Amendment No. 64 is consequential on amendment No. 65, amendment No. 67 is related and amendment No. 66 is consequential on amendment No. 67. With the agreement of the committee these amendments will be taken together. Is that agreed? Agreed.
SECTION 54.
Chairman
I move amendment No. 64:
In page 77, subsection (1), line 25, to delete "Inishmore, and" and substitute "Inishmore,".
The Minister of State at the Department of the Taoiseach, Deputy Carey, who has responsibility for the islands, proposed to enhance the sustainability of economic life for the population of those islands. The original list was incomplete and additional islands, which are inhabited for 12 months of the year, were brought to the attention of the Department. It was an oversight on the part of those with direct responsibility for the islands. This is not to be construed as an extension of the seaside resorts scheme. It is an administrative correction.
I welcome amendment No. 67 which adds Coney Island to the list of islands which are designated for tax advantages under the Bill. This derives from the very welcome and overdue report on island development, which has many major advantages for the islands. However, I was completely dismayed to discover that Coney Island was absent from the report and had vanished from the map and the list of designated islands. Coney Island is not a collection of crags or rocks which appear at low tide, it is a very substantial land mass measuring two miles by one mile. Its population numbered over 100 at the turn of the century but has sadly decreased in the interim.
How many families live there?
Two.
What about Lambay Island?
I will deal with it in a moment. There are two households on Coney Island at present, with a population of around 30 during the summer months. If Deputy McDowell would like to visit the island I can inform him that it has its own public house. I was dismayed to discover that the Coney Island was excluded despite the fact that it fulfilled the necessary criteria. It is inhabited, there is no direct access by way of bridge, causeway or linkage to the mainland and, unlike Lambay Island, it is not privately owned.
All these things quite clearly were there but it has totally disappeared. A map on the report shows no sign of the island in the bay. One might as well have looked for Hybreasal as look for Coney Island in this report.
The man from Atlantis.
However, the Minister is now making amends——
Will we designate Hybreasal too?
——by adding this to the list of designated islands. That is wise of the Minister because Coney Island has a habit of getting back at people who do not treat it well. One of the first recorded witnesses to that fact is St. Patrick. He was not liked by the islanders who did not agree with what he was doing, so his hostess, instead of serving him a rabbit for dinner which was the custom at the time, served him a cooked cat. I do not know what it did for his digestion but it broke his tooth. If the members of the committee do not believe me they need only call to the National Museum and look up the Christian artefacts where they will see, in an ornate casket, the tooth St. Patrick lost on Coney Island.
The Deputy is not going to claim that for relief as well.
The Minister has done his job for Coney Island so he can dine out in comfort in Sligo without bringing his dentist or orthodontist.
Chairman
This sounds more like the Estimates for the Department of Arts, Culture and the Gaeltacht.
We are all conscious of the cultural, historic and linguistic contribution the islands have made to this country and have a romantic attachment to them but now we are doing something practical. The Minister of State, Deputy Carey, has provided money for access routes and now the Minister for Finance is introducing important concessions in regard to residential property. Perhaps the Minister will elaborate on the question of a renting lease for a one year period. Does that involve continuous residence for a period of 12 months or does it mean taking out a lease for 12 months? Perhaps he will also elaborate on some of the other provisions.
I welcome this important provision which will have a beneficial impact on the islands. I am delighted that Coney Island in Sligo Bay is included.
What were the tally returns for Coney Island in the general election?
Chairman
The Progressive Democrats got one vote.
Will the Minister indicate the population of taxpayers on this island?
I was surprised when this was published, particularly after the Social Welfare Bill. What will this do for islanders? Very little. Were options put to the islanders? What problem are we trying to address and is this the most effective way to address it? Is the proposal open to abuse and will the Minister have to come to the House next year with provisions to tighten it?
The Minister obviously has money to spend on islands. I am aware of the proposal made by Comhdháil Oileáin na hÉireann — I debated it with them 18 months ago — that tax exemptions be given to islanders. People see parts of the country being given perks by the Government — for example, urban Dublin is given one scheme and seaside resorts are given something similar — so everybody wants the same perk. That is how schemes are extended. However, sometimes we do not think about what we are trying to do, who we are trying to help and the effect of what we do.
Let us look at the problem the Minister is trying to address. There is a perception that there is a difficulty for islanders or for people who wish to reside permanently on islands in acquiring houses in which to live. I presume that is the problem the Minister is trying to address. If we are talking about islanders, most of them have access to family lands. On the other hand, most of them do not have the opportunity to earn a taxable income or do not have taxable incomes whereby they will be in a position to avail of tax breaks. They need an increase in the basic Department of the Environment, in non-Gaeltacht areas, and Department of the Gaeltacht grants. That is the simple way of dealing with their problem and it would ensure that bona fide permanent residents on islands will get the breaks.
If we are talking about developing the business of renting houses on islands, we surely want the islanders to be the main beneficiaries. On the islands some islanders moved into newer houses up to 20 years ago and still own semi-derelict houses, some of which were converted into stables and so forth. It would be ideal if these houses were reconverted to dwelling houses but most of the owners of these properties are in the social welfare system, through receipt of unemployment assistance and so forth, as opposed to being in the tax net.
