The Minister of State, Deputy Rabbitte, was in possession and he has seven minutes remaining.
Financial Resolutions, 1996. - Financial Resolution No. 7: General (Resumed).
Debate resumed on the following motion:
That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(Minister of State at the Department of the Taoiseach, Deputy J. Higgins.)
The objective of science, technology and innovation policy is to create an economy where industrial competitiveness is founded on the innovativeness and quality of its products, processes and services which in turn are provided by a high technically skilled workforce. Ireland's economic development and indeed the survival and growth of its smallest companies must be based on innovation-led competitiveness rather than short-term and volatile competitiveness based on costs. There is also a need to create an environment which is conducive to innovation and risk taking and indeed to generally promote innovation awareness and an appreciation of science and technology in relation to innovation.
The important point here, which was brought out most forcibly by the Tierney report, is that in trying to create an innovation based economy a number of elements must be brought together in an integrated way to form a national system of innovation. Innovation is not a simple or predictable process but it must be understood in terms of the links and interactions involving people, firms, markets, technology, skills, capital and, above all, knowledge.
Looking more closely at the main elements of the national system of innovation, the State sector, third level and industry are the principal providers and users of the knowledge. I have set out the reasons why the State must be involved in supporting the science and technology base of this country. The State is required to make available a portfolio of activities to meet both the short and long-term needs of the economy, ranging from the funding of basic and strategic research to the provision of technical information requirements of firms. The third level sector is required to produce graduates and post graduates trained to the highest international standards. The enterprise sector is required to invest more of its own resources in intangible areas such as research and development and to put innovation at the core of development strategy.
A positive adoptive attitude to science, technology and innovation is the single most important force for shaping long-term competitive success in Irish industry, yet most of our indigenous companies are only dimly aware of the true importance of science and technology. This lack of awareness is not confined to indigenous firms. It extends to this House, to the media and to the public. On a regular basis I have sought to introduce into public debate major issues relating to science, technology and innovation policy, the implications of the information society and the structure and direction of industrial development, but I regret that the public debate that one might have expected did not ensue.
The legacy of the Tierney report will be its lasting contribution to an understanding of the value of investment in science and technology for a small country such as Ireland. For my part, and following on from the Tierney report, I have asked Forfás to prepare a three year awareness campaign aimed essentially at policy makers and decision makers in the public and private sectors.
As the Tierney report pointed out, there is an onus too on the many organisations connected with the Irish science and technology world to play their part in the science and technology promotion effort. Academic research is increasingly recognised as an important component of the national system of innovation in all countries. This reflects three key aspects of the activity: its role in generating new knowledge, in providing access to sources of knowledge generated in other countries, its role in educating and training the next generation of graduates, post graduate researchers and technologists for work in academia, industry and the public sector and the increasing relevance of academic research for industrial development itself.
One of the key aims must be to build bridges between science and the economy over which original, innovative and creative ideas flow from the scientific community into the economy at large; bridges across which industry, society and the economy can access the wealth of knowledge that resides in the third level sector; and bridges to a middle ground where creative ideas can be put to entrepreneurs who see a commercial value or application for such ideas, who have the ability to marshal the necessary resources and the capacity to undertake the risks involved to create a viable commercial entity which creates or meets a need.
Within the national system of innovation, the Tierney report demonstrated the role of the third level sector, particularly in the areas of basic and strategic research, and sought to promote such interaction between the colleges and industry at a variety of levels. Every country must build the capacity to create, absorb and apply new technologies, whether developed locally or elsewhere. It is impossible to generate enough knowledge locally to meet industry's needs. We need to be able to exploit all available national and international sources so that the economy is not at a competitive disadvantage.
It is clear from the Tierney report on STI that where there will never be enough public money to fund the endless range of investigative research possibilities, there is an added onus on us to make the best possible use of what we have. Nevertheless, I am convinced that we must devote adequate resources to the research activities of the third level sector to ensure that we turn out highly skilled graduates and postgraduates who provide the essential underpinning for continued innovation in the enterprise sector.
