With the agreement of the House, I should like to share the remainder of my time with Deputy Séan Ryan.
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).
I am sure that is quite satisfactory and agreed. Agreed.
When I last contributed to this debate I spoke at some length about the taxation aspects of the budget. Today I should like to turn to its spending aspects and the Estimates procedures.
In his budget the Minister for Finance sought to maintain levels of spending on social services which has provoked most criticism from Opposition Deputies. The Minister has been criticised for failing to eliminate the current budget deficit. We were told by Deputies McCreevy and Michael McDowell that he should have availed of this opportunity to run a budget surplus and reduce the overall level of our national dept. While there is a serious argument to be advanced in this respect, it was advanced in a politically dishonest manner. Whenever we offer people genuine choices we need to spell out their consequences. Whenever we talk about reducing current spending we need to specify exactly where those cuts should be effected.
Some weeks ago I listened with care to Deputy Brendan Kenneally recite the Fianna Fáil line which included some colourful phrases — I think I paraphrase his comments fairly accurately — such as an allegation that the Government was embarking on the road to financial ruin, which most people accept is patent nonsense. Deputy Kenneally then went on to to argue at great length why spending should be increased. He described the lack of spending on county roads in his constituency; he condemned the reduction of the budget allocation to An Bord Bia; he mentioned the fact that Rehab could gain more from a single fund-raising event in or close to his constituency than they were being given in the budget. He deplored the lack of spending on the Garda and prison service and became positively agitated at what he described as the disgraceful increases in social welfare benefits.
This typical double-think is politically dishonest. The Fianna Fáil Party cannot simply condemn the Government for failing to make cuts and then go on to argue for a whole range of substantial increases in expenditure. If Fianna Fáil was to effect cuts in public spending it would need simultaneously to specify precisely from where such funding will emanate. It is simply not good enough for Deputy McCreevy to argue the macro-economic point to be followed by spokespersons from the spending ministries arguing the exact opposite.
This budget has made provision for the continued improvement of child care services. We need to know from Fianna Fáil whether it would have cut that provision. The budget also makes provision for improvement in the legal aid service. Would this provision have been cut if Fianna Fáil had been in Government? For the fourth consecutive year the budget raises the level of capitation grant to primary and secondary schools. Would this have occurred if Deputy McCreevy had been Minister for Finance and Deputy Martin Minister for Education? I look forward to Fianna Fáil spokespersons answering some of these questions.
I make no apology for supporting increases in spending of the kind to which I have just referred but that does not mean I believe all public spending is good; nor does it mean I believe the State is uniquely gifted in spending people's money. Undoubtedly there is waste within the public and Civil Service. Management and budgeting techniques in the Civil Service are archaic and in need of urgent reform. I know the Government is committed to dealing with some of these issues by means of the strategic management initiative for which there is all-party support; its urgency cannot be overstated.
We need to veer from the practice of budgets being increased incrementally in accordance with inflation without any serious evaluation of the need for that budget in the first place. There is understandable pressure on local Civil Service managers to maintain their budgets which, in turn, leads to pressure to spend money in a given year so that an increase can be justified for the following year. It is time for a serious re-evaluation of such budgetary practices and a fundamental examination of Government performance. We need to question whether we are getting value for money but we need to go further; we need to ask ourselves whether, in some instances, we should be doing anything or whether we should continue to deliver a particular service in its present form.
In many ways there already exists a precedent for such re-evaluation. For example, our semi-State bodies such as Aer Lingus, Telecom Éireann and the ESB have been forced through a painful, difficult process of self-analysis and restructuring. We all appreciate the difficulties this has caused for many employees of those bodies. However, we also acknowledge that the restructuring was necessary. The Labour Party is and always has been committed to the public service. We have sought to smooth the way and involve all of the social partners in the redefinition of the public service over the past few years. The process in Aer Lingus, Telecom Éireann and the ESB has been undertaken responsibly by trade unions and employers alike, recognising the need for change. The same thinking and process should be applied to elements of the Civil Service itself. In that respect I welcome the positive approach of the Civil Service unions to the strategic management initiative. I hope the Government will honour its promise to involve the trade unions at every stage of that process.
I turn now to the issue of public spending and the Exchequer borrowing requirement. I repeat that I am opposed to the 2 per cent growth limit on public spending which, in itself, is a nonsense; it makes no sense to limit our overall level of expenditure without any reference to revenue. What matters is not what we spend but rather whether we can afford to spend it. In that respect, the borrowing requirement, expressed as a percentage of gross national product, is a meaningful indicator whereas the overall level of spending is not. For example, no householder would attempt to budget by simply looking at one side of the equation; nor does it make any sense for a Government to do so.
I emphasise that I support responsible constraints on spending. I support the Maastricht criteria and believe in getting value for money. I also believe in clearly linking expenditure to results. For example, there is no point in flinging money at the health budget in the hope that hospital waiting lists will be reduced. It is right that increased funding should clearly be seen to yield returns and I trust the Government will continue that approach.
I want to return to the argument about the national debt because arguments about its absolute level are largely academic.
On a point of order, a Cheann Comhairle, I had been in my office listening to this debate and heard Deputy Derek McDowell refer to me on a couple of occasions and to a number of things I had said in this debate. I must point out that I have not yet contributed to this debate. I should like the record corrected.
If that is the case, I apologise unreservedly to the Deputy; that had been my understanding; perhaps I confused him with one of his colleagues.
Doubtless Deputy Kenneally will have an opportunity of putting his point of view later.
The absolute level of the national debt will inevitably fluctuate. This arises not only from increased expenditure but from changes in interest rates and in the relative values of the currencies in which that debt is denominated. Those factors can add or subtract hundreds of millions of pounds to our national debt within a very short time.
For example, to run a current budget surplus of, say, £100 million for the express purpose of reducing our national debt would not be worth a candle and would inflict a great deal of social damage, most likely on those who can least afford it. Ultimately, we would have reduced the national debt by a tiny fraction of 1 per cent only. If we followed the strategy suggested by the Progressive Democrats and flogged off all our national utilities over the next three years, we would have succeeded in reducing our national debt by no more than 3 per cent of its current value, when the damage done to our public services and pain inflicted on individuals would be out of all proportion to the benefit gained. This is not to say that the debt does not have to be repaid but it is clear that to deflate the economy in order to do so would be a gross mistake. Our debt-GDP ratio has decreased significantly in recent years. This is a direct result of economic growth and increased tax revenue. There is every reason to believe that economic growth and tax revenue will continue to increase in the coming years. This will multiply and increase our capacity to repay the debt and at the end of the day that is all that matters. Dangerous tinkering of the kind suggested by Fianna Fáil and the Progressive Democrats might gain us some brownie points from the markets but it could end up having the opposite effect from what is intended.
I was struck by the Minister's use of the phrase "social solidarity". This concept is critical not just in the way we formulate our budgetary strategy but also in the way we seek to run our society. The thrust of Government policy in recent years has been to concentrate additional spending on areas of disadvantage. Schools located in disadvantaged areas have attracted additional funding and tax reductions have been targeted at the lower paid. We have sought by a range of expedient taxation measures to introduce an increased element of equity into our society. It is right that we should continue to do so.
There is another aspect of social solidarity which we must acknowledge. We must not just seek to benefit those who are less well off. We must also ensure the continued willingness of those who are better off to subsidise their fellow citizens and contribute to institutions and services which benefit everyone. We must, at all costs, avoid the position which applies in the United States and, to a lesser extent, in the United Kingdom where the middle classes have private pensions, send their children to private schools, pay for private health care and do everything possible to shut themselves off from the realities of society elsewhere. This inevitably breeds resentment and ultimately undermines the social solidarity which makes the welfare state possible. We do this by ensuring that our public services are of a standard which caters for people of all backgrounds. In many ways we have succeeded in doing that.
Our health and education services are such that most people do not feel the need to opt out. Nonetheless, there are some worrying signs on the horizon and we cannot afford to be complacent. This budget represents an element of continuity in maintaining services and in targeting taxation reductions at the lower paid. I commend the Minister.
Mr. R. Ryan
It is almost a month since the budget was introduced and its impact has been overshadowed by the tragic breakdown of the IRA ceasefire in Northern Ireland. Nevertheless, I am pleased to have this opportunity to contribute to the debate even at this late stage. I hope the breakdown in the ceasefire will not have too great an impact on our economic performance over the coming year. I note this morning that the ESRI, in its quarterly report, suggests that any further deterioration in the peace process would have long-term implications for the economy. Is it too much to hope that the vast majority of the people, North and South, who have expressed a desire for a political solution to the problem can penetrate the hearts and minds of the faceless people who send out guileless men to kill and maim?
The budget will continue the progress made in the public finances during the past few years. The basic thrust of an article by Senator Joe Lee in The Irish Times earlier this year in relation to general economic management was that if nothing is broken, do not try to fix it. Such a prognosis is only half right. Despite recent economic progress, which according to the latest ESRI report is set to continue, we continue to have problems. Economic growth has been secured but a certain section of the population has thus far been excluded from its benefits. This has been a problem for some years. It is not a concidence that the first budget to tackle the problem head on was introduced by a Labour Party Finance Minister. This House and the people will recall that when Fianna Fáil and the Progressive Democrats were in power the measures they adopted, particularly in relation to taxation, were directed at the better off. This is not to say that taxation relief does not form an important part of this year's budget. I have calculated that the total taxation relief provided for this year is £178 million. This is not an inconsiderable figure. If the provisions aimed at tackling long-term unemployment announced by the Minister for Finance, Deputy Quinn, are successful, as I am confident that they will be, in future years the scope for increased tax relief will be all the greater.
PRSI workers who pay over 80 per cent of the total tax take have to be convinced that other sectors of the community are paying their fair share. It is up to the Government to ensure this is the case. I avail of this opportunity to spell out some of the progress made in recent years. Child benefit increases over the period of the Programme for Competitiveness and Work are worth £200 per year for a two child family. For a four child family the same increases are worth over £500 per year. These improvements are applicable to all families and are of great benefit to the income of the household because they are not taxed in any shape or form. In the same period, it is estimated that 116,000 new jobs have been created, a 10 per cent increase in job creation. This is not enough, there is still a long way to go but we have made progress over the past couple of years.
The budget seeks to continue this improvement and to extend it to sections of the population who have not benefited from employment growth. Measures announced by the Minister include reduced employers' PRSI to increase the incentive to expand employment; refocused community employment to concentrate on the needs of the long-term unemployed; the provision of an additional 1,000 full-time places on community employment schemes; an £80 per week employers' subsidy scheme for those who take on a person who has been unemployed for three years or more — this is aimed at getting 5,000 people back at work; and expansion in the numbers on the back-to-work allowance scheme from 10,000 to 15,000 places; retention of child dependant allowance and medical card for a certain period by a person who has been long-term unemployed on taking up employment — this is a great incentive for those in low income jobs.
I would encourage the employer groups who have lobbied myself and other backbenchers and who have made submissions to the Minister, particularly the small business sector who have a role to play, on the basis of the progress and concessions made not only this year but last year, to take on extra employees. This would make a significant impact on unemployment.
The reason the budget was greeted with such ire by Members on the Opposition benches is that the measures I have outlined have been taken in conjunction with an ongoing improvement in our social infrastructure. We are all aware of the poor condition of our non-national roads. People have taken to the streets and to the ballot box to protest about potholes and the inadequate road network generally. I am pleased that my party colleague, the Minister for the Environment, Deputy Howlin, was able to announce a £225 million package to modernise our roads, £146 million of which will be spent on non-national roads this year as part of a ten-year plan. I compliment the Government on going down that road.