Now let us look at what the Minister will do. I am Mr. Mobile Cash, living in Dublin 4. I can now go to the islands, buy up property, build houses and rent them on one year leases to anybody willing to take them. They might include another man from Dublin 4 who wants a holiday home. I will get a tax break because I am well off. Compare Mr. Mobile Cash to the islander who is a good carpenter or tradesman. He cannot get out of the social welfare net because his opportunities of earning a living are limited to part-time fishing, part-time farming and providing bed and breakfast accommodation in the summer.
What happens to the islander? He improves his house with his own labour and materials purchased by himself. Then the Minister for Social Welfare announces that even though the islander earned only £2,000 from renting that house for 12 months or for the summer, the capital value of the property must be taken into account, making no deduction for the amount of time, effort or materials put into it and reducing his social welfare pound for pound for the capital value. If the valuation office in Dublin say that the house is worth £30,000 what will the Department of Social Welfare do? It will calculate that it is £3,000 benefit to the islander and irrespective of what he is earning — he might only be earning £1,5000 — reduce his dole or pension by the appropriate rate. In the case of unemployment assistance, that would be approximately £3,000, give or take a few pennies.
It is obvious that there was no consultation about the proposal which is surprising given the Minister's background in town planning, between the Minister and his officials and the planning authorities, at least in my county. Deputy McCormack and I are members of Galway County Council. In the new draft plan we propose facilitating the refurbishment of derelict buildings. However, on Inishbofin and the Aran Islands there is a total ban, in areas designated as outstanding scenic amenity areas, on the building of speculative housing. The only people who will be granted planning permission, and the rules have been somewhat relaxed, for new houses on the islands are people who are already living permanently on the islands, people who want to build a second family dwelling, returning emigrants and people whose dwelling is so rundown that they need a new house.
There is a contradiction in this provision. There is a tax break to build houses to be put on the market for rent yet the county councils are doing their best to stop such speculation on the islands because they fear there will be a Manhattan of houses leased for 12 months of the year which are owned by people who see the islands as a nice place to visit and leave at their convenience. I stand to be corrected on this but I do not see any firm residency proposal here; one must have a 12 month lease. The Bill does not say one has to reside in the house all the time. Many of the people who come to the Aran Islands, Inishbofin and Connemara have no problem buying houses outright for full residential purposes.
In rural Ireland there is a big difference between the Gaeltacht and other areas. To obtain the Gaeltacht grant there is no floor area requirement. In other areas there is such a requirement. Those of us who live in rural Ireland see the floor area requirement under the Department of the Environment grant as farcical. When people build houses they cannot do the sensible thing of keeping the roof two blocks up and putting in two velux windows because the Department will say they are ineligible for grants because they are exceeding the floor area.
Chairman
Deputy, your point is good but could you be more brief?
This is specific to the whole proposal.
Does the Deputy want this section to be part of the Bill?
There are more people living permanently on Inishtravin, Omey Island and Inishbarracháin than on Coney Island. Perhaps the people on those islands do not want this. If money is being provided for the islands, it should not be on a take it or leave it basis, because if people are not given a choice they will take what is on offer. Given the complications of this proposal, does it deal with the problems we are trying to solve? Is it fair to the islanders that their opportunities for development are curtailed under the social welfare code? They may prefer a break under this code, or increased housing grants, rather than this proposal. The Minister should consult with them in an open way. What is intended by this proposal for the best reasons in the world is not the best way to solve what may or may not be a major problem on the islands.
I welcome this measure. It has generated an extraordinary amount of interest among people who are interested in islands, want to live on them or are living on them. I watched a television programme the other night about the leaving of the Blasket Islands. Politicians and Governments have ignored the plight of the islands for many years and this is one of the reasons we have so many uninhabited islands along our coast.
At long last the Government has taken this issue in hand and has published a discussion document. I greatly welcome the initiative taken by the Minister, which will bring investment to Ireland. Four islands off the coast of Donegal have been designated. These include Tory Island, where great things are happening at the moment. Two or three years ago a returned emigrant built a fine hotel on the island but he received no concession of any kind. If this measure comes into operation it would provide an incentive for him to build an even bigger hotel. The hotel he built has 14 bedrooms but it is too small and he must expand. If this will help him to make a further investment, I would welcome it.
Unfortunately, Gola Island, near where I live, has not been designated. There is direct access from Bunbeg to the island. About 20 or 25 years ago Gola was inhabited and it had a two teacher school, of which Deputy Coughlan's father was principal. Some years ago Deputy Nealon made a television programme about the leaving of the island.
I am glad to report that in recent years people have gone back to Gola. The Department of Arts, Culture and the Gaeltacht has sanctioned a number of grants to the families of islanders who left 25 years ago and who are now returning. One or two grants have already been paid and two or three are in the pipeline. Gola has been approved for Leader grants and grants have been sanctioned for a café and a shop on the island.
Is there direct access to the island?
No, there is only access by boat from Bunbeg. This takes about 20 minutes. This year we are celebrating the 80th anniversary of the Easter Rising of 1916. The two navigators on the Asgard were from Gola — Charles Duggan and Patrick McGinley. Two years ago the present day Asgardwent to Gola and a plaque was unveiled in their memory. The Department of Arts, Culture and the Gaeltacht has sanctioned grants to repair the island’s pier. Four households on the island have been given census forms for next Sunday night. I appeal to the Minister to incorporate Gola island as a designated island.
