the PAYE credit, set out in section 3 of the Bill. In other words, the amendment would increase the value of the home carer tax credit by €990 per annum. The cost of increasing the home carer tax credit as proposed is estimated at €49.4 million in 2007 and €73.6 million in a full year. As I indicated in my Budget Statement last December, the total cost of the income tax and levy changes I made is more than €1.25 billion in a full year, which is almost 40% greater than the previous year's total. The increases in the employee tax credit and the personal tax credit, in addition to benefiting all workers, were intended to ensure all those on the minimum wage would be completely outside the tax net and they removed approximately 88,000 low income taxpayers from the tax net this year. This means almost two out of every five wage earners or 846,000 will be outside the tax net in 2007, as compared with one third or 667,000 workers in 2004 and one quarter of the workforce or 380,000 persons in 1997. This is a highly significant development.

When one devises a budget and sets out spending plans, that is it for the year. While the amendment affords an opportunity to discuss such plans, there is no question of accepting an amendment that would incur an additional cost of €7.36 million in the current year. I do not subscribe to a number of the views expressed, including Deputy Boyle's reference to the need for social justice. This Administration has, through its taxation policies, provided a greater degree of social justice to low income earners than ever before with 40% outside the tax net altogether. Almost 500,000 people who paid tax under the rainbow Administration do not pay tax anymore because of the changes we have made and not all of them are low income earners. That is also a significant development in the context of a total workforce of more than 2 million with 600,000 new jobs having been created over the past decade. Some of those jobs resulted from changes we made to the tax code, including moving the burden of taxation away from work to capital and wealth. The Government parties have reduced the burden on income earners by one quarter and we have increased the total capital tax take from 5.7% to almost 16%. That is as it should be if one is to provide for greater social justice for working families. All working families know that but Members continue their efforts to table amendments such as this, which suggest that we have been remiss in looking after them when the position is quite the contrary.

Several income tax changes I introduced in this year's budget will benefit married one-earner couples. For the second year in a row such couples have received substantial increase in their credits and the standard rate band increased by €2,000 to €43,000. Personal employee tax credits were increased by €130 to €1,760 and €270 to €1,760, respectively. These changes ensure a married one-income couple in the PAYE system who received a home carer tax credit may earn up to €30,250 without any liability for income tax. The tax bill of a married one-income couple earning in excess of €43,000 will reduce in 2007 by an additional €970 per year as a result of the budget. People have examined the progressive nature of the budget changes, which have been benefited low income families more than high income families in percentage terms.

The latest data from the OECD, which was published last week, highlights that in 2006 a married one-income couple with two children in Ireland on the average production wage received more money in cash transfers from the State than they paid in income tax and social security contributions.

VAT is our greatest tax.

That is a significant change.

But it does not take account of VAT.

Ireland is unique because it is the only country in the OECD to have achieved this. The figures do not take account of the further improvements we made in the 2007 budget. Married one-earner couples on the average industrial wage in this State are uniquely placed compared with their counterparts in all other OECD countries in that they pay less in income tax and social security contributions than they receive in cash transfers and that is very significant.

As I mentioned on Committee Stage, there are other perspectives on this issue. While I do not agree with everything the OECD has to say on this area, Deputies will recall the organisation holds the view that the Government should abolish the home carer tax credit and consider moving to a fully individualised system of taxation to reduce both average and marginal effective tax rates on second earners in married couples. Female participation rates in the workforce are below the OECD average and the organisation suggests we need to further incentivise second earners in families, many of whom are women, to enter the labour market. I do not totally concur with that view.

As I outlined on earlier Stages of the legislation, the claim that individualisation was introduced in 1999 to increase the female labour supply is not the full story. The weakness of our income tax system, as Deputy Burton pointed out, was how heavily it bore on single people because to improve their position, double increases had to be given to married one income couples and this used up scarce tax resources. If we individualise tax bands, we will inevitably increase the relative burden on single earners for a given amount of tax relief. While I accept people may make life choices at different times, I am not sure that the clock can be turned back at this stage and nobody is suggesting that I should do so. It was correct to move towards this with caution and to recognise societal attitudes and circumstances had to be taken on board while, at the same time, ensuring we facilitated participation in the workforce to the maximum extent.

I do not accept there is a need to go down the road suggested by the Deputy because the tax package introduced in the budget was worth €1.25 billion. I made my decision and choices, as every Minister for Finance does, in the context of a good economic policy that enables the Minister of the day to consider tax reductions. While I do not accept the amendment, I recognise it gives an opportunity to Members to air their views on this matter. Given the overall budget packaged amounted to €1.25 million, no Deputy has suggested where the additional €7.36 million required for the amendment will come from. That is a matter for the Government and not the Opposition to worry about.