I welcome the allocation from the National Roads Authority of almost £23 million to improve the roads in Fingal. An additional £8 million has been allocated for the urban renewal scheme. A submission has been made to the Department of the Environment for an urban renewal scheme in my constituency of Balbriggan which was once the industrial capital of Fingal but is now an unemployment blackspot. The Department is currently reviewing the urban renewal scheme and I hope Balbriggan will be included in the next scheme.
Progress has also been made in regard to housing, an area on which little headway was made by the Opposition parties when they were in power. The Minister for the Environment has maintained Labour's commitment to this important area; the allocation for this year is £366 million. With so many people on the housing waiting lists, a larger increase would have been appropriate but I congratulate the Minister on what he has achieved.
I congratulate my party colleague, the Minister for Education, Deputy Bhreathnach, for the continuing improvement in funding for education. Capitation levels, the bedrock of financial support for our schools, have increased substantially each year since she entered office. I am not satisfied, however, with the size of the allocation for the second level school building programme, the funding for which has been reduced to £30 million. Will the Minister reconsider this matter because many children are being educated in prefabricated classrooms, which is totally unacceptable if we are to provide them with the type of education required in the future.
It is easy for the Opposition to argue for a reduction in public expenditure yet neither party could achieve this while in Government. Rather than being a burden on the public, public services were viewed by those parties as essential. The spectacle of Opposition politicians arguing for reductions in public expenditure is in stark contrast to their behaviour in their constituencies where they call for Government intervention on a regular basis. They should stop knocking social services and acknowledge the invaluable role they play in our society.
There are currently two industrial disputes on the horizon involving nurses and civil servants who were on picket duty yesterday. I hope a mechanism will be found to ensure the people involved in those disputes are given adequate recompense for the valuable work they do on behalf of the State.
I commend this budget to the House and have no doubt next year's budget will result in further improvements in our social infrastructures in addition to necessary tax changes.
I am pleased to have an opportunity to participate in this debate on the budget. In laying blame at the door of Fianna Fáil, Deputy Ryan and the previous speaker should remember that when Fianna Fáil returned to office in 1987 it took some difficult decisions, and the record will show that. As a new Deputy at that time, I found myself in the eye of the storm in having to cope with what we referred to then as cuts in public expenditures. Those cuts were radical in certain cases but they were necessary. It has since been proved that they laid the foundation for a developing and successful economy, the benefits of which we are all reaping now.
The decisions taken at that time were painful and Fianna Fáil backbenchers were under enormous pressure to dissuade the Government from implementing various cutbacks but we held firm in that regard. I acknowledge the appreciated assistance of the Fine Gael Party at the time. That assistance was in the national interest and it is unfair for speakers now to say Fianna Fáil does not have the stomach for such action. It has been proven that we do and the country is the better for it.
There is no longer anything surprising about Budget Day which, in the past, was full of surprises. The Minister for Finance was a popular and sought after person and the House was always full to capacity. The public gallery would have been packed to overflowing with people who had a direct interest in certain aspects of the budget.
In the past two years that is no longer the case. There were few people in the public gallery this year and it seemed like an ordinary working day in Leinster House which was a little disappointing. The reason for that lack of interest is that most of the information in the Budget Statement of the Minister for Finance is well known in advance. In the period leading up to the budget, we can read in newspapers about the changes proposed, even those such as excise duties which would directly affect our taxation finances. Deputy Hogan, unfortunately, lost his job on this issue. In hindsight I believe he should have been restored to his job. We certainly learnt a great deal more before this budget than we did from his faux pas. Most people regretted his demotion because Deputy Hogan had been an effective Minister of State in the short time he held that position.
On budgetary policy, a debate is emerging on the financial planning of the country's finances, which seems to be done on a year to year basis. That does not make much sense. A set plan for economic development should be laid down over a three or five year period. The Government should consult the social partners and other interested groups on the general thrust of our financial management over a three or five year period. If such planning was done on a three or five year basis, we would be less inclined to be subject to pressure and lobby groups, some of which are quite powerful, because the parameters to which we must adhere would have already been set. I hope either this Government or a future Fianna Fáil led Administration will bite the bullet on this issue.
The Minister for Finance announced in the budget that he intended moving the budget process forward to the autumn of each year, perhaps starting next year. That is probably a good thing but I have a sneaking suspicion — perhaps I am quite wrong — that the proposal in the Estimates for the 1998 budget will become an election manifesto. I will be watching very carefully to see if the budget proposals become the basis of the Government's election manifesto. The Government may decide to produce the Estimates in September or October 1997, if it has not left office, and then put the package to the people. That leaves the Government open to intense pressure to include sweetners that ordinarily it might not do.
We would never do that.
That remains to be seen and time will tell.
The social partners were called upon to participate in the preparation of a national plan in 1987 and since then have played a very constructive role. They accepted that certain corrective measures had to be taken and have supported them. Society owes them a debt of gratitude for the patriotic manner in which they have assisted in the proper planning and development of our economic and social affairs. Their contribution has been significant and we are the better for it.
A sound economy is essential to provide facilities for the less well off in society. If the economy is doing badly it is the poor who tend to lose out, as has been proven in the past. When the economy is doing well there is room to target the less well off with a view to improving their economic lot in terms of jobs, social welfare payments and other supports. The perennial problem of the past ten to 15 years is the question of unemployment. The blight of unemployment has led to increased emigration. We are reaping the benefits of the decisions taken by successive Governments since 1987, with the support for part of that time of Fine Gael in Opposition. I hope that will continue. Latest reports suggest that our economic base is soundly rooted and, given the absence of certain extraneous issues, can grow by 5 per cent, which is very significant in European terms. I hope that the difficulties with the peace process will not last and that by the combined efforts of the Government and Opposition together with the British Prime Minister and his Government a mechanism will be found to restore the peace. Apart from the tragic loss of life, the collapse of the ceasefire has a crucial bearing on the development of our economy in areas such as tourism and people's willingness to invest in our economy. The person who plants a bomb or who takes a life is making a direct impact on the ability of the economies North and South to develop.
A significant number of net new jobs has been created in the past two years but the Minister for Finance did not refer in his budget speech to the type of jobs that have been created. There is a growing concern that some new jobs are not what they are cracked up to be, jobs that do not give a person an opportunity to borrow from a bank because there is no reasonable long-term guarantee of permanence. We need to find out the types of jobs and the sectors in which they are being created. One hears a great deal about growth in the service sector and it has contributed substantially to the increase in jobs but we are concerned about the type of job that has been created. I hope such information can be made available because we need to know if we are creating sustainable jobs that give people a decent chance of making a living and planning their future with a degree of certainty.
I welcome the introduction of a subsidy for employers taking on new employees who have been unemployed for at least three years. Let me sound a note of caution, however, as the Government will need to ensure that the procedures for participating in the scheme are as simple as possible. We introduced similar job subsidy schemes in the past but the administrative work involved was so detailed that many would be employers did not have the time to go through the rigmarole of the paperwork and wait a considerable length for the subsidy to be paid. In those instances the targets were never met. I call on the Government to establish a simple system for employers to avail of this £80 job creation subsidy so that it will be taken up by the maximum numbers. Otherwise employers will be reluctant to participate in the scheme, not because they do not wish to but because it is time consuming to administer it.
It is welcome that certain categories of unemployed persons can retain their medical card on their return to work. This is a good thing — something we were calling for when our party was in Government — and I hope it will be put in place as quickly as possible. This has a bearing on people's decision to return to the labour force, particularly in low paid employment. Concern will be expressed by those currently in employment earning sums marginally above the qualification threshold for receipt of a medical card. They lose out consistently because of this. They may argue that if they were unemployed, they would receive a sum close to what they are now earning with the added benefit of a medical card. The matter is not as simple as that, but, as the Minister is fully aware from dealing with constituents at clinics, different standards are applied in each health board area. A graduated system would be worth considering taking the proposed changes into account.
I wish to deal with some of the matters for which I have responsibility in my role as Fianna Fáil spokesperson on the travelling community, child care and special education. In mid-1995, the excellent report of the task force on travellers, established by the Fianna Fáil-Labour Administration and chaired initially by Deputy Liz McManus, now Minister of State at the Department of the Environment, was published. It made a number of outstanding recommendations and brought together every aspect in a way that had never been done before, although there are umpteen reports dealing with the various needs and difficulties of the travelling community. I have called on the Taoiseach to arrange for a debate on it at an early date. Every Member has an interest in the welfare of travellers as the difficulties experienced in their constituencies impinge on their rights and entitlements.
In reply to questions tabled by me the Minister for Equality and Law Reform indicated that interdepartmental discussions are taking place which I hope will be brought to a conclusion quickly. The Minister could then proceed to implement the recommendations in the report. A number of serious issues remain to be dealt with, on which progress must be made quickly. The travelling community has been singled out for special mention in recent media reports dealing with the upsurge in crime in rural areas. These articles have been condemned across the board which is to be welcomed.
One cannot provide a good health and education service to the travelling community unless its accommodation needs are met first. Unless an extra 3,100 units of accommodation are provided between now and the year 2000 the targets set out in the report will not be met with the result that travellers will continue to be forced to live on the side of the road.
In the greater Dublin area 161 families are living on temporary halting sites which lack basic facilities such as water, sanitation and power; 204 families are living on the side of the road, often in dangerous conditions with nowhere to go and 60 families are living in overcrowded group housing schemes, giving a total of 425 families. The figures are comparable in other major built-up areas. Unless their accommodation needs are met, we cannot provide them with educational and training opportunities through agencies such as FÁS or a good health service.
In this connection the proposal that a traveller accommodation agency should be established is an excellent one. I hope that such an agency would be given the necessary statutory powers to ensure that every local authority plays its part in meeting the accommodation needs of travellers. On the costs involved in providing such accommodation, criticism has been expressed. I reject this on the basis that much ground has to be made up by comparison with every other sector in society. That is the reason the expenditure involved seems inordinately high.
The finding of a report published in 1987 showed that the number of deaths per 1,000 live births among the travelling community was 18. This is a startling figure. The comparable figure among the settled community was seven. The findings also showed that the average life expectancy of travellers was only reaching the 1940 level of members of the settled community.
It is not practical to suggest that the members of the travelling community who have their own culture and way of life should settle in ordinary housing. Many of them would not be able to cope in the same way that many members of the settled community would not be able to cope if they were asked to live in a caravan for the rest of their lives.
The INTO recently held a special conference in Galway to consider the issue of special education at which a number of crucial questions were raised. For a variety of reasons we have not been able to make the progress we would like in providing the necessary resources to meet the special education needs of children. Teachers, management and support groups have been calling for the adoption of a co-ordinated approach as recommended in the report of the review group published a number of years ago. I do not have time to deal with the issues that need to be addressed, but such an approach must be adopted if progress is to be made.
The provisions of this legislation, the most important to come before the Oireachtas since 1908, are much more caring than those of the 1908 legislation. While they may have been an advance at the time, they leave much to be desired now. The Minister of State, Deputy Currie, is responsible for the implementation of many of the provisions of the 1991 Act. As his predecessor, I welcome the progress in this area. However, will he ensure that health board reports are founded on facts? While the funding provided is substantial and encouraging, in the last number of years — even when Fianna Fáil was in Government — some projects were not developed to the extent envisaged. For example, the provision of a small number of additional places for homeless children does not make an appreciable difference to a health board region. Advisory committees, which have a crucial role to play in the implementation of the Child Care Act, should submit reports on an annual basis.
