Financial Resolution No. 34: General (Resumed)

Debate resumed on the following motion:

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

—(The Taoiseach).

Deputy Simon Coveney

I am pleased to have some minutes to comment on the budget which was announced yesterday. The budget needed to try to achieve two aims. First, it had to make a serious impact on reducing our deficit problem. Fine Gael agrees that the figure required for that needed to be approximately €6 billion in the first year. However, the budget had to try to achieve that in as fair a way as possible. There is no fairness in making cutbacks and tax increases amounting to approximately €6 billion. There is no fairness in what is happening because essentially we are creating a debt for our children and grandchildren to pay because of our inadequacies as a State and the mistakes we made. If we are to secure funding for next year to put Ireland on a path to recovery, there is a need for a very serious adjustment in the way the State functions in order to close the gap between what we earn and what we spend.

Second, and perhaps more important at this stage after two very tough budgets, there needed to be a sense of hope and direction. If we are asking people to endure sacrifice and pain, reductions in income and increases in taxes, there must be another strategy in parallel to the deficit reduction strategy, which is about creating jobs and growth. As I listened to the Minister, Deputy Batt O'Keeffe, I was not inspired by what he had to say, namely, that we would continue to give money to our existing agencies in the hope that they will perform better than they did in the past. That is no longer good enough. We need to change the way we do things, for example, the way in which the public sector operates. We need to assess, examine and benchmark the way in which our agencies work. If they are not working we must change or abolish them. It is not only about spending money.

However, when Fianna Fáil talks about budgetary strategy money is all it seems to talk about. We are either to spend more or to spend less but there is nothing about addressing the vehicle for delivery of the service, the way in which we structure the State and politics. Political reform is about reducing a Minister's or the Taoiseach's salary instead of addressing the way in which we make decisions in this House and the way in which Opposition parties are given resources to hold the Government to account in a proper fashion. We need to ask whether we need both a Seanad and a Dáil to pass legislation effectively and whether we have an electoral system that elects Deputies who are fit for national legislative work as opposed to looking after local issues within constituencies. None of those issues are even mentioned in this budget, never mind addressed.

In terms of the cutbacks made, there is neither justice nor the level of fairness people should expect. When one looks at the exceptions made to social welfare cutbacks one sees these were political decisions. There was a great deal of pressure by Fianna Fáil backbenchers for the State pension not to be cut and therefore it was not cut. My party agrees with that. However, it seems there was not sufficient political lobbying to protect carers, blind people, widows and the disabled. A decision was not taken to prioritise those areas in a political way. That is not acceptable.

A number of very vulnerable sectors rely on State-sponsored income to support their livelihoods and the Government should have protected those other vulnerable areas. It could have done so even in the context of this budget. My party priced the protection of widows, blind people, carers and the disabled as costing in the region €96 million. We also devised a plan of alternatives to make up that difference and published it last week. In typical fashion, the Government decided to ignore it.

In its four year strategy Fine Gael chose not to target child benefit. However, if the decision was taken to target that benefit it was immoral to cut the child supports of a person on social welfare to the same extent as the supports of a person who is earning €100,000, €150,000, €200,000 or €250,000 per year. If child benefit is to be cut it should be cut from people who can afford to do without it, not from those on the lowest incomes. There is no fairness or equity in the budget when family supports for children are being cut for families who are on €15,000 to €25,000. The cut for them is to be made to the same actual extent, never mind the percentage, as the cut to families where the parents are millionaires. That says a lot about the moral compass of Fianna Fáil.

I shall make a couple of points in regard to my area of interest, transport. The Government has made a big play of cutting from €10 to €3, per person per journey, the travel tax which we charge people for leaving Irish airports. The travel tax never made sense. It does not make sense to tax a person for the privilege of coming to Ireland when we are trying to attract millions of people here to spend their money, set up businesses, take holidays, stay in our hotels, eat in our restaurants and so on. We are taxing people for the privilege of coming here to spend their money. That makes no sense at €10 per passenger and it makes no sense at €3 per passenger, which will raise a miserable €30 million next year. If something does not make sense, we must get rid of it and find another way of raising money or cutting expenditure that makes sense. If we are serious about the tourism industry in Ireland, we need to make Ireland easy and cheap to access through our airports, whether regional or national. We do not need to charge or tax people for the privilege of coming here.

Deputy Deirdre Clune

Today, we see the devil of this budget is in the detail. As we examine it further, it becomes more apparent how unfair it is. I refer in particular to the tax increases on lower and middle income working families, who have been dealt an unfair hand. The budget will hurt them and reduce their spending power, and it will suck money out of the economy that these people would have spent on small businesses, services in their communities and essentials for themselves. That money will not now be available to them, which has a negative effect on the economy.

The Government had forecast in the four year plan that 2011 would see a 1.75% growth rate but the budget undermines that prediction. Even before the Minister announced the budget, the European Commission revised that growth projection to 0.9% and the money the Government has taken out of the economy in terms of personal taxation will further reduce the growth rate. The combination of child benefit cuts, reduced tax credits, paying a higher rate of tax at an earlier stage and the universal social charge that now starts from an income of €4,000 will definitely impact more on low and middle income families than on higher earners. One need only look at all the tables and examples on offer to know that this position does not make sense.

With regard to social welfare, the €8 cut in widows' pension, invalidity pension, blind persons' pension and the carer's benefit does not make sense. These are people who cannot work and who may be in charge of young children. This is not the area the Government should tackle. Widows and carers are generally female and have not been able to add to their employment value because they are out of the workforce, so they are particularly hit by the €8 cut. The focus should have been on people who are fit and able to work. The grey area between the income from welfare and the income from work should have been tackled. However, the emphasis was on those who cannot work — on widows, those on invalidity benefit, blind persons and carers — which is unfair.

In the whole area of social welfare, there is no mention of tackling fraud, despite the recent "Prime Time" programme which estimated that between one in ten and one in seven social welfare benefits are fraudulently claimed. This would lead to a saving of €2.2 billion to €3 billion per year if it was tackled. A simple proposal such as the setting up of a fraud hotline could have been a step towards tackling this area. As part of our Reinventing Government proposal, Fine Gael has suggested a one-stop-shop to encourage rationalisation across all State sectors, including in regard to farm related payments, supplementary welfare allowance, medical cards, higher education, legal aid services and all such areas where there could be a means assessment provision. This could be done simply in a one-stop-shop. The Government could have done much in yesterday's budget instead of just focusing on the easy prey, which was its approach.

It was a disappointing budget in that it did not provide any sort of stimulus. A simple proposal such as reducing the lower rate of VAT, increasing DIRT, ensuring accredited capital allowances would go from eight years to three years and introducing a measure in regard to software purchases would have worked towards getting the economy moving. However, there was no imagination and no emphasis on ensuring money stays in the economy so the people can spend and contribute to growth.

Deputy Phil Hogan

There is no doubt the lower and middle income groups have suffered greatly and are now the new vulnerable sections of our community arising from the type of recklessness that has been brought forward by the Minister for Finance in the budget yesterday. The vulnerable have also taken the brunt of serious fiscal retrenchment, including carers, people on blind pensions, widows and disabled persons, who have all taken a hit. So much for the protection of the vulnerable. These people did not cause the problems of the country. They worked their way up along the line in order to fend for their families and their children. They worked hard and are now paying for the financial irresponsibility and policies pursued particularly since 2002 by Fianna Fáil-led Governments.

It seems that in the Department of the Environment, Heritage and Local Government, the area I know best, Fianna Fáil has quickly taken its revenge on the Minister, Deputy Gormley, who, because of his sudden rush of blood to the head in calling a snap election, is now to suffer the largest cut of 27% in his Department's Estimate. This means that vital services, such as fire services, national parks and wildlife services and social housing, will suffer a massive cut of €300 million next year on the back of a huge cut this year. This effectively consigns a large number of our people to social housing lists for far greater lengths of time than should have been the case. No imagination is being applied to ensure we have the demand and supply of houses in the marketplace married with the social housing lists. Great attempts will have to be made in this regard because no direct funding is available from the Department of the Environment, Heritage and Local Government. Effectively, the Minister, Deputy Gormley's legacy in power after three and half years is that of the emasculation of the services of his Department, the considerable reduction of funding in regard to housing and local government and the virtual elimination and stagnation of the Department itself.

