Priority Questions.

Before we commence, I congratulate the Minister for Finance on his appointment and wish him well in office. We will be as vigilant as possible in keeping an eye on what he is doing. The Minister comes to his office with a great reputation inside and outside the House and I am sure he will bring great skills to bear on his work.

I also welcome the Minister for Finance. He travelled the world in his last post and I hope he has as much fun travelling the highways and byways of the tax code in his new office. We look forward to having a positive working relationship with him. I wish the Minister luck in his job.

Like previous speakers, I welcome the Minister. I do not know if he has found a geographical analogy for his new post, though Switzerland might be a good one. I hope we will have a positive working relationship in the coming months.

I congratulate the Minister and offer him good wishes in his new post. We will get on with the business.

I am grateful to the Deputies who wished me well and I look forward to being kept busy by all sides.

Benchmarking Awards.

Richard Bruton

Ceist:

1 Mr. R. Bruton asked the Minister for Finance if he plans to institute changes in the benchmarking exercise proposed for assessing increases in public pay. [24590/04]

In the public service pay agreement under Sustaining Progress, the parties committed to engage in consultation on the terms of reference and modus operandi and the establishment and timescale of further benchmarking exercise. In the most recent agreement on the second phase of Sustaining Progress, the parties agreed that the benchmarking body will commence the next benchmarking review in the second half of 2005 and report in the second half of 2007. The parties agreed to review the operation of the first benchmarking exercise and consider ways in which, having regard to the experience gained, the process can be improved and streamlined. The parties also stated that the body should seek to ensure the optimum level of transparency consistent with the efficient and effective operation of the benchmarking process.

The membership of the body and its terms of reference will be agreed between the parties not later than July 2005. The parties agreed that arrangements for the next parallel benchmarking process will also be the subject of discussion between them. Consultation among the parties will commence formally later this year.

Is the Minister aware that this House had no say in the partnership arrangement? It was never debated here. We depend on the Minister and the Government to represent the public interest in this area. Is the Minister satisfied that the last occasion on which settlements were reached the process was sufficiently open and transparent? Does he agree that it was not acceptable to taxpayers who had to stump up €1.3 billion that they were not shown the basis on which the awards were made? The basis for making awards was kept secret. Does the Minister agree it was surprising in a system designed to compare pay rates in the public and private sectors that every instance involved an increase in public pay? There was not a single instance of a decrease relative to the private sector.

The benchmarking commission said three quarters of the award was conditional on new reform. Does the Minister agree the Government introduced no new reform package after the commission reported and that no union was asked to move beyond its established position in the period before the payments were made?

As I said in my answer and as stated in the agreement, the parties consider that the body should seek to ensure the optimum level of transparency consistent with the efficient and effective operation of the benchmarking process. As it is independent, how the body reflects this in its report is a matter for itself. In the last exercise, the body felt constrained in the amount of information it could provide due to assurances of confidentiality it gave when researching the data underlying its examination. In any event, to avoid endless debate and nit picking in the context of an exercise of this type, all information cannot be released. Some degree of selectivity must enter into the matter. While I take the Deputy's point that it would be desirable for the body to give more information the next time around, this is a matter for it to decide.

The establishment in Sustaining Progress of monitoring of real change by independent performance verification groups was a significant departure. For the first time, real change and modernisation have been linked to pay increases. It is a welcome development. I will seek to ensure in future that under Sustaining Progress all pay increases, whether general round or benchmarking, will be tied to an ongoing programme of public service modernisation. Such modernisation is a far better criterion than the previous relativity considerations.

Why does the Minister believe this is a matter for the social partners to decide? Is it not the taxpayers and we who represent them in this House who should have a say as to whether the process is sufficiently transparent? Why does the Minister put all faith in those who are sitting around the table as partners? Naturally, they will tend to approach this matter in a manner which fails to guarantee the level of transparency we who represent ordinary people expect. Does the Minister recall that the one strongly independent member resigned from the benchmarking commission because he felt the awards being made were insufficiently transparent and robust? Given this history of lack of transparency, will the Minister give leadership to opening the process to make it fully transparent for the benefit of all?

It is important to point out that we set up this body and gave it a remit and terms of reference which arose out of the discussions under social partnership. One's view depends on one's commitment to social partnership. I believe it has brought far greater progress in economic management and social policy than would otherwise have been the case. If one wishes to suggest a more adversarial model which will not necessarily give the same value for money——

The Minister is evading the question I asked to answer another one.

The Minister without interruption please.