The Minister proposes to create an additional 700 net new posts this year. I hope they will not be created as a result of rejigging other services in the health area. I hope personnel are not rearranged merely to deal with the implementation of the provisions of the Child Care Act. Will the Minister confirm that will not be the case?
The Child Care Act is about putting in place resources, trained personnel and the legal framework on which a number of the sections are based. All the necessary provisions are included in the Act. If we can put in place the necessary structures to meet the priorities set out in the legislation we will have done a good job for our children.
There are many other areas which the Minister must address. He has a keen interest in the ongoing problem of truancy. He recently visited a primary school where approximately 83 per cent of the pupils attend on any one day. In a similar school in a neighbouring middle class area approximately one pupil per class is absent on any one day. The truants, who are generally absent on Mondays and Fridays usually, end up getting into conflict on a small scale with the Garda but in later years many of them end up involved in serious crime. Will the Minister introduce proposals on truancy so that we can resolve this problem?
I wish to share my time with Deputy Deasy.
I am sure that will be in order.
I welcome the opportunity to contribute to this year's debate on the budget, the second introduced by the Minister for Finance, Deputy Quinn. It is designed to create jobs, a major difficulty encountered by this and previous Governments, and it strikes a fair balance. There were demands for major tax reductions, particularly in income tax. There were also major demands on the Departments of Health and Education to ensure equality for all citizens. Furthermore, there were demands for the unemployed, the disabled, those in receipt of pensions and for the improvement of our county and regional roads. To meet those demands serious consideration had to be given to the amount of tax relief that could be given to those who contributed for many years to the upkeep of the country.
The Minister accommodated his Cabinet colleagues and at the same time introduced tax relief for those who deserve it. The suggestion of many eminent journalists in recent years that a Labour Party Minister could not be trusted with the public finances has been put to bed by the Minister for Finance. His sound judgment has ensured that the economy will continue to grow, with the highest growth rate in Europe. A 1 per cent growth rate results in the creation of approximately 6,000 new jobs. Last year our economy grew by 8 per cent, giving us 48,000 new jobs. At the same time, we maintained low interest rates and low inflation which augurs well for the future.
The Government must ensure that high growth rates translate into more jobs and the redistribution of wealth in a progressive and fair fashion. State intervention in the market place is essential if we are to make real inroads to job creation. In this regard, I welcome the Minister's decision to make this year's budget a budget for work. It contains a series of significant specialised areas designed to assist the long-term unemployed. I welcome the positive attitude the Government has adopted to tackle the unemployment crisis, but it cannot do it alone. It will require the co-operation of the social partners, particularly the trade unions, IBEC and the farmers.
The main cause of social deprivation and disadvantage is unemployment, particularly long-term unemployment. It is generally accepted that if a person is unemployed for more that three years he or she has an 80 per cent chance of not getting a job. That vicious cycle must be broken because not only does it require a considerable increase in the social welfare budget, it creates many difficulties in other areas. An area where there is large scale unemployment presents difficulties for all Departments, unemployment destroys homes and families. In some communities several generations of families have not worked and that dangerous sociological trend must be arrested. People should not be left in this vulnerable position.
The Minister has implemented a series of fiscal measures designed to create jobs. The reduction in employers' PRSI and the increase in the employees' PRSI allowance will make it attractive for employers to take on extra workers. These changes will help to eliminate unemployment traps which prevent many people from taking up work. In future, the long-term unemployed who take up work will be able to retain social welfare benefits, for example, medical cards, for three years. However, employers must not exploit this. If the Minister is prepared to make £80 per week available to employers to take on extra workers they must match this amount and not take advantage of the long-term unemployed. Many people do now want to take up employment because they are afraid of losing their medical cards. As those of us who have to pay doctors know, medicine does not come cheap. That they can retain their medical cards, for three years on taking up employment will make it easier for them to get back into the work force and get their lives together.
The aim of all social welfare provisions should be to help people get back to work; they should be an investment in the capable and productive. We must invest more funding to help people overcome their disabilities and upgrade their skills. The community employment scheme is one of the initiatives which helped people develop new job skills. It was launched by the Minister, Deputy Quinn, when he was Minister for Enterprise and Employment. Community employment workers have benefited greatly from the budget. For example, the decision to transfer them from Class J to Class A was a progressive step forward — they should not have been singled out or had different conditions imposed on them. There is enough of that type of class distinction in various employments at present without contributing to it. The budget gives proper recognition to the value of community employment schemes both for workers and the community at large. The allocation of an extra 1,000 places and the retention of 25 per cent of places for the long-term unemployed will help job creation.
I understand why Department do not wish to increase public expenditure but schemes could be better policed and would be more productive if public bodies played a leading role in this area. It is important to ensure that the jobs created under the community employment schemes do not replace existing jobs. This happened in certain cases and many public sector workers have been left with a bad taste in their mouths since the decision in 1987 to cut back on the number of people employed in the public service. The only way to solve this problem is to ensure that agreements are signed so that existing employees will welcome community employment workers into their places of employment.
Growth in the economy is important for the creation of real jobs. There was major growth in the tourism industry last year but jobs may be lost in the industry this year if the peace process is not reinstated. I sincerely hope the people who have created the difficulties in the peace process will realise they are affecting their own people. A return to violence will also affect the level of inward investment. I hope the men of violence also realise that industrialists will not invest here if there is violence but will invest instead in peaceful countries.
In the area of job sharing there is tremendous potential to create real jobs for which people have been educated and trained. However, this will require the full co-operation of the trade unions and employers in the private and public sectors. When people reach a certain age they do not have the same pressure on them to work a full week. Their families may be reared and they may want to have more free time. Job sharing can create positions for college graduates, nurses, teachers, health care workers, engineers and technical staff. In my trade union days I advocated the encouragement of this type of employment as I did not believe it would be possible in the long-term to provide 35, 38 or 40 hours work for all employees given the introduction of technology and the other developments in the work place. Employers and trade unions must take steps to ensure that as many jobs as possible are available for young graduates so that they stay in the country and help build it in the future.
I thank Deputy Fitzgerald for sharing his time with me. I am not impressed by schemes run by State agencies which are supposed to help create employment. One can fiddle around with figures and tamper with FÁS and other schemes run by Departments which provide employment on a temporary basis, but we need to solve the problem of unemployment on a permanent basis. The way to do this is to reduce the level of taxation, PRSI contributions and levies. In other words, there must be a direct attack on the disincentives to work. A worker becomes liable for income tax on quite low income and he or she does not have to earn much more to be caught in the higher rate. If the worker has a reasonable salary, at least half of it is paid in taxation and PRSI. That is the real disincentive. Many of these schemes are piddling little schemes which do not achieve anything worthwhile.
In this year's budget there should have been a reduction of 2 per cent in the taxation levels, taking the 27 per cent rate down to 25 per cent and the 48 per cent rate to 46 per cent. That would give a clear message to hard working and highly taxed employees that the goal is to reduce taxation in the near future to 20 per cent and 40 per cent and widen the bands along the way. It is preferable to reduce the rates; widening the bands is a secondary consideration.
Employees should be given hope that they will gain from working hard as there is much hopelessness and helplessness. People do not see light at the end of the tunnel. Although anyone who says this is criticised, a number of people who could work do not because it would not pay them. Between their social welfare benefits and the perks from being unemployed, they find it much easier and more comfortable not to work rather than to take a job for a few pounds more per week. If they can get a couple of days doing nixers, that is all the better.
When unemployment tables are published they should not only contain a blanket figure like 270,000. There should be projections and a breakdown of the figure into those who are generally out of work, those who are about to receive retirement pensions, those on FÁS schemes, those out of work on a temporary basis, etc. The figures should contain a clear analysis of the overall position and every category should be listed.
The vast majority of unemployed people are genuinely out of work but there is a significant element who, because of the reasons I mentioned, find it more profitable to stay unemployed, do nixers and get fringe benefits. They see no point in working. Every Member of this House is aware of this issue. They will not speak about it publicly because they are afraid they will be criticised or lose votes but it is a fact of life and until it is faced we will have severe problems. The real issues should be tackled. Tax should be reduced and people should be given an incentive to work hard.
On last night's Private Members' motion there was an unfair attack by a Democratic Left Deputy on the farming community who, she said, are not paying their fair share of income tax. Farmers are listed among the self-employed who pay taxation on the basis of what they earn. If they do not earn much money they do not pay tax. It is diabolically unfair to accuse a section of the community which works extraordinarily hard of cheating the system. That is basically what was said.
About 180,000 people are listed as farmers but hardly 50,000 of them are commercial farmers. Most of the other 130,000 are termed subsistence farmers and there is a huge distinction between the categories. They live primarily on social welfare benefits and partly through their farming activities. They may have four or fewer animals but they are categorised as farmers. One gets a distorted figure when one looks at the amount of tax paid by farmers. Many of the commercial farmers may also have commercial problems through heavy borrowings, disease, misfortune and bad weather, so some of them would not be elibible to pay tax. As with any self-employed person, they return accounts, are assessed and pay what they should. It is unfair to attack a section which works as hard if not harder than anyone else, from 6 a.m. to 8 p.m. seven days a week at some times.
The self-employed and the PAYE sector keep this country ticking over. They should get relief at every turn because we are too highly taxed as a nation. People like Deputy Lynch should know that this year it is projected that agriculture will bring in earnings of £2 billion, which in itself will keep the social welfare system and health services going. To criticise those who are working hard is counterproductive and unfair.
A matter which has given rise to much concern in recent times is law and order and the position appears to be getting worse. There have been horrifying crimes of late. Some of them are in the process of being solved but that is not the point because the victims and their families have suffered. We need a radical approach to deal with the problems on our streets and in the countryside. We can have all the strategies in the world using the present Garda Síochana force but it will not solve the problem to any significant extent. The gardaí are doing their best and will continue to do so but the problem needs additional measures.
Previously in this context I have mentioned our Army of 11,000 men and women. I do not say our law and order problem is out of control because I do not want to over-dramatise, but it is creating serious difficulties. When people feel unsafe in their homes or walking in our towns and cities, including O'Connell Street, the main street of our capital city, drastic action is needed. I advocate that the Army be mobilised to assist the Garda in securing our towns, cities and countryside. People should feel safe in their homes, walking outside or driving about.
In other countries the military act as an aid to the civil authority when the civil authority has been overrun by criminality. As legislators, we need to adopt a new approach, and I wish a majority of my colleagues would say likewise. We should mobilise the 11,000 people in the Army to help the civil authority to stop the loutish, criminal behaviour and the lewd comments one must listen to. In my travels as a member of the Council of Europe I have never seen elsewhere in Europe the indiscipline, bad manners and misbehaviour that I see in this country. In some countries which are supposed to be Third World countries the standard of manners and discipline is far superior to what we see here. Strictures will have to be imposed on people who will not behave themselves.
Present Garda numbers are not sufficient to bring a very serious situation under control. I ask that the Government and the Members of this House consider a practical approach to law and order as the problem is out of control in many areas and cannot be tackled under the present system.
Six months ago Deputy Séamus Brennan was in here screaming at the Minister for Transport, Energy and Communications, Deputy Lowry, in connection with certain matters. Now that the Minister has turned out to be a knight in shining armour, as he was yesterday on the Long Mile Road when he and his driver Tadhg Daly went to the assistance of a mother and her child who were being assaulted, I thought Deputy Brennan would have been magnanimous and said a good word about somebody who has been attacked constantly in this Chamber. This may not be a budgetary matter but it is related to the issue of law and order. If we had more civic-spirited people we would go a long way towards solving our problems, but they will not be solved under the present system. With due respect to the Garda they need more assistance numerically and in terms of legislation.