As a first step in this direction I recently announced an initiative to provide a number of post doctoral research fellowships. Where excellent projects exceed the ability to fund them by a factor of 8:1 then we are immediately into the business of prioritising and selectivity and other criteria, such as relevance to social, economic and other circumstances of our national profile, must enter the equation. The question is how to sensitively strike the right balance. In practical terms, that means promoting greater third level industry collaboration and co-operation and generally maximising the synergy inherent in our research support schemes.
It costs money and effort to create knowledge and we only begin to see a return on that when we start to use the knowledge. That is what the recently launched National Research Support Fund Board, known as the measure four board, is all about. This measure brings science and technology or basic and applied research together. This is appropriate as the old distinctions between the two are, in any event, becoming blurred.
We will continue, therefore, to make efforts to develop a S & T strategic and align it as closely as possible with overall industrial policy involving a closer focus on the needs of the firm. However, it is also essential that this necessary process of targeting should not weaken the genuine spirit of innovation and the more outward looking perspective that has been adopted by progressive researchers in third level colleges. Above all, we must endeavour to encourage and keep our best people.
The Tierney report estimated that 80 per cent of Irish industry has little or no technological capability. There is an urgent need, therefore, to look at existing programmes to see how best to enforce the STIAC recommendations aimed at increasing the technological capability and innovation performance, particularly in smaller indigenous enterprises. The national technology audit programme has already proved useful to industry. The process involves an analysis of a company's operations to identify opportunities where technology can lead to profitability followed by enhancement and a programme of implementation.
Another programme aimed at helping companies to make better use of technology is the Tech Start programme which operates by building up technology skills within the firm. Many companies recognise the need for innovation — whether a product or process — but where will they find help? Tech Start aims to fill that need. It was established in 1989 and helps companies to locate and employ suitable technical graduate skills.
This budget is guaranteed to stimulate growth and activity in the one area of economic endeavour which has flourished under the stewardship of this Government; it is a budget which guarantees an increase in crime. The Minister for Finance has cynically slammed the door on all those who looked to this Government for protection. It is a burglar's budget with a message which is clear and worth remembering — if a person is old, alone and afraid, this Government has abandoned them; if a person is young and vulnerable, this Government has no protection to offer; and if a person is worried about crime, this Government has ignored them. Short of directly grant aiding crime, the Minister for Finance has made every move possible to promote its growth.
At a time when terror is sweeping the nation, the only answer offered by the Minister for Finance is a publicity inspired tax break for the elderly who install alarms. People who look for proper policing and an effective prison service have been told that if they are old enough and spend enough of their money, the Government will give them some back. It is a concept dreamed up by a desk bound public relations consultant who knows as little about real life as the Minister for Finance cares. This budget encourages crime; it is the fiscal equivalent of a nolle prosequi.
The budget should be recognised for what it is — the public abandonment of any pretence by the Government to the implementation of a criminal justice policy. During the past year the Minister for Justice has shown the consistency of direction of a weathervane. Why are we surprised by the revolving prison door policy when it is being implemented by a revolving Minister? At a time when leadership and direction are needed in the fight against crime, the Taoiseach has entrusted responsibility to a Minister who has engineered more policy pirouettes in a year in office than most ballerinas execute in a lifetime.
The Minister for Justice, as the editorial in The Irish Times noted this morning, stumbles from one crisis to another giving the distinct sense of trying to make up answers as she goes along. Yet again this week the Minister implemented her motto — invisibility is the best form of transparency — when she declined an invitation to speak on “Morning Ireland” and account to the people for the shambles she has made of her area of responsibility.
Why is it that when favourable publicity is to be found, the Minister for Justice can abandon her desk with relish and be seen in innumerable photo-calls with her nose poised over the latest cache of illicit drugs? Yet when questions need to be answered, the Minister who promised openness, transparency and accountability delivers absence, obfuscation and evasion. It is a poor reflection on the Department of Justice when its Minister relies on the right to silence as the cornerstone of her duty to be publicly accountable.
The Minister for Justice's cavalcade of publicly funded media consultants have taken the opening words of the legal caution "you are not obliged to say anything unless you wish to do so" and turned them into a press policy for her Department. How much will taxpayers pay this year to have the Minister for Justice advised when to run and when to hide? In one short year, she has turned indecision into an art form and institutionalised indifference.
