Order of Business. - Budget Statement: Motion.

I move:

That Seanad Éireann notes the Budget Statement of the Minister for Finance.

I am trying to absorb the Budget Statement which is probably one of the shortest ever, although at least it gives us the chance to read through it. I welcome the decentralisation of 10,500 jobs which is a positive move. Looking at the distribution of those jobs, I regret that more of them are not going west of the Shannon. It is not an issue in which I have any constituency interest but it is a pity the jobs will not go there. I would very much welcome an unequivocal commitment in writing from the Minister for Finance that benchmarking will be paid, as agreed. That would be a positive move.

I have no doubt the self-satisfied members of the Government parties, Fianna Fáil and the Progressive Democrats, have no idea what will hit them over the coming days, weeks and months when they start to get telephone calls on the issue of public service pensions. What is being proposed in the budget cannot be implemented. In my judgment – it is only my judgment because I do not have a vote or a call on this issue – no national agreement will be agreed while these proposals are extant. I suggest public service unions will not be in a position to accept a new public service pay deal while those daft proposals are in place.

There is a proposal to increase the minimum retirement age to 65 years. There might be an argument for that, although I do not subscribe to it. There are many teachers who could teach until 65 years of age and beyond and who would be delighted to do so. However, this proposal requires people to teach until 65 years of age. There are many teachers who would not be physically able to handle a class of 25 to 40 infants or an honours leaving certificate class at 65 years of age. The proposal is absolutely daft. If that is not bad enough, the next proposal removes the compulsory retirement age of 65 years and proposes that there should be no compulsion for people to retire at a particular age if they are "fit and willing to stay on". People on Zimmer frames will be holding down jobs and they will have doctors' certificates stating that they can work. They will be taken from their jobs in boxes. The Minister spoke about creating promotional opportunities but this is absolutely daft.

People may think it does not relate to Members of the House or to people who work here and that they should not care. As somebody who defended, argued for and negotiated pensions for Members of the Oireachtas – this proposal will not affect me – it is appalling to think that under the new regime, somebody who is elected to the Oireachtas at 21 or 25 years of age, is re-elected in ten or 20 subsequent elections and loses their seat at 51 or 52 years of age will not be entitled to receive a pension for another 14 years. Whoever thought this through is daft. It is a classic example of people in the pensions section of the Department of Finance sweet-talking the Minister, as they have always done, with nobody checking what is going on. Somebody deserves to get their backside kicked on this issue. It is an appalling vista and it will not work. That should be recognised and it should be changed immediately.

There is much wrong with this proposal but I do not have the time to go into it. I accept it was a recommendation in the public service pensions report. However, Members will note that a number of us on that commission submitted a minority report opposing it. The Minister said he would not implement the increased 1% and that he is not applying any changes to people currently in jobs. As I said previously, it would be better to cost it and if it is necessary to deal with the public service unions to take another 1% of whatever to pay them, it would be better.

I do not want to hear people whinging in future, as they have in the past, about retired Members of the Houses, or their widows or widowers, having nothing on which to live because we are beginning to institutionalise that situation. It is time people considered this before it goes too far.

I have welcomed some measures. Previously I asked for something small but an tábhachtach, sin an cinne atá déanta ag an Aire nach gcuirfear cáin ioncam ar na mná tí atá thar cheann na scoláirí a fhreastalaíonn ar chúrsaí sa Ghaeltacht i rith an tsamhraidh. It is only right given all they do and the measures they must put in place to look after students. There is little in it for them and it is a positive move which will be welcomed in Gaeltacht areas.

I welcome the proposal on public private partnerships. It is bad there has been no change in the tax bands, although not for people like us or for people with high incomes. We are going back on what we did some years ago when we brought people, particularly the lower paid, out of the tax net. We are now pulling them back into it. I do not see the logic of that for the sake of a small amount of money. Given the type of society and community we are trying to build, it is not a good way in which to move forward. This is penny-pinching, particularly in light of the Minister's prognosis for the next three years. He said that next year, he expects GNP to increase to between 3% and 3.3% and that economic growth in 2005 will be 4% and 4.5% in the following year. These are impressive figures but if we are going to make that kind of money, we must examine how we will share it out.

The proposal to take apart the public service pension arrangements is almost a guaranteed Exocet, which will destroy any chances of getting agreement on a new national wage agreement. I am certain people will not go along with this appallingly badly thought out proposal. I ask the Minister to take this message on board and negotiate a return from that position. If it is just a negotiating position, that is fine because we have all been there. However, if some people think they can make this stick, they are mistaken. Many people will use this proposal to build up a head of steam against a new agreement. It is a mistake.

I wish to share time with Senator Norris.

An Leas-Chathaoirleach

Is that agreed? Agreed.

I do not share all Senator O'Toole's sentiments. Any effort to shake up the public service is good because it is high time it was shaken up. If it must start with pensions, that is all to the good because of the limited opportunity to shake up a service which has got its way virtually everywhere.

I see the problems pointed out by Senator O'Toole. If he is right and this means no more national pay deals, I welcome it. If part of the Minister's plot is to decide to bring about a scenario which will challenge the public service, and if the public service, like Senator O'Toole, says it will have no more pay deals, then let us have no more of them. We have had enough of them. Let us end them and go ahead with free collective bargaining.

Another man who can be sent to the bank.

It is not such a threat to the economy of the nation that we have no more pay deals. There is no proof that the pay deals were the saviour of the economy. The people who did well out of the pay deals were the public servants. Of course they start hurting and do not like it much when the suggestion is made that they be given some sort of equality with the private sector. They may be made to work until they are 65 years of age. Senator O'Toole says there are certain 65 year olds who cannot keep a class in order. That is true, but it is also true of some 25, 35, 45 and 55 year olds. It is nothing to do with age.

People must retire sometime, but I do not see any reason public servants should be given preference over anybody else. If they are to be given such preferential treatment in terms of salaries and wages, let us see them given the same treatment as others on pensions. I welcome that and hope it is not a negotiating ploy. If it is not, and if we have no more pay deals, that is the price we must pay. We will then find out whether the pay deals were the great panacea for the economy. I suggest they were not. That is a minority opinion but I will not back away from it.

I wonder what influences were brought to bear most on this budget. I do not share the view that the greatest influence was, necessarily, the Fianna Fáil backbenchers although some good points in it were the result of that pressure. I welcome with great enthusiasm the idea that we should decentralise as much as possible.

Hear, hear.

I am sorry it did not happen earlier and that there is not more of it. What the Minister proposes is radical but the plan to transfer 10,000 jobs out of Dublin is nothing like enough. Anybody who lives, works or suffers in Dublin knows it is not a pleasant place in which to live or work. It is no longer even a pleasant place to visit.

They should move Independent Newspapers to Castlebar.

Senator Dardis will have his chance to speak in a moment when we will probably have another lecture on stem cells, if we are lucky.

Anybody who has to work in Dublin knows it is not a pleasant place to live. We should say yes to further decentralisation. There may be some peculiar preferences regarding where Departments are going. That is a political point. In every case the proposed moves allow the Minister in question to drop in on his way to Dublin. If we look at the list we can see they are all on the roads the Ministers take to Dublin. That may not be the case for the Minister of State present – I have not time to go through them.

He would have to turn off for Trim.

Apart from the public service pensions issue, I see the writing of people outside the Houses and the political parties in this budget. The evidence is that there are huge pressures from the public service on this budget. Who was it who made a thundering speech last night saying there should be no PRSI changes in it?

Mr. Begg.

Thank you Senator, that is the answer I wanted.

Ten out of ten.

My old friend came to the rescue again.

And will appear at the Gaiety pantomime next week.

It was Mr. David Begg. It is the oldest political trick in the world – demand something, get it, and then go back and say they gave me what I wanted. There are no PRSI changes because the public service unions did not want them. Another small but highly significant matter is the tax allowance for membership of a trade union which rises from €130 to €200. Why is that?

Very good.

It is very good for Senator Mansergh who does not have to pay into a union and is never likely to be admitted to one because he is the only other public schoolboy—

I am an Irish Farmers Association member.

Do not spoil it now, say no more.

An Leas-Chathaoirleach

The Senator without interruption, although he is inviting trouble.

I must point out that Senator Mansergh is the only other public schoolboy in this House, a minor public school to boot, and he is welcome to that.

Does that disqualify me from being a union member?

An Leas-Chathaoirleach

Senator Ross without interruption. I remind the Senator that he is sharing time.

