Finance Bill 2014: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

The Minister for Finance stated that Ireland has the fastest growing economy in the European Union. He did not give much context or detail on what this means and there was no question about whether it is good in itself. When we boast about having the fastest growing economy in Europe, we would do well to remember that we also have the fastest growing child poverty rate in Europe. We should be looking closely at why matters are working out that way.

The markets like us to show growth in order to restore their confidence in us. This is what the Government is aiming for, regardless of the cost. Its policies are very much market driven. During the boom times, planning was market and developer driven and we know where that got us. Given the battering that neoliberalism took during the crisis, it is difficult to understand why it continues to thrive. The Government boasted that the budget represented the end of austerity but until we claw back the serious inroads made into public services and the living standards of ordinary people, austerity will prevail. Inequality is rising and there is little doubt that the austerity of the last six years has seriously eroded public services. It will be a huge challenge for any Government to row back and restore what we had previously.

The Minister, Deputy Noonan, is a bright and able individual. I like him, although I do not agree with him. He makes his arguments very well but so do people like Mr. Michael Taft. I would like to pick the latter's brains in order to present the matter from another perspective. In October, Mr. Taft carried out a budget analysis using data from the Government's budget report, adjusted for inflation and IMF projections for population increases in Ireland. He found that total spending on public services, social transfers and investment will fall by more than 9% by 2018. Funding for schools, hospitals, policing, transportation, enterprise supports and other public services will fall by more than 8%. Government investment, which is vital to our infrastructure and our attractiveness as a place to do business, will fall by 15.4% by 2018. As he points out, this is the most irrational of all cuts from the point of view of economic growth.

The Minister, Deputy Noonan, told us that Ireland already has one of the most progressive income tax systems in the developed world. In 2015, he said, the top 1% of income earners will contribute 21% of all income tax and universal social charge revenue collected. By contrast, we were told, the bottom 76% of income earners will pay 20% of the total. According to Michael Taft, however, this is a ridiculous statement when one takes into account his finding that Ireland has the highest rate of pre-tax, pre-transfer income inequality in the OECD. It is true that the top 1% of income earners will pay 21% of all income tax and USC collected in 2015. That is as it should be, given that this group has more than 20% of the wealth in Ireland. In fact, it is disgraceful that these top earners will pay so little.

The tax system is progressive only to a point, with increases in taxation flattening out after the €70,000 plus mark. Once one joins the top 10% of earners, the more one makes the less one pays as a percentage of household income. That does not amount to a progressive tax system. Rather, it is a system that rewards the rich and the super-rich. The carrots that were attached to the budget nicely illustrate this situation. Those in the top 10% - that is, those earning above the €70,000 mark - got 4.3 times more cash than the many workers who earn between €17,500 and €33,800. An extensive study by the Nevin Economic Research Institute, NERI, earlier this year found that as a percentage of household income, the poorest 10% pay taxes of 28% and the top 10% pay a rate of 29%. That is hardly progressive.

When it comes to the crunch, playing around with the income tax percentages, as this budget does, is something of a sideshow. The real issue is the massive cuts in investment and expenditure on social services. Mr. Taft gave a seminar on 22 October in response to the budget in which he pointed out that expenditure on public services in Ireland is 14% below the average for the EU 15. Compared with other small, open economies, we would have to increase Government consumption by €7 billion to reach the mark. When it comes to public investment, Ireland comes in at 20% below average and would need to increase spending by €800 million to €1.7 billion in order to match the EU average. All of this is compounded by the fact that total investment in the economy is 40% below the eurozone average.

Even our masters in the IMF have changed their tune a little of late. In a recent report, entitled Redistribution, Inequality and Growth, the IMF challenges the notion that policy makers must choose between tackling inequality and achieving faster growth. The argument now goes that reducing inequality leads to faster and more durable growth. Some weeks ago, the IMF went so far as to break with standard neoliberal doctrine by encouraging member governments to take advantage of historically low borrowing costs to boost spending on public investment. Most economists everywhere in the world - Stiglitz and Krugman among them - agree it is a no brainer. With money to be had for less than 2%, the idea of not borrowing directly to invest in infrastructure is crazy.

The Minister, however, pointed out that EU rules prevent him from borrowing serious amounts to invest in infrastructure and that including such investment on the books would mean we would not meet our EU targets. We should be challenging those rules because they do not make sense. The Taoiseach has said that one of the arguments for Irish Water is that the Government must create a commercial State entity which, more than likely, will be eventually privatised. Even while it is still owned by the State, a commercial State entity is able to borrow off the books, which the State cannot do. It would make sense for the State to avail of the low cost of money to invest in infrastructure now. We should challenge the European rules in order to be able to do that. Infrastructure investment would have an impact on people's lives in a way the so-called recovery has not. The figures look good, but the majority of people are not experiencing this apparent improvement as impacting on their lives. The type of serious programme of investment I am proposing would have a dramatic effect.

Budget 2015 may be characterised as a continuation of policies which have seen the Government operating like Robin Hood in reverse. The Minister continues to rob from the poor and from ordinary people to further enrich those at the top of Irish society. What could have been an opportunity to level the playing field and begin to eat into some of the rising inequality we have seen in recent years - an inequality that accelerated during this Government's term of office - was wasted. Instead the decision was taken to enrich those at the top to the detriment of everybody else. Not only is this bad for citizens on social welfare and the growing group made up of the working poor, it is also criminally irresponsible in terms of the cost to our society into the future.