It would appear that the Tánaiste swapped his vision of a rotating Taoiseach for a revolving Minister for Justice who would point in whichever direction the wind blew. From her bungling of the Brink's-Allied fiasco to her Cabinet contortions over Castlerea she has come to personify everything which is incompetent in this Administration and her contribution to this budget confirms that view.
It is sad that in the concerted campaign of guerrilla warfare that substituted for Cabinet discussions in the lead-up to the budget, the Department of Justice was yet again outmanoeuvred. During 1995 we saw that the voice of the Minister for Justice was so valued at Cabinet that her colleagues could make cuts in her Department's budget in her absence. Mindful of this, she brought her battle to the press and publicly warned her colleagues that if they did not start to take crime seriously, they had no hope of retaining office. Today she has received her answer and she knows that her voice carries as little weight outside Cabinet as inside. In the game of fiscal roulette which passes for financial policy under this Government, the Minister for Justice has yet again lost her chips and has been sent from the table.
The budget represents another humiliation for the victims of crime. Government protestations regarding its effectiveness in the fight against crime are as illusory as the rainbow which it projects itself to be. The fight against crime should be a priority for any Administration. However, this Government has accorded it the status of a confused afterthought. The Minister for Finance need take no comfort from the fact that his party does not hold the Justice portfolio. He will be remembered as the man who garrotted the Department of Justice in the middle of a crime wave.
Crime now threatens our traditional way of life in rural as well as urban areas. No cottage is too remote, no amount too small, no person too old to escape the attentions of marauding criminals. The protection of citizens is a fundamental obligation in any society. I remind the rainbow coalition that in a hierarchy of obligation it is a superior obligation, a duty that takes priority over other duties. This Government is failing in that duty. This budget has guaranteed that this failure will continue into the future, and the price failure will not be paid by this Government. It will be paid in suffering, hurt and deprivation by those least able to afford it — the old, the poor and the vulnerable.
This budget was a golden opportunity for the Government to launch a crusade against crime, to say to the people that the mistakes of the past were being put behind them and that a new, coherent policy would be pursued, a twofold policy of crime detection and punishment coupled with crime prevention, a policy which would result in the elimination of unacceptable backlogs in the criminal courts and make provision for the incarceration of those found guilty of serious offences. However, this budget only promises us more crime from the criminals and more indifference from the Government.
The reason is the Government is more concerned with appearance and presentation than with policy and its implementation. In short, it is a cosmetic Government. The scale of the money being squandered on armies of managers, handlers, advisers and consultants for the members of this Government indicate its true priorities — a desire to look good whatever the cost. Illusion has replaced reality in the mind of this Government. The illusion of success is more important to it than the reality of terror-stricken pensioners afraid to sleep at night for fear of the consequences of the Government's indifference.
In delivering the Budget Statement the Minister for Finance, Deputy Quinn, showed all the sincerity of a hostage speaking at gun point. When the Minister for Social Welfare, Deputy De Rossa, demanded a political ransom from the Government, it decided to pay, and the Minister, Deputy Quinn, was sent out to read the terms of surrender. The Minister, Deputy De Rossa, is the real Taoiseach. When he says "jump" the Cabinet asks "how high?". His indifference to crime has brought us to where we are.
No domestic cause in modern Ireland deserves greater support and encouragement than the fight against crime. No Government will ever have a better opportunity to confront crime and plan the future of its criminal justice strategy than this Government had this week. It has failed to grasp the fundamental principle that a coherent criminal justice strategy is a necessity, not a luxury. It is not something which can be viewed as optional or superfluous. It is one of the foundations upon which a healthy society rests. This budget continues to permit that foundation to be eroded by lawlessness. The Government has not brought this about by mere inadvertence. It is a deliberate policy of calculated indifference arising out of an inability to formulate a coherent policy. The same muddled indifference can be seen throughout the budget.
