Dáil Éireann díospóireacht -
Wednesday, 23 Feb 2000

Vol. 515 No. 1

Finance Bill, 2000: Second Stage (Resumed).

The following motion was moved by the Minister for Finance, Deputy McCreevy, on 23 February 2000: "That the Bill be now read a Second Time".

Debate resumed on amendment No. 1:

To delete all words after "That" and substitute the following:

"in view of:

the absence of a clear economic policy underpinning the Finance Bill,

the continual changing of expenditure targets by the Government,

the threat to competitiveness caused by inflation,

the inadequacy of income tax relief for the lower paid,

the contradictions in labour force policy in the tax proposals which apply to spouses,

the absence of fair and practicable proposals on child care, and

the refusal by the Minister for Finance to introduce a fair and equitable tax regime for credit unions,

Dáil Éireann declines to give a second reading to the Bill.".

–(Deputy Noonan).

Mr. P. Carey:

It is always useful when considering proposals such as those contained in the Bill to consider the historical context in which they arise. The Finance Bill is concerned with the raising and distribution of Government revenues. We fund the activities of Government principally by raising taxes and the concept of raising taxes is very ancient. The Crusades were funded by raising taxes. In this country, famine relief works were funded by raising taxes on a local basis. In Britain the First World War was funded by the introduction of a broad based tax on income and we have lived with taxes on income ever since. The building of such projects as Ardnacrusha power station and Shannon Airport and the development of new hospitals, not just recently but throughout the period since independence, the national road network, the education system, up to the provision of free second level education for all in the 1960s as well as new centres of third level education, are all powerful evidence, if it were needed, of the benefits that have accrued to the nation and its citizens from revenues raised by successive Governments. Taxation has also served to provide assistance for the weaker sections of society on a progressive basis.

As time has passed one of the most important ways in which the taxation system has helped society has been through the provision of financial incentives for the encouragement of industry. The 1940s and 1950s were a period of high protectionism for native industry but the 1960s under Sean Lemass saw a change of direction in Government policy which helped to prepare the country for the rising tide of economic growth through successive programmes for economic expansion. The introduction of the Shannon free airport development zone, a 10% corporate tax rate for manufacturing industry and, more recently, the development of the International Financial Services Centre were all crucial to the modern economic miracle we have witnessed. It would be impossible not to recognise the part our membership of the European Union has played in this development but we should never overlook that we have much to be proud of in our own efforts in this regard. Through our taxation policy and education system we have produced an economy that is the envy of many other countries.

The Bill is ample evidence of the success of the economic policies of Fianna Fáil in government. Since his appointment in 1997 the Minister for Finance has overseen serious reductions in the levels of personal income tax, capital acquisitions tax and capital gains tax as well introducing a number of innovations in the pensions area.

With regard to income tax the enactment of the Bill will see the standard and higher rates of tax reduced to their lowest levels since the foundation of the State. This must be viewed as a remarkable achievement. It is all the more notable when one considers the position that prevailed just over ten years ago. An article in The Irish Times on Monday of this week stated:

Today's booming economy is a vastly different creature to the battered economy of 1987. At that time, the public finances were in a shambles. Soaring inflation and interest rates, negative investment, a penal personal tax code, massive unemployment and widespread emigration had combined to bring the State to a virtual standstill.

Tax incentives created the foundation on which our booming economy was founded. The reductions in income tax proposed in the Bill, combining as they do with the proposals in the Programme for Prosperity and Fairness, will help to maintain growth in the economy on a steady course for the next few years. The Government is giving back to taxpayers the benefits that have accrued since we had to tighten our belts during the difficult years in the 1970s and 1980s. Fianna Fáil said that it would create the environment in which industry could flourish. We achieved that aim and now, I am happy to say, taxpayers are reaping the rewards for placing their trust in Fianna Fáil.

With regard to capital acquisitions tax the Minister announced in the budget major increases in the tax thresholds for inheritance tax and major reductions in the levels of tax by abolishing the multiple rates and introducing a level rate of tax of 20%. These changes have been confirmed in the Bill and will be a source of enormous relief for families. Improvements are to be made to the basis of aggregation. Previously, penal rates of tax applied to relatively small inheritances and frequently required the disposal of the inheritance to pay tax.

Earlier I listened to what the Governor of the Central Bank had to say about the economy in the context of EMU. He made a number of salutary points which are worth noting. We have to be reasonably careful in managing the economy and if corrective action is not taken at some stage we could be in trouble. Deputy Yates said that we are not conscious that there may be another side to the boom and bloom economy, however, the Minister is well capable of tuning the economy to suit. In his address to the Joint Committee on European Affairs the Governor of the Central Bank said:

Studies undertaken by the Central Bank suggest that, for the medium term, we have the capacity to sustain a growth rate of the order of 4% to 5%. This is about twice the estimated potential growth rate for most European economies. The exceptional growth over and above this for the past few years was made possible by a high degree of slack in the economy and in particular, by a rather low employment rate. This good performance contributed to a welcome increase in living standards and employment. Now, however, there is mounting evidence of overheating in the domestic economy. This is reflected in exceptionally rapid increases in property prices, unprecedented demand for credit, labour shortages, higher inflation in the services sector and chronic congestion in the physical infrastructure.

During the past year, there has been a marked disimprovement in our inflation performance, both in absolute terms and by reference to our main trading partners. In January, the rate of inflation here, as measured by the HICP, the benchmark index for euro area comparisons, was 4.4%. This was two and a half times the rate prevailing in the euro area as a whole. This puts us at the top of the league table. Some of the rise in headline inflation can be ascribed to once-off or temporary factors – such as the rise in excise duty on cigarettes, higher oil prices and weakness in the euro. There is, however, a strong rise in underlying inflation which for the most part reflects the existence of strong demand.

Nobody claims that inflation here must be at precisely the same level as in the euro area generally. It is reasonable to expect some differential at this time in view of our economic conditions but there are obvious limits. The point I want to emphasise is that, if present trends persist, we may have a sharp loss of competitiveness on our hands.

I was glad when the Minister came down heavily on tax evasion. The Committee of Public Accounts by way of the DIRT inquiry has done the country a remarkable service. It has been clearly stated that there will be no hiding place for tax evaders. I have no compunction in saying that tax evasion should be rooted out, whether by big business or multimillionaires. I represent a constituency where social welfare fraud on a small scale has nearly always been part of the culture. I am not trying to condone it, but often people had no option but to hide the fact that they had done some nixers when pursued by the Department of Social, Community and Family Affairs, often for a couple of hundred pounds. It has been decided at long last and not before time that big tax defrauders should be pursued and I compliment the Minister on this.

Child care was a big issue in the run-up to the budget. The £3,000 allowance for stay-at-home spouses who look after children, a handicapped person or an elderly person will equalise the position. It is welcome for that reason. The other initiatives taken on child care area are also welcome. The supply side has to be addressed. The provision under which there will be a 100% tax write-off of the costs incurred in providing new child care facilities and the refurbishment of existing centres is to be applauded. A number of interesting initiatives have been taken. There is a fine crèche facility in DCU which is funded in an innovative way. There is also a fine facility in Coláiste Eanna in Cabra and another in Ballymun. Many more are needed.

The provision relating to gifts to third level institutions is important. Increasingly, there will be a need for third level institutions to plug into the private sector. I am glad that the MIT will be funded to a certain extent through the Ryan Institute. The traditional and new universities have been lobbying for this for a long time. I hope when it moves to the Grangegorman site the Dublin Institute of Technology will benefit from income accrued in this way. I commend the Bill to the House.

Mr. Bradford:

I wish to share my time with Deputies Olivia Mitchell, Finucane and Naughten.

An Leas-Cheann Comhairle:

Is that agreed? Agreed.

Mr. Bradford:

I wish to offer the Minister a few suggestions. Section 13, which I welcome, but which does not go far enough, relates to rent relief on private rented accommodation. Due to a number of factors but in particular the failure at national level to build sufficient local authority houses throughout the country, there is a huge demand for rented accommodation. The vast majority of the tens of thousands of people who are on local authority housing lists are resident in private rented accommodation. Much of this accommodation is unfortunately in poor condition and most of the people in question are paying high rents.

The Bill provides for a general 50% increase in the rent relief available; it is a 100% increase where the tenants are over 55. I welcome that in so far as it goes, but the Minister should try to avail of this opportunity to look at the important link between the tenant and the landlord. He must accept that rented accommodation will play a much more important role in the provision of housing than it did previously. The absence of proper legislation to support the tenant and the absence of sufficient tax relief in that regard are matters which could be looked at. I have often stated that the solution to the housing problem will not come solely from the Department of the Environment and Local Government or from simply building more houses. There is a need for a multifaceted response. The Minister must look closer at the question of rent relief for the tenant and put in place a firm foundation of security of tenure for the majority of tenants. I welcome the increase in the allowances but wish they would go further. The majority of tenants of whom I am aware, who are renting flats which are often in poor condition, are paying £80, £90 and £100 per week. The single person's rent tax allowance of £750 is not sufficient.

There is provision for the urban renewal scheme and every local authority has been presenting towns to the Department of the Environment and Local Government for inclusion in it. The previous tax relief schemes worked well and I am sure the new urban and village programme will also work quite well. The Department of the Environment and Local Government has received the submissions from the local authorities and I hope it will be able to reach an early conclusion on these applications because I know, from my own constituency, that the various interest groups in the towns in question would be interested to start work at the earliest possible date. I welcome the provision which allows these tax reliefs to enter the legal framework and I look forward to those towns benefiting from the scheme as soon as possible.

Most contributors to the budget debate referred to the surprise big news story of the Minister's Budget Statement, namely the policy of individualisation. The £3,000 allowance being introduced in the Bill by the Minister, Deputy McCreevy, is an attempt to solve a problem which he himself brought about. The genie has got out of the bottle and it is impossible to get it back in. As one looks at the list of categories which will not qualify for the £3,000 tax allowance, one will see further anomalies. If the Minister feels he has solved the problem by providing this allowance, while I concede he has taken a step in the right direction he will not solve all of the problems which his change of policy has brought about. When Deputies come across the many people in the constituencies who deserve this allowance but who are written out of it as the section stands, they will be back here to revisit this problem with the Minister in next year's Bill. I warn him that if he feels he has solved the problem, he has much ground to make up yet.

