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Dáil Éireann díospóireacht -
Wednesday, 5 Nov 2008

Vol. 666 No. 1

Financial Resolution No. 15: General (Resumed).

Debate resumed on the following motion:
THAT it is expedient to amend the law relating to inland revenue (including value-added tax and excise) and to make further provision in connection with finance.
—(The Taoiseach).

Prior to the introduction of budget 2009, Members on this side of the House, and I have no doubt Members on the other side, had great expectations. We all knew tough decisions needed to be made but what we did not know was that those decisions would affect the young, the vulnerable and the elderly.

The Government's budget, introduced two weeks ago, is a missed opportunity. Many of the cuts will affect pivotal sectors, including the education sector and particularly primary and secondary education. During the past couple of weeks, my office has been inundated with calls from parents, teachers and teachers' unions who have described as a disgrace what the Government has done to education in Ireland. A child gets only one chance at primary education as compared to two, three or four chances to access third level education.

In opting to increase class sizes, the Government did not give adequate consideration to what it was doing. The teacher unions showed their anger and frustration last week when they protested on the streets of Dublin against what the Government has done. At a recent INTO meeting in my own county, I heard parents speak of their despair that their children, who are encountering serious difficulties in primary education, will no longer get the help they need.

In my seven year political career, I have not witnessed the type of anger that was expressed by the elderly in the Westland Row church the week after the budget was announced about the withdrawal of medical cards from people over 70 years of age by the Government. The over-70s are to be congratulated on the manner in which they ran their campaign. While I welcome the Government's reversal of that decision, I do not believe it has gone far enough. I have spoken to many retired people in receipt of old age pensions who have put away approximately €20,000 or €30,000 for a rainy day. I am sure the Minister will agree these people are not among the 5% of our population who are the richest in this country. I have no doubt that every Member's office will be inundated with calls when elderly people receive letters from the Health Service Executive stating they have to re-apply for their medical cards.

I attended a lobbying session today of the Irish Creamery Milk Suppliers Association, ICMSA. I spoke to farmers, their sons and other younger farmers. What the Government has done to the agricultural industry in this budget is wholly disgraceful. There must be incentives if we are to encourage people into agriculture. Two of the more important incentives were the opportunity for a mother or father to retire and installation aid as a cushioned payment for a younger farmer coming in. I come from a farming background and no younger farmer will want to come into the agricultural industry when he or she sees what the Government has done.

Fine Gael has highlighted a number of these bad decisions over the past two to three weeks. It is amazing when one listens to the Government's backbenchers because they are fully in agreement with the wrong decisions made by the Minister for Finance. The Green Party has gone into hiding over the past number of days. I was amazed to hear Deputy Mary White on my local radio station after the budget. She was asked why she gave the Minister a standing ovation and she replied she was overwhelmed by the contents of the budget. She is one of the people speaking out of both sides of their mouths over the past number of weeks.

The Green Party has a role in Cabinet responsibility, as it has two senior Ministers in Deputies Gormley and Ryan. They sat around the Cabinet table as these decisions were made.

Fine Gael has offered alternatives through our finance spokesperson, Deputy Richard Bruton. Such alternatives are worth listening to and implementing. Over the past number of years the Government was able to throw money at every problem in every corner of the country and had no difficulty doing so. There was €10,000 here, €50,000 or €100,000 there and €200,000 somewhere else. That money was tossed around by the Government over the past number of years without care. There was no responsibility for spending or consideration for the future. Such spending produced PPARS and electronic voting machines, which annoyed the public, but the public is also dissatisfied with the Government because of the decisions made in the recent budget.

I have no doubt the Minister of State has listened to some of the concerns of his constituents. We will feel the detrimental effects of this budget for many years. I listened to the comments made by a backbench Deputy on one of the national radio stations and it was mentioned that the decision on class sizes would be reversed within a year or two. However, I believe once the Government has decided to increase class sizes, it will never roll it back. One should consider the anger felt by parents about what has happened in the education sector. The Government has completely neglected the most important people in our society, the young people we will depend on to take up qualifications in the future.

There is no doubt that the Government went for the soft options in this budget, hitting, as I mentioned earlier, the most vulnerable. The longer this Government continues in office, the longer it will keep its head in the sand. Its members are drunk on power, arrogant and totally out of touch. They are not living in reality. Some of the senior Ministers are going around believing there is no problem and that everything is okay when it is not.

I would like the Government to listen to what the ordinary person on the ground is saying. It could have made tougher decisions in other areas but it chose not to do so. I was very annoyed about some of the decisions in this budget.

Deputy Edward O'Keeffe has 30 minutes.

I might not take the 30 minutes. I am delighted to speak on the budget, which was very realistic, well thought-out and planned for the crisis in this country——

——inherited from the western world and, one could say, the events of Wall Street. We could have had a Wall Street crash of 1930s proportion coming along the line. I was shocked listening to the comments of Deputy Kehoe as we have served this country well for the past ten years and I have no doubt we will serve it for another ten or 15 years with the way it is going.

It served the Deputy well.

We have done well in the education sector. I cannot understand teachers going to meetings now who were around and did well from the Celtic tiger. The debate surrounding the education cuts in the budget is an exaggeration. The Fine Gael spokesperson was not overly enthusiastic about the wages or salaries of teachers. The party's finance spokesperson talked about adjusting to a €4 billion cutback but we only brought about a €2 billion cutback. The party has left unanswered how it would find this €4 billion in cuts. Would it close down the whole public and Civil Service?

They are all Fianna Fáil.

There is no point in the Opposition making those kinds of charges.

Where have all the billions gone?

If it wants to be realistic and productive——

The tills are empty.

The Opposition was asleep on the medical card issue. It was announced in the budget and the Opposition did not know about it.

The cash is gone.

Fianna Fáil had to educate the Opposition on it, and we put the matter right. One had to admit there was no increase in the medical card scale from 2006 until after the budget.

