Before calling on the Minister for Finance, I must issue my usual reminder that the principal features along with the Minister's speech are being circulated strictly on condition that the budgetary measures remain confidential until the Minister has announced them in the House. I must ask everyone in the Chamber to respect the confidentiality of the information being supplied to them. I also ask Members and others to ensure that all mobile phones are switched off.
Financial Resolutions, 2001. - Budget Statement, 2001.
This is the fifth budget that I have had the honour to present to this House during this Government's term in office. It is not only the last—
It is the last.
And probably the worst.
(Interruptions.)
It is not only the last budget of our current term, but it also comes at a pivotal point in terms of the uncertain world economic outlook.
This is a budget designed to secure the future for us all in a fair and balanced manner. It will do this by carefully managing the public finances to sustain confidence in the economy. It is a budget in which the resources available now and going forward are more constrained than we would wish. This requires us to match our spending plans and the resources we have to achieve them.
This is a budget in which we must safeguard the vulnerable in society, we must prioritise our needs and we must continue to invest for the future. This is a budget which will secure sustainable growth. It will ensure that Ireland emerges from this period of uncertainty stronger than ever and ready to achieve our future potential.
Borrowing and InvestingIn 2002 I will not be borrowing. I am budgeting for an Exchequer surplus and a general Government surplus. My views on the imprudence of Exchequer borrowing are well known and of long standing. We got ourselves into a mire by borrowing for current purposes in the past. The legacy hung around our necks for more than 20 years. I am not going to repeat the mistakes of the past.
I am a firm believer in investing for the future. I will be meeting the statutory requirement of providing 1% of GNP for the national pension reserve fund out of currently available resources. I do not go along with those who call for us to cease providing for future ageing costs by means of contributions to the national pension reserve fund. If this concept is to work, what is required is a continuing commitment to resource it and not a fair weather one. If we fail to do this, it becomes even more difficult to persuade the public to make provision for their own retirement and other ageing costs. This budget will ensure that the funding of this reserve is not disrupted by the less favourable economic outlook for 2002.
Consequences of the Change to the EuroAn historic change in the economic life of the country will take place in 2002. Between 1 January and 9 February next, the new euro notes and coins will progressively displace the cash that we have all been used to, thereby completing the introduction of the single European currency. The Central Bank of Ireland is at the centre of the cash changeover both through its statutory role in the issue of banknotes and its involvement, as an agent of the State, in the provision of coin. A corollary of this is that there are certain once-off benefits to the finances of the bank. There are two distinct aspects, one relating to the note issuance and the other to the provision of coin.
As regards the first, the replacement of Irish banknotes by their euro counterparts will, by reason of the way the note issuance has been treated in the accounts of the bank in the past, generate a windfall boost to the bank's surplus income. I am advised by the bank that the bulk of this windfall will materialise in 2002 when it will add an estimated 240 million to the surplus income. I propose that this amount will transfer to the Exchequer in 2002.
The introduction of euro coin has highlighted an anomaly in the way the seigniorage, or economic benefit, associated with the right to issue coin is brought to account in Ireland. The norm in other EU member states is that the state receives the benefit and this is in line with the Maastricht Treaty. Unusually, under our legislation, that benefit is assigned to the currency reserve of the Central Bank, although the bank merely acts as an agent of the State in the provision of coin. I propose to rectify the position by introducing legislation which will assign to the Exchequer the proceeds of future coin issue, that is, the issue of euro coin. This will, I am informed by the bank, benefit the Exchequer to the extent of some 370 million in 2002.
These measures will together benefit the Exchequer to the extent of some 610 million next year. This will be applied towards the funding of the required contribution to the national pension reserve fund. The legislation, which I intend to bring forward at an early date, will contain all the provisions necessary to give effect to my intentions.
This budget seeks to do four things: to develop our infrastructure; to improve public services and promote equity; to encourage enterprise and investment; and, to do so in a way that sustains fiscal policy. Achieving such goals would be a challenge even in settled times. It is a greater challenge when so much uncertainty prevails regarding the short-term international economic outlook. I have no crystal ball to see through the clouds of uncertainty nor do others. As I have said many times, economics is not an exact science. What happened this year is, in my view, proof of that. This means that we should be cautious in our assessments going forward and, as a country, we will need to take stock of the situation again when it comes to the next budget.
This year's budget has been framed against the prospect of a significant slowdown in our economic growth in 2002, due mainly to international factors. The slowdown began earlier this year and was exacerbated by unfortunate and horrific events during the year. The key characteristic of the current global economic environment is uncertainty about the timing and pace of recovery. The estimates being made by market commentators for Ireland's GDP growth next year vary from as low as 1.5% to as high as 7%. The IMF, the OECD and the European Commission's forecasts are in the middle of this range. My estimate is in this range also. I expect GDP growth next year to slow significantly to 3.9%. Going forward, I expect a pick-up to our medium-term potential growth rate of around 5%. These forecasts represent our best estimate, but obviously they are subject to the risk of variation in view of the uncertain international outlook.
Employment is expected to increase by about 1.5% annually to 2004. Unemployment could average 4.75% next year but the upward trend should reverse as external conditions improve. After a temporary upturn early next year, consumer price inflation is projected to ease, helped by lower imported inflation, before falling to 2.25% by 2004. Full details of the economic projections underlying the budget are included in the stability programme update, which I am publishing today.
There is no point in wishful dreaming. The reality is that the future is particularly uncertain at present. Nevertheless, our economy is basically in good shape and that message should go out clearly. As long as we take account of the reality of the current situation and position ourselves to take full advantage of the recovery when it comes, we will have done well.
The 2002 budgetary targets, which take account of the measures I am announcing today, are as follows: an increase in net current spending of 10.5% and in net capital spending of 10.5% over the 2001 projected out-turn; a current budget surplus of 5,570 million; a capital budget deficit of 5,400 million; an Exchequer surplus of 170 million, including a release of 500 million from the capital services redemption account to meet interest costs on the national debt; a general Government surplus of 837 million or 0.7% of GDP; and a debt to GDP ratio of 34%, the second lowest in the EU.
These targets are subject to the same caveats as to uncertainty as the range of forecasts I mentioned earlier. The projected Exchequer surplus allows for a limited provision for the cost of benchmarking in 2002 since it is impossible at this stage to predict what costs will arise from this process.
The Minister was out by £2 million last year.
In the current economic climate we must make clear choices if we are to continue to safeguard our future economic progress. We must also safeguard the position of the vulnerable and create scope for further economic growth to create jobs. This is consistent with the aims of the Programme for Prosperity and Fairness and the budget will help deliver further on the goals of this programme. In shaping our budgetary provisions for next year, our focus has been on managing the challenges immediately ahead in order to secure our longer-term goals. These goals have been well captured by our agreement with the social partners under the PPF, which seeks to build a competitive, prosperous, fairer and more inclusive Ireland.
We have already made significant progress towards these goals over the period of the PPF but, as agreed with the social partners, the pace of progress has to reflect economic growth. The likelihood of growth below the PPF forecasts next year therefore requires us to be flexible, while maintaining our capacity to accelerate the rate of progress over subsequent years. As envisaged in the PPF, we have developed frameworks which set out our ambition for the medium term. In the national development plan, we outlined the scope of our vision for the development of the infrastructure required by a modern and dynamic society.
A key objective of this budget is to continue to raise the quality of our public services. We have shown our commitment to this goal. Between 1997 and 2002, and taking account of the additional expenditure provided today, the Government will have increased net voted current expenditure by 10.3 billion, or 79%, and net voted capital expenditure by 3.7 billion, or 195%. Now more than ever we need to continue to improve the overall management of public expenditure. We must focus on what we are achieving in terms of real output and outcomes. Such an approach will help deliver better public services. Increased expenditure is not always enough on its own.
It is also my view, based on my experience over the past five years, that we should move in the future to a unified tax and expenditure budget in which all tax and spending decisions are announced as one on budget day and not in two stages, as happens now. Over and above the figures provided in the published expenditure Estimates last month, and including the social welfare package, I am providing an additional 1.35 billion in net current spending and a further 550 million in net capital spending for next year. The full range of additions to both current and capital spending are included in the summary. My statement will deal with the main items. Last month, in announcing the Estimates, I indicated that I had decided to concentrate the available resources on a number of specific areas. Accord ingly, my announcements today are concerned with infrastructure, the development of a quality healthcare service and enhanced social welfare provision.
Our economy has performed well in recent years. We have raised our income levels to above the EU average. However, our infrastructure needs to match up with the rest of the economy. The expenditure Estimates which were published on 15 November provided significant capital allocations in 2002 for roads, public transport, water, housing and education. The extra 550 million I am announcing today for capital spending is mainly for roads, public transport, housing, water services, waste management, education, health, harbours and telecommunications infrastructure.
Total Exchequer capital investment next year in roads alone will be 1 billion, with over 450 million being invested in public transport. Total Exchequer capital spending on housing in 2002 will be almost 1.1 billion, while capital funding for education, to build and refurbish schools and third level colleges, will amount to some 560 million.
By the end of next year we will have spent 8.5 billion on the economic and social infrastructure programme of the national development plan which is above that promised in the published operational programme. This Government is fully committed to the implementation of the national development plan because it lays the foundation for our future economic growth. Details of the additional capital spending are set out in the summary.
Public Private PartnershipsPublic private partnerships will make a further contribution to delivery of priority economic infrastructure projects under the national development plan. Construction work has begun on five post-primary schools following the signing of a PPP contract in recent weeks. A further 42 pilot projects are being developed in the areas of roads, rail, environment and education, with additional projects in these and other areas currently being assessed. Over the next three years these projects should contribute private finance in the region of 800 million to our infrastructure programme.
TOURISM
Tourism has made an important contribution to our economy, especially in creating jobs. It has also helped to spread the benefits of our economic growth throughout the country. Next year will be a very challenging year for tourism. In order to support the industry, I propose allocating an additional 11 million for tourism marketing on top of the provisions already contained in the Estimates. The funding will be used for regional and sports tourism and for the international marketing of the island as a whole.
HEALTH
Last week, the Minister for Health and Chil dren launched the health strategy. This strategy represents a blueprint for the development of the health services over the next decade, with a particular emphasis on improving the quality of service delivery.
Today I am allocating additional Exchequer funding of 425 million, with a full year cost of 613 million.
This brings gross health expenditure to nearly 8.2 billion for 2002. The Minister for Health and Children will be announcing the full details in due course. These will include spending on additional beds for acute hospitals, the setting up of a treatment purchase fund to reduce waiting times for public patients and to add to the range of service delivery options. They will also include funding for the physically and intellectually disabled and older people as well as the development of certain GP initiatives.
The development of the health services has been a priority for this Government. Between 1997 and 2002 we will have increased the gross health and children allocation by over 4.5 billion or 125 per cent.
Deputies
Hear, hear.
After many years when our expenditure on health trailed behind most of the rest of Europe, Ireland's position is now on a par with the EU average. As our population ages in future years, the pressures on health spending will increase further. Our planning must take account of this, as well as the pressures in many other areas.
This Government has put the funds into health. The challenge now is to ensure that the quality and quantity of services that people receive match this investment.
A Deputy
That is the question.
With over 8 billion now being spent on the health services, those managing the service must secure the effective delivery of this huge amount of resources. Against this background, I particularly support the organisational reform agenda signalled in the health strategy, notably the proposed independent audit of functions and structures.
I have a further initiative to mention in this regard. Following consultation with the Minister for Health and Children, I am establishing an independent commission on financial management and control systems with a remit to examine, evaluate and make recommendations on relevant systems, practices and procedures throughout the health services.
I do not blame—
I will announce full details of the terms of reference and membership of the Commission shortly.
(Interruptions.)
Order, please. Silence. Please allow the Minister to continue without interruption.
SOCIAL INCLUSION/SOCIAL WELFARE
This Government has done more than any other in the history of the State to promote social inclusion, far more than our immediate predecessor. Last year's social welfare package was a major leap forward in protecting the vulnerable in society. This year will continue that progress.
From the outset, it has been a central goal of this Government that everybody should have the opportunity and incentive to participate in the social and economic life of the country. Under our stewardship, employment opportunities have been greatly expanded. This has been the single biggest factor in advancing social inclusion in this country.
Deputies
Hear, hear.
We have committed unprecedented amounts of money to delivering on social inclusion. In the health strategy, we have set out the developments and the restructuring which will be pursued over the coming years to provide the efficient and responsive health care system which our people require.
The review of the national anti-poverty strategy is nearing completion. The Government's response to this review will provide the basis for action in this area into the future. In last year's budget alone I provided over 1.5 billion in full year terms for social inclusion measures across all Departments. This year, notwithstanding the greater constraints on the public finances, I am following this up with a further allocation of over 1.6 billion in full year terms.
Social Insurance FundSince its inception in 1953 the Exchequer has assisted the social insurance fund. For instance, in the ten years to 1996, the Exchequer contribution exceeded 2 billion. Thanks to this Government's record on employment, the fund is now in such a healthy financial position that the Exchequer can recover some of this funding.
That will match—
The fund will have a surplus of about 1.4 billion at the end of 2001. I indicated last year that it is important to keep the surplus under review. Having regard to its strong financial position, I am satisfied that it is appropriate for that fund to make a contribution of 635 million in 2002 towards the Exchequer.
(Interruptions.)
Order, please.
Taking account of the other changes I am announcing today, the fund will still have 1.2 billion in hand at the end of 2002.
A Deputy
The Minister is some chestnut.
That is social inclusion for you.
Social WelfareToday's social welfare improvements will cost £850 million or 1,079 million in a full year. This equals last year's record package for social welfare improvements and means that social welfare expenditure in 2002 will be two thirds higher than it was in 1997.
For 2002, all social welfare weekly increases will be paid with effect from 1 January. Implementation will be delayed for administrative reasons for some categories and these recipients will get a lump sum payment in February. In effect, increases for those dependent on social welfare will now be payable more than five months earlier than when this Government came into office.
Deputies
Hear, hear.
Order, please. Can the Minister be heard without interruption? Silence.
For convenience, in describing these increases I will refer only to Irish pound amounts.
Old Age PensionsEach of my budgets has clearly demonstrated this Government's commitment to supporting the position of our old age pensioners. This year is no different. Today I am increasing the full personal rate of old age and related pensions by at least a further £10 per week. This will bring the old age contributory pension to £116 per week and the old age non-contributory pension to over £105 per week. We have more than achieved our commitment to increasing all old age pensions to at least £100 per week over this Government's term. This means that with the proposed increase in the qualified adult payment, a contributory old age pensioner couple, both aged over 66 years, will next year receive over £205 per week. Taking my five budgets together, the personal rate of old age contributory pension will have gone up by nearly 50% while a couple both over 66 years will be getting 54% more.
What about the 2,500 pensioners—
This is well ahead of inflation and represents a real improvement in the living standards of our older citizens.
(Interruptions.)
Order, please.
A Deputy
The Minister is all for the banks and against the pensioners.
I will be doing a damn sight better than when the bearded duo socialists were in charge.
Other Weekly Payments and Qualified Adult AllowancesI am also matching last year's record increases by providing at least a further £8 per week for other full rate social welfare recipients. This increase is much greater than projected inflation for 2002 and allows for continued improvement in the position of all social welfare dependent households.
Two years ago, I commenced a phased increase in the rate of qualified adult allowances from 60% to 70% of the personal rate. I am providing today for a further substantial step towards this goal. Accordingly, this allowance in general will be increased by more than £8 per week—
Eight pounds.