On the matter which was discussed on Question Time, namely the disabled drivers tax concession, which we did not have time to tease out properly, the Minister for Finance stated that a review group is looking at the problem. Since I came into Leinster House, a review group seems to have been looking at this scheme. On Question Time the Minister informed the House that 5,400 persons qualify for the various concessions under that scheme and he does not want to widen the net too much. "Shame on him", would be my response. This is one of the wealthiest economies in the world. We are not talking about giving grants to people, but about allowing special tax exemptions for a marginalised disadvantaged group of people. The review group is working against the backdrop of the Minister saying "keep the budget strings tight". This is one area of fiscal policy where I would like to see the Minister being a little more generous. I hope he will demand of the review group that it will report quickly, generously and favourably to the many thousands of people, who are dependent on driving or being driven, to give them some degree of dignity. It is a shame that in a wealthy country the Minister cannot put in place a scheme of generous tax concessions for people who are genuinely disabled. Deputies will be aware of people who are genuinely disabled but fall outside the remit of the disabled drivers tax concession scheme. I want to see that scheme changed to make life a little less miserable for many people who are severely disadvantaged.

Mr. Naughten:

Tourism is the fastest growing sector of the economy. While the numbers from the Continent have weakened in the past year, they still provide a substantial element of the income within the tourism industry. Many tourists hire cars to travel around the country and visit some of the more popular destinations. The majority of them come from countries where people drive on the right hand side of the road. Approximately one million tourists from North America and mainland Europe use cars to travel around Ireland. They find driving on the left disorientating. Add to this the poor quality of the roads compared to those in their countries and there is a cocktail for disaster.

It is estimated that 10% of road traffic accidents involve a foreign driver. The Insurance Federation claims that between 10% and 15% of accidents involving hired cars are as a result of tourists driving on the right hand side of the road. However, the car hire industry, with a fleet of approximately 25,000 cars on the roads, has failed to introduce an effective warning system for foreign drivers and has been intransigent in implementing new systems.

There is an electronic system, which has been developed in Ireland, which would dramatically improve the awareness of foreign drivers of the requirement to drive on the left, but without the obligation to install such a system it will continue to gather dust. The car hire industry would be agreeable to the introduction of a system if it was tied to the cost of motor tax. The industry feels that the current motor tax system is crippling the further development of the sector.

A scheme could be introduced in the Bill whereby a hired car with such a system installed would be entitled to a reduced level of car tax. This would be a small price to pay to save lives given that road fatalities cost £785,200 each. Will the Minister for Finance pass on the matter to the Minister for the Environment and Local Government and examine the issue on Committee Stage?

To turn to the provision in the Bill which relates to DIRT and tax evasion, tax evasion was rampant during the 1980s and 1990s when the country was on its knees and Governments had to cut back on services, especially within the health service. The recent investigations focused on the roles of banks and building societies, but tax evasion measures were practised by investment advisers, financial consultants and insurance brokers also. They were facilitating people to hide funds from Revenue, social welfare, the health boards, etc. They too were involved in the establishment of bogus non-resident accounts. They, along with others, manipulated special savings accounts, which had a cap of £50,000, by establishing accounts with a number of financial insti tutions. Financial advisers were also involved in the establishment of falsely named accounts for clients to cover up money from Revenue. This was endemic within the system until the criminal justice money laundering Act came into force in 1995. A person had to have photo identification and a recent household bill to open a new bank account. However, ways were quickly found around such requirements. When genuine clients provided data to satisfy the Act, their identification and bills were photocopied several times so that when another individual wanted to open a false named account, it would be opened with a different financial institution using the genuine clients' name furnishing the previously copied information. To prevent the initial client discovering such an account, the bank in question would be contacted a couple of weeks later to instruct it to change the address and route all correspondence through the broker. Identity documentation for motor insurance clients also facilitated the establishment of such accounts.

While many of these brokers have since folded due to the negative investment returns, these key players in the multi-million pound tax evasion scam will never be known. Unless we are aware of these facts, we cannot ensure that such scams will not be repeated in the future.

Can the Minister give assurances that Revenue now has the powers under this Bill and other legislation to ensure this type of evasion cannot manifest itself again? Can he assure the House that we no longer have such loopholes in the money laundering Act? Can he guarantee that scams involving special savings accounts and false named accounts are not being used to establish savings accounts with An Post? Without such assurances in an economy flush with money, can we really say that such tax evasion is confined to the history books?

Communities along the River Shannon are outraged that the Minister has refused to compensate farmers for fodder lost in the extensive flooding which occurred in December last and in January of this year. Many householders and rural dwellers also suffered losses and should be paid compensation. The refusal by this Government to pay any compensation has caused considerable anger among the community which has, through no fault of its own, again incurred extensive losses of fodder and damage to its property and homes. The number of people seeking compensation is relatively small but some have experienced substantial losses. The home of one family has been completely destroyed and repairs will cost in excess of £35,000 – the home is without any insurance cover.

Each year we see flooding in the Shannon basin – no one is amazed by that – but what we are talking about is the extent of the flooding this winter, not only over the Christmas period but last September as well when many farmers lost fodder. There is no case of flooding in the Shannon basin in the history of this State in which the State did not compensate farmers and house holders until now. This Government has decided these people are not entitled to compensation. I commend the Government on the funding it is providing to Third World countries suffering flooding but it is not willing to compensate people here. There is an old phrase which says charity begins at home but, sadly, this Government has neglected it. It is willing to compensate those abroad who, I am sure, badly need such compensation and funding but people in the same situation in this country are not deemed eligible for funding.

The Minister for Finance has turned his back on these people. It is the first time in the history of the State that a Government has turned its back on those communities along the River Shannon which have experienced flooding because of neglect over the years by Governments which were not willing to put proper maintenance measures in place for the River Shannon. I will have another opportunity to raise these and other matters on Committee Stage.

Mr. Finucane:

This budget was the most commented upon one in a long time because it was the subject of series of U-turns. In regard to the individualisation aspect of the taxation proposals in the budget, it was claimed at the time that it was very socially divisive. We witnessed the interesting spectacle, which I have never seen in ten years in the House, where the Minister's party colleagues went out to the plinth to publicly criticise the budget in terms of how it impacted on stay-at-home wives.

I listened with great interest to a comment made by the Taoiseach the following Sunday to Gerald Barry. When he was asked to comment on this, he said he was not aware of what was happening on the day as he had many other commitments to which he had to attend. It amused and astounded me given that one of the people leading the crusade at the time was his brother, Deputy Noel Ahern. I found it hard to understand how the Taoiseach could say he was not aware of what was happening because everybody else knew it was an orchestrated campaign.

As a result of that type of pressure and the fact Fianna Fáil Deputies wanted to outflank the Independents on this issue, we have the £3,000 stay at home allowance. A previous speaker remarked that this £3,000 stay at home allowance will give rise to many anomalies and I agree because it is restrictive in regard to whom it applies.

I attended a meeting in Limerick last Monday night organised by the mid-western private nursing homes association. I estimate that about 400 people attended that meeting. The main criticism related to subvention and the cost to people using private nursing homes. Nursing home subvention has remained static since its introduction in the early 1990s and the consumer price index has not been factored in. As a result, many people are under severe financial pressure. What happens if the wife of a person who works is in a nursing home? That £3,000 allowance will not apply in that case which is an example of the type of injustice which can arise.

It has been prophesied that the budget, and the subsequent budgets, if we could call them that, will cause inflation to spiral. Inflation is of concern to people. An increase of 7p per gallon of petrol has been earmarked. In the context of the tax hike the Government will take from petrol, is there merit in trying to keep inflation low by picking up something from the taxation element in regard to the 7p increase in the price of a gallon of petrol and offsetting it against what is happening at present? There is probably merit in that because people are concerned that what one gives with one hand, one takes it away with the other. It is not like smoking cigarettes because that is a choice people make. We accept that the funding which will come from the increase in cigarette prices will go to the heath budget. It is, however, an economic necessity to run a car in many areas.

Any Deputy from a rural constituency will know that the big issue is low pay. Many companies in my area pay £10,000 per year to workers and quite often that is achieved through overtime. SIPTU, in its criticism of the budget, was very wise to focus on low paid workers. There has been an attempt to try to resolve that situation but not enough has been done. It is regrettable that the Government did not take on board a proposal made by my colleague, Deputy Noonan, to take low paid workers out of the tax net. At the time Government commentators rubbished his proposal but it is interesting to note that proposal is embodied in the Programme for Fairness and Prosperity. There is a degree of acceptance of what he said at the time.

Low paid workers earning less than £10,00 per annum in my constituency and in other constituencies, with whom we all empathise, should not pay any tax. With regard to the budget, there are concerns about low paid workers. I respect the way the unions took up the cudgels on their behalf to fight to improve their position.

We had the budget, then the social welfare changes and then the money earmarked for the stay at home wives. By dealing with these competing sources, the Government hoped to allay people's concerns, but many anomalies will be created as a result. The approximately 250,000 carers are not satisfied with what was provided for them in the budget. It did not address their needs.

Ms O. Mitchell:

I welcome the opportunity to comment on the Bill. In the short time available I will confine my comments to specific aspects of it. Unlike other speakers, I will not dwell unduly on the much discussed individualisation of bands and on the subsequent decision to introduce a tax allowance for the stay at home spouse caring for a child or an elderly relative. I wish to comment on child care which was at the centre of that debate. Despite the vast amounts of money com mitted one way or another in the budget or directly afterwards, the child care issue remains unresolved with none of the interests involved satisfied that they have not been disadvantaged relative to other groups. The issue of child care must be addressed not only for economic or social reasons but in the interest of children in a changing society. How we care for children and how they are brought up are issues that must addressed, and the sooner the better.

There is a solution which would be equitable and cost effective if the political will exists to provide it. It would require some money and the co-operation of the Ministers for Finance and Education and Science. I propose that primary school sites should be the focus of child care, that they should provide child care venues and that the State's only financial outlay would be the provision of the site and the capital cost of construction or refurbishment of under-utilised classrooms which exist in many schools. Such a facility would be provided locally by local voluntary of community groups, perhaps franchised to them and run thereafter on a commercial basis. The only State subsidy would be the initial capital cost. This would make child care affordable or at least more affordable and locally accessible.

The are many advantages to this method of addressing child care. A site for such a facility is available in every parish. Children would be cared for in their own communities with their brothers, sisters and peers. It would alleviate the need for parents to drive their children of different ages to and from venues around the city throughout the day, which puts enormous stress on families. It would be available to all parents, whether married or single, in the workforce or at home. It would be up to each local community to decide whether there should be cross-subsidisation from those who are at work to those who want to get training to return to the workforce or who want to undertake any form of training. It would have the important economic advantage that it would be a once off commitment on behalf of the State at a time when there is money to invest in infrastructure. We may not always have money to make large cash payments directly to parents. If we put in place the infrastructure now, we will have achieved something. The principle of funding capital expenditure exists in the capital allowances that are provided to commercial operators.

I would also like to deal with the issue of carers of disabled persons. I welcome the changes introduced in the budget, but the major issue of people's access to the carer's allowance has again been left unresolved. To qualify for a carer's allowance one must be practically destitute. Those who qualify are merely switching from one form of State payment to another in which case there is no substantial improvement in the carer's income. It is almost impossible to find a person other than a recipient of State income who qualifies for the carer's allowance. To qualify for it, one must have no income and virtually no visible means of support. This scheme appears to be geared at people who drop out the sky from another planet to take up a caring role.

