Finance (No. 2) Bill 2013: Second Stage (Resumed)

I welcome the opportunity to continue the discussion on this Bill. In the short time I had on Thursday last, I noted that the budget is in two parts. There are two announcements on the day totalling an hour and a half, with the two Ministers explaining their different elements of the budget. We hear all that debate on the day in question, including the financial motions, and we have several votes on those proposals on budget day.

When one starts to tease out the hidden bits within the expenditure report and the budgetary measures, one starts to see the detail and the full effect of the budget and its consequences in the Social Welfare and Pensions Bill and the Finance Bill, which we are debating. None of those sections can be separated from one another because they are the budget in total. Nobody can say they voted for this or that because each and every aspect of the budget is intertwined with the other. That is why it is important that when my party put forward proposals for an alternative budget, all our figures and measures were intertwined and balanced and the changes were across the board. They were not simply changes to social welfare or taxation measures but also to how Departments are funded.

The problem with this budget, as with every budget since this Government came to power and in the term of the previous Government, is that the burden remains on the most vulnerable in society. I have heard Members on the other side of the House argue that the burden on the wealthiest in our society has been increased. As a percentage that is probably true, but the disposable income of the most vulnerable in society, those who depend on social welfare, or those on low income, is greatly reduced, whereas the disposable income of the richest in our society is increased.

Those who are vulnerable cannot take additional hits in budget after budget. The more the Government goes after them, the more it affects their ability to survive and the more it affects the local economy. That is one of the arguments I had two weeks ago with the Minister for Social Protection and have had with her predecessors. The more they cut social welfare, the more they affect local business and suppliers because every last penny of social welfare is spent. It is not put into banks or put away for long holidays abroad. It is spent and returns directly to the Exchequer quite quickly through VAT and wages. The richest in our society have the ability to squirrel away money in various different ways, whether in bank accounts, shares or offshore accounts. That means it is often beyond the reach of our tax system.

Some quite high profile figures in our society, who regard themselves as Irish men and women, have moved their accounts and financial interests lock, stock and barrel offshore and pay no dividend on money raised in our society to the Irish Exchequer. That is sad to see. It is a questionable practice. We must continually consider how our taxation system can capture those who hold moneys, who claim to be Irish citizens, who work in Ireland but conveniently manage to be out of the country long enough to avoid paying tax here.

It is a pity that the low rate of corporation tax was not strengthened in this Bill to ensure it is paid or that at least a higher proportion of what should be paid is paid. We have seen reports of some big companies that have managed to avoid paying a large proportion of that tax. In some cases they pay only 4%. That is not a welcome taxation measure. It is welcome only if it is implemented as other taxation measures are implemented for the ordinary worker. What type of message goes out if large corporations and rich people in society can evade millions in tax yet the State would hound ordinary people to pay tax, including asking them to pay in advance, as the Revenue Commissioners have requested for the property tax?

The context for the budget needs to be taken into account as well because it is not intended just to balance books but to re-balance society, to address the fact that 16% of our society is at risk of poverty and that there is a continual brain drain of between 70,000 and 80,000 people emigrating every year. More and more, these are young people who have the skills and the education we will require to rebuild our society and our economy. That is one part of the context and the other is that those who are employed and have been successful in breaking the cycle are increasingly part-time, casual or contract workers. Sustainable full-time paid and permanent employment is becoming a thing of the past. It is dangerous for our society to build our economy on the casualisation of work because it is very difficult to plan future income from those casual, part-time or contractual workers.

There are 175,000 people in this country who are long-term unemployed. The budget did not introduce substantial measures to address that problem. Elsewhere today there has been a debate about the youth guarantee. The Taoiseach is debating it in Europe. That will only be a guarantee if he succeeds in substantially increasing the amount of money that Europe will deliver, and the amount this State puts in, rather than reducing it because the Minister for Social Protection has taken €32 million away from the young unemployed people in our society and has retained only €14 million of it as a job creation, youth guarantee measure. That means that €18 million has disappeared into the black hole of the economy never to be seen again rather than being used as a stimulus with a substantial increase as well.

According to the International Labour Organization, the cost of creating sustainable jobs and for the guarantee to live up to its name is in the region of €6,600 per participant, yet the combined measures the Government has announced will lead to approximately €500 per participant. That is a substantial difference and that figure comes from the possible figure for the youth guarantee across Europe and the €14 million that has been set aside. That will not make any major dent in the level of youth unemployment. Any measure is welcome if it manages to address the problem, but it is not a guarantee if one cannot live up to it as a guarantee, and that is what some of the discussions in Europe today were about. It is a sad state of affairs if this Government and the European Union as a whole is sending out a message to young people that the youth guarantee is not in fact a youth guarantee.

The only way to ensure a real youth guarantee is proper investment in job creation for young people.

The Minister for Social Protection, Deputy Joan Burton, mentioned that core payments were once again protected, but no such thing has happened. Year on year she has managed to interfere with the core payments of those on social protection. She has changed and reduced core payments this year for jobseekers aged under 26 years, and the same applies with the supplementary welfare allowance. She has interfered with the illness benefit, and earlier this year the jobseeker's benefit was changed, with three months being taken off. The fuel allowance was reduced last year. Child benefit was substantially interfered with this year and there will be another change in January as a consequence of last year's budget. These are all core payments and no one can say they are not.

There are 112,000 families on the housing list and that number is growing. The Minister can point to subsidies to private landlords in the form of rent allowance, the rental accommodation scheme or the proposed housing allowance payment. The problem is that at the same time the Government is doing that, rents are going up and the effect will be that the investment in private landlords will lead to reduced levels of accommodation for those on the housing list.