It needed five attempts.

At that stage, the medical card scale was under the €223, which was the maximum pension being paid. We put the matter right. I could consider the whole well-structured budget. I know much about agriculture.

The Deputy is not saying it outside the Chamber.

I made comments in Cork the other night. I do not run away; I will not do that for anyone.

The Deputy ran away.

Deputy O'Keeffe will make his comments through the Chair and Deputy Kehoe will refrain from interrupting.

He was missing from a couple of votes.

Never mind that stuff now. I ask Deputy O'Keeffe to continue.

The Deputy is very——

He was not here for a number of votes. He must have been afraid.

I admire the Deputy's memory. It is very good.

Interruptions are not allowed.

Agriculture has suffered a minimum of cutbacks and we have been really generous in that area. It has been really well served by Fianna Fáil in Government for many years.

There were the small firms before that.

Between 1994 and 1997, when the Opposition parties were in Government——

The Deputy must have been in the bar before coming in.

——there were cutbacks. Installation aid, retirement benefits, farm grants and many other schemes were disbanded. The Deputies' memories are very short. There were also 12,000 applications in-house that were not processed and farmers were left without as a result. We have not acted in such a way; we have suspended a scheme until the economy improves and we will look after those people on another day.

Fianna Fáil has had 12 years in Government.

Do not tell me——

It cannot blame anybody else.

The Deputies do not like being told the truth.

Do not react.

Leave the Deputy alone.

It is important the Deputies know a bit of the truth. The Opposition often does not know about it. This budget was good and many areas were looked after. I will make a few specific points regarding roads in my own area, where we have done very well in the development of such roads.

What was bad about the budget?

We have the N73 and N72, taking in Mallow to Fermoy and Mallow to Rosslare, as well as Mitchelstown to Mallow and on to Rathmore, which is the constituency of the Ceann Comhairle. These require upgrading and I appeal to the Minister for Transport, through the Department of Finance, for extra funding for those two routes. They carry significant volumes of traffic, especially during the summer months because of the tourist business from Rosslare to Killarney. They are vital to the area's infrastructure. I do not know the exact cost of the funding but not much would be needed to allow the upgrade. I appeal for them to be looked after. The entire problem has been brought about by globalisation in the world economy. We were mad on it and globalisation was everything. Everyone learned the globe when attending school and everyone knows where are the other parts of the world.

Boston or Berlin.

However, I know about globalisation in respect of agriculture best and I wish to refer to this subject this evening. We destroyed our agriculture industry in the past ten years because of globalisation. We lost many of our jobs and have displaced many farmers.

The Government closed down the sugar factory in Mallow.

Fine Gael supported that as well. The Deputy should not try to tell me that——

The Deputy should not respond at all and should keep going.

On globalisation, we lost——

There is no "we"; there is "ye".

We had cheap imports from the Pacific and south Atlantic regions, which competed successfully against Irish farmers. I have seen this. The same thing happened in my own locality, where we had a wonderful organisation called Dairygold. It used to turn over €1 billion per annum, killed 500,000 pigs and 100,000 cattle, as well as processing approximately 200 million gallons of milk into substantial and good brands. All now is gone. A chief executive came in there four or five years ago who diversified into the construction industry. Although he was going to build empires in the towns and villages, all that remains to us is rubble. We have loads of rubble in Mallow and Mitchelstown. The reason I mentioned the N72 and N73 is because the rubble would be ideal to rebuild those roads.

Including the beet factory that Fianna Fáil closed down.

I will revert to this issue shortly. The Deputy should keep quiet.

The fine brands that were developed in that area, such as Galtee cheese, Mitchelstown bacon, Galtee bacon and Calvita cheese all are gone and are being sold off——

Back to the future with Calvita.

However, the Competition Authority objects to this. Moreover, 1,500 jobs were lost and I blame Enterprise Ireland for much of what happened as it went along with the flow because it constituted globalisation.

I also am highly critical of Kerry Foods, which is a major importer and which does not kill a single animal in this country. It only is a secondary processor that imports, thereby destroying Irish agriculture and the Irish farming scene. I have stated this previously and few jobs will be created in this manner. Although agriculture has greatly suffered in this regard, the Fine Gael Members tonight are discussing matters that are peripheral to agriculture, such as installation aid.

I am discussing the real economics of agriculture where the bread and butter of the industry——

So is installation aid and the disadvantaged areas scheme.

What about the suckler scheme?

That is only small bread. It only amounts to €4 million. The Deputy should not worry about it.

Deputy O'Keeffe should not respond to the Deputies' points.

It is small money to Deputy O'Keeffe.

I make the point that I wish to see——

It is small money to Deputy O'Keeffe.

Members should consider what happened in Iceland.

It is small money to Deputy O'Keeffe.

I refer to Iceland.

Deputy O'Keeffe is a big farmer.

What about the small farmer?

Iceland went down the road of——

I do not recall Deputy O'Keeffe interrupting Deputy Kehoe. Members must be fair.

That is because he agreed with me.

Deputy O'Keeffe should continue.

Iceland neglected its fishing industry and went down the path of financial services. Where is it today? The same thing has happened. We neglected our agriculture in a manner that was promoted by everyone. I spoke at meetings throughout the country and was laughed out of school in many places at public meetings——-

——because I was told that agriculture was yesterday's business.

I raised this issue with Dan McLaughlin of Bank of Ireland. I had known, and can quote several paper cuttings from the past four or five years to this effect, where we were going in the world economy in respect of construction but no one took it seriously. That is the reason we have finished up on the rocks today. The results published by AIB this morning are quite frightening when compared with those from six months ago. I consider them to be quite alarming.

