Dáil Éireann debate -
Wednesday, 8 Dec 2010

Vol. 724 No. 2

Leaders’ Questions

Deputy Enda Kenny

The budget yesterday was the product of an exhausted Government. It lacks conviction, confidence and compassion. The impact of the Fianna Fáil-Green-Independent-supported budget has and will consign thousands of low and middle income families in this country to near penury, a serious financial hit, a serious drop in living standards and hardship and pressure they could never have imagined. It is a budget of booby traps and landmines that will go off in these families' houses economically and financially over the next 12 months.

The Minister for Finance said that his budget was sensible, rational and equitable. Yesterday the Taoiseach's salary was 13 times that of a person on the minimum wage and today it is 14 times the level of a person on the minimum wage. Does he consider that is sensible, rational and equitable?

The Taoiseach

In regard to the preface remarks made by Deputy Kenny, this Government has set itself the task for the past number of months to produce a four year plan and to bring forward a budget, which I am glad to say had the support of the majority in this House. I welcome that this has been the case, that people in this House have been sufficiently capable of looking at where the national interest lies at this time.

Deputy Seymour Crawford

Their personal interest.

Deputy Pádraic McCormack

At a price.

The Taoiseach

On the points made by Deputy Kenny, since this crisis began, this Government and others have indicated the need to give demonstrable effect to show the reductions that have to be made. The net take home pay of the Taoiseach is now 45% less than it was when I took office and that of a Minister's it is up to 40% less. That needs to be said and it needs to done. Everything we can do to reduce the size of the Government needs to be considered very carefully.

On decisions that have to be made that affect the lives of everyone, it is about making sure that we have a sustainable position going forward to avoid larger cuts that would otherwise have to be considered were there a failure to take action now. The decision of Government to put those interests of the country and of all the people first in making these decisions does not make them any less valid for that.

Deputy Pádraic McCormack

What about yourself?

Deputy James Bannon

The Taoiseach should answer the question.

Deputy Enda Kenny

That is not the question I asked the Taoiseach. I said that his budget yesterday was a product of an exhausted Government and that it lacked compassion, conviction and confidence. The Minister for Finance described it as being sensible, rational and equitable. I said that the Taoiseach's salary yesterday was 13 times that of a person on the minimum wage and today it is 14 times that level. Is that sensible, rational and equitable? The Taoiseach said that this is about having a situation where we will have a sustainable position going forward. Yet thousands of people today, widows, blind people, disabled people and carers are going around their houses, possibly with no heat on, looking in despair at what the Government has done when the Taoiseach did not need to do that. As was pointed out by Deputy Noonan yesterday evening, the Fine Gael alternative did not require income tax increases in 2011. It was costed by the Department of Finance and the savings that the Taoiseach could have had for the blind, the disabled, the carers and the widows — at a cost of €96 million — could have been made by a move to a single payment section, if he had any rationalisation plans for a sustainable position going forward. I will ask the Taoiseach whether he considers in his own case that this is rational, sensible and equitable? Does he consider on this morning that to have imposed these hardships on carers, widows, blind people and disabled people was sensible, rational and equitable, particularly when he did not have to do it? This was not the Brian Cowen of old.

The Taoiseach

I want to make a few points on that contribution. First, it seems now that the Leader of the Fine Gael Party is suggesting that the budgetary strategy of Fine Gael Party for this budget was that there would be no increase in income tax. The 2011 effect of our tax changes will yield €883 million, or €1.1 billion in a full year, in income tax revenue. Will Deputy Kenny during the course of his contribution on the budget debate kindly tell us how he would make the €6 billion adjustment by finding another €883 million cuts over and above what were announced by Government yesterday? Otherwise he is not in a position to have a budgetary strategy that is credible. One either increase taxes or one cuts expenditure.

Deputy Enda Kenny

This was costed by the Department of Finance.

An Ceann Comhairle

Deputy Kenny, please.

The Taoiseach

The costings that the Deputy has had done in the Department of Finance in respect of his initiatives are fine in themselves. The simple point I am making to him is that he is now saying that the Fine Gael Party would have made an adjustment of €6 billion in yesterday's budget without raising income tax. That requires——-

Deputy Bernard J. Durkan

The Government has the three year plan.

The Taoiseach

That would require further cuts in the order of €1.1 billion for the full-year effect.

Deputy Enda Kenny

It was costed by the Department of Finance.

The Taoiseach

The Deputy might outline to us in a few moments in the budget debate how the party intends to do this. If that is the position——

Deputy Enda Kenny

The measures take in widows, carers, the disabled and the blind, as well as the minimum wage.

The Taoiseach

I am coming to that point now. If that is the position, the level of social welfare cuts to be contemplated, given that social welfare is 38% of total spend, would be far deeper than what the Government brought forward yesterday. The Deputy goes on to make the point——

Deputy Bernard J. Durkan

The Government had a three year plan two years ago. It is now a seven year plan.

An Ceann Comhairle

Deputy Durkan, please.