Although I do not agree with all Deputy Deasy's views, I compliment him on the forthright manner in which he expressed them, and I certainly think he had courage to stand up and say what he believes. I also compliment the Minister, Deputy Lowry, and his driver on their prompt action yesterday.
Small events often highlight how out of touch Government is with the reality of people's lives. One such event was the announcement in the budget that tax relief would be given on the cost of alarms. On the Sunday before Tom Casey was murdered I spoke to a journalist about crime in rural Ireland and the provision in the budget of tax relief on the cost of alarms. I told him that tax relief was not what we needed, because most vulnerable people in rural Ireland do not have a taxable income and, anyway, are afraid of the system. What is needed is a simple measure on which, for some reason best known to himself, the Minister for Social Welfare refuses to budget. It relates to the penal assessment of capital, particularly in the case of pensioners who have lived frugally and saved for a lifetime. Anyone who lives in rural Ireland knows that old people keep money in their homes because they will lose heavily on their pensions if they put it in the bank. This is a double tragedy because it puts these people at risk and, further, money lying in houses is dead money which is no use to anybody.
If somebody has lived frugally and saved £10,000 over a lifetime, he is assessed at the rate of 10 per cent and his pension is reduced by £20 a week. Many old people cannot understand why thriftiness and frugality are penalised by the loss of pension rights. They cannot understand either the lack of relationship between the assessment of capital and the money that capital is earning. The average interest rate on demand deposit accounts in the high street banks is .25 per cent. To put it in simple terms, if a person is means-tested on £10,000 he loses £20 a week, but if he puts it in the bank he gets about £0.50 a week or £25 a year in interest.
If we recognise the truth that much rural crime is associated with break-ins to houses where people are thought or known to have cash stashed away, we should do away with means-testing of capital in the case of pensioners, not set up more task forces.
The State has always encouraged the saving of money. I cannot understand, therefore, why the State does not encourage people to put their money into the Post Office savings banks or the credit unions where the money would become available to the community or to the State and serve a useful purpose. If the Minister for Social Welfare is interested in putting alarms into the houses of vulnerable people he should introduce a straight grant rather than tax relief and do away with means-testing of capital for pensioners.
This budget does little for most people, but it certainly does nothing for rural people. Most people in rural Ireland are subsistence farmers and very few in my area live off their holdings. As far as social welfare benefits are concerned, means are assessed on a £1 for £1 basis for the self-employed. I often hear high earners complain about paying tax at 50 per cent but little is said about the rate at which small farmers, fishermen working out of currachs or those who operate a seasonal bed and breakfast business are taxed. It is time to face up to this issue. It is incredible that endless time and money is spent trying to calculate whether small farmers with two or three cows have an income of £395 per annum. It is also incredible that the income from operating a bed and breakfast business in a three-bedroomed house for six or eight weeks in the summer is assessed.
Apart from the REPS scheme there is no mention of the social welfare code in the recent islands report. What is the point of developing agriculture when most people on the islands depend on social assistance for supplementary income and are penalised if they increase their farm output?
It has been traditional in my area for people to stay at home and look after their parents. This is not confined exclusively to women. One of the reasons for the bachelor syndrome in the west is that people stayed at home and dedicated their lives to the care of elderly parents. If one spouse is working and the other applies for the carer's allowance the first £150 income is disregarded but if a small farmer with 20 acres stays at home to look after a parent he or she does not receive any relief for the small amount of income derived from the farm. Even if the person earns £30 or £40 per week from the farm it is deducted from the carer's allowance. Both categories should be treated equally, otherwise we condemn the latter category to a subsistence standard of living. We say to them that they cannot improve their incomes, which would directly benefit the person being cared for, because the bureaucrats who thought up the scheme did not take them into consideration.
The car scrappage scheme is urban based. A car is considered a necessity in the city although there is public transport whereas it is essential in rural areas. Many families need second cars in areas where there is no public transport. Small cars such as a Micra which can be bought for £8,000 are suitable in the city but would not last long on country roads in mountainous areas. People need good quality 1.3 or 1.6 litre cars. I proposed some years ago that £200 should be paid for each car scrapped provided the car and tax book were brought to a registered scrap-yard. This matter should be reconsidered. Abandoned cars, some of which are used as hen houses and so on, are the greatest eyesore in the countryside. If such a scheme were operated this problem would be resolved. Young joyriders buy "company" cars at knock down prices but if £200 was paid for scrappage it would do away with this practice. It would be a more equitable and less artificial scheme than the present one which is geared towards the middle class urban second car owner.
We are aware of the damage caused to the motor trade by the importation of second-hand cars. There is VRT and VAT on cars. If one imports a car and VAT has been paid in another jurisdiction one does not pay VAT on entry to this country which makes it attractive to import from countries with a lower VAT rate. Many imports are from Britain where there is a 17.5 per cent VAT rate. It would be interesting to know if there is an obscure EU regulation that prevents us from reducing our VAT rate to 12.5 per cent and increasing the VRT rate slightly. Such a change would make importation of second-hand cars unattractive. It would also mean that each car would bring in more revenue. We could afford to reduce the total rates of car taxation when VAT and VRT are combined. I hope the Minister understands what I am saying and will give it some consideration and pass it on to his colleagues.
Medical cards are the bane of TDs' lives. Many of us spend hours looking after those who have lost their medical cards because they are £5 over the means limit. I welcome, to a point, the retention of the medical card for three years of employment. However, that only defers the evil day because we hope that the person will stay in employment permanently. That is the answer for only some people to the medical card issue. It is a short-term answer for those who obtain employment but it only defers the blow. Losing their medical card means a great deal to people.
Those who are less than £25 or £30 over the medical card means limit should be given a chance to buy into the medical card scheme. In other words, they could have a medical card if they made a financial contribution towards it. An absolute cut off level means that people lose out. The cost of drugs is not a huge problem for those who lose their medical card because there is a refund of drugs scheme under which a drugs bill of over £90 in a quarter is refunded. However, there is no ceiling for those, particularly families with young children, who make multiple visits to doctors. Regardless of how much they pay in a quarter, they have no way of recouping that money. Consideration should be given to a scheme to refund doctors' fees which would mirror the refund of drugs scheme. If the amount one paid one's GP in a quarter exceeded £90, on a standard fee per visit basis, one could reclaim the difference. In that way a ceiling would be placed on the amount that people have to pay their GPs. Fees charged by GPs seem to vary greatly but the standard fee per visit could be set at £15. With a ceiling of £90 equalling six visits per quarter, the cost of every additional visit would be refunded as long as one could prove that one had paid the fee. Such a scheme would be no more open to abuse than the issuing of prescriptions and would remove the huge gulf between those who do and do not have a medical card.
All non-medical schemes and levies, such as leaving certificate examination fees, which depend on the holding of a medical card but have nothing to do with medicine should be detached from that scheme. Such items add to the huge gap between holders and non-holders of medical cards and are a disincentive to take employment in certain circumstances.
I was disappointed at the lack of reform of the social welfare system in this year's budget. We could argue for hours about the general increases but I was very disappointed by the lack of reform. A number of years ago a Minister of State spoke about integrating the tax and social welfare codes. That seems to have gone by the board. I could spend a week discussing the many anomalies in the social welfare code. I wish to highlight some simple changes which could have been made and I hope will be made in the near future.
It is crazy that dependent children are paid different rates under different schemes because all children have the same costs. A rate should be fixed — preferably the higher rate — for a dependent child, regardless of the scheme. Their shoes, cornflakes and clothes all cost the same. If one wishes to give lone parents extra money that should be done through the basic allowance rather than through the child dependent allowance. It is nonsense and illogical to say that children cost different amounts of money depending on the situation of their parents.
All schemes for dependent children should have the same age limit. The limit for unemployment benefit is 18 years of age but it is 21 years of age for long-term unemployment assistance as long as the child is in full-time education. All of the schemes for dependent children should have a uniform age limit of 21 years of age. It would be a huge help to those who cannot work through illness or are laid off from their jobs if they received payments for their dependent children up to the age of 21 years.
The demographic trend shows a large decrease in the number of children. I welcome the increase in child benefit. However, I am disappointed that it was not extended to dependent children of 20 years of age who are still in full-time education. Many parents who have difficulties in putting their children through full-time education find such child benefit a huge help. We spent the autumn taking about the family but we should do something for families.
There was a great deal of merit in what Deputy Deasy said about employment. Schemes will not solve the employment problem. More worryingly, the number of jobs to be created by the schemes announced in the budget amounts to 11,000 jobs. That is a poor response to the 285,000 people who are signing the unemployment register. I am not saying that any recent Government has tackled this differently but it is time to look at the problem realistically.
A scheme which gives employers £80 a week has been introduced. I have spent my lifetime giving people employment and if I identified a good worker I did not care if he had been unemployed for three or ten years. I did not need to be given any money to employ him if I had a job to give him. Most employers will say that all the money and incentives in the world will not make them carry passengers who will not perform. Most employers would feel that subsidising workers who cannot perform their tasks at the same standards as everyone else would create a "them and us" situation in the workforce. We must approach employment creation in a different way. While I do not agree with the solutions put forward by Deputy Deasy I agree with much of his analysis.
That brings me to the tax system. Tax changes in this year's budget were minimal. I particularly welcome the introduction over two years of the £80 PRSI exemption. It is an innovative and welcome move. Taking into account the reduction in mortgage relief there is very little change in the tax system, and everybody must recognise that.
PRSI and levies should be amalgamated. The system whereby people with a medical card do not pay levies while those without one pay, and where people earning more than £173 per week pay levies while those earning less than that amount do not is nonsense. An employer would have to be a genius to work out the system without the aid of a computer and remember all the rules that apply. I was involved in paying out wages for about 20 years and every year extra rules were introduced. I am glad I am not in that job now; if I was I would insist on having a computer. The system need not be complicated. It could be worked on a revenue neutral basis. For example, the first £80 should be exempt, a rate of 5 per cent could be applied to the next £220, with the balance at 8 per cent. The ceiling could be adjusted upwards until a revenue neutral basis is achieved. It could then be decided how much money would be refunded. Such a system would be simple, cogent and easily understood. There should be no ceiling on employers' PRSI. The rate should be fixed at 10 per cent.
It is essential that low paid people are taken out of the tax system. We have been told that a further 12,000 people were taken out of the tax net this year, but if we accepted the figures quoted by every Minister for Finance in the last 30 years for those taken out of the tax system, there would be nobody in the system. The first £100 of income for a single person and £200 for married couples should be exempt from tax, with exemption limits for children. It is a waste of time for the Revenue Commissioners to assess single people earning less than £100 per week and married people earning less than £200 per week. Instead they should concentrate on those evading tax. Until that is done there will continue to be an interface between social welfare and tax, which makes it difficult to create employment and causes people working legally in the system to lose money. Much more radical changes are necessary to tackle this problem and I hope such an approach is taken in next year's budget.
I wish to share my time with Deputy Bell.
Is that agreed? Agreed.
I compliment the previous speaker who made a very fair, reasonable and logical assessment of the budget. It is a pity this debate did not take place before the budget so that issues raised by speakers such as Deputy Ó Cuív could have been taken into account and changes made in those areas. The Deputy referred to many issues about which I feel very stongly. As a small island nation we have an enormous capacity to produce complex and confusing systems. A logical approach should be taken to the tax system. Bureaucrats have too much say in these matters. Politicians who deal with problems on the ground should be able to convince bureaucrats that the system must be simplified.