I plead with the Minister to make this allowance more accessible by increasing the income disregard to make it more than a mere subsistence payment and to ease the burden of the extra costs, which are seldom recognised, involved in caring. Higher heating costs are incurred, not because disabled people need a higher level of heat than the rest of us, but because they and their carers are in the house literally 24 hours a day. There are all sorts of hidden costs involved of which many people may not be aware.

I would go further and suggest that a flat payment, however small to begin with, should be paid to all full-time carers regardless of their income, in recognition of the enormous contribution and sacrifice they make on behalf of all of us. It is seldom recognised that carers put their lives on hold when they take on the care of a relative. This may be for only a few years in the case of an elderly relative, but in other cases it can be a lifetime commitment. That is an enormous sacrifice for a person to make and the State should recognise this by providing adequate payment for those concerned.

I thank the Minister for the significantly increased allocation to services for the mentally handicapped, which is long overdue but very welcome. I hope it will make significant inroads in the current year into providing residential, day care and respite services. I hope it will be sustained in the coming years so that waiting lists will become a thing of the past.

I regret the Minister has not yet espoused fiscal incentives for environmental improvements. One measure in the budget sought to restrict excise duty rebate to bus operators using low sulphur diesel. This was a purely cosmetic exercise because, to the best of my knowledge, there are no buses using anything other than low sulphur diesel. Irrespective of whether diesel is low sulphur, it is a filthy fuel and is one of the major pollutants in Dublin. With the new fleet of buses to be funded under the national development plan that are about to come onto our streets and spew out toxic fumes, it was a missed opportunity to at least not begin the process of a move to cleaner fuels. This is an issue on which we can bury our heads in the sand only for a limited period. I am sure the Minister is aware we have already exceeded the 2010 limit on greenhouse gas emissions, to which we signed up to in Kyoto. If we do not start now, through incentives, to clean up our air, it will be forced on us eventually in the form of environmental taxes, which will not be only unpopular but will damage our competitive position.

Mr. Fleming:

I wish to share my time with Deputy Noel Ahern.

An Leas-Cheann Comhairle:

That is agreed.

Mr. Fleming:

I welcome the opportunity to speak on this Bill, the purpose of which is to give legal effect to the budget announced in early December and various measures announced in the intervening period, which no doubt will be discussed during this debate and on Committee Stage.

This is the third of the five budgets planned by the Government and it sets us on the road to enhanced prosperity and fairness for all our people. A number of Members opposite concentrated on the announcements made since budget day, which are included in the Bill. I have been in the House only two and half years and have seen two previous budgets. I am also fortunate to be a member of the Joint Committee on Finance and the Public Service which will be dealing with this Bill on Committee Stage for three days next week. My limited experience here has been that we always get a statement from the Minister on budget day and, some weeks after, a press release outlining further details of what it is proposed to include in the Finance Bill. Last year the Finance Bill included a number of new features. On Second Stage in the Dáil, there were more new announcements and, right through Committee Stage, the Minister was happy to deal with amendments and, in some cases, bring forward amendments on Committee Stage and right up to Report Stage.

There is a misconception on the other side of the House that what is announced on budget day is all that can be in the Finance Act when it is ultimately passed. That is not the case. It has never been the case and I do not expect it ever will be the case. The Finance Bill is an evolving process. Not only does it evolve from budget day until it is finalised by the Houses of the Oireachtas, but in respect of matters that are not dealt with during the detailed debate on Committee Stage this year, the Minister is happy to take on board suggestions for inclusions in next year's Finance Bill. In that regard the budget process is always ongoing. The shutters are not just drawn down when one budget is finalised. Life moves on and provisions in the Finance Bill move to take account of an evolving situation.

I am happy with the announcements that have been made since budget day which have improved the Finance Bill. I have no problem with the Minister coming into the committee next week with further amendments to further enhance the Bill, and I hope they will get the support of all sides of this House if they are for the betterment of the people we are here to serve.

This budget provides for £1 billion in personal income tax reductions on top of the £1 billion already delivered by the Government in its previous two budgets. It will remove 70,000 people from the tax net, including 10,000 people over the age of 65. That is a very important development, Last year a married couple could earn £13,000 before they came into the tax net. That figure will now be increased to £15,000. That is a tremen dous weight off the shoulders of old people who, at that stage of life, worry about tax and about their financial liabilities and like to have their affairs in order. It is a welcome development that an additional 10,000 people over 65 are being taken out of the tax net. Elderly people in my constituency are particularly pleased with that aspect of this budget.

This budget takes 125,000 taxpayers off the top rate of tax by substantially widening the standard tax band for single taxpayers and two income married couples. The top tax rate has been reduced by 2% and the lower tax rate has also been reduced by 2%. That is a phenomenal improvement on where we were a decade ago when tax rates were over 60%. This is how to fuel economic development, thereby increase employment, and make it worthwhile for people to work.

The increase in the basic allowance for a single person is up by £500 and by £1,000 for a married couple. These increases are to be welcomed. On capital acquisitions tax, I am very pleased with the exemption of the shared family home from capital acquisitions tax for all those sharing the home, irrespective of the circumstances of their family relationship. The measure also cuts capital acquisitions tax to 20%, simplifying it in comparison with the three band structure we had up to now of 20%, 30% and 40%. We are also increasing the threshold for payment of capital acquisitions tax by substantial amounts so that no tax will now be payable on gifts or inheritances below £3,000 which are taken from a parent. I am very happy with those aspects.

This budget encompasses the recently negotiated Programme for Prosperity and Fairness. That is how we have operated in recent years, and it is the principal reason for our economic success. Given that economic success, it is important that we now change our economic agenda to ensure that everybody shares in the benefits of the improved economy. I am pleased to see the Government's emphasis on the issue of social inclusion because, when the economy is doing well, it is incumbent on the Government to pay particular attention to that area.

I have no hesitation in saying that the national economic factors which underpin this budget are very strong indeed. I can understand why some commentators from outside the country might be slightly critical. I share the Minister's view that they do not fully understand the model of social partnership we have here. It is far more sophisticated and more inclusive than exists in most other countries. Members of this House have complained in the past that, effectively, many of the major decisions on pay, prosperity, income and taxation policy are being handed over by Government to the social partners for discussion and ultimately decision outside this Chamber, that the Government is handing over power that is within its own remit to the social partners. Other people may not agree, but I think that is a good thing. Being in Government is not just about the exercise of power. The Government has power, but it gets far better results by not using it aggressively and by having people working with it. I would not like to see Governments having to vote pay increases for public sector workers through this Chamber on a year by year basis hoping that would run right through the entire economy. That would lead to confrontation in the House and outside it. That is why I am happy to see what I call sensible Government which includes sharing power and responsibility. It is a philosophy that I adhere to.

I want to refer to only a couple of sections in detail now. Being a member of the Committee on Finance and the Public Sector, I will be happy to go into more detail on other aspects of it on Committee Stage.

Section 12 gives effect to the £3,000 carer's allowance announced by the Government on 8 December for spouses caring for children, the incapacitated and the aged. It is very important that that allowance is available only to people who are caring for or looking after people. It is not available to a spouse who is at home and not doing work of that nature. Some people may not like that, but I think it is justified. We must give a special carer's allowance to people who are caring for other people, be they younger or older people. The section spells out how this allowance will apply in detail. To ensure the allowance works as smoothly as possible, it is proposed to allow for an income disregard where the caring spouse has a limited amount of income of their own, for example, through part-time work. It is also proposed that the allowance will be available where an aged or incapacitated relative resides in the caring spouse's home or is being cared for close by. The allowance can also be retained for one year after the spouse returns to full-time employment. This, and the tapered withdrawal of the allowance when the spouse's income exceeds the income disregard, is designed to ensure that the allowance is not suddenly lost when the family circumstances change. The Minister has indicated that we will discuss that in further detail on Committee Stage.

I am very pleased with that section. When the Minister announced it, I immediately spotted a potential difficulty which would arise unless there was an income disregard for people where, for example, the husband is on or below the average industrial wage and they are not well off and the wife has had to go out to the local shop, supermarket or hotel to do some additional work. They earn an extra £50, £60, £70 or £80 per week. The announcement as originally made on the first day might have given the impression that once that spouse was working outside the house they could not qualify for the carer's allowance. It would have been most unjust if that had been the case without the income disregard. A person can now earn up to approximately £80 per week and still retain the full £3,000 income tax carer's allowance. I am also pleased that there is a tapering relief so that a person on overtime may on occasion go marginally over that rate. It would be very severe if there was to be a loss of the £3,000 carer's allowance as a result. The Minister has introduced a well measured detail in this case, but I will be pressing him to increase the disregard to well over £100 for future years. While it is not much at £80, it is a major step in the right direction and I will be seeking further advances on that sum at a later date.

Section 38 extends the qualifying period for the urban and rural schemes until 31 December 2002. It also increases the capital allowance in respect of qualifying commercial buildings to 100%. The year one allowance of 50% will apply both to owner-occupiers and lessors. There has been some controversy about this legislation in the past year and, due to the European Commission's ruling, the double rent and rates relief will not apply to such schemes. I can understand that because the rent and rates relief was an operating subsidy as opposed to a capital subsidy. It was giving businesses in those areas an unfair operating advantage over business outside the designated area. It is not unreasonable that the European Commission should have ruled in that manner and I acknowledge that a change is taking place.

I am particularly happy about this because four areas in Portlaoise town are specifically covered by the scheme having been submitted by Laois County Council for inclusion. The four areas are in the ownership of the local authority. In the nature of things, local authorities go about their business slowly. In only one of the schemes has the council entered a public-private partnership for the development of a housing scheme and a new private medical care centre in what was an old hospital. It has taken quite a bit of time to get this far on the first site and there are three remaining ones. I am glad this extension has been introduced because it will allow major developments to take place on the other three sites owned by the local authority. It should be taken into account that these incentives are not strictly for owners of private property. A sensible local authority can use them for the benefit of the local community through a process of public and private partnership.

Section 72 deals with the new town renewal scheme which is close to my heart. We discussed this matter in detail on Committee Stage in last year's Finance Bill. Over the last decade smaller towns have suffered enormously while major cities and county towns have benefited from the designated areas scheme. People who had money to invest found it beneficial to take their money out of smaller rural towns and invest instead in designated sites in major county towns. Smaller towns became further run down as a result. Laois County Council has submitted a plan for Mountrath, Rathdowney, Mountmellick and Portarlington for inclusion in the new scheme which will commence at the beginning of the new tax year and will run to 31 March 2003. More than any other single measure, the scheme will help to revitalise smaller rural towns, including the four in County Laois. Similar small towns ranging in population from 600 to 3,000 will get a new lease of life as a direct result of section 72. In such small towns the section will go down in history as a contributory factor that enabled them to turn the corner and restore prosperity to areas that had been deteriorating for years. I look forward to teasing out the details on Committee Stage.

