Deputy Kieran O'Donnell was in possession but he is not present. Does the Tánaiste and Minister for Finance, Deputy Brian Cowen, wish to respond?
Finance Bill 2008: Report Stage (Resumed).
Before the sos, we had a discussion on this amendment similar to that on Committee Stage. All I can say is that the manner in which Deputies characterise the work of the commission, which met for the first time this morning, is very unfortunate. Members are entitled to their views on any individual or what they regard as the orientation or composition of the commission, but attacking its professional integrity is not a very constructive means of suggesting how it should go about its work. The commission will do its work according to its terms of reference in a way that will exhibit a genuine effort on its part to come forward with ideas on the equitable distribution of the tax burden between income, labour and possible environmental issues, and on the financing of local authorities in this context.
These issues have been dodged consistently in some respects by consecutive Governments because of the political sensitivities involved, but they clearly must be addressed in some way in order to have a sustainable public finance system. In this regard, one must also bear in mind the challenges posed by demographic change, globalisation and climate change. Such major international trends and phenomena will have an impact on our ability to generate resources and the purpose to which we put them. It is a matter of achieving a sustainable level of expenditure in the context of increasing costs in some social policy areas, as a result of the ageing of the population, for example. The issues involved are considerable and I suggest that the terms of reference the commission has been given are quite comprehensive. They are not as specific as Deputy Burton outlines in her amendment but by the same token they are not omitting or excluding particular areas either. It is best to give full discretion to the commission to look at the present state of the taxation code and to come forward with recommendations in any area of policy, recognising that the terms of reference are quite wide, expansive and comprehensive and are in line with what is set out in the programme for Government. This is probably the best way of ensuring that the terms of reference are consistent with the political commitment regarding the setting up of the commission in the first place.
Following the announcement on the establishment of the commission, which is now beginning its work, reference has been made to the high standing in which the chairman is held. I would suggest, that being the case, the chairman is quite capable of ensuring that the direction of the commission's work will be such as to instil rather than undermine confidence by us in the outcome of its work; indeed, we could look forward to the quality of its work being quite high as a result of his chairmanship. We can agree there is at least one person in whom we have some confidence, although I would suggest that all of the persons who have been appointed have an expertise in this area and an ability to make a positive contribution.
We have engaged in tax reform, as has been stated, without the existence of a commission on taxation in the past quarter of a century. I heard recently an interview by the former chairperson of that body who suggested perhaps that much of the work might have been ignored. It had some quite radical proposals at the time. Certainly, it is true that it was not transplanted word for word into the taxation code because all of these recommendations, ideas and studies by eminent and reputable people require to be posited in the political circumstances of the day. At the end of the day it is we in this House who are accountable to the people and support or modify their judgments as we see fit, and they recognise that such is the case as well. We must apply our own political realism to many of these issues.
In that context, in more than a decade we have seen a move towards a greater simplification of our system and codification of our tax code — the Taxes Consolidation Act 1997 is an important piece of legislation. We have seen a continuing effort to reduce taxes on labour and, indeed, on capital in an effort to spur economic activity to deal with the historic problems of underemployment and mass emigration, which have bedevilled and characterised the Irish economy in the past. Such problems, thankfully, are no longer the reality but are ones about which we cannot be complacent in the future while at the same time we may operate from a position of strength. Having joined a common currency system and had the benefit of being part of the euro area, that ability to withstand external turbulence, as we have seen since the autumn, in financial and equity markets has been a clear demonstration of the correctness of the decision in the late 1990s to pursue our full participation in and membership of the euro currency area.
Needless to say, since the debate on Committee Stage I have not changed my mind substantively from when I stated that introducing the type of specific terms of reference such as the Deputy has proposed would only serve to restrict the work of the commission and place it under unnecessary constraints. If we were to make the terms of reference so specific that they would remove discretion, why have a commission in the first place?
As I have indicated previously, the members of the commission are drawn not only from the social partners but the accounting and other sectors, and also include accomplished people with environmental and economic expertise and those with wide experience in central and local government. The wide range of skills and knowledge of the members of the commission will help to ensure that we get a report that can help shape future policy in a positive manner. Therefore, I do not accept the amendment.
The Minister's reply is very disappointing. One of the issues the commission — I noted its imbalanced composition and counted 11 or more persons connected with taxation advisory services of one kind or another — should address is that, unfortunately, we have grown a rather unequal society in recent years where there are millionaires who pay no tax. We have the phenomenon of persons who can leave the country at midnight to be non-resident for tax purposes — they live here for all intents and purposes but claim they are non-resident for tax purposes.
I read the Minister's remarks yesterday on Liechtenstein, where he congratulated the German authorities on their action in getting some information on tax dodging of a high order organised, I think, by the Royal House of Liechtenstein. Tax avoidance of that scale is not perpetrated by ordinary people. It has the royal stamp of approval of the super wealthy. The Minister felt that what the Germans did was correct. I congratulate him on that rather more egalitarian approach, not often evident from him.
If he praises the German authorities for pursuing tax dodgers from Germany who are hiding their money in trusts in Liechtenstein, why not ask the Commission on Taxation to look at our own cherished group of people, who have done well? Good luck to them. They are enterprising and entrepreneurial people, but in a republic they should not decide that the rest of us will pay tax but they will contribute nothing. It goes to the foundation of republican principles that everybody contributes.
There is also the issue in the report the Department commissioned in the run up to the budget that the cost in 2006 of the Minister failing to implement section 110 on stamp duty avoidance by developers was €250 million for one year. If the figure is typical, in the boom years of the construction industry, with land prices hyped and development deals, it probably cost €750 million over a three year period. Once again, there is one law for the little people and another for people who have the resources to indulge in tax avoidance on the scale essentially encouraged by the Government.
For Deputy Burton's information, the crown prince's brother is a vice-president of the Liechtenstein bank in question.
I knew there were royal connections but I was not quite sure what they were. Does it make it better though?
I did not say it did. I expressed approval this morning of the German authorities' actions but residence rules, which we set in the Oireachtas, are a separate matter from residents hiding away earnings in some offshore bank.
I really want to take up one or two points relating to section 1(a) of Deputy Burton’s amendment which is to do with married persons and child care. Rightly or wrongly, the decision was made approximately 20 years ago in the 1984 budget to abolish child tax allowance. Since then there have been substantial increases, particularly since the mid-1990s, in child benefit and now, of course, there is also the payment, which was enhanced in this year’s budget, for children under six.
It is worth bearing in mind that those who stay at home to look after children need not necessarily have the child care costs of those where both spouses go out to work. That is, if one likes, a compensating difference in the financial situation. I know a case can be made that it is good for socialisation purposes for any child under the age of three years, even where one parent is at home, to attend a child care facility, a crèche or preschool. In the debate on individualisation this is not taken into account. Where both spouses have to work, they have no choice but to pay many thousands of euro each year in child care costs which can be saved where a spouse is at home.
What Deputy Mansergh has said is the clearest evidence of the reason individualisation and its social consequences should be examined in detail. Nobody suggested tax policy was easy. It is always about balancing competing interests. Unfortunately, the commission established by the Tánaiste is very similar to the Cheney commission on the environment in America which was loaded down with oil men and other lobbies with a vested interest. I do not expect the accountants on the commission to lose a night's sleep about the impact of tax policies on families with more than three children. I would expect a commission on taxation to look at inequity, where some pay no tax and others, even on modest incomes, pay a lot.
Some people who are non-resident but live here may for all we know have deposits in Liechtenstein. When people do not have to pay income tax, their earnings and wealth can accumulate dramatically. It is a very large advantage to be offered by the State. This must and should be weighed by the commission.
I said the Minister's decision to provide tax breaks for private hospice care is sad. This will go against the establishment of the commission and against previous reports that all such tax breaks must be costed and examined. The evidence is that many of them carry dead weight and contribute nothing extra. In this case, we are going to make private patients who need medical services at a stage when they are terminally ill. Many of them may be in severe pain and need palliative care. However, even at a stage when they are terminally ill, the Government wants to distinguish between public and private patients. That is regrettable in a republic.
Amendment No. 3 in the name of Deputy Burton has been ruled out of order as it involves a potential charge on the people.
I move amendment No. 4:
In page 13, line 22, column 3, to delete "€900" and substitute "€1,540".
This amendment deals with the home carer's credit which the Minister has increased by €130, from €770 to €900. Anything is better than nothing but Fianna Fáil made a commitment to double it. It should at least be the same as the PAYE credit. We must treat people who opt to care for someone at home as being entitled to be recognised as working in the home. Therefore, they should receive the allowance available to someone working outside the home.
This provision was introduced following the introduction of individualisation. At the time the difference between the amount of tax at the 20% rate allowed to two-earner and one-earner couples was approximately €7,000. After the exertion of much pressure by both Fianna Fáil backbenchers and the Opposition parties, the Minister moved to provide a special home carer's credit of €3,300. In the intervening period the differential at the standard rate between a one-earner and two-earner couple has expanded to €26,000, worth €5,500 in cash terms to individuals, but the home carer's credit was never increased. This is the first increase in a period of approximately seven years.
There is no doubt that those who opt to stay at home have been disadvantaged by this provision. Any practising Deputy knows the reality facing many couples. When they are strapped with a mortgage and a child arrives, they must look at the child care options. There is no tax relief for child care costs which amount to approximately €200 per week, to which child benefit comes nowhere close. When and if a second child arrives, the cost of child care is unsustainable. Only those on exceptionally good wages could afford it. People then decide to drop out of the workforce for a couple of years to care for their children in the home, to which they see many benefits in the early years. Experts also agree that it is beneficial for young children to have the company of a parent at home. However, parents are hit with a massive tax penalty, a potential penalty of over €6,000. What public policy tells a family that decides one parent will spend a few years caring for a child at home that it should be hit with a tax penalty of €6,000? No far-seeing public policy considering the situation we face would state that was sensible. According to the Minister, the provision resulted from a desire to provide tax relief for workers that would not be so costly, because people in the workforce who were married would have to be given double. We are left now with an extraordinary situation where families trying to care for children must face bills that are more substantial than their huge mortgages. This year there was only a 60 cent increase in child benefit, and nothing for those who specifically commit to child care. Public policy is effectively stating children are consumer goods and those who choose to have them must cope and hack it as best they can. That is so short-sighted it is unbelievable.
In countries such as France one sees posters on billboards stating having a child is not a huge burden. There the government is advertising on billboards to encourage people to have children and leaning over backwards to find a public policy that will support them. The reason for this is that the population of that country is in decline and the French Government knows it will not be able to support the pension burden in the long term, that the country will not have a vibrant workforce or be at the front end of innovation if it does not have strong growth in the young population coming through the education system. That is now public policy in France which may be 20 years further down the road than we are, in terms of the greying of the population but there is a relentless trend and that is the way we are going. However, we have the opportunity to have a much more positive policy towards promoting the welfare of children.
On introducing this provision, no doubt with good motives, Charlie McCreevy took a wrong turn. He wanted to encourage more people into the workforce. We have relatively high participation in the workforce but it is very noticeable that we do not have high participation in the 25 to 40-year age group because women in this critical age group are dropping out of the workforce. They are doing so partly out of personal preference but also because of the tax penalties we impose and the lack of support.
Taking the view of where Ireland needs to move to, this sort of approach to family support does not fit in with our long-term needs. The Minister and the rest of the Government must come up with an approach to families that regards child rearing as a very important responsibility that people take and recognises that the State is there to help. It is one of the most important investments the State and families make in the future of the country and we should be leaning over backwards to facilitate that investment just as we would lean over backwards if Google was talking about putting plant and machinery into the ground. Human capital is the future wealth of this country and we do not in any way lean over backwards to provide families with the sort of support they need.
Tax policy is only a tiny element of the overall mix. We need to think much more centrally about children. The rhetoric of many Ministers reflects an understanding of that but when it comes to practical policy, it does not materialise. Maybe the Commission on Taxation would provide the momentum to think again about this but I suspect it will look very narrowly at the tax code and will not see the wider picture.
I do not pretend that this is the "be all and end all" measure to address this but it is part of a policy towards children that regards achieving the maximum potential of children as a core objective of public policy. Under our current public policy on children, nothing is done until there is a crisis, we then come in too late with inadequate interventions and wonder why things go wrong and why children are at the margins in our community.
This is only a very small piece of a jigsaw puzzle that needs to be put together in terms of public policy. This was an error in the approach of the Minister's predecessor. We should recognise that having sternly resisted it for many years, Fianna Fáil in the last general election committed itself to increasing the home carers tax credit for the first time. It was the first crack in the approach adopted by the Minister and his predecessors when they came to face the people and realised the reality of what people must contend with. This is an important area where the Minister must not only accept this amendment if he is so disposed but, as the person who will soon lead the country across all Departments as opposed to just the Department of Finance, take this as an issue on which we must change our thinking. If the Minister is adopting a few areas where change must occur, it is in the approach to families and the important work they are trying to do.