In the course of another debate in this House a few weeks ago, I stated that many people have invested heavily in the Irish stock market and other stock markets. Rather than investing in pension funds, they invested in the shares of Irish banks. They will receive no dividend. Such people will have paper shares and I do not know when they will grow again, expand and pay out dividends. I noted the bank today referred to 2011 and possibly later. Such people now are paupers because the small amount of capital they possess precludes them from qualifying for a non-contributory old age pension. Many such people have contacted me and I am quite concerned by this issue. I acknowledge the banks and all businesses must improve their capital base. The only way they can do that is by not paying a dividend, rather than engaging in scrip issues and whatever goes with so doing.

In respect of interest rates, I made a point in the House some weeks ago about the manner in which we had behaved. Developers bought land from farmers at crossroads and paid small money for it. They then developed such land by putting water or sewage pipes into it thereby increasing its value three, four or fivefold. Moreover, they got away with 20% capital gains tax. Had that tax been set at a higher level, we may not have had the problems we face today in respect of developers. As I have suggested previously, we should have a much higher rate of tax for speculators than for the ordinary Joe Soap. Although the man on the street expects an increase of 2% or 3% in his wage packet, share options was the name of the game for these people. I invest heavily and make no secret of it. I have suffered a lot in recent weeks and make no apology for that either. Members will see that my returns for next year will not be better than those for last year. I can live with that.

I am sure they will be informative anyway.

They will not be embarrassing for me.

I grew up in a house in which finance was discussed and this economy used to have high interest rates to discipline the economy. During the past ten or 12 years, although Japan has set both low and zero interest rates, it still has not emerged from its difficulties. The only way in which one can discipline an economy is to have higher levels of interest. Low interest rates and zero interest rates were set in America four or five years ago and further back but it has not done them any good. If one wishes to stop spending, one must make it expensive to spend and we should have done that. I remember the 1950s and 1960s when de Valera and Seán Lemass were in power. They used to operate credit squeezes and would increase interest rates. The Central Bank then had much greater authority and control than is the case at present. While one criticises the Financial Regulator and the Central Bank, this might not be justified because of the Single Market and of events in Europe, which governed them to an extent. Perhaps we are taking a wrong direction. Although we have been boastful about reducing interest rates, it appears the financial institutions are not able to lower such interest rates as they should.

Will Deputy O'Keeffe give way for a question?

I will answer the Deputy's question.

Is Deputy O'Keeffe suggesting that our decision to join the euro was a mistake?

No, I am not. I am in favour of the euro and I supported the Lisbon treaty openly.

I wish to refer to that issue in this debate. I remind Deputy Stanton that when he attends meetings and invites me to support his party, as he did the other night, I also would welcome him to this side of the House to support Fianna Fáil in the good decisions we take. He would be more than welcome on this side of the House.

I thank the Deputy.

I had a lost opportunity the other night because Deputy Stanton spoke after me but I would have welcomed him warmly on this side because our decisions are always much better than those of Fine Gael.

The Deputy is very kind.

An historic moment.

I came into the House this evening to develop a point I made previously. I made a statement in the House in respect of the state of auditing. To back up my statement, I can cite two major companies, namely, Enron in America, which was a huge company, and Parmalat in Italy. They went to the wall during the good times but had they been properly audited in either country, they would not have experienced difficulties. There is a need for a tightening of auditing and the structure of appointing auditors to limited liability companies must be changed in the Oireachtas. There must be greater input into the selection of auditors. Perhaps there should be a selection process, similar to that which has been put in place by the Minister for directors of banks. The latter has not been announced yet but he is about to do it. I envisage a system in which there would be a panel of auditors from which they could be selected. This would be the way to do it because we are losing out heavily in this regard. I believe the banking problems in respect of the liabilities that have arisen and their foreign borrowings to fund the Irish market and perhaps other markets abroad, should have been seen by auditors. Such matters should have been raised and such activities should have been brought to heel. However, this was not done and that is where we are today.

On the Lisbon treaty, it is highly embarrassing for Ireland that it has not ratified the treaty. We must work hard to get back into the mainstream of Europe, to become the model of Europe again and to become the favoured people in Europe. We must get all sectors of society to support us. I refer in particular to the farming community, which has most to lose in a scenario in which we are not in Europe. I believe this must be done quickly. I have campaigned for Europe more extensively than most because I campaigned for it initially in 1972. It was obvious to me that those who opposed our accession in 1972 were still around and at some stage would get a victory, which they did in the referendum.

I do not worry about victories but what happened was a tragedy and it should not have happened. I heard Cardinal Brady speak at today's meeting of the Sub-committee on Ireland's Future in the European Union. He spoke about Europe and referred to Tory Island among other things. In principle, he was in favour of supporting the Lisbon treaty.

Much has been said about school buildings in tonight's debate. I understand that next year we will build 62 major school building projects and that we will build 100 school extensions. In addition, small school work schemes will go ahead as well as devolved grants. Many questions have been asked about Church of Ireland schools. I have sympathy for the Church of Ireland as the minority religion. Those schools qualify for a block grant of €3.8 million. I have two minority schools in my area and I was concerned about them because they raised the issue with me. I am grateful to the Minister for Education and Science for being helpful in that regard.

It is difficult to debate an issue when things have been so favourable previously. We had many good years. However, all budgets are difficult. We had a budget in 1997 that caused difficulties. Every budget in recent years had its problems because it did not meet the requirements of every citizen. People are fond of lobbying and creating a fuss about issues.

I am impressed by the support of the Green Party, under the leadership of Deputy Gormley, for the Government. He realises the importance of the economy and has put the national interest at the top of his agenda in supporting the budget. That kind of commitment from a minority party is a sure sign of the importance of the issue at stake.

We have to borrow €11.5 billion this year and we will borrow €13.5 billion in 2009 to keep public services afloat. In 2009 alone that is equivalent to borrowing an extra €37 million every day of the year. That is an indication of how serious is the matter. We have gone from a position of substantial growth in the economy to not having any growth. By 2011 that will mean additional borrowing of €45 billion. That is an enormous sum on which to pay interest. It is equivalent to approximately €10,000 for every man, woman and child in the country or more than €21,000 for every worker. Ten per cent of day-to-day spending will be borrowed in 2009. We must recognise that the figures are serious and accept the situation. I hope the Opposition recognises that. In fairness, the Opposition has been reasonably supportive but it has not answered my question on where it would make savings of €4 billion as opposed to the Government's €2 billion.

