I wish to share my time with Deputy Foley.
Financial Resolutions, 2001. - Financial Resolution No. 6: General (Resumed).
Is that agreed? Agreed.
I was speaking about the remarkable achievement in this budget in view of the fact that there has been a general downturn in the economy. There was the foot and mouth disease crisis where fortunately we in Ireland escaped with one outbreak and of course there was the 11 September disasters in the United States. I am particularly heartened by the summary of the economic outlook for 2002, with economic growth forecast at 3.9%, employment again to increase by 1.5% annually to 2004, inflation set to fall from 4.2% to 2.25% by 2004, an Exchequer surplus and general Government surplus in 2002 and at the same time an increase in net current spending and net capital spending of 10.5% in 2002. By any yardstick these are very attractive figures.
Yesterday I briefly referred to the social welfare increases which have been well documented at this stage. As I have always said in this House, the worth of a Government can be gauged by how it treats the older people in society and certainly over the past five years the Government has lived up to that expectation. This year's increase of £10 per week brings the old age pension to well in excess of £100, which was the target set by us in 1997, but when one adds to that all the other benefits being granted, the increase in the fuel allowance and the extra electricity allowance, one will find that our pensions are among the better off pensions in the world. That is not to say that is the way it should be, but I get great satisfaction at my constituency clinics from meeting people who left this country many years ago and who find on their return that even with their full contributory pensions from England, they can still avail of a reduced rate non-contributory pension with all the additional social welfare benefits which that entails. That is laudable and something about which we must be very happy.
On the taxation side, I am delighted again that the lower paid in particular have benefited in this budget and I compliment the Minister on that. He has continued what he set out to do four years ago, against the current economic climate. As I said yesterday evening, when one remembers that not many years ago the higher rate of tax was 65%, with a surcharge, and the lower rate was well in excess of 30%, that achievement speaks for itself. I am delighted a contribution has been made to the national pensions fund to provide for future generations and that is to be commended.
Obviously in every budget there is a downside and I must refer to the increase in the excise duties on petrol and diesel and the effect they will have on the transport industry. During the course of this year, because of the downturn in the economy, the events of 11 September and the foot and mouth disease crisis, the tourism sector in particular has suffered. I welcome the additional funding which has been provided for that sector. Nevertheless, I want to raise one specific matter on behalf of the Coach Tourism Council of Ireland, which has been in touch with the Minister's office for some time looking for a rebate on excise duty on fuel for operators engaged in coach tourism. The operators have suffered huge losses and are under severe pressure. They are also at an unfair competitive disadvantage in comparison to the State-sponsored company. They are hit by the increase in the price of diesel of 5p per litre, the increase in VAT and the high excise duty rate for high-sulphur diesel, which has been increased by 6% per litre more than low-sulphur diesel.
Low-sulphur diesel cannot be got in Ireland. It has been tried at Whitegate, but it would mean that all the pumps at service outlets would have to be changed and that would have serious consequences for this sector, which is on its knees at present. Therefore, I want to emphasise that a rebate on excise duties on fuel should be granted to this sector in the Finance Bill. The Minister has indicated that he is prepared to look favourably at that and I hope he will do so.
I welcome the health strategy announced by the Minister for Health and Children, Deputy Martin, last week. Obviously there is a great debate about the extension of medical cards to those most in need and I certainly support that call. I appreciate that there are many demands on the funding available to the Minister but nevertheless I ask that he seriously consider extending the entitlement to medical cards, in particular to children under a certain age. I look forward to a favourable response on that in the not too distant future.
I am pleased to welcome this budget. The Minister has got the balance right. His five budgets have been good. He is a man who has his finger on the pulse. He knows what is happening out there and I think he has got it right on this occasion.
I thank Deputy Aylward for sharing his time with me.
I welcome the opportunity to make a contribution on this excellent budget, the Government's fifth, which is a unique record. Deputy McCreevy, the Minister for Finance, is to be congratulated as it allows for politically astute measures, including an historically large increase in spending on health, significant increases in child benefit, social welfare payments, pensions and spending on roads as well as modest tax cuts to benefit the lower paid. The budget manages to fund the proper measures by avoiding the need to borrow while enabling the Minister to achieve the remarkable feat of raising capital and current spending by 10.5%, cutting tax in an economic turndown and still running a budget surplus.
The Opposition denounced the source of the extra money but the Minister pointed out that these funds were owned by the State and that his plans to take money from the social insurance fund and the Central Bank would be underpinned by legislation in the Social Welfare Bill. Future Ministers can do the same if they so chose.
The increase of 125 million for health on top of the Estimates of two weeks ago represents the largest ever raise and may prove to be a shrewd move. The increase in child benefit of £25 per month for the first and second child to £92.62 and by £30 per month for the third and subsequent children to £116 is welcome. The Minister has also fulfilled his commitment to put 1% of GNP into the national reserve pension fund.
Changes in tax payments will take a further 68,000 people out of the tax net. Those earning up to 90% of the minimum wage will now pay no tax and the Government's aim is to remove all on the minimum wage. Widening the standard rate tax band will remove 57,000 from the higher rate although the rates of 20% and 42% remain unchanged.
The old age pension goes up by £10 per week bringing it to £105 for non-contributory and £116 for contributory pensions. All other full rate social welfare recipients will get £8 while £9.50 goes to those who receive the lowest payments.
Married couples earning two incomes will fare better than single income families. A married couple with one spouse working will be able to earn £29,140 after their basic tax credit and still pay income tax at the standard rate. A married couple with both partners working can earn £44,104 and still remain on the 20% tax rate. This is a difference in taxation of £3,982 for a couple where one spouse stays at home.
I welcome the over 8 million boost for the tourism industry, on top of what was announced in the Estimates, as it embarks on a major international marketing drive. It will go to various sectors, with £5 million going to the regional tourism bodies to develop festivals and cultural events, for example. I welcome the once off contribution of 320,000 to the Rose of Tralee Festival. This festival had serious financial problems and could have been forced out of business which would have been a major loss to Tralee, Kerry and Ireland as it had always made a major contribution to promoting tourism. Tourism Ireland Ltd., the new all Ireland market organisation, receives 2.76 million, while 1 million goes to the national sports tourism initiative bringing it up to 5.67 million annually until 2007.
The Government is making a major effort to encourage people to buy houses and apartments to rent out. This is designed to help the house building industry and to ease the rental accommodation crisis. From 1 January, purchasers of apartments and houses for rent will be able to offset mortgage payments against rental income. In addition, the 9% stamp duty on second-hand properties was abolished. This was a major stumbling block in the past two years and reduced the sale of second-hand houses to a trickle. Up to now, anyone who invested in a £200,000 second-hand house or flat to rent out was faced with a stamp duty bill of £18,000, but now investors will play the same sliding scale of duty as owner occupiers with the 9% applying only to properties costing in excess of £500,000.
This budget is caring and equitable, in keeping with our radical social philosophy. As a country we have made magnificent progress over the past four years as is recognised everywhere. Our early budgets were central to boosting confidence and prolonging the prosperity as long as international circumstances allowed. An unprecedented period of high growth allowed us to catch up on our European partners. We exploited our opportunities to the full to do the maximum for social inclusion in other ways as well, and the emphasis of this budget is directed towards the least well off and improving public services.
In recent weeks, the Opposition claimed that there was a cutback in the funding for school building projects but the facts show that this misrepresents the truth. The January 1997 budget allocated 74 million to all school building projects while this budget allocates 335 million. The impact of funding can be seen throughout the country. In 1997, there were only 22 large scale school building projects under way. Today, there are 200.
We must continue to attach great importance to jobs. The reduction of employer's PRSI to 10.5% is a major boost to competitiveness that largely compensates for the removal of the ceiling. I could talk much more on this excellent budget but time does not permit me to do so.
I thank the civil servants in the Department of Finance for the manner in which they presented the budget. It has been improving over the years but on this occasion not only were the Minister's speech and the details of the budget available but also the Financial Resolutions. More importantly, by their including the multi-annual budgets, we can see clearly what the trends will be. That is a major step forward in transparency and accountability, because, regardless of what spin a Government puts on a budget on the day, it is clear from the figures provided where we will go next year and the year after. I thank the officials of the Department for doing a fine job in presenting the budget and the supporting documents.
On budget day, the most disappointed man in the House was the Minister for Finance, Deputy McCreevy, and I am not surprised at that. In a way I was disappointed for him. I remember in the early 1980s that the day after a budget he used to go after the Haughey administration in particular and lecture them on sound finances, for not putting the full picture to the people, on voodoo economics and trick in the loop financial measures. I understand why he was disappointed when he delivered his budget because he was forced by the Government into the position that he had deplored all his life. That is a great tragedy for a man who had a view of how the country's finances should be run. Many of us on this side of the House, who have a high personal regard for the Minister, shared his grief.
However, we must deal with the budget as it was presented to us. On budget day there was a tragedy of enormous proportions. The Minister for Finance all his life built a reputation on sound finances and came into office pledged to control public finances and not to increase public expenditure by more than 4% in any year above the outturn of the previous year. We must judge his performance, first, on what has happened to the public finances and then the manner in which he tried to disguise what was happening, despite the officials' great work.
I deal with that first because there was an appalling raid on the social insurance fund when almost 600 million was taken from its surplus. That fund is the accumulated payments of the ordinary workers of this country who pay pay related social insurance.
Their employers also put in an amount. This is done under law and the fund is there for a specific purpose. The Minister, when he introduced the 1% of GNP payment into the other fund for public servants' pensions, said in this House – anyone can check the record – that he intended to put the social insurance fund beyond the reach of politicians as well.
He felt this was a pension fund which had the same integrity as a private pension fund and that he would like if this was part of the setting aside for the rainy day in the future, to ensure that social insurance pensions of all sorts could be paid. It is an appalling reversal of policy that he was forced into a position where he had to raid the social insurance fund, but raid it he did and he raided it in a most appalling way.
I was looking at theFinancial Times this morning and one of its main financial stories this morning is that the government of Argentina – whose finances are in an appalling state at the moment – has expropriated funds from private pension funds. A spokesman for its government said that any strategy it has taken recently to preserve the integrity of its finances has lasted no more than a day. The IMF in Washington said that while what the Argentinian government was doing was appalling the IMF felt that in the particular circumstances it was justified; it was either that or a devaluation of the peso and financial ruin in Argentina.
After five years of the most prosperous growth ever, we have our Minister for Finance raiding a pension fund into which workers have paid their contributions. The two administrations that have raided pension funds this week are the administration in Argentina and the administration in Ireland. What does that do for our international credibility? It is justified in Argentina because of the appalling financial crisis. It was done here for expediency, for political purposes to hide the Minister's blushes, to pretend we were not sliding into deficit when we are sliding into deficit. In the best tradition of Mr. Haughey it is to ready-up the financial figures for political purposes. That is a great tragedy for this administration and it also affects our national credibility.
The Minister has also announced that he will force the Central Bank to pay over money. I refer to the business supplement inthe Irish Times. Spokespersons on behalf of the Central Bank are objecting very strongly to this. They say it is not within the legal remit of the Minister to do this, that it is an interference with the independence of the Central Bank. They say that they will be forced to work on an Estimate if the Minister forces the Central Bank to pay over this money. They will not know the true picture of the funds at their disposal for another three years. They will not be in a position to state accurately within one month after the introduction of the euro what the additional savings to the Central Bank are from the non-return of punt notes and coins in circulation.
This is another off the top of the head initiative from the Minister. It is the kind of thing he deplored all his life, the kind of thing Mr. Haughey would regard as a wonderful financial wheeze. Without the consent of the Central Bank he announced in the House that he will take a set amount of money when the Central Bank does not even know what amount of money will accrue to it as a result of the changeover to the euro.
The Minister is also bringing forward payment dates for corporation profits tax. This is very interesting. I heard the Tánaiste yesterday attacking the Labour Party for the suggestion by Deputy McDowell that in certain circumstances the tax base would have to be looked at in a deteriorating financial situation. The Minister's proposals for corporation profits tax will have exactly the same effect over the next five years as increasing the rate from 12.5% to 15%. I heard the Tánaiste lecturing Deputy McDowell yesterday by saying that his proposal would close down the country and there would be no inward investment if there was a move from 12.5%, yet the Minister for Finance had announced a measure which takes it from 12.5% to 15% for the next five years. I wonder if we are back again to the days of individualisation when even senior Ministers like the Tánaiste have no idea really of the consequences of the measures announced on budget day. If we choose to follow the Argentinian road by raiding the Central Bank then we are back again to the days of GUBU and the days of Mr. Haughey.
These are the actions taken by the Minister to avoid the political blushes. If we sweep aside the thin disguise and look at what is actually happening to the public finances, an appalling picture emerges. When this Government came to office in 1997 it inherited a fiscal situation where the budget at the end of 1997 – Deputy Quinn's last budget – was in surplus. That was the first surplus recorded for years and years. One would have to go back to the founding of the State to find a surplus. That was the Minister's opening position. He says he wants to be judged over five budgets, so let us judge him now. He has disguised the fact that we are sliding into deficit this year, but because of the good work and the transparency, accountability, honesty and professionalism of the civil servants in the Department of Finance, anybody can look at the tables and see what the trend is. The projection on a no-change policy is that we will have a deficit of just under 3 billion in 2003. The deficit in 2004 will be 3.7 billion. That is an appalling situation when one thinks of where we have come from since 1997 in fiscal terms.
Deputy Jim Mitchell has provided me with a graphic but we do not have the electronic capability in the House to show it on screen. It shows that from 2001 to 2004 a projection on the figures provided by the Department of Finance, the deterioration in the public finances over that period will be a decrease or a disimprovement in the Exchequer position of 8.1 billion. We should think about that. Twelve months ago in this House the Minister projected a surplus and the opening position in 2004 shows a deterioration in excess of 8 billion. That is the legacy that this administration is leaving to its successors. That is an appalling indictment of this administration. It is an appalling indictment of this Minister and an appalling indictment of the Taoiseach. He is more responsible than anybody else for this budget. If one took this budget to the forensic experts in Garda Headquarters to be examined electronically for fingerprints and hidden signs and codes, it would show all the fingerprints of the Taoiseach and very few of the fingerprints of the Minister for Finance.
The problems would not be that appalling if we had something to show for the past five years. If we look at the record of the past five years we see that the problems faced by the Irish people are quite difficult. We have the appalling mismanagement to which I referred. We have gone from a situation where the Minister for Finance pledged that he would maintain public expenditure to increases of not more than 4% year on year and yet this year on the projected outturn, public expenditure has increased by 23%. How can one pledge 4% and end up with 23%?
Send for Paul Goldin.
This was not a sudden deterioration in 12 months. The previous year's out turn showed 17% as against the 4% promised. We have this appalling mess created by this administration. We know that economic forecasting is not an exact science and events this year have confirmed this. However, there is an enormous difference between economic forecasting and actually managing an economy. The Government may argue that it has been unlucky with its economic forecasting but we cannot talk about luck when it comes to managing an economy; that is entirely a question of competence. Any manager worth his salt will say a manager should always manage for both the good days and the bad days. In particular good managers manage for the unexpected. This administration, in so far as it has any managerial competence, has merely managed to surf on top of the wave of prosperity. The longer it stayed on top of the wave of prosperity, it began to suffer from the delusion it had created the wave on which it rode.
It is vital to manage the economy against the background of a long-term vision of the country. Day-to-day management without long-term vision is nothing more than a gamble. When gambling, there are times when one hits and times when one misses resulting in being either ahead or behind. However, a Government cannot set out a list of achievable national objectives by simply extemporising, making it up as it goes along and hoping it stays out of political difficulty. That is what this Government has done.
With the national finances facing meltdown once more, when all economic signs are pointing us right back to the 1980s with big deficits again and very strong commitments to borrowing, we have little to show for the years of prosperity in terms of public services or the quality of life enjoyed by the people. This is a result of the hit and miss approach indulged in on a day-to-day basis by this Government.