I seriously disagree with the Minister's priorities. He said he found 25 times the cost of this concession in his tax package and he did not feel home carers were worthy of consideration in devising the package. Home carers have been left out every year since individualisation was introduced. The Minister did not weigh up the relative needs of home carers and their families and he did not have a great struggle with his conscience. Every year home carers have not received a shred from the Government parties. The carer's allowance was introduced under pressure from Fianna Fáil backbenchers, rightly so, because they recognised the proposal of the Minister's predecessor was unbalanced. The carer's tax allowance was then introduced and subsequently converted to the carer's tax credit. Not a single farthing has been found since to increase the carer's allowance. In the same period, the employee's tax credit increased by €1,100. There was no careful balancing of the needs of different family structures and needs. There was a complete blindness to this family unit, which is common among young people. As the figures about which I spoke show, they will inevitably face this huge pressure if they have one or two children. We must devise ways to deal with these pressure points in the family cycle. It is the same as in the later stages when trying to care for older people who perhaps need institutional care. We need to devise ways to accommodate them.

The Minister quoted glowingly an OECD report to show that one earner families are uniquely well placed in Ireland because they receive more in social benefits than they pay in tax. Let us not forget that compared to any other European country, we are in the ha'penny place when it comes to the provision of child care and support for families with medical costs. The means test figure for the medical card is below the minium wage. One must earn below the minimum wage for one's family to be considered worthy of support with health expenses. There is virtually no support in respect of child care costs, other than the figure of €1,000 for which the Minister provided. We are not treating one earner families on an equitable basis in any way. The Minister is living in a completely separate universe if he believes statistics produced by the OECD prove we are far-seeing in the way we support young families. That is definitely not the case.

I take issue with some of what the Minister said when he quoted the OECD report. He will find that everyone on this side of the House does not agree with the conclusion that we should get rid of the home carer's credit, a recommendation made in the report.

The Minister spoke about net transfers in payments from the State taking income tax into account. The reality is that he has overseen not a change from income tax to capital tax but a change from income tax to spending taxes. As regards single income earner families, the effect of VAT negates whatever statistic the Minister quoted as much as anything else. The biggest amount we collect in tax is VAT.

There are spending taxes in every OECD country. What is the Deputy on about?

It accounts for quite a high proportion here. The tax take has also increased under the Minister. It has gone up a number of points. Therefore, he cannot have it both ways. He cannot say he has reduced taxes when overall taxes——

The Deputy cannot have it both ways. That is his problem.

I am not the Minister; I am not making these decisions.

One can have it both ways if one is in opposition. We have established that much.

I can point to the Minister's inconsistencies.

We have established the situation.

Perhaps the Minister will have the opportunity to do the same soon.

I certainly will not try to have it both ways.

Acting Chairman

Please allow the Deputy to speak without interruption.

I will give the Minister an opportunity soon.

The Deputy will have to grow up if he comes over to this side of the House. That is the problem.

I have grown up — both of us have at this stage.

The OECD report goes against others mentioned. For instance, the birth rate across OECD countries is very low. Ireland and France have the highest rates in the OECD at 1.9 per 1,000 women of child bearing age. Even that figure is below the replacement rate. The OECD seems to have conflicting policies in terms of economics and society. It seems to be stating we need to get more women into the workforce, yet the role of caring for families, whether by women or men, seems to be something of a side show in many reports. One cannot have economic development and a declining birth rate, while at the same time trying to encourage the maximum number into the workforce without making any financial provision to give people the option of remaining at home to care for their families.

From my observation, the Minister and Deputy Boyle are big boys. The Minister does not really get the point. I am sure he is as familiar as anybody else with people's life cycles. If a couple with children are both at work, they benefit from tax reductions of €6,000. Saying, in the abstract, that the tax wedge in Ireland is very narrow and so on is correct. Work started on this when the Labour Party was in government with Fianna Fáil and has been ongoing for approximately ten years. Doing this is not easy but the Minister is refusing to recognise that it is seven years since the former Minister, Charlie McCreevy, did this and the economy has changed, as have social patterns.

A considerable number of young couples must live long commuting distances from their places of work in order to buy affordable housing. The Tánaiste used to talk about the teacher married to the nurse and how it was critical that they should be able to afford a house. In west Dublin an affordable three bedroom apartment — not a house — from the Government's affordable homes agency is marketed as being affordable at €320,000 to €340,000, nearly nine times the average industrial wage. Using OECD figures, that is an extraordinary multiple of earnings. Young couples must pay an awful lot for housing or move great distances from locations of work and mass transport in order to find cheaper housing. They must then pay up to €200 per week per child for child care. The Minister is making family life impossible.