If the money currently directed towards private landlords was instead directed towards local authorities - I am referring to local authorities rather than voluntary housing associations - then the Government would see a better and more sustainable outcome for long-term delivery of housing. Announcements were made in the budget that additional moneys would be made available for voluntary housing bodies. Again, local authorities have been left out despite that they have had a very good record of delivering for communities and those on the housing list over the years.

Another problem is the proposal for the home adaptation grant and the fact it has been cut by 40%, a mean cut considering it comes on top of the previous year's cut. This year money is being made available to insulate houses and I have no major problem with that because it is a job stimulus measure, it is required and it should be available across the board. Local authority housing should be the first to benefit from the insulation scheme because the people in those houses often depend on social welfare, they are the lowest paid and cannot afford to upgrade their houses. The fact that the housing adaptation grant has been substantially cut is affecting the most vulnerable in society, the very people the Government said it would protect in the programme for Government. These are the people who need doors widened because the wheelchair will not fit into the house, a ramp at the front of the house, bars to pull themselves into the house and bars to help them walk around the basement of the house. They may need a toilet and bathroom downstairs because the house they live in is no longer useable by them because they may be confined to a wheelchair or they may find it difficult to walk. These are the people who are now going to be on longer waiting lists.

I know the position in my city, Dublin, and I presume it is the same across the board. Dublin City Council ran out of money to facilitate adaptations for disabled people in June this year. The miserly money that the city council gets from the Government to facilitate these housing adaptations will be spent or committed for those who have been waiting on the list prior to June this year and those who have been added to it since then. It is a false economy because we are finding that people end up staying in hospitals or nursing homes because their houses are not fit for purpose and that is a further cost to the State. This is a substantial cost and I have dealt with people who have ended up staying in hospital or nursing homes for several months. In one case the delay was nine months before the person was allowed home and only then when the family managed to get a loan from the credit union to make the necessary adaptations to the house. The family could ill-afford it and they are still struggling to cope.

The other proposal highlighted to deal with the unemployment crisis among young people was JobBridge. I will not go into detail because I have had this argument with the Minister for Social Protection. The community employment schemes are problematic as well because there has been no reinstatement of the training grant. Therefore, those on the community employment schemes still do not have a guaranteed outcome and they are not getting the same training as in the past.

Apprentices have also been hit by a deduction. They are forced to make deductions while in education. They will suffer the consequences and perhaps this will discourage some young people from staying in an apprentice scheme. Perhaps they will take the bád bán to America or Australia. I hope they stay and I encourage anyone in an apprenticeship to continue in it, despite this Government, to get the qualification and use it in this country. We live in hope that we can create an economy and society of which these young people can be proud.

Sinn Féin made its proposals and the Minister rejected them because he did not implement them. I am disappointed that once again the Minister failed to take the opportunity to introduce a wealth tax. We have had this argument across the Chamber in recent years. A wealth tax has been introduced in other countries. It is not something we simply plucked out of the air. We did not decide on an exorbitant figure to be dropped down on all the rich people in society. The Department should at least take the opportunity in the coming months to see exactly how it could work. Let us consider the French model. The authorities in France have considered increasing the tax and the percentage charged on people with wealth. Let us consider that as a model to see whether it could impact or raise the type of money required instead of the property tax, which is a blunt instrument, as we have seen in recent weeks.

I heard some on the Government benches bemoaning the property tax, how it was implemented and the fact it does not take account of maintenance fees and so on. These are the very people who voted against having a proper debate on it. They will suffer the consequences for its introduction and the fact it is a regressive rather than progressive measure, as all taxation should be.

I call Deputy Jerry Buttimer who, I understand, is sharing time with Deputies Joe Carey, Noel Coonan, Paul Connaughton and Joe O'Reilly.

While listening to Deputy Ó Snodaigh I thought I was in "Back to the Future" and "Groundhog Day" because the voodoo politics of Sinn Féin certainly do not add up at all. I am sorry Deputy Ó Snodaigh is leaving but the reality is this budget is a jobs budget.

It is Groundhog Day again. I heard all this last year as well.

It is a budget about getting people back to work. I realise Sinn Féin and perhaps the Acting Chairman might disagree on some of the aspects of the budget but they will join me in welcoming the fact that the Government is putting people first, creating jobs and putting our country on a sound economic footing. We must recognise the sacrifice and the role played by our citizens.

At this point I have to be totally impartial.

That is a first, Acting Chairman. This has been piloted by the Minister for Finance. Let us put it in perspective because this is about job creation. I am referring to the 9% VAT rate, the small and medium enterprise job creation stimulus, the home improvement scheme and the endgame of the troika leaving the country.

We must consider the regions as well. I wish to speak about Cork in particular. I welcome the Minister's decision to give funding to the creation of the convention centre in the city of Cork. It is a major decision and a massive boost to the region.

The context of this year's debate on the Finance Bill is more interesting than usual, because it coincides with the successful conclusion of the 12th and final review mission of the programme with the European Commission, the ECB and the IMF. Despite what many doomsayers might say, this represents a significant milestone. The budgets for the years between 2011 and 2014 implemented consolidation measures of almost €16.4 billion. I acknowledge this has been difficult for the people and many unpalatable decisions have been taken. Nevertheless, steady progress has been made in recent budgets, which has brought about a situation in which the public finances are back in check. Moreover, jobs are being created at a rate of 3,000 per month, economic growth has returned and the State is set to emerge from the troika programme on 15 December next.

I wish to refer to some specific elements of the Finance (No. 2) Bill. I welcome the retention of the 9% VAT rate for the hospitality and tourism sectors. It has been a hugely significant initiative for the tourism industry and underlines the commitment of the Government to job creation in the sector. I believe the beauty of this initiative is that it protects the primary small to medium-sized businesses, which are the backbone of the economy and society to an extent. The continuation of this initiative has given business owners confidence in what still is an extremely difficult economic environment. While the measures remain in place, they should be used to maintain value for money and to support existing jobs and investment in further job creation.