I am not evading the Deputy's question. I am making the point that one either commits oneself to a social partnership model or one does not. I do not accept it is unaccountable. The independent body reports to the Government which decides whether to accept the recommendations. If the Government decided to walk away from social partnership, there would be consequences. I contend that——

That is not the question the Minister was asked.

I am trying to bring the Deputy to the realpolitik of the situation in terms of what is consistent with a level of transparency. I have said to the Deputy that we can learn from what has happened to improve it in the next round. The question is how to make transparency consistent with creating an operation which has public confidence among social partners. If the Deputy’s view is that the economy should be run by Government diktat and that if he were on this side of the House, the reservoir of public interest would lie with him, he has a far narrower view of how to conduct economic management in a modern economy than I have.

I would love to answer that and I hope the Ceann Comhairle will let me. The Minister is attempting to create a caricature of the situation.

In fairness, that has been a consistent Fine Gael position.

We have already gone over time on this question.

If the Minister insists on using his time to ask me questions, the Chair should allow me to answer.

I request the Minister to address his remarks to the Chair in future.

Budget Statement.

Joan Burton

Ceist:

2 Ms Burton asked the Minister for Finance when the Book of Estimates for 2005 will be published; the date on which he expects to deliver his Budget Statement; his priorities for the forthcoming budget; and if he will make a statement on the matter. [24850/04]

The Abridged Estimates Volume will be published on Thursday, 18 November 2004. Budget 2005 will be presented to the Dáil and published on Wednesday, 1 December 2004. As the Deputy knows, it is not usual practice to comment on specific budgetary policy measures in advance of the annual budget and I do not intend to deviate from that. The Government's economic and fiscal priorities are based on An Agreed Programme for Government and are designed to sustain and continue the record economic and employment growth levels we have seen since we first took office in 1997.

Does the Minister agree with me that much of the buoyancy in tax receipts for the past two years has arisen from income tax largely on the backs of contributions made by PAYE workers for whom tax bands and tax credits have been frozen? As a consequence, these workers are looking to the Minister for tax justice in the forthcoming budget.

A question, please.

Does the Minister agree that it is not appropriate that more than 600,000 PAYE workers pay tax at the top rate? The Minister spoke of social partnership to my colleague. He has indicated to the social partners that only 20%——

The Deputy should confine herself to asking a question. Otherwise she will not have time to ask a supplementary.

Does the Minister agree with what has been stated as Government policy to the social partners that only 20% of PAYE workers should pay tax at the top rate? Can we look forward to some tax justice for PAYE workers in the forthcoming budget?

On tax justice, some 380,000 PAYE workers were exempt from tax when this Government took office in 1997. Today, as a result of seven successful budgets introduced by my predecessor, 622,000 taxpayers are exempt from tax. For the 240,000 taxpayers who previously paid tax under the rainbow coalition of previous Governments, that is defined as tax justice.

It is misleading to say that half of those paying tax do so at the top rate. The number of income earners exempt from tax has grown steadily since 1997 from 380,400 to 622,800. That represents an increase of well over 60%. A 60% increase in the number of people not paying tax has occurred under this Administration, yet I am asked to ensure more tax justice. Results from the very significant increases in the personal and employer tax credits, formerly allowances, in successive budgets have also brought about greater tax justice because, as the Deputy will be aware, they favour the lower paid. That was not the case under the previous system.

The problem with using the term "taxpayers" rather than "income earners" is that the more people we exempt from tax using the personal and-or employee credits, the higher the percentage of taxpayers in the top rate even if there is no increase in numbers. The more people we take out of the tax net, the fewer people who pay tax, yet Members opposite use statistics to suggest more people are paying tax at the higher rate in statistical percentage terms even though there has been no increase in numbers. While I would not suggest it is mischievous on the Deputy's part, it is a misleading and a partisan use of statistics. If fewer people pay tax — to the tune of 240,000 — than was the case when this Government came into office, that is real tax justice. When one brings about change under the credit system introduced by my predecessor rather than the allowance system, that too is greater tax justice because it ensures more people pay tax at the standard rate.

The role of this Government will be to ensure that those on low pay receive the best benefits. I will not accept the contention that this Government has not been according tax justice to more taxpayers. Not alone has it done so, it has reduced rates. The net tax take from those on the average industrial wage, including PAYE, PRSI and the health levy, has been reduced by 10% from 27% under the rainbow coalition to 17% under this Administration.