I would ask the Minister to consider introducing an environmental tax incentive for companies that recycle waste oil. One or two companies undertake the dirty job of collecting used oil from lorries, tractors, garages and filling stations. Rather than incinerating such oil, such companies have made a proposal to the Department of Finance to recycle oil for use as clean fuel. However, they will require tax incentives to facilitate such recycling. The proposal has not been included in the Bill but I will ask the Minister to insert it on Committee Stage. If that cannot be done I will ask him to include it in next year's Finance Bill.

I commend the Bill to the House.

Mr. N. Ahern:

It is a good time to be in Government and probably a good time to be a Minsiter for Finance. The economy is going well and while the Minister cannot claim all the credit for that, if things were going badly he would get some of the blame. Therefore, it is probably reasonable and just to give him some of the credit. Falling unemployment figures, the number of new jobs created in the last couple of years, the growth in the economy generally and the state of the nation's finances mean that everything is going very well.

The budget was formulated against that background and contains much that is good. The fuss over the individualisation issue in which many of us took part, took many eyes off the ball. We all went off chasing one particular issue while ignoring many of the good elements in the budget under financial affairs and other ministerial briefs. This debate gives us an opportunity to recognise some of the things that were overlooked. One billion pounds in tax reductions is an enormous figure which only a few years ago people would have regarded as funny money. One must recognise that the same amount, if not more, has been delivered in tax reductions over the previous two years.

When things are going well expectations go through the roof. Some people say their situation will only improve by about £15 per week, yet a couple of years ago if they improved their situation by 15p a week they would have been eternally grateful even to achieve that and survive with their shirts still on their backs. Expectations have risen enormously, however, and in that context one expects the Opposition to be demanding everything. That is partly their job but a sense of fair play has gone out the window. I would like to quote from a leaflet which my Labour Party constituency colleague delivered. It is a personal letter from Deputy Ruairí Quinn, the Leader of the Labour Party, and while I would not agree with his views, in politics we are entitled to comment and to up the ante. The letter states:

People in receipt of social welfare benefits have been treated just as shabbily. Old age pensioners received an increase of £7 per week. Everyone else is expected to put up with an increase of £4 a week. Given the resources available to the Government these are miserable increases.

Blah, blah, blah. One can say that but it is a joke really, particularly when one realises what Deputy Quinn did for the old age pensioners when he was Minister for Finance. He gave them £3 one year, £2.20 the next and the princely sum of £1.80 another year. The letter is scandalously wrong. I am making a differentiation between comment and untruths, or whatever the parliamentary term is for that. It continues:

High earners have done well out of this budget. Those struggling on low incomes have practically been ignored. For instance, a family with two children earning £10,000 per year receives an extra £2.15 per week under this budget.

That is an absolute lie; it is scandalously wrong. He probably means the benefits they would get from taxation, but he totally ignores the £7 increase from family income supplement and the £4 increase from child benefit. I picked those two statements: one of which is a matter of opinion with which I disagree, but the other is just scandalously wrong. To score political points is one thing, but if one is stating something as fact one must have some standards. This is a personal letter from Deputy Quinn. He states that a family with two children on an income of £10,000 receives £2.15 per week according to this budget. They do not. They receive £13.15 per week, so there is a big difference. His assertion is scandalously unfair.

Much has been made of this budget's treatment of the low paid. I have heard Ministers for Finance talk about taking thousands out of the tax net since I became a Member of Dáil Éireann and before, but we know that 95% of them went back into the tax net the following week. There is a great deal of hypocrisy. This year the improvement for the low paid was not enormous – they could earn £110 instead of £100 per week before paying tax. However, that follows a substantial increase last year, when the threshold jumped from approximately £70 to £100. One thing we can say about the Minister for Finance is that he keeps emphasising that he wants us to look at his budgets in totality rather than at any one in isolation. He does not play it safe. From looking at his three budgets one could say he goes in a certain direction and rectifies a certain wrong each year. He does not play it safe by giving tuppence to one and tuppence farthing to another and, in his view, is rectifying matters. That has long-term value, but in the short-term it can seem out of synchronisation. He is making significant changes to the whole structure.

Much has been done for the low paid in his three budgets. In addition, minimum wage legislation and the new national agreement are coming in. Many people spoke about minimum wage legislation for years but did nothing about it. Then, when the minimum wage was set at £4.40 per hour, unions ran out and spent a fortune on campaigns to raise it to £5. Where were they before the Government agreed to bring in minimum wage legislation? Much of this is hypocrisy where people do nothing but shout and roar to try to add 5% or 10 % to a total in order to make themselves look innovative.

This is the era of social partnership and there is no doubt that the country has done well out of social partnership for the past 12 to 13 years. However, although I was concerned I am somewhat reassured by Deputy Cullen's remarks today, which shows the House still has some relevance. He said:

The imposition and levying of taxation is the prerogative of the House. That is the reason we have the Money Bill mechanism to ensure legislative decisions on such matters can only be taken in this Chamber. It is only right, therefore, that the House should take particular interest in the taxation initiatives in the programme.

It is reassuring that the House has some relevance. I was worried that although social partnership is fine, it might be going too far. We should be careful or we will become irrelevant. We must constantly involve ourselves and make ourselves more relevant or the action will take place in partnership discussions. I was in Finland before Christmas when its Parliament was going through its budget. The announcement by the Minister there seemed to come in the last week of a four or five week process rather than at the start of that process. They seemed to have many discussions on estimates, budgets and other matters which led to suggestions the Minister and various Departments took on board, but the budget, Finance Bill and debates took place in the last three days. That was a summary of what had happened for the previous few weeks. We seem to do it the other way around here. There are secretive talks for months in the Department of Finance and then the Minister comes into the Chamber and throws things at us that we have not previously heard of and that even his ministerial colleagues have only been informed of that morning. We then spend weeks afterwards talking about the event. We must watch out or we will become irrelevant. Looking at the Finnish example, we should reform ourselves. Much of the talk in the budget debate or on various Stages of the Finance Bill should come first and the budget should come afterwards. We have much to learn.

People use that fantastic word, "reform", about taxation, but everyone has a different meaning for it. I see nothing wrong with our income tax system except that one pays tax too soon and at the high rate too soon. I was concerned by the individualisation suggestion, though I am happy with the way it has panned out now with the £3,000 allowance. The Minister of State, Deputy Cullen, said this morning:

I am pleased our vision for reforming the tax structure has been endorsed by the social partners in the new Programme for Prosperity and Fairness. We are all agreed that our taxation system will be further developed to deliver tax reductions in a fair, targeted and equitable way.

He went on to say that the social partners endorsed the drift towards individualisation, but I am concerned by that and by us becoming irrelevant. The social partners include Community Action Network, Community Workers' Co-op, Conference of Religious of Ireland, European Anti-Poverty Network, Focus Ireland, Gay and Lesbian Network, Irish Association of Older People, National Adult Literacy Agency, Irish Commission for Prisoners Overseas and so on. They are happy with the drift towards individualisation, which is interesting, but I would rather listen to my colleagues on all sides of the House. I do not know who some of those organisations represent – not many. Many of them are funded by various Ministers, but I do not know who they represent. Many are set up just to represent themselves. Many Members were concerned with individualisation and I would much rather listen to a cross-section of Deputies who, for good or bad, have some sort of mandate and who represent those who have elected us. I am concerned that too much emphasis is being shifted away from the Dáil just because that motley crew has endorsed this – I wonder if they discussed it. The fact that it is in the partnership deal and makes them happy does not make me happy. It is a matter for debate among public representatives who have been elected by the people.

The budget debate went off the rails to discuss how we look after our children, but neither the budget or the Minister for Finance is responsible for looking after our social structure. I am glad of the £3,000 allowance and of the changes being brought forward. Many women are now working, and I see where the Minister is coming from. North Kildare is not typical of my constituency where middle class pockets comprise elderly and settled people. There is a great deal of good in this budget and we must recognise that. I hope that we, as elected representatives, continue to make this House relevant and discuss issues within this House rather than outside it.

Mr. Rabbitte:

I wish to share time with Deputy Michael D. Higgins.

An Leas-Cheann Comhairle:

Is that agreed? Agreed.

Mr. Rabbitte:

I have been around long enough not to swallow some of the red herrings expertly cast in front of the House by Deputy Ahern. While praising the budget as the best one yet, he also managed to remind us of his own heroic role in fighting off individualisation. It is true that he was in the vanguard of that rebellion and he is entitled to come into the House and state that Deputy Healy-Rae should not receive all the credit.

It is naive in the extreme – and "naive" is not a word I would normally apply to him – for Deputy Ahern to state that he is now happy as a result of the allocation of the £3,000 allowance to quell the revolt which had such broad-based support right up to the pinnacle of the Fianna Fáil Party. Deputy Ahern is entirely wrong to suggest that the group of community organisations which comprise the so-called "third pillar" is happy with individualisation. The Deputy put that on the record quite deliberately. They are not at all happy with it but they have done a deal with the Minister, a better deal than we managed to wrest from the Minister in this House or than Deputy Ahern and his fellow back benchers managed to get with the paltry £10 per week credit for stay-at-home spouses.

The trade unions managed to obtain a significant reversal of the individualisation issue. I am not referring to the £10 per week increase but to the fact that the Programme for Fairness and Prosperity provides that the future increase in the individual band will be in line with wages. That is not what the Minister told us on budget day. He came into this House with a schedule to increase the band by 100% over the course of three years. I do not know what the wages movement will be over the next three years but it will not be of the order of 100%. It is a cumulative 15.75% in the agreement and presumably tax factors will add to that. That might result in a total 20% increase, not a 100% one. In any other parliament in Europe, a Minister for Finance forced to do such a reversal on a cornerstone of his fiscal policy would now be on the back benches making a statement explaining why his own Taoiseach, Government and back benchers forced him to do it. It is just fantastic what the Christian Brothers have done in teaching civil servants and trade union officials to come up with a formula of words which can disguise anything and keep any Minister in office. That is what has happened in the Programme for Fairness and Prosperity.

Deputy Ahern had a fair point when he said that social partnership raises questions for this House. If one takes account of the extent to which decisions are now being taken at European level on the one hand and at the social partnership level on the other, it certainly erodes the role of this Parliament. We must address that. I supported the idea of social partnership long before I became a Member of this House and, on balance, its benefits outweigh its disadvantages. That Parliament has not managed to obtain any slot in terms of the social partnership and decision making process further erodes our position.

