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Seanad Éireann debate -
Wednesday, 5 Dec 2001

Vol. 168 No. 19

Budget Statement: Motion.

I move:

That Seanad Éireann notes the Minister for Finance's Budget Statement and, in particular, notes the budgetary response to the taxation and other commitments in the Programme for Prosperity and Fairness (PPF).

I thank the Leader of the House for allowing Senators to discuss the Minister's Budget Statement in this House on each of the last three occasions. It has been indicated to me that it may not be a great idea for this House to discuss the budget at this time, as attention is, understandably, focused on the Dáil. It is crucially important, however, that Senators put their views on the record of the House, rather than looking for an opportunity to do so on the Order of Business tomorrow morning. It should be recognised that merely an initial response can be given at this point, as the Budget Statement has been given in the last hour or so. The statements I make represent my initial reaction to the Minister's proposals.

The Minister's decision to reassign the surplus reserves of the Central Bank to the national finances is a positive move, in the best interests of Irish taxpayers. I have raised the quaintly described surplus revenues of the Central Bank on many occasions during the past ten years. The Minister's decision represents the best way to address the matter. I have no doubt that the economic purists and virgins of this country, such as Moore McDowell, are unhappy with anything which is not written in college textbooks. In this House and at meetings, I have pleaded with the Minister to show this kind of creative thinking. Similarly, I have often asked the Minister not to renege on his commitment to the national development plan and to making progress on the requirements of the PPF. While more could have been done in the budget to this end, I recognise that he has managed to put money that was unusable to good use. I agree with the decision to demonstrate good housekeeping by continuing to invest in the pension reserve, which is important. I wish to move on to the main issues.

As president of the Irish Congress of Trade Unions, I believe the issue of income tax is a central plank of the financial aspects of the Programme for Prosperity and Fairness. A commitment was made that workers would, in the round, receive tax benefits over the three years of the PPF amounting to between 9.5% and 10%. When I spoke on the budget last year, gains had been made of between 4% and 6%, bringing us half way to our target. Speaking in this House recently, I said it was crucially important for workers who voted for the PPF to see further progress in the budget. It would be an important step regardless of how it could be achieved, I said, if we were to retain trust and confidence in the process of national partnership. Considering that about 5% or 6% of the tax gains remained to be achieved, the least we sought this year was a further 2% to 4%. I acknowledge that at least 2% has been given to the group I have mentioned and in some cases a net tax gain of 3.5% will result from today's budget. The ICTU admits that the Minister has covered half the distance and it hopes that the remaining half will be covered in the third PPF budget next year. I recognise that it is a positive development.

Like the curate's egg, the budget is good in parts, as evidenced by its social welfare provisions. There have been improvements in social welfare payments and the Government listened to much of the case put forward by the ICTU in its pre-budget discussions with the Minister. However, what has been delivered and for what did we look?

We asked that the lowest payment, employment assistance, be increased to a minimum of £100 from the current level of £83 or £84. The Minister has increased it to £94.50 which does not meet our request, but it goes a long way towards it. The other increases work out at about £8 per week for various payments and allowances and this is also progress.

However, we have been trying to establish a link between social welfare payments and the average industrial wage to create a certain ratio which could be worked on from year to year, even if only as an objective at this stage. The Minister has not done so and that is a reflection of the current finances. We are disappointed in this regard, as will be those who deal with people who are dependent on social welfare payments. The Minister's decision in this regard will also be regretted by trade unions which operate in areas in which many people are dependent on social welfare. Teachers in disadvantaged areas feel strongly that progress in this area, while welcome, should be made more permanent through a linkage with the average industrial wage.

I am also disappointed by the Minister's decision to increase VAT to 21%, a move for which he gave no justification. This measure is disappointing at a time when we are trying to improve consumer confidence. VAT is being increased to a level which was originally introduced as an emergency measure many years ago. The Minister of State may correct me on this point, but it is like the emergency which never ended. This measure could damage consumer confidence. Senator Quinn, who will second the motion, will support me on this point even though he may disagree with some of my other comments. This move may prove to be a mistake given that we are trying to retain competitiveness, create wealth, ensure that the economy moves forward and maintain confidence.

I also regret that the Minister crumbled so cravenly in front of the IBEC and business lobby on the issue of employers' PRSI. I sought odds on the fact that the Minister was not for turning on this issue. He will claim that there is still no limit. However, the reality is that he has given back €347 million to the business community which could be better used on something sensible like primary education or even the roads in Waterford.

I find it hard to disagree with the Senator.

The Minister should have spent this money in some other way, rather than putting it back into IBEC's claws.

It is important to state that it was a good idea to sensibly use the surplus reserves in the Central Bank. The Government was perfectly entitled to do so, despite what some commentators might suggest. If Mr. Duisenberg has reservations about this measure he can stuff himself. I am delighted that the Government can solidly show its fingers to Commissioner Solbes and Mr. Duisenberg as they cannot plead European directives or law or illegality on this issue. We are doing what we want to do with our money in the interests of our people and for the betterment of taxpayers and citizens. I welcome this measure which was a creative use of funds.

The overall impact of the tax measures which give £500 million back to taxpayers was no less than we could have expected. We sought such provisions and the Minister has just done enough to keep us quiet on this side of the House. He has gone half way towards the PPF commitments and that is to be welcomed.

The increase in the back to school clothing and footwear allowances will be welcomed, particularly in disadvantaged areas. Teachers working in such areas constantly raise with me the pressure on families at that time of year and this positive improvement will be welcomed.

I did not have time to study all of the budget's capital spending provisions, but I examined the measures regarding education. There is an increase of €36 million in spending on primary school buildings, but this is not enough. I acknowledge that it is a step in the right direction, but there are serious problems on the ground. The Minister of State must take this issue back to the Department and ensure that money is scraped together during the year. This money is not for anyone's pocket. It is not a case of teachers or boards of management looking for money. It concerns the structures within which children learn, teachers teach and parents leave their children. At the very least we can surely demand that conditions in primary schools are no less satisfactory and comfortable than we require under law for crèches and other places in which children are looked after and where they are secure and safe.

I am grateful for the opportunity to comment on the budget. I welcome the measures regarding the Central Bank and acknowledge the improvements in personal taxation as being another step in the right direction which take us half way towards to the PPF commitments. I regret that social welfare payments have not been linked to the average industrial wage, but recognise the significant step forward in this regard. The provisions regarding school buildings and education are not sufficient, but are a move forward. We should not increase VAT and the Minister of State should revisit this decision before the Finance Bill.

I am surprised that the Minister bowed the knee to IBEC and the business community. Of what is he afraid? Could he not let them pay their taxes? They are getting a Christmas windfall which they could have done without.

It is a pleasure to second the motion and I support Senator O'Toole's expression of thanks to the Leader for allowing this debate to take place. I do not always congratulate Senator O'Toole, but I do so regarding the wording of the motion which states:

That Seanad Éireann notes the Minister for Finance's Budget Statement and, in particular, notes the budgetary response to the taxation and other commitments in the Programme for Prosperity and Fairness.

The Senator tabled the motion four days ago.

I like the Minister, Deputy McCreevy, for a number of reasons. He takes the long-term view on many occasions. I went to school and played rugby in Newbridge close to where the Minister comes from. We played rugby against many teams, but the real cute guys were the Kildare people. As they came towards one with the ball they would dummy one way and the other and one was left not knowing where the ball was. I felt a bit like that listening to the Minister's Budget Statement. He seemed to go one way and then the other, and then one realised the ball was back in his hands again.

I will consider whether the Minister achieved his budget objectives and not just in the context of this year's budget. I think this is the first time a Minister has introduced five annual budgets.

Kerry did the four in a row so the Minister beat it by one.

This budget sought to develop our infrastructure, to improve public services and promote equity, to encourage enterprise and investment and to do so in a way which sustains fiscal policy. Did the Minister achieve that? I return to the metaphor of the rugby ball. When I heard the Minister say at the very beginning that he was not going to borrow, I said, "Well done". Then I got suspicious because he announced that because of the euro changeover the Central Bank had about €700 million to spare. It appeared that the Minister was about to dip into the once-off windfall. He then announced that he was putting that money into the national pension fund and the ball was back in the right place again. I say well done to the Minister. I was suspicious of him but I have had to relax my suspicion because he has done a worthwhile thing.

I look at the budget from a business point of view, although I am not here representing business. Senator O'Toole looks at it from a different aspect. My first question is, "Is the budget pro-business?" I am stunned at the effect on businesses of the move to current year payment of tax rather than what obtained before. I have no doubt this is a sensible thing to do and I do not blame the Minister for doing it. However, it has a huge effect on the cash flow of many companies. In many cases the question is not whether or not a company is making a profit but whether there is enough cash to pay the bank. This measure will benefit the State in the coming year to the tune of €792 million. Individual companies will have to pay tax before the year is out and before they know how much profit they have made and they will be liable for a penalty if they do not do so. If this will mean an increased income to the Exchequer of €792 million, it will certainly have an effect on companies. I do not know how to balance that against the fact that corporation tax is coming down to 16% and soon, I hope, to 12.5%.