Much industry has come into this country in recent years, including from North America. Today is an historic day in the United States with the election of Barack Obama. I hope his commitment to this side of the Atlantic will be equal to that of previous US Presidents and that we can continue to have 100,000 jobs provided by North American industry in Ireland. However, we must also praise our own company, Cement Roadstone, which employs 100,000 people across the world. We have good businesses in this country and Cement Roadstone is one of our flagship industries. It deserves praise for its commitment. In recent days that company suffered substantially in the financial markets but for a multinational Irish company it employs a significant number of people. We greatly admire the company and its managers who have brought such success to the organisation, with the island of Ireland acting as a flagship for us in all regions and continents around the world.

I also praise the American companies that are located in Ireland. I hope they can all stay with us in spite of what has been said. Dell is the one I am most concerned about because it generates significant employment in my area of Cork on the Limerick border. I hear a lot about the company. I believe Dell is committed to Ireland and I hope it can continue here. The convoy of cars going from my area to Limerick city is reminiscent of the Munster final. Dell is a major employer that has taken up the slack due to the loss of the food industry in my area.

The food industry is one thing that is near and dear to me. Country of origin labelling must be addressed in an Irish context because of the huge amount of food imports that is taking from the livelihoods of farmers. It is a major issue. I serve on two committees of the House, namely, the Joint Committee on Enterprise, Trade and Employment and the Joint Committee on Agriculture, Fisheries and Food. Deputy Willie Penrose is Chairman of the former and Deputy Johnny Brady is Chairman of the latter. They have done great work in the area of country of origin labelling but we are not making the kind of progress I would like. If we do not make more progress we will have more imports. Country of origin labelling is necessary to give choice to housewives. It is important to know where a product comes from and to offer choice. If we do not have that we will never have the wholesome Irish food we were used to in the past, such as the traditional Irish breakfast.

I am conscious of what is happening in the country in this regard. We do not have any poultry processing such as we had in the past and there is no pig processing into a branded product. We only have primary production. There is no packaging or branding such as we had in the past and we are losing out heavily because of that. Fifteen years ago or more when we were in Opposition I went on a trip to Chicago. I was advised to take a case of Jameson whiskey and a case of Baileys with me for promotions there. It was a St. Patrick's Day event. Jameson was not attractive at that time. Baileys was the in thing, and it still is. It is one of the brand leaders in the country. Jameson has been an outstanding success in the intervening 15 years. It is now a brand leader that challenges the major Scottish whisky brands, which have been very successful across the world. Jameson has been an enormous success under Irish Distillers and is an employer in my constituency, which I share with Deputy Stanton. The company continues to expand.

We should not dismiss brands and say they are out of date. We should promote them and develop them more. That is why I refer so much to the food industry and what has happened in north Cork. I am very passionate about what is happening there. I am sick of it. I cannot believe what has gone on there given the great success that emerged out of the developments from the 1930s. There is no need for it. My argument is that it was based on development and building. We were going to build apartments and hotels. We have built nothing only for all those places that are rubble. I gave the example of Jameson. Galtee cheese is gone; it is made abroad. Shaws ham is packed in Scotland. It came out of Mitchelstown. No one knows where Calvita cheese comes from but if one looks at the bottom of the box it contains a little symbol and it states it was packed in England. I do not know why we had to do this or why farmers in my area supported that kind of executive. I call him Jerry Rubble now because that is what he is. He is rubble. I give the comparison between Jameson and why we lost our food industry.

The Deputy cannot cast aspersions on any individual outside of the House. I have said that before.

I have it said now anyway. It is on the record. Country of origin labelling would do a lot for this country. There is resistance in Europe to it. What is happening is that all the foodstuff that I give out about are coming in through Rotterdam where some adjustment is made and it is sold across Europe. What is happening is that chicken and beef come into Ireland with breadcrumbs or some such additive and until we correct that system we will have no success with Irish food.

Ireland is one of the most successful countries for the production of food in the world because we are surrounded by water. It is a safe country. I refer to the island of Ireland, North and South. We have the ability to produce good food. The farming community has lost heavily because it has failed to develop and protect its co-operatives. We are seeing a downturn in agricultural prices and over-production in the milk industry in some parts of the world. Milk is being produced in substantial quantities in America and New Zealand and much of that is coming into Europe in spite of the tariff barriers. In the past, co-operatives were very vigilant, did great marketing for farmers and took their produce, but we have lost them. The recession will inspire people to protect their businesses rather than enjoy the buoyancy that existed heretofore.

My constituency has done very well under Administrations over the past ten or 15 years. There have been substantial new school developments and roads, and a new road is being built from Cork to Dublin. There are many industrial developments in Fermoy and such places. That town has done reasonably well and the new cattle mart has been grant aided by the Government. It has been the flagship sales area.

I want to praise a few projects in my part of the country of which I am very proud. I am very proud to have obtained Government support for them and hope I will continue to do so. I hope that, in spite of the decline in prosperity and the difficulties that exist, we will still be able to grant aid and support deserving and necessary projects. I have no doubt but that we will do so under the Taoiseach, Deputy Brian Cowen, and the Minister for Finance, Deputy Brian Lenihan. The budget of the Minister for Finance was a Houdini job and was done very well. It has been acclaimed and the people realise it had to be structured in the way it was. Three major issues arose in respect of it but, ultimately, we have survived very well. Not alone that, people accept the budget and believe what we did was right. They are prepared to stay with us and support us in every way.

I wish to share time with Deputies Perry and Joe Carey.

Is that agreed? Agreed.