That is pathetic.
—so that next year payments for most social welfare couples under 66 years will increase by more than £16 per week.
In my full term of office, the personal rate for most recipients under 66 years will have increased by at least 37%, while the corresponding rate for a couple will have increased by more than 44%. Families with children will also receive the child benefit improvements which I am announcing today.
I am also providing for a special increase in the lowest social welfare payment rates. Accordingly, recipients of short-term unemployment assistance and supplementary welfare allowance will benefit from a weekly increase of more than £9.50. This brings the payment rate for these schemes up to the same level as applies to most other recipients—
Provided they have not been cut off.
—under 66 years.
WidowsFollowing on last year's increase, I am again providing for a special weekly increase for recipients of the widows contributory pension aged 66 years and over to further narrow the gap with the rate of the old age contributory pension. Accordingly, next year the widows contributory pension will increase by £12, bringing the payment rate to £114 per week. I am also providing for the widowed parent grant to be almost doubled to just under £1,970 with effect from today.
Fuel AllowanceLast year, I announced an extension of the period for which the fuel allowance is payable. This year I am increasing the rate. With effect from January next, recipients of this scheme will get an extra £2.09 per week, bringing the total payment under this scheme—
When will the Minister start his budget speech?
(Interruptions.)
Order, please.
—to more than £7 per week.
Child BenefitLast year I announced the Government's intention to invest around £1 billion in increased child benefit over a three year period. As I said at the time our central objective is to support parents in whatever choices they make in looking after their children. Child benefit also offers a most effective means of channelling income support to low-income families in order to tackle child poverty.
In line with the record increases which I provided last year, I am now announcing the second step in this three year programme. This will see child benefit rates increased by a further £25 per month for the first and second children to £92.62, and by £30 per month for third and subsequent children to £116.
These increases will be paid in May but back-dated to April, or five months earlier than when we came into office. The increases mean that child benefit will have gone up by £62.60 per month for first and second children—
Child care costs more than £100 a week.
—and £77 per month for third and subsequent children since 1997 – a trebling of the payment rates. From next year, a family with four children will receive more than £417 per month in child benefit. By any measure, this is a very substantial level of support to parents in fulfilling their caring duties.
In addition, I am proposing improvements to the back to school clothing and footwear allowance. From next year, more than 70,000 children aged 12 years and over will benefit from an increase in the payment rate which will rise to more than £94 per child. In addition, some 8,000 more children will be eligible for this payment next year due to an easing of the means test—
That tells its own story.
—which I am also providing for today.
Other Social Welfare MeasuresThe Summary of Budget Measures contains a range of other social welfare improvements, full details of which will be announced by the Minister for Social, Community and Family Affairs.
He is on the box every other day.
These measures include a further easing of the income disregards for the carer's allowance to benefit about 3,400 new carers and 2,300 existing ones—
Another round of photographs.
—an increase in the annual respite care grant to £500; a 20% increase in the number of free units under the free electricity allowance; a relaxation in the qualification criteria for the free telephone allowance; the extension of the free travel companion pass to invalidity pensioners; an increase in the income thresholds for family income supplement to bring the average payments to recipients up to around £59 per week—
Does the Minister fancy anything for Cheltenham?
—and an increase in the earnings disregard for recipients of disability allowance.
PERSONAL TAX PACKAGE
I will now turn to taxation measures. The personal tax reductions which I will shortly announce will have a full year cost of £500 million or 634 million and will consolidate the strategy of removing more low paid earners from the tax net and more middle income earners from the top rate.
One would not even notice that.
These measures take effect from 1 January 2002. Revised tax credit certificates incorporating the changes will issue from mid-February. The relevant tax rebates will be made by employers to their employees—
Just in time.
Could the Deputy's party do better?
—shortly afterwards.
Personal TaxationThis Government in its term in office has rewarded work and enterprise, as it set out to do, by substantially reducing the tax burden on ordinary taxpayers. In particular, the Government has delivered on what it promised the electorate in 1997 in relation to income taxation. As a result of our five budgets more than 380,000 taxpayers will have been removed from the tax net—
Did the Minister mention medical card holders?
—both tax rates have been reduced substantially, along with PRSI and levies; all taxpayers and especially those on lower pay have benefited; the tax system has been made fundamentally more equitable through the introduction of tax credits in budget 1999 – something those opposite spoke of but did not do when they had the chance.
After this budget there will be more than 690,000 income earners outside the tax net or 37% of all those on Revenue's records. The corresponding figures when we took office were 380,000 or 26%.
Of the 4.8 billion in tax reductions in these five budgets, 43% has gone on increasing the basic tax allowances, or credits as they are now, including the PAYE allowance; a further 22% went in taking more than 370,000 taxpayers off the top rate of tax; more than 16% went to reduce the standard rate of tax paid by all taxpayers, and just 11% went to cut the top rate of income tax.
There are statistics, statistics and damn lies.
These are the facts. They are a reality that will make some commentators uncomfortable. It robs them of a much loved fiction that this Minister favours only the better off.
The Minister, Deputy O'Rourke, knows that is a joke. She is laughing.
I am laughing at the Deputy.
This is not the case. All taxpayers have benefited substantially from the major tax reforms and tax reductions which this Government has carried out.
This Government has succeeded in transforming the income tax system to give the country a simpler, fairer and more rewarding system. I have done more than most to close off certain abusive tax loopholes through which the very well off could reduce their taxable income to almost nil. Tax reliefs are still required to stimulate enterprise and investment, but they must be carefully focused to ensure they hit their targets.
Changes in Tax Credits and BandsLast year I indicated that the Government intended to increase the income tax entry point towards the level of the minimum wage. The Programme for Prosperity and Fairness made it clear that it was an agreed policy objective of the Government and the social partners to make this happen over time.
When will the Minister get to the good part?
I am pleased to say that further substantial progress is being made this year by increasing the basic personal tax credit by 123 to 1,520 and the PAYE tax credit by 152 to 660. The effect of this will be to raise the entry point to the tax system for a single person to £165 per week or more than 209 and to remove 68,000 low income earners from the tax net. When we came into office the relevant entry point was £77 per week.
Shame on the Deputies opposite.
This entry point to the income tax system will now be at 90% of the current minimum wage. I am also increasing the single standard rate band by 2,605 to 28,000 with relevant changes to the married bands as set out in the Summary of Budget Measures. The impact of these changes will be to remove 57,000 taxpayers from the higher rate of income tax in 2002.
Tax Relief for the ElderlyWhen we came into office, the income tax exemption limits for those aged 65 and over were as low as 5,840 per annum single and 11,680 married. I have increased these substantially in my first four budgets. I propose to increase them again. The new limits will be 13,000 and 26,000 – an increase of more than 120% in my period in office. This will remove more than 11,000 elderly taxpayers from the tax net. This is in addition to the 68,000 low income earners already removed from the tax net by the tax credit changes just announced.
INDIRECT TAXES
The Government has decided to restore the standard rate of VAT to 21% from 1 March 2002. I had reservations about cutting that rate last year. I said I would be looking to see if it was fully passed on. I am not convinced that this was the case. The VAT-inclusive excise duty on petrol and diesel will be increased by 5p per litre from midnight tonight.
Rev up the engines.
The VAT-inclusive excise duty on cigarettes will be raised by 10p per packet of 20, with pro rata increases in other tobacco products, also from midnight tonight. I am also increasing the excise duty on cider to the same level as that for beer.
What about champagne?
Those of us on this side of the House anticipate that we will be drinking plenty of champagne after the summer next year.
They will have plenty of time for it.
They will have nothing else to do.
This will better align the duty rates by reference to the alcoholic content of the products and take account of the increase in cider's market share.
The overall impact on the consumer price index of the increases in VAT and excises is estimated at 0.9%, giving an average inflation rate for next year of 4.2%. The revenue raised will help towards funding the extra spending on the important public services developments I announced a short time ago. We also need to maintain revenue from indirect taxes if we are to be serious about reducing the burden of other taxation on effort and enterprise.
BUSINESS TAXATION
Employers' PRSIIn the area of business taxation I am reducing the top rate of employers' PRSI from 12% to 10.75% with effect from 1 March 2002 at a full year cost of 347 million. I had planned more wide-ranging reforms of the PRSI system to simplify it and rationalise its application, but the changed situation in the public finances has put the completion of these plans beyond reach at this stage.
Corporation TaxThe standard rate of corporation tax on trading profits will fall to 16% from 1 January 2002 and 12.5% the following year. I am now providing that over the next five years companies will move to a situation in which their main corporation tax payments will be made on a current year basis, instead of the existing system under which all tax is paid well after the end of the accounting year. This change will yield a large cash flow benefit to the Exchequer in each of those five years. This will amount to 792 million in 2002.
More funny money.
The current year basis is common in other OECD countries like the United States of America, and it makes sense for us to move in that direction.
(Interruptions).
I bet there will be no advertisements on the radio about that.
Order, please.
Details of this measure are in the Summary of Budget Measures.
BES and Seed CapitalThe current business expansion and seed capital schemes of tax relief are being extended for a further two years beyond 31 December 2001. The limit on investment in any one firm under the BES will be raised from 317,500 currently to 750,000. The increased limit will also apply to the seed capital scheme.
Well done.
Shipping Tax
Within the company tax system I will be introducing a special shipping tonnage tax regime from 1 January next in recognition of the particular requirements of the shipping industry.
We will ship out the Minister.
Other Investment and Area Renewal Schemes
I am also aware of the difficulties being encountered in completing projects under various tax relief schemes for property investment. Therefore, I am extending the deadlines for eligible projects under the urban and rural renewal schemes—
I thank the Minister very much.
—the capital reliefs for student housing and the park and ride and multi-storey car park schemes. These deadlines are being extended by two years or so, that is, to end-2004 in most cases. These measures will encourage investment and enterprise.
OTHER TAXATION MATTERS
I now wish to turn to a number of other taxation issues.
Property Taxation MeasuresI am restoring interest relief as a deductible expense in calculating tax on rental income from residential property, with effect from 1 January 2002. Circumstances in the property market are much changed and the presence of investors is required to secure the future supply of housing to meet accommodation needs.
About time.
Mr. Hayes
Where is the Minister for the Environment and Local Government, Deputy Dempsey, now?
Order, please.
I am also altering the stamp duty system to align the investor rates for new and second-hand residential property with those for owner-occupiers of second-hand houses generally. The full details are set out in the Summary of Budget Measures.
The Minister of State, Deputy Molloy, is embarrassed.
Climate Change Policy
Last year the Government adopted the national climate change strategy, recognising that climate change is now a threatening global environmental problem. We are all aware of the adverse effects of sulphur emissions. In budget 2001 I indicated that I intended to introduce a new, higher rate for diesel with high sulphur content.
Sulphur has nothing to do with climate change.
Is the Minister going to save the planet?
This will apply from 1 March 2002 to allow for disposal of stocks and be 6 cents per litre higher than the excise rate for low sulphur diesel.
That will clear the air.
Other Tax Changes
The Summary of Budget Measures contains details of other tax reliefs and changes, the more notable of which are a cut in betting tax from 5% to 2% from 1 May next to prevent jobs and revenue in that sector from moving offshore—
The last throw of the dice.
—increases in tax credits for blind persons, incapacitated children and the widowed; adjustments to reliefs for farmers affected by foot and mouth disease to help with restocking; new reliefs to assist the development of sports facilities in the State; an increase in the donations limit for tax relief for heritage items; enhanced reliefs to encourage the development of medical facilities in the State; a change in the aggregation period for capital acquisitions tax; and a number of measures to combat tax avoidance.
We could do with them.
LOOKING TO THE FUTURE
This country's future economic outlook is bright. All economic commentators share that view. We are, however, passing through a period of slower growth and no one can predict how long the economic downturn will last, no matter to what school of forecasters one belongs.
A Deputy
Where did the £3 billion go?
It is a time for cool heads and steady hands.
Time for change.
We cannot reflate the world economy. We can, however, make sure that we are poised to exploit the global upturn when it comes. Even if some eyes here are fixed on short- term issues and events, as leaders, we must have a vision of where we are going.
In that context, what is happening now does not alter the medium to long-term cost implications of population ageing for health, welfare and pensions.
God rest the tiger.
As I have made clear, I am making provision now through the national pension reserve fund towards meeting these costs in the future.
This budget presents the people with choices. Fiscal policy is a national prerogative, as it is in all other EU member states. This House decides the issues and, as political parties, we put our proposals to the electorate for its sovereign choice. This is as it should be. However, we do not make policy in a vacuum. As far as EU rules are concerned, we continue to meet the requirements of the stability and growth pact. We always listen to fair advice, but decide ultimately what is best for Ireland. If we have to defend what we decide, then that is a natural consequence.
Economic theories and philosophies come and go.
The Minister ignores them.
They are refined, changed and adapted. However, if one cannot create wealth, no State, irrespective of political ideology, can ever have sufficient or adequate resources to redistribute.
Careful economic and budgetary management provides the soundest basis for our future. That principle underpins my own political beliefs and the Government's aim of securing the basis for further growth, rewarding work and effort, developing our infrastructure, distributing resources fairly and creating a society that can look forward with confidence to the years ahead.
In a time of difficulty we have looked after the concerns of the low-paid, those in need of health care, and those reliant on social transfers.
(Interruptions.)
Difficulties created by the Minister.
Order, please.
This is what real social inclusion means.
We promised and have delivered five budgets without borrowing. My five budgets to date are the five chapters in my first book. While some famous authors can write only one book, others can write a second best seller. I look forward, therefore, to beginning my second book after summer 2002. I commend this budget to the House.
EXPLANATORY NOTES
1.Basis of figures
The figures shown for receipts and expenditure in 2001 are projected outturns and reflect present knowledge. They are subject to revision when the end-year figures become available. Fully audited details for 2001 will be available in the 2001 Finance Accounts to be published not later than 30 September 2002.
2. RevenueThe estimate of revenue for 2002 is based on the tax provisions in force at present. The projected outturn for 2001 includes 223 million collected under the Voluntary Disclosure Scheme (see Note 1 on page 1311).
3. ExpenditureThe Estimates for Public Services (Abridged Version) & Summary Public Capital Programme 2002 (AEV), was published on 15 November 2001. The estimated expenditure figures for 2002 contained in the White Paper are consistent with those published in the AEV. However, the 2001 outturn figures for voted expenditure are different from the 2001 figures which were published in the AEV as the figures have been revised to reflect more up-to-date information.
4. Appropriations-in-AidVoted expenditures are shown net of Appropriations-in-Aid. These are receipts which, with the agreement of the Dáil, may be retained by a Department or Office to offset expenditures instead of being paid into the Exchequer Account of the Central Fund. Details of gross voted expenditures by Departments are contained in the Estimates for Public Services (Abridged Version) & Summary Public Capital Programme 2002.5.PRSIPRSI contributions are paid into the Social Insurance Fund (SIF) and do not form part of the revenues paid into the Central Fund as is explained in the following paragraphs.
Disbursements by the Department of Social Community and Family Affairs fall under three main categories, namely,
a)payments out of the SIF which are related to the entitlement of persons under their insurance/PRSI/benefit record, e.g. unemployment benefit, contributory pensions, etc.,
b)payments to persons who have ceased to qualify or have never qualified under their insurance/PRSI/benefit record to be paid out of the SIF, e.g. unemployment assistance, non-contributory pensions, etc., and
c)other payments such as grants to organisations.
