Before calling on the Minister, I understand there is a slight delay in the book being circulated but the speech is available. That will be circulated in due course.
Budget Statement 2013
They cannot afford a printer.
As budget day is a good day for taking stock of where we are, let us do so. In the second half of this year, the National Treasury Management Agency, NTMA, has raised more than €7 billion in the markets. The Bank of Ireland, ESB, Bord Gáis and AIB all have raised funds for the first time in years. This year, the IDA has announced 84 projects set to create 8,650 jobs. The economy grew last year and will grow again this year and next year. There are manifest signs that the country is emerging from the worst of the crisis and that the efforts of the Irish people, despite the hardship, are leading to success.
There are different measures of success, however, and in taking stock of where we are, I would like to examine them. The first measure of success is whether the bailout programme is being fulfilled. It is, as Ireland has fulfilled 160 separate conditions of the programme and has now drawn down more than 80% of the low-cost money available under the programme. We also have made the fiscal, structural and legislative changes that provide the basis for a renewed economy that will lead to job creation. If fulfilling the programme was the only measure of success, then we are successful, but, of course, that is not the only measure. We must go back to the markets at sustainable interest rates. The NTMA has secured access for some of our funding this year but we must be certain of market access as needed. If a return to the markets is the measure of success, I am confident we will achieve this objective but as yet it is work in progress.
For the Government, however, and for the Deputies and Senators who support it, the real measure of success is a growing and developing economy, which provides a fulfilling life and decent standard of living for all our people and a country in which everyone who wants to work has a job and where our public services are unsurpassed in their quality. On the basis of this measure of success, despite the progress made, the country still has a long way to go but the Government is prepared to travel that distance. Today, on budget day, the Government recommits itself to this task and political friends and foes alike should be under no illusion; the Government will not resile from the task in hand. It will not dither or procrastinate but will drive forward to lead this country out of the despair and despondency and lack of self worth in which we found ourselves in March 2011.
The Government will continue to fulfil the conditions of the bailout programme, it will carefully plan full market return, it will build on the strong sectors of the economy and repair the weak sectors until they are strong again, it will grow the economy and create the jobs for which so many out of work and so many young people yearn.
Last year, in the budget, despite the lack of resources I took a series of initiatives to grow different sectors of the economy in farming and agrifood, in foreign direct investment, in the export trade, in the tourism industry, in financial services and in the property market and these initiatives have helped to grow and create jobs in these sectors.
This year I will follow a similar strategy but my emphasis will be on small and medium-sized enterprises, SMEs. Our large exporting sector, which includes both multinationals and growing indigenous companies, is forging ahead and delivering solid export growth and a strong balance of payments surplus. I am aware, however, that the operating environment in the domestic economy remains difficult, particularly for small and medium-sized enterprises. To give this critical sector a helping hand, I am bringing forward a ten-point tax reform plan. This plan includes measures that will make a real difference for the SME sectors such as reforming the three-year corporation tax relief for start-up companies to allow unused credits to be carried forward. This will help SMEs and start-ups navigate their early years. It also includes increasing the cash receipts basis threshold for VAT from €1 million to €1.25 million and amending the close company surcharge de minimis level. Both of these measures will improve cash flow for SMEs. The plan also includes amending the research and development tax credit by doubling the initial spend eligible for the credit from €100,000 to €200,000 to encourage innovation and business expansion and extending the foreign earnings deduction for work-related travel to certain countries beyond the BRICS, which will support exports. These measures will make a real difference to SMEs by assisting their cash position and supporting their creation of jobs. I also will publish a public consultation paper on a micro-business tax today.
Given the fragile state of the public finances, the individual measures are modest. However I believe the combination of the measures will have a significant beneficial impact. I also am pleased to announce an additional initiative that will support small businesses in all sectors of the economy. Virtually all businesses in Ireland rely on cost-effective transport for their inputs and outputs. This transport is provided by hauliers, the majority of whom own small businesses. In order to assist the competitiveness of this key industry, I am introducing a rebate on diesel with effect from 1 July 2013.
This initiative will be strictly policed so as to ensure that the beneficiaries are fully tax compliant.
Work is being undertaken by senior officials in a number of Departments to finalise the PlusOne initiative, which is intended to encourage employers to hire individuals who are long-term unemployed. It is envisaged this new incentive will replace the Revenue job assist and the employer PRSI incentive schemes. Details of all the budget measures I am announcing today are set out in the budget documentation. There also are presentations on key sectoral initiatives, including the SME-----
On a point of order, this is unprecedented. While I do not wish to interrupt the Minister in his budget speech, ten minutes into that speech-----
Fianna Fáil wrecked this country.
-----the budget documentation has not been circulated to the Opposition.
It will be in a few minutes.
It is unprecedented and I ask the Minister-----
Thank you. We already have-----
-----to pause until the budget documentation is circulated to Members.
We already have explained.
It is unprecedented.
The Minister will proceed with his speech.
This is unprecedented and is a disgrace.
As I stated, all the supporting documentation, including the SME ten-point tax reform plan, will be available on the budget website.
The Government is complementing these taxation actions with a focus on the provision of credit to SMEs. New initiatives from the Government, such as the microfinance scheme and the loan guarantee scheme are now in place. These schemes are complemented by additional credit funds such as those supported by the European Investment Bank, the Silicon Valley Bank and the European Investment Fund, which are targeted at the innovation sector. To further assist SMEs in this area, I am announcing today a number of credit specific initiatives, including approval to the Credit Review Office to extend the team of available reviewers in order that SMEs seeking assistance from the Credit Review Office receive a considered and timely response to their application and the publication by the Credit Review Office of specific guidance for SMEs on accessing credit from banks. Moreover, the National Pensions Reserve Fund also is developing a range of support funds to provide equity, finance and restructuring and recovery investment to the SME sector. The funds are expected to range in size from €100 million to €400 million.
SMEs are the lifeblood of the economy and will play a vital role in the recovery of employment growth in our country.
Deputy Bannon is happy anyway.
I am widening the definition of registered farm partnerships to add other production partnerships, such as beef, to the 640 milk production partnerships that can already avail of the enhanced 50% rate of stock relief. Qualifying young trained farmers in such partnerships can continue to avail of the 100% rate of stock relief. Furthermore, as small businesses, many of the other reforms in the ten-point tax reform plan will benefit farming and the agrifood sectors.
In order to improve farm efficiency and help achieve the targets in Food Harvest 2020, I am introducing a relief from capital gains tax arising on disposals of farm land for farm restructuring purposes. This is a once-off relief which will apply in respect of transactions initiated in the period from the start of January 2013 to end-December 2015, subject to obtaining EU state aid approval. These measures are designed to create additional jobs in farming and the agrifood sectors.
This year, my Department carried out an economic impact assessment of the current film tax relief scheme, widely known as section 481. In light of the report’s findings, which I have published today, and after consultation with the relevant Minister, Deputy Deenihan, and representatives of the film and TV industry in Ireland, I propose to extend the film tax relief scheme to 2020; reform the operation of the scheme by moving to a tax credit model in 2016 so as to ensure better value for taxpayers' money and eliminate the need for high income investors to provide the funding for the scheme; and enhance the scheme so as to make Ireland even more attractive for foreign film and TV productions. These changes will rectify the anomaly by which investors received a disproportionate amount of the tax relief as opposed to the funds going to production. These measures are designed to create additional jobs in the film industry.
The year 2013 is very important for the tourism industry. Promotion of The Gathering has been under way for some time and reports indicate that it is striking a chord both at home and abroad. It is an initiative that we should all support. Due to the nature of the tourism sector, the supports I have announced already to assist the small and medium enterprise sector will apply to most of the businesses in the tourism industry. In addition, the tourism industry is already benefiting from the second reduced rate of VAT of 9% that I introduced in the jobs initiative in May 2011. I confirm that the VAT rate of the tourism industry will continue at 9% in 2013.
In last year’s budget, I introduced certain measures to help stabilise the property market, which was one of the major constraints on economic growth. This year has seen the first signs of stability in both the residential and commercial property markets in six years. The residential market is showing increased activity due to the return of economic growth and the impact of the enhanced mortgage interest relief I introduced last year. This measure will end on 31 December this year as I have set out on numerous occasions. However, in order to maintain momentum in the domestic property market, I am providing an exemption from the new local property tax up to the end of 2016 for any new or previously unoccupied homes bought in that period and, in addition, purchases of any homes in 2013 by first-time buyers will also be exempt for the same period. This exemption for three years from the local property tax will also apply to residences in unfinished estates.
Big Phil is not even here.
In the commercial market, the capital gains tax incentive that I announced in last year’s budget means that any property bought between now and the end of 2013 will be relieved from capital gains tax if held for at least seven years. I am fully aware that regeneration is necessary in a number of our cities in order to ensure a balanced economic recovery. To date regeneration schemes have failed to encourage private sector investment in the areas most in need so I will examine proposals for a targeted incentive in already identified regeneration areas.
Commercial Property and Real Estate Investment Trusts (REITS)
Initial indications are that the reduction last year of stamp duty from 6% to 2% for commercial property transactions has also helped bring stability to the commercial property sector. Demand for high-quality large office spaces has strengthened in 2012. In order to attract new investment, I will provide for the establishment of real estate investment trusts, REITs, which allow for investors to finance property investment in a risk diversified manner.
The introduction of REITs may also assist NAMA in deleveraging its portfolio and allow it to bring more sustainable activity to both the commercial and residential property markets. NAMA is already making €2 billion of funding available over the next four years to complete residential and commercial projects in Ireland. This investment, which is already under way, with some €650 million of advances already approved, is expected to create significant employment in the region of 25,000 jobs in the construction sector and additional jobs in the wider economy. NAMA is also making €2 billion of vendor finance available to prospective purchasers of commercial properties over the same period. These property measures are also designed to create additional jobs in the property and construction sectors.
International Aviation Services
The task forces established to consider what was needed to effect independence for Shannon Airport concluded that there is potential for significant job creation in the aviation sector in Ireland. To facilitate the sector, I will be putting in place measures to facilitate the construction of hangers and ancillary facilities that will be key to attracting additional aviation sector organisations to the country. My Department will also examine, together with the Department of Transport, Tourism and Sport and the Department of Jobs, Enterprise and Innovation, the feasibility of new funding sources for airlines and aircraft financing and leasing companies. Further details should become available shortly. Whereas these measures were proposed by the task forces for the new International Services Centre in Shannon, I am making the measures available to all other airports who wish also to avail of these measures.
Based on the latest information, including the November tax receipts, my Department now projects that the general Government deficit for this year will be 8.2%, comfortably inside the required target of 8.6% under the excessive deficit procedure. The projected deficits for 2013 to 2015 are 7.5%, 5.1% and 2.9%, respectively, all in line with the targets we have to achieve. These deficit projections are based on projected economic growth for GDP in 2013 of 1.5%, rising to 2.5% in 2014 and 2.9% in 2015, as published in the medium term fiscal statement three weeks ago. Total voted and non-voted expenditure will be €69 billion in 2013 and €54.5 billion of this consists of voted public expenditure, as well as expenditure funded by the social insurance fund and the national training fund. The Minister for Public Expenditure and Reform, Deputy Howlin, will present his expenditure report immediately after my statement. The budget and expenditure report includes the €3.5 billion budgetary consolidation required in 2013 to achieve the deficit target. Projected consolidation for 2014 and 2015 of €3.1 billion and €2 billion respectively is unchanged from the figures specified in the medium term fiscal statement, both regarding volume and the split between revenue and expenditure.
The Irish financial crisis could be summarised in the word "debt", consisting of both national debt and personal debt. The Government is committed to dealing with both. Continuing to borrow large amounts to fund our day to day services is simply not sustainable. The reality is that stable public finances are an essential prerequisite to long-term economic growth and job creation. We will only be able to successfully access the markets in the long term if the markets believe we have a credible fiscal strategy and agree that our debt is sustainable.
Dealing with personal debt is also vital. The Central Bank is overseeing the roll-out of a range of options to deal with unsustainable personal and commercial debt. I stress that these measures are focused on unsustainable debt as taxpayers cannot afford to fund blanket debt forgiveness. I welcome that Allied Irish Banks is committed to contacting 1,500 customers per month to work with them to restructure their mortgages.
It had better get on with it.
This is the level of ambition the Government expects from all banks, whether State-owned or not. These commitments to helping people who are in unsustainable debt are not just social obligations on the Government. It is critical that the issue of mortgage debt is addressed because we cannot sustain a situation where more than 100,000 families could be effectively excluded from participation in the economic recovery. I will now deal with the tax proposals in the budget.
I will begin with the area of Government policy on pensions. The pensions sector is a very important part of the financial services industry in Ireland and provides a service to enable people to make provision for their retirement and old age. As it is in everyone’s best interest, the Government wishes to encourage as many citizens as possible to continue to invest in pension schemes.
Only two copies of the Minister's speech have been distributed.
Please proceed, Minister.
Perhaps there have been some late changes.
However, some people have been allowed by previous Governments to benefit from hugely generous pension arrangements subsidised by the taxpayer. While the Government wants to encourage those on lower and middle incomes to save for pensions, it will not allow pensions of the scale previously allowed to be accumulated at the expense of taxpayers whose actual earnings are, in many cases, a fraction of those large pensions.
I want to clarify the Government’s policy on a number of important issues. First, tax relief on pension contributions will only serve to subsidise pension schemes that deliver income of up to €60,000 per annum. This will take effect from 1 January 2014. Second, tax relief on pension contributions will continue at the marginal rate of tax. Third, the pension levy announced as part of the jobs initiative will not be renewed after 2014.
The current arrangements governing the maximum allowable pension fund at retirement for tax purposes of €2.3 million still allow for very generous pensions for higher earners through tax subsidised sources, particularly by way of defined benefit schemes in both the public and private sectors. Therefore, the necessary arrangements to give effect to the programme for Government commitment to effectively cap taxpayers’ subsidies for pension schemes that deliver income of more than €60,000 per annum will be put in place in 2014. Consultation on the specific changes required to the existing regime will continue with, among others, the pensions sector and Departments of Public Expenditure and Reform and Social Protection. The retention of marginal rate relief on pension contributions coupled with the proposed changes in maximum tax relieved pension pots will preserve and target tax relief to those providing for pensions up to €60,000 per annum.
Constitutional and legal constraints severely limit what steps the Government can take in relation to pensions already in payment. However, to ensure equity between all citizens based on their level of income, the reduced rate of the universal social charge introduced by the previous Government for those aged over 70 years with an income in excess of €60,000 will be discontinued from 1 January 2013 and the standard rate of the universal social charge will apply. In addition, in the interest of fairness, top slicing relief will no longer be available from 1 January 2013 on ex gratia lump sums in respect of termination and severance payments where the non-statutory payment is €200,000 or more. At present, the individual’s average tax rate for the previous three years applies to such lump sums rather than the marginal rate of 41%.
I have been advised in numerous submissions of the value of allowing limited early withdrawal from additional voluntary contribution, AVC, pensions. Therefore, in the Finance Bill I will make provision for persons with AVCs to withdraw up to 30% of their value. Any amounts withdrawn will be subject to tax at the individual’s marginal rate since marginal rate relief was provided on the contributions. The option will be available for a three-year period from the passing of the Finance Bill in 2013.
The contributory State pension is one of the key benefits funded by PRSI contributions and it represents, together with other PRSI benefit payments, excellent value for money. This is especially so for those on the lower part of the income distribution, those with shorter contribution histories and the self-employed. PRSI contributions are progressive and redistributive because people at the higher end of the income distribution generally get back less than they pay in.
To ensure the stability of the Social Insurance Fund in order that it can continue to pay the pensions and benefits on which those earning the least are so reliant, there is a need to broaden the income base for PRSI. My colleague, the Minister for Social Protection, Deputy Joan Burton, will increase the minimum level of annual contribution from the self-employed from €253 to €500 and abolish the weekly allowance for employees. Both these measures will make a fairer link between the amount of contributions and the significant benefits received. The Minister will also bring forward legislation to change PRSI contributions as follows. Where modified PRSI rate payers have income from a trade or profession, such income and any unearned income they have will be made subject to PRSI with effect from 1 January 2013. Unearned income for everyone else will become subject to PRSI in 2014. This means PRSI will be payable on income generated from wealth such as rental income, investment income, dividends and interest on deposits and savings.
That is robbery.
These changes in PRSI are progressive-----
They are regressive.
-----as they will ensure that all sources of income are subject to PRSI.
Local Property Tax
I will now turn to the local property tax, which the Government is introducing as a better alternative to increased taxes on income. Property taxes are used across the world as they are better for the protection and creation of jobs than taxes that increase the cost of employment. The local property tax will commence with effect from 1 July 2013 for the second half of the year. To design a tax that is equitable, the Government has accepted most of the recommendations made in the report of the expert group chaired by Dr. Don Thornhill. The report is being published this week.
The main features of the tax are as follows. It will be collected by the Revenue Commissioners. Owners of residential properties, including rental properties, will be responsible for payment of the tax. The tax will be payable on the basis of the market value of the property, as assessed by the owner. To aid owners the Revenue Commissioners will provide valuation guidance to which owners can refer. Alternatively, owners will be free to use a competent valuer. The initial valuation will be valid up to and including 2016, which will provide three and a half years of certainty for property owners.
The rate of the tax will be 0.18% of market value up to €1 million and 0.25% on values above that level. These central national rates will not be varied during the lifetime of this Government. Properties with a value of more than €100,000 and less than €1 million will be assessed at the mid-point of a valuation band of €50,000 width. For example, properties valued at between €150,001 and €200,000 will be assessed at 0.18% of €175,000, while properties with a value below €100,000 will be assessed at 0.18% of €50,000. Properties valued at more than €1 million will be liable at 0.18% on the first €1 million and 0.25% on the balance, without banding being applied.
Property owners will be able to choose from a wide range of payment options, including payment by direct debit, credit or debit cards, cash payments or deduction at source from salary, occupational pension or certain State payments. Certain properties will be exempt from assessment and these exemptions will largely correspond to exemptions from the household charge.
The Government is committed to real local government democracy and accountability.
Therefore, from 2015, local authorities will have the power to vary the rates by 15% above and below the central national rates to better match their funding needs. In this way, the property tax will strongly reinforce local democratic decision making and encourage greater efficiency by authorities on behalf of their electorates.
As I stated earlier, there will be a half year's property tax charge in 2013. Using the example of properties in the €150,000 to €200,000 band, the charge in 2013 will be a half year charge of €157. It is important to note that this represents an increase for the year of no more than €57 on the household charge payable in 2012.
I have already set out certain exemptions from the local property tax that will apply to first-time purchasers of homes in 2013 and to purchasers of new or previously unoccupied homes up to the end of 2016.
A voluntary deferral will be available to liable persons whose gross income limits do not exceed €15,000 for a single person and €25,000 for a couple. A deferral option will also be available up to the end of 2017 where gross income less 80% of mortgage interest falls below €15,000 for single people and €25,000 for a couple. Marginal relief will apply where the income or adjusted income is €10,000 above the income limit, to permit deferrals of up to 50% of liability. Interest will be charged on deferred amounts at 4% simple interest per annum, which is half the rate charged in default cases. Deferred property taxes and interest will have to be discharged on the sale or transfer of the property.
The household charge will cease with effect from 1 January 2013 and the NPPR charge or "second homes charge" will cease with effect from 1 January 2014.
Full details of the local property tax will be set out in the finance (local property tax) Bill 2012, which will be published this week and commence Second Stage in the Dáil next week. Extensive information is available on the budget and Revenue Commissioners' website and from the Revenue Commissioners' helpline.
I view tax compliance as a core principle of our democracy. Public services can only be provided to citizens because people pay their taxes. I want to reassure the vast majority of tax compliant citizens that the Revenue Commissioners will strictly enforce the local property tax and they will collect any unpaid household charge for 2012.