I regret that there is little real tax reform in this budget. There was a great deal of speculation that the bands would be widened. Not to widen the bands is, in effect, a stealth tax. I would like to have seen the Minister continue on the radical programme, in which he has been involved over the past seven years, of reducing direct taxes or, not my preference, widening the bands. I regret he has not taken that initiative.

I thank Senator Ross for sharing his time. I too welcome decentralisation and also the implementation process put in place by the Minister. However, he has not set a completion date which raises the suspicion that it will be a long time before it takes place. I too agree there is a geographical element to the decentralisation. This is understandable in the short term but may be negative in the long term.

I welcome, as I am sure the Minister of State does, that the Department of Agriculture and Food will move to Portlaoise, which is in my little bit of bog and just over the hill from Deputy Parlon. On the transfer of the Department of Arts, Sports and Tourism and everything else they can find to Killarney, this may be appropriate as far as tourism is concerned. However, it indicates the need for a separate Department of the Arts as throwing them in with sports and tourism demeans them. As we have such a wonderful and fine artistic tradition, particularly in the literary arts, there should be a separate Minister with responsibility for this area.

There is a slightly instant quality about this debate, as the Minister has only just stopped speaking. I said a great deal of what I wish to say about serious topics during the debate on the Estimates some weeks ago, in anticipation of this debate. I considered proposing an amendment to this motion, to change it from "That Seanad Éireann notes the Budget Statement" to "That Seanad Éireann ignores the Budget Statement". One of my gripes is that the Constitution does not trust this House with anything remotely connected with finance. Amendments can be ruled out of order because they involve a charge on the Exchequer. There is a case for examining this matter as part of the process of Seanad reform.

I am glad to be a Member of this House at this time, because it means I will receive my pension as soon as I leave it. I understand there will be small difficulties for other people. There is always a slightly positive element to these matters, however. As far as this House is concerned, it is probably a good thing that people come into politics with special expertise from areas such as medicine, teaching and law and then return to such areas. I do not see why the State should give pensions to people who return to lucrative jobs before they reach the pension age. There is plenty of life in them after politics. We should be satisfied that they will be able to find another use for their talents.

I agree with many of the comments of my friend, Senator Ross, on many issues, but I do not agree with him on free collective bargaining. The most vulnerable elements in society are squeezed when one enters free collective bargaining. The powerful elements in society, such as the strong unions, cream off everything in such circumstances.

I think we can go further in certain respects. In his next budget, I hope the Minister for Finance will do more to assist those who are financially most at risk. He has produced an interesting budget with a few surprises, which he seemed to front-load. I thought it was terrific, from a theatrical point of view, that he opened his statement with an announcement that I do not think many people were expecting. Although he has been buffeted by criticism from Europe and commentators in this country, he has held the ship fairly steady, by and large.

Very steady.

The Minister was wise to be prudent, cautious and stingy in this budget. He has the opportunity to take a prudent course and to give us a more interesting budget in future years. I thank the Chair for his indulgence.

I am delighted with this budget.

Surprise, surprise.

It is an excellent budget from many different points of view. One of the reasons I am pleased is that the Minister was up-front about decentralisation.

Some 200 civil servants will move to Tipperary town.

I am sure Members from all sides are pleased that the decentralisation programme will benefit 53 locations. Many people had stopped believing that decentralisation would ever happen, but—

We still do not believe.

—it is happening now. The decentralisation of 200 public service jobs to Tipperary will make an enormous difference to the town.

Hear, hear.

I am sure decentralisation will make a similar difference to other towns. It has been mentioned that few jobs are to be decentralised west of the Shannon, but the first decentralisation programme in the early 1990s focused on that region to an overwhelming extent. The two programmes have to be considered together. Not only does today's announcement represent a fulfilment of many promises that were made, but it also dispels some of the fears expressed when the national spatial strategy was published. Many people came to the pessimistic conclusion at that time that all decentralisation, if it was to happen, would be concentrated in hubs and gateways, but that has not transpired to be the case. Decentralisation is about spreading wealth around the country, which is very important. I wish the Minister of State, who will be in charge of implementing this process, the very best in that regard. Along with my colleagues, I will give him every assistance if anything needs to be done at a local level. I appreciate that there will be disappointment in places in south Tipperary, such as Carrick-on-Suir.

Absolutely.

I have every faith that the decentralisation process will be successful. Other places will benefit when it is carried forward.

Senator O'Toole made clear that certain pension changes will be subject to a good deal of discussion and, perhaps, negotiation in the context of the next partnership agreement. I do not doubt that the partnership agreement will survive. Senator Ross seems to think there is no evidence that pay deals have done the Irish economy any good. A different view is taken by almost every international agency, including the OECD and the IMF, as well as most commentators.

This budget maintains and underpins the economy as we move towards 2004. The net number of jobs increased by approximately 17,000 in 2003. I have calculated, on the basis of the figures in the budget, that it will increase by approximately 30,000 in 2004. The proposed minimal borrowing level of 1.1% is prudent. One of the best lines in the Minister's speech was "Borrowing is the real stealth tax"– I could not agree more. Inflation is being brought under control and will be reduced to 2.5%. Despite claims to the contrary in the last year, the public finances are in excellent order. We have a really strong basis for progress as the international economy recovers. I notice the Minister's projections for revenue next year are slightly over 5%. I suspect the figures might be quite conservative, not for the first time. There is no harm in erring on the side of caution.

The five-year programme of public investment at current levels cannot be described as a stop-go system. The provision which has been made for carrying over 10% of budgets provides for greater flexibility. I am particularly pleased that an extra €30 million has been provided for schools, as it means an additional €55 million will be available in total for primary and secondary schools in 2004, compared to 2003. Such infrastructural development is just as important as investment in roads and transport.

The most hard-bitten socialist could not find anything to criticise in the progressive tax tables included in this budget. All benefits are concentrated on lower and lower-middle income groups. Those on the minimum wage will benefit. It can be argued perfectly validly that the higher tax band has not been shifted and that those who are better-off will have to wait a little longer. I do not doubt that changes will be made in that regard in future budgets as economic conditions improve. The correct priority has been chosen in the present circumstances. The increases in indirect taxes are fairly minimal. The impact of indirect tax increases on the CPI will be approximately half of that of last year. It is projected that the inflation rate will be 2.5%, which will bring us back into line with Europe.

The social welfare increases provided for in the budget are two or three times greater than inflation, even in today's relatively tighter economic circumstances. Before anyone criticises the increases for being mean, it should be noted that under the rainbow coalition the increases were between 2.5 % and 4%.

That is an old chestnut.

The fact is—

The Senator was not a Member of the House when the rainbow Government was in power.

Senator Ryan criticises the Government's social welfare record all the time. If we were to believe the Senator, we would be grinding—

There were problems before the rainbow coalition came to office.

The Senators have not given a true version of the Minister for Finance's ideology.

Senator Mansergh should not forget Ernest Blythe's shilling.

There is not a scintilla of truth in it.

What about Ernest Blythe and the shilling?

We have done far more for deprived areas than the rainbow coalition. The Opposition does not give us any credit. The Senators opposite bang on about the Minister, Deputy McCreevy, who apparently cares only for the rich.

That is right.

It is outrageous behaviour.

An Leas-Chathaoirleach

Senator Mansergh, without interruption.

Ask the rich.

The Opposition has got it totally wrong. Our social record of recent times will compare well to theirs any day.

Ask the rich.

Ask the poor – they are the people—

Ask the rich.

Senator Ryan should not doubt that those who benefited from increases in child benefit and pensions brought us back into office at the last election.

They will vote the Government out of office as well.

What about the 2.5%?

The Senator remembers the 2.5% – that is right.

There has been much debate in the past 24 hours and previously about community employment schemes. In that context, I am glad to see the new rural initiative which will employ an extra 2,500 people. Opposition Senators will find that will fill some of the gaps.

It is not good enough.

I am sure the Minister will elaborate at greater length. Both sides of the House were keen that film tax relief be extended, which it has been as I said it would. This is a good budget that will help the economy strengthen again in the course of the year. It is fantastic that in the middle of a downturn we have an unemployment rate of 4.5% and employment is still growing.

The Senator should tell that to the people in Carlow and Kilkenny who lost their jobs today.

This has never happened before. Let us have no lessons on economic management from the other side of the House.

I urge Senator Mansergh to take it easy.

From a health point of view.

We do not want to have any unnecessary health spending in the Seanad today.

I note that the Minister of State at the Department of Finance, Deputy Parlon, has a smile on his face, and why not with the promise of 250 decentralised jobs for Birr?

Almost 1,000 jobs are promised throughout the constituency.

The constituency has a border with Tipperary.