I agree with the analysis of the budget put forward by John Douglas of Mandate. It is, he said, a highly regressive budget which redistributes wealth from the lowest-paid to the highest-paid earners. An employee earning €70,000 will be better off, thanks to this Government, to the tune of €750 per year. A low-paid worker on €15,000, meanwhile, has been compensated by only €105. It should be noted that these figures do not take account of the introduction of water charges. Social Justice Ireland has pointed out that this is the fourth regressive budget in a row and one which further widens the gap between rich and poor by some €500 per year. Between 2008 and 2015, SJI observes, budget changes in tax and social welfare have impacted mostly on two groups. These are welfare dependent households, which have lost more than 12% of their income, and, second, the working poor, who have lost 13% of their income. This budget failed to prioritise those groups and will instead worsen their situation.

Correspondence I received from two constituents is reflective of what people in these circumstances are experiencing. One of these constituents is a woman, aged 47 and with two children, who spends more than 50% of her income on rent. She wrote:

I have been working full time in Ireland since entering the country. I feel like I am walking against walls. After paying rent, electric and the bus to work, I have €500 for three people. I cannot get rent supplement because I work 40 hours. I cannot get one-parent supplement because I earn too much, even though it is only €450 per week. We were not able to heat our house for the last three years and I will not be heating it this year. I have to pay everything when it comes to school.

Next year this person will have to pay water charges on top of everything else, all out of a monthly net income of €500 between three people. She goes on to say:

Now I have to sub-rent two rooms in order to have the money for... simple things like school or shoes for my children. I do not want to do this. I would like my family home to be my family home.

Another woman wrote:

I cannot afford to give any more. I cannot afford to be scared any more. I would really love the Government to come and live off our earnings. We have no loans but we just cannot manage ... I am fed up with managing. Both of us go out to work. We should be able to see something good from our wages.

The reality is that people are not. They are getting up earlier, working longer for less than they did years ago while the cost of living is rising. It is an absolute disgrace the Government missed an opportunity to target those families.

Water charges have to be brought into this context. Even the few crumbs the Government threw at people will be massively wiped out by water charges. Nobody is taken in by this idea that the Government will cobble together some magic solution in the next two weeks which will keep water bills low, allowing it to limp on to the next general election, after which they will skyrocket. The Taoiseach has consistently said he needs money to invest in Irish Water's infrastructure and that is why the charges are in place. He speaks about taking a couple of hundred million euro - with the budget concessions it might be down to €300 million - out of the pockets of householders to do that. He is masking the fact that in this budget alone €400 million was given back to the high earners in our society through tax concessions and paybacks. Instead of further enriching the rich, the Government could have nullified the whole basis for the water charges to begin with. Deputy Mick Wallace referred to research from Michael Taft from UNITE which showed the top 17% of earners got tax cuts to the tune of approximately €400 million courtesy of the Government. What other conclusion can one draw but that it will be hard-pressed home owners who will pay for water charges who will also pay for these tax concessions?

We already pay for our water. The people already pay €1.2 billion, largely sweated off the backs of taxpayers, to our water infrastructure. The setting up of Irish Water cost €640 million. That is money paid twice by taxpayers through property tax and the use of their pension funds. Now, the Government wants us to pay water charges again - paying for it a third time. The big carrot for this is that this money will be used so that Irish Water can borrow money so we can pay that back again, essentially paying for it four times. It is absolute and utter lunacy.

Could we get the money elsewhere? One only has to look at the headlines in today’s newspapers about the activities of the multinational sector and corporations to know we could. Not only did the Government give back €95 million to corporations in the recent budget, we have one of the lowest corporation tax rates in Europe which is not even implemented. We see supposedly gilt-edged reputable companies consciously organising their tax affairs so they can avoid paying tax in this country. There is a direct link between an erosion of our public services and the Government’s decision to make ordinary householders meet that deficit. If these corporations even paid the effective rate of corporation tax - remember it is the lowest in Europe - this State would have €2.5 billion extra to play around with every year. That is more than enough to invest in a proper water infrastructure system, to improve all benefits and deal with those on the bottom.

The Government, however, chose not to do that. Instead of protecting citizens, it has consciously used this budget to protect those at the top. It is incredibly unfortunate that the Government has not taken positive initiatives to encourage investment. I agree with the points made by Deputy Mick Wallace on that score.

It is a crime that billions of euro of citizens’ money in pension funds is invested abroad. While I accept these are private pension funds and the Government cannot control private money or direct them what to do, it can encourage them as to what to do. We have a tax system which benefits high earners in tax breaks for pensions. Manipulating the pension tax benefit system to link the benefits at home in Ireland would encourage those pension funds to invest in Ireland. It is only by putting people to work on some of the programmes to deal with massive infrastructural deficits that we will transform the economy. It will get more people back to work in a serious way, not zero-hour contracts or part-time rubbish jobs or JobBridge internships over which the Government stands.

It is a little bit rich to listen to lectures about how we need to conserve water when for the past four years the Government has been in power it has not put a single water butt on to a Government building, not to mind investing in a proper system of rainwater harvesting in State buildings or a programme of grants to allow people to remediate their houses to cut down on water consumption. These are also activities that could get people back to work and improve the buoyancy of our economy. Some of the pension funds I referred to earlier could be encouraged to invest at home through these initiatives. Again, however, it is another wasted opportunity.

The facts speak for themselves. The rich have been made richer at the expense of ordinary citizens. Thankfully, the people have seen through that. They are up off their knees and will not be taking it anymore.

I call Deputy Olivia Mitchell who is sharing time with Deputies John O’Mahony and Anthony Lawlor. Is that agreed? Agreed.