The amount voted by the Dáil to the Department of Social Community and Family Affairs is composed of payments falling under (f2>b) and (f2>c) above, together with any sum needed by the SIF to ensure that the total income of the fund is not less than the total sum paid out of the Fund in any year.
For most past years, an Exchequer contribution has been required to meet the shortfall on SIF. However, no Exchequer contribution has been required since 1997.
6. Prefunding of future pensions liabilitiesThe National Pensions Reserve Fund Act, 2000 provides for prefunding part of the future cost of social welfare and public service pensions, and the setting aside of 1% of estimated Gross National Product (GNP) annually for this purpose (see Note 7 on page 1311).
7. Proceeds from sale of ICC Investment Bank and TSBThe proceeds from the sale of ICC Investment Bank and TSB in 2001 are included as Capital Receipts (see Note 5 on page 1311).
8. Service of National DebtThe 2001 projected Central Fund outturn reflects a reduction of 56 million in the assets of the Capital Services Redemption Account. The 2002 figure reflects a reduction of 292 million in these assets.
9. Tables in EuroThe Tables and Notes shown on pages 1311 to 1317 are denominated in euros. Tables and Notes in Irish pound equivalents are shown on pages 1319 to 1325. Rounding may affect totals.
TABLE 1 (euro)
Total Receipts and Expenditure
|
Reference |
2001 |
2002 |
||
|
000 |
000 |
|
Receipts |
||||
|
Current |
Table 2 (euro) |
28,727,932 |
29,902,657 |
|
|
Capital |
Table 2 (euro) |
1,879,518 |
1,273,603 |
|
|
Total |
30,607,450 |
31,176,260 |
||
|
Expenditure |
||||
|
Current |
Table 2 (euro) |
24,247,875 |
25,707,830 |
|
|
Capital |
Table 2 (euro) |
6,035,680 |
6,124,072 |
|
|
Total |
30,283,555 |
31,831,902 |
||
|
Exchequer Surplus (Deficit) |
323,895 |
(655,642) |
TABLE 2 (euro)
Details of Total Receipts and Expenditure
|
Reference |
2001 |
2002 |
||
|
000 |
000 |
|
Estimate of Receipts and Expenditure – CURRENT |
||||
|
Receipts |
||||
|
Tax Revenue |
Note 1, Page 1309 |
27,928,000 |
29,080,000 |
|
|
Non-tax Revenue |
Note 2, Page 1309 |
799,932 |
822,657 |
|
|
Total |
28,727,932 |
29,902,657 |
||
|
Expenditure |
||||
|
Voted (Departmental Expenditure Voted Annually by the Dáil) |
Note 3, Page 1309 |
20,553,160 |
22,076,608 |
|
|
Non-voted (Non-discretionary expenditure charged directly on the Central Fund) |
||||
|
Sinking Fund* |
Note 4, Page 1309 |
478,000 |
475,900 |
|
|
Other Non-voted Current Expenditure |
Note 4, Page 1309 |
3,216,715 |
3,155,322 |
|
|
Total |
24,247,875 |
25,707,830 |
||
|
Surplus (Deficit) on Current Account |
4,480,057 |
4,194,827 |
||
|
Estimate of Receipts and Expenditure – CAPITAL |
||||
|
Receipts |
||||
|
Sinking Fund* |
478,000 |
475,900 |
||
|
Other capital receipts |
Note 5, Page 1309 |
1,401,518 |
797,703 |
|
|
Total |
1,879,518 |
1,273,603 |
||
|
Expenditure |
||||
|
Voted (Departmental Expenditure Voted Annually by the Dáil) |
Note 6, Page 1309 |
4,949,944 |
4,975,597 |
|
|
Non-voted (Expenditure charged directly under particular legislation) |
Note 7, Page 1309 |
1,085,736 |
1,148,475 |
|
|
Total |
6,035,680 |
6,124,072 |
||
|
Surplus (Deficit) on Capital Account |
(4,156,162) |
(4,850,469) |
||
|
Exchequer Surplus (Deficit) |
323,895 |
(655,642) |
*The Sinking Fund provision is a transfer from the current account to the capital account.
NOTE 1 (euro)
Tax Revenue
|
2001 |
2002 |
||
|
000 |
000 |
|
Customs |
161,000 |
167,000 |
|
|
Excise |
4,046,000 |
4,064,000 |
|
|
Capital Gains Tax |
859,000 |
758,000 |
|
|
Capital Acquisitions Tax |
165,000 |
151,000 |
|
|
Stamp Duties |
1,219,000 |
1,230,000 |
|
|
Income Tax |
9,096,000 |
9,753,000 |
|
|
Corporation Tax |
4,289,000 |
4,601,000 |
|
|
Value-Added Tax |
7,859,000 |
8,345,000 |
|
|
Agricultural Levies |
11,000 |
11,000 |
|
|
Voluntary Disclosure Scheme |
223,000 |
0 |
|
|
Total |
27,928,000 |
29,080,000 |
NOTE 2 (euro)
Non-tax Revenue
|
2001 |
2002 |
||
|
000 |
000 |
|
Central Bank – Surplus Income |
451,303 |
475,000 |
|
|
National Lottery Surplus |
175,200 |
176,500 |
|
|
Dividends |
27,934 |
31,743 |
|
|
Interest on Loans |
|||
|
Local Loans Fund |
21,600 |
20,300 |
|
|
Other Loans |
711 |
711 |
|
|
Other Receipts |
|||
|
Passport and Consular Fees |
25,268 |
26,900 |
|
|
Court, Land Registry Fees, Fines, etc. |
85,600 |
84,900 |
|
|
Miscellaneous |
12,316 |
6,603 |
|
|
Total |
799,932 |
822,657 |
NOTE 3 (euro)
Voted Current Expenditure
|
Vote No. |
Service |
2001 |
2002 |
|
000 |
000 |
|
1 |
President's Establishment |
1,887 |
1,975 |
|
|
2 |
Houses of the Oireachtas and the European Parliament |
64,359 |
76,363 |
|
|
3 |
Department of the Taoiseach |
21,803 |
31,664 |
|
|
4 |
Ordnance Survey Ireland |
3,441 |
7,982 |
|
|
5 |
Central Statistics Office |
42,568 |
51,219 |
|
|
6 |
Office of the Minister for Finance |
85,779 |
84,615 |
|
|
7 |
Superannuation and Retired Allowances |
164,002 |
190,039 |
|
|
8 |
Office of the Comptroller and Auditor General |
5,087 |
6,191 |
|
|
9 |
Office of the Revenue Commissioners |
254,224 |
256,702 |
|
|
10 |
Office of Public Works |
133,296 |
147,674 |
|
|
11 |
State Laboratory |
5,382 |
6,014 |
|
|
12 |
Secret Service |
420 |
900 |
|
|
13 |
Office of the Attorney General |
10,684 |
11,441 |
|
|
14 |
Office of the Director of Public Prosecutions |
16,340 |
24,880 |
|
|
15 |
Valuation Office |
6,220 |
7,711 |
|
|
16 |
Civil Service Commission |
11,344 |
10,474 |
|
|
17 |
Office of the Ombudsman |
4,108 |
4,427 |
|
|
18 |
Chief State Solicitor's Office |
25,437 |
28,388 |
|
|
19 |
Office of the Minister for Justice, Equality and Law Reform |
160,898 |
214,604 |
|
|
20 |
Garda Síochána |
898,000 |
890,793 |
|
|
21 |
Prisons |
260,000 |
261,580 |
|
|
22 |
Courts |
53,775 |
53,530 |
|
|
23 |
Land Registry and Registry of Deeds |
27,435 |
28,622 |
|
|
24 |
Charitable Donations and Bequests |
390 |
401 |
|
|
25 |
Environment and Local Government |
716,478 |
674,425 |
|
|
26 |
Office of the Minister for Education and Science |
233,917 |
281,183 |
|
|
27 |
First-Level Education |
1,298,472 |
1,404,344 |
|
|
28 |
Second-Level and Further Education |
1,516,504 |
1,607,791 |
|
|
29 |
Third-Level and Further Education |
1,104,592 |
1,201,016 |
|
|
30 |
Marine and Natural Resources |
95,721 |
108,475 |
|
|
31 |
Agriculture, Food and Rural Development |
970,668 |
817,316 |
|
|
32 |
Public Enterprise |
304,394 |
310,712 |
|
|
33 |
Health and Children |
5,619,064 |
6,108,145 |
|
|
34 |
Enterprise, Trade and Employment |
846,576 |
884,145 |
|
|
35 |
Tourism, Sport and Recreation |
183,211 |
185,090 |
|
|
36 |
Defence |
697,194 |
710,703 |
|
|
37 |
Army Pensions |
124,207 |
135,839 |
|
|
38 |
Foreign Affairs |
134,939 |
147,962 |
|
|
39 |
International Co-operation |
239,411 |
371,906 |
|
|
40 |
Social, Community and Family Affairs |
4,099,626 |
4,508,581 |
|
|
41 |
An Chomhairle Ealaíon |
43,068 |
42,990 |
|
|
42 |
An Roinn Ealaíon, Oidhreachta, Gaeltachta agus Oileán |
157,399 |
170,832 |
|
|
43 |
National Gallery |
6,215 |
6,964 |
|
|
Total Voted Expenditure |
20,648,535 |
22,076,608 |
||
|
Less Departmental Balances |
95,375 |
– |
||
|
Total Exchequer Payments towards Voted Expenditure |
20,553,160 |
22,076,608 |
Departmental balances are those amounts issued from the Exchequer Account of the Central Fund for departmental spending in one year which remain unspent at year-end and are carried forward to be used in the next year. They have no effect on Departmental spending which is governed by the allocation in the Estimates for Public Services.
NOTE 4 (euro)
Non-voted Current Expenditure
|
2001 |
2002 |
||
|
000 |
000 |
|
Service of National Debt |
|||
|
Interest |
1,881,000 |
1,681,900 |
|
|
Sinking Fund |
478,000 |
475,900 |
|
|
Debt Management Expenses |
33,000 |
34,500 |
|
|
Sub-total |
2,392,000 |
2,192,300 |
|
|
Other Non-voted Current Expenditure |
|||
|
Contribution to EU Budget |
1,245,600 |
1,381,500 |
|
|
Payments to Marathon Petroleum Ireland Ltd. under Finance Act, 1992 |
16,198 |
6,500 |
|
|
Election Expenses |
8,760 |
17,270 |
|
|
Salaries and pensions for judiciary and holders of Constitutional Office and Pensions and allowances for certain members or former members of the Oireachtas |
22,347 |
24,252 |
|
|
Miscellaneous |
9,810 |
9,400 |
|
|
Sub-total |
1,302,715 |
1,438,922 |
|
|
Total |
3,694,715 |
3,631,222 |
NOTE 5 (euro)
Other Capital Receipts
|
2001 |
2002 |
||
|
000 |
000 |
|
EU Receipts |
|||
|
Cohesion Fund |
295,000 |
175,000 |
|
|
European Regional Development Fund |
254,000 |
403,000 |
|
|
European Economic Area Financial Mechanism |
9,900 |
0 |
|
|
Loan Repayments |
|||
|
Annuity under the Local Loans Fund Acts, 1935 to 1987 |
15,200 |
13,960 |
|
|
Other Capital Receipts |
|||
|
Sale of State Property |
5,800 |
64,000 |
|
|
Proceeds from the sale of ICC Investment Bank |
322,275 |
0 |
|
|
Proceeds from the sale of TSB |
408,350 |
0 |
|
|
Proceeds from the sale of shares in Eircom |
11,219 |
0 |
|
|
FEOGA |
38,000 |
102,000 |
|
|
Miscellaneous |
41,774 |
39,743 |
|
|
Total |
1,401,518 |
797,703 |
NOTE 6 (euro)
Voted Capital Expenditure
|
Vote No. |
Service |
2001 |
2002 |
|
|
000 |
000 |
|||
|
3 |
Department of the Taoiseach |
7,000 |
3,600 |
|
|
4 |
Ordnance Survey Ireland |
1,946 |
1,957 |
|
|
5 |
Central Statistics Office |
2,532 |
746 |
|
|
6 |
Office of the Minister for Finance |
11,753 |
17,879 |
|
|
9 |
Office of the Revenue Commissioners |
16,966 |
17,588 |
|
|
10 |
Office of Public Works |
250,132 |
216,817 |
|
|
19 |
Office of the Minister for Justice, Equality and Law Reform |
14,363 |
20,739 |
|
|
20 |
Garda Síochána |
24,530 |
27,036 |
|
|
21 |
Prisons |
41,120 |
50,034 |
|
|
22 |
Courts |
26,461 |
31,042 |
|
|
23 |
Land Registry and Registry of Deeds |
899 |
1,905 |
|
|
25 |
Environment and Local Government |
2,419,419 |
2,433,386 |
|
|
26 |
Office of the Minister for Education and Science |
39,363 |
34,603 |
|
|
27 |
First-Level Education |
150,453 |
131,400 |
|
|
28 |
Second-Level and Further Education |
177,954 |
164,309 |
|
|
Vote No. |
Service |
2001 |
2002 |
|
|
000 |
000 |
|||
|
29 |
Third-Level and Further Education |
194,834 |
208,351 |
|
|
30 |
Marine and Natural Resources |
122,442 |
112,389 |
|
|
31 |
Agriculture, Food and Rural Development |
109,286 |
108,434 |
|
|
32 |
Public Enterprise |
439,300 |
439,676 |
|
|
33 |
Health and Children |
373,621 |
443,040 |
|
|
34 |
Enterprise, Trade and Employment |
226,782 |
242,379 |
|
|
35 |
Tourism, Sport and Recreation |
92,046 |
84,292 |
|
|
36 |
Defence |
54,840 |
24,128 |
|
|
38 |
Foreign Affairs |
3,928 |
7,489 |
|
|
40 |
Social, Community and Family Affairs |
9,080 |
8,953 |
|
|
41 |
An Chomhairle Ealaíon |
5,079 |
4,679 |
|
|
42 |
An Roinn Ealaíon, Oidhreachta, Gaeltachta agus Oileán |
122,855 |
135,730 |
|
|
43 |
National Gallery |
9,142 |
2,952 |
|
|
44 |
Flood Relief |
1,818 |
64 |
|
|
Total |
4,949,944 |
4,975,597 |
NOTE 7 (euro)
Non-voted Capital Expenditure
|
2001 |
2002 |
||
|
000 |
000 |
|
Loans |
|||
|
Bord Iascaigh Mhara under Sea Fisheries Acts, 1952 to 1982 |
889 |
241 |
|
|
Share Capital Acquired in State Sponsored Bodies |
|||
|
SFADCo Ltd under the Shannon Free Airport Development Co. Ltd. Acts, 1959 to 1989 |
63 |
0 |
|
|
Investments in International Bodies |
|||
|
European Bank for Reconstruction and Development Act, 1991 |
743 |
767 |
|
|
Multilateral Investment Guarantee Agency Act, 1988 |
306 |
0 |
|
|
Payments under the European Communities Acts, 1972 to 1986 |
|||
|
ERDF and Cohesion Fund Repayments |
1,587 |
16,343 |
|
|
FEOGA |
102,000 |
64,000 |
|
|
Other Capital Payments |
|||
|
Payments in respect of pre-funding of future pensions liabilities |
971,984 |
1,035,000 |
|
|
Insurance Acts 1953 to 1958 |
24 |
1,524 |
|
|
Harbours Act, 1996 |
7,771 |
10,250 |
|
|
Miscellaneous/Other Payments under Statute |
369 |
20,350 |
|
|
Total |
1,085,736 |
1,148,475 |
TABLE 1
Total Receipts and Expenditure
|
Reference |
2001 |
2002 |
||
|
£000 |
£000 |
|
Receipts |
||||
|
Current |
Table 2 |
22,625,085 |
23,550,256 |
|
|
Capital |
Table 2 |
1,480,241 |
1,003,044 |
|
|
Total |
24,105,326 |
24,553,300 |
||
|
Expenditure |
||||
|
Current |
Table 2 |
19,096,753 |
20,246,561 |
|
|
Capital |
Table 2 |
4,753,484 |
4,823,099 |
|
|
Total |
23,850,238 |
25,069,660 |
||
|
Exchequer Surplus (Deficit) |
255,088 |
(516,360) |
TABLE 2
Details of Total Receipts and Expenditure
|
Reference |
2001 |
2002 |
||
|
£000 |
£000 |
|
Estimate of Receipts and Expenditure – CURRENT |
||||
|
Receipts |
||||
|
Tax Revenue |
Note 1, Page 1309 |
21,995,087 |
22,902,361 |
|
|
Non-tax Revenue |
Note 2, Page 1309 |
629,998 |
647,895 |
|
|
Total |
22,625,085 |
23,550,256 |
||
|
Expenditure |
||||
|
Voted (Departmental Expenditure Voted Annually by the Dáil) |
Note 3, Page 1309 |
16,186,929 |
17,386,742 |
|
|
Non-voted (Non-discretionary expenditure charged directly on the Central Fund) |
||||
|
Sinking Fund * |
Note 4, Page 1309 |
376,456 |
374,802 |
|
|
Other Non-voted Current Expenditure |
Note 4, Page 1309 |
2,533,369 |
2,485,018 |
|
|
Total |
19,096,753 |
20,246,561 |
||
|
Surplus (Deficit) on Current Account |
3,528,332 |
3,303,695 |
||
|
Estimate of Receipts and Expenditure – CAPITAL |
||||
|
Receipts |
||||
|
Sinking Fund* |
376,456 |
374,802 |
||
|
Other capital receipts |
Note 5, Page 1309 |
1,103,785 |
628,242 |
|
|
Total |
1,480,241 |
1,003,044 |
||
|
Expenditure |
||||
|
Voted (Departmental Expenditure Voted Annually by the Dáil) |
Note 6, Page 1309 |
3,898,398 |
3,918,601 |
|
|
Non-voted (Expenditure charged directly under particular legislation) |
Note 7, Page 1309 |
855,087 |
904,498 |
|
|
Total |
4,753,484 |
4,823,099 |
||
|
Surplus (Deficit) on Capital Account |
(3,273,244) |
(3,820,055) |
||
|
Exchequer Surplus (Deficit) |
255,088 |
(516,360) |
*The Sinking Fund provision is a transfer from the current account to the capital account.