The decision to reduce the air travel tax to a zero rate was most welcome. As a direct result, Ryanair is set to provide eight new routes at Shannon Airport. This positive announcement will create 300 direct jobs and the additional 300,000 passengers travelling on these new routes will create many indirect jobs in hotels, guesthouses, bars, restaurants, shops and petrol stations throughout the mid-west region and along the west coast. For the first time in years, there is a positivity about Shannon Airport's future. I compliment the chairperson of the board, Rose Hynes, the new chief executive officer, Neil Pakey, as well as the management and staff at Shannon Airport on their work in restoring the fortunes of Shannon. I am informed that in the first year of operating as an independent entity, Shannon Airport is set to break even and might even return a small profit, which is a highly significant achievement by the new structure there. The specific measure to reduce the rate of air travel tax to zero will help Shannon Airport to continue on a path of growth.

As for agricultural taxation, I welcome the review as outlined in the Minister's Budget Statement. It is timely, necessary and a significant component in the mixture that must be dealt with if the ambitious targets set out in the Food Harvest 2020 strategy are to be met. There is an intrinsic link between the taxation system and the full potential of Irish farmland productivity, and while this nettle has not yet been grasped, it badly needs to be. I believe the Food Harvest 2020 goals are pie in the sky and will not succeed until this issue is dealt with.

The construction industry has suffered greatly in recent years. While construction levels equating to 25% of gross domestic product are unsustainable, construction levels in the low single digits as a percentage of GDP are just as unwelcome. As a concerted effort to get to the international average of 12% of GDP is a worthy aspiration, I welcome the new home improvement initiative included in the budget.

I wish to make a final point in respect of the single parent's tax credit. Will the Minister accept amendments on Committee Stage to ensure there are no unintended consequences arising from the changes that have been made?

In introducing the Finance (No. 2) Bill, the Minister stated the objectives of the Government over the past two and a half years were, first, the implementation, and second, the exiting of the EU-ECB-IMF bailout. In parallel with this, the Government sought to support business by creating jobs, putting people back to work and putting people into education and retraining. In the context of this budget and Finance (No. 2) Bill, the Government certainly is on target to achieve this. I compliment the Minister on his personal input in this regard, as well as on the leadership and direction he has shown over the past two and a half years in getting us to this point.

Members of the Opposition will criticise elements of a budget and Finance Bill, and in fairness to them, none of us is perfect and neither is this measure. Despite what the Opposition might say, however, it certainly has received overwhelming endorsement from the private sector. The president of the Construction Industry Federation, Mr. Tom Parlon, represents an industry that was devastated by the mismanagement of the previous Government and has come out strongly in favour of the incentives that are in place for construction. Deputy Carey mentioned the housing renovations initiative, but initiatives are also in place in respect of schools and prisons. While Deputy Buttimer has left the Chamber, I note a new prison is being built in Cork although I do not know whether he will take credit for that. In addition, Limerick Prison is being renovated to upgrade and modernise it.

From my perspective, I must welcome the measures with regard to farming and, in particular, in respect of farm consolidation and the handing over of farms to next-of-kin and to sons and daughters. I welcome the concessions that have been made and which will apply up to 2015 in this regard, as well as in respect of stamp duty. I also welcome the new initiatives regarding long-term leasing, which will enable land to be brought into full production and act as an incentive for all land to be utilised. I look forward to more such initiatives. I also welcome the €23 million that has been invested in a new beef genomics scheme which will be of great benefit to the suckler herd, which has been experiencing some degree of difficulty and pressure.

There have also been initiatives in respect of starting one's own business, and Deputy Carey mentioned the initiatives pertaining to air travel and tourism.

Those initiatives are important not only for Limerick and Shannon but for the mid-west and the midlands. I am glad the Government is concentrating on that sector. We had an immediate response to that from Ryanair which launched new routes out of Shannon.

I also welcome the initiatives in the justice area, particularly the recommencement of recruitment to the Garda Síochána, which will result in the Garda college in Templemore being used again, and the €9 million that has been invested in the Garda traffic fleet. There are a number of issues to cover, and with only four minutes allocated for contributions, I may not get to mention a number of them.

I want to end on the issue on which I began regarding the Minister and the EU-ECB-IMF bailout. Many people have suffered in recent years on foot of the poor decisions taken resulting from the bank crisis, especially those who lost their jobs, those in receipt of social welfare benefit and those in receipt of disability benefit. I am sure the Acting Chairman would agree that 15 December will be a red letter day for Ireland when it is hoped, under the leadership of the Minister, Deputy Noonan, we will exit the bailout programme. I ask that the Minister use the mechanisms of the Finance Bill to grant those who have suffered most a bonus over the Christmas period, namely, that social welfare recipients be given a bonus that was traditionally given some years ago. I ask that he do that as a gesture of goodwill and of hope for the future that this country is getting back to where it once was.

I welcome the opportunity to speak on this Bill. Since the announcement of budget 2014 I have been contacted by many people in east Galway regarding its various provisions. In particular, I have been contacted by three groups, trades people, tourism and restaurant business owners and separated fathers, and I will concentrate on the issues affecting them.

In recent weeks I have encountered many trades people who have welcomed the fact that the Government has finally taken action to level the playing field for tax complying trades people by incentivising the employment of those whose tax affairs are in order by home owners seeking to avail of the new home renovation incentive scheme. Initially, many of those trades people were worried that the timing of the introduction of the scheme could adversely affect their work in the final two months of this year, but this matter has since been addressed and those fears allayed in what I believe to be yet another common sense and probity measure taken by the Government. The initiative may also be the spur or incentive that some home owners need to get work carried out on their home. It is to be hoped that many people who formerly worked in the construction industry will benefit as a result of this measure.