Does the Minister agree that the same has not been done for those he describes as average taxpayers as has been done for the wealthy in terms of the creation by his predecessor of massive tax shelters? Some wealthy taxpayers in this society will make zero tax returns this month while 632,000 PAYE workers will pay tax at the rate of 42%. The Government has indicated——

The Deputy must ask a brief question as we are running out of time.

Does the Minister agree with the Tánaiste that something has gone sadly wrong with the PAYE tax system that so many workers now pay tax at the top rate of 42%?

I will accept a brief reply from the Minister.

I have just explained the situation for the Deputy.

Does the Minister not agree with the Tánaiste? The Tánaiste agreed with me.

Deputy Burton should allow the Minister to continue.

I am trying to answer the Deputy's question. Some 240,000 people who paid tax when Deputy Quinn was Minister for Finance do not do so now. There are 1.8 million people in the workforce. We have made significant improvements in terms of tax justice for ordinary PAYE workers. The rates previously charged when the Deputy's party was in Government were reduced by 10% by my predecessor.

More people pay tax at the 42% rate.

That is further——

It is not a low rate, it is a high rate.

Deputy Burton should allow the Minister to continue without interruption.

Some 0.76% of total taxpayers pay tax at the marginal rate.

Public Private Partnerships.

Caoimhghín Ó Caoláin

Ceist:

3 Caoimhghín Ó Caoláin asked the Minister for Finance the changes which have been implemented by his Department in the way in which public private partnership projects are developed and managed, based on experience of the grouped school pilot partnership project as outlined in the value for money report of the Comptroller and Auditor General published on 28 September 2004; if his Department has examined the wider implications for continued use of PPPs in delivering infrastructure; and if he will make a statement on the matter. [24849/04]

Does the Minister accept that——

The Deputy should allow the Minister to read his reply.

Deputy Ó Caoláin is not in Government with Fianna Fáil yet.

In June 1999, the Government approved a programme of pilot PPP projects. The aim of the pilot projects was to learn practical lessons about how PPP processes can be developed in Ireland to contribute to the delivery of infrastructure programmes generally. The grouped schools project was the first of the pilot projects procured on a design, build, finance and operate basis.

Arising from the early experience of these PPP pilot projects my Department issued guidelines on the procedures for the assessment, approval, audit and procurement of PPP projects. These guidelines, which were published in July 2003, set out checks and balances to be applied in PPP procurement to achieve value for money. They outline the steps involved and introduce new requirements appropriate to PPP procurement. The Comptroller and Auditor General acknowledges this in the report and notes that lessons learned during the PPP pilot projects in the education, transport and environment sectors, including the grouped schools project, have been incorporated into the guidelines. Two significant developments include the setting of an affordability cap which is the maximum allowable budget for a project and the appointment of a process auditor in large projects to ensure that all required regulatory and administrative steps have been taken in the process prior to contract signing. My Department is engaged in the process of producing more detailed guidelines on specific aspects of the PPP procurement process.

I have noted what the Minister said. Does he accept that it is extraordinary that the Comptroller and Auditor General's report indicates it is expected this pilot project will likely turn out to be between 8% and 13% more expensive than traditional procurement and operation? Is it not also extraordinary that that report states that the Department of Education and Science should have concluded it was likely the PPP approach to procurement would work out at between 13% and 19% more expensive than conventional procurement? Does the Minister acknowledge that this was the — I emphasise the word "the"— pilot project in terms of the Government's testing of the value for money from the PPP approach and that in this particular instance the project has clearly failed that test? Given the Department of Education and Science set no budget or spending limit for the project and estimated it would be 6% cheaper, has the Government reconsidered the PPP approach, especially in the delivery of projects signalled under the national development plan?

I would like to put a simple question to Deputy Ó Caoláin.

I have asked a question of the Minister.

I will answer the question in this way. If the Deputy prefers I can simply read the reply. Would the Deputy have a problem if any of the schools in Tubbercurry, Dunmanway, Clones, Ballincollig and Shannon had been built in Cavan-Monaghan?

One of them is in Cavan-Monaghan.

Of course the Deputy would not have a problem then and I will tell him why.

If the Minister knew his geography he would know Clones is in Cavan-Monaghan.

The Deputy should allow the Minister to continue without interruption.

I have spoken to people——

The Minister should answer the question.

——who have spoken with the parents in those areas and they are delighted with the projects.

So have I. Is this the way the Minister is going to continue?

Let me move on to the next point.

This is outrageous.

When Deputy Ó Caoláin and others ask how the Government will speed up projects——

The Minister answered Deputy Burton's question in the same manner.