For example, in assessing people for social welfare, medical cards and other benefits, some civil servants enjoy prying into people's private affairs, meddling in their business and asking them to produce documents. I agree assessments are necessary, but some assessments costing thousands of pounds need never be undertaken. I refer to a case I dealt with recently of a 93-year-old man who was reassessed for eligibility for a medical card. To exclude people such as these from assessment would not damage our attempts to eliminate fraud. That person was also asked to produce documents about his income and about a farm he handed over ten years ago. When I made inquiries into the matter I was told that the person's medical card would not be withdrawn anyway.
Why waste public money and time on such matters? Public servants went on strike yesterday because of the Government embargo on employment, yet time is wasted on assessments such as this. I appeal for logic, understanding and a degree of humanity in making assessments. There is no point making assessments if a decision is made before the assessment.
I agree that assessments for subvention are necessary but I am aware of four cases where patients died before all the information was collected. Is that a worth-while system? I am not saying these people died within two to three weeks of application, I am talking about cases where people died seven and nine months after the date of application. In those cases a decision could not be made because all the information had not been collected.
I have tremendous regard for carers, people who make an enormous contribution to society. Everybody accepts that a carer's job is seven days a week, 24 hours a day and the system demands that it is so. I am aware of a case where a carer's allowance was withdrawn because her sister cared for the invalid some weekends to give her a break. Is that a fair system? Even though as a country we support a five day working week, carers must work seven days. How can any policy based on such crude, heartless and severe basic guidelines be successful? How can we expect people to continue to do such demanding work — in the course of which they save this country a fortune — without being entitled to a break? The position of carers must be reviewed.
An elderly person living alone is entitled to additional allowances. If he or she becomes invalided and can no longer live alone, the living alone allowance is withdrawn even though there are additional expenses because of the infirmity. There are enormous financial demands in terms of heating and other necessary facilities when caring for an invalid in the home. We must have a fairer system.
I was amazed to discover that eligibility for disabled person's maintenance allowance varies according to the health board area in which one lives. That should not be the case when dealing with public money. The eligibility criteria for the disabled person's maintenance allowance should apply in the Southern Health Board, the Eastern Health Board and in other health boards. I know of a young girl with a disability who was refused disabled person's maintenance allowance, but others in the same institution were granted the allowance. When I examined the case, I was told health board areas have their own rules in regard to this allowance. That is a basic injustice. I cannot understand why people who deserve support from the State are victimised in this way. This area must also be investigated.
One cannot speak on the budget without referring to unemployment. As Deputy Ó Cuív said, taking into account all the people taken out of the tax net under the provisions of previous budgets, one would wonder if anyone should pay tax. If we added up all the jobs that were to be created during the past ten years, one would wonder why we are not in a position to recruit people from other countries to take up all the job opportunities. Our aspirations are perfect, but things do not work out exactly as planned.
Two basic principles must be followed if we are to solve our unemployment problem. It must pay people to employ people. It must be worthwhile for an employer to create a job. While improvements have been made employers still find it too costly to employ workers. It must be worthwhile for people to work. We cannot expect people to take up employment opportunities if they would be better off financially on social welfare. Those are the two basic principles for generating employment.
Last week a working couple put the facts and figures before me and I could not contradict them or argue with the figures. They would be better off financially if they gave up work. They applied for a mortgage subsidy as they are both on low income, but were refused it because they are in full employment. That subsidy is one the benefits to which those on social welfare are entitled. This must be examined. We are depending on people with a work ethos to remain in employment and not be driven into unemployment for a period because benefits for the unemployed are higher.
It is interesting to hear the views on medical cards. Certain categories of people, such as those suffering from long-term diseases or multiple sclerosis, may consider they should be automatically entitled to a medical card. Do people with medical cards attend doctors more frequently than those without them. Some people appear to be addicted to visiting doctors and taking pills or other medicine. People who pay doctors' fees and chemists' bills do not run to the doctor with every pain and ache. The real problem is the cost of providing the medical service. Strenuous efforts are being made to curtail the expenses of that service. It should be curtailed at a level which would ensure that people who need a medical card would not be denied one. This too should be investigated.
Overall, this was an excellent budget, based on objectives of which Members would be proud. The objectives were to keep mortgage and interest rates low. This was to be achieved by curbing the growth in public spending and cutting State borrowing. Another objective was to give the long-term unemployed the hope of employment. Achieving that objective gives the possibility of overcoming the many social problems associated with long-term unemployment, particularly drug addition and crime. The budget was excellent in ensuring that interest rates would be kept down, that employment would be encouraged and public spending would be restrained. Those who claimed to know the contents of the Budget Statement prior to its reading in this House warned that public spending would escalate out of control, yet the Government has ensured that spending this year will grow by only 2.5 per cent in real terms, the lowest rate of increase in Government spending for years. When Fianna Fáil and the Progressive Democrats were in Government, the rate of Government spending was 6.4 per cent. I am confident that the budget, produced by a Government of which my party is a member, will succeed in effecting a dramatic cut in the growth of expenditure compared with its rate of increase since 1993.
It is a realistic budget, proposing improvements in social welfare benefits — with which I agree — and other creative measures which I hope will be successful in generating employment. Once again the Minister increased child benefit — it has increased by 45 per cent over the past few years — clearly acknowledging that families with children should be accorded the recognition they deserve.
While Members might have liked many other provisions included or changed, as in all walks of life, we must be patient and acknowledge that this budget constitutes a considerable step forward. While some of its elements may be disappointing, its overall thrust was good for the individual and society as a whole.
I agree fully with Deputy Theresa Ahearn's sentiments on means-testing. As Members will be aware, the report of the Comptroller and Auditor General on this subject makes very interesting reading. As my party spokesman on Social Welfare over many years in Opposition, I strongly argued that means-testing should be administered in a more effective, efficient manner. The present system is not just time-consuming, it imposes ridiculous direct and indirect burdens on the Exchequer. I doubt it is generally known that some 600,000 people are means-tested annually in one form or another, some even twice annually, at a total cost of £4.14 million, comprised of £3.5 million this year in respect of supplementary welfare allowance, £0.28 million in respect of disabled person's maintenance allowance and £0.36 million on determining eligibility for medical cards. The need for a general, radical overhaul of the overall method of means-testing goes without saying, on which I will have some suggestions to make when discussing the Social Welfare Bill.
I was very disappointed that the Minister for Finance did not have sufficient time to elaborate on his Budget Statement, as many of the benefits for the large spending Departments were not referred to because of the time constraint on him but were announced since by the relevant Ministers. For example, many additional millions of pounds were allocated to the Department of Education, announced later by the Minister, Deputy Bhreathnach, benefiting all regional technical colleges, in addition to assistance being given to 75 per cent of schools generally awaiting approval of capital projects over the past two years or so. Some had already received assistance and will get more this year.
The Minister for the Environment produced the largest package — as he did when in the Department of Health — of local government proposals probably within the history of the State. For example, the Louth county manager, following criticism by some Members of the Opposition, on Monday evening last indicated that he was perfectly happy with the allocation of £200 million for roads in the county with £76 million for sewerage and water schemes. Collectively, that probably amounts to more money allocated to my county than that allocated by successive Governments since the foundation of the State.
It would be interesting to compare those figures with the performance of previous Governments. I should point out also that the last Government provided additional moneys for roads. Indeed our acting chairman is probably more aware than most that roads in Border areas were totally neglected by successive Governments in recent years. However, my party colleague, the Minister, is providing very substantial funding for county roads in all Border counties, which has been fully acknowledged by the relevant local authorities. He introduced a ten year programme, not alone for resurfacing and restructuring but for their replacement, as some were not designed to accommodate the volume of traffic now using them. He is the first Minister to have produced such a positive, ten year programme which I very much welcome, and which was not referred to in the Minister's Budget Statement. Knowing my colleague, Deputy Quinn, no doubt he wanted to share the good news with his Cabinet colleagues. The annual budget no longer reflects the total financial package of benefit to the State generally.
Minister Howlin and Noonan, when in the Health portfolio, made a substantial impact on health services generally, providing additional funding for dental and optical treatment and increasing the eligibility limit for medical cards in addition to reducing the long list of patients awaiting hip replacements and other hospital and medical services. I am glad to see that trend continue under the present Minister and Government, many of which were not referred to in the Minister's Budget Statement. Subsequently, the Minister for Health informed us of the good news. The additional moneys allocated, particularly to those large spending Departments, should be taken into account within the overall budget strategy.
I heard a certain amount of criticism of the allocation of £14 million to the Department of Defence, on which I should comment since I am familiar with this subject. Anyone who knows anything about an early retirement-pension scheme will be aware that not all the capital allocation will be made before its introduction, that several months may well elapse before its implementation. In fact it has not yet been approved by Cabinet but I am satisfied the Minister will ensure it will be fair and achieve the objective of reducing the overall age limit within the Defence Forces, thus allowing older members to retire on a reasonable income.
I must repeat — as the Minister has on several occasions — I am confident there will not be any closures of barracks within the Border region or elsewhere. Those of us who live in the greatest military area within the Border region will know and appreciate the present and past importance of such military installations, as I do having served on the Border for many years. As chairman of my parliamentary party and of the Defence subcommittee, I am more than confident that my party would not support any such proposal. Indeed, having spoken to the Minister, I am assured that no such proposal will be put to Government.
It is usual for the Opposition to criticise the budget and the Government. It should be noted that £160 million of the additional moneys allocated in the budget are effectively for public sector pay increases: income tax relief amounts to £92 million, PRSI levy reductions, £75 million, other tax reductions, £11 million, Army pensions, £13 million, long-term unemployed initiative, £10 million, social welfare increases due pre-budget 1996, £54 million and social welfare increases in the 1996 budget, £80 million.
During my 14 years as a Member I have not come across any budget — I examined a number of them and participated in debates on social welfare Bills and budgets in those years — that equals this one. I am proud to say that the budgets with Labour Party involvement over the past four years have and will achieve more. I congratulate the Minister for Finance, Deputy Quinn, who is the first Labour Minister for Finance in the history of the State, on his achievements.
The Minister, in the budget, set himself three targets: to reward work, to promote enterprise and to strengthen social solidarity. The budget has succeeded in meeting the Minister's criteria and the Government's target.
It is a budget for all the community, not merely sections of it. That in itself presents problems because it is not possible to straddle so many different areas and give something to everybody. One cannot give too much to anybody, one has to share it out as best one can. In recent years the community has grown from strength to strength. This performance improved considerably last year. Last year's employment figures represent a significant improvement on other year's figures, impressive though some of them have been. In 1994 the labour force survey indicated that employment growth was in the region of 45,000. The Opposition sought to throw cold water on those figures. I know there is a considerable discrepancy in the employment figures, as measured by the live register and the labour force survey and the Minister has correctly identified the labour force survey as the correct measure of employment.
Much has been said in the House about the changing nature of work. It has been correctly stated that our social welfare system is based on a model of work practice which is becoming rapidly outdated. The live register contains a significant number of people whose income from unemployment is supplemented. It also includes a significant number of people who are seeking qualification for schemes. Under the equal status arrangement many wives are claiming unemployment assistance in their own right in order to qualify for schemes. This means that the figures on a household basis are doubled in that the live register shows two people unemployed in the one house rather than one. I welcome greater participation by women in the work place. I also believe in supporting people in part-time employment.
