I propose to share time with Deputy Ring.
Financial Resolutions, 1998. - Financial Resolution No. 5: General (Resumed).
Debate resumed on the following motion:
THAT it is expedient to amend the law relating to inland revenue (including value-added tax and excise) and to make further provision in connection with finance.
—(Minister for Public Enterprise)
Is that agreed? Agreed.
It is clear that the original spin and gloss the Government put on the budget has given way to a calmer and cooler assessment of exactly what were its provisions. A general requirement of people is that we should sustain the economic boom that has given the Minister for Finance consecutive chances to hand out money. We have had record growth in the economy of 50 per cent over the past five years. If we are to sustain this boom and not move from boom to bust, we must look at the capacity issues of the economy. If we look at capacity issues we will see severe problems ahead.
There are capacity problems in relation to housing where there is a clear imbalance between supply and demand. We need an extra 45,000 houses a year, yet the Government has not made available the developmental sanitary services, water and so on to ensure that amount of accommodation construction can take place.
In another area of infrastructural development, such as public transport — we are having a debate later in this House on that very matter — it is clearly established everywhere in Europe that a train carrying 500 people or a bus carrying 80 people is far more efficient than a lane of cars and we do not have the investment in this budget, in the public capital programme in the Book of Estimates to bring that about. We will not therefore be able to sustain a situation where the Minister had almost £1,000 per worker to give away and yet we are assuming that the boom will continue.
Notwithstanding the difficulties in the Asian and Russian economies and, latterly in the UK economy, which is clearly stagnant, we are facing, as the ERSI prophesied, a clear economic slowdown with, in particular, tapering of investment. This budget fails to meet the major over-riding macroeconomic objective of sustaining this boom.
Turning to some specific issues of deep concern in this budget by far the most disappointing area is that of child care. Child care is an essential component of public policy in relation to an expanding workforce. We have 95,000 more people at work today than we had this time last year. If we are to continue to grow the workforce, we are not only dependent on school leavers and returned emigrants but on mothers returning to the workforce. There was an expectation after the establishment of the expert group that this budget would start to address for the first time the specialist needs relating to child care. The agenda of what is required was very clear. First, it is children under five years of age who are not at school that require special attention. A reasonable expectation was that child benefit for children from zero to five years of age would have been doubled. However, the increase has been deferred to 1 September, virtually the latter end of 1999, and the increase works out at a paltry 69p per week. That would not pay for a cup of coffee for the childminder, let alone for a proper childminding service.
It is very interesting to note that this issue is not new because the Fianna Fáil election manifesto of 1977 specifically promised £2,000 worth of tax relief at the standard rate, and nothing has been provided in two budgets in that regard. Even the most modest request of £5 million to develop cre che facilities has been abandoned, and that in no way creates a conflict between women working in the home and women in the workplace. There is a need to deal with that issue, not only in the interests of the needs of mothers and children, but in light of the need for an expanding workforce.
I acknowledge that steps have been taken on tax reform and in relation to the low paid. However, I have an anecdote which illustrates a big concern. It concerns a man, 38 years of age, who had worked all his life and who has now been diagnosed with a particular form of cancer which I hope can be cured. He has found himself on disability benefit. He gets no pay related benefit, nor does he get any tax refund. He has four children. He finds now that he will get an increase of £5 next June on his social welfare payment. He does not get one penny for his children. Whether he has no children or four children, he gets the same rate of increase. How can he be expected to pay his mortgage and everything else out of £138 a week? This man never thought he would be idle. He is not in the long-term unemployed category — there is no question of incentive to work.
The fact there was not a penny increase in child dependant allowance payments for anybody on social welfare indicates that a new poverty is developing. We are talking about people who are paying their taxes, PAYE and PRSI and they are finding it very difficult to manage. A trade-off was always acknowledged — if child dependant allowance payments for social welfare for adults were not paid, the child benefit would match it. This has not happened.
I would like to say a few words about the health service. For the people who do not have a medical card, every day is a budget day on health. The Minister for Health and Children has announced that inpatient hospital charges to BUPA and VHI are to go up by 9 per cent. The VHI and BUPA have deferred an increase in premia, but it may be higher than 9 per cent. We have had a radical change in the drugs refund scheme in terms of the thresholds and the amalgamation of the two schemes. For someone who could be a pensioner, someone who does not have a medical card, the benefits of the budget have been completely eroded by virtue of the changes to the drugs refund scheme and the increases in private health assurance premiums.
Last year in the budget there was a fanfare about £12 million to deal with waiting lists and a special initiative this year, £8 million, but 100,000 bed nights were lost to the system and waiting lists lengthened by over 10,000. Those waiting lists however, do not reveal the biggest element of the waiting lists. A man came to my clinic this weekend who is waiting for a hip operation. He has had his X-rays and been referred by his GP but he must wait until next August to see the consultant. He is not on the waiting list because he will not be formally put on it until next August. There is a layer of people who are waiting to go on waiting lists.
I am concerned that no initiative was put in place for first time home buyers, such as exempting the first £100,000 of the purchase of a second hand house from stamp duty and developing the sanitary service capital budget. Nothing has been put in place for first time home buyers, who are also the people with the child care problems to which I referred earlier.