We have to make doing business easier for small businesses which are the economic lifeblood of Ireland. That is the reason I very much welcome the retention of the lower rate of VAT in the hospitality sector. Small restaurant business owners in east Galway expressed the fear to me that a rise in the VAT rate would hamper their efforts to attract business in what remains a very difficult climate. I believe that business owners recognise the Government's unwavering efforts in terms of job creation and recognise that it is only through job creation that a stagnant economy can be brought back to life. One job can lift a family back to economic viability. That is the reason we have to continue in our efforts to support small businesses.

The catering sector is not the only one affected by the decision in regard to VAT. Hotel and tourism business owners have also welcomed it, and I look forward to seeing more tourists in the west next year, especially given the abolition of the travel tax and the pledge that increased numbers of air passengers will be brought into Ireland as a result. Tourism spending is badly needed in the west and efforts such as this initiative and the travel tax must be applauded.

I also welcome the retention of the current rate of corporation tax. It is important that the message is put out in as forceful manner as possible that this is an integral part of the Irish regime and that it is something that is not up for renegotiation.

While many of the reactions I have received on a personal level to the budget have been positive, I have been contacted in recent weeks by many separated fathers, and each has outlined to me exactly how the change in the tax credit system will impact on them. The tax implications are significant and I welcome the statement by the Minister, Deputy Noonan, that situations will be examined where the primary carer does not have a tax liability. I believe this may help the circumstances of many separated fathers. However, many fathers may well continue to be adversely affected as a result.

I believe that the issue raised by the controversy over the single parent tax credit is one that merits much greater investigation. Family break-ups are a fact of life and the Government has ensured proper provision is made for children. In cases where parents live separately, there is an added cost of two properties to be maintained in terms of property tax, lighting, heating, etc. The size of the house provided by the secondary carer, the father in many cases, has to be sufficiently large to accommodate the children in order that they can stay over. Further investigation is needed in terms of the burden that is being placed on separated families and we must examine measures needed to balance this while simultaneously ensuring families who live together are in no way disadvantaged and that no financial obstacle is put in the way of families waiting to reunite.

Borrowing €12 billion per annum to keep the country afloat is unsustainable. We have to progress to a more sustainable budgetary framework, and that is what budget 2014 achieves. The deficit is lowered and all sections of Government will have to reflect the new reality with leaner management of greater resources. Had the focus been on having a much leaner Government during the years of the boom, spending would not have spiralled to the degree it had, but there is nothing to be gained from bemoaning decisions made.

Although it marks a milestone on the road to recovery, there will be no celebrations as the troika exits the country on 15 December. It is a welcome step but one which fails to put money in the purses of householders. We have a long road to travel and the people will not rest until such time as unemployment levels have been drastically reduced and young people once again have the option of living and working in their own country.

This Bill is another chapter in outstanding stewardship of the economy by the Minister, Deputy Noonan, since 2011. It represents another serious effort by him and by Government to get our people back to work. All its contents and strategies are predicated on that idea of having our people working again. It is an important step. We can be very happy with the progress to date, although we are in no sense complacent. It is worthy of note that when we came into office there were 400,000 people unemployed and now the live register is at its lowest since 2009, with 3,000 jobs being created every month. A prestigious development and one that supports our IT sector is expansion by Facebook of its European headquarters in Dublin with the creation of an extra 1,000 jobs. That indicates where we are at.

We have travelled a huge journey. Our economy has returned to growth with 0.4% GDP growth in quarter two. We have had two successive years of economic growth in 2011 and 2012. Real GDP increased by 2.2% in 2011 and 0.2% in 2012. We have successfully executed all obligations under the three year bailout programme, a key step in the process of leaving the programme next month, which is very welcome.

One of the vital components of our local economy is our small and medium enterprises. It provides employment for 70% of our workforce, and that sector has created 39,000 new jobs during the past 12 months. In recognition of this fact, the Minister devised a ten point tax reform plan aimed at assisting with cashflow and supporting the creation of more jobs. Part 1, chapter 3, section 21 of the Bill increases from €200,000 to €300,000 the amount of expenditure eligible for research and development. That is important. Business can increase expenditure from 10% to 15% on research and development, which can be outsourced. Now more than ever our small businesses need to be examine ways in which they can set themselves apart in a competitive way. This investment is part of that.

Part 1, Chapter 2, section 6 has an interesting new provision for anyone who is long-term unemployed. An important point that should be put on the record and that merits repeating often enough for people to cop on to it is that there is a two-year exemption from income tax up to a maximum of €40,000 available to anyone who is on the live register for more than 12 months and who wants to set up a new business.

On top of that we have managed to retain the 9% VAT rate for tourism related services. That is critical in my area and every area of the country. The reduction of the air travel tax to 0% is critical. The 13.5% tax relief on home renovations will be very important and will kick-start the construction sector. The credit guarantee scheme is important. The initiatives in regard to agriculture and the transfer of land and partnerships are very important. The Finance Bill is crafted around job creation strategies, incentives for further job creation and initiatives in that area. We have been successful.

Our record with the 9% VAT rate supports the view that the initiatives and incentives in the Bill will work. All our actions as a Government and everything we do should be predicated on that principle. It is important that our people get back to work and everyone gets to participate in the economy and in society.

We have 30 minutes remaining in the debate. The indicative schedule has a 20 minute slot for the Opposition to be shared between three Members with the Minister having 15 minutes to reply to the debate. That makes 35 minutes. Will the Minister use his full slot or will he yield five minutes?