The effect of this measure, mentioned in just a couple of lines in the Budget Statement, will be huge in future years. The Minister has said the change will be made over five years, at 20% per year. This is a cash-flow benefit to the State of €4 billion and it will have to come from businesses which are competing in the marketplace and hoping to achieve success and maintain the fight against inflation.

The Minister was wrong last year to make a deal with partners, whether with farmers, trade unions or businesses, and then steal a march by taking away the cap on employers' PRSI. Perhaps the cap should not have been there in the first place; I do not disagree with Senator O'Toole on this point. However one cannot introduce such a measure on the sly. This was a sleight of hand which should not have happened. The Minister has not given way, and Senator O'Toole is pleased about that. He has done something, but his gesture will cost the State €347 in PRSI reduction. This sounds generous until one compares it with the €792 million which businesses will have to pay. I welcome the Minister's gesture but it does not make up for the mistake he made last year.

Is the Minister investing in the future? I have to say he is. In this case he has scored some tries and even converted some of them. I applaud his extension of the BES and seed capital schemes. It is interesting that he has responded to the needs of the shipping industry by introducing the special shipping tonnage tax.

It is also interesting to see that the Minister has reversed the measures recommended in the Bacon reports. The reports' recommendations to facilitate the establishment of more homes, at least in the greater Dublin area, has been reversed. I say, "Well done" to the Minister for re-introducing interest relief on rental properties. This was necessary because I understand almost no houses are being sold in Dublin and therefore no houses will be built if we are not very careful. The Minister is responding to current needs. He is responding not only with regard to rental property but also with the urban and rural renewal schemes.

I agree with Senator O'Toole that replacing the 1% VAT is a mistake. One of the biggest challenges facing the country, and not just business, is inflation. Having removed 1% last year, the Minister now says he was never very confident about doing that and he has put it back on again.

I have not mentioned the many other benefits in the budget. Have the Minister's five budgets taken us in the right direction? They have gone some way. He has done the right thing in many ways. I would have preferred to see the Minister making a much bigger impact on infrastructural improvement and on improving the lot of the disadvantaged. The Minister has a long way to go in these areas but perhaps he will have another five years in which to do that.

This budget is the Minister's last effort before an election and he asks for another five years. Let us see what the public think of it.

I welcome the Minister to the House. I am pleased to have the opportunity to contribute to the debate on this important motion.

I compliment the Minister for Finance, Deputy McCreevy, on an excellent fifth budget. The Department of Financce, under the Minister, has brought a sense of fair play to the people of Ireland. The budget protects the national interest as well as the lives and livelihoods of the people. The national development plan is in place and at the same time we have massive increases in spending on health, education and social welfare. The budget also contains measures to help the construction industry. The various components of the budget set down a series of supports and back-ups to see the country through the year 2002 and to leave behind some of the bad memories of 2001.

I am pleased the Minister has attempted to reverse the trend in the construction industry, which seemed to have fallen asunder in the past couple of months and which is so important to every village and town. I am particularly pleased that the Minister has extended the rural renewal tax designation scheme to the end of 2004. Interest relief on rental income has been restored and there have been necessary changes in stamp duty. These are massive boosts to the construction industry and I compliment the Minister on them.

The rural renewal scheme is of vital importance to a large area of disadvantage. The counties of Leitrim, Longford, Roscommon, Mayo and Sligo have seen a new enthusiasm as a result of investment under this scheme. It is appropriate that it has been extended for a further two years. Interest relief on rental income and the changes in stamp duty are a top-up to that.

The way the Minister has looked after the elderly is an indication of the caring attitude of the Government. At a time when there seems to be a shortage in the public finances, an increase of £10 per week is being granted to old age pensioners. In 1997 the new Government of Fianna Fáil and the Progressive Democrats promised to raise the old age pension to £100 per week. I am pleased to see the contributory old age pension being raised to £116 per week and the non-contributory pension to £105 per week. This is above and beyond the commitment given by the Government four and a half years ago.

I am also glad to note that child benefit, for so long the Cinderella of successive Governments, is being increased significantly. The addition of £25 for the first and second child brings the monthly payment to £92 and the addition of £30 per month for the third and subsequent children brings the monthly payment to £116. It is a recognition by the Minister of the needs of families with children. A family with four children will rightly receive £417 per month in child benefit. The Government has demonstrated its resolve in this area. Other areas of social welfare have also been addressed. There are increases in the family income supplement and the back to school footwear schemes and guidelines for the carer's allowance have been extended.

No Government has done more than this to reduce the tax burden. While the Minister has looked after every section of the community he has excelled himself today by ensuring that those on low income will not pay income tax on the first £165 of their weekly income. It means that 90% of the minimum wage will be exempt from income tax. It also means that just short of 700,000 wage earners will be outside the income tax net. It is a credit to the Minister and the Government.

Those aged over 65 years who are or have been in the tax net are aggrieved because they considered they had made their contribution to this country. They will not pay any tax on incomes of €13,000 or less. That is to be welcomed.

I was pleased when in his previous budget the Minister reduced VAT from 21% to 20% but I was unhappy that it was not passed on. The public did not benefit. The Minister has increased the rate to 21%. The extra funding will be well spent on health and education.

The Minister has been a breath of fresh air in terms of the country's finances. Many extraordinary statements have been made over the past weeks suggesting the country would have to borrow and that money had been squandered. In response, it is only necessary to note the vast improvements of the past five years. Despite the extraordinarily difficult year as a result of the foot and mouth disease crisis, the subsequent downturn in tourism and the events of 11 September, the Minister has been able to introduce a budget with a projected surplus while providing big increases in social welfare, tax relief and health and education, all of which will benefit the public.

I compliment the Minister and the Government. The public will respond positively to the budget. Already the response in the media has been positive. I compliment the Minister of State and I thank Senator O'Toole for affording the House the opportunity to debate the budget.

Listening to the Minister's speech this afternoon one would have to ask where all the money has gone. Instead of using the unparalleled opportunities afforded by the fastest growing economy in the world to govern wisely, regrettably he has displayed incompetence.

In his Budget Statement last year the Minister projected a budget surplus of 3.8% of GDP, equivalent to approximately €3.8 billion. Today the surplus is expected to be €170 million. However, even that is a fraud. The Minister is robbing the social insurance fund of €635 million. Since the public owns this fund, this money is not real revenue but an accounting trick. He is also cashing once-off benefits from the Central Bank to the extent of €610 million. Again, the public owns this money, it is not real revenue but an accounting trick. The Minister is also taking €500 million from the capital service redemption fund, another accounting trick. When his accounting tricks are excluded, the Exchequer surplus of €170 million becomes a deficit of €1.6 billion.

In his Budget Statement the Minister said one of his objectives is to sustain fiscal policy. However, an examination of budget projections for next year illustrates he is using funny money this year. On a no policy change the Minister is forecasting a deficit next year of €3 billion. This will put us in danger of exceeding the EU's 3% deficit limit. The table summarising the current capital and revenue budget set out in the Minster's Budget Statement illustrates the projected deficit for next year and the following year.

Despite the years of prosperity, over 120,000 people are on housing lists looking for social housing. The Taoiseach's statement yesterday indicated that only half the Government's target in this area will be met. At a time of greatest need activity in the housing sector has been driven down. Capital expenditure should be used to support the economy when it is weak, yet such expenditure is down 12% compared with last year. Expenditure on tourism is down over 40% even though it must cope with the disastrous consequences of the foot and mouth disease crisis and the loss of the American market following the terrible tragedy of 11 September. Last year, just as the high-tech sector faced its deepest downturn the Minister abolished the employers' ceiling on PRSI, increasing the wage cost of high earners by over 5%. At least today the Minister had the good grace to admit that mistake and take some measures to address it.

The Government has poisoned the future of privatisation through the botched privatisation of Telecom Éireann. By selling the company at a time when the telecommunications bubble was at its height the Government ensured that over 500,000 citizens lost out when the share price dropped. Today the Minister had the opportunity to offer them some recompense but nothing was done.

Why would he recompense private investors? The Senator's suggestion is nonsense.

Rather than using the opportunities presented by the fastest growing economy in the world to right some of the great wrongs in our society, the Minister squandered the opportunity to help those in need of medical cards by raising the threshold for exemption. It is crazy that a person earning a little over £100 per week is obliged to pay almost £30 when visiting the doctor.