When Nigel Lawson was the UK Chancellor of the Exchequer the people were rolling in the aisles of buoyancy after his budgets. However, that boom was followed by negative equity, high unemployment, higher inflation and depression. I fear all the signals are there that we will follow the same route. Having given so much money back in reduced taxes and pumped so much money into the economy, the Minister did nothing to stimulate consumption which would not result in more foreign holidays, more imported cars and more imported brown goods which are giving wealth to other economies and taking it out of Ireland.
The Minister should have taken an imaginative step in relation to pension provision. The rate of return for people making private provision for pensions, which has been limited to 15 per cent of salary heretofore, is low because of low interest rates. That should be radically altered so that anyone can top up their pension and get tax relief for so doing.
The Government should now make a decision in regard to the sale of shares. The bulk, 50.1 per cent, of Telecom Éireann is to be sold by an IPO in the middle of next year. There is no prospect of retailing those shares. Instead of selling them to institutions in the US and elsewhere, we should be trying to soak up that consumption by ensuring the ordinary Telecom Éireann subscriber has an opportunity to buy those shares. There are no proposals in this budget to deliberately try to soak up the extra consumption which has been generated.
The budget does not address the four crucial needs in the economy. The first is the need to deal with our infrastructural situation. That means developing a modern transport network, in the form of Luas, upgrading our railways and providing, in the short-term, a proper city bus service. There is no strategic approach by the Minister for Public Enterprise to doing that; instead, we have ad hoc and piecemeal responses.
There has been no attempt to deal with the housing crisis. There are 45,000 applicants for local authority housing. We used to build 1,700 houses a year in Dublin and this year we will build 230. The figures speak for themselves. There is no proposal to deal with the high property and site prices and to address the Dublin housing situation. Therefore, the homeless, those in the rental sector and all those down the line will suffer. The Government has no real agenda for public housing and transport, which are medium term issues requiring sustained resolution, capital investment, planning and a commercial focus.
We must break the cycle of disadvantage, by which I mean the 16 per cent of people who leave school with no useful qualification. It is interesting to note the ESRI projections for future labour requirements up to 2010, from which it is quite clear there will be less demand for unskilled manual labour and more demand for people with qualifications. The only way to break the cycle is to ensure that 100 per cent of children, if possible, stay at school longer, go on to third level and can read and write. That means making fundamental changes.
The OECD report said we have the highest rate of adult illiteracy in Europe. We have heard anecdotes about people who cannot read prescriptions, medicine bottle labels and so on. We have over 500 schools with average class sizes of more than 30 pupils. That situation does not require an incremental approach but a fundamental sustained attack, particularly at a time when the school going population is declining by a quarter because of the demographic changes and when the money is available.
There is no overarching strategy to deal with the health waiting lists, the perpetuation of the cycle of disadvantage through education and the new poverty constituency which is developing, particularly among those who are sick. The high paid benefited from last year's budget and the low paid have benefited from this year's. There is no sustaining strategy for either infrastructure or social need.
I ask the Minister for Finance or the Minister for the Environment and Local Government to take the earliest possible opportunity to clarify the situation in regard to the urban renewal scheme. A number of towns in my constituency, such as Enniscorthy and Wexford, have benefited greatly from the scheme. The scheme has expired for those towns, which is unfair. It was expected that on 1 August a new tranche of provincial towns would be announced but this was deferred to 1 October. We were then told, in reply to parliamentary questions, that the matter was running into difficulty with the EU Commission because of the tax incentives. We then expected that it would be announced on 1 January. We still have no announcement and my fear is that the decision on regionalisation, which has scuppered the economic development of the east coast, will ensure that any area which does not have Objective One status, as proposed by the Government, will be excluded from the urban renewal scheme. Will the Minister clarify whether we will have another urban renewal scheme or whether it will be confined to certain areas?
It would not be possible to give away the volume of money which has been given away without having some good elements in the budget. I welcome the tax credits and the thrust of the income tax changes. However, there are very few imaginative changes in the area of consumption. The fundamental problems of the economy, in terms of perpetuating disadvantage and sustaining the boom, have not been properly addressed.
I thank Deputy Yates for sharing his time with me. The only positive aspect of the budget was the tax changes, which I welcome. They are also welcomed by PAYE workers, who have carried the can over the years. Some of them think the changes did not go far enough but it is a start in the right direction, which I welcome.
I was very disappointed that nothing was done for farmers. The Minister brought out a new scheme called small farmer's assistance. I ask the Minister for Social, Community and Family Affairs to call off the hounds in north Mayo and the rest of the country because the attacks on small farmers over recent years have been outrageous. I thought this was happening only in Mayo until I saw what happened over the weekend, when a circular was issued by a civil servant. I have been in the House for only a short time but in that time I have never seen a civil servant being sent out by a Minister to explain why he sent a circular to the health boards. The Minister has lost control of his Department.