Let me be very clear. Men want to have it all. Why should women not want the same? They want to be able to do things which reflect their life choices and commitments, particularly in caring for families. There is nothing politically wrong with this. It is right politically and for our society in the long term. That is the part of the argument the Minister must recognise. This is not only about producing happy women workers for IBEC, it is also about producing people who will have opportunities to work and care for their families.

The argument that the only way to assist married one earner couples in the tax system is through the home carer credit exclusively is flawed. As I said, a range of tax changes have helped such couples in the same way as they have helped other couples and single persons. We have transformed the situation in the sense that there is a much lower interest rate regime, far greater wage growth, far more people are at work and outside the tax net. Some 80% of wage earners pay less than 20% of their wages in tax. That transformation has greatly increased disposable income. Married and working couples are now far better off under the tax code than ten years ago. As I said, 500,000 are outside the tax net altogether. The argument made by the Opposition seems to be that the only way to help married one earner couples is through the home carer tax credit. That argument is flawed. A series of measures in successive budgets have greatly improved the position.

The tax package was 40% greater in size than its predecessor. It helped married one earner couples in the same way as it helped others. The tax package for this year is worth €1.25 billion. If we continue with the right economic policies, there will be the prospect of further tax reforms in the future when all these matters can be considered.

The Minister's final comment completely distorts the debate by stating the Opposition presumes that reforming the home care credit is the only way to tackle the needs of many young families. No one on this side of the House said that and no one believes it.

The Deputy acknowledges no progress.

The reality is that the Minister introduced this issue into the debate by quoting the OECD at great length to the effect that single income families and young families are treated uniquely well in Ireland. The Minister said this because he compared——

For the record——

Acting Chairman

Deputy Bruton, without interruption.

I apologise, but for the record——

Acting Chairman

Will the Deputy give way to the Minister?

——under our tax code, a married single earner couple at the average industrial wage is placed uniquely among the OECD countries.


I do not refer to single people but to a married couple with a single earner.

Acting Chairman

Deputy Bruton, to continue.

That argument convinces me the Minister is living in a world of his own.

He does not understand it.

It is true.

It is a world out of touch with the reality of young families——

It does not suit the Deputy's argument.

I imagine there are as many such families in Tullamore as there are in Dublin West, Dublin North-Central or Cork South-Central.

People in France and Germany pay much higher tax rates.

Acting Chairman

Deputy Bruton should be allowed to continue.

The reality facing many such young couples is that we lack proper social policies for dealing with child care, their health needs and their housing needs.

There are such policies.

Members should consider the manner in which, through lack of proper strategic planning, we have put people onto impossible treadmills of long commuting, high child care costs and lack of support in critical areas. Such an environment has been created for young families. The home care credit is one element of a much wider spectrum of policy in which we have been negligent regarding the importance of supporting families during the extremely difficult period they must face.

The planning structure has abandoned many such people. The Minister's quotation of the wonderful statistic from the OECD to the effect that they pay less in tax than they receive in some cash supports proves absolutely nothing in the context of trying to create an environment in which young couples have the opportunity and the appropriate support to allow their children to develop their potential.

It proves we have a far more family-friendly taxation system than the Deputy is prepared to concede.

It does not——

It certainly does.

——prove that in any way.

Not for single income families.

Acting Chairman

The Minister should allow Deputy Bruton to speak.

The Minister has been given a long opportunity to debate this point. Regardless of whether he has all of this data at his fingertips to prove Ireland has been uniquely good to young families, one must be below the minimum wage to qualify for a medical card that would give such hard-pressed families access to a GP.

In the part of Dublin city that I represent, so-called affordable housing is not available to young families on low incomes because they do not have enough money to meet the payments even when it is affordable. The point at which the Minister's subventions take effect, namely, at €28,000 for a couple buying a house, is ludicrously low. The Minister is providing no support to families that are trying to get on the housing ladder. The Minister will acknowledge that if such families are forced to rent, only €14 a week in tax relief is available. However, if they happen to be on welfare, they would get 95% of their rent paid. We are not in any way being sympathetic to, or supportive of, the needs of such families that are creating the next generation.

This society should judge itself by asking whether it provided an environment in which such young people could develop to their full potential. However, we hand-trip them at every hand's turn. We have failed to learn from the errors of others that experienced similar rapid economic growth. We did not create the requisite planning environment or social planning to deliver to such people and have seriously undersold them. I fully agree that tackling the home carer's credit is not the be all and end all. However, it is highly symbolic of the manner in which thinking on the Government side of the House and among those beyond politics who introduced such thinking has neglected such an important element of social development, which must partner economic development.