The Minister also gave a commitment last year to remove from the tax net those on the minimum wage.

Approximately 90% of them have been removed from it.

He has not fulfilled that commitment.

Senator Doyle without interruption.

When addressing the House on the Programme for Prosperity and Fairness, the Minister for Finance stated that we were all in a "win-win situation". I warned him against scoring an own goal on that issue, but I believe he has now done so. If I were to ask the employees of Aer Lingus and Gateway or the ordinary shareholders in Eircom if they are in a win-win situation, they would answer "No". They will inform Fianna Fáil Deputies and Senators at the general election that they have lost out to a major extent. They Minister has not scored one own goal, he has scored three of them.

They should have done what I told them to do, namely, not to invest in it. If people want to gamble money, that is their business.

And they have to pay the State tax on every gamble they make.

I am grateful for the opportunity to address the Seanad on the Government's fifth budget. I thank Senator O'Toole for tabling the motion to allow us to engage in this debate. The Senator said, somewhat forlornly, that the Seanad does not seem to obtain the media coverage it deserves when it holds this debate on budget day. That may be true, but it is singularly important that the debate should be held. I have always found this debate to be extremely worthwhile and lively.

It may come as a surprise to some that 26 June of this year marked the fourth anniversary of the Fianna Fáil/Progressive Democrats Government entering office. I am proud that over this period we have provided this country with good Government and have overseen the most sustained and significant development of the economy. It is appropriate today to remind the House of some of the achievements so far during our tenure of office. When the Government took office on 26 June 1997, it did so on the basis of a programme of commitments. I will now list just some of the promises we made and what we have delivered in the last four budgets.

We promised to create more jobs and tackle long-term unemployment. More than 300.000 new jobs have been created and unemployment, including long-term unemployment, is at an all time low.

We promised to reduce personal tax and to encourage people to take up work. More than £3 billion in tax reductions has been delivered in the last four budgets. The standard rate of tax has been cut from 26% to 20% and the higher rate from 48% to 42%. This has meant a real increase in disposable income for everybody. More than 300,000 workers have been taken out of the tax net altogether. Such a development would have been undreamt of a number of years ago. Furthermore, the introduction of tax credits has made the income tax system more equitable.

We promised to develop a quality health service and we have nearly doubled the allocation for the health sector. We now have more than 4,000 additional doctors, nurses and other health care professionals. Waiting lists are down 25% and 90,000 more hospital treatments are being carried out. We know more needs to be done and for that reason we have put a comprehensive health strategy in place for the next ten years to deliver a world-class service.

We promised major investment in education. The Government has a proven record in providing for significant extra investment in education. We increased net current spending by over £1 billion between 1997 and 2001 – a cumulative increase of over 50%. In addition, the Government has provided for a major increase in capital funding for building and refurbishing schools. This funding has almost quadrupled since 1997. Class sizes in primary and secondary schools are at their lowest and there are 20,000 more third level places

We promised to build an inclusive society. We increased expenditure on social welfare by over £1.5 billion at a time when the numbers of unemployed people were dropping substantially. The bulk of this money has, in a real sense, been directed at social inclusion. Child benefit rates have increased dramatically and the announcements by the Minister earlier fulfil the commitment he gave last year. This comes about, perhaps, against people's expectations. Even before the increases announced today, we had more than met our commitment to bring the rate of old age pension to at least £100 per week. We have, in fact, well exceeded that target.

There are many more developments to which I could refer but I will not do so. Before I move on I can assure the House that the Government will continue to focus on the need to sustain economic growth and prosperity and, at the same time, ensure equality and a caring society for all our people.

The budget has been prepared on the basis of much slower growth next year than we have experienced in recent years. We must accept the reality that the economic environment has changed and that a cautious and prudent budgetary policy is the only option. Even before the tragic events of 11 September, the major economies of the world had already experienced a sharp downturn. Our economy is in good shape and should be well placed to benefit from the international recovery. We need to position ourselves to take full advantage of the recovery when it comes.

Members will have heard what my colleague, the Minister for Finance, has said on the subject of Exchequer borrowing. I am sure the House will agree that we cannot afford to repeat the mistakes of the past. We need to proceed with care in these uncertain times. Now, more than ever, we must also ensure value for money in public expenditure. Nevertheless, our objectives in the budget focus on safeguarding the vulnerable. improving public services, promoting equity, developing our infrastructure and encouraging investment and enterprise.

I welcome Senator O'Toole's comments about what the Minister is doing with the Central Bank's surplus and the reserve fund. These will be used in a real sense to benefit the Irish people.

Hear, hear.

I must inform the Senator that the commitment to ensure that over £1 billion was placed in the social fund for the betterment of the elderly was honoured without the Minister having to borrow to do so. That is an extraordinary achievement and has rightly been welcomed by Senators O'Toole, Quinn and others.

Social inclusion has always been at the heart of the Government's policies. We will continue to protect the less well off in our society. Available resources will be concentrated on the development of a quality health care service, improved social welfare provision and the continuing development of our economy through further capital investment.

The health strategy announced last month by the Minister for Health and Children is a ten year plan that will deliver a quality health service for all. The strategy represents a blueprint for the development of the health services over the next decade, with particular emphasis on improving the quality of service delivery. The budget includes additional Exchequer funding of €425 million, bringing gross health expenditure to nearly €8.2 billion next year. The increase will go towards additional beds for acute hospitals, the setting up of a treatment purchase fund to add to the range of service delivery options, funding for the disabled and older people and the development of certain GP initiatives.

Now that the funds are being put in place, we must ensure they are used to best effect. I welcome the Minister's initiative in establishing an independent commission on financial management and control systems with a remit to examine, evaluate and make recommendations on relevant systems, practices and procedures throughout the health service. I salute the broad welcome given to the health strategy by health practitioners. This reflects the fact that they had a major input into the strategy and it belies statements by some Opposition Members that the strategy could be produced overnight. I accept that the strategy took a number of years to draw up, but it has been well thought out and will allow every man, woman and child to have confidence in what the future holds. The health strategy is additional to the huge improvements that have already been made in the health service. I am proud to belong to the Government that introduced those improvements.

Social welfare increases will amount to €1.1 billion in a full year. They will be paid, in most cases, with effect from 1 January. Recipients will receive a lump sum in February where payment is delayed for administrative reasons. It should be remembered that before we took office those dependent on social welfare had to wait over five months from budget time for any increase. What changed times we live in.

The full personal rate of old age and related pensions will increase by at least a further £10 per week. This will bring the rate of old age contributory pension to £116 per week and the old age non-contributory pension to over £105 per week. With the proposed increase in the qualified adult payment, a contributory old age pensioner couple, both aged over 66 years, will receive over £205 per week next year. Under this Government, the personal rate of old age contributory pension will have increased by over £38 per week while a couple, both over 66 years, will receive over £72 extra per week. This demonstrates our commitment to support our older citizens.

Full rate social welfare recipients will receive an extra £8 per week. The rate of qualified allowances is also being increased by over £8 per week. This will mean a rise of more than £16 per week for most couples on social welfare. Since 1997, those dependent on social welfare will be better off by over £26 per week for a single person and £48 per week for a couple. Recipients of short-term unemployment assistance and supplementary welfare allowance will benefit by more than £9.50. This brings the payment rate for these schemes to the level which applies to most other recipients under 66 years.

The widow's contributory pension for those aged 66 or over will rise by £12 to £114 per week. This will narrow the gap with the old age contributory pension. The widowed parent grant will be almost doubled to about £1,970 with effect from today. It is generally accepted that direct financial support is a very effective way to tackle child poverty. Last year, we gave a commitment to provide an extra £1 billion in increased child benefit over a three-year period. We delivered phase 1 this year. Child benefit rates will, next year, be increased by a further £25 per month for the first and second children to £92.62 and by £30 per month for third and subsequent children to £1I6. Since 1997, child benefit for first and second children has increased by £62.60 per month and £77 for third and subsequent children. No previous Government has provided such support to parents. By way of illustration, a family with four children will receive over £417 per month next year in child benefit. These significant increases are being made to support parents, whatever their choice of child care arrangements.

Parents will also benefit from a rise in the back to school clothing and footwear allowance. The rate will increase to over £94 per child. This will provide assistance to over 70.000 children aged 12 years and over. As of today the means test will be eased, allowing another 8,000 children to benefit.

Recipients of the fuel allowance will receive an extra £2.09 per week, bringing the total payment under this scheme to over £7 per week. Other measures include a further easing of the income disregards for the carer's allowance to benefit about 3,400 new carers and 2,300 existing ones; annual respite care grant up to £500; a 20% increase in the number of free units under the free electricity allowance; a relaxation in the qualification criteria for the free telephone allowance; the extension of the free travel companion pass to invalidity pensioners; an increase in the income thresholds for family income supplement to bring the average payments to recipients to around £59 per week.

