Dáil Éireann díospóireacht -
Tuesday, 24 May 2005

Vol. 602 No. 7

Leaders’ Questions.

Mr. Kenny

Obviously there are many questions we could ask about yesterday's tragedy but as there are expressions of sympathy on the Order of Business I do not wish to also raise it under Leaders' Questions.

Following a visit to Cork last week, members of the business community brought to my attention serious concerns about commitments given by the Government on the debt Cork Airport now faces. As I understand it, on 19 July 2003, the then Minister for Transport, Deputy Brennan, announced on behalf of the Government that it had made a decision to break up Aer Rianta and to establish independent airport authorities at Dublin, Cork and Shannon. On that occasion the Minister gave specific assurances that both Cork and Shannon would be debt free so as not to hinder their future development. The Minister said this status was vital to allow the airports to compete for new business. He also said it would mean a fresh start for all three airports.

As I understand it, the terminal at Cork Airport is under construction. Some 600 persons are working on the terminal and the wage bill is more than €900,000 a week. A business plan has not yet been submitted. Cork Airport faces a debt of €160 million as a result of this development and that figure continues to rise. I understand the debt in respect of Shannon is of the order of €80 million. In the context of the commitment given by the then Minister for Transport, Deputy Brennan, and irrespective of what business plans come in, surely this means that the viability of both airports will be seriously hampered as a consequence? Is it the Government's intention to honour the commitment given on its behalf by the then Minister, Deputy Brennan, on 19 July 2003?

The Taoiseach

In the discussions last year and ever since, there has not been any change in that. As the debts of Shannon and Cork airports related to Aer Rianta they were considered to be the responsibility of Dublin Airport and were to be taken into account as part of the Dublin operation. Obviously the business plans and the business programmes have to come back but the question in Cork where they were building a new terminal at a cost of €150 million was how would this be funded? That may not be so much the case in Shannon. It was always an issue as to whether the Dublin Airport Authority would be able to handle a second terminal as it needed a cash flow to be able to fund any debt it would incur which would be exacerbated by the fact that the original debts, liabilities or capital acquisitions, whatever one wishes to call them, would be carried forward. That was the position then and I understand it is still the position. The authorities must reflect it in their business plans.

Mr. Kenny

That is not the understanding of persons in Shannon and Cork. They were met face to face by the former Minister for Transport, Deputy Brennan, who told them there would be no debt accruing to Cork Airport so it could have a fresh start and compete for new business.

I am concerned that another commitment by the Government is being broken. People in Cork are seriously upset and very concerned about the validity of the statement made by Deputy Brennan on 19 July 2003 to the effect that the decision by the Government represented a new start for Dublin, Cork and Shannon airports. Surely it is an example of the Government having put the cart before the horse again in that it made the commitment initially that there would be no debt accruing to Cork and Shannon airports and then asked for business plans in the knowledge that there are serious debts facing both airports, not to mention the decision last week in respect of the Dublin Airport Authority.

Will the Taoiseach confirm and reiterate the Government's commitment, as made by the former Minister for Transport, Deputy Brennan, that there will be no debt accruing to Cork and Shannon airports when the relevant legislation comes into effect? Will he confirm that this represents a fresh start for Dublin, Cork and Shannon airports? I ask him to tell the truth.

The Taoiseach

To the best of my knowledge, this is the first I have heard of what the Deputy is saying. Cork and Shannon airports were to proceed, as per the agreements last year, with the establishment of Cork and Shannon airport authorities as separate companies, initially with no assets or staff. They were to prepare their plans. Dublin was always seen to be carrying the debt for them and the cashflow was needed to run the second terminal. I have not heard of any change to this position. I have met representatives from Dublin, Cork and Shannon many times and they have never raised that issue with me. Unless somebody tells me otherwise and there are developments about which I have not heard, the position is as I have stated.