I will make you a promise tonight, a Cheann Comhairle. There are a few cases in my constituency which I am going to watch. I have a few friends in the legal profession who like politics and I will ask them to take one or two cases against the Department of Social, Community and Family Affairs. What the Department has done over recent years has been immoral and wrong. It has attacked the weak in society. Officials have gone to small farmers in the west and counted their sheep and cattle and then said they can make an outrageous amount on each animal per week. The officials are not farmers, if they were they would know what prices farmers are getting in the marts.
The events of last weekend proved to me that the Minister has lost control of his Department. I guarantee to his officials that I will make a few of them busy over the next 12 months because I intend to bring one or two cases to court, even if I have to pay for it myself. Over recent months the Department has lost control and nobody is willing to tackle the problem. We saw the proof last weekend when the official from the Department explained to the public about the circular to the health boards. It was an attempt to take a few pounds from the needy at Christmas. These poor people are depending on payments from the health board, yet they are under attack.
The same applies to small farmers. The scheme announced by the Minister is a joke. Deputy Noonan said a few weeks ago that the problem for the Taoiseach was that although he is extremely popular, he has many weak Ministers around him. The Minister for Agriculture and Food, Deputy Walsh, has lost control of his Department. He has lost control of the area aid scheme. I am due to debate that issue on the Adjournment tonight so I will not dwell on it now. He has also lost control of the REPS section. The staff there tell farmers they intend to conduct spot checks but there are no inspectors available to carry them out. There is a wait of up to ten months for an inspector. The Minister appears to be unable to tell his officials they should select the number of cases they can deal with and deal with them, instead of taking on more and more cases. Now they have lost control.
There has been a new development in the budgets of recent years. They now run from the end of December in order to bring the local authorities and State agencies into line and to ensure January to January budgeting. I welcome that. However, it is wrong that the Minister should announce increases in social welfare which will not take effect until June. In the case of child benefit, the increases will not be paid until September. That is outrageous. However, the public is not fooled.
If there is one section of society which should be taken care of, it is women. The child benefit payment is the only income they receive directly. There are many bad husbands in this country and the first place they go when they receive their social welfare payment is to the pub to spend the money on drink. The poor women are left to depend on the St. Vincent de Paul or moneylenders. That is when these women suffer. These women rely on the child benefit payment to buy school books, shoes and other items in addition to doing Santa at Christmas.
What has this Government done? It has given £20 million to the bookmakers. The Ministers are fond of horse racing and the GAA so they give these sectors as much as they like. However, they cannot give women a few extra pounds each month. The increase announced by the Minister is 75p per week per child from September to January. The women and children of this country are worth more than 75p. This is outrageous. It is time to get our priorities right. Even at this late stage something could be done to increase the child benefit payment. What is happening at present is a scandal.
If the Minister for Social, Community and Family Affairs has any control left — I do not think so — he might consider taking on his officials in the Department on this matter. They seem to be walking all over him and are trying to walk all over the ordinary citizen. However, with the help of my colleagues, I intend to put a stop to that.
The carers of the elderly are another section of society which has been treated badly. There was never so much money available to the Government and I believed that it would at last do something for carers. I hoped that between £30 and £40 would be given to people who do not qualify for the carer's allowance because of the means test. They should be given some recognition. There is little point talking about tax breaks. They are only for the rich, as I constantly remind members of my own party. Tax breaks are not much good for the poor or for middle income families.
The Minister should have given carers between £30 and £50. It would be a small contribution in recognition of their wonderful work. Perhaps something can be done in that regard next year. The people who care for the elderly at home are not a burden on the State. They are saving the State the cost of putting the elderly into homes or other institutions and of having to pay for doctors, hospitals or nurses. They do this task for nothing and they deserve recognition. The carers' association lobbied hard but was disappointed that nothing was done for them on this occasion, as I was.
Another item worth mentioning is the fuel allowance. There is no such thing as a summer in this country. We have experienced 18 months of rain and, in my opinion, the weather broke the day this Government took office and it never recovered. There is now a permanent winter so why can the fuel allowance not be given, for the sake of the few million pounds, to people in need throughout the year?
I wish to comment on the vehicle registration tax. The Minister's announcement of an increase is a scandal. I remember when every Member of the House was trying to convince the Irish people of the benefit of joining the EU. The biggest carrot was the promise that it would be possible to buy cars in Dublin, Brussels, Glasgow, Cavan, Monaghan, Westport and Castlebar for the same price because there would be no differences in tax. In this budget, however, VRT has been increased. That is a scandal. It is not right to tell people one thing at one time and something different later.
I do not care about the green brigade. People need cars, particularly good cars. There are so many fatalities on the roads at present that it is essential to have a good vehicle, particularly if one must travel by car regularly. I have two suggestions to put to the Minister. The first is to abolish VRT. If that is not possible, he should not implement the increase until March or April of next year. That would be fair to the dealers. I have no interest in this area but I was speaking about VRT to the owner of a small garage yesterday who has arranged to sell about 12 cars. Everybody has, at some stage in the past, bought a new car and everybody knows that a person is unlikely to buy a car in October or December. Somebody who is planning to buy a car for the new year will do the deal in those months but take possession of the car on 1 January. The Leas-Cheann Comhairle will agree this is a fair point.