The Minister for Finance supported by the Cabinet wants to be judged on five budgets so let us look at the record. The Government pledged to keep public spending growth within a limit of 4% per year. It has totally failed to do so. Public expenditure in 2001 has increased by 23%. That is not a Fine Gael figure, but is the figure provided by the officials in the Department of Finance with which the Minister for Finance agrees.
This Government inherited a low inflation economy. It failed utterly to keep it that way and, due entirely to misconceived Government action in fuelling the fires of an economy that was already blazing particularly in its last budget, it drove Ireland from the bottom of the inflationary league table to the very top. In the words of Sean Healy, it ruled a country that had the prosperity but lacked the fairness. The fundamental divide between the rich and the poor is wider as it leaves office than when it came in.
When it comes to completing projects on time this Government has also been an appalling failure. We all know about the Luas light rail system in Dublin. It should have been operational by now if the Government had gone ahead with the proposals it inherited when it came into office in 1997. However it procrastinated, held reviews, carried out revisions, fooled around, held press conferences, hired PR firms, brought out the spin doctors and then in a gesture reminiscent of the Congo Republic in its darkest days, the Taoiseach had a photo call in an empty carriage in Merrion Square poised on railway lines coming from nowhere and going nowhere. If there was ever a metaphor to describe this Government, that is it. It is on lines coming from nowhere and going nowhere and in an appalling mess.
The national plan was announced with great expenditure of taxpayers' money on the gurus, spin doctors and PR firms. However it had barely started when it was running way behind. It is now two years behind schedule and 150% over budget. If this were the private sector, they would all be sacked. They would not get as far as the annual general meeting. They would be out the door in jig time as soon as the figures became apparent. With the voodoo economics, the funny financing and the trick of the loop transfers of money, in which the Minister engaged on budget day, if he were the financial controller of any private firm in this country, he would have seen the shares drop very significantly the following day and he would be out the door by breakfast time on Sunday. The Minister is a great advocate of private sector discipline. If he had done this in the private sector he would have been fired in jig time.
Let us consider the appalling carnage on our roads, which has visited almost every family in the country particularly affecting young people. Five years ago, the Minister, Deputy Dempsey, brought in a five-year plan for road safety on our roads. The key basis for this was an amendment to the Road Traffic Act. We waited until two weeks ago to get the amendment before the House and then it was accompanied by an announcement the Minister would not be able to implement the measures he had proposed for another two years. Five years of procrastination on a road safety strategy from a Minister for the Environment and Local Government, who talked a great game but unfortunately never put a ball in the net for any area of policy in five years.
If we consider our readiness for an information society, again there was all the talk. There was the link with the Massachusetts Institute of Technology. We were going to revitalise the James's Street area of Dublin and we were going to take the lead as the information economy. On the list of OECD countries we are third from the bottom. We are falling behind our competitors. Digital television is late. The roll-out of broadband internet access has not taken place in some parts of the country and is exorbitantly expensive in others. We have not yet issued licences for third generation mobile telephones and we are the only country in the European Union that has failed to do so.
As I go around the country there is a growing realisation among industrialists that the piece of infrastructure that will make three quarters of the country uncompetitive in the next two years is the lack of access to broadband internet. In my constituency and in that of Deputy Donal Carey and throughout the mid-west region, there is broadband access but at three times the price of what it costs in Dublin. We have been advised by the most senior industrialists and the biggest employers in the region that if this continues for another two years, they will be uncompetitive and will not be able to sustain operations at the current level. This is true all along the west coast and throughout Munster and in the midlands of Leinster. The only place where there is broadband access at competitive European rates is in the greater Dublin area. Any Government with any concept of a regional policy would want to take note of this.
After five years of the most prosperous economy ever experienced, we have a legacy of incompetence in economic management among Ministers, who think their only role in life is to con the public by posing for pretty pictures and think there is no need to run their Departments. They are led by a Taoiseach, who, I understand, now only spends two days in his office. This country is no longer being run and is on automatic pilot.
Under the Freedom of Information Act, we requested the list of the Taoiseach's appointments in St. Luke's in Drumcondra and at his office in Merrion Street. He is more often in St. Luke's in Drumcondra or elsewhere in the country. Last summer, when the Minister for Finance was trying to meet him to tell him about the deterioration in the public finances, he has to go on pilgrimage to St. Luke's in Drumcondra. When the Minister for Finance requested a meeting with the Taoiseach, he was told to turn up at his constituency clinic where he could be fitted in between three people looking for medical cards and a woman looking for a house.
This was at a point when the finances were deteriorating massively. The CSO knew that in the first quarter, growth had gone down from 11% to 1.8%. We now know that because the figures have been published. This became clear to the Minister for Finance in the second quarter of April, May and June. He also knew that expenditure was heading to more than 20% and revenue had dropped back to 2%. The result for the whole year is a 23% increase in expenditure and a 2% increase in revenue. It does not require an A in honours maths to know where that will lead.
What was the reaction of our great Taoiseach? He said he would see the Minister in St. Luke's in Drumcondra and it would be all right because the lads that advise him in Drumcondra would fix it for him. That is appalling. Is it any wonder we have the lack of result I described?
When the Government tries to do something, such as beating budgets, for example, it is also extremely incompetent. There was a £14 million project in Irish Rail – I do not know if we will get to the bottom of it – but the outturn was anywhere between £40 million and £70 million. Competent management is getting things done on budget. That is what competent managers do. These people cannot get things done and when they do, the budget is all over the place.
The biggest charge one could lay against incompetent managers is that they have an alchemist capacity to turn success into failure. I was always impressed by the story of Midas when I was young. When he touched something, it turned to gold. I was enthusiastic about this as I thought it would be a great ability to have until my mother said the slice of bread I had in my hand might also turn into gold and that would be difficult. Whatever the Midas touch is, the Government has the opposite. Midas could turn dross into gold, but the Government has the capacity, as it has shown over five years, to turn gold into dross and has done so time after time.
This message will not be lost on the half a million shareholders encouraged by the Government to invest in the success of Eircom. We had a successful telecommunications company which was in State ownership. The gurus were hired and the spin doctors brought on board. The advisers to whom between £80 million and £90 million was subsequently paid were briefed by the Minister for Public Enterprise and the Minister for Finance to gear up the company for sale. We all know what happened and the grief visited on many small shareholders throughout the country.
This was an appalling con job because the Government was not dealing with people sophisticated in the purchase of shares or who understood high finance, but with those who felt they had a patriotic duty to get involved and buy shares in the great enterprise when it was floated. Many old age pensioners used their savings to buy shares. Many borrowed money from the cre dit union and bought shares because they were convinced by Government public relations that this was a way of sharing the success of Eircom with the people. The sales pitch was that it was the people's company and they were entitled to some of the profit. Some 450,000 Eircom shareholders have lost up to 40% of their investment. Many borrowed what they invested. That is a good example of turning success into failure, of the reverse of the Midas touch and of what Fianna Fáil will face from the people in the long grass who are waiting for election day to tell it what they think of the Administration.
Aer Lingus was a highly profitable company when Deputy Dukes was in charge and when he left office in 1997. It was showing extensive profits and there were inquiries from airline companies across Europe who wanted to buy into it. It was ready for further expansion and investment. However, look at it now. There were 6,000 employees in Aer Lingus, which is now in an appalling mess.
What did the teachers and the nurses get from the five years of prosperity? They are moving out of their professions as there is a crisis of morale.
As regards specific targets, the Government set out lower house prices, but the result is higher prices. It stated it would provide more child care places, but the result is fewer places at more expensive rates. It set out simple targets, such as to halt school truancy. However, the result is that it has increased. It set out to reduce crime, but there is more. It set out to ease traffic congestion, but the result is chaos. The first day of Operation Free Flow in the city was a mockery of everyone involved because everything ground to a halt. It set out to close Sellafield, but the result is it is expanding. There will also be a MOX plant, which will threaten the east coast, thanks to the great relationship between the British Prime Minister, Mr. Blair, and the Taoiseach. That relationship is bound in gold and will overcome all difficulties. It is an appalling record.
There is nothing in the budget for the taxpayer. There is 600 million in tax concessions and 580 million in tax take. The budget has broken trust with the Hauliers Association of Ireland, which blocked roads and bridges 12 months ago and stood down the protest on the basis that VAT on fuel would be reduced. However, it has been increased again. There has been an increase of 22p or 23p in the price of a gallon of petrol. The VAT increase of 1% from 1 March means that a further 2.5p or 3p will be added to the price.
House prices will increase.
House prices will increase. However, worst of all, as we look around our constituencies, is that people are fearful for their jobs. We see the lack of investment coming through the pipeline, particularly from the United States. In those circumstances, the Minister decided to change the arrangements for paying corporation profit tax. He has done so in a way that, as well as paying the liability for this year next year, they will also have to pay a further 20%. It is exactly the same as if corporate profit tax was raised from 12.5% to 15% and this will last for the next five years. Does the Government think the decision-makers in the boardrooms of the United States have not seen this? Do they understand the Government's commitment not to raise the rate above 12.5% again is a flawed promise?
It is an appalling record. The Government should not come back after Christmas. It should go to the country and let the people adjudicate now. As far as the Government is concerned, the show is over and it is time to give the public the opportunity to adjudicate on its appalling record.
I wish to share my time with the Minister of State at the Department of the Environment and Local Government, Deputy Molloy, and Deputy Johnny Brady.
I always admire Fine Gael's consistency. As far as it is concerned, there is always a crisis, doom and gloom, no hope and nothing to be achieved. Its record speaks for itself as one looks back, as I can, at the 1970s, 1980s and during the so-called rainbow Government in the 1990s. The crisis for Fine Gael is twofold.
It is nice to see the Minister of State and the Minister of State at the Department of the Environment and Local Government, Deputy Molloy, back together again.
Look at consistency.
Order, please. The Minister of State to continue without interruption.
I did not interrupt Deputy Noonan. However, if Fine Gael wants to play that game, it will not find a better man to do so.
The first big crisis for Fine Gael is that the Government did not borrow money. That is the basis of its approach to the budget.
It robbed instead.
It thought it would be able to march up and down the streets accusing the Government of borrowing money. That is the first thing that did not happen. The second crisis for Fine Gael is that almost everybody in the country is working which means its market has been removed. Deputy Noonan is saying happy Christmas to everyone from Fine Gael which is here on the doom and gloom bench of the world. That has been the consistent Fine Gael message during the years. It does not have a vision or plan for the future and does not carry out an in-depth analysis of where we should go or what it might have to contribute to the development of the country. We know from its consistent stance that it does not have the capacity to deliver on either front.
Since coming into office on 26 June 1997 the Government has created an economic climate which has helped all aspects of our economy to flourish. It has achieved one of the best economic performances in the world in the last four years, a record which is the envy of many of our European partners. The economy has grown in GDP terms by an annual average of 10%. Our debt to GDP ratio stood at 74% in 1996, the last full year before we came into office, and will be about 36% at the end of 2001, the second lowest in Europe. More than 300,000 new jobs have been created and long-term unemployment is down from 5.6% to 1.2%. As a result, unemployment will have fallen from 10.3% in 1997 to an expected average of 4% this year.
The Government has delivered on the economy and, through this budget and the previous four, on its promises. We promised to develop a quality health service. By 2002 we will have increased the gross Department of Health and Children allocation by over 4.5 billion, or 125%, since 1997. There are now more than 4,000 additional doctors, nurses and other healthcare professionals, a fact at odds with claims by the Labour Party and Fine Gael that all the extra jobs were created in administration. There are 90,000 more hospital treatments being carried out.
We all recognise that more needs to be done and it is for this reason that the Minister for Health and Children, Deputy Martin, launched the Government's health strategy last week. This is a comprehensive strategy, which will put in place a world class health service. Over the next ten years we are delivering on our commitment to develop a quality health service and I am very pleased at the reaction of most of those involved in its delivery. They have warmly welcomed the vision and quality of the health strategy that has been produced.
We were taunted at the start of our term in office with regard to our commitment to increase old age pensions to over £100 per week. We have exceeded that and made a major investment in education. Class sizes are at their lowest levels, almost in living memory. There are 20,000 extra places at third level, enabling far more of our children to prepare themselves for success in a modernised economy. We have delivered on all our educational commitments.
A key part of the Government's programme was to reduce personal tax and encourage people to take up work. Over our five budgets more than 4.8 billion in tax reductions has been delivered. The standard rate of tax has been cut from 26% to 20% and the higher rate from 48% to 42%. We should remind ourselves that during the rainbow Government's term in office one penny was the entire amount given back to the taxpayer. The initial entry point to taxation has been more than doubled, to £165 from £77. These changes delivered substantial increases in real disposable income for everyone and the introduction of tax credits has made the income tax system more equitable. After this budget 690,000 income ear ners, or 37% of all those on the records of the Revenue Commissioners, will be outside the tax net. The corresponding figures when we took office were 380,000 or 26%.
On the issue of taxation, it is important to dwell for a moment on the facts often forgotten by those who criticise the Government. Of the 4.8 billion in tax reductions in these five budgets, 43% has gone on increasing basic tax allowances, or credits as they are now known, including the PAYE allowance. A further 22% went to take over 370,000 taxpayers off the top rate of tax, over 16% to reduce the standard rate of tax paid by all taxpayers and just 11% to cut the top rate of income tax. These are the facts. All taxpayers have benefited substantially from the major tax reforms and tax reductions which the Government has carried out. It has been a Government for all taxpayers, a fact some would like to deny.
Before looking in a little more detail at what the Government's fifth budget has done, it is important to dwell for a moment on current economic conditions. To say the Government had to introduce its fifth budget in uncertain times may be considered an understatement. Clearly, the horrific events in the United States of America, which we all witnessed on our television screens in September, and the ensuing conflict in Afghanistan have exacerbated the already difficult economic situation. These events, added to the economic slowdown in the USA, the problems of the information and communication technology sector and the domestic restrictions put in place to combat foot and mouth disease, have dramatically changed our economic outlook for next year. As a result of this difficult economic climate, leading international and domestic commentators have reduced their forecasts for the economy for next year. The estimates by market commentators for GDP growth next year vary between 1.5% and 7%. The budget was prepared on the basis of a forecast for GDP of 3.9% for 2002. However, it is fair to say that while growth may average just under 4% for next year as a whole, we expect a pick-up as the year progresses and, consequently, the economy to grow at around 5% in the medium term.
Though this is a period of uncertainty, we must not lose sight of the fact that GDP growth of the order of 3.9% for next year will be a source of envy to many of our EU partners. In this budget and over the last four years the commitments made to social welfare, housing, social services, health, education and science and job creation have been extraordinary. In terms of child benefit alone, the receipt by a family of four of over £417 per month was undreamed of when the Government took office. This reflects the commitment that the Government has brought to economic policy. One of the things that has underpinned that policy has been social inclusion. If an economy developing at the pace of ours does not ensure there is social inclusion, the outcome will not be beneficial for all. The figures demonstrate quite clearly what has happened in the last four years in the delivery of the Government's five budgets which have given an enormous benefit to every man, woman and child. Whether one lives in Dublin or the regions, one can certainly see the substantive benefits in quality of life and standards of living.
Of course, there is more to be done and more will be done by the Government and Fianna Fáil. The party has always been to the fore in delivering policies, radical and otherwise, needed to drive the economy. The Minister for Finance has been, without doubt, one of the outstanding thinkers in his Department in many a long year. The way forward is through his even-handedness, focus on the economy and belief that the way to ensure a future is to create jobs for all. That is what he has achieved in government in recent years.
This budget copperfastens the measures taken by the Government since coming into office to reduce house price inflation, increase housing output to match demand, afford greater access to the housing market to first-time buyers, create conditions for a vibrant private-rented sector providing quality accommodation and increase social housing output. The Government published, Action on House Prices, in April 1998, which detailed the first of a series of major policy initiatives covering all aspects of housing. Its primary focus was to increase housing supply through a range of infrastructural and tax measures and to prevent investors pricing first-time buyers out of the market we inherited from the outgoing Government. These measures were supplemented in 1999 by further action on the housing market and in June 2000 the Government published, Action on Housing, which spelled out additional actions necessary to continue the momentum already achieved. In July 2000 the Government published the report of the Commission on the Private Rented Residential Sector.