I compliment Deputy Edward O'Keeffe on taking a question from an Opposition Member during the course of the debate. This is very unusual for a Government Deputy or Minister and I do not believe I have witnessed it before. It allows for proper debate in the House, which is sadly lacking.

I did it out of courtesy for my friend Deputy Stanton, who shares my constituency and who is inclined to come across to my side.

I believed the Deputy was doing it out of respect for the procedure of the House, but that is another matter.

I made the point in a debate in the House in July that inflation was the highest it had been for quite some time and that unemployment was rising rapidly. According to a report on the day in question, electricity costs were due to rise by 20%. I said we were facing a crash in the housing sector and a perfect storm in that everything was coming together. Unfortunately, I have been proved correct in that everything did come together. I stated in July that Ministers should appear before every Dáil committee to outline their plans in detail. Unfortunately, this did not happen and the Government waited and let the summer go by as circumstances worsened. It introduced a budget that was rushed, poorly thought out and lazy. This is clear because, before the ink was dry, the Government had to row back on three major issues.

The Government made three major blunders. It had to reverse the incorrect decision on medical cards for older people. The original decision in this regard should never have been made. It had to reverse its shocking decision on the disability allowance, which was also wrong and affected the most vulnerable despite the Minister for Finance telling us the budget was to protect them. It did not protect them and the intention all along was to hit them, so to speak. The Government had to reverse the levy imposed on those on very low pay. This levy was a savage attack on people on the minimum wage. These three reversals alone show the budget was poorly thought out and cobbled together. It focused on hitting the most vulnerable and weak, which is worrying. We have had meetings throughout the country with teachers, parents and farmers. Government Deputies have said they are listening to these groups, feel their pain, will tweak this and that and see what happens in the Finance Bill.

Many of the budgetary measures are self-defeating and I will mention a few, first making reference to education. I know the area of education pretty well. The Minister for Education and Science told us that research shows that reducing class sizes really does not matter. I was curious about the research he quoted and asked him to identify it in a parliamentary question. In a reply I received yesterday, he mentioned a study by Eric Hanushek. This researcher found that effects of class size on student achievement were insignificant in 74% of the studies examined. The Minister did not elaborate further on the study but I did some research and discovered Mr. Hanushek has had many critics. A Policy Perspectives report, entitled "What Research Says About Small Classes and Their Effects", written in 2002 by Bruce Biddle and David Berliner, has pointed out that many of the supposed class-size studies cited in Hanushek reviews do not examine class size directly but rather a proxy measure presumed to represent it, namely, the student-teacher ratio.

Class size is vital. The Minister makes the point that the quality of teaching is as important, if not more so. I agree with him, but if he did his research properly, he would discover that most researchers state in their literature that class size is crucial in a child's early years. They state small classes have a considerable impact that features for some considerable time. Even if children end up in larger classes later on, they still benefit from having been in smaller classes in the first, second, third or fourth years of primary school. Research has shown that class size affects the amount of time one spends in school and one's longevity. Evidence shows good education improves people's health and well-being. By increasing the class sizes of younger children, the Minister is doing an awful lot of harm that will have to be paid for in the future. I ask him to reconsider his decision and not rely on one or two research projects. I refer him to the student teacher achievement ratio, STAR, project in Tennessee, which was carried out over quite some time. He should examine this and take his evidence therefrom when forming policy. Let us have a proper debate on class size and education.

What has the Minister done in his budget to improve the quality of teaching in our schools? He has got rid of the early retirement scheme. If a teacher who is burnt out, tired and ageing wants to retire, he or she cannot do so. The Minister now requires him or her to stay in the classroom with the small children until he or she reaches retirement age instead of facilitating him or her to leave to allow a young teacher, fresh from teacher training college, to take over. I fail to see how this decision helps. As I stated, the cuts have not been thought out or examined properly.

The free books scheme has been hit, so to speak, as has Traveller education. How can any Minister justify this? Language support teachers have been hit, so to speak, and some principals told me they may not be able to open their schools next January because of the substitution decision. If a teacher rings in sick on a Tuesday or Wednesday morning, the principal may not have anyone to cover his or her class. This is bad enough in primary schools where one can divide up the children, but at second level, where there are specialist classes, it is not so easy. It will cause chaos in schools. Principals are already stressed and this measure will make circumstances infinitely worse. It is a direct attack on the education system.

The Minister for Education and Science has been praised for the steadfast manner in which he defended the education cuts, as if this were some kind of virtue. This would be fine if there were positive and beneficial education cuts. They are the opposite. The Minister is defending education cuts which are damaging, negative and detrimental and he should not be praised by anybody for that. I challenge people to examine the implementation and effects of these cuts. They will cause a great amount of harm.

I wish to move to other issues. The Disability Federation contacted my party and I know it has contacted other Deputies. It is concerned about the reduction in its budget and maintains that a 1% cut in funding to disability services comes in addition to a 1% cut imposed by the Health Service Executive this year after efficiency savings were made. We see again that people with disabilities are affected and are hit. I already alluded to the attempt by the Government to make changes in the disability allowance. That was rowed back under pressure. Fine Gael was about to put forward a motion on the issue in the House and it is probable that the Government got wind of this and changed its strategy at the 11th hour. It did the right thing there by making the change but did the wrong thing by introducing it in the first place. I worry about the mindset of people who saw this and tried to change it.

There are also issues concerning the national disability strategy, the funding for it and where the funding goes. There does not appear to be any mechanism of tracking that funding in order to make sure it ends up where it is supposed to. That is something we must examine.

A number of years ago, when he was Minister for Education and Science, Deputy Noel Dempsey piloted the Education for Persons with Special Educational Needs Act, a major part of national disability strategy, through this House. We were promised it would be completed by 2010. The Act dealt with education for persons with special educational needs and children with disabilities in the classroom but yet again this Government, which lauds itself for protecting the vulnerable, has decided to cut funding. It left in place all its Ministers of State but decided to attack children with disabilities in the classroom. As if they did not have enough to worry about, parents across the country are now worried about this. The Act was progressive legislation at the time and I am disappointed the Government has decided to attack it and to stop funding.