This is proof of the alleged political interference which can occur in these areas.

The constituency is also represented by Deputy Enright – all right Enright.

The two issues which jump off the pages of the budget are decentralisation, the announcement of which we were not expecting today, and the raising of the minimum retirement age to 65, referred to earlier by Senator O'Toole. Those are the two smokescreens which have been raised by the Minister in front of his budget in an attempt to deflect attention from how little is contained therein.

Senators have referred to decentralisation. Five years ago, we were promised action on decentralisation and it is convenient that, six months before the local elections, the Minister should today announce details of places and numbers of posts to be filled. However, just €20 million has been allocated for the redistribution of these jobs which means nothing will happen next year. Nevertheless, Government candidates in places like Birr and elsewhere will be able to take credit for the decentralised jobs when nothing will happen for the foreseeable future. There is no timeframe for today's announcement. While we all welcome the idea of decentralisation about which Senator Ross spoke strongly, it has dragged on for far too long and we are still left with vague promises about numbers without any commitment to a timetable for implementation. It is about time we got such promises.

The public service retirement age has been raised to 65 years, about which I share Senator O'Toole's concerns. However, I agree with much of what Senator Ross said, although I was surprised by his comment that the Minister for Finance does not want any more pay deals. Perhaps he knows something the rest of us do not.

He does not.

Perhaps Senator Ross is correct that the Minister for Finance's mind is exercising clever reverse psychology in this regard.

He is quite wrong.

I am interested in Senator Mansergh's final point on the new rural social scheme. It has been announced again and the Senator quite rightly gave it emphasis in his remarks. However, we have little information as to what form the scheme will take. It has the potential to be a good scheme for rural areas but we do not have any meat on the bones yet and it is therefore too early to say what effect, if any, it will have.

Senator Mansergh referred to Carrick-on-Suir not having been allocated any jobs. I spent my brief time in the public service as a teacher in Carrick-on-Suir. The issues of a lack of a decentralisation announcements for Carrick-on-Suir and the increase in the minimum age for retirement from the public service overlap in my mind in regard to Carrick-on-Suir. I am struck by the fact that a city the size of Kilkenny is to get just 105 places, while Portlaoise will get 400 places and Wexford is scheduled to get 325 according to today's figures. That is disappointing from a Kilkenny perspective.

Kilkenny has many other things going for it.

Kilkenny could have done a hell of a lot better, as could Carrick-on-Suir, which borders with County Kilkenny and has a large catchment area in south County Kilkenny. Carrick-on-Suir is not scheduled to get any decentralisation. Therefore, the budget is not all good news, contrary to what Government Senators would have us believe.

A Senator spoke of what he regarded as the key sentence in the budget.

That was me.

The one sentence which gobsmacked me appeared under the heading of "Indirect Taxation". The second sentence in the Minister's remarks reads: "The goal of keeping inflation low takes precedence on this occasion." This is an extraordinary remark for a Minister for Finance to make in the context of producing a budget. He has stated that this goal only applies on this occasion, when I would have thought this to be an important job for the Minister for Finance in any budget.

I have defended motorists in the House before and will do so again tonight. It is wrong for the Minister for Finance to increase the duty on fuel, namely, petrol and diesel. In the debate on the Estimates last week, I stated that Australian and other systems which tax emissions rather than the fuel itself should be examined and pursued in the long term. The motorist is one of the most beleaguered of all citizens when one considers that, as we sit here tonight, thousands of motorists are stuck in traffic burning extra fuel due to congestion and delays. Despite this, motorists will pay five cent extra per litre for petrol and diesel from midnight tonight, about which they will not be happy.

The Minister for Finance announced an increase in child benefit, which has been lauded by Government Senators as some sort of mammoth increase. However, two years ago the Minister promised that he would increase child benefit last year by €20 per month for the first two children and €25 per month for third and subsequent children. Despite that promise, last year the increase was just €6, as it is this year. Contrary to what is being presented as a great success, the budget is behind the Minister's previous commitments on increases in child benefit – it is just another one of the many broken promises.

There is no mention in the budget of child care, one of the most serious problems which affects young women trying to get into the jobs market.

No specific mention is made of first-time buyers. Local authorities are taking on board development charges and are passing them on to first-time buyers. In effect, we now have a first-time buyer's tax instead of a first-time buyer's grant. Those people will not be cheered by the announcement that there will be an additional €30 million in the local government fund. These levies are still going to come down the tracks because, as we have been informed, they must be in place by the end of March next year. Those people who are still trying to build their first house will still be affected, regardless of the contents of the budget.

There are positive aspects to the budget. I agree with Senator Ross, however, that it contains little in the way of reform or change. Two issues, namely, decentralisation and the increase in the minimum retirement age, dominate the budget, which contains precious little else. With that in mind, I cannot support it.

I welcome the Minister of State, Deputy Tim O'Malley. I listened to the contribution of the Minister for Finance in the Lower House this afternoon and I was impressed by what I heard. The progress he has made over many budgets is maintained in that which he introduced today. The economy is in safe hands and the Minister has introduced a set of measures which will ensure that it will be well placed to avail of an improvement in international economic conditions. As Senator Mansergh observed, the Minister has ensured that borrowing will be minimised.

The Minister also achieved that which I thought it would be difficult to achieve, namely, not adding significantly to inflation on the part of the Government. I was concerned that any significant increase in direct taxation would have an effect on domestic inflation and place Ireland at odds with other European Union member states. I am pleased that the measures which have been introduced will minimise the risk in this regard.

The Minister, Deputy McCreevy, has been consistent. The budget protects the gains already made and caters for those who are most disadvantaged. Failure to do the latter was a criticism of previous budgets. I do not believe that such criticism was legitimate. If one examines matters dispassionately and carefully, one will see that the most disadvantaged have been catered for, particularly in terms of child benefit and other social welfare increases. It is a significant achievement to grant across the board increases which are of the order of twice the level of inflation. Such increases constitute real and positive benefits for those who are disadvantaged. I will not catalogue the various measures involved, but I must highlight the increase of €10 per week in old age and related pensions and also the increases in children's allowance, widow's contributory pension, deserted wives benefit, etc. These are measures of which the Government can be proud.

I am also in favour of the measures proposed in respect of decentralisation.

Suggestions have been that some of these proposals will be to the political advantage of individuals. However, on any objective assessment, I do not see how we can locate Defence Forces' headquarters anywhere other than at the Curragh. There is no reason that the Department of Defence should not be situated adjacent to those headquarters in Newbridge. The announcement that 250 Revenue officials are to decamp to Athy is a measure of the case put forward not by politicians but by the Athy investment, development and employment forum. The latter is made up of local people who act on their own behalf and who made their case eloquently and coherently to all the leaders of Government. It was they, not politicians, who secured those 250 jobs for Athy. I hope politicians across all parties helped in that effort but I do not believe anybody made a political sally on their own behalf in respect of Athy, which is disadvantaged and which requires the jobs in question. I welcome the fact that 250 Revenue jobs will go to Athy.

It makes excellent financial and logistical sense to locate Defence Forces' headquarters in the Curragh and to place 300 staff there, where they rightly belong. Since I entered the House some time ago I have advocated that Defence Forces' headquarters should be located at the Curragh and I am pleased that this will now be the case. I welcome the relocation of 200 jobs to Newbridge under the decentralisation of the Department of Defence.

A total of 10,300 people will be moved to out of Dublin to other areas of the country. This will benefit both those areas and the capital.

When will they be moved?

Senator John Paul Phelan referred to motorists who are heavily penalised. If motorists were so heavily penalised, they would not be clogging up the dual carriageway as they are at present. If the penalty was severe, cars would disappear from our roads.

Does the Senator want those cars to be removed from our roads?

In recent years, increasing numbers of cars have been appearing on our roads.

The Senator wants to tax them off the roads.

That is a total misrepresentation of what I said.

That is exactly what the Senator said.

It was represented that the Minister for Finance is taxing cars off the roads. The contrary is the case, however, because increasing numbers of cars are appearing on our roads, which gives rise to many attendant difficulties.

I wish to refer to the Minister's contribution in the Lower House, particularly in respect of income tax. When the Government came to power, it gave a commitment that it would not increase personal rates of taxation and that the huge achievements made prior to its entering office would be maintained. The Minister stated:

Some may think that they can reduce unemployment by high tax-and-spend policies. However, any such reduction would only be temporary and would in any case be reversed as tax increases damage our competitiveness. We, on the other hand, have got unemployment down and kept it at low levels by keeping tax rates low.

That is not true.