I welcome the initiative of the Minister of State with responsibility for the islands, Deputy Carey, in publishing this proposal on island development. It is significant that this important committee is discussing islands and is serious about doing something for them. Deputy Ó Cuív, who also represents a number of islands, asked what are we trying to do for islands. In case anybody gets the wrong impression from the committee's official report, it must be said that we are doing a great deal for islands. We have done more for them over the last two years than was done over the previous 20 years.
Deputy Ó Cuív and I have the privilege of representing Boffin Island. Over the last two years we have allocated £75,000 for coastal erosion on that island. We allocated about £40,000 for a community centre and substantial money has been allocated for roads there. I never received a vote there — I may do so in the next election — so I am not making these points in a political sense; I am only putting on record what we have done for islands. Last week I visited the Aran islands with the Taoiseach and the Minister of State, Deputy Carey, and we announced the provision of a mains electricity supply. The Government has woken up to the fact that we have islands off our coast and we are doing substantial good work for them.
I have no fear of this proposal from the point of view of islands within the jurisdiction of Galway County Council. As Deputy Ó Cuív rightly pointed out, controls on buildings on islands will be a matter for the county development plan. The type of development which can take place on islands is within the control of the county council. I was instrumental, with support from Deputy Ó Cuív, in getting a clause inserted in our new draft development plan whereby landowners will be allowed develop holiday type houses of which they must retain ownership for a number of years. This will encourage that type of development. I support Deputy Ó Cuív on one point and I would ask the Minister to liaise with the Department of Social Welfare on the danger of that type of an initiative by an islander affecting his social welfare.
Of course it does.
Deputy Ó Cuív should not panic. When the REP scheme was introduced in Connemara to suit the farmers, I was delighted to get a concession in the budget whereby the first £2,000 income from the REP scheme no longer affects anybody's social welfare entitlements. Those things can be done if we have the will to do them. It is quite clear that this Minister and the Government have the will to solve the problems of our west coast islands. I fully support their efforts.
I will be in touch with the Minister about not affecting social welfare payments when those island people have the initiative to build a holiday home on their own holdings. I am sure I will be treated with the same respect as when I made representations about the REP scheme not affecting social welfare.
Chairman
I have allowed a great deal of latitude on that point.
It is a very interesting subject.
Chairman
It is and I am sure it will sound very well on the local radio station, but we have given enough time to it now. We will not get as much latitude on succeeding sections. I will not be calling anyone apart from the Minister to reply.
I have met people who represented the islands. I have been on Clare Island on a number of occasions and have pleasant memories of my visit there. There is a need to do something for the islands. Various groups have been put together over the years and Governments and parties have paid lip service to them. Anything that would enhance the position of people living on islands is to be welcomed.
Deputy Ó Cuív goes to the kernel of the point and he recognises that the Government has good intentions in bringing in this particular relief. However, the Deputy has raised pertinent points as to what it might do and whether it will have the desired effect. We do not want to give tax breaks for people living there with high disposable incomes.
As regards the earlier point concerning capital gains tax, I was informed that one of my amendments was not being allowed because it would involve a charge on the Exchequer, even though that is the opposite of what it was intended to do. Numerous tax breaks are available to high income tax payers many of whom boast that they have eliminated their total tax bill through BES, urban renewal and other relief schemes. My amendment No. 100 would set a limit. People who boast about those things create terrible problems in society because ordinary employed persons who pay their PAYE get quite mad when they hear about this.
This is a tax break which will allow people to offset the cost of refurbishment against all rental income. While the Government and the Minister want to do something for the islands, many good points have been made by Deputy Ó Cuív which will have to be taken into account. Everyone knows what the intention is but this may not be the best method of doing it.
The list and schedule of islands was submitted to the Department of Finance by the Minister of State, Deputy Carey. I heard what Deputy McGinley said about Gola Island. The comparison and the analogy are similar with regard to urban designation. Whereas the Department of Finance has responsibility for whatever tax regime is put in place, the drawing of the boundaries and selecting towns for urban designation is primarily a function of the Department of the Environment. The Department of Finance had no say or involvement in that categorisation or in the boundary determination which was properly a matter for the Department of the Environment. Therefore, to be consistent with that approach, that route would be appropriate for Deputy McGinley and others who wish to have references to other islands like Omey Island. Omey Island, however, is connected to the mainland.
It is not.
You can drive across when the tide is out. That matter should be raised with the Minister of State, Deputy Carey.
Chairman
With a view to a possible amendment on Report Stage?
A fairly clear criterion was set down in relation to islands that qualify regarding habitation and residence. Logic would suggest that Gola Island should be included, if Deputies can satisfy Deputy Carey whose office should be the first port of call.
With respect to Deputy Ó Cuív's substantial observations I would hate to think that, as a Dublin 4 exile himself who defected to the west——
I am not a rich one.
He is not exactly impoverished. His family would not go down that road.
His mother made him rich.
One could not be rich with the costs we incur in trying to service constituents in our part of the country.
Dublin goes down as far as Ringsend.
I know. I am talking about the constituents that Deputy McDowell mentioned earlier in connection with capital gains tax, as opposed to Dublin 4 constituents.
As a native of Dublin 4, some residual affection for the town that reared him should at least be resonant in the Deputy's voice.
I have great affection for it.