I hope this budget slays, once and for all, the lie that the current Minister for Finance does not care for the young and aged. No Minister for Finance – as far back as I can remember – has done more for disadvantaged people in this country than the current Minister, Deputy McCreevy, has done over the past five years.

Senators

Hear, hear.

The Minister's record is extraordinary. In spite of what people thought might happen today, given the difficult economic circumstances, he did not flinch or take his eye off the ball. He fulfilled every commitment he set out to achieve five years ago. What an extraordinary record.

Senators

Hear, hear.

An additional €3 million is being provided for the appointment of an extra 350 teachers at first level and 200 teachers at second level from the commencement of the next school year. An additional €10 million is being provided for a range of measures in the education sector to assist pupils with disabilities and to provide improved services in the special needs education area. The Minister for Education and Science will announce the details at a later date. An additional €250,000 is being provided for a pilot disability awareness programme for second level transition year students.

Net capital spending, which includes infrastructure spending, has increased from €1.9 billion in 1997 to nearly €49 billion this year. Even with such a high level of investment in our infrastructure more is needed to meet the growing needs of the economy. Last month the Minister provided significantly increased capital allocations in 2002 for roads, public transport, water, housing, and education. Today he announced a further €550 million for capital spending. This increase will be targeted at the key priority areas in the national development plan: €36 million for primary school building; €19 million for secondary school building; €146 million for local authority and social housing; €100 million for national road improvements; €38 million for water and sewerage services; €16 million for waste management; €44 million for public transport and €19 million for telecommunications infrastructure. This is all extra capital spending announced in the budget today, in addition to the provisions announced in the Estimates last month.

I was particularly pleased to hear Senator O'Toole, who is so close to the Programme for Prosperity and Fairness, welcoming what this Government has done in fulfilling its commitments. He illustrated that the programme outlined in the Estimates and budget shows an absolute commitment to the national development plan.

We all appreciate that our tourism industry has been badly hit by the tragic events in New York last September and is heading into a tough year. Funding of €6.35 million annually is being provided to Bord Fáilte for a five year period for marketing in the areas of product, cultural and regional activities. An extra €1.27 million is being provided to support efforts to attract major sporting events with tourism potential for Ireland. Funding of €3.5 million is being provided to Tourism Ireland for international marketing and to meet incremental pay and overhead costs arising from start-up.

Additional funding is being provided to the fishery harbours programme for the development and upgrading of fishery harbours and also to An Bord Iascaigh Mhara, BIM, for the sea fisheries development programme. This will cost €2.5 million in 2002.

Workers will receive €634 million in income tax reductions with effect from 1 January. Next year will see more low-income earners taken out of the tax net altogether. A substantial number of those on middle-incomes will move from the top rate of tax to the standard rate. As the Minister said last year, we want to move the income tax entry point towards the level of the minimum wage. The Programme for Prosperity and Fairness made it clear that it was an agreed policy objective of the Government and the social partners to make this happen over time. Further progress next year will see an increase in the basic personal tax credit by €123 to €1,520 and the PAYE tax credit by €152 to €660. This will bring the entry point to the tax net for a single person to £165 or €209 per week and take 68,000 low-income earners out of the tax net altogether. The corresponding entry point when we took office was £77 per week.

Who was in Government then?

The entry point now stands at £165 per week. That is extraordinary. The single standard rate band will also increase by €2,605 to €28,000 with relevant changes to the married bands as set out in the summary of budget measures. This will take 57,000 taxpayers from the higher rate of income tax in 2002. When we came into office the income exemption limits for those aged 65 and over were as low as £4,600 per annum for a single person and £9,200 for a married coupled. We have raised the limits substantially. We propose to bring them to over £10,000 and £20,000 respectively. The new limits will be €13,000 and €26,000. This will remove over 11,000 elderly taxpayers from the tax net.

The employment of a carer allowance can be claimed at an individual's marginal rate of tax where a person is employed to care for a family member who is incapacitated. The amount that can be claimed under this relief is being increased from €12,700 per annum to €30,000 per annum. This increase will help people to care for their relatives at home and it is a substantial commitment in relation to carers.

The Government has decided to restore the standard rate of VAT to 21% from 1 March 2002. In addition, the VAT-inclusive excise duty on petrol and diesel will be increased by 5p per litre from midnight tonight. The VAT-inclusive excise duty on cigarettes will be raised by 10p per packet of 20 – as a heavy smoker, I am very pleased it is not increased by €1, as people were suggesting – with pro rata increases in other tobacco products, also from midnight tonight.

We would not all agree with the Minister of State in that regard.

I thought the Senator might say that. However, in the overall budget, I believe the Minister has hit the nail on the head. In fairness, with the increases he has brought in, the money will be well spent on social services. That is the reason for those increases. Many would like all of us to stop smoking and I would also love to do so – but perhaps another day.

Excise duty on cider and perry will also be raised to the same level as that on beer, in order to better align the duty rates by reference to the alcoholic content of the product. The overall impact on the consumer price index of the increases in VAT and excise duties is estimated at 0.9%.

With effect from 1 March 2002, the top rate of employers' PRSI will be reduced from 12% to 10.75% at a full year cost of €347 million. The standard rate of corporation tax on trading profits will fall to 16% from 1 January 2002 and to 12.5% the following year. Under the existing system, tax is paid well after the end of the accounting year. The Minister has decided that, over the next five years, companies will move to a situation in which their main corporation tax payments will be made on a current year basis. This system is common in other OECD countries. This change will yield a large cash-flow benefit to the Exchequer in each of those years which will be €792 million in 2002.

Interest relief, as a deductible expense in calculating tax on rental income from residential property, will be restored with effect from 1 January 2002. I believe everybody will welcome that. The Minister has also decided that investors in new and second-hand residential property will pay the same rates of stamp duty as owner occupiers generally. These measures will encourage investors back into the property market and help to secure the future supply of housing to meet accommodation needs.

The business expansion scheme and the seed capital scheme are being renewed for a further period of two years. It is proposed to increase the existing company limit for the business expansion scheme to €750,000. In the case of the seed capital scheme, investors will be allowed, subject to the annual investment limit of €31,750, to spread their investment over six years rather than the current five years. This means that the amount on which they can get a refund of tax will increase from €158,750 to €190,500. In the case of the designated BES funds, because of the short time available, any money raised by them up to 31 January 2002, provided it is invested before 31 December 2002, will be deemed to have been raised in the tax year 2001. This will enable individual investors to claim tax relief on their investment in the short 2001 tax year or the 2002 tax year.

In order to further stimulate investment and enterprise, the Minister has decided to extend the deadline for eligible projects under the urban and rural renewal schemes, the capital reliefs for student housing and the park and ride and multi-storey carpark schemes. These schemes will be extended to the end of 2004 in most cases. I hope that these extensions will enable more projects to be completed, including some in my constituency of Waterford. It will be helpful throughout the country. We are all being asked about these schemes, many of which are held up in the planning process. This is a tremendous boost for local government, in terms of projects being undertaken by the private sector and strongly supported by local authorities.

The betting tax rate will be reduced from 5% to 2% from 1 May next. This measure is being introduced to prevent jobs and revenue in that sector from moving offshore. I am sure that will be welcomed by those who follow horseracing.

Will the bookmakers take another 2%?

It is a welcome move anyhow. On the environmental side, we are all aware of the damaging effect, particularly in urban areas, of sulphur emissions. In order to encourage a switch to low – sulphur diesel a new, higher rate for diesel with high sulphur content will be introduced. The higher rate will apply from 1 March 2002 to allow for disposal of stocks and will be 6 cent per litre higher than the excise rate for low sulphur diesel.

The scheme of relief for the donation of heritage items provides for a payment on account of tax of an amount equal to the value of a heritage item donated to the national collections, provided certain conditions are met. The heritage item must be worth at least €95,250 and the value of items approved for donation under the scheme in any one year cannot exceed €3.8 million. Given the importance of this scheme in encouraging donations of important items to the national collections, it is proposed to increase the single item threshold to €100,000 and the annual limit to €6 million. Auctioneers fees incurred in purchasing a heritage item, subject to the annual limit, will also be allowed for the purpose of this scheme

On farmer taxation, stock relief will be adjusted to help farmers affected by foot and mouth disease with re-stocking. The current two year period during which farmers can opt to defer book profits that have arisen from compensation received in respect of the compulsory disposal of livestock under a disease eradication scheme approved by the Minister for Agriculture, Food and Rural Development will be extended to four years. The corresponding two year re-stocking period during which such farmers can qualify for 100 per cent stock relief is also to be extended to four years. The four year periods in respect of these reliefs will apply in respect of such disposals arising from 21 February 2001.

