For the past five years I have had the privilege of being an Opposition spokesperson responding to the speech of the Minister for Finance on budget day. It was a role I greatly enjoyed and I hope I performed it with the appropriate level of responsibility. I noted in several of those speeches the trend of recent budgets — the seven that had been produced by the previous Minister for Finance, former Deputy Charlie McCreevy, and the three produced up to today by the current Minister, Deputy Cowen. Analysis carried out by the Combat Poverty Agency showed that the first six of those budgets unashamedly favoured the better-off in our society, that the seventh was neutral, and that the three produced by Deputy Cowen showed a trend, which has continued into this year's budget, of favouring the less well-off at the expense of the better-off. The first principle in drawing up any budget is to achieve this. The Minister must be congratulated.
One of the reasons for our participation in Government is the idea of index-linking the tax system so that those on minimum wages are not caught within the tax net and those on average industrial wages are not in the higher tax band. I would like to see this achieved through legislation and being done automatically every year, but I am glad to see it has been done in this first budget of the new Administration.
The Minister needed to tick many boxes, the first being social equity, which he addressed well. The second box was that of getting the balance of future economic development right to ensure increases in public expenditure were controlled, the cost of living was met by all Departments' allocations as far as possible and surpassed where necessary, and capital expenditure on infrastructure addressed the gaps in our economy as soon as possible. The overall increase in spending is8.6%, comprising 8.2% in current expenditure and 12% in capital expenditure. The Minister described the ability to rely on improved and increased research and development as an engine for future economic prosperity, a sub-theme of the budget that will have a benefit in future.
My party is most concerned about environmental policy, in which we would like to see the most achieved. My party is a junior member of the Government and by no stretch of the imagination is this a green budget, but it is the greenest budget ever and has been influenced by the Green Party significantly. While people might look at the headline changes in tackling the growth in carbon emissions, those changes being in respect of VRT and motor tax, there are other aspects of the budget that show what the green imprint has achieved. The increases in expenditure in the Departments of the Environment, Heritage and Local Government and Communications, Energy and Natural Resources are above the average — 13% and 25%, respectively. Some of their subheads display how the Ministers are getting the funding for the policy areas in which they need to meet the programme for Government's core commitment of reducing carbon emissions by 3% per year. The budgets of the Environmental Protection Agency and the national parks and wildlife service have increased by 43% and30%, respectively. By any criteria, this budget has a green influence.
A plethora of smaller items litter today's budget, such as the exemption of bio-fuels from excise duties, the matter of changes to VRT instead of the tax system in respect of hybrid vehicles — a 50:50 split between electrical and fuel-based — and a complete VRT exemption for electrical vehicles. These measures are designed to give a choice.
Those who want to question the Green Party's commitment will discuss how motor taxation changes will hit motorists. The temporary changes in the current system of motor taxation will have effect from 1 February 2007 to 1 July 2008 and are the last throes of an old system. However, that system is one of local government's main sources of funding. If people want local government to be resourced properly, they must recognise it must be funded in this way.
The proposed increases — 11.5% for cars of more than 2.5 litres and 9.5% for cars under that size, which are good measurement criteria in terms of social justice — are not excessive when one takes into account that the rate of inflation since these taxes were last raised in 2004 has accumulated to 15%. People are paying proportionally less for motor tax than at the time of the previous increase.
An effort has been made not to endorse any of the scaremongering in the media in recent weeks. The proposal for a short-term change in motor taxation is sensible, sane and fair. The real changes with the greatest environmental and social effects will come into effect on 1 July 2008 when the VRT and motor taxation systems will merge into a carbon-based system. This will encourage people buying new vehicles to shop around for the most effective. A car labelling system will apply to every car, including imported second-hand cars. On this basis, consumers will be given every assistance in ensuring not only will their money be spent to the best effect with the State's assistance, they will be given the best choice in terms of helping the environment.
My colleague will address the Green Party's influence on the budget's important social aspects later in the debate. Several references by the Minister are the direct fulfilment of pledges in the programme for Government. The commission on taxation was negotiated by the Green Party and we welcome its establishment next year. We are delighted with the debate on how to achieve fair taxation. These comprise an important start.
The Minister referred to commitments to be honoured from next year onwards, including the doubling of the income threshold for health cards for children under six years of age and the trebling of the income threshold for people with an intellectual disability and who are under 18 years of age. These important social commitments were included in the programme for Government by the Green Party and we welcome that they are well on their way towards implementation.
Given prior constraints due to changes in the international economy, this is a good and fair budget that shows the direction in which the Government will go for the next four years. I am happy to endorse the budget and congratulate the Minister on the balance he has achieved. I look forward to the provisions being added to by future budgets.