The whole area he describes and the problems associated with it, as well as the interaction with the social welfare system, are pertinent. However, we are on the Committee Stage of the Finance Bill and there is a limit to what we can do within the finance provisions.
We responded to a request from the council for the islands and from the Minister of State with responsibility for western development who now has a budget of approximately £1 million. However, as a society we are trying to move away from the grant culture.
Tax breaks are not grants.
I accept that point, but it is a partial solution to a complex problem. I heard what the Deputy said in relation to others but we will have to see. His experience is related to a number of islands, although not the entire community of islands around the coast.
I beg your pardon, there are very few islands that I have not been on. I have been on Rathlin Island, Tory Island, Inishbofin, the Aran Islands and Oileán Cléire. I am in contact with the islanders and the comhdháil all the time. I have had the same argument with them about this issue, and major figures in the comhdháil support me. One of the interesting things is——
All this is done at the request of the comhdháil organisation.
Yes, but in my view that does not matter. Just because somebody says something to me — be they the comhdháil or anybody else — I do not take that view as necessarily being a mature reflective one if I cannot in my own intelligence reconcile it with——
What does the Deputy do, look into his own heart?
Exactly. That is what I am elected to do. The island people are told to take what the State gives them or they will get nothing. That has always been the policy.
This is done at the request of the organisation representing the islands. It is in the book.
Chairman
Deputy Ó Cuív, without interruption.
From the first time I heard the proposal I have argued this. I have no doubt that ordinary people on the four major islands of County Galway — which represent 50 per cent of the island population of this State — will see this as being negative rather than positive for their interests because of the way it is being done.
If we are talking about getting votes and being elected the Minister should get on with the job quickly because this will breed huge resentment amongst my constituents on the islands. They will say that, once again, the Government has cleverly skipped over the social welfare factor and when that has been quietly put to bed so that there can be no options, despite what Deputy McCormack said, we come to the Finance Bill. We will be given something and told this is the only way help can be given; we must either take it or leave it. Nobody will leave it. This is the opposite of everything in the Minister's nature regarding planning and sustainability, so I ask him between now and Report Stage to seriously consider in a non-political way the possible effects of this, whom it will help and whether it will achieve the results he wants it to achieve. Nobody has given a longer commitment to the islands than I have. Much has been done for islanders but much more needs to be done. Problems I have been highlighting for years have not been addressed and we will continue to fight about those. I know enough about how people actually operate as opposed to how people who devise schemes think they should operate to know that this would have a negative rather than a positive effect on the islands.
The Minister is familiar with another part of Connemara, where there is a huge drive which makes it very attractive for people to sell pieces of their property, their potential wealth, for short-term gains. As far as sustainability is concerned, that is cutting off your nose to spite your face. I have always argued that sustainability needs to be sustainable. The means of making money must remain within the permanent island community. It has been rightly pointed out that I come from Dublin 4. I have no objection to people coming in from outside. Turlach de Blacún on Inis Meáin is a perfect example. He came from Dublin like myself but he made a permanent, enduring commitment on an island to the creation of employment and so on. That is fine, nobody has any problem with that.
Chairman
I have allowed a great deal of latitude and I cannot allow repeated Second Stage speeches. Please come to your conclusion quickly.
At least I have kept to the substance of what is here and have not listed all the achievements of Fianna Fáil on the islands back to 1932.
What were they?
Electricity, water, transport access and piers, to name a few. I suggest that the Minister look at the options for creating more permanent dwellings and encourage more people to live permanently on the islands. Go back to the comhdháil with a full menu of the options before this provision is enacted into law. This will have the opposite effect to that which the Minister hopes to achieve, particularly as the specific issue has not been addressed. A 12-month lease or ownership is not equivalent to 12 months' residency.
There is a lot of merit in the scheme. Our county development plan has catered for eliminating the dangers that Deputy Ó Cuív sees in the scheme. We have done that simply by eliminating a clause in the previous plan introduced by one of the Deputy's own councillors which allowed all types of tourist housing development in Connemara and ruined several areas. We have deleted that from the plan and we have inserted a provision that will control the type of housing to the benefit of the local people. We must examine the issue of local initiative not affecting social welfare benefits that people would normally be entitled to. If we can get other Departments to look at that issue we can develop this scheme for the benefit of the people living on the islands.
Chairman
I am now concluding this debate.
I have heard clearly what the Deputies have said, particularly the last points reiterated by Deputy Ó Cuív. We can consider an amendment that would require for the benefit to be triggered off, that the person leasing the building would have to live in it for 12 months. People may wish to consider that. The origin of this is very clear. I know Deputy Ó Cuív does not agree with the conclusions of the majority of the council for the islands but it is driven by that. It is a limited attempt, through the mechanism of the Finance Bill and through the use of a tax mechanism to enhance and encourage permanent residence on the islands because permanent residence has been declining. That is what it sets out to do — no more, no less. It does not attempt to provide an entire solution to island problems. The people who formed the council suggested that this was one of the things they wanted done.
Leaving out what they said, how will it do it?
Through the system as worked out there which has worked elsewhere.
Chairman
It is open to be considered on Report Stage. I have given extraordinary latitude to this section and we have many more sections to discuss. We have been very fair about it and I will put the question now.