The Finance Act, 2001, provides for capital allowances for expenditure incurred on the construction or refurbishment of buildings used as private hospitals. In order to qualify for the allowances, the hospital had to be operated by a body with charitable status for tax purposes. This condition is now being removed. Furthermore, the minimum requirement of 100 in-patient beds is being reduced to 70. This scheme is subject to clearance by the European Commission from an EU state aids rules perspective. Discussions are ongoing with the European Commission.

The motion before this House refers to the budgetary response to the commitments in the Programme for Prosperity and Fairness. The partnership process has served this country over the years. I am sure Senators will agree that the balanced approach taken in this budget is the appropriate response to difficult circumstances and is consistent with our agreement with the social partners, who recognise the reality of the current economic situation just as well as we do.

The last four years has been a period of continuous success for this country. Looking ahead, I have no doubt the Irish economy is basically in good health and that, with careful stewardship, our success story can continue. That success is founded on the basis of sound budgetary decisions as outlined in today's budget and its predecessors. It is also founded on the fact that this Government has delivered and will continue to deliver on its promises to the benefit of all of our citizens. The electorate will have an opportunity next year to deliver their verdict on our stewardship and I am confident of that verdict.

I compliment my colleagues, Senators O'Toole and Quinn, on putting down this motion. This has become an annual event and I thank the Minister of State for treating it as seriously as he has done. It is a pity the Seanad is not entrusted with Exchequer Bills. That seems an unnecessary limitation and it also affects our performance on committees. For example, there was a meeting of the foreign affairs committee yesterday but, because it was dealing with budgetary matters relevant to that committee, Senators were excluded. As a member of that committee, I find that amazing. I attend all the meetings and, despite the fact that the committee had been discussing the Middle East, I could not take part, because of this constitutional bar.

I welcome this budget. All comments I have heard on the radio have been favourable, though some regarded it as somewhat patchy and wanted a bit more. By and large, it is a judicious budget. With regard to what has been described as creative accounting – thank God for it. That is what I like – a bit of creative accounting. It is really imaginative, good and useful to take a little from our hoard. Do those who oppose this want us to borrow on the international market and expose the country to further debt? I consider that a lunatic proposal. What alternative has the Minister? I congratulate him on balancing the books without exposing us to further borrowing.

I am also very glad it is now quite clear the election will be on 16 May. That could not be more suitable to me. I thank the Minister for Finance and the Taoiseach. Bloomsday will fall right in the middle of the election campaign for the Seanad, giving me an opportunity for a little publicity. While most others are far from the airwaves, I will be wearing my funny hat and telling the voters I am still alive.

I welcome this but I am Oliver Twist. We have something but I want to ask the Minister for more, particularly in the case of social welfare benefits. I believe they should be directly linked to the average industrial wage. It is a target for which we must aim. I received a number of submissions on the budget and I hope to put some of their principal suggestions on the record. They come from the National Women's Council of Ireland, the Conference of Religious in Ireland, the Combat Poverty Agency, the Carers Association and others. All have one thing in common, the growing disparity between the richest elements in society and the poorest. In the next budget we will have to face this problem and reduce the inequalities in this country. Inequality is the cause of all our troubles.

I am glad the Minister has prudently provided for pensions. I have an interest in this because I am getting older every minute like everyone else. The age profile of our population will change and that is something we must bear in mind.

I wish to put on record some of the ideas of the National Women's Council of Ireland, although the Minister has probably already been made privy to them. The council's document starts by saying that the richest one third of families benefited five times more than the poorest. This House debated part-time workers a few days ago and women are the core element of that group. Women returning to paid employment, which is a desirable objective, need support in education, retraining and so forth. There is also the issue of escalating child care costs and the health exposure of women. I am glad the Minister has gone some way in this regard.

There is the issue of the vulnerable people in the asylum seekers category about which the council offers specific suggestions. With regard to family friendly policies, the National Women's Council of Ireland suggests paid parental leave and the introduction of a social insurance payment for parental leave at the rate of the existing maternity benefit payment. It also refers to paid paternity leave with a modest request for five days such leave. It is good for children to have both parents with them and it is good for the parents too. I welcome the increase in child benefit but the council suggests that the payment should be £25 per week. The current payment is about half that amount.

The council suggests, with regard to health services for women, the establishment of a free national breast and cervical screening programme for all teenage girls and women and the allocation of resources to the reduction of hospital waiting lists. A certain measure of the road has been travelled in that regard. The council recommends the extension of the medical card to all dependent children under 18 years of age and that medical card eligibility levels should be set so that the earnings of those on the national minimum wage fall within eligibility thresholds. It finally recommends that members of the Traveller community should have medical card eligibility for five years after returning to employment. This is worth considering in view of the vulnerability and social position of members of that community.

The submission deals with the issue of asylum seekers through a series of suggestions. I will not outline them because the Minister probably has the document. However, I should mention the tragic case of a child who was scalded to death because of the substandard accommodation in which the parents found themselves.

The Carers Association points out that less than one in six carers receives a carer's allowance, which is currently £88.50 per week, even though each carer saves the State at least £300 per week. There are 50,000 full-time family carers in Ireland caring for people 24 hours a day, seven days a week. There are 70,000 more caring at home for at least 40 hours per week. There are 35,000 children in Ireland with severe disabilities, more than 30,000 people with dementia and more than 10,000 people who are disabled as a result of strokes. Most of these people are looked after by carers. The carers are a saving for the State and we should support them as much as possible.

The association recommends that all carers should receive the respite care grant and that it should be substantially increased, greater than the increase provided. There should be more than one grant which should be paid at full rate for each cared for person. It recommends payment after the death of the cared for person in recognition of the difficult circumstances for the carer and that respite grants be paid if the qualifying date for the grant is within six weeks of the death of the cared for person. That is a humane and obvious suggestion.

CORI made a number of points in its submission. Again, it pointed to the widening gap between the rich and the poor and the fact that although we now have a per capita income above the European Union average, our infrastructure and social provision are well below that level. I believe it is most important that we invest in our roads and transport infrastructure. I wish to hear more about the underground railway for Dublin. That must be included in the infrastructure programme and a start must be made on it. After the traffic chaos yesterday everybody has now come around to that point of view. It was voted through by all sides of this House and, as I have said time and again, it is the only thing for technical reasons that will resolve the traffic problem in Dublin.

The Combat Poverty Agency made a number of key points in its submission. It seeks the indexing of welfare payments and taxes in line with wage growth, a weekly welfare increase of 10.8%, an equivalent rise in tax credits and bands, additional increases to households on the lowest welfare rates bringing the adult personal rate to £98 per week and the qualified adult dependant rate to £68.60, an adequate rate of child income support by increasing child benefits further, making the tax system more equitable by abolishing the employee PRSI threshold and using the resources to further increase PAYE tax credits to £510.

Finally, I wish to mention two special projects.

The Senator has said finally.

I did not. Before I conclude I wish to make a special plea for two groups. The first is Carmichael House with which I have a personal connection. I have been involved in it for some years. It was established in 1988 and looks after 43 member groups and a further 250 organisations. The centre is in difficulty because of the condition of its building and the provision of funding. It has four requests of the Minister. It seeks ongoing core funding for the administration, which is £120,000 for 2002, three year core funding for its training and support service, which amounts to £60,000 for 2002, pilot funding for the information and communications technology support unit, which totals £40,000 for 2002, and an immediate capital grant of £1,059,000 to refurbish Carmichael House. The roof is the leading danger. It is economical to support the centre, given the number of people who are supported by this extraordinary organisation.

To bring my contribution to a shuddering halt, the Minister, Deputy McCreevy, who is a softie at heart, promised a little capital funding for the Irish Seal Sanctuary, and I urge him to deliver on this.

Today's budget is the culmination of five years of exceptionally good and intelligent government on the part of Fianna Fáil and the Progressive Democrats. It gives coherence to a five year strategy and is the culmination of four good budgets delivered previously.

The economic policies followed by this two-party Government have delivered an unprecedented growth in employment, achieved huge reductions in unemployment and record improvements in social welfare. The Government has transformed the country from mass unemployment, with all its despair and its ugly economic and social effects, to virtual full employment. This has happened as a direct result of the sound economic and budgetary policies brought forward and carried through in the budget under consideration today.

One of my few disappointments arising from the budget is that the Minister did not impose a €1 increase on the price of cigarettes. I was deeply disappointed by that. The Minister of State, Deputy Cullen, can put that in his pipe and smoke it.