NOTE 1
Tax Revenue
|
2001 |
2002 |
||
|
£000 |
£000 |
|
Customs |
126,798 |
131,523 |
|
|
Excise |
3,186,484 |
3,200,660 |
|
|
Capital Gains Tax |
676,517 |
596,974 |
|
|
Capital Acquisitions Tax |
129,948 |
118,922 |
|
|
Stamp Duties |
960,041 |
968,704 |
|
|
Income Tax |
7,163,682 |
7,681,112 |
|
|
Corporation Tax |
3,377,862 |
3,623,582 |
|
|
Value-Added Tax |
6,189,465 |
6,572,222 |
|
|
Agricultural Levies |
8,663 |
8,663 |
|
|
Voluntary Disclosure Scheme |
175,627 |
0 |
|
|
Total |
21,995,087 |
22,902,361 |
NOTE 2
Non-tax Revenue
|
2001 |
2002 |
||
|
£000 |
£000 |
|
Central Bank – Surplus Income |
355,430 |
374,093 |
|
|
National Lottery Surplus |
137,981 |
139,005 |
|
|
Dividends |
22,000 |
25,000 |
|
|
Interest on Loans |
|||
|
Local Loans Fund |
17,011 |
15,988 |
|
|
Other Loans |
560 |
560 |
|
|
Other Receipts |
|||
|
Passport and Consular Fees |
19,900 |
21,185 |
|
|
Court, Land Registry Fees, Fines, etc. |
67,415 |
66,864 |
|
|
Miscellaneous |
9,700 |
5,200 |
|
|
Total |
629,998 |
647,895 |
NOTE 3
Voted Current Expenditure
|
Vote No. |
Service |
2001 |
2002 |
|
£000 |
£000 |
|
1 |
President's Establishment |
1,486 |
1,555 |
|
|
2 |
Houses of the Oireachtas and the European Parliament |
50,687 |
60,141 |
|
|
3 |
Department of the Taoiseach |
17,171 |
24,937 |
|
|
4 |
Ordnance Survey Ireland |
2,710 |
6,286 |
|
|
5 |
Central Statistics Office |
33,525 |
40,338 |
|
|
6 |
Office of the Minister for Finance |
67,556 |
66,640 |
|
|
7 |
Superannuation and Retired Allowances |
129,162 |
149,668 |
|
|
8 |
Office of the Comptroller and Auditor General |
4,006 |
4,876 |
|
|
9 |
Office of the Revenue Commissioners |
200,218 |
202,169 |
|
|
10 |
Office of Public Works |
104,979 |
116,303 |
|
|
11 |
State Laboratory |
4,239 |
4,736 |
|
|
12 |
Secret Service |
331 |
709 |
|
|
13 |
Office of the Attorney General |
8,414 |
9,011 |
|
|
14 |
Office of the Director of Public Prosecutions |
12,869 |
19,595 |
|
|
15 |
Valuation Office |
4,899 |
6,073 |
|
|
16 |
Civil Service Commission |
8,934 |
8,249 |
|
|
17 |
Office of the Ombudsman |
3,235 |
3,487 |
|
|
18 |
Chief State Solicitor's Office |
20,033 |
22,357 |
|
|
19 |
Office of the Minister for Justice, Equality and Law Reform |
126,717 |
169,014 |
|
|
20 |
Garda Síochána |
707,232 |
701,556 |
|
|
21 |
Prisons |
204,767 |
206,011 |
|
|
22 |
Courts |
42,351 |
42,158 |
|
|
23 |
Land Registry and Registry of Deeds |
21,607 |
22,542 |
|
|
24 |
Charitable Donations and Bequests |
307 |
316 |
|
|
25 |
Environment and Local Government |
564,272 |
531,153 |
|
|
26 |
Office of the Minister for Education and Science |
184,225 |
221,450 |
|
|
27 |
First-Level Education |
1,022,630 |
1,106,011 |
|
|
28 |
Second-Level and Further Education |
1,194,344 |
1,266,238 |
|
|
29 |
Third-Level and Further Education |
869,937 |
945,877 |
|
|
30 |
Marine and Natural Resources |
75,386 |
85,431 |
|
|
31 |
Agriculture, Food and Rural Development |
764,463 |
643,689 |
|
|
32 |
Public Enterprise |
239,730 |
244,706 |
|
|
33 |
Health and Children |
4,425,373 |
4,810,555 |
|
|
34 |
Enterprise, Trade and Employment |
666,733 |
696,321 |
|
|
35 |
Tourism, Sport and Recreation |
144,290 |
145,770 |
|
|
36 |
Defence |
549,085 |
559,724 |
|
|
37 |
Army Pensions |
97,821 |
106,982 |
|
|
38 |
Foreign Affairs |
106,273 |
116,530 |
|
|
39 |
International Co-operation |
188,551 |
292,900 |
|
|
40 |
Social, Community and Family Affairs |
3,228,718 |
3,550,796 |
|
|
41 |
An Chomhairle Ealaíon |
33,919 |
33,857 |
|
|
42 |
An Roinn Ealaíon, Oidhreachta, Gaeltachta agus Oileán |
123,962 |
134,541 |
|
|
43 |
National Gallery |
4,895 |
5,485 |
|
|
Total Voted Expenditure |
16,262,043 |
17,386,742 |
||
|
Less Departmental Balances |
75,114 |
– |
||
|
Total Exchequer Payments towards Voted Expenditure |
16,186,929 |
17,386,742 |
Departmental balances are those amounts issued from the Exchequer Account of the Central Fund for Departmental spending in one year which remain unspent at year-end and are carried forward to be used in the next year. They have no effect on Departmental spending which is governed by the allocation in the Estimates for Public Service.
NOTE 4
Non-voted Current Expenditure
|
2001 |
2002 |
||
|
£000 |
£000 |
|
Service of National Debt |
|||
|
Interest |
1,481,408 |
1,324,604 |
|
|
Sinking Fund |
376,456 |
374,802 |
|
|
Debt Management Expenses |
25,990 |
27,171 |
|
|
Sub-total |
1,883,853 |
1,726,577 |
|
|
Other Non-voted Current Expenditure |
|||
|
Contribution to EU Budget |
980,990 |
1,088,020 |
|
|
Payments to Marathon Petroleum Ireland Ltd. under Finance Act, 1992 |
12,757 |
5,119 |
|
|
Election Expenses |
6,899 |
13,601 |
|
|
Salaries and pensions for judiciary and holders of Constitutional Office and Pensions and allowances for certain members or former members of the Oireachtas |
17,600 |
19,100 |
|
|
Miscellaneous |
7,726 |
7,403 |
|
|
Sub-total |
1,025,971 |
1,133,243 |
|
|
Total |
2,909,825 |
2,859,820 |
NOTE 5
Other Capital Receipts
|
2001 |
2002 |
||
|
£000 |
000 |
|
EU Receipts |
|||
|
Cohesion Fund |
232,331 |
137,824 |
|
|
European Regional Development Fund |
200,041 |
317,388 |
|
|
European Economic Area Financial Mechanism |
7,797 |
0 |
|
|
Loan Repayments |
|||
|
Annuity under the Local Loans Fund Acts, 1935 to 1987 |
11,971 |
10,994 |
|
|
Other Capital Receipts |
|||
|
Sale of State Property |
4,568 |
50,404 |
|
|
Proceeds from the sale of ICC Investment Bank |
253,812 |
0 |
|
|
Proceeds from the sale of TSB |
321,602 |
0 |
|
|
Proceeds from the sale of shares in Eircom |
8,836 |
0 |
|
|
FEOGA |
29,927 |
80,332 |
|
|
Miscellaneous |
32,900 |
31,300 |
|
|
Total |
1,103,785 |
628,242 |
NOTE 6
Voted Capital Expenditure
|
Vote No. |
Service |
2001 |
2002 |
|
£000 |
£000 |
|
3 |
Department of the Taoiseach |
5,513 |
2,835 |
|
|
4 |
Ordnance Survey Ireland |
1,533 |
1,541 |
|
|
5 |
Central Statistics Office |
1,994 |
588 |
|
|
6 |
Office of the Minister for Finance |
9,256 |
14,081 |
|
|
9 |
Office of the Revenue Commissioners |
13,362 |
13,852 |
|
|
10 |
Office of Public Works |
196,995 |
170,757 |
|
|
19 |
Office of the Minister for Justice, Equality and Law Reform |
11,312 |
16,333 |
|
|
20 |
Garda Síochána |
19,319 |
21,293 |
|
|
21 |
Prisons |
32,385 |
39,405 |
|
|
22 |
Courts |
20,840 |
24,448 |
|
|
23 |
Land Registry and Registry of Deeds |
708 |
1,500 |
|
|
25 |
Environment and Local Government |
1,905,447 |
1,916,447 |
|
|
26 |
Office of the Minister for Education and Science |
31,001 |
27,252 |
|
|
27 |
First-Level Education |
118,491 |
103,486 |
|
|
28 |
Second-Level and Further Education |
140,150 |
129,404 |
|
|
Vote No. |
Service |
2001 |
2002 |
|
|
£000 |
£000 |
|||
|
29 |
Third-Level and Further Education |
153,444 |
164,090 |
|
|
30 |
Marine and Natural Resources |
96,431 |
88,514 |
|
|
31 |
Agriculture, Food and Rural Development |
86,070 |
85,399 |
|
|
32 |
Public Enterprise |
345,977 |
346,273 |
|
|
33 |
Health and Children |
294,250 |
348,922 |
|
|
34 |
Enterprise, Trade and Employment |
178,605 |
190,889 |
|
|
35 |
Tourism, Sport and Recreation |
72,492 |
66,385 |
|
|
36 |
Defence |
43,190 |
19,002 |
|
|
38 |
Foreign Affairs |
3,094 |
5,898 |
|
|
40 |
Social, Community and Family Affairs |
7,151 |
7,051 |
|
|
41 |
An Chomhairle Ealaíon |
4,000 |
3,685 |
|
|
42 |
An Roinn Ealaíon, Oidhreachta, Gaeltachta agus Oileán |
96,756 |
106,896 |
|
|
43 |
National Gallery |
7,200 |
2,325 |
|
|
44 |
Flood Relief |
1,432 |
50 |
|
|
Total |
3,898,398 |
3,918,601 |
NOTE 7
Non-voted Capital Expenditure
|
2001 |
2002 |
||
|
£000 |
£000 |
|
Loans |
|||
|
Bord Iascaigh Mhara under Sea Fisheries Acts, 1952 to 1982 |
700 |
190 |
|
|
Share Capital Acquired in State Sponsored Bodies |
|||
|
SFADCo Ltd under the Shannon Free Airport Development Co. Ltd. Acts, 1959 to 1989 |
50 |
0 |
|
|
Investments in International Bodies |
|||
|
European Bank for Reconstruction and Development Act, 1991 |
585 |
604 |
|
|
Multilateral Investment Guarantee Agency Act, 1988 |
241 |
0 |
|
|
Payments under the European Communities Acts, 1972 to 1986 |
|||
|
ERDF and Cohesion Fund Repayments |
1,250 |
12,871 |
|
|
FEOGA |
80,332 |
50,404 |
|
|
Other Capital Payments |
|||
|
Payments in respect of pre-funding of future pensions liabilities |
765,500 |
815,129 |
|
|
Insurance Acts 1953 to 1958 |
19 |
1,200 |
|
|
Harbours Act, 1996 |
6,120 |
8,073 |
|
|
Miscellaneous/Other Payments under Statute |
291 |
16,027 |
|
|
Total |
855,087 |
904,498 |
Mr. J. Mitchell: If I recall correctly, the budget speech last year was greeted by the same bellows from the benches opposite. Never before was a budget presented to this House in which the figures were so inaccurate. I acknowledge that the Minister is presenting his fifth budget which, in different circumstances, would be seen as an achievement. However, looking at the state of the Exchequer's finances as just confirmed, this is a miracle budget which has turned wine into water. Thankfully, it will be the Minister's last.
Never before has a Minister for Finance come into the House with so much egg on his face or with such inaccurate figures from his last budget. There is a divergence of 4.3 billion when one takes into account the surplus and once-off issues. We have had a surplus of a little over 100 million compared to a forecast by the Minister on this day last year of 4.4 billion. If the Minister is as inaccurate again this year, we will have a deficit by the end of next year of close to 5 billion even before we count the creative accounting and the mirroring, massaging and distortion of figures in this budget.