Government measures on the housing market have been remarkably effective. We built over 13,000 houses per 1,000 people last year, the highest rate in the European Union in proportion to population and about four times the United Kingdom rate. House completions last year reached almost 50,000 units nationally, the sixth consecutive year of record housing output. Since the Government took office, over 200,000 new houses have been built with record levels of output being achieved in each succeeding year. When we took office we inherited conditions in which house prices were out of control. House price inflation peaked in 1998 with annual house price increases reaching 40%. As a result of measures we have taken to increase the supply of zoned and serviced land, speed up planning procedures, reduce speculative demand and bring housing supply up to meet real demand, house prices have been brought under control. House prices are now static in many areas and decreases are being recorded in the more over-heated sectors of the market. The annual rate of house price increases is now running at 5% to 6% compared to the levels of 1998. First time buyers now also have an increased share of the housing market as evidenced in the increased level of applications for new house grants and in the loan applications data.
The developments in house prices and supply and the improvement in the position of the first time buyer have allowed us to introduce measures in the budget to deal with the rental sector. Interest deductibility against rental income for housing was withdrawn by the Government in 1998 as part of a set of measures designed to reduce speculative demand for housing, reduce pressure on house prices and create space in the housing market for first time purchasers who were our priority. The budget measure of interest deductibility as well as the changes to the stamp duty system whereby the rate applying to investors has now been aligned with that applying to existing owner-occupiers will encourage an increase in the supply of rental accommodation. Accommodation provided with the aid of interest deductibility will be subject to compliance with proper regulatory controls and to registering tenancies with the private rental residential tenancies board.
The measures introduced in the budget complement other reforms introduced by the Government on foot of the recommendations of the Commission on the Private Rented Residential Sector, including those measures given effect to in the Finance Act, 2001, and they lay the groundwork for a diverse, properly functioning and well managed private rented sector. I also welcome the fact the deadline for the section 50 student accommodation scheme will be extended by two and a half years to 30 September 2005. This, along with other technical adjustments to the scheme and together with changes in interest deductibility and stamp duty, will ensure the 14,000 bed spaces of purpose-built student accommodation which are already in the pipeline can be brought on stream at an early stage.
The Government can also claim credit for bringing about real and positive changes in the provision of social housing. The 146 million provided in the budget is on top of the 1.46 billion of capital funding provided for housing in the abridged Estimates published in November. This is more than three times the amount provided in 1997. Last year we introduced a four year multi-annual local authority housing programme which provided initially for 22,000 local authority housing starts over the four year period. In our Action on Housing policy statement, we increased the programme to 25,000 new starts over the four year period. Last year local authorities started 5,000 houses. This year they will start 7,000 houses. By the end of this year we will have achieved about 50% or half the increased target for local authority housing starts. Local authorities will complete or acquire some 5,000 houses this year and I anticipate some 6,000 will be completed or acquired next year, the highest level of completion for more than 15 years.
On coming into office the Government quickly identified the important contribution the voluntary and co-operative housing sector had to make to tackling the growing demand for social housing. The Government's commitment to developing and expanding the sector and to giving it the necessary resources and support to enable it become an important and significant force in the housing area is reflected in the national development plan which includes ambitious targets for output by the sector for each year of the plan and provides the necessary funding to achieve these targets. Output by the sector last year showed a substantial increase in the number of units of accommodation provided, with some 950 units completed, the highest output by the sector since 1995. The indications are that output by the sector this year will be in line with the ambitious national development plan target of 1,250 units, the highest output ever by the sector. We are well positioned to exceed this next year and to achieve the national development target of 1,500 units by the sector. The target over the lifetime of the national development plan is to increase the output from this sector to 4,000 housing units per annum.
Housing output from the local authority housing programme, together with output from the complementary social housing programmes of voluntary, affordable and shared ownership housing along with vacancies occurring in existing local authority housing stock, will enable the housing needs of around 11,000 households to be met this year which is a credible achievement. Equally important is that the accommodation we are providing under our social housing programmes is of the highest quality in design and construction.
The Government's response to overall housing need is credible. It is a comprehensive and, on foot of the budget, it continues to be well funded. We have been pro-active in our approach since the day we took office. We have increased supply to meet demand. By the end of this year the Government will have provided more than 18,000 local authority houses since taking office, with a further 4,000 in voluntary housing schemes. My Department has also provided funding for more than 5,500 units under the shared ownership scheme. In the period 1997 to the end of this year, the needs of about 47,000 families will have been met through the various social and affordable housing options. We took successful action to secure stability in house prices. We have demonstrated our commitment to meeting social housing needs and now, with the timely intervention in this budget, we can lend further support to the development of the private rented sector.
I wish to share my time with my colleague, Deputy Ellis. I commend and congratulate the Minister for Finance and his officials on introducing one of the most innovative budgets in recent years. Its success and appeal is evidenced by the manner in which the Opposition has been left floundering and grasping at straws in a vain attempt to pick holes in it. It is the fifth budget introduced by the Minister and, no less than the first, it continues to deliver on the Government's programme. This is an outstanding achievement by an outstanding Government which is set to see out its full term in office. It has a record of which the Opposition can only dream and envy.
The Minister has said, but it is worth repeating to reinforce the point, that the budget's objectives are to develop infrastructure, improve public services, promote equality and sustain enterprise and investment in a way which sustains fiscal policy. The budget safeguards the vulnerable in society, prioritises our needs and continues to invest for the future.
The Government's record in managing the economy has been very impressive. Growth has reached unprecedented levels, hundreds of thousands of new and sustainable jobs have been created and there is full employment. For the first time there is sustained immigration with tens of thousands coming to this country to take up work. We also have a measure of illegal immigration which would not take place if Ireland as a society and an economy did not have much to offer. Those dependent on welfare payments and pensions have received historic improvements in their incomes. The unique contribution made by carers in society has been recognised. Although the economy has slowed in the past six months due to the impact of foot and mouth disease and the terrorist attack on America, the position is by no means as bad as the prophets of doom and gloom would have us believe.
The economic outlook for the coming year is sound. Economic growth is forecast to be just under 4%, employment will continue to rise by 1.5% until 2004, inflation will fall to 4.2% next year and to 2.25% by 2004, there will be another Exchequer and general Government surplus in 2002 and net current and capital spending will increase by 10.5% in 2002. This is not failure, it is success. Ten years ago such a projected performance would have been regarded as miraculous and well beyond our reach. I welcome the budgetary measures on personal taxation. The Government has transformed the tax code so that the ordinary person now gets to spend more of his or her own money. This represents a huge practical increase in the personal freedom of the ordinary citizen.
The budget's business taxation measures have also been broadly welcomed by the business community. To those who would quibble with some of them, I say that business has benefited enormously from the positive environment created by the Government. The business community also has a responsibility to make a contribution to society. Indirect taxation increases have been modest. In addition, the housing measures are most welcome in that they will encourage people back into the private rented accommodation market, thereby moderating rents.
The further large increase in children's allowances will be welcomed by all mothers. The 1997 budget, presented by the famous rainbow coalition Government, provided £30 per child. By comparison, the current budget will give £92.62.
Agriculture does not feature prominently in the budget which is a reflection of the fact that our society is now a predominantly industrial one. I welcome, however, the capital gains tax measures to compensate farmers for the compulsory purchase of their lands for road construction. These measures, taken together with the recent deal with the IFA, should go a long way towards securing acceptance and smooth progression of our vital national roads programme. I wish to compliment the Minister and the president of the Irish Farmers' Organisation, Mr. Tom Parlon, for their work in concluding this settlement.
Infrastructural investment is to be further supported by the budget. When the Government returns to office after the next election, it will make the removal of infrastructural bottlenecks in transport, communications and roads a priority, in order that economic development and the regional development efforts of State agencies, such as the IDA, can bear fruit. We will, therefore, remain an internationally competitive location for inward investment. This is of major importance with EU enlargement around the corner.
In reflecting upon this budget, we may also wish to consider what has occurred during the period since the Government assumed office. Deputy Johnny Brady outlined the enormous increases that have occurred in the budgetary provisions on child care. In the final budget presented by the rainbow coalition Government, in 1997, the Minister for Social Welfare, Deputy De Rossa, introduced a £1.75 increase in the old age pension. When the current Government took office and promised that old age pensions would reach £100 per week, or more, before it left office, many people felt it was a political promise that could not be kept. People realise now, however, that the Government kept its word. Following this budget, a non-contributory pensioner will receive £116 per week or 147.30. That represents enormous progress for those who are dependent on social welfare. Other welfare payments, including child benefit, provided for in the budget mean that a family with four children will receive approximately £417 per month. This is progress indeed, compared to the situation which pertained prior to this Government assuming office in 1997.
At the next general election, the Government will be judged on its record over the past five years. On behalf of my constituency, I wish to express sincere thanks to the Minister for Finance for renewing the rural renewal scheme which has been of great benefit in encouraging people to live in the area. It has provided a confidence boost to those who live there as they will now be able to avail of opportunities of which they had been deprived for many years.
The Government faced major problems in framing this budget. People may say that we have taken money from the social insurance fund, but we have been putting money into it and it is now in surplus. If it was necessary to withdraw money from the fund, then the Minister was right to do so. The fund has not been left in any jeopardy for the future. Let us be fair about this; we are living in very uncertain times as far as the world economy is concerned. The events of 11 September changed everything and we must wait and see how long that continues.
The Minister for Finance has done a tremendous job in looking after people in need. The less well off have received a better deal from this Government than from any previous Administration. Given the welfare increases introduced since the Government came to office, people will appreciate that it has taken care of those in need. The increase in income limits for the carer's allowance is to be welcomed as it means more people will be eligible for the allowance. Carers require help to care at home for people who would otherwise have to live permanently in institutions. They deserve any support they receive.
The increase in respite grants is also to be welcomed as is the doubling, from 5 December, of the widowed parent grant. All these measures lead people to understand that the Government is helping people in difficulty. When people analyse the budget, they will realise that the Government has lived up to its commitments. It has put 300,000 more people to work and has brought unemployment to a record low. Who would have dreamed five years ago that immigrants would have to fill job vacancies because there were no Irish people to do so? Nobody would have imagined five years ago that work permits would be sought in order to fill jobs to maintain our industrial growth.
The Government has maintained its contribution to capital projects in the national development plan. The Minister of State at the Department of the Environment and Local Government, Deputy Molloy, is to be complimented on the way he has dealt with the housing situation over the past five years. I know Deputy Durkan will laugh at this.
It is not a laughing matter, anything but.
Deputy Durkan should review what he did for a few years.
We have the worst housing situation in the history of the State. The Government should be ashamed of itself.
Deputy Durkan should remember that he was a Minister of State at the Department of Social Welfare when the previous Government gave pensioners an increase of £1.75.
The Deputy should be ashamed to mention housing.
He had no influence over his socialist colleague, Deputy De Rossa, who handed that out. The Government will be judged by its record. I only hope that the people who judge it will look at the possible alternative, namely a rainbow Government such as we had for three years which impoverished rural Ireland.
I wish to share time with Deputy Bradford. An analysis of the budget by the justice commission of the Conference of Religious of Ireland, stated that it represented prosperity without fairness. While the budget's entitlements for old age pensioners are welcome, CORI's analysis stated:
As a direct result of the choices contained in budget 2002, the number of people living in relative income poverty will continue to rise, the rich-poor gap will continue to widen, many people in low-paid jobs will gain nothing, families on very low incomes will not have the right to a medical card [which is a controversial issue in Sligo-Leitrim], and a large number of people will continue to wait for appropriate accommodation.
After almost five years in office, the Government has failed to give priority to the deprivation being experienced by the country's poorest people. The CORI Justice Commission document states:
While the country has been experiencing its most prosperous period ever, the Government's Budgetary choices have produced a situation where Ireland's poorest people are expected to live on £93.56 a week. Its choices have also widened the rich/poor gap by £191 a week. This is unjust, unfair and unacceptable.
The Minister for Finance had an opportunity in this budget to leave an economic legacy built on the political philosophy which he clearly worked on until now. However, he has fallen short. The Minister's smash and grab budget will add to inflation. Fuel increases of 25p a gallon will hit everybody but particularly those in small companies and small businesses. The VAT hike spends end for e-business growth and advance corporation tax increases will certainly put pressure on cash flow requirements of businesses by 800 million.
This budget was designed to win the next general election but it has seriously undermined the medium to long-term competitive position of the economy. The Minister has effectively raided any reserves available to him so as to obscure the need for borrowing. However, spending increases will have to be met in future years when there will be no more reserves. This is a once off reserve. We are looking at a budget deficit projection of 2.5 billion for next year. Questions will be asked as to where this is expected to come from. There are only 52 weeks to the next budget. It will require tax increases or borrowing. The incoming government will have a difficult job to do. If the Minister was trading in a company he would be charged with unethical trading given that he has borrowed money from three different sources to balance the books. The manner in which it was done has prevented borrowing. The difficulties involved with the euro changeover, compounded with the VAT increase, will add to inflation. There is a huge cost to business people caused by the euro changeover. The Minister has made a profit on the euro changeover to the extent of £230 million. The business people who have financed the euro changeover have gained nothing. The VAT increase changeover and taxation on plastic bags are introduced at a most difficult time. Business people and the bulk of the PAYE sector pay into the economy.
I am concerned at the level of increase in current spending at 10.5%. The stated objective of Government when taking office was to keep public expenditure increases to 4% per annum. These increases are on top of a 23% increase in 2001. The expansionary nature of this budget will have a serious impact on Irish competitiveness. Having fallen from a position of second place we now rank in eleventh place. The perception of Ireland as a competitive economy is very much eroded. I am concerned also about our ability to maintain existing employment and export markets. The growth of the economy has been on the backs of small companies employing fewer than ten people. This Government has not supported any small company in the past four years. We have seen a decline in the bigger companies. September 11 has been blamed for too much. The downturn happened way in advance of that date. Those who take the risk in business and employ people have been dealt only abuse. They have not been given an incentive or any encouragement. Given the high rates and all the additional charges on small companies, it is regrettable that the budget has imposed a further taxation on them.
By capturing the windfall gains of the Central Bank, taking the surplus of the social insurance fund and bringing forward corporation tax payments the Minister has simply engaged in a "smash and grab" exercise. Given that he is expecting the cashflow of small companies I am concerned that the budget will damage Irish competitiveness, which is important for exports. The increases in VAT and tobacco will increase inflation by 1%. The increase on tobacco was not nearly enough. The opinion was expressed by the Minister last week that it would be increased by 1. This was playing to the gallery for election purposes. Had he increased the price of cigarettes by 1 those addicted to smoking would continue to smoke and the social welfare increases would have been wiped out. The increases in VAT will increase inflation by 1%. This brings Ireland's inflation rate to two and a half times that of the eurozone average of 1.6% and twice that of our major market and competitor the UK at 2.2%.
According to the latest figures available from the Revenue Commissioners 88% of companies pay corporation tax on profits of less than £50,000, which is not a huge profit. The earlier date for payment for corporation tax will put a huge strain on cash flow in small companies who will have to pay 800 million up to a year earlier. This is cooking the books. This is unwelcomed in difficult trading conditions, particularly for companies in manufacturing and international traded services who are not experiencing a reduction in corporation tax. That is quite considerable.
The higher VAT rate of 21% is negative and spells the death knell for the fledgling e-business sector. Consumers benefited by reductions of £220 million last year. This increase will drive consumer prices up again putting further pressure on inflation.
On the question of VAT I was disappointed at the increase. The Minister's justification for VAT increases has been described as flawed and misguided. He penalised the public, rather than raised revenue in a more creative and transparent way. I am critical of the Minister for increasing VAT to 21% and would describe the move as misguided and unfair. I reject his contention that the reduction in the VAT rate in 2000 was not been passed on to consumers. This is a slight on thousands of hardworking people in the State. He indicated that this reduction was not passed on.