I ask the Minister to be fair to these dealers in terms of the deals they have done. He should wait until March or April to implement the VRT increase so the people who have made a deal to buy a new car will not be obliged to pay up to £700 more in price. Otherwise there will be friction between the dealer and the customer. It would be preferable not to implement the increase at all but if the Minister intends to so do, he should defer it until March or April next year. It is a reasonable request on behalf of an industry which went through a terrible slump for many years. It has done well in recent years with record numbers of new cars being purchased. What is the point in penalising it again? The Minister should consider this in the context of the forthcoming Finance Bill.
I wish to make two more points about social welfare. Last year in my health board area, the guidelines for a medical card were increased by £1 per client and £1.50 per couple. That is outrageous. A person who receives an increase of £3 in his or her social welfare payment and who only secured the medical card in the previous year by a margin of £2 or £3 will lose the medical card this year. There was a case in my constituency in which the local authority, which sometimes acts as if it is accountable to nobody, did not carry out the rental valuation over a single year but on a two year basis. The couple concerned received a £5 increase in social welfare but Mayo County Council took £4 of that increase from them. That is wrong. The guidelines should change in line with social welfare increases. There is little point giving somebody an increase of £3 if they lose their medical card and the local council takes £2 of it. Something should be done about this.
My second point relates to housing. The budget failed the many thousands of people who are waiting to build or buy their own home or who are depending on the local authority to provide them with a house. I expected to see the introduction of many schemes in the budget. I call on the Minister to provide more funding for local authorities to open green areas, to install water and sewerage facilities in them and to make land available for housing. He must stop the speculators because they have made great profits in recent years. I speak as an auctioneer. Builders now come in and pick a number from the top of their head when deciding how much they will charge for a house. The reason for this is the shortage of land and available houses. The way to deal with this is to ensure land and houses in excess of demand are made available, thereby making everybody competitive.
Like Deputy Yates, I was disappointed there was no increase in the first time buyers grant. In the context of house prices £3,000 is outrageous. Why was there no increase in grant for young couples? I was also hoping something would be done in relation to stamp duty for first time buyers of second hand houses, which should be abolished.
Of most concern to those who come to my clinics are the grants available to renovate old houses. There are three grants available in my area and I presume the position is the same in the rest of the country. First, there is special aid for the elderly which is administered by the health board. The health board has begun a new policy. I ask the Minister for Health and Children to send a circular to all health board officials to put an end to the outrageous demand on pensioners of £1,000 in the context of works amounting to £2,000 or £3,000. What is the country coming to and what are officials in the Department thinking about? Have they lost touch? A policy should be introduced whereby these officials would be sent on a regular basis to Deputies' clinics to see how the other half live. The officials in their ivory towers in Dublin do not know what is happening. Somebody in the Department of Health and Children should write to the health boards to stop this outrageous behaviour of looking for £1,000 from pensioners for jobs costing £3,000. If a pensioner had £1,000 they would not ask the health board for a grant.
Disabled person's grant is also available and the Minister has increased it and provided additional funding. However, not enough money is provided and people are waiting up to 15 months for applications to be examined. The other grant is the essential repairs grant of £1,800. Where would one get a roof repaired for £1,800? This should be £3,000 and I ask the Minister to examine it.
This again was a budget for the rich and God help the poor as they have not been thought about.
Often times the public asks what the difference is between Fianna Fáil and Fine Gael. One could spend a long time saying what the real differences are, but there is one very significant difference, namely, whenever there is a good and growing economic climate we hear voices from Fine Gael saying that after boom comes bust. This is largely part of the Fine Gael anatomy as it has presided over so much of the bust times that it is almost hoping it will happen. We promise people that through this budget we are carefully ensuring the economy and job creation will continue to grow steadily.
I have no idea how Deputies Ring and Yates sat in the House at a time when it took three budgets to give to old age pensioners what this Government has given in one budget. How was it possible for the Deputies to sit comfortably in their seats during those three budgets——
Child benefit.
——and to stay silent when the increase in old age pensions was so miserly? How was it possible for them to sit in their seats when 7,000 or 8,000 were being taken out of the tax net in one year while this Fianna Fáil led Government has taken 80,000 out of the tax net in one year?
None has been taken out yet.
How was it possible for Deputy Ring to sit comfortably in his seat when the people he spoke of in north Mayo had to begin paying tax on earning £79 per week?
They did not earn enough money to pay tax.
How was it possible for the Deputy to be comfortable when this was happening? This figure has been increased to £100, with 15,000 elderly people coming out of the tax net.
I congratulate the Minister for Finance on a very balanced, fair, imaginative and successful budget. In the 1970s I remember the late Deputy, Mr. Paddy Burke, saying great things have happened in our time. There is no doubt that the growth in the economy and the ability to maintain it and increase employment was never better. The Government's strategy in the budget and the Book of Estimates is to have the greatest possible investment in social inclusion, to continue to improve the public finances and to ensure that as EU funds begin to diminish we have the capacity to maintain growth and the strength in our economy to continue investment from our own resources.
It is extraordinary that people are giving out about our attempt to reduce the national debt. Every sensible person knows that when they have a surplus of cash they can, if they wish, spend it on consumer items, on improving their home or on reducing existing debts. It has always been a sensible combination to reduce debts as this ensures funds are available each year which can be spent at one's own discretion.