Any arrears that are not discharged before 1 July 2013 will be increased to €200 and will be collected through the local property tax system.
Go on Big Phil.
The local property tax is fair and progressive, as all property owners make a contribution-----
Regardless of income.
-----but those who own the most valuable properties will pay the most.
The Government continues to implement the programme for Government commitments of maintaining the current rates of income tax together with bands and credits and not increasing the top marginal rates of taxes on income.
Ireland's income tax system is one of the most progressive income tax systems in the world and is the most progressive in the EU. Those who earn the most pay by far the most in tax.
I would encourage Deputies to look at annexe F of the budget documentation, which illustrates the distributional impact of recent budgets.
The Government is firmly committed to this progressive system, as it illustrates the fairness of our tax code. This level of progressivity in the tax system and the record levels of foreign direct investment show that we are striking the right balance between our income tax levels and incentivising investment and job creation in Ireland. The more jobs that are created, the wider our tax base will be for the provision of public services.
I see greater fairness of the tax system as reducing the number and amount of reliefs that can be availed of by income earners to shelter their income from tax. Already, the ability of certain wealthy people to reduce their income tax liability to very low levels through judicious use of tax incentives has been restricted. The introduction of the high earners restriction has been successful in generating additional tax revenue. In 2010, the most recent year for which the Revenue Commissioners have figures, €80 million of additional revenue was secured from 1,544 individuals.
In addition, I am announcing that, from 1 July 2013, maternity benefit will be harmonised with other social welfare benefits in respect of its tax treatment. As is the case with all social welfare payments, maternity benefit will continue to be exempt from the universal social charge.
This measure will correct an anomaly so that women on maternity benefit will pay the same level of income tax as when they are working.
I am not increasing excise duty on diesel and petrol.
They are dear enough.
That is right.
That is the end of the cheering for the day.
With effect from midnight tonight, excise duty on a pint of beer or cider is being increased by 10 cent, on a standard measure of spirits by 10 cent and on a 75 cl bottle of wine by €1, with pro rata increases on other alcohol products.
With effect from midnight tonight, the price of 20 cigarettes will increase by 10 cent and "roll your own" tobacco will increase by 50 cent per 25 gram pack.
Outrageous. The poor smokers.
The rates of both VRT and motor tax across all categories will increase with effect from 1 January 2013. In order to incentivise a more year round motor market, I have decided to introduce a dual registration period. Therefore, in 2013 and subsequent years, vehicles registered from 1 January in 2013, for example, will carry a year tag of 131 and those registered in the second half of the year will carry a year tag of 132. In subsequent years, the same principle will apply.
I am extending carbon tax to solid fuels on a phased basis over two years commencing after this winter period. A rate of €10 per tonne will apply with effect from 1 May 2013 and this rate will increase to €20 per tonne on 1 May 2014.
The extension of carbon tax to solid fuels brings their tax treatment into line with the treatment of other fuels.
Earlier this year, I launched a public consultation on certain proposed amendments to the tax relief available for donations to charities and other approved bodies. Based on this consultation, I have decided that donations made from the 2013 tax year will be subject to a new, simplified tax relief regime. The new rate will be a blended rate of 31%, which will apply to all donations.
I have, since taking office, received proposals that suggest there may be a significant number of philanthropists worldwide, many of them Irish citizens or with Irish family backgrounds, who would be interested in making significant donations to initiatives that would aid Ireland's economic recovery if our tax system were changed to ensure suitable recognition of such donations. I have decided to ask the Oireachtas Joint Committee on Finance, Public Expenditure and Reform to examine these proposals and revert to me with its recommendations.
A key element of this budget has been to ensure fairness. In that context, I am introducing a number of measures in the area of capital taxes to ensure that people with wealth make a fair contribution to the State. These include decreasing the threshold at which capital acquisitions tax applies by 10%, increasing DIRT from 30% to 33% and increasing the rates of capital acquisitions tax and capital gains tax by 3% to 33%, all changes to take place from midnight tonight.
Our recovery plan has been and remains export-led growth. I have already set out measures by which we will extend the recovery to the SME sector.
Retaining Ireland's competitiveness for mobile foreign investment remains a central plank of this Government's export-led recovery strategy for Ireland. The Government remains 100% committed to maintaining the 12.5% corporation tax rate-----
If companies pay at all.
-----a sentiment I believe is shared by the vast majority of Deputies in this House. Even though this commitment has been stated numerous times, it is worth repeating so that there can be no doubt.
Ireland has for the past 50 years sought to have a competitive corporate tax strategy to attract job-rich foreign direct investment into Ireland. Our policies in respect of tax co-operation and international exchange of tax information have always earned international respect.
It is in this context that I am very pleased to announce today that Ireland has become one of the first countries in the world to agree a new intergovernmental agreement with the United States in respect of the US Foreign Account Tax Compliance Act, commonly known as FATCA.
Reaching such an early agreement with the United States will be of great benefit to Irish business.
When I stood before the House last year on 6 December, the Government was locked out of bond markets. Our two-year bond yields were almost 10%; now they are less than 2%. We have seen a total transformation in only 12 months. Today, markets and foreign lenders are lending once more to Ireland and are willing to lend to Irish businesses. That is essential for our businesses and our economy to continue on the path to recovery.
Confidence is returning to Ireland. Unemployment fell by 3,600 on an annual basis in the third quarter of this year - the first year-on-year fall recorded since 2005. The Manufacturing Purchasing Managers' Index shows that Ireland is the only country in the euro area to record an expansion – the ninth consecutive month of expansion. Retail sales have recorded strong growth in recent months. Services exports are running at double-digit growth. In five of the past six months, consumer sentiment has risen.
When this budget is implemented, most of the tax consolidation committed to by the Government will have been completed and even though the revenue target for 2014 is €1.1 billion the carry-over effect of today’s measures reduces that to approximately €500 million. In 2015 the carry-over effects will reduce the programme target of €700 million to a similar level. People have asked me to point the way forward. They have asked whether harsh budgets will ever end. When we are here next year, please God, the tax take will be approximately €500 million, not over €1 billion as in previous years and the tax take the following year will be a similar amount.
The Minister is some man.
We are making progress and in doing this I am setting out the likely levels of future revenue consolidation to reassure people and to boost their confidence. This will help businesses to plan and to invest and it will encourage people to plan their spending. It will allow the markets to assess the sustainability and credibility of our fiscal strategy in the full knowledge that what we have undertaken to do, gets done. We are now well on the road to recovery so let us look to the future with confidence.
We are in a cul-de-sac.
I now call on the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, to make his statement.
What about a standing ovation? Come on lads, clap.
Members should settle down please. I called on the Minister.
Deputy Mattie McGrath gave the Minister a standing ovation when the Opposition was breaking the country.
I called on the Minister. Did Members not hear me?
A Cheann Comhairle, on a point of order-----
There is no point of order.
Why do you not listen to me?
We do not have copies of the statement.
The Minister's statement.
It will be circulated.
It would all leak beforehand.
The convention is that it is not circulated until I begin speaking.
Will the Minister please proceed without interruption.
To complement the Budget Statement by the Minister for Finance I am announcing the Expenditure Estimates for 2013. This Government continues to face a daunting challenge in repairing the economy and the public finances. Difficult decisions are still required. We are committed to meeting that challenge, and are confident that through good government we can lead Ireland back to independent funding and back to sustainable growth in living standards and in employment. The expenditure adjustments I am announcing amount to just under €2 billion out of an overall adjustment of €3.5 billion. As a result, current expenditure will be reduced to €51.1 billion in 2013, and capital spending to €3.4 billion in 2013. I am very conscious that adjustments of this scale, of necessity, affect everyone. However, we have sought to be fair, protecting the most vulnerable to the greatest extent possible.
The crisis that we are enduring is a result of a series of related failings. Ours is a banking, fiscal and political crisis. It will not be resolved unless all three issues are addressed. That is why the Government established a Department of Public Expenditure and Reform, not merely a Department of public expenditure. This represents the Government’s commitment to more effective and open government. Measures including whistleblowing reform, new freedom of information legislation, the new powers recently conferred on the Ombudsman, legislation to empower the Oireachtas to hold inquiries within the existing constitutional constraints, legislation to bring greater transparency to lobbying activity, and revised ethics legislation in response to the reports of the Moriarty and Mahon tribunals are all at an advanced stage of preparation in my Department. The Minister for the Environment, Community and Local Government, Deputy Hogan, has also announced a programme of radical-----
Who is he?
-----local government reform.
Cá bhfuil sé?
Is he still on holidays?
We are working too on revised budgetary procedures to enhance the role played by parliamentarians in our budgetary process. For the first time, this year Oireachtas committees debated the annual Estimates in advance of decisions taken. Changing budgetary processes for all eurozone member states may make this the last December budget in this country.
Oireachtas committees are also scrutinising legislation in advance of finalisation by Government and feeding constructively into the decision-making process. I intend to bring proposals to Government shortly for Ireland to participate in the global Open Government Partnership, reinforcing our commitment to progress in this area. These are crucial reform measures which stand as this Government’s response to our governance crisis. I believe they will not only help bolster confidence in our political system but will help to enhance openness and transparency around policy formation in the State.
Today though, is primarily about our fiscal crisis. We must cut spending while the pressure on our public services remains greater than ever. Last year’s census revealed that there were almost 350,000 more people living in Ireland than in 2006. Compared to 2008, there are over 565,000 more medical card holders today. There are over 50,000 more students in our schools and almost 30,000 more third level students. There are almost 80,000 more people in receipt of the State pension and nearly 200,000 more people receiving jobseeker's payments each week. It is against that backdrop that we must continue to meet our fiscal targets and to reach a deficit of below 3% by 2015.
Public Service Reform/Croke Park Agreement
Reducing public expenditure and numbers while continuing to provide key public services and social supports is not easy. That is why we are undertaking the most comprehensive reform of the public service since the State was founded. The Croke Park agreement has been essential in supporting this reform. The value of a stable industrial relations environment in achieving a fiscal consolidation of this scale should not be underestimated. Public service staff numbers will be reduced to approximately 287,000 in 2013, a reduction of some 33,000 from the 2008 peak of 320,000. We plan to go further to reduce this number to 282,500 by the end of 2014.
Public servants have already had two pay reductions, totalling an average of 14%. Top salaries have been reduced by up to 30% and capped at €200,000. We have also reduced the salaries for new entrants to the public service by a further 10%. Public service pensions have been reduced, saving more than €100 million annually. Legislation for a new single public service pension scheme has been enacted to reduce future pension costs.
We are implementing a radical reform of the way in which public procurement is organised, to yield significant savings. We are reducing duplication and waste through greater use of shared services for a range of back-office functions. For example, a new human resources shared service centre for the Civil Service will reduce human resource headcount by 17% and costs by 26%, with annual net savings of €12.5 million.
We are taking a focused and integrated approach to external service delivery of non-core activities, where appropriate. In April, we published a new e-Government strategy, which builds on Ireland’s strong recent performance in this area. The most recent European Commission e-Government benchmarking exercise shows that Ireland is now ranked first in Europe for the provision and sophistication of online services to businesses and citizens. We have agreed the standardisation of annual leave and paid sick leave across the public service, which will yield both productivity increases and cost savings.
Notwithstanding the progress made to date, the public service pay bill, at 36% of public spending, will need to make an additional and substantial contribution to meeting our fiscal challenge next year and beyond. Additional productivity and cost extraction measures not envisaged under the current Croke Park deal will be required to ensure that the Government meets these commitments.
Following my invitation, the public services committee of the Irish Congress of Trade Unions recently agreed to enter into discussions to establish if we can reach agreement on such measures. The aim of these discussions is to achieve an additional reduction in the cost of delivery of public services of the order of €1 billion from the public service pay and pensions bill over the period 2013 to 2015.
Public servants are delivering on our vision for a new public service and their contribution should be and is recognised by this Government.
This is a real opportunity for us to build on the achievements of the current agreement and drive a range of workforce reforms which will support our public services into the future. Reforming public services is not just about reducing unsustainable cost. We need a public service that is flexible and responsive to public needs – a service that will be world class.
Supporting Jobs and Enterprise
Creating jobs for our people is central, as the Minister, Deputy Noonan, has said, to this Government’s agenda and the Minister has outlined a series of tax measures to build on the jobs budget and the Action Plan for Jobs the Government announced last year. The figures show some growth in private sector employment.
In 2013, we will maintain our support for employers across all sectors and in sustaining jobs. I am allocating total capital expenditure for the Department of Jobs, Enterprise and Innovation of just under €500 million next year to drive the jobs and enterprise agenda.
I am providing Enterprise Ireland with an allocation of €139 million to support indigenous Irish exporters next year. In addition to a wide range of existing measures, this will support the launch of a new ten-year €175 million venture capital fund which will fund new and expanding Irish companies over the medium term.
The Government is restructuring county enterprise boards to provide a one-stop shop through the local authority system. This reform will be supported by an allocation of more than €26 million next year which will facilitate this transition and fund schemes to support small businesses in every county of our country.
A key challenge is to ensure new jobs will be created as our economy improves and result in a reduction in rates of unemployment. This will involve the Government providing for better targeting of labour activation places and opportunities to provide valuable work skills to unemployed people, particularly those who are long-term unemployed.
I am providing an additional €11 million next year, and €26 million in a full year, to allow the Department of Social Protection increase by 10,000 the number of placements available across the labour market activation schemes offered by that Department.
This will improve employability and work readiness outcomes for participants by giving them opportunities to put their work skills into practice and to learn new skills. My colleague, the Minister for Social Protection, will outline these schemes in detail later today.
The five-year Exchequer Capital Framework published last year sets out a programme of Exchequer investment of €17 billion out to 2016 which will address critical infrastructure deficits, aid economic growth and jobs and provide for much needed infrastructure. The overall capital budget for next year will be €3.4 billion and will focus on the sectors prioritised in last year's capital review, namely, health, education and jobs.
In July, I announced a new jobs stimulus initiative amounting to a package of €2.25 billion aimed at leveraging funds to support a new public private partnership, PPP, programme of projects in key areas of infrastructure. There have been some very positive signals to that initiative. PPP bundle 3 reached financial close last month and construction has commenced. A loan of €50 million secured through the European Investment Bank for this project is a further signal of that bank’s renewed confidence in the Irish State and in our recovery programme, as is the provision of €200 million in funding for Exchequer projects in schools and in the water sector.
The capital allocation for education will ensure we will continue to provide additional school places next year to meet growing demographic demand. Preparatory works for the major Grangegorman DIT campus will also get under way next year.
My officials are also engaging with the Council of Europe Bank on funding for the justice projects prioritised by the Minister for Justice and Equality in his PPP programme.
I have reached agreement with the troika that the proceeds of State asset sales, which will come on stream next year, can be used to support investment and structural changes in our economy and develop and create jobs. Last week, my colleague, the Minister for Transport, Deputy Leo Varadkar, gave details of the commencement of the pre-construction enabling works for the Luas Broombridge project which will be provided for in the allocation for the Department of Transport.
I am also providing €17.4 million to the Department of Children and Youth Affairs for the development of a new youth detention facility at Oberstown.
The Minister for Children and Youth Affairs, Deputy Frances Fitzgerald, is driving this project, which is due to start next year and will create 520 jobs during construction. On completion, it will mean that 17 year old boys will no longer be detained in St. Patrick’s Institution which is unsuitable for children and has been heavily criticised by many national and international bodies.
We have long recognised that energy efficiency measures in both the public and private sectors have the potential to generate jobs and to help Ireland meet its climate change targets. Ireland has challenging CO2 and energy saving targets to meet between now and 2020. The Government’s national energy efficiency action plan sets out the measures necessary to deliver the national 20% energy saving target. One of the key measures is the retrofitting of existing buildings to achieve energy savings. The targets in this area imply upgrading the energy performance of 100,000 houses per annum and reducing the energy consumption in the public sector by 33%. These are challenging targets, but they are also great opportunities. The Government has taken measures to stimulate economic activity and unlock the untapped potential of the public sector in this area. I have agreed to allocate €9 million to improve the energy consumption of central Government buildings between now and 2015.
Furthermore, to place the retrofit industry on a sustainable footing, the Minister for Communications, Energy and Natural Resources has been working closely with the private sector to create an energy efficiency fund. Good progress has been made by the Minister, Deputy Rabbitte, on exploring private funding participants' interest, but as a sign of the Government’s intent, I have agreed to provide €35 million as seed capital for this fund, with a view to establishing a leveraged fund of €70 million.
Energy retrofitting is labour intensive and provides job opportunities for our hard-pressed construction sector. We have companies in Ireland which supply much of the material for these works, so jobs will be secured and created at home by these measures. The Minister, Deputy Rabbitte, will announce details in due course.
We all know we must reduce public expenditure. Our current levels of expenditure are no more sustainable than the property bubble that once sustained them. There is no point in trying to pretend otherwise. We must be strategic, however, in how we do this. We are not going to slash and burn essential public services to satisfy particular interests, or in response to sensationalist headlines.
We need to protect the more vulnerable in our society to the best of our ability. Accordingly, the Government has decided to raise the expenditure ceilings for next year in two Departments that deliver social values in our society. Spending in the area of social welfare and in the Department of Health will increase by €150 million in each Department.
Buy them a calculator as well.
This means that a lower adjustment is required for those Departments than previously stated in the budgetary outlook. These increases will be funded by a number of taxation measures, as set out by the Minister for Finance, and by an increased dividend payment to the State.
The social protection expenditure ceiling for next year will be more than €20.2 billion. Expenditure on social supports has an important impact on stabilising our domestic economy through supporting the overall demand for goods and services. Many of our communities depend on that spend.
In this context, we concluded that reducing the primary weekly rates of social welfare payments would have a detrimental impact on domestic consumption and should not happen. Accordingly, I can confirm that we are, once again, not reducing any primary weekly rate of social welfare payment.
What about child benefit? What about the respite grant?
This means that all pensioners and all those under 66, such as people with disabilities and jobseekers, will have their weekly primary payments fully maintained.
Opposition Deputies did not predict that.
In addition, there will be no change to either the rate or duration of weekly fuel allowances where payable.
Nevertheless, the pressures on our social welfare budget are considerable. It is, by far, the biggest component of current expenditure. For example, pensions will cost around €200 million more in 2013 than in 2012 and unemployment, while stabilised, has not reduced to the extent we envisaged last year. Even with the increase I announced to the social protection budget, measures must be taken to reduce costs.
Here it comes.
We will reduce the duration of jobseeker’s benefit by three months. This will save €33 million in 2013 and €82 million in a full year. The household benefits package comprises electricity allowance, telephone allowance and free television licence schemes. Given the universal element of the household benefits package, we have decided to reduce the supports available to the telephone allowance scheme, to achieve savings of €61 million next year.
We have also decided to introduce changes to the electricity allowance to achieve savings of €20 million next year.
Please allow the Minister to speak.
Deputies should know similar changes last year did not have an impact on any recipient. We got better deals from providers.
We will reduce the child benefit rate by €10 per month. This measure will save €136 million next year. We are conscious of the impact it will have on many households. Therefore, we are providing for additional supports that are specifically targeted at low-income households. These include €14 million in funding to the Department of Children and Youth Affairs to increase the number of child care places available to low income workers and €2.5 million additional supports to the Department of Children and Youth Affairs to further enhance targeted early-childhood and education supports for children in a number of very disadvantaged areas. Full details of the specific social welfare measures are set out in the expenditure report. My colleagues, the Ministers for Social Protection and Children and Youth Affairs, will expand on these measures later today.
I am allocating €13.6 billion to the Department of Health next year.
The Minister is leaving the bad news to the ladies.