Today's budget consolidates the changes and reforms that the Progressive Democrats Party has promoted with its partners in Government. It is a good budget for the young and the old. At its inception the Government said it would increase the old age pension to £100 per week, and it has exceeded that target in today's announcement. In addition, as a result of the taxation measures, a total of 11,000 pensioners who are paying tax have been removed from the tax net. It is a good budget for older people.

A point the Minister should take note of for next year is that the fuel allowance, at £7 per week, was a bit mean. As we set out five years ago to bring the weekly allowance up to £100, we should set out in the next budget to bring the fuel allowance up to the cost of one bag of coal, which is currently about £9.

At least.

That is about the average. Of course, there is variation from place to place but that is only a matter of pennies. As a principle, we should seek to make the fuel allowance the average cost of one bag of coal. Every pensioner would appreciate that and it should be an objective for future budgets.

This budget makes provision for carers, and a provision under the health strategy is to free up beds to enable the waiting lists to be cut. That is a provision that will benefit older people more than any other section of society. It is mainly older people who wait years to get hip replacements and hip operations. They suffer severely as a result. The main beneficiaries of the treatment purchase fund of €30 million will be older people and sick people. This is a good budget for our senior citizens and that is important. A country that does not pay tribute to and care for its senior citizens, those who built the foundations of the State, is not worth its salt. This Government has proved over five budgets to be very caring towards it senior citizens and I praise it highly for that. I am glad that my party has been a part of this endeavour.

It is a balanced budget. All the predictions that led up to it, and all the fears that the changing economic circumstances would leave the Minister, Deputy McCreevy, in such a position that he would not be able to make provisions across the board were proved wrong. He has brought in a skilful and well thought out budget, on which he is to be complimented. The taxation measures in today's budget will keep us competitive and will not inhibit the creation of increased employment.

That we should not only have tax reduction policies was always the aim of my party. The Progressive Democrats Party has an inherent belief that people are entitled to keep at least some of the money that they earn, but we were also acutely aware of the impact that high taxation was having in the effort to keep labour costs down and keep this country competitive. I am glad that the taxation policies of the last four years have been carried through and built upon in this budget.

Much has been said about the widening gap between rich and poor. I, like everybody else, want to see that gap narrowing. The increased child benefit will go a great way towards helping to do that. The most intensive poverty is among children, where there are large families on very low incomes or on no earned income at all. Child benefit will go a long way to alleviate such poverty.

We made reference on today's Order of Business to the recently published OECD report on educational attainment in Ireland. My heart was gladdened by the survey of 500,000 15 year olds from across the industrialised world. One of the findings of the study, carried out by a body with high-status, the OECD, was that children from areas that were deemed disadvantaged in socio-economic terms were doing just as well in literacy, maths and science attainment. That is a good thing. If young people can be given a good education, they have a start in life and an opportunity to compete on an equal footing with children from other areas whose families have much higher incomes.

I am particularly pleased that, under the capital allocations, the Minister for Finance saw fit to give £1.5 million towards the refurbishment of Cork Opera House.

At least there is something good in this budget.

I will address that interjection shortly. I am equally pleased that the Minister saw fit to give £1 million for the restoration of Fota House. The Minister of State at the Department of Health and Children, Deputy Moffatt, will know that Cork city will be the European capital of culture in 2005.

And deservedly so.

I agree. I thank the Minister for this funding. Some 90% of those on the minimum wage will be taken out of the tax net altogether. I welcome that and I look forward to the day when that figure will be 100% of those on the minimum wage. Some £6 billion is to be spent on health. Unless we are very bad managers, we should be able to bring about radical, significant and far-reaching changes in the health services.

However, there is a sickness in this country and I do not know how we will address it. That sickness is amnesia among the Opposition parties. They forget the appalling budgets they brought in while in power. They are suffering from severe amnesia.

The electorate will give them their medicine.

There is also a sickness in the wider community. I call it cynicism and "whingeism". There are people who could not say a good word about this budget.

Mr. George Lee, for one.

No, I did not mention anybody. That attitude is very sad. This is a remarkably good budget. I am proud to be a member of the party that helped to put it in place.

I welcome the Minister of State at the Department of Health and Children, Deputy Moffatt, to the House. I have heard some very interesting contributions in this debate. However, before I came to the House, I heard a lot about trickery, creative accounting, heavy presentation, cosmetic touches, smoke and mirrors and matters like that. I am glad that we have an eminent chartered accountant present and I look forward to his comments.

Accounting is an art. It took me a long time to learn how to do it.

We will see if the Senator can separate the wheat from the chaff. On the Minister for Finance's admission, he is forecasting a deficit of almost £3 billion for next year.

I do not think so.

Is that not correct?

Acting Chairman

The Senator should address his remarks through the Chair and not ask the Minister direct questions.

Certainly. I am always guided by the Chair.

Acting Chairman

Thank you. Be guided.

Mr. Ryan

Guided, but not directed.

The point I want to make is in regard to the deficit which the Minister has projected. He has heralded the end of the so-called Celtic tiger. The serious question, raised by Deputy Mitchell in the Dáil earlier, is where all the money has gone. That has not been addressed.

There was mention of that eminent economic commentator, Mr. George Lee. While I did not hear everything he had to say, he was extremely critical.

Acting Chairman

I am sorry to interrupt you again but I do not think it is in order to mention people outside the House.

Again, I apologise but he was already mentioned by someone else.

Acting Chairman

Regardless of whether he was mentioned by others, I would appreciate it if the Senator did not mention him.

That beautiful lady from Cork, Senator Quill, mentioned health.

She did not mention him.

No, but she mentioned health and she talked about this increase—

Acting Chairman

Another thing, Senator, if you are referring to Members of the House, I would prefer if you addressed them as Senators, whether they are beautiful or not.

Did I not say Senator Quill? Forgive me. Senator Quill talked about what this amount would do for health. Unless the Minister and the relevant Department address the fundamentals regarding the black of hole in health, I am afraid the moneys provided will not see us out of the difficulties we are in in that regard.

The budget shows an Exchequer surplus of €170 million and, of course, this year we have to make the mental adjustment to euros from pounds. Someone in this House already referred to it as a fraud but at a minimum, there are serious questions to be asked regarding that supposed surplus. The Minister is robbing the social insurance kitty by taking €635 million. The point has already been made that the public owns the social insurance fund so it is not real revenue. That is one of these alleged accounting tricks. He is cashing in once-off benefits from the Central Bank of €610 million. Again, these are public funds and not real revenue – another accounting trick. He is taking €500 million from the capital services redemption fund – again, not real revenue—

Savings and deposits.

Will the Chair protect the speaker please?

Acting Chairman

I am protecting the speaker. Senator Coghlan, without interruption. What more can I say?

I am happy enough with the situation.

The point I want to make in this regard – I am sure the Chair and the Minister of State, Deputy Moffatt, will appreciate it – is that when we get through the smoke and mirrors, all the presentation touches and the cosmetics, this so-called budget surplus of €170 million will become a deficit of €1,575 million, or €1.6 billion. That is the situation which I, as a layman, see from what I have been given and what I have heard.

There are a number of very important U-turns in this budget and admissions of past errors and mistakes on the part of the Government and I very much welcome some of them. This increase of 1% in the standard rate of VAT is a hugely retrograde step. The Minister started to move in the right direction on that last year but now he is undoing all the good. When will we get in line with the rest of Europe in regard to the proper rate of VAT? As regards interest relief on residential property, the Minister had to – I think wisely and properly – undo the Bacon mistakes. I welcome that.

As regards reducing the top rate of employers PRSI, what the Minister has done there to alleviate the storm and the criticism is totally inadequate. The basic personal tax credit increased by €123. I do not think that will amount to £5 per week. I will wait for the accountant opposite to tell me but I do not know if that is even £5 per week. That is nothing.

Acting Chairman

I do not think you should refer to Members as accountants. They are Senators.

But the Senator is an accountant.

Acting Chairman

That is in his private life.

The Senator is a noted accountant and I have great respect for him as an accountant, if I may say so. I do not know what he is going to offer me this evening but that is another question.

The tax relief for the low paid is simply paltry and no one given what we have been through could say it is enough. The entry point to the tax system has been raised to £165 which is only 90% of the minimum wage. Everyone believed that, at a minimum, the Minister would have taken every low paid person out of the tax net. He should have gone that extra 10% to ensure every low paid person was taken out of the tax net.

I would be very concerned about those who have contributed so much to society – people on pensions. We are not caring enough of our senior citizens who have contributed all their lives to this society and who have paid their taxes down through the years. The limits provided for them are not sufficient.

Acting Chairman

Your time is concluded.

It could not be.

Acting Chairman

It is.

Subtract the interruptions.

Acting Chairman

I will not subtract interruptions. Eight minutes are eight minutes.

I have always appreciated your latitude

These are merger amounts and they are not sufficient. People will be very disappointed.