Success in reducing unemployment from the appallingly high levels at which it stood in the past was due to the tax policy of the previous Government.

No, it was the policy of the Government previous to that.

The Minister also stated:

This lesson should be learned by those who mistakenly call for us to increase our tax burden towards the levels of some other states in Europe. Such calls are misplaced and those who make them fail to see that job creation is the appropriate goal if we are to achieve real social inclusion. High direct tax rates destroy jobs sooner or later. This Government has no intention of going down that route now or in the future.

I wholeheartedly agree with him in that regard.

Reference has been made to the rural measure. That measure, in the context of the social scheme and the fact that 2,500 places should be created, is significant. I resent any suggestion that poverty in rural areas is in some ways different from or less worthy of being attended to than that experienced in urban areas. Those of us who live in rural areas are aware that the poverty which exists there is just as grinding as that in urban areas. That poverty frequently goes unrecognised and I am glad the measure in question will address it. I reject any imputation to the contrary.

I agree with Senator Mansergh's comments on stealth taxes and I will not repeat them. I welcome the concept of multi-annual capital envelopes. It should be possible to ensure we can roll through from one year to the next, that moneys which are not spent can be carried forward and that the Department can plan coherently from year to year.

The budget copperfastens many of the gains made in previous years. It is consistent with the strategy adopted by the Minister for Finance in successive budgets. He should be applauded for the measures he has introduced. It is good that there have not been major shifts and changes. The budget is a case of steady as it goes and the ship is under good control under the Minister's captaincy.

On budget night, it is traditional for the Government to say it was a most magnificent budget and the Opposition to say it was awful. I will adopt a reasonably tempered tone as I share Senator Phelan's concern about Senator Mansergh's health.

All parties can agree on that issue.

We are all fond of him. I know the Senator too long not to be concerned about his well being.

Does the Senator not like a little exuberance occasionally?

The House would be poorer without him.

That is why they brought in the chemist.

I have often written that the Minister, Deputy McCreevy, is the worst Minister for Finance ever, even though he has a well organised Department and his officials read all the newspapers, including those published only in Cork. He took wrong decisions when he had choices to make. He did not invest in infrastructure when he had the opportunity and, instead, reduced the national debt. An appalling infrastructure deficit has developed. According to the Minister, Ireland is at the upper end of the scale in terms of infrastructure investment in Europe, which confirms this lack of development. He is comparing the country to others that developed their infrastructures over 20 years, yet this is considered to be idealistic nonsense. We have fallen so far behind, we do not believe we can develop such an infrastructure.

The Department of Finance is doing its best to prevent the development of a proper system of off road public transport similar to that in European cities of comparable size to Dublin. The Department decided the State cannot afford this and it is in the wonderful position of being able to say half the time measures cannot be taken because there is no market for them but, when the market develops and such infrastructure is desperately needed, the officials say the projects are too dear and cannot be undertaken. This is a wonderful double lock which means that when the Exchequer can afford to undertake such projects, it will not do so because they are not needed and, when they are needed, they are too dear because acquisition of property is expensive and labour costs are high and they cannot, therefore, be undertaken. This prevents the development of a road and rail infrastructure that much poorer European countries such as Portugal take for granted. Lisbon has a metro, yet Portugal is still a comparatively poor country. I will visit Budapest next week. That city had a metro 25 years ago, about which the people of Dublin can only dream, yet Hungary has only one sixth of our per capita GDP. This is a fundamental fault.

The other fundamental fault of the Minister and the Government is the institutionalisation of inequality. Ireland is one of the most unequal countries in terms of income in the OECD. All the old folksy rhetoric of the Minister for Finance and his allies that everybody is a little better off than they were ten years ago does not get away from two issues. The first is the income gap has widened and the second is inequality matters. This is not an academic theory. If a society believes inequality is all right, the inevitable consequence of institutionalising income inequality is inequality in services. I can provide Members with many studies by eminent academics, which demonstrate that a society cannot sustain income inequality on the scale experienced in Ireland without profound inequality in service provision.

The political values that underpin a belief in the need for inequality as an instrument for growth inevitably leads to inequality in many other areas. I agree with Senator Dardis that there is appalling, grinding rural poverty, which is often compounded by appalling, grinding loneliness. It is worthwhile to take action to relieve rural poverty and isolation, particularly of elderly people in areas where there is little or no public transport.

Contrary to the accepted wisdom, it is not necessarily true that higher levels of personal taxation lead to higher levels of unemployment. Ireland does not have a higher level of unemployment than the Netherlands or the Scandinavian countries. Penal personal taxation is not a great concept and it was adopted in Ireland because the law was not being enforced for a long time. As a result, PAYE taxpayers carried the tax burden. It is nonsense to suggest this is an inevitable correlation and it is not supported by economic studies.

The reduction in capital gains tax to 20% in this State has been an enormous incentive to many companies in the private sector to pay senior and middle ranking executives through methods that reward them in terms of capital gains rather than income increases. They, therefore, pay 20% on the extra revenue they generate from capital gains and avoid paying the top rate of income tax. Only the veritable little people in public sector jobs pay the top rate of tax. How would increasing capital gains tax reduce employment? Property speculation and share speculation generate capital gains tax. There are many exemptions, for example, in the area of productive investment. CGT was reduced to 20% and the business class thinks the Minister, Deputy McCreevy, is the best Minister for Finance ever because its members became rich on the spot. They pay the tax without grumbling because they know it is a good deal.

What happened the yield of tax?

I explained what happened to the yield but the Senator was not listening carefully. Many people converted income into capital gains because it was cheap and easy and they paid 20% tax rather than 42% tax. It was a great scam, out of which they did well, and they will be eternally grateful to the Government for its generosity.

Before Government Members begin cheering about social inclusion measures, they should read the latest report of the Society of St. Vincent de Paul. Can they forget about what happened seven or eight years ago? The State is almost 100% richer than it was in 1996 when former Minister Proinsias de Rossa was alleged to have abandoned pensioners. This is a different country with different opportunities and the Government should have the confidence to be judged by its own decisions and sustain its judgment without harping back to 1996 because the next statement it utters will refer to Ernest Blythe taking the shilling from pensioners in the 1920s. Let us talk about modern Ireland, which is a rich country, and let us debate the way resources are allocated. The Government has made decisions about resource allocation that sustain inequality, let down our infrastructure and create an unequal Ireland.

I wish to share my time with Senator Daly.

An Leas-Chathaoirleach

Is that agreed? Agreed.

I welcome the Minister of State, Deputy O'Malley and officials of the Department of Finance to the House. I had the experience today, for the first time, of sitting in the Dáil Chamber during the Budget Statement. I had always found budget day a very serious affair but there was a buzz of excitement in the Dáil today, because the Minister for Finance had steered the Irish economy through a turbulent period of three years while the world economy was in recession. The Minister and members of the Fianna Fáil party were excited—

It was due to the cutbacks.

It was an exciting occasion – we were moving forward, having steered through the turbulent waters off Cape Horn.

Is the Senator being serious? What about the cutbacks?

An Leas-Chathaoirleach

Senator White, without interruption.

I am being embarrassed in the presence of my husband, who is in the Visitors Gallery. Yesterday, the New York Times

The Senator's husband must be as shocked as she is over the cutbacks.

Senator Bannon should realise he is in the national Parliament – not at a county council meeting.

An Leas-Chathaoirleach

Senator White, without interruption, please.

The Dow Jones industrial average, yesterday, was at its highest in 18 months and the indications are that all sections of the American economy are beginning to grow again. Managers are ordering and, as Dr. Dan McLaughlin said recently in Sligo, in an address to members of the Fianna Fáil parliamentary party, as soon as American companies began to build up their inventory control, all sections of the American economy have begun to re-order, following a turbulent three-year period during which companies were cutting back to the bone. Once they begin to build up their inventory control, the international companies based in Ireland will begin to re-order.

The excitement in the Dáil today was similar to what I have felt in my business life, in terms of getting new orders and knowing that one's company is going places.

There was all-round shock. The Senator is playing to the gallery.

Senator Bannon is displaying his narrow-minded approach and lack of vision.

An Leas-Chathaoirleach

Senator Bannon will have his opportunity to speak and should allow Senator White to continue without interruption.

The budget was launched today in an atmosphere in which the world economy is beginning to turn around. Ireland will be part of that. It has been said that Senators and back-bench Deputies have no influence. From my personal experience today, that is not true. I lobbied the Minister for Finance, with whom I had a meeting, and wrote to the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, and the Minister of State at that Department, Deputy Michael Ahern, requesting an exemption from stamp duty on intellectual property. To my amazement, as I sat in the Dáil Chamber today, that exemption was announced in the Budget Statement. On that basis, I have no time for any further claims that one cannot be influential through the Seanad. I was asked to make that approach by my nominating body, the Irish Exporters Association.