The main thrust of the tax provisions was to take more people out of the tax net, to substantially increase the level of tax returns to low income groups, to equalise taxes as far as possible and not have people on very high incomes benefiting substantially more than people on lower incomes and to increase relief for the elderly. By any standard the budget has brought in fundamental changes and will be of benefit to people on low incomes, eliminate the poverty traps, reform the tax system and meet the needs of people most in need of benefit.
Since my first day in public office I have had a deep-rooted interest in education, the disadvantaged and physical and mental handicap. I am delighted the budget for 1999 will have a big impact in these areas and will improve the quality of life for many.
Ireland's most valuable asset is our people, particularly our young people. We already have a reputation for excellence in education. Because our future prosperity will be dependent on the capabilities of those people who will be entering the workplace, the Government is very conscious of the need to ensure the right education with appropriate content to the highest standards. This is the surest way to secure the future of our young people and the future social and economic prosperity of the island.
The additional money provided for the education sector in the budget will increase spending in 1999 to £2,623 million, an increase of over 9 per cent on the provision for 1998. The published Estimates already provide £205 million more than was provided in 1998 and allow for the largest increase in direct funding of primary schools in the history of the State. In addition, they provide for significant teaching and child care assistant resources to assist children with special educational needs. The budget allocates significant additional funding to education initiatives related to disadvantage. These additional initiatives, costing £19 million in a full year, will address the problems of adult literacy, the need to encourage children to complete second level and the development of psychological services.
Deputy Yates touched on the number of children with literacy problems on leaving the primary sector, a problem the Government is addressing in the most fundamental way possible. As a result of the programme, 225 new primary teachers will be appointed. There will be remedial services available in every primary school from next September. Home-school liaison teachers will be appointed to every disadvantaged school while at second level 225 new teachers are being appointed. Combined with a very significant change in the manner of dealing with over quota staffing in secondary schools, these new teachers will enable the move towards the provision of an automatic remedial resource in all schools and home-school community liaison in all disadvantaged schools. In the health services there are major improvements in both the capital and current programmes. It is no harm to compare the 1995 and 1997 figures, when there was a total of £309 million invested in capital expenditure in the health area. For 1998 to 2000 it will be £467 million, an increase of £150 million to improve facilities in our hospitals and other health care resources.
Regarding the capital programme, it was interesting to hear Deputy Yates deviating from the course set by Deputy Noonan, who suggested we were overheating the economy by providing a substantial increase in the capital programme. How is it possible for Opposition Deputies to sit comfortably when the capital programme was being increased by 9 per cent? It is being increased by 30 per cent this year, and the evidence of that is in telecommunications, infrastructure, housing and right across the spectrum of the economy.
How much was taken from first time home buyers?
Deputy Farrelly should allow the Minister to speak.
Every first time home buyer had to pay 12.5 per cent.
Deputy Farrelly will have an opportunity to speak later.
Deputy Farrelly and his colleagues were quite happy to leave the new house situation alone for three budgets when they had an opportunity to do something about it.
Talk facts.
Everybody realises that is not the way to help first time buyers.
What is Deputy Smith doing about it?
We are taking a number of initiatives which will be seen in the near future. In relation to agriculture, it was easy for the Opposition——
Any ships to Libya?
I ask Deputy Farrelly to desist from interrupting.
——to abandon farm installation aid, dairy hygiene and farmyard pollution schemes.
Why?
I ask Deputy Farrelly to show some respect for the Chair and to desist from interrupting.
Not enough money was provided.
We know that when one recalls these facts for the Fine Gael Party it finds them difficult to take, but it abandoned those schemes.
The Deputy's party did not provide enough money.
We are providing the money. The record shows that these key schemes for young farmers were abandoned by Deputy Farrelly's party, and we are restoring them.
Regarding the management of the economy, boosting the capital programme, reaching out to the disadvantaged and making dramatic changes in health and education, this budget, combined with the 1999 Estimates, removes problems in a way no previous Administration could do. Those who support the Government will understand that additional resources were spread in as fair, equitable and balanced a way as possible. There will always be other areas in which money can be spent, but it is important to tell the public the truth. There is no point in the Opposition saying we are spending too much and that there are other areas they would spend money on. The least the public is entitled to is an honest assessment of what is happening. One cannot have it both ways.
That was not done in the last election or in any other election.
I ask Deputy Farrelly to desist and to allow the Minister to speak.
Deputy Farrelly always told the truth.
I will get the Navan man after you.
Deputies will agree when I say that last Wednesday's budget was a radical one, one which concentrated on the low paid and the disadvantaged in our society. The Government remains committed to reducing the burden of personal taxation. This is being done to reward effort and to improve the incentives to work. Including the personal tax package of £581 million announced on budget day, the total amount actually provided for reducing personal taxation in the past three years is nearly £1,500 million, much higher than the Partnership 2000 commitment of £900 million.