The Minister for Finance arrived in this House with a Budget Statement that was put together with scissors and paste. Separate political interests drafted and crafted their individual paragraphs and policies without regard to any coherent overall strategy other than, of course, retention of office. That is the sole unifying theme in a budget which has all the hallmarks of being put together with political chewing gum and string.
There is a price to be paid for a budget drafted with a view to political survival rather than economic well being. It is a price this country will have to pay in the coming years and as they put their hands deeper into their pockets many voters will ask what Fine Gael stand for. From the perspective of Cabinet discipline, the snooty aloofness adopted by Fine Gael Ministers during the Spring-Rabbitte street fight was commendable, but it is no substitute for an economic policy. Where in this tax-and-spend budget is the Fine Gael input to be found? Where is the prudence of financial management much loved by Fine Gael in their contributions to debates in this House? The necessity of political survival has led the Minister for Finance to warmly embrace the drunken sailor school of economics, and Fine Gael has paid for the rum. The sooner the Fine Gael Ministers realise there is more to being in Government than sitting at a Cabinet table passing time before lunch, the better.
Bringing the public finances to the state of fiscal health the Minister Deputy Quinn inherited from the Leader of my party last year took political imagination and prudent management. It did not happen overnight nor without effort on the part of taxpayers. All that has now been squandered. Fine Gael's talk of tax reform is a hollow joke. Any Government which cannot institute substantial tax reforms when the economy is growing at its present rate will never do so. This week the Minister for Finance showed himself to be an economic disciple of the Duchess of York. He has embarked on a programme of reckless spending in the hope that Budgie the Helicopter will arrive to provide the necessary airlift to fiscal safety in the future. Such fairy tale finance as we were treated to by the Minister makes pleasant listening and reading but it has no basis in reality. It is devoid of purpose of policy and its aim is political, not economic or social.
This is Deputy Quinn's last budget. No one in this House is in any doubt but that the shadow-boxing of the Ministers Deputy De Rossa and Deputy Rabbitte were but a warm-up for the knock-out blow they have long intended to deliver this time next year. Not even the most hallucinogenic of political forecasters can envisage Deputy De Rossa fighting the next election as part of a Government. The political ransom extracted on the floor of this House by Deputy De Rossa may buy some time, but it will not save this Government from its inevitable political fate — electoral oblivion.
The Government which flagged itself as the most left wing Administration in the history of the State gave miserable increases in social welfare in two successive budgets. The elderly, who got an increase the equivalent of the price of a lollipop in their living alone allowances last year, were told they would have to be wealthy enough to pay tax before they could be assisted in the purchase of a burglar alarm this year. There is no true red-blooded socialist who would not say the safety and protection of the lives of the poor is as important as the safety and protection of the property and lives of those who are more fortunate.
That is only the half of it. Labour and Democratic Left beat their red socialist breasts in Opposition, but show their true hypocritical hearts in Government. In this budget, they used the twin-track approach to ensure there would be no real tax reform this year either. Fine Gael will not derail them, but they had better know, and know now, that they are on a collision course with the electorate who have not been fooled. Everybody knows now there is no crock of gold at the end of the rainbow, that it was an illusion after all.
In December 1994 all the Taoiseach wanted for Christmas, to coin a phrase based on a children's song, was his two left feet. He has had them for over a year now and all he has managed to do is to score own goal after own goal. It is pitiful for his dwindling army of followers that he has destroyed the spirit and heart of his party. What is much worse is that he is destroying the spirit and heart of Nationalist Ireland also.
Last Tuesday the Taoiseach likened his Justice Minister to Kevin O'Higgins. It was my fellow townsman, Daniel O'Connell, who said of Peel originally, but it was repeated by Kevin O'Higgins who said of Lord Balfour "he sat there with a smile like moonlight on a tombstone". That, in short, is the face of the rainbow coalition Government as it slides towards its inevitable and fateful meeting with the people of this country.
In Education, 1996 is the year of the total abolition of undergraduate tuition fees. It is also the year of expansion and consolidation of the early start programme for pre-school children in disadvantaged areas. It is the year when financial allocations to schools for their running costs have been increased by six times the rate of inflation at primary level and more than three times the rate of inflation at second level.