Furthermore, at a meeting of the Joint Committee on Finance and the Public Service, representatives of the film industry, including Ardmore Studios, pleaded with us to lobby the Government to retain section 481, which has now been extended for a further four years. That will be very comforting for the 4,500 people working in the film industry in Ireland, including actors, craftspeople and electricians and the 3,500 young people who are studying that industry.

It was apparent at the joint committee meeting that there were many different voices speaking on behalf of the film industry. Due to our success with section 481 over the past ten years, other countries are copying us. We need a visionary organisation driving the film industry. I suggest the Minister set up a development authority for the Irish film industry on similar lines to the IDA.

(Interruptions).

An Leas-Chathaoirleach

Senator White, without interruption.

That development authority should send out a message, throughout the world, that Ireland is the best location for film making.

An Leas-Chathaoirleach

The Senator has three minutes remaining.

May I have another minute?

An Leas-Chathaoirleach

Senator White is eating into Senator Daly's time.

I wish to refer to the BES scheme. Having established my company with my co-founder, Ms Connie Doody, 17 years ago, we could not have grown the business without access to BES funds. I am delighted the Minister has extended that scheme for the next three years. People find it much easier and more lucrative to invest their money in property but, with the extension of the BES scheme for a further three years, the guarantees and tax relief it provides for investors are very attractive. The upper limit has been increased from €750,000 to €1 million. Young companies will have the assurance that funds will be available up to that level over the next three years.

I thank Senator White for sharing her time. She has made a very big contribution to Irish business development in general and her valued contributions in this House are worth hearing. I compliment the Minister for Finance on implementing, at long last, the proposal to decentralise the Civil Service from Dublin to regional areas. I wish to express the appreciation of the people of County Clare and, particularly, Kilrush, for which a very good case was made in recent years for the establishment of a Government office there. I welcome the decision which has now been made to decentralise part of the Revenue offices to Kilrush.

As part of that scheme, there was a joint arrangement with Newcastlewest, County Limerick and Listowel, County Kerry. I am glad those three towns will benefit from reorganisation of the Revenue section of the Department of Finance. Decentralisation becomes very attractive where it involves a substantial block of civil servants moving to a particular geographical location. The availability of the Killimer ferry service will be an attractive feature for Revenue people moving to Kilrush, Listowel and Newcastlewest. I urge the Minister to expedite this move and I am glad he has put an implementation team in place. Contrary to an earlier statement in this debate, a deadline for implementation has been set, with an implementation team to report to a Cabinet sub-committee by next March. Furthermore, the Minister has provided an up-front capital contribution of €20 million to kick-start this scheme and ensure it will be put in place.

I also compliment the Minister on his provision for the Shannon region, which has been identified as the location to which 100 Irish Aviation Authority personnel will move from Dublin. That authority has already made a very significant contribution to the development of Shannon Airport and the surrounding region. This move will represent further consolidation of the aviation authority's position in Shannon and a substantial contribution to the development of the Shannon and mid-west region. The relocation of 300 personnel from Enterprise Ireland to Shannon Airport is also very opportune. Since 1959, Shannon Airport and Shannon Development Company have been the main economic engine for development in the mid-west region. They have made a very valuable contribution to the overall economic development and prosperity of that region, which will be further enhanced by the relocation of part of Enterprise Ireland. The consequent economic benefits will extend throughout the whole mid-west region, as well as in the immediate Shannon area.

I compliment the Minister for Finance and the Minister of State at the Department of Health and Children, Deputy Tim O'Malley, on their work. Since he took up office, Deputy O'Malley has demonstrated his commitment as one of the political heads of his Department, based on his experience as a member of the Mid-Western Health Board and, subsequently, in the Department of Health and Children. It is important to have people of his calibre and that of the Minister for Finance, Deputy McCreevy, spearheading the drive for revitalisation of provincial areas. Today's announcement is one of the most significant developments in any budget over the past ten or 15 years. I compliment both the Minister for Finance, Deputy McCreevy, and the Minister of State, Deputy Tim O'Malley, on the work they are doing. I hope the whole scheme of relocation will be expedited, consolidated and undertaken as expeditiously as possible.

I welcome the Minister of State at the Department of Health and Children, Deputy Tim O'Malley.

Last year I looked at the budget as a schoolteacher would and I gave the Minister for Finance, Deputy McCreevy, a low honours mark, somewhere in the upper 60%. This year, I am not going to be a schoolteacher but a cook, examining the cake the Minister for Finance has baked in this budget. Last year, I said "he tries hard but could do better." This year I want to see if this cake has the sort of ingredients we want. Will it be a big enough cake? Will it be healthy, of long-life and will it be divided fairly? I seldom disagree with Senator Ryan, but on this occasion I do when he claims the division of the cake is the important matter. It is the size of the cake, together with its division, that is important.

Is the cake big enough? The Minister for Finance has worked hard to prove himself over the last several years. He has ensured the cake will be bigger through ways of incentivising the nation. Over the years, he has done a good job on this, particularly through reducing various kinds of taxation. I am not a betting man, but when he reduced betting tax – I think it was from 10% to 5% – he took in more revenue and when he reduced it again to 2%, he took in even more. The same happened when he reduced the capital gains tax from 40% to 20%. That is one way of baking a bigger cake.

While he has done nothing particular to bake a bigger cake in this budget, he has taken steps towards doing so. If we take his word for it, he projects that he will increase employment by 23,000 in the coming year. If he manages this, it will be a bigger cake. He projects that GNP will rise for the next three years by 3%, 4% and 4.5% respectively. Those are not the heady heights we had in previous years, but if that is the objective of the Minister and his sums are correct, he will have done well.

There are other areas where these same incentives will be applied. Film tax relief is a real example of where an incentive and jobs are created. I congratulate those who argue the case for research and development. If we are to invest in the future, research and development is an important element and I say "Well done" to the Minister for Finance. I had not noticed the intellectual property stamp duty until Senator White referred to it. All these are steps in the right direction. Another interesting incentive was in the area of corporate headquarters and holding companies. I travel around Europe and I know a number of companies which plan to set up headquarters in Ireland because it is a good place to do business, one of the reasons being the tax incentives in this area. In this regard I give the Minister for Finance good marks in regard to the size of the cake he has baked.

Is this a healthy and long-life cake? There is a big crisis in pensions facing Europe. The Minister for Finance has touched on it and has taken the first tentative steps in the right direction. However, he must go farther in tackling this sword of pensions which hangs over us. As we can work longer into old age, we have not funded ourselves for future pensions, unlike other European Union member states.

I am not sure if the Minister has done nearly enough in the area of inflation. He projects the effect of price increases will be 0.4%. It does not seem high and inflation is coming down. However, it has a long way to go before we are competitive again. If there is one area that our future depends on, it is competitiveness. We have not recognised the needs of this area. The Minister's heart is in the right place.

He will lose marks when I see what happens with public spending. Public spending is still high and infrastructure costs and other areas such as benchmarking have not been tackled. The proper provision for economic growth is in infrastructure development. However, the Minister admits that we failed to provide properly for infrastructure and that it will cripple economic growth if we do not get it right. The question is not so much what is spent but how. There is no tradition of cost benefit analysis on how we spend public money. The Minister referred to infrastructure investment but action will speak far louder than words. I am not giving him good marks for the long-life of the cake and I am more concerned about the food safety aspect of it.

All Members will agree that this is a dull and boring cake. There was nothing in the budget to excite us.

It is an exciting budget.

I felt sorry for Deputy Richard Bruton, who had to criticise it, because there was no meat and nothing tasty in it to have a real go.

My main criticism is in the division of the cake. Did the Minister for Finance divide it fairly and equally? I agree with Senator Ryan on this issue. In the Book of Estimates two weeks ago we saw too many examples of financial nit-picking where cutbacks and the new charges referred to by the Fine Gael Party were directed at the less well-off. This is the real challenge we face. The state of the national finances is better, probably considerably so, than the Minister led us to believe when the Book of Estimates was published. The first thing the Minister could have done today was to roll back some of the cutbacks, new charges and increased costs and fairness would demand that he did that.

I say "Well done" to the Minister on the cake he has baked. It will be bigger than it was and it is safe. It is not as tasty as I would have wished and it is not divided nearly as well as it could have been. I will give him 75% with the comment that he has tried hard and could do better next year.