In recent times I had the enforced opportunity to reflect on the really important things in life which most people will agree are our health and the health of our loved ones, our families, education and security, the dignity of a job, a decent home and the time to enjoy all of these. What have today's budget and the previous four budgets done to support and foster these important goals? Waiting lists have soared in the health services. At Our Lady's Hospital for Sick Children in Crumlin, they are 91% greater than when the Minister came to office. Through his tampering, trickery and tinkering with the housing market, a home for hard-working young people is unaffordable and this budget will not change that. Those who did manage to buy a house sit this evening in traffic gridlock contemplating how they will pay their huge mortgages.
Nothing can be done without resources. The Minister presided over the Exchequer in its five most prosperous years. The question on everybody's lips today is "where has the money gone?". The Minister says he is not borrowing when in fact he is borrowing from the Central Bank and the social insurance fund. He can do this on a one-off basis, but the figures will have to be included in next year's budget. The Minister is falsifying the figures and playing with mirrors.
Rubbish.
He is confiscating it.
The Minister is forecasting a notional surplus of 170 million. When one takes the 1.245 billion he is robbing from the Central Bank and the social insurance fund, which he will not be able to repeat next year, he is borrowing 1.175 billion. This is a deficit.
A Deputy
Charlie Haughey economics from Charlie McCreevy.
Compared to his forecast of 4.4 billion last year, it is a turnaround of 5.575 billion in one year which represents gross incompetence. This is a creative accountant, not a creative Minister.
At the weekend, the Taoiseach claimed the deterioration was entirely due to factors outside our control. He blamed foot and mouth disease and 11 September for all our problems and repeated the claim on three occasions in the course of a two minute interview. Let us consider what happened in other countries. In Britain, foot and mouth disease was much worse and lasted for much longer than here and the impact of the 11 September massacre was just as great, yet the deterioration in our budget versus national income over the past 12 months is four times greater than that in the UK. This does not only apply to the UK. Were France and Germany not affected by 11 September and foot and mouth disease?
The deterioration of Ireland's finances from the last budget to this one was 4.2%.
It is 1% of GDP.
In the UK it was 0.8%, in Germany 1% and in France only 0.5%. This is the international effect of foot and mouth disease and 11 September. It seems the Taoiseach is claiming these are the only factors which undermined the ebullient forecast of the Minister last year. I assert to the House and the people watching on television that today's state of the nation's finances is not a problem of international confidence, but one of home-made incompetence.
On other budget days we have had "Champagne Charlie" and even "Cheeky Charlie", today we have a "Right Charlie".
Cider Charlie.
Charlie's greatest failing is that he thinks he knows all the answers, he is always right and anyone who disagrees with him is a "leftie" or a "pinko".
There is no harm in that.
What really highlights the Government's incompetence is that earlier this year, when it became evident revenues were falling significantly below expectation, the Minister for Finance not only failed to rein in public expenditure, he went on a splurge. At a time when he needed to diet he did not merely go to the fridge, he got into it.
Is this a cartoon or a finance budget?
Expenditure in the second half of this year was increased threefold above the norm of previous years, which really highlights how false are the Taoiseach's claims that the problems are international. They are overwhelmingly domestic and overwhelmingly the creation of Fianna Fáil and the Progressive Democrats. The figures have been massaged in the hope that analysts will not notice. It commenced with the Book of Estimates which, for the first time since 1981 when Fianna Fáil was also in power, are incomplete and economical with the truth.
It is not clear whether the White Paper on receipts and expenditure is a true and accurate comparison with last year's White Paper in so far as there is more than a suspicion that some of next year's expenditure has been brought forward to this year. This would have the effect of creating a higher base on which next year's increases will be based and thus would massage the percentage increases next year making them look smaller than they really are. It is an attempt to tone down the true level of the collapse in the public finances. This is not just a swing, it is an implosion. It is as if the McCreevy Rangers are four goals up with 15 minutes to go and end up being trounced seven to four. They now face relegation to the Opposition benches.
The Minister's figures tell us that voted current expenditure went up this year by 23%. Such an increase should have left its mark and been noticed by people everywhere. In reality, no one can see it anywhere. I have been asked time and again in the past few weeks where the money has gone. It is as if over 4 billion has gone missing. That is more than enough to open an Ansbacher account for every member of Fianna Fáil, dead or alive. One could even buy a diamond ring for every woman in the country and give a free ticket to every man for the World Cup in Japan and South Korea. It is a loss of mammoth pro portions. I am reminded of that line in the movie "Jerry Maguire"–"Show me the money". The truth is it is gone with the wind. The Government has squandered it.
Tomorrow is another day, Rhett.
Tomorrow is another day.
And so was yesterday.
The giants are here. The intellectual giants of Fianna Fáil are back.
That is the first bid by a Fianna Fáil Minister for the Department of Finance that I have heard so far in public. The Minister, Deputy McCreevy, budgeted for an already excessive 20% increase in voted current expenditure but this has now risen to 23%. However, this does not tell the full grim reality of the mess into which he has got us. In the second half of this year – this is one of the hidden matters which analysts may not notice – expenditure is 30% greater than in the first half. The normal year's increase in the second half of the year over the first half is only 10%. The increase in the second half is three times what is normal. If we project that into the future and into the post-election situation, we are facing a much grimmer 2002 than the Minister would like to pretend.
This budget has all the hallmarks of Fianna Fáil in the 1977-82 period, during which it turned a sound economy into a basket case.
There was massive unemployment.
I will give the statistics, now that the Minister mentioned unemployment. In 1977, there were 87,000 unemployed. By the time Fianna Fáil left office in 1982, the figure was marching towards 200,000 and then 300,000. The Minister should stay quiet.
What was it when we came into office and what is it now?
It did it all on its own with no help from the Progressive Democrats.
As I said, in that period Fianna Fáil turned a sound economy into a basket case. I had believed those GUBU years were forever in the past. They are back. Fianna Fail has once again misspent its way into a crisis. After its last reckless splurge, it was Fine Gael and the Tallaght strategy that came to the rescue. I had thought the benefits of sound finances had been learned by all. Despite this gigantic waste of public money there are still many glaring gaps in our public services.
When he was Minister for Social Welfare, Deputy McCreevy, true to his current form, ignored the less well off in our society, penalised them and brought in his famous dirty dozen measures. He has done it again. I want to give just 12 examples of the Government's failures. There are 27,000 people on hospital waiting lists. As I said earlier, there is an increase of 91% in the waiting list at the children's hospital in Crumlin. In the Mater Hospital, with which the Taoiseach will be familiar because it is in his and my constituency, the waiting lists have risen by 41% since he became Taoiseach. That speaks for itself.
There are 120,000 people on housing waiting lists, which is more than double the number in 1997 when Fianna Fáil came to power, despite the fact that it has enjoyed the five most prosperous years in our nation's history.
Bring us up to date.
Young people in primary schools are waiting more than eight years for orthodontic treatment. The position has deteriorated during its term of office. There are now 15,000 children, some of whom are 18 and 19 years of age who were prescribed this treatment when they were ten and 11 years old, waiting on that service. In Northern Ireland, the wait is less than one year.
Widows and persons on long-term sickness allowances, until today, were expected to live on as little as £85.00 a week. For the widow and for those who are sick long-term this means no hair-do and no pint. They cannot afford to go to the hairdresser and they cannot afford to go to the pub.
During the term of office of the Government, parents of children with autism have had to go to court to demand a fair chance for their children and cancer patients have to go to court to demand life saving treatment. An individual who receives £101 or more per week does not qualify for a medical card. If such people have to pay £25 or £30 for a visit to a doctor, 30% of their weekly income is spent on doctors. They cannot afford to go to doctors.
Even with all the spin doctors.
Many thousands of people, even after today's budget, on the minimum wage still pay income tax. The 7.5% of people who are earning more than £200,000 a year have gained as much as £50,000 in tax concessions during the Minister's term in office. His behaviour as Minister for Social Welfare and as Minister for Finance is consistent. He has shown contempt for the less well-off. Many thousands of disabled people are immobilised because of a lack of personal assistants and by the lack of priority given to this issue by the Government.
Few young people can afford to buy their own homes. This has emerged during the term of office of this Government. It is a creation of Fianna Fáil and the Progressive Democrats. Housing output has fallen steadily this year. The number of housing completions is down by more than 10% and, worse still, the number of housing starts is down by almost 20%. This means there will be even fewer houses next year. We also have more traffic jams and traffic gridlock directly as a result of the Government's traffic policy, with greatly increased journey times, stress and air pollution at enormous economic cost.
These are the new McCreevy dirty dozen, which come from the same stable as his original dirty dozen when he was Minister for Social Welfare.
The Deputy should refer to the Minister as the Minister for Finance.
May I address him as the outgoing Minister for Finance, a Cheann Comhairle?
The Minister cannot find the money for all these necessities despite the continuing splurge which is taking place at an even higher rate as we speak, but he claims it is okay for the Government to have 76 PR consultant firms to assist in its photo opportunities. I have estimated that every time the Taoiseach gets a photograph in the newspapers it costs the taxpayer about £100,000.
Is it good value?
Benchmarking is a new buzz word and I note the Minister made no provision for benchmarking in his speech.
I did.
The Deputy should read the back-up note.
If we were to benchmark the Minister's performance against his spending on those 12 issues, he would come out as a right dunce.
In terms of economic confidence and sound finances, no matter how one analyses the issue the Minister has made a mess of things. That is not to say the parties in the Government have not made a significant contribution to the economic miracle known as the Celtic tiger, but the Minister has crash landed our economy, which was flying high before he took the helm.
It was the parties now in Opposition who laid the foundation for economic growth. Fine Gael and Labour brought down inflation from 21%, the rate left by Fianna Fáil in 1982, to 4% by 1986, and it remained below 4% every year until the Ahern-McCreevy Government came into office. Resulting from the drop in inflation, the same Fine Gael-Labour Government turned a large Fianna Fáil balance of trade deficit into a surplus in 1986, and our trade has been in surplus since.
It was Fine Gael and Labour that introduced airline competition in 1985, which brought millions of tourists to the country and created many jobs. It was a Fine Gael and Labour Government that transformed the semi-State sector from financial chaos left by Fianna Fáil in 1982 to a state of financial health by 1987. It was a Fine Gael and Labour Government that established the national lottery which has done so much for sport, recreation and charity. It was Fine Gael that proposed the Tallaght strategy, which was the mother and father of the Celtic tiger. It was a Fine Gael and Labour Government that introduced the 12.5% corporation tax which all acknowledge is the main attraction for our highly successful world record in drawing foreign direct investment and creating tens of thousands of new jobs. It was a Fine Gael and Labour Government that abolished third level fees which has helped many young people through college and to improve their job prospects. It was a Fine Gael and Labour Government that first accepted the principle of an annual budget set-aside to cover future pension costs and it was a Fine Gael and Labour Government that brought about the first current budget surplus.
The present awful mess, which is solely of the makings of the current Government, should not be allowed undermine confidence in our economy. I have every confidence in the economy but I have no confidence in the Minister. I am confident about our economy because, among other things our debt-GNP ratio is the lowest in the EU except Luxembourg. Our total revenue take is the lowest in the EU and even lower than the USA. Our employment levels are up by 750,000. We have effectively achieved full employment. Our income per capita now exceeds the EU average. I am very proud of the significant contribution that Fine Gael and Labour have made to bringing this economic miracle about.
We do not want these sound finances and this sound economy undermined. If the Government continues with its current policies and mismanagement it will be undermined. I have great confidence in the economy but I have no confidence in this Minister for Finance and the sooner he is moved, the better for our country.
The Minister for Finance proudly proclaims that he has doubled health spending since 1997. He points to the increase of more than 20,000 in the numbers working in the health service. Yet the much vaunted health strategy points out that we need 8,000 nurses and 1,000 hospital consultants because the Minister sanctioned additional administrators not medical professionals. Having doubled spending, waiting lists are, at best, unchanged and at worst significantly longer. I have twice referred to the National Children's Hospital in Crumlin. Is it not a sign of an uncaring, heartless Government that in a time of economic prosperity it would allow its waiting list rise by 91% since this Government took office? Is this how we cherish the children of the nation?
Where is the money going? Ireland, the fastest growing economy in the OECD in the past five years has to ship its sick abroad for treatment. Can people see what a farce this is? The health strategy suggests that some of the waiting lists can be dealt with by purchasing private beds. If these beds have been available, it is a scandal that pub lic patients have had to sue in court to find a bed and this Government waits until the eve of an election to take an initiative. The Minister has, as usual, thrown money at the problems in the health service. My party does not object to money being spent – we support it – but we object to money being spent without results.
Today the Minister announced millions of pounds of additional capital for health. Yet there are examples of wasted money throughout the country. For example, the 98 bed extension to Mullingar General Hospital, which was built when the present Leader of the Opposition was Minister for Health, remains unoccupied and has not even been fitted out. If it had been opened as originally planned in 1997 it would have cost £11 million. The extension will now open in 2007 at a cost of £43 million. This highlights the wasteful nature of this Government's expenditure and is why it has spent double the money and yet has not improved the health sector.
The Minister for Foreign Affairs, Deputy Cowen, has gone very quiet. He was Minister and did nothing about it.
He let us down.
I provided the money.
(Interruptions.)
I want to offer the Minister for Foreign Affairs, who was Minister for Health, the opportunity to explain why he did not provide the money to open the extension to Mullingar General Hospital.
We put the structure there—
(Interruptions.)
People cannot trust this Government and this is why we cannot trust the people's health to this Government. Health spending has increased by 3 billion per annum with no results. How can we trust this Government to deliver 10 billion of value under the health strategy? We got 400 billion in today's budget which is in reality only 300 million because the Minister played tricks with the Estimates. When one takes the full-year effects of the initiatives during this year, the money in the Book of Estimates is actually 99 million less than the out-turn for this year – a reduction in health expenditure.
The increase is therefore of 300 million. Inflation in medical goods and services is almost three times that of ordinary inflation so, in real terms, this is a reduction in health expenditure by some amount. Where is the £10 billion plan? It is actually a £1 billion plan per annum. The Government proposes to increase expenditure in a year by £1 billion and then multiply it by ten for each year of the plan. It is a trick, like most of the figures in this budget.
The launch of this strategy has been the most cynical exercise in political spinning in memory. The Minister announced that some money would be spent to deal with a crisis of waiting lists. Last year's 14 million was allocated and clearly achieved nothing. Money is being claimed to have been spent but waiting lists are longer. If what we hear of plans to send patients abroad is true then most of today's allocation will go on air fares as patients will be accompanied by at least one nurse as well as a relative and the money will have to be spent on their accommodation also. This is comment enough on the Government's complete failure in this area.
In any socially just society the less well off must be provided with a minimum income that keeps them above the poverty line. The most urgent and needy cases are widows and those single people who live on a long-term sickness allowance. The value of their pension is about £40 per week behind that of pensioners when the free schemes are taken into account. The Minister has closed that gap by £2 per week. Old age pensioners get £10 more and widows get £12 more which is a welcome step in the right direction but why should a 59, 60 or 61 year old widow living on her own look forward to turning 66 so she can get the free allowances for ESB, TV licence, travel and fuel? Why should she wait in poverty? These people are the most disregarded in our society along with single people suffering from long-term illness. The Minister's approach to them, today, while welcome, does not go far enough. His treatment of widows in the past has been callous.