Such major failings in public policy mean we cannot talk about enormous economic success. Ireland has experienced such failings and the sooner the Government faces up to them, the sooner a meaningful debate on how to address them can begin. There is no point in sticking one's head in the sand and quoting the OECD glowingly about statistics that are meaningless to the real, concrete family life stories that Members are trying to address.

I am bitterly disappointed by the Minister's response to this debate. He quoted statistics to the effect that 40% are outside the tax system. Such people are outside the tax system because they earn less than the minimum wage.

How many of them were in the tax system when the Deputy was in office?

Acting Chairman

The Minister should not interrupt.

This is the reason they are outside. Such people are not even earning the minimum wage.

The Deputy never even introduced the minimum wage when he was in office.

Acting Chairman

The Minister should allow Deputy Bruton to speak without interruption.

The Minister tries to come before the House and pretend——

The House was heaving with socialists all over the place.

——that this wonderful social innovation, that people——

The minimum wage is the maximum wage for many people. This is what the Government has done.

Acting Chairman

Deputy Burton, allow Deputy Bruton to speak without interruption.

Deputies Bruton and Burton were in a Government with an unemployment rate of 10%.

The Minister's minimum wage has become the maximum for many workers.

Acting Chairman

Deputy Bruton, without interruption.

The Deputies represent a Government that presided over 10% unemployment.

The unemployment rate was 18% when we entered office.

Acting Chairman

Deputy Bruton, without interruption.

The Government's minimum wage constitutes the maximum for too many families. That is what is wrong with it.

Acting Chairman

Deputy Burton should allow Deputy Bruton to speak without interruption.

A dose of economic and social reality is required. Members must reconsider——

I refer to €9 an hour.

——the manner in which those families that bear the burden of the so-called Celtic tiger are being supported. They are the ones who are making the huge investment in the housing capital that must be done in such a rapid period. They are the ones who are being abandoned in respect of their child care needs. They are the ones who are being obliged to undertake long commutes and who are separated from their families, which would have provided the traditional support to help them through those early years. We have sold short many of these young families and should not pretend otherwise.

Amendment put and declared lost.

I move amendment No. 10:

In page 15, to delete lines 32 to 40 and substitute the following:

""(2) Subject to this section, where an individual for a year of assessment proves that in the year of assessment he or she defrayed health expenses incurred for the provision of health care, the individual shall be entitled, for the purpose of ascertaining the amount of the income on which he or she is to be charged to income tax, to have a deduction made from his or her total income of the amount proved to have been so defrayed.",".

Amendment agreed to.

Acting Chairman

Amendments Nos. 11 and 12 cannot be moved as they overlap with amendment No. 10 and are addressed to the same part of the Bill. Given the decision on amendment No. 10, amendments Nos. 11 and 12 must fall and will not be debated.

Amendments Nos. 11 and 12 not moved.

I move amendment No. 13:

In page 21, between lines 1 and 2, to insert the following:

"14.—The Minister for Finance may by regulations provide that the tax relief for childminding shall be available to persons who have care of children in accordance with conditions prescribed by such regulations, irrespective of the number of such children.".

I raised this issue with the Minister on Committee Stage. It is a technical amendment to deal with the issue of people providing, in the main, part-time child care to more than three children. The regulations made by the Minister specify three children. While I do not know whether the Minister has had time or has taken the interest to have this issue examined, it has been pointed out to me that for many families child care is about trying to bridge different needs at different times. Nowadays, one of the key issues is the provision of after-school care services, particularly when the mother is working and is obliged to commute. In the case of lengthy commutes such as those previously discussed, she may not return home until 6.30 p.m. Consequently, people often need a bridging after-school care service, lasting for one hour to two and a half hours. Someone who provided such a service on a home minder's basis is unable to so do if more than three children are involved.

This amendment should not pose any great problem for the Minister. Members should bear in mind that although the Minister introduced a childminder's provision last year, he restricted it to €10,000 and consequently the take-up was extremely poor. Most full-time workers in child care earn far more. The Minister referred to the minimum wage. While it has been helpful, the problem with a minimum wage is that it may become a maximum wage. The trade union movement, which opposed the minimum wage for a long time, has always been aware of this point. As is the case at present, this can affect an entire sector and of the 2 million people at work, 666,000 or more earn the minimum wage or are below the tax threshold.

This amendment seeks flexibility to take into account those women who may be home carers and who are doing some childminding to supplement their income. Did the Minister or his officials take the trouble to check out the position? The Labour Party was asked to raise this issue because a number of childminders had this experience.

Acting Chairman

Will the Deputy move the adjournment?

Yes. I know the Minister was disappointed at the take-up.

Acting Chairman

The Deputy is being asked to end the session.

This measure would improve it.

Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.