This includes families of all shapes and sizes. We know that not all families are conventional families headed by married couples. As I mentioned earlier, our treatment of cohabiting parents where only one parent works is disgraceful and indefensible. I know the Minister will say that we are awaiting changes in other areas of law before we do anything about it, but that is the reality. We have to think more about family in the way we put together our tax and other codes. I do not wish to hold up the House but I believe this is a worthwhile amendment.
I thank Deputy Bruton for moving this amendment, which is very important. The amendment is about trying to give young families a choice in respect of whether they want to stay in the workforce or take a year or two out of it. That choice is not available to them at the moment. As Deputy Bruton said, there is a penalty of approximately €6,000 for coming out of the workforce. It is a very reasoned and fair amendment in respect of the home carers' tax credit.
As Deputy Bruton said, it is only one small element of it. We need to look at our tax code with a greater focus on children rather than the traditional way we have looked at it. There is a lack of support in respect of child care. We know about the debacle that happened over the past couple of months and will happen again at the back end of this year in respect of funding for the Minister of State, Deputy Brendan Smith's Department.
The objective behind the home carers' tax credit was to try to combat the financial inequality created through individualisation. The difficulty is that this particular threshold has not kept in line with wage increases or increases in inflation. It will not have a significant impact on the overall tax code but will have a direct impact on families. It is an amendment that sets the Government and the Oireachtas in a direction where we want to focus on children and on supporting them in the best way possible, regardless of the make-up of their families.
In many cases, the cost of child care is equivalent to the cost of a mortgage. I know from personal experience about the cost of child care and the drain it puts on many families. I urge the Minister to accept this amendment as a small step to addressing the inequality within the system.
I repeat that the child tax credits were abolished by the parties opposite in 1984. Over the past dozen years or so, there has been a significant increase in support for child rearing not primarily through the tax system, but through direct payments. That was seen as fairer and more equitable, particularly vis-à-vis those who were not in the tax system. When assessing the consequences of public policy, it must be borne in mind that we also have one of the highest birth rates in Europe.
I do not share the nostalgia for the pre-individualisation era. Individualisation was introduced in recognition of changing social realities. There is a contradiction in Deputy Bruton's argument. He begins by talking about a spouse who withdraws from the workforce because of the cost of child care and is, therefore, implicitly better off. He then seems to say that the moment they get home, they discover that they are worse off because of so-called tax penalties. Given the cost of child care where the full cost is being paid, when a spouse comes home, those costs do not necessarily have to be paid anymore.
I do not dispute the fact that the amendment may, in abstract, be desirable, as is any increase in tax credits. However, we heard it said this morning that the public finances were in a catastrophic state of affairs. We now have an amendment which suggests that the budget gap be made even wider.
It is not often that I agree with the Government but Deputy Mansergh made the point that I was about to make. The point was that tax legislation is very anti-family. People are caught in a trap. For some people, it is uneconomic to continue to work because the cost of child care is so severe. In the last budget, they received an increase of €3.30 per week between child benefit and the early child care supplement. The supplement is worth €1,100 per year, approximately €21 per week, yet child care costs approximately €215 per week. There is a shortfall of approximately €200 per week for people whose children are in child care. They are trapped and they cannot make up their minds whether to stay at home and mind their children or be forced out to work to pay the cost of child care. This measure was introduced under the inequitable individualisation measure. The amount of the child care allowance has not been increased since then. Fine Gael wants that balance to be redressed. The dependency ratios are becoming higher as the years go on because we are an ageing population. Rather than reacting in ten or 15 years time, the Government should be proactive and should make it easier for people to afford to have families. As Deputy Bruton said, families should not be a commodity but rather a way of life. I know from personal experience that the Minister is putting young mothers and fathers in impossible situations. I hope the Minister will consider Deputy Bruton's amendment which is a valid one. I ask him to include it in the terms of reference for the Commission on Taxation. This should be a proactive measure. A pensions time bomb is in the offing because our dependency ratio will increase at such a rate in the next 15 to 20 years.
I commend Deputy Bruton not so much on his amendment, although I fully support it, but rather on his somewhat novel idea of lobbying a future Taoiseach and of trying to instil or develop a social conscience in Fianna Fáil. This is particularly useful and I wish him well in his endeavour; indeed I might join in with him and extend it to paternity leave, for example, as there is not a single day of paternity leave in this State. We all know about the crisis in child care, which has been referred to by other speakers. We are all aware of the crisis in preschool education and home support workers. We would all have neighbours, never mind constituents, who are grossly in need of additional support in that area. If this debate on the Finance Bill could be used to develop a culture of social conscience in a potential future Taoiseach then it could be time well spent.
Today is 5 March and International Women's Day is celebrated on 8 March. I can understand that perhaps men in Government and in the Government parties are of the view that women are rather contrarian. I have to admit we want it all. We want to be able to be part of the paid workforce and when we have children or responsibilities to elderly relatives we also want to be able to spend time caring. From listening to speakers on the Government side, this is probably regarded as a contrarian view. Why should we not want everything, if in the end it is worthwhile for society that parents should have time to look after their children? By the time most people have children, they often have fairly heavy mortgage commitments. When they have a first child it is often possible for both parents to go back to work, full-time or part-time, with child care costing approximately €200 a week. Grandparents or sisters can also be very helpful with child care. Returning to work is possible in these circumstances. However, when there are two or three children in a family the weekly cost of full child care for three children is very often between €500 and €600 which amounts to more than €2,000 a month. For most families, affording a mortgage payment of more than €1,600 a month, gross, is at the outer edge of the scale so €2,000 a month for child care, crèche fees, after-school care and so on, is very expensive. It is therefore a no-brainer for many families that during the years when children are very young and parents want to be able to look after their own children full-time, one or other of the parents should be able to stay at home. This may be the father in a percentage of cases but for the most part it is the mother. We should not lose sight of the fact that this is actually good for society.
I refer to the table of tax reliefs which represents the "right-on" feminism of 15 years ago. The one-parent family credit is €1,830 which is the same as the PAYE tax credit for people working. However the home carer tax credit is only €900. If our lovely couple with their three children were to split up, as a separated family they would receive the full tax credit. I understand why this was done and it reflects the concern of 15 years ago when people parenting on their own had it very tough and rough and we wanted to acknowledge them and include them. We must equally take account of the current situation.
I understand the budgetary constraints on the Minister, particularly with the bad figures for the first two months of this year. However, I ask him to consider the principle which is to do with people not caring for a house but rather caring for children and caring for elderly relatives. I really hope the Minister will examine this. The great coup by Mr. Charlie McCreevy at a stroke enabled tax rates for single workers or tax impacts for single workers to be reduced and encouraged a significant number of women to join the labour force.
Just this morning the Taoiseach acknowledged that many thousands of building workers are likely to become unemployed. A building construction worker becomes unemployed and his wife then goes out to work because it may be easier for her to find work. This couple will immediately reduce to a single earner family tax credit. The tax penalty to them will be approximately €6,200 which they will be required to pay in extra taxes because one of them became redundant and only one of them is now working. I strongly urge the Minister to reconsider this. It will be expensive to re-jig policy to make it family-friendly and child-encouraging but it is something that ought to be done.
I am a believer that in political life the job of a politician is to decide on what sort of society he or she wants and to build policies around that principle instead of the other way around where people say certain actions will cost too much money. Many things cost too much money but one does not know the benefits of the proposal put forward by Deputy Bruton and which used to be evident in our society. On Committee Stage I made the point that I have no objection to either married fathers or married mothers working outside the home if that is what they wish to do. That is a matter of choice. However, we should not force people into that situation where the tax system will penalise them. The most insensitive part is that we do not recognise the role of the stay-at-home parent, whether it is the man or the woman. Let us be frank about it, in most cases it is the woman.
Let us consider what has happened to society as a result of not having more parents in the home. We have rushed out to try to find more child care places. The planning laws needed to be changed. We now have a dearth of volunteers in society, caring for elderly neighbours and elderly parents. All the voluntary work that used to be done has disappeared. People are asking what has happened. If we want that sort of society that is what we will get. My theory in life is that I do not want that sort of society. I prefer the society in which I was brought up. I make no apologies for saying so. It was of great benefit to me personally to arrive home from school at 3 o'clock or 3.30 p.m. on a winter's evening and for my mother to be there. She gave me a hot meal and made certain I sat down and did my homework, and did all the normal things. She visited neighbours and was part of a community. That is good for society and is a good way of living. However, we are saying that woman has no value to the economy. Our tax system implies we want such women to do all these other things, but they are of no value to us. People adopting the ideas I am expressing can be accused of being old-fashioned, opposed to women in the workplace and all this sort of nonsense. That is all rubbish. I have no problem if somebody wants to make his or her own arrangements privately. If that is the way they want to live their lives, so be it. If they are working in the workplace they should be treated like anybody else, whether they are male or female. However, what we need to decide is the value we put on a parent staying at home particularly in the formative years when children are growing up, including the teenage years. We must decide whether we are going to recognise this in our tax system. If it costs money, so be it — we need to prioritise it and identify savings elsewhere.
This evening we will debate a Private Members' motion, which while the Government has amended it, in principle it does not disagree with. We are talking about anti-social behaviour, the prevalence of drug and alcohol abuse in communities and the proliferation of knife crime, including the recent tragic death of two Polish men in Dublin. I noted that over the weekend a 16 year old girl was taken into custody for questioning in connection with the crime. All the signs are there. It is only human nature. Of course a 15 or 16 year old whose parents do not guide them will get into trouble. We are all human. The world has not changed that much. The sooner we wake up and realise this the better. We need to be prepared to say, as I am prepared to say, that we made a mistake in not recognising the value of the parent in the home in the formative years when children are around. It is far better that either the mother or father is there to look after their children than putting them in the back of a car at 6 a.m., driving 20 or 30 miles, dropping them off at a crèche, handing them over to other people to look after them, driving to work, finishing work, driving 20 or 30 miles to the crèche, picking up the children and arriving home at 7 p.m. or 7.30 p.m. Apparently we think this is a good way of living and do not think this will do any damage to the child. Are we codding ourselves? The sooner we realise we have made a mistake the better. The sooner we agree to accept the amendment tabled by my good colleague, Deputy Bruton, in accordance with the commitment we gave in our election programme, the better it will be for society.
The amendment before us relates to doubling the home carer credit from €770 to €1,540 in one go. The budget increased it from €770 to €900 as part of an overall programme for Government commitment. Every year Ministers for Finance make certain choices on taxation and expenditure and overall budgetary parameters. While less than in previous years, the personal tax package, including PRSI and health levy changes, amounted to approximately €582 million. The aim of the income tax measures in the budget was to use tax credits and bands to keep low-income earners out of the standard rate band and average rate earners out of the higher rate band as promised in the programme for Government. During the general election campaign, I said that was a matter of higher priority than other tax commitments.
The measures were also focused on assisting the elderly, lone parents, widowed persons and widowed parents, those with a disability and carers. Some 54% of the resources of the personal income tax package were devoted to assisting those categories and the low paid. To provide a doubling of the home carer tax credit as suggested by the Deputy would mean that increases in other income tax credits or reliefs would need to be curtailed or not implemented. As I mentioned on Committee Stage, it is a question of finding the balance and deciding what is fair and reasonable in how we intend proceeding over the course of a Government programme.
The argument can be made all the time — I have listened to the debate. People are talking about the historical situation and the legacy of moving towards individualisation and the changes my predecessor brought about. It was not just about the need to deal with the increasing participation levels in the labour force. That is not the full story, particularly as it relates to the female labour supply. The weakness in our income tax system at that time was how heavily it bore on single people who started to pay tax at a very low rate of income. I believe it was at the equivalent of €84 ten years ago. That was having an impact on job creation and economic activity generally by bearing very heavily on that rate in terms of how the income tax system was structured. There was also the question of double increases to married one-earners and this used up tax resources as we tried to deal with that. So what we did was change the structure.
If we wanted to go back on individualised tax bands we would inevitably raise the relative burden on single earners for a given amount of tax relief. While I accept people may make life choices at different times in their lives, I am not sure we can turn the clock back at this stage. In my view it was right to move towards this system with caution and to recognise there are societal attitudes and situations that need to be taken on board while at the same time ensuring we facilitate participation in the workforce to the maximum extent possible. The differential between the married one-earner band and the upper limit of the married two-earner band impacts on higher incomes only if they are above €44,400. That level of income is 30% greater than the average industrial wage. It is important to stress the current structure of tax bands means that married one-earner couples on average earnings are not affected by the different standard rate bands. That is an important point, from which one can deduce that the Deputy's amendment would do little to help those whose income is below €44,400.