Are we to have a chat or is the Deputy going to continue interrupting?

The Minister should answer the question.

I will. I have no problem answering it.

Deputy Ó Caoláin should allow the Minister to reply without interruption. Also, if the Minister were to address his remarks through the Chair and not directly to the Deputy, there might be fewer interruptions.

The Chair is a far more preferable representative of the constituency than the Deputy who tabled the question. I will direct my reply to the Chair.

The Chair cannot be involved in any debate in the House, on questions or otherwise.

(Interruptions).

Is the partnership off?

The value for money of that project will best be gauged over its 25 year life span. Those projects are up and running much quicker than under traditional arrangements. There are people in my constituency who are anxious to find out when their school merger projects will be included in PPP, and if people are not like that in the Deputy's constituency, he must live in another country. These parents have gone to see these schools and they know, as I know, that if they become part of a PPP pilot project like this one, the lessons from the early days of the process will be learned. If we try new ways of doing things, we learn as we go along.

If we were to depend, however, on the traditional procedures of the Department to get those five schools up and running, the Deputy and I both know they would not be built. That is a fact. We should not suggest, as the Deputy did, that the PPP is a failure as it is not. We must learn lessons as we go along and take into account some of the recommendations from the Comptroller and Auditor General. The quality of schooling available in those schools and the quality of the work environment for the teachers are much better but are not part of any tangible asset on a balance sheet that would be considered in an audit by the Comptroller and Auditor General.

We are politicians and while I respect the duty of the Comptroller and Auditor General to give his views on these matters because he has a job to do in terms of value for money in public procurement projects, I also know the PPP process is important if we are to deal with many of the infrastructural deficits about which the Opposition often moan. If the Deputy contends that we can do this through a traditional capital programme while staying within the stability and growth pact guidelines, he is not up to speed about what is available and what is possible.

The rationale of the Government is that the savings made through PPPs providing capital investment could be better spent by the State. If the pilot project proves that there are no savings, does that not suggest there should be a re-evaluation? Of course it does. Does the Minister not accept that if there are no savings, the rationale must be questioned? That is the result of this test case. Clones is in my constituency and I am familiar with the satisfaction with the schooling in the school.

The Chair cannot be flexible in future with time if Deputies abuse the time limits laid down in Standing Orders.

The Chair should address those remarks to the Minister, who used up more of the time than I did.

If the Deputy did not interrupt me, he could have asked two supplementary questions. A continuing evaluation of PPP processes, not a re-evaluation, to ensure they can be part of the drive to improve our infrastructural deficit is the considered and rational policy response.

Is the Minister acknowledging that this PPP has failed? It did not meet the criteria laid out.

It has not failed. We have restricted the criteria. There will be further lessons to be learned from this first pilot project and, in the nature of any pilot project, we learn and improve as we go along. We do not decide that because there were some problems with the outline, which can be addressed in future PPP projects, it was a bad idea in the first place.

Tax Code.

Paul McGrath

Ceist:

4 Mr. P. McGrath asked the Minister for Finance the cost of extending the standard rate cut off point in order that the 632,000 taxpayers estimated to have paid at the top rate in 2004 be reduced to 400,000 in 2005. [24852/04]

I am informed by the Revenue Commissioners that the cost of achieving a position where it is estimated that no more than 400,000 income earners will pay tax at the top rate in 2005 is approximately €1.3 billion in a full year.

The Minister is quoting statistics but he neglects to mention the important ones. Someone on 90% of the minimum wage still pays tax. That was not the situation in 1997 for people on the minimum wage.

There was no minimum wage in 1997.

There was no minimum wage but there was a comparable wage. The Minister also neglected to say that 407,000 paid tax at the top rate in 1997 while 630,000 now pay tax at the top rate. That is despite that in 2001, the previous Minister announced in his Budget Statement that he was removing 107,000 from the top rate of tax. In 2002 he announced that he was removing 57,000 from the higher rate. How does the Minister reconcile the fact that the former Minister gave those statistics when we know that year on year, the numbers paying tax at the higher rate have risen dramatically to the extent that now 53% of taxpayers pay at the higher rate? There are some not paying tax, about the same percentage as paying tax at the higher rate, but many of those are in part-time jobs working just a few hours a week.

A problem in dealing with statistics is that if we compare apples and oranges, we end up with a mess.

That is what the Minister is doing.

The Deputy is talking about the top rate. The top rate in 1997 was totally different from the top rate in 2004.

