Given the composition of the Government, I would have imagined that this would be due to its commitment to the poor. However, the budget gives the lie to that. The allocation to the weakest and most vulnerable in society is positive proof, if any further proof were needed, that the high flowing rhetoric we heard, particularly from the left wing parties in Government when they were in Opposition, was nothing more than a cruel deception.
In 1989, in less favourable economic circumstances, social welfare was generally increased by 3 per cent and the long term unemployed received an increase of 9 per cent. At that time, Deputy De Rossa, now the proud Minister for Social Welfare, took it upon himself to describe these increases as "particularly cruel". He is now part of a Government which has pegged social welfare increases at 2.5 per cent. This is the most optimistic forecast for inflation over the next 12 months. The great alibi, to which Deputy Kavanagh referred, is the increase in child benefit. While I welcome any improvement in this allowance, I do not welcome it when it is to be paid, as apparently it will be, by the poorest and most vulnerable in society.
Everybody will receive the increase, including the wealthiest in society, and it will be paid for by the poorest. If inflation exceeds 2.5 per cent, it will be paid for by a real cut in the rate of social welfare. Regardless of the rate of inflation over the next 12 months, it will be paid for by a real cut in child dependant allowances received by social welfare recipients. Is the Minister for Finance aware that there are 240,000 pensioners here who will not gain from the child benefit increases? Is he aware that there are many recipients of unemployment assistance, unemployment benefit, disability benefit, disabled person's maintenance allowance and every other category of social assistance who will not gain from the child benefit increases for the simple reason that they do not have children?
It is a cruel irony that the most left wing Government in the history of the State, in terms of membership and rhetoric if not reality, awarded an increase in social welfare payments that makes Scrooge look like a philanthropist. The champions of the dispossessed have awarded old age pensioners an increase of 22p a day. The increase for the unemployed is marginally less; they could only manage 21p a day there. The increase for people on disabled person's maintenance allowance, who are ill as well as poor, is 21p a day. This is big money. It might be enough to enable one to buy a packet of peanuts in some of those establishments in the city where left wing ideologues gather to suffer together on behalf of the poor. However, I would not hold my breath. The important point is that it seems sufficient to satisfy the keepers of the nation's conscience.
It is particularly stark when looked at in conjunction with another budgetary measure, the abolition of fees for third level students. I am not criticising this move as I agree with it in principle. However, I profoundly disagree with the manner and particular context in which it was done. It will benefit only one sector of society, those whose income is too high to enable them to qualify under the means test. For those people in that upper strata of society, at least in terms of income, the benefit will be more than £2,000 per annum, or more than £40 a week.
This is £40 a week, from a Government which leans to the left, for people whose income is such that they cannot satisfy the means test for the third level grant. Old age pensioners living alone will receive an extra £1.60 a week. In Democratic Left's scale of values, one daughter of a beef tribunal lawyer is worth 27 old age pensioners. The position appears to be that the longer and louder a party trumpets its ideology in Opposition, the quicker it abandons it in power. The rainbow law is performance in inverse proportion to rhetoric.
The Labour Party and Democratic Left are the ultimate political acrobats, keeping their balance while doing the opposite to what they said they would do.
However, there is a serious aspect. We are all aware of the campaign which preceded, with ever increasing intensity, the fall of the last Government. We are all aware of the rhetoric, the promises made and the protestations about State cars, the number of Ministers of State, ministerial advisers and spin doctors. When one looks at the numerous U-turns, the ultimate of which is the Left's attitude to the poor, it reminds me of a George Orwell quotation. He had a rather jaundiced view of politicians and the language they used to express their ideas. In 1984 he stated:
Political language is designed to make lies sound truthful, murder respectable and give the appearance of solidity to pure wind.
We are rapidly approaching the position here where nothing any politician says will be taken, or deserve to be taken, seriously. The only achievement of this Government will be the institutionalisation of cynicism about politics and politicians.As I am sharing my time, I do not have much time to refer to the tax changes.
Due to the fact that a cold, calculated and deliberate decision was taken to go back to borrowing for current expenditure at a time when there was clearly no need to do so, it should come as no surprise that the approach to tax reform is, to put it at its most charitable, minimalist.The change in the 27 per cent band from £8,200 to £8,900 looks deceptively impressive at first sight but when inflation is taken off this figure, it is only a 3 per cent increase in real terms and it is even less when one takes into account the continuing restrictions in VHI and mortgage interest reliefs.
The same applies to the £150 increase in personal allowances. The PRSI exemption for the first £50 of income is welcome but it is partially offset and clawed back by a reduction in the PRSI allowance for tax purposes from £286 to £140 per annum. These paltry real increases in allowances are hardly consistent with the Minister's claims of radicalism on the tax front.
It is surprising that the Minister continued to maintain the old fiction of taking so many thousands of people out of the tax net. Those people will be back. They always come back; it is the ultimate boomerang effect. I have listened to claim after claim, year after year and budget after budget of many people being taken out of the tax net. If all those whom successive Ministers for Finance rightly claimed at the time were taken out of the tax net were permanently out of it, we would have a tax paying population of about 250,000 people. The people taken out of the higher tax rates and put into the 27 per cent rate will also be back paying the higher rates because our income tax system is grindingly progressive. There is no need for the Minister for Finance to peddle those old fictions about taking so many thousands of people out of the tax net. It is a nonsense and a sham and should be abandoned not only by this Minister for Finance but by all future Ministers unless the tax system is radically altered.
The net result of all of this tinkering with the tax system in the budget is that somebody below the average industrial wage still has to pay tax at the margin of 55.75 per cent of their total income. At column 2049 of the Official Report of 9 February, Deputy De Rossa said: "In the coming year, the Government must set about monitoring and evaluating these reforms to ensure that they are effective as job creators". This shows a blinkered approach to the relationship between tax reduction and unemployment. He still does not believe that tax reduction or reform has anything to do with creating employment. He believes that one should monitor every bit of tax reduction to see how many jobs it creates, as if one was talking about two chemical elements in a laboratory that were supposed to produce a certain reaction that could be measured scientifically.
The reality — and every developed economy has shown it — is that a low taxation climate is conducive to enterprise initiative and ultimately economic growth out of which jobs are created. Of course we are not doing enough to translate our economic growth into employment, but that is another argument. It does not take from the fact that a favourable tax climate is a sine qua non to economic growth, which again is a sine qua non to employment creation.
When this Government was in the process of forming, Democratic Left held a meeting in a Dublin hotel where it duly wrestled with its conscience for a few minutes and decided that it was going into Government. It did so on the basis of a paper produced by the leadership.On the following day, all the national newspapers carried quotations from some of the speeches made at this meeting. One speech was delivered by a Mr. Fergal Ross, who was described as the son of the party leader, Proinsias De Rossa. Mr. Fergal Ross opposed Democratic Left's decision to go into Government on the basis of the paper presented by the leadership, which he said was "full of classic fudges". Who am I to disagree with Mr. Ross? It was full of classic fudges and that is reflected in the budget because this budget is a classic fudge from beginning to end and the people, with whose welfare this Government has been entrusted, will be the losers.