Deputy Ahern stated that this was the best of times to be Minister for Finance and I agree with him. He also stated that there is nothing wrong with the tax system. People could go to Bunny Carr for years, as many of Deputy Ahern's colleagues did, but he could not teach them to come up with something ex tempore on the floor of Dáil Éireann to the effect that this tax system is fine and that the only thing wrong with it is that people come into the tax net too soon and are put on to the higher rate too early. That is such a profound defect that it undermines everything Deputy Ahern said. That is what is wrong with the tax system. People currently come into the system at £100 per week and after the budget provisions become law, they will come into it at £110 per week. I cannot for the life of me understand how someone can come into this House and give his blessing to the budget on the basis of an income tax system which has those effects.

It was left to our colleagues in the trade union movement to extract far better terms. I note that the Minister is now committed to exempting people earning up to £200 per week from the tax system. We must wait and see whether that happens but it would only be fair. We have long argued that if there is to be a minimum wage, it would be absurd to bring people on the minimum income into the tax net.

It is the best of all times to be Minister for Finance. It is the first time in the history of this State that a Minister for Finance has the resources to significantly address the plight of poor people and introduce real tax reform. Instead, the Minister has opted to cut taxes, thereby ensuring that the major beneficiaries will be the better paid. At the same time he is widening the gap between the rich and the rest of us and between the rest of us and the poor.

The NESC report, to which the Minister was a party, set out certain priorities. It outlined the necessity to tackle social exclusion; to give priority to increases in the standard rated personal allowances; and to link social welfare payments to improvements in living standards. The Minister thumbed his nose at the NESC consensus pleading an electoral mandate in order to further feather-bed the very well off and in the process earning an inflation warning from Europe. A majority of one is a majority in this House but the Minister is going too far by continually trotting out the line that he has an electoral mandate to screw the poor and reward the rich in the tax code. Matters are not as simplistic as that.

In spite of having signed up to the NESC strategy report, the Minister further widened the gap between the haves and the have-nots. He provided £942 million in a tax package while at the same time providing £390 million for social exclusion. The vast majority of the £942 million will go to people on higher incomes. A single person on social welfare will receive an additional £4 per week while a single person on an average income will receive an additional £20. A married couple on social welfare will receive £7.80 while an average income couple will receive £40. Deputy McDowell pointed out earlier that a married couple on a combined household income of £50,000 will be £2,444 better off.

The Combat Poverty Agency enlisted the assistance of the ESRI to show that after adjustment for indexation of average incomes, the poorest 10% of households will benefit by 0.7% while the richest 10% will benefit by 4.3%. This is the most ideologically savage budget ever introduced by a Minister for Finance. It is viciously anti-poor people, as distinct from being anti-poverty. It has risked fuelling inflation in order to transfer huge benefits to the already well-off. It put social partnership at risk. If it has failed to do so – we do not know the outcome – it is only because the Taoiseach, in the Programme for Prosperity and Fairness, had to attempt what the Minister refused to do in the budget. It was impossible to redress the balance in the new agreement. When social welfare recipients get their £4 increase, it will be eroded by inflation which is already 4%. If one is a smoker one will suffer because of the 50p increase in the price of cigarettes. It seems to be fashionable for everyone in the House to agree with this as a marvellous gesture. I am not so sure if I agree with it. Many of my unfortunate constituents smoke and will do so no matter how much the price is increased by the Minister for Health and Children. Where are they left if one subtracts the increase from the £4 per week?

There are many anomalies in the new Programme for Prosperity and Fairness in an attempt to undo what the Minister did in the budget. One of the more undesirable innovations is the PRSI exemption for those earning less than £200 per week. Exempting workers from PRSI and beginning to erode the PRSI fund is of dubious merit and will create new poverty traps as someone earning £201 per week will pay the full rate. The same applies to the levy exemption threshold. These are the measures which must be resorted to in the wake of the injustices created by the budget. The Taoiseach is now becoming a court of appeal for the Minister for Finance. The trade unions go to the Taoiseach, as do the credit union leaders, the INOU and the so-called "third pillar". He attempts to redress the injustices done by throwing money at the problem rather than doing what he should have done in the first place which is dismantle the budget.

A previous speaker said that on budget day the Taoiseach gave an interview to the effect that he did not know anything about this – he was preoccupied with other matters and it slipped past him. This from a man who would mind mice at a crossroads. The notion that this slipped past the Taoiseach is not credible. Amazingly, all of this is being recklessly driven by a Government which constantly attacked the supposed profligacy of the rainbow Government. Conjuring with figures cannot hide the fact that the average increase in public spending for 1998 and 1999 was about 10%. We do not know what it will be this year. All we know is that it will be more. All of this is coming from a Minister for Finance who likes to present himself as the hard man of fiscal rectitude.

The budget has undergone so much renovation that it is reminiscent of a famous film star in the United States. The disparity between rich and poor has deliberately been given further impetus. Apparently, the Minister believes that if one is unemployed or on low pay in this tiger economy, it is one's own fault. He has ignored the huge urban tracts where deprivation is clustered. This can only be tackled if the State is prepared to transfer large resources to them. Meanwhile, the Minister ladles on the increases for the rich and powerful. If one lost out last year on the halving of capital gains tax, a word in the ear of the Minister and one will be included this year. The new programme has dramatically altered the Minister's individualisation schedule. This Finance Bill is the most viciously anti-working class ever introduced by an Irish Government.

Mr. M. Higgins:

I thank Deputy Rabbitte for sharing his time. Some measures in this Bill are welcome, for example, those to which Deputy Ahern referred regarding increased provision for the mentally handicapped and so on. However, I find it hard to accept the philosophy running through the Bill. As Deputy Ahern said, there is no doubt that it must be a great time to be Minister for Finance and to be in Government. The largest surplus in the history of our State was available to the Minister for Finance. That is the answer to Deputy Ahern's comparison of increases in social welfare by different Administrations. The Minister could have made significant changes to benefit those with different social opportunities. That he did not do so was not an accident. The reasoning behind his failure to do so can be detected in one statement after another from the budget to yesterday's statement on the Finance Bill.

The Minister's view, acquired by contamination from the Progressive Democrats, is that everyone is entitled to everything they earn, without paying a penny to account for anyone else's need. Therefore, on budget day, the benches were full and everyone was waiting for this Croesus to spend money and give relief to different groups. We knew it would never happen and the poor would end up with 0.7% and the rich with under 5%. The Minister was led by those who wanted a reduction in the top rate of tax and stressed the importance of looking after their plutocratic support rather than those on social welfare – they won. Many decent members of Fianna Fáil are appalled by this as they are by today's announcement that the transmission service will be sold off and the national broadcaster will become a tenant in what was previously owned by the people and operated so they could hear their own stories. This will generate an even greater surplus. As the Tánaiste said, privatisation will not be stopped. The people will end up owning nothing – why? This is because the little group which leads the Fianna Fáil Party and drags it along by the nose is against the concept of society. They are not that far from the famous dictum of Mrs. Thatcher that there is no such thing as society.

With £1.5 billion to spend, the budget does not make one reference to social solidarity. These two words have not passed the lips of Deputy McCreevy since he became Minister for Finance nor those of a Fianna Fáil Deputy since it joined with the Progressive Democrats in forming this Government. However, social solidarity does exist. In his speech, after the long list of tax deductions and those who will not pay as much as previously, the Minister said, "These substantial tax reductions will not be lost sight of by the electorate when the appropriate time comes". What a naked, blatant appeal to greed and self-interest. Why would the Government not increase its share of the polls? The message is simple –"say nothing, look at what you have got for yourself". There is nothing about what surrounds us. The appalling suggestion in this Bill is that all poor people could be middle income earners and are restrained from being superrich. We must all aim to be in the super rich category with windfall profits which will now be ideally almost tax free. It is very significant, given that we used to have the Minister of State with responsibility for housing who is present here, up on his hind legs telling us he was reducing the capital gains tax on building land to address the housing problem. In this budget it does not have to be building land at all; any speculative windfall profits and any kind of speculation visiting a huge social cost on society is to have the reduced rate of tax. There is a mentality that this form of society with all its inequalities is a perfect one, that the only thing wrong with poor people is that they are not middle income people and the only thing wrong with both is that they are not rich people and that rich people are entitled, in a perfect world in the vision of the Progressive Democrats and others, not to pay any tax at all as if these people live in an isolated encapsulated world and it did not matter that there were people all around who shared their citizenship, who want a decent education, decent housing, decent health services and who are forced to live on totally inadequate incomes. Does anyone want to compare the people who benefited at the top end from the budget to a person getting £4 and paying 50% more for a packet of cigarettes? How their life was changed by the Minister, Deputy McCreevy, the Minister with the biggest surplus in the history of Ireland.

In fairness to him and from his alliance francaise– as I have described it – to the Tánaiste, they do not believe in what I am describing. They, and the people who elected them, must take the responsibility for this “hard hearted Hannah” approach they represent in relation to the Finance Bill. His invitation to them is that they should not forget that he gave the greedy ones what they wanted, that they should not forget this and the top rate of tax will be reduced again the next time. He said “these substantial tax reductions will not be lost sight of by the electorate when the appropriate time comes”. However, some members of the public care about the concept of society, solidarity and the right to housing, health and to collect tax from those people who can afford to pay it, particularly to hammer taxes on those who make money on doing nothing productive, such as hoarding land with permissions and tormenting people who will never be able to put a roof over their heads. These are the people who gained from the budget. It is all very well for people to express social concern if they vote for such a budget. It is ridiculous to suggest that one can compare this budget to budgets in times of scarcity. It is very different.

In this budget and all the budgets the Minister is planning there is a mechanistic view of the economy which is that the economy exists quite separately from society, the social order that surrounds it. I referred to this many years ago as "the de-peopled economy". The economy is like an engine outside one's door, and it is tended as if it was separate from our lives. In that mechanistic model without any moral view of the economy, the de-peopled economy, there is now a worse view which is that the purpose of the economic measures the Government stands for, and which the Minister introduces in the Finance Bill, is to reward greed and invite people to be greedy. More importantly, he has made a significant shift in his budget speech. He spoke about what I would call "a conscription to the economy". I have the greatest respect for those who try to look after their children in difficult circumstances at times when there is a total absence of child care. As far as the Minister is concerned, child care is not important for the child's sake. Child care is not important to give choices to parents who may wish to make provision at home, in crèches, in work or whatever. Child care is important when it is linked to business, to the economy, when one can extend the socialisation of the costs of industry to include child care. We now get this litany from the Government. There was no housing crisis in Ireland and there is not, until it endangers economic growth. There is no child care problem unless it interferes with employment.

