I welcome the Minister of State to the House.
Budget Statement 2008: Statements.
I welcome this opportunity to present to Seanad Éireann key features of today's budget. This is the first unified budget which brings together the resources available and the various demands for expenditure.
Today, the Tánaiste and Minister for Finance announced a budget which is prudent, progressive and inclusive. In the last 12 months the global environment has altered and a number of downside risks have emerged. Continued economic and employment growth will depend on how we respond to these changes and risks. This budget has been structured to strengthen the economy's capacity and retain its flexibility. This will allow us to respond effectively to this new, more challenging economic environment and to be in a position to take advantage of whatever opportunities may emerge.
The Government's objective is to maintain sustainable growth while continuing to implement a responsible fiscal policy. Government policy is focused on maintaining and improving public services today while also planning and building for the future. The Government's key priorities are therefore, responsible management of the public finances, delivering a challenging public infrastructure investment programme, caring for the less well-off, strengthening education and training and protecting the environment. Today's budget will protect the incomes of the vulnerable, support ordinary working people, promote our environmental goals and help home-buyers and boost the economy.
The global economy has remained strong this year and world GDP is estimated to grow by more than 5%. However, financial turbulence, increasing oil prices, the slowing US and UK economies and currency fluctuations, particularly the weakening dollar, all present strong downside risks for 2008. The Irish economy has also performed strongly in 2007 and GDP growth is expected to be around 4.8%. While housing investment has moderated this year, other investment activity, including NDP spending, continues to perform well. Taking account of external and domestic risks, GDP is therefore forecast to grow by 3% in 2008.
Employment growth has been a major success story for Ireland and the Government estimates that 72,000 net new jobs will be created in 2007. Non-Irish nationals now account for nearly 12% of the labour force. The unemployment rate averaged 4.5% in the first three quarters of the year and this compares well with other countries in the eurozone. The current position should be compared with ten years ago when the unemployment rate was over 10%.
Our future success depends on our willingness and ability to enhance the competitiveness of the Irish economy in all sectors. We are no longer a low cost economy. Therefore competitiveness must be strengthened through increased productivity, particularly in the services sector and through innovation and quality improvements.
It is in the context of this economic environment that budget 2008 has been framed. Although circumstances have changed since the pre-budget outlook was published in October, theTánaiste has increased provision in a number of key areas. However, to achieve this, he has planned for a general Government deficit of 0.9% of GDP for 2008.
In January this year, the Tánaiste launched the National Development Plan 2007-2013. The plan sets out the Government's investment strategy for our economic and social infrastructure over the medium term. Despite the tightening budgetary pressures, the Government has prioritised capital infrastructure. The new multi-annual capital envelope for each Vote group was published today and shows that capital expenditure is to be maintained at an average of 6% of GNP over the next five years. The capital investment programme for 2008 will therefore be over €8.6 billion and will focus on transport, education, housing and environmental services.
A total of €3.8 billion gross expenditure has been provided today for transport. Of this, €1.7 billion will be invested to improve our national roads network which is essential for long-term economic and social prosperity. Almost €1 billion will be invested in our public transport system. The remainder will be allocated to improve our non-national roads, regional airports and ports. Road safety is also a high priority area. The high number of fatalities and serious injuries on our roads is a matter of ongoing concern for all of us. A total of €44 million has been allocated to the Road Safety Authority in 2008 to help bring down these numbers.
There has been a major financial investment to improve our water services infrastructure in the previous and current national development plans. In 2008, €471 million will be allocated. This investment will finance schemes throughout the country, including major schemes for supply to Dublin, Limerick, Donegal, Kildare Portlaoise, Waterford and Castlebar.
In the past three years, the Government has provided over €2 billion in education infrastructure. This has provided 28 new schools and major refurbishment and extensions in existing schools. In 2008, capital investment will be €828 million. Over €594 million will be used to provide accommodation for 13,000 extra children next year while €184 million will provide for infrastructural investment at third level.
I am also pleased to see that an area for which I had responsibility for some five years, namely, housing policy, has been provided with a record Exchequer provision in 2008 of more than €1.7 billion. Taken together with non-Exchequer financing, the overall housing package totals approximately €2.5 billion.