There is much more I could say, some of which I will in the debate on the social welfare Bill. I led an all-party delegation to a conference in Stuttgart in Germany two weeks ago on growth and unemployment. The purpose of our visit was to listen and learn. I can truthfully say for my colleagues from each of the parties represented that we were able to teach most of the Europeans a few lessons. They applauded our growth and the way we are conducting our financial affairs.
In this debate a number of Members from the Government side said Opposition Members had no great objection to the budget and were just going through the motions. There is probably a degree of truth in that. There was nothing in the budget about which one could go wild from either a positive or a negative stance. There was much hype and fanfare about the budget. It was brought forward a day from the usual Wednesday and I am not sure why. Senator Mitchell and his commission were issuing their report on the Wednesday. From a PR point of view I presume it was better to bring it forward and have a couple of weeks hype beforehand because the Government knew the North and Senator Mitchell would take over after the Wednesday.
To borrow a phrase used by another Member, this was a budget of lost opportunities. In previous years Governments tried to keep the show on the road by raising a few extra million pounds to fund existing commitments. There were few opportunities for any innovative measures or reform. Significant progress has taken place in recent years and the Government had an opportunity this year, if it chose, to take radical steps to act on what the Opposition and everyone involved in politics has been talking about for years. The Minister produced a dull and boring budget. There was little interest in it, perhaps that was due to half of it being leaked beforehand. In the Chamber on budget day there were empty seats and in the public gallery. I have been informed by people who have been Members for longer than me that there was a time when one could sell one's visitors' pass for £20 on budget day but this year they could not be given away. There was simply no interest in the budget or demand for visitors' passes.
Deputy Theresa Ahearn said it was a pity we do not have this debate before the budget rather than weeks afterwards. That opportunity exists in debates on Estimates or the Appropriation Bill. However, this year the debate on the latter was confined to four of five hours.
There is no doubt that the economy has been progressing well in recent years. I do not blame any Minister for Finance for taking the credit but the progress has not been all his doing. If the economy was doing badly, he would have to take the blame. He is right to bask in the glory while he can. The economy does not get into a good state overnight and neither is a mess created overnight — it is a gradual process and, in this case, it has probably taken seven or eight years. We are now reaping the benefits of good economic management over that time.
The statistics for employment, growth rates, exports and inflation given by the Minister for Finance on budget day, sounded impressive. It has been said in relation to the inflation rate that if one excluded the free third level fees it may not be down as much as the figure bandied about. I am not sure of my facts on that. When we talk about giving an old age pensioner a 3 per cent increase, free fees are of no benefit to them. I hope they are not being conned that the real inflation rate is 3.5 per cent or 4 per cent, before the free fees are taken into account.
I do not blame the Government for taking credit for something positive. A number of speakers continue to claim credit for the low mortgage rate. Nothing that this Government has done in the past 14 months has helped that specifically. If I recall correctly there were two increases in the mortgage rate last year, one of which was due to internal factors and the other to international factors. That has evened out but one of the increases last year was due to internal factors for which the Government must share some of the blame.
The Minister forecasts a current budget deficit this year of £80 million and that is to be welcomed. He obviously lost the battle with other Ministers when the Estimates were being drawn up and, bearing in mind that the Department of Finance has been conservative with its figures in recent years, I am sure the £80 million deficit forecast for this year will turn out to be a surplus. The Minister will then join Deputy Bertie Ahern in claiming to be the second Minister for Finance in 25 years to bring in a current budget surplus.
This is a conservative budget and, from the point of view of figures, cannot be faulted because it should bring in a current budget surplus. However, I hope the Minister is not storing up all the goodies for next year to have a giveaway budget in the run-up to a general election. That might be clever politically but it would be financially irresponsible, I realise a Government will try to put its best foot forward in the run-up to an election but I hope that will not be the case with next year's budget.
I read in a newspaper recently that the average PAYE worker will contribute £200 million more in taxes this year than last. This year taxpayer will pay approximately £730 million more than they did last year. That is a huge amount of money, much of which has been swallowed up in additional expenditure. I am sure it was spent on worth-while projects but was it necessary to spend such a huge amount so quickly without giving some of it back to the PAYE workers?
The increases allowed to PAYE workers this year are pathetic. Increasing the standard band by £1,000 for a married person and £500 for a single person is minimal. Those are the type of figures we heard about ten years ago when salary levels and tax allowances were half what they are now. Many people will be shocked and disappointed when they get their new tax free allowance forms in April because their mortgage and VHI allowances will have been reduced. That is sound policy — everyone should get the same relief at the same rate — but when that was done three years ago I understood there would be an increase in the bands each year to compensate.
No attempt has been made to get the average industrial worker out of the 48p band. A recent statistic indicated that four-fifths, or 80 per cent, of the average industrial wage comes under the 48p band. That is unacceptable as people earning those wages should not be in the top tax rate. The answer might be to return to the old system of three rates but it is ludicrous that a person earning an average industrial wage should pay the same rate of tax as some high flyer earning £100,000 or £150,000 per year.
The general exemption limits have been increased to £400 for a married person. That is inadequate. Deputy Ó Cuív referred earlier to the numbers taken out of the tax band this year but when they are awarded their 1 per cent or 1.5 per cent under the Programme for Competitiveness and Work, they will go back into that band. That has been the trend up to now. We hear much talk about taking low paid workers out of the tax net but when we get an opportunity to do it — and there was an opportunity in this budget — we simply remain in line with the inflation rate.
This is the third budget under the Programme for Competitiveness and Work. In the past three years various Governments failed to meet the commitments entered into with the unions. Low paid workers will enter the tax net this year at the same level of real income at which they entered it in 1993 when the Programme for Competitiveness and Work was first negotiated. It will be difficult for the Government to get the unions to agree to a new pay deal because, while it believes it kept to its commitments and gave the percentage increases promised at that time, the unions are of the view they have not shared in the benefits of the growth in the economy.
As a former trade union activist, I know the value of these agreements. Rather than getting an increase, more workers remain on the same salary, depending on for whom they work. There is much goodwill on the part of the trade unions and the Government in regard to these agreements, but the Government must play fair with the unions. They cannot be conned and the Government must give the various increases when they are due.
This is a budget of missed opportunities. There was no reform or easing of the tax burden on low paid workers and the thresholds were not raised, which would have taken the average industrial worker out of the top rate of tax. That was promised by some of the Government partners when they were in Opposition. When taxation was imposed some years ago on unemployment and disability benefit, some of the people now in Government hit the roof and promised faithfully if they were ever in power that provision would be removed. That has not happened.
Last year saw the closure of the Irish Press Group. I realise the issue of VAT rates is an old chestnut — unlike the UK, we pay VAT on newspapers — but I thought some adjustment would have been made in this year's budget. The closure resulted in the loss of approximately 600 jobs, many of which were journalists. Some of those have found other work, some have not but several hundred other workers in the group have been totally forgotten. A Government gesture on VAT rates would have signalled that these people had not been forgotten. It would show them that somebody still cares about them. It is sad that the Government chose not to do anything on this. Irish newspapers face tough competition from UK newspapers and it is regrettable that the Government did not take the opportunity to support them.
Tax relief to a maximum of £800 will be available to pensioners to install an alarm system. This was a very good idea but it was handled badly. It shows how out of touch the Government is in some respects. Was it not extraordinary that the Government with its spin doctors, PR men, advertising agencies and handlers did not realise that few pensioners are in a position to claim the additional tax free allowance because they do not have that level of taxable income? As somebody said to me, it gave the impression that the life of one old age pensioner was more valuable than another because he or she had a few extra pounds. That sent out the wrong signal. The Government in an effort to retrieve the situation set up a task force. I hope the Minister for Finance will take the opportunity to extend the scheme and allow a son or daughter to claim the additional tax relief when the old age pensioner installs the alarm. Alternatively a cash grant of £200-£300 could be provided.
A sum of £4 million was provided in the budget to implement the recommendations of the Cabinet sub-committee on science and technology. Prior to this Government taking office 14 months ago there were plans to establish a science and technology park in Dublin. This idea has been mooted for some years and the chamber of commerce was actively pushing it. Under the EU SPRINT programme a rigorous evaluation was carried out which recommended that a science and technology park be located on lands at Abbottstown Agricultural College, just beyond the boundaries of my constituency. This site is relatively close to Dublin City University and is close to Bally-coolen Industrial Estate, an IDA estate with a great many computer factories. This recommendation was overruled by this Government. The Minister for Social Welfare, Deputy Proinsias De Rossa, who shares my constituency, allowed that science and technology park to be given to his party colleague, the Minister of State, Deputy Rabbitte, in Dublin South-West. If it had gone to Dublin South-Central, I could have said that Deputy Gay Mitchell and the Fine Gael Party had swiped it and Deputy De Rossa could plead that he cannot win every argument. In this case, he gave it to his own man, Deputy Rabbitte. That has gone down very badly in Finglas, an area of high unemployment.
The answer to the problems of the unemployed is not necessarily handouts but about providing jobs. Fourteen months ago the people in Dublin NorthWest were eagerly awaiting the establishment of the science and technology park. I have read all about science and technology parks and what has been achieved in the areas in which they are located, for example, the North Carolina triangle where hundreds of thousands of jobs have been created. People are upset that this project was given away and the view locally is that Deputy De Rossa gave it to his colleague, Deputy Rabbitte, for Dublin South-West.
Mining tax relief will cost £1 million each year. I am a little surprised about this. As far as I am aware a condition of a mining planning permission is that the owners have to return the environment to the way they found it when the mine closes down. One could never say that the Labour Party were the friends of the mine owners but it is extraordinary how matters have changed because now £1 million will be given to mining companies to do what they are legally obliged to do and undertook to do when they received planning permission. Who looked for this concession and who will gain from it? I wonder if it is a "thank you" to someone who supported the Government's divorce campaign. It seems extraordinary to give £1 million away each year to a group to do what they are legally obliged to do. I would have thought we could have come up with better ideas for spending £1 million.
I pay tribute to the Minister for Social Welfare for his successful innovations in the budget. The increase in the living alone allowance to £6 is a good idea. For too long rises in the living alone allowance were limited to 10p and I am glad to see we are moving from that. The extension of the free schemes to low income retired employees of semi-State bodies and the Civil Service whose pensions are £30 per week or less above the social welfare equivalent is a very good move. I worked in CIE and I know that many people were going out on pensions which were not much better than the old age pension. I would like to think that in years to come the £30 ceiling might be increased. This will certainly help a great many people who paid the low rate of PRSI.
The means that are disregarded when assessing people's eligibility for the fuel scheme have been increased to £15 and this is welcome. Some people who have paid into occupational pension funds receive very small pensions, no more than £10 or £12 per week, but by getting this money they were losing the £8 fuel allowance. This change is a good move. It is the second year in a row it has moved in this direction and I hope this will continue.
I welcome the increase in the carer's allowance. There are many people caring for elderly parents or relatives at home who do not qualify for this allowance because their partner's earnings are above the qualification limit. They deserve recognition, even if only £20 to £25 per week.
On social welfare, I thought the Minister concerned would do something special this year. The general increase of 3 per cent, in line with inflation, is disappointing. It will be paid from mid-June. Last year, in a good move, the Minister decided to pay the increases three to four weeks earlier than normal and gave a commitment to make further progress. It is a pity that will not happen on this occasion. Many people are angry that the increases announced in January will not be paid until June or July. It is my hope that in time it will be possible to pay them from April.
The 3 per cent increase for the elderly can be contrasted with the increase of 13 per cent in the allocation for the Arts Council. I am aware that there are moves to encourage the wider community to take an interest in the arts, but the Arts Council will retain the image that it caters for the pseudo intelligentsia and the well to do in parts of Dublin city and Galway. This is a clear indication of where the Government's priorities lie on certain matters.