I welcome the Minister of State at the Department of Health and Children, Deputy Tim O'Malley. I congratulate the Government, particularly the Taoiseach, the Tánaiste and the Minister for Finance, Deputy McCreevy, on this excellent budget. It is a blueprint for the development of Ireland.

Hear, hear.

It is the most radical budget in the history of the State. We have never had such an extensive and fair decentralisation scheme bringing entire Departments to the regions. The Houses of the Oireachtas are the only ones excluded in the programme. We could have gone to Athlone or even Roscommon, however we are hopeful to stay where we are. Bringing the Department of Community, Rural and Gaeltacht Affairs to Knock Airport is a magnificent gesture. It shows the fairness of the Minister for Community, Rural and Gaeltacht Affairs, Éamon Ó Cuív, as he could have brought it to his Galway west constituency.

There are some other goodies there, though.

Members will remember the comments of the late Deputy Jim Mitchell on Knock Airport about the "foggy, boggy hillside". Now a Department is to be decentralised to that area which has a magnificent airport, built by Monsignor Horan and the former Taoiseach, Mr. Charles J. Haughey. It is a marvellous decision.

I am delighted that Roscommon town has received 230 Land Registry jobs.

Roscommon is the second worst county in the midlands region after Longford.

Allow Senator Leyden to continue without interruption.

This will create massive opportunities because of the need for the legal profession to have agents, as in Dublin. All legal firms have agents in Dublin who go to the Land Registry to examine files and make searches. These will now be required in Roscommon. We have registers of deaths, births and marriages so Roscommon town is the registry headquarters in Ireland – Roscommon, the registry town. Deaths, births and marriages, land and property will now all be registered in the Roscommon area, which is a great gesture. It is a great boost to myself, Deputy Finneran, Roscommon County Council, Roscommon Chamber of Commerce, every cumann member throughout County Roscommon—

The Senator is looking after them.

What did Senator Bannon do for Longford?

Allow Senator Leyden to continue without interruption.

—and all the supporters of Fianna Fáil. We are very proud of this development. The last time I was in the Oireachtas, we got decentralisation. I am back and we have got it again. The last time I was here in 1992, I got the registry of deaths, births and marriages.

The Senator got the second worst deal in the midlands.

Senator Bannon will get his turn to speak next and should allow Senator Leyden to continue without interruption.

It is more than a coincidence. In 1992 I asked the then Taoiseach, Albert Reynolds, to give us something for Roscommon. He gave us 50 jobs in the Department of Health and Children's general register office. Unfortunately, that decision was only implemented in 2003 after my return to the Oireachtas. The opening was attended by the Minister for Finance, Deputy McCreevy, and the Minister of State, Deputy Parlon, representing the Office of Public Works. It looked very good on the day and while they were very tight-lipped, we know they were impressed by the support given to the general register office for deaths, births and marriages. We will now have a further 230 jobs along with all the ancillary work in building and equipping that development. I offer my gratitude to the Government.

It is a great day for the Fianna Fáil majority and the Progressive Democrats who are working extremely well in Government implementing this policy. No Government in the history of the State has decentralised 10,500 jobs to the regions. This will be implemented within three years. In the lifetime of the Government, all this work will be completed and the staff will be in place. We will have the headquarters of the Department of Education and Science in Mullingar, the Department of Agriculture and Food in Portlaoise and the Department of Communications, Marine and Natural Resources in Cavan. In excess of 100 jobs will be decentralised to Ballinasloe, with 130 jobs going to Longford. Carrick-on-Shannon fought hard and will get 265 jobs. This is thanks to Oireachtas Members like Deputy Ellis and Senator Mooney, who have been fighting for a long time and have now succeeded.

The Senator should mention Deputy Perry also.

This decision represents a vote of confidence in the BMW region and specifically Roscommon. The jobs in Claremorris and Knock will have a spin-off effect for Ballaghadereen. The one disappointment is Boyle. I have no doubt that the chamber of commerce there is expressing regret that Boyle has not been successful as it was providing a free site for decentralisation. The Fianna Fáil and Progressive Democrats' policy of decentralisation is being implemented, but we must maintain the fight. Boyle will get spin-off benefits from Sligo and Carrick-on-Shannon. All the areas around Boyle have benefited from the development of the credit card company in Carrick-on-Shannon and now it will benefit from the decentralised jobs. The extension of the tax incentive area to the end of 2006 will give an opportunity to finish all the projects that are under way at present. We had not expected this extension, but I know Leitrim County Council and all the Oireachtas Members from the area fought hard for it.

I congratulate the Minister for Finance on introducing this development. It is a great day for politics, for Fianna Fáil and the Progressive Democrats, and will help us as we face into the local elections. In Roscommon we have five good candidates and we intend to get four out of the five seats. Due to the decentralisation of 230 jobs to Roscommon, the people will respond and vote for Fianna Fáil in the local elections. We will also get two MEPs elected to Europe in the Connacht-Ulster constituency.

This budget is a shame and a disgrace to the democratic process. Even by the Government's standards, it is an exercise in extortion that would in any other circumstance result in it having to face legal accountability. A year ago, I referred to the Minister for Finance as "Charlie the Slasher". This has proved an apt title for a Minister who over the past year has single-handedly caused more hardship among the less well off than anyone could have realistically imagined.

This budget, while a repetition of the scandalous document of last year, is an even greater indictment of the duplicity and gross mismanagement of the public finances by the Minster for Finance. After a year of holding the people to ransom and squeezing every last cent possible from the purses of the weakest sections of our society, the unemployed, disabled, elderly and sick, nothing has changed. The Government has no shame, as it cannot afford it. It spent and squandered it along with our public money, the fruits of our boom years. We all know that the Government has squandered the public finances and now it expect its criminally negligent shortfalls to be met and mended by those least able to afford their demands.

In a shocking replay of the 2003 budget, we once again find stealth taxes, a total shutdown of services for the most vulnerable in society and a drastic curtailment of others. The budget contains many stealth taxes in which the taxpayer is yet again being asked to pay more while public services deteriorate. Although mainly disguised and denied, the Government has been forced to admit to some of the following charges: long-term medication users will pay more as will those attending hospitals, those dependent on rent supplement and those sending their children to college. Last night an increase in toll charges for cars and other vehicles was also announced.

These are only a few of the intended stealth charges. Local budgets will continue to be squeezed. Apart from the once-off contribution of €30 million to local authorities, the freeze on Exchequer contributions will be followed by increased local charges. The big State monopoly companies will be looking for their share. Already the ESB has approval for an increase. Health insurance, rail, broadcasting and postal services will not be far behind. There is evidence they have sought increases which, no doubt, the Government will grant.

Fine Gael has stood up against the benchmarking madness and stood for the hard working taxpayers who will pay for invisible improvements in public services out of their hard earned money. There have been cuts in discretionary schemes on which the poorest sector depend. Child care grants, community employment participation, the treatment purchase fund, FÁS training and integration budgets have all been cut by the Government. Investment in water and sewerage schemes has been cut. Funding for urban regeneration schemes has been cut, with the exception of what is proposed under decentralisation, for which we will have to wait. Funding for the Environmental Protection Agency has been cut. Health spending has been drastically cut. Some 70,000 households in this country live in poverty. People are not even assured of a hot meal every day, yet cuts of €58 million to social welfare schemes are due to be implemented next year. This is what will happen even though a gloss has been put on it.

Is this a Cumann na nGaedheal text from 1932?

The rent allowance supplement has become another victim of the Government's cavalier attitude to the less well-off.

Did Senator Bannon get this from the archives?

Order, please. Senator Bannon without interruption.

Applicants for rent allowance must be renting property for at least six months before they can apply for the allowance. This amounts to another bureaucratic stranglehold on the needy.

The back to education allowance has also come under the axe, in addition to the traditional half-rate payment for lone parents and the crèche allowance. Community employment schemes have been savagely cut. A member of the Minister of State, Deputy Parlon's party, walked out in disgust—

Not true.

—at the way community employment schemes have been affected.

Order, please. Senator Mooney will get an opportunity to correct these points.

Did the Senator dream this up?

It will be extremely difficult—

Senator Bannon without interruption, please. There will be an opportunity to address these points.

There will be an opportunity for the Minister of State to address this.

Senator Bannon should speak through the Chair.

We saw evidence yesterday of the great discontent in the Progressive Democrat Party. The bed is beginning to burn under it. Its members are walking away. We will see resignations within the next 12 months.

Dream on.

While I am not a believer in Old Moore, I agree with his prediction on the collapse of the Government in the not too distant future. We saw evidence of this yesterday when the Longford Member walked out in disgust. The heat is becoming too much for her.