This increased funding is in line with the housing commitments contained in Towards 2016 and demonstrates the Government's determination to honour these obligations in full. It will allow for the commencement of a significant number of new social housing units. Work will progress under the regeneration programmes, including the ongoing redevelopment of Ballymun, as well as bringing to completion a large number of units under both the local authority and voluntary housing programmes. In total, it is expected that programme output will amount to some 9,000 homes in 2008. The funding will also support the delivery of 5,500 new affordable homes. In addition, funding will also be maintained for the provision of Traveller and homeless accommodation.
Ireland must respond to the challenge of climate change and take steps to meet our Kyoto commitments. In the Budget Statement, the Tánaiste provided a carbon report in line with the undertaking in the programme for Government. He reported that currently, Ireland's greenhouse gas emissions amounted to some 70 million tonnes annually based on the latest available data.
In the past two budgets, tax and expenditure measures were introduced in this area. Today, the Tánaiste and Minister for Finance introduced major changes to vehicle registration tax and motor tax. The vehicle registration tax rate available to cars registered on or after 1 July will be based on the CO2 emission rating of the car and not the engine size. There will be seven VRT rates, ranging from 14% to 36%, with the higher-emitting cars paying more. Existing incentives for certain hybrid electric and flexible fuel cars will be extended to 30 June 2008 and after this date, there will be a further top-up relief to €2,500 on the VRT payable on these cars. Electric cars and electric mopeds will be exempt from VRT from 1 January 2008.
On motor tax, the Minister for the Environment, Heritage and Local Government has proposed an increase in motor tax rates of 9.5% for cars below 2.5 litres and 11% for larger cars from 1 February 2008. In addition, it is intended that the Minister for the Environment, Heritage and Local Government will bring forward a proposal to link motor tax to CO2 emissions instead of engine size for new cars from 1 July 2008. The Tánaiste has also provided for the National Treasury Management Agency to purchase carbon credits through the carbon fund.
The State energy companies will invest €1.7 billion in 2008. This will be mainly in electricity and gas transmission and in distribution networks in new and modernised power generation and wind energy projects. The Exchequer will provide €86 million for energy in 2008, which is almost double the 2005 investment, and this demonstrates the Government's commitment in this area. In addition to the €150 million planned in the national development plan for energy research, the Tánaiste has allocated a further €13.2 million for this purpose. A specific focus of the research will be to develop alternatives for renewable energy from ocean sources. A total of €13 million has also been provided for energy conservation.
Farming plays a number of important roles. These include contributing to economic growth, sustaining rural communities and conserving our environment. A number of measures have been introduced to support agriculture and help farmers meet the standards in the EU nitrates directives. Due to the successful take-up of the farm waste management scheme, an increase of €35 million was announced to bring the provision to €150 million for 2008. In addition, €370 million has been allocated to REPS 4, which will benefit nearly 60,000 farmers.
Farm taxation changes announced today include a new relief from capital gains tax on the dissolution of farm partnerships and the relief will run for a period of five years. In addition, the Tánaiste made arrangements to allow farmers who receive diversification aid under the sugar beet compensation package to spread the payments for income tax purposes over six years. The farmers flat rate addition for VAT is being retained at 5.2% for 2008.
Fishing plays a critically important role in our coastal communities. However, to ensure a sustainable fishing industry there is a need for restructuring and a reduction of the number of fishing boats. A total of €21 million is being allocated in 2008 for a decommissioning scheme for fishing vessels and the tax code will be amended to help maximise the take-up of the decommissioning payments.
The Government is committed to ensuring significant improvements in the quality and delivery of health services. The provision for health next year has been increased by 7.6% to almost €16.2 billion. This includes new funding of €276 million for a range of health developments, including services for the elderly, for people with disabilities and for children. An additional €110 million has been provided for the introduction in 2008 of the nursing home support scheme, A Fair Deal, which will bring the total public expenditure for nursing home care for the elderly to €920 million. An additional €50 million is being provided for the disability sector. This is in line with the budget 2005 multiannual investment programme towards the implementation of the Disability Act 2005. A total of €29 million in additional funding will be provided for the expansion of cancer care services, while additional funding of approximately €87 million will fund immunisation programmes and other health care improvements.
The abuse of drugs is of major concern to our society and today the Tánaiste provided an extra €12.5 million, in addition to the provision in the pre-budget outlook, to facilitate the implementation of the national drugs strategy rehabilitation report. This will ensure the expansion and strengthening of the local drugs task forces and for the roll-out of services to new commuter belt towns, mainly in Leinster. From midnight tonight, the excise duty on cigarettes will increase by 30 cent per pack of 20, inclusive of VAT, with pro rata increases on other tobacco products. This measure has been introduced to promote improved public health and should be welcomed.