I am not an expert in the area but I commend Deputy Ó Cuív for bringing this before the committee. He knows what his constituents do and generally pursues their interests on their behalf. It is a very brave thing to take on something in a Finance Bill which probably would be perceived as being of great benefit to islanders. On those grounds alone, as I have disagreed with Deputy Ó Cuív on many occasions in my own party on many issues, I should be on the record commending him for doing this.
He has brought effects of this section to my attention which have to be considered. I do not know if the Minister will have enough time between now and next week to consider them but Deputy Ó Cuív has brought forward arguments which, when he has explained them, are very hard to counter. That is to be commended because it is a brave stance to take.
If between now and Report Stage the comhdháil comes back with alternative suggestions, is the Minister willing to consider them seriously?
If the council comes back to the Minister of State, Deputy Carey, and if the Minister of State, who has delegated responsibility for this area, supports what it proposes, and if we are talking about measures that can be properly incorporated within a Finance Bill, not grants or something else, then I am not opposed to that. However, I have to say the logistics of all of that and the constraints between now and Report Stage are so tight, as Deputy McCreevy will be able to tell you, that I would be misleading you if I were to indicate that we could probably do something. There is a 90 per cent chance that we can do nothing at all between now and next week.
In respect of planning, Deputy Ó Cuív and Deputy McCormack in the first instance as members of Galway County Council will decide whether the Aran Islands become Manhattan or not for planning purposes, not the Department of Finance and the Revenue Commissioners.
Amendment agreed to.
I move amendment No. 65:
In page 77, subsection (1), between lines 25 and 26, to insert the following:
"(d) in the administrative county of Limerick, the island of Foynes,".
Amendment agreed to.
I move amendment No. 66:
In page 77, subsection (1), line 28, to delete "Inishturk; " and substitute "Inishturk, and".
Amendment agreed to.
I move amendment No. 67:
In page 77, subsection (1), between line 28 and 29, to insert the following:
"(e) in the administrative county of Sligo, the island of Coney;".
Amendment agreed to.
Question proposed: "That section 54, as amended, stand part of the Bill".
I did not know that there is an island of Foynes. Is there anyone on it?
There are two people on it.
There are two people on Coney?
Yes.
We are getting down to a micro approach to Finance Bills. Some time in the future Deputy McDowell and I might have a proposal to benefit some two people in County Kildare and I am sure it will be considered.
There is an inhabited island off the east coast of Ireland, Lambay Island, owned by Lord Revelstoke and his family. I do not know why they should not get a few shillings too.
Has a general election been announced only from Galway West, Limerick East and Sligo? Are elections taking place there about which we know nothing?
Chairman
Hold on a second.
I suggest they not use the term "Island of Coney" for Coney Island next time because next you will be talking about "Island of Mutton" for Mutton Island.
Question put and agreed to.
Sections 55 to 59, inclusive, agreed to.
NEW SECTION.
I move amendment No. 68:
In page 92, before section 60, but in Part I, to insert the following new section:
"60.—The Third Schedule to the Finance Act, 1995, is hereby amended by the addition of the following to the list of qualifying resort areas:
‘The Town, Hinterland and Foreshore of Balbriggan.'.".
This proposal was put forward by my colleague from the constituency of Dublin North, Deputy Ray Burke——
This is not an island.
——this is not an island — who made a big case that the town of Balbriggan, County Dublin, should be designated as a resort area for the purposes of the scheme and he has not changed his view. I note that the Minister has not made any provision this year for more areas to be brought into the seaside resort scheme but Deputy Burke was of the view, both last year and this year, that Balbriggan was a traditional seaside resort and should be included.
There was more basis for including Balbriggan in the scheme than some of the places brought forward by the Minister last year. I said yesterday I would not name towns but I would not have included some of them. As Balbriggan was definitely a traditional seaside resort town, I am asked to move the amendment on those grounds.
No, for all the reasons that I argued last year and in the interests of brevity, having absorbed a certain amount of time on islands. I can elaborate more comprehensively——
No. It is all right.
I just want to say that this is a slap in the face for the riviera of North Dublin.
Chairman
The committee will suspend discussion on amendment No. 68 to deal with amendment No. 69.
NEW SECTION.
I move amendment No. 69:
In page 92, before section 60, but in Part I, to insert the following new section:
"Chapter VII
Income Tax, Corporation Tax, Capital Acquisitions Tax: Reliefs in Respect of Part-Time Third Level Education Fees
60.-(1) A person shall be entitled to deduct from his taxable income such sum as he has incurred in payment of fees in respect of part-time third level education.
(2) A company shall be entitled to deduct from its taxable income such sum as it has paid to its employees to defray the fees incurred by them in respect of part-time third level education.
(3) No such payment as aforesaid by a company shall be treated as a gift for tax purposes.".
The Government decided last year that people would not have to pay third level fees, a decision which resulted in a considerable amount of discussion. There were various social and economic grounds in favour and against it and the measure was debated inside and outside the House. That debate is now over. In that same Finance Act the Minister gave tax concessions for people who would be paying fees to other third level colleges which must also be welcomed.
However, for some reason fees paid by part-time were not allowed as a deduction against income tax. There has been considerable lobbying by people in that sphere of life which is a growing segment of the education market. These are people who work in jobs which often do not pay well and have decided to undertake a degree course at night, for example, to better their employment prospects and themselves. They must provide for their fees from their after-tax income. They would probably not have been in the position to attend a third level college so they are paying effectively for the broad body of tax-payers who will benefit from not having to pay third level education fees. On all socio-economic and equity grounds they certainly deserve a tax deduction for the third level fees they pay. I do not know the cost of this provision but the pay-off in the longer-term to the economy must be on the positive side.