I will yield five minutes.

That is gracious of the Minister.

I wish to share time with Deputies Tom Fleming and Joe Higgins.

The failure to achieve a write-down to the cost of the bank bailout is a huge millstone around the neck of every citizen and it is one of the reasons we are facing a budget of this nature next year and the year after. The notion that is the final tough budget and that if people straighten their backs, they will come out of the recession in the next year or two is not true. This gives false hope to people about the future.

Interest payments on State debt are equal to the amount being borrowed in 2014. The interest payments for 2014 are €8.2 billion against Government borrowing of €8.16 billion. Interest payments will increase over the next few years. Interest payments in 2014 equate to the total spend on education and 50% of health spending. The portion of the national debt, which is the result of the bank bailout forced on the State by the ECB to protect German, French and British banks and the EU banking system, is odious and it should be repudiated. The refusal by the Government to contemplate an increase in taxes on wealth, high incomes and corporate profits means the costs of the crisis since 2008 have been unfairly loaded on those who can least afford it. A total of €30 billion in austerity measures through cuts in social and capital spending and tax hikes, levies and charges that adversely affect the poor and those on low and moderate incomes have destroyed domestic demand and activity in the economy.

I question a number of the contributions made by Government Members about the policies to get people back to work through tax credits and to help small businesses. There is a major question mark over these incentives because if people do not have money to spend, jobs cannot be created. The Exchequer returns showed that VAT receipts for August were almost 28%, or €65 million, below the Government's target for the month. VAT is considered one of the big four revenue streams and it was €2.45 million or 3.5% behind target for the first eight months of the year. If people are not spending, VAT returns drop. While this needs to be examined more closely over a longer period, it seems to indicate people are not spending. Until they do, the economy will not turn around. If the Government continues to take money out of people's pockets, that will be the outcome.

A regime of tax reliefs that overwhelmingly benefits the wealthy, big business and those on high incomes has been maintained and it is estimated to cost the Exchequer €8 billion, which equals the debt interest bill the State must pay annually. The Government has deliberately followed a policy in its three budgets of protecting the elite at the expense of the majority. The single parent tax change provided for in the legislation is indicative of this approach. The Government will not touch the wealthy, corporate tax, anyone earning more than €100,000 or the assets of the wealthy which have increased in recent years. The value of the assets of the 300 wealthiest people in the State increased by €3.6 billion in 2012. Their assets are worth €66.6 billion. This includes helicopters, art and so on.

While the Government will not touch these assets, it saw an opportunity to cut the income of single parents. I was contacted by one man about this who said, "The first point is relatively straightforward and it relates to the repeatedly stated fact that the programme for Government cannot and does not provide for an increase in income tax. I have pointed out to the Minister that any removal of any portion of a tax credit and/or extended tax band will de facto amount to an increase in income tax payable, therefore breaching directly the programme for Government". That is a good point. This is a roundabout way of taxing the income of ordinary people who can ill afford it and who are trying their best to put their children through school, to rear them the best way they can and to support their families. This is a blunt instrument with which to go after people. It is shameful and the Minister should reverse this cut. He should take this measure out of the Bill and give back people a little dignity to rear their children.

The Bill and recent budget measures have failed to address the imbalance in our society and we have a continuation of the regressive measures that are impacting disproportionately on the weakest and most vulnerable in the State. It is again a case of stripping the elderly, the disabled, the unemployed and those in negative equity or mortgage arrears while billions of euro are handed to foreign bondholders. The cumulative impact of budgetary cuts leaves many people experiencing gross inequality and social exclusion on a daily basis.

This is epitomised by the draconian cuts to social welfare assistance to the under 26 age group. It is claimed that social welfare payments to these people are a disincentive to work but there are strong financial incentives for them to seek work. Prior to the recent budget cut, a young person aged 23 or 24 was in receipt of €144 per week and those aged 25 received €188 per week. It is proposed to reduce these payments to €100 and €144, respectively. The majority of young jobseekers do not claim secondary benefits and, therefore, this is the maximum payment they receive. Even if they were to take up a job on the minimum wage rate, they would have weekly take home pay of €329 minus the universal social charge. There is a financial incentive, therefore, for young jobseekers to take up employment. It is also claimed that this decision will encourage young people to take up education, training and work experience opportunities. It is estimated that these cuts will impact on at least 20,000 jobseekers in 2014 based on the current live register. This does not take into account new claimants aged between 22 and 25 from January 2014. An analysis shows there are 3,250 places on the Tús, Momentum and JobBridge schemes and it is not possible to indicate how many places will be created by JobsPlus. This means 20,000 people will be incentivised to take up 3,250 guaranteed places. There is a lack of quality education, training and work experience opportunities and the reality is young people cannot access places that do not exist in the first place.

The youth guarantee scheme guarantees a young person a quality education, training or work experience place if he or she is unemployed for four months or more, and the initial allocation of €14 million is welcome. However, it represents only 5% of the estimated annual cost of a comprehensive scheme. While it is difficult to estimate the cost of the implementation of the youth guarantee in Ireland, the National Youth Council of Ireland ascertained earlier this year that full implementation would cost €217 million per annum based on the number of young people unemployed for six months or more. It is encouraging that the Government can access European funding to complement Exchequer funding of at least 66% of the overall expenditure.

Will the Minister ensure maximum use is made of funds available? There is no breakdown of the €46 million proposed for education, training and work experience opportunities for under 25s and, more important, the number of places being provided. At best, 3,250 new places will be created and additional places will depend largely on employer recruitment of those under 26 years of age. The JobsPlus and JobBridge are demand-led schemes and it will depend on the employer taking on employees and interns. The statistics show that 29% of interns on JobBridge are under 25 years of age. The reduction from 12 to six months in eligibility for under 25s for JobsPlus is welcome. Will the Minister consider extending this to 25 years olds?