The decision to increase the VAT rate to 21% is an attempt by the Minister to raise revenue on the backs of consumers, when a more transparent attempt to raise revenue may have involved taking on the strong vested interests. It is ironic that the consumer has been targeted once again while large banks and insurance companies have escaped this budget without any new levies or taxes. The Minister increased this indirect tax, rather than risk alienating key vested interests. It is a lazy way of raising revenue. The Minister contends that the reduction in the VAT rate had not been passed on to consumers last year. The inflation figures do not sustain the Minister's claim that the reduction in VAT rates were not passed on to consumers. The claim is flawed and misguided and has been used as a fig leaf by the Minister to make unwarranted increases in consumer tax. His claim that business people did not pass on the reduction was unfair to the business community which applies the VAT reductions when they are introduced. I would be more than surprised if that is not the case. The increase in VAT and the euro changeover will cause business people major difficulties. The Minister started his career condemning the splurge economics in which he now engages. It is forecast that there will be a £2.5 billion deficit at the time of the next budget, which will put major pressure on the economy.
A survey reported in today'sIrish Independent, which was carried out in advance of the package announced, reveals that most people expected to be worse off following the budget. IBEC has criticised the reversal of the VAT cut in last year's budget. Small firms are also disappointed with many aspects of the budget.
The elimination of poverty was not on the Government's agenda. Many people are expected to live on £93 per week. There has been talk of a weekly increase in benefits of £8 and several speakers have made comparisons to what was introduced during the term of the rainbow Government. However, the rainbow Government was only in power for two and a half of the past 13 years, Fianna Fáil-led Governments having been in power for the remainder. That is a long time for a party to be in government. The members of the electorate are intelligent people and they are not impressed. They will make their decision in the 2002 general election.
I tabled a parliamentary question to the Minister on the number of consultants employed on the national development plan and spatial strategy, on which progress has been disappointing. I have heard nothing about the development of the regions. The Leader of Fine Gael, Deputy Noonan, has stated that north Sligo will be a growth centre when he is elected Taoiseach and I am certain that will be the case.
They say in business that "turnover is vanity and profit is sanity". The turnover of this budget is about vanity, by which the Government is completely driven. The sanity aspect is that it is predicted there will be a £2.5 billion deficit at the time of the next budget, a worrying indication. People may point to the success of the economy but they should note that the forecast for the economy was healthy during the two and a half year term of the rainbow Government led by Deputy John Bruton. We are now aware of the implications of a forecast of a £2.5 billion deficit at the time of the next budget. We all hear of the boom in the economy, but the members of the electorate know that pay day must come. People know they will have to pay higher taxes to sustain the Government's incompetence. If the Government was a company doing business, the board of directors would be sacked at the annual general meeting.
Deputy Noonan correctly alluded to the position of the Eircom shareholders who were conned. The electorate has also been conned because, in spite of the Government's claims, pay day will come. Like the shareholders who bought into Eircom, the electorate will realise that where there should have been prudent management, the Government was a spendthrift.
The Government cannot spend at the rate of 24% when there has been only an increase in the intake of 4%; the figures do not add up. It is similar to the case of profit in a business, there is an obtainable margin within which any business can operate. The obtainable margin here has been burned out by the Government. What the Government is spending has quadrupled compared to the intake. This position cannot continue. I am concerned about the mismanagement of the economy. If the Government was a company, it would be charged with unethical trading. If the Minister for finance, an accountant by profession, had to submit annual accounts which showed he had taken the money from the accounts of three companies and put it into one account, that would not be allowed.
People have bought into the social insurance fund and the perception is they are unhappy with the Minister's use of that fund. The Minister has also availed of the redemption of the euro changeover at a time when people are only coming to terms with the changeover. The newspapers report today that the Central Bank is not happy about this and has not agreed at this point in time to make this fund available. This area has been mismanaged.
The health strategy was announced by the Minister for Health and Children with great fanfare. The Minister for Finance provided for only 1.5% of the cost of this ten year plan. It is a joke that the Government is talking about a ten year health strategy. It must assume it will be in Government for the next ten years but that will not be the case. If it is in Government for the next five months—
The Minister of State opposite is not in Government at all.
Am I in Opposition?
The Deputy is an annex to the Government .
I look forward very much to looking over at the Minister of State sitting on these benches next May or June.
Deputy Bradford might be an annex after the next election and there might be a change of leadership.
Definitely not. I am quite certain that the next Taoiseach of this State will hail from Limerick and that the Minister of State will be in Opposition. That day is coming very soon. The Minster of State will be on these benches looking over at us and I hope we will have a five year term of office.
The Deputy might be a Government front bencher at last.
I thank Deputy Perry for sharing his time with me. I hope the Minister of State, Deputy O'Dea, will restrain himself.
If he breaks loose, we will do our best to restrain him.
Perhaps enough has been said over the past 48 hours about the budget. The rather muted applause on the Fianna Fáil benches which greeted the Budget Statement by the Minister, Deputy McCreevy, spoke volumes. Some Fianna Fáil Deputies were probably cautious because they gave previous budgets great rounds of applause, but within days, not to mind weeks, the flaws quickly appeared. The Minister no sooner sat down on Wednesday evening than it quickly became apparent to the public and economic commentators that the Fianna Fáil Finance Minister who spent many years in the late 1970s and early 1980s decrying the economics of his party and, in particular, decrying the economic policies of his former leader, Charles Haughey, had done a major U-turn. What we saw on Wednesday was one Charlie putting in place what another Charlie used to teach. The budget was about voodoo economics and funny money, phrases which have been used many times already. That is what we saw on Wednesday evening and the Minister of State knows it. We saw an attempt to cook the books.
The Minister, Deputy McCreevy, in one of his first statements on Wednesday said he was not going to borrow money. That was to be the big case for the defence, that after five years of a booming Celtic tiger economy with the figures looking very dubious, the Minister was not going to borrow money. The official position is that the Minister did not borrow money. He did not beg or borrow and, although I will not say he stole, he certainly plundered the workers by taking the money from the social insurance fund.
I am surprised the Minister of State, Deputy O'Dea, finds it amusing that the Minister for Finance would plunder workers' funds to falsely balance his books.
The Minister of State has a funny sense of humour.
I did not yet hear the case for the prosecution.
I understand the reason he would try to do that because it must be embarrassing for a Minister who got the figures so wrong over the past 12 months. He presented one set of Estimates 12 months ago but it has all gone wrong, and before I get a lecture from the Government benches about 11 September and the foot and mouth disease crisis, I accept there were unforeseen economic problems but the figures were going wrong even before the foot and mouth disease crisis arose here late last spring. How can the Minister of State, Deputy O'Dea, or any of his senior colleagues, explain why the figures were so far out? I appreciate that in the midst of the sense of embarrassment surrounding the Government it had to do something to con ceal the fact that it got it so wrong, but plundering the social insurance fund and taking funny money from the Central Bank to cook the books is bad economics and bad politics.
Cooking the books is not new to the Fianna Fáil Party. We saw it in 1981 from the former Minister, Gene Fitzgerald, and also in 1992, with the famous VAT at point of entry measure. That was another pathetic effort to cook the books. Fianna Fáil has the recipe in terms of cooking the books, but it is a pity that it has been used by the Minister, Deputy McCreevy, in the last budget of this Administration.
The public is not stupid, however, and the party will reap the rewards in a few months' time.
With the help of God.
All budgets have good and bad points and I welcome the increases in social welfare—
Just as well.
—but I am disappointed that, once again, carers have been ignored. There was the token mention of a relaxation of the limits and that more people will qualify for the carer's allowance, but they will probably qualify for only £2, £3 or £3.50 per week.
The bare minimum.
It is scandalous that in a country which has had record resources, tens of thousands of people are providing full-time care to ensure that their elderly relatives do not have to seek institutional care. We are giving them pittance and, if that is the result of five years of the Government's Celtic tiger and its management of the country's finances, it is a negative picture in terms of what Fianna Fáil wants to do for carers.
They have strangled the tiger.
Another omission in this year's budget, as in last year's, is the area of environmental protection and waste management. Admittedly, that is the responsibility of the Government's official failure, the Minister for the Environment and Local Government—
It is a matter for the man in the white boiler suit.
—and while we have provided tax relief in some form or other for residential property, holiday homes, car parks, etc., which I welcome, we should have done something to promote the practice of recycling.
A good point.
Every local authority in the country is facing a shocking waste management crisis, yet we are not doing anything to promote recycling. I thought the Government would have availed of the opportunity in this budget to put in place some tax reliefs to ensure that recycling operations could be set up. Recycling is expensive and is probably a loss-making operation, but it is absolutely necessary if we are to make any impact on cleaning up the environment. Most of us in this House have served on local authorities at one stage or another and are aware that every local authority is facing an enormous crisis, but Governments did not do enough planning over the years to tackle this problem. Within months in Cork, and I am sure in many other local authorities, there will not be any site to which people can take refuse. Recycling is pathetically insufficient and if the State cannot put recycling plans in place, we must give some incentive to private operators to do so. The budget should have been used to put in place financial packages to encourage movement in that direction and I am disappointed it did not happen.
I am also disappointed that more was not done to kick-start the construction industry. It is an open secret that, over the Christmas period, 15,000 to 20,000 of the building workers who take holidays will not return to work. I appreciate the Government's decision in relation to interest on residential property which is a step in the right direction, albeit one which only corrects an earlier mistake. I am surprised something was not done in terms of new house grants as there were indications in that regard. A new house grant of £3,000 might have been of some advantage ten years ago, but with the average new house in the smallest town and village costing £120,000 and £125,000, a £3,000 new house grant is grossly insufficient. The Government should have considered the building industry in the budget. The Fianna Fáil Party, rightly or wrongly, claims to be the official voice of the construction industry and the friend of the builder.
God help the poor builder with friends like that.
Regardless of the politics, we must recognise that the building industry is in a severe crisis. We could have a lengthy debate about the social housing proposals from the Minister, Deputy Dempsey. Not only do they not work, they are having the reverse effect. All of us are aware from our own constituencies that building projects have simply stopped. There are no new starts. I am not exaggerating. That is clear to everybody.
It is a fact of life.
Building projects are being put on hold and the budget could have been used more effectively to put life back into the building industry. It is a major employer and source of rev enue, yet we have the longest ever housing queue. As for the 100,000 or 120,000 people on local authority housing lists, this budget told them they have to wait a little longer. That is unacceptable and I am very disappointed that progress has not been made in this area.
There are certain issues such as housing on which, even with a limited budget, progress can be made if the political will exists to do so, but there is no political will on the part of the Government or the Minister for the Environment and Local Government. I am sorry I do not have more time, but these are the crucial issues we must reflect on as a nation before the next general election because after five years of record resources, there is very little to show for it.
I wish to share my time with the Minister of State, Deputy O'Dea, and Deputy Killeen. I am delighted to have the opportunity to contribute to this budget debate, the fifth such debate of this Administration. In December 1997, when the Minister, Deputy McCreevy, announced the first of five budgets, few would have thought they would all come to pass. I want to dwell on a number of issues in the time available to me.
I congratulate the Minister and the Government on the work they have done for the elderly. When we came into Government in 1997, we said the old age pension should reach £100. We can all debate the merits or demerits of that, but the old age non-contributory pension is now £105 and the old age contributory pension is £116. It is vitally important that the people who have been living in terrible conditions and who have experienced very difficult times are rewarded at the end of their days.
On the carer's allowance and providing people with incentives to care for their elderly relatives at home rather than depend on institutions, one of the issues in the 1997 election was the fact that home helps were getting £1.40 per hour. That was a very limited scheme, but home helps are now paid in excess of £6 per hour. A huge number of people throughout rural Ireland, including my constituency, now work as home helps. Travelling around, I find it one of the greatest schemes ever devised. It makes a huge contribution to ensuring that elderly people continue to live out their lives in dignity in their communities and with their friends and relatives. While people might argue that more can be done, at least pay has increased from £1.40 per hour to more than £6 per hour. I encourage the continuation of the scheme.
In recent years vast sums of money have been spent on various sectors, including the sports capital programme on which I will focus. For smaller club organisations, whether GAA, soccer or other sporting disciplines, sports capital funding is vital. It is one of the key elements of Government funding. Having an excellent sports facility in a village, town or city might not capture every young person who might become involved in drugs or other difficulties, but it will provide opportunities for many of them to stay out of trouble. There have been vast improvements in my constituency in this respect recently. Prior to 1997 the typical sporting grant was in the region of £5,000 to £10,000. Now sporting clubs in rural villages routinely receive sums of between £60,000 and £100,000 for proper sporting and dressing room facilities. It is high time rural areas had these facilities and I encourage the Government to ensure such funding continues.
I am glad the Minister of State at the Department of Education and Science, Deputy O'Dea, is present. In recent times, we have heard a great deal about capital funding for school projects. Again, the Minister for Finance, Deputy McCreevy, has allocated extra funding to the Department of Education and Science for schools. There is no doubt that primary schools, particularly the older buildings, were neglected in the past. One could argue that hardly a lick of paint was put on them. We have embarked on a major refurbishment programme. I am delighted such huge sums have been invested in schools in the past four and a half years. While I accept that for every refurbished school, another three or four wait in line, at least investment has started, particularly in primary schools where staff and pupils had to endure very poor and primitive conditions. I encourage the Government to continue the schools building and refurbishment programmes.
Waiting lists in the health system are a major concern and have become an election issue. Everybody has a story to tell about the amount of time parents, grandparents or children have had to wait in the accident and emergency departments of public hospitals. A person with a sports injury might arrive at an accident and emergency department at 7 p.m. and be discharged at 3 a.m. or 4 a.m. the following day. The Minster for Health and Children, Deputy Martin, has recently published the Government's health strategy. We have heard about its faults and failings from the Opposition. However, for the first time, we have a strategy which accepts there are huge difficulties in the health service, is willing to tackle them and will make money available.
In ten years' time.
Deputy Broughan should wait for his time to speak.
He should concentrate on his own speech. The Deputy might say ten years' time, but if he looks back at various health plans—
The Deputy would have to—
The Deputy should show some manners and allow Deputy Moynihan to make his speech.
Deputy Moynihan, without interruption.
In the 1950s, a programme to eradicate tuberculosis was introduced by Dr. Noel Browne who is now considered one of the great Health Ministers. As a result of the new strategy, the health system will acquire a reputation for greatness which people will attribute to the strategy of 2001 in the same way we now look back to the introduction of free education in 1968 as the origin of the Celtic tiger. The wealth of our young people stems from free education and the fiscal policy of the Fianna Fáil Government which took office in 1987.
We all remember 1977 as well, Willie.
On a point of order, Members should be allowed to make their speeches without this buffoonery.
That is not a point of order. I appeal to Members to treat fellow Members with respect and to refer to Ministers as "Minister" and Members of the House as "Deputy".
I apologise. The Minister of State upset me.
Instead of making snide remarks across the floor, perhaps the Opposition will admit that the Fianna Fail education strategy of 1968 and its1987 strategy which turned around the economy laid the foundation stone for the Celtic tiger.
I am worried at times by the costs of public sector building. The costs contained in tender documents for some projects seem to be twice as high as the price for which the private sector could build them. We should look into this matter and cut back on hidden costs.
Planning, an issue which has been around in rural areas for some time, recently reared its head when An Taisce announced it would object to all once-off houses in rural Ireland. Politicians from rural communities have long argued for preserving rural post offices, schools and local identity. Allowing An Taisce to proceed down the route of appealing all once-off houses in rural areas would be detrimental to rural constituencies such as mine. It is a vital issue for the survival of many rural communities and I strongly oppose attempts by An Taisce to stifle the development of once-off housing.
To reiterate my comment of a moment ago, this is the budget debate and, regardless of people's views on it, which I respect, Deputies should be allowed to make their speeches without interruption.
This is a debating chamber.
The Standing Orders of the House are that Members make their speeches without interruption.