The Government has been devoting much of the available resources to helping those lower down the scale who are less well off. The reason workers on the minimum wage are outside the tax net is precisely that we changed the structure of the bands. If there is nostalgia about the old system, it is clear that, given the entry point at which one would start paying tax, it would be less possible for those on the minimum wage to be outside the tax net because the use of tax expenditure resources would be shifted away from the lower end. The fact that 80% of the workforce pay at the standard rate is an indication of that shift. It is important to make that point. By the same token, the reduction in rates, the broadening of bands and general simplification of the system during the last decade mean that greater disposable income is available to married couples with one earner as well as with two earners on similar incomes, compared to what would have been the case ten years ago. People are bringing home and keeping more of their own money.
The OECD has made the point that Ireland is the only country where, when one takes child benefit payments into account, there is a negative contribution with regard to married couples with one earner and two children. In net terms, they do not pay tax at the effective rate when one takes into account, as Deputy Mansergh said, transfers available in a more equitable fashion through direct provision than through the tax code, restricted to those in a position to pay tax. It is more complicated than the suggestion that those more committed to the home carer credit are, in some sense, more pro-family than I am. I do not accept that suggestion.
No one is making that suggestion.
The argument certainly contained a suggestion that one was less committed to married couples with one earner as a result of this measure. Clearly, if one had a home carer credit, as Deputy Bruton suggested, of €1,540 rather than €900, it would be of greater benefit. The fact is, however, that the tax package I devised was geared towards the lower end. I have made the point that married couples with one earner earning less than €44,400, 30% above the average industrial wage, would not gain.
It is not a huge salary.
I am explaining where the burden of taxation resides. I am making the point that while it would do something, it would not do a whole lot to help the people in question. The suggestion that married couples with one earner are being ignored is not correct. By the same token, there was not a move on the rate of €770 since it was introduced in 2000. The issue was discussed in the debate on the last budget when Opposition parties suggested they would move to a greater extent than I was prepared to move in the tax package I announced in our manifesto, simply to double the home carer credit during the course of our Administration. From memory, I think the Opposition was going to increase it to €1,760. I may be wrong but that is my recollection seven or eight months later. Those points are relevant. I am moving on the issue, having begun a process which is not a panacea but a recognition that we should move beyond the €770 mark. That figure was devised by the former Minister for Finance, Charlie McCreevy, in an effort to rebalance a suggestion he was neglecting married couples with one earner.
I do not know if there is much point in replying to Deputy Morgan's suggestion that I am bereft of a social conscience. It is great to see people trying to persuade me that I should have one but I stand over the policies achieved and implemented by Fianna Fáil in government. Deputy Morgan has a good record of agitation, while we have a far better record of achievement, a major distinguishing feature between him and me. On the Opposition benches he has the luxury of being able to ask for whatever he likes since he will never have the responsibility of doing anything about it.
It is a matter of striking a balance, as the Minister knows.
While I do not wish to deviate beyond the parameters of the Finance Bill, I will not take lectures on social conscience from the Deputy, given his support for past atrocities.
It is about making this country a better place for all, including the less well-off.
The Minister said 80% of earners were paying tax at the standard rate. As regards young couples, in particular, both partners are being forced to work outside the home. In such a situation they will be able to avail of €26,400 extra in the standard rate band. We are talking about allowing people to stay at home to look after their children but under the current system, they cannot afford to do so financially.
Will the Minister comment on the anomaly, whereby if a one-earner family separates, instead of receiving a home carer allowance of €900, both partners will qualify for the single person's credit of €1,830? Will the Minister also comment on the projected fall in the birth rate and the consequent increase in the number of adult dependants? Surely it makes sense to put tax measures in place in this regard. Deputy Bruton's amendment would help in that respect. The Minister might address those points.
I call the Tánaiste to reply.
The Tánaiste, rather — the Taoiseach, sorry.
He is the Tánaiste.
The Deputy should try to avoid that temptation. He should respect the incumbent rather than playing that game. I do not regard it as flattery. Others had smart-ass comments to make about it.
It was not said in that way.
I know that.
It was a mistake.
The personal tax credits available to couples with dependent children depend on their marital status and income. They range from one single tax credit for a one-income cohabiting couple to the equivalent of four single tax credits for a separated or divorced married couple, or a former cohabiting couple, each with income. The situation where up to four single credits are available reflects the fact that there are two separate single-parent families to be maintained with the associated costs where dependent children are involved. What was the Deputy's second point?
My second point concerned the falling birth rate.
In the last seven years we have seen an increasing population with the changes we have had. I do not suggest for one moment that it is all down to the tax system. There are social phenomena and societal values at play which go way beyond the tax code. Drawing conclusions from one point to another may not be a very sound method by which to devise tax policy. We are trying to make things more equitable for those who require our help. It can be argued that we could do more, or less, but some choices are questionable. We can have that political debate. I have outlined the thinking behind the personal tax package I devised which was geared more towards the lower paid. There are specific tax credits, including the one we are discussing — although obviously not to the level Deputy Bruton would like — whereby I have made some moves in an effort to target assistance at people in particular circumstances where extra recognition should be given in the tax code, given the constraints and room to manoeuvre available to me. I do not expect it to be a unanimous view.
Is the amendment being pressed?
It is but I would like to make my concluding comments, if I may.
I am sometimes unable to tell whether Deputy Mansergh is spoofing. He said that he struggles to understand how people can suffer a penalty when they give up a job. However, consider a person who leaves a job paying €30,000, which is close to the average industrial wage, because he or she faces annual child care costs of €20,000. Such people will find that they have not only lost their salary of €30,000 but that their spouse has lost the advantage of their PAYE tax credit, worth €1,830, and that the proportion of the latter's band which is taxed at 20% has dropped by €26,000. That is the penalty. I am sure Deputy Mansergh knows this but is being obtuse.
The Minister says it was not part of his priorities to make these changes in one go. I question the basis upon which he sets his priorities. He seemed to suggest that the change we propose would in some way conflict with his desire to concentrate relief at the low end. The reality, however, is that this is a flat rate tax credit and is just as much a relief concentrated at the low end as are the personal tax rate changes on which he has chosen to concentrate. Moreover, it is targeted and not available to every couple. Deputy Barrett, for example, would not be a beneficiary because he does not have children in the eligible category, unless his spouse were caring for someone who is incapacitated.
Is it not a supreme irony that the Minister for Finance is willing to say to someone who is incapacitated that he or she will be allowed tax relief up to €50,000 if a carer is brought in from outside the home but will not even receive the PAYE credit of €1,830 if his or her carer is a member of the household? It requires some extraordinarily convoluted thinking to arrive at that type of attitude to people who care for incapacitated family members in their own home. Moreover, only a tiny fraction of carers qualify for the carer's allowance.
I do not accept the Minister's view that this amendment somehow seeks to turn back the entire individualisation clock. That would not be the consequence of this proposal.
I did not say that.
I acknowledge the Minister's point that this was a way in which individualisation allowed him to concentrate some tax relief on single people without having to give all the benefit to one-earner couples. Our objective is to recognise the home carer per se. We do not seek to reverse individualisation. The Minister is setting up a straw man when he pretends it is a question of reversing individualisation. This a flat rate credit concentrated on people who are either caring for children or a person who is incapacitated. The social argument for this is extremely strong, as I am sure many on the Minister’s side of the House would agree.
When the Minister comes to frame next year's budget, he should not pretend that increasing the home carer's credit is in some way of benefit to the better off, unlike the other measures he is proposing. This is a targeted measure aimed at families to whom we have a duty of assistance. Many of them are anything but well off, as the Minister knows from his own work with young families.
The type of social picture implicit in many of the Opposition contributions is at some remove from reality, certainly as far as younger people are concerned. In my experience, young people make careful calculations before moving out of the workforce as to whether they will be better or worse off. I do not buy the notion that they leave the workforce believing they will be better off only to discover they are worse off.
Those were entirely Deputy Mansergh's own words.
Deputy Bruton is trying to ride two horses at the one time.
Deputy Mansergh is out of order speaking at this stage in the debate. I wish to set the record straight. I said such workers would face a penalty; I did not say they would be worse off. I explained the penalty, which is the loss of their PAYE tax credit and the narrowing of the spouse's standard rate tax band.
I understood Deputy Bruton was making another intervention and intended to wrap up later. That is why I asked him at the outset whether he was pressing the amendment. He tells me he has wrapped up the debate on his side and, in those circumstances, I have no choice but to put the question. I apologise to Deputy Bruton for the confusion on my part.
Amendments Nos. 5 and 6 are related and will be discussed together.
I move amendment No. 5:
In page 15, line 30, to delete "€2,000" and substitute "€3,000".
This amendment relates to the amount of relief available for tenants in the private rented sector. We must rethink our approach in this area. Most people have the ambition to purchase their own home; that is long ingrained in our psyche. There is nothing wrong with this and we rightly support it in public policy. However, the extent of the gap that has emerged between our support for those who opt to purchase their own home and our extraordinarily mean treatment of those who rent is highly dubious. Many of the poorest families I come across are trapped in the private rented sector because, regardless of their ambitions to purchase their own home, they cannot afford to do so. If they are in employment, they are denied access to rent supplement, the rental allowance scheme and all other State supports in this area. They depend solely on this particular tax credit as the only public recognition of their expense.
A couple paying rent in the private sector are entitled to tax relief on €4,000 whereas a couple who purchase their own home will, under the Minister's new scheme, get €20,000 relief on the interest payment for seven years, followed by €6,000 for a further eight. This represents a significant advantage in hard cash terms over their counterparts in the private rental sectors. It is €22,400 in the first seven years and €8,000 over the rest of the life of the mortgage. In other words, we are giving a capitalised amount in tax credits of more than €30,000 to people who are in a position to purchase versus those who are trapped in the private rented sector. While it is public policy to promote home ownership, our niggardly treatment of people caught in the private rented sector is difficult to justify. An alternative approach would be to introduce a housing credit, which has been strongly advocated in other jurisdictions but never given serious consideration here. It would be a flat rate credit available to people across the different spectrums, whether tenants in private rented accommodation, home owners and so on.
Our unfair approach to those renting privately has had the unintentional effect of forcing increasing numbers to apply for inclusion on the public housing lists as the only way in which they can obtain reasonable support. Under the differential rent arrangement, the maximum one pays is 15% of one's income over a certain figure in rent. We are creating an extraordinary position whereby people who are renting from the local authority have access to a good public subvention, private purchasers likewise receive good support, as do those who are unemployed and in receipt of rent supplement, but people who work and rent privately are screwed. I do not think it stacks up. I know the Minister will talk about his priority, with which I agree, of building up infrastructure under the national development plan. Public policy has been promoting a forced concentration on housing as the infrastructural asset we want to develop. Should we continue to focus on housing assets in this way? Perhaps we should start to move towards a continental attitude to home ownership. One has more flexibility when one is renting one's home. Renting results in a higher level of utilisation of the housing stock. We would not have to invest such a high percentage of our scarce resources in our housing stock if it were used more efficiently. This serious issue needs to be examined. We should give some assistance to people in the private rented sector in the short term. I am sure the members of the Commission on Taxation will examine this area.
While there is a real need to develop this country's infrastructure, I do not believe we should try to contain the deep commitment of the people of this country to trying to own their own homes. We should continue to support home buyers. We need to consider whether the huge discrimination faced by those who wish to avail of the private rented option continues to be justified. I honestly think it is not. I cannot stand over it from the perspective of short-term equity, regardless of any consideration of how we use our assets. Those who attend my clinics are, by and large, people in the private rented sector who are on some interminable waiting list for a council tenancy which, in many cases, they will never get because they do not have enough points. I am sure the same is the case in the Tánaiste's clinics. We have to tell such people they have no chance of getting a council tenancy. Given that the Central Bank has reported that 50% of the population is unable to buy a home, it is likely that those who come to our clinics in these circumstances are below the home-buying threshold. Similarly, the affordable housing scheme, which is a good idea, is of no assistance to them because it is not delivering the beef. Last year, which was a very good year, just 2% of new housing was in the affordable housing category. It is just not delivering and will deliver less, obviously, as a result of the collapse in private house building. We need to rethink our strategy in this area because we are constraining the housing options of a particular category of people.
It is right that the State should, as far as possible, promote people's ownership of their own houses. I remind Deputy Mansergh, who is something of a historian, that in 1973 the then Labour Party Minister for the Environment, Jimmy Tully, gave people the right to buy council houses. There has been cross-party agreement that the right to access home ownership is a social good. I suppose we are continuing the tradition of the 40-shilling freehold.