As indicated, this includes an additional allocation of €150 million over what was previously indicated. The demand for health services continues to grow due to demographic pressures and we must make certain these services continue to meet the health needs of our population. For example, by the end of year, it is expected that expenditure on the primary care reimbursement service will account for 20% of total HSE expenditure. This growth is being driven by the cost of drugs, payments to professional service providers and the growth in the numbers of medical cardholders. We will take measures to contain these costs, while at the same time ensuring that medical needs are met.
Cuts to home help.
These measures will yield savings of €323 million next year. To contain the growth in the cost of medical cards under the primary care reimbursement service, we are increasing the prescription charge for medical card holders. This charge is being increased from 50 cent to €1.50 per item and the monthly cap for a family is being increased by €10 to €19.50. The increased co-payment for drugs will help make funding more sustainable. The drug payment scheme threshold is being increased from €132 to €144 per month and will save an additional €10 million. Professional fees for health service providers, such as GPs and community pharmacists, will be reduced to save €70 million.
Will that include the Minister for Health, Deputy Reilly?
People over 70 years, with an income of €600-€700 per week for a single person and €1,200-€1,400 per week for a couple, will have their medical card replaced with a GP-only card.
What did the parties in government say about this two years ago? Can they give us a lend of their placards?
The increased demand on overall services is being met through reform of health structures, changing the way services are delivered and securing efficiencies and pay savings. The discussions on savings through an extension of the Croke Park agreement will be critical to meeting the funding needs of the services next year and beyond. Other measures, including efficiency and improved income collection, will yield savings of €150 million. My colleague, the Minister for Health, will announce details of the health funding and savings measures later this afternoon.
The Department of Education and Skills estimates that next year will see over 20,000 additional pupils in primary and secondary schools, with a further 3,300 at third level. Gross education current expenditure will total just over €8.5 billion next year. Education and training will continue to be a priority of this Government and this is evidenced by the level of investment in this area at a time of such severe resource constraints. In particular, we will prioritise and protect, as far as practicable, the programmes that deliver the best results and meet the requirements of children, parents, the disadvantaged, the unemployed and the labour force. However, we cannot exclude the education sector from making the savings we have to make. Difficult choices have been made in areas like health and social protection. While bearing in mind demographic pressures in the coming years, we have had to take decisions to meet the budgetary parameters in education. We focused the savings measures on those areas where expenditure can be reduced without a significant impact on core education services.
We will increase the staffing schedule for fee paying schools next year by two points. We are reducing the allocation to VECs by €13 million in 2013. The VECs will be able to deliver the same level of service by managing from within both their Exchequer allocation next year and their resources.
The sick leave referral arrangements for teachers and special needs assistants, SNAs, will be made similar to those operating in the Civil Service. Changes will be made in respect of the income supports paid to new entrants to further education and training programmes.
The student contribution in higher education will be increased by €250 in each of the years 2013, 2014 and 2015. This is necessary to help maintain higher education services at a time when the Exchequer is severely constrained.
What about Trinity College Dublin?
We are reducing the allocation to higher education institutions by €25 million. Using their existing own resources-----
Where will they get them?
-----as well as very considerable Exchequer allocations, the higher education sector, Deputy McGrath, will be able to maintain services in 2013. Further details of the education measures are set out in the expenditure report and will be announced in detail by the Minister for Education and Skills.
In addition to jobs, social protection, health and education, important measures are being taken in other areas. Savings from agriculture, including from changes to the disease eradication, suckler cow, REPS and early retirement schemes, will yield €89 million.
What does that have to do with public service reform?
Within the justice sector, reductions in Garda overtime and-----
-----various other payroll and efficiency measures will yield over €60 million.
Will Deputy Mattie McGrath please stay quiet? The public would prefer to hear the Minister rather than listening to Deputy McGrath shouting all the time.
Following agreement between the housing bodies and NAMA, I expect the flow of properties from NAMA for social housing to increase significantly next year and an additional €10 million will be allocated to the Department of the Environment, Community and Local Government to ensure we make real progress in delivering these units to those on social housing lists who need them. A range of other expenditure measures are set out in the expenditure report.
Political Expenses Reform
The payments the Members of these Houses receive are constantly under scrutiny and rightly so. While the revised system of expenses introduced by the last Government was an improvement on what went before, the system remains unsatisfactory. The recent Committee of Public Accounts report has raised a number of issues regarding who should determine Oireachtas expenses. As the PAC report acknowledges, previous efforts at the independent setting of remuneration did not resolve all issues. To that end, I have written to the Houses of the Oireachtas Commission, as the body responsible for these Houses, seeking its views on a cross-party, all-Member basis.
Nonetheless, there are a number of issues that require to be addressed immediately.
It is untenable to have a system of unvouched expenses so I am proposing to abolish the unvouched element of the parliamentary standard allowance.
We have been saying that for years.
In future, all Members of the Oireachtas will have to use the vouched system.
What about the logged miles?
I also intend to reduce the volume of money available for the vouched system. I will also be applying reductions of 10% and more to the expenditure limits that comprise the parliamentary standard allowance and of 50% to the allocation of Oireachtas envelopes.
Similarly, it is untenable for the party leaders' allowances to be paid to Independent Members-----
-----without any external validation of its use.
We have been saying that for the past 18 months.
Mattie will have to get a new van.
He has a horse outside.
Can the comedians wait until the Minister has finished? Then you can have your play time.
I intend to amend the legislation to provide for such auditing. I also intend to apply an across the board reduction of 10% to the party leaders' allowance.
Currently, severance is payable to Ministers and other officeholders, commencing the day after the person ceases to hold ministerial or other office. This is payable for a period up to a maximum of two years. I do not believe this is justifiable any more. I now propose to introduce legislation to abolish this payment for current members of the Government-----
-----and all future officeholders.
In total, spending adjustments designed to yield more than €15 billion have been implemented during this crisis. This represents the vast bulk of the required total adjustment.
The scale of this adjustment should not be underestimated, nor do we underestimate the difficulties this has caused for many of our citizens. As reliable economic commentaries from the ESRI to the European Commission and the OECD have indicated, we have sought to do so in a manner consistent with fairness. In reducing the deficit, we are endeavouring to ensure we protect the vulnerable in our society. Those who can contribute more should and will do so.
This year’s general Government deficit is estimated at just under €13.5 billion, or 8.2% of GDP. This is within the 8.6% of GDP limit set by ECOFIN in December 2010. We must continue to meet our fiscal targets and to reach a deficit of below 3% by 2015.
The next comprehensive review of expenditure will commence in 2013, and will be central to identifying additional cost savings and future efficiencies. The Croke Park agreement will continue to enable reforms and to extract costs from the public service.
As a Government, this is our second budget. The economy we inherited had experienced a catastrophic shock. When I took office last year, I could not be certain that we would, as a nation, make it through this crisis.
I no longer hold that fear.
What the people of Ireland have endured has been tough and almost without precedent in the developed world. That we will come through it - and we will - is a significant shared achievement for our people. In time, future generations will be proud that we, as a people, tackled this crisis head on. There remain difficult challenges ahead of us but Ireland and her people will prosper again.
Spokespersons will have 60 minutes each. It is for the main parties to decide how to share their time.
With the agreement of the House, I will share 30 minutes of my time with Deputy Seán Fleming.
We are all agreed that the Irish people have made enormous sacrifices in recent years as Ireland works its way through an extraordinarily difficult economic period. The Irish people have been patient and tolerant. They have made major changes in their own lives to reflect the new economic realities faced by them and by the country.
I ask Deputies to be fair to the spokespersons. If they wish to have discussions, they should do so outside the Chamber. Please show some regard for other people.
Thank you, a Cheann Comhairle.
Of all the things people want from their politicians at this time of crisis, the most wanted are honesty and leadership and for us to ensure the decisions made are fair. I wanted the Government to bring in a budget that gave people hope for the future, showed we are all in this together, that was about fairness and solidarity, had enterprise at its heart, said something about our values as a country, was about more than the national accounts and provided some direction for Ireland. Fianna Fáil want the economy to recover. That is why we have put forward our own ideas in A Fairer Way to Recovery, to achieve the deficit targets and stimulate economic activity.
I hoped the Government, in preparing today's budget, had learnt a lesson from last year when the Minister introduced the first regressive budget since the crisis began in 2008, a budget that hit the poorest income households the hardest. It will take a while for a full assessment to be done of the impact of today's budget on different income groups. On the face of it, however, low and middle income families and elderly citizens will bear the brunt of the budget. They are the biggest losers from a budget that has, again, protected the country's highest income earners at the expense of struggling families who are put to the pin of their collars to pay essential day-to-day bills such as the mortgage and their grocery, heat, electricity, health, transport and school costs. I get no sense of empathy or understanding from the Government, nor do I get any sense that they understand what life is like for ordinary people and families.
The Government has introduced a budget that is shaped more by the respective party political needs of Fine Gael and Labour than the national interest. The deep divisions between Fine Gael and the Labour Party that emerged in recent days are most revealing. Fine Gael showed that its absolute priority in the budget is to protect those who have most. We are told the Labour Party made valiant efforts to protect households dependent on social protection but, clearly, it has failed.
All of this begs the question, who was looking after everyone else in the middle. Families who do not qualify for a medical card now have to make a drugs payment of €144 per month. In the budget negotiations, who was watching out for families who get no assistance whatsoever with their mortgage or rent or who have to bear the full cost of their children's education?
The price Fine Gael wanted to extract in return for considering even a modest increase in tax for those earning more than €100,000 was to cut the most basic welfare payments.
Fine Gael used the basic welfare payment of €188 per week as a negotiating chip to protect those earning more than €100,000 per year.
The Deputy wrote the speech too early.
The Government has increased the universal social charge for pensioners over 70 years of age by 3%, but it cannot increase the tax on those earning enormous sums of money.
Fianna Fáil will not outdo Sinn Féin.
In the face of this resistance from Fine Gael, the Labour Party capitulated and accepted the symbolic fig leaf of a so-called mansion tax that will affect a small number of people and bring in little additional revenue.
Will it affect Dr. Reilly?
Principles that were articulated in opposition are forgotten around the table of power.
Fianna Fáil believes the Minister had some scope to increase the direct taxation burden on those with very high incomes. This would have given him a wider set of choices in deciding his spending priorities.
The Minister, in a highly regressive move, abolished the PRSI exemption threshold in a move that will cost every worker earning anything above the minimum wage €264 per annum.
This will be seen for what it is, an increase in income tax through the back door, and it will fool no one. The promise not to increase income tax has been broken by default today.
This change is designed to have the greatest impact on low and middle income families. For example, a worker earning €20,000 will pay €264 per annum while it will cost a worker earning €200,000 per annum the very same €264 per annum. As a proportion of their income, it will cost the person on €20,000 ten times more than it will cost the person on €200,000 per annum.
What is the total tax bill in a year?
This proposal will bring in €300 million in a full year. Behind the property tax, it is the second largest revenue generating item in this budget.
Today the Government has targeted families with children, who need their car to go to work and who have made sacrifices to provide a home. A family on low to middle income, with three children, living in a modest house with a mortgage and valued at €220,000 in a full year will pay €405 in property tax, an increase of €305 on the household charge, and will lose €10 per month for the first and second child and €18 per month for the third child, a loss of €456 in a year. Assuming it is a one income household, it will lose €264 in PRSI and will pay at least another €50 in motor tax, amounting to just under €1,100. That does not count the additional money for the drugs payment scheme and the additional charges Ministers will announce later this week, such as school transport costs. We have yet to find out the impact of the Minister for Health's proposals for health insurance premiums.
That impact is irrespective of income: it is not income sensitive. The example I gave is the same for a couple on €20,000 as for a couple on €200,000. It does not matter. The property tax, the child benefit cut and the PRSI increase are not income-related. How can the Minister stand over a situation where people on low and middle incomes will lose as much in nominal terms and far more proportionately than people who earn multiples of their incomes? It is inequitable by anyone's standards.
Before last year's election, the Labour Party said it would not agree to cuts in child benefit, that it was a red line issue for the party. Families were told child benefit would be safe under Labour. It was a commendable stance to take during a general election and the party was so exercised by the issue that during the election it took out newspaper adverts and erected posters warning people about the dangers of voting for Fine Gael. In the first budget, the Labour Party broke that promise. It cannot blame Fianna Fáil, the troika or the memorandum of understanding for that because it says nothing about child benefit. Just like the pledge on student fees during the election, the pledge on child benefit was made with the full knowledge about the state of the country's finances. The party made that promise to secure votes. It got the votes, is now in power and has broken that promise twice. That is the Labour Party's record on child benefit and it will not be forgotten by families around the country.
There will be an attempt to say this budget was dictated by the troika, that the cuts and tax increases were decided in Brussels and Berlin. This budget, like last year's budget, was decided in Dublin after the four wise men let the Cabinet see it on Wednesday. I acknowledge the Minister is working within tight constraints and must introduce a budget with an adjustment of €3.5 billion and there is no easy way to do that. The decisions announced today are the decisions of this Government and as the Minister said up to 14 months ago, the troika made clear it has no difficulty substituting one fiscal measure for another with equal value.
Let us look at the record of this Government. It has cut home help services from elderly citizens while protecting bankers' pay and pensions. It has cut special needs assistants from special schools while paying its advisers above the agreed pay cap. It shamefully forced the most severely disabled people in the country to stay outside the gates of this House overnight in the cold to embarrass it into a U-turn when it proposed to cut their personal assistants. We must question the Government's priorities when we hear the parents of children in a school in Dublin must be told to make sure their children have a coat on in class because it cannot afford to fix the boiler. We must question its priorities when HSE social workers are writing to the Society of St. Vincent de Paul asking for public donations to be used to paper over the gaping cracks in the public health service, even before the health cuts that will be introduced by the Minister today. There is something perverse about continuing to pay increments to senior civil servants while the elderly, who have lived through the toughest of times and kept the State afloat, are now being asked to pay the price.
The centrepiece of the tax package is a new tax on the family home. Thousands of families and individuals will simply be unable to pay the property tax. The Government did not raise the possibility with the troika of the property tax being replaced with other taxation measures. The Minister knows that the memorandum of understanding we signed up to in 2010 provided for a site value tax, an altogether different animal to the market value family home tax he is introducing in this budget.
The Minister should have told the troika there is no question of introducing a family home tax against a backdrop of a mortgage arrears crisis that is out of control. The Minister has the perfect reason for doing it but instead he is proceeding with a punitive tax on the family home at a time when most people can ill afford to pay it. This will be a divisive tax, which will hit all home owners but especially penalises home owners in Dublin, Cork and other major urban centres.
Where is the legislation underpinning this property tax? We were promised we would have the legislation for this debate but we do not have it. Where is the Thornhill report? It has been knocking around Government Buildings since June but the Government did not have the courtesy to publish it in advance of today's budget so we could have a proper debate. This is the Government that talked about reform of the budgetary process.
This tax will be hardest felt by families in low to middle income brackets and by those dependent on welfare. We believe this is the wrong tax at the wrong time. According to the last official figures from the Central Bank, almost 170,000 mortgages are in arrears or have been restructured, more than 20% of family home mortgages. That is likely to rise to one in four when the next official figures are released. The mortgage arrears problem has got dramatically worse in the 21 months the Government has been in place. These people cannot pay their mortgages, they are not choosing not to pay, they do not have the money to pay, and now the Minister is imposing a property tax on them. How many people sitting at the Cabinet table have any understanding of what it is like for a family which is struggling to make the monthly mortgage repayment?
Where is the Minister for the Environment, Community and Local Government?
He is in Doha.
How many Ministers even have a mortgage on the family home?
The Minister said the exemptions are largely based on the exemptions to the household charge, which are exceptionally narrow in nature. The Minister failed to point out, however, that those on mortgage interest supplement, who were exempted from the household charge, are not being exempted from the property tax. Around 16,000 of the lowest income families in the country, who cannot pay their mortgage without the assistance of the State, are now being required to pay this property tax. It makes a mockery of the lip service paid by the Government to addressing the mortgage arrears crisis.
All of that is without even mentioning the buy to let mortgage book, which is in a complete mess, as the Minister well knows.
We know that three out of ten of them are in arrears of 90 days or more. They will need to pay the non-principal private residence charge next year but the NPPR will then be abolished from 2014 onwards.
A report by Davy estimates that half of family home mortgages are in negative equity at this point. That is at least 400,000 family home mortgages where the value of the mortgage is greater than the value of the property. How is it fair to impose a tax on a net liability, which is what these families have? It is wrong to suggest that negative equity is not a problem so long as the family can continue to service the mortgage. It is a real trap for people and is deeply unfair to impose a property tax without taking any account of the value of the mortgage vis-à-vis the value of the house. The budget is doing nothing for those people.
Approximately 160,000 people paid at least €10,000 on stamp duty over the past ten years and many of them had to borrow that money. They are repaying that money every month in their mortgage repayment and as they see it they are already paying their property tax. In addition there are people in rural areas - the Taoiseach will know this well - who have paid up to €15,000 to local authorities in respect of development contributions to build a one-off house in the countryside.
Many of them were fiddled.
They have a legitimate case to make, but that is not being taken into account.
We have an unemployment rate of almost 15%. An Irish League of Credit Unions survey showed that 1.8 million people live in households that have less than €100 on which to live after essential bills have been paid. The reality is that a great many individuals and families will be unable to pay this property tax because they do not have the money. The Minister's attempts to take into account ability to pay with his deferral proposal, where gross income less 80% of mortgage interest falls below €15,000 for single people and €25,000 for a couple, is not adequate. That will simply open an administrative nightmare. People who cannot even pay their mortgage are now being lumbered with having to work out whether they are entitled to a deferral of their property tax obligation.
When will Fianna Fáil apologise to all these people?
For many older people this will become a tax from beyond the grave - a tax on a home they have spent an entire lifetime to secure. On their death, instead of being safe in the knowledge that the home will pass to a loved one, the taxman will be first in the queue to take a slice of the value of their home. The deferral the Minister has announced today will be subject to an indexation per annum. So for every year that somebody on the State pension defers payment of the property tax it will increase by 4% per year. It is a major concern for older people to have coming to the end of their lives that they will have to pay such a punitive tax.
I have serious concerns about how the self-assessment system will work. How are people to know what their property is worth today? What will the penalties be if they get it wrong? The Minister referred to people getting a valuation on their property. Is he encouraging them to spend a further €100 or more every year to have a valuation done on their property so that they can ensure they remain within the law? The Minister has estimated a yield in a full year of €500 million. According to the Department of the Environment, Community and Local Government and its Minister, Deputy Hogan-----
Where is he?
-----some 1.6 million households are potentially liable for the household charge. The Department of Finance document states that the Revenue believes there could be up to 1.9 million households liable. Let us use the Department of the Environment, Community and Local Government's figure of 1.6 million. The full-year projection of €500 million divided by 1.6 million households assumes a 100% collection rate and gives an average charge per house of €313. Does the Minister really believe he will achieve a 10% collection rate in respect of the property tax? I believe he will need to revisit the estimated yield from this measure.
Will the banks be liable to the property tax for properties they have repossessed from families? Why is the Minister excluding sites that are zoned for residential development, which would have been captured under a site-value tax? The proposed mansions tax is little more than a sop to the Labour Party in return for Fine Gael getting its way on the highest income earners not having to pay any more direct taxation. The mansions tax is essentially a Dublin tax. Homes worth more than €1 million are rare enough in Dublin and are extremely rare outside Dublin.
What about the one in Moneygall?
How much additional revenue will this yield? It is clear from the budget documentation that up to the €1 million threshold they are only liable to 0.18% and the 0.25% rate only applies to the excess over €1 million. One wonders how much extra revenue will be delivered by this so-called mansions tax in the way the Minister has configured it.
The Minister, Deputy Reilly, has one in Moneygall.
The expected yield from this along with the money in respect of the 3% on pensioners, which is approximately €38 million in a full year, should be compared with what would have been achieved if the Tánaiste had got his way and added 3% to the universal social charge for those earning more than €100,000, which would yield up to €200 million. The Government would have had far greater choices if it had access to cash in that regard.