Ireland's ability to respond quickly and effectively to technology advances in recent years has provided a significant boost to economic and employment growth. Positioning ourselves at the frontier of new advances will be important if we are to achieve and maintain competitive advantage in specific areas. Major ongoing investment in science and technology will be required to ensure we can exploit emerging advances. To this end, the budget provides for an increase of €36.5 million, bringing the total investment in this area to almost €300 million in 2008. This will fund continued investment in basic research in centres for science, technology and engineering and in strategic research clusters. The budget also provides for €133 million for current science, technology and innovation expenditure for higher education research.
The announced enhancement of the research and development tax credit scheme is a complementary measure to the Government spending on science, technology and innovation. The base year which is used to calculate expenditure on research and development is being fixed at 2003 for a further four years to 2013. This will provide greater certainty to industry in respect of the scheme.
A total of €84 million in additional funding has been provided for overseas development assistance, ODA. This will bring our total ODA contribution to €914 million, or 0.54% of GNP, in 2008. Ireland's target ODA contribution ratio is 0.7% of GNP in 2012.
The Government is committed to ensuring that the less well-off also benefit from today's budget. The total cost of the social welfare improvements announced today will be €957 million in 2008 and €980 million in a full year. Maximum weekly personal rates for contributory, transition and related social insurance State pensions will increase by €14 per week, while the maximum personal weekly rate for the non-contributory State pension will increase by €12 per week. This brings the State contributory pension to €223.30 per week and the State non-contributory pension to €212 per week. In addition, the social insurance qualified adult allowance for claimants of pension age has been increased by €27, to bring it to €200 per week.
In recognition of the importance and the contribution of carers, the carer's allowance and carer's benefit will increase by €14 per week and the respite care grant also has been increased by €200 to €1,700. All other personal social welfare rates will increase by €12 per week and this will bring the lowest full adult social welfare rate to €197.80 per week. There will be proportionate increases for people on reduced rates. In general, rates will increase from the first week of January 2008.
Services for older people are an immediate priority for the Government. The Government's commitment to older people is set out in the latest partnership agreement, Towards 2016, and reinforced by the commitment of €9.7 billion in the national development plan. Over the last two years, the Government has added €400 million to services for older people, which is targeted primarily at community supports for the elderly. These include the provision of home care packages, home helps and day and respite care. This support is continued in the 2008 budget with a further allocation of €25 million for elder care, including the provision of home care packages and other community support services. The duration of payment of the national fuel scheme will increase by one week, to 30 weeks, commencing from April 2008.
The Tánaiste has provided for an increase of €14 per week, to €221.80, in the minimum rate of maternity benefit and adoptive benefit from January 2008. Child benefit rates will increase by €6 per month for each of the first and second qualifying children, to €166 per month, and by €8 per month for each subsequent qualifying child, to €203 per month, effective from April 2008.
The upper income threshold for entitlement to the one-parent family payment will increase by €25 per week to €425 from May 2008. Family income supplement income thresholds will increase by €10 per week in respect of each child.
The back-to-school clothing and footwear allowance will increase by €20 to €200 in respect of each child aged two to 11 and by €20 to €305 in respect of each child aged 12 and over. The widowed parent grant is being increased by €2,000 to €6,000, effective from today. The Family Support Agency will be provided with additional funding for marriage, child and bereavement counselling, research projects and other services. The money advice and budgeting service, MABS, will be provided with additional funding for training and additional support to MABS companies.
A key feature of recent budgets has been to reward work through a fairer and more progressive tax policy. One element of this was to keep the lower income groups outside the tax net. This approach has been maintained in this budget and the measures announced today will keep 32,600 income earners outside the tax net. The personal tax credit for a single person has been increased by €70 and €140 for a married couple. The employee tax credit will also increase by €70 per annum. The entry point for a single person on PAYE has increased from €17,600 to €18,300 and the PRSI and health levy entry points have also increased accordingly.
The 20% standard income tax band is being widened by €1,400 per annum to €35,400 for a single earner and €44,400 for a married couple with one earner. For married couples with two earners the band will be €70,800. As the 2008 projected average industrial wage is €34,000, this should keep the liability of those on average earnings at the standard rate.