The Taoiseach

Not alone would the Deputy's party not raise income tax, to the cost of €1.1 billion, it now would not have made any changes in the payments mentioned. That would require a further €90 million, meaning the total would be approaching €1.2 billion.

Deputy Paul Kehoe

That was costed by the Department of Finance.

Deputy Terence Flanagan

The Taoiseach should answer the question.

The Taoiseach

Coming to the next point, if there were other areas in the social welfare budget——

Deputy Enda Kenny

I asked a question that has not been answered.

Deputy Bernard J. Durkan

Where is the soft landing promised by the Government?

The Taoiseach

——that needed to be hit——

An Ceann Comhairle

The Deputy is——

The Taoiseach

The total amount reduced on working age payments——

An Ceann Comhairle

Deputy Durkan, please.

The Taoiseach

——would be a further €3 per week. That would be €11 plus adjustments for qualified adult allowance. Those are the facts.

Deputy Enda Kenny

The Taoiseach should answer the question.

The Taoiseach

If the Deputy wants a sensible debate——

Deputy Paul Kehoe

The Taoiseach should answer the question.

The Taoiseach

I am answering the question.

Deputy Paul Kehoe

He is not.

The Taoiseach

The figures do not add up. Fine Gael cannot have Deputy Noonan speaking out of both sides of his mouth——

(Interruptions).

The Taoiseach

——and this man coming in facing five different directions the same morning.

Deputy Enda Kenny

The Taoiseach will not answer the question.

An Ceann Comhairle

We are finished on the first question and are moving on. I call Deputy Eamon Gilmore.

Deputy Enda Kenny

The blind have had their payments cut.

Deputy Paul Kehoe

Deputy Bannon was right. They are in the departures lounge.

Deputy Pádraic McCormack

He is a bit sore this morning.

Deputy Enda Kenny

The Ceann Comhairle is moving us on.

An Ceann Comhairle

The budget debate will begin shortly.

Deputy Bernard J. Durkan

Where is the soft landing? Where did it go?

Deputy Eamon Gilmore

In the budget for 2010, the Minister for Finance announced a fairly modest measure whereby tax exiles would pay a levy to the Irish State. This was subject to a number of fairly generous conditions, and the tax exiles would have an income in excess of €1 million per year and property worth more than €5 million. To date, not a single cent has been collected from that levy. In reply to Deputy Shortall, the Minister for Finance indicated a few days ago that the first amount to be collected will not be due until 31 October 2011.

Meanwhile, in yesterday's budget payments to carers have been cut for the second time by €8 per week. People on the blind pension have seen a cut for the second time, again by €8 per week. Widows have seen the same cut and people who have lost their jobs have been also cut for the second time. All these cuts, which are second cuts, will come into effect in approximately three weeks' time, at the beginning of the new year.

Will the Taoiseach explain why the measure on tax exiles, which was introduced last year, will take two years to come into effect whereas people on some of the lowest incomes in the country, including carers, widows, people who have lost their jobs and blind people, have been hit twice in the same period? The pain being inflicted on them comes into effect immediately.

The Taoiseach

I do not have the details of the issue raised by the Deputy but I will certainly follow it up. It is clearly a detailed Finance Bill matter. I want to make the social welfare position clear. We have had to make changes for the full-year effect. There was a time, before we came back into office, that an increase — when there were increases — was not effected until July the following year. We changed that to give a full-year effect.

Unfortunately, as the Deputy knows, with 38% of total spend in the social welfare area, it is not possible to make the correction which must be made in our public finances without reducing our welfare spend. Nevertheless, our welfare spend this year is €3 billion more than what it was in 2008, when the crisis began. In times when there were available funds to improve welfare, we trebled the total spend on social welfare. This was in the past decade at a time when cost of living increases were not 300%. We did this because of national anti-poverty strategy commitments and a range of areas where real social advances were made. In the golden era often referred to by the Labour Party, when it was part of a Government, the cost of living increases were approximately 5.5% per annum and the total welfare increases in the three budgets was just 10%. Members will recall the famous £1.50 increase from one of the Labour Party heroes, Proinsias de Rossa.

Deputy Bernard J. Durkan

He is a long time gone.

The Taoiseach

For 25 years he spoke about social justice and when he got a chance to raise the old age pension, he put it up by 30 bob.

Deputy Seán Sherlock

He never decreased it.

The Taoiseach

We must be straight with people.

Deputy Bernard J. Durkan

The Taoiseach has selective memory.

The Taoiseach

It otherwise would not be possible to make a €15 billion adjustment over the next four years, to which the party is committed, in order to reduce the deficit to 3% of GDP by 2014.

Deputy Pádraic McCormack

The Taoiseach's party caused that problem.

The Taoiseach

It is not possible to make that adjustment——

Deputy Seán Sherlock

The Taoiseach's party excoriated Mr. de Rossa for that action.

An Ceann Comhairle

There should be one speaker at a time.

The Taoiseach

——without including savings and adjustments in the social welfare budget. We must be straight with people.

Deputy Ruairí Quinn

The Taoiseach has never been straight.

The Taoiseach

We are saying we will bring it back to 2007 levels. When the Opposition was last in Government, child benefit was £30.