Mr. Rabbitte

I am sure the Taoiseach saw last night's splendid "Prime Time" programme on taxation. If not, I am sure he has been advised of its content. Essentially, it depicted how the powerful and wealthy in our society exploit the tax code to minimise their tax liability or avoid paying any tax at all. The blood of anybody who saw the programme and who goes to work in the morning and pays his taxes as best he can would boil at the unfairness of the operation of the tax code. Such a person has no discretion in terms of his or her tax liability while the elite seem to be able to write their own tax bills or pay a voluntary tax.

The Taoiseach will recall that he is the author of a particular measure concerning tax exiles. The record of the House shows that at 6.05 p.m. on Friday, 6 May 1994, a bank holiday weekend, he introduced an amendment in this regard. He will recall that he advised me of it at 11 p.m. the night before. His explanation of the very opaque amendment was very technical.

An Ceann Comhairle

The Deputy's two minutes have concluded.

Mr. Rabbitte

He concluded by saying:

In recent days I had much contact with staff in FÁS International Services, Telecom Éireann, ESB and other agencies who are concerned about matters that affect them when going abroad for contracts of short duration. I hope we have dealt with most of the points in this regard and I will deal with the remaining points over the weekend.

This had nothing to do with anybody employed in FÁS, the ESB or any other organisation whose staff were going abroad. To have stated it did was misleading. In the ten years that have passed since this statement, has the Government made any plans to restrict the extraordinary latitude we give, under the tax code, to very wealthy people to disport themselves in this country as and when they choose without being subject to any enforcement, monitoring or supervision that one can see, thus benefiting at the same time——

An Ceann Comhairle

The Deputy is a minute over time.

Mr. Rabbitte

——by not paying any tax in this jurisdiction?

The Taoiseach

I did not see the "Prime Time" programme last night but received a briefing note thereon. Before dealing with the question, tax incentive schemes have been good in this country and have generated much economic activity. They were introduced with a view to providing incentives for economic development and not to enrich particular individuals.

As Deputy Rabbitte knows, there is an ongoing examination of all the tax incentive schemes to determine whether some of them are too generous, whether they are needed now, whether they require amendment or whether they should be capped. All of these issues have been discussed and the Minister has brought in outside financial experts to assist him in the ongoing examination.

On the last point raised by Deputy Rabbitte, I remember the issue very well but do not remember introducing the amendment at 5 p.m. on the Friday of a bank holiday weekend. I would be surprised to hear that the committee was even sitting then. However, I remember the issue, which was debated for a long time. It arose from the Commission on Taxation's report of that year. There was much argument on the issue outside the House. I may have tabled the amendment late because, as I remember very well, there had been considerable discussion at the time between the leader of my party and the Labour Party. The Deputy will recall this very well. Neither of us would have been surprised that the amendment was tabled so late.

Deputy Rabbitte was implying on "Questions and Answers" last night that I had thought up the amendment over night. However, as he knows, the issue had been discussed for a long time. Former Deputy Ivan Yates expressed concern that if a person came to the State at 11 p.m. and left the following day at 6 a.m., that person would be treated as being in the State for two days. He and I, the then Minister for Finance, tabled similar amendments on Report Stage, of which Deputy Rabbitte would have been well aware. I found this out today having checked the matter quickly at lunch time. Had I had more time, I would have found out more.

The amendment was agreed by the Dáil and continues to apply today. To make a mild political point, if the Labour Party, which Deputy Rabbitte now has the honour of leading although he was representing another party during the debate in question, believed it was so terrible at the time, it had an opportunity to change it through the Finance Acts of 1994, 1995 and 1996. It did not deem it a bright idea to do so.

It should be noted that the administrative practice of Revenue prior to the 1994 Act was based on a number of nights spent in the State. The Report Stage amendment merely confirmed the procedure being adopted at the time. It was quite a contentious issue.

The Deputy asked me if this issue should be examined ten years on. All the tax incentive schemes are being examined and this one should also be examined.

Mr. Rabbitte

The first half of the Taoiseach's answer dealt with tax incentive schemes but I did not raise any issue pertaining to these at all. I have been clear that tax incentive schemes comprise a legitimate instrument to stimulate economic activity, depending on circumstances and the economic cycle. Of course they ought to be reviewed and subjected to a test determining their demonstrable economic benefit. This has not and is not being done.

