Dáil Éireann debate -
Tuesday, 18 Dec 2012

Vol. 787 No. 3

Leaders' Questions

Deputy Michael McGrath

The manner in which the Government is seeking to ram the property tax Bill through the House today is ridiculous and unnecessary. Some 88 amendments have been tabled, none by the Minister for Finance. The Government is allowing three minutes of debate per amendment tabled. The tax does not fall due until next July. This begs the question of why the Government needs to use its massive majority in the House to bulldoze through this legislation through without proper debate or scrutiny.

The Government has no mandate to introduce this property tax. In last year's general election, the Taoiseach and his party campaigned vigorously against the introduction of any annual recurring tax on the family home. The Labour Party advocated a site value tax with provision for exempting certain home owners. It stated that the needs of people who paid stamp duty and those in negative equity would need to be taken into account. The Bill that has been published makes no such provision for those people.

In the Minister for Finance's Second Stage speech on the Bill last week, he acknowledged for the first time that the Government had the discretion to use alternative measures to achieve the troika's targets, yet the Government has chosen not to do so.

When the full effect of this tax hits, it will push many low and middle income families over the financial cliff. They will not be able to pay. Some 180,000 family home mortgages are in trouble. Does the Taoiseach even realise that a family with three or four children and a gross income of more than €480 per week will not be able to avail of a full deferral of the property tax? Does he realise that the homeless charity Focus Ireland estimates that it will be hit by an annual property tax bill of €100,000? Home owners in Dublin, Cork and other major centres will be particularly hammered by this tax, which ignores ability to pay and the value of the mortgage attached to the property.

Will the Taoiseach at least honour one of the commitments made in the programme for Government by not guillotining debate on this property tax legislation, which cannot in any way be described as urgent?

The Taoiseach

The decision to introduce a property tax was originally signed up to by the Deputy's party with a view to raising €530 million in 2014. The tax as originally proposed by that party was unfair. This is an issue that is central to the memorandum of understanding, and the Government has decided to introduce it on the basis of a levy of 0.18% on the value of the property and, in the case of houses worth €1 million or more, a higher charge on the portion above that value. There is a recognition of the challenges many people face in this regard. The inclusion of deferrals and the issue concerning pyrite have been referred to specifically by the Minister.

Deputy McGrath is well aware that in the past 20 years, commercial premises, including retail outlets and other businesses, have been hit every year by local authorities that had no wider tax base from which to run services and provide facilities for people. This measure was considered by Government on the basis of it being fair and progressive and with an understanding that there are challenges facing people. The timescale for the debate on the legislation was set out by the Government Whip at last week's Whips' meeting. As the Deputy is aware, the Revenue Commissioners have undertaken the mechanics, design and collection of the tax, with a view to ensuring that everybody will contribute. We are one of the last countries in Europe not to have a property tax. The vast majority of income from the tax will be retained by the local authorities for the provision of facilities and services for the people who pay it in the first instance. From that point of view, the Bill will proceed through this House and the Seanad, as outlined by the Government Chief Whip at the meeting last week.

Deputy Michael McGrath

In his Budget Statement the Minister for Finance said that the Irish financial crisis could be summarised in the word "debt", consisting of both national debt and personal debt. For families who cannot pay their mortgage today, the Government's solution is to add more debt to the problem they already face. Only people in certain, very limited circumstances will be given the option of deferring the property tax. In effect, therefore, they are being asked to take on more debt and will be charged 4% per year for the privilege deferring their payment.

The Taoiseach has not answered a fundamental question. What is the need to rush this legislation through the House, given that it will not come into effect until July next year? The Bill raises a host of issues which will not be open to us to address satisfactorily in the very limited time available. We are expected to deal with 88 amendments in three and a half hours, which is three minutes per amendment. There is no need whatever for that. Will the Taoiseach show the House some respect by allowing adequate time for debate? There is no reason that we cannot return to the Bill in January and have a more mature and responsible debate that will allow us to address the clear and inherent anomalies and unfairness it contains.

The Taoiseach

The Deputy is well aware that towards the end of every parliamentary session, there is always pressure to get legislation through. The property tax is being organised and collected and the mechanics put in place by the Revenue Commissioners. A serious amount of co-ordination is required from them. As the Deputy rightly points out, the property tax is effective for a half-year next year. The mechanics of that have to be put in place from early in the new year. It is a fairer alternative to increasing income tax and putting a tax on jobs.