After careful consideration of the matter, the Government has decided to move towards a tax credit system. This year this will involve the standard rating of the basic single and married personal allowances and the PAYE allowance. To ensure that there are no losers from the move to standard rating, the standard rate income tax bands are being increased from £10,000 to £14,000 for a single person, and from £20,000 to £28 000 for a married couple. For the tax year 1999-2000 the threshold for the top tax rate will be £14,000 for a single taxpayer and £28,000 for married taxpayers. These are figures that could only have been dreamed of three or four years ago.
The effect of these changes will be to ensure that single people on PAYE will not pay income tax on earnings under £100 per week. As a result of the budget almost 80,000 people will be removed from the tax net and the number of people on marginal relief, facing a marginal rate of tax of 40 per cent, will fall from just under 82,000 to just over 24,000. We have also taken 17,000 from the higher rate of tax. These are very significant achievements.
In addition, as well as increasing the personal rates of old age pension by a further significant amount, the tax exemption limits for those people aged 65 years of age and over are being unified and substantially increased to £6,500 per annum for single people and £13,000 per annum for married couples. This will mean that married couples aged 65 or over will be exempt from income tax on income up to £250 per week. Over the past few days many people have stopped me in the street to tell me the difference this will make to their lives.
The Government is also conscious of the growing wish for a recognition of child care needs in the tax system. The question of child care tax relief raises important and complex issues. The Government has discussed this area in some detail and proposes to examine the matter further. In doing so it will take into consideration the recommendations of the Partnership 2000 working group on child care which is expected to finalise its report shortly. I can understand the disappointment of some in this area. However, it is important that we develop the correct policy in this area. It is right that we should improve the supply of child care. As a means of facilitating and encouraging this the Government has decided that the provision of certain cre che facilities by employers will no longer be subject to a charge to income tax in the hands of employees as a benefit-in-kind. Furthermore, the Finance Bill will provide for capital allowances to allow for the write off of capital expenditure incurred in connection with buildings or premises constructed or used by employers to provide child care facilities for their staff. This capital allowances regime will also extend to providers of child care services generally in the community.
The budget also provided for enhanced reliefs for carers and a range of new reliefs to aid the provision of convalescent medical facilities, to improve the availability of student accommodation and to alleviate traffic related problems. These reliefs may be small steps but they are important ones.
The Government is committed to reducing the corporation tax rate to 12.5 per cent on trading income and to 25 per cent on non-trading income from 1 January 2003. From 1 January 1999, the standard rate of corporation tax will be reduced from 32 per cent to 28 per cent. The lower 25 per cent rate will remain unchanged but will apply to the first £100,000 of profits rather than the current £50,000. The budget set out a philosophy, a tax regime to aid investment and job creation. I fully endorse the approach taken by my colleague, the Minister, Deputy McCreevy.
The range of social inclusion measures in this budget were designed to build on what has been done in recent years. Partnership 2000 committed the Government to spend £525 million over three years on social inclusion. The actual amount that has been committed over those three years will be almost double that figure and close to £1 billion. This shows yet again this Government's determination to ensure that all parts of society can benefit from the continued strong performance of the Irish economy. The major social inclusion measures announced include an increase in the personal rate of pensions and related payments by £6 per week. This adds to the significant increases announced last year. The rate of the qualified adult allowance will also increase by £3 per week. These increases again go a long way towards meeting our promises to the older members of our community, and Deputy Ring's comments were very hollow.
In general, personal rates of social welfare payments will increase by £3 per week. The qualified adult allowance will increase by £2 per week. Additional increases are being provided for personal rates for those in receipt of short-term unemployment assistance and supplementary welfare allowances, thereby bringing social welfare rates for all categories up to at least the minimum level recommended by the Commission on Social Welfare, upon which the Opposition does not seem to want to comment.
The carers scheme will improve considerably. An extra £200 will be paid each year to recipients as a contribution towards respite care. The scheme will be widened to cover the carers of children in receipt of the domiciliary care allowance. The residency conditions will be relaxed as will the requirement that the carer must provide full-time care and attention. Apart from the general level of increase announced in health spending before the budget, it also provided just over £45 million for further developments, including a hospital waiting list initiative, services for the elderly and mental handicap services.
As Deputies will be aware, my colleague, the Minister for Education and Science, announced a significant allocation of £57 million to tackle educational disadvantage. The additional money provided will be used, among other things, to target adult literacy, the need to encourage children to complete second level education and the development of the school psychological services.
Despite our success in reducing the numbers on the live register, more needs to be done to make sure the unemployed have the necessary skills to enable them to access the jobs that are available. The extra measures announced in the budget include job clubs to equip the unemployed with skills to find employment and a bridging programme for the long-term unemployed to ensure they can participate on FÁS programmes with the best employment prospects.
This budget would not have been possible if it were not for the strong performance of the economy in recent years. However, the very strong growth cannot last indefinitely and account must be taken of what is happening in the world economy. Growth in our trading partners is expected to slow down next year and, as a small open economy, Ireland cannot expect to remain immune to these developments.