The study the Taoiseach referred to is the first that was undertaken under pressure from my colleague, Deputy Burton, last year. I will go back to the point. The record will show that the Taoiseach brought in an amendment at 5 o'clock on Friday evening. That is the simple fact of the matter. There is no point in trying to blame former Deputy Ivan Yates or anyone else. The Taoiseach gave the assurances to me, privately, which I was happy to accept, although I am on the record as saying: "I think one could be forgiven for being suspicious about getting a major item like this on a holiday weekend, by way of a last minute amendment." That is on the record of the House for 6 May 1994. I went on to raise the objections to it and so on. There is no point in talking about the Labour Party reviewing this in 1995 or 1996. This is one of the areas little focused on or understood, a very arcane area of tax law that was only in operation for a year or two at that time. The question I put to the Taoiseach was about the fact that ten years later we now know how it has been abused and the Minister for Finance said last night that he had no intention of reviewing it and that it was working perfectly.

An Ceann Comhairle

The Deputy is two minutes over time.

Mr. Rabbitte

I cannot, for the life of me, see what this has to do with FÁS or ESB employees working abroad. This was brought in, like other matters at that time, with certain people very clearly in mind. The PAYE taxpayer believes that this is profoundly unfair, to put it at its mildest. I ask the Taoiseach again whether this will be included and if there is any intention——

An Ceann Comhairle

I ask the Deputy to give way to the Taoiseach.

Mr. Rabbitte

——to restrict the 183 days requirement to be in this jurisdiction.

The Taoiseach

I have three brief points to make. Deputy Rabbitte raised the matter of tax incentives on last night's "Prime Time", which was what the entire programme was about.

Mr. Rabbitte

I was very thankful to the Taoiseach, last night.

The Taoiseach

I thank Deputy Rabbitte. I appreciate that greatly and will thank him, personally, when I meet him.

Second, as I understand it the Minister is looking at all of the allowances. The third point is that this particular mechanism does not just relate to a handful of people. I am not sure what the figure is but it is used by quite a lot of people. The argument which has been used for a long time is that there are many people, some termed non-resident who come here and pay tax, who spend quite a lot of money and have many businesses in this country. They generate a good deal of wealth. They could go elsewhere or stay elsewhere and it is better to have them in the country over a longer period. The Deputy is right in that it covers a certain category of people in this country. There is no doubt about that. I well recall the arguments about that. They are generally wealthy people, not FÁS workers, as the Deputy said.

The reason for the operation of the clause is that it was agreed it was better to have these people spending as many days as possible in the State. That means they have directorships, investments and property here. They spend money while they are here, probably more than the rest of us would in the entire year.

Ms Lynch

They do not pay tax.

The Taoiseach

Even if a person is non-resident, Irish people are liable to income tax on directorships, rental procedures and in other areas. It is not simply a black and white situation. We all know the types of people we are talking about.

Mr. F. McGrath

They are chancers.

The Taoiseach

They are not chancers.

Mr. F. McGrath

They are chancers and dodgers.

The Taoiseach

They are significant Irish people who come back. As regards Deputy Rabbitte's question about whether this should be examined in the review, I have no difficulty with that.

Mr. J. Higgins

It is a day when our schools are in mourning over the young lives lost in the awful tragedy in County Meath. Members will express their sympathy and have points to make on the safety of children on school transport.

I want to draw the Taoiseach's attention to another aspect of student welfare, which is the urgent and extensive investment needed immediately for physical fitness facilities in schools, in the form of gyms and sports halls. Everybody was taken aback in recent days when it was announced that many principals throughout the State have a "no running" policy in school playgrounds. The Taoiseach described the ban as shocking, but the reality is that teachers have explained that it is the lack of space and facilities that is the real cause. If insurance was a consideration, that should certainly be put off side. However, it is the former point that is mostly responsible, in primary and secondary schools.