The Minister has extended carbon tax to solid fuel, a measure that will hit many of the poorest households that rely on coal and turf for basic heating. Some of these people have installed stoves in recent years and will be particularly hard hit by the addition of carbon tax to solid fuels. The Minister should reconsider this measure which will hit the poorest households the hardest.
Our budget submission called on the Minister to build the budget around certain priorities. The priorities we suggested were the areas of education, mental health and disabilities. Considering what is proposed in the budget, I am deeply concerned that the health cuts being unveiled will result in further cuts in direct services for people with disabilities.
There is nothing in it at all.
It is fine for the Minister to shake his head. We will find out in coming weeks when cuts affect service providers such as COPE Foundation, Jack & Jill Foundation and the Brothers of Charity Services. Their cuts are never outlined in the budget document but when it comes to the national service plan being agreed they will get a cut. I hope the Minister proves me wrong and he protects them. I hope there are no further cuts to direct disability services. Let us wait and see. I hope the Minister is right and that there will be no cuts. Is he giving such a commitment today?
The Minister should go on and give us a commitment.
The Minister can offer a commitment today that they will not be cut and put it to bed. Will they be cut or not?
The Minister will not answer the question. That is the bottom line.
The Minister has gone very quiet now.
Buried in the depths of the expenditure reductions is a €325 per annum cut in the respite care grant from €1,700 to €1,375. That is a cruel cut and there is no need for it to be implemented. My God, the bar has been set so high to qualify for a respite care grant now that many people with a family member, who has a serious disability, either use that grant to get a break - use it for respite - or they use it to provide essential intervention services for their loved one to fill the gaps where the HSE is not providing those services. There is no need for that cruel cut and I ask the Minister to reverse that cut which hits the most vulnerable people. Given the choices the Government has made in respect of taxation, it is impossible to justify that people with special needs should suffer a cut affecting their standard of living, which will add extra anguish and pain to the family members who care for them and save the State billions of euro every year in the process.
At the conclusion of my budget speech last year, I made the point that I have repeated since that the fairest way to measure the Government's performance on the economy is by measuring how successful it is at tackling the jobs crisis. I welcome some of the initiatives outlined in the Budget Statement, which hopefully will help the SME sector to create additional jobs here. Since the Government came to office in March 2011, using the official CSO figures, the quarterly national household survey seasonally adjusted, there are 30,000 fewer people at work. The unemployment rate increased from 14.3% to 14.8%.
We all accept that it would have gone up far more but for the safety valve of emigration. A total of 87,000 people, mainly young people, left our shores in the 12 months to April 2012. When the Minister took office, he said employment levels would grow by 0.5% in 2012. He now says they will fall by 1.2%. He said unemployment would be 13.7% by the end of this year. He now admits it will be just under 15%. He is now predicting no increase in employment levels throughout next year. All the fanciful talk of 100,000 jobs under NewERA and the five point plan has been long forgotten. The five point plan has not been seen since February 2011.
The most alarming aspect of this is the dramatic increase in the number of people who are long-term unemployed. A total of 60% of people out of work are now long-term unemployed. What are we doing for them and where are the jobs? Can we really say we are putting enterprise at the heart of everything we do? Can we say we are doing everything to support the 200,000 small businesses in this country who provide almost 700,000 jobs? We know these businesses will lead the economic recovery if we give them the capacity to do so. These businesses are starved of credit. The Minister knows that banks are not meeting the lending needs of this economy. Even when AIB came before the Oireachtas Committee on Finance, Public Expenditure and Reform, it confirmed that the new lending it has extended so far this year is €600 million, not the €3.5 billion the Minister says it is providing. They are loans that are repackaged and approvals that never get drawn down because the conditions and interest rates are so onerous that the borrower would never have the capacity to draw down that money.
The Minister said the economy would grow by 2.5% in real terms in 2012. He now says it will grow by 0.9%. He said it would grow by 3% next year but has now halved that and says it will grow by 1.5%. He said private consumption, which is the driver of the domestic economy, would grow by 1% in 2013. He now says it will fall by 0.5%. He said exports would grow by 6%. We are now told they will potentially grow by 3%. The warning signs were there in respect of the public finances and Exchequer returns yesterday, particularly in respect of the self-employed. The €300 million deficit in income tax last month should have set the alarm bells ringing and the Minister should be giving that sector every support he can in its time of need.
I had hoped and half-expected that the Minister would pull a rabbit out of the hat today in respect of the promissory note and bank debt. I am, sadly, disappointed. I wish him well in his ongoing negotiations. The technical talks on the promissory note have been ongoing for about 14 months. They must be extremely technical. We have not seen any paper so far and would love to see one and have an input into it. I wish the Minister well in that because it is important for the country and we will do everything we can to support the Government to get a deal on bank debt. The Minister also needs to be honest with people in respect of the use of the European Stability Mechanism. It will be at least a year before there is any relief in that aspect of bank debt and he might as well call it as it is and tell people what the position is.
The previous Government agreed to all those things.
The Government could have changed it.
Deputy Michael McGrath, without interruption.
This budget day is one which many ordinary families have been dreading. They are looking to this House and Government for reassurance about their future. They want a Government that will lead them through this economic crisis in a fair and compassionate way. The harsh reality is that today's budget will put an unbearable financial burden on many families. This budget reaffirms the approach of a Government that has broken almost every promise it made to the people at the beginning of last year. People were looking to this budget for a sense of hope and for some sense that the Government understood what their lives are like. This Government has the numbers to put through whatever budgetary measures it wishes, but on the basis of what has been presented today, getting public acceptance of these measures will be a far greater challenge.
I look forward to making a contribution on detailed aspects of the budget. I want to highlight issues that will affect the majority of ordinary families and people. This budget effectively tightens and squeezes the majority of families. Despite promises that this would be a fair budget, it is anything but. It follows the pattern of last year. Fine Gael defended its constituency of high earners while Labour capitulated on its so-called core values. Contrary to grandiose claims, this is not a radical or reforming Government, rather it is a complacent one. The Minister for Social Protection presides over a €685 million overspend, while the Minister for Health must look for another €360 million this week. Everything this Government does is dictated by political expediency, as demonstrated by the unseemly row and horse trading between Fine Gael and Labour Ministers in the run up to the announcement today.
Over the past two years and during the previous election, commitments were given to the people which today are being broken. Put simply, this is a U-turn budget from a U-turn Government. In every area from third level fees to child benefit to class sizes to carers' payments to employees' PRSI to property tax, Government parties have shown they are willing to say anything to get elected until they are safely ensconced in their offices when they cast those promises aside. We are witnessing a Government that is obsessed with style over substance. Last month, the people voted in a referendum to enshrine children's rights in the Constitution. Today, the Government is cutting child benefit. That is its answer to the people who voted in the referendum. It is also cutting the overall budget for the Department of Children and Youth Affairs by an additional €16 million. That is happening a few weeks after the people at the Government's request enshrined the rights of children in the Constitution. The response of this Government is to cut child benefit and funding for the Department of Children and Youth Affairs.
Labour has spoken out against the bank guarantee on many occasions in the past. Despite this, last week, every Labour Deputy voted to renew that for a further 12 months. The Government claims it wants to protect the most vulnerable, but last year, it introduced a budget that was unfair and this budget is the same. The test of fairness is how one goes about achieving the adjustment of €3.5 billion. This side of the House accepts this figure must be achieved, but the test of fairness is how one goes about it. The Government has discretion as to how to apportion the split between additional taxation and expenditure cuts. We believe fairness dictates a 50-50 split between tax increases and expenditure reductions. Once the decision was made by the Government to load the burden of the €3.5 billion on expenditure cuts, it was inevitable that this budget would hit the poorest and most vulnerable the hardest. Fairness went out the window in the interests of political expediency.
I will address specific measures in the budget and will inevitably concentrate on issues that affect families, children and parents. The cut in child benefit can only be described as an anti-family measure. Today's €10 reduction in child benefit, taken in conjunction with last year's reduction, will take €200 million out of families' incomes. The reduction makes a mockery of Labour's red line approach on child benefit about which we have heard before. Child benefit is a core payment to 600,000 families that helps sustain the health, wealth and well-being of 1.5 million children. Child benefit is a universal payment that provides vital income support for families in meeting the costs of rearing children, especially during a time of unemployment and economic hardship. In October, the Minister for Social Protection told us she would only consider cutting child benefit when we were able to offer Scandinavian levels of child care.
There was no mention of it in the statement today. Throughout the country ordinary families are struggling to make ends meet and meet their basic child care costs. This crude attack will cause significant hardship for families. The Minister will also impose additional expenses on working low income families.
I wish to explain the changes made to child benefit because they will have escaped many people. The Minister had already announced cuts to child benefit to be introduced on 1 January, which were not repeated today but which will affect every family claiming child benefit. At present the rate is €140 for the first and second child and this will be cut by €10 per week to €130. The current rate for the third child of €148 will also be reduced to €130, according to the previous announcement and the announcement made today. For the fourth and subsequent child the current rate of €160 will also be reduced. Families will wish to know how it will affect them. Families with one child will see a reduction of €10 per month. A family with three children will see a cut of €38 per month, or €436 being taken from the mother's hand per annum. For a household with four children the cut will be €696 per annum. This is a very severe cut and it is important that people understand what is going on.
It is not only in this area the Minister will make cuts. He will also make it more difficult for people to obtain mortgage interest supplement. This scheme had worked well over a number of years and helped people avoid falling into arrears with their bank repayments. It costs approximately €3,500 per recipient, which is good value compared to what would be paid in rental supplements if the recipients were in private rented accommodation. The measures introduced by the Minister are coming into effect as time goes on and they will have a substantial impact in 2013. The Minister for Social Protection, Deputy Joan Burton, stated that rather than it being a preventative measure she wants a person to be in arrears for at least two years. This means a person must struggle for a year and then deal with his or her bank or financial institution, meet the conditions of the deal reached for an additional 12 months after which he or she will qualify for mortgage interest supplement. If people can meet the deal offered by the bank the Minister will then tell them they do not need mortgage interest supplement, so she is on the way to phasing it out.
Another issue which needs to be mentioned is the one parent family payment. The age limit for this payment has been 14 years, but legislation was passed earlier this year which means from 1 January 2013 the age limit will be reduced to ten years for new applicants. This must be taken into account. In the first week of January the Minister will also reduce by approximately €20 the income disregard which can be earned without the one parent family payment being affected. This measure was announced on a previous occasion but will come into effect next year.
The measures announced by the Minister will hit families where it hurts most by removing another €50 from the pocket of those who qualify for the back to school allowance. One must be on a very low income to qualify for this allowance. The Minister stated this will save €17 million, but this saving is on the back of the poorest people of Ireland, because by and large one must be in receipt of a welfare payment to qualify for the back to school allowance. At present the payment is €250 for children over 12 years of age and this will be reduced by €50. The payment for children under 12 years of age will be cut from €150 to €100.
With regard to older people, the household benefits package is valued throughout the country. Our senior citizens and people with disabilities depend on it. We know it is a significant cost to the State and we know it must be considered carefully. Approximately 400,000 people depend on the household benefits package. The main areas it covers are gas, electricity, telephone costs and the television licence. Many utility companies make excessive profits through what they charge the State for the package. The Minister for Social Protection should drive them harder and get better bargains for the State rather than making cuts. The €61 million saving should be shared between the companies providing the services, which have a monopoly, and none of it should be brought to bear on elderly people or those with disabilities.
Was the budget poverty-proofed? The answer is that it could not have been because the Ministers only saw it a few days ago. Was it gender-proofed? It could not have been because only four Ministers, all men, were in possession of it until a few days ago. They could not have gender-proofed it. Was it equality-proofed? It was not. It was rushed to the printers in the past day or two without detailed discussion. If it had been gender-proofed and the Minister had thought about it carefully he would not have done much of what he did. Many of the measures announced in the past hour and a half are anti-women and anti-mother. I am shocked the Minister announced he wants to tax maternity benefit. He will tax mothers who give birth to children. As I outlined earlier, child benefit payments to a woman - and most child benefit payments go to women - with three or four children will be reduced by more than €600.
The measures announced by the Minister will hit women who have children. They will also hit new applicants for the one parent family payment as the age limit will be reduced to ten years of age and families with children over this age will not be eligible to apply. The Minister, Deputy Joan Burton, has the view they should not all be out working and somebody should mind the children when they come home from school. As I also outlined earlier, the amount which can be earned before the reduction in the one parent family payment takes effect will also be reduced. We know the overwhelming majority of those in receipt of the one parent family payment are women.
The Minister has done a very nasty thing by cutting the carer's respite grant. This is a grant for carers who look after elderly or disabled people, including disabled children in receipt of domiciliary care allowance, in their home. I cannot believe for an amount of €26 million the Minister has decided to cut the respite care grant and will reduce it by €325 from €1,700 per annum to €1,375 per annum. This grant is what allows people to keep their sanity. They need the respite care grant so they can have a break for a week or two at some stage during the 52 weeks of the year. They provide 24-hour cover 365 days a year and need to be able to pay someone to come and look after their dependent relative. They need a break. However, the Minister will cut the respite care grant payable to the carer. This is nasty and unnecessary. The Taoiseach and the Minister, Deputy Howlin, are two decent men and I ask them to reconsider this. Two categories of people receive the respite care grant, namely, those in receipt of carer's allowance and those who do not qualify for it because of the means test but still provide 24-hour cover 365 days a year. The only payment the latter group receives for providing full-time cover for an elderly or sick relative is the respite care grant of €1,700 a year. I cannot believe the Minister is cutting it. The majority of carers in Ireland are women. This is another anti-woman move. This is also the case with regard to the changes to the household benefits package because the majority of elderly people are women as they tend to live longer. The reduction in the household benefits package will affect elderly widows.
I cannot believe the Minister has done this to the women and the mothers of Ireland - taxing maternity benefit, cutting child benefit, cutting the eligibility for one-parent family payment, cutting the carer's respite care grant, cutting the back to school clothing and footwear allowance, and hitting the household benefits package that will affect more women than men. I am shocked that he has done this. Had he taken a few days extra, he would have seen that. The mistake was made when the Minister decided to achieve the majority of the €3.5 billion by way of expenditure cuts. Had he done it the way we suggested, he would still have achieved his targets. Our document is on the public record. Some of what the Minister has done is in our document published two or three weeks ago, but had he followed our approach, we would have had an equal split between the taxation and expenditure cuts. Instead, the Minister chose to load it on the lowest paid who most need the support.
It is the consequence of Fianna Fáil's approach.
In respect of the Department of Social Protection benefits, the Minister has cut the period in which people can avail of jobseeker's benefit, from 12 to nine months for people who were working for three, four or five years and who, through no fault of their own, have lost their jobs, and from nine months to six for those who have worked ten, 20 or 30 years and who never missed a day's work or a week's contribution. The Minister is cutting their benefit from nine months to six months to save €82 million. The Minister might say that will encourage them to get back to work. That would be fine if there were jobs available, but the only option he is giving jobseekers, who are at their weakest and most vulnerable, having lost a job after working for decades and who know nothing else, is to cut their jobseeker's benefit. The Minister is essentially saying that new Labour's way is for these people to go to Frankfurt, Quebec or Queensland or wherever to get a job.
The Minister has also made it more difficult for employers to employ people. He has cut the employers' redundancy rebate at a saving of €30 million. We all would agree that the future success of the economy lies in small local businesses which employ between two and five people. If a downturn in business occurs through no fault of their own, the small business operator must lay off workers. If the employer cannot get that redundancy payment rebate, he or she will think twice about employing a person. That is a disincentive to employment.
The Minister has also cut the back to education allowance. He has discontinued the €300 payment per annum at a saving of €24 million. He has also cut the respite care grant.
This brings me on to a bigger issue directly affecting the Minister for Public Expenditure and Reform, Deputy Howlin. He should bear this point in mind because I have not made it previously. There was an application in the Dáil this week for Supplementary Estimates for the Department of Social Protection and the Health Service Executive to the tune of €685 million and €360 million, respectively. As the Minister knows only too well, there were a number of Supplementary Estimates last week totalling €73 million across a range of Departments. These Supplementary Estimates were voted by the Dáil because of the Government's flawed budget last year. The Minister's figures were wrong, we told him his growth projections were wrong and we told him the health budget was wrong as well. The Minister has had to come back in recent days with Supplementary Estimates to the tune of €1.118 billion for all those Departments. There has been well in excess of €1 billion by way of Supplementary Estimates.
They already counted PRSI. It is being recounted. We know that.
In preparing for the Supplementary Estimates debate last week, the Library and Research Service gave me details of all the Supplementary Estimates. I asked how much there was in Supplementary Estimates in previous years and the staff gave me the figures for each year back to 2007. There have never been in recent memory Supplementary Estimates of the scale of those that have gone through the House this week. That is remarkable, and it is a statement of fact.
Deputy Fleming will be aware that the recounting of PRSI is a third of it.
They amount to €1.118 billion. I will spell it out to the Minister in further detail. When the Taoiseach set up the new Department of Public Expenditure and Reform, I thought it was a good idea and I supported it. In the Government's first full year in office, we have seen this Department fail utterly. The Taoiseach should take out the scorecards he stated he had for the Ministers. Here is the biggest Supplementary Estimate in living memory coming after the setting up a Department with responsibility for public expenditure.
Deputy Kelleher cannot count.
What use did that Department serve? I will explain it to the people. Since the Minister stood in this House exactly one year ago, all of the Departments that are under his direct control as Minister for Public Expenditure and Reform-----
The Minister's success.
-----overspent by €3 million every day, €20 million a week or €100 million every month for the past 12 months, and there have been Supplementary Estimates recently in the order of €1.2 billion. The list is available and the Minister knows it well. I have never seen such a poor outcome for a new Department and I did not expect I would be going down this road. I did not expect Supplementary Estimates of such scale----
I will go through it with the Deputy.
-----but those are the irrefutable facts.
I will explain about the PRSI recounting, but Deputy Fleming knows about it.
We told the Minister this time last year that the health Estimate was flawed. The figures were wrong; they did not stand up. Everybody knew they were flawed. The Minister, Deputy Howlin, needs stronger legislative powers to be able to stand up to the Ministers, Deputy Reilly and Deputy Burton, and tell them they cannot overspend.
No wonder the Minister, Deputy Howlin, is smiling. He will not stand up to the Minister, Deputy Joan Burton.
Deputy Howlin comes into the House at the end of the year and thinks he can slip through €1 billion in Supplementary Estimates that arise from flawed budgeting. There was no overspending in the Department of Health. The Minister, Deputy Howlin, had a flawed budget for that Department to start with. Everybody told him the figures passed by the House last year were not adequate for the job. The Minister is talking today about achieving another €781 million in cuts for next year. That is not true. It is fairyland stuff. The Minister spun it for the year and he is doing it again.
In the Department of Education and Skills, there is another broken promise from the Labour Party in the form of an extra €250 in student fees, all to raise €55 million. It is a small figure in the education budget but the Minister is making students pay. The Minister, Deputy Quinn, stated a week ago that he is happy with his budget and he has come here today looking to cut €123 million from that budget. These are issues that need to be addressed by the Minister, Deputy Howlin, and his Department over the course of the year.
As we are all aware, this time next year the troika will have gone home. There is only one thing standing between Ireland and the troika going home, and that is how the Minister manages the Government's finances between now and then.
There has been an outcome of 8.2% in a single year.
If we continue to have overspending of the Estimates produced today-----
It is 8.2%.
-----in the order of €3 million a day, €20 million a week, €100 million a month or more than €1 billion per annum, woe betide the Minister if he does not do his job and the troika must stay.
The target was 8.6%; the outcome, 8.2%.
The troika are scheduled to go. They are on the road out of here.
Thanks to us.
They were here for a short period and the Minister, Deputy Howlin, should not mess it up.
