I propose to share my time with Deputy Foley. It is understandable that Deputy John Bruton does not want the budget to be debated. There is so much good news in it that he does not want people to be aware of it. I assure him that we intend to debate it here and convey the information to the public who very much welcome the budget proposals.
It is important to reflect on the situation as it existed last year, and the contrast between now and then. This time last year we had extremely high interest rates, speculation against the punt and a general lack of confidence in the economy. In contrast, we now have historically low interest rates, the lowest rate of inflation for 30 years, confidence in the Government and in the economy, and a general mood of prosperity. This is due to the measures being adopted by the Government. This budget should not be assessed in isolation, but taken as part of an overall plan by the Government to set the economy on a sound footing. The primary focus of the budget is undoubtedly job creation, and in particular to help the less well off in our society, social welfare recipients or low-paid workers. The Minister has attempted to tackle the problem of low pay and has succeeded in his objective.
The move to provide funds for small businesses is welcome. If we are serious about creating jobs in future, we must look to our own and provide the resources necessary to allow the small businesses of the present to be the big employers of the future. Too often the banks have charged such businesses penal interest rates. I welcome the move by the Government to assist such industries in their endeavours to expand, and I have no doubt it will lead to the creation of many jobs in the coming years. The provisions for such businesses of a fund of £100 million pounds at special rates and with less restrictive credit terms than in the past is welcome. In addition, subsidised loans from the European Union will be provided to entrepreneurs in this country. There is no doubt that our economy has the capacity to grow at an enormous rate, provided the fundamentals are right.
This Government has again shown its commitment to the underprivileged in society by the manner in which it is addressing social welfare issues. I welcome the 3 per cent increase in social welfare payments which, as inflation in the past year was only 1.5 per cent, was a significant increase. I am also glad that the Minister paid particular attention to people with families and increased the children's allowance for people with three and more children. The family income supplement is an excellent benefit for people who are low paid, and I am glad that the Minister has again maintained the incentive for people to work by increasing the benefit payable under this scheme.
I am particularly pleased the Government decided to extend the CEDP to all areas of the country. I am aware of the excellent work being done under this programme in the north side of Cork city. The programme has many advantages, not least that it gets unemployed people out to work and gives them a sense of belonging and pride because they are working for the money they receive. It has also helped to clean up many neglected areas of the city.
I welcome the provision in respect of survivors' contributory pensions. I am glad the Minister for Social Welfare, in particular, finally recognises the position of widowers. There have been many campaigns to highlight the fact that widowers were not entitled to a pension from the State. I am glad that anomaly has been corrected in the budget and pay tribute to the Minister for Finance and, in particular, the Minister for Social Welfare for recognising an important need in the community. All Members should welcome that positive step.
The changes in personal taxation are significant and have been widely welcomed. Most people regardless of their level of income, will benefit from the changes announced in the budget. I welcome the fact that the 1 per cent levy has been removed, and that all employed people will benefit from the widening of the tax band. The Minister has taken an important step in reducing the marginal relief rate of tax to 40 per cent. This is a reduction of 8 per cent and will improve considerably the take home pay of low income employees and, indeed, improve the incentive to work, for people who heretofore would have been taxed to the hilt later in the year. Low paid workers will benefit further from the removal of the health levy and the employment and training levy to the tune of 2.25 per cent. This is a significant boost for people earning less than £9,000 per annum. Employers will save a significant amount of money also with the PRSI contribution being reduced from 12.2 per cent to 8 per cent.
Those are significant changes in regard to tax for the low paid and will no doubt lead to the creation of more employment and make it easier for people in business at present to sustain existing levels of employment.
Concern has been expressed about the reduction in mortgage interest relief. However, it is important to point out a number of facts in this regard. Everyone, regardless of the amount of the mortgage, is in a better position now than one year ago, due to the fact that interest rates have decreased substantially. For most people the saving will be in the order of 30 per cent on what they were paying last year.
Another important point is that fixed rate products are now available under which people can tie in at a fixed rate of interest for anything from one to ten years, depending on their circumstances. They will not have to worry about increases in interest rates for a number of years. The changes proposed by the Minister in personal taxation are a step in the right direction. He has protected the low paid in our society while at the same time ensuring that most people benefit. It is a step in the right direction towards providing a more equitable tax system for all. Surely at the end of the day this is what we all want.
I am particularly pleased the Minister decided to replace the existing urban renewal scheme which is due to expire on 31 July. There is no doubt the present urban renewal scheme which has been in existence since October 1985 was very successful in achieving what it set out to do, that is, stimulate construction activity and revitalise the areas of our cities that had become run down and dilapidated.
I have a particular interest in this since my time in the Department of the Environment as Minister of State with responsibility for urban renewal. During that time I visited most of the areas that qualified under the designated area scheme and saw at first hand the excellent work that has been done in reviltalising those areas. There is no doubt the scheme has great merit. It achieved its objective and it is essential that such a scheme is continued in some form.
I note that the Government decided to replace it with a more targeted scheme and this will no doubt promote employment in inner city areas. I am glad the Minister also decided to extend this scheme outside of the cities to towns around the country. Those towns will benefit greatly from the schemes when the details become available.
There is much merit in the proposal to launch a pilot scheme to encourage people to live on the upper portions of business premises in city centre areas which are at present vacant. It is essential that people move back to city centres to live if we are to create a vibrant atmosphere. One need only look to cities on the Continent where people live over business premises to see the effect and benefit that such an initiative can have for a city. If we can get people to live in our city centres it will be to the benefit of all in the long term, including businesses in the area.
Thus if one combines the various proposals, it is clear that the Minister managed to create a very exciting and positive budget which offers growth potential to a range of sectors and individuals. It is important to acknowledge that many provisions have been included by the Minister to improve overall living standards despite the fact that the national finances are constrained particularly because of the burden imposed by the national debt. I note that in excess of £2 billion will be required to service the public debt in 1994; this is equivalent to £1 in every £6 of State expenditure.
Taking into account the overall financial situation and the major funding needs of the Departments of Social Welfare, Education and Health, the Minister must be complimented on the variety of positive measures in the budget. Taking the budget's provisions in conjunction with the vital reductions in bank interest rates, the climate is becoming increasingly more sympathetic to the needs of developing industry. This development is vital if we are to make substantial progress in our efforts to create long term employment opportunities. While we must explore every avenue which offers the potential of job creation, a major breakthrough in this area can only be achieved if we fully harness the creativity of home-owned enterprises. The work of the Government over the past year, and the specific achievements of the Minister for Finance in particular, have undoubtedly been of great benefit to our business sector. When one considers the formidable obstacles which must be overcome by the modern business man or woman if they are to survive in an increasingly competitive market place, it is clear that they both need and deserve our full support in their endeavours. Further to the measures introduced in this budget, and the overall improvement in the financial climate, I hope the changed structures in the organisation of the IDA also prove to be of benefit in the development of our indigenous business.
In conclusion, I emphasise my strong support for this budget. In particular, I would like to highlight two key features of the Minister's proposals, namely, a continuing commitment to the particular needs of social welfare recipients and the acknowledgment of the need to provide a boost to those directly involved in job creation. I fervently hope that the encouragement provided by this budget will be quickly built on to accelerate the ongoing development of our economy to the benefit of all the people of Ireland. At present far too many people have much to offer but do not have an opportunity to play a role in the economic life of the country. All of our efforts must be focused on meeting the urgent needs of such individuals. Various elements of this budget, taken in conjunction with the National Development Plan, provide the momentum necessary for the rapid expansion of our economy. All our people, but in particular those currently suffering serious economic deprivation, must benefit substantially as a result.