On the deadlines for urban and rural renewal schemes, I would like to see the details because there are still many dilapidated areas in towns and cities throughout the country. In fairness, some of this may not have been the Government's fault. I would like to see the details of these schemes and I plead with the Minister to ensure the very dilapidated areas in some towns, which were not dealt with and which should have been, are included in these schemes. As I said, we do not have the details of what is included but I plead that all such areas are included.

I welcome the Minister of State to the House. I do not intend to dwell on small issues. I know Senator Coghlan represents South Kerry rather than North Kerry but I thought he would have at least mentioned the £250,000 for the Rose of Tralee Festival.

I thank Senator Bonner for bringing that detail to my attention.

I compliment the Minister on what he has done not only today but in the four previous budgets he brought before the House. All week commentators made statements about how he was going to provide from the PRSI fund and from Central Bank reserves but I think he out flanked them today and shocked them with the basis on which he has delivered from where he is going to get the funding. He has been a fantastic asset to this country since he became Minister for Finance. He has pushed through radical change, one change after another, in the tax system. He has simplified the same system with revolutionary measures and he has left an indelible mark on this economy and on political life in this country.

I have no doubt in saying he has been the best Minister for Finance we have ever had and I doubt if we will ever be able to match him again. His record over his first four budgets in which he delivered all of the programme he put together with our coalition partners and all that was in the election manifesto of our party when we stood at the last general election were achieved in last year's budget. I was slightly worried that in this year's budget we would fall short on the basis of the downturn in the economy but the Minister has given the answers today. When it comes to the important things in relation to taxation and social welfare, the things that affect the ordinary people, it might be worth remembering that he reduced the lower rate of tax from 26% to 20% and the higher rate from 48% to 42% over his first four budgets. He promised £100 for the non-contributory old age pension and today he has increased that in his fifth budget to £116.

While there has been a downturn in the economy, overall it has not affected what the Minister, Deputy McCreevy, set out to do when he became Minister. That is certainly the case this year. It should be remembered that he took brave decisions in reducing the rates of inheritance tax and capital gains tax to 20%. He also improved the thresholds so that partners rather than married couples had the same protection. Families gained from the innovative measures he took concerning capital taxation.

The Minister replaced the allowance system with a tax credit system. He has done many things. Having listened to one of the commentators on the television before coming into the House, it seems that comments always have to be negative or against what the Minister has done. They ignore all the good points. The term "creative accounting" was used to describe some of the things the Minister did today. As I said during Senator Coghlan's speech, I see no point in having deposits in the bank if they cannot be used. That is what the Minister has done today. He has acquired £480 million from central bank funds because of impending changes due to the euro changeover. He has taken £500 million out of the social welfare fund. People forget to think he has over £5 billion in the pensions reserve fund. The funding today is probably the money that is going into that fund. He is only taking it out of one deposit account and putting it into another.

The Minister hopes to raise approximately £600 million in cash flow that will affect companies because of the change in the preliminary tax date. One must remember that individual taxpayers who are self-employed have to pay their tax half way through the current tax year. PAYE employees have to pay the tax on a monthly or weekly basis as they are being paid. I see no great reason to crib on the part of businesses given that the Minister has reduced corporation tax rates from rates that were as high as 48% a number of years ago. In two years' time, they will be down to 12.5%. Therefore, I see no great difficulty for these companies which will be paying their tax, eventually in five years' time, one month before the year ends.

As I said, the Minister established the pension fund reserve. There have been no tax cuts this year in respect of the tax rates. He has delivered £500 million in tax cuts. As far as I can remember, that may be the amount he delivered the first year he was Minister for Finance. It was heralded as a fantastic achievement. Yet, in a year when our economy has taken such a drastic downturn, the Minister has come up with £500 million again. During his term in government, he has given just slightly under £4 billion in tax cuts to the taxpayer.

The Minister has always ignored bureaucratic advice and has always been his own man. I can remember him when we were both secondary students in a boarding school. He is exactly the same today as he was then, a man with his own views who is always prepared to honour them. That was proven where the capital taxes cut is concerned. He not only gave benefit and freed up assets, but he trebled the income to the State by that decision. He has been a genuine policy maker.

The success of the economy has been reflected in the giving of tax cuts rather than the increase in public spending. The current tax system provides for work incentives, unlike the system that pertained four or five years ago, which was an anti-work system.

People are complaining that the Minister has not changed the entry point to the tax system to £183 per week for people on the minimum wage. However, he has reached £165. As was explained earlier, that figure was only £77 in 1997.

I could cover so much but I will keep it for another day. It will save me having to prepare for future discussions. I have one or two points concerning what the Minister referred to in the small print. I welcome the tax relief for investment by individuals and sporting bodies for capital programmes. That will be a tremendous help to local communities and people will be prepared to invest their money. I welcome particularly the huge increase in the income limit for employing carers. I welcome the extension in the farm restocking deferred profits scheme from two to four years. I also welcome the extension of the rural renewal scheme.

I welcome particularly the social welfare increases – £10 for contributory old age pensioners, £12 for widows and £8 for ordinary social welfare recipients. The Minister has eased the income disregards concerning the carer's allowance. I welcome the extra €1 million he is providing for funding of TG4.

There were fears that there would be cutbacks in the national development plan in respect of infrastructural projects. I welcome the increased funding, particularly the increased funding of £100 million for national roads. I spoke to the Minister last week in relation to the N56, the secondary road that runs to west Donegal, which was going to lose its place on the map again. I am encouraged by the Minister's decision to increase the funding.

I will raise all the other points I have after Christmas when we are in the House again.

Acting Chairman

Does Senator Ryan want to speak?

Mr. Ryan

I do. Does that surprise the Chairman? First, so as not to be entirely churlish, I welcome the specific allocation of a large sum of money for the refurbishment of the opera house in Cork. It was an astonishing omission from the programme of the Minister for Arts, Heritage, Gaeltacht and the Islands in the summer. It is badly needed. The theatre is one of the most efficiently run theatres on these islands.

I got a present in my mail as I was coming up to the House, a diary from the Department of Social, Community and Family Affairs. The Mini ster for Social, Community and Family Affairs is a well-meaning man, but I suppose there is something symbolic about the fact that a diary from his Department contains in the back a wine vintage chart. This seems to be a long way from what it should be about. People like myself, who have done well out of this Government in the past five years, want to say that they did not want the Government's munificence. There are many people like me in this State who know that the price of our comparative affluence is misery on a scale that this country has never seen before. Housing is worse than it was five years ago. The health services are worse than they were five years ago. Education is underfunded by comparison with what was needed. Child care is worse than it was five years ago, as is public transport and road transport. These are facts.

These are not facts.

Mr. Ryan

Every one of those things—

These are opinions.

Acting Chairman

Senator Ryan, without interruption.

Mr. Ryan

The local authority housing waiting list—

Senator Ryan should not make up things.

Mr. Ryan

For an aspiring TD, it is surprising what Senator Cox does not know.

Acting Chairman

The Senator should not provoke interruptions.

Mr. Ryan

The local authority waiting list has doubled. That is a fact. The number of homeless people has doubled. That is a fact. The proportion of people in receipt of medical cards has gone down, even though we know that the primary care system, properly run, is the best way to reduce the pressure on our hospital system. That problem has got worse. Child care has got worse.

There are many more people at work.

Mr. Ryan

The fact that there are many more people at work is a reason—

The corollary—

Acting Chairman

Senator Ryan, without interruption.

Mr. Ryan

The fact that the numbers who are poor get smaller is not the issue. The issue is that we could have a much better society. The real difference between this Government and the Labour Party and I is that we believe in economic and social development, while the Government believes in economic growth at all costs.

We have had the best social development in the history of the State.

Mr. Ryan

We did not have development in this country because people arrived in Government and knew immediately what they wanted to do about taxation, but it took them four and a half years to find out what they wanted to do about the health services. That is the difference. I knew our health service and child care services were inadequate four and a half years ago but they did not. I knew the road system was appalling four and a half years ago but they did not. I knew the rail system was appalling then but they still do not know as they are still not doing what they promised to do.

What is the national development plan?

Acting Chairman

Senator Ryan without interruption.

Mr. Ryan

The national development plan is late, underfunded and—

At least it is there.

Acting Chairman

Senator Ryan has only eight minutes.

Mr. Ryan

—on these figures cannot be delivered.

He should stop telling lies.

Acting Chairman

He is entitled to speak. Senator Cox will have an opportunity to speak when he concludes.