It is hard to believe that only three weeks ago on the eve of the budget the newspapers were full of concern that there might be a giveaway budget that could jeopardise the national recovery or that not enough would be given away. In the event, every single taxpayer and welfare recipient will be better off as a result of this budget, albeit by a modest amount. It is not the amount that is significant. It is the fact that, after so many difficult years, we at last have a budget that does not take more from us than it gives. The budget’s thrust was very much focused on increasing employment and securing the recovery, ensuring that progress we have made painfully over the past four years is sustained in the future. While paying ourselves more in pay and benefits may be a short-term stimulus to the economy, if it is done at the cost of more borrowing, then it can only undo what has been achieved and will send us into an ever downward spiral.

The measures announced on budget day and included in the Finance Bill are both prudent and proportionate. Changes in tax and the universal social charge, USC, taken together ensure every worker’s pay packet increases. This is true of both PAYE workers and the self-employed. There is considerable upset, however, among the self-employed about the onerous 11% USC rate. It was introduced and increased to ensure there was no disproportionate benefit to the self-employed with incomes over €100,000 compared to those on PAYE and has its roots in the changes to the PAYE ceiling back in 2011. Notwithstanding the logic of it, the optics are not good. It appears to the self-employed that they are being punished relative to the PAYE worker on a similar income. The assumption the self-employed had a tax advantage prevails and may have been true in the past. The rules, however, changed and Revenue has become far more efficient in collecting from the self-employed. The rule has changed also in that they are paying tax in advance rather than after the event.

Over the years of the recession, we lost an awful lot of our entrepreneurs; some of them were wiped out forever. We need now to grow and nurture a whole new generation of employers, however small the size of their business. Without them, there will be no new jobs. No matter how logical or justified this higher rate of USC is, it creates the perception that the self-employed are being penalised in some way and not valued.

As we know, when it comes to investment decisions, optics and perception are all-important. The bottom line is that the effective rate of tax for the self-employed is 44.3%, while for PAYE workers it is 42.3%. The marginal rate of tax for the self-employed is 55%, whereas for PAYE workers it is 52%. I know it will not happen in this budget, but I ask the Minister to examine as soon as possible a rebalancing of the mix of USC and taxes in a more transparently fair way, because, as I said, the optics are equally important.

The Minister should also reinstate the sunset clause by way of an amendment to this Bill. A sunset clause was included originally, which recognised the penal, onerous and, by implication, temporary nature of this tax. While that clause expired this year, it was reinstated for PAYE workers but was removed completely - and there is no mention of reinstating it - for the self-employed. I strongly urge the Minister to do so this year. It would send out the right signal that this is not going to be a permanent tax.

As regards pensions, I welcome the measure whereby the requirement to take 5% out of approved retirement funds, ARFs, annually is being reduced to 4%. I hope we will see a further decrease to 3%.

I want to make a case for the many people who are on defined benefit pension plans but are still working, and who now see almost all defined benefit pensions being wound up. Their funds are being used to purchase personal retirement bonds. On retirement, an employee whose bonds derive from a defined contribution scheme can either buy an annuity or transfer their money to an ARF. Those on defined benefit schemes, however, find that they must purchase an annuity on retirement. Therefore, the latter group does not have the same flexibility. Purchasing an annuity is an expensive option, particularly at the moment, because interest rates are so low that people must spend a huge amount of their fund just to get a meagre pension. I ask the Minister, therefore, to examine the possibility of giving the same flexibility to those on defined benefit pensions that those on defined contribution schemes have.

I welcome the reduction from 5% to 4% in the mandated withdrawal from ARFs each year. The fact that people have to take out 4% each year will ensure that there is no loss to the Exchequer, because the tax will be paid annually at 4%.

Notwithstanding what I said about the USC, the overall budgetary thrust is very much pro-business and pro-investor. It strengthens and extends the scope of many of the existing measures we took last year. Particularly welcome is the publication of the roadmap for tax competitiveness and the concrete commitment to a range of actions to give certainty to the business community, which is so important. Doubts about the 12.5% corporation tax rate, together with the reputational damage of the "double-Irish" tax arrangement, could, if they were allowed to persist, have been catastrophic for inward investment. Therefore the public commitment to maintain the 12.5% rate and introduce automatic tax residency for companies no matter where they come from - if they are incorporated here - is essential and timely.

On balance, this budget is proportionate and of benefit to everybody. Based on the certainty it provides, we can look forward to better budgets in the future.

I am glad to contribute to the debate on the Finance Bill, which is effectively the implementation of measures in the budget. It is interesting to see that none of the opposition parties is represented here now. Maybe that is an indication that they are conceding that the budget was an excellent one.

I welcome many of the measures, which, for the first time in five years, demonstrate that there is some light at the end of the tunnel for those people who have sacrificed so much on the back of difficult decisions that had to be taken by this Government after our economic sovereignty was surrendered in 2010 following the boom-bust cycle of the noughties.

Many of the measures, particularly the removal of another 80,000 people from the USC and the reduction of USC rates for those on lower incomes, are very much to be welcomed. I assume and hope that that will continue and that there will be greater measures in budget 2016.

In addition, child benefit measures and the partial restoration of the Christmas bonus provide a welcome signal to vulnerable people on low pay. The restoration of Garda recruitment and the replacement of Garda vehicles are also welcome budgetary steps. Garda recruitment ended in 2010, but it is now up and running again so that crime can be tackled with a consequent reduction in crime figures. New Garda vehicles are badly needed because the mobility of criminals and the types of crimes they commit must be combated.