This is the fifth year in succession that the economy has experienced very strong growth in both GNP and GDP. Employment growth is continuing strongly in 1998 and the general Government budget balance was in surplus in 1998, close to 2 per cent of GDP. However, a note of caution should be sounded. The performance of the economy has given rise to heightened expectations of what the Government can provide. This is reflected in the level of demands for additional expenditure, tax cuts and extra tax reliefs. In addition, the performance of the economy is generating certain other pressures including public sector pay, the tightness of the labour market, increasing house prices, the need for further infrastructural investment, increased competition both in general and for foreign direct investment.
We need to ensure that we have sufficient resources to meet any challenges in the future, whatever their cause. I am sure Deputies will agree that the budget has been radical and innovative. The House will also agree that this budget has been one of fairness. I am satisfied that it is prudent and will help us to meet all future challenges.
I am delighted with the provision in the budget and the 1999 Estimates for items within my area of responsibility. I acknowledge that 1998 was a particularly difficult year for voluntary youth organisations. They were forced to provide increased levels of service in very strident budgetary circumstances. I have gone to great lengths to get them extra money and I have succeeded. A Supplementary Estimate for £380,000 will be moved before a committee of the House tomorrow and I am sure it will receive unanimous support. That will bring funding for the voluntary youth sector up to a reasonable level for 1998.
While this additional funding is significant in terms of maintaining and supporting existing services I am very gratified that I have also secured an increase of £1.5 million in the budget for the coming year. This is the single largest increase in youth service funding since the introduction of lottery funded support in 1988. It will allow for the continued expansion of the service and, in particular, will guarantee support for voluntary input on which the service is based. I have indicated on many previous occasions my belief that our youth services are ideally placed to complement the work of the formal education sector.
The work of voluntary youth organisations enhances the capacity of young people to deal with the effects of unemployment, poverty, deprivation, injustice, inequality, etc., and it also helps them to become involved in effecting change. Funding under the youth services grant scheme provides financial assistance to the 35 national and major regional voluntary youth organisations which support local clubs and units throughout the country and special youth work projects for disadvantaged young people. I assure the House of my total commitment to these organisations in the years ahead.
When considering the value of grants paid to youth organisations the significant involvement of unpaid volunteers should not be forgotten. The extraordinary dedication of volunteers who work with young people gives a substantial multiplier effect to State grants, making investment in youth work extremely good value for money. This year my Department provided funding for the operation of more than 150 special projects to assist disadvantaged young people. Unfortunately, as Deputies will be aware, such schemes do not operate in many parts of the country. I wish I had the money last year to expand the operation of the schemes, but I will expand them next year.
I am particularly conscious of the crucial role which information plays in the personal and social development of young people. To this end, my Department provided funding last year for the upgrading of computer equipment and software in the national network of youth information centres, which number 27, as well as providing for staff training. I look forward to the publication of the youth work Bill early in 1999, which will put the entire voluntary youth work sector on a statutory footing and will consolidate the sector. It will bring all the relevant provisions together and ensure the best value for money is obtained for the money invested in the voluntary youth scheme.
In January 1998 I published the school transport review committee's report, which undertook a comprehensive study of the entire school transport system. The report was circulated to all relevant and interested parties for their views. Its recommendations dealt with a broad range of transport issues, including the question of escorts and special services. It estimated that the cost of providing an escort service on all special transport services would be £1.9 million per annum.
It has been a priority of mine to secure additional funding for escorts and harnesses on special school transport services. I was committed to achieving this aim given the fact that funding remained static at £150,000 per annum since 1994. Having forwarded proposals to the Cabinet to have an escort on every school bus carrying physically and mentally disabled school children I am particularly delighted with the £1.7 million increase in 1999 which I have received for the expansion of this service and the funding of harnesses. This brings the total funding available for such provision to £1.8 million in 1999 and it means that before the end of the year every bus carrying special needs children will have an escort. In addition to this most welcome and significant development, my Department is preparing a comprehensive guide on school transport to be published early in 1999. An extensive safety campaign aimed at school transport users will also be launched then and will continue during the year as part of Bus Éireann's ongoing safety promotion.
1998 was a very busy and productive year for adult education. A Green Paper on it was published and my Department and I developed a variety of new initiatives. The Green Paper published on 24 November sets out a range of recommendations for the future development of adult education within the framework of lifelong learning. One of the highest priority recommendations is the establishment of a national adult literacy programme, which will incorporate key features of awareness, outreach, development of local referral networks, flexibility in provision, a continuum from one to one to group tuition, staff development and standardised reporting. This process is being made possible by the fact that when the Government came into office 17 months ago the provision for adult literacy was £2 million per annum while next year it will be £5.8 million.
The main priorities in the development of such a programme will include the promotion of public awareness using a variety of printed and oral media, outreach strategies to target those most in need and the establishment of referral networks on an area basis involving key actors in the field, such as FÁS, local employment services, area partnerships, etc. Flexibility means ensuring the literacy service is provided in accessible locations at a range of times, including mornings, night times, weekends and the summer. There should be a continuum from one to one voluntary tuition to tuition in small groups, with the option of national certification. There must also be innovation. There will be new approaches to basic literacy provision, including family based literacy programmes targeting parents and their children, new outreach strategies, intensive programmes targeted at those most in need, a small number of demonstration open learning centres, and distance learning.