Nineteen ninety six is the year when grants for school running costs have again been especially targeted at schools designated as being disadvantaged. It is the year when student maintenance grants have risen by double the rate of inflation and it is the year when a new, targeted and expanded vocational training opportunities scheme offers hope of a better future to the long-term unemployed.
I welcome this opportunity to contribute to the budget debate. The total gross provision for the four Education Votes for 1996 is almost £2.2 billion — an increase of over £100 million on the 1995 Estimates allocation. The 1996 Estimates demonstrate convincingly the Government's major commitment to quality in education and to continuing the task of eliminating disadvantage in our education system. These are the first annual Estimates since the publication of the White Paper on Education and they mark an important phase in its implementation.
The 1996 provision for education reflects our view that the development of the education and skills of people is as important a source of wealth as the accumulation of more traditional forms of capital. National and international bodies have identified the central role of education and training as one of the critical sources of economic and social well-being in modern society.
The World Competitiveness Report surveyed 48 countries. It tested their education systems and how they respond to the need of a competitive economy. Ireland's education system ranks second, after Singapore, among these 48 countries. This is truly testimony to the wisdom of investment in education, but we cannot and we will not be complacent. The OECD calculate that in 1992, about 70 per cent of unemployed people in Ireland had left school before completion of senior cycle. That is why targeted investment, to retain young people in school and provide second chances for adult learners, is essential for Ireland's future.
The increased provision for primary education in the 1996 Estimates demonstrates that the provision of adequate resources for primary education continues to be a priority for this Government. All subsequent education and training is built upon the foundation of primary education.
This year the capitation rate in primary schools rises by £5 to £45 per pupil, while in schools designated as disadvantaged it rises by £10 to £75 per pupil. In the three years since I came into office the ordinary primary capitation rate has risen by 61 per cent while the targeted capitation rate in schools designed as disadvantaged has risen by two thirds.
The 1996 Estimates include a provision of £150,000 for a substance abuse programme at primary school level. This programme will be implemented in co-operation with the Departments of Justice and Health as well as the Garda Síochána, teachers, parents and other interests. It forms and important part of the Government's strategy to combat the menace that drug abuse poses to our young people.
The 1996 Estimates provide almost £860 million gross for the second level Vote. This is approximately £30 million greater than the 1995 provisions. The Government is committed to achieving a 90 per cent completion rate at senior cycle by the year 2000, but simply having students stay longer in school is not enough. We must reform our curricula. We must introduce new types of leaving certificate. Only by doing this can we provide courses which will meet the needs of all our young people.
The 1996 Estimates provide for a rise of £12 in the capitation rate given to second level pupils in the free scheme, and a £27 rise in the capitation rate in second level schools designated disadvantaged. That more than adequately recognises the necessity for adequate funding for the variety of new programmes already in our schools meeting the needs of an increasing number of pupils staying on to complete the senior cycle.
The total budget provision for first and second level education in 1996 is almost £1.6 billion. Over £1.2 billion of this provision, or 75 per cent, is for the salaries of teachers. It is imperative that such a huge investment be used efficiently and effectively. All programmes at first and second level should be subject to continuous review and evaluation because the quality of the education system is a vital factor in getting value for investment. The Inspectorate of my Department which currently has the main responsibility at national level for quality assurance is concerned about this.
I have begun a consultative process with teachers, parents and school managements to introduce a new model of school inspection in both first and second level schools. This approach will ensure that each school is inspected and reported upon as a unit. The inspection will focus on the development of staff, the quality of school buildings and the provision for meeting individual student needs.
We must be concerned with the manner in which all our resources, human, physical and financial, are being used. I will shortly issue invitations to the partners in education to work with me on the introduction of whole school inspection.
On the provision for third level education the 1996 Estimates provide for gross expenditure on the third level Vote of over £520 million. This is an increase of over £58 million on the 1995 allocation. This level of funding will permit continued expansion of student numbers in third level education. It enables me to increase the level of student maintenance grants by 5 per cent, that is by twice the rate of inflation.