Other increases in personal tax credits include the following. Tax credit for an incapacitated child will increase by €660 to €3,660 per annum, the home carer tax credit is being increased to €900 per annum and age credit will increase by €50 to €325 for a single person and by €100 for a married couple. The age exemption has also being increased to €20,000 and €40,000 respectively and the allowance for trade union subscriptions will be increased from €300 to €350 per annum.
As a result of today's budget, the number of earners who will be outside the tax net in 2008 will be more than 878,000. The total cost of the income tax, PRSI and health levy measures will be €432 million in 2008 and €585 million in a full year.
The small company tax liability threshold for the payment of preliminary tax on the simpler prior-year basis is to be increased from €150,000 to €200,000. The tax liability threshold at which preliminary tax is not payable has been increased from €150,000 to €200,000 for new start-ups. Small business VAT registration thresholds have been increased to €37,500 per annum for services and €75,000 for goods from 1 May 2008. This will take 2,700 businesses out of the VAT system.
The stamp duty charge on financial cards will be reduced. For credit cards it will be reduced by 25% to €30; for combined cards, by 50% to €10 and for ATM and debit cards, by 50% to €5. However, there will be an increased duty on cheques from 15 cent to 30 cent per cheque. This supports the shift from paper to electronic transactions.
Gross expenditure for the justice area will total almost €2.7 billion in 2008. This major investment will fund a range of developments. These include continued expansion of the Garda Síochána to a total of more than 14,200 fully-attested Garda by end-2008, delivery of a modern communications system and other measures to support the fight against crime. Additional funding of €5 million is being provided for social inclusion initiatives. In addition, €14 million is being allocated to the Prison Service for its building programme and for the roll-out of a new communications system.
The housing market has slowed in recent months. Contributory factors include higher interest rates, tighter credit control and changing consumer sentiment. Acknowledging the importance of the construction sector to our economy, today's budget includes a range of measures designed to support rather than unsettle the market. Mortgage interest relief has been increased for first-time buyers by €2,000, to €10,000 for a single person and by €4,000 to €20,000 for a married couple.
The most significant improvement today is the major reform of stamp duty. Property valued at less than €1 million will be charged stamp duty on the basis that the first €125,000 will be exempt from tax and the balance will be charged at 7%. Purchasers of houses valued at more than €1 million will be charged at 9% on the portion of the price in excess of €1 million. The effective rate on most homes will be well below the headline rate and the maximum effective rate up to €1 million valuation is 6.5%. The current exemptions for first-time buyers and buyers of new homes will be retained.
Currently there is a five-year rule to avoid clawback of exemption where the owner moves out and lets the property. This has now been reduced to two years. These measures were designed to simplify the system, to improve the efficiency of the housing market, to support employment and to boost confidence and economic activity. Under this heading, the income tax relief on rent payments will be increased by 11%. Finally, the threshold for the rent-a-room scheme will be increased from €7,620 to €10,000.
This budget was framed in the context of change both in the global and domestic economy. The Tánaiste and Minister for Finance has introduced a budget which is broad in its reach and generous, particularly in the areas of social welfare and home purchase. The approach taken has been clear and decisive, which can only benefit our economy in the uncertain times ahead.
The budget shows how misguided or misleading the Government was at the previous election, because our expectations are not being fulfilled. We were told the good times, which date back a decade, would continue as long as Fianna Fáil was back into power. Fianna Fáil was voted back into Government, but we have gone from a surplus of €3 billion in the previous budget to an expected deficit of €2 billion at the end of next year. That is a serious dent to anybody's credibility in terms of prudent financial management of the economy. It is evident the Government has utterly failed in what it was supposed to do in terms of balancing the budget and getting its figures right.
The economy appears to be okay in the sense that income tax receipts are up, which could mean we are taxing people too much. As everybody knows, the tax receipts showed more people paid the higher rate of tax than the standard rate. Taking the European Union as a whole, it is unusual that the majority of people are paying income tax at the higher rate. Corporate tax receipts are also down which does not bode well for the future if something happens to the economy. One can well ask whether the Government knows what is going on.