The Minister took €10 off child benefit.
Deputy Sean Fleming's party brought them in.
It is only one budget.
The Minister should not mess it up.
Order. Deputy Sean Fleming has the floor.
A forest of placards.
Last Thursday was an interesting day in this Chamber. The public is focused on us today and they all tune in once a year to see what is going on in the House, but I would take them back to Thursday last when the Labour Party voted to renew the bank guarantee in this Chamber. That seems to run counter to everything that party's members stated they would do before they took office.
Also last Thursday, the Minister, Deputy Howlin, presented a Supplementary Estimate for his Department to provide for pensions for retired civil servants, 84 of which were in excess of €100,000. When will he learn that the people do not want to hear of a Supplementary Estimate providing for these high pensions?
The Deputy's party gave them to them. They negotiated and signed off on them. He has a brass neck.
Deputy Howlin is the one who has done the talk. He promised the change.
Deputy Martin's former colleagues are collecting them as well-----
These are civil servants' pensions.
-----such as the former Taoiseach, Bertie Ahern, and all the rest of them.
We had a proposal for it.
I want to be clear. These pensions were for the retired Sir Humphreys. The modern-day Sir Humphreys captured the Minister to look after the retired Sir Humphreys because they will be in that category some fine day.
I abolished the top level appointments commission terms which Fianna Fáil brought in.
The pensions were for civil servants only. If that had happened in a local authority where it had trouble in the last month of the year meeting the payments for its retired workers, it would have had to have found the money for those pensions out of its own resources and make the necessary cuts.
Civil servants, however, were able to walk into the Minister, Deputy Howlin's office and say: "Minister, we need money for the retired civil servants". There was no mention of retired council workers or any retirees in other State agencies who do not have the same access to the Minister.
The issue of public sector pay and reform was not sufficiently dealt with here today. We have had some reform and the Minister has spoken a lot about abolishing quangos. In 2011, he said that 48 agencies would be abolished or merged by the end of 2013 but we can see that will not happen. One third of the 48 State agencies earmarked for abolition or merger in 2012 will have completed the process by the end of the year, but the others will not. In addition, of the 46 planned for 2013 it appears that only half of them will be on time. Part of this is down to the failure to pass legislation in this Chamber by the respective line Ministers who are obviously putting up a resistance.
The Minister for Public Expenditure and Reform makes great play about efficiencies, shared services and public sector reform. I support the principle of shared services whether it operates across the HSE, local authorities, the Garda Síochána or Government Departments, including the Department of Education and Skills. The public have seen one example of what this Government means by sharing services and that is the third-level grant processing scheme, commonly known as SUSI.
That was your invention.
As the Minister knows, this came into being this summer.
The Minister for Education and Skills, Deputy Quinn, launched it.
Yes. The Minister, Deputy Quinn, apologised for the delays but I think he was also apologising for the Minister for Public Expenditure and Reform because this is a reform issue. Some 66,000 people applied for third-level grants but, as of today, half of them have not yet been approved. Most TDs are now coming across a new phenomenon in their constituencies. I have had numerous examples of where people were informed in writing that they qualified for a 100% grant, only to be told later that the grant had been reduced by 50% or not approved at all. When I followed that up by tabling parliamentary questions I was told that due to the volume of cases, errors inevitably occur. People are having to leave third-level institutions due to those administrative errors. They took up college places on the basis of letters they received - I have copies of those letters - yet subsequently letters were issued which stated something different. It affects students from low-income families who should be eligible for such grants.
I wish to comment on the Department of Children and Youth Affairs because we have had the children's referendum. Apart from cutting child benefit, the Government is also cutting funding to various youth programmes to save €5 million. In addition, the subvention rates towards child care costs and places are also being cut by €3.7 million. Expenditure for the schools completion programme is being cut, as is money for the national children's strategy and the early intervention programme. I am shocked that a few weeks after the children's referendum the Government is cutting the Department of Children and Youth Affairs budget for 2013 and child benefit on top of that.
The Minister could have assisted job growth in the economy by ensuring that money earmarked and passed by this House for capital expenditure on publicly funded projects was used for that purpose in 2012. We now see a massive underspend of €400 million, however. At the end of October, he told us that would not happen when the underspend was €336 million. A month later, the figure had reached €405 million. Every one of the jobs that is not proceeding represents a loss of employment. We estimate that there are 4,000 fewer people at work today because the Minister did not spend the €405 million on projects for which he received funding. Those 4,000 people are suffering due to the ineptitude of various Government Departments in not getting the jobs done.
I appeal to the Minister concerning the €3 billion worth of publicly funded contracts that are due to happen next year. We on this side of the House will do everything to assist him, but will he please ensure the Construction Contracts Bill goes ahead as a matter of priority? So many subcontractors and their direct employees are not being paid for their labour, and every TD is experiencing this in constituency work. The main contractor is being paid by the line Department or the contracting agency on behalf of the State, yet subcontractors and their direct employees have not been paid. That is because of the tendering process and the lack of proper mechanisms to ensure that competent and financially strong contractors would get these jobs in the first place. It is a scandal that people who work cannot get paid. This House is unanimous on that issue. I want to get this legislation over the line because it has been months since we debated it on Second Stage.
The budget contains a number of taxation measures, including the property tax which my colleague Deputy Michael McGrath has outlined in detail, that are not necessary at this time. They should not proceed now. There are a number of very unfair cuts right across the areas of health, social welfare, education and others, that should not happen. They are falling disproportionately on the poor because the Government has decided to make most of the adjustments in expenditure cuts, rather than on people who could pay more. Many of the cuts are unfair and we oppose them. We will be trenchantly opposing this budget due to its unfairness concerning families and the ordinary people of Ireland generally.
Deputies Pearse Doherty and Mary Lou McDonald who are sharing time. Is that agreed? Agreed.
In recent weeks, people across this State have been gripped by two emotions - hope and fear. They were hoping that the budget the Minister announced today would have made things better, that it would bring jobs and help rebuild our broken economy. They also hoped that it would improve the health and education systems, and that it would ease the burden they have been carrying since 2008.
They are also fearful, however, that the Minister would do what he did last year, that he will continue to repeat the mistakes of Fianna Fáil, and that he will continue to make ordinary people pay for the bad decisions of bankers and politicians.
People want this Government to succeed. Even those who voted against it and did not want it in office, want it to succeed. Like hundreds of thousands of ordinary people, I have shared their hope that this budget would be different, would break with the failures of the past, would chart a new course and would make things better. Today, however, the Minister has dashed all our hopes and has confirmed all our fears. Despite his best attempts to spin what has been announced today, one thing is crystal clear. If I had closed my eyes during either of the Government Ministers' speeches, I could have been listening to Brian Cowen, the late Brian Lenihan or anyone else from Fianna Fáil delivering the same speech. They proposed and implemented many of the decisions that have been announced today. Fine Gael and Labour have swallowed the failed economic policies of Fianna Fáil, hook, line and sinker, and are now implementing them with gusto.
As I listened to the Minister, I wondered if he was living in a different reality to the rest of us. His failure truly to grasp what ordinary people across this State are going through is shocking. I have met these people across the country in towns and villages. They tell me that they are living from week to week; they are finding it tough and are barely able to get by. They are the mothers who go without dinner so their children can eat. They are the fathers who stand in the dole queue, trying to keep some of their pride and wondering if they will be able to meet the bills that are coming in. They are the elderly who gave their lives and taxes to this State and are now living in poverty. Their help is being stripped away from them in every single budget, yet they still hold themselves with dignity.
I am embarrassed to stand in this Chamber, where we are so proud to have been elected to serve, and hear the Minister and the Government let these people down so badly. The Minister pretends that their suffering is not real. What has been delivered in this House today is a bill for the ordinary families of Ireland. It is a bill that picks up the tab for the failed policies of Labour, Fine Gael and Fianna Fáil – three parties that have caused, deepened and lengthened the recession.
In December 2010, Fine Gael and Labour stood on this side of the House and rightly lambasted Fianna Fáil for introducing its fourth consecutive austerity budget. When in opposition, Deputy Eamon Gilmore said Fianna Fáil had introduced cuts that broke new ground in political stupidity. He then crossed to the Government benches and did exactly the same thing, not once but twice.
The position is the Fine Gael-Labour Party Government has implemented €7 billion in taxes and cuts after riding into office on a wave of popular support to end austerity. So much for the brand new dawn or the democratic revolution for which people hoped and the Government promised. Few families have been untouched by this crisis, whether by emigration, unmanageable mortgages, bills they cannot meet or job losses. However, the Minister clearly thinks these families have more to give and so he has hit them with a family home tax, child benefit cuts, increased motor charges and hikes in the price of cigarettes and alcohol. As someone tweeted earlier while the Minister was on his feet, because of the Minister's work in the budget today it will now cost people more to get to work where they will be paid less to take back to the home in which it now costs more to live.
Tá an Nollaig buailte linn, agus i gceann cupla seachtaine beimid ag ceiliúradh na Nollag. Ar fud na tíre beidh cathaoireacha folmha ag tábla an dinnéir arís i mbliana. Nuair a tháinig an Rialtas isteach agus nuair a d'fhógair an tAire an buiséad deireanach, bhí 1,500 duine ag fágáil na tíre gach seachtain. I mbliana, agus é ag fógairt an dara bhuiséid, tá 1,600 duine ag fágáil na tíre. Tá siad ag fágáil na tíre agus ag cuardú post, poist a gheall an Rialtas go gcuirfí ar fáil; gealltanas eile briste.
The biggest cut the Minister has inflicted today is the cut in people’s expectations. It is clear he is removed from the suffering of the ordinary people. It is clear he does not understand what they are going through and what their lives are like. However, there is no forgiveness for not bothering to read or choosing to ignore the many reports that are put on his table explaining to him what such people are going through. A few months ago, the Irish League of Credit Unions published a survey that demonstrated clearly that 1.8 million people now are left with less than €100 of disposable income at the end of each month. It reported that half of all adults are struggling to pay their bills on time and that eight out of ten people are concerned about their ability to cope with increasing energy costs this winter. What has the Government done? It has cut child benefit, the back to school allowance and the household benefits package. Moreover, it has reduced the length of time for jobseeker's benefit, thereby once again punishing people for losing jobs and not being able to find others because the Government will not create them. It has reduced the redundancy rebate, which will affect employers and has increased the accident and emergency admission charge and the cost of prescription medicine. Medical cardholders will now be obliged to pay treble, that is, €1.50, for prescription charges and the Government has lowered the medical card threshold for the over-70s. It has cut the carer's respite grant and has increased the pupil-teacher ratio for small schools in a measure that will have a particular impact on rural areas. In addition, it has announced, albeit not today and not as part of the book, that later on, 100 Garda stations will be consolidated. The closure of Garda stations in rural areas will affect those communities in a terrible way. Moreover, the Government has increased third level fees. Not once, twice or thrice but four times has the Tánaiste, Deputy Gilmore, broken his pledge. How can he sit there on the Government benches? While it is fair that he does not wish to make eye contact, he has broken his pledge on this issue four times because the Government increased it last year, will increase it this year and intends to increase it by €250 for the next two years. Shame on Deputy Gilmore. However, the Labour Party is good at making pledges and then breaking them when in office.
There are parents who will feel the impact of the Minister's budget in the pit of their stomachs. I refer to parents who know their children intend to emigrate next year or who have been obliged to borrow to pay for Christmas or who will be despairing about how to feed or clothe their children on foot of the impact of the cuts to child benefit. Child benefit is the payment that is keeping many families just above the water line and for many working families, it is the only contribution they receive from the State. Many of them will take the blow quietly because so many feel utterly defeated. After shouting so loudly at the ballot boxes a mere 22 months ago, a quiet despair now has crept into and settled into homes across the State. The three members of the Government on the bench opposite are responsible for that despair. They no doubt will try to dismiss what I am saying here as mere Opposition rhetoric, just as the Government dismisses the many calls from external groups and organisations that represent the vulnerable and the struggling. The Government members will say there is no alternative but there is an alternative. While they may not have bothered to read Sinn Féin's alternative budget, it set out a full list of measures, encompassing €2.7 billion in additional taxes and more than €1 billion in savings, which would have allowed the Government to make a €3.5 billion deficit adjustment this year. As the Minister for Finance is aware, these detailed measures were costed through parliamentary questions to him and put on the public record in this House. I believe 45 of them were costed by the Department of Finance and one, which the Government refused to cost, was costed independently by Sinn Féin. The big difference between Sinn Féin's approach and that of the Government is we know the budget adjustment is necessary but can be made without hurting vulnerable low and middle-income families. I recall that Colm McCarthy once noted the Government had not run out of compassion, it had run out of money. I believe he was wrong, as the present Administration has run out of compassion, ideas and principles.
Today, the Government announced it will raise more than €1 billion through a family home tax, motor tax and excise duty increases. Its family home tax will be the straw that breaks the backs of many families. Moreover, the so-called mansion tax is nothing more than a gimmick. If I am struggling to feed my children or to keep the roof over my head, it does not matter to me that someone down the road is paying a bit extra if I cannot afford to pay it myself. This is what the Minister has failed to realise. He could have introduced a wealth tax that asked for a contribution from the very wealthiest in our society. I refer to a tax at 1% on net wealth over €1 million, which would be made up of all property. The Minister should outline how precisely he can claim to be broadening the tax base when he goes back repeatedly to the same people to pick their pockets for a few extra euro. It simply is not the case. He again is hurting the most vulnerable low and middle-income earners in society. He could have introduced a new PRSI rate for employers on income above €100,000. Instead he decided to abolish the PRSI weekly threshold of €127, meaning all workers in the State who earn more than €127 per week will be obliged to pay an additional €264 in tax per year. While the Minister has increased PRSI from the self-employed, what will they get for it? Many people who are self-employed and who worked in the construction trade and other trades have been left high and dry as they are unable to avail of social welfare benefits when they find themselves to be without employment.
The Minister for Finance and the Taoiseach have made much of the Government's pledge to protect people’s incomes. They claimed that under the present Government, people could be sure the wage packets they take home would be secure. Sinn Féin called on the Government to change that policy of protecting all tax earners but only to protect those earning under €100,000 per annum. Sinn Féin asked the Government to increase the tax rates for those earning more than €100,000 per annum. Sinn Féin also asked the Government to remove all those earning the minimum wage from the universal service charge, USC, tax net. People who earn less than €17,000 per year spend every cent in the local economy. Consequently, by taxing such people and failing to remove them from the USC, the Government has hurt both their quality of life and their local economy. Sinn Féin's proposal would have put €10 a week or more than €500 a year back in the pockets of 296,000 people. Instead, the Minister has gone after these people and has asked them to pay an additional €264 per year. The person with a salary of €200,000 will not feel the impact of €264 a year but the person earning €18,000 per year will feel it more than the Minister could ever imagine. This measure will bring in €289 million in a full year but a new 48% tax rate on income over €100,000 would have brought in €365 million. That is what would have been progressive.
The Minister could have called for changes to the tax treatment of private pensions. The changes to the private pension tax reliefs do not go far enough and do not even apply until 2014. It is clear the Government has been successfully lobbied by an industry and once again, the Labour Party has made a spectacular U-turn on its own policy.
We called on it to standardise pension and other tax reliefs because it has been revealed time and again that the top 20% of income earners avail of 80% of those reliefs. Instead, it allows people to continue to claim tax reliefs of up to 41% for private pensions.
What a short memory has the Labour Party and Deputy Gilmore. He was not long in here before his chant went from "Tax the wealthy" to "Tax everybody but the wealthy". Today, it was announced that even maternity benefit will be taxed, so the Government wants to tax children before they are even born. Shame on the Government, as this is only a couple of weeks after the children's referendum.
People in the middle have been asked to give again and again with nothing in return. We can consider how today's budget will affect two people, Micheál and Gráinne. They are lucky enough to each have a job paying just under the average industrial wage and they both need a car to get to work. They have four children and the eldest is in university. We can see how much they are being squeezed by being sent a bill of €1,759.
By applying PRSI to the first €127 of Micheál’s and Gráinne’s salary, the Government is charging them an extra €528 per year. On top of that, the family home is worth €200,000 and has a large mortgage, but it will now be taxed at €405. The child benefit they rely on to make ends meet will be slashed by €456 next year. The band C cars they drive will be taxed at an additional €120 per year. The eldest son in college will now have to pay an extra €250 in student contribution fees. Micheál and Gráinne, with their four kids, are being charged €1,759. If that family does not have the eldest in university but is in receipt of the back to school allowance, the bill would be €1,900. The Government should tell that family that the budget is fair and a measure of success.
One of the more cynical things done by the Government is trying to spin the notion that this budget is fair, and I am sure the backbenchers will be spinning this idea. It is not fair. The Government has claimed it is fair because it has implemented some measures affecting high earners. I welcome the fact the Government has introduced some of policies articulated by Sinn Féin over many years but the action does not go far enough. We welcome the increase in capital taxes, the higher universal social charge on pensions, PRSI being extended to other forms of income, the lowering of the capital acquisitions tax threshold and the increasing of the rates of capital acquisitions and capital gains tax. These are fair measures and I only wish the Government had implemented them before.
Some of these measures are blindingly obvious and we have advocated them for many years. I cannot see why they were not implemented previously but better late than never. The Taoiseach is smirking.
The Deputy's leader is nodding off.
It is important not to kid ourselves. These measures are a drop in the ocean compared to the pain inflicted on ordinary people today. That pain has been inflicted on top of successive budgets introduced by this Government last year and by Fianna Fáil in the years before. That pain has been inflicted on a certain group of low and middle income earners; they have been deliberately targeted.
A fair budget is not just about tackling high earners but instead it is about protecting people who cannot give any more. The Government has not done that. The Taoiseach and Tánaiste have made excuses about limited resources. It seems that is an excuse to make the wrong choices. In Sinn Féin we know this State is spending more than it takes in, and that has created a bill that must be reduced. Sinn Féin has sent proposals to the Government to achieve this, providing choices that added up to €3.5 billion and allowed for new money to spend on restoring and protecting the rights of children and families.
Inniu tá úinéirí tí buailte go holc ag an Aire leis an cháin mhaoine. Tá thar céad míle duine faoi ualach trom ag riaráistí morgáiste. Tá 1.8 milliún duine a bhfuil níos lú ná €100 cu ag deireadh na míosa. Ach tá an tAire i ndiaidh cáin éagórach a chur ar na teaghlaigh céanna seo. We asked the Government to choose a wealth tax instead of a family home tax. Fianna Fáil put the family home tax on the agenda, including it in a four-year plan even before the troika came. The party negotiated it into the memorandum of understanding and looked to include it in its last budget. The current Government did not have to run with that failed policy. This tax is a fiasco waiting to happen.
I will remind the Taoiseach of what he said in 1994 when he opposed the introduction of a family home tax. I invite him to repeat the words.
This is the vampire comment.
The Taoiseach said it was morally wrong, unjust and unfair to tax a person's house. He has sat opposite smirking at the fact he will introduce this same type of tax, asking people to pay it who cannot even pay their mortgages and who are struggling to get by.
I am smirking at the Deputy's leader.
It is morally wrong, unjust and unfair. Those are the words of the Taoiseach. During the 2011 election campaign, the Tánaiste, Deputy Gilmore, promised not to introduce a family home tax on residential homes. He said, "We have to remember that many people have already paid a family home tax on their residential home in the form of stamp duty". Shame on the Taoiseach and Tánaiste for betraying the Irish people, who trusted them to live up to the commitments and promises they made. They rode into office on the back of those promises and they are now content to break them.
Today the Government is breaking these promises and there is only one appropriate word - hypocrisy. Those in the Government are hypocrites. Hundreds of thousands of families will be unable to pay this tax. Many more who will be forced to pay it will be pushed further into financial stress or poverty. The proposal will also hurt the economy because it will take money from people's pockets which they would otherwise spend in the local economy every day. Taking this from the pockets and cash tills in the local shop, grocer or barber, there will be a resulting cost in jobs. This tax is anti-family and anti-jobs.