This is the reason the House receives so little attention.
Other Members have an opportunity to contribute and they should be afforded the same courtesy as I expect them to show to others.
An odd interruption helps.
The policy platform on which this Government was elected was to grow the economy and reduce the burden of taxation on the backs of taxpayers. The Government has succeeded beyond the wildest expectations of even its most ardent supporters. Not only have most targets been met, they have been exceeded. Ironically the one target we have not managed to meet is the reduction in the top rate of income tax for the better off the Government is supposed to favour. However, we have gone 75% of the way.
I want to take the few minutes available to me to puncture the bloated balloon of lies, distortions, half truths and downright misrepresentations that the tax and social welfare policy of the Government has been skewed in favour of the better off. Now that the Minister for Finance, Deputy McCreevy, has introduced five budgets in this House, we can examine his record. Deputy Noonan said this morning that he wanted to judge the Minister on his record so we will do that. The introduction of tax credits in 1999 was a seismic shift in the income tax system. That single move did more to introduce equity into the income tax system than any other fiscal measure since the foundation of the State.
There was a fundamental inequity in the old personal allowances system which simply meant tax came off at the top marginal rate. When there were different rates for different categories of income earners, obviously those at the top end of the scale benefited most. That was recognised not just by this Government but by the Opposition parties. I recall many years ago the former Taoiseach, Garret FitzGerald, writing an article inThe Irish Times in which he proposed the introduction of tax credits. The difficulty was that Garret FitzGerald, the Labour Party and others agonised, speculated, wrote position papers, theorised and prevaricated about this issue. The Minister, Deputy McCreevy, acted while others prevaricated, spoofed and waffled.
The Minister is not using tax credits.
Some 380,000 taxpayers have been taken out of the tax net as a result of the Government's fiscal policies. There are now almost 700,000, or 0.7 million, income earners outside the income tax net.
There are still 1.2 million in it.
Allow the Minister of State to proceed without interruption.
That is 37% of potential taxpayers compared to a figure of 380,000 or 26% of potential taxpayers when the rainbow Coalition introduced its last budget.
The Minister of State is always looking backwards. He should look forward.
Who favours the better off? Some 11% of the almost 5 billion which this Government has put into tax relief over the past four and a half years went to cut the top rate, including 89% for other measures. Who favours the better off? As a result of this budget, a couple who are aged over 65 will not enter the tax net if their income does not exceed 26,000, or in excess of £20,000. A single person will not enter the tax net if he or she earns up to £165 a week. That is not sufficient but it is a damn sight better than the £77 per week at which they entered the tax net following the last budget of the rainbow Coalition.
That was five years ago.
Deputy Durkan, please.
Inflation has not been running at 120% over the past five years. We intended to take people on the minimum wage completely out of the tax net.
The Government did not do so.
We have gone 90% of the way. We would have taken them out completely were it not for the downturn in the economy. Let me mention in passing that it was this Government which introduced the minimum wage. Members of the Opposition theorised, speculated, drew up policy documents, agonised, soul searched—
The Government prevaricated.
—and wrestled with their consciences about introducing the measure which the Government introduced.
The Government wrestled with its conscience for long enough.
I can say the same about the social welfare system. Deputy Durkan served in that Department with something less than distinction for approximately two and a half years.
The Government introduced only one Social Welfare Bill in five years.
Deputy Durkan must allow the Minister of State to speak without interruption.
Social welfare expenditure in 2002 will be two-thirds higher than when the Government took office. For the benefit of those whose grasp of mathematics is shaky, that is 66% higher than it was when the Government took office. Which side of the House favours the better off? The increases in social welfare will take effect from 1 January, five months earlier than they did when Deputy Durkan was second in command in the Department of Social Welfare. Who does that benefit? Who will benefit from the increases being brought forward to 1 January from the end of April?
It benefits the Minister of State's chances of re-election.
It hardly benefits the millionaire stockmarket players or even beef tribunal or Flood tribunal lawyers. It benefits the less well off. Who favours the better off?
The Minister of State, without interruption.
At a time of economic stringency, the Minister has managed to increase the old age pension by £10 per week. The old age pension which was £67.50 per week when the rainbow Government left office is now £116 per week .
That was a generation ago.
The Deputy's definition of a generation is very different from mine. He will be aware that prices have not increased by 100% in the past five years. The policy of the rainbow Government was to increase social welfare by less than the rate of inflation, or 2.5%. Who favours the better off? Other social welfare payments have been increased by more than 40%. The contributory old age pension for a person with a dependant has increased to almost £200 per week, up 100% since the days of the rainbow Government. So who favours the better off?
The Government has taken unprecedented steps, as was generously acknowledged by Deputy Quinn, to end child poverty. That has hardly been done to assist the better off.
There was never more child poverty.
By common consensus, the best way to tackle poverty is to create employment. The Government has brought unemployment down from 10% when it took office to 4%, an unprecedented social achievement. That measure has done more than any other in the history of the State to combat poverty.
On health policy we have a two-tier health system of which the Labour Party made great play. We also had a two-tier health system when the Labour Party was in office for four and a half years. If we have a two-tier health system, which is something with which I ideologically disagree, it must be said that the vast bulk of expenditure on health goes to assist those who cannot afford private health care, those who are in the second tier. That expenditure was £2.7 billion per annum when the Government took office. It is now £6.5 billion to assist those who cannot afford the cost incurred in the first year—
—and that speaks volumes about the Government's commitment to the less well off.
There is nothing to show for it.
In conclusion, I am not impressed by the "join the dots" economic policy we are hearing from across the floor, depending on whatever spokesman is speaking for whatever party, changing policies and changing tack with all the speed it takes to jerk a knee. I am not impressed by economic lectures from people who now come out with economic pronouncements—
Some of us were never in office.
—couched in all the arrogance and confidence of Hitler's ultimatum to Poland or Czechoslovakia but whose performance in office was more akin to Mussolini's navy.
The Minister of State is obsessed with the 1930s.
The budget provides for 1.35 billion net or 1.68 billion gross expenditure and for capital spending of 550 million. The capital spending is to be supplemented by public-private partnerships of which five are under way, including St. Caimin's school in Shannon of which I am a former board of management member. Some 42 further projects are being developed with an investment of 800 million in private funding in the infrastructure programme.
There are significant changes in regard to taxation on housing. It is well known that I argued strongly against Bacon three, even though I must concede it played a part in controlling spiralling houses prices. Other factors clearly contributed to the slowdown in the house building programme. It has become extremely fashionable to attack building contractors and developers but it is useful to remember that, in addition to providing housing, they employ people. The employment is widely dispersed throughout the country and it is relatively well paid. The workers in that sector had begun to be very concerned, and rightly so, and I am delighted that the Minister has made these provisions in the budget. At the end of the day, a sufficient supply of houses to meet demand will be the best device to control prices. I welcome the fact that interest relief is being restored as a deductible expense and I also welcome the changes regarding stamp duty.
There has been some controversy about the fact that the Minister has decided to make use of the surplus income from the Central Bank. There is no advantage in hoarding cash reserves in that particular institution and I do not think anybody has argued with conviction that there might be any advantage.
The social insurance fund is strongly in surplus, with 1.4 billion at the end of 2001, and it will still have a surplus of 1.2 billion at the end of 2002. That is exclusively due to the Government's success in increasing and encouraging employment. It is important to remember that using part of this fund will help to sustain that employment and ensure that there is a reduced drawdown from that fund in the future.
I also strongly welcome the fact that the Minister proposes to bring forward the payment of corporation tax to the current year. This will be done over five years, which I presume is as quickly as it could be done, and there will be a benefit of 792 million in 2002. As far as I am concerned, corporation tax is owed in the same way as PAYE income tax and should be paid. The sooner it is paid in the current year the better. Aside from the financial advantage in the current year, that initiative should have been taken long ago.
The CORI document tends to be the bible of the Opposition to some extent in all budget debates and we all used parts of it when we were in Opposition. Unusually this year the first page of the document welcomes 11 Government initiatives. It makes the argument, which is the most common argument made against the Minister, that a couple on long-term unemployment assistance are only £48 a week better off after his efforts while a couple on the average industrial wage are approximately £130 better off. One of the points the document fails to advert to is that there are substantial attendant costs for those in employment. These costs are associated with going out to work and, ultimately, those who subscribe to a more tax on income policy are working against employment. The end result of a substantial increase in income tax, which is the only alternative to the policy the Minister has pursued, will inevitably cause the loss of a huge number of jobs.
The initiatives welcomed in the CORI justice document are: the increases in child benefit, which are huge but not taken into account in the table I mentioned; the increased tax allowance for carers; the increase in old age pensions, which is beyond what was promised; the doubling of the widowed parent grants; the bringing forward of the payment of more social welfare increases to January 2002, which is the time at which they should come into effect anyway; the increase in funding for special needs assistants in primary schools, which I welcome greatly having spent a long time working in the primary school sector; the increase in the back to school allowance for clothing and footwear, which is hugely important; the funding of the rural transport initiative; the general increases in health spending; the CAIT initiative; and the increase in the ODA budget to 0.45% of GNP, an important element which has not been referred to much.
There is an additional allocation of £11 million for tourism marketing. As I said previously in the House on a number of occasions, the loss of any major percentage of the 36% of transatlantic traffic at Shannon Airport would be disastrous not only for the airport, but for tourism in the west. There is already a reduction in services arising from the events of 11 September; some losses in numbers are inevitable in that regard. A device should be found, preferably in the context of this kind of allocation and provided through the regional development authority, Shannon Development, to remove charges on all in-bound passengers to Shannon Airport for four years on all services, new and existing. It would benefit Aer Lingus enormously because that airline has most of the services in Shannon. It certainly would have a dramatic effect on bolstering the tourism sector in the west.
It is as well to remember that the impact of tourism spending is much higher proportionately on the west than it is on other areas. While the gross amounts spent in the capital would exceed the amounts spent in the west, the impact of that spending in the west is enormous. Several studies explain why this is the case and anybody who lives in and represents that part of the country will be only too well aware of the impact the tourism spend has on the economy of the west. No initiative would have a more significant impact than one for inbound passengers. Obviously, no extra benefit would derive from such a measure if passengers whose journeys started in Ireland were included.
The budget contains a commitment to the health strategy which was announced before the budget. This initiative has taken up a great deal of time in the media and some debate here and it is clearly required. In my constituency the plans for Ennis General Hospital are at a very advanced stage. The project team will report within a few days and a major extension will go to contract over the coming months. It is much needed.
One of the things we in Ireland do not always realise is that all our European neighbours and other countries in the developed world have experienced enormous difficulties with their health systems. One of the enduring pictures from the British general election campaign last year was the attack on the Prime Minister by a lady whose partner had difficulty getting treatment. A member of my family, who happens to be in the UK at present, sustained a sports injury and it was instructive to find that the level of hospital service and support one can get there is much worse than what is available in Ennis General Hospital. That is something I would not have known if it had not been brought home to me personally.
There is also a project in County Clare about which I have been badgering the Minister, Deputy Martin, and the Minister of State, Deputy Moffatt, for some time. This is the Stella Maris private nursing home in Lisdoonvarna, which has closed down. It was run by an order of nuns which, sadly, no longer has the resources or personnel to run it. I am confident that the additional allocation now available enables the health board to proceed with its plans to work in co-operation with the local community to re-open that nursing home. The people have been beating around the bush and chasing all kinds of daft initiatives for several months and it is time to get down to basics, deal with it and provide for it from the health budget.
There is also an additional 100 million for improvements of the national roads. In Clare, the Newmarket-on-Fergus bypass, which is almost completed, will have the effect of taking the town off the first slot on all AA road reports where it has been for the past three or four years. Next to that comes the Ennis bypass. Obviously there have been difficulties in accessing land because of the dispute with the farmers, but that is close to being resolved – perhaps it is resolved – and I am confident that will go ahead, with a starting date in 2002. In addition, there is the Crusheen-Gort bypass. Aside from the advantages of reducing travel times for people who reside and must do business in that area, it will contribute enormously to allowing better access to the entire west from Shannon Airport and from the other access points along the west coast, all the way down to Rosslare.
There is an additional 67 million in Exchequer capital funding for education. That is an enormous increase. There is huge demand, as the INTO list of substandard schools in the past couple of weeks showed. It is an issue which traditionally has been dealt with very slowly but this will have a substantial impact, particularly when taken in conjunction with the PPI initiatives. The provision for education of 560 million in 2002 is five times the 124 million provided in 1997.
I wish to share my time with Deputy Gormley.
Is that agreed? Agreed.
Looking back on it, the last episode of the famous "Bull Island" series was very prescient when the Minister McCreevy character dreamt restlessly and ceaselessly about how to balance the books for the 2002 budget. At one stage it showed him trying to rob the Dáil bar and then outside selling the last of the Christmas wrapping paper. He came up with various other crazy plans.
How does the Deputy get the time to watch that?
It is a late night show. It is sad that, in reality, the Minister, Deputy McCreevy, who was preoccupied when we met him occasionally in the House in the past few weeks, came up with similar ideas in that he raided the Central Bank, the national insurance fund and the capital services redemption account, where he got his hands on 610 million, 635 million and 500 million respectively. Most seriously, he grabbed money from the social insurance fund without any legal basis. Section 7 of the Social Welfare (No. 2) Bill has a scant two lines which will attempt to give a cloak of legality to his illegal act.
A cloak and dagger budget.
A cloak and dagger budget, a flimflam budget, a three card trick, the kind of budget that one might see on a racecourse in certain parts of these islands.
A damn good budget.
Of the three expropriations, the seizure of 40% of the social insurance fund is the most serious, utilising as it does for entirely different purposes a large portion of workers' PRSI. As my colleague, the general secretary of the ICTU, Mr. David Begg, rightly said on television on Wednesday, many imaginative and progressive ideas were suggested during the years by the voluntary community sector and among ourselves in the House as to how the 1.6 billion surplus could have been used, for example, to introduce a proper system of parental leave for men and women or a decent level of carer's benefit. Only about 300 people applied for the current benefit introduced two years ago. There are many other areas in which the money could have been better employed.
The Minister's legacy will be one of division. A colleague this morning quoted the CORI analysis of the budget which has the headline, "Five in a row – prosperity without fairness." Its statement read: "As a direct result of the choices contained in budget 2002, the number of people living in relative income poverty will continue to rise, the rich-poor gap will continue to widen, many people in low-paid jobs—
The Deputy should read out the 12 items that it welcomed in the budget.
—will gain nothing, families on very low incomes will not have the right to a medical card, a large number of people will con tinue to wait for appropriate accommodation." In fact, 150,000 people will continue to wait. This is the Minister's divisive legacy after his famous five in a row. He said he did not want to borrow—
He did not want to borrow, but he did.
—which is understandable, because we remember the crazy legacy inflicted on us by a previous Minister for Finance, George Colley, and a Fianna Fáil Government 30 years ago. It is great that we got ourselves out of those disastrous circumstances. Governments, in which the Labour Party and our colleagues in Fine Gael served, played a large part in digging us out of the position in which we found ourselves after the crazy Fianna Fáil Governments of the 1970s.
The Labour Party walked out of Government with them.
It is good to see that the general Government debt to GDP ratio is heading towards 34%, but it must be remembered that it also reached its highest absolute level under the Minister. I agree with him that some of the macro-economic conditions facing us leave us with uncertainty. However, his reckless policy last year of driving the general Government balance from £3,500 million to a paltry £323 million was also a key factor in producing the circumstances that we now face.
The Minister made little reference to the likely performance of the euro. We hope it will do well, but if it strengthens too much against sterling or the US dollar, there will be additional problems facing the incoming Government. What also has a bearing on the social welfare package is that, in anticipation of the euro, there has been widespread and massive inflation in food, services, insurance and drink prices in recent months. The Minister hopes the confusion accompanying the introduction of the euro after Christmas, in regard to social welfare rates, will spare his blushes, but those on social welfare and low incomes have already paid a bitter price for it, as Deputy Rabbitte has frequently highlighted.