Many more people pay at the top rate today.

The top rate of tax is paid by 50% more people.

Is it the contention of the Opposition that we go back to the 48% rate and make 450,000 people pay that? Where is the Deputy coming from? He should get his act together. There is a different tax rate, the average industrial wage has risen by €10,000 and 240,000 people who used to pay tax do not pay tax at all.

That is not true. It is an incorrect conclusion.

There were 380,000 people in this State who did not pay tax when we entered office and 620,000 do not pay tax now, but I am being told that on the basis of those two statements, I cannot draw the conclusion that 240,000 more people do not pay tax now than in 1997.

That was not what the Minister said.

The Deputy must allow the Minister to finish.

How can the Minister say that 240,000 who paid tax do not pay tax now? That is exactly what he said. An extra 600,000 people are working.

At least the Deputy acknowledges that.

Of the 600,000 who are working, 240,000 do not pay tax but a further 240,000 pay tax at the top rate. The Minister cannot conclude that they do not pay tax. How does he reconcile that with what the previous Minister said each year that he was taking an increasing number of people from the higher rate when the reality shows that the numbers paying tax at the higher rate have been steadily increasing? The Minister is not too good at answering that question.

The questions are not too good either. More pay tax at 42% than paid tax at 48%.

An additional 55%.

There are 600,000 more people working and 240,000 more who do not pay tax than was the case in 1997. The figure has gone from 380,000 to 620,000. When more people are working and tax rates are reduced, it moves differently from before. The Deputy suggests that we are in a worse position now because 240,000 more do not pay tax and 600,000 more are working, and complains that 200,000 more pay tax at 42% instead of at 48%. I remind the Deputy that it is a function of higher earnings and more people working. Perhaps the Deputy's solution is to have nobody working, nobody paying tax and we will all be in Nirvana. Is that the logic of the Deputy's position? He is not prepared to acknowledge that is the function of a growing labour force, earning more wages, in the context of lower tax rates, a tax credit that helps the lower paid more than under the old allowance system which differentiated in favour of those on the higher rates——

The Minister is talking rubbish now.

——and with 240,000 fewer workers.

The time for the question is concluded.

We are in a better position than in the past.

Ceann Comhairle, you are not sharing the time equally.

Sorry, Deputy, so long as Deputies continue to ask questions——

It allows for time to be shared equally.

It does not, Deputy.

It should be shared into times of two minutes for each reply and one minute for each answer.

No. Deputy, that is not correct. The Minister has two minutes to answer a priority question. There is no time limit on the supplementary questions. The time limit does not apply on supplementaries until we move onto other questions. If the Deputies wish to change, they know the way to do it but the Chair will implement Standing Orders as laid down by the Members of this House. There is no time limit on supplementary questions in priority questions.

Tax Code.

Dan Boyle

Ceist:

5 Mr. Boyle asked the Minister for Finance the Government’s position on the use of environmental fiscal measures in view of its decision not to proceed with a promised carbon tax. [24949/04]

Taxation can play a part in attaining environment objectives. However, as Minister for Finance, I am concerned to ensure that in developing policy on tax measures we take into account any effects on Ireland's international competitiveness, particularly with regard to non-EU countries which compete with Ireland and which may have low taxes on energy. I am also concerned in framing policy about the effect that the imposition of such taxes may have on the consumer price index and how they could impact on the less well-off members of our community.

On the question of carbon tax, the Government decided it was not an appropriate policy option and that it would intensify action instead on the non-tax measures under the national climate change strategy. This decision followed an examination of the environmental, economic and social impacts of the proposal. The Government concluded that the environmental benefits of a carbon tax would not justify the difficulties that would arise, particularly for households, from the introduction of such a tax.

Apart from the carbon tax, the national climate change strategy envisages other initiatives in the tax area with one such example being tax reliefs for green initiatives. Essentially, this approach uses the tax system to provide incentives for certain behaviour. Such examples include capital allowances for corporate investment in renewable energy projects which have been available since 1998, and an excise duty differential, granted in budget 2002, to encourage sulphur-free diesel which resulted in the entire diesel market changeover within a few months. In addition, a provision in the Finance Act 2004 provided for the introduction of a scheme for excise tax relief for biofuels. The purpose of the scheme is to allow relief for pilot projects to investigate and evaluate the market for biofuels in Ireland. I am open-minded towards initiatives in the tax area which can impact positively on the environment but in reviewing any such initiatives I must be mindful of competitiveness issues and the impact of any particular measure across the overall community.