I welcome the increase in child benefit. There has been much hype about the large increase in the payment for twins. I have certain reservations about this in terms of the way it will be interpreted and acted upon by some.
It is proposed to extend the family income supplement scheme to those who are job sharing. How will this operate in practice? Will the allowance be payable on a weekly basis or only in the weeks the person concerned is not working? It is also proposed to reduce the number of hours from 20 to 19. Will this apply to those participating on the community employment scheme?
The people living in Dublin northwest were hoping that a commitment would be given by the Minister for the Environment to proceed with the proposed refurbishment project in Ballymun at a cost of £110 million over a period of years. All they were seeking was the go ahead to commence the planning process.
In the Budget Statement the Minister for Finance indicated that in future the Select Committee on Finance and General Affairs will hear pre-budget submissions. I pay tribute to the chairman of the committee, Deputy Jim Mitchell, for broadening its remit in the past year. When this matter was discussed recently it was mentioned that there was a possibility the committee would get stuck with all the delegations which make pre-budget submissions to the Minister. If he expects the committee to fulfil this role, he should give a commitment that he will take its recommendations into account in preparing the budget.
In regard to the £80 subsidy payable when an employer takes on a person who has been unemployed for one year or more, will an employer be able to offer £20 to a married man with three children who will then be able to claim family income supplement? I am eagerly awaiting the publication of the rules and regulations for the scheme. It has potential but I hope it will not be abused. Employers should be required to pay a minimum amount.
I wish to share my time with Deputy Connaughton.
That is satisfactory and agreed.
The budget is the key point in each year where the Government outlines its priorities. Coming into this budget the Government had two objectives: first, to ensure that public spending is contained and that an environment which would allow for sustained economic growth and increased competitiveness is nurtured and developed; and second, to ensure that the problems associated with persistent high unemployment, poverty and social exclusion are addressed. On this front progress has been made but much remains to be done. Those of us who joined Fine Gael to pursue a just society still have a hill to climb. I will return to this point later.
Prudence in overall Government spending has helped create a climate where economic growth is at last converting to job creation on an admirable scale. This concept of prudence must remain a cornerstone of economic policy. Government spending in 1996 will grow by only 2.5 per cent in real terms. This compares with a figure of 6.4 per cent under a recent Administration. By keeping this tight rein on the public finances we have brought mortgage rates to their lowest level for 30 years. If interest rates were now at the same level as a few years ago, a mortgage holder with a £40,000 mortgage would have to find £130 per month more.
Low interest rates are the key to the economic growth which we are currently enjoying. As Minister of State with responsibility for the International Financial Services Centre, I can see the practical benefits of that growth with 11 cranes on the Custom House Docks site and a further 174,000 sq. ft. of office space to become available by the end of 1996. Already more than 2,500 people are directly employed in the centre in over 380 projects with commitments from existing companies for a further 1,700 jobs.
Overall, as a result of our record economic growth, the increase in employment in 1995 was 45,000 — 45,000 people now have the opportunity of work and more will follow in 1996 as a result of this budget.
This Government's strategy is not based on the old discredited notion that a rising tide will lift all boats. Economic growth of the magnitude currently being enjoyed will launch some boats but without special targeted measures many other boats will remain stuck on the sand banks.
Some have criticised this budget for its emphasis on targeting support to help people back into the workplace. I ask those critics what sort of society they want to live in. Are they happy to live in a society where people turn in despair to drugs and then to crime to feed the habit? Are they prepared to write off entire communities as irrelevent? Do they not ponder when they read that 75 per cent of the prisoners in Mountjoy come from five deprived areas of Dublin? Do they not believe action is required when they hear that less than 10 per cent of children in the south inner city of Dublin take up third level courses while better off parts of the same county enjoy a third level participation rate of 50 per cent and upwards? I want to live in a better society than that and as a politician, particularly as a Minister of State with responsibility for local development, I intend to do everything possible to bring about a fairer society.
No one claims the budget will solve all our problems. However, it is a step in the right direction. I welcome, in particular, the 5,000 places provided on the back-to-work scheme, the 5,000 places on the new work trial scheme and the extension of the VTOS scheme to give a further 1,000 unemployed people an opportunity to return to education, enhance their skills or acquire new ones that are required in the increasingly competitive jobs market. I also welcome the 1,000 full time places reserved in community employment for people over 35 years who have been unemployed for more than three years and the 5,000 places on the £80 per week recruitment subsidy scheme.
Those measures are a clear demonstration of the Government's desire to tackle the cancer of long-term unemployment. There are also other pro-job measures in the budget designed to tackle the poverty trap. For too long the lack of interaction between the tax and welfare systems has acted as a barrier to people coming off welfare. I welcome the provisions which allow the retention of the medical card for three years by those who enter employment after one year of unemployment, the retention of the child dependant allowance for 13 weeks by people unemployed for 12 months and the improvement in the family income supplement. These measures, together with the extension of the area allowance scheme to all 38 designated partnership areas — which I announced before Christmas — will help bridge the wide cavern from the world of welfare to the world of work.
However, I find it difficult to pat myself on the back when one of my constituents receives £75 per week, pays £1.25 in PRSI, lives alone and must bear the full running costs of his home since his mother's death. He does not qualify for family income supplement or the dole, because he works more than two hours a day, and, according to the Eastern Health Board, he does not qualify for supplementary welfare, a matter I am pursuing. Obviously, the just society has not yet arrived and much remains to be done. Nonetheless, the budget measures are part of a concerted attack by this Government on disadvantage and unemployment.
The local development programme, for which I have responsibility, is in the forefront of that attack and has a special and signal role to play in creating a just society. I do not believe many Members, not to mention the public, understand what is meant by local development. It is my ambition that people in every parish in poor areas will become as familiar with it as they have with the trade union movement. My priority is to provide funding to get the partnership companies up and running. I have undertaken a series of regional meetings with community leaders to explain how local development works. I am holding a seminar on local development for members of the Oireachtas which I hope will be well attended. It is important that Members are able to talk about local development and its potential for the removal of disadvantage and the creation of a more just society. Local development is more advanced here in practice and in theory than in other member states. In time, I hope we can present it to Europe as a way of tackling disadvantage in a real and targeted way.
Local development is about giving the long-term unemployed, the disadvantaged and early school leavers a new opportunity. It is about equipping them with skills and opportunities to solve their problems. Rather than grandiose State imposed initiatives, local development offers an initiative from the bottom up — subsidiary in action. It is about local communities analysing their problems and proposing community based solutions in partnership with the State, State agencies and the social partners. It may lack sufficient provision for democratic accountability, but I am examining this matter.
The budget for the local development initiative is £111 million and job targets are set at 8,000 up to 1999. Area Development Management Limited, the national intermediary with overall responsibility for administering local development, has already allocated almost £17.5 million to eight partnership areas as well as £300,000 to the 39 groups in non-designated areas to prepare their development plans. That £111 million will be spent on local development in the next four years.
In 1996 funding will be allocated to the remaining 30 partnership companies and to groups in non-designated areas. In addition, nearly £16 million will be allocated under the URBAN initiative to the north side of Cork city, west Tallaght, Clondalkin and Ballymun in Dublin. Those who accuse me of steering an unfair share to my constituency should take note. For the first time an integrated, tailored and targeted approach is being adopted to deal with disadvantage. A menu will be available, ranging from psychological services to the availability of information technology, trauncy tracking and pre-school facilities, from which partnership companies, with the assistance of an educational coordinator, can select. A child who regularly falls behind in school is a clear candidate for long-term unemployment. That is why education is central to resolving this problem.
In the area of training, FÁS is required to draw up a framework agreement with the partnership company to supply services which the partnership company identifies as needed within its area. Funds are available to deal with environmental improvements. No one would want to locate a business near dereliction. Funds are also available for estate management training for tenants. While the area of estate management rests with the local authority and the Minister for the Environment, estate management training in partnership areas for tenants is a matter for the partnership company. Grants are also available for those who set up enterprises with one to five employees in disadvantaged areas. Mentoring services and advice will also be available. The local development programme will be integrated, educational and environmentally friendly. It will provide estate management training and money for jobs. It involves 12 pilot schemes and was not drawn up overnight. This programme will work and can be used as an example to other member states.
During our Presidency of the EU a conference on local development will be held with that objective in mind. I have already commissioned the OECD to produce a report on local development. I urge all Deputies to familiarise themselves with local development which has great potential to tackle long-term unemployment and disadvantage.
For the first time an integrated, tailored — the programme for parts of Dublin will be different from that for the west for example — and targeted approach is being adopted to tackle the problem of disadvantage. Local development, in tandem with the measures announced in the budget, can and will change our society for the better. My objective is to establish local development in every needy parish, urban and rural, and to ensure that it becomes as well known and as effective as the credit union movement is known to be in meeting its remit.
An important part of local development assisted by the budget is community development. Basically this is about helping people to develop their capacity to influence development. Experience shows that such participation requires high levels of self-confidence and leadership skills. The allocation of an additional 1,000 VTOS places means that more than 8,000 unemployed people will engage in full-time education at second and third level in the coming year. The local development programme can provide further funding for activities such as training in communication, leadership and facilitation skills.
As a Christian Democrat, I believe that every person counts and is entitled to equality of opportunity. However, not everyone has an equal chance in the society in which we live today. While the budget and the local development programme will help to give them that chance we have much further to go. Parties in Opposition spend their time setting out visionary documents on areas of public policy. In Government we should map out our journey for justice. As Martin Luther King said: "Injustice anywhere is a threat to justice everywhere".
Some critics have argued that an obsession with meeting the Maastricht economic and monetary union criteria is leading the Government to take wrong economic options. They argue as if economic and monetary union were some theoretical central banker's invention rather than an essential element in the development of our economy and the creation of new jobs. By creating economic and monetary union and the single currency we will enable Europe to realise fully its economic potential and to place itself centre stage in the global economy. As a country which is largely dependent on trade Ireland should benefit more than most from this development. I welcome the debate which is now beginning on the single currency as it is essential that we prepare fully for the euro and are in a position to join from day one.
As I said, I wish to live in a fairer society and I firmly believe that the budget can help us achieve that. The 800,000 people on social welfare have 700,000 dependants. At a time of prosperity, the sign of a mature and caring society is its wish to help others share in that prosperity rather than be left behind. We can tackle disadvantage, unemployment and the sense of hopelessness experienced by some people in our society. We have sought, and have responsibility, to lead people out of that hopelessness. While the budget is a help in this regard, we have a long way to go before we achieve a just society. For Christians, Lent is a time for penance while Easter is a time of great renewal. When I was in Syria last week I wondered if I was really on the road to Damascus. Justice starts with each of us and within us, and it has no place for the bomb and bullet. A sense of justice will enable us to deal with the law and order problem, with gardaí, judges, administrators and politicians carrying out their duty without fear of vested interests. Justice will provide a real opportunity of access to third level education to the underclass in our society who cannot yet aspire to such education.
While dealing harshly with the drug pusher and violent bully, justice will also address the need for prison reform and the provision of decent levels of local authority estate management which must deal with the real environmental issues, that is the conditions in which people live, particularly in inner city flat complexes where decent levels of order, control and partnership need to be fostered. Justice will admit the need for action when an inner city mother loses four of her children to AIDS and it will not ignore the problem until it reaches rural communities.