The Minister boasted of his extra £850 million, 1,009 million, in the social welfare budget, but because of the raid on the social welfare fund, the net increase is only 444 million, or £300 million, since the gross resources available to fund social insurance expenditure of £3.298 billion in 2002 were significantly reduced.
The most disappointing feature of the social welfare budget was the failure to accept the benchmarking report of the community and voluntary pillars and the trade union movement. The Department of Social, Community and Family Affairs accepted that we should try to move towards a target of 27% of gross average industrial earnings for the lowest social welfare payments by 2006 and that we should have a medium term target of 30%, which would have meant that this year the Minister would have raised basic rates by an average of £14. Instead there is a miserable increase of £8.06 across all the social assistance rates, bringing long-term social assistance up to a miserable 118.
They asked for £14 and we gave them £9.50.
Long-term unemployment assistance, one parent family payment and blind pension were raised to £93.56 per week. Before Wednesday I argued that we should have a basic rate of £100, 127, per week which would have been a major step towards the benchmark of 27% of gross average industrial earnings. The basic Labour Party package would have cost only £743 million, 943 million. We wanted to create the circumstances in which by 2006 we could deliver the figure of 30% that our party leader guaranteed in recent months. I welcome that the Minister aligned short-term unemployment assistance and SWA with long-term assistance to create one fundamental basic rate of £93.56.
The increase in the social insurance side was disappointing as rates of invalidity pension went up by only £8, under 66 widow's contributory pension by £8 and under 80 old age contributory pension by only £10. The Minister was constrained in these increases because he had raided the social insurance fund. Our package would have increased invalidity pension and other rates to at least £103.60, 131. As I said before, neither the Minister for Social, Community and Family Affairs, Deputy Ahern, nor the Minister for Finance, Deputy McCreevy, sought to develop a range of new benefits for workers and employers from the social insurance fund. Everyone agrees the qualified adult allowance should increase to 70% of the personal rate, but again this year the Minister was only prepared to move on £8.06. As CORI points out, the Government expects citizens to live on a miserable £69.31 or 88 per week. The Minister for Social, Community and Family Affairs claims he has now reached the much vaunted £100 per week in respect of non-contributory old age pension. I commend the Government on achieving that. It is still, however, very far from the 34% which has been long advocated by my older colleagues in the ICTU senior citizens group in the seniors citizens parliament. They chose 34% as a reasonable amount. If it had been brought to that level this year, it would mean at least 160 per week.
The Deputy's party gave them £1.40.
We are in a new era and in a few months' time the Deputy might be on a front bench. There could be a totally new situation. We must give great credit to our trade union colleagues and to the voluntary and community sector for the increases in child benefit. The extra £25 and £30 are to be welcomed. It is disappointing, however, that the increases are not payable from 1 January and are backdated only to April. It is also disappointing that once again child dependant allowances have not been increased. Child dependant allowances and the fuel allowance are the major benefits which have not been increased during the lifetime of this Government. The child dependant allowances still stand at a miserable £13.20 to £17. We have had many complaints from widows with young families in that regard. The Vincentian partnership – Saint Vincent de Paul – strongly argued that we should have moved over a two year timeframe to bring all child dependant allowances up to £17. Unfortunately the Ministers, Deputies Ahern and McCreevy, have said no.
Within minutes of the budget bring delivered I received a strongly worded fax from the Carers Association, the title of which read, "Carers let down by budget again." The association strongly attacked this budget which it regards as a derisory response to its problems. There is an increase of only £25 in the single disregard and only £50 in the married disregard. This still leaves the great majority of carers outside the threshold for the carer's allowance. The Minister of State, Deputy O'Dea, was in the House. I recall meeting the Carers Association seven or eight months ago when a message was sent to Limerick – the Deputies from Limerick may find this interesting – through Deputy O'Dea that in this year's budget the married disregard for carer's allowance would be on a par with the average industrial wage, £389 per week. It is an incredible let down that it has reached only £300.
He is probably putting out a leaflet about it.
It is for this reason the Labour Party has devised a strong and comprehensive social inclusion policy for carers. As my party leader has said we will abolish the means test and replace it with a carer's payment. We would allocate a portion of this payment to those who are already on a social welfare benefit. We would introduce a cost of disability payment. We would organise a nationwide system of community care. The Government had five long years in which to deliver for the carers of Ireland and it did not happen.
Annex C of the Budget Statement is supposed to be a poverty-proofing exercise for social inclusion. It is a derisory two page document which tells us very little. It grudgingly states that the impact of poverty is one criterion for assessing this budget. The impact on people who are poor is perhaps the most important criterion by which the budget should be assessed. Father Seán Healy and the CORI Justice Commission once again summed it up by saying this Government has widened the rich-poor gap by £191 per week in the past five years. After five years we now have a more divided society than ever. The incoming Government will have a huge task in trying to restore social cohesion.
I wish to share my time with Deputies Browne(Wexford) and Wade.
Deputy Broughan has outlined a litany of very desirable policy objectives but his party when in Government has been spectacularly successful over the years in not achieving measures to provide a more equal society. I refer to Deputy Broughan's comments in relation to the carer's allowance. This morning I did a radio interview on our local radio station with Mr. Collins of the Carers Association. He admitted that Deputy Dermot Ahern, as Minister for Social, Community and Family Affairs, has been most innovative. I commend the Minister on his work over the years. Deputies Durkan and De Rossa were spectacularly unsuccessful in their work in the Department of Social Welfare for a number of years. In 1997 there were 9,200 people availing of the carer's allowance. Today there are almost 20,000 people availing of the allowance. There has been an increase of 184% in the expenditure allocated for the carer's allowance scheme since this Government came into office. That is the record of success.
This budget continues to help the older people who laid the foundation of today's economic success. We have increased the contributory pension to £116 and the non-contributory pension to £105. In 1997, Fianna Fáil promised to increase the pension to £100 and we have more than delivered on that. This budget is focused on the poor and the less well off. The personal tax credit and the PAYE tax credit have been raised significantly. This rise will take 68,000 low income earners out of the tax net. In the past five budgets implemented by the Fianna Fáil and Progressive Democrats Government, 380,000 people have been taken out of the tax net. I remind the Fine Gael Party and the Labour Party that a massive £1.25 billion has been included in this budget for social inclusion measures. I remind Deputies Broughan and Durkan ,and particularly Deputy De Rossa, that the rainbow coalition Government allocated only £273 million for social inclusion measures in the 1997 budget—
The Government has given only £300 million.
These are not laudatory policy objectives; the people want policies to be implemented and funding made available towards those excellent proposals which have been brought forward by the Fianna Fáil and Progressive Democrats Government.
There has been much deliberate misrepresentation by the Labour and Fine Gael parties on the so-called raiding of the social insurance fund.
It is a heist, not a raid.
Between the Central Bank reserves and the social insurance fund, about 800 million is being transferred back to the Exchequer. In the coming year 1.035 billion will be transferred to the pensions reserve fund. What is being put in for pensions for the future far exceeds the amount that is being taken from the surpluses. I remind Deputy Durkan that, by definition, surpluses are over and above the requirements of the day.
Deputy Durkan's constituency colleague, the Minister for Finance, has produced an excellent budget, which is innovative, provides for the further development of infrastructure and includes very positive social inclusion measures. Since the Government came into office in 1997, some 300,000 new jobs have been created. It is not many years since there were only 1.1 million people at work here and there are now 1.8 million people at work. That is predominantly due to the good management of the economy by the Fianna Fáil Party in Government. By any stretch of the imagination—
The imagination needs to be stretched.
—the Government has been extremely successful in ensuring people in receipt of pensions get a proper level of payment. Free schemes have vastly improved. Deputy Broughan referred to the carer's allowance. He conveniently forgot to recall that a carer's benefit scheme has been introduced. The free schemes have been extended to everyone in receipt of the carer's allowance. In 1997, child benefit was only £30 per month. There has been a massive increase in this figure, which fulfils a policy objective of Fianna Fáil's at the last election. I am very pleased that the Minister for Social, Community and Family Affairs, Deputy Dermot Ahern, has been so successful in increasing so substantially the child benefit provisions and the provisions for old age contributory and non-contributory pensions.
There have also been major improvements in taxation. The final budget of the rainbow Government allocated a mere £393 million for personal tax reductions. This Government has taken 380,000 taxpayers out of the tax net. There are now 690,000 income earners outside the tax net or 37% of all those on the records of the Revenue Commissioners. This budget will take 68,000 low-income earners and 11,000 elderly taxpayers out of the tax net. By any objective assessment, these are major achievements which are in keeping with the sound social philosophy of the Fianna Fáil Party since its establishment in 1926.
The Minister for Health and Children, Deputy Martin, has introduced a health strategy which will be most effective. The increased spending in the coming year will create 650 new hospital beds and will ensure that by the end of 2002 no adult will spend more than 12 months on a waiting list and no child more than six months.
In recent years, under this Government, there has been a huge investment in infrastructure, roads, water, sewerage and housing in rural areas. There is vibrancy in these areas and rural regeneration is taking place. In areas where the population was declining drastically, that trend is now being reversed. The Minister for the Environment and Local Government, Deputy Dempsey, introduced a number of measures to ensure the smaller towns and villages could meet the demand for housing. He has provided very substantial funding to ensure all our towns and villages can have water and sewerage facilities—
But no houses.
Deputy Durkan would build the houses before having the water and sewerage. That is typical of Fine Gael policy. Fine Gael would put in the houses before the infrastructure. That is a policy of which Fine Gael should be very proud.
We put the people before everything else.
In the past four and a half years, the Minister, Deputy Dempsey, has ensured adequate provision has been made to build up the infrastructure of our small towns and villages so that housing can be provided at affordable prices and with a proper geographic spread throughout the country.
I commend the Minister for Finance and his officials for producing one of the most innovative budgets in recent years. Its success and appeal are evident from the manner in which the Opposition has been left floundering and heckling. Since I came into this House, I have never seen so many hecklers. It is seldom that I speak, but if the general public saw what goes on here every morning, led by the former Workers Party member, Deputy Rabbitte and others—
If Deputy Wade cannot stand the heat, he should get out of the kitchen.
In all my years I have never seen such lack of respect for people, particularly for the Ceann Comhairle. They were all great people two months ago when they gathered to make a presentation to him for 40 years' great service but they never seem to obey the Chair. There are just a few people who do this but when I see this sort of behaviour, I understand why so many members of the public do not vote.
This is the fifth budget introduced by the Minister for Finance and I congratulate him on his achievement. He will go down in history as one of the greatest Ministers for Finance of all time. The budget represents an outstanding achievement by an outstanding Government which set out to complete its full term in office. Its record is the envy of the Opposition.
The Minister said, and it is worth repeating to reinforce the point, that the budget's objectives are to develop infrastructure, improve public services, promote equality and sustain enterprise and investment in a way which sustains fiscal policy. The budget safeguards the vulnerable in society, prioritises our needs and continues to invest for the future.
The Government's record in managing the economy has been most impressive. Growth has reached unprecedented levels, hundreds of thousands of new sustainable jobs have been created and we now have full employment. For the first time, there is sustained immigration with tens of thousands coming to this country to take up work. We also have a measure of illegal immigration which would not exist if Ireland as a society and an economy did not have much to offer. Those dependent on welfare payments and pensions have received historic improvements in their incomes. The unique contribution made by carers in society has been recognised.
I welcome the increases being provided to old age pensioners and the infirm. I grew up in the 1960s and became a carer of my elderly parents before they died. We have seen tough days in the past. The elderly and infirm deeply appreciate the increases given to them in recent budgets. Many pensioners made an enormous contribution to building the country and they did not crib or protest. They were always happy with their lot. I am delighted the Government has increased the old age pension to which all old age pensioners are entitled. I also welcome the welfare payments.
The Government's record of managing the economy has been impressive. Growth has reached unprecedented levels. Although things have slowed down in the past six months due to the impact of foot and mouth disease and the terrorist attacks on America, they are not as bad as the prophets of doom and gloom want us to believe. I pay tribute to the Minister for Agriculture, Food and Rural Development, Deputy Walsh, and to the Minister of State, Deputy Davern, for the wonderful way they handled the foot and mouth disease crisis. I am sure Deputy Durkan, who is a good friend of mine, will agree that the House was united in its praise for how it was handled. The Minister played a blinder in that regard. We should pay tribute to the public for the way it responded to the appeal by the Department, the Minister, the Government and everyone to adhere to the stringent conditions which were put in place to keep foot and mouth disease out of the country. There was great co-operation, particularly among sporting bodies which played a vital role in calling off matches. It created many problems for the association in which I am deeply involved, the GAA, in terms of fixtures. However, everyone co-operated and we should pay tribute to them for that.
We should also pay tribute to the Minister for Tourism, Sport and Recreation, Deputy McDaid, for the sports grants he gives to all sporting organisations. The Minister has an interest in and has contributed to all sports. Sporting bodies will look forward to good news about sporting allocations which will be announced shortly. Although it is not in my electoral area, £200,000 was given in the budget to Neville Park in Rathkeale. That pitch was given to the GAA for a nominal fee by a famous family, the Nevilles from Kilfinny. Their father won an all-Ireland with Dublin long before my time or that of Deputy Durkan or the Minister of State at the Department of Tourism, Sport and Recreation, Deputy Eoin Ryan.
Definitely before the Minister of State's time.
Three members of that family are priests. I was vice-chairman of the county board at the time they gave the field to the GAA. It is used for training teams in Limerick. It was an unusual development at the time because most big pitches were located in towns, such as Enniscorthy, Tulla in Clare and Bruff in Limerick. This pitch was bought to train teams in bad weather. Some £200,000 was given to it in the budget, which is welcome. Grants have also been given to rugby, soccer, GAA and community clubs in the county I represent.
The economic outlook for the coming year is sound. Economic growth is forecast to be just under 4%, while employment will rise by 1.5% until 2004. Inflation will fall to 4.2% next year and to 2.25% by 2004. The people will see the budget as one of the best. People were prepared for a poor budget, but I know from the calls to my office, my clinic and my home that people, particularly pensioners and the infirm, are happy with it. There is still more to be done and I am sure we will do that when we return to power in May.
Perhaps in 2010.
I commend the Government for the great work it is doing. I am sorry for the Opposition. In the Scór competition, which is organised by the GAA, there is a section for novelty acts. Some of the Opposition would qualify for that.
(Wexford): I compliment the Minister for Finance on introducing a worthwhile budget with which the majority of the people are satisfied. As a former Minister of State at the Department of Social Welfare in 1997, Deputy Durkan must be embarrassed when he sees the substantial increases which have been given to old age pensioners and people on social welfare.
I am like Fianna Fáil in that it is difficult to embarrass me.
(Wexford): I listened to some Members yesterday who said we should not look back. However, if my memory serves me right, there was a growth rate of 7% in 1997 and we all know the miserable increases people on social welfare received at that time. I am surprised Deputy Durkan is here today to make a contribution.
The Deputy should wait for it.
(Wexford): We are aware that the Government has created an economic climate over the past five years which has helped all aspects of our economy. We have had one of the best economic performances in the world in the past five years. Many of our European partners are envious of that. We have created more than 300,000 jobs and long-term unemployment is down from 5.6% to 1.2%. It is expected that unemployment this year will remain at 4%. That is beyond all our wildest dreams, particularly if we go back ten or 12 years ago when the country was under the cosh.
I welcome the Minister's recognition of the need to look after old age pensioners, people on social welfare, the sick, the disabled and the more vulnerable sectors of our society. For too long, particularly in the 1960s, 1970s and early 1980s, they were not given the recognition in budgets they should have been given. These people built the State, raised large families and made all the sacrifices. It is only right that we should recognise their tremendous input in the difficult years of maintaining democracy to ensure we had a country of which we could be proud. I am pleased the Government has increased the personal rates for old age pensioners and people on social welfare over the past five years.