There is a fallacy that most young jobseekers live at home and, therefore, have financial support from their parents and families and do not want welfare payments. The reality is that where young jobseekers are living at home and apply for jobseeker's allowance, their claims are means tested and the parents' income is taken into account in a process known as benefit and privilege assessment.

The statistics show that more 19,000 applicants under the age of 25 had their applications for jobseeker's allowance refused between 2009 to 2012. This clearly shows that the payment is going to young people who are living in low income households. The Government stated that this cut will only apply to young people on jobseeker's allowance but they represent 92% of all claimants as the majority of young people lack the 104 weeks PRSI contributions to qualify for jobseeker's benefit. They have not entered employment or they have worked for fewer than two years.

The under 26 welfare payment is one of the more contentious issues. This should be rescinded over the coming months for the reasons I explained. Will the Minister review the matter given the huge number of places that will be needed to cater for these people? In the medium to short term, the jobs will not be available. We need the economy to pick up a bit before we implement all these tough measures.

I want to protest against another despicable use of the guillotine in the debate on the Finance (No. 2) Bill 2013. Fine Gael and the Labour Party have again displayed outright contempt for the views of elected representatives who have come into the House even in the last hour and who have been crowded into very small time slots rather than engage in the type of consideration of the measures proposed in the Bill, which is needed. The Finance (No. 2) Bill enshrines the measures contained in another right-wing austerity-driven budget. Fine Gael and the Labour Party have continued the disastrous policies of their predecessors, Fianna Fáil and the Green Party, which is essentially to continue to place the burden of the crisis of European capitalism and the crisis resulting from the madness of the profit-driven financial markets system on to the shoulders of working class people, of middle and lower income workers, of pensioners, of young people and of society generally.

This budget contains the most cruel attacks and contempt for the youth, with the cuts to the jobseeker's payments for younger people up to 25 years, which is not so young, and with the cynical strategy of forcing them to take the most menial jobs at the discretion of whatever employers offer. There is a cruel attack on maternity benefit and on elderly people's medical cards. In fewer than two months, every household in this country, the majority of whom are ordinary low or middle income workers, unemployed or pensioners, will face a full year demand for the new home tax, or the so-called "local property tax".

Currently all over this country, construction crews are breaking up the pavements in front of people's homes and placing water meters in front of them at a cost of €538 million of taxpayers' funds to facilitate another tax on a vital natural necessity, namely, water. Bogus conservation arguments have been advanced that it is about preserving water which is already treated with taxpayers' funds. We do not take that seriously from this Government or from previous Governments which, over the past 20 years, lifted not a finger to include significant water conservation measures in the building by-laws that could have drastically reduced the amount of treated water used in households. The savings said to result from metering, if equivalent to British use which is privatised and metered, may be 2% of treated water. Some 40% leaks into the ground, so it is obvious where that €538 million should be invested, namely, in rectifying the infrastructure.

The Government again chose to hit ordinary people with further new burdens as part of the continuing demand by the European establishment that the financial markets systems, the gamblers and speculators, would be bailed out. A wealth tax for every 1% on the very top echelons of this society could yield €580 million per annum. Seamus Coffey, a conservative economist, reckons that the effective rate of corporation tax is 8%. Therefore, for every 1% increase in corporation tax, €525 million could be raised. If it was even approaching the European average of 18%, that would be a substantial extra resource. Progressively increased income tax placed on the top 10% of income earners would have yielded very significant resources, as would a financial transaction tax.

It is outrageous that this country will pay approximately €8.5 billion in interest alone on the odious debt imposed on our people by the European establishment and accepted by cowardly Governments for debts with which the Irish people have nothing to do. There are substantial resources there that could have been used for major job investment programmes. The Nevin institute states that for every €1 billion one invests in infrastructure, 14,000 jobs can be created. We could, therefore, have programmes for tens of thousands and a rebooting of this economy but we have a Government which is wedded to the financial markets system and which puts itself and our people at the mercy of the speculators. Does anybody believe the speculators and the financial markets will take seriously that this State is rocketing forward economically? I fully expect that the sharks will begin to circle again in a year or two years as the reality of the disaster that is austerity becomes clear.

The Government is relying on a discredited system and is condemning youth and working class people to ongoing despair and difficulty. That is why I am committed to socialist policies and to the socialist transformation of society where wealth is in democratic ownership, in public ownership, as the financial institutions should be, and to utilising the wealth and resources to rectify the problems and for major infrastructural and other investment to create jobs for our people and to transform life for our people by contrast with this disaster which is occurring currently.

I thank Deputies for their considered and useful contributions today and last week. During the course of this Second Stage debate, a number of Deputies raised the future prospects of the Irish economy and Irish society. The Government is acutely aware of the challenges the Irish people have faced over the past few years and the resolute way they have faced them. The difficult decisions that have been taken are bearing fruit. The public finances have been put on a sustainable path and the economy is being rebalanced. However, more work needs to be done. For this reason, with Government agreement, my Department and the Department of Public Expenditure and Reform are drawing up a medium-term economic strategy to cover the period from 2014 to 2020.

The Government's focus is firmly fixed on achieving a successful and durable exit from the EU-IMF programme of financial assistance, which runs until December of this year. It is doing all it can to this end. All options that assist in supporting durable and sustainable future market funding will be considered in light of what is appropriate for Ireland. I am aware of the concerns some consumers may have about the domestic banking landscape. Deputies should be aware that under the provisions of section 149 of the Consumer Credit Act 1995, as amended, regulated financial institutions must apply to the Central Bank for permission if they wish to increase charges and fees.