We are talking about people’s homes. The Government has called it a property tax but property is everything: it is houses, shares, horses and yachts. This tax is on people’s homes, and people need their homes. It is not a luxury.
Is there any property tax in the North?
The Government wishes to tax people for having a roof over their heads, even if they have contributed already and are continuing to contribute to economic recovery.
The Deputy is being hypocritical.
Most people’s houses are owned by the banks and most people must pay massive mortgages. For those who bought in the last decade, they are essentially paying dead money in payments on a house that is worth half of what they borrowed. So many young families bought houses because they were encouraged, cajoled and bribed into doing so by politicians, the Government and banks. Many of these families paid stamp duty when buying their homes, with amounts of many thousands of euro in many cases.
The family home tax will not take into account what people earn. There is a threshold of €15,000 for a single person where payment can be deferred but there will be 4% interest for that luxury. The person who is absolutely skint will have to pay more in home taxes as not only must the tax be paid eventually but there will be interest on top. The person who is well off can pay this charge without a blind bit of notice because his or her income has not been touched by Labour or Fine Gael.
The Government faced massive resistance on the household charge of €100. People said they could not and would not pay it. Nevertheless, the Government has sent out threatening letters to families, building up the stress for people who could not pay. The exemptions for the property tax are pitiful and we all know that social housing will be included.
The Minister stated the property tax will be levied on local authorities. In such circumstances, local authorities will be forced to increase rents for their tenants, which is disgraceful. The idea that people will be chased into the grave for this unjust tax is unjust and repulsive. As I indicated, the proposed deferral is a sham. Asking people to pay more because they do not have the money to pay the property tax in the first place is a disgrace.
Nobody who will struggle to pay the family home tax cares if other countries have family home taxes. The countries in question did not have a property boom or crash, as we did, nor do they have huge household debts, as is the case across this State. Taxes in other countries pay for free health and education and decent public services, whereas our taxes pay for the mistakes of Fianna Fáil, Fine Gael and the Labour Party. The family home tax will pay for bankers’ salaries and bondholder bailouts. That is the difference and the Minister should be ashamed to bring such a measure to the House.
A comprehensive wealth tax is the way of the future. The Minister should look abroad to find out what his ministerial counterparts are doing in France, Spain and Iceland. The Tánaiste should note that his party's sister party in Germany, the Social Democratic Party, SPD, proposes to introduce a wealth tax, as do the Liberal Democrats in Britain.
Sinn Féin twice produced legislation that would have reduced the salaries of Ministers, Deputies, Senators and the Taoiseach. Not one cent has been cut from politicians' salaries today. We asked the Government to cut the incomes of politicians and high ranking civil servants rather than cut child benefit but despite tinkering with allowances, the basic salary of a Deputy continues to be €92,000 a year, a Minister still earns €169,000 per annum and the Taoiseach earns €200,000. Not only does the Minister for Finance, who introduced the taxation measures that will bear down heavily on ordinary families, earn €169,000 but he still receives a ministerial pension from his previous time in office. That is not acceptable.
It is a lie.
The Government is not in a position to tell low or middle income families that they can manage without €10 a month in child benefit for each child - the figure is higher for subsequent children. I cannot imagine any of the Ministers opposite having to look into the recesses of their kitchen cupboards to try to find enough ingredients to put together a meal for their children, as many mothers and fathers were doing this afternoon when the Ministers for Finance and Public Expenditure and Reform were announcing their budget. Ministers inhabit a different reality, a little bubble in which they earn huge sums of money, have access to a personal driver and are disconnected from real life.
I ask the Taoiseach and Tánaiste what happens to the Labour Party and Fine Gael when they get into government. In the 1980s, they introduced a tax on children's shoes and now they are cutting the benefit that keeps children in shoes. Do they have something against children? Do they not like them? Why do children bear the brunt time and again?
Tá scéal mór déanta ag an Rialtas a deir nár athraigh sé rátaí cánacha ioncaim. Ach ón lá inniu amach, tiocfaidh ardú ar bhillí cánacha daoine. Ní dhéanann sé mórán difir do ghnáth-theaghlaigh amuigh ansin cén dóigh ina bhfuil an bille ag méadú mar caithfidh siad é a íoc. Is í an cheist mhór atá acusan ná an mbeidh orthu níos mó a íoc nó an bhfuil siad ar dóigh níos fearr mar gheall air seo. Don chuid is mó daoine, caithfidh siad níos mó a íoc mar gur chuir an Rialtas a lámh ina bpócaí agus thug sé amach na euro deireanacha a bhí fágtha acu.
Sinn Féin asked the Government to end the generosity of providing higher tax reliefs for high earners and instead put resources into reducing excise duty on petrol and diesel. Today, the Minister increased motor tax, introduced changes to vehicle registration tax and blankly refused to reduce excise duty on motor fuels. The Automobile Association calculated that between January 2009 and January 2012 the average family’s monthly fuel bill more than doubled from €142 to €300. Motorists have been squeezed at every opportunity and from every angle by successive budgets introduced by Fianna Fáil, Fine Gael and the Labour Party when they ramped up excise duty on petrol and diesel. Now they want to squeeze motorists some more.
Just last week, the cost of public transport increased. These price increases are biting at people who must pay more to get around or travel to work. Many people in rural areas do not even have the choice of taking a Luas tram, DART, train or public bus because successive Governments have failed to invest in public transport. Between the increases in fuel prices introduced this year and last year, motor tax hikes to be introduced next year and VRT changes, the Government is implementing a policy that makes it too costly for many families to leave their homes. People in rural areas know the Minister has abandoned them and they will not stand for it.
I am pleased the Minister announced a rebate on fuel tax for the haulage industry. Sinn Féin proposed such a measure in our jobs plan in October and it is one I hope will provide some relief to the struggling transport sector.
Sinn Féin asked the Minister to increase the taxable amounts from the super-pension pots to cover the cost of restoring more than 1 million home help hours cut by the Government last year. Thousands of people scattered across every county do a job without any help or acknowledgement from the State. They spend every waking hour and many an hour when the rest of us are sleeping taking care of elderly, infirm parents or severely disabled children. They do not have nights out or holidays and their ability to work in full-time paid employment is stripped from them. The small carer’s allowance they receive is under constant threat. These are the unrecognised heroes. The only respite available to them is the few hours of home help they receive each week which enables them to visit the post office, chemist or grocery store and run other little errands they must attend to. The Minister has removed from many of them the ability to live an independent life. Home help was their chance to stay in their own homes. Those of them with whom I have spoken say they do not want to be a burden on the State. Again, however, the Government has taken Fianna Fáil's lead on this issue and adopted its policy of placing the heaviest burden on the shoulders of those who can manage it least.
The Taoiseach and Tánaiste had choices but the only choice they made was to ignore all the other choices available to them. The Government couches its budget measures in lectures on deficits, numbers and targets and claims we are getting there. Where are we getting? Meeting a 3% deficit in 2015 will not fill a child’s belly, put clothes on children going to school or warm the house of an elderly couple who face the choice every day between heating or eating. Where does the Government want this country of ours to be in the coming years?
Ní chruthaíonn preas ráitis poist. Sin an rud atáimid ag feiceáil seachtain i ndiaidh seachtaine, ráitis ag teacht ón Rialtas. Is infheistíocht atá de dhíth chun daoine a fháil ar ais ag obair. Tá an neamart iomlán atá déanta ag an Rialtas ó thaobh infheistíochta i bpoist de agus deireadh á chur le slí bheatha daoine. Le bliain anuas, cailleadh 5,800 post níos mó ná a cruthaíodh. Ó tháinig Fine Gael agus Lucht Oibre i gcumhacht, tá 20,000 níos lú post sa gheilleagar.
For the past four years Fine Gael, the Labour Party and Fianna Fáil have attempted to fix the economy through austerity. It may be news to the Taoiseach and Tánaiste but austerity is not working and has not fixed the problem. Austerity measures amounting to €28 billion have not reduced the deficit and the Government must change course. One cannot starve one's way out of a famine. Investment is required in growth and jobs.
The record levels of unemployment have seen our tax receipts collapse and our social welfare spending spiral out of control. If we know it is a problem, why does the Government do nothing about it? Labour, Fine Gael and Fianna Fáil talk the talk on growth, the need for jobs and investment in the economy, but they have done nothing about them in office.
Sinn Féin sent the Government a jobs plan in October-----
Full of holes.
-----that set out an investment strategy to create thousands of jobs. We showed how a €13 billion investment could be funded through the National Pensions Reserve Fund, NPRF, the European Investment Bank, EIB, and the private pension industry and by not cutting the capital budget. Instead, the Government has reduced the capital budget by €500 million. The Taoiseach would be as well taking the Tánaiste, packing the bags of 5,000 young Irish people and bidding them farewell for Canada and Australia. These young people should and could work in the construction sector if the Government did not cut the capital budget.
Fianna Fáil in office turned on the emigration tap, but this Government has refused to turn it off. The people who leave our shores every year are not just numbers. A young woman contacted me recently having just emigrated to Canada with her husband and two young girls. She told me how her parents had described their leaving as being like a death in the family. They mourned her leaving that night like they had mourned her brother's death several years prior. She spoke of her distress at inflicting that on them and at taking their grandchildren away from a close-knit family and of her frustration at feeling like she had no choice.
Her story is familiar but no less shocking - the mortgage that became unaffordable when the jobs were lost, the reality of a dole queue for the first time, the desperation as reminder letters came through the door, the strained meetings with banks and the realisation that the figures did not add up. The members of that young family have uprooted their whole lives and moved to the other side of the world. They will spend Christmas alone this year. Her Facebook page, like many others, is full of best wishes and messages telling her how much she and her children are missed.
Her message of goodbye from this State was a letter from the Department of Social Protection looking for confirmation of her flight details so that it would not overpay her child benefit. If ever proof was needed that the Government lacked compassion, this story is it, yet it has an abundance of compassion for bankers and bondholders. Despite the hype, the 27 bankers who receive more than €500,000 in basic salaries have not suffered a pay cut in this budget. The rest of us must suck it up but, by God, the bankers who caused the problem will be protected at all costs by the Government.
By making an adjustment of €3.5 billion today, the Government will be bringing the total in taxes and cuts to this economy in the past five years to €28 billion. This is its second austerity budget after Fianna Fáil introduced four, but the Government does not plan to stop here. It plans to wrench a further €5 billion out of the economy in the next two budgets to 2015.
As the Taoiseach knows, 2016 marks the centenary of the 1916 Easter Rising. It is fair that Deputies and people across the country ask what type of republic will we have 100 years on and what type of state will Labour, Fine Gael and Fianna Fáil leave to us. They have decimated public services, taxed families beyond the coping point and forced another generation of young Irish people abroad with little hope of return.
The men and women of 1916 did not risk their lives for those three parties to tear the fabric of society. They did not declare the Republic on the steps of the GPO so that this or the previous Government could hand the keys of Government Buildings over to the troika. They stood up for Irish citizens, but the three parties only stand up for bankers, bondholders and vested interests. They have sullied the vision that inspired the women and men of 1916. In doing so, they have failed and continue to fail the people of the State. Their arrogance and lack of compassion knows no bounds. Their claim that there are no alternatives is pathetic.
While listening to the radio last week, I was reminded of the power of ordinary people to bring about change. In 1955, Rosa Parks refused to give up her seat on a bus in Montgomery, Alabama. As a woman and an African American, she had been taught to accept her lot in life, to accept second class citizenship and to accept that there were no alternatives. However, one day she decided that enough was enough and she refused to give up her seat to a white passenger. When she was interviewed a few days later, she stated, "The time had just come when I had been pushed as far as I could stand to be pushed". Rosa Parks's act of defiance that day inspired an entire generation of civil rights campaigners to struggle for a better life. Tired of being pushed around, she decided that she would be pushed around no longer. She stood up for herself and all those like her who were being treated as second class citizens.
In today's budget, the Government has pushed the people of this State as far as they can be pushed. It is time for ordinary people to realise that they do not need to take this anymore. It is time for people to take a stand. Whether it is with Sinn Féin, behind their union banners or in their communities, they can organise and fight back. Citizens have rights. They elected us and can replace us. It is time for ordinary people to draw a line in the sand and to say "No" to the Government's family home tax, its cuts to child benefit and its policies of emigration and unemployment.
When Rosa Parks decided to say enough is enough, she gave people hope that a better future was possible. When she decided to take a stand, she gave people the confidence to follow her lead. Like Rosa Parks, I believe that a better future is possible, that our broken economy can be fixed, that jobs can be created and that our children can have a future in their home country. I believe that there is an alternative to the failed policies of Fine Gael, Labour and Fianna Fáil. For this reason, my Sinn Féin colleagues and I will be voting against this appalling budget.
It is a pity that Sinn Féin did not give Jerry McCabe a chance with its carry on.
What did the Taoiseach say?
Robbing the people.
Here we go again. This is the sixth successive austerity budget, the sixth time that Ministers have announced a vicious attack on the living standards of low and middle income people and their families. This Labour-Fine Gael Government shares the same perverse instincts as the last Fianna Fáil-led Administration and the same unshakable belief that punishing struggling families is somehow fair. It is not. Neither is it acceptable.
It is deeply insulting to the wellbeing, not to mention the intelligence, of citizens to parrot the rhetoric of fairness constantly while delivering policies that devastate their standard of living and their morale. It is a bad joke to speak the language of economic growth and jobs while introducing another contractionary budget that will further damage the domestic economy, lengthen the dole queues and send more of our people onto the emigration trail.
Despite the media hype and the supposed haggling at Cabinet, it turns out that, once again, Fine Gael has it largely its own way. Inequality on Fine Gael's watch comes as no surprise. It does not "do" social solidarity. That is not in its DNA. Fine Gael takes the view that the working poor or people struggling on welfare can be offered up to protect wealth and the wealthy.
Today, the surrender of the Labour Party to this agenda is final and complete. The party of James Connolly is now led by the nose, following a course that brings devastation to low and middle income workers and their families. The Labour Party now defends the very policies that so angered it when in opposition. It stands shoulder to shoulder with a party that it vowed to rein in as partners in government. If Labour's plan on entering government was, as it claimed, to contain and put manners on Fine Gael, its plan has failed spectacularly.
Labour has surely hit rock bottom when the only comfort that its Minister for Social Protection, Deputy Burton, can offer to pensioners who cannot afford the new tax on the family home is that they can defer payment until after they die.
How gross is that? Just like Fianna Fáil before it, the Government runs a twin-track strategy of austerity, cutbacks and charges on workers alongside a craven appeasement of bondholders, bankers and international financial institutions. When one adds to that the truly warped sense of entitlement of senior politicians and the upper echelons of the public service on bumper salaries and pensions, then the full-scale madness at play becomes evident.
Let us be clear; none of that is lost on the general public. The budget is very bad news for everyone who counts the cent at the end of each week, who are put to the pin of their collar just to survive. There is no comfort in this budget for families saddled with negative equity - who are in mortgage default or muddling by on interest-only arrangements. There is no comfort for them but there is a tax on their home as they struggle to keep a roof over their heads. For the average working family this budget means a tax of between €300 and €500 in a full year on their home, a cut to child benefit, a reduction in health and education services and a decrease in their take home pay.
The decision to set aside the PRSI exemption is truly disgraceful. It will mean a reduction of €261 per annum regardless of income. That will be the cut, regardless of income, whether one is on €18,000 per annum or €180,000. Not alone that, the Government also decided to tax maternity benefit. Those who wish to start a family are to be penalised for the choice. That is a regressive measure that is anti-family and anti-woman. For those out of work the prospects are even grimmer, mainly because the Government has failed to deliver any job creation plan despite all of the talk. It cynically relies on emigration – the loss of our brightest and best – to reduce the numbers on the live register.
The Government is to reduce the social protection spend by €452 million. The pretence by Government that it has protected welfare payments is downright dishonest. It is a lie. The Government is cutting the jobseeker’s benefit entitlement by three months. That will hurt people. People who try to get back to education are being penalised by the reduction in the back-to-education grant. For those out of work who need additional assistance who must often wait for their welfare application to be processed, the budget for exceptional needs payments has been cut by €6 million.
The Labour Party and the Fine Gael Party claimed that they would protect social welfare. We see today that they have done nothing of the sort. The treatment of children in the budget is shocking. It runs against all the fine words and concern for child welfare expressed in the course of the children’s referendum only some weeks ago. The Government is cutting the back-to-school allowance, which is intended to allow parents purchase clothing and footwear in order to get children back to school. The Government thinks it is morally or politically justifiable to cut the allowance by €50. The Minister indicated that an additional €14 million would be awarded to the Department of Children and Youth Affairs. That is tokenism at its cheapest and most cynical. No doubt the manoeuvre was cobbled together to save the blushes of the backbenchers who surely must have some strand and sense of decency left. The Government has cut child benefit again. I aim the point in particular at the Tánaiste and Minister for Foreign Affairs, Deputy Gilmore, and the Labour Party. That will hurt families. A family with two children will be down €240 per annum, while a family with four children will lose approximately €700.
Perhaps Members of this House do not understand what the child benefit payment is used for. Let me acquaint them with reality. It pays for such things as electricity bills. It buys a warm winter coat or a pair of shoes for children. A cut of that nature will mean that families will not be in a position to do those ordinary and necessary things. The Government has form in terms of child benefit. When the cut was made last year and lone parents were targeted, the Government promised a world-class Scandinavian model of child care to compensate. What a joke. If one were to ask the parents of this country, in particular mothers, about this world-class service, I am pretty sure of the answer one would get. It does not exist. This is a bad day for children and a bad budget for parents.
The Government has failed the first real test of its commitment to children and their welfare since the referendum. In direct contrast, the Government treats those on high incomes and those who are very wealthy with kid gloves. There is no additional tax on individual incomes of more than €100,000. There is no proposal to broaden the tax base. One could do it by levying a wealth tax. That would be a real property tax. Those at the upper echelons of the civil and public service are still protected – not by the Croke Park agreement – but by the Government. There is no tough medicine for them. The Government has flatly refused to address the runaway pay and has tinkered around the edges of dealing with excessive pension pots of a small number in the public service. The same Government will now go back looking for more from rank and file civil and public servants who exist on very modest incomes. So much for fairness, reform and political change.
Our country is in crisis with nearly 15% of the working population on the live register. The working class is hurting. The middle class - middle Ireland – is hurting too. Families who never thought they would see the inside of a community welfare office are now hard pressed to put food on the table and keep the lights on. We have said that to the Government time out of number, yet the Government sneers at our proposal to introduce an emergency pay cap of €100,000 in the public sector. That is a fine income but the Government sneers at the idea because it is not a choice it wishes to make. Were the Government to make such a choice, it would have allowed it to provide free school books for every child in the State; an additional incentive for one-parent families to remain in work; it could have doubled the budget for school meals; increased the fuel season allowance by six weeks; it could have reinstated 950,000 home help hours; and it could have restored the training and materials allowance for community employment schemes. The Government could have done all of that but it does not have the bottle to make such a choice. While it would be a hard choice, it would also be a fair one.
The Government’s “I’m alright Jack” attitude is perhaps most clear in its failure today to deal with politicians’ pay or to deal conclusively with allowances. The Government has tinkered around the edges. Bully for the Government. Let me highlight some of the measures the Government has left intact. It will still give committee chairpersons an additional €9,000 for the glory of chairing a committee. It will still give so-called super-junior Ministers an additional €17,000 just for showing up at Cabinet meetings. The Government will still shell out huge salaries in breach of its own cap to its special advisers.