The other area about which I feel strongly is the failure of the Minister for Finance to recognise the serious hardship suffered by people who have escalating mortgages and reducing incomes, and who are, therefore, under huge income squeeze. There was no recognition of this in terms of increasing the mortgage interest relief by 30%, as advocated by Fine Gael. The alternative proposals put forward by Fine Gael would mean such people would also get some respite from having no income tax cuts in 2011. Instead, lower income earners are now suffering the institutionalisation of the income and health levies under the universal charge that was effectively legalised and made permanent by the Government yesterday. This charge will apply from an income of €4,000 upwards, and the income and health levies are now effectively permanent in the system.

The Government response to the crisis which is upon us with the advent of the IMF and EU is to hit the lower and middle income groups, to emasculate the services of local government and to introduce more stealth taxes and charges at local level. Its main priority in Dublin is to bring forward a directly elected mayor, which would create more charges for business and customers. We now know the Fianna Fáil-Green priority in local government is a directly elected mayor, another vanity project of the Greens. Unfortunately, the Minister, Deputy Gormley, has been let away with this but, equally, he has been punished by Fianna Fáil Ministers around the Cabinet table for the fact he called a snap election unilaterally some weeks ago.

Deputy Jimmy Deenihan

I wish to refer to various comments made by the Minister for Finance yesterday on "Prime Time" and also by other Government speakers with regard to Fine Gael's attitude to the public service. Fine Gael takes great pride in the public service. It set it up. Cumann na nGaedheal, when in power, set up the public service appointments commission that ensured continuity with the previous Administration. It ensured the best people were appointed and that we had the best civil and public servants in the world. Public servants serve this country very well.

My party set up the Local Appointments Commission. We have a very proud history in this respect. All we want is to see reform so we can save money, thus ensuring an efficient public service that will be an engine of growth and that waste will be eliminated. We start with ourselves. Our leader has proposed to abolish the Seanad. There is a rumour circulating that a referendum on this will be held by Fianna Fáil at the same time as the general election. Our leader has proposed to reduce the number of Members in the Dáil to 130.

The national recovery plan confirms that the patent royalty exemption will be scrapped. This has major implications at a time where we are trying to create an enterprising economy. The exemption is one of the drivers of such an economy. I realise this because one company in Kerry has used it very effectively. It has been a significant driver of innovation and growth within many Irish companies and for foreign inventors resident in Ireland. The exemption scheme was very workable and drove both innovation and sales.

If a company developed a product and gained patent royalties as a result of the sale of that product, it meant the investors could receive a share of the royalties tax free. The abolition was signalled in the four year plan and the scheme has been abolished since 24 November.

A report on the research and development tax credit scheme, commissioned by the Department of Finance in 2007 and produced by Goodbody Economic Consultants, clearly states:

The Irish R&D tax credit scheme is less generous than that of some of Ireland's European competitors. In this context, the Patent Royalty Tax Exemption scheme must be regarded as substantial component of Irish tax-based support for R&D and one which helps raise the level of R&D tax-based supports in Ireland to that available from such supports across the EU.

The provision allowed for a payment of a dividend tax-free to the inventor subject to a maximum limit. The maximum limit was curtailed significantly in recent years. In addition to the exemption being important to indigenous companies, it was a significant reason some inventors chose to reside and pay tax in Ireland. It is for this reason that many research and development companies decided to come to Ireland.

Malta recently set up a structure similar to ours and introduced similar provisions. Other countries considered doing so also. For a saving of €20 million in 2011 and €15 million in a full year, we are now scrapping one of the major incentives for inventors to establish in Ireland. We talk about creativity and entrepreneurship, yet we kill one aspect of them in one fell swoop. This is ridiculous and the matter should be revisited. The incentive helped a company in County Kerry to do very well.

There will be major trouble over the adjustment to the section 23 relief. The decision in this regard will be contested in the courts because people who entered agreements under the section in good faith — I do not refer to the developers but to investors — will be badly stung. They budgeted for a period of ten years. The relief is being discontinued and this will mean many of the investors will go bankrupt. The decision will be contested in court. I am convinced the Minister will be hearing more about this. I am signalling this matter to the official present from the Department of Finance because it has major implications.

Deputy Seán Barrett

Let me quote an e-mail by a self-employed constituent of mine. It was also sent to my Government colleagues in my constituency:

As a self-employed constituent of yours can you please tell me the logic of increasing PRSI payments from the self-employed when the benefits we are entitled to are nil?

Add in reduced pension contributions relief, a new universal social charge, end of the PRSI ceiling, reductions in tax bands and credit plus increased security tax and I think you have got me in just about every way possible. And that is before I have to put up the VAT I charge my reducing band of clients!

Enterprise culture? You must be joking.

That sums up this budget. The individual is self-employed and summed up in one short e-mail what it is like to be starting one's own business in this country. One starts with a noose around one's neck.

I was so disappointed by the con trick carried out in respect of the new universal social charge. I believed the Government would reform the whole PRSI system so as to specify clearly what one gets from one's contribution. Instead, the health levy and the income levy were added together permanently and put under a new title. What a con trick. At the same time, we have done nothing to reform the PRSI system, especially for those who should have a separate charge for a fixed rate of old-age pension. Everybody should contribute and there should be no non-contributory benefit. Everybody who starts work should contribute towards a fixed amount. In such circumstances, one could specify the health services and other benefits one would receive. Instead, we engage in another money-raising enterprise.

With regard to my portfolio of foreign affairs, I am extremely upset over the cut of €35 million to the overseas development aid budget. We signed up to a target of 0.7% of GDP, to be achieved by 2015. For the past two years, the Government has cut the budget. Some €35 million has been cut on those who are hungry.

The Government also made a big issue of signing up to the hunger target of 20%. The Minister for Foreign Affairs attended a UN meeting and sat beside the Secretary of State of the United States to sign up to the relevant agreement, yet the first effort to achieve this target resulted in the cutting of the budget by €35 million. If another couple of cent had been added to the price of a bottle of wine that same amount of money would have been raised.

There was a proposal to increase betting duty paid by bookmakers from 1% to 2%. This has been postponed. I regret this but note that legislation has been introduced to tax offshore operations that are not contributing anything by way of betting tax. I ask the Minister to increase the betting duty in shops from 1% to 2%. At present, a 1% tax is levied on the bookmaker. The easiest approach would be to levy 1% on the punter. One cent in the euro would produce an extra €38 million approximately for the industry. All betting operations, be they on-line or in exchanges, should be licensed. I hope the legislation will be introduced very shortly.

Let me outline the importance of the betting industry. Over 2,000 jobs were lost in the past 18 months as a result of the lack of funding in the industry. The Minister of State at the Department of Finance, Deputy Mansergh, will be well aware of this because he represents a constituency with a very significant racing and bloodstock industry. Most racecourses are facing financial problems. The number of foals produced has dropped from 12,500 to below 9,000.

For every three foals born there is one full-time job. Horse trainers are running into difficulties and the prize money for owners has dropped considerably. All race course developments have halted. We have an opportunity now for more employment and having jobs in rural communities throughout this country. I ask that the Government do something in the finance Bill to increase the levy from 1% to 2%. No punter would object to having to pay €1 in every hundred for placing bets. It will result in jobs in rural Ireland. It will restore the bloodstock and greyhound industries to their rightful places but most of all it will provide jobs in this country, particularly in areas where it is difficult to get employment. It will also retain our image as the leading bloodstock country in the world.

Minister for Community, Equality and Gaeltacht Affairs (Deputy Pat Carey)

I wish to share my time with the Minister of State, Deputy Martin Mansergh, and the Minister of State, Deputy Mary Alexandra White.

An Leas-Cheann Comhairle

That is agreed.

Deputy Pat Carey

The Leas-Cheann Comhairle might let me know when ten minutes has elapsed.

An Leas-Cheann Comhairle

I will.

Deputy Pat Carey

Táim buíoch as an deis labhairt faoin ábhar tábhachtach seo. Agus sinn ag tabhairt aghaidh ar na dúshláin éagsúla atá romhainn, thar aon rud eile ní foláir dúinn dóchas a bheith againn. Ní féidir dóchas a bheith againn gan cinnteacht a bheith againn. Is dóigh liom go dtugann an buiséad seo an chinnteacht sin dúinn.