In the education sector, the budget will provide for 900 extra classroom teachers, 480 resource teachers and 365 special needs assistants. These posts are necessary to maintain the pupil-teacher ratio at its present level. Education is a crucial pillar of our economy and is the reason we have been attracting so much inward investment in recent times. That needs to continue into the future.

Measured supports for home refurbishment, which were announced in last year's budget, have now been expanded. This is a boost for employment in the construction sector which is spread throughout the regions. It is important that construction is not confined to the major urban centres. The recovery is evident in the main cities, but not so in regional areas. These measures will help to achieve that spread, however, as well as supporting employment in the construction sector. In addition, they will help businesses that are tax-compliant while restricting the black economy.

The introduction of a 9% VAT rate a few years ago when the Government first took office has been one of the success stories and has created thousands of jobs. Such jobs in the tourism and hospitality sector are spread throughout the country. Improved and targeted marketing by Fáilte Ireland and Tourism Ireland has been very visible on the ground this year, particularly in the Mayo constituency that I represent, with the Wild Atlantic Way. Various targeted marketing concepts mean that employment is being spread throughout the country. That was badly needed and is thus very welcome.

One factor needs to be noted, however, given the return to growth in the tourism sector. The 9% VAT rate is there to support tourism, so that sector should not take advantage of increased visitor numbers - which are now back up to 2007 levels - by raising prices and thus becoming uncompetitive. The Government has done its part but the tourism sector must continue to take the opportunity without exploiting tourists.

In my region, Ireland West Airport Knock had its busiest ever year, with more than 700,000 passengers, including more than 100,000 in August alone. This emphasises the crucial importance of the facility.

Last year, I chaired a study group on this and made recommendations on the support it needs for the coming years. Some recommendations have been implemented but I hope to see more implemented in the coming months. It is important as a vehicle to get people into the heart of the western region.

There is little doubt the recent positive news on our economic figures is a vindication of the path of the Government over the past four years. It is important that people who made sacrifices are supported. The recovery is evident in large urban centres but I represent a part of Mayo with nine or ten small villages ranging in population from 500 people to 3,000 people, such as Claremorris, Ballinrobe, Charlestown, Kiltimagh, Swinford, Foxford, Ballyhaunis, Knock and Kilkelly, which have yet to see great recovery or job creation. In the coming budgets, I hope there will be positive discrimination towards the special needs of places in that category so the economic benefit of the recovery can be spread. This may take place through the implementation of the CEDRA report but it needs attention.

I welcome many of the farming measures and supports. It is one industry with a regional spread and has taken Ireland through many recessions and depressions. It is doing so again and I welcome the tax measures to increase the ease with which land can be transferred and mobilised. There is some concern about the definition of an active farmer to avail of these concessions. Farmers had to get outside employment in recent years to buttress their low incomes and it is important they are not discriminated against and not allowed to benefit from the farming measures. Perhaps this can be re-examined in the Bill.

Like my colleagues, I welcome the opportunity to speak on the Finance Bill, which is related to the budget. Three years ago, we were making difficult decisions for the good of the country while people were making sacrifices but no Opposition Member was in the Chamber. I am glad to see Deputy Dara Calleary is making a hasty entrance into the Chamber.

I listened to the rebuttals from Deputies Clare Daly and Mick Wallace but they made no mention of the reduction in USC. Some 410,000 people have been taken out of paying USC since we came into power three years ago. I love to see new incentives for entrepreneurs and start-up companies. Four out of every five jobs are generated in the first five years of a start-up company. While everyone talks about multinationals coming in, the indigenous micro-firms in this country employing fewer than ten people will generate most of the jobs in the economy. I welcome the measures on this point.

This is the first time we have seen a long-term strategy in the budget. There is a layout of what will happen in the next three years. People like certainty as it sends out a signal that they can plan their future and their lives. There was derision about the DIRT tax relief for first-time buyers. It is a minimal sum but sends a signal that we are willing to step into the housing market to do something where the situation might cause a problem. The Central Bank has a consultation document about the 20% minimum deposit. During the consultation period, I hope the Central Bank realises it has created a knock-on effect in the housing market, particularly in my area and in the associated areas in the Dublin region.

I have always welcomed relief on the home. I suggested it to the Minister a couple of years ago. The problem is retired people cannot avail of it. Perhaps we can provide relief with regard to the source of income they have, which may be DIRT or another form of tax. They are being excluded from renovating their homes. Mostly, they renovate their homes to look to the future as they would like to leave the home in decent condition for the generation that may inherit it.

There were many positive measures on farming, such as the idea of land mobility and getting young farmers working on farms. There is an anomaly in the difference between the business relief and agricultural relief. To avail of the agricultural relief, people must have some agricultural qualifications but not for business relief, for which people must only hold the business for six years. I would appreciate some consistency on this.

The sports relief was introduced by a Kildare man, Charlie McCreevy, a number of years ago. What happened last year reduced the options available to sports people. I would like to a reversion to the previous situation, where a sports person could apply relief to any ten years of the sporting career. It was set up mostly for people with short-term careers in sport, of ten or 15 years. I refer to those in the racing industry and golfers whose best years may be behind them. To gain the benefit of it, they must choose ten years out of 15 but perhaps we could revert to applying it to the best ten years.

For the past number of years, I have argued for increasing the licence fee for gaming and slot machines. It is a handy way of getting revenue. There may be a chance to include it in the Bill and it could generate an extra €20 million. It sends out a signal to all sectors.