The big story of the economy is the collapse in stamp duty receipts which has resulted from the slowdown of construction industry activity. The relatively small adjustment in our economy has resulted in Government finances being completely thrown off predictions in the space of six to nine months. This is an indication that Fianna Fáil's mismanagement of the economy is slowly strangling the Celtic tiger. In some respects it appears that Fianna Fáil and its Government partners did not manage the economy well in recent years and that this was covered up due to the large receipts from income tax, VAT and corporate tax. As a result of Government mismanagement, the underlying problems were not addressed. That does not bode well for the coming years. Now that the Government's poor financial management of the economy has been exposed, we are in for a harsh few years.
The economic downturn cannot all be blamed on the global situation. The biggest story, however, is the Government's mismanagement of the economy and the fact that fundamentals were not dealt with in the past years. We expected more of that from this budget. It is easy to talk about the way money will be spent, especially when the Minister is borrowing money again to spend, but very little has been said about accountability, reform and the way taxpayers' money should be spent, priorities expressed on this side of the House for a number of years. The Government refused to do anything about that in recent years and we are now paying the price.
Regarding the major emphasis on the national development plan, the Government should clearly state what it intends to do in the national development plan. It should not say it intends to spend €1 billion here or €900 million there or that it will allocate €13 million for the development of wave power. Those are the only areas we can identify, the small money, so to speak. We want to know where the big money is being spent and the Minister of State should ask the Minister what is going on in that regard.
Another factor is that, as Minister for Finance, Deputy Brian Cowen has increased current public spending from 25% to 31% of GNP. The Minister is taking us back to the late 1970s and early 1980s. In the late 1980s it was decided by the leadership of both Fianna Fáil and Fine Gael that such spending was unsustainable yet the Government is letting public spending run riot. There is no reform or sustainability in the economy and we will run into major problems in future years unless something happens in that regard.
There is a certain mockery in terms of the budget delivered today in the way the Minister relates to the other citizens in the country. We are all supposed to clap for the extra €12 on the non-contributory pension and the extra €14 on the contributory pension. The value of a mother or father who stays at home to care for their children in the eyes of the State is €18 per week. The value of a pregnant mother is €14 per week. The lowest full adult social welfare rate is now €197.80 but that must be viewed in the context that only a few weeks ago the Minister awarded himself a €700 pay increase, in addition to his €5,500 a week.
The car tax changes indicate the same sort of disconnect Ministers have with the general public. When one is driven around in a car and one does not have to pay for the driver, the petrol, the diesel or the motor tax, it is easy to slap another tax on to the general public——
——without feeling any shame. Will the Green Party members of Government push for changes to the type of cars Ministers drive? The Green Party Ministers are embarrassed to be driven around in cars that are not environmentally friendly but why do they not put the same pressure on their Government colleagues? They should lead from the top rather than expect everybody else to do it. The Government talks about the great changes to VRT and protecting the environment but it will be interesting to see if there are fewer Mercs at the back of Merrion Square this time next year.
On pensions, in the past few weeks, even since we had a debate on the issue in the House, there has been a collapse in the value of pensions of people in the private sector, yet in this budget the Government will have to borrow some of the €1.7 billion it put aside for public sector pensions, including their own, next year. A concession can be made regarding the hardship everyone will experience in the next few years if Ministers reject the pay award they gave themselves some weeks ago. What is happening in the country is insulting to people.
The big story of this budget is that the Government has left it too late. Stamp duty reform has come too late. There already has been a massive lack of confidence in the housing market.
The soft landing that was talked about for many months is not happening. We must face up to reality now. The housing market is in a serious mess. The Minister should stop talking like an auctioneer and tell the truth to the people of Ireland. There are problems in the housing market. We must deal with them but the Government is too late in respect of stamp duty reform.
In regard to carbon tax and VRT, again the Minister has left it too late. We must reduce our emissions to 63 million tonnes of carbon to meet our Kyoto commitments. When did the Minister find out about that? Was it yesterday? Currently we are at 70 million, yet it is only now the Minister talks about climate change and changing VRT. It is as if the Government woke up yesterday morning only to be told we are supposed to reduce our emissions to 63 million tonnes in the next four or five years.
The €13 million for investment in wave power research and development will not make a huge difference. If we are serious about the issue we must be proactive in terms of what we are to do about it. The Government will be borrowing money next year to buy carbon credits because we failed to deal with our commitments to reducing our carbon footprint. Unless the Green Party comes up with some means of dealing with cattle expressing methane in the fields of Ireland, this country will face a serious crisis.