As those who are renting their homes enjoy very little security of tenure, it is difficult for them to access a long-term right to rent properties in a fair way. There was once such a right in Ireland and continues to be in many European countries. If one travels to city centres in France and Italy, one will find families which are renting high quality apartments and houses. They can rent such properties intergenerationally because they have rights of succession. The Irish market is different and has become more different as the years have passed. Most people try to get on the property ladder by buying a home, but the recent problems in the housing sector have made that extremely difficult. The affordability barrier has been raised by the credit crunch. It costs much more to pay a mortgage for a modest starter home than it did some time ago. The impact of the Minister's increases in mortgage interest relief over the last two budgets has been negated by recent developments in the international and Irish finance markets, the property market and the credit market.
When the many people who have to rent in the private housing market rent old section 23 properties, or the successors of those properties, landlords get tax breaks. In such circumstances, most landlords register properly with the Private Residential Tenancies Board and the Revenue Commissioners and are quite happy to assist tenants who wish to avail of tax relief on the rent they are paying. Landlords who do not register with the Revenue Commissioners, because there is no tax benefit in it for them, are often reluctant to register with the Private Residential Tenancies Board as they are required by law to do. Many of them are reluctant to pay tax on the rents they receive. The situation becomes even more ridiculous when one considers that the Health Service Executive, which spends several hundred million euro on rent allowances, often consciously turns a blind eye to those to whom rents are being paid.
The Labour Party has tabled an amendment, which will be considered later in this Report Stage debate, providing that the Revenue Commissioners be given full access to the information registered with the Private Residential Tenancies Board in order that they can pursue landlords who are not paying tax on the rental of properties. The HSE and the local authorities need to get their act together to end the waste of public money which is resulting from the Government's management of the rent allowance structure. It seems the Government has decided to hardly ever again build old-style local authority accommodation. If that means massive estates like those in many of our cities and towns will no longer be developed, that is fine. I do not think anybody wants to see massive local authority estates becoming islands of deprivation in otherwise well off cities and towns.
The Government's attitude to the rental sector needs to be seriously overhauled. Landlords should be paying tax on their earnings from the properties they rent. Information about such properties should be available to the Revenue Commissioners, who should be able to pursue landlords who avoid paying tax. Equally, tenants should be encouraged and facilitated to claim tax relief on their rent allowances. I do not want to return to the debate that took place this morning. Landlords who operate under the counter often strongly discourage tenants from claiming tax allowances. To secure their properties, tenants often have to supplement the rent that is recorded by the HSE as being paid with under the counter payments to landlords. That is quite common in certain parts of the country. The Minister needs to recognise that while there are many decent landlords — it can be a good business if one runs one's property properly — the many landlords who do not want to pay tax are having a field day. One way of incentivising tenants to ensure that the landlord of the property they are renting is paying tax is to improve the tax rebate people can get for renting. Therefore, I recommend the thrust of the Fine Gael amendment to the Minister because it incentivises people.
I raised a matter on Committee Stage which was previously highlighted by my colleague, Deputy Ciarán Lynch from Cork. This is the case where tenants in receipt of rent supplement from the HSE end up having to deduct tax for non-resident landlords because people who pay rent to foreign landlords are obliged to deduct the tax at source. It seems ridiculous that even people renting through the HSE have a responsibility for deducting tax on behalf of a non-resident landlord and can become liable for it.
I recommend the spirit of the amendment and I feel this is one of the areas where in the good years of the Celtic tiger it was very easy for the Government to turn a blind eye to whether landlords paid their fair share of tax. Now that times are getting tougher, we cannot afford parasitic landlords who are renting, in some cases, very substandard properties for €1,200 or €1,600 a month and then showing two fingers to the rest of us by not paying tax on the properties.
I agree with Deputy Burton that the right to buy council houses is a good policy. There was also a scheme in the late 1980s for buying them out and many of the older council houses, from the 1920s to the 1950s in particular, were very solidly built. Some of them look absolutely terrific in private ownership, having been refurbished.
It could be said that, particularly in another jurisdiction and perhaps occasionally in this jurisdiction, there was much criticism of that policy from a very left-wing perspective. I also agree that landlords should pay tax and the existence of this relief is an incentive to see that happens.
The amendments may be put down to simply discuss the subject but taken literally, they involve an increased cost to the Exchequer in what is an acknowledged tighter position. There is also an economic impact to be considered, which is that whenever a rent allowance against tax is increased, or mortgage interest relief is raised, we must always consider the knock-on effect.
If it simply enables landlords to charge higher rents without much benefit to tenants, it clearly would not be a particularly good idea. Whenever those limits are raised, and particularly by a relatively large step as proposed here, that issue must be considered.
I support the amendment. Considering rent relief, a single person receives €400 per year or €33 per month. The increase amounted to just over €3 per month. For a married couple the relief is €800, which is €67 per month, and the increase was just short of €7 per month.
Ireland is changing and more and more apartments are being built. The balance will probably shift towards rented accommodation like the European model and although we must allow people to buy their homes, some will not be able to afford the homes they live in. The Minister should bear in mind that there may be people who end up renting over their lifetime. They should be entitled to a reasonable amount of tax relief, which at the moment is paltry compared to the rents being paid.
Deputy Mansergh indicated the landlord may just take up the extra tax relief through higher rents. If more tax relief is provided, tenants may be more inclined to demand of landlords that they become compliant and register. It may have a benefit in making sure landlords pay their taxes, as well as improving the quality of rented accommodation. I commend Deputy Bruton's amendment.
Section 6 of the Finance Bill implements the budget announcement to improve the level of rent relief and the section amends section 473 of the Taxes Consolidation Act 1997, which grants relief to taxpayers for rent paid in respect of private rented accommodation which is their sole or main residence.
The changes I am introducing will introduce an amount of relief due to all categories as follows: for single persons under 55, the credit goes from €1,800 to €2,000 and for single persons over 55 the credit increases from €3,600 to €4,000; for married and widowed persons under 55, the credit is increased from €3,600 to €4,000; and for married and widowed persons over 55, the credit is increased from €7,200 to €8,000.
The amendment proposed by the Deputy increases the amounts due for single persons only. The tax code generally ensures a married couple should get the same level of relief as two single persons. The cost of the Deputy's proposal would be approximately €28.6 million in a full year. Over the last four budgets I have increased rent relief by 57% in total, which far exceeds increases in the costs of living and in rents over the same period.
I am satisfied the increases in the relief that I have provided for in the Bill will help to reduce the burden of rent for tenants in the private rented sectors, particularly in light of a report showing recent increases in the supply of rental accommodation, which will lead to reduced rent levels.
The changes provided for in this Bill are generous by these standards and I am not in a position to accept the Deputy's amendment.
Rent relief for people over 55 is already higher than mortgage interest relief for non-first time buyers. For those aged under 55, it is two-thirds of the level of mortgage interest relief for non-first time buyers. I am satisfied the 11% increase I announced in the budget was the appropriate measure to take at this time as a larger increase in rent relief could encourage landlords to increase rent.
I am disappointed the Minister has not really engaged in the debate on whether we are treating people fairly. He has read out his brief, which I could have written myself. The more interesting question is what the Minister for Finance thinks of the way we treat people who are in the private rented sector.
I do not know if it is different in Offaly but most disadvantaged people who are struggling, working and trying to get by and feeling the pinch, are in the private rented sector. They are really being put upon. Private rents have increased by 12% in the past 12 months, although I am sure the Minister is correct when he states there has been some softening in the past month or two. By and large, rents have been rising very rapidly because of the rising cost of borrowing, etc.
I can take the point made by Deputy Mansergh that with landlords, in any market where a subvention is supplied, demand and supply elasticities will rule. The benefits will be shared and this is inevitable. Rent supplements, a pillar of existing Government policy, are the same. There is no doubt a significant portion of rent supplements has resulted in higher rents paid to landlords. That does not mean we would not intervene to provide support to people who are out of work and would otherwise be out on the street.
Public policy must take a view on this area. I could understand if the Minister was speaking about moving to a house credit system, where money would be paid directly to the individual rather than through the tax code. When the process goes through the tax code, it is at least a good distance away from the landlord and it is not easy for him or her to grab hold of it. As Deputy O'Donnell stated, it also requires the landlord to be compliant for tax purposes.
I put this forward as I have raised the issue with the Minister before. On previous occasions he expressed some interest in considering the matter but in this budget he has moved the goalposts even further away from the person in private rented accommodation. I am a bit disappointed in the Minister's response but this issue will return in the taxation commission report when we see it. As a House, we will have to return to it.
I move amendment No. 7:
In page 16, between lines 2 and 3, to insert the following:
8.—Part 30 of the Principal Act shall be amended by inserting a new section:
"785.—A person who reaches retirement under a Defined Contribution Pension Scheme shall from 1st March 2008 not be required to purchase an annuity unless they do not have an income equivalent to the Non-Contributory Old Age Pension prevailing at the time of retirement.".".
I do not pretend the amendment has been well drafted but it is to pick up on an issue we discussed on Committee Stage, that is, that under defined contribution schemes, people reaching retirement are now compelled to purchase annuities. This is in stark contrast to people in the self-employed category. As the Minister knows, his predecessor, Mr. McCreevy, brought in very generous provisions for the self-employed to set up these retirement funds. One of the big advantages of the retirement fund is that when one reaches retirement age, one does not have to take out the money in an annuity unless one's income is extremely small. I believe a figure of €12,700 has been set. If one can show one has €12,700 from some other source and that one is self-employed, one does not have to take out one's money in an annuity.
As the Minister knows, the problem with annuities is that they are extremely bad value in the marketplace at present because they are tied to the yield on Government bonds, which has been very low for some time, and they are related to life expectancy, which is lengthening. Buying annuities is extremely bad value. The most inequitable element of them is that if one buys an annuity and one happens to die, one's annuity dies with one. Presumably, the insurance company or whoever sold one the annuity is the beneficiary of all one's careful savings over one's lifetime and those who one leaves behind do not get the benefit.
There is a big issue about these defined contribution schemes anyhow, whether people are putting enough into them and whether they will have enough to support themselves when they reach retirement. Adding even more difficulty by compelling people to buy a bad product in the marketplace seems inexplicable. The Minster said he wanted to discuss the issue of pension reform with the social partners. He also has the Green Paper. The Irish Congress of Trade Unions believes it is bad policy to force people to buy annuities, and I have not heard anything to the contrary from the employers, the third strand within social partnership.
On the law of averages, approximately 60,000 people reach retirement each year. Before the Minister moves to change this in next year's, or in the following year's, Finance Bill, perhaps 60,000 or 120,000 will have been forced to purchase these annuities if they are in a standard PAYE scheme under defined contributions. Those of us in the public service are in the privileged position that we do not have to worry about this because we have a defined benefit. However, we are becoming rare animals. Nothing like this is provided in the private sector.
What does the Minister think about this compulsion to buy annuities? As most of these people have a social welfare contributory pension, it is not as if they will be without anything. They meet the test the former Minister, Mr. McCreevy, set for the self-employed. They will not be penniless if they do not buy the annuity and if they use their money foolishly because they will still have the contributory pension. They will have fulfilled the requirement the Minister's predecessor felt was needed to be imposed on the self-employed.
Does the Minister believe this compulsion to buy annuities is still appropriate? If like me, the Irish Congress of Trade Unions and many others, the Minister believes it is not, why not get rid of it now rather than put it off to some future date?
I do not know what the cost to the State would be as a result of making such a change. I suspect it would probably be minimal, although perhaps there is some hidden cost. Presumably exchanging being forced to buy an annuity would not have a tax implication because one way or the other, the resource will come to pay tax as it is realised in an income stream for the individual involved. I do not believe it has a tax implication.
Many people reaching retirement, including people around the House, face this issue. I received a spontaneous telephone call this morning from someone who said this was terribly unfair and who was not from my constituency. I said I was going to debate it with the Minister today and I would find out what he thinks about it. It is an issue which really matters to those affected. If we believe it is worth doing, why not do it now and not force at least another 100,000 people into a straightjacket of a scheme which we really do not believe should be in place in the long-term?
The Green Paper has begun a debate on the options we should take in regard to a whole range of pension-related issues. We should avoid deciding what to do in a piecemeal fashion. It would be better to do this in an integrated and planned way. That is what the Government, in conjunction with the social partners, wants to do. The Deputy raised some important but complex issues which need to be fully thought out. The decisions will have far-reaching effects and impacts on pensioners' lives for a long time to come. There are many ways in which to look at this issue.