I think the Minister would recognise there is an argument to grant a tax break here on the grounds of equity to level the playing pitch with regard to third level education establishments. Perhaps the Minister will accede to my request.
Chairman
Looking at the amendment, I wonder how this one, which will surely involve a charge on the Exchequer, got through.
I do not understand that.
Chairman
I think it was an oversight. Deputy Burke, we are dealing with amendment No. 69, which is the second of two amendments which propose the insertion of new sections before section 60. Therefore, I will allow you to speak on amendment No. 68, which had been disposed of and which related to Balbriggan, County Dublin.
I appreciate your consideration. Amendment No. 68 is one which I put forward this time last year when we discussed the extension of the schedule of towns to be included in the urban renewal relief for tourism towns. I put forward the town of Balbriggan as an ideal location which would benefit from designation. Despite the fact that we pressed the amendment to a vote last year, the Minister refused to accept it but returned on Report Stage to include a list of other areas, some not too far from Balbriggan in counties Louth and Meath and elsewhere, which coincidentally seem to have some link with Members from his political party. I do not criticise him in any way for that; it is his prerogative. I asked then and I ask now that Balbriggan be included in the list of designated towns for urban renewal under the tourism scheme despite the fact that the Minister's amendments to the tourism scheme this year have watered down the benefit of that designation although it has been in operation for only nine months. However, I believe the scheme would benefit Balbriggan, even in its watered down version, as it is the most northerly town in Fingal, County Dublin. It has a fine industrial tradition and a history of involvement in the hosiery and textile industries, industries which unfortunately are now more prevalent in south-east Asia than in north County Dublin. The town has suffered dreadfully from the problems of unemployment and a lack of investment but there has been some welcome investment in recent years by Sonopress Ireland which we hope to see extended. Balbriggan also suffers from through-traffic that is, heavy traffic going through the town although, admittedly, the main motorway is coming and there will be an inner bypass.
The town has unique tourism assets, the rail line and good beaches. The number of bed and breakfast premises has increased from about five to about 200 to 300 in the Balbriggan-Skerries hinterland in the past few years. The town has geared itself psychologically to tourism development. It has some of the finest hostelries one could hope to find anywhere — I am a witness to the comfort of many of them and I would like to see them expanded further. The town has an old hotel in need of renovation and upgrading.
The chamber of commerce, the town commissioners, business interests and the community prepared a plan recently which is geared to tourism development and considers tourism central to the town's future. It needs the psychological lift of urban renewal status under the tourism scheme. I urge the Minister to extend the qualifying resort status for urban renewal to Balbriggan. The Minister should accept the proposal for the reasons I have given — the main reasons being unemployment in the town and the willingness of people to help themselves. They need the lift of designation as a qualifying resort.
The Deputy has made a compelling case for the extension of urban renewal status to Balbriggan. In the absence of the Minister for Tourism and Trade, who initiated the idea of the seaside resort rejuvenation package, I would point out that there is a conflict between the two schemes. The seaside resorts scheme was confined originally to seven west and south coast towns which previously had developed a trade and a sub-economy around domestic tourism, which in time had been bypassed by a decline in the quality of the product and an increase in affluence which caused a shift in the market. The focus of the seaside resorts scheme was to reinforce the tourism infrastructure of those towns.
I do not disagree with what Deputy Ray Burke has said about the needs of Balbriggan because my party colleague, Deputy Seán Ryan, made a similar plea. However, it is a matter for Fingal County Council to make the case to have Balbriggan included in urban renewal scheme to the Department of the Environment. Some benefits which will come from the improved infrastructure — an infrastructure to which Deputy Ray Burke made a significant contribution. Hopefully, the Balbriggan by-pass and the extension of the motorway will improve the overall development of Balbriggan.
I respect Deputy Ray Burke too well not to give him a straight answer and I cannot see my way to extend the seaside resort status to Balbriggan when the case he has made is for urban renewal designation. The case could be more effectively made in the first instance if Fingal County Council were prepared to vigorously promote it to the Department of the Environment. In turn that application would come to the Department of Finance.
I am disappointed the Minister takes this view on the tourism potential of Balbriggan and the need for the seaside resort designation as a first step towards it regeneration. There is a hotel in the town which needs renewal and many areas of the town would benefit from the designation. The issue of urban renewal status is separate. The issue here is the ability of the Government to give tourism and job potential in Balbriggan a lift.
I am disappointed with the Minister's approach. I acknowledge his recognition of my efforts in the area but he is failing on this issue. I make a point of this matter because it is of such importance.
I understand the Deputy's commitment to the issue. The Department has received applications from 50 additional locations for inclusion in the scheme to the extent that we would have inland seaside resorts.
Chairman
Sun City.
Places known for their tourism potential, such as Knock, have requested this status. Set against the background of the available capital for it——
I am making a case for a seaside resort which has a rail line running along the beaches.
If I give in to one more we will end up with a watered down scheme.