This budget faces up to the reality of the current economic situation. A vote for this budget was a vote to ensure that we have the money to pay for our vital public services in areas such as health, social welfare and education. These are the facts, and no amount of wishful thinking or political posturing will alter those facts.

As Minister for Community, Equality and Gaeltacht Affairs my primary concern in budget 2011, and that of my Ministers of State, was to make every effort to ensure that the daily front line services provided with funding from my Department were protected, especially those focused on the needs of the most socially deprived communities. This reflects my strong belief that the development of real and sustainable communities is vital to the social and economic fabric of our society. Every saving that can be made from cutting down on overheads will be pursued to ensure that the urban, rural, Gaeltacht and island communities we serve retain, to the greatest extent possible, the services that have been developed in partnership with them over the years.

Regarding the community and voluntary sector, the overall adjustment of 16% will apply to spending in the community and voluntary area. My Department will continue to prioritise front line services in the coming year. A total of €80 million has been provided to support the development of communities in this year's budget.

I want to pay tribute to all of those people the length and breadth of the country who not just in the past two weeks, but day in and day out, have worked might and main to make sure their communities are better and stronger. It was welcome to see the activities of communities, particularly in the past two weeks of very difficult weather conditions. It was encouraging to see those organisations that received modest enough funding from our Department contribute hugely to the great community effort that remains the hallmark of Irish society.

In order to protect the invaluable work being done at the front line by community and voluntary groups, my Department will begin a formal process of consultation with the sector in the new year. That is something I promised we would do and it is being done in consultation with them, and indeed at their instigation. The purpose of this structured dialogue will be to ensure that the impacts of any budgetary adjustments to the services provided by the sector are minimised. Far more important than the minimising of the budgetary cuts is that the shared objectives of all the partners in the community development process can be realised. It has happened successfully in other parts of Europe and I believe it can be done here.

The 2011 allocation of €80 million will continue to facilitate supports for communities through the local and community development programme, volunteering initiatives and the funding scheme for national community and voluntary organisations. I know the community and voluntary sector can continue to play a pivotal role in developing our communities and in protecting the most vulnerable members of our society.

In the past year there has been considerable debate among the community development practitioners in the country about the best way forward. I believe the new integration process is bedding down well. I know it may require some further time to bed in fully and it is for that reason some additional time may be required in order for that to happen.

A new funding scheme for the key community and voluntary organisations will be advertised shortly. The three year scheme that is ending on 31 December was a very successful one. It has been evaluated and calls for proposals for funding from that particular budget head will be invited shortly and I am aware there will be the usual interesting mix of organisations who will be coming forward. On that note, I will be encouraging the greatest possible level of collaboration and co-operation between those organisations. It is happening already but I want that to continue and develop even further.

The seniors alert scheme, which supports older people to continue to live securely in their homes, will continue in 2011 following its successful introduction earlier this year. We will be making €2.4 million available next year to assist groups to purchase and install safety and security equipment in the homes of our older citizens. That is a larger figure than was made available this year.

A total of €33.8 million is being made available in the context of the National Drugs Strategy 2009-16. Of that, €32.8 million is current expenditure, with the remaining €1 million available for capital projects. I made it clear when I was appointed to this Department that I would seek to protect the resources devoted to supporting drugs task forces and delivering the national drugs strategy. The reduction in this area will be just over 1% this year. I am aware of the pressures faced by the sector given the level of reductions in recent years and I also recognise the very significant expansion of services during 2010. I want to acknowledge and thank all of those who have contributed to that particular process in the past year, certainly since I was appointed. There is a remarkable change in the level and diversity of service provision in the entire drugs task force area, and I believe that will continue. Next year we will be aligning the drugs strategy with a new alcohol misuse strategy, and I look forward to starting the implementation of that at the beginning of next year.

I am confident that the protection given in budget 2011 to the 480 community-based drugs projects funded through my Department will allow their work to continue in the next year. The Family Support Agency and the family resource centres, which are doing invaluable work the length and breadth of this country, will also continue with their programmes. The counselling and bereavement programmes which have been so successful and which are in such great demand will continue. They will be at a slightly reduced rate but they will continue to be available.

A total of €62 million is being allocated to the Leader programme in budget 2011. That is a significant increase on the original €40 million allocated in 2010. That will ensure that this programme continues to transform the social and economic fabric of rural Ireland. It clearly shows the Government's ongoing commitment to rural Ireland and the vital part it plays in the social and economic life of our country.

I had the pleasure of working with the 36 local action groups who deliver the rural development programme across the country. They have been very successful in disbursing significant financial resources to rural communities. It was a pleasure to be able to ask for a Supplementary Estimate of €8 million to be made available to them in recent weeks. The spend for 2010 has been increased to €48 million. I compliment the work those organisations are doing.

The projects funded through the programme directly address issues that impact on the social and economic fabric of rural communities, including the creation of employment and enterprise. It is expected that over the period of the programme 12,000 sustainable jobs will have been created as well as a significant number of spin off jobs. The way things are going at the moment I have no doubt that the figure of 12,000 will be exceeded. Many of the groups are already providing valuable training opportunities in rural communities to increase skill levels to help the building of sustainable communities in rural Ireland. The programme also continues to fund the provision of the community halls and meeting places that are so vital to the social cohesion of rural Ireland.

Bhí an cur chuige céanna againn maidir le cúrsaí Gaeilge agus Gaeltachta. Nílim ag séanadh go mbeidh na ciorruithe dian, ach déanfar na seirbhísí is tábhachtaí — na seirbhísí duine le duine, nó túslíne — a chosaint. Mar shampla, tá an cistiú a chuirtear ar fáil chun tacú le seirbhísí ríthábhachtacha do phobail na n-oileáin á choimeád ag an leibhéal reatha de €5.7 milliún. Déanfaidh an cinneadh seo cosaint ar na seirbhísí farantóireachta atá riachtanach do phobail na n-oileáin. Ní bheidh ach laghdú beag de 50 cent ar an íocaíocht a fhaigheann mná tí na Gaeltachta faoi scéim na bhfoghlaimeoirí Gaeilge. Leanfaimid ag déanamh forbairt ar na coláistí samhraidh, a bhfuil an oiread sin tábhacht ag baint leo. Leanfar chomh maith leis na campaí samhraidh agus scéim na gcúntóirí teanga. Beidh na scéimeanna seo riachtanach agus sinn ag féachaint chun cinn ar fheidhmiú an straitéis 20 bliain don Ghaeilge, a fhoilseofar go luath. Leanfar freisin leis an bhforbairt ar ché Chill Rónáin ar Inis Mór. Leanfar le forbairt ionaid pobail agus teaghlaigh ar an gCeathrú Rua i gConamara, i mBaile na Finne i nDún na nGall agus ar an bhFeothanach i gCiarraí.

Cuirfear cistiú os cionn €40 milliún ar fáil don nGaeltacht agus do na hoileáin i 2011, €19.6 milliún d'Údarás na Gaeltachta san áireamh. Is fíor nach mbeidh an méid céanna acmhainní is a bhí ar fáil sa ghearrthréimhse, go háirithe ó thaobh airgead caipitil de. Mar Aire, tá mé agus tá an Rialtas bródúil as an infheistíocht shuntasach atá déanta agus atá fós á dhéanamh againn sa Ghaeltacht agus sa Ghaeilge. Mar a dúirt mé, tá laghdú tagtha ar mhaoiniú sa ghearrthréimhse ach níl aon mhaolú tagtha ar dháiríreacht an Rialtais maidir lenar sprioc líon na gcainteoirí laethúla Gaeilge a mhéadú ó 83,000 faoi láthair go 250,000 faoi cheann 20 bliain. Níl aon amhras orm ach gur féidir linn an sprioc sin a bhaint amach. Beidh impleachtaí ag an mbuiséad seo do chách. Ní chóir dúinn géilleadh don éadóchas. Níl an cath caillte. Tá mé cinnte gur féidir linn teacht slán ó na fadhbanna atá againn faoi láthair mar thír níos láidre agus níos cothroime.

Minister of State at the Department of Community, Equality and Gaeltacht Affairs (Deputy Mary Alexandra White)

I am delighted to be able to speak on this year's budget and to talk about the budgetary allocations for which I have responsibility. I also want to speak briefly about my party's input into the budget.