Whatever happened in Longford is not relevant to the discussion on the Budget Statement.

I saw her voting with the Government today.

It is difficult for people who are displaced from community employment schemes – due to cuts imposed by the Fianna Fáil-Progressive Democrats Government – to avail of other job opportunities on the open market. Despite the upsurge in capital, the Minister refused to give extra funding to these essential schemes.

The Fine Gael Party is committed to restoring community enterprise. We regret that the Taoiseach, Tánaiste and Minister for Finance failed to recognise the great work that has been done through community employment schemes. Whether the word used is "cut" or "slashed", the cause and effect are the same. The cause is Government ineptitude and mishandling of finances, of which there is evidence everywhere, the effect is to punish and penalise the less well-off.

Moreover, other cuts are in store with the weakest once again bearing the brunt. Further hospital beds will be closed and contract staff laid off. New teaching materials will not be purchased and broken school equipment will not be replaced. The onus will be placed on parents to do this. Cuts in travel allowances will affect outreach services. Nursing home beds and respite care will be curtailed. Local improvement projects will be put off. Streets and public places will become dirtier. The backlog in the provision for the needs of the disabled will remain unmet. Like a conjuror pulling a life saving rope out of a hat, or more topically given the time of year, like Santa Claus bringing goodwill, the Government now, as it always does, is producing goodies in a pre-local election promise binge.

Senator Bannon must conclude.

Do I not have a further minute?

No. The Senator will deprive his colleagues of speaking time if he takes another minute. The Minister of State has 15 minutes.

It is a pity the Senator did not see the news programme "Six-one", as there was unprecedented and almost universal acclaim for a tremendous budget. I hope he will get an opportunity to see the news at 9 o'clock.

This is another trick from the Government. The same will not be said tomorrow or the next day.

Order. Senator Bannon has made his contribution. The Minister should be allowed to speak without interruption.

A debate in this House has become a regular part of budget day each year. I thank the Independent Senators for tabling this motion which provides Members with an opportunity to comment on the budget. It also allows the Government to hear those views and, at the same time, to put on record the objectives which underpin budget 2004 and the measures that will deliver them.

I begin by reminding the House of the core objectives the Government and the Minister for Finance, Deputy McCreevy, set out today. We want to continue to foster employment and growth, to maintain our prudent approach to the public finances, to invest more in infrastructure and to keep inflation low, thereby securing Ireland's competitiveness, and in this way secure the resources needed to achieve social inclusion. We have made progress in all these areas, which is evident for all to see.

Unemployment has been reduced from 16% down to under 5%. Our debt to GDP ratio has fallen dramatically from 100% of GDP down to 33% of GDP. These are real benefits which allow more people to share in a growing economy, while more revenue goes to fund sensible income policies and future investment. The strategic decisions taken by Government in recent years, as well as those taken in this year's budget, mean that we are well placed to benefit from an improvement in the major economies, provided that we continue to steer a prudent and far-sighted course. Senators will agree that to do otherwise would be to repeat the failed policies of the past.

As part of today's budget, the Minister published the Government's economic forecast for the coming years which underpins the budget. Unlike last year, when uncertainty abounded – with good reason – we can now point to the general consensus that the much heralded international recovery is under way. The economies of our significant trading partners look better than they have in recent years. However, there are still significant imbalances in the world economy, which are still a source of concern and, as such, pose a risk to the sustainability of the international recovery. Senators are aware of how sensitive is our economy, for example, to sudden falls in the US dollar against the euro and the difficulties this poses for our exporters.

The Government expects economic expansion to move back towards our long-term growth prospects. In particular, the Minister has forecast that, barring a major external shock, real GNP will expand by 3% for 2004 with real GDP growth growing slightly faster at 3.3%. For the years 2005 and 2006, it appears that real GNP may expand by 4% and 4.5%, respectively. As a result, we expect employment to increase by 23,000 next year while unemployment should average approximately 5%. Taking account of the changes in today's budget, consumer price inflation should average 2.5% in 2004, which is a halving of inflation in the space of one year.

Senators will, no doubt, have listened with interest to the Minister's announcement on decentralisation. While this initiative was signalled in budget 2000, the next phase will adopt a new approach. Entire Departments – including Ministers and senior management will move out of Dublin. A total of eight Departments and the Office of Public Works will move headquarters to provincial locations, leaving seven Departments with headquarters in Dublin. Up to now, approximately 4,000 public servants have opted for decentralisation. The next phase, involving all Departments and offices, will see 10,300 civil and public service jobs move to 53 centres in 25 counties. The programme will be implemented on a voluntary basis.

In my capacity as a public representative from a constituency outside Dublin and, as Minister with responsibility for the Office of Public Works, I am acutely aware of the benefits this will bring in terms of a more balanced development of the regions. I welcome this decision and look forward to its implementation. Details of the decentralisation programme are outlined in the budget summary.

The Government will continue to borrow wisely to ensure that much needed investment can proceed. For 2004, we will increase gross spending on public services by just under 7% and spend close to 5% of GNP on capital projects. In recent years, there has been a rapid rise in public spending, particularly in areas such as social welfare, health, education and infrastructure. The prospect of lower future growth means less revenue will be available to fund increases in public spending. Consequently, the Minister has signalled his intention to keep increases to this year's level in the coming years.

We are making a very significant investment in infrastructure, almost €28 billion since 1997 and we plan to spend €5.6 billion next year. As a percentage of our GNP, this is twice what is spent in the rest of the EU. However, we must also ensure that the taxpayer gets full value for this level of investment which requires a more focused and planned approach. In this regard, the Minister announced a new initiative today involving rolling five year multi-annual programmes for all investment areas.

With effect from next year, Departments will be allowed to carry over to the following year un-spent Exchequer capital allocation, to a maximum of 10%. This initiative will be a significant benefit to longer term projects.

Speaking of capital, Senators will be pleased to hear that a further €30 million has been allocated to provide school buildings in the primary and secondary sectors. The Minister wants to see greater involvement of private sector interests in the funding of major spending projects through public private partnerships. He also intends to bring forward proposals to make changes to public sector contracts for construction, construction-related services and the hiring of consultants.

It has been suggested that the Government should renege on its commitment to implement the report of the independent Public Service Benchmarking Body. The Government has no intention of so doing. We have an agreement on which both sides must deliver if we are to achieve the quality of services we all want. Senators will be aware of the initiatives the Minister has introduced over the years to fund the State's future pension liability and to encourage people to provide for their own pensions. These initiatives have been extremely necessary in light of predicted demographic problems in the future. It is estimated that the number of people of pensionable age will increase threefold over the next 50 years. The major economic problem this represents for the future must be addressed now. The Government has therefore decided to introduce changes to the pension arrangements for new entrants to the public service from 1 April next year. The minimum pension age in most cases will be 65. Staff who enter the public service will be permitted to continue working after they reach that age. It is important to note that existing staff and pensioners will not be affected. Revised arrangements will also come into effect for the Garda, prison officers and members of the Defence Forces.

The reduction of consistent poverty and the improvement of living standards will continue to be a Government priority. Over the past number of years, our policies in this area have brought real benefits to those in greatest need.

God bless us. The Government is not living in the real world.

Order please.

The social welfare package announced today involves the expenditure of a total of €630 million in a full year. The Government will continue to evaluate public expenditure in a way which allows it to free up resources to direct them to the areas which are most in need. It has done so today.

The level of additional benefits announced today by the Minister for Finance is well ahead of the rate of inflation. The Minister announced a €10 increase in the full personal rate of old age and related pensions.

That is an insult.

Order please.

Senator Bannon should look at what Fine Gael provided when it was in Government.

The Minister of State, without interruption.

The old age contributory pension will be increased to €167.30 per week. The new rate for the old age non-contributory pension will be €154 per week. Widows' and widowers' contributory pensions for those aged 66 and over will increase by €11.50 to bring the rate up to the level of the old age contributory pension. The new weekly rate for widows and widowers aged 80 or over will be €173.70.

All other personal weekly social welfare rates will be increased by €10 per week. This measure will bring the lowest full personal social welfare rate to €134.80 per week. The full qualified adult allowance rates will increase by at least €6.60 per week. There will be a special increase of €16.10 in the invalidity pension qualified adult rate where the qualified adult is aged 66 or over to make it equivalent to the old age contributory pension equivalent.