On the other side of the coin, social welfare is often allocated in a way that acts as a poverty trap. This is the case for single mothers who wish to marry. If they get married they lose all their benefits. It is important that any improvements in social welfare are made in a way that does not create drops such as these. An elderly person wishing to have a member of the family living with him or her cannot do so in the context of the living alone allowance. The reversal of this could help solve the housing problem as well as problems of security and loneliness.
Many carers providing 24 hour a day, seven day a week care are only receiving £88 per week. They are completely disregarded and taken for granted by an uncaring Government in the most prosperous era in our nation's history.
After five years of unparalleled prosperity many of our citizens live in a twilight zone. Despite the prosperity, life is not good for them. Female participation in the workplace is at its highest level since the foundation of the State. There are now over 300,000 families where both spouses work, some by choice, but many because the cost of housing has exceeded the capacity of many single income families. Two years ago, through the process of individualisation, the Minister gave further incentives for both spouses to work. At the time I predicted a problem which is now about to emerge. Given the downturn in the economy and the likely loss of jobs by many of those working as one of a couple, they will not only lose their salary, but will be expected to pay £42 more in tax. It is a crazy situation brought about by the Government. It is totally anomalous – lose one's job and pay more tax, £42 a week to be precise. This reform will come back to haunt the Minister. Between now and the Finance Bill I will urge him to recognise the folly, stupidity and lack of sensitivity of what he has done and press him to correct this silly injustice.
The Minister clearly was not thinking of real people, but of economic concepts and treating them as participating units in the workforce. These participants are real citizens struggling to meet real mortgages and despairing as they spend ever longer hours away from real children in ever more frustrating traffic chaos. The Government is out of touch with them. Real people listened to the Government's promises in the last general election. It promised initiatives to alleviate the cost of child care. They listened in 1997 during the general election and continue to listen in vain. Does the Government have any concept of what it is like to lift sleeping children out of their beds at 7 a.m. to be placed in a crèche and 12 hours later to inch through endless traffic jams to collect those same children with the hope of an hour with them before they go to sleep? The Minister can have no idea of what it is like to be with one's children only at weekends, otherwise he would have acted on his promise to help families with the burden of child care costs.
The Minister celebrates the achievement of his fifth budget today while thousands of parents who believed his promises have been rebuffed. These same parents worry about the education of their children. It is a disgrace that Ireland is the sixth worst funder of primary education in the OECD. Congratulations, we are ahead of Mexico and the Czech Republic. Five years on we still have 20% of our children leaving primary school functionally illiterate. Is the Minister proud of this? Does he accept on recollection that he has done enough to provide the sort of resources that could achieve results as for instance in Finland – a country of commensurate size and wealth? Under the Government those with special needs must use the courts to secure the education of their children. In our primary classes today we have up to 1,000 unqualified teachers. Nothing has been done about this in today's budget, but there is yet another allocation of money in the hope of dealing with the capital issues in our schools.
Does the Minister have any clue about the state of our primary schools of which 800 have applications in the Department of Education and Science for capital works? Some of them are an absolute disgrace where pupils and teachers work in Dickensian conditions. As an example, what comfort is the Minister's budget to the 140 pupils in St. Michael's national school in Mohill, County Leitrim, the building programme for which, which was due for completion next year, has been deferred indefinitely? This is unacceptable in a land of plenty and an indictment of the Government's incompetence.
The Minister has dabbled in the housing market in recent years. He cannot blame the Bacon reports for the situation as he added and subtracted from them. After five years of plenty with the Government there are now 120,000 on housing waiting lists, more than double the number when the Government came to office four and a half years ago. Its policies have added to the price of houses. Housing output has been reduced, rents in the private sector have increased by about 20% per annum while this generation has become the first in our history without the prospect of buying a home.
Since the Government took office the agricultural sector has approached an even more precarious level of decline. As the nation has prospered, agricultural incomes have stalled, growing by just 1%. Not only has the Government abandoned rural renewal, but by its inaction has promoted rural decline. Last week I visited County Donegal which has effectively five Government Deputies, including a Minister, but the national development plan treats the north western portion of the country as if it was the Sahara Desert. There is no major road proposed for that sector, no improvements in vital health services to eliminate the situation where many have to travel long distances to Sligo, Galway or Dublin for vital services and no university in the region. How can it overcome the problem of unemployment when it has been singled out for disregard by the Government, even though it has five Government Deputies? The people of County Donegal have been taken for granted.
To compound these problems the Department of Agriculture, Food and Rural Development has seen its Vote cut by 15%, or 165 million, for 2002, this in a year when tourism, the other principal economic activity in rural Ireland, has been decimated. For 2002, as the tourism industry faces its worst year, the Minister in the Book of Estimates has cut the Bord Fáilte grant by 26%. He restores a few million pounds today, but it remains significantly cut. What is the logic of this when tourism needs more spent on it than in the past year?
Under the Government county managers are encouraged by the Department of the Environment and Local Government to implement a planning regime so restrictive that the children of landowners cannot get planning permission to build houses on family land. This is the kind of policy that leads to rural depopulation, the closure of rural post offices and bank branches, and the disappearance of a way of life.
Our national road system is a shambles. The two year old national development plan, with all its inadequacies, is already one year behind, thus the seeds of future economic growth remain unsown. In Dublin we have a perverse, one-dimensional traffic policy. Traffic lights are now erected, not to regulate traffic, but to frustrate and delay. Cycle lanes are often not an aid to cyclists, but a means of reducing lanes for motorists. Traffic islands, chicanes, one-way systems and widened footpaths are often provided for where they are not needed in an apparent attempt to deliberately cause traffic congestion. Twenty-four hour bus lanes are a self-evident excess, except in the context of driving motorists mad. Meanwhile, not one overpass or underpass is planned for Dublin city despite the fact that no other city of its size has solved its traffic problems without such facilities. This includes many cities which have been much more successful in moving people to public transport than is the case in Dublin. A man I admire, the environmental columnist of The Irish Times, is bound to disagree with my analysis, but how can true environmentalists think that a traffic policy that causes such gridlock and air pollution is good for the environment?
The next government will bring forward the national development plan and build the roads needed to relieve the congestion. Where necessary, we will budget extra money to bring them to completion sooner. There is a sound economic and environmental case to be made for this. Moreover, there will be an urgent review of traffic policy in Dublin and in other cities to end the torturing of motorists and businesses alike who bear the cost of the present lunacy, which in Dublin is estimated to cost more than 1.25 billion a year. To cap it all, Deputy O'Rourke the Minister for Public Enterprise, has moved half of CIE's rail freight on to the roads.
What have the Minister's five budgets achieved? I would say for those watching at home or listening in the cars stuck in traffic, that they do not feel any better off as a result of the Minister's largesse. After five years of his budgets, they spend at least one extra hour a day in traffic instead of with their loved ones. This Government's solution is to suffer for a further ten years and by then the national development programme will sort it all out.
The rapidly falling output of housing is a clear signal that the Government's policies are failing. The traffic gridlock and the delay of almost every project under the national development plan is another indication of their failure. That the Minister's estimates for this year were 4,300 million out, also indicates the Government's failure. That the Minister has allowed expenditure to escalate beyond belief without achieving results clearly shows that the Government's policies are failing.
More than that, one would complain less if, in the course of these five years, the Government had achieved social justice. I outlined the dirty dozen, 12 points in which the Minister and the Government have manifestly failed. However, there is hope. I assure the people at large that there is a Government in waiting and that it is a Government which will be dedicated to caring for the less well off and to achieving a just society. The power is in their hands and they will use it wisely.
This budget is a lie, a fraud and a disgrace. To balance the books, this Minister took money from the Central Bank – over which I shed few tears – but, more to the point, he has taken money illegally and disgracefully from the social insurance fund. The Members on the Fianna Fáil benches told me a year ago, when I suggested that we might defer some payment into the pension fund available from 2025 onwards, that I was raiding the fund. Yet their Minister for Finance has the gall to say here today that he will take 600 million from the fund which already exists, that he will for good reason take money from the fund provided by the workers and the employers.
Until three or four years ago the social insurance fund was a fiction. It was basically part of taxation, but now we have one. It is a nest egg, a fund available for paying social insurance benefits, not notionally but legally as provided for in the Act. Deputy Cowen, as a lawyer, knows that. It is covered by the 1983 Act and is not the Government's to spend. It does not belong to Fianna Fáil nor the Minister to balance the books. It belongs to the pensioners and those who subscribed to it and it is there for a purpose. There is a straight trade-off between the pensions, the benefits, which we pay to people who need them, and the money he has taken away.
He took it to save his blushes so that he can say, as he did frequently in his speech, that he did not have to borrow. It is a disgrace and a lie, and when the phone-call comes in tonight from our friends in congress, the Taoiseach will know all about it. The Minister is taking money to which he is not entitled from the workers of this country.
He is stealing, not borrowing.
Page D16 tells the real truth that we have a surplus this year of more than 100 million, but next year the full account of what happens this year comes into play. Next year we end up with an Exchequer borrowing requirement, or rather, a deficit, of 2,347 million, which is the figure that we should be examining today as it is the real cost of what the Minister has done.
That is the fraud of this budget.
At the start of this year, as my colleague, Deputy Jim Mitchell, already said, the Minister stated that he had a likely surplus of no less than 322 million. By the end of last week that had turned into a surplus of 323 million. If we strip out the once-off deals – the sale of TSB, ICC and the proceeds of the so called voluntary disclosure scheme – we are down to a real deficit of 600 million. In barely 12 months, the Minister has managed to turn a huge projected surplus into a deficit. A turn around of this kind in one year is flabbergasting and totally without precedent. The Minister has managed to lose an amount equivalent to the annual budget of the Department of Education and Science.
This collapse is not just because of the events of 11 September or the foot and mouth disease crisis. The collapse in Government revenues is due in no small part to the mismanagement of the economy and, more particularly, to the way in which the Minister spectacularly lost the plot in last year's budget. In plain language, he blew it. He tore the guts out of the tax base at a time when he sought to raise spending by 20%. Far from a 12% increase in income tax this year, he will have less than last year. In a year when there may still be 6% or 7% economic growth, that is quite some achievement.
The Minister has become the Fabien Barthéz of Irish politics. He likes doing his own thing. He is given to the occasional grand gesture but is always likely to drop the ball when the pressure really comes on. Like Monsieur Barthéz, the Minister rode his luck while the economy was doing well and people were prepared to forgive him the odd gaff – the credit unions, individualisation, the appointment of Mr. O'Flaherty, and so on – but like Fabien, the Minister's luck has run out and like his mentor, the Taoiseach has stood by for far too long and it is far too late to intervene. The chickens are coming home to roost.
The most spectacular and immediate victim of the Minister's failure is his colleague, the Minister for Health and Children, Deputy Martin. For years, as the several former Ministers for Health in the Chamber know, health looked for greater resources – more beds, nurses, consultants, nursing home places, better step down facilities, more investment in services for the mentally handicapped and the disabled. Above all, the Department sought greater investment in primary care and accident and emergency services. To be fair to him, Deputy McCreevy gave additional money, albeit reluctantly, but he has not ever accepted the basic core case put by health professionals and the Department that we need a quantum leap in funding to deliver the sort of service that people clearly want and to which they are entitled.
Hear, hear.
In the ten year health strategy, which the Minister for Health and Children published last week, he talked of an additional £10,000 million, or 12,700 million, over ten years in addition to the £2.5 billion already available under the national development plan, a total of 15,000 million. Today, the Minister provided 400 million. These are big figures – 400 million in comparison to a ten year strategy costing 15,000 million. Barely 2% of the ten year strategy will be delivered in the first year. That tells us all we need to know about the Minister's commitment to the Government's health strategy. If the big figures do not tell the story, let us look at the details because some of them bear inspection. This is a ten year health strategy. The Minister talks about an additional 5 million or £4 million for mental health; 15 million or £12 million for primary care; 10 million for child welfare; and £5 million for cancer services.
In addition to the Estimates.
In addition to the Estimates, granted. The health strategy is all about additional resources. We are talking about minuscule figures. Over a ten year period, how could they possibly constitute a strategy which could ever add up to anything remotely close to 15,000 million? We should not be surprised by this because Deputy McCreevy has never been a fan of the health strategy nor has he been a particular fan of health service funding. We all know that. Two years ago he described the health service as "a black hole". Earlier this year in Ballymascanlon, he derailed the plans of the Minister for Health and Children by making it clear that he had no intention of funding his colleague's grandiose plans. The Department of Finance was embarrassingly quick in contradicting the Minister for Health and Children's endorsement of the medical manpower report.
The Minister's previous record pales in comparison to this pre-emptive strike against the health strategy when he introduced his own Estimates document on 15 November. The Minister, Deputy McCreevy, made it clear that the so-called health strategy was not really a health strategy at all; he said is was "no more than a collection of already existing programmes". More to the point, he went on to say that no new money would be provided unless or until economic circumstances allowed that. It makes one wonder what the point is of drawing up a ten year strategy. Surely the point of a strategy is to allow one to plan. Nobody believes that the number of acute beds can be increased overnight nor does anyone believe that the required number of health professionals can be recruited in one fell swoop. What is needed is a sustained and planned expansion and improvement in services brought about by structural reform and a steady increase in resources. The problem now is that the strategy has failed at the very first hurdle. Even if the little bit of extra money announced today is taken into account, the increase in the health budget this year is actually far less than it was last year. Of the 121 actions set out in the strategy announced last week, at least half will take additional money and most of that money simply is not there.
As an aspirational document the health strategy is worthy but with a few fundamental flaws. As a working policy in the hands of this Minister for Finance, it is a dead duck. For much of its term, this Government told us that there was no need for hard choices, that we could cut taxes and improve services at the same time. I recall the Taoiseach using that phrase more than once. However, when the Minister for Health and Children spoke in the House last week and last night, his tune had changed; suddenly there was talk of having to choose. Unfortunately for the Minister for Health and Children, Deputy Martin, the time to choose is already past. The Minister for Finance has already blown the resources needed to deliver the improvements in the health service which the public is rightly and vociferously demanding.
The public is understandably cynical about the bona fides of a Government which produces a ten year strategy for the health services four and a half years into its term of office, in the clear knowledge that its failure to deliver a decent health service will be a telling issue in the impending general election. To produce a strategy without any commitment to fund it, not only into the future but right from the very start, really takes the biscuit.
This failure to commit funding is of course most obvious in relation to the critical issue of access. For most of this Government's term the number of people entitled to medical cards has been falling. It is now under 30% and virtually all of those people are social welfare recipients. People on the minimum wage or part-time workers are ineligible despite the fact that they live on low wages. I am sure these people were heartened by the announcement in the strategy last week that the extension of the medical card would apply to some 200,000 people, only to have their hopes dashed a matter of hours later when it was announced that there would be no extension next year and for the period of office of this Government. Once again, it seems that the poor must wait.
On a point of order, why has the Minister for Finance left the Chamber? It is not good manners.
That is not a point of order, Deputy. Deputy McDowell to continue. Deputy Ryan, you are interrupting your colleague, Deputy McDowell.
It is not normal procedure.
The Minister's absence speaks volumes.