From day one, I have made reference to this, which is setting down a marker for next year's budget. I refer to child relief for young couples who want to get back into the workforce. It is a difficult one to get around but I am in favour of a second year of preschool. Academics have shown that it proves beneficial and perhaps we can examine this. The vintners welcome the fact that there is no increase in excise but they would like to see something done about below cost selling of alcohol. The last point mentioned by Deputy John O'Mahony is that the tourism sector is booming. I see two Mayo Deputies in the House and they are on the Wild Atlantic Way. Kildare is the route through which people go to the wild Atlantic way but they do not stop over. I would like more encouragement for our greenways in Kildare along the canal. The NTA is positive but I suggest more funding. The message must go out to the hospitality sector not to mess with the 9% VAT rate or we will remove it.

Deputy Anthony Lawlor is welcome to Mayo any time.

We always welcome tourists to the county.

I note the Minister of State's remarks on below-cost selling and completely endorse what he said. However, I remind the House that many amendments were tabled to the Consumer and Competition Protection Bill which would have assisted in this regard but which were voted down by the Government. This is not just a finance-related issue, there is also a need for a whole-of-government approach to it.

I welcome the debate on the Finance Bill 2014 and wish to focus on a number of issues related to it. The Bill, sadly, lacks a policy on entrepreneurs. This is particularly disheartening when one considers what could have been brought forward. At Question Time yesterday we engaged in a discussion on alternative sources of finance for entrepreneurship, especially crowd funding. Start-up businesses are still experiencing difficulties in obtaining finance in order that they might make a go of it. Some 10,000 to 15,000 start-up entrepreneurs are currently visiting this city in order to take part in the Web Summit. Were they to come to this country and seek finance to set up businesses on the basis of the ideas they are selling at the RDS, they would find it extremely difficult to do so. The Bill does very little to improve the position in this regard. I accept that it will result in some very welcome changes to the IAS, etc. However, these are for people who have money to invest and no account is taken of those individuals with small amounts of money who may wish to invest in either SMEs or community projects. I acknowledge that there is a great deal of work being done in the Department on crowd funding, which is a new concept which we must embrace by taking the ball and running with it. The fact that we have been able to attract so many entrepreneurs to the country this week shows that there is a willingness on people's part to take chances. I encourage the Minister of State, Deputy Simon Harris, one of the younger members of the Government, to drive the agenda on crowd funding onward within the Department.

The second point I wish to make relates to the tax treatment of entrepreneurs. When one compares the provisions contained in the budget for PAYE workers - miserable as they are - with those for entrepreneurs, one can see that the latter are being absolutely hammered once again in terms of the increase in the universal social contribution, USC, being foisted on them and income and taxation levels. While it is all very well to welcome multinationals which come to the country - unlike some Members sitting behind me, I am of the view that they are welcome and should be encouraged to come here - we must consider the bigger picture. I pay tribute to Mr. Martin Shanahan and his team at IDA Ireland for the work they do. I pay a particular tribute to Mr. Shanahan for the way he managed a certain television interview earlier this week. We must depend on our own people to create and sustain businesses. Entrepreneurship works on the basis that if one's business venture fails, one gets up and launches another. We need to encourage the culture of entrepreneurship. We must ensure the many entrepreneurs who put their necks on the line and are successful - I accept that there are others who are not so successful - are not hammered in terms of taxation. It must not be the case that they might consider themselves being better off as PAYE workers rather than as business people creating employment for others. From the perspective of finance, that is the picture with which they have been presented in both the budget and the Bill.

I welcome many of the measures contained in the Bill in respect of farming, particularly those which relate to moving a new generation of people into farming and giving them access to land and assets. I agree with Deputy Anthony Lawlor's assessment of the difference between business and farming. I draw the Minister of State's attention to the very vague definition provided in the Bill of the term "active farmer". The Bill refers to an active farmer as being someone who is involved in farming for not less than 50% of his or her normal working time. Many farmers do not have the option of spending 50% of their normal working time on their properties because in order to sustain their enterprises, they require off-farm incomes. Teagasc's national farm survey for last year shows that some 30% of all farmers had off-farm incomes. This figure rises to 42% when those with suckler herds are taken into account. I would hate to think many will lose out on the capital gains reliefs being made available to allow people to move to working land or into land ownership because the definition of what constitutes an "active farmer" is too narrow. I ask that some effort be made to define the term in the broadest way possible. Perhaps requiring people to acquire green certificates, pursue Teagasc courses, etc., might be one way to proceed. I accept that we do not want to extend the reliefs to everyone and completely agree that in order to obtain them, people should be working actively on their farms and earning incomes from them. However, let us not just exclude those who out of necessity are obliged to have other sources of income.

The other element missing from the Government's narrative on economic recovery is the notion of regional recovery. The areas of Dublin 2 and Dublin 6 are doing very well. When one strays beyond these postal codes, however, one sees that the shoots of recovery are somewhat less green in hue. In places beyond the M50, with the exception of Galway and Cork, they become progressively less green. There is a need for a complete renewal and revision of regional policy. There is absolutely no sense in recreating the problems in Dublin, Galway, Cork and other cities in the context of shortages of property to buy or rent. These problems gave rise to the difficulties we have spent the past few years trying to solve. If we continue to focus on the areas to which I refer and to push investment into them, we are going to recreate the problems I have outlined.

The regional economy offers enormous opportunities. Those who live in the regions are talented and skilled and, if they so desire, have the right to obtain employment in locations as close as possible to the areas in which they were born. All they want is the opportunity to do so. As well has having a strategy which encourages SMEs in the regions, there is also a need for a strategy to encourage inward investment into these regions. The fact that some 64% of all IDA Ireland client visits take place in Dublin, Cork and Galway shows that something is missing from our overall policy. I accept that what I am suggesting would involve the provision of a tax package, but it would also require a willingness on the part of every Government body to take real action in order that we might create a sustainable economy, rather than paying lip service to the concept.