There have been major increases in the level of child benefit under this Government. Next year will see a further increase of €6 to bring the rate for the first and second child to €131.60 per month. The rate for third and subsequent children will increase by €8 to €165.30 per month. Further measures which will be announced by the Minister for Social and Family Affairs are set out in the summary of budget measures. A total of €25 million is being provided to support persons with intellectual, physical or sensory disabilities. This funding will be used to provide additional emergency residential placements, extra day services – especially for school leavers – and to enhance health support services for children.

The Government has made substantial progress in lifting the burden of tax on jobs and enterprise and is committed to continuing this successful strategy. This year, the Minister has targeted our limited resources towards those on low pay by increasing the employee tax credit by €240 to €1,040 per annum. This measure means 90% of the minimum wage will continue to be free of tax and will remove 39,200 taxpayers from the tax net. The first €246 per week earned by a single worker will be tax free.

The income tax exemption limits for those aged 65 or over are also being increased. The new limits will be €15,500 for single persons and €31,000 for married persons. This represents an extra €500 and €1,000, respectively. The increase in the exemption limits will remove an additional 2,200 elderly taxpayers from the tax net. These income tax measures will cost €287 million in a full year. In three years, these limits have increased in value by almost 44%.

Senators will be pleased to hear that a number of tax reliefs which were due to end have been extended. The business expansion scheme and the related seed capital scheme will continue to the end of 2006 in recognition of the positive role the schemes play in the development of small firms. The ceiling on the amount which can be raised under these schemes is being increased from €750,000 to €1 million. Another measure which I am sure the House will welcome is the extension of the film relief scheme to the end of 2008 with an increase in the ceiling to €15 million per film from 2005.

Senators will also be aware of a number of area-based tax reliefs which were due to end next year. In recognition of the fact that enforcement of the current cut-off date would result in practical difficulties, I am pleased to inform the House that the Minister has agreed to extend these schemes until 31 July 2006. The extension is made on condition that the projects involved will have commenced or are moving ahead at the relevant time. The Minister has also decided to extend the relief for corporate investment in renewable energy sources for a further two years as part of our strategy to meet our Kyoto Protocol targets.

It is important that we continue to move up the value chain in terms of the quality of employment we develop. A new initiative to encourage research and development in Irish companies is to be introduced. It is proposed that a tax credit will be available to companies for incremental research and development expenditure. Up to 20% of this expenditure will be allowable against corporation tax in any given tax year. There will also be an exemption from stamp duty on transfers of intellectual property.

The Minister has also decided to introduce measures to encourage multinational corporations to locate their regional headquarters and holding companies in Ireland. This will involve an exemption from CGT for Irish resident companies on the disposal of a substantial shareholding in their trading subsidiaries. There will also be an expansion of our double taxation relief provisions for dividend income paid to parent companies in certain cases.

The Government will get it back in development levies.

Order please.

Taking into account the need to keep inflation down, the Minister has decided to make only minor changes to indirect taxation. Taxation on cigarettes and other tobacco products will increase by the equivalent of 25 cent per packet of 20 cigarettes. The VAT-inclusive excise duty rate on petrol and diesel will be increased by 5 cent per litre. These increases will take effect from midnight tonight and will raise €243 million next year.

I turn next to the agricultural sector with which I am very familiar. The budget contains a number of measures that will benefit farmers. I am particularly pleased by the Minister's decision to establish a new rural social scheme. This scheme will provide worthwhile, locally based jobs for members of families eligible for the farm assist scheme. It is envisaged that up to 2,500 places will be available on the scheme. The effect will be the improvement of rural services and the provision of income to small farmers through a working week which is compatible with farming. Details of the scheme are set out in the budget summary.

A number of tax measures have been introduced to assist the farming sector. First, the special scheme of capital allowance for farm pollution control due to end this year will be extended for another three years to the end of 2006. Second, there will be major improvements in the tax reliefs available for farm leasing to promote better use of our national agricultural land resources. These measures arise from the decoupling decision taken by the Government following the mid-term review of the Common Agricultural Policy. The exempt threshold for leases of five to seven years is being increased from €5,079 to €7,500. For leases of seven years or more, the exempt threshold is being increased from €7,618 to €10,000. In addition, the age limit for the qualifying lessors is being reduced from 55 to 40. Third, the farmers flat-rate VAT will go up from 4.3% to 4.4%. This rate change will ensure that farmers will continue to be compensated in full for the VAT they bear on their business inputs. There will be a corresponding increase in the VAT rate for livestock sales.

To turn to the recently published Estimates, next year the Government will spend €1.39 billion in support of agriculture. This represents an increase of €62 million or 5% over the corresponding 2003 figure. When account is taken of the reduced expenditure requirements related to BSE in 2004, which arises from the improved disease situation, this expenditure represents an increase of 8% in real terms. A further €1.6 billion will be paid out on EU funded agricultural measures in 2004, mainly through direct payments to farmers. This will bring total expenditure on agriculture to approximately €3 billion in 2004. Direct payments to farmers will amount to an average of approximately €13,000 each per year.

The progress we have made over recent years has laid a firm foundation for future success. We can only build on that foundation if we continue to follow sound budgetary policies. Irish people have seen the rewards which have come from good management of the public finances and are wise enough to recognise the need to avoid short-term fixes.

The people have been harmed today.

Order please.

One need only look at news on "Six-one" to see how wise the people are. This budget represents a prudent combination of targeted tax and expenditure measures which will bring real benefits. At the same time, it protects the vulnerable in our society. We have more jobs in our society and a better standard of living for all, especially for those on the margins. We are seeing real benefits in the delivery of better public services focused on delivery and quality and we are able to put in place the much needed infrastructure that will continue to add to our future successes. The indications are there that we have come through the worst of the international downturn and I am confident that we can look to the future with optimism. This budget is another important step in the Government's delivery of its policies. I commend the budget to the House.

In a sense, this is a "nothing" budget. There are no ideas in it – certainly no big ideas. More often than not, that is good cause to be thankful when dealing with the Minister's ideas because most of them have caused us grief over the years. However, on this particular occasion, there was a need for greater ambition and greater innovation than we have seen. The real budget happened two weeks ago in the Book of Estimates, which put the squeeze on public services and imposed a series of 16 social welfare cuts. That is what will cause pain and that is the story of the budget. What we have today is marking time in terms of social welfare and tax. It is a repetition of a number of ideas, most of which have been announced before.

The biggest of those ideas is the decentralisation plan which was first announced by the Minister in 1999 in the 2000 budget. He has repeated it almost every time he has had to answer parliamentary questions in the Lower House. He usually uses the same mantra, including notions such as relocating Department headquarters down the country and so on. I accept we did not get the detail we got today previously and, to that extent, it is new. However, there is little money –€20 million – to bring about the decentralisation and, as far as we can tell, there are no targets on how long it will take. I am extremely sceptical about whether this decentralisation will happen within the foreseeable future. The temptation is to think that it has a great deal more to do with the timing of the local elections than with anything else. Indeed, if anybody was in any doubt about that, the extraordinary performance of Senator Leyden earlier, when he dealt with the alleged impact on Roscommon, is proof of that point.

I am a Dubliner and there are few Dubliners in this House. Maybe we should take an attitude dictated by our local circumstances from time to time, although we Dubs rarely do so. This is a zero sum game. If 10,300 jobs are to be gained by various exotic places around the country, then they are being lost to our capital city. Our capital city is still the area in the country in which most unemployment is located. It is also where many people choose to live, including no doubt the Minister's officials in the Department of Finance, few of whom will be affected by this decision. Some people who live in and who were brought up in this city will not wish to be forcibly relocated to some place down the country to shore up the Fianna Fáil county council seat in Ballygobackwards.

That is insulting.

Senator McDowell, without interruption.

If we are talking about a serious programme of decentralisation strategically organised in places in which we want to see growth based on the spatial plan, then that is fine. However, that is not what we are talking about. We are talking about Senator Leyden and his mates in County Roscommon being able to go around next June telling people they have got 250 jobs or whatever or that they may get 250 jobs at some point in the undetermined future.

We know where the Labour Party stands on decentralisation. The Senator has written off the rest of the country.

Senator Mooney, I am in a minority in my party, as we Dubs are in all parties.

No, the Senator is not. He is in a party which wants to go into Government with—

Senator Mooney—

I am in a minority in my party, as we Dubs are in all parties. Occasionally, we have to speak up for ourselves and for those civil servants who want to stay in this glorious city of ours.

My party supports a serious programme of decentralisation which is intended to provide for regional development based on the spatial strategy. I do not see that in this plan. What I see is a programme for local government candidates from Fianna Fáil and the Progressive Democrats throughout the country. I do not believe civil servants should be asked to