This is what I mean when I say his invitation to the people was to become prisoners of an economy separate from society, to have an attitude in relation to concern that did not take into account any value beyond oneself; one's neighbour's poverty is one's neighbour's problem. This is the message coming from the Minister of all the riches. He will pile on more surpluses if he can, aided by the Tánaiste who suggests she should not be held back on privatisation, as they prepare one robbery after another, such as the one I described this morning as selling something to private gurriers and which was paid for in the licence fee by citizens of this country so that they could listen to and tell each other their own stories, making them tenants in their own country. The people who have done best from the budget are a type of new landlord class of the super rich who parade and strut around the country giving interviews on how Government decisions made them multi-millionaires overnight, without them having to do anything productive. We are invited to say, "Keep going and maybe a grandson, grandchild or granddaughter of yours might be able to do the same, and wouldn't it be wonderful for Ireland?". It is a miserable vision from a miserable Minister for Finance who is simply not concerned. It will always be the same until that mentality is defeated by people who care. Perhaps it is the case that things are at a bad stage in Ireland. Perhaps the greed is deep and we are getting a greedy Government for a greedy people.

It is necessary to state the consequences of what is being done. A two income family on £50,000 and more will gain substantially from this budget but a person on social welfare benefit will get £4 per week. We are sometimes asked "what would we have done?" We published our proposals in relation to the Finance Bill before the Minister produced his budget. There would have been 200,000 more people taken out of the tax net altogether. One does not have to be a genius to ask why not take the people at the bottom out of the tax net? Why not raise the tax band? What special characteristics did the people at the top have? What special case was made for the top rate of tax? The answer is that these people had to be kept happy and we should make sure they do not miss what we have done for them, and they will come to the golf classics and contribute, no doubt. If the top rate of tax was left as it was, the range of services that are desperately required in a civilised society could have been expanded.

I loved the idea of the Minister of State, Deputy Cullen, this morning, who in a classic give away suggested that if there is productivity and contingent on future economic growth, there will be an opportunity to do much about social inclusion. It is a residual of there being further economic growth and further productivity. He did not say "we are starting with social inclusion". He is saying there will be crumbs for you, we will be seeing you at the back door when we have rewarded everyone else over the period of the national agreement.

The next issue, which is very interesting, is the long list of matters we can debate on Committee Stage, if we get a chance. There is the notion for example of the building land, but there are other issues, for instance, the reduction in corporation profits tax. What we are now witnessing is a type of casino capitalism, where people are being invited as stars. They do not win the lotto, they could get a Government licence. This is the privatisation agenda, selling what does not belong to one, selling what belonged to the public to a few people who may later sell it on to others at enormous profit. Then one is supposed to stand up and give a "hallelujah". This is called enterprise, entrepreneurship. Whatever it is called, it is theft from the public and we will hear more later about the latest scam in relation to that.

It is time people looked carefully at particulars in the budget which I have not the opportunity in the time available to mention. How many extra carers are facilitated in the budget? Was the means testing for this reduced? No, it was not. How many people on the lowest possible incomes will be able to participate in society any better?

The Minister allowed himself a flourish at the start of the debate. It is the type of flourish that has a certain vulgar peasant charm to it. He said:

I have pleasure in bringing before the House the first Finance Bill of the century. It is in many ways a noteworthy event, particularly as there has been much speculation in some quarters as to what the Bill may contain.

He also said in a little piece of peasant cunning:

These substantial tax reductions will not be lost sight of by the electorate when the appropriate time comes.

It is a miserable electorate that would vote for a miserable budget at a time of great surplus which has left so many poor people and others who had hoped for real participation in citizenship unhelped. Let the chorus of the new plutocrats, the new landlords, ring in the Minister's ears. I hope that after the next election he will have more time to spend with them.

Mr. Collins:

I wish to share my time with Deputy Browne. I support the Finance Bill. It is key legislation which brings about various changes that were introduced in the budget last December. However, the budget is not the only instrument available to the Government to bring about economic change. Within the last three months, substantial policy changes have been put in place which will have far-reaching social and economic implications.

The budget is an extremely important arm of the Government's economic and social policy. However, the Government has also forwarded the national development plan, worth over £40 billion, to the European Commission. It outlines spending and investment priorities for the seven year period, 2000 to 2006. The Government has also concluded the Programme for Prosperity and Fairness which will put in place, subject to the approval of the trade unions, fair and rewarding wage increases over the next 33 months. The national development plan, the Programme for Prosperity and Fairness and the budget must be considered together because they are interlinked.

Before considering in detail the budgetary changes which will be brought about in the Finance Bill, I wish to reflect on events which brought us to this stage. Since 1987 budgetary restraint has been a core principle of consecutive Governments and has ensured an economic turn around in the competitive position of businesses. Wage agreements brought about by widespread consultation between the Government, trade unions and employer groups have guaranteed that industrial unrest has been minimised. This has broadened Ireland's appeal as a destination for foreign investment.

Lower borrowing, a reduction in the country's debt/GNP ratio, falling unemployment and annual growth rates between 8% and 10% have all played their part in bringing about an economic turnaround. In a way, Ireland is at a crossroads. The average income per capita is now higher than ever. Ireland has gone from being the poor mouth of the European Union to becoming the fifth wealthiest nation in the EU. This has created tough and challenging choices for the Government regarding the direction in which society will go.

It is clear from the publication of the national development plan that the Government has decided that the economic gains made to date must be consolidated and made permanent. This is why £17.6 billion will be spent under the economic and social infrastructure operational programme over the next seven years. Improvements in the national road network, public transport systems and waste water treatment facilities will be key elements of the programme.

In addition, £6 billion has been put aside for building social and affordable housing schemes. The Minister for the Environment and Local Government, Deputy Dempsey, recently announced a record number of house completions in 1999, totalling over 46,500 units. This is an increase of 10% on the 1998 figures. Output nationally in 1999 in terms of new house completions was more than twice the output achieved in 1993. This record output comes at a time when the Government is set to fundamentally strengthen the role of local authorities in the planning and provision of housing. The allocation of £6 billion under the national development plan will go a long way towards achieving such policy objectives in this regard. The Government is well on course to achieve a national housing output of 55,000 new units in 2000.

While economic growth is now more widespread than ever, the Government also recognises that many key social problems still remain. While annual growth of 8% to 10% in recent years has increased the quality of life of many families, it has not filtered through to all sectors of society. The national development plan, the Programme for Prosperity and Fairness and the Finance Bill are all geared towards bringing about social changes which will help the less well off in society. This is why the social content of the budget, totalling over £500 million, will ensure that comprehensive additional social inclusion measures are proceeded with in the coming years.

The old age contributory pension has been increased by £18 under the Government, compared to half that amount during the three Rainbow Government budgets. I am confident that such pensions will be £100 a week before we next face the electorate. Those who call the current increase of £7 in the old age contributory pension paltry should look back to 1995 when the then Rainbow Government gave an increase of only £1.80. However, the Social Welfare Bill includes the necessary changes to the social welfare code as well as other changes necessary as a result of the talks on the Programme for Prosperity and Fairness.

The centrepiece of the budget was the changes in taxation. Nobody can dispute the fact that £1 billion given in tax relief far exceeds the amounts given in the last three budgets. The Government has acknowledged the importance of increasing tax free allowances. They have been increased by over £1,800 for a single person and double that for a married couple over the Government's last three budgets. This compares to a total of only £550, or a third of that figure, given in the three Rainbow Government budgets. The tax free allowance now stands at £4,700 and this will take 50,000 people out of the tax net.

This Fianna Fáil/Progressive Democrats Government also promised the electorate that it would cut tax rates, and it has done so. There has been a reduction of 4% in each rate of tax. The higher rate has been reduced from 48% to 44% while the standard rate has been reduced from 26% to 22% since the Government took office in 1997. This compares to a reduction of only 1% in the standard rate when the Rainbow Government was in office. The change in the bands whereby a person will not pay tax at the higher rate until he or she earns over £17,000 will ensure that 125,000 people now will not have to pay tax at the top rate in the coming years.

It is fundamentally inequitable that many newcomers to the workforce should have to pay the higher rate of tax when they are earning below the average industrial wage. The increase in tax free allowances and the putting in place of a structure whereby 125,000 people will not have to pay tax at the top rate will reward lower to middle income earners. The taxation system in its simplicity has always been too brutal. In part, this may have been the case because of the horrendous economic conditions of the 1980s. However, the 1990s brought about change and lowering the burden of taxation on workers is a cornerstone of Government policy. Matched to this is the commitment to wage increases in the Programme for Prosperity and Fairness which will be implemented over the next 33 months if the trade unions support the programme after ballots of their members.

There is broad agreement in the House on the necessity and desirability of cutting corporate tax rates to 12.5% in the coming years which has had a huge spin-off in terms of stimulating business. Corporate tax revenue has now almost doubled from just under £1.7 billion in 1997 to over £3 billion in 2000.

Revenue receipts from capital gains tax – which the previous speaker criticised – have also increased from £132 million to £343 million. This is as a result of clearly halving the liability on capital gains which encourages people to take a profit on property gains and reinvest.

I support the general changes in the capital acquisitions tax code. This is a taxation, whether by means of inheritance or gifts, which needs to be streamlined. Payment in the future of capital acquisitions tax at 20% is fair and balanced. I also welcome changes which will be brought about in the transfer of a family home and definitions relating to same. There have been too many hardship cases where a particular individual, who is not married to the person who owns the home and has died, has to pay a huge and unjustifiable tax bill. These changes to the capital acquisitions tax code are certainly bold. However, the Government will have to keep a close watch on these changes to see how they operate in practice.

The budget will ensure that taxpayers on average incomes will be between £20 and £30 a week better off. This is carried forward with the process of radical tax reform. We can face the first years of the new century with a sense of confidence. There are now only 172,000 unemployed which is comparable only to 1982 figures. The percentage unemployed is down to 5.1% and is likely to fall below 5% next year.

The general Government debt/GDP ratio is set to fall to 46% in 2000 and rapidly thereafter. The Government no longer needs to borrow even for capital investment. Apart from the £3 billion in EU funding, we are able to fund from our own resources the major infrastructure programme in the national development plan at a cost of £41 billion while putting money aside for the funding of pensions.

As public finances have improved there has been a progressive and real reform of the tax system. We have lowered the tax burden while strengthening the social safety net. These are sensible policies which are being considered by the Government, all of which I support.

I commend the Bill to the House.

Mr. Browne

(Wexford): I welcome the opportunity to contribute to the Finance Bill and compliment the Minister on some of the changes made on a number of issues since the budget. I welcome the reduction in tax rates not only this year but in recent years. This is encouraging more people to enter the workforce and they have more take home pay. I recall the high tax rates of 55% when it was more productive for people to remain on social welfare than to work. I am pleased the Minister, in his wisdom, through a combination of tax reductions, widening of tax bands, individualisation, etc, has managed to reduce the amount of tax people have to pay. That is reflected in the number of people entering the workforce. We now have the lowest number on the live register in our history.