A core foundation stone in building the economy in the region in which I live is Ireland West Airport Knock. I will reiterate the figures for the benefit of the Minister of State. Some 700,000 passengers passed through the airport last year and it contributes more to the State in terms of PAYE and PRSI than it receives from it in the form of a subvention. It is the absolute jewel in the crown not just of County Mayo but also of the west coast. It has enormous potential in developing as a jobs and tourism hub. As Deputy Anthony Lawlor noted, it is the airport of the Wild Atlantic Way. This facility needs a package of supports. It is not seeking a bailout or a handout; rather, it is looking for an investment which it will repay many times over. There is flexibility within EU state aid guidelines in the context of investment in regional airports. It has been shown on numerous occasions, even in the recent case of the second terminal at Munich Airport, that if there is a willingness, these guidelines can be circumvented. Investment in Ireland West Airport Knock would result in growth the areas of employment and SME and entrepreneurship activities. As indicated in this regard, the State would receive a return many times greater than the amount originally invested. I acknowledge the work Deputy John O'Mahony has been doing on this matter. He headed up a very ambitious study group which spent a huge amount of time examining this matter last year. However, delivery is now required and we need to see hubs such as that at Ireland West Airport Knock being developed in order that the economy might be driven forward.

It would be foolish to comment on matters of finance without commenting on certain letters which were sent to the previous Minister for Finance by the former president of the European Central Bank, ECB, Mr. Jean-Claude Trichet, and which were finally published this morning. Three years ago Mr. Trichet threatened the previous Government and the people and held a loaded gun to their heads. The letters in question show that the ECB strayed well beyond its legal mandate at the time by forcing a settlement on the people that had nothing to do with either supervision or regulation. If the ECB had been as active as it should have been in these areas, we might not be in the position in which we find ourselves. The letters also show that there is an urgent need for Mr. Trichet to come before the banking inquiry in order that he might explain both his actions and the policies he was pursuing at the time. The notion that he has retired is not good enough, particularly as the country is paying for the consequences of the letters to which I refer and, in particular, Mr. Trichet's failure to fulfil his supervisory role.

There is a need to immediately revisit the commitment made at the European Council summit in 2012. The discussions in this regard in the context of our ability to obtain a refund or recapitalisation have been parked. We must also pursue the matter of the promissory notes and the bonds being used to pay for them which the ECB would like us to sell into the markets. This issue is also up for renegotiation. It is clear that the ECB exceeded its official mandate and that it certainly exceeded its moral mandate. One is obliged to ask when the European Union which has always prided itself on bringing its citizens together allowed itself to become driven by the ECB and letters sent by the former president of that institution. It is time citizens were brought back to the heart of the European Union. Their interests, rather than the pursuit of an economic model which is not suitable for every country, must be paramount. The model to which I refer might be suitable for larger member states, but it certainly is not for others. The experience of Ireland, Greece, Spain, Portugal and Cyprus in recent years is evidence of this. The letters published this morning illustrate the ethos at the heart of the ECB's policy. It is time to change that ethos.

The next speaker is Deputy Stephen S. Donnelly who is sharing time with Deputy Lucinda Creighton.

In a moment I will talk about the specifics of the budget and things I would like added but first I would like the opportunity to review budget 2015 to see whether it stacks up against values I hold dear, along with other Members of Dáil Éireann across all parties.

Budget 2015 is regressive. The combination of water charges and income tax changes means this budget will take money from lower income households and give it to higher income households. This is not my opinion - it is a mathematical certainty. Previous budgets from this Labour and Fine Gael Government were regressive and Economic and Social Research Institute, ESRI, analysis supports this assertion. In other words, in those budgets the Government asked those who had least to contribute most but at least it asked everyone to contribute. This is the first year the Government has introduced a budget that takes cash from lower income households and gives it to higher income households. In real terms this means people on the minimum wage will lose money as a result of this budget and that money will be given to people on higher wages, like the Members of the Oireachtas. This seems neither a reasonable nor proper thing to do.

Budget 2015 is fiscally irresponsible. Until now this Government could take some credit for making hard choices and lowering the deficit. I do not agree with many of the choices that were made previously but at least the Government could say it met and exceeded targets that were set. The Troika is not out of the country a wet week. In the April stability programme update the Government identified measures for a deficit reduction target of €2 billion but less than nine months later, in what may be a pre-election budget, the Government reversed engines by €3 billion. This is not a marginal change - the Government has given it the full Bertie. However, it looks as though the Irish people may have changed. Despite this largesse, potentially before an election, Government satisfaction ratings continue to drop in the polls. Perhaps the public has decided the Fianna Fáil style of politics should no longer be tolerated.

Budget 2015 wastes public money and health care provides a clear example. This year health care spending will overrun by around €500 million. Some parts of the health service are run very well and others are run extremely badly and the Government could have aimed to improve procurement. I identified how around €1.1 billion could be saved over several years by forming a joint venture with the National Health Service, NHS, in the UK and mandating generics as was done in England and Wales. The Government could have examined the operation of the Health Service Executive to see how hospitals could be better run with better preventative care. It could have studied new and better ways to buy drugs, equipment and devices but instead the Government said to the health service "you overran by €500 million this year so you can have an additional €500 million next year". That is not a responsible way to handle public money, in my opinion.