At this time of the year when many young people are filling up their CAOCAS forms, there is a hype surrounding the minority of high points courses. I want to ensure young people take on board the many courses which have much more modest points requirements.
There are more places than ever available at third level, almost 17,000 extra places since I came into office. There is more investment than ever in facilities at third level and third level is seen to be accessible to all in a way which it never was before because of the abolition of full time undergraduate tuition fees.
I have a vision of education as it continues from the early start pre-school to the third level college. We must support our students in education and encourage them to fully benefit from it.
Before the abolition of full time undergraduate fees, 37,000 of the 88,000 people in third level education paid fees. Families whose income was in excess of £60,000 a year had enough tax saving on covenants to pay student fees. Children of some university employees enjoyed free tuition in various colleges and there was public disquiet that many families of modest means had to struggle to pay third level fees.
Now all that has changed. The system is fair to all. It will, I hope, reverse the trend which was shown over the past 12 years where, in contrast to every other socio-economic group, the children of families of modest means, the children of nurses, guards, teachers, and public servants, actually saw their participation rates at third level fall while participation rates from every other group rose.
The abolition of under graduate tuition fees is an achievement which demonstrates that higher education is for all without barriers of income, social status or family background. The abolition of fees has improved access to higher education, something that Deputy Michael Martin promised on the national airwaves in July 1994.
Not all young people will reach third level or even the leaving certificate. That is why I am pleased to announce an additional 450 Youthreach places this year to prevent young people being trapped in a cycle of disadvantage and am glad the increased Youthreach provision dovetails with the 500 youth employment option places established by the Government for 18 to 19 year olds.
The vocational training opportunity scheme is aimed at older people who are unemployed. During the last year I was criticised for not proceeding with the proposed expansion of this scheme and for not making a further 1,000 places available in 1995. I was told that course after course had to be cancelled because of the failure to expand the number of places.
When I investigated I found some disquieting facts. Many vocational education committees did not fill their quota of VTOS places and the drop out rate from VTOS was disturbingly high. When I investigated individual courses which had to be cancelled, I found there was the capacity to run these courses despite assertions to the contrary.
Why are the 1,000 places now being restored? They are restored because they will not be simply more of the same type of programme. They will be targeted in areas where they are needed most and will operate with specific support structures for adult learners and with special arrangements which will be informed by the recent consultancy study on VTOS which I will publish shortly.
Many of those who called so loudly for more VTOS places in 1995 seemed to emphasise quantity with little regard for quality. I will ensure that the 1,000 extra places for which the 1996 Estimates provide are quality places; our unemployed people deserve no less.
This budget shows the Government's commitment to education. The education Estimates show targeted prudent and productive investment in our people. The emphasis on quality in the education system which is evident throughout the White Paper Charting Our Education Future will ensure that this investment will yield rich rewards for individuals and for society.
The budget could be described as being complacent. Complacency denotes a smug satisfaction in holding office, but the ability of the so called talents of the left allied to Fine Gael, to come up with innovative ideas to target those most in need or to provide an impetus in the productive sector has been conspicious by its absence. We should reflect on how sad it is that a Government that came in at the top of the economic cycle when we had unprecedented levels of growth and the most healthy public finances for 15 years is unable to get over the ideological problems that beset it. There is a failure to see politics as an ability to improve this country. Politicians see the opportunity, as members of this Government, to pursue their own base sectional interests and shore up that part of the constituency that they declare is more theirs than anybody elses.
The attempt to give the impression they have a social conscience while failing to understand how the economy operates gives rise to the most damning reproach one can articulate during this budget debate. Unfortunately members in Government do not know how the economy operates. Some are late converts to the concept of a social market economy and it has only been in the latest part of their political development that they have moved from a revolutionary view to a democratically based approach to the resolution of problems in society.
Fianna Fáil, having come into office in 1987 when the crisis of confidence had enveloped our society, were faced with the perception that we were incapable of dealing responsibly with our problems and managing our way out of them. In common parlance, it was felt we did not deserve our independence because we were throwing away the opportunities presented to us. That crisis of confidence, that limited horizon of opportunity was swept aside by a determined Government in a minority position. We were anxious to do the right thing by the economy and sort out the mess in the public finances inherited from the 1982-87 debacle.