There were no easy decisions, as everybody in this House knows. Every choice was made with acute awareness of how difficult these decisions will be for everybody in the country and they were taken with a heavy heart but with a full commitment to prioritising those most in need.

In the areas for which I have responsibility — equality, integration and human rights — I have worked hard to protect the necessary funding for the equality and integration framework. Our priority was to protect funding for the equality and rights bodies and I believe that the 2011 allocations — over €3 million for the Equality Authority, €1.46 million for the Irish Human Rights Commission and the 9% increase for the Equality Tribunal to €2.5 million — will ensure that these really important bodies can carry on their core work in promoting equality, combating discrimination and promoting, and, indeed, protecting, human rights. Indeed, last week I authorised €70,000 in funding from the Office of the Minister for Integration to the Equality Authority for a workplace diversity programme which the authority runs in conjunction with the social partners.

I have supported the equality and rights bodies' initiatives since I became Minister of State, be it the Equality Authority in launching a recent report into homophobic bullying, the Irish Human Rights Commission inquiry into the John Paul Centre in Galway, or the diligent work of the Equality Tribunal, in progressing cases of alleged discrimination and in conducting their work effectively at a time of increased cases over the past number of years. These are valued bodies, they do good work and I am proud of their ongoing commitment to a more equal Ireland.

The Office of the Minister for Integration will see a reduction, and this was a difficult decision. However, it will receive €4.18 million and the European Refugee Fund will receive €1.58 million. It has been a good year at the Office of the Minister for Integration with the establishment of the Ministerial Council on Integration, which has provided a forum for migrants to speak directly to me about how they feel about living and working in Ireland and any perceived discrimination or racism in our country. All four initial fora have now met and this institution will be a feature of the budget next year and in the years to follow.

On a good news story, next year I will be funding a migrant media interns project in which two migrants will be given six months' placement with local or regional newspapers to help local media document the experiences, issues and perspectives facing the migrant community in our country.

There was a positive response from local authorities to calls for funding proposals and I received proposals from local authorities which had not applied for funding in previous years. I am confident that local authorities, national organisations, sporting bodies and anti-racism initiatives which were funded this year will be adequately supported again in 2011.

I am pleased I have been able to protect funding for gender equality and Traveller support projects. My Department will still be providing over €0.5 million to national women's organisations. I pay tribute here to the National Women's Council of Ireland and Cúram for the voice they provide in progressing the agenda of gender equality in Ireland.

Recently, I met the Norwegian Minister for Defence, Ms Greta Faremo, whose reflections on gender equality were that experience proves that gender equality and full participation of women is a precondition for growth, development and peace and those countries who neglect that need pay for it by slowing down on their path to progress.

Deputy Mary Alexandra White

These are small steps, but they are necessary steps. I am reminded of my old history teacher in the Ursuline convent in Waterford, the long-since deceased Angela McGrath. When we were struggling boarding students she used to quote Winston Churchill to us and she used to say, "never never never never ever give up". We on this side of the House will not give up, to get things right for our country.

Deputy Seymour Crawford

Just take one step; that is the important thing.

Minister of State at the Department of Finance (Deputy Martin Mansergh)

I will begin with a comment one would not normally make, but I think the convincing passage of the budget last night was very helpful for confidence wider afield in what we have to do to face our current economic and financial situation. It is encouraging that a marginally larger majority than might have been expected did recognise the realities facing this country and voted accordingly.

The aim of the budget was to be fair and to do the least possible prejudice either to growth prospects in the economy or to living standards, particularly of less well off citizens. Obviously, in the current situation if one is being realistic stimulus measures have to be extremely well targeted because there simply is not the large-scale funding for conventional forms of stimulus. Unfortunately, it has not been demonstrated so far in this debate that there was somehow an easier way.

We cannot expect, as a letter writer living in Germany suggested to The Irish Times on 1 December, to go on enjoying higher living standards on borrowings than exist throughout Europe. He referred particularly to the remuneration received by the professions in this country. De Valera famously said in 1932 that no man should earn more than £1,000 each year. Since the budget, the Taoiseach, President and judges will be on take-home pay of scarcely more than €100,000 a year. This should be extended not only to the semi-State sector, which has been decided in principle, but to all professions to the extent they are paid by the State. I suspect very few of the electorate realise that the take-home pay of Deputies, who are perceived as being very well paid, will be only just above €50,000 a year.

Social welfare payments are still well above the real levels they were until the very recent past. Unfortunately, we had overshoots in all directions in the boom years and these have to be corrected. It is painful for everyone concerned because practically everybody will have become accustomed relatively quickly to the higher living standards and an adjustment downwards is never very easy but we have to do it if we are to be able to continue to borrow over the coming years until we correct our deficit to maintain the basic services described very ably a few moments ago by my colleagues on my right and left, the Minister, Deputy Pat Carey, and the Minister of State, Deputy Mary White.

Since I came into office in 2008, the Office of Public Works has taken a 41% cut in our gross expenditure, or a reduction from €681 million to €401 million. I am proud rather than ashamed that we have been able to make that contribution and I think we have managed to maintain most of our vital services, not always without difficulty. The services we provide have been extended. The formation of the national procurement service has a dual role to rationalise procurement and implement some of the savings decided by the Government through more efficiency and also to make the process more user-friendly through an outreach process, particularly to our small and medium enterprises. At the same time, it is unrealistic to think that procurement can be run on the basis of a pre-1958 economy — a type of protected Sinn Féin style economy. Small and medium enterprises have to be competitive and in terms of procurement they must also seek out contracts abroad.

With regard to flood risk management, in the aftermath of the November 2009 floods which hit the country, the Government allocated €50 million for capital spending on flood risk management activities for 2010. This allowed us to extend the number of capital work schemes already targeted and under way throughout the country in places such as Mallow, Fermoy, Clonmel, Ennis, Mornington in County Meath, Waterford City, Carlow Town, Johnstown in County Kildare and along the Dodder in Dublin. As a direct result of last November's floods, the OPW has commenced studies in Bandon, the lower area in County Cork and Claregalway in County Galway as well as funding a study of Skibbereen undertaken by Cork County Council and detailed design for a scheme on the Dunkellin River in Galway. We will also commence design work in areas including Carrigaline, Midleton and Ballymakeera in the next two months. Some of these will develop into full-scale schemes.

The 2010 allocation also allowed the OPW to increase funding to local authorities under the minor works programme. This programme, which I introduced in August 2009, targets minor or small-scale flood defence works undertaken directly by local authorities. Under this programme, a total of €16 million has been approved this year for local authorities for works and studies including minor works executed by the OPW, and further applications for funding are being received and assessed on an ongoing and rolling basis. In total, approximately 170 small-scale projects in 23 counties have been approved for funding this year. In allocating funds, my office continues to concentrate on areas where there is a substantial risk to human life, property and infrastructure. In addition to capital and minor works, the OPW is committed to the programme for the production and completion of catchment flood risk assessment and management plans, CFRAM, and associated flood mapping for all national catchments. The Lee CFRAM has already been published but it will be extended. It will mean additional targets for the OPW being included in multi-annual budgets as various recommendations arise in the coming years.

I am pleased to state the allocation in the 2011 budget for capital flood relief work is €45 million including carryover. This reflects the very keen and competitive tender prices currently available in the market and is sufficient to enable the OPW to continue with its planned flood risk management programme to the benefit of many communities and businesses throughout the country. I am very proud that in the past couple of years we have been able to ramp up substantially our flood protection and defence programme, but this will need to be carried on for at least the next ten or 15 years by our various successors in Government.

Deputy Pat Rabbitte

I wish to share my time with Deputies Michael D. Higgins and Kathleen Lynch.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Deputy Pat Rabbitte

I entered the Chamber during the speech being made by the Minister of State, Deputy Mary White, and feel bound to say that there reaches a stage where, if language has no meaning, debate is very difficult. The Minister of State's main claim for her time in Government and for the budget is how they protect education. If there is one thing this budget does not do, it is that it does not protect education. I am amazed that anybody on the Government side of the House could make such a claim. Some 1,200 teachers are to be taken out of the system, Youthreach is to be cut, fees are to be implemented for post leaving certificate students, fees are to be introduced for school transport and an unspecified number of psychologists are to be removed from the system. The Minister of State suggests that is protecting education.