Another relevant matter is the decision by Government to subsume the Combat Poverty agency into the Office of Social Inclusion. I disagree fundamentally with this. I know there have been a number of reports on the agency's future and perhaps we should do something with it. However, perhaps it would be better if Combat Poverty were to be subsumed into the National Economic and Social Development Office where it might still put forward an independent critique of poverty in this country. Now more than ever we need an independent voice that can research and report on the extent and effect of poverty on people. My fear is that if Combat Poverty is taken under the Office of Social Inclusion it will disappear. We would then no longer have an independent voice to report scientifically on poverty and that would be a retrograde step because all governments should have such a voice. I put it to the Government that this action will get rid of that voice.

We must examine the attack made on the budget for youth affairs which is of particular interest to me. The grant-in-aid for general expenses for youth organisations has been cut by 10%. It is part-funded by the national lottery and has been cut at a time when we must support young people in the communities out of school. If we cut that budget youth clubs and organisations and youth cafes will all be hit. There have been reports in the past few days about the drug issue in the country and how serious it is. The drugs initiative and young people facilities and services fund has also been cut, by 5%. Instead of adding to these funds and investing in the future, in youth and education, we are to cut back on them, in particular on these organisations which are already run on a shoestring and can barely survive. Any cut, even a small one, can have a considerable impact. I ask the Government to take a look at this and bring forward a proper policy on youth issues. It does not have one although it has a Minister of State for youth affairs.

My final point concerns decentralisation, another example of something that was cobbled together at the last minute on the back of an envelope. In Youghal in County Cork decentralisation was ready to roll but has been stopped. Deputy O'Keeffe mentioned agriculture and there have been many debates in the House with Deputy Creed and others on the impact of the budget on agriculture. Young people have again been hit by the cut in installation aid and this has turned them away from agriculture.

Overall, not been much thought was given to this budget. I hope a debate in the House will inform Ministers, officials and others and perhaps encourage them to look at issues again. This should have been done initially, as I suggested last July. We should have had a proper debate when we knew things were going wrong but the Government could not wait to get out of the gap last July. It waited and waited and I am afraid the horse has bolted.

Though I do not agree with the saying, politics is often all about perception. In budget 2009 the Taoiseach and the Minister for Finance, Deputy Brian Lenihan, wanted to create the perception that they were in control and were in possession of the wisdom to guide Irish society and this economy through the current turmoil and position us correctly for the future. The Minister concluded his budget speech with a call for patriotic action and asserted that we were all in this together. As is customary, he received a standing ovation from the opposite side of this House but that ovation rather quickly turned into something else. There is a very short distance between a pat on the back and a kick on the backside.

I always become suspicious when I hear somebody invoking patriotism. It brings to mind the words of Samuel Johnson who said that patriotism is the last refuge of the scoundrel. We are now at the last refuge stage for a Government that has been reckless in its stewardship of the economy. The first draft of history seems to indicate that this Government has blown the greatest opportunity the country has ever had to establish its mature economic identity around the world.

It is the sheer hypocrisy of this budget that I find galling. We may take some of the measures in agriculture as an example. In disadvantaged areas 40,000 farmers will lose over €1,000 per year. This cut is a direct attack on rural communities on the west coast and attacks farmers in my constituency in County Clare, where 6,120 will be directly affected. The disadvantaged area payment was introduced to give farmers some respite because the land they farm is poor. It is much harder to make a living from it. The application of the 1% income levy on gross income for farmers and the self-employed is unfair and goes against all principles of a fair and equitable tax system. The suspension of installation aid for young farmers and the early retirement scheme from midnight on the day budget 2009 was presented places the future of farming in jeopardy. The farming sector is being hit disproportionately in this budget. Hitting farmers by amounts in excess of €2,000 is simply not right. The measures are unfair, unjust and clearly need to be revisited. I appeal to the Minister to think again about the harshness of suspending the young farmers' installation aid scheme, the early retirement scheme and the disadvantaged area payments.

The throngs of pensioners who came to Dublin from the four corners of Ireland illustrated forcefully that the Government got it wrong when it removed the automatic right to a medical card for those over 70 years of age.

This budget is a missed opportunity to bring about real public service reform. It has hit the old, the sick, the disabled and the young, the most vulnerable sectors of our society. By hitting these groups and by omitting to bring about any serious public sector reform the Minister for Finance ignored the real underlying problem with this country's finances.

The 32 cuts proposed in the budget for education have a slash and burn feel about them and will have a devastating effect on every student. The class size issue was a central part of the 2007 Fianna Fáil election manifesto. That Ireland is consistently near the bottom of OECD leagues on this issue should be a source of shame and embarrassment to the Government. The lack of investment in education in recent years has resulted in Ireland having the second largest class sizes in Europe. With these cuts, Ireland will be placed bottom of the OECD league — so much for the concept of developing a knowledge-based economy. These savage cuts will place our four and five year olds at a disadvantage in the early years of their education. How are these children supposed to attain their full potential in overcrowded, dilapidated classrooms? Ennis national school in County Clare is a prime example of this problem.

I object to the fact that schools in County Clare will lose many teachers. In Ennis, for example, St. Flannan's College, of which I am a past pupil, will lose five teachers, Coláiste Muire will lose four teachers and Ennis national school will lose five teachers, consisting of two mainstream teachers, two English support teachers and one Traveller support teacher. Other primary schools such as Tulla national school and Tumgraney national school will not receive the vital additional teacher they dearly need. Every school in County Clare will be affected and students will suffer.

The €2 and €10 travel tax is ill-considered in its application. In the context of Shannon Airport in my constituency of Clare, it undermines the principle of having a proper and balanced approach to regional development. The tax sends out the wrong message and undermines this Government's supposed commitment to the regions.