I wish I had more time to deal with the serious concerns about the health service, the educational services and all the other promises made. Whether it is medical cards, new hospitals or new schools we will see a serious reduction in the next few years unless the Government faces up to one responsibility. It must start the reform that has been talked about for so long. It must make everybody accountable in that regard and we might just save enough money to invest properly in our public services because the same amount of money will not be available in the coming years.
Now that the applause is over, I am delighted to have the opportunity to make some comments on the budget delivered earlier. I welcome the Minister of State to the House. I am delighted to see a queue of speakers on the opposite side of the House, no doubt to welcome what is probably the best budget since 1987-89.
Come on, Marc.
Senator MacSharry, without interruption.
I will start my contribution by stating a few facts.
Send in the clowns.
I did not interrupt anybody on the other side of the House.
I would appreciate it if Members listened to the speaker.
That type of statement invites interruptions.
Despite the standard annual rhetoric we have heard from the Opposition——
Where did the surplus go?
——nobody has contributed more, across all of the headings Senator Twomey mentioned, than Fianna Fáil in Government since the foundation of the State. That is a fact. It may be a painful one when one is sitting on the Opposition benches but it is a fact nevertheless. It pains me to hear Deputy Twomey pour water on the significant increases, in what are difficult international and national circumstances, in social welfare payments. It must be remembered that the only innovation on the part of this Opposition in Government, when the chips were down in the past, was to introduce VAT on children's shoes for fear that women might have small feet.
The Senator has a short memory.
Those are the facts. Thank God for the late great Jim Kemmy and Fianna Fáil——
Where did the surplus go?
——who took down that Government, which is what it deserved. The Opposition should not tell us what should or could have been done because when faced with the opportunity — not Senator Twomey because he was an Independent at that time——
Fianna Fáil has squandered our opportunity.
Nevertheless, nobody has achieved more in terms of delivering to the people of this country than Fianna Fáil in Government.
The Government squandered it.
Those are the facts.
I wholeheartedly support, on behalf of my Fianna Fáil colleagues — Senator Boyle of the Green Party will join us later — and the Progressive Democrats, the Minister, Deputy Cowen, in respect of a budget that has introduced a number of significant packages at the right time. We have faced a challenging international environment in recent times. When somebody sits down and sets out projections or a manifesto for an election, for example, they do it based on the best data available at that time. When circumstances change however, on this side of the House we change our minds. What does the Opposition do when circumstances change?
Is that a U-turn?
No, it is not a U-turn.
Senator MacSharry without interruption.
This budget contains increases across all the relevant headings at a time when growth is below what has been the trend of recent times. The Minister successfully managed to do that. He has got the balance right in terms of watching current expenditure while also ensuring, not through taxation but through moderate borrowing, that there will be continued progress in the capital programme. This will help to maintain momentum and employment and, above all, maintain and increase our attractiveness to foreign direct investment and ensure the growth of the regions and economic growth generally.
Having examined the package of reforms, I greatly welcome the measures for the most vulnerable and least well off in our society. They amount to €980 million. That is a difficult figure for a group of parties whose best innovation when the chips were down was VAT on shoes. It may have been a long time ago——
The Senator is stuck.
——but I remember it well. Thank God for democracy. Thank God the people have seen sense on a consistent basis and realise there is no substitute for experience and delivery, as has been evident from 1987 to now. Certainly, economic circumstances have changed nationally and internationally. Whether it is the result of genius or his experience in so many Departments——
I cannot cope with this.
——we have seen the Minister deliver a budget that looks after the most vulnerable in society while establishing an economic environment that will allow the economy to grow at sustainable levels. I welcome that.
There are very significant increases in the non-contributory pension.
What was the increase from the Senator's party in 1982?
That was a totally different environment.
What was it in 1993?
The Senator should stick with today.
We must deal with the facts. This is an extraordinary level of interruption, a Chathaoirligh. I was respectful and quiet as I listened to the Opposition spokesperson——
The Senator is not making sense.
——and I intend to be until the end of the debate.
When a Member is speaking I ask the other Members to listen.
This is a budget of investment in our future. It is about promoting and protecting the environment. It introduces measures which do not penalise people for supporting the environment but incentivises them to realise their responsibilities for the future. This planet is not just for us and the Fianna Fáil, Fine Gael and other parties of today but for our children and their children. In that context I welcome the package of reforms in VRT and the innovations in the BES scheme. These not only establish incentives in terms of carbons and vehicle taxation but also incentivise the business community by encouraging entrepreneurs to come up with measures and innovations that will help us to protect the environment from the many threats it faces.