A good example of an innovative approach is the broadcasting of literacy classes over the airwaves, which is funded by my Department in association with Tipp FM and the National Adult Literacy Agency. Two hours of programming is provided each night on dedicated local transmitters in Nenagh and Clonmel for classes delivered by a literacy tutor. This model has great potential for improving the quality and scope of the overall service, particularly for isolated rural dwellers.
It is clear it will be essential to substantially increase investment in this area on a phased basis in the years to come. At present an estimated 5,000 adults annually participate in the existing adult literacy programmes, and this number is expected to double with the additional funds I have secured. In addition, NCAA certified courses at national certificate and diploma levels have been commissioned from Waterford Institute of Technology; these provide training on an in-service basis for literacy organisers and tutors in association with the National Adult Literacy Agency. That will be further developed along the lines mentioned in the Green Paper. The other key recommendation in the Green
Paper is the back to education initiative, and Deputies can rest assured no effort will be spared to commence it as soon as possible.
An interdepartmental working group on literacy initiatives for the unemployed has also been established. Under the women's education initiative, my Department has allocated £600,000, with the support of the European Social Fund, to voluntary women's groups in 1998 and 1999 to enable women to plan and pursue lifelong education opportunities and to acquire access to mainstream programmes. Thirteen projects have been selected for grants and I hope to expand and develop this initiative in the years ahead.
We will shortly introduce further proposals on the question of an education bank. We have made changes to VTOS, equalising the rates and conditions with those of the back to education allowance and we have abolished the 10 per cent quota, which had been a serious bone of contention for many years. With reference to the contributions of Deputy Yates and Deputy Ring, moneys have also been made available in the financial year 1998-9 for the provision of child care facilities for participants in Youthreach, VTOS and senior traveller centres. It is hoped this will attract people who would benefit from these programmes but cannot join them at present because of child care responsibilities. We have provided the money to make a serious beginning in this regard.
My officials and I have worked hard to secure this extra funding for adult education, youth affairs and the school bus service. I thank them for the assistance they have given me, and I am delighted with the large funding increases which the Minister for Finance has allowed for those three areas in the budget.
I wish to share my time with Deputy Bradford.
Is that agreed? Agreed.
The fundamental image of this budget which remains in everyone's mind is that conjured up by the Minister, Deputy McCreevy, in the last minutes of his contribution, when he asked us to visualise him as a happy-go-lucky Charlie, gambolling down the street with a smile on his face, a spring in his step, and £1000 million of our money in his pocket, who feels so good that he proceeds to deposit our money in the bank and to give himself a great deal of credit for this negative act. He says that he has treated us harshly for the sake of the future, but that is arrant nonsense, as is the image.
Why was it necessary to reduce the national debt by so much this year, when national income or GDP is of the order of £57 billion and the national debt, partly due to the good work of the NTMA, is down to £27.5 billion? We are heading towards a debt to GDP ratio of 1 to 2, and the ESRI informed us that in that in the next millennium that ratio would be 1 to 4. An analogy has been drawn with a householder who took out a mortgage in the 1970s; it appeared huge at the time but it pales by comparison with the current value of his home and his repayments. In that context the Minister's decision was totally inappropriate. Most people expected him to run a general Government deficit and to save some money, but to deposit such a huge amount on our behalf was totally unnecessary, given our current circumstances. He did so for two reasons: first, he was pressurised by the Department of Finance's mandarins, who are determined not to enter into obligations for the new millennium and the decades ahead, despite our wealth; and second, despite his folksy manner, the Minister is a hard man, a true accountant who believes in delivering a bottom line, accountancy result.
Nonetheless, we have massive infrastructural needs in this city and our other urban centres, as Deputy Carey knows. We could have put the money banked by the Minister into the Dublin traffic infrastructure to provide a basic public transport system, but there was barely a nod in that direction in the budget. One of our education unions is upset that our pupil-teacher ratio remains among the highest in Europe. The initiatives taken by my colleague, the former Minister, Ms Niamh Bhreathnach, on early start, remedial education and deprived areas have not been followed; the Minister had the money but decided not to spend it.
On social housing, he trumpeted that he was providing 4,500 "starts", which returns us to the level of the mid-1980s when Labour was in power with Fine Gael, but the current waiting list is 45,000 families. He is content to nibble at the problem, reducing the list by 10 per cent, even though he knows a fundamental initiative is needed. I know what he should have done, and probably those on the Government benches know also — he should have provided mortgage relief in respect of the large repayments which people face, expanded shared ownership schemes, etc. — but he did not do it. Training schemes for the unemployed received a derisory £23 million.
Most shameful of all was the much praised £3 per week increase in social welfare payments. In this city, entire families are existing on a basic allowance of £73 per week. The increases have been deferred until next June — what happened to the Rainbow Government's practice of moving social welfare increases back to April, when tax changes occur, or to January, as the Minister appeared to suggest last Wednesday? Why could we not give people who receive these derisory payments these miserable increases in the next few weeks, rather than making them wait six months. This Government has failed lamentably to meet the needs of almost one-third of our population and of our children, who still live in poverty. The image of the Minister happy to bank £1,000 million on our behalf is a hoax.
Debate adjourned.