Deputy Michael McGrath

Fine Gael gave an undertaking before the election not to introduce a property tax.

The Taoiseach

It is a progressive tax in the sense that those who can afford it will pay more.

The Deputy referred to the challenge people face. The quarterly national accounts for the third quarter of 2012, released today, show GDP growing by 0.8% year on year and by 0.2% quarter on quarter. It is the first time since 2010 that private consumption has grown year on year. This is encouraging given that it is generally more labour intensive than export growth. It is good to see that sign of confidence returning.

Everybody understood that the Government would introduce a property tax, because of the memorandum of understanding and the requirement to widen the tax base.

Deputy Michael McGrath

That is not what the Taoiseach said in the election last year.

The Taoiseach

There were fears, however, that it would amount to an enormous sum for households. With the rate set at 0.18%, people can at least plan what their contribution will be, both for the half-year in 2013 and the two subsequent years. After that the local authorities will have responsibility for the property tax.

Deputy Gerry Adams

Gan amhras, is buiséad millteanach, cruálach agus dona é buiséad 2013. Aontaím leis an Taoiseach faoi Fhianna Fáil ach ní féidir leis an locht a chur ar na daoine eile mar gheall ar bheartais an Rialtais seo. The CSO figures released today show that the economy contracted by 0.4% between July and September. It is clear that the economy is flat and this cruel budget will make matters worse. The Government is inflicting more debt and more hurt on households. To their shame, Government Deputies are voting for harsh cuts to child benefit and the respite care grant and forcing desperate householders to seek assistance from wonderful charities like the Society of St. Vincent de Paul, Barnardos and others. Today the Government will, with the minimum debate, impose the maximum debt on households by way of the family home tax.

This is not the only charge households are facing. I understand that patients, including cancer sufferers, will have to pay more next year for hospital stays. Meanwhile, waiting lists for operations grow longer as public services are starved of funding. At the same time, the Government has torn up its pledges on education. The increase in the pupil-teacher ratio from 17.1: 1 to 19.1: 1 for post-leaving certificate programmes is of particular concern. As a former teacher, the Taoiseach should be aware that this will result in the loss of hundreds of teaching posts and the cancellation of courses. Many young people who look to this process to progress beyond secondary education will be robbed of that chance. The Government talks about encouraging people to upskill and retrain in order to get a job, but the decisions it is taking totally subvert this. In my constituency of County Louth, there will be a loss of up to eight teaching posts in two further education colleges. I am sure it is the same throughout the State. Was this decision equality-proofed? Does the Taoiseach accept that it will see teaching posts lost, training courses closed down and job opportunities reduced?

The Taoiseach

Tá trí ní áirithe luaite ag an Teachta. In regard to the CSO figures and the state of the economy, I have already pointed out to Deputy Michael McGrath the quarterly results that were published today, showing that GDP grew by 0.8% year on year and by 0.2% in the third quarter of 2012.

An Ceann Comhairle

Deputy Adams's main question related to pupil-teacher ratios.

The Taoiseach

I repeat that private consumption grew year on year for the first time since 2010. This encouraging development is in line with the figures set out by the Department of Finance. Growth will continue in 2012 and in 2013 for the third consecutive year. As both the Minister for Finance and the Minister for Public Expenditure and Reform pointed out in their budget presentations, we are making progress and are on the road to recovery in terms of our economic health, but there are serious challenges ahead.

The Deputy referred to cancer patients. Legislation that was enacted back in 1987 introduced an obligation for patients to pay a daily charge, which is currently set at €75 and capped at €750 or a maximum of ten days. In 2011 the Health Service Executive raised €50 million from that charge. As part of budget 2013 it was announced that the charge would be increased by €5 to €80. The charge applies to each inpatient or day-case patient. The fee is not connected to any particular disease or illness for which a person is being treated and no new charge for cancer patients was introduced here. I remind the House that the charge was increased annually by successive Fianna Fáil Governments in the period 2002 to 2009, with the exception of the election year of 2007, by an average of 12%.

Clearly, there are cases, which have come to my attention, where the discretionary element that always applied in the case of medical cards is being reviewed by the panel of doctors who examine that.