However, it is very sad to see what has happened to education in an economy that needs to invest in education.

I have expressed the view previously that when the history of this remarkable period is written, the Opposition will be indicted for having made an error with regard to the motion of no confidence that was to be moved a few weeks ago, when the drift seemed to be demoralising the people and there appeared to be no progress. The reason the Opposition refused to proceed with the motion was that we were told a four year plan that was critical to the future was about to be published, that the IMF was at the door and it was necessary to bring in a budget. So it has transpired. Yesterday, we listened to the Minister for Finance and to his little history lesson yesterday, which was entirely at variance with the facts, to such an extent that one doubts the truth of how all of this period has been presented.

First, the Minister told us that things were turning around until some malign influence got its hands on the economy during the month of August and that as a result things started to whirl out of control. The Minister arrived at the Fianna Fáil think tank and, for the first time, said the €3 billion settled on looked like it would not be enough. There was uproar as a result, but before one could say Jack Robinson, a sum of €6 billion became the matter of fact new orthodoxy that had to be taken out of the system. Anybody who thinks that in our small economy €6 billion is somehow an abstract figure will know once he has read the budget what exactly it means for ordinary citizens the length and breadth of the country, both employed and unemployed. The ESRI expressed its open disquiet about what removing €6 billion will do to our economy and I am reliably informed that the IMF was of the view that €4.5 billion would have been more appropriate.

What happened is that the €6 billion was the last throw of the dice in order to fend off the markets. That is why the figure of €6 billion was brought forward. As far as the Government was concerned, if the IMF was to come into Ireland, it was not to happen until the new Government was ensconced, but then Chancellor Merkel made her statement at Deauville and that brought everything forward by a number of months. The result is that the IMF came in anyway and the four year plan was published and we were told it was a great work of creativity by the Government. Frankly, I do not believe any of that. I believe the plan was being worked on by Brussels and that the preparations were being made for the intervention of outside assistance long before that. It went on for weeks. This four year plan is a creation of our new masters and the Government acquiesced in it. Now we are stuck with it. The Government had put the €6 billion into the public arena and could not pull it back. We are now stuck with the €6 billion, notwithstanding the view of the IMF.

What happened then was that the ECB called a halt because it had enough of the voracious appetite of our banks for liquidity, based on borrowings that no longer had collateral backup that was acceptable to it. The result, notwithstanding the attempts by the Government to stave off the day until a new Government came into office, was that the IMF came into the regime, in a fitting final chapter to the lifetime of the Government. It is like the revelation by the Minister, Deputy Gormley, under pressure last Saturday. I find it beyond belief that since 29 September 2008, Minister after Minister on that side of the House has lied about the circumstances in which the guarantee was arrived at. The Minister, Deputy Gormley, said that it was decided at a Cabinet meeting on the Sunday and that the Taoiseach and Minister for Finance agreed the details on Monday night. The Taoiseach said it was discussed on the margins of a Cabinet meeting on Sunday and was decided on the Monday night. Which was it? Does the Government any longer know what the truth is?

If we could be misled about something as big as the guarantee, how can ——

Minister for Tourism, Culture and Sport (Deputy Mary Hanafin)

On a point of order, I presume that if somebody is being accused of telling a lie, the person is, therefore, a liar. That term is not allowed to be used in the House and I ask for it to be withdrawn.

An Leas-Cheann Comhairle

The precedent refers to if an individual is accused and I was checking that. I did not hear anybody being individually accused of telling lies. I heard "Ministers" being accused.

Deputy Mary Hanafin

I beg the Leas-Cheann Comhairle's pardon, but the Deputy referred to the Ministers over there on the bench, which directly accuses those Ministers sitting here on the bench.

An Leas-Cheann Comhairle

Allow the Chair to explain. It is a fair point. The Deputy knows that he is not allowed in the House to accuse identifiable people of lying.

Deputy Kathleen Lynch

It is a bit rich to get sensitive about being called a liar.

Deputy Pat Rabbitte

I withdraw the imputation against any individual as I do not want it to distract from the point I am making, which is that for two years the Ministers over there, including Minister Hanafin, in whose mouth butter would not melt, told us that the bankers arrived at the gates of Government Buildings after the markets closed on Monday and the two Brians were railroaded into the decision that was made. Now we have the Minister for the Environment, Heritage and Local Government, Deputy John Gormley, telling us the decision was made the previous day at a Cabinet meeting. One can call that "untruths", "misleading the House" or whatever one likes, but it is what happened.

The result — this is why there is grave concern about what has happened — is that what has happened has put the successor Government, whatever its composition, into a straitjacket. For example, if one looks at the framing of the Financial Emergency Measures in the Public Interest (No. 2) Bill which is to be taken tomorrow, it makes this quite plain in its citations. The Government is bound by the agreement entered into with the EU, IMF and the European Financial Stability Facility, just like its successors will be bound by it notwithstanding the fact that it did not have the guts to bring it before the House for a vote of approval.

As the limited time left to me does not permit me to speak about the treatment of carers and widows, I will confine my remarks to the Taoiseach's criticism and misrepresentation of the Labour Party's position on income tax. In misrepresenting our position, he conveniently forgot to tell the House that our income tax proposals would have cost an additional €870 million in a full year. The Government's proposals will cost €1.2 billion in a full year.

I suspect the Taoiseach is well aware that he completely misrepresented our position, even if one ignores the universal social charge. That charge will discriminate against the lowest earners in our society, who are already hit by the minimum wage. The 6% of people being dragged into the tax net for the first time will be subject to the universal social charge once they earn more than €4,000 per annum. The charge also discriminates in favour of the highest earners.

Deputy Michael D. Higgins

I welcome the opportunity to speak about the budget and the context in which it was presented. It is important that we address rather than evade the consequences of this budget. That it proposes an adjustment of €6 billion even while the interest bill on our borrowings is €5.1 billion as a result of adding the problems in our banking system to the deficit and current borrowing tells one a great deal.

It is important to be truthful about what has failed and the origin of the difficulties in which we find ourselves immersed. They are not the problems of a functioning real economy, which thankfully is still in prospect. They are entirely the consequence of the irresponsible gambling that passed as banking. They were exacerbated by a failure of governance and a moral irresponsibility that will forever stain the reputation of professions such as auditing and accountancy, which were formerly regarded as operating to inviolable standards. I refer to the signing off of accounts. The failure of the State flows from the Secretary General of the Department of Finance through the Governor of the Central Bank and the Financial Regulator. At some stage we must be able to assure the public that we are moving into a new culture of regulation, responsibility, accountability and transparency.

Deputy Noonan referred this morning to simplistic notions of right and left. It is simply a fact that the regulation with a light touch advocated by the former Minister for Finance, Mr. McCreevy, and the light regulation described by the neoliberals of the Chicago school are concepts which come from the right. It is rare that one hears an argument from the left in support of deregulation or such light regulation as makes the destruction of the banking system possible. Deputy Noonan may not acknowledge it but there is a difference between the left and the right. The left recognises the social, the case for redistribution and the cohesive power of redistribution in establishing citizenship. The right, however, makes its case from the perspective of radical individualism and usually expresses itself in the Reagonomics of advocating that individuals' should be permitted to decide how they spend their money. That is the origin of the disaster in which we find ourselves and the result was an ugly, greedy, ostentatious and uncultured kind of expenditure. It is interesting to observe how the right reacts. I am sure the Minister of State at the Department of Foreign Affairs, Deputy Peter Power, was as appalled as I by the suggestion that we should not pay a penny in overseas aid until we balance our budget, which was made to The Irish Times by a distinguished Irish entrepreneur and philanthropist. This scandalous suggestion totally ignores the damage speculative gambling has done to Ireland’s reputation. Our reputation has been saved by our overseas development aid programmes and peacekeeping operations, as well as by our writers and those who put genius into the version of Ireland they have delivered abroad. The damage to our reputation was done by professional people who lacked morals and bankers who lacked ethics.