The level of expenditure and investment in the capital programme is still unprecedented in historical terms. As a Member from the west, I welcome the fact that the first stage of the western rail corridor will be completed and I look forward to when, as is Government policy——
It will eventually get to Sligo.
——it reaches Sligo. Senator Healy Eames is aware of my commitment to that. With regard to taxation, we have again tried to ensure that people on the lowest incomes are either kept out of the tax net or pay the minimum amount of tax. This is most important and must be welcomed.
Approximately 80% of budget expenditure is in the areas of health, education and social welfare. To be able to do that in a far more challenging environment than has existed for the past ten years is a credit to the Minister, his officials and the Government. It would be ridiculous of the Opposition not to admit that, at least. As a practising auctioneer I welcome the changes in stamp duty. They have been carried out in an innovative and clever way to ensure the benefits reach those who most require attention, including first-time buyers and people at the lower end of the market. The average house price is €370,000; it is less in the regions. There is something in the changes for everybody. It was necessary to inject an element of confidence in the market. It is a statement that the indicators of this economy are still impressive in an international context, notwithstanding the international pressures. I welcome those changes and I hope they and the changes in tax relief for mortgages will help the housing market.
Given the nature of the debate, I do not have time to go through all the areas on which I wish to comment. This is a budget which, as a member of Fianna Fáil and a representative of the Government side of the House, I am proud to state has given priority to the most vulnerable in our society. That is welcome and is in the Fianna Fáil tradition. I am proud of that. In difficult circumstances it has ensured, through the capital programme and with moderate borrowing, that we can maintain momentum and create employment and economic growth. Above all, it has made a significant start in confronting the great challenges we face in protecting the environment. It combines a number of measures, which we must all buy into through our choices and the incentives offered in the budget, to contribute to the preservation of our environment.
With the permission of the House I will share time with Senator Norris.
I look forward to this debate each year. When I was at school I always wanted to be a school inspector or examiner, and I look forward to acting as the budget examiner and giving marks for it. Last year, I gave the budget a pass and used the term "could do better". What is the mark this year? This year's budget was dull and boring, with no surprises and little innovation. Thank God for that, because that is what was needed. We do not need dramatic changes.
This year there was a new challenge for the Government and Senator MacSharry has mentioned it. There is a new environment internationally and nationally. There was a danger of the Government slamming on the brakes and being afraid to borrow. On this occasion the Government chose sensible borrowing, and I will give it an acceptable mark for that. Competitiveness is the area that must be watched for the future. I am pleased that no steps were taken to damage that. I am particularly pleased with the investment in science, technology and research and development.
However, I am disappointed that no steps were taken to cut public expenditure, an area where we face a real challenge as Senator Twomey mentioned, particularly expenditure on pensions and salaries. I am concerned about that because it will damage our competitiveness in the future. What was done with regard to stamp duty and the construction industry was sensible. It is not dramatic but will encourage the housing and construction sectors. On that basis, it is at an acceptable level. What about business and investment? The steps taken, in small ways, for small and medium sized enterprises are acceptable and I would encourage them.
I was particularly pleased that there was no tinkering with foreign investment. We have had the confidence of foreign investors in Ireland for the past 20 years because we have been able to say, "This is what you get if you come here. We do not change direction mid way because of some other challenges outside." I am pleased this was the case today. From that point of view, I can give the budget reasonably high marks.
I applaud the Minister's commitment to deliver in full the national development plan because this should be a priority in our preparations for the future. Roads are important, as they always have been, and so are other types of transport. However, these are no longer the most important priority in getting Ireland ready for the future. As I have said here before, our number one priority should now be education. Education does get a look-in in the national development plan and it also features in the spending plans announced today, but not to anything like the required extent. If we are to prepare properly for the medium and long-term future we must invest a lot more in education. Investment in education is mentioned in the budget and it was talked about today, but not to the extent I would like.
When it came down to what sort of marks I would give this year, I decided to give honours. However, I am not going to give top marks because of insufficient investment in education and the unacceptable reduction in overall public expenditure. Had the Tánaiste attended to these areas he would have got top marks, but he has certainly received higher marks than in previous years. The Government cannot relax. The Minister is receiving honours, but only just.