The Celtic tiger is not roaring in all sections of the community. Sometimes as the Celtic tiger roars I think greed is taking over our little nation and that the well off and particular sections of the community are making vast amounts of money while others are left behind. At a time of plenty and prosperity that should not be allowed to continue. We have heard much in the past few months about social exclusion and the need to bring people on board. I hope the Minister will ensure that happens.

While we all welcome the new agreement between unions, employers, farmers and all the different sections of the community, I wonder about the decisions reached at. Most of the unions have welcomed it and said it is the best deal that could have been reached. However, the deal will do little if anything for the low paid and the socially excluded. Given the increases negotiated, those at the higher end of the scale will receive the largest increases. I have no doubt the trade union leaders on £70,000, £80,000 and £100,000 per year will receive substantial increases.

At the end of the 33 month period of the agreement the socially excluded will have received little. If one looks at the Celtic tiger as it roars on, builders, big businesses and land speculators are making most of the money. While that is happening the local authority housing lists are getting longer because many are not in a position to buy their own homes. Even in rural areas and small towns, houses which were selling for £100,000 a month ago suddenly increase to £120,000 if the first lot is snapped up. I spoke with a builder last week whose first sale of houses, in the town in which I live, was so successful that he decided to move elsewhere because by summer these houses will be worth an additional £30,000. There is much exploitation in that area which the Ministers for the Environment and Local Government and Finance should consider. Given the increased house prices many people are not in a position to buy their own homes and it is not getting any easier despite what Ministers may say.

I welcome the home carer's allowance. While there was some hullabaloo at budget time and many went out on the plinth and attacked the Minister, the home carer's allowance is very important. From a family point of view the contribution of the spouse who stays at home to look after the children or a handicapped person should be reflected in any Government's tax policy. I am pleased the Minister has recognised that and introduced a scheme which will be of major benefit to the stay-at-home spouse. He has introduced it in such a way that people can earn a certain amount and still avail of the home carer's allowance. It is obvious the Minister was reflecting the views of all sides when introducing the scheme, for which I thank him. I hope the allowance will continue to be increased in future years. The Ministers for Finance, Social, Community and Family Affairs and Health and Children should revisit the question of the carer's allowance. This allowance is very important but the means test is too strict. Many people are excluded from the allowance because of their very modest incomes. Nursing homes in the south-east cost £500 per week and I am sure costs are similar in other parts of the country. It costs more than £1,000 per week to keep a person in hospital. A small extension of the means test for the carer's allowance would allow many people to look after their aged parents or others who require full-time care in the home. Some changes have been made in the scheme but they do not go far enough. The Minister should examine this issue.

High nursing home charges are partly caused by the shortage of nursing homes, particularly in rural areas. Although the standard of many homes leaves much to be desired and although costs are high, many elderly people have no alternative but to go into their local nursing home. Section 32 of the Bill allows capital allowances for expenditure on nursing homes. I welcome this measure. I am surprised that more builders are not building nursing homes – I presume they are making too much money building houses. However, I am glad the Minister has decided to continue this capital allowance. I hope builders and other investors will consider this area of investment. There is a dire need for nursing homes throughout the country and, as our population gets older, this need will increase.

Urban and rural renewal schemes have been very successful. The small towns scheme was proposed to the Minister for the Environment and Local Government by Wexford County Council two years ago when he visited the county. I am glad that we are about to see smaller towns with populations of 500 people benefiting from this scheme. There is much dereliction in small towns throughout the country. This scheme will give an incentive to builders, developers and local people who own businesses to develop them. There have been arguments in many counties about the selection of towns for the scheme. Nevertheless, I ask the Minister to make the scheme operational so that developments can take place as quickly as possible. I also ask him to encourage developments which incorporate over-the-shop living accommodation. In Enniscorthy, where I live, very few people live in the centre of the town and it is important to bring life back into our towns. I hope the Minister will ensure that as much over-shop and over-office space as possible is used for living accommodation.

The recent tax evasion and banking scandals have been politically very damaging. The reputations of all politicians have suffered because of the actions of a few. We know that 99% of politicians are decent honourable people and it is important that we make it clear that tax evasion will not be tolerated by this or any future Government or by any politician. Section 138 of the Bill provides for changes in the legal requirements for the publication of details of tax defaulters. All tax defaulters should have their names published. PAYE workers must pay their taxes and we must make it clear to them and to other honest taxpayers that we will ensure that tax defaulters are brought to justice. It is widely believed that people who move in certain circles can avoid paying tax and break the law in other ways while ordinary people must pay their taxes and face the consequences of any misdemeanours. All politicians must make it clear that we adhere to the principle that tax must be paid and defaulters should be punished.

The Minister should examine the question of giving incentives to builders to build local authority houses. About five or six years ago builders were beating on the doors of local authorities offering to build local authority houses, but because the building industry is buoyant it is now almost impossible to find a builder to build local authority housing. The Ministers for Finance and the Environment and Local Government are right to want to provide more local authority houses. It is important to provide the maximum possible number of houses for people on waiting lists.

In the past two years, Wexford County Council has found it very difficult to find builders. When builders begin a local authority scheme we find it very difficult to have the schemes completed. House completions can take a year or 18 months. Penalty clauses do not appear to be successful. We must find a way to involve the private building sector in building local authority houses and in making a percentage of affordable houses available, as the Minister is trying to do. I hope the incentives provided in the Finance Bill will encourage the completion of as many local authority and affordable houses as possible. The scarcity of houses and their high cost is causing a serious problem.

The Minister has introduced important incentives for the PAYE sector over the past four years. In opposition one attacks the Government but it is important to recognise that the Minister has made an effort by way of the tax incentives introduced in the PAYE sector in the last four years to make it more profitable to go out to work. That is what we have all been calling for for years. The person who goes out to work should not be crucified by a penal taxation system. The taxation system should be reformed to encourage young people in particular to go out to work and thus ensure the economy continues to boom. Although interest rates are rising, which will have an effect on inflation, we have had a relatively bump free ride in the last five or six years. Some hiccups are inevitable along the way but I have no doubt that with proper management of the public finances the Celtic tiger will continue to roar for all the people, not just certain sectors. The Minister is trying to ensure the less well off will benefit and be much better off when the Government completes its term of office in two and a half years time and prepares to re-enter office. It is important that the socially excluded are brought on board, given a voice and made feel wanted and part of the Celtic tiger.

Mr. Ring:

I wish to share my time with Deputies Timmins, Crawford and Ó Caoláin.

Acting Chairman (Mr. Doherty):

Is that agreed? Agreed.

Mr. Ring:

If there is one thing the Government is good at it is public relations. There is vanity but no sanity. The spin doctors are well paid and on much higher salaries than Deputies. It is funny but I have yet to see their big salaries and expenses mentioned in the newspapers but they do a good job for the Government which has been telling the people how well they have been doing and will do in the coming years.

Many people were outraged by the recent budget. There is no doubt that the Minister got it wrong as there have been three further budgets since Christmas. With the publication of the Finance Bill we now know which one he will use. What the Government and the PR people are doing is wrong; they are being dishonest in stating that everybody is being touched by the Celtic tiger. Rather than benefiting, many are suffering because of the policies being pursued on housing, farming and health. Nothing is being done for them. I am referring in particular to those on middle incomes who cannot afford to send their children to third level and do not qualify for a medical card or other forms of assistance from the State. They have big mortagages and are finding it difficult to make ends meet. They are put under pressure by their children to feed and buy clothes for them to the same standard as Joe Soap next door and all the time the story is being spun that the economy is performing well and that there is no shortage of employment opportunities or money. The ones doing business are the banks and leasing companies. If one does not have a penny in one's pocket and wants to buy a £50,000 car all one has to do is sign up. The country is full of such people who have borrowed money they cannot afford to repay, draining the economy in the process.

Last Monday I met in my clinic a lady who is seeking to be accommodated in public housing. Currently she is renting a one bedroom apartment for which she is paying £95 per week. Half of the housing stock in the town in which I live is located within the tax designation area and as a consequence is owned by persons from outside the county. The lady's husband works as a janitor in a hotel and brings home about £200 per week. They are not in receipt of a rent allowance. To avail of the tax break the developer who owns the property has to make it available for tourism purposes between April and October. As the lady concerned only has a short-term lease she cannot have an ESB meter installed. She showed me an electricity bill, not from the ESB but from the developer. The ESB charges 8.1p per unit of elec tricity in a domestic dwelling; the lady concerned is being charged 11p per unit by the developer. Her bill should have been £175 for the two month period in question but she was charged £300 by the developer. That is immoral. If that is what the Celtic tiger is about there are many people – I am referring to the wealthy – who are very sick. The owner of the property in question is a big builder who changes his car every two months, not every two or three years. He drives a BMW. He also has a Mercedes which he uses on Sundays and all the time he is crucifying the poor little creature on £200 per week who has two young children. There is something wrong with society when something like this can happen.

Two weeks ago I raised the case of a man who was awaiting an operation. It was a case of seventh time lucky. He went into hospital in Galway last Saturday and the operation was performed this week. There is something wrong with society when a sick man in pain is admitted to hospital six times and sent home each time. The health service is in disarray.

In 1996 there were in the order of 1,300 on the orthodontic waiting list. I was informed in reply to a parliamentary question last week that this figure has increased to over 4,000. If there is one thing that the new Minister of State at the Department of Health and Children, who is present in the House, and the chairperson of the Western Health Board, Deputy Cooper-Flynn, should do it is to take on the officials dealing with the health services. There is something wrong when a man is admitted to hospital six times and sent home each time and when the orthodontic waiting list has increased in four years by almost 3,000. I am sick and tired of being told that the economy is performing well.

I will leave the issue of child care until another day. The elderly now pay VAT on the telephone monitoring service provided by the Department of Social, Community and Family Affairs and on their ESB and telephone bills among others. Pensioners over the age of 70 should not have to pay VAT on essential services. The opportunity should have been taken in the budget to exempt them.

Mr. Timmins:

Deputy Browne referred to the establishment of nursing homes. I do not wish to see developers get involved in the construction of nursing homes because the few I have seen constructed recently are merely functional. The Ombudsman reported that most of the complaints he received were about nursing homes. If I was the newly appointed Minister of State at the Department of Health and Children and this fell within my remit, I would look at the establishment of a regulator for nursing homes. As the age profile increases there will be more difficulties. There will be incentives for people to develop nursing homes, but the care of the elderly might take a back seat to the care of profits. That is a matter at which the Minister may look.

The Finance Bill, which should give effect to the Government's budgetary proposals, has been born out of much controversy. What should have been a routine celebration evolved into the party from hell, as Member after Member on the Government side came forward to criticise the Minister's budget. Whether it was orchestrated or not, it was not an edifying sight and it may have set an unhealthy precedent. To my mind it was an indication of a lack or an absence of leadership in the main Government party as its most senior Minister was abandoned in a time of need. I found it all the more amusing on viewing a video clip of the Minister's Budget Statement, when one could clearly view the Members happily clapping as they bellowed out, "Hear, hear." It certainly gives one food for thought. That video clip may become a collectors' item in time to come.