It is a cruel irony that the Minister for Social Protection, Deputy Joan Burton, pays her special adviser €127,000 per annum. Fancy that. The Minister for welfare cutbacks awards her adviser €127,000. The Government should have ended that situation today. It should have capped the pay of special advisers. It should have abolished the special payments for committee chairpersons. It should have gone much further and placed a cap on politicians' pay. If this Government was serious, worth its salt and committed to fairness that is what it would have done but the truth is that under Fine Gael and Labour, a great deal was promised but in reality the same old boys club culture remains.
I can see in my mind’s eye the Economic Management Council, a very grandiose title. I can see the Taoiseach, the Tánaiste and the Ministers for financial misery - four men in a huddle - reassuring each other, to borrow the words of the Minister, Deputy Howlin, earlier, that they would get through these difficult times. Good for them.
It is a bit different from the army council.
It is a pity they did not consider how others - citizens, families, mothers and women - will make it through these times. So enamoured of themselves are they that they still pay themselves way over the odds by European standards. I will give the Taoiseach an example. The French President earns €20,000 a year less than the Taoiseach. French Ministers are paid €40,000 less a year than their Irish counterparts. I will spell that out for him. France is not in a bailout, and its population is 13 times that of our own. Are the Ministers opposite really worth it? Are they for real?
The health service is under unbearable strain; it is just not working. The Minister, Deputy James Reilly, is not up to the job of management or reform. Under his watch 870 hospital beds have closed, 1,200 nursing home beds have closed, 950,000 home help hours have been cut from the system, and there have been cuts to disability services.
We know also that last year's budget was a work of fiction. It is ironic that the very Department that requires a supplementary budget of €360 million, is now to be cut by €1.1 billion in a full year. How on earth will the Minister do that without damaging the most basic of care?
The increase in prescription fees and the cut in the drug refund scheme will add to the distress of patients of all ages but in particular it will add to the distress of parents with sick children.
The Minister gives no credible detail in his budget in terms of the savings he proposes from generic medicines or private income from beds in public hospitals. We do not have the detail on this but it is fascinating that the Minister will make a cut of €44 million to primary schemes. He has hit the electricity and gas package for the elderly by €23 million and their telephone allocation by €61 million.
The Minister has targeted education again. Once again he will ask third level students for an additional €250. I do not know if the Minister sees the contradiction between his stated position for educational excellence for a knowledge economy and pricing students out of education but students can now see his two-faced approach. He sold them a pup at the last election. He will not do that again because the students are not fools.
It is less than three weeks to Christmas and families have scrimped and saved to provide for the holiday period. People do not have very much now, but they still have pride in themselves and in their families. They still have a sense of what is right, fair and just.
The need to take tough decisions is a constant refrain of this Government but tough for who? It confuses hard decisions with bad decisions. It looks for soft options and soft targets. The spectacle of a Government that talks tough when punishing its own people and yet time and again returns home from European Council meetings with its tail between its legs is truly pitiful. It is unworthy of those it represents.
Has the Taoiseach had the tough talk with Angela Merkel or the lads from the troika? Has he told them that we cannot and should not be expected to pay the debts of others? He has not. He disguises his lily-livered, gutless interaction with our European Union partners with guff about repairing our international reputation. Give us a break.
If the Taoiseach is unable to secure a deal on the debt burden, on the promissory note, and if he is incapable of deficit reduction that does not crush low and middle income families then he is not up to the job of government. It is that simple.
This Government is now 20 months in office and this is its second budget. There is nowhere for it to hide. It chose the well-worn path of the Fianna Fáil gang that went before it. Fianna Fáil brought this State to its knees and now Labour and Fine Gael are keeping it there. Fianna Fáil sheltered the rich, protected wealth and insulated privilege. Now this Government follows suit. Its choice is to protect those at the top and punish the rest. It should not come into this Dáil ever again and waffle about fairness. This Government is not fair. It could not handle fairness, and its budget today is testament to that.
We now move on to time allocated to the Technical Group. Time is being shared among Deputies Richard Boyd Barrett, Stephen Donnelly, Thomas Pringle, Clare Daly, who will have four minutes, and Mick Wallace, who will have eight minutes. Deputies Finian McGrath, Seamus Healy, Catherine Murphy, Luke 'Ming' Flanagan and Mattie McGrath have six minutes each.
I wish I could say otherwise but today is another day of shame for this Government. It is not a day of hard choices, as it kept repeating. It is a day of cruel choices inflicted by those who are protecting the privileged and the powerful on those who are struggling and in despair. It is a day when it has driven tens of thousands of families who were teetering on the edge of poverty into poverty. It is a day when it has hammered a few more nails into the coffin of the battered Irish economy.
I say to the Tánaiste that this Government had a choice. A few simple measures could have done away with the need for all the suffering it has inflicted on ordinary families today. If it had simply enforced, as we suggested, the 12.5% corporation tax rate and increased in a significant way the taxes on those earning in excess of €100,000 a year, as 88% of the population now want it to do, it could have done away with the need for all this suffering and despair and all those families being driven into poverty.
If the Government had done that not only could it have prevented these vicious cuts but it would have had the resources to reverse some of the most vicious cuts imposed in recent years. It could have abolished the universal social charge for those on average incomes. It could have lifted the special needs assistant, SNA, caps that have caused such suffering to some of the most vulnerable families. It could have reinstated the Christmas bonus for social welfare recipients and for pensioners. It could have reinstated the home help hours for the elderly and the disabled. It could have reversed the increases in registration fees and the cuts in grants for students and many more of the nasty cuts that have been imposed in the past two years. To do all of that would have cost approximately €3 billion. Those measures alone would have been covered just by making the corporations that made €70 billion in pre-tax profits last year pay a little more tax, and all that suffering could have been avoided.
Instead, the Government made a cold-hearted decision to attack those who have nothing or next to nothing yet again. The property tax will cost ordinary families hundreds of euro, €300 or €400 extra per year. How will the 1.3 million people in this country who have less than €50 a month left over pay the charge? They simply do not have it. How will they pay for the cuts to child benefit? If they have three children, they will lose €38 per month. How will they deal with the €20 per month loss in earnings if they are working, as a result of the abolition of the weekly PRSI allowance? The 1.3 million people with less than €50 a month after they pay their bills will have that €50 and more taken from them as a result of these measures. This will drive them into poverty.
Then there are some of the really nasty cuts. The decision to cut the respite care grant for families with children with disabilities is obnoxious. Some €356 has been taken from families with disabled children or family members when it could give them some respite once a year. It is an outrage to cut the back-to-school allowance by €50 for some of the poorest families in the country. The Government had choices to avoid this suffering and make those who have the money and the profits pay a little more so the poor and the struggling do not have to struggle more than they do. The Government could have marshalled funds by imposing taxes to fund a stimulus and jobs programme to put people in this country back to work so they can contribute to the economic recovery we so badly need. None of that will happen and, shamefully, the Government restated its commitment to selling off our forests and other State assets and enterprises that could be the vehicles for job creation and economic recovery. Shame on the Tánaiste and shame on this Government. This is a recipe for long-term economic depression and suffering for hundreds of thousands of families. The Government had a choice; why did it not take it?
The entire approach to this budget is flawed. The Government is taking €3.5 billion from the Irish people and handing it to Anglo Irish Bank as payment on a debt we never owed. The Government is taking €3.5 billion from the Irish people but the deficit will fall by less than €1 billion. Why is that? It is because of the payment of almost €2 billion of interest to Anglo Irish Bank on a debt we never owed. The Government will allow AIB to retain a €1.1 billion top-up to its pension fund. The Minister for Finance, Deputy Noonan, stated that tax compliance is a core principle of our democracy. He lectures the people on their obligation to pay a property tax, the entire benefit of which he will hand to Anglo Irish Bank.
The Government brought forward virtually no meaningful investment measures. Instead, it announces a cut to funding in our third level sector. This is madness. What is the result? Yes, GDP is rising very slightly but it is rising because of exports by our multinationals. The profits all get expatriated. GNP, the measure of Irish companies, will rise by less than 1%. The Government makes much play of the fall in unemployment but it is due to emigration. The number of people at work has fallen by 35,000 in the past year. The austerity only approach, which feeds tens of billions of euro to two dead casinos, is doomed to failure. This budget is the latest chapter in that sad approach.
The Government spoke earlier about fairness. Let us examine the numbers. Between 2012 and 2013, if one earns €20,000, income tax will increase by 1.3%. If one earns €120,000, it will increase by 0.2%. There is an increase in tax on a person earning €20,000, which is 32 times bigger than the increase in tax for someone earning €120,000. The property tax, the change to PRSI, cuts to child benefit and the increases to duty, motor tax and carbon tax are regressive. I do not know how the Government can use the word fairness with a straight face. The budget is a massacre of those in the negative equity generation. The Government is cutting their child benefit, increasing their income tax and charging them for homes they despise, which are debt around their necks. If they are renting out their house and renting another house to live in because they cannot afford to buy a bigger house to live in with their children, the Government will charge 7.5% PRSI on the rental income from the house they do not want, which is in negative equity and on which they are now being charged a property tax. It is a joke.
The austerity only approach does not work, a point on which history is unambiguous. Further payments to the banks cannot be justified when this is being asked of the people. The Government makes great play of being 85% of the way there. This is rubbish. One payment of €31 billion was made to Anglo Irish Bank, which is a nominal accounting measure. The deficit peaked in 2009 at €22 billion. Next year, the deficit will be €13 billion so we are less than halfway through correcting the deficit. The Minister for Public Expenditure and Reform, Deputy Howlin, stated future generations will be proud of the work done today. They will not. They will ask why their country was decimated in the name of anonymous bondholders and why their schools and colleges were stripped of teachers and investment. They will ask why they are still paying for the debts of Anglo Irish Bank and Irish Nationwide. No Government should ask its people what is being asked by the Government.
I accept the deficit must be closed if the Government stops the €5 billion payment to Anglo Irish Bank and Irish Nationwide and takes back the €1.1 billion pension top-up from AIB and directs it towards education, job stimulus, investment and protecting vulnerable groups and reversing the most egregious cuts and reducing inequality. Then we can start to a genuine recovery in the economy. Vote after vote in the House tonight will push us further down the failed path of austerity.
The Minister for Public Expenditure and Reform, Deputy Howlin said, "What the Irish people have endured has been tough and almost without precedent in the developed world". He says this as if we should be proud of it. Is he proud that children, pensioners, medical card holders, the unemployed, low earners and the self-employed will carry the can? How can people look to the future with confidence, as Deputy Noonan exhorted them to do today? This is a most regressive budget that will make people who are already struggling go below the water line.
The introduction of the property tax ensures it will be resisted by many people. The 0.18% rate is deliberately set low so that when local authorities take over the levying of the tax the real increases will kick in. Coincidently, this will only happen after the local elections in 2014. Does the Government think people will be fooled by this? There are very few exemptions from the property tax. Allowing people on low incomes to defer the tax and slapping an interest rate of 4% on them for doing it will be no comfort to them. Forcing people to build up future debts on the back of the property tax is only building further resentment at the targeting of the weakest in society yet again. The opposition to this tax will be fierce and rightly so. The people of Ireland will, through their opposition, force fairness on the Government. Opposition to the tax is not for the sake of it but is opposition to the strategy that the Government is pursuing of making the weakest sectors in society liable for the debts of the European banking system.
Removing the €127 PRSI exemption is also hard to stomach. A person earning €18,000 a year will pay the same PRSI increase as we Deputies, who earn €92,000. How can a Labour Party Minister justify that? The Fine Gael Party guaranteed no increases in income tax but for low income workers PRSI is a tax on income. How can the Minister say he has not increased taxation?
The Labour Party made much of wanting to increase the universal social charge for those earning over €100,000 per year. They lost that battle to their masters in coalition yet they are happy to take away the PRSI threshold. The Labour Party does not protect the vulnerable; it targets them more and more.
The increase of the self-employed PRSI annual contribution to €500 is a sickening blow for the self-employed. They get very little in return for their contribution. I have pushed the Minister for the last two years to allow access to benefits for the self-employed that would offer them support if they need it and would justify increased contributions, but it falls on deaf ears. The Government makes much of the deficit in the Social Insurance Fund as a reason not to provide self-employed people with benefits and these measures are being dressed up as a way to close the deficit. The fact is that the Social Insurance Fund should be in deficit when we are in a recession and built up when we are in recovery. The Government does not see that.
Taxing maternity benefit is hard to believe. It seems like a mean spirited measure. It is targeted to raise €40 million in a full year and makes the children of the country pay once again.
Again and again, we see the vulnerable being hit. The back-to-school clothing allowance, the respite care grant and household packages for the elderly and disabled are being cut. Reducing the respite care grant by €320 will hit families who use this to get some relief for a disabled or elderly family member. We can add to this the cut in child benefit of €10 per month, which is simply lazy. This is another across-the-board cut. A family on social welfare with three children will lose €30 a month. A family with three children on €100,000 a year will lose €30 a month. Where is the equity in that?
If the Labour Party had the will, a system could have been put in place to have a fairer targeting of cuts in child benefit. I put proposals to the Minister that would have saved €120 million on child benefit but would only target those earning over €80,000 a year. This could have been achieved without a heavy administrative burden on the Department. There are almost 700,000 children in families on low incomes either dependent on social welfare, getting family income supplement or earning under €80,000 per year in this country. The Minister could have protected those children but chose not to.
The 200% increase in the medical card prescription charge once again targets the vulnerable. It is the only part of the health budget that people can be sure will be delivered on. Once again, €51 million is to be taken from the most vulnerable. I have no faith, like the rest of the country, that the Minister will deliver the savings he says he will from the reduction in the costs of prescription drugs. Does anyone in the House really believe that he will achieve €330 million in savings?
The Minister said the budget protects the vulnerable. The budget measures are a litany of attacks on the most vulnerable. There is nothing in the budget that will protect those who need it.
The Fine Gael Party is only interested in balancing the books and does not care what the impact of the changes are, but the Labour Party should care, or should not have told everyone it will protect the vulnerable. The Labour Party has rolled over and has no credibility left. No one will think that Labour are looking after anyone except themselves. That is the sad reality.
Hope for people died when the Government took on the policies of the Fianna Fáil Party in 2011 and ditched its election promises. In the last two budgets the Government has taken ownership of those policies and built on them. It is clear that this is no country for the poor, the vulnerable and those who need to be protected the most.
There is a huge element of the annual Christmas pantomime about this debate. There are the usual set pieces and routines. We have heard it all before. There is mock indignation from the people who started the austerity and robust defence of the measures from the other side of the House. For the people outside the gates and in their homes, however, this is not a pantomime and there will not be a happy ending. People are terrified and angry. We can say what we like in here and the Government can dress it up, but everything has got worse for people. Any leeway they had is gone. There are people who were in work and are no longer in work. There are people who are in work who are working harder for considerably less.
The only solutions to these problems being put forward by the Government is to dish up more of the same. This is the economics of lunacy. No matter how one dresses it up, this is Robin Hood in reverse. The Government is robbing the poor to continue to allow those at the top to get away scot free. One would expect that of Fine Gael. They are playing to their constituency and doing what they said they would do.
For the Labour Party, on the hundredth anniversary of the foundation of the party to stand over this and for Labour Deputies to have more interest in their mobile telephones than in the budget debate is a disgusting indication of how far the party has fallen. It has chosen to wage war on ordinary people. The budget contains not a single measure to tackle the wealthy. If the actual rate of corporation tax were imposed and corporations were forced to pay what they owe, it would negate any other measure in the budget. I do not even speak about tackling the high earners or going after them with a wealth tax. Instead, the Government has chosen to target the vulnerable.
Thirty years ago, the Labour Party's predecessors brought down a Government on the issue of VAT on children's shoes. Labour Party Deputies now vote for a home tax. Let us call it what it is. This home tax is the equivalent of VAT on 40 pairs of children's shoes, yet they sit there with not a bother on them. It is a disgrace.
We have dealt with the issue of targeting mothers by taxing maternity benefit and stripping electricity payments and telephone allowances from pensioners. People who have worked all their lives see their entitlement to jobseeker's benefit reduced, respite care is slashed, hospital charges are increased and so on.
The big one is the home tax. A basic roof over one's head is a massive whopping liability for so many people, and the Government is asking them to pay a tax on it. Council tenants are included in the net because local authorities will be levied for all the houses in their stock. They have no money so they will pass the tax on to tenants. Poor people are allowed the luxury of deferring the payment and paying a higher rate of interest. This is lunacy. Thankfully, I do not think people will pay the tax because they do not have the means to do so.
There are about 200 gardaí outside the gate of Leinster House today. I thought they were here to stop the daylight robbery that is going on in here, but it became apparent that they are here to protect the members of the Government. They need protection because the people are not going to stand idly by and allow them drive the country into the depths of despair. They will not tolerate it.
Whenever a budget appears a critical question must be asked. Does the budget seriously address the massive levels of inequality in our society? Does it make a genuine effort to close the gap between the top 10% and the bottom 10%? Sadly, the answer today, as with previous austerity budgets, is "No".
A few days ago, I found a page from The Guardian which I had kept from 8 December 2010, the day after the last budget of the Fianna Fail-Green Party Government. The headline was, "Poor Pay Price of Saving Ireland's Economy". The article went on to say:
During the budget debate in the Dáil, Fine Gael spokesman on Finance, Michael Noonan, accused the Fianna Fáil-Green Party Government of being socially blind and said the budget was soft on the rich and hard on the poor. Michael Noonan added, "This is the budget of a puppet government doing what it is told by the IMF, the EU and the ECB".
He was right.
Irish Labour Finance spokeswoman, Joan Burton, said the winners in the budget were the bankers, both foreign and Irish, who were hoovering our money. She said responsibility was not being borne by reckless lenders or those who lent to them. She said the budget would leave Irish society more divided than ever.
She was right.
That same month, as they prepared for an election, Fine Gael said a recurring residential property tax on people's homes would be unfair for a number of reasons.
The party said it would be difficult for asset rich but income poor households to pay, particularly the elderly and the unemployed, and that it would be deeply unfair for a young generation who paid exorbitant amounts of stamp duty and VAT on the purchases of over-valued houses, many of whom are now in negative equity. Once again, Fine Gael was right. Within three months, Fine Gael and the Labour Party were in power and how power changed everything. The people of Ireland voted for change, but they did not get it. They got lots more of the same. The gap between what politicians say they will do and what they do in reality has been well exposed.
The injustice of how the pain has been shared is breathtaking. The Government's decision to allow a neoliberal philosophy from Europe to shape policy has seen the most vulnerable suffer most. We are also witnessing the development of a new poor from the ranks of the middle class. We have reached a stage in Ireland where the majority of people are struggling to pay their household bills - over 50%. Only the best off have been spared. Offering support for families that need it should be seen as a function of society and of Government. For too long politics has capitulated to the idea of evaluating outcomes when often the parts that work cannot be counted and the parts that can be counted do not work.
Today, unemployment haunts Ireland as massive emigration helps to keep the figure below the 500,000 mark. The people of Ireland care more about the jobs deficit than about the budget deficit. Austerity has failed and fiscal consolidation has failed to spur growth or tackle unemployment. Growth requires financial investment, investment that does not suit the political thinking of our masters in Europe or our own Fine Gael-Labour Party Government at home. Basic economics teaches us the best way to cut borrowing levels in the long term is to get people back to work. As John Maynard Keynes put it, look after unemployment and the budget will look after itself. Europe's crisis, however, is not just about economics. Unlike GDP or inflation, unemployment is the only major economic indicator that measures real human beings. Unemployment is not a price worth paying. Sadly, at the moment Europe has a different idea, and Ireland has a different idea.
What has been happening in the past few years is nothing short of a complete rewriting of the social contracts that have existed since the Second World War. In these contracts, renewed legitimacy was restored in the capitalist system after it had been discredited by the Great Depression. In return, they provided a welfare state that guaranteed minimum provisions for all those burdens most citizens must contend with throughout their lives, such as child care, education, health, unemployment, disability or old age. The path we are now taking does not put the interests of people first. We are looking at a system with deep structural inequalities and a rigid adherence to a failed economic ideology that protects neither democracy or human rights.