Ministers and TDs are transient people. It is a great privilege to be a Member of the national Parliament and to be an office holder is a bonus. We are all human and each of us has our own concerns and commitments. I have a high regard for my political colleagues and I am aware of the genuine desire among the great majority of them to serve the public. However, somehow our collective worth is not equal to the sum of our individual worth.
The next millennium will begin in four years time and now is a good starting point for serious reflection. The recent IRA bombs demonstrate how necessary that reflection is. At a time of unparalleled growth and unprecedented levels of wealth we should remember that we pass this way but once. What we do today will be history and we should ensure that our history tells a story of justice. Never has there been a greater need for justice nor such an opportunity to advance it. To quote Cicero, "the fundamentals of justice are that no one shall suffer wrong and that the public good be served". What better term of reference is there for a journey for justice, a charted course to the next millennium and beyond?
We are all capable of committing the seven deadly sins and we as politicians are capable of appealing to the pride, hate or envy in society. What society yearns for is justice. A journey for justice which sets out to promote the idea that no one shall suffer wrong and that the public good will be served is a journey which the people want to make. We can build on what we have achieved. We know where we are starting from and by pinpointing our destination we can from time to time measure the progress of our journey. Much needs to be done and the challenge is great. The reward for public office is in achieving set goals and as we set about implementing the programme, A Government of Renewal we should also set our sights on the longer journey for justice.
Budget day was so long ago that the public has forgotten what was contained in the budget. Even though the public may not react to the budget it should be remembered that its consequences are extremely important to the lives of most people. During the short time at my disposal I wish to make a number of unconnected points.
If I were asked the greatest achievement of the budget I would have to say it was the ability to keep borrowing at a low level. This may mean little to the ordinary punter but at some stage most people will have to borrow money. One of the problems of high interest rates is that it is very difficult to make money on borrowed money. The biggest financial contract most people are likely to enter into is for the purchase of a house. Farmers who want to purchase tractors or animals will invariably have to borrow money.
One great problem for many years was that the State was the biggest competitor for available money. If it wants to borrow substantial sums for the everyday running of the State, so much pressure is placed on the money market that ordinary investors have to pay more for the money available. As the Minister said, against that background we have not had lower interest rates for 30 years. I am not an economist but while this period of low interest rates and inflation continues, many projects are making good ground and I hope those running them will be able to take on whatever competition comes their way, because due to external circumstances far beyond our control, we will not always have low interest rates. I compliment the Government and the Minister for Finance because the budgets of this year and last and next year's also, one hopes — ensured that the State will not be competing against ordinary borrowers, which is an important starting point.
People have said they will not gain much from the budget because they will pay as much income tax as ever and pensioners will argue that a 3 per cent increase is not a great deal on top of their current earnings. I accept that it is a step in the right direction that pensioners and the disabled receive increases greater than the rate of inflation but there is no point in overstating the case — people will not throw their caps in the air after a budget, because budgets do not work that way.
It is important to steer the economy so that enterprise will flourish. On the radio this morning Dr. Terry Baker of the ESRI stated that from his viewpoint as an economist, we would have a good year. Given that the economy will grow by between 5 and 6 per cent, the inflation rate is just over 2 per cent and borrowings are so low, we are clearly in the middle of an economic hump. He reckoned there would be 31,000 new jobs by the end of the year — I would prefer to see another 30,000 but this is a significant increase.
Recently, there was an all out attack in the Irish Farmers' Journal on the Fine Gael element of the budget, which stated that quangos and white elephants were being bred again and money was being spent for the wrong purposes. We have no shortage of white elephants, set up by Governments of all hues, but if the tide raises some or most boats, the rewards should be spent fairly evenly across the country. I cannot see why anyone would object to county roads being repaired so that they do not have potholes one could bury a rabbit in. Why should country people put up with uneven surfaces? The Government decision to pump million of pounds into country roads, although not enough, is much better than anything done before.
The budget made it easier for those paying inheritance tax on the transfer of either farms or businesses to other family members. I have long held the principle than when young people inherit, there should be no financial impediment to them making progress even before they get possession of a shop, van, farm, etc. We should be in a position to transfer property for productive reasons, particularly to family members, so they will have a chance to establish themselves — they will have other big start-up costs. Afterwards, a tax regime should ensure that if they genuinely earn in excess of a taxable income, they should pay their fair share. It is bad policy to have a system whereby people who inherit businesses, shops, farms, etc., should have to pay huge amounts of inheritance tax when a property has been transferred. They should be given every chance in life and taxed if they make a profit.
Deputy Noel Ahern referred to crime and I make an appeal to the Minister in that regard concerning the Finance Bill. He indicated he wished to give some financial help to people living in lonely areas — such as my part of the west — and the elderly living alone to ensure they installed the correct type of alarm. Telecom Éireann has a facility whereby if a person hears an intruder, he can press a mechanism kept with him, even in bed, to notify a next door neighbour and the gardaí. That would save a huge amount of personal injuries and I sincerely hope that change will be made.
I wish to share my time with Deputy Moffatt.
An Leas-Cheann Comahirle
That is satisfactory and agreed.
This country needs a tough Minister for Finance. Hard decisions must be made and he must not be dictated to by Democratic Left, as he was on this occasion. All that party wants to do is borrow more and more. Ireland was in good financial shape when our former Taoiseach, Deputy Reynolds and former Minister for Finance, Deputy Ahern left office. Let us hope this Coalition Government will not leave us in the same condition as in the aftermath of the 1982 to 1987 Coalition. After that tough decisions had to be taken by the then Fianna Fáil Government led by Mr. Charles Haughey and the Minister for Finance. Mr. MacSharry on taking office. These paved the way for the current economic situation. We all had to suffer cut-backs because of the inherited national debt. which had doubled. The country had almost gone down the tubes but Fianna Fáil turned the position around. I pay tribute to the then Fine Gael Opposition, led by Deputy Dukes. His party followed the "Tallaght strategy" of supporting the minority Fianna Fáil Government for the betterment of the country. At that time Labour and Democratic Left voted against everything. They were more interested in criticising our party leader and Taoiseach at the time and telling untruths in the Dáil which led to the beef tribunal which cost this country millions of pounds. That money would have been better spent on promoting industry in the west. Would it not have been better for Deputy Pat Rabbitte, one of the chief spokespersons against the beef industry, to have tried to promote industry in Tallaght in his own constituency where there is 78.5 per cent unemployment? Would it not have been better for him to do something about the drug problem in his constituency which has got out of hand and where the mothers of school-going children are taking drugs?
We have heard from Deputy Gay Mitchell and others about low interest rates, etc. These are the result of the 1987 budget and the hard decisions that had to be made at that time, but it is not we who are in Government to reap the benefit but Fine Gael, Labour and Democratic Left. Are they thinking about the end of the millennium when we will no longer receive money from Europe? As a member of the Council of Europe I have been in both eastern and western Europe and there are better incentives for employment in Poland now than there are in Ireland. Before Deputy Albert Reynolds left office as Taoiseach, he signed for Masonite to set up in County Leitrim where there has been a decline in population. Five hundred people are employed there and, it is hoped, another 500 people will be employed. That has been a great boost to the west, but it is the only industry that has set up in the west in recent years.
The Minister for Finance intends to borrow over £1 billion this year to run this country, but he should instead repay some of our national debt.
On the subject of crime, is the Minister for Social Welfare so much out of touch that he thinks pensioners in the least populated areas of the west are so affluent that they are paying tax? The vast majority of old age pensioners in my constituency are living on non-contributory pensions. They do not pay tax and, therefore will not benefit from this measure.
Very little was done in this budget to benefit my constituency. No industry has set up there in the past few years. The only jobs in my area are those under the community schemes which, although welcome, are only a drop in the ocean given present unemployment figures. Rural Ireland has always suffered under Fine Gael and Labour and is now suffering under Democratic Left.
Farming is a way of life in rural Ireland, but little was done for farmers in the budget. Farmers who bought cattle to fatten in their sheds during the winter will probably lose £100 a head because the Minister was unsuccessful in obtaining a cattle export subsidy on his many visits to Europe. Because of our wet winters cattle must be housed during the winter. This winter was the driest ever in the west, but the Minister has done away with the grant for slatted houses because they were over subscribed last year. If that is the case the Minister should have made a new application to Europe for money to enable people to build slatted houses.
The budget does not promote indigenous industry. I welcome the money made available for county roads by the Minister for the Environment. It was badly needed. However, we also need a great deal of money for national primary roads. The Collooney-Sligo by-pass is well under way but the road from Collooney to the County Roscommon border needs to be upgraded, widened and relined and I hope money will be made available for that. If we want to have industry we must have good roads and the more money that is made available for them the better. It is hoped that before 1999 we will get our fair share because after that I do not expect we will get much money from Europe. Poland and other countries will apply to join the EU and they will get much of the money we were getting up to now. It is up to us to make sure we get money from the Cohesion Funds for our roads.
On the provision of housing in rural areas, if we want to increase the population in rural Ireland and encourage people to live and work there we will have to give them housing grants of £8,000 to £10,000.
I am very concerned about the planting of trees in rural Ireland. Recently I received a letter from a constituent of mine who bought a house in a very scenic part of rural Ireland with the Ox Mountains at the rear and a beautiful landscape to the front. The area was planted with trees which obscure his view of the Ox Mountains and beautiful landscape. Planning permission should be required for tree planting. At present it applies only to the planting of areas in excess of 200 hectares.
How do we encourage people to take up employment? At a recent seminar it was stated that a person with four children is better off unemployed because he or she will receive a medical card, mortgage subsidy and other benefits. If people could retain the medical card, it might encourage them to seek employment. I know a person who wishes to set up an industry in a rural village but cannot do so as the village does not have three phase electricity. This should be available in every village, as well as a sewerage scheme.
I thank my colleague for sharing time with me. Despite high economic growth, spending is unacceptably high and instead of 2 per cent it will be 5 or 6 per cent. Rather than tinkering with issues we should have long-term strategic planning. We must tackle the problems and not adopt "safe" budgets.
Many social welfare recipients would gladly forego their recent increase if it was redirected to the justice area and they could feel safe in their homes. People wanted a reduction in taxation and changes in PRSI. There is great economic growth and the financial markets are buoyant but we have not taken advantage of that.
We did not tackle the problems in the health area. Nurses are threatening to go on strike. Despite the Programme for Competitiveness and Work, teachers were given increases but the position of the caring profession was put on the long finger. No money was provided to deal with problems in the accident and emergency service, waiting lists, etc. We need a long-term strategy. The hepatitis C issue has not been resolved. There are delays in the orthopaedic, cardiac surgery and other areas. An extra £10 million was allocated for mental handicap services, of which £4 million was for capital expenditure. Some £3 million was spent in 1995. That leaves £3 million for this year which is totally inadequate, particularly when we consider the numbers on waiting lists for placement in hospitals, community units and respite care. It is unfortunate that we do not look after the weaker sections.
I commend the Minister for Social Welfare for increasing the carer's and children's allowances. However, we have given increases across the board and that is not good management. Money must be targeted at areas of greatest need. Employment in peripheral areas is often neglected. There are employment black spots in Dublin but the infrastructure is in place there unlike in remote rural areas. In Ballina where there are 3,000 people unemployed out of a population of 8,000-9,000, an advance factory was financed privately. The IDA is afraid to take risks and does not erect advance factories. Short-term employment schemes such as FÁS schemes and so on will not solve the unemployment problem in the long-term.
Fianna Fáil's proposals in that area were more concrete. We said that we would try to get 4,000 people off the long-term unemployed register immediately and give them long-term employment rather than tinkering at the edges with small schemes.
Debate adjourned.