Mr. Ryan

The Fianna Fáil Party with 77 Deputies has been driven by the Progressive Democrats, which has four Deputies, for four and a half years in a direction that is against the better interests of the people who vote for the Fianna Fáil Party. Those who vote for the Fianna Fáil Party need good public services, a good health care system and local authority and social housing, but they did not get them. The Government has broken its commitment in the Programme for Prosperity and Fairness, producing about half the number of houses it promised. It has failed to deliver on every issue of social well-being because it was driven by a minority party of four Members, with an ally in the Minister for Finance, to fund extraordinarily excessively generous tax cuts for the very rich.

The tax cuts, from the bottom up, benefit the very rich. There was a determination to cut the top rate of tax and a predominant focus on mak ing the very rich much richer. Let us not have this nonsense about the capital gains tax cut producing increased revenue. The capital gains tax cut coincided with the extraordinary explosion of capital gains that was happening before the tax cut. It was extra cream for an already grossly overfed cat. It was not done because it was necessary or useful, but because it was ideologically driven.

I have said repeatedly that I am a pragmatist. I believe in what works and I have seen what works in the Netherlands, Denmark, Sweden, Norway, Finland and Austria – successful, rich societies which use their riches in an intelligent way for the benefit of all. What we have in this country—

There are high levels of local taxation there which are supported by socialist Governments.

Acting Chairman

Senator Ryan, without interruption.

Mr. Ryan

It works and that is the fundamental point. There is gross inequality in Ireland. The inequalities in the health service are mentioned in the health strategy, but it does not mention that every country that accepts massive inequalities of income ends up with massive inequalities in health care outcomes. Societies which minimise inequalities minimise inequalities in health care outcomes also. The Government took a clear and definite decision, but the chickens are coming home to roost. People can say it did not work, it did no good and we are worse off than we were five years ago.

I am reliably informed that if I had been in the House many years ago, I would have heard the same type of rhetoric and rubbish from certain Opposition Members. That is sad. Life changes and Ireland has changed.

We do not interrupt when we hear such rubbish.

Acting Chairman

Senator Cox without interruption.

There are more people on our housing waiting lists, but the biggest housing building programme was funded by the Government. The reason houses have not been built is that local authorities – I am a member of one – have not progressed housing plans at the same speed as the Department of the Environment and Local Government. That is a fact.

More money than ever before has gone into the health services. The Minister produced a fine health strategy for the next couple of years.

Mr. Ryan

Aspirational.

If one listened to the radio, one would have heard something about which we will hear more in coming years. A lady spoke about people living longer because they survived cancer, particularly breast cancer and colon cancer. We are beginning to see the changes arising from the investment and management of the health services. We are seeing the difference because people are living longer and have a better quality of life. Cancer care is being provided and there is no shortage of money going into health care. To say the health services are worse is an easy vote-getting headline, but it is a disgrace. The health services are continually developing. Nurses are developing with set job plans, development courses and better education. Junior doctors are improving and the whole delivery of service has improved hugely.

The OECD report on education was mentioned this morning. Where did that put the children of an education system which has supposedly worsened? We were second to Finland in the report and better than America and Britain. How has our education worsened? Four years ago where would we have seen a class of six children suffering from autism in an ordinary primary school benefiting from caring assistance, teaching assistance and individualised education programmes? Where would that have happened? How can the Senator say education has become worse? It is easy to talk in headlines but when we look at the details, we see where the difference has been made.

It is claimed that child care has not been improved. A family of four children will take home over £490 per month from next May. That is tax free and not means tested. To earn that money at the top rate of tax, I would have to earn an additional salary of £8,000 to £9,000. How can the Senator say provision has not been made for child care? That money goes to the home of every family in the country with a child and most of the time it goes directly to the mother. It is not means tested and it is often the only individual source of income that parent has to support their children. It hits where it is needed most and it is reducing the levels of child poverty.

In relation to medical cards, people say everyone has a job and everything is much better, but they do not have medical cards any more. Is it not great that people do not need medical cards any more? If I needed a medical card four or five years ago but I got a job and did not need a medical card as I was paying for health care myself, I would be proud.

Mr. Ryan

People still need them and cannot get them.

It is not that one needs it—

Mr. Ryan

On a minimum wage people cannot afford it.

—one can provide for oneself. We are moving away from a dependent society. An additional 4,000 doctors, nurses and other health care professionals are working in the health care industry. The amount of relief that can be claimed when employing a carer makes a huge difference to people. The level has been increased from €12,700 to €30,000. That means someone can employ a person to work at home. This is a new way of looking at helping people to stay at home and it relieves pressure on our hospitals. It ensures that those who could not get care at home and were taking up acute beds can be moved home and cared for there. The Government recognises this and it is putting in place the structures that will allow that to happen.

Respite grants have been increased to £500. Has the Senator ever seen the face of a mother who has received a summer respite cheque for £500 from the Department of Social, Community and Family Affairs, to pay for a week's care for the child while she gets a break? It makes a huge difference. Where was the £500 four years ago? I do not think it existed.

Senators have asked what the Minister for Finance has done about the rental sector. He has listened to the difficulties of those trying to rent houses, who need rent allowance and find it difficult to locate properties. Having listened to arguments about the disappearance of investors from the marketplace, the Minister reduced stamp duty so that investors will return and is allowing interest tax relief. He listened to the points that were made to him, recognised the problems and is facilitating the rejuvenation and regeneration of the construction industry. This will mean more jobs which will be highly paid. The Minister is attracting foreign investment, which had been going to places like Spain, Florida and Portugal in recent years.

The Minister has brought in the initiatives that were recommended in the Bacon report. The time has come to review plans and make changes, now that the economy has changed. We know the Minister is smart because he is not afraid to review matters annually. Now that financial matters are a little tighter, he is looking for areas where extra revenue can be generated. He has the sense not to borrow money.

Mr. Ryan

He steals it instead.

He does not steal it.

Mr. Ryan

The Minister steals money from the social insurance fund instead.

Senator Cox's time is very limited. She has only seconds left.

Senator Ryan should leave Senator Cox alone.

The final point I would like to make relates to increases in sports development grants, which was one of the smartest moves today. Those who give money to sporting organisations for capital development are finally to be allowed to write off the donations against tax. It is the most innovative and creative initiative in the budget.

I thank the Minister of State, Deputy Cullen. Members of the Opposition laughed when the Minister, Deputy McCreevy, said that he would introduce five budgets. During the first, second and third budgets, they said that the Minister would not introduce another budget, but the joke is now on them as this is the Minister's fifth budget and it is great.

I am astonished by Senator Cox's remarks, which have made me wonder which country she lives in. The electorate, including those of us on this side of the House, recognise that the last five budgets have been a waste. A number of years ago, a colleague of the Senator's went to the regional hospital in Galway to highlight the fact that there were people on stretchers in the corridor.

Left there by the rainbow coalition.

It was highlighted just before the election.

We are talking about £125 million.

I did not interrupt Senator Cox, in spite of many opportunities.

Senator Coogan has two minutes remaining.

After being elected, I did not hear a word from Senator Cox's colleague, despite the fact that corridors are still full of people.

The sum is £125 million.

The Senator's comments about expenditure cannot disguise the fact that the health service has not improved. The Government has spoken about its wonderful ten year programme, but it is easy to make promises for ten years. The budget is a series of promises and nothing else. In terms of Government expenditure, referred to by Senator Cox, one cannot say that the Minister robbed Peter to pay Paul as both Peter and Paul are being robbed. When we look for funds in a few years' time, they will not be there.

This budget is an attempt to get the Government, which has proven itself to be inept, back into power after the election. I ask Senators to show me evidence of improvements as regards infrastructure. It takes as long to get from one part of this country to another as it did 20 years ago. The Government has said that infrastructure has been put in place, but it should talk to those trying to drive trucks from Galway to Dublin or from Cork to Limerick, who can testify to the problems. The cost of such journeys will increase as a result of the Minister for Finance's decision to increase petrol and diesel by 5p per litre. I would not have been believed ten years ago if I had said that one would pay an extra 25p per gallon of petrol in 2001, but it has happened as a result of today's announcement.

The Government has overseen the best opportunities this country has had to establish infrastructure and decent health and education services, but it has failed. The Government tries to claim credit for everything, to the extent that one would think it is trying to claim credit for the reduction in the number of people with cancer.

The Government put in the specialists.

Time and again, the Government has tried to claim credit for everything. Children and their parents deserve the credit for our improved educational statistics in the OECD report, as the children did the learning and their parents taught them. The Government's measures did not contribute to the figures, as teachers will testify. What changes were made in the past five years that were not made in the previous five years? All that happened was that children were properly educated by their parents. I thank the Chair for allowing me to speak, as I did not intend to do so, but I could not resist the opportunity to respond to the waffle I have heard.

Question put and agreed to.

When is it proposed to sit again?

It is proposed to sit at 10.30 a.m. tomorrow.

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