During the Committee Stage debate Deputy Bruton's concern related primarily to the equity or fairness of a system that allowed some pensioners to invest in an approved retirement fund while others were obliged to purchase annuities with the attendant danger that should the member die early in his or her retirement, the annuity would die with him or her. What also came through in the earlier debate was the perception that annuities currently represent poor value for money. These two issues — a perceived lack of value in annuities at present and the equitable treatment of pensioners — have been the primary arguments put forward for the extension of the approved retirement fund option for pensioners across the board in recent years.
Annuity contracts are a well established feature of the pensions landscape and are probably likely to remain so. There is a wide range of annuity contracts. They may be fixed or escalating with a fixed rate of increase or index linked. They may cover a single or a joint life. In addition, a guaranteed period may be purchased, for example, an annuity may be guaranteed payable for a minimum period whether the annuitant survives the minimum period or not. The longevity and investment risks for those purchasing annuities are pooled. In essence, this means that people who live longer can expect to receive more than the capital used to purchase the annuity while the capital of those who die shortly after purchasing an annuity effectively enhances the returns of those who live longer.
As pointed out in the Green Paper on Pensions, for each argument in favour of extending the approved retirement fund option, as suggested by the Deputy, there are some counter arguments against such an extension. The fact is that for a person to retain the value of his or her pension as a lump sum in an approved retirement fund may be to overlook the many advantages for the individual that a guaranteed stream of income can provide over time. An annuity ensures an income regardless of how long the purchaser lives. An approved retirement fund on the other hand may involve the adoption of complex investment and withdrawal strategies taking account of matters such as life expectancy. Over time this could become very onerous particularly as a pensioner increases in age. There is also the clear possibility of outliving one's pension assets. Pensioners may also find their income falls, for example, if the investment performance of their fund has been poor.
Other factors include the perception of life expectancy which can tend to be underestimated by individuals and returns from approved retirement funds which may be overestimated. The approved retirement fund option may indeed be particularly unsuited to holders of relatively small pension funds, which I suspect is the category of pensioner about which the Deputy is most concerned, in view of their likely inability to cope with fluctuations in income and capital deriving from investment performance.
I put forward these alternative arguments simply to point out that annuities provide a secure means of converting pension savings into pension income. This would avoid the danger that pensioners could exhaust their pension savings during their lifetime. The level of comfort, simplicity and security of income they can provide should not be dismissed lightly.
I am not trying to pre-empt, one way or the other, the outcome of the debate on the Green Paper on the degree to which the approved retirement fund option should be extended, if at all, to other categories of pensioners or for that matter how and to what extent the market for annuities can be encouraged to diversify and become more competitive. The Deputy raises an important issue which must be addressed in the context of how it will mesh with whatever reforms we draw up. We need to proceed in a planned and integrated way because many could be affected.
According to figures in the pensions screening paper, it is estimated that over 52,000 are currently in receipt of annuity-based pensions. Approximately 239,000 people are in defined contribution occupational pension schemes that lead to the purchase of annuity contracts. In addition, some 311,000 who have either personal pensions or PRSAs may also choose to purchase annuities. In a report commissioned in the context of the national pensions review it was noted that total of annuity premia amounted to some €230 million in 2004.
While it is not possible to say with certainty, there are reasons to believe annuities will continue to play a role in the pensions market. An ageing population with an interest in the maintenance of pre-retirement living standards in retirement can be expected to present a strong incentive for the financial services industry to meet that demand with competitively priced products suited to consumers' needs. One of the factors likely to support such growth is the projected large increase in the number reaching retirement. The number reaching 65 years is projected to increase by approximately 100% in the next 20 years. As a result, there will be an increase in the proportion of those reaching retirement who will have individual pension funds. Another factor will be the steady growth in the number of older pensioners. Annuities may be seen as relatively attractive to such individuals. A third factor will be the decline in the proportion of persons reaching 65 years with only defined benefits.
The position is continually evolving, a matter we must address in attempting to reach decisions. There are complex issues involved.
I accept that there are complexities involved and that people can make bad investment decisions or that things could go wrong. However, they should be given a choice. Why are the self-employed given a choice — clearly, people value that choice — while PAYE employees are not? This smacks of some form of paternalism, particularly when one considers that the annuity relating to some funds is only 3.6% per annum. For all the money one accumulates, therefore, one gets only that amount per annum. That is a hopeless return in the context of all the savings in which one might engage.
There is also the argument that people enjoy flexibility if they have access to a fund. They have choice but they also have the flexibility to do different things with the capital they have accumulated. We are going to be obliged to inform people that they must give more serious consideration to saving for their retirement. They would do so if there was a degree of flexibility. It should not be the case that individuals feel they are throwing money down a black hole and will never see it again except in the form of a slow release payment when they reach retirement age. As the song goes, "That don't impress me much". I do not believe people will be encouraged by matters as they stand.
We must treat people in a mature way. We must give them the same choices as those given to the self-employed and provide them with flexibility regarding the way in which they wish to use their money. What I am proposing represents a positive change and it would not involve a cost to the State. I accept that there are other things on the balance sheet which must be weighed up. However, I am of the view that the Minister will adopt what I am proposing in due course. Why not take our courage in our hands and do so now? The outlook in respect of this change is positive. People would not be locked into it and they would still be in a position to purchase annuities if they so choose. Notwithstanding the fact that people might make bad decisions, they should be given a choice and allowed to proceed on that basis.
I am not opposed to that general approach. I do not understand why certain categories are denied choice, particularly if others have it. I understand the logic of the Deputy's argument. Reforms will be required in order to make pension provision more attractive. Too often the question is asked as to why more people on lower incomes are not involved with pension schemes. The answer is simple in many respects — they do not have enough money. In basic terms, a pension is a deferred income. If one is struggling to survive on a particular amount of income at present, it is extremely difficult to make plans for the future. People also ask why we do not have greater pension coverage, etc. Arriving at an answer in that regard does not involve rocket science.
There are those who are of the view that we merely need to put in place reforms and then everyone will have access to a pension. One needs a disposable income over and above that relating to one's existing responsibilities and commitments in order to provide for a pension. Many have used the pay related social insurance system, through a weekly PAYE contribution, to build an entitlement to a State pension when they reach retirement age. We have been successful — I do not know if we can continue at the rate we are going, particularly in the light of demographic changes — in providing a pension that covers the basic necessities of life. The challenge we face revolves around the extent to which we can provide a means to encourage people to supplement this basic pension by making provision now for when they retire.
The financial services industry will be obliged to provide more diversified and imaginative products. It is not a captive market. The old idea of local insurance men — be they from New Ireland Assurance or Hibernian Life, etc. — collecting a few bob from each house is long gone. That is what happened when I was young. People required particular prudence and foresight to be able to make such a contribution.
Everyone refers to the need to introduce reforms. We are committed to reforming the system and a great deal of work is being done. There is a major actuarial exercise that must be undertaken and this would need to be accurate and well considered. The Department of Finance will be considering that aspect of the equation, even as others refer to reforms and arriving at solutions.
The Deputy made a more general point regarding how pensions have been structured over time on foot of the cohort who are interested in investing in them. He has also referred to the fact that, statistically, the benefits that are derived are greater for those individuals than they are for others. The basic point is that there must be income available to allow people to provide for pension coverage. I would love everyone to have sufficient income in order that we could all enjoy pension coverage. However, as much as we are trying to spread opportunity and prosperity, the reality to which I refer remains for many.
This is an area in respect of which one must be able to predict what will happen to each part of the matrix in order that what evolves will be better than what currently in place. As the Deputy is aware, a certain proportion of the evolution of pension policy is not based on the continuation of defined benefits regardless. The latter comes about as a result of the life expectancy issue and how this feeds back into actuarial costs and product development in the first instance. Cognisance must also be taken of what is affordable and sustainable in the context of employer contributions, etc.
It is not that one is overwhelmed by the science involved but the more one examines this issue and discusses it, the more one becomes aware of the fact that we must proceed in a systematic and comprehensive way in order to include as many as possible. I am not stating there will be unanimity in respect of the outcome. However, in the light of the importance of this issue for everyone, including workers and their representatives, people must be given an opportunity to participate and offer ideas as to how we might proceed. Although people criticise the time it is taking, its complexity is such that it should take some time.
To quote Mao Tse-Tung, the journey of 1,000 miles starts with the first step. This first step could be useful. I accept the Minister's good faith in presenting it.
This is a complex issue and there are major questions of equal treatment for those who have defined benefits as we do, those who have had tax relief on large incomes over a long time and have accumulated significant funds subsidised by the taxpayer and those who cannot afford to put anything by and get nothing from anyone other than the State pension.
We can do something now as a first step.
There is a lot we can do this year and in the coming years.
Yes but why say to whoever it is——
I never found Mao convincing and I am surprised that Fine Gael does.
All these people have certain insights.
If one spends a long time in the wilderness one will take up anybody.
That is a bit harsh.
I am only joking.
If one stands at the edge of the sea waiting to decide whether to put one's toe in the water one might freeze to death because one never got in. One will never get to the other side if one never puts one's toe in the water. One can never have all the certainty one wants in this life.
I want to be sure we are getting into water not mercury.
The Minister has a massive matrix that he wants to fill out in his own mind about all the complex players on pensions, with 40,000 columns in one direction and 40,000 rows in the other.
That is what Deputy Bruton loves.
When he sees all the little lights shining he will move. The Minister should take his courage in his hands. This is something he can do that will have a positive effect for 30,000, 40,000 or 50,000 people who will retire in the next year. It will not cost anything but will give people flexibility and choice, the ability to make decisions for themselves and it will be seen as a progressive reform. The Irish Congress of Trade Unions supports it. I doubt that IBEC opposes it. It will be the Minister's first toe in the water. He may find it quite warm and be tempted to go much deeper, much more quickly.
I can feel the Deputy's hand on my back already.
I move amendment No. 8:
In page 16, between lines 21 and 22, to insert the following:
11.—Section 216C of the Principal Act is amended in subsection (5) by substituting "€17,500" for "€15,000".
This is a small amendment and I do not intend to delay the House with it. The upper limit for people who provide child care in their own home, to have the concession of not making a tax return, is €15,000. The take-up on this is low. At the very least it should move to be in line with the minimum wage which would be €17,500. Would the Minister consider that small increase in order that people who care for children in their own homes would not be brought in to make tax returns if the income that it generates is under the minimum wage?
The time has come for the Minister to examine this provision thoroughly. I had a long discussion with the Minister when he introduced it and I hoped that it would help some people providing child care. Many value this service, particularly those who can come home early from work and have a half day's child care every day. It has not worked, however, for various reasons. Some of the associated technical regulations such as the number of children has proved awkward, for example for a person who minds some children in the morning and some in the afternoon. A teacher, for example, can be home at 3 p.m. or 3.30 p.m. I have told the Minister before that in the Dublin area, which I have reason to believe is typical of the whole country, it is not possible to get part-time child care. A husband and wife who juggle their hours, such as public servants working on flextime, may need only 25 hours of child care a week.
It is almost impossible to get part-time child care in most commercial and large crèches, including some of the community crèches, because of the charging system. This will get worse when the new charging system is introduced in community crèches. The only alternative is private child care. This should be to a good standard, the providers ought to be insured and registered with the health board, have training and it ought to provide them with income support without entangling them in red tape and bureaucracy. I do not wish to repeat the arguments made a couple of years ago when he introduced this measure. I complimented the Minister then on bringing it in because fundamentally it is a good move. Some of the private child care providers do not particularly care for it because they think it has brought in additional competition for scarce child care workers but equally there is a high demand for less than full-time child care.
For the reasons we discussed on amendment No. 5 some women want to retain a connection with the workforce. They may have employers, particularly in the public service, who will allow them more flexible working hours. This may also apply to men. The partners may be able to take some time off with the effect that they can be with their children more often which dramatically reduces the child care bill. This is also socially desirable. The Minister ought to take an opportunity to examine why this provision has not worked as well as we thought it would.
I would not worry too much about some of the large commercial crèches which have tax breaks. There are different kinds of child care and care provided in a child's home or the child minder's home which is local, friendly and registered and of a proper standard is the Rolls Royce model for many people. Their child is not cared for with too many other children. This is important, particularly for small babies. I support the spirit of the amendment to improve and make this provision more attractive but that alone will not be sufficient. The problems in this relief go deeper. We all share the view that people should have options about the kind of child care the parents would most like and with which they are most comfortable.
I can confirm that in the parts of this State outside Dublin, with which I am familiar, it is almost impossible to get that sharing arrangement except in the unregistered crèches which present their own challenges and dangers. The Oireachtas crèche costs €694 per month. The other difficulty is that if both parties are working they lose their home makers' allowance. Then to rub salt in their wounds there are virtually no tax credits in those cases. We need significant additional creative thinking to come to terms with the major costs involved and the provision of that bit of flexibility to allow people stay in touch and keep their hand in the workforce.