I went to school just outside Balbriggan for a number of years, in Gormanstown, and I have fond memories of Balbriggan. I suppose I did a lot of things I should not have been doing — if only my mother had known about it. Perhaps on those grounds alone the Minister could make an exception.
No. I will be as consistent as the Deputy would wish me to be.
I wish to press the amendment.
Chairman
I am putting the question, "That the new section be there inserted".
Question put.
Chairman
I think the question is lost. Would the Members wishing to have their dissent from this decision recorded in the official report of the proceedings of the committee please raise their hands?
Deputies Ray Burke, Cullen and McCreevy dissented.
Amendment declared lost.
Chairman
We will resume the discussion of amendment No. 68.
Debate resumed on the following amendment:
68. In page 92, before section 60, but in Part I, to insert the following new section:
60. The Third Schedule to the Finance Act, 1995, is hereby amended by the addition of the following to the list of qualifying resort areas:
The Town, Hinterland and Foreshore of Balbriggan. . .
—(Deputy McCreevy).
Will the Minister explain why students who go to universities have their tuition fees paid in full but students who do a university degree in a private college, such as Portobello College or Griffith College, get no assistance unless the person paying the fees has a taxable income? What is the rationale for distinguishing between different institutions furnishing students with the facilities to study for third level degrees recognised by the Higher Education Authority?
We do not propose to accept the amendment because of the additional cost it would entail.
How much would it cost?
What would it be?
Approximately £2 million at the standard rate. The introduction of free fees for third level education attracted much support and much controversy. To come to Deputy McDowell's question, we concentrated initially on the State system because the private system is a recent phenomenon and the accreditation of its courses with the Department of Education is still being regularised and finalised. It is not an area in which I am an expert and therefore I speak in general terms, subject to confirmation. The principle is that access to third level education — irrespective of whether the supplier is the State, a private body or a combination of the two — should be free, provided that the courses are accredited by the relevant body. Otherwise institutions could set up courses and charge a fee which the State would pay; Deputies can readily construct the scenario.
To be consistent, the principle must be applied to everyone and given the demographic bulge in the academic cohort coming through the system, there is a case for facilitating and encouraging bona fide suppliers of third level courses in the private sector to come into the system. From a purely financial point of view, as distinct from other arguments about diversity, pluralism, etc., there is a case for ensuring additional demand is met by additional supply from that sector, rather than the expensive and costly provision of a third level institution established and constructed to meet a demand which may last no longer than ten to 15 years but whose first and foremost instinct will be to ensure its survival for 100 years. That is the view from the besieged battlements of the Department of Finance and not necessarily one that would be shared by professional educators, who would see themselves as extending their own system. Pluralism with regard to diversity of supply in the education system is of itself a good thing. I therefore have no principled argument against it, provided the general safeguards are put in place — I do not think Deputy McDowell would disagree with that.
With regard to the amendment, I am informed that part-time students, night students or students who are working and studying at the same time were not eligible for grants in the old days, because the presumption was that they chose to study and were working and self-supporting. In many cases the employer, if he contributes in full or in part for the cost of the fees, can recoup that cost against tax if the course engaged in by the student employee is related in overall terms to the activity of the company.
I cannot accept the logic of what the Minister is saying in not accepting the amendment, because it does not add up. I was lobbied by a number of colleagues and various institutions on the grounds that third level students should qualify for grants but I resisted that argument because I do not believe that should be the case. However, on equity grounds, they should have a tax reduction with respect to the level of fees they pay. The Government has now made a decision, for whatever reason, a decision that will be discussed for years to come whether it was good or bad in socio-economic terms. Some say that at this point in our economic development, the money it will cost the State could be better spent in other parts of the educational system.
The same argument could be made about the late Donogh O'Malley's initiative.
The same argument was made. However, at this stage of our economic cycle there are problems in our education sphere and the decision of the Minister for Education on third level fees was justified in present circumstances. That being said, the people who will pay for it are the general body of taxpayers, including part time third level students with jobs, who are really full time students in the sense that any college course now requires full time attention. In all justice, the fees they pay should be allowed as a tax deduction against their income. The tax they pay currently funds the great level of service we have in the education sphere and will partly fund the decision of the Minister for Education. I accept the arguments from my colleague, Deputy Martin — who put the matter forcefully to me — and other Members of my party that the minimum which should be given to these people is a tax break. We should encourage those who have the guts to work and take on another demanding activity at night — some of these people are also married. For those who have a compelling reason to do a course to better themselves and who fund it themselves, the minimum which should be done is to provide a tax relief in respect of the fees at a standard rate. I presume the £2 million the Minister says it will cost has been calculated at the standard rate.
I will return to this on Report Stage. If a person leaves second level school and for a variety of reasons, mainly socio-economic reasons gets a job, and decides to better himself or herself and takes a part time course, but because the course is not related to the employer's trade and so does not qualify for tax benefit and is unable to get his or her employer to fund it, there appears to me to be a compelling case in equity and justice to encourage that person, so in principle I am prepared to look at that.
The Minister is getting solid support.
Chairman
He is getting advice.
As always, anyone in my position gets excellent advice from the Department of Finance but ultimately I take responsibility for the decisions. I am making the clear case that I will return on Report Stage, having consulted colleagues and, if necessary, others. I will consider positively the case of a person who has left second level school, is working and paying tax and is engaged in a part time course for which he or she is paying the fees if the course is for a primary third level degree, not a post-graduate or other course already supported by the system. I will come back to the Deputy on Report Stage.