The Labour Party is often asked for its suggestions. The issues to which Deputy Rabbitte directed our attention were discussed at a recent seminar organised by the policy institute at Trinity College Dublin to launch a report, Ireland's Tax Expenditure System: International Comparisons and a Reform Agenda, co-authored by Micheál Collins and Mary Walsh. Anyone who reads the report will note its estimate of the annual cost of Ireland's tax expenditure, including the property related expenditure to which the Minister, Deputy Hanafin, referred. As this expenditure is contracted over several years, the cost in tax foregone will continue beyond next year. There was a choice in this, however. The Government could have closed down the allowances immediately or else suspended them until 2015.

The total cost of maintaining the current allowances for the blind, widows and carers is €90 million. Before the sensitivities of Government Deputies start firing on all cylinders, they should ask themselves how it is republican to make the blind, those on invalidity benefits and carers suffer the consequence of actions of those involved in the banking sector. The estimated cost of the expenditure is set out in table 2 of the policy institute report. The OECD's figures on the top ten countries for tax expenditure as a percentage of GDP are set out in table 4 of the report. The figure for the United Kingdom is 8.651% but Ireland is close behind at5.642%. One might have begun by investigating the impact of the various tax expenditures on the general structure of taxation. The Trinity paper quotes from the OECD paper of 2010.

Aspects of tax expenditures can cause the resulting complexity of the whole to exceed the sum of the complexity of the parts, in public perception as well as reality. As legal provisions, regulations, instructions and forms are piled upon one another, the body of tax wisdom needed to navigate the system can grow beyond the capacity of many non-experts. The marginal added provisions, even if they do not apply to a particular taxpayer, obscure that taxpayer's field of vision of what he or she needs to know. From a simple systems perspective, the potential interactions among additional tax expenditures could grow geometrically as more are added.

The Trinity paper gives the example of the Irish seed capital scheme, designed to refund prior tax paid by unemployed taxpayers to enable them to set up as self-employed, "which requires navigation skills to chart 52 pages of complex legislation".

If the Government said, "Look, we are in a tough place", it could, then, look at the place from which the great defects in the structure of tax and the economy began, which is among the people who have been taking the benefits.

Let me go back to the consequences of taking €8 off the meagre blind pension, for example. The way to judge that is to look at the consequences of taking that proportion out of a person's disposable income. On radio this morning with the Minister for Social Protection, Deputy Ó Cuív, I said the issue is that every cent of these low incomes is accounted for. The sum of €8 is not what counts but what it means as a proportion of disposable income. Then one places it side by side with the additional costs and then one considers a dependant in the household.

I watched the Minister for Finance respond to these kinds of arguments made by people like me. He said, "Look at the small number of people who are paying most of the tax". Let him realise that they are paying the tax because they are able to pay it and are in a position to do so. They are not a precious group of people whose sensitivities are so great that they cannot be asked to pay more. The other side of the issue, as the Trinity paper shows, is that they have a large raft of loopholes and hundreds of quasi moral professionals advising them on how to milk them. It is not the people on the blind pension, invalidity payment or the minimum wage, or any of those who are now to be dragged into the tax net, who have enjoyed all of these perks. The high earners and high taxpayers are the people who wined and dined with bankers, who were sending out messages to the public saying they were under-borrowed.

We in the Labour Party have been asked where we stand. Let us hear it from the two larger parties also. Is it that they want to go back to that space, from 2000 onward, from which they departed, or are they willing to move to a new space in which they will have new structures and new versions of professional accountability eliminating different kinds of tax concessions and so on? We will answer that question. That is what is in our publications, but let us hear it from the Government party when they reply to the debate.

Deputy Kathleen Lynch

This is probably the most unequal and unjust budget I have seen in my time in this House. We know the reasons for this. A widow under 66 years of age will lose €8 from her payment. I have never understood why younger widows are discriminated against in this way. My sister was widowed at the age of 34 and left with six children. Why was she not entitled to the household packages, when she needed them far more than those who had their families reared? I do not begrudge social welfare to anyone. It is so little and so difficult to live on.

There is a saying in Cork that one never sees the poor at sales. That is because they do not have that spare money the rest of us have to get a bargain, because all their money is accounted for. The €8 that has been removed from their income this week is €8 out of the €20 that is put away every week for gas and electricity. There will be cutbacks. These people will not be outside the gate. They will cut back on food, heating, clothing and on the luxuries, little as they were, that they had.

I want to talk about a group of people who are, somehow, not mentioned. When legislation is said to be in the national interest, it is as if this entire group of people are not part of the nation and do not figure in the national interest. This is the group of people I come from, among whom I grew up and lived and whom I still visit every weekend of my life. It is the working class, who have been convinced, since the foundation of the State, that they are, somehow, not as worthy. They are less worthy. They will take their €8 hit and be grateful for the little they will get. This nationalist State — not this Republic — calls upon these people when times are good to go and work and sustain the economy, and when times are bad it is their fate to be unemployed and to be treated like this by the Government. The nationalist State has convinced them that they are not worthy. They are the people whose schools do not get the resources given to schools in other areas. Their children do not get the education they deserve and need, and they are convinced that this is their lot in life.

I listened to Deputy Mary White tell us about equality. She has fallen into the same middle class trap as others in this regard. Equality is not just about gender. It is about class, finance, education and health. If Deputy White produces a Bill that will allow more women to be elected to the Oireachtas, I will be the first to congratulate her. My only aim in life is to have more women in positions of power so that we can deal with the deep inequalities in Irish life and convince people in areas where there is true deprivation that they are worthy and should get a better deal for themselves. They should demand a better deal for themselves.

Some €8 is to be taken off a blind pension or from a carer's allowance. The carer's allowance is an anomaly within the social welfare system. It is the only social welfare payment for which one must work. Carers must work seven days a week——

Deputy Michael D. Higgins

And 24 hours.

Deputy Kathleen Lynch

——and 24 hours a day. To tackle the deep inequality in this country we must convince working-class people that they are as good as anyone else and should not accept the type of treatment the Government has meted out to them. They are not there to go to work when times are good to sustain the economy. They are worth far more than that. Their children are as good as anyone else's children but the Government does not recognise that.

There is a privileged elite in this country. This elite does not even have great amounts of money. It has access. It also has privilege, which the people I know, live with and grew up with will never have, and they are in awe of it.

James Connolly said, "The great only appear great because we are on our knees. Let us arise.".

Minister for Tourism, Culture and Sport (Deputy Mary Hanafin)

I would like to share my time with Deputies Billy Kelleher, Christy O'Sullivan and Finian McGrath

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Deputy Mary Hanafin

There is no doubt that yesterday's budget was a tough budget and that everyone in the country will feel the brunt of it. However, at 7.30 this morning in minus 5°, as my team and I stood outside the DART station in Dún Laoghaire, giving out information leaflets about the budget, I was struck by the hundreds of people who were going about their daily lives, going to work and education and getting on with things. They are the people who will help to lift this country. By their commitment to themselves, their work, their families and their children they will ensure that the country will turn around, the economy will be lifted and the opportunities that some of the rest of us have got will be there for them as well.

It did not matter that it was cold and dark; they wanted to take the information to plan their future and to find out how to adapt their living circumstances for their families. It was very much with a sense of, "I am getting on with my job, now you get on with your job." I fully appreciate the work they do but sometimes we forget about the 1.8 million people who are working and we forget about the 1 million people in education. They are getting a top quality education and the qualifications to enable them to have a future here. It is to help to protect those people that the Government has introduced this budget which, undoubtedly, is difficult. There is no easy way to take €6 billion out of the economy. The only way to do this is to take it from each of the different sections and Departments. It is with a heavy heart that one cuts social welfare payments. Nobody wants to do that. However, in balancing the different elements, one realises that even though it was necessary to cut the carer's allowance, the two elements the carers fought really hard to keep, the respite care grant and the half-rate carer's allowance, were preserved. Increased funding has been put into disability services this year. This measure was not announced in the House yesterday because it was not possible to announce all measures in the time allotted. Additional funding has gone into the home help packages. If money is not taken out of payments, it would have to be taken out of the services. People who require a great deal of support and health care prefer to have access to the services and the professional health care services than to be given a payment, although I accept it is difficult to have the payment taken away.

The same is true for people who are working and will now pay more taxes. The fact that the tax is being front-loaded for this the first year of the four year plan at least will give people some hope as regards knowing what they will have to pay not only next year but that a further burden not of the same degree will be placed upon them for the future years.