I am glad I provoked the Tánaiste earlier in the debate. I should look forward to a debate with him at any time on the issues raised by him or by me.
I want to make a very brief point. For many parents now, child care costs are equivalent to a second mortgage. The general thrust of what is being proposed is good, where people can have their children minded in someone else's home, in an environment with which they are familiar. It is a very simple measure, which seeks to ensure a greater take-up of the scheme and make child care affordable. For many people there is no form of tax relief for anything to do with child care. It is a measure the Tánaiste should consider.
I do not believe we will have any difficulty in debating with Deputy Morgan the social conscience of this party, as exemplified in social policy back to its foundation.
I recall this measure being discussed in quite an animated fashion in the tax strategy group in the late 1990s. At that stage the figure of £6,000, if I recall correctly, was the sum being debated and the issue as regards the allowance, which was being introduced for the first time, was whether this initiative was compatible with equity within the tax system. It has now grown for totally pragmatic reasons to €15,000 and nobody doubts it serves a useful social purpose. It recognises the difficulty of collecting or enforcing tax collection from such a source. On the other hand, if some limit is kept to it, this encourages one form of relatively inexpensive child care provision as compared to some of the alternatives and provides useful and tax-free earnings to a household where there may well be other sources of income. The issue is apart from cost considerations, which lies behind all of these amendments. If it is increased, will that mean the cost of a particular form of child care for the people using it will straightaway increase by the same amount? It seems that in present circumstances €15,000 is not a bad level and in fact is fairly generous, stretching issues of tax equity practically to the limit.
When I introduced this measure in the Finance Act 2006, the limit was set at €10,000. I increased it by 50% last year to €15,000, but there was not much of a take-up, for a number of reasons. Although the relief was always targeted at small-scale child care operations, I felt at the time that €15,000 was a more realistic figure, given the costs of child care. The tax returns for the first year only reached Revenue last October for the €10,000 limit. It will be October 2008 before we have any additional information about the 2007 tax year. That said, I am not aware of any complaints that the current levels are set too low. We should prefer to see how the scheme operates over a number of years before deciding whether a further increase ought to be considered or regarded as having merit.
If clarification is needed, the limit is three children at any one time. A person could mind three in the morning and three different children in the afternoon and still be within the scheme. If there are more than three children, the child minder must be registered. If there are three or less he or she is only required to notify the authorities. Children do not have to be minded full-time in order for the particular exemption to be availed of under this code in an effort, as Deputy Burton said, to provide the widest range of choice possible as formal and informal options that best suit parents who want to have their children looked after for any period of time during the course of the day. For that reason I cannot accept the amendment.
I thought for a wonderful minute that Deputy Mansergh, for once, was going to agree with an Opposition amendment, only to have my hopes dashed that the outer limit of his tolerance for equity stretched only to where the Minister has already put the benchmark. No doubt we shall keep trying to persuade Deputy Mansergh of the merits of the change.
I do not want to hold up the House, but I believe the €17,500 figure is just the minimum wage. The fears Deputy Mansergh has that the whole equity structure of the tax system will come tumbling down because of people providing care for three children being allowed this exemption from making a return if they are earning less than €17,500, is ill-founded. I am disappointed the Minister will not accept the amendment. We have not managed to get any amendment by him yet. At least last year we got one through. There is one later, however, which he has conceded to Deputy Burton, so——
The Deputy unnerved me with his analysis this morning about the tax bases.
Did that upset the Minister? I cannot get any concession from him.
No, the Deputy unnerved me.
Amendment No. 9 is in the name of Deputy Bruton. Amendment No. 10 is related and both will be discussed together.
I move amendment No. 9:
On page 16, between lines 21 and 22, to insert the following:
11.—Section 477 (1)(a) of the Principal Act shall be amended by deleting “€400” and substituting “whatever charge has been levied by the relevant authority in the year of assessment”.
This is to remove the ceiling from the amount of tax relief available on bin charges. We are promoting a much more responsible approach to managing waste. People are being asked to shoulder responsibility not only in financial terms in paying, but also as regards their co-operation with the separation and recycling of materials. For some families this still means costs that run beyond the upper limit set. We should not set an upper limit on this, I believe. As we move through the amendments towards what is contained in Deputy Burton's proposal, tax relief at source, it would be easier to administer if there were not ceilings and thresholds that require calculations as regards how much of a payment is due for tax refund, and how much is not. It would add to the simplicity of removing this ceiling. I do not foresee Deputy Mansergh's concern that by extending this relief we shall suddenly see an expansion in the charges being levied to grab back the 20% concession that would be available on the amounts paid.
I support both of the amendments that are being grouped together. We need to move to a point where we give this relief at source in order that we can ensure everyone gets it who is entitled to it. The Minister made the point on Committee Stage that it is not just the local authorities who are involved in this now, and there are also private contractors. With some ingenuity on the part of the Revenue Commissioners, a system could be devised to allow deduction at source. The question of complexity as regards larger numbers of providers is something the Minister should greet with some scepticism when that response comes from Revenue. It now has systems which allow taxpayers to pay online and methods for easily calculating these types of liabilities. To be told time and again that because there is not a monopoly provider the situation is hopelessly complex and impossible to deal with is not an argument the Minister should accept too easily.
There is no reason the Revenue Commissioners could not provide tax relief at source in respect of environmental and waste collection charges. After all, service charges for waste collection, be it by public or private operators, are normally set once or, at most, twice a year. There is some certainty associated with them, which makes it very easy to calculate how much is to be paid and the value of the tax relief. Throughout the country charges are largely levied in respect of household properties. Since there is not a great turnover of residents, it would be very easy to put in place a system that would allow the authorities to establish with considerable certainty the households liable to charges. It would be easy to develop a database like those that the ESB, Bord Gáis and other service providers have a well deserved reputation for maintaining. The Revenue Commissioners' database of addresses — containing those of at least one person per household — is just as well developed. The Revenue Commissioners obviously send tax certificates to the houses of all those at work, of whom there are slightly in excess of 2 million. Therefore, a basic information structure is in place that would allow for the provision of tax relief at source in respect of service charges.
It is galling that many people are meeting the growing cost of service charges while not benefiting from the tax relief the Government decided should be made available to encourage individuals to pay such charges. Since service charges are levied by fewer than 200 operators, including county councils and private operators, it seems feasible to have a data capture system that would allow for the provision of tax relief at source. Given the work of the Revenue Commissioners, they ought to adopt such a system.
This morning I mentioned on two occasions the issue of individuals paying charges to management companies. In my constituency when an apartment is rented or purchased, often through the affordable housing scheme, the management charge is, on average, €2,400, which is not cheap. The management fee almost always includes the refuse collection service charge for an apartment but, because there is no regulation by the Government, despite lots of promises, the circumstances that obtain are unsatisfactory. The Taoiseach and former Tánaiste, Deputy Harney, told me repeatedly in the House that they believed the non-regulation of management companies was a disgrace and that the issue would be attended to by the Government pronto. If we were in cowboy films and were waiting on the Government to ride pronto to assist various categories of taxpayers, the film would be over before the US cavalry arrived.
I mentioned this problem to the Minister for Finance. I suspect addressing it will require legislation on both management companies and management agents — there are two sets of actors. In many cases, the management company directors are the developers of the managed properties. They are the Minister's friends, not necessarily mine, and have a ready-made cash cow in the form of management fees. They are meant to hand over the management company to the residents but, because they never complete the development, the hand-over is postponed. Not all developers do this and some handle the matter fairly and well. However, what some are doing to residents in such developments is an unholy disgrace. If there were tax relief at source, it would represent another way in which to exert pressure on rogue management companies to behave responsibly and give those living in the developments and paying through the nose for service charges some recompense and access to the tax relief to which they are entitled by law in respect of the service charge element of their management fees. It would be a good and fair policy.
It was amazing and fascinating to hear Deputy Mansergh refer to the tax strategy committee which is regarded as being up there with the great and the good in the hidden world of the public service. It is a very important body but one should try to imagine its very important members wrestling, over their breakfast, cup of tea or croissant, with the equity of a €6,000 tax break for a childminder. No wonder those who are not well off sometimes consider the Department of Finance to be conspiring against them. I can understand that Deputy Mansergh and others wrestle with their consciences over the equity of a €6,000 tax break for a woman minding kids and probably about the equity of tax reliefs on bin charges for those paying fees to management companies but the same set of people have no problem with multimillionaires being stuffed to the gills with tax breaks. This this does not seem to bother them. Deputy Mansergh's comments certainly constitute a fascinating insight into the world of the haut Civil Service. No wonder the officials in question have handed themselves such salary increases. I wonder whether they live on the same planet as the rest of us, even the ordinary Deputies in this House.
I recommend the amendment to the Minister. I hope that, in the absence of a taxpayers' advocate, he will exert some pressure on the Revenue Commissioners to address the issue.
The tax relief in respect of the waste collection charge is somewhat questionable. Virtually everybody is charged. I, therefore, wonder how beneficial it is. Would it be more productive or worthy to consider the introduction of a threshold below which relief would be available and above which it would not, or the subvention of families on very low incomes?
The number who do not need a bin at all is growing. If they have a reasonable income and some space outside the house, they can create a compost heap or bin and can bring their recyclables to the local civic amenity centre for proper and safe disposal, at a very low charge. The charge is usually a couple of euro in any of the centres I know. Given that those on higher incomes invariably have transport to achieve such a laudable environmental goal, the scheme for providing tax reliefs for those who pay bin charges should be skewed in favour of those on lower incomes who invariably do not have the space around their homes to create a compost heap and very often do not have transport to convey recyclables to a civic amenity centre. Very often, they do not have the space about their homes to store them. I have a major doubt about the usefulness of the scheme as it operates. There is a significant case to be made for taking a fresh look at it with a view to encouraging those on higher incomes to deal with their waste issues in a more environmentally responsible manner and obviate the need for a bin completely. I accept that the entire refuse service generally operates in a more environmentally friendly fashion in terms of the use of the brown bin, green bin, etc., but we could encourage people to move away from using the bins altogether. I accept that there are small quantities which must be disposed of, which is where use of the pay bag comes in. Certainly, that is how I operate. I try to avoid using the bins completely. Perhaps that is a method on which the Tánaiste might reflect.
In fairness to the Department of Finance and the tax strategy group, I was speaking about discussions held ten years ago when €6,000 would have been a much more realistic figure than it sounds today. As my record in the Seanad shows, I certainly would have been against the continuation of many of the multimillion euro reliefs. I am not sure the seaside home scheme was ever a good one. It was introduced by the Government of which Deputy Burton's party was part. I certainly fully support the policy followed by the Tánaiste under which these schemes are being phased out and pension contributions are being capped.
There are two amendments. Obviously, if a good, efficient and fair way could be found to administer tax relief at source, there is a policy in place to do this. It would have to be administered through the local authority in the case of a public authority service charge, although it would be more complicated where the private sector was involved and especially complicated in an area such as my constituency where there are a few examples of the management companies about which Deputy Burton spoke.
What I feel is a bad amendment is the previous one which suggests the limit should be removed in respect of the charged levied by the relevant authority. One must understand the psychology of local authorities. Sometimes strapped for cash, they would be able to justify practically any increase in bin charges on the grounds that it was tax deductible. It would be most undesirable from the point of view of those who must pay these charges, namely, the citizenry, if there was unlimited relief because I do not think they would be the beneficiaries.
I welcome both amendments. We speak about promoting a greener environment. Costs will go up and people are entitled to tax relief. I come from the practical school of politics and cannot understand why one cannot provide tax relief at source on environmental service charges. As the Acting Chairman, Deputy Cregan will be aware, there is one main environmental service company collecting bins in my region. It is a sophisticated company with fantastic systems. It should be simple at the end of every year for it, like any employer completing a P35, to file a return with the names and PPS number of every customer who has availed of its service and link it with the Revenue system in order that the people in question obtain the relief. Where tags are sold in shops, let the individual concerned go to the local authority providing the tags to file a return at the end of the year. We need to progress to a system which is straightforward and equitable and by which people would receive tax relief. In many cases with various tax reliefs many taxpayers are not obtaining relief because they are not claiming it. I am interested in hearing the Tánaiste's views on this practical measure that could be applied to provide relief at source on bin charges.
I appreciate that we are dealing with two amendments seeking tax relief for refuse collection and services charges but scorn has been thrown by Deputy Burton on the tax relief available for child care costs. I remind the Deputy that her former leader, Deputy Quinn, when Minister for Finance, did not even consider it appropriate to bring forward tax relief for such costs.
The Deputy missed the topic of the debate. He was not here earlier.