Shannon Airport has been kicked repeatedly by the Fianna Fáil Party for the past two years. The loss of the Shannon to Heathrow route has been followed by the proposed shedding of 280 jobs in Aer Lingus. The Government claims it is not able to intervene in Aer Lingus affairs and cannot answer the fundamental question as to the reason it holds a 25% shareholding in the company but is unable to influence its direction.

With the introduction of a new travel tax, the Minister for Finance, in his wisdom, is trying to tax the airline industry out of recession. Why is the Fianna Fáil-led Government hitting Shannon Airport hardest? Why will a tax of only €2 apply to flights from Dublin Airport to Liverpool, Manchester, Glasgow and East Midlands airports while a €10 tax will apply to flights from Shannon to all these destinations?

In recent days, Ryanair has indicated that its €400 million investment in Shannon Airport is in jeopardy. The company accounts for 60% of traffic in Shannon Airport, flying to 35 different routes and accommodating almost 2 million passengers, with an average fare of €10 per flight in the winter months. At the stroke of a pen the Minister has imposed on passengers a tax which will increase the cost of flights by 100%. In response to a parliamentary question I tabled on this matter, he acknowledged that no analysis was carried out on how a travel tax would impact on the tourism and business sectors before the measure was introduced. He then justified its introduction on the basis that three other European Union countries have a similar tax in place. This is a short-sighted approach because Ireland is an island nation whose economy is dependent on air travel.

The Minister's travel tax is anti-tourism and anti-business and will result in further job losses in my region. The outrageous measure must not be introduced and I demand again that the Minister for Finance and the Fianna Fáil-led Government urgently scrap it as it will have a devastating effect on Shannon Airport and the mid-west.

As I stated, politics, unfortunately, is about perception. This Government, with its enslavement to spin and public relations, has forgotten that ultimately politics is about people. With this budget, it has forgotten about people, sidestepped and refused to tackle the real difficulties and, contrary to what the Minister said, failed to spread the burden. This is not a surprise because gross mismanagement of the public finances by successive Fianna Fáil-led Governments has put us in this position in which we find ourselves. The parties on the benches opposite will not chart a course out of it.

The 2009 budget was conceived at a wild party held in a Fianna Fáil fuelled building boom and has been delivered prematurely in a welter of panic and confusion. As we approach the 12th successive year of Fianna Fáil-led Government, we are experiencing a game of "back to the future". However, one cannot blame somebody else.

In the cold light of a new reality, the Fianna Fáil-led Government has reached for the first available excuse by arguing that our economic problems are not its fault but a result of global economic turmoil. The worldwide downturn is not the root cause of the disastrous deterioration in Government finances, which was well in progress before the failure of Lehman Brothers in mid-September caused global credit facilities to cease functioning, thus triggering a global banking crisis. The banking crisis will add additional burdens to the Government's budget difficulties and make any recovery in Government finances even more difficult. I am concerned about the equity of banks and the survival of small companies. If the economy is to grow again, we must create jobs in small companies and businesses.

I will make one general point about the global banking crisis. The crisis arises directly from the fact that rewards in society have not been distributed fairly over many years. Serious income inequalities have arisen both in the United States and Europe and particularly in this State since the 1980s, and these widening differences favoured the financial sector. The mismanagement evident in this sector, including reckless lending practices, is a matter of grave concern.

The previous Taoiseach often spoke of his interest in Robert Putnam's ideas of social capital and his concern to ensure that we have an accumulation of social capital in Irish society. Perhaps the current Taoiseach will concern himself more with the preservation of the financial assets of citizens. In the broad sweep of history, James Burnham's forecast of the management revolution has now come to pass. While this author and socialist commentator was wrong on many issues, he was at least close to being right in this case.

In the past decade, a new financial executive management emerged and shareholders effectively lost control of their money. The executive managers of the financial institutions, in their intense greed and desire for the wealth of ordinary citizens, devoured the wealth of the owners of capital and each other. The effective power of shareholders vanished as executive management lined its own pockets.

The problems in the global economy, particularly inequalities in income, have implications for future policy making in every country. Executive management must behave in a way that promotes fairness in society as a whole so as to properly serve the longer-term interests of its shareholders.

The Taoiseach will have difficulty convincing the electorate that the economic situation facing the country is the worst in the past 100 years when he has not yet convinced his Cabinet colleagues that this is the case. Every day one sees Ministers make announcements and pronouncements on issues on television. The reason the Taoiseach and his Cabinet have difficulty facing up to the true scale of the crisis in Government finances is that the current crisis is the direct result of years of Fianna Fáil disinterest and incompetence. The Fianna Fáil Party has been in power for 12 years. In the United States, a mood for change has resulted in an historic decision. Here, too, we have a strong mood for change. The United States has experienced eight years of President Bush but Ireland has had 12 years of a Fianna Fáil-led Government which lost its way several years ago.

People are tired. The Government became ever more incompetent as each year in office elapsed. It has been in power for so long that it has become complacent, lost touch and become ineffective. This incompetence violates the expectation of citizens for good government and diminishes their esteem of all politicians. It is well documented by a range of Government projects which resulted in poor value for taxpayers' money. Each new demonstration of ineptitude shows that the problem is beyond politics and is one of plain, old-fashioned, honest incompetence. This incompetence and indifference to waste means it is time for the Government to go.

On a more specific issue, the parameters of the budget are based on the view that the decline in consumer spending will be limited to the final quarter of 2008 and that, as global confidence recovers, Irish consumers will recover their spending habits and Government revenues will recover strongly in 2009. I hope the Government is right but I do not believe it will happen. The crisis in Government finances is recognised to the extent that some crude tax increases have been introduced, and even cruder cost cutting measures, into next year's budget. The Government has tried to portray these cuts as precise surgical procedures, carefully targeted to the lowest priorities. What has actually been done is crude, ineffective clubbing rather than clean surgery. Cost cutting is a short-term tactical move and just buys some time, the panacea of a quick fix at a heavy human and social cost.