That said, a Finance Bill has been produced, much of which was not contained in the Budget Statement. It would appear that the Bill, in conjunction with the Social Welfare Bill, will bring increases in excess of £300 million over and above that for which the budget had allowed. However, this change in policy brings into question the ability of the Government to plan for and supervise the economy. At this stage, most members of the public are unaware which budgetary measures will be implemented and which will be binned.

The Minister in his speech said that time would tell, but budget 2000 will be seen as a defining point in the evolution of tax policy in the State. I hope it will not be seen as a defining point in the evolution or otherwise of the economy, as its expansionary policy impacts on inflation. It has created a real concern that the Government is not capable of managing our wealth.

Are we really as wealthy as we think? Deputy Ring spoke about the spin doctors telling us how well we were doing, but a middle income couple in the greater Dublin area, who do not own a house, would not think so. A student nurse would not think so nor would a young child in the Eastern Health Board area awaiting orthodontic treatment for four years. The improved economy has not helped with hip replacements. If you are a 40 year old awaiting adoption assessment in the South Eastern Health Board, the prospect of being assessed in 2005 is far from proof positive that things have changed for the better. Widows, widowers and old age pensioners have again seen their expectations dashed by a minimal increase, while all the time growing inflation impacts upon them. I get the impression that the Government is happy to meet its commitments to this section of society in the context of the next general election as opposed to having a genuine concern about the marginalised.

I welcome the provisions in section 21, which provide tax relief for postgraduate fees under certain conditions. At a time when there are many opportunities to draw people away from the education system, it is imperative that every possible incentive is put in place. However, the income levels in place for qualification for grants at degree or diploma levels should be increased. Many families, particularly those in the PAYE bracket, cannot afford to send their children to a third level institute.

There are certain items excluded from the budget which I would have liked to have seen included. Section 137 deals with donations of heritage items. I wish the Minister had included a relief for the many young couples who, at the request of Dúchas, must pay archaeologists to carry out digs on the proposed site of their house before building may commence.

I am aware that the Minister has received many requests from retired military personnel who are seeking to have military service allowance calculated into their pensions. It is unfair that some people availing of an Army pension are included while others are excluded and I hope that this can be addressed in the forthcoming pensions Bill.

In the time remaining to me I want to concentrate on section 72, which deals with the new town renewal scheme. It is proposed that it will come into effect on 1 April next and operate until 31 March 2003, subject to EU approval of the business elements of the reliefs. I have spoken about this scheme on the Planning and Development Bill, 1999, and I wish to reiterate the points I made then. As far as I can recall, a letter of instruction was issued when the scheme was being developed to the effect that section 23 development should be used sparingly. In most of these small towns, a small number of people own many properties. I ask the Minister to bear that in mind. I realise that the scheme is not designed to make the rich richer but rather to resurrect the derelict centres of towns. If the scheme is to be successful, however, it is imperative that the various incentives are put in place for the people who own the properties.

I regret I do not have more time because there are many other issues which I wish to address. The Bill has many shortcomings. This is highlighted by Deputy Noonan's amendment, which points up numerous issues. If these had been included at the outset, the Bill would be much improved.

Mr. Crawford:

I support my colleague, Deputy Timmins, in what he said about the urban renewal scheme. That has been a mess for a long time and we want to get it cleared up and move forward as quickly as possible.

I welcome that the Minister for Finance has basically accepted the Fine Gael proposals on inheritance and gift tax. They are a major improvement. It is important that family homes, businesses, farms, etc. can be transferred at a reasonable cost. The previous position was causing a great deal of pain, especially in the housing sector. However, it is a pity that the Fine Gael proposals on income tax were not taken into account also. Deputy Noonan spelled out clearly what needed to be done to make sure that those on low incomes were taken out of the tax net. The Minister, Deputy McCreevy, has moved that net from £100 to £110.

However, since the budget the Minister has done many other U-turns. He has signed up to a national agreement under which the likely minimum wage will be £200. He and his Government colleagues are saying that in time those on this wage level will be taken out of the tax net, but it is a pity he did not move more towards that this year.

What will be the overall cost to the economy of individualisation? The rate of inflation, at 4.4%, is double the European average. The Government has missed its targets in each of the previous two years. With planned spending of 4%, it went to 10% and it will be 10% or more this year. If the Government was serious about trying to minimise inflation, and while I do not disagree with it increasing the tax on cigarettes and tobacco, it could easily have reduced the tax on petrol and diesel and lowered the cost to those who must maintain cars on the roads. This would have certainly helped to balance the inflation problem.

The low paid derived no benefit from the budget. Recently I met a young factory worker on £200 per week. He will benefit to the tune of £4 per week on 6 April. However, he smokes 20 cigarettes a day and, therefore, since budget day he has been losing £3.50 per week. Overall he will gain nothing extra this year. A married man on £370 will gain £7 a week. However, a married couple or partners – as this is often the more desired way to live now – on £51,000 a year will gain £50 per week. A disabled person will gain £4 per week and a disabled couple will gain £7.80, with inflation at 4.4%.

I understand, from what the Taoiseach said this morning, that the minimum wage will be introduced. What will be the cost to industry? In the Border region, we have many low paid jobs and we do not have the hi-tech industries many people said we would get very shortly. We expected miracles but they did not happen. A person earning up to £170 per week should be exempt from tax. If that were the case, industry and those earning that amount would be much better off.

When will the minimum wage be introduced? How much time will industry get to implement it? That is the question those involved in industry are asking. It has been talked about for a long time but we were told only this morning it would be introduced on 1 April. How can industry adjust to this? The Government expects everybody to jump when it says so.

As Deputy Browne said earlier, the housing situation is in a shambles. If the Minister was serious about housing, he would have made sure extra money was made available to local authorities to build more houses or at least ensure low cost housing was available through some source to avoid the present crisis.

In regard to carers, there is no change in the disregard of £150 introduced in the 1996 budget. It has not been changed in the past three budgets, although wages have increased. The Rainbow Government changed it in its two budgets. There is no increase in the nursing home subvention. I recently met a carer who looks after her sister and whose husband works in an ordinary job. She cannot get a penny, yet she could allow that young person who is dying of cancer, and for whom she cares, to go into a home or elsewhere. This State, despite the Celtic tiger roving about, is not prepared to do anything for her.

Farm assist was supposed to solve the problem of low paid farmers. According to the Minister in a reply to me a few weeks ago, more than 1,000 farmers have been taken out of the farm income programme and those who are still included receive about £2 less on average than what they got in real terms 12 months ago. Where is the Celtic tiger? Child care is another major issue.

Roads are still a serious issue as far as rural dwellers are concerned. County Monaghan – it is not much different in County Cavan – got an increase of £31,000 this year as against its allocation last year. When one considers the increase in the price of tar and oil, wage increases and inflation, what will that mean? That £31,000 will be divided between four road areas. The situation is extremely serious.

People in rural areas want to know where the Celtic tiger is and whether it has one, two, three or four legs because it has not been seen 30 miles outside the capital city or in a few other areas. I ask the Minister to use this opportunity to assist the low paid, the disabled and those who are less well off and to make this Finance Bill relevant to the low paid and the poor.

Caoimhghín Ó Caoláin:

This Bill implements a budget that was and is disgracefully biased in favour of the better off. No Minister for Finance has been in a stronger position or has been better placed to implement tax changes which could substantially benefit the lower paid. Instead, this skewed Finance Bill once more benefits disproportionately the higher earners. It provides for the reduction of the top rate of tax from 46% to 44%, a costly measure for which there was neither need nor demand. The Bill reduces the standard rate of tax from 24% to 22% but the low paid still remain in the tax net.

Those on the proposed national minimum wage will remain in the tax net. No Government was ever in a better position to implement a minimum wage but three years on from the pre-election commitment of Fianna Fáil, we are only now seeing the beginning of the process. Under the proposed Programme for Prosperity and Fairness, the national minimum wage will rise to £5 per hour only from October 2002. Those workers will still be in the tax net and, by that time, will have fallen behind other workers in real pay terms. By that time also, this Minister for Finance will be out of office but he will have earned the gratitude of the wealthiest in our society.

As part of the Government's patch up job on the 1 December budget after the cuts and bruises it sustained, we had the PRSI and health levy exemptions for the lower paid. This is a classic patch up job. Instead of taking from those who can most afford it and giving to those most in need, this measure simply dips into the social insurance fund which belongs to all workers in an attempt to make some amends for the gross inequities of the 1 December budget.

Contrast the treatment of the low paid in the Finance Bill with the treatment of the corporate sector. Yet again the Minister has provided a bonanza for this sector, including the banks and other financial institutions whose gross profiteering is notorious, as is their disdain for the small customer and the small business in favour of the large deposit holders. The DIRT inquiry has revealed the extent to which these institutions actively embezzled funds that were badly needed for public services. Their reward today is tax reduction. It has been estimated that the reduction in the corporation tax rate over the past three years will save the corporate sector close on £400 million in every subsequent year.

Even this is not enough because we learned today that the Financial Services Industry Association is cracking the whip at the Minister for Finance and the Taoiseach and threatening that if the Revenue Commissioners continue to pursue DIRT vigorously, as they are obliged to do, major companies will pull out of the International Financial Services Centre. This is outrageous blackmail by an arrogant corporate sector which has been given the most favoured treatment by this and previous Governments. The ordinary worker who has tax taken from his or her weekly pay packet has no choice but these multinational profiteers spend huge sums on avoiding and evading tax as well as benefiting from massive tax breaks. I urge that this blackmail is rejected by the Minister and the Taoiseach.

One of the most glaring omissions from the budget was its failure to effectively address the housing crisis. There are no imaginative tax measures in this Bill to free up housing such as the capital gains tax increases which I and my party proposed to the Minister in our pre-budget submission. That would have curbed property speculation. There is the further measure which has not been addressed or included – the abolition of stamp duty for houses worth under £150,000. The gaps in this Finance Bill and the deeply flawed measures on housing land in the Planning and Development Bill again highlight the lack of a comprehensive housing strategy on the part of this Government. It is a crisis – make no mistake about it. It is a crisis for every needy family on all local authority waiting lists throughout this State.

There is one aspect of this Bill which refers directly to the town renewal scheme, which I welcome. I have seen the benefit of previous urban renewal schemes in the counties I represent. In my home county of Monaghan, three of the four applicant towns were approved for inclusion in the new scheme. I would like the fourth, Carrickmacross, included and, accordingly, I urge an extension of this scheme to allow for the maximum take up providing for the rejuvenation of all our small and medium sized towns.

Debate adjourned.