A number of Deputies spoke about the local property tax, which does not fall within the scope of this Bill. I reiterate that there is no requirement on any property owner to pay the local property tax for 2014 before 1 January 2014. I can absolutely state that no penalties will apply if a person does not pay before then, as the tax is not due until 1 January next. Perhaps it is worth mentioning that other specific issues which were raised by Deputies during this Second Stage debate are not primarily the responsibility of my Department. Therefore, I cannot address them in this reply.

I would like to respond to some specific points that were made about the Bill. Some Deputies referred to the decision to replace the one-parent family tax credit with the single person child carer tax credit. They sought to portray this as an attack on separated fathers. Ultimately, the number of single fathers affected by this measure will depend on the family circumstances in each case. This cannot be described as an attack on single fathers. It is important to point out that the child benefit payment will not be the determining factor in deciding who can claim the new tax credit. That payment is being used as the initial indicator to ease the transition from the old credit to the new. It should be noted that this new policy has been agreed by the Government on the basis of the Commission on Taxation's recommendation that the credit should be retained, but should be confined to the principal carer only. As I outlined in my opening speech, I intend to propose a Committee Stage amendment to provide that the new credit can assist the non-primary carer to take up or remain in employment where the primary carer has no tax liability.

A number of Deputies referred to the budget decision to restrict tax relief in respect of medical insurance premiums. I am advised by the Revenue Commissioners that based on 2012 data, it is estimated that up to 577,000 policy holders, which equates to almost 53% of all policies, may be affected by this measure. Of those that are affected, many will only be affected marginally, depending on the cost of the policies that individuals purchase.

Deputy Lawlor mentioned the sportspersons relief. I want to be clear about this issue. Following the concerns raised by the European Commission, we had two options. We could choose to extend the relief to allow sportspersons to live in another European Union or European Free Trade Association country, or choose to abolish it altogether.

Deputy Michael McGrath suggested that the home renovation incentive is too cumbersome for individuals. The incentive is designed to be very easy to claim. All claims are handled online through the Revenue website. Deputy Lawlor asked whether invoices can be accumulated to reach the €5,000 threshold under the home renovation incentive. The threshold can be reached by carrying out several jobs. It does not have to result from a single job. Therefore, any qualifying job undertaken can be included to reach the €5,000 threshold.

I acknowledge that Deputy Michael McGrath and Deputy Pearse Doherty both welcomed the change introduced in section 38 of the Bill to ensure Irish companies cannot be "stateless" for the purpose of their tax residence. I welcome Deputy Michael McGrath's positive response to the enhancements to the research and development tax credit that I have announced. These enhancements include the phasing out of the base year when resources allow.

Deputies Michael McGrath, Shortall, Mitchell and McDonald made a number of comments about my dealings with the pensions sector and the additional 0.15% pension fund levy that will apply to pension fund assets next year and in 2015. I acknowledge Deputy McGrath's welcome for the changes being made to the standard fund threshold regime. However, I must correct one misapprehension that he and others seem to be under. It has been suggested that individuals in the public service have been singled out for preferential treatment under the regime. This is incorrect. The changes to the standard fund threshold regime apply, as appropriate, to both defined benefit and defined contribution pension arrangements in both the private and public sectors. I would not categorise my engagement with the pensions sector on the proposed changes to the standard fund threshold regime as a "bargain", in the manner suggested. The assessment that the changes to the regime required to deliver on the budget 2013 commitment to cap taxpayer subsidies to higher value pensions would have a considerably lower yield than originally estimated meant that the achievement of our overall budgetary objectives, including the continuation of the reduced VAT rate for the tourism sector which the Deputy and many others have rightly welcomed, necessitated among other things the imposition of the additional 0.15% pension fund levy for 2014 and 2015.

Deputy Shortall pointed out that the levy does not apply to unfunded public service pension schemes. While this is the case, of course, she omitted to mention that public service pensions above €12,000 per annum have been cut by an average of 4% since 2011 by means of the public service pension reduction, with much more severe cuts at higher pension levels. Deputy Michael McGrath accused me of penalising and not incentivising pension savings. He quoted figures from the Irish Brokers Association in this regard. That association and other groups have made it clear to me previously that the most significant incentive to pension savings is the marginal rate tax relief on pension contributions, which I am maintaining. Deputy Pearse Doherty said that I blindly accepted the pensions sector proposals for their changes to the standard fund threshold regime and the yield associated with those changes. This is clearly incorrect.

Deputies Michael McGrath, Boyd Barrett and Simon Harris referred to the capital gains tax relief for entrepreneurs which I announced in budget 2014. In light of the required increases in capital gains tax rates over recent years, and the need to encourage entrepreneurship in the economy, there is a case for a targeted and time-bound capital gains tax relief to encourage investment in assets used in specified new trading activities which would give rise to economic benefits and employment.

DIRT was mentioned by several Deputies. In certain cases, deposit interest can be paid without deduction of DIRT or individuals can get a refund of DIRT deducted. There is no exemption for children. One Deputy mentioned accounts owned by children in credit unions, but there is no reason such accounts should be treated differently from accounts held by children in other financial institutions.

I assure Deputy Boyd Barrett that the Finance Bill provisions relating to real estate investment trusts do not involve any policy changes. They are purely technical changes intended to correct minor errors in the legislation enacted earlier this year. While I note the Deputy's comments in relation to section 33, I strongly refute his characterisation of this measure as a bailout of the banks. The removal of this restriction will serve to level the playing field between participating institutions and other companies.

Deputies Pearse Doherty, McLellan, Nash and Deasy raised issues concerning the living city initiative, which was announced earlier this year as part of the Finance Bill 2013. I said at the time that the proposed scheme would be subject to a full ex ante cost-benefit analysis and would require EU state aid approval from the European Commission. Following the receipt of a report, an application for EU state aid approval will be submitted shortly to the European Commission. The evidence presented in the cost-benefit analysis will form part of this application.