I thank the Minister for showing an open mind in this regard. In all justice and equity that is exactly the type of person I wish to help. In past years a number of people missed out on a chance. Thanks to our parents' conviction, we were lucky enough to be able to go to college directly after second level school. Thousands of my colleagues did not have that opportunity but would have made far better third level students than I ever was and there are still such people to the present day. In the past few years, the number of institutions which allow people to go back after the age of 23 is growing. Those people who missed out the first time are paying for themselves. This is the minimum which should be done and I thank the Minister for his open mind.
To be clear, I will look at it. There may be unforeseen aspects but I will come back to it on Report Stage.
The Minister seems to have changed his mind, which I welcome. The situation which might have pertained in the past is very different today, with the encouragement of people to avail of education. I welcome his response. However, he said "specifically a primary degree". I do not want the south-east to be discriminated against again.
I will clarify that point. I should have said "specifically not a post-graduate degree". In other words, a third level qualification. It was a slip of the tongue on my part. I do not want to precipitate a demand for a university of Waterford.
The Minister's party leader made numerous promises to the south-east and my constituency of Waterford in that regard. I am conscious of the breadth of courses which are involved in the college and the number of working people who have decided to fund their college courses. People such as us have encouraged them to get more qualifications and education. It is a very positive move on the part of the Minister to consider, as part of his deliberations for Report Stage, including that matter.
The Minister seemed to imply — I do not want to over-emphasise it — that while other people might have a different view, he thought the nature of the supplier of educational services did not matter as the primary issue was the nature of the product supplied, if I can use such base terms about such important matters. If he needs arguments against those who disagree with him, he should look to the Constitution which requires the State to give reasonable aid and assist private and corporative initiative in education and, where necessary, to supplement it with its own system. I presume "corporative" includes universities. The State has a constitutional duty to attempt to give reasonable support in that area. Therefore, there is a very strong argument that private educational institutions could go to the courts and say they cannot be discriminated against and held out as ineligible for receiving assistance because they are private profit-making institutions as opposed to corporate or State institutions.
I apologise for being late but I had to meet two deputations this morning on related education matters. I thank the Minister for his significant response to the amendments which were tabled. It is an important issue, not just for the individuals concerned in terms of pursuing part-time education and improving their qualifications, but also in terms of their consequent improved contribution to the economy. It is important for society as a whole to encourage people to improve their qualifications and skills because our rapidly changing economy demands greater levels of adaptability.
There is also the question of equity. New categories of students, particularly part-time students, feel they were left out of the abolition of fees bonanza. Could the Minister outline the parameters——
Let us be clear about this before we go onto the 1 o'clock news.
I have no intention of doing that. In regard to the private education establishments, there is a committee sitting at the moment which is addressing the question of tax relief for some of the private colleges.
There are people who do not pay tax.
Yes, the inequity is that those who do not earn enough to pay tax will be totally discriminated against. There should be a common approach to this. If courses are designated by the NCEA — in other words, if they are designated by the State -it should not matter whether they are provided by a private or public sector college. If they meet all the standards we lay down, they should receive the same benefits as students in the public sector. The higher education grants scheme should reflect that reality, which it does not at the moment.
I understand the Deputy's commitment and his other commitments in relation to this. I am prepared to look sympathetically at this amendment — that is as the furthest commitment I will give today. I have outlined the thinking I will bring to bear on it. We are talking about a person who has left secondary education and is now working and has decided to enrol in a third level course, which is probably recognised by the NCEA, and whether that person is entitled to tax relief on their fees if the company for which they work is not in a position to get tax relief if it pays the fees. In many cases, the company can qualify for tax relief if it pays the fees.
It is a relatively narrow area and will not solve many other problems in relation to education. It is an income tax provision; this is not an education Bill per se. I am prepared to look sympathetically at it but we have to cost it and I will have to consult with other colleagues. I will come back to it on Report Stage.
Before the Minister makes it a condition that the company is not in a position to pay for it, he will also have to deal with the situation where the company, for whatever reason, will not pay for it. There is no point in saying that someone is all right if they are in a profitable company but it is too bad if their employers cannot pay.
We have a mechanism called Report Stage.
Chairman
I can see other difficulties — for example, if somebody is employed by their father who is also paying the fees. There will be other complications.
All of these matters must be looked at.
I accept, as the Minister said, that this is the Finance Bill and not an education Bill. However, there is a need for integration in our approach to such issues. We cannot have rigid demarcation between Departments on this issue. The Government and all Members of the Dáil should have a common set of objectives in terms of educational development and see how best to use the various mechanisms available to us in the areas of finance and education to advance those objectives. There were significant recommendations in the de Buitléar report on the reform of the higher education grants scheme which impinge on this Bill. It is regrettable that some of them have not been implemented.
Chairman
This is the first time an out of order amendment got onto the order paper without being ruled out of order because it imposes a charge. I am advised that it got through a loophole.
Amendment, by leave, withdrawn.
Sitting suspended at 11.28 a.m. and resumed at 11.40 a.m.
Clerk to the Committee
It is 11.40 a.m. and we can recommence. The Chairman is unavoidably absent and I invite nominations for a temporary Chair.
I nominate Deputy Connor.
Clerk
Is that agreed? Agreed.