The failure to address the issue of access in a serious way is a fundamental flaw in the health strategy. We have a two-tier system of health in this country whereby people with private insurance effectively pay to jump the queue. Priority is decided not by medical need but by ability to pay. At its core, our health system is fundamentally unfair. My party and our spokesperson on health, Deputy McManus, have made it clear that we will seek to address this by introducing a system of compulsory universal insurance where the premia of less well-off people will be partly or wholly paid by the State. The Minister for Health and Children rejected our proposals but told us at the same time that he does not like the two-tier system. In practice, the Minister is trying to have it both ways; he is telling those who do not have insurance that they will have equal access to health care while at the same time telling VHI and BUPA subscribers that they should continue to subscribe, notwithstanding the fact that the only reason most people subscribe to health insurance is to get preferential access. The Minister is saying contradictory things to different people. It is clear he has no intention of reforming the two-tier system, a fact which is unacceptable to me and to the Labour Party.
The Minister for Finance, Deputy McCreevy, has often said that we should not judge him on just one budget, rather we should judge him over the course of his five years. Perhaps we should do that. At the end of his five years in office, public services are a shambles. He has singularly failed to bring about the sort of improvement required in infrastructure – be it roads, water services or transport. He has widened the gap between rich and poor in spite of having an unprecedented opportunity to do the opposite and has frittered away enormous sums of money in tax cuts which could have been used to produce lasting improvement in our quality of life.
I do not dispute that Ireland is a wealthier place than it was ten years ago. The facts speak for themselves. National income per capita has risen from barely 80% of the EU average to above the EU average. GNP growth since 1994 has averaged about 8%. I do not dispute that this Government has contributed to those levels of growth, no more than I would expect them to suggest that we did not contribute when we were in office three or four years ago. I do not dispute that this Government has created wealth; my quarrel is about what they have done with that wealth. We had the opportunity, perhaps for the first time, to really transform this country. We could have given ourselves a health service to be proud of, a transport system that worked and well resourced schools and teachers. Instead we have hospital waiting lists that are longer than ever, teachers and school managers who waste time fund-raising, a road system which is increasingly dangerous and a public transport system which is, by any standard, simply not up to the business.
At the end of the seven years of boom, Irish people – or rather some Irish people – are major players in the property markets of Spain and France while anyone who lives in this city will spend hours every day getting to and from work or anywhere else they might want to go. In the national development plan published in 1999, the Government committed itself to fund a number of measures – some of them quite inexpensive – in the area of public transport. Most of those measures had been bandied around for some years. The DART signalling system was to be upgraded to allow the network to carry more trains but this has not happened. DART were to be extended to allow for longer trains at peak times but this has not happened either. I know all about this because I live in Clontarf, quite close to Killester DART station, and I see the queues of people who arrive there in the mornings. We were to have QBCs on all the major arteries into Dublin, only half of which are in place. The Government promised an integrated ticketing system in Dublin but this has not happened. Operation Freeflow is an embarrassment and is now referred to as Operation No Flow. The Government prevaricated for so long about Luas that it will be another two years before another tram is sighted on the streets of Dublin, assuming of course that the Taoiseach does not have them parked at street corners during the election campaign next year.
Iarnród Éireann is so strapped for cash that its safety programme is way behind time and there is no prospect of any improvement in services to its customers for the foreseeable future. So bad are things in CIE that a bridge on East Wall Road in my constituency, soon to be transferred to the Taoiseach's constituency, which was damaged six months ago, cannot be fixed for another six months because CIE does not have the money.
The record on roads is hardly any better. Our primary roads are the worst in the European Union. Even Greece and Portugal, which at least on paper are poorer than we are, have a much better primary road system. The consequence of this failure to provide decent national roads is much more than simple inconvenience. There is not a single kilometre of motorway west of the Shannon or in the Ulster counties of the Republic and there is very little dual carriageway. This adds immeasurably to the difficulty of attracting foreign direct investment into those regions.
Having to drive very long distances on national roads without any opportunity to overtake has made our roads infinitely more dangerous than they could be. We could and did live with this as long as the number of cars was below the EU average. Now there are about 250,000 more cars on our roads than five years ago. Conditions that were tolerable then have become intolerable and dangerous. During its five years in office, this Government has seen only 35 kilometres of motorway or dual carriageway completed. The national development plan is for 500 kilometres. Much of the rest of this is hardly beyond the planning stage and it is an open secret that the money needed to complete that plan will simply not be available. Even if it were available the money needed would overshoot the amount provided in the plan by at least 3 billion.
The announcements made today were a bit of a damp squib. The NRA calculates it needs about 1.1 billion next year merely to give effect to the contracts currently in place. It will have an allocation of 600 million. This cutback of 500 mill ion will bring planning to a halt and means the programme will not be delivered on time.
I acknowledge the NRA has valiantly tried to play catch-up in recent years. However, to have any chance of delivering on the targets, would require certainty in relation to the Government's commitment on funding. On more than one occasion in recent weeks, the Minister has said the NDP is a flexible plan, which can be slowed down or accelerated as money becomes available. In this, the Minister could not be more wrong. The NRA can only enter into contracts if it knows the money will be there to meet those contracts. It cannot make plans if it does not know whether it will be able to pay for those plans. The NRA has finally managed to interest non-Irish contractors in some of the bigger projects, something that is utterly indispensable. If we are to do the business we must retain the interest of those contractors and we cannot do it if they cannot be sure the money will be available.
The roads programme must be delivered on time using whatever funding mechanisms are needed, including borrowing. I know I am supported in this by those at the coalface, including the Construction Industry Federation. Any cutback or deceleration in the programme will send out all the wrong messages and will have serious consequences for the economy later on.
If there is one defining difference between this PD/Fianna Fáil Government and the Labour Party, it is in our attitude to public services. The Minister has made his view clear and unambiguous on many occasions both before and during his tenure as Minister. He believes we should give people back money by way of tax breaks and they can look after themselves. He gave voice to that on the establishment of this Government's programme for government. At that time he committed the Government to reducing the fraction of national income spent on services over the term of the Government. It is no surprise he has delivered on that promise.
It may surprise the Minister to hear we on these benches and many people in the country do not regard medical attention, nursing home care or education as mere commodities. Many of us regard the provision of these services as a mark of the sort of decent society in which we want to live. Many of us want to live in a country that provides services for everyone and not just for those who can afford them. We are willing to pay through our taxes and our social insurance for the provision of those services.
Over his term in office, this Minister has cut taxes by too much and invested too little in services. Some of us, but not all of us, have more money in our pockets, but at the expense of worse public services and greater inequality than otherwise would or should have been the case. I acknowledge that many workers felt they were paying too much income tax and some relief was needed, but the Minister, Deputy McCreevy, has gone much too far in the opposite direction. Many of the tax cuts, of which no doubt he is proud, have given little or no benefit to ordinary workers.
The Minister has taken six percentage points of the upper rate of tax, something that exclusively benefits the 23% of workers who pay tax at that rate. He halved capital gains tax. He has torn the guts out of capital acquisitions tax. He abolished probate tax. He has virtually abolished betting tax. He has virtually halved corporation tax.
How much extra revenue did he bring in?
I know some of those measures were popular at the time, certainly for people paying those taxes. However, all of us must acknowledge the Minister's largesse comes at a cost that was spelt out most clearly and eloquently by the Minister for Health and Children last week in the House when he told us: "Of course I would like to do more, much more, but the money is not there". The money is not there because the Minister for Finance has blown it. He squandered the money and the opportunity it gave because he did not and does not believe the provision of public services, using public money, is a good thing. Many of us will rue for a long time the fact that when the opportunity to transform public services finally came to this country, we had a Minister for Finance who was ideologically opposed to taking that opportunity.
The one tax cut the Labour Party has consistently argued for in recent years is the removal of the first £183 or 232, the minimum wage, from the income tax net. As a society we have decided it is unconscionable that anybody should earn less than £183 per week. I compliment the Taoiseach and the Minister for Finance for their roles in this. Given that we have formed that judgment, it is unreasonable and illogical for the Government to take any part of that sum. In the past two years the Government has come round to that point of view. The Taoiseach, the Tánaiste and the Minister for Finance have articulated that view, but it has not happened in the past and it did not happen today. The Minister fell far short of delivering it today.
Is it not amazing that the one tax commitment that was demonstrably socially just and would clearly benefit the less well off to the best possible extent is the one that has fallen off the side of the table? The Government can do all it wants for corporation tax, capital acquisitions tax, capital gains tax, betting tax and probate tax, but it cannot take the minimum wage out of the tax net.
We created the minimum wage.
The Government only did so because it was under pressure.
The one tax commitment that really mattered to most of us is the one it has not delivered.
Last weekend, on behalf of my party, I produced a statement that argued unambiguously in favour of borrowing this year. We should not be in that position. The Minister should not have cut taxes to the extent he did last year. He should not have sanctioned the daft savings scheme the total cost of which we still do not know. Most of all he should have allowed himself some flexibility in the long-term pensions reserve fund. I am sure members of the public are not too familiar with the pensions reserve fund, so I will try to explain what it is. The Minister looked at the experience of some European countries, principally the bigger countries such as France, Italy and Germany, saw they were struggling with their current pension liabilities and decided that since he had money left over he would set it aside for 2025 onwards. I did not disagree with that in principle because it seemed like a perfectly reasonable thing to do. If one has money left over, then why not set it aside for a rainy day? However, it does not make sense to buy an umbrella and set it aside for a rainy day in a quarter of a century's time if it is already raining and one does not already have an umbrella. The Minister is proposing, not this year but next year and the year after if one looks at the figures in today's document, to instruct the NTMA to borrow on the open market and then to invest that money on the international equity markets. That defies common sense. I am not suggesting the fund should be abandoned or we should look to access the 8 billion which is currently in the fund, although I would be open to ideas on how it can be used productively before it is drawn down. I am suggesting that the Minister could and should have given himself and his successors room for manoeuvre when money is not as plentiful as it was as recently as last year.
Over the weekend I re-read last year's budget speech by the Minister for Social, Community and Family Affairs, Deputy Dermot Ahern, who, unfortunately, is not here today. It was a wonderful piece of rhetoric. I had little problem with most of the rhetorical content. He spoke about true republican values and the importance of reducing inequality, particularly income inequality. The trouble is that he is living on a completely different planet from the Minister for Finance who calls the shots and signs the cheques.
According to figures produced by Fr. Séan Healy of CORI, who is not a fan of the Minister and I am sure the Minister is not a fan of his either, income inequality has been hugely exacerbated during the Government's term. A large part of this increased inequality is the result of changes in income tax and social welfare introduced by the Government. CORI calculates that the gap in disposable income between a person earning £40,000 a year and an unemployed person has widened by £159 or 200 a week. This leaves us in the unacceptable and obscene position where relative poverty has increased at a time of unprecedented economic growth. It did not have to be that way. The Government could and should have benchmarked social welfare payments to gross average industrial earnings and raised payments as earnings increased. If it had done that, it could and should have virtually eliminated relative poverty during its term of office. Instead, the Minister for Finance has stoutly refused moves from the Department of Social, Community and Family Affairs to benchmark and has disparagingly referred to anyone who makes the argument as the poverty industry.
My party leader, Deputy Quinn, has set out the Labour Party's commitment to social welfare recipients. If we are given the opportunity by the people, we will benchmark the lowest social assistance rate to 30% of gross average industrial earnings and, thereafter, we will raise payments in accordance with wage increases calculated on a previous year basis. That can be done by 2004 at the latest and possibly by 2003. When we have done that, we will have eliminated relative poverty.
The case of carers bears special mention. Many tens of thousands of people give freely and frequently of their time to look after elderly or infirm relatives. Many of these people are elderly. They are placed under huge strain by having to or choosing to spend virtually all their time looking after a family relative who cannot look after himself or herself. Some years ago the carer's allowance was introduced as an income support for people in this situation. The time is ripe to take a further step. We should move from the carer's allowance as a means tested income support to the carer's allowance as a positive recognition of the role and work done by carers. We should also explicitly recognise the self-evident fact that carers save the State a great deal of money which would otherwise be expended in publicly providing care for elderly people who need it. Accordingly, my party will, if given the opportunity, abolish the means test for the carer's allowance. We will also permit people who are already receiving another welfare benefit to receive up to half the carer's allowance in addition to their existing benefit or allowance. In addition, we acknowledge the need to provide carers with back-up help and respite assistance. For too long we have taken carers for granted. It is time to give them real recognition and tangible assistance.
Before today, the Minister projected an accumulated surplus of 2,242 million in the social insurance fund. After his raid on the fund today and the relatively insignificant payments, he is talking about a surplus of 300 million.
That is some theft.
I had anticipated before I came into the House today that the Minister might do what he said he would do last year and introduce some reform of the PRSI system. With that in mind, I decided to give the matter some thought. Perhaps it might not do any harm to divulge some of my thoughts here today because they have a bearing on what the Minister has done. The first thing to acknowledge is that the system is a genuine mess. It is complicated to the point where it is virtually incomprehensible to the average worker. If one factors in the health levy, one would need to be an accountant or a sad person to make any sense of it. I acknowledge that is not entirely the fault of the Minister for Finance, although he did make things worse with his mini budget early in 2000. The first 127 of weekly income is exempt from PRSI for everyone and the first 287 is exempt, provided one does not earn more than that. If one earns more than 287 a week, then all the income is subject to PRSI. If one earns less than 347 a week, one does not pay the health levy, but if one earns more than 347 a week, one pays the levy on the entire income. If we factor in the ceiling of approximately 35,000 and the fact there are two different rates of employers' PRSI, it is an unholy mess. That, self-evidently, calls for simplification and reform.
We should develop the insurance fund as a genuine insurance fund into which people contribute for defined benefits which they are entitled to expect in certain circumstances, whether unemployment, optical treatment benefit or old age pensions. My view, not that of my party, is that all workers should contribute something, however little, to the fund. Contributions should be simple and progressive. We must look seriously at the way the fund works. At present, as we found out to our cost today, the Minister can intervene and do whatever he likes. The stakeholders, the people who pay into the fund, do not have any rights. We need to establish the stakeholders as people who have rights. We need to put in place a board of trustees and we need to have representatives of the employers, of Government and of workers who will decide on changes both in terms of the contributions made into the fund and the payments made out of it or at least who will have a right as of right and as a bare minimum to be consulted. The total take in the fund should not be reduced.
In view of what the Minister has done today, perhaps I should elaborate on that last point. Irish social welfare benefits are much lower than the European average. That is largely because our rates of contribution are low. That may also have something to do with the fact that we traditionally compare ourselves to the United Kingdom whose contribution rates and benefit levels are also low. The time is now appropriate to move to a much better level of benefit, particularly for people who are long-term dependent on social welfare. It is not good enough in 2001 that we ask our senior citizens to live out potentially the last 20 or 25 years of their lives on £116 a week. The benchmarking commitment I mentioned earlier would bring that old age pension to 170 a week, although that is still not sufficient. We must ensure that we do this in a planned and affordable way. We must ensure it is affordable now as it is, or would have been before today, but we must also ensure it remains affordable as the population ages and in the event of a significant increase in unemployment.
Today the Minister reduced the level of employers' contributions to the social insurance fund. This sort of stuff is very frustrating. We have heard demands for months from employers to restore the ceiling for employers' contributions and PRSI, even though nobody has ever explained satisfactorily to me the reason there was a ceiling in the first place. We have heard employers demand that we reduce their contributions to the social insurance fund without any indication that any employer or employers' representative has thought about what the fund is for in the first place. Nobody has said that we should reduce or freeze old age pensions. This has been seen as just another tax break for employers. There is something very frustrating about what passes for public debate when that sort of thing can happen. I do not buy the employers' case. The percentage of national income taken by profits and capital has increased exponentially in recent years. According to the comparative figures for employers' PRSI contributions in European countries, ours are the second lowest. Surprise, surprise, the lowest contributions are required in the United Kingdom, but many other countries require employers to contribute to the social insurance fund at a rate well over twice that required by us. They do not just include the traditional social democratic countries of northern Europe, but also ones as diverse as France and Spain.