I will speak about areas within my Department's remit. For many weeks some people have argued that funding to the arts and sport should be reduced but the Government appreciates the value of those areas as much as it does tourism, the other element of my Department. Each of the three areas has a value in society and each of them has become crucial for Irish communities, small and large. Each of them is very valuable for the economic contribution they make to the country. The cuts in my Department reflect the value we place on each of those areas. The tourism marketing budget has effectively been kept but with a small reduction. However, this reduction does not affect the core marketing activities of Tourism Ireland or Fáilte Ireland. This means we can attract extra visitors to this country and with a particular focus on the convention centre, on business and on golf and activity holidays. We hope to market the country in new and imaginative ways in partnership with the airlines, ferry operators and tour operators who are all very enthusiastic. They have welcomed the package of measures introduced for the tourism industry in the budget, not least of which was the reduction in the air tax to €3 and the additional incentive offered by the Dublin Airport Authority. I have had meetings with the airlines and with the tourism industry at which everyone raised the issue of the air tax. It is hoped to see a positive response to this reduction from the airlines by way of their proposals to carry more people into the country. This could have a beneficial effect. A significant budget has been allocated for tourism along with the new facilities and investment in capital infrastructure. I am quite satisfied that we will meet our targets for next year which by 2014 would lead to 8 million tourists coming to the country and supporting an additional 15,000 jobs in an industry which already supports 190,000 people working all over Ireland.

The allocation of almost €150 million for the culture sector shows a real commitment to arts and culture in our society. The day-to-day expenditure for the arts is down just 3.8%. Organisations around the country were very concerned that their value would not be appreciated and that their funding would be slashed but this has not happened. This is because the Government recognises that people in this area are already working for very little and they make a significant contribution to national culture and creativity. They help give young people other outlets for their energies and their desire to participate. The funding for the Arts Council will help to support 50 different venues around the country, 200 festivals and 400 arts organisations. I welcome the fact that recent research has shown that 2.3 million adults here participate or attend arts events, theatre, art galleries, classical music performances, opera, dance performance, and so on. This illustrates the vibrancy of a sector which is well worth supporting as the Government has done in this budget.

I refer to two other areas which were not mentioned yesterday but which require to be recognised. The artist exemption is a tax relief that could have been abolished along with so many others. However, because of the value we place on our artists, writers, sculptors, photographers, and so on, we have kept the artist exemption but reduced it to €40,000. That sum covers almost 80% of the artists in the country who will continue to benefit. The first €40,000 earned is completely exempt from tax. This was a very important statement about how Ireland regards the cultural sector. The second tax relief was one which could have been abolished, the section 481 investment for film and television productions. This will remain because of the value for employment and its effect on the number of film productions being attracted into Ireland which in turn sends out a positive message about the country. We are providing funding for our cultural institutions and for initiatives next year such as Dublin Contemporary and for the expansion of Culture Night throughout the country and Culture Ireland and Imagine Ireland in the United States for which specific funding will be made available to showcase Irish artists.

The area within my Department's remit is sport. It is very easy to suggest slashing funding to sport but sport plays an increasingly important role in communities where people have more time on their hands than they would like to have. It has also seen a resurgence in volunteerism in communities. We continue to support sport through the Irish Sports Council, the swimming pool programme and the sports capital programme. We continue to support the volunteers, the clubs and the major sporting organisations. This Government genuinely values all aspects of Irish society and despite the tough budget and the difficult decisions that had to be made, it tried to make it as fair and as balanced as possible without losing sight of our national values.

Minister of State at the Department of Enterprise, Trade and Innovation (Deputy Billy Kelleher)

I welcome the opportunity to speak on this budget for several reasons. We are all aware of the challenges facing the people and the country. This budget is a first instalment in an attempt to address that difficulty. We must all acknowledge that this budget which is taking money from the vulnerable, will cause pain and difficulties for those people. Equally we must acknowledge the need for an honest debate. We cannot deny that this country is in a parlous state on a number of fronts. First and foremost is the difficulty with the budget deficit and a shrinking economy that has left tax receipts much lower than anticipated for several years. Equally we have the issue of recapitalisation of our banks to try to stimulate credit flow through the economy to encourage the broader investment required to expand the economy again. Those two factors put great pressure on any government formulating a budget.

Some of the comments from the other side of the House have been disingenuous for several reasons. Most people are conscious that social welfare supports those at the lower end of the socio-economic groupings and is something this party has continually supported in recent years in good times. I am very proud of what our party has achieved in government. There appears to be air-brushing of history as if we never made any strides in supporting those who are vulnerable, carers, those with disabilities and those on State pensions. No Minister for Finance would lightly come to the House and publish a budget with a reduction in social welfare payments. However, if we do not pass the budget and bring forward a four-year plan, we put at risk everything we have achieved to date. As a country and a society we have achieved a considerable amount. It behoves all of us in highlighting the difficulties and acknowledging the problems we are facing to come up with proposals and ideas to address those difficulties as opposed to outlining in broad brush terms that the Government has somehow failed people and society.

The issue of the bank guarantee and the Government support for the banking institutions in 2008 have been continually bandied around the House. While it has been continually discussed, people will not acknowledge that the reports by Professor Honohan and Messrs. Regling and Watson have indicated clearly that a substantial bank guarantee was required in September 2008 for a number of reasons, primarily that the banks were in danger of imminent collapse. People seem to believe the bank guarantee was introduced just to support the banks as if the Government had another choice. It had no choice on the night other than coming in to guarantee depositors and senior bondholders simply because the banks would not have been able to access money the following morning in the markets and as everyone knows if a bank runs out of money it leads to a systemic collapse of the broader economy. Members of this House should be honest about that matter. I acknowledge it was a very difficult decision to make but at least any independent analysis of it should accept the reports of Professor Honohan and others who were brought in to evaluate and adjudicate independently whether it was the right decision.

Deputy Seymour Crawford

He also advised that the Government was wrong.

Deputy Billy Kelleher

Inherently it was the right decision.

As a member of Fianna Fáil I am hurt over the accusation being bandied about by the Opposition that somehow we guaranteed Anglo Irish Bank because it was a Fianna Fáil bank. If we are to believe that, why did Deputies Noonan and Bruton, who are blue-blooded Fine Gael people, invest in Anglo Irish Bank? Why did they purchase Anglo Irish Bank shares if they knew it was a Fianna Fáil bank?

Deputy Seymour Crawford

That is outrageous.

Deputy Billy Kelleher

If we are to address the underlying challenges facing the people, let us have an honest debate here. We all know we need a budget adjustment over the next four years of approximately €14 billion and this is the first instalment of €6 billion. I accept it will very difficult on the people, but if anybody can show me an easier path out of the difficulties in which we find ourselves, I will gladly take it on board. Unfortunately to date we have heard polar opposite views from the Opposition. The potential Fine Gael-Labour coalition should be called the Fine Gael-Labour collision because they are on a collision course on everything discussed in this House and yet they claim a coherent story is coming from the Opposition.

Deputy Michael D. Higgins

There are honest differences.

Deputy Billy Kelleher

There are certainly honest differences, but I do not think——

Deputy Seymour Crawford

What about Fianna Fáil and the Green Party? Fianna Fáil bends over backwards for the Green Party.

Deputy Billy Kelleher

——they can be compatible.

Deputy Seymour Crawford

They have destroyed the country and should not start lecturing us.

To consistently air-brush what our political party has achieved over many decades of service to the country is totally unacceptable and I am entitled to defend my position on that.

Regarding how Ireland can address the underlying difficulties, I accept that we have a budgetary difficulty that is very challenging — not for the Government that can make these decisions but in the context of the impact it will have on people's lives, including those on social welfare, those who have lost their jobs and those in fear of losing their homes. It must be acknowledged that the four-year plan has been published and supported by the European institutions and the IMF. For people to suggest that we have surrendered our sovereignty is simplistic and undermines the sheer reality of what faces the State. It would be completely irresponsible for any government to propose a budget on 7 December knowing it could not fund it when the State's cash reserves run out in June or July 2011. We have a duty as a Government and as a Parliament to at least acknowledge that the State is now funded for several years and can get on with dealing with the serious challenges that face us. Equally we are able to fund the services the Government has build up over many years.