Deputy Michael McGrath mentioned that the Government announced a reduction in the air travel tax in July 2011. He suggested that we did not follow through on it. The July 2011 announcement was subject to agreement being reached with the airlines to bring in additional passenger numbers. Such an agreement was not forthcoming. I have been heartened by the response of Ryanair to last month's budgetary announcement.

Deputy Pearse Doherty argued that the increase in excise duty on alcohol is a revenue-raising measure. It is estimated that these increases will raise €145 million in 2014. This has helped me to retain the lower rate of VAT for the tourism sector. I point out that the percentage of excise on a pint of beer is less than it was ten years ago in 2003.

Deputy Doherty also stated that the extension of betting duty to remote operators would raise €20 million in a full year. The Betting (Amendment) Bill 2013 was published in July. Deputies will be aware that under the technical standards directive, the EU Commission had to be consulted about the Bill following its publication and this led to a standstill period of a minimum of three months. It is my intention, subject to agreement with the Whips, to progress the Bill in this session.

I acknowledge the references made by many Deputies from both sides of the House to the retention of the 9% reduced VAT rate for tourism-related services. The outcome has been very positive with an estimated 15,000 additional jobs created in the sector. I am therefore happy to confirm the retention of this arrangement under the Finance Bill which, in tandem with the reduction of the air travel tax to zero, will reinforce and build on the progress already achieved in the important hospitality sector of the economy.

Various Deputies raised the issue of changes to the income tax pay and file arrangements. I am aware of the concerns that have been raised by various stakeholders and have recently completed a consultation process on this very issue.

Unfortunately time does not permit me to address all the issues raised during our debate here and as I mentioned in my opening statement there are still a small number of matters under consideration for inclusion by way of amendment on Committee Stage. I thank my colleagues for their very constructive contributions and I commend the Bill to the House.

Question put:
The Dáil divided: Tá, 73; Níl, 37.

  • Barry, Tom.
  • Butler, Ray.
  • Buttimer, Jerry.
  • Byrne, Eric.
  • Cannon, Ciarán.
  • Carey, Joe.
  • Coffey, Paudie.
  • Collins, Áine.
  • Conaghan, Michael.
  • Conlan, Seán.
  • Connaughton, Paul J.
  • Conway, Ciara.
  • Coonan, Noel.
  • Corcoran Kennedy, Marcella.
  • Coveney, Simon.
  • Creed, Michael.
  • Daly, Jim.
  • Deasy, John.
  • Deering, Pat.
  • Doherty, Regina.
  • Dowds, Robert.
  • Doyle, Andrew.
  • Durkan, Bernard J.
  • English, Damien.
  • Farrell, Alan.
  • Feighan, Frank.
  • Fitzpatrick, Peter.
  • Flanagan, Charles.
  • Griffin, Brendan.
  • Hannigan, Dominic.
  • Harrington, Noel.
  • Harris, Simon.
  • Hayes, Tom.
  • Heydon, Martin.
  • Hogan, Phil.
  • Howlin, Brendan.
  • Humphreys, Heather.
  • Humphreys, Kevin.
  • Keating, Derek.
  • Kelly, Alan.
  • Kenny, Seán.
  • Kyne, Seán.
  • Lawlor, Anthony.
  • Lynch, Ciarán.
  • Lynch, Kathleen.
  • McCarthy, Michael.
  • McGinley, Dinny.
  • McHugh, Joe.
  • McLoughlin, Tony.
  • McNamara, Michael.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Nash, Gerald.
  • Naughten, Denis.
  • Neville, Dan.
  • Nolan, Derek.
  • Noonan, Michael.
  • Ó Ríordáin, Aodhán.
  • O'Donnell, Kieran.
  • O'Donovan, Patrick.
  • O'Dowd, Fergus.
  • O'Mahony, John.
  • O'Reilly, Joe.
  • O'Sullivan, Jan.
  • Penrose, Willie.
  • Perry, John.
  • Phelan, Ann.
  • Reilly, James.
  • Ring, Michael.
  • Ryan, Brendan.
  • Stagg, Emmet.
  • Stanton, David.
  • Wall, Jack.

Níl

  • Adams, Gerry.
  • Boyd Barrett, Richard.
  • Broughan, Thomas P.
  • Calleary, Dara.
  • Collins, Joan.
  • Collins, Niall.
  • Colreavy, Michael.
  • Cowen, Barry.
  • Doherty, Pearse.
  • Donnelly, Stephen S.
  • Ellis, Dessie.
  • Fleming, Sean.
  • Fleming, Tom.
  • Halligan, John.
  • Healy, Seamus.
  • Healy-Rae, Michael.
  • Higgins, Joe.
  • Keaveney, Colm.
  • Kelleher, Billy.
  • Kirk, Seamus.
  • Kitt, Michael P.
  • Mac Lochlainn, Pádraig.
  • McDonald, Mary Lou.
  • McGrath, Finian.
  • McGrath, Mattie.
  • McGrath, Michael.
  • McLellan, Sandra.
  • Mathews, Peter.
  • Murphy, Catherine.
  • Nulty, Patrick.
  • Ó Caoláin, Caoimhghín.
  • Ó Snodaigh, Aengus.
  • O'Brien, Jonathan.
  • Pringle, Thomas.
  • Shortall, Róisín.
  • Troy, Robert.
  • Wallace, Mick.
Tellers: Tá, Deputies Emmet Stagg and Joe Carey; Níl, Deputies Aengus Ó Snodaigh and Dara Calleary.
Question declared carried.