There is no threat to Irish productivity which has been increasing year by year for as long as I can remember, certainly for the past ten or 20 years. There is no credible threat to competitiveness. We have reduced corporation profits tax by four percentage points in each of the last three years and will do so again next year. Our rates of corporation profits tax are, by far, the lowest in the European Union. They are so low that we are under increasing pressure from our colleague states to increase them. In that context where is the beef? I for one do not buy the employers' case and I am astonished that the Minister does. It is astonishing that he appears to be far more open to arguments such as this from employers than he is to arguments from those earning low pay.
It has been a bad year for the Minister for the Environment and Local Government, Deputy Dempsey. His musings on the electoral system came to nothing when the Taoiseach pulled the rug from under him on the matter of the dual mandate. He was forced to do an embarrassing U-turn on electoral funding. The issue I want to talk about today is that of climate change because, to my amazement, the Minister for Finance referred to it in the course of his speech. I have only a summary of the plan to deal with climate change produced by Government 15 months ago, but it refers to the following commit ment. The Government promised that from 2002 onwards taxes would begin to take into account the amount of greenhouse gas produced in any activity. Tax changes were to be phased in order that sectors could adjust incrementally. The reason I mention this is that we, in common with other EU countries, have been lambasting poor old President Bush for turning his back on the Kyoto Protocol. His was a disgraceful move, but it is crystal clear that the national climate change strategy the Government produced 15 months ago is not worth the paper on which it is printed. I have never heard the Minister, who as a member of Government committed to increasing carbon taxes from today on, utter a single syllable to suggest that he takes the strategy seriously. As recently as a few months ago he was one of only two Ministers in the European Union, his Spanish colleague being the other, who was opposed to carbon taxes. There is a case for increasing tax on carbon heavy energy. Hypothecated carbon taxes should and must be used for environmentally friendly energy such as renewable energy and public transport. This was accepted in theory by the Government 15 months ago, but, unsurprisingly, it has done nothing about it.
The Minister has today reversed almost everything he has done with regard to the property market in the last four years. I am not ashamed to say I supported some of the measures recommended by the Bacon report and some of the Minister's interventions in the market. I did so, largely, to give an opportunity to first-time buyers. To some extent what the Minister did was successful. His were never intended to be permanent measures, they were intended to take investors out of the market temporarily to facilitate first-time buyers by giving them a leg up and the advantage. That has been done. I am not convinced that the Construction Industry Federation reacted as we might have wished. There are clear indications that those in the construction industry who are hoarding land, or in a position to hoard options on land, have deliberately dried up the supply in an attempt to manage the market.
There is simply no way to escape drawing the inevitable conclusion my party did some years ago that the State, or local authorities, or its house building agency, must get directly into the business of buying and securing land banks and dealing with them as they see fit. The Government's record on social housing was neatly summed up by the Taoiseach the day before yesterday. He acknowledged, explicitly, that despite the slow-down in the construction industry and the fact that fewer private homes are being built this year, the industry would not be taking up the slack in social housing. The national development plan committed the Government to 25,000 housing units over the course of its term of office, but it is now likely that less than half that number will be built. It is a shameful display and shows us exactly where the priorities of the Government lie.
In just a few weeks we will witness the historic and unprecedented introduction of the single currency, when euro notes and coins will come into circulation. I pay tribute, as we all should, to the many here and throughout Europe who have worked long and hard in the last 12 years to ensure the vision of a single currency became a reality. The single currency has already demonstrated that it is a considerable success. We need only imagine what might have happened to the currency markets of Europe in the aftermath of 11 September if we had 14 separate currencies rather than one. Currency is ultimately a tool in the hands of business and consumers and it is in that light that it will be judged a success or failure after 1 January. There is a great onus on Government, the Director of Consumer Affairs and us all to ensure the introduction of the euro does not lead to rip offs which leave members of the public feeling they have been taken for a ride. That said, the event is an important one and I sincerely hope it goes well as I believe it will. The euro will define our economic future and the future management of our economy.
Tá an Teachta McCreevy in a Aire le cúig bliana anuas agus ba chóir dúinn féachaint siar ar an méid atá bainte amach aige. Cinnte, tá roinnt mhaith daoine níos fearr as ná mar a bhíodar cúig bliana ó shin. Cinnte, tá sé ar chumas roinnt mhaith daoine an tarna saoire thar lear a chaitheamh i rith na bliana nó, b'fhéidir, buidéal níos daoire fíona a ól. Ach ó thaobh an chomhphobail de, ó thaobh áiseanna agus seirbhísí poiblí de táimid go léir thíos leis an méid atá déanta ag an Aire seo.
Bhí deis aige, deis nach raibh riamh ag Aire Airgeadais go dtí seo forbairt agus feabhas thar cuimse a dhéanamh ar an gcóras leighis, ar an gcóras iompair phoiblí agus ar thithíocht shóisialta. Ach ní amhlaidh atá déanta aige. Sa bhliain seo, 2001, tá daoine fós ag fanacht blianta i gcomhair cóir leighis; tá níos mó daoine gan dídean ná mar a bhí le blianta agus tá easionannas ioncaim ag dul i méid i gcónaí.
Over 750,000 people are better off.
This is an outstanding job by the Minister.
Today's budget will be remembered for the raid it made and the fraud committed. The Minister has not borrowed, but taken money from the social insurance fund and the Central Bank, and has no intention of giving it back. He had no right to take it and will rue the day, as will the Taoiseach, this precedent was established and accepted. I assure the Government that the two Bills required to give a veneer of legitimacy to what it has done today will be vigorously opposed by this side of the House.
Thar cheann an Comhaontais Ghlas, fáiltím roimh an deis seo cúpla focal a rá mar gheall ar cháinfhaisnéis na bliana seo chugainn. The budget shows more clearly than anything that the Minister for Finance, known outside and inside the House as Champagne Charlie, is drinking from a glass which has lost its fizz. That an exclusive diet of champagne will eventually kill a person is a reminder of the unhealthy way of life promoted by the budget. That champagne has to be imported is another reminder that the Fianna Fáil-Progressive Democrats Government has neglected the potential of this country to become more self-reliant in food and energy. Instead, after five years of careless and inequitable Government, Ireland has become more reliant on fossil fuel and food imports and more than ever on inward investment. In other words, under the Government the people have become, for a range of reasons, more vulnerable. Some may be told they are invincible or even immortal. The fact is that all of us are faced with differing degrees of vulnerability, none more so than the people sleeping rough tonight in the streets around Leinster House. This is the legacy of the Government – vulnerability.
How can the Minister, Deputy McCreevy, commend the budget to the people when he has overseen in the past four years an increase of 60% in the numbers sleeping rough in Dublin alone? This is more than the combined numbers sleeping rough in Manchester, Liverpool, Birmingham, Nottingham and Oxford. During a period of unprecedented wealth in the State coffers, those most in need of help have seen their position worsen while those with sufficient wealth have grown increasingly richer. In the previous budget the Minister said he was happy for those over 70 to get a medical card. What use is that to the hundreds of people sleeping rough whose average age of death is 42 years? There is a clear need for a co-ordinating agency – we would like to call it Dídean, meaning shelter – to ensure services are delivered and progress is regularly reported to the Oireachtas on the area of homelessness.
What is the response of the budget to the crisis in homelessness and housing which has thousands of families in scarce, sub-standard, over-priced rented accommodation? Why in this time of plenty when the coffers have been more than full have we been brought to a point where more than 125,000 people are on local authority housing waiting lists, which is more than 45,000 households, while just more than 4,000 houses were provided last year by local authorities and the voluntary sector? This is disgraceful. Focus has determined that just more than a third of new homelessness in Dublin is caused by evictions. Almost 20% of Dublin's homeless have a job, but can they afford or find housing? The answer clearly is "no".
When the Estimates were published, I said the under capacity in the construction industry, which operates at 10,000 housing units under its peak of recent years, needs to be harnessed. If necessary, capital borrowing should be used to provide badly needed social housing. To help with this we certainly need a national housing agency. Inadequate as it may be, the Minister sees fit to boast about the number of houses built.
However the energy efficiency of these new buildings is of a remarkably low standard compared to our European Union neighbours with similar climates. As a result, energy expenditure in inefficient households can exceed £1,000 per annum. The Irish Energy Centre has estimated households could save £75 million a year if they lived in energy efficient homes. However, the Government continues to charge the standard VAT rate of 20% on insulation and renewable energy installations compared with just 5% on such energy savers in the United Kingdom. Likewise, none of these new houses has been fitted with water meters or water saving measures. The Government is not just dining out on the inequality of present-day society but it is happy to sentence future generations to an almighty energy and resources shortage. To anyone concerned about resource management, the Government is a bunch of wasters.
Such is the lack of concern for energy efficiency from the Government that almost a third of the paltry £6.1 million allocated in 2001 to energy conservation was not even spent, and the Sustainable Energy Bill still languishes awaiting Dáil time. If the Minister, Deputy McCreevy, thinks he can smile after clawing back £2 million not spent on energy conservation, then God help his successors and especially the younger and poorer in society.
The unprecedented human build-up of greenhouse gases caused largely by burning fossil fuels has made climate change a reality for everyone, except the mandarins in the Department of Finance, it seems. The recent synthesis report of the intergovernmental panel on climate change has the following to say on the reality of what the country faces:
Globally, the 1990s was the warmest decade, and 1998 the warmest year in the instrumental record. Observed changes in regional climate have affected many physical and biological systems, and there are indications that social and economic systems have been affected. The rising socio-economic costs related to weather damage and to regional variations in climate indicate increasing vulnerability to climate change.
The same report shows that global costs of extreme weather events have increased 1000%, from an average of $4 billion per year in the 1950s to an average of $40 billion per year between 1990 and 1998, even when costs are adjusted for inflation over the same period. Insurers in Ireland can vouch for increased costs due to extreme weather at home, with costs for last year's flooding estimated to be as high as £40 million. These costs have already been passed on to Irish house holds, accounting for up to half the recent inflation in the price of household insurance.
The Government's national climate change strategy referred to by Deputy McDowell promised the following:
Government will put in place an appropriate framework for greenhouse gas taxation, prioritising COf8>2 emissions from 2002 [basically, next month] on a phased incremental basis and in a manner that takes account of national economic, social and environmental objectives.
Having listened to the Minister, Deputy McCreevy, it is clear the Government is not just intent on wasting energy but is intent on ignoring its own climate change report, and wasting paper as well in the process.
Climate change will not be tackled by a random rise in excise duty. What is needed is a comprehensive shift away from reliance on income tax to a tax system designed to conserve finite resources with the necessary waivers and compensatory payments to avoid fuel poverty and disadvantage. The Government's national climate change strategy specifies that this should be decided in consultation with the social partners. For reasons best known to this Government and previous ones, environmental interests are not represented within this process. The stark reality is that ignoring measures which are needed to reduce emissions of greenhouse gases will devastate future budgetary provisions. Climate change is a disaster which is beginning to happen for the insurance industry, farmers, tourism, and especially for the poor, the homeless and those whom the Government would prefer to ignore.
What the Government does not ignore is the interests of its wealthy supporters in the building industry. The public private partnerships mentioned in the Budget Statement need to be understood for what they are. The Minister told us that, in the next three years, 80 million will be the private contribution to the infrastructure programme. What the Minister really means is that private money will be invested with the certainty that it will be repaid with a large profit for the investor. Who will repay this money? It will be consumers once again, and the poorest consumers as well as those with wealth. This is the most perverse form of social exclusion available to any Government and it will hurt the poorest most. Not only is the Government reneging on its responsibility to provide public utilities and infrastructure, it is raiding the social insurance fund for 635 million so that the next generation will have less for social needs and pensions while having to pay for the use of the infrastructure at the same time.
Carers will get little comfort from this budget. The reality of hardship will continue for widows or widowers, who are also carers, with a large family which may include a child with special needs. Such people, and I know a number in this situation, will continue to be faced with Hobson's choice – to opt either for a widow's pension or a carer's allowance – because the Government will not allow such disadvantaged families to have both. Such citizens have a tough life already and are helped little by this budget. If such persons depend upon public transport, little will change, especially if they are living in rural areas. Instead, the Minister is pushing ahead with motorway plans as a priority at the expense of public transport needs. The National Development Plan envisaged an inequitable 2:1 ratio favouring road building over public transport. After today's budget, we will have even greater inequality with a 2.5:1 ratio.
The private investor is being relied upon to provide public transport infrastructure, but when will the Minister realise that park-and-ride facilities and student housing are considered as public capital projects in inclusive, equitable societies elsewhere in the EU? Even if a private investor does come to the rescue of this hapless Government, the facilities will be costly for the consumer in the long-term and, in the case of student accommodation, can be taken back after ten years.
Not only those requiring student accommodation feel let down by the budget. Others in the primary, secondary and tertiary sectors of education are also left with little to celebrate. Their best option is fund-raising.
The situation that gave rise to the Synott case still faces parents of children with special needs. Equally unforgivable is the squandering of public resources in the privatisation of public utilities and infrastructure. Is it not strange that large sums of public money can be written off in consultancy fees and preparations for selling off State assets, such as Aer Lingus, while at the same time, workers in Aer Lingus are being threatened with redundancy because the Government decides not to challenge the EU Commission's State aid rules? The favouritism shown to privatisation policies permeates each policy area touched by the Government.
Even in the health service, the Government stands idly by as some GPs turn their backs on local communities and announce doctor-on-call schemes which require ordinary people to go without an after-hours medical service. They have no choice but to get a taxi to a hospital up to 12 miles away, as in the case of my own town of Balbriggan.
Sectors which are not easy to privatise, generally lose out even more to this Government. This has a devastating effect on the most vulnerable in our society – those in the caring professions, the poor and the homeless, as well as the environment generally, including wildlife and those who care for animals. Volunteers at the Irish Seal Sanctuary are being cut off social welfare unless they walk away from their responsibilities and give up voluntary work in order to find so-called paid employment. This is all happening in what has been called the year of the volunteer.
Mahatma Gandhi put it better than anyone when he said that, "The greatness of a nation must be judged on the way it treats its most vulnerable citizens and its animals". It is clear that the Government stands indicted by that yardstick.
Is léir go bhfuil daoine bochta fós bocht agus go bhfuil an domhan nádúrtha faoi chois ar bholg ag an Rialtas seo, níos mó ná ariamh.
Tá Teachtaí ag cur fáilte roimh an euro. Níl aon dabht ná go mbeidh an-chuid athraithe ann dá bharr. Ach, nach bhfuil sé aisteach nach féidir le duine in Éirinn seic a scríobh i euro chun íoc as earraí sa Ghearmáin, mar shampla, agus go bhfuil orainn fós dréacht bainc a fháil chun é sin a dhéanamh? Is léir go bhfuilimid ag glacadh le cuid de chuspóirí an euro ach nach bhfuilimid ag glacadh leo ar fad. Sin cuid den rian atá fágtha ag an Rialtas seo.
Ar na Bainc atá an milleán, ní ar an euro.
Sitting suspended at 6.45 p.m. and resumed at 7.15 p.m.