With regard to the pupil-teacher ratio mentioned by the Deputy, this applies for a percentage increase in respect of fee-paying schools. It does not apply in the case of other schools and will not lead to the loss of hundreds of jobs. The education sector is going through a period of quite significant change, and the use of technology should be encouraged far more. The Department of Communications, Energy and Natural Resources, for example, has connected another 286 secondary schools to 100 megabit speed Internet connection and a further 200 were approved yesterday. There are schools where the number of pupils is not large enough to have a range of teachers due to the pupil-teacher ratio that applies. In many such schools where some students wish to do honours mathematics, for example, they can do so through remote connection to schools where teachers can teach online. For the small numbers of pupils in particular schools who might wish to do honours mathematics because of the extra points or because they have a flair for it but because of the number of pupils in the school they do not have a teacher to teach them honours mathematics up to the leaving certificate, the use of technology is of growing interest and importance. That is both cost saving and very effective in the interest of individual or small groups of students in schools where they do not have such specialist teachers.

The Deputy's assertion that the increase in the pupil-teacher ratio for fee-paying schools will lead to the loss of hundreds of jobs is not accurate.

An Ceann Comhairle

I remind Deputies that the Standing Order allows for a brief question on a matter of topical interest.

Deputy Michael Healy-Rae

It is Christmas, a Cheann Comhairle.

Deputy Gerry Adams

I will make a brief comment.

An Ceann Comhairle

Not on all three or four subjects please.

Deputy Gerry Adams

Okay. I asked one question, but I was given a commentary on what was wrong. People who happen to be in hospital will get no comfort from the Taoiseach's assertion that this extra charge does not apply to just to one illness or disease.

To refer to the question about post-leaving certificate courses, PLCs, my question was not about fee-paying schools but about colleges of further education. The post-leaving certificate courses involved are a liberation for many young people who might not have made it through education the first time around, who might not have made their minds up or who might have been in some other difficulty at the time and they now wish to get back into further education. With respect, the Taoiseach's answer was wrong. The Teachers Union of Ireland has said that the increase in the pupil-teacher ratio will result in the loss of 200 whole-time equivalent posts. This could mean up to 400 part-time posts. The cut is penny wise and pound foolish. It is not good economics, leaving aside the philosophy that underpins it. The Government has saved €4 million, but the social consequences are immeasurable. The Government is robbing many citizens of the opportunity of further education. Contrast that with what the Taoiseach says about retraining people and opening education to people. For many, PLCs are a first step into a successful career. Was an equality assessment of this measure carried out? The Taoiseach did not answer that question.

The Taoiseach

I do not have the detail of everything associated with this. The Deputy referred to the issue of patients being treated. A total of 67,206 discretionary medical cards were issued to people who have particular hardship or because of the nature of the illness being treated. A total of 450 new primary teacher positions were approved as well as 450 post-primary teacher positions. Earlier today, the Minister for Education and Skills, Deputy Ruairí Quinn, and the Minister of State at the Department of Education and Skills, Deputy Ciarán Cannon, announced the provision of 6,000 extra post-primary places for persons who are long-term unemployed with a view to giving them the opportunity to get back into the world of work, where the majority of them wish to be. I am sure the 6,000 extra places will be of interest to colleges of further education.

Deputy Mary Lou McDonald

What about the pupil-teacher ratio?

Deputy Shane Ross

I note the comments the Taoiseach made to Deputy Adams on growth. My question is about the growth figures he quoted because yesterday the International Monetary Fund, IMF, had some telling things to say about the Irish economy, especially the growth figures that are emerging. Indeed, its forecast and that of the Department of Finance are very different. The IMF says growth will be 1.1% next year while the Department of Finance says it will be 1.5%. That is a marked difference. It underlines the fact that the Government, through the Department of Finance, has consistently overestimated the growth figures and growth forecasts. As a result, we have overestimated our ability to repay the debt incurred as a result of the bailout programme.

Yesterday, the IMF urged the Government not to impose austerity cuts in future budgets because the growth figures were so dismal. That is underlined by the figure of 0.2% for the third quarter quoted by the Taoiseach. It is another disappointing figure. Is it not strange that these high priests of austerity and extraordinarily disciplined lenders are standing back in shock at the fact that the Irish Government is continuing to pursue cuts which they say will be damaging to the economy? Is it not strange, even unique, that the lenders in this situation should be less enthusiastic about the repayments and the austerity being imposed on the Irish people than the Government? In view of the attitude of the IMF, which is critical of the Irish Government for being too austere, is the Taoiseach prepared to give a commitment to the House that in the next budget he will at least consider not proceeding with the severe cuts that have been predicted and announced by the Government for future years?