This cost cutting exercise is in fact the evidence that proves this Administration's incompetence as a Government. In the real world of business, effective managers try to reduce the cost of carrying out the activity, while keeping the activity going. This approach recognises that once an activity disappears, it is considerably more difficult to start it up again. Only as a very last resort is the business line shut down.

What Fine Gael has proposed the best policy to control and reduce the costs of carrying on the existing business of Government. Reducing the cost of the public sector wage bill is by far the best option in present circumstances. Everyone stays in work, existing services can largely be maintained, and the drop in the standard of living will be temporary. A Fine Gael-led Government following this policy can restore the trust of the people and show that the Government and its Ministers are persons of substance, in control of the country and able to bring direction, efficiency and cost effectiveness to the State's activities. In terms of specific policy areas I would like to see more attention being given to the indigenous manufacturing sector. From a small acorn the large oak grows, but there is no respect in this country for the business person who is creating a small number of jobs. There is nothing for them.

A key factor driving economic growth is the presence in Ireland of many global high technology companies. More than 80% of exports from the manufacturing and service sectors are produced by these companies. Of more importance to national economic success is the indigenous sector, both manufacturing and services. The manufacturing sector has made little progress in the past ten years with the number of jobs falling. Medium and large indigenous industry is of central importance in industrial policy because of its degree of integration into the economy. There is an urgent need to review the effectiveness of the instruments and incentives used in the development of the indigenous manufacturing sector in every village and town.

This sector must get renewed priority so that investing in productive capacity for solidly based growth becomes more rewarding than making quick profit through speculation in property. We need a significant expansion in local start-ups and in indigenous companies, with renewed attention to the issue of linkages with multinational companies located here. There is an urgent need to improve their long-term competitive advantage, not just by a short-sighted attack on labour costs but by increased research and development, an emphasis on superior design and product quality innovation and marketing.

This has been an appalling budget from an Administration nearly 12 years in Government, with all the hallmarks of massive incompetence. I thank the Ceann Comhairle for allowing me the time to make these comments.

I welcome the opportunity to speak on the budget. I should like to empathise with Deputy Joe Carey, as regards something he said. He mentioned his alma mater, St. Flannan’s College, Ennis, as having lost teachers. He also mentioned my former secondary school, Coláiste Mhuire, as having lost teachers and I extend my sympathy to County Clare on that basis. However, I must now don my Dublin South-Central hat in relation to education. One of the points made was that schools in DEIS areas were not to be affected. I understand from the number of e-mails I have been receiving from schools, teachers and parents since the budget that is simply not the case. While technically the DEIS schools are meant to be protected, they are losing supports such as book grants, Traveller support schemes and support for physics and chemistry in the secondary schools. Wearing my scientist hat I am appalled to think money will be pulled from physics and chemistry. We are preaching day in, day out the importance of science and technology for the future development of the country and one of the first areas to be hit is the support for physics and chemistry. How, in all honesty, does the Minister expect there will be interest and commitment for difficult subjects such as physics and chemistry in secondary schools if the support grants are to be pulled from them?

The same is true in areas such as home economics, art, choirs and orchestra, those types of additional subjects one might say that help to provide a more rounded student as against the whole academic aspect of education, which is also, of course, very desirable. However, when money is pulled from such areas one ends up with grind schools where it is the survival of the fittest and the only thing that matters is points. One will find people looking at the lowest common denominator, picking five or six subjects or whatever the minimum requirement is to get the points for a place in college or whatever. That is fine for those schools who can deal with that. It is not fine where there is leaving certificate applied and vocational, very dependent on those other subjects which create some type of more general opportunity for students who are not academically inclined and towards whom we should have the very same degree of commitment. The support has been pulled from the leaving certificate applied and vocational courses as well. They have been particularly successful in many of the disadvantaged areas where the drop out rates are enormous in many schools.

If I have time later on, I shall come back to education again, but I want in particular to look at the impact of the budget on Government supports for the arts and sport. This is an area that has not been mentioned at all. It has been significantly sidelined in terms of commentary, despite the fact that support has been very significantly reduced. This can only have a detrimental impact on the many small groups, clubs and organisations that rely on funding from the Arts Council or the Irish Sports Council. The decisions taken in this area are particularly short-sighted, similar to cuts in other areas where Departments have targeted those most in need of funding, the smaller clubs, organisations and groups that receive funding from the Arts Council and the Irish Sports Council. They are unable to raise the finances themselves and so are absolutely dependent on this type of support.

Total funding for the Department of Arts, Sport and Tourism is down 22%, more than one fifth. This fact highlights Fianna Fáil's true commitment to arts, sport and tourism. Arts and sport are fine to support in the good times. They are a great place for the vanity projects or indeed, the white elephant, if I can remind the House of the dreaded Bertie Bowl. However, when times are tough this is the area that tops the queue for the chop and takes the first hit. The Government has no respect for the important and vital role these sectors play in the community. The proposed national stadium has moved from Deputy Bertie Ahern's pie in the sky Bertie Bowl, with 80,000 seats and no public transport, to a national sports campus with a 25,000-seat stadium that was committed to in the agreed programme for Government in 2007. This project has been placed on indefinite hold. It has a grant of just over €4 million for 2009 and based on that amount of funding it seems highly unlikely there will be any significant progress in the foreseeable future.

The former Taoiseach was famously fond of the Robert Putnam book, Bowling Alone, which charted the collapse of the American community. It is a very interesting book to consult in terms of what actually happened when the small sports clubs and the bridge club, for example, fell apart. The former Taoiseach’s colleagues who remain in Government must be aware of the role arts and sports play in a community together — and in fostering community spirit. I spoke yesterday to a residents association which was interested in developing its own local festival, the whole purpose of which was to generate a community spirit.

Debate adjourned.
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