I call the Tánaiste.
Deputy Finneran has the wrong end.
It always amazes me how Deputy Burton regards herself as being ideally equipped to look into the mindset of ordinary people and the rest of us do not have a clue.
On the amendments, please.
We are badly equipped. It is only extraordinary people who vote for Fianna Fáil. We must put up with that continuing mindset.
On the amendments, the relief for service charges is available in respect of charges paid by a householder in the previous year subject to a maximum claim of €400. Where an individual makes a claim in any year, the level of relief claimed is allowed automatically for all future years. That is an important point, that once a claim is made, effectively the benefit is given in future years by Revenue. The Revenue Commissioners have provided a number of simplified ways for individuals to make their claim for this relief. They may do so by text, on-line or by telephoning or writing to their local tax office. The argument is that allowing unrestricted relief would also serve as a disincentive to householders to reduce the amount of waste which they dispose of and aggravate the associated environmental issues with which local authorities must deal.
There are issues with trying to provide tax relief at source. Unlike mortgage interest relief where tax relief at source is provided by sophisticated financial institutions, service charges are primarily levied by businesses designed to process waste, not money and documents, as in the case of financial institutions.
What about the Internet?
It is difficult to put in place the structures to adequately reflect the range of business models and services charges levied by over 400 separated business, some of which are very small-scale.
Most people now file on-line.
The tax relief at source system for mortgages is operated by some 200 banks, building societies and local authorities familiar with such work. Revenue, however, is prepared to continue to see what can be done and will continue with discussions with those involved.
An added complexity is identifying and isolating commercial customers from residential customers. Therefore, there are issues in terms of the various collection methods and arrangements used and charges leveied. It is not that there is an easy way of sorting the matter out and that it can all be done at source. Revenue will continue to work with the ten local authorities still involved in waste collection. They co-operate with Revenue in publicising entitlements. I am not in a position to accept the amendment.
If the Tánaiste introduced it with the ten local authorities, I imagine the other 390 providers would move quickly to come up with systems under which their clients could access the same facilities. One would find that the ingenuity of the marketplace would respond to the Tánaiste's initiative if he started with the ten local authorities and invited the others to come up with schemes whereby customers could equally avail of deduction at source.
The Deputy is assuming there is competition on every run.
Has the Tánaiste received any advice from his officials in addressing the issue of management company fees? Young people, in particular, pay these fees which include service charges, the accounts or receipts for which they cannot access. Therefore, they cannot obtain this tax relief. I do not know whether the Tánaiste has taken an interest in the phenomenon of management companies and the difficulties posed by them. The constituencies most affected are in the growth areas on the edge of towns. There are now tens of thousands, mostly young people, living in management company controlled properties. Some of them are now living with negative equity and their mortgage repayments are very high. It is a worthwhile objective to try to ensure they can receive even the small amount of tax relief to which they might be entitled. What is the Minister's response?
That is an initiative we must take up with Revenue to see if there is any way around the problem where people pay a management charge to the management company for the provision of services, not just refuse services, but others also.
The problem is management is the vehicle which pays the service charge to the local authority or the service provider. This leaves the question at one remove from those paying the service charge. The question is: how is it possible to devise a system that might be of assistance to individual occupiers in isolating the portion that is the service charge and seeing whether there is a way in which the benefit could derive to them as distinct from the management company which provides the service as a business expense? It is an even more complicated problem because of having to identify behind the management company the persons who pay management charges, the amounts paid and all the rest. That is an even more difficult problem than that presented by the traditional model, not to mind management companies where businesses provide the services at varying levels of cost. If we cannot even sort out the first model, it will not be easy to come up with a solution.
I will ask Revenue to look at the issue. I accept the point and would like to see people being able to obtain a benefit, although it is not significant. They should have an entitlement, if possible. However, it is a difficult problem which is not easily solved.
On the question of management charges, management companies receive a combined bill from a local authority or refuse collection provider. The simple solution is for them to divide the total amount among the units and allocate this sum to the unit owners' PPS numbers and return the information to the service provider which will then forward it to Revenue. All companies file P35s. There is nothing complicated about separating domestic payments from commercial ones. This is already being done with different PRSI rates for P35s. If the will is there, it can be done. The point made about competition is irrelevant to the argument. The argument is about taxpayers getting tax relief at source on bin charges. If the political will was there, a Revenue system could be put in place.
Revenue has a track record in this regard. It is interested in trying to accommodate taxpayers. For example, where people make a claim, the credit is provided forever more. People would probably get the benefit, even if they moved. The idea that Revenue is trying to deny them their entitlements is wrong. There is a responsibility on taxpayers to claim their entitlements. The provision of tax relief at source is only possible in respect of certain payments, for the reasons we have given. It is acknowledged that there is a variation in this regard and that the matter is not as simple as suggested. This does not mean, however, that Revenue will not continue to seek to solve the problem more satisfactorily. It will continue to engage to see how it might be able to solve it. Let us acknowledge there is a problem and not suggest Revenue is not interested in trying to solve it.
How about starting with the ten local authorities?
I will talk to Revenue about how we might make progress on the issue but I do not want anyone to think it is only a matter of doing that and everything else will follow. That is not the case. I point out to Deputy Bruton that he cannot make the assumption that the market would come into play because there was competition on all routes. There is not. Even if it was agreed with the ten local authorities, if there was someone else providing a service where there was no competition, there would be no incentive for them to continue with it. The market is not geared that way.
It should not be an incentive, but a filing requirement.
The assumption that there is competition on all routes is not correct. I did not say there was not merit in what was said, just that Deputy Bruton's suggestion was not the solution.
I move amendment No. 10:
In page 17, between lines 29 and 30, to insert the following:
14.—Tax relief at source shall be available for environmental service charges.".
Amendments Nos. 11 and 12 in the name of Deputy Burton are out of order.
I move amendment No. 13:
In page 17, between lines 29 and 30, to insert the following:
14.—Where an employer provides a childcare facility directly to an employee, or pays the childcare costs of an employee to a third party, the provision or payment shall not constitute a taxable benefit-in-kind.".
I recommended this amendment to the Minister previously. It follows from our general discussion of the issue of child care. It seeks that where an employer provides a child care facility directly for an employee or pays the child care costs of an employee to a third party, the provision or payment should not constitute a taxable benefit-in-kind. The amendment tries to even out the situation for workers. Where people work for large public employers, it is very easy to facilitate the arrangements but where they work for smaller employers, their employers may not be able to provide for the same level of arrangements that large employers, including the public service, can make.
This is another element of the jigsaw in respect of child care provision. The provision in the amendment would assist a specific and limited number and I recommend it to the Minister. Otherwise, he could review the whole area in order to take into account those who would not benefit from it. During Committee Stage he said he was anxious to avoid people getting tax benefits to which they were not entitled, or that the provision might be used as a tax avoidance mechanism. However, where bona fide child care services are provided, these arrangements are possible with large companies. It is difficult, therefore, to see why people who work for small-scale employers should not have the same advantage.
As the Deputy is aware, we debated this topic on Committee Stage. It was also discussed at some length during previous Finance Bill debates. As I indicated to the select committee, the position is that the existing law already provides an exemption from an employee benefit-in-kind charge where employers provide free or subsidised child care services for their employees. The exemption applies where the child care facilities are made available solely in-house by the employer, or are made available by the employer jointly with other participants, or are made available by other persons and the employer is wholly or partly responsible for financing and managing the child care service, or are made available by other persons and the employer is wholly or partially responsible for capital expenditure on the construction or refurbishment of the premises. Essentially, in order for the exemption to apply, the employer must be involved in the provision of the facilities, their management or funding.
Concerns were expressed previously that the relief was not available to small and medium-sized enterprises by virtue of their size. Where the individual small and medium-sized enterprise might not be able to facilitate the provision of child care facilities on its own, the legislation allows it to join with other small employers to provide co-located facilities, contribute proportionately to costs and jointly provide the child care service. In this way, SMEs can collectively address the differences of scale in the provision of facilities. The proposal, in so far as it relates to direct provision of child care, is addressed in existing legislation.
The second proposal in the Deputy's amendment suggests employees be given a benefit-in-kind exemption where their employer purchases child care services for them from third parties. A core requirement of the current exemption is that employers must be involved in the provision, management or funding of facilities. Apart from this, the main difficulty with the Deputy's suggestion would be the potential cost to the Exchequer. Allowing employers to buy child care services for employees from third parties is unlikely to have any significant impact on the supply of additional child care places. It could lead to some displacement, with employers buying up the most convenient child care places for their employees, with those not getting such a benefit being forced out to less convenient child care facilities.
There could also be a knock-on effect on the cost of child care, as people being subsidised might be prepared to pay even more for the service. Therefore, it would not be a legitimate policy objective to provide tax relief for some taxpayers who have been lucky enough to be employed by an employer or group of employers which have sourced child care places from the existing complement of places. Such a policy would be of no benefit without taxable income. Ultimately, such a provision, if introduced, would lead to pressure for full tax relief for all those paying their own child care costs, with the associated cost being borne by the Exchequer. As the Deputy is aware, current Government policy is designed to increase the supply of child care places through the creation of additional places and not to use resources to grant tax relief for child care costs per se. He will also be aware that in the past few years, the Government has sought to support parents with children. These support measures include the early child care supplement, the national child care investment programme which is aimed at increasing the supply of affordable child care places by 50,000, a training strategy for national child care aimed at producing 17,000 additional child care training places by the end of the decade, increased maternity leave and a tax incentive for those who mind children in their own homes, a matter we discussed earlier. It is for these reasons that I am, unfortunately, not in a position to accept the Deputy’s amendment.
I understand where the Tánaiste and Minister for Finance is coming from. However, providing child care has become such a complex jigsaw that it is very difficult to understand it fully. A whole series of issues need to be examined because of the anomalies in and unfairness of the system.
A new system of charging for community-based child care facilities will be introduced by the Minister of State, Deputy Brendan Smith, who wants to eventually reach a commercial charge for people in work. I understand civil servants in his Department complained because they were of the view that the better-off, particularly in villages and towns, were benefiting from community child care facilities. I am sure the Minister is familiar with this issue. It seems ironic that people with varying incomes and none in an integrated community in towns and villages who are to participate in and use a community facility will probably be charged much more in the future. There is probably a case for charging them a certain amount more. According to the reports of the senior civil servants urging the Minister of State to make these changes, many of the people in question are probably self-employed or work for small employers. Therefore, this time next year the Minister might be subject to some lobbying to address the issue again. The new system will throw up certain anomalies, particularly for those on moderate incomes who are either self-employed or work for small employers. Most of them tend to work either for themselves or for small or family-run businesses. The Minister has spoken about employers and small and medium-sized enterprises gathering together, which is to be desired. However, it is not happening very quickly. Perhaps other sections of Government might look at how policy is panning out.
Child care policy must be kept under review all the time. I am simply making the point that there are many initiatives and that additional places are being provided. The question of affordability arises in this regard. Fair dues to the Minister of State, Deputy Brendan Smith, for being prepared, after a very good consultation process, to work with others and give them a timeframe in which to ensure community places will be used in the way contemplated by the Oireachtas. Where persons are in a position to contribute a little more towards the costs of those excellent facilities, that should happen on the basis of equity in order that those on lower incomes do not cross-subsidise places for persons who can afford to pay a little more. Everyone talks about reform but, by definition, implementing reforms leads to there being winners and losers. As people set up community facilities and show considerable initiative in so doing, we have provided a way forward that will enables some of the problems to be solved in an orderly and equitable fashion.
I think the Deputy accepts the general policy point, which concerns additionality, which we will support in whatever way we can. We had a discussion about the informal sector, in which additionality is not coming through as much as we would have liked. I will know better next October whether even the increase to €15,000 from €10,000 has resulted in the provision of any more places. Similarly, we will continue to encourage businesses to look at investing in child care facilities or even refurbishing existing facilities to provide a basic child care facility in the workplace. The capital allowance system is designed to do this. We will do anything we can to facilitate such a development but it must be on the basis of additionality.
Amendment No. 14 in the name of Deputy Burton and Amendment No. 20 in the name of the Minister are related and will be discussed together.
I move amendment No. 14:
In page 17, between lines 29 and 30, to insert the following:
14.—Where an employer provides training to an employee, or pays the training costs of an employee to a third party, the provision or payment shall not constitute a taxable benefit-in-kind.".