I thank my colleague and friend, Senator Feargal Quinn, for allowing me time. I greatly enjoyed his schoolmasterly performance. I am sure the Tánaiste and Minister for Finance, Deputy Brian Cowen, will be greatly heartened to know he has received a better report than in previous years. I also agree with Senator Quinn that the atmosphere in the Dáil was a little dull. The Budget Statement did not seem to provoke anything like the outrage seen in previous years. There was a certain lack of atmosphere. With regard to the general content, despite the fact that it is dull, the balance has been got right. It seems the Government is now waking up to the fact that there has been considerable squandering of public money and a notable lack of accountability, particularly in capital projects such as roads. A lot of money has been wasted. However, I will not waste time, which is another precious resource, by listing the areas in which there was a lack of prudent management, good governance and oversight. We will revisit this area in the new year, as we traditionally do.
I have a sheaf of submissions made to all Senators from the Society of St. Vincent de Paul, the Disability Federation of Ireland and so on. I am glad there was some degree of concern shown in this area. Yesterday I was speaking at the graduation ceremony of Enable Ireland at the Microsoft plant, in which sophisticated machinery is produced which allows people who are disabled to re-enter the workplace, where they can play a significant economic role. This is a useful investment, because it costs many tens of thousands of euros, for example, to retire somebody owing to disability. For 80% of people with disabilities, theirs is an acquired disability such as spinal injury. That is very interesting. Almost 70% of those with disabilities remain unemployed. That is a huge figure compared with the equivalent in continental countries. Anything that allows people with disabilities to be productive members of society is to be welcomed.
I was sitting in the Gallery for the Budget Statement. I noted that there was general allocation of €2.7 billion for rail and bus services. There was no mention whatever of the metro, however, although the Luas was mentioned. I hope this is not a sinister prelude to a dilution of the metro programme. It is probably the most vital element of transport for this capital city and it affects everybody in the country because such a disproportionate number of people live here. I hope there will be a continued and firm commitment to this sensible development.
The environmental tax and VRT provisions are fine. However, the raising of motor tax for larger capacity vehicles is just grubbing around for a few extra pence. It has nothing whatever to do with the environment. The Minister may nod his head all he likes, but he will still be wrong. He is nodding again, but I will remove the nod. The only way to implement the polluter pays principle is to put a tax on petrol. I have a large car. It is a beautiful car which I bought for €5,000. I keep it in the garage and walk here almost every day. I used to cycle until it became too dangerous. How much pollution am I creating? A person in a Mini creates a lot more if he or she uses it all the time. A tax on petrol would affect the environment, but tax on large cars will not. This will affect poorer people.
The doubling of duty on cheques is a stingy measure. The Minister said he wants to use this to drive people to use automated systems and credit cards. However, elderly people and people who are a little bit thick, like me, use cheques. They do not want to use automated systems because they do not understand them.
It is a mean thing to raise the duty on cheques. It will not raise much money but will cause serious inconvenience. It will also hit small businesses. I do not see any virtue in it and it should be reconsidered.
The Senator is in his last minute.
I hope not of this life. What a frightful warning.
I meant the Senator was in the last minute of his speech.
I feel weak as a result of it. There is a section of the budget dealing with health. It is fine that all this money is being spent, but there should be an audit. What I am interested in is not how much money is being spent but whether it is being spent wisely.
Let me give an example to the Minister of State. I spoke to a person the other day who came to see me about an aspect of the health services. As a result of lobbying, a particular service was made available to the public. The first thing to happen was that four managers were appointed. There were to be three staff to deliver the service, but they were stuck because of the recruitment embargo. The delivery of this service has been sanctioned, the managers have been installed, but there is to be no service. The health system must be strenuously audited to prevent events such as this.
There was also mention of housing. I welcome that there will be a reduction in stamp duty in the lower end of the housing market. I also heard the Minister mention affordable housing. In his conclusion he mentioned a "challenging backdrop" and had a little checklist of features of the budget. These are all pretty good, and I agree with Senator Quinn that the budget meets the challenge. The checklist states that the budget "supports the incomes of the vulnerable". The Minister seems to have done something there. It also states: "It keeps taxes low for working people." As somebody with a reasonable amount of money, I cannot disagree that the less well-off should be more favoured. I will initial the report issued by the headmaster, Dr. Feargal Quinn, but I will say again that I want more horse sense in the small areas I have outlined.