Deputy Bernard J. Durkan

When will they give up that line?

Deputy Seán Barrett

That was 13 years ago.

The Taoiseach

It is now €140.

Deputy Pádraic McCormack

We are back in 1997.

The Taoiseach

Despite the fact that Governments——

Deputy Seán Barrett

It was 13 years ago.

An Ceann Comhairle

Deputy Barrett, please.

The Taoiseach

——will have to contemplate decisions of this nature, we can retain many of the social gains we have achieved, not only in capital programmes but in current programmes as well. We can retain much of it but we cannot sustain all of it in present circumstances. When circumstances improve——

Deputy Bernard J. Durkan

When the Government leaves.

The Taoiseach

——and we get through this period, people in these positions will be the first to be dealt with.

Deputy Róisín Shortall

The Taoiseach is never straight with us.

The Taoiseach

It is the truth and those are the facts. To contend otherwise would mean not being straight with the people.

Deputy Dermot Ahern

Hear, hear.

Deputy Róisín Shortall

He has never been straight with the people.

Deputy Kathleen Lynch

It would be a first.

Deputy Eamon Gilmore

It was a very interesting reply as it is quite clear the Government and the Taoiseach has not given a second thought to the issue of tax exiles since this time last year, when that budget was introduced. This is a Government presiding over a two-tier society, treating one group of people earning more than €1 million per year and who pay no tax to this State with one set of laws and asking carers, the unemployed, the blind, widows and people in poor circumstances, to contribute and pull together. It stipulates that such people should contribute the same as everybody else.

The reality is the people with high wealth and earnings pay no tax to the State. The Taoiseach introduced a measure last year, and even if such people must contribute, it will be two years before it kicks in. There is no mention of it in this year's budget and the Taoiseach cannot tell me why these people are getting two years to make their contribution. In the same two years, people on the lowest levels of income are having their income cut twice with immediate effect.

In the middle of last night, Deputies Healy-Rae, Lowry, Mattie McGrath and Behan, who made all kinds of noises before the budget came in, voted on obscure financial resolutions in voting for the budget. In the next 24 hours they must come here to cut the money paid to blind people, widows, people with disabilities and others in poor circumstances for the second time over this budgetary period.

An Ceann Comhairle

The Deputy should finish up.

Deputy Eamon Gilmore

At the same time, tax exiles who do not pay income tax to the State have not yet paid a single cent of the amount that was announced last year. The Taoiseach is presiding over two laws, one for tax exiles and another for people dependent on social welfare payments.

The Taoiseach

I do not accept what the Deputy says. All non-residents who have businesses in the State pay taxes in respect of those businesses, whether they are resident or non-resident.

Deputy Eamon Gilmore

What about income tax?

The Taoiseach

The position was the same when a former leader of the Labour Party was Minister for Finance. We have tightened the rules since then. The changes to which the Deputy refers came into play when the Labour Party was last in government. Let us talk about facts. Whether a person is resident or non-resident, he or she must pay tax in respect of any businesses he or she has in the State.

The Deputy asked about the welfare system without notice. If he had put me on notice, I would have a full answer for him but I will get a full answer. It is not honest to say to people that one is committed to making sure we get our public finances in order by 2014 but there will be no cuts in social welfare. We have a prospective Government opposite. One crowd says there will be no increases in income tax while the other crowd says there will be no cuts in social welfare but it will implement the necessary adjustments and policies. That is not a credible or honest position.

Deputy Enda Kenny

The Government did not tell the truth. It is incapable of being truthful.

The Taoiseach

It would create a problem because Deputy Kenny wants to cut €6 billion but does not know how he will do it, while Deputy Gilmore wants to cut €4.5 billion and double income from additional taxes next year to €2.5 billion.

Deputy Enda Kenny

We are not negotiating with the IMF.

The Taoiseach

Deputy Kenny says he will not increase tax next year. What sort of a Government would we have if we were sitting down for a budget debate? Is he talking about this Government? We would have a Government without cohesion, coherence or policies.

Deputy Enda Kenny

The Taoiseach should be straight with people.

The Taoiseach

Behind all the populist talk and all the nice headlines I am sure the Opposition will get by making superficially attractive contrasts, the fact is that Deputies Kenny and Gilmore do not have a policy position that adds up. By next July the country would not be able to access funds to pay 1 cent in social welfare payments after that date if we had the likes of the Deputies in power. That is the reality.

Deputy Emmet Stagg

The Taoiseach and the crowd behind him created the mess we are in.

The Taoiseach

The more people talk about the real issues, the more they will see who is prepared to take decisions to ensure the country has sufficient funds to look after the most vulnerable. Perhaps people will listen to them rather that the incoherent nonsense I have been hearing this morning.

(Interruptions).

An Ceann Comhairle

We must move on to the Financial Resolutions 2011.

Deputy Róisín Shortall

On a point of order, we have not yet had sight of the Social Welfare Bill which is scheduled to be taken at 6.30 p.m. When are we likely to receive the legislation?

The Taoiseach

I understand copies have been placed in Members' pigeon holes.