Is the Minister aware that Ireland has the least number of environmental fiscal measures of any of the developed countries and is listed as such by the OECD and that his predecessor's decision not to fulfil a budget commitment on carbon tax was largely the result of ignorance of how environmental taxes work? The ESRI has clearly stated that a carbon tax could have raised money which, if recycled, could have been spent on increased social welfare payments, added tax incentives, funding for research and development to encourage activities such as energy efficiency? What the Minister's predecessor has done and what the Minister seems to be maintaining is that a cost will accrue to the Irish taxpayer in a number of years when Ireland has to live up to its Kyoto commitments, a cost which currently can be judged at a value of €1.1 billion. That money will be made from traditional taxation sources. A carbon tax presented an opportunity to cope with that tax load over a longer time period and have it targeted at the source of the problem. We have failed to meet our international commitments.

I do not agree with the Deputy that the decision was born out of ignorance. Considerable work was undertaken in examining proposals for a carbon energy tax, including an extensive consultation process. Following that process, the Government decided that a carbon tax was not an appropriate policy option and that the modest contribution which the tax would have made to tackling emissions would be replaced by alternative measures.

The Government concluded that the environmental benefits would not justify the difficulties that would arise, particularly for households, in the introduction of such tax. Furthermore, the Government cannot ignore developments in the international oil market. The recent price increases reflect the ongoing supply and demand situation in the oil market. In this situation the resultant increase in the real price of energy products will, in any event, give an enhanced incentive to energy conservation.

A carbon tax would have involved a range of compensation, recycling and tax abatement measures. Despite these measures, it would be likely to have some adverse economic and social effects that would not be fully dealt with by compensatory measures. In addition, it would impose price increases on many products already suffering sharp increases and would largely raise revenue from products already subject to existing excise duties and where a new tax is not specifically necessary to increase tax rates.

The Minister should be aware that fuel poverty now exists in society and this Government does not have any measure in place to tackle the problems of fuel poverty. Carbon tax was one such measure that would have allowed revenue to be created and recycled and targeted towards those most in need in society. The Minister in his reply listed less than a handful of measures that could be in any way attributed as environmental tax measures or tax incentive measures. It shows the poverty of the Government's thinking in this area. The Minister's reply as an opening contribution contrasts widely with the answers given earlier on public-private partnerships where the Minister stated he was in favour of new and innovative approaches in terms of finance initiatives, yet he is not prepared the address the same thinking to alternative taxation measures. These different types of taxes would relieve the burden on traditional taxpayers and allow less income tax, less VAT and spending taxes to be collected. It would allow for targeted measures to assist the environment as well as attacking those who are creating environmental problems in our society.

The Deputy is obviously more taxed in his tax than the Government is. A difference of opinion exists. The rationale behind the carbon tax was to change the relative price of fuels based on carbon emission, thereby altering consumption patterns and to encourage energy efficiency and improve environmental quality. Carbon tax would have applied at a relatively low level to all carbon-based fuels, including peat, coal, heating oil, diesel, petrol, natural gas and LPG. The revenue raised from the tax would be recycled and used for a range of purposes, including measures to help alleviate the effects of the poorest in society, as the Deputy stated.

The carbon energy tax as proposed has been just one element of the Government's approach to meeting Ireland's commitment under the Kyoto Protocol to reduce emissions of CO2. The overall reduction required is of the order of 9 million tonnes per annum and the direct effect of the carbon tax would have amounted to a possible maximum reduction of just over half a million tonnes. This modest contribution——

The Minister cannot know that.

——would be replaced by alternative measures, including support for emissions abatement mechanisms such as energy efficiency initiatives and also the purchase of additional carbon emission allowances on the international market.

Regarding alternative policy options which were referred to in the decision not to introduce a carbon tax, they are principally a matter for my colleague, the Minister for the Environment, Heritage and Local Government, who can answer further specific questions on this point. I understand the national climate change strategy provides a broadly-based framework for achieving greenhouse gas emissions reductions in the most efficient and equitable manner while continuing to support growth and prepare for the more ambitious commitments that will be required after 2012. Among the key measures in the strategy are switching towards less carbon-intensive fuels, expanding renewable energy, promoting greater energy efficiency in transport, industry and construction and a range of measures to reduce emissions from agriculture.

Who will pay the bill?

As I said in my reply, I am open-minded towards tax initiatives which can impact positively on the environment but in reviewing any such initiatives, the Government must be mindful of competitiveness and the impact of any measure on the overall community.