It is seldom that a Government lasts five years and it is good for democracy and for us as politicians. We did not like having an election every two or three years in the early and late 1980s. It is also good that a Government honours its commitments. We maintained that old age pensions would be increased to £100 during the lifetime of the Government. We have gone beyond that and the public recognises it. I accept we had the finances to do it, but for the first time in many years a Government honoured the commitments given in a programme for Government. Great credit is due to the Taoiseach and to the Ministers for adhering to that. We can go to the country next May proud of our achievements. We can tell the people the Government has honoured its commitments and will continue to do so.
We all talked for many years about the burden of taxation. When I came into the House in 1982 there was no encouragement to work and the high rate of taxation was a disincentive. People stayed at home rather than taking a job. It was more productive to be on social welfare than to work. I am glad that has changed. The higher rate of tax has been reduced to 42% and the lower rate has been reduced to 20%. I hope whatever Government is returned after the next election will continue that reduction. There was a difficulty in reducing the rates this year because of finances, but there was still a widening of the bands and tax credits. It is my wish that we con tinue, in the years ahead, to reduce the burden of taxation. Many people want to work. Young people, in particular, are earning and taking home very good money because of the taxation system now in place. Of those on low incomes, 380,000 have been removed from the tax net. I welcome the announcement in the Budget Statement that a huge percentage of those on the minimum wage are to be removed from the tax net completely. I hope all will be removed from it next year.
The introduction of the minimum wage was one of the most enlightened measures taken in my 19 years in the House. Young people were being exploited as were the not so young, particularly women. They were not being paid a decent wage. The minimum wage was introduced by the Government and has been improved annually. I hope the improvements continue because they ensure people have reasonable take home pay and are not dependent, as before, on the whims of an employer who decided whether to pay them £2, £3 or £3.50 per hour. Now they must pay them the minimum wage. This is to be welcomed.
The health service is a difficult area. We all recognise that over the last four years the Ministers for Finance and Health and Children have pumped substantial amounts of money into it, yet it seems the system has not improved. I certainly welcome the Minister for Health and Children's recent health strategy and the proposed root and branch examination of the health service. I ask him to look seriously at the health boards which are the greatest load of bureaucratic nonsense. They are top heavy with administrators, hospital management and senior managers when what is needed is staff at the coalface. I ask the Minister to consider a more localised structure. The county structures in the past worked very well. Subsequently, the monstrosities of the health boards were built up and little empires created by chief executive officers and middle and senior management. Serious consideration should be given to their abolition.
I ask the Minister to look at St. John's Hospital, Enniscorthy, where funding of £12 million was announced three years ago. Due to the bureaucratic nonsense of the South-Eastern Health Board, the project for which that money was set aside has not even got to tender stage, while half the money has been siphoned off for other hospitals in the health board's region. I ask the Minister to ensure the project is started as quickly as possible.
I have reservations about nursing home subvention. The cost of keeping old people in nursing homes has escalated enormously. There is a need for the Minister to look at the allocations. Beds are costing £350 to £400 per week. If an old age pensioner has £110 from their pension, they have to make up £300. It is difficult because the subvention varies from health board to health board. Some meet the full difference while others only give a percentage. I ask the Minister, therefore, to look at instructing health boards to grant the full amount to enable older people to stay in nursing homes. I have dealt with cases where people had to leave nursing homes because they could not make up the difference. The introduction of a home subvention scheme would facilitate the many people who would be prepared to keep older people at home if they received an allowance. Due to the costs involved they are not doing so.
I welcome the fact that the budget is a positive one. I listened to Deputy Durkan's colleagues state that it is an election budget. I hope that is true and that the people take on board what the Opposition is stating.
I hope those who take it on board do not take revenge.
(Wexford): Saying it is an election budget is the same as saying it is a very good one. I do not doubt that on the third Saturday of next May when the people go to cast their votes they will recognise the enormous contribution the Government has made over the last five years to their welfare through the creation of jobs and the reduction of taxation. We will get a resoundingly positive note from them and be returned as a majority Fianna Fáil Government after the next election.
I do not know how best to describe this budget.
It is a very good one.
(Wexford): It is very, very good.
Various people have described it in various terms, most of them unflattering. Some say that if one looks closely at it, one will see it is a mirage that will disappear. Given the time of year, others describe it as a surprise Christmas stocking, full of brightness, colour and promise, but containing a few bangers. It is intended to tap into the feel-good factor. I describe it, most accurately, as the hoodwink budget because the public is about to be hoodwinked in a way it has never been hoodwinked before.
People in County Kildare would not agree.
I feel so sorry for the Members opposite because their time has come. It has been brought forward much, much faster than they would ever have thought. I have heard those on the other side of the House reminisce about great things such as the increases in social welfare going back five years. Five years of water has passed under the bridge and we have come to a juncture where the public has to ask if things are as good as they were promised they would be. The answer is "No." The people have definitely been hoodwinked, but, fortunately, they will not be hoodwinked any more.
Let us look at a few of the hoodwinks. Five years ago the average household shopping basket cost at least half of what it does now. Insurance costs were at least half of what they are now. One can think of more important examples. The family home was half the price it is today, as was the number of people on local authority housing lists. The number on hospital waiting lists was half what it is now. Under every single heading where the Government parties have attempted to bask in the reflected glory of the budget, there are negatives and the people have paid.
On the Sunday before the last general election there was a headline in a famous daily newspaper which read, "Payback time". Little did it know what the public was going to be led into. How could a Government which had so much money and so great a surplus over the last five years bring a 3.2 billion surplus to a 2.2 billion deficit all in one go? The Government is not getting full credit for what it has done. It has achieved almost the impossible and gone into free-fall in the space of one year. How was it done? This is a hoodwink budget because it is calculated to make the public feel good for the shortest possible time, just like a painkiller. The only problem with a painkiller is that it does not take away the cause of the pain. It may take away the pain momentarily, but one has to suffer when it wears off.
Let us look at the housing market and what the budget has done for it. It has done absolutely nothing. I heard various Members on the other side of the House eulogising the Minister for the Environment and Local Government in regard to housing. The market is a disgrace and I cannot understand the reason nobody on the benches opposite realises it. There has never been such a housing crisis in this country since it was founded. I do not know from where the inspiration comes. More than 100,000 people are on housing lists throughout the country, and another 100,000 cannot buy a house because of house prices. What is the Government talking about? The housing situation is a disgrace.
When it was recognised the health services were in a shambles, the Minister for Health and Children thought some dramatic action had to be taken. The Government could not proceed with the budget and not mention health, so something had to happen before it. What did it devise for those who have been waiting three, four or five years for hip replacements and heart surgery and who have even had to wait for chemotherapy? A few days before the budget the Government unveiled a ten year plan.
What in heaven's name will a ten year plan do for someone who is in pain and needs urgent attention? What in heaven's name will happen to the families of those people who require attention now and not in ten years' time? There is nothing for people seeking health services. There has been nothing for the past five years and there will be nothing for the next ten. Hence the plan. We hear about plans to solve every problem but we do not hear the resolution of the problem. We hear what could be one but we never see it done. We hear about the action it is necessary to take but we do not see it taken.
What has happened with transport after five years of this Government? It is something else. One can scarcely get out the gates of Leinster House. One sometimes has to wait 45 minutes to get out the gate, let alone drive across the city.
One can if one is on a bike.
Soon a bike will not be safe either because going by balloon will be the only way one will be able to travel in this country. This will be hastened by the fact the Government will probably increase fuel prices to such an extent that one will not be able to travel by road or air. The transport situation is a disgrace.
To add insult to injury, a few weeks ago a train was placed on tracks outside the gates of Leinster House, but there were no tracks at either end of the train. It was meant to make people feel good.
It is high-tech futuristic transport for the people.
It was the feel-good factor again and the Minister knows it. The Minister is a decent man; he must be embarrassed.
The Deputy's party said it should be left there all the time.
The Minister is a decent man. He knows full well it was a disgrace to place a train in the middle of Merrion Street allegedly to make people realise how well they will feel when travelling on the train. I saw poor unfortunate people going into the train and sitting down and reading their newspapers as if they were travelling. It was a mirage.
It was a real train.
There is an analogy between the budget and pulling Christmas crackers in that, invariably, they go off with a bang and one of the parties is left with a paper end with nothing in it while the other has the part with all the goodies. It is the same with the budget, and it is the people who got nothing.
The people got everything. The Opposition got nothing.
The big bang has happened, the people feel good but the sting has yet to come.
One matter people will be anxious to recall and the Government will be anxious for them not to recall and which was referred to already by our party leader, Deputy Noonan, is the Eircom flotation. That was some achievement. The Government spent £78 million on consultants to assist it with the flotation. It cost £78 million to tell the people that this flotation was the greatest thing that ever happened, that it was imperative they became involved in it and that they spend as much money as they could on it and borrow, if necessary, which many did. Elderly people were encouraged to invest their life savings in it and young kids went to their piggy banks and took out their money to invest in it. Thinking the Government was being honest, the people took their money from their piggy banks and savings accounts and invested it in Eircom.
A few weeks ago they received letters in the post to the effect that it was proposed to take their shares from them at a fraction of the cost they paid for them and that, if they did not wish to sell, the shares would be taken anyway. Members of the public who fell for that, hook, line and sinker, thinking they were supporting a national enterprise and the telecommunications infrastructure of the country, paid an unbelievable price. Some of my constituents have shown me the letters they received informing them of the urgent necessity to sell their shares at a price over which they had no control. These unfortunate people thought they would have an investment for about ten years and that they might have a little nest egg at the end. Imagine the disappointment of young kids, teenagers and students who, advised by their parents, may have invested whatever small savings they had in what they thought was a safe Government flotation.
It is the one area which will cause the greatest disappointment and upset when the public comes to pass judgment on this Administration. The one thing that a person should never do is disappoint those who have faith and confidence in him or her and who rely on him or her to do the right thing. Where did it all go wrong?
The Government has lived on a type of merry-go-round or carousel. Its thinking is that we had a surplus one year, we will have one the following year and probably one the year after. It is not a question whether we will or not but how large the surplus will be. However, it has all been whittled away.
I have mentioned the shortage of houses, the lack of transport and the Eircom flotation. Reference was made to agriculture. Like everything else, that sector is being cosied along. There was no reference to it in the budget and there is no long-term plan for it. The Government has a happy-go-lucky approach, hoping someone will throw a lifeline or that Brussels or someone will look after it. There is no long-term plan or clearly defined objectives and certainly no confidence in the agriculture industry.
Inflation has decreased because practically everything has come to a halt all of a sudden. The Government blames this on the events of 11 September or foot and mouth disease or some other cause. Certainly it could not be accused of anything itself.
Those events had no effect?
Other economies have not taken the same dent as ours has and we should not delude ourselves about that. Some economies have shrunk by 0.5% whereas, in this country, we had surpluses of £2 billion and £3 billion in recent years and this year a deficit of £2 billion. How did we manage that? How does one manage to have a £5 billion shift in one fell swoop? It certainly was not because of 11 September or foot and mouth disease. There must also be other factors, and the sooner the Government wakes up to that fact, the better for everyone concerned. Otherwise, people will begin to ask serious questions.
This is a hoodwink budget. The Government hopes next April and May will come and go without the public recognising what the budget contained. That will not happen, however. Those days have gone. I do not think one can cod people like that anylonger.
There have been continuing references from the Government side of the House to what social welfare payments and taxation levels were like five years ago but, sadly, they ignore the reality of what has occurred in the meantime. The household shopping basket has doubled in price, along with countless other household items, but I have not heard any Government speakers mentioning that fact. Could it be they do not understand what is happening? I doubt that because there are many decent people on that side of the House. It must be the case, therefore, that the Government scriptwriters do not want them to acknowledge what is happening.
Housing is the biggest issue in my constituency but, instead of providing houses, the Government, through the local authorities, offers plans for the future. We have a ten year plan for health and a 20 or 30 year plan for housing. It will take 50 years to solve the housing problem, if it is ever resolved which I doubt. I compliment the Government, however, on reducing people's expectations in that regard. The average young couple no longer aspires to own their own house because it has gone beyond their reach.
We have the highest rate of home ownership in the European Union.
Once upon a time, the catch-cry of experts was that we were selfish and too many people owned their houses, and we should become more cosmopolitan and perhaps more continental. They said we should aspire to renting our houses or even leasing them. Now, the leasing option has definitely gone because nobody can afford a lease any more. Renting is the last resort of the unfortunate people on the housing list. That option has gone too, however, because about 40 people are seeking every single house that is available for rent in my constituency and the result is that rents have been driven through the ceiling.
It was a great achievement for the Government, in the space of four years, to deprive people of any hope of owning their own home or even renting one. The only thing the Government can offer people seeking accommodation is a plan for the future. They say, "It'll be all right on the night. Sometime, somewhere down the road, we'll help you with your housing situation". It is an absolute disgrace. I cannot understand why nobody on the Government benches recognises what is happening. Over the past few days, I have listened to various speakers, one or two of whom mentioned that An Taisce is objecting to developments in the countryside while somebody else is objecting in the towns. Yet nothing is being done about it. If our population is rising and our economy is expanding at the rate Government Members claim, something must happen. People will have to live in houses.
In the former Communist countries, they built multi-storey blocks on the outskirts of towns and cities. They said, "It's good enough for you. You can live there and see how you like it". Nowadays, people go to look at those blocks to see what it was like to live in such an environment. In a few more years that will be happening here. I would not like anyone on the Government side to think I am saying this for political purposes. This reality is now dawning on us. Nothing has been done to deal with the housing shortage which is the most disastrous since the foundation of the State. I cannot understand why it is not being recognised by the Government which has taken no action at all.
Earlier in the debate, a Government Deputy said how wonderful the Minister is. If it is that easy to be wonderful, we can all be wonderful.
On a point of order, is the Deputy aware he is sharing time with me?
No, I was not aware of that but I am willing to.
There are 11 minutes remaining.
If the Deputy so wishes, he may take five minutes or so.
Is that agreed? Agreed.
The housing shortage saddens me. I was a member of a local authority for many years, but I have never seen the housing situation like it is now. In the really bad days when there was no money in the Exchequer – a time that is now being condemned by Members on the Government side of the House – local authorities were building houses and people were buying homes. The private and public sectors were working hand in hand. During the four year period from 1982 to 1986, some 1,700 home loans were offered by the local authority of which I was a member. Therefore, 1,700 people bought houses who today would not be able to do so.
Does the Deputy remember the HSAs? They broke a lot of people.
I will tell the Minister about the HSAs. Some 1,700 people owned houses who would not otherwise have owned a home.
They had to be bailed out.
Some 1,700 people got houses who otherwise would not have. Now, however, there is a housing emergency. Countless numbers of people are looking for houses and the Government is not bailing anyone out. The Government is ignoring the problem. Nothing is being done for those people. In the same 1982 to 1986 period, the local authority of which I was a member, built up to 350 houses per annum. In the halcyon days of the present economic upsurge, the best they could do was about 130 in a single year. It is a disgrace. Where does the Government think people will live?
Everything nowadays comes down to economics. An Taisce and the planners tell us it is cheaper to house people in high density areas in cities and towns but we already know that. In fact, the cheapest way to house the entire population would be in one massive block with a single pipeline for all the utility services. In that way, we could solve all the economic problems. Unfortunately, however, there is a high social cost to be paid for that kind of foolhardy planning. That cost has been visited upon various other economies throughout the world over the past 50 years. If anyone wants to choose that option they should ask why huge tower blocks are being demolished, not only in this country but all over Europe. It is because they have failed and there is no merit in that type of development.
My advice for the benefit of Deputy Conor Lenihan, who seems to be perplexed by what I am saying—
The Deputy is building fantasy tower blocks.
The problem facing the homeless – and by homeless I mean those who cannot buy a house – is that they are forbidden to build in either urban or rural areas. Where are they going to go? What is the Government and the Minister for the Environment and Local Government doing about it? Absolutely nothing. Somebody, somewhere will have to investigate that and the outcome will be interesting.