We have had a very difficult time as a people. Most parliamentarians come in here with genuine beliefs and want to represent the views of their constituents. However, we also have a duty to ensure that there is a positive image that gives hope to the people. While I accept the people are shattered at this time, we can certainly get through the crisis with leadership and by facing the challenges in an honest manner and at least being up-front and showing what the Opposition would do or what we would do if returned to government. People need to have this honest debate.

The Government has invested enormous amounts in social welfare, education and health. However, in the area of economic recovery we have invested vast sums — and will continue to do so — in promoting indigenous companies and in attracting foreign direct investment. It behoves all of us to send out a positive signal that Ireland is still a country with positive fundamental aspects. It has a very well educated and flexible workforce — while some people might argue it is too flexible, Deputy Higgins and I can have that argument another time. Given these two factors coupled with investment in infrastructure, it is still a country where we can attract and are attracting large levels of foreign direct investment. Whether in opposition or in government everybody in this House who recently endorsed the 12.5% corporation tax rate should send out those positive messages. The damage that some of the discourse is having on Ireland is unacceptable. For the sake of everybody, let us have honest debate and be up-front with people while at the same time meeting the challenges in a positive way as opposed to continually promulgating doomsday scenarios.

Deputy Finian McGrath

I thank the Minister of State, Deputy Curran, for providing me some speaking time. I also thank the Minister, Deputy Hanafin, and the Minister of State, Deputy Kelleher, for sharing their time. The true character of a democrat is to always allow Members of this House to air their views. It is a pity some of the other political parties do not share my views on democratic rights, but that is a debate for another day.

In regard to the budget, I have always said that I would listen to the Minister for Finance, read the small print in the budget and then decide how I would vote. I also judge it on how the Government treats people, especially those who need our support at this difficult time. I agree with the Minister of State, Deputy Kelleher, that we need honest debate. However, on examining the details of the budget, I am appalled by the decision to cut €8 from the income of those on welfare, including those who have already suffered by losing their jobs. The cut of €10 in supplementary welfare allowance, which is the safety net for many poor people, is shameful. The decision to cut child benefit without compensating children depending on unemployed parents is beyond all belief. The minimum wage cut will not save the Government a single cent and will not reduce Ireland's borrowing requirement. That, to me, is honest debate. There is no evidence that such a cut will create a single job but there is ample evidence that it will increase poverty and hardship for many families. In some cases it will mean that people at work will be worse off than those who have lost their jobs. This, in itself, will create a further call for cuts in welfare and deeper impoverishment of large sections of our communities.

Let us have an honest debate and these are the honest facts. The measures in the budget will impart a severe deflationary shock to the economy such that it will make it very difficult for the country to recover. It will condemn us to a prolonged slump lasting up to perhaps ten years. The consequences of this for a whole generation of citizens are almost unthinkable. The reason I have such a pessimistic view is that I believe recovery cannot be achieved by austerity alone and I repeat that in this debate. Growth is needed to do the heavy lifting of adjustment and to expand the size of the economy so that the scale of the debt problem is proportionally decreased.

In regard to the budget and people with disabilities, yesterday's cut means that people on disability allowance are down €847.60 a year since 2008. An €8 per week cut in the disability allowance was announced in the budget. This on top of an €8.30 per week cut last year, amounting to a cut of €16.30 per week in only two years, which represents a fall in benefit from €204 to €188 per year. It has been proven time and again that there are extra costs associated with having a disability.

There has also been a cut in the carer's allowance of €16.50 per week on the 2008 rate, bringing it down to €204 per week. These cuts are at variance with the national disability strategy which is often spoken of in Government circles. We should not penalise the disabled, the blind and the sick for the actions of the bankers. That, to me, is honest debate and it is important to have such honesty.

On a positive note, I welcome the fact that the salaries of the Taoiseach, the Tánaiste and Ministers will be reduced, that there will be a maximum salary of €250,000 for those in the public sector, including State agencies, that there will be no reduction in the State pension and an additional payment of €40 will be paid to households that receive the fuel allowance payment.

I met a group of senior citizen in Coolock today and while they were relieved that there will be no cut to the State pension——

An Ceann Comhairle

The Deputy has gone way over time and his colleague is anxious to contribute.

Deputy Finian McGrath

——they were disgusted about the shenanigans in the banking sector and the wealthier parts of the society.

This budget is unjust and it is not about fair play, hence my rejection of it.

Deputy Maureen O’Sullivan

I thank my colleague for sharing his time with me and facilitating me in having this opportunity to contribute.

We are facing massive economic problems and no one should even consider trying to down play or minimise them. We must be realistic about the fact that austere measures are needed but what must be acknowledged are the difficulties and frustrations facing those who had no hand, act or part in the current disastrous financial situation and the terrible sadness that all of this could have been avoided. It is frightening to think that we will spend more on the annual repayments than on funding our health system and education.

One point that is accurate is a statement in the recovery plan that tax and expenditure measures will negatively affect the living standards of citizens in the short term, but I ask which citizens will they affect? This is where the plan and the budget are fatally flawed. It may pass some economic tests but not the political one which requires support from the people. The poorest are being asked to take cuts and what I find most appalling are the cuts to be imposed on those with disabilities, both mental and physical, and their carers. We know that there are extra costs for those living with a disability.

Social welfare cuts will have disastrous effects on many families and individuals. We are in the closing month of 2010, the European Year for Combating Poverty and Social Exclusion and yet the current crisis has already seen more people driven into poverty. There are significant elements of the plan and budget which instead of lifting people out of poverty will push them further into poverty and social exclusion. With the higher rate of tax having stayed the same, there is little evidence that those who have more will pay more.

The plan refers to maintaining investment in education and we know that one of our major assets is our educated people. I am glad that the school building programme is being sustained and I hope that Gaelscoil Bharra in Cabra will finally get its building. Yet there is a massive reduction in student grants, the grants that are needed to keep people in education, especially those from lower socio-economic groups. There are also cuts in resources and literacy programmes, yet we continue to fund private education and education quangos.

The uncaring attitude towards those on the minimum wage is matched by the arrogance in total refusal to even consider an increase in corporation tax, which suggests that we have been turning a blind eye to the way this country has been a semi-fraudulent tax haven for major international companies dodging paying their legitimate taxes in their own countries — even a small increase in the tax charged to those international companies could have been made for them to make a contribution here.

I acknowledge that the budget has attempted to start at the top with a cap on salaries but it is not enough and, more importantly, I want to know if this provision will come into force now in respect of the obscene salaries of €300,000 plus and double and treble that amount? Will the bonus payments be eliminated, will the expenses payments be at least halved and what about the payments for serving on boards made to people who already have hefty salaries and who serve on a number of boards?

Irish people would buy into a recovery plan if it was fair and equitable and if the pain and the sacrifice were shared equally and were proportionate but, unfortunately, it is not and there are many people in Ireland tonight who are not suffering unduly because of this.

Deputy Mattie McGrath

I said last night that I was ready to support this budget and I believed it to be in the best interest of this State. I do not want to play politics with this decision——

Deputy Ulick Burke

The Deputy must have had a conversion.

Deputy Mattie McGrath

——unlike my colleagues across the floor of the House. Possibly the political thing to do would be to reject the budget, but I do not believe the interests of the people I represent would be served by putting politics before conscience.

It is my priority to get the ECB and the IMF out of Ireland——

Deputy Mattie McGrath

The Deputies opposite sought more pay all along the way in recent budgets. The Deputies opposite sought to ensure that people got more pay, more quangos and more people serving on boards.

Deputy Michael Ring

We will never be as big a hypocrite as the Deputy.

Deputy Mattie McGrath

All they wanted was their own people serving on boards.

Deputy Michael Ring

The mighty mouse in the constituency is up here.

Deputy Mattie McGrath

We will see what their commitments are. I will not be lectured by some of my colleagues across the House.

(Interruptions).

Deputy Mattie McGrath

I welcome the change in regard to ministerial cars and other such changes. We have to tackle the lard. We went after the minimum wage which I do not believe was right but we must tackle the waste, bring down the maximum wage and enforce the provision in that respect religiously.

Debate adjourned.

Dáil Éireann debate - Wednesday, 8 Dec 2010

Financial Resolution No. 34: General (Resumed)

Dáil Éireann debate -
Wednesday, 8 Dec 2010