The Taoiseach

The quarterly figures speak for themselves. The IMF has been largely supportive of the efforts the Irish Government is making towards an improvement of our public finances and a general improvement in our economic circumstances. Nobody said it would be easy. I note the IMF comment in which it recommends no supplementary budget until 2015, if that is the case. The budget for 2013 has been put through the House. While it is challenging for many people, we would expect that the effort in it to focus on business, job opportunities and the creation of jobs through further investment will grow our economy for the third consecutive year. Consider our position just over 15 months ago. It was very serious. The country had no standing or reputation, was not in a position to raise money, was in a very poor state in terms of inward investment and had a domestic economy that was utterly depressed. The decisions made by the Government to change structures, recapitalise the banks and rebuild our reputation speak for themselves.

Nobody wishes to stand here and say we will have to make further adjustments which will mean cutbacks in services. One cannot cut services beyond a certain point. That is why the Croke Park agreement must be implemented in full and in an accelerated fashion. The Minister for Public Expenditure and Reform is negotiating with the trade unions about extra savings to be achieved from that agreement. These are all in the interests of the economy. Ms Lagarde has been very favourable towards Ireland and I note the comments made by the IMF.

The IMF also made the point that a commitment given to this country by our European colleagues must be followed through. That is an important element of hope for our people. The patience they have shown, the challenges they are confronting and the difficulties they encounter must be tempered on the other side through the assistance that was committed to the country on 29 June, when the decision was made in respect of the break between sovereign and bank debt and, on the other hand, the negotiations that have been ongoing about the promissory notes at ECB level.

It is difficult to know what will happen to the global economy. American interests are making strident efforts to deal with the fiscal cliff the country faces before the end of the year. That could see an enormous improvement in the American economy, given its efforts in the energy field, which will speak for themselves, and the new regime in China on the other side of the world. From a European perspective, serious headway has been made in Ireland, a small country, and there are challenges ahead. We need extra support from our European colleagues. I can testify that the efforts made at the European Council meeting last week are focused on improving the situation in European economies, where leaders see that tough decisions must be made because we cannot do this on our own. If our partner colleagues are making headway, it is easier for Ireland as an exporting nation to grow its economy. I cannot provide details of the 2014 budget but we would like to see a situation where Members of the House have the opportunity to discuss the range and spectrum of what is involved at an earlier date.

Deputy Shane Ross

The issue is very straightforward. I take the point of the Taoiseach, when decoded, about urging Europe to take a softer line and saying that Europe should meet its obligations to Ireland. I hope the Taoiseach agrees Europe is failing to meet its obligations to Ireland, which is what the IMF is implicitly saying. There is obviously a split between the IMF and the rest of the troika. The IMF is saying that because of our failure to grow at the predicted rate, the Government should be prepared to defer the predicted budget cuts forecast and promised for next year. Will we be prepared to take the less austere line of the IMF or are we going to show a greater enthusiasm for austerity than the lenders?

The Taoiseach

The single supervisory mechanism is part of the process of making the decision, following the decision of 29 June. The decision was endorsed by the Heads of Government at European Council level. Within the ECOFIN group, the Minister for Finance will start discussions on the modalities, mechanics and circumstances that will operate, which will lead to banking union. In parallel circumstances from that point of view, Ireland finding itself in a unique position as a special case will be raised at the group meeting.

The focus in the 2013 budget was unashamedly pro-business and pro-opportunity for small and medium-size enterprises to grow. That is where middle Ireland is working exceptionally hard in the face of demanding challenges and that is where the effort the Government must be seen-----

Deputy Mattie McGrath

The Taoiseach could have fooled us.

The Taoiseach

-----to improve the lot of those who are unemployed, long-term unemployed, on low incomes and in the squeezed middle sector. If it is left as it is, they will never have the opportunity to have greater prosperity and activity at the level of jobs. That is where the focus of the budget has been. Our economy will be built on the backs of small and medium-sized enterprises.

Deputy Billy Kelleher

Their broken backs.

The Taoiseach

That is why the Government did not tax employment by increasing income tax or placing additional taxes on work. People can now plan their lives more clearly. I would like to think that if we can continue economic good progress during 2013, we will get the assistance committed to us from our European colleagues, which will make the country more attractive for investment and job creation. There will be greater access to credit for the small and medium-size enterprises with the consequent job creation prospects for hundreds of thousands of people who deserve jobs. That is where the focus of the Government will be.