We have come so far in overturning that problem and in coming to grips with the ability to produce a budget where Government expenditure bears some relationship to the revenue collected by Government. A fundamental in the proper management of our economy is being cast aside by this Government at the very height of the economic cycle. We have unprecedented levels of Structural Funds coming into our economy, representing in the region of 5 per cent of GNP annually. This presents a great opportunity to us, yet we see the Government throwing it away. We say to those in the productive sector that we require even greater effort and will provide even greater incentives to drive the economic growth that will create jobs and make the productive sector stronger so that we can provide for the high level of public services which our people anticipate from a responsible or socially caring Government.
The problem with the ideological base of this Government and the problem in terms of those who are influencing policy is that they do not understand the basic economic facts. One cannot provide for the foreseeable future the high level of public services we would all like to see if we hinder the productive sector.
The complacency I am talking about is that Government members unused to being in Government see an opportunity to spend to hold their constituencies together politically for the next elections. They are not really concerned about people who must take a risk to build a revenue base for a Government in a position to provide services from revenue. Whatever about one's criticisms of targets, policies or political persuasion of the previous Administrations, they restored credibility to the public finances. For the first time in many years we had Governments that not only met the fiscal targets they set themselves but improved on them. I have observed that change in the political culture whereby a Government or Minister for Finance can outline programmes and policies and come what may will stick to them. We did that under severe criticism from the then Opposition. The problem is that the current Government set targets which were even more lenient than those of its predecessor. However, within one year of coming into office and in the most benign economic circumstances possible for any Government given all the opportunities created in the previous decade in terms of getting the economy into proper shape, the Government broke its own targets. It exceeded spending targets and this aspect is fundamental to maintain confidence and ensure continued growth in the economy if we are to tackle the unemployment problem.
It is too often forgotten that since the 1930s more people are now at work; the level is higher than ever before. The policies pursued in the past were successful and there was a need, once the top of the cycle had been reached, not to get involved in a further extravagant expenditure binge. If all other circumstances are equal, expenditure in terms of maintaining public services during a recession is a proper economic option. It is prudent action when the proper management of any economy is examined seriously. However, it is crazy to get involved in an expenditure binge at the top of an economic cycle.
The £12 billion expenditure barrier was exceeded in the Book of Estimates presented before Christmas and this dictated the type of budget introduced this week. It decided the amount of room for manoeuvre available for the forgotten majority, the people at work. Many of them are on low and middle incomes and are caught not just in poverty traps but also in marginal tax rate traps. Those people who worked for the economic growth in the previous decade were entitled to expect relief from a responsible Government, they were entitled to expect more in their pay packets and that the Government would continue to control expenditure.
However, this did not happen because of the sectoralism which is rife in the Cabinet and which came to the fore in the Ministers budget speech. Every sector had to be considered because some people felt that certain constituencies were more theirs than anybody elses, those who feel that their political street cred can only be maintained if we tinker with a few schemes here and there. They forgot about the productive base of the economy which determines the ability of any Minister to spend 1p in their Department. This aspect was completely forgotten. The lost tribe of modern Irish political life is the million or so taxpayers who make it possible to deal with the high dependency ratio in the economy, to look after the old, sick and infirm by providing pensions and to provide proper educational structure for the young so they can compete in the jobs market in the future. This is the biggest criticism that can be levelled at the budget.
It is a pity the so called dominant member of the Government, a party of self styled free enterprise, has nothing to say to employers who are trying to create wealth and jobs in the economy. When Minister of State, Deputy Coveney, as eminent a businessman as he is a politician, referred to the corporation tax reduction of 38 per cent to 30 per cent as a fillip for small business, I wondered at what stage politics overtakes business acumen. Everyone is aware that the limit of £50,000 on profits is minimal and the increase available to small business people is a £4,000 rebate on existing tax liability. What will this do to generate wealth in the economy? We should remember that only one-third of small business is incorporated in companies; two-thirds do not have companies. Should they not be considered as people making a contribution to whom incentives should be given to provide more jobs?
Debate adjourned.