The biggest failure of budget 2015 is the failure to invest in education. The net total increase in spending on education between this year and next year is €46 million - current expenditure is up €60 million and capital expenditure is down €14 million. This change amounts to less than 0.5% of the education budget and is also less than inflation. In real terms, this budget represents yet another cut to education and that is a really dumb thing to do. A school principal in Wicklow recently said to me that the cut in the capitation grant to his school meant he could not heat the school to the necessary extent. He asked me what he should do and I submitted a parliamentary question to the Minister for Education and Skills, Deputy Jan O'Sullivan, and asked what school principals should do when capitation grants are being cut. I pointed out that the principal to whom I spoke had run the numbers and could not keep the heat on when it was needed. I asked for the advice of the Minister and the reply I received said "capitation provided for general running costs and funding provided for caretaking and secretarial services may be regarded as a common grant from which the board of management can allocate according to its own priorities". Let us consider what this actually says to schools - capitation grants will be cut and if this means schools cannot keep the heat on the money should be taken from somewhere else. We are all trying to help schools in our constituencies and we all know they do not have money elsewhere to draw from. What should schools do? Perhaps they should have fewer tables and chairs for children and provide less paper. The response I received essentially says that if the heat must be turned off that is the school's problem and not the problem of a Department, such as the Departments of Finance, Public Expenditure and Reform and Education and Skills. This is not an acceptable way to govern this country.

Budget 2015 is nakedly political. We have heard much praise of the 11 measures that will return profits to people who own land and I have no problem with them. I have examined these measures and some seem very sensible. It is interesting, however, that Fine Gael, the farmers' party, has 11 measures to return profits to landowners but has neither 11, ten, eight nor five such measures for any other sector of society.

Budget 2015 attacks the self-employed and this is extraordinary. The Government keeps talking about the importance of entrepreneurs and the Taoiseach attended the recent web summit but the budget introduces a higher rate of tax for the self-employed. Again, this is extraordinary and I asked a few people who were previously involved in policy why it has been done. They said the feeling in the Civil Service and amongst TDs, all of whom are on public sector pay and pensions, is that self-employed people can reduce tax exposure in various ways so efforts should be made to compensate by taxing them more. As we all know though, the opportunities for a self-employed person to lower his or her taxation burden have been more or less cut out in recent years. The old mindset still remains. We try to encourage enterprise and entrepreneurship and recognise that the web summit was fantastic. We tell people to set up businesses, invest money, take risks and work hard but then we tax them more than civil servants and politicians in Dáil Éireann who, between them, make the rules and are safe. If the entrepreneurs fail they do not get the same social protections as everyone else but we claim to support them. This is hypocrisy at its worst and it must stop.

Budget 2015 is devoid of the information we all need. Regardless of one's view of the budget I hope all Members of Dáil Éireann agree that we have not been given sufficient information to do our jobs and interrogate it. Only Dáil Éireann can vote through finance Bills and we in Dáil Éireann are constitutionally obliged to hold the Cabinet to account. Along with others, for some years I have requested that a distributional analysis of the budget be provided setting out who gives, who takes, who wins and who loses. When I asked the then Tánaiste, Deputy Eamon Gilmore, for this information he accused me of being an opportunist. In this Chamber I recently asked the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, for such a distributional analysis of the budget but he refused because he said it would not be reasonable to assess crisis-era budgets in such a way. This is a preposterous thing to say to Members of Dáil Éireann.

A line item in the budget applies €900 million to what are called "demographic pressures" - I have no idea what such pressures are and there is no reference to them in the documentation. Hundreds of millions of euro in additional expenditure has been granted to something called "existing services" and, again, there is no further reference to this. About 36 hours ago in the finance committee I asked the Minister for Finance, Deputy Michael Noonan, for a reasoned document explaining why Ireland should not sign up for the financial transaction tax. He may be right that we should not sign up but we do not know and he refused to provide such a document. He said his job is to govern and make policy and that was the end of that - he was not minded to provide Parliament or the Oireachtas Committee on Finance, Public Expenditure and Reform with his rationale behind important decisions on taxation.

I am running out of time so I will send on the range of proposals that I would like the Government to consider. A clause in the Constitution has been interpreted in a way that means no Deputy or Senator can suggest an amendment to legislation that will cost money or raise money. In the context of the budget, if we in Dáil Éireann cannot propose anything that will cost money or raise money we cannot engage meaningfully on Committee Stage.

Perhaps when the Government decides to hold a referendum on the public ownership of Irish Water - I am submitting legislation on the matter - we might also have legislation to allow Members of Dáil Éireann to do their jobs.

I am pleased to have an opportunity to speak to the Finance Bill, but I have a sense that it is a futile process. It is extremely disappointing that, after more than three and half years into the lifetime of the Government, the promised changes to the budgetary process have still not been implemented. These were changes that the Minister for Finance and almost everyone in the Fine Gael Parliamentary Party endorsed wholeheartedly. It was a key element of the pre-election platform and the manifestos of both Government parties, yet we still have no transparency in the budgetary process. We all know how it works. We stand up and contribute to the budget debate and contribute again to the debate on the Finance Bill, yet nothing will be taken on board and the Government will essentially do what it wants and there will no be accountability to this Chamber. The open budgetary process promised has not been delivered and yet another element of the so-called democratic revolution is absent.

I wish to reiterate what I said in the debate on the budget. It is welcome that some individuals and families will have a little more money in their pockets at the end of every week owing to the changes in taxation introduced. However, there are others - Deputy Stephen S. Donnelly has already pointed this out - many of whom are at the lower end of the pay bracket and, in particular, the self-employed, who, once again, have been targeted by the Government as easy pickings. That is unfortunate, but it is also indefensible.

