Last evening I listened to part of the contribution of Deputy Gallagher when he strongly criticised the leader of my party, Deputy John Bruton, for not specifying the costings of some of the proposals he advanced. I smiled to myself on hearing a Labour Party Member wonder from where all of these proposals would be funded. He must have a very short memory because I recall in the run up to the general election promises being given to semi-State bodies such as Aer Lingus, Bord na Móna and others expecting the big pay out or golden handshake. Unfortunately, they had not been costed, so that when the new Government assumed office they did not deliver the goods. It was somewhat hypocritical of Deputy Gallagher to voice such criticisms when he could not see the beam in his own eye.
I welcome this opportunity of contributing to the budget debate. The first budget of any new Coalition Government is particularly important in that it reflects the blend of ideologies and priorities of its partners. However, the budget of 1993 was a non-event and very quickly dismissed by the national media as an item warranting little attention. It would appear that the general public also found it a tremendous bore. At a time of record unemployment levels it was disappointing that a Government with the largest majority in the history of the State did not take positive action to eliminate the greatest ill of our times, unemployment. Sadly, that did not happen. Discussions that have taken place since then have focused more on the appointment of advisers and family members within the Government rather than on the real issue of how our unemployment levels can be reduced.
One positive provision of this budget was the increase in the carer's allowance, which is to be welcomed. Carers are tremendous people who devote their time and energies to the care of someone less fortunate than themselves, those who are unable to look after themselves, perhaps an elderly relative, one of their children or even a neighbour unable to care for herself or himself. These are the unsung heroes of our nation, thousands of whom perform this work of mercy daily without counting the cost on themselves.
The introduction of this carer's allowance a number of years ago was a long overdue recognition of their tremendous work. That recognition soon turned very sour when a stringent means testing system was implemented. Applicants for this allowance are assessed by the Department of Social Welfare, who base their decision on the income of the people involved without any regard to the loss of income incurred in caring for those who cannot look after themselves. It is disappointing that in this recent budget the Minister did not see fit to relax the qualifying conditions for such carer's allowance. There is an assumption abroad that anybody who looks after an elderly relative is automatically in receipt of this allowance. Sadly, only about 1,100 people nationwide are in receipt of the maximum allowance. Therefore, I am very disappointed the Minister did not do something for the other thousands of carers who do not at present qualify for this.
Another positive development in this budget has been the increase in child benefit, which generous improvement will be welcomed by many. However, it should be noted that this is an increase across the board and does not take into account the circumstances of people receiving the allowance. In other words, parents earning perhaps £40,000 per annum will receive the same increase in child benefit as others in receipt of a weekly dole allowance. The cost of this increase in a full year will be of the order of £50 million. Surely that £50 million could have been targeted more precisely at those most in need of help?
In addition, the 3.5 per cent increase in social welfare payments is to be welcomed. Here I should like to quote from the response of the Conference of Major Religious Superiors' in their document on the budget:
While we welcome the overall increases to social welfare recipients we regret that they are so low. We doubt that these increases will keep pace with inflation since they would be eroded by increases in differential rents and VAT. Also, we need to point out that these increased payments do not take effect until the end of July.
Raising social welfare payments to the minimum recommended by the Commission on Social Welfare, that is £65 for a single person and £104 per week for a couple, would have cost £150 million and could have been done. This would have the double effect of helping the vast majority of the poor and giving a valuable boost to the economy.
Another positive aspect of the budget is the increase in the family income supplement. I welcome this increase as it is an excellent way of ensuring that payments are made to those in need. We can ensure, through the family income supplement scheme, that it is worthwhile for a person with a family to continue working instead of going on the dole.
The single most objectionable aspect of the budget is the 1 per cent tax on employment to be paid by employees in receipt of £9,000 and over per annum. This is supposed to be a temporary measure but, like all other temporary measures introduced by the Department of Finance, it will quickly become a permanent feature. This is a straightforward tax on employment and will help to convince those already at work that perhaps they would be better off on the dole.
Another aspect of the budget which is particularly distasteful is the introduction of the 2 per cent probate tax. The significance and magnitude of this tax has probably not yet been understood or appreciated by the public at large. It represents the reintroduction of death duties. Children inheriting from their parents will have to pay an additional £1,000 on every £50,000 worth of property inherited. It will hit the business community particularly hard and will also be significant from the point of view of the agricultural sector.
Another aspect of this probate tax, which flies in the face of a recent Government direction, is that it will be imposed on a spouse who inherits from his or her partner. The Minister will allow the spouse to inherit the family home exempt from probate tax but any additional property, a business or farm, will be subject to this tax. This is a callous form of additional taxation which will cause severe hardship and the Minister should revoke it. I am sure many cases have already been brought to his notice to show that if this probate tax had to be paid it would have caused severe hardship for the spouse concerned. This is, as I said, an objectionable form of taxation and should be revoked.
The changes in the VAT rates represent a disincentive to job creation and will put many industries at risk. The change in the VAT rate on food and accommodation has been condemned by the tourism industry in general. It will help to reinforce the idea that Ireland is not competitive in the international tourism market and will result in many job losses.
The increase in the rate of VAT from 10 per cent to 12.5 per cent on newspapers represents a particular blow to the industry and will have a profound effect on our national newspapers. Up to 50 per cent of daily newspapers sold are now imported from Britain where newspapers are zero rated.
This new VAT rate represents a major blow to the smaller provincial newspapers which provide, particularly in my own area of County Westmeath, secure and pensionable employment. They also provide a flow of information in their own catchment areas which is invaluable to the community. Indeed, local newspapers fill a particular niche in that they record the history of their locality on a weekly basis, the local football match or a meeting of the local Fianna Fáil cumann, while some members may be lucky in having their speeches in this House published. The local newspaper has it all and records it for posterity.