Against the fact that the national task force on obesity said every school-going child should have at least 30 minutes a day, or two hours a week of physical fitness exercise, is it not crazy that parents and teachers in many parts of the State have to spend endless hours, days, weeks and years lobbying the Department of Education and Science for investment in sports halls and gyms? In view of what has emerged in the last week, and the report, will the Taoiseach now say the Government will immediately ring fence investment for physical education infrastructure in schools? If he does not do that, is not the whole health strategy as regards obesity a fiction?

An Ceann Comhairle

The Deputy must conclude.

Mr. J. Higgins

I am not saying the schools and the physical fitness regime is the only answer, but it is an important one, acknowledged by all.

The Taoiseach

The Deputy is highlighting an important issue about the activity of young people and the fact that they should be able to do some of that in school. Improved PE facilities account for a large part of the enormous amount of money being spent in upgrading schools. Any worthwhile initiative in this whole programme is, of course, good. The Deputy will agree that children spend less than 20% of their overall time in school. However, they learn much of the basics of PE training, gym work etc. there, so that is important.

I do not buy the argument that obesity comes about through lack of training, though. The only research that I have seen showed that 35 years ago obesity related to 5% of the young population. Now it is approximately 15%. At a time when people had nothing, children were out playing and running around school yards. Now it is a different issue. I cannot vouch for the accuracy of those figures. Other countries have done similar studies which showed the levels of obesity to be relatively low. Having said that, facilities are important and prevention is far better than cure. It is good to have people active, as encouraged by the sports and community grants.

Some 4,000 communities have received money in the last six or seven years that is helping to build a really good capital base of facilities where children can go, whether it is scouts, football, community halls or whatever. The more activity there is as regards PE and gym training in school yards or halls, the better and this is important. I do not disagree with the Deputy. Some €2 billion has been spent on upgrading schools in the last few years, which is an enormous amount. Every year about 1,200 projects are being finished and all of them are improving the facilities.

As regards this issue it is important that the community is linked to the school. We are now seeing in the 3,000 or so schools across the State an enormous amount of work in terms of schools and local facilities. There is no point in building school halls that are not being used during the day. The use of such facilities should be closely monitored and that is what the Department of Arts, Sport and Tourism is doing.

Mr. J. Higgins

If such investment has been made, why did the INTO discover that 80% of schools surveyed in Donegal did not have a PE hall, that 70% of schools surveyed in Kerry did not have one and a similar percentage was found in respect of schools between those two counties? The University of Limerick in a study on secondary schools pointed to an absence of adequate facilities, qualified staff and timetabling as regards physical education.

I accept that lifestyle is a major factor. Schools cannot be expected to correct everything that is unhealthy or tending to make people unhealthy in society but schools have a corrective role. In this regard, they have an important function. Does the Taoiseach accept that this issue is linked to an earlier point Deputy Rabbitte raised, in that, if the speculators who flit off to the Bahamas and Switzerland at weekends for tax purposes stayed here instead and paid their taxes, as other elements of big business should pay equally to the PAYE system, we would have far more funding for such facilities?

What new urgency is the Government bringing to bear on investment in regard to this important sector of education that will show an acceptance of what has been said in the past week?

The Taoiseach

This issue is being dealt with across Departments. The huge amount being invested in recreational facilities in terms of sport and community facilities should be linked to schools because we would obtain much better use of such facilities. Under the capital programme approximately €2 billion has been spent in the area of education across schools. Approximately €3.5 million will be spent over the next five years under the multi-annual programme.

Deputy Higgins referred to the physical education programmes in primary schools. All primary teachers are receiving in-service training in this area. It is a core part of the curriculum. There is no reason for not running a policy on playgroups. There is joint funding in terms of the community grants for playgrounds and provision of approximately €4.6 million for playgrounds in schools. That provision taken with the sports grants is a significant investment to help our young people. I accept the point the Deputy made. While provision in this area is not the only issue in question, I accept it is an important one. It is important that children are able to do drill and PE and that teachers are able to train them in that respect. That is the reason such education is a core part of the curriculum. It is also important to build up the number of facilities available where possible.

We have now put community facilities into 3,000 places. The schools should use them in the day time. Separate facilities are not needed for use by schools. Local clubs and societies should allow schools to use their facilities in the day time.