Increased costs in the budget are hammering the road transport sector. We cannot bring heavy goods around the country on a bicycle, unfortunately, but it is certain that increased transport costs in the budget will be passed on to consumers. That, in turn, will erode any benefits in the budget to any sector. When this budget is fully and finally uncovered after the general election, it will be seen for what it is – no asset as far as the general public is concerned. Unfortunately, people cannot get a home. Nor can they gain access to health services. It is impossible to get transport, public or private, or to get in or out of our towns and cities or villages due to a lack of proper access.
Who wrote that?
One cannot invest in a Government flotation because if one does, one will have to pay. There is access in that area but if one gains access one will pay through the nose for it. The public will see the light and will put the sign up in April or May for the Government: "Sorry, there is no access today, you are out".
Kildare will not be pleased with that.
The Government has engaged in cosmetic surgery. Clearly, the next Minister for Finance, whoever he or she may be, will have much to deal with because of this creative accounting. There is no question about that as the Minister has dipped into a number of honey pots and we will eventually feel the sting in the tail.
I wish to take up a number of points raised by the previous speaker. Some Deputies across the floor are well aware of the housing problem from their constituents. Some 140 million has been allocated to deal with the local authority housing lists. We are talking about 1,200 houses. By my calculations, that will cover only one in every 40 people on the housing lists.
One in 40 people will benefit. That is not dealing with the housing crisis, that is paying lip service to the housing crisis. I have enormous sympathy for the people who come to see me in my clinic on whose behalf I contact Dublin Corporation. What can I say to them? I must tell them the Government has pandered to the speculators and the landlords but has not helped the ordinary people, it certainly has not done so in this budget. To take up the point made by Deputy Durkan, my solution is not to house people in tower blocks. Ballymun is an experience that should not be repeated, neither is building houses in isolation the solution. Proper planning such as works in other countries is required. Eco-villages, an idea the Green Party has advocated, would be a workable solution. Unfortunately the Minister for the Environment and Local Government, in spite of representations made to him, has simply ignored it.
We have had the launch of the ten year health strategy. The people are wise enough to know they will not see its benefits. There has been an increase in the price of cigarettes. It was interesting to observe a female smoker on television the other night saying the Minister was great. She had expected a huge increase in the price of a packet of cigarettes which only increased by 10p.
Listen to George Lee.
The Fianna Fáil press office has done a splendid job in spinning because this lady was absolutely delighted. She thought the Minister had fought against those people who recommended a higher increase. In fairness to the Fianna Fáil Party, it has devised a strategy over the years whereby if one treats people like idiots, they like you for it. I do not know if that will work in the next election. I am of the view that they are not all idiots and some of them will suss the Government eventually.
There has been a 50% increase in health expenditure in recent years but it must be recognised that we are coming from an extremely low base and that the percentage of GDP spent on health continues to lag considerably behind our European Union counterparts. Questions must be asked about efficiency. I do not believe the health strategy takes on the vested interests
The whole question of transport and quality of life issues has not been addressed in the budget. There was no attempt to introduce a proper climate change strategy. Reference was made to sulphur dioxide which has nothing to do with climate change. I attended a lecture recently which showed that sulphur dioxide actually slows down global warming, if anything. Spending on public transportversus roads is still more than a 2:1 ratio in favour of roads. That is not the way to proceed. We will continue to get gridlock and nothing in the budget addresses that problem.
I wish to share time with my colleague, Deputy Brady. I want to deal with the contribution of the previous speaker which was mild compared to some of the economic illiteracy we have come to expect, not so much from the Green Party but from Fine Gael. In recent days, it has been startling how illiterate Fine Gael has become on economic matters. Deputy Gormley is factually in error when he states that spending on health is lagging behind that of other EU countries. My information, thanks to the budget and successive budgets of the Government, is that health spending in Ireland is equivalent to the EU average. That is an enormous improvement on the situation we inherited on assuming office almost five years ago. We inherited a situation where the health service was chronically under-funded.
We face a situation where the health service is in need of reinvestment of a particular kind, specifically in terms of bed numbers. That capacity constraint is resulting in many of the queues and delays in our hospitals. Those treatment delays will be addressed over a period. We cannot wave a magic wand and cure it overnight. There is an underlying bed capacity problem which requires capital spending of a high order. That will involve investment in hospitals and their ability to deliver the number of beds for a burgeoning and growing population which is becoming more prosperous, thanks to the wonderful measures introduced in the budget.
I am of the view that the Minister will be judged by the historians and, in particular, by economic and financial historians for the period of the late 20th and early 21st century, to have been one of the greatest Ministers for Finance the country ever had.
The Minister has supervised a period of inordinate and enormous growth in the past three years, a year on year growth of 9%. This is extraordinary. These are figures which the French would say aresans pareil, without comparison. We may never see times like this again. We have never had them before and it is arguable that we will ever have them again. This is a power house economy which has gone from being a relatively poor country in the 1980s to being extraordinarily affluent today. Some argue it is the 20th richest country in the world while others contend we are in 40th position.
Notwithstanding all of this, in terms of democratic standards and performance we are up there with the best in the world. Having recently returned from England, I am struck by how much higher the standard of living is in Dublinversus the British capital and other parts of England. We are now beyond comparison with the UK and have lost the old chip on our shoulders. For this reason, I was disappointed with Deputy Jim Mitchell's response to the budget. His speech was littered with the kind of comparisons with the UK that Ireland used to go on with interminably in the old days when the country could have been characterised as a post-colonial State. That was the hallmark of Deputy Mitchell's speech. He was trying to make bogus comparisons between Ireland and the UK when everybody knows we have passed out the UK in terms of the standard of living we enjoy. We have passed out the best lifestyle opportunity available to people who live in London. It is extraordinary to be able to say that. I emigrated to London in the mid 1980s and when I hit there I thought it was a far wealthier country than the one from which I had come, which it was in objective terms, but that is no longer the case. Dublin, as a capital, enjoys a higher level of wealth than London. That has all happened in the past five or six years.
That has happened because the Minister has taken a few basic nostrums and implemented them in a programmed way through various budgets, of which this budget is the final one and perhaps the greatest, given the difficult and straitened economic times in which we are living. In the few simple principles he adopted, he has tried to return taxpayers' money to taxpayers through a mixture of cutting taxes, rising the bands and taking more and more lower paid people out of the tax net to encourage people to go out to work.
Many of us who campaigned for the first time in 1995 and 1996 prior to the last general election noticed the level of complaint among the electorate about why there was no incentive for many people to go out to work and why, if they did, they would be punished. Those people were in a tax or income trap, which meant that in a good number of cases people were better off on the dole or drawing social welfare benefits rather than going out to work. We have all noticed the effect these tax cuts, tax changes and reforms have had on people in our constituencies, particularly in the more disadvantaged areas, who previously would have been better off staying at home and drawing the dole. That is the underlying message coming from Deputy McCreevy's budget. The incentive to work exists and there are employment opportunities because the Government has supervised a period of extraordinary growth in employment.
That has come about mainly through foreign, direct investment. The foreign investors cannot be all wrong. They see the confidence in this economy, the trained work force, the confidence with which this Government is implementing its programmes and plans. It is not easy to supervise an economy that has been growing like ours at the rate of 9% year on year for three years. It puts pressure on the health service, infrastructure and on almost every aspect of State or publicly delivered service because it is difficult to catch up with that type of growth, which is the reverse of the position in the 1980s. At that time there were outflows of 25,000 to 45,000 people every year, depending on whose estimates one believes, but certainly a minimum of 25,000 people left this economy every year in the 1980s. The position is now reversed and that number of people is now flowing into the economy and there is also the factor of the natural growth in the population.
I was amazed at the level of economic illiteracy evident on the Fine Gael benches in response to the budget. I was surprised that Deputy Noonan trusted his number two to try to attempt to nail the budget. I want to put out one message. Deputy Jim Mitchell's speech in response to the budget made no impact, nor did any of his subsequent TV interviews. He seems to lack the basic requirement or even the killer instinct that Deputy Noonan has in relation to budget day speeches. Deputy Mitchell's punches did not hit the target and were well wide of the mark. I am sure if Deputy Noonan had the time, he might consider changing his Finance spokesman in the months ahead, but he will not have the time to do that because we are on the road to an election.
Many people have asked if this is an election budget. It is because we are approaching an election year. This is a very good election budget. This party will be able to use the budget as a platform to build a case, and I advisedly say this, argue and make a positive injunction to the public to put a Fianna Fáil majority Government back in office. We have demonstrated over the past five years how we can run the economy and make it an inordinate success compared to what was there previously, even under the previous Government.
In the next few months leading up to the general election people should examine and evaluate the budget, the strategy on health care and the moves and strides we are taking to address the infrastructure deficit. They should ask themselves a simple question, which of all the political parties in Leinster House will be able to deliver on the marvellous promise we have created over five budgets? Will the next Government be a mixture of Fine Gael, Labour and the Green Party or some other eclectic mix of smaller, more fragmentary parties? I say definitively that those parties cannot rule this country. They cannot deliver on the promises they make. They cannot deliver on the type of economic success achieved by Fianna Fáil in coalition with the Progressive Democrats.
The parties opposite are weak and divided. They are parties of false promises. They make promises and say they will do this and that, but they will not be able to deliver on them. Fine Gael, which regards itself as a Christian Democratic party or a right of centre party, will go into Government with the Labour Party, which now composes elements of the old Democratic Left – some call them socialists, some call them "pinkos", some call them liberals, but those in the Labour Party are very confused. They are being outflanked in the socialist department by Sinn Féin. That was evident from Deputy Quinn's performance on the "Late Late Show" when he was very comprehensively defeated by Mr. Adams, which was hardly surprising given his lacklustre performance.
I argue that the people will not vote for a motley coalition of three parties who are virtually incoherent on economic issues. All they can do is criticise the positive measures introduced by the Government, but they have not suggested any alternatives. It is interesting that Deputy Bruton, the former leader of Fine Gael, made that exact same point on the abortion issue. He said in a recent contribution that it was not enough for Fine Gael simply to oppose the Government policy on abortion without putting in place an alternative. Fine Gael is not interested in putting forward an alternative proposal because it knows that if it does so, it will not only be rejected by the public but that Fine Gael, even if it enjoys a modicum of success in the election, will be in office in coalition with the Labour Party who will geld all those policies in the time honoured fashion as it always does. When Fine Gael goes into coalition, its desperation for government means that it surrenders on virtually all its support and on all the policies it has neatly devised in the previous few years.
Perhaps the most opportunistic dive Fine Gael has made on economic matters in recent days has been the absurd promise made by Deputy Jim Mitchell, who signally failed to make any impact in his response to the budget, of an offer of £20 million for taxi men by way of compensation. This was produced as if by magic, like a rabbit out of a hat, and I do not believe for one minute that the taxi men, their wives and families, who feel very injured and damaged by deregulation, will take the offer of £20 million from Fine Gael at all seriously. I do not think anyone would take such an offer seriously. Deputy Mitchell, who prides himself on respect for the public finances, given his previous role as Chairman of the Committee of Public Accounts, has said this offer is an open cheque book, the £20 million is only an initial offer and that if there is a need for more he will keep signing the cheques. This is a bizarre offer from a person who spent the past four years lecturing and preaching us on the need to protect taxpayers' money. Now he wants to give an open cheque book to Vinnie Kearns and Tommy Gorman. Having met those gentlemen recently, I do not believe they will put much faith in Fine Gael's policy, given that its policy on this seems to be two headed. On the one hand, Deputy Jim Mitchell, is trying to love bomb the taximen and, on the other hand, Deputy Olivia Mitchell, is decrying them from pillar to post up and down the country, and in every newspaper and media interview she makes no secret of her dislike for this profession. I doubt very much that the taximen will see Fine Gael as their friend, notwithstanding the £20 million offer that is being brandished at them.
I was to deal with one or two important measures in the budget. One is the tax relief being given to many tireless workers in football and sporting clubs throughout the country who are trying to raise funds to build facilities. This enlightened move by the Minister will be a major incentive to them as they go about selling tickets to raise money to build extra changing rooms or whatever.
The increases for the elderly and children, in addition to the general round of social welfare increases, are welcome and give the lie to the assertion that we are not looking after the less well-off. The whole thrust of this budget and the previous four has been about giving the less well-off the opportunity to work, but also protecting those who cannot go out to work by increasing social welfare rates. That is the hallmark of the Minister and the Government.
I commend the Minister for Finance, Deputy McCreevy, and his officials on one of the most innovative budgets in recent years. The Opposition cannot make any serious criticisms about its contents and, as a consequence, has been flailing around aimlessly in recent days.
This is the fifth consecutive budget delivered by the Minister, which must be something of a record. The budget is an outstanding achievement by an exceptional Government which will fulfil its stated intention of seeing out its term of office. The antics of the Opposition are largely a product of frustration and envy.
The principal objectives of the budget are to develop our infrastructure, improve public services, promote equity and encourage enterprise and investment in a way that sustains fiscal policy. It safeguards the vulnerable in society, prioritises our needs and continues to invest for the future. The Government has a solid record of economic management. Over the past four and a half years growth has been unprecedented in the history of the State. Hundreds of thousands of new jobs have been created and unemployment has been rolled back, particularly in areas of social and economic disadvantage. Since the last election, most are now at work rather than wasting away on welfare. The Government has created full employment. In the past year alone 40,000 people have come here to work legally under the work permit scheme, with many more thousands working here illegally. Those people would not come here to work if our society did not have something going for it. As Deputy Lenihan said, we should be proud to be Irish.
Commentators such as those inThe Irish Times, the RTE economics correspondent and so on who are lapsing into the old negativism and begrudgery should be ashamed of themselves. Not only have the unemployed and those in employment prospered under the Government, but those who rely on State benefits and welfare supports have benefited enormously across the board. They have received historic increases in income. There has been a huge increase in children's allowance and carer's allowance in recognition – rightly so – of the major contributions made by mothers and carers to society.
The economy has slowed down in the past year due principally to the foot and mouth disease outbreak and the terrorist attack on America, but that is not the disaster the Opposition is trying to make it out to be. Such growth could not continue indefinitely. The economy was showing dangerous signs of overheating through excess demand in a number of areas, and the slowdown gives us a welcome opportunity to take stock and consolidate the gains made under the Government. The economic outlook for the coming year is sound. Economic growth is forecast at just under 4%. Employment will continue to rise by 1.5% until 2004. Inflation will fall to 4.2% next year and 2.25% by 2004. We will have another Exchequer and general Government surplus in 2002 when net current and capital spending will increase by 10.5%. That is not failure; that is success. Ten years ago such a projected figure would have been regarded as miraculous and beyond our reach.
I welcome the measures on personal taxation. The Government has transformed the tax code and people now get to keep, and spend, more of the money they earn. That is an increase in personal freedom for the ordinary citizen. The business taxation measures have been broadly welcomed by the business community. I say to those who would quibble with some of them that the business community has benefited enormously from the positive environment created by the Government. It, too, has a responsibility to make a contribution to society. Indirect taxation increases have been modest, while the measures on housing are most welcome in that they should encourage people back into the private rented accommodation market, thereby taking the heat out of the rising rental market. That is vitally important because one can hardly find a house to rent in Dublin.
The further large increases in children's allowance will be welcomed by mothers everywhere. Agriculture does not feature prominently in the budget, which is a reflection of the fact that we are now a predominantly industrial society. However, I welcome the capital gains tax measures relating to compensation for farmers for the compulsory purchase of their lands for road construction. These measures, taken together with the recent deal with the IFA on the matter, should go a long way towards securing acceptance and a smooth progression of our vital national road programme.
The various social welfare increases in the budget will be warmly welcomed by their recipients, whom they will benefit almost immediately. The detail has already been well covered by my colleagues in the debate, but what will benefit all our people in years to come will be the reinforcement of capital spending in the national development plan announced this week. These additional moneys will improve the job prospects and quality of life of this and future generations.
This is a prudent and far-sighted budget which builds on the Government's success and provides for ongoing prosperity for the people. As Deputy Lenihan said, if it is not broken, do not fix it. The Minister and the Government are to be congratulated on this budget.