I moved this amendment on Committee Stage and thank the Minister for responding to it. When employers provide training for employees as part of their employment, this is deemed to take place for the purposes of the business and is not subject to benefit-in-kind regulations. When an employee is made redundant and the redundancy deal provides for a training package, this package is deemed to be a benefit-in-kind and liable for taxation of up to 50% because it is no longer seen to be of benefit to the employer because the employee is being made redundant and undergoing training following redundancy. We are facing into a period when there will be a higher unemployment rate. A practice originated with a number of multinational companies which involved offering training packages to upskill departing workers to either assist them in respect of the job they had peformed, to help them to train for other jobs or to start a business. It seems unfair and anomalous that such packages in the hands of the employee being made redundant should be subject to tax as part of the redundancy scheme.
I am delighted the Minister has brought forward amendment No. 20 to address the issue. The case which gave rise to it is the one involving The Coca-Cola Company in County Louth which is, unfortunately, making employees redundant and where, as part of the redundancy package, employees are receiving training worth around €5,000. With these packages, no money passes to the employee. They cannot take the cash in lieu. It is not like winning a car and receiving its value in cash. One must take up the training package.
I have been asked a question about the Minister's amendment. Under section 201(1A)(a)(iii), provided for under the amendment, the training must be completed within six months of the termination of employment. I understand the Minister is anxious to prevent his amendment from being abused. In practice, is this wisest thing to do? Let me give some examples. During the years Dublin West has had large numbers of industries with a lifespan of ten to 15 years, such as call centres, IT centres, various types of factories and employments which have come and gone as business has changed or been outsourced to other countries. 3Com was a very good employer in the Dublin 15 area. It departed because it was affected by the bursting of the IT bubble. It outsourced and the employment went abroad. Many of the women who worked there retrained as special needs assistants and found employment in this expanding sector.
In many cases of redundancy it is not possible to find the course of one's dreams within the six-month period allowed. It is not always advisable to pay for a course up front. I know many young men who have been working in the construction industry for the past eight or ten years. They have worked under hard conditions. Many of them are highly skilled and possess an entrepreneurial spirit. Many of them now want to return to education and ultimately study at college for a degree. This should be encouraged. It can take a long time for people to organise a return to education and attending pre-university courses. The Minister seems to be confining it to very traditional workers' training rather than including education, learning and upskilling in the wider sense. If, for instance, the company making workers redundant was to suggest they do a return to education or a pre-university course which are provided by most colleges — in my view they are not doing enough in this area — the costs mount up. People in that situation usually work at night such as driving a taxi in order to pay the fees. I can see this is an anti-avoidance mechanism and I do not wish to detract from the Minister's desire to have an avoidance mechanism but I ask why the period could not be extended to encourage people to go the whole hog and if possible go to third level. The people coming out of the building industry have to be some of our best, most skilled and most entrepreneurial people. Many of them are under 35 years and many are under 27. I ask the Minister to think outside the box on this matter. We do not want people just doing training courses of the kind that in the mid-1990s and before employment started to take off, gave FÁS a bad name. I would like it to move from just courses to genuine learning and education because the economy has a shortage of IT sector skills, accounting skills and skills in areas such as asset management. Many financial services sector jobs require skills. A scaffolder may need to retrain and should be encouraged to go forward to third level education. This would be a real bonus to our economy. As people leave employment with a company they are given opportunities for personal development and upskilling. For some people that might well mean paying for driving lessons and getting a driving licence but for many others with a leaving certificate it could be the beginning of an opportunity to go to college, acquire qualifications and in turn be in a position to compete for a skilled job. We keep hearing that employers are having to bring in foreign workers. We could be facing into the worst of all worlds where the foreign workers made redundant in Ireland from sectors such as construction, are highly mobile, as suggested by the Taoiseach this morning. They can go abroad whereas our people are not that mobile because they have family and other commitments in Ireland. We need to provide them with the maximum amount of learning and educational opportunity.
I do not wish to seem churlish in not thanking the Minister for the amendment which I am delighted he has tabled. I commend the amendment but I ask him to be a little more flexible and open it wider to education and learning.
With the permission of the Ceann Comhairle, amendments Nos. 14 and 20 are being discussed together.
The Deputy's amendment as tabled on Committee Stage highlighted the issue of whether the cost of retraining provided by an employer as part of a redundancy package was taxable. I indicated to the Select Committee on Finance and the Public Service that I would consider the issue before Report Stage.
The current situation is that statutory redundancy payments are exempt from tax. In addition, redundancy payments in excess of the statutory redundancy, including provision of retraining, are also currently free from tax up to certain statutory limits. The number of educational schemes and tax reliefs already in operation to assist individuals who have found themselves unemployed should also be noted. It was on that basis we devised the proposal.
Educational schemes are currently available. I refer to the back to education allowance scheme with immediate access for persons made redundant, the cost of education allowance, general education training and development courses, the back to education initiative including post-leaving certificate courses as well as vocational training opportunities scheme and local authority grants. All those schemes are available. Tax reliefs are in existence in this area to assist individuals finding themselves unemployed to retrain and to re-enter the workforce. There is relief for fees paid for third level education, relief for fees paid for training courses, relief for long-term unemployed which applies to both employers and employees, double deduction in respect of certain emoluments to help the long-term unemployed to return to employment and relief for training of local staff before commencement of trading. Many of those circumstances are covered by existing arrangements.
Having considered the matter, I have decided to introduce a new subsection into section 201 of the Taxes Consolidation Act 1997 which provides an additional new exemption of up to €5,000 for each eligible employee where an employer bears the cost of retraining workers as part of a redundancy package. An eligible employee is a person who has more than two years of continuous service. The retraining must be part of a redundancy package and be designed to improve skills or knowledge used in obtaining employment or setting up a business. To encourage people to avail of the training offered and be in a position to return to the workforce, there is a requirement that the course be completed within six months of the employee being made redundant.
As I indicated earlier, there are other supports and tax reliefs available for long-term courses. There are two measures in the section designed to counter tax avoidance. First, the exemption will not apply to spouses or dependants of the employer and second, employees will have to avail of retraining as they will not be able to receive cash instead, as the Deputy said.
I commend the amendment to the House on the basis that there is a large range of other initiatives, schemes and allowances to cover a situation where a person has immediate access to the back to education allowance scheme, for example. This was provided in budget 2007 to persons made redundant so long as they were entitled to statutory redundancy and qualified for a social welfare payment. Budget 2008 provides for an annual allowance towards the cost of recipients' studies as well as their weekly payment. This allowance is paid at the start of each academic year and was increased from €400 to €500 in budget 2008. I think the point is covered.
The flexibility offered by the amendment would greatly be improved if the Minister changed the period from six months to 12. However, I do not believe it is possible to amend it on the floor of the House. This issue was drawn to my attention by some of the workers and union officials associated with Drogheda Concentrates, the plant of Coca-Cola, which, unfortunately, is closing down. Because multinationals provide these schemes, it seems arbitrary to confine training to be completed within six months. Could the Tánaiste even extend the period to 12 months which would allow for a full-year course, as it would allow flexibility to someone considering going back to education in a particular way? That is all that is at issue.
I tabled the amendment in response to the issue raised. I am not in a position to change it now on Report Stage — I have just introduced it and would like to see it enacted. There is a requirement to encourage those who avail of the training offer to be in a position to return to the workforce. The course is required to be completed within six months of the employee being made redundant, which avoids having a six-month period after which the person could do the six-month course. The idea is to try to get people straight into a training regime as part of their redundancy package. It is part of the redundancy package, not supplementary to it. It is far better to encourage people into a training course immediately rather than providing a length of time within which a course could be taken, as they might step back for a while.
We are facilitating a training fee of up to €5,000 as part of a redundancy package. A person might well decide to take the €5,000 in addition to the €20,000, or whatever sum he or she is getting, and do whatever he or she wants to do, including some of the points the Deputy is making. It is not restricted. It is part of a bigger lump sum allowing people to decide where they want to go to change their career thereafter. If it is to be part of that redundancy package, the logic behind the proposal is that we need to see an immediate movement into training places. There are many other additional schemes people would be able to take up, which would meet many of the circumstances about which the Deputy is talking. I ask that my amendment be accepted and we will see how it works out. It should genuinely cover the cases about which people are concerned.
I am delighted the Tánaiste has tabled the amendment in response to the issues I raised, for which I thank him. Paragraph (iii) requires that the training must be "completed within 6 months of the termination of employment". It would be better if it could be completed within 12 months, to provide extra flexibility. Many workers, particularly those being made redundant by multinationals, do not have much choice regarding such packages which are given on a take it or leave it basis. However, many of the packages have much to recommend them. There should be a focus on educational opportunity that, in turn, might facilitate people to go on and get a degree, seriously upskill and be able to compete for some of the jobs which employers are telling us they cannot fill owing to shortages. I accept the Tánaiste's amendment in spirit in which it was tabled. I am just making the point because it was made to me by shop stewards from the particular company in question.
I welcome the amendment. How can we deal with a situation where the relevant course is not available? Someone could be made redundant and want to move into a particular area.
They should take the €5,000 and use it later when the course becomes available.
The amendment requires that the course must be completed within six months. The relevant course might not be available.
The person does not take the €5,000 training fee. He or she takes it as part of his or her redundancy package. Within the redundancy packages one person might receive €25,000 and another, €20,000 plus €5,000.
I accept that.
They would all receive the same amount.
The thrust of the amendment is to encourage people to retrain. I take the Tánaiste's point that a person can do this. However, by way of a practical measure, if it were to be extended by a small period, it could facilitate people. This is about retraining, not necessarily about the money.
Let us enact the provision, as I believe it will meet the need identified. Other situations are being raised which are legitimate. Other avenues can be pursued in enabling people to get on those courses. They will not just be dependent on this sum of €5,000. Some may take that opportunity because they see something that is available immediately and they can go after it. If they do not do so, they could take the €5,000 in cash and wait until April or whenever the course comes up. These are practical measures.
Will the Tánaiste review the matter?
Everything is under review all the time. I review issues regularly.
It is nice to hear that.
I move amendment No. 15:
In page 17, between lines 29 and 30, to insert the following:
14.—The Principal Act is amended in Section 779 by inserting the following new subsection:
"(3) A person, none of whose taxable income is chargeable at the higher rate, who makes a pension contribution within the limit set out in this section, shall be entitled to receive a tax credit contributed to the pension scheme equivalent to relief at the higher rate.".".
This amendment was discussed on Committee Stage. Its purpose is to provide that people on low incomes who are either paying no tax or paying tax at the 20% rate would be able to avail of pension tax relief on an equitable basis in order that they would be able to obtain the same relief as would be available to someone paying at the top rate. It is eminently reasonable and commands the support of all parties in the House, including Fianna Fáil. The Minister, Deputy Séamus Brennan, had suggested a more generous 50-50 scheme extending without limit.
I have made the point about Ministers for Social and Family Affairs and Ministers for Finance.
Mine is a much more conservative, measured and limited scheme that would only apply up to the relevant ceilings of the income tax code for those whose income is not taxed at the 41% rate. While we had a thorough airing of the matter, we ought to do this. As I said in our discussion on the annuity reform, it is important to start the process of reform. The Tánaiste seems to be of the opinion that we need to have all the ducks in a line before even doing things that are crying out to be done in the interests of fairness. I acknowledge that there is considerable complexity in this proposal. However, some things are, as they say colloquially, no brainers. Ensuring someone on a low income gets the same tax relief as someone on a high income is a no brainer as far as pension relief is concerned.
I know the Tánaiste will rightly say many in that category cannot afford to set aside money. However, if they do, it is totally unfair for the State to decide that one person will receive far less support towards his or her pension contribution than someone who is much better off. As I said on Committee Stage, according to the last Revenue figure I saw, the total cost of tax concessions to pension contributions was €3 billion, largely shared by a small group and inequitably spread, according to the evidence of the ESRI. If we needed to find revenue to fund this measure, it could be found by restricting some of the reliefs at the upper end in order that we would be able to have something more equitable and fair for people at the bottom end.
This proposal stands alone as a measure that can proceed. I do not believe any of the social partners or any other persons with whom the Tánaiste might wish to consult could possibly object. It has been crying out to be done for years. When we start to see the reality of what the ESRI has done on the basis of estimates, that the benefits of this €3 billion relief are concentrated among such a small number of individuals and the cost is equivalent to what we are paying out in social welfare pensions to thousands of individuals, there will be a hue and cry about how we have dealt with this issue for many years. I, therefore, ask the Minister to accept this worthwhile amendment.
As it is now 7 p.m., I must ask the Deputy to move the adjournment of the debate.
Does the Minister agree to my excellent amendment?
Does the Minister want to nod quickly?
He could nod it quickly through.
Fair enough but the Deputy will know that the succinctness of my reply is not disrespectful to the weight of the issues he has raised. We intend to respond by developing longer term policies to deal with these challenges in the wake of the consultation process to which he referred. However, I cannot accept the Deputy's amendment on its own.