Our domestic economy is struggling to breathe and the Government says there is only one way to deal with it, but there is always an alternative. Another world is possible. Cutting the deficit is vital but it must be done at the right time and in the right way or it will make things worse. Austerity is squeezing the life from the economy at the very time it needs more oxygen. It is squeezing the life out of the people. There is nothing inevitable about high and growing inequality. Different paths chosen by others bear this out. Nations can choose to be high tax with good social services, like the Nordic countries, or follow the American model of the survival of the fittest. Austerity economics pretends there is no alternative.
A recent OECD report, Divided We Stand, noted that in the western world, the gap between the incomes of the top 10% and the bottom 10% has multiplied by a factor of 14 in the past 25 years. The experience in the West has shown that social mobility happens least where incomes are most unequal. When the fate of young people is fixed by their parents' fortunes, it reinforces the vicious cycle of poverty. The widening wages gap, and the emergence of a winner takes all culture, has been worsened by cuts to benefits as low incomes fail to keep pace with the rise in earnings. Former US Treasury Secretary Lawrence Summers, hardly a left wing thinker, recently said that the principal problem facing the developed world is the strong shift in the market reward for a small minority of citizens relative to the rewards available for most other citizens. In Ireland, much progress was made on taking children out of poverty but the austerity budgets of the past few years are undermining that progress. They are forcing children back into poverty. It is not possible to reduce child poverty at the same time as cutting child benefit. How do we measure the savings against the long-term costs? What is the cost of child poverty? This is false economics. It fails the economy, it fails society and it fails the people.
This budget is a grave attack on children, families, the disabled and our senior citizens. It is a budget steeped in unfairness and full of broken promises, especially from the Labour Party. It is also a budget of the wrong choices for our citizens and it is steeped in inequality. Let the lesson be today that this Government has broken many promises, especially as it knows full well the economic reality for many families on the ground. It will go down in history as a budget that pushed many people over the edge, with a lack of vision, compassion and economic reality. People are hurting but the Government put the boot in even harder to families, carers, the disabled, the unemployed, small businesses and our senior citizens.
The facts in today's budget speak for themselves. Child benefit will be reduced by €10 per month, another broken promise. The respite care grant is being reduced by €325. The changes in the household benefits package will see cuts of up to €20 million. There are increases in the drugs payment scheme threshold and charges for medical card holders. In education, there are increases in the student contribution by €250 in 2013, 2014 and 2015. That is the reality of this budget, the reality of what happened today in the Dáil. The VECs will be cut by another €13 million in 2013. These schools serve many disadvantaged pupils.
The prescription charge for medical card holders is being increased from 50 cent to €1.50 per item, with the monthly cap for a family rising from €10 to €19.50. The drug payment scheme threshold is being increased from €132 to €144, a cut of up to €10 million. People who are over 70 will have their medical cards replaced with a GP-only card. This is all part of today's budget. Health and disabilities have been slashed once again.
I notice the Minister mentioned the Croke Park agreement in his speech, which I support. For many people the reality of the Croke Park agreement is very difficult. For St. Michael's House, which provides disability services, the most significant challenge it faces is the waiting list for residential care, which is the longest in the country. There are 317 people on the priority list for residential services. Some 45 of these families are in serious difficulties and significant pressure is being exerted on the organisation to provide residential services for this group. Currently, there are 283 adults with an intellectual disability living with one or more parent who is over 70. That is the reality - adults with intellectual disability in their 40s and 50s whose parents are dead or too elderly to cope, and there are 45 such families on the emergency waiting list.
That issue could be resolved tomorrow morning if there was the political will. It is not a huge number.
St. Michael's House has lost €11.2 million in cuts. Under the Croke Park agreement it has reduced its staff by 160, reduced absenteeism from 6.5 % to 3.5% and has reduced administration staff by 34%. There is an example of productivity, but what will the Government do? It will cut again. A 1% cut for these families means €700,000 from their service. A 3% cut means a reduction of €2.1 million. That should be compared with the billions of euro being pumped into the banks. St. Michael's House will have intermittent closures in day services, residential services and respite services. It will have a reduction in transport services, support services and clinical services. This is the reality for many families and people with disabilities.
In 1941 US President Franklin D. Roosevelt said:
There is nothing mysterious about the foundations of a healthy and strong democracy. The basic things expected by our people of their political and economic systems are simple. They are: equality of opportunity for youth and for others; jobs for those who can work; security for those who need it; the ending of special privilege for the few; the preservation of civil liberties for all; and the enjoyment of the fruits of scientific progress in a wider and constantly rising standard of living.
Sadly these are missing from today's budget.
Some €3 million is being spent on special advisers, which equates to 300,000 home help hours. It is a disgraceful situation. We also have the home tax which is an attack on the family, on young couples in negative equity and on senior citizen couples under financial pressure. At one time the Taoiseach was opposed to the home tax and now he supports it. The budget should have been about fairness and sorting out our public finances. However, all we get are more cuts and attacks on families, the family home, children, the disabled, the carers, the unemployed and low-paid workers. It is a budget steeped in injustice. I will be voting against it and I urge all Deputies to reject it.
This is a deeply unfair and shameful budget that attacks the most vulnerable in society. It hits the poorest people by hitting the working poor, middle Ireland, the elderly and children. The Government refused to go with the alternative of taxing high earners and preferred to attack the most vulnerable. The most shameful cut is the attack on children. Central Statistics Office figures indicate that 200,000 children live in poverty and 500 children are homeless. However, the Minister for Social Protection - an odd title - has cut €10 from the first and second child, €18 from the third child and, from 1 January 2014, €30 from the fourth child. That is against a background of Labour in government. During the 2011 general election campaign the Labour Party had an advertisement claiming it would protect child benefit because it had already been cut by too much. It stated: "Labour is against Fine Gael's latest proposal to cut child benefit by €252 p.a. for the average family. Families need Labour in Government."
The Deputy may not display any such items in the Chamber.
Shame on the Tánaiste and shame on the Labour Party. This is a disgraceful and shameful attack on families. It shows that the Labour Party has absolutely nothing in common with the Labour Party of James Connolly, Jim Larkin or any of the founders of the party. The budget hits almost every other section in society. Carers, who look after those with disabilities, are having their respite care grant cut. There are attacks on the elderly in the electricity, gas and telephone allowance household package schemes. There is a shameful attack on low income families - the working poor - with the abolition of the €127 PRSI allowance. There is the property tax, or family home tax as it should be called, which is a major attack on families, on the 160,000 mortgage holders who are in distress, on the half of mortgage holders who are in negative equity and on local authority tenants who are being hit for the first time under this tax. Of course, it bears no relationship to ability to pay. The increases in prescription charges and for the drug payment scheme are also an attack on the elderly.
The approach in the budget is wrong. It is more austerity, more cuts and more taxes. That approach has patently failed. The budget should be about job creation. Since it came to power the Government has actually destroyed jobs. In the year to 30 June, the Government's figures show that 33,400 net jobs were lost to the economy. In the quarter to 30 September, 5,800 net jobs were lost. Built into the budget is a loss of jobs this year, no increase in jobs next year and a very modest increase in jobs in 2015, which is only a target.
We need a complete change of approach. We need to stop the austerity. We need to tax the wealthy; there is huge wealth in society. We need to stop paying the debt. Some €9 billion will leave the country next year in the payment of debt. We were told that would stop. Remember the promises to burn the bondholders and not a single cent for the banks. We need direct creation of jobs by the State because there is a major job strike and investment strike by people in this country.
The trade union movement has a responsibility with regard to the budget. Can Labour-affiliated trade unions stand over this shameful budget which attacks the working poor and the most vulnerable in society? I call on these unions to disaffiliate from the Labour Party and to call a conference to start a real labour party as Connolly and Larkin did in my home town of Clonmel in 1912.
The focus of attention by media and individuals will be on the detail of the budget and how it will impact on people. However, to understand why cuts and increased taxes are being imposed we need to consider the big picture. The big picture is the astronomical cost of servicing the debt. Some of that debt was legitimately built up but other elements were imposed on us as a result of the bailout. We are paying slightly over €8 billion in interest. A bailout gives the impression that we are getting something and it will be something positive, but in fact it is a very expensive loan to pay for dead banks and to pay back bondholders. It pays for things we should never have incurred in the first place. For that our EU partners call us "special".
Both Government parties promised to renegotiate the debt and free up money for a stimulus. We were going to get a strategic investment that was to create tens of thousands of jobs.
If I remember rightly, the target was 100,000 jobs. There are jobs initiatives in this budget which are welcome but they will have a tiny impact on the level of unemployment. The reduction of three months in respect of jobseekers' payments makes me wonder what people are paying PRSI for, yet lower income workers are being drawn into that system. We are getting more TUS schemes when what we want is more jobs.
In its manifesto, Fine Gael told us that it was not going to impose a property tax because it would impose a tax on people who are income poor and asset rich, mainly elderly people. It spoke about people in negative equity who are most affected by this budget and this tax. A property tax takes little account of ability to pay. The value of the home may be considered without any consideration of the level of debt attached to it. People who have paid stamp duty and development contributions now see a facility in the budget for someone to buy the house next door for half the price being exempted because he or she is a first-time buyer. That will create significant resentment. I do not believe it is about first-time buyers. Rather, it is about the property market first and foremost.
There is a trend here that we saw before. It seems that this will be a slush fund for the Minister for the Environment and Local Government to shore up a dysfunctional local government system that delivers a tiny range of services. If we look at some European systems, we can see that everything from child care to policing to leisure facilities is paid for by property or poll taxes or rates. The inequitable distribution of the fund has been a feature for decades and I have no confidence that this will change in centralised environment. Other charges will be imposed, such as those for water and wastewater. People are paying for the maintenance of roads through their motor tax and paying bin charges. What will they get for paying this property tax? It is a valid question for people to ask. We must remember that the reason for this is a decrease of just over 40% in the income of local authorities since 2009. This has been taken from the local authorities to pay back this significant debt.
The silo-by-silo based approach to the budget ignores the cumulative effect of its impact. This includes the imposition of a property tax, cuts to child benefit, increases in the cost of solid fuel, the fact that people will no longer be exempt from paying PRSI on the first €127 of their weekly income, the now annual increase in third level registration fees and the increase in the monthly threshold for the drug repayments scheme from €132 to €144 per month. Some families pay this every month. If one pays this every month, that comes to €1,700 per year, which is a very sizeable amount. The cumulative effect is affecting possibly the same households with all those measures having a major impact on them. People are already struggling and the cumulative effect of this will in some cases take the food off people's tables. Some are just about keeping the roof over their heads. I am very concerned that the level of personal debt has not been considered in this context.
I welcome the vouching system for political expenses which should have gone further. Had the leader's allowance provided to Independents been at the level it is now and the other allowances reduced to that level, it would have generated savings to the Exchequer of €1.197 million. The travel and accommodation allowance should have been tackled. I do not believe the Houses of the Oireachtas Commission is the appropriate body to oversee any kind of review. It should be an independent review as the commission is not representative and the process is not transparent and not good enough.
Today is the beginning and the end of the budget debate. It is the beginning and the end of the discussion of how we finance vital public services. I say it is the beginning and the end because regardless of what the Opposition say, the Government will still plough ahead with what is obvious economic suicide. We were told by the Government that we could make a submission if we wished. If that process was one of serious engagement, it would be great but it is not. It is a process that demands that we show the Government what we have but we do not get to see what the alternative is - that is, until today when it is too late.
The most striking part of the two Ministers' speeches was the use of the slippery language of deceit. Yeats and Wilde must be turning in their graves at how the English language was abused here today in order to justify the unjustifiable. The Minister for Finance says with a totally straight face that unemployment is down. There is no mention of the fact that people are leaving this country in droves. If a tsunami came to our shores and one half of our population was wiped out, would the Minister come in here the next day and tell us how he solved the unemployment crisis? If he did this, it would be no more farcical than what he said today. The Government can try to ignore and forget the people who left this country but we will not forget them. Unemployment is only down because of what the Government has done, namely, driven them out of the country.
The unemployment crisis will remain the same unless some fundamental reforms are made, many of which were promised when the two Government parties were looking for votes. Upward only rent reviews is one example. This is crippling businesses but the Government now claims that it would not be possible to tackle it. How convenient but for whom? It is not convenient for the ordinary people.
Local government reform was promised. Meaningful reform would mean huge savings which could be passed on in the form of rates reductions. Current rate levels are unsustainable and are crippling existing businesses and preventing new entries into business. One example is a hotel in Roscommon which remains closed because anyone interested in opening it would face a rates bill of almost €50,000 per annum. I predict the hotel will fall into a state of disrepair and become derelict because of unsustainably high rates. At the same time, the manager of Roscommon County Council earns more than the Prime Minister of Spain. There is a suite of directors of services costing the guts of €750,000 per year. We also have more chief and assistant fire officers - a total of four costing €400,000 per year - than New York city. The Government is standing by this. The result of this madness is that businesses are crippled with high rate bills and the Government is doing nothing about it.
Healthy competition between businesses is the lifeblood of a successful economy. When this Government came to power, we were promised a robust Competition Authority. We have had no luck there. The former head of the Competition Authority, John Fingleton, estimated that lax enforcement was costing the Irish economy €4 billion per year. The Government would get many home helps out of that. What did the Government do to help business? It introduced the Competition (Amendment) Act which was not worth the paper it was written on. It contained no provision for civil fines and no rewards for whistleblowers although we know what the Government thinks about them because we heard it in the Dáil yesterday. It contained no effective private enforcement even though it is part of European law. The Government is great at telling me about European law but not very good at sticking to it. There was a failure to prevent regulatory capture. Finally, to show that this Government does not believe in real competition, the Competition Authority is underfunded to the point where there are only two gardaí taking care of it. We have more gardaí in a small part of west Roscommon than that.
Put all this together and it is clear that the Government is crippling business. We often hear about governments that are pro-business and pro-people. This Government is neither and is the enemy of both business and people. Does the Government believe the Irish League of Credit Unions when it states that 1.8 million people are left with only €100 at the end of every month? If it did, it would not have done what it did with PRSI today, would not have imposed a further property tax and would not have cut the suckler cow premium scheme for farmers. If the Government gave a damn, it would not have cut child benefit. I know some members of the Government might use it for holidays but when I was growing up, it was used to pay the electricity bill.
The Government might not call electricity a core need of a family but I do. I believe families have a right to it. If the Government cared about ordinary people it would have done something about household and mortgage debt. Instead it has left the whip hand with the people who destroyed the country, namely, the bankers. They decide whether to cut one's debt and will they do so? No, they will not.
What would I have done? That is why I am here. What would my alternative have been? I would have approached the multinational companies and told them the Government of the past two years had made a mess of running the country. I would have told them we are on the brink of collapsing as a society, something which is neither of benefit to them nor the ordinary people of Ireland. I would have informed them that Ireland was embarking on reform which would make the country more competitive and leaner than ever before. I would also have informed them that this process would take two years and to achieve it during this time a levy of 2.5% would be put on corporation tax. At the end of two years of real reform the levy would be lifted and their companies would do even better in an economy where price competition for services existed. This levy would raise €750 million.
I would also refuse to pay the promissory notes, which according to a research paper I had prepared by the Oireachtas Library and Research Service would save us €1.3 billion. Standardising tax breaks for pension contributions to 20% would increase the tax take by €700 million. Eliminating tax free status on lump sum pensions would save €170 million. I would also legalise cannabis, which according to research done by the Oireachtas Library and Research Service would save the country €500 million.
The Deputy's time is up and he is taking time from his colleague.
Two other measures which need to be achieved in the coming years are with regard to €3.7 billion wasted on drink abuse and €1.1 billion wasted on obesity. I suggest we have a Minister for Health and a Minister for sickness. We need a Minister for Health also because there is money to be saved. There are choices to be made today by a Government which made us promises but unfortunately it has taken a road which will crucify the country and in the future we will crucify it electorally.
Five minutes remain.
I apologise to Deputy Mattie McGrath.
I am delighted to be able to speak on the budget, but to stray from that topic I want to extend my congratulations to the Tánaiste on his recent visit to Clonmel to remember the founding of a decent party and I am delighted it went off peacefully. I must question the people who protested at the event and the cost of this to the State. We must be able to cherish our heritage and history. We have differences of opinion here but I meant to drop in to say hello but I did not have time. I am glad the Tánaiste had a fíor fáilte and that he enjoyed it. I hope his work was successful.
However, I completely differ with the Tánaiste on the budget. He made many promises prior to the election and made many attacks from this side of the House. I am disappointed because it is a horrible budget. It was divided into two little booklets and presented by two Ministers. It was well massaged and the nuances are hidden. I will refer to page 15 of the document produced by the Department of Public Expenditure and Reform. Why can an assessment not be done on child benefit? Why can it not be means tested instead of cut across the board? I do not accept it would cost too much and that the officials could not do it. That is ridiculous in this day and age. There is no fairness.
The back-to-school clothing and footwear allowance is a necessary scheme and can be the difference between people going to school and staying at home. Our young people have a right to education. The changes to the farm assist scheme will be a big blow to rural Ireland. I am appalled by what is being done to jobseeker's benefit. With regard to the redundancy payments scheme, why would any self-employed person want to employ people? If for some reason he or she must let them go, the full redundancy scheme must be paid. The employer rebate element was previously 65% and this had been reduced to 15% but will be discontinued. This is a major blow to self-employed people. The supplementary welfare allowance for exceptional needs payments will be reduced. It is used sparingly, meaningfully and well in the main to support those with exceptional needs. The respite care grant is used by families who care for their loved ones and keep them out of hospitals, which provides significant savings to the State. It was €1,700 and has been cut to €1,375. This is sad.
The back-to-education allowance has been cut. We want people to return to education. Education now goes from the crèche to fourth level and I champion lifelong learning. The people in receipt of this allowance are struggling and want to better themselves and prepare for new jobs in new markets to support the economy. With regard to the household benefits package, this and previous Governments have had an inertia with regard to tackling the big guns, namely, the suppliers such as the ESB, Eircom and telecommunications suppliers. The savings should be made by doing this and not by hitting with cuts the elderly people who cherish a telephone call and use 1890 services such as the Good Morning South Tipperary listening service. They need ESB units. We are in for a shockingly cold winter and we must be down to earth and realise these are the weakest people in society.
Administrative savings have been promised due to the reduced costs for medical certificates and I hope we get them. I welcome increased funding for activation programmes and school meal provision. There are certainly cherries in the budget but overall we have bowed down to the troika. We must learn that austerity does not work and has not worked. I had never before been involved in a sit-in but yesterday I sat in at a banking institution for 12 or 13 hours - the Ceann Comhairle missed me from the House - on behalf of a family from County Wexford which was traumatised by the activities of agents of Friends First. We are bailing out the banks and paying the troika but we are stifling initiative and causing inertia and fear.
I was down town earlier and I saw the protest outside. Those of us who choose to go out and get up on platforms must be careful. The protest was ending as I was coming in but it had been hijacked like the protest last Wednesday. People must take responsibility for what they say. I saw gardaí being attacked by a group well known to them who were spoiling the protest. We must be careful when calling people out on the streets because it has dangerous consequences. The ordinary quiet people, namely, lower income earners, self-employed people, small business people, small farmers and middle-class people, do not protest because they do not have the time, energy or money to do so. We must be careful with regard to the type of people we bring out. Last Wednesday was unbelievable and I never saw the like of it. We were almost lynched because we dared to differ from people who are supposed to be pro-choice. Where is the country going? We must be careful. We must support the Garda Síochána. We must have the right to come to the House and make speeches and vote as we want. Let the electorate decide. We cannot be bullied.