This week we have witnessed the great achievement that is the Web Summit. Everyone is celebrating and giving plaudits to the organisers. However, there is something incredibly depressing and ironic about the fact that today we are debating a Bill which is telling every Irish technological entrepreneur to go off and start the business somewhere else, not in this jurisdiction, not in Ireland but probably or preferably in London, and to do business and invest money there. Even the founder of the Web Summit, Mr. Paddy Cosgrave, who should be given considerable credit for what he has achieved has said he is thinking of holding the summit elsewhere. That would be a great shame and a great loss to the city.

Ireland must be more than simply a nice place for Facebook, Google, LinkedIn or the other major global technological companies of the world in which to set up headquarters and avoid large tax bills elsewhere. There is no question that without these companies Mr. Cosgrave would not have been able to turn the Web Summit into the major success that it is. Equally, it is true that we are missing a major opportunity to harness the entrepreneurial spirit and talent already in the country. A self-employed person in Ireland who has started and built her own business, who is creating and has created jobs, is paying 3% more in income tax than someone employed in a multinational company on the same salary. That is simply wrong. In 2011 the self-employed were obliged to pay a 10% rate of universal social charge, while their counterparts on exactly the same salary paid 7%. These figures have been increased to 11% and 8%, respectively, in the budget.

There is a deep suspicion of the self-employed that permeates the mentality in government and particularly the Department of Finance. This suspicion leads to the belief the self-employed are tax dodgers and that they should somehow be singled out and targeted. This is entirely the wrong signal to send to people who are working, generally, night and day to make a success of their enterprise, to grow it and to offer job opportunities to others in society and throughout the economy. In the United Kingdom if an entrepreneur creates a small company that generates revenue of up to £250,000, the company can provide its employees with share ownership that is subsequently subject to a reduced capital gains tax of 10%. There is no such scheme in this country. This tax incentive encourages employers and people starting a business to give employees a real stake in the future of the company in which they are working. It motivates the employer and the employee. It gives them a genuine feeling of ownership and a sense of taking control of their future and destiny. For some unknown reason, the Government has decided against this policy in Ireland without giving any reason, despite the fact that this was Fine Gael policy before the general election, when Deputy Leo Varadkar was the Front Bench spokesperson on enterprise. A clear position was adopted, but it has not been heard of since and not implemented by the Government.

When the Government entered office in March 2011, there were 92,000 self-employed persons in Ireland who had paid employees on their books. Believe it or not, this figure had fallen to 89,000 by the end of June this year. The number who are self-employed with no employees had increased from 202,000 in March 2011 to 226,000 by the end of June this year. These are Central Statistics Office figures; they are independently verified and extremely concerning. While general employment has grown in the meantime, self-employed small business people have not contributed to this job creation because the Government has made it so expensive to do so. Similarly, although almost 25,000 entrepreneurs have decided to go it alone and start up a business, none of them has been in a position to take on other employees.

Ireland may well be the best small country in the world to have a company, but it is most certainly not the best small country in the world in which to start, grow and upscale a business. Unless we change these fundamentals, our over-reliance on foreign direct investment will walk us back down the road of economic ruin which we have already experienced. Nothing has changed. The same fundamentals, as former Deputy Brian Cowen used to say, are in place and nothing has changed in terms of the attitude and priorities of the Government. It is still all about putting our eggs in one basket, that is, foreign direct investment, and the property sector. We have seen a 25% increase in house prices in Dublin in the past year, which is good news for the banks and the builders. Arguably, it is also good news for the Government. However, it is not good news for the economy or a sustainable economic vision for the country and it is certainly not good news for citizens.

Let us compare the treatment of the self-employed, whom the budget has clearly targeted, with the way in which those involved in the property sector, particularly developers and our friends in the Construction Industry Federation, have been treated. By removing the 80% windfall tax on rezoned land the Government is once again creating a toxic link between developers and the political process. It is wrong and no one in government or on the Government benches is expressing even the slightest degree of concern about it. During the good times of the last Fianna Fáil Government we know exactly what went on. We know about the way in which considerable pressure was applied to councillors to rezone land. Vast profits were made by flipping that land, rezoning it from residential to commercial or from agricultural to residential. Areas entirely inappropriate for development were rezoned on a haphazard basis and we are doing the same again. We have no national spatial strategy and no national development plan of meaningful worth, yet we are going down exactly the same road as before. There is a lovely plan entitled, Construction 2020. It seems the idea is to get everyone involved in a scramble to get onto the property ladder. That is precisely what our friends in the Construction Industry Federation want and the Government is obliging them. There is a promise to underwrite unsustainable bank loans for first-time buyers, pitch them against each other and control the supply issue and so on and so forth. There is no lateral thinking and nothing new. It is the same old, same old philosophy that led the country to economic ruin.

I can only sum up my feelings and concerns about budget 2015 as seriously disappointing. It is a missed opportunity.

Many measures could have been introduced to support entrepreneurship and the domestic indigenous economy and to tackle the major issues that exist in rural Ireland, where nothing is happening, basically, in terms of growth in small and medium-sized businesses. It is a repeat of the mistakes we saw in the period from 2000 to 2010. While Members on this side of the House will highlight these issues and the Government will ignore them, I sincerely hope the Government will consider introducing next year the type of budgetary process that was promised by both government parties before the last election, but with more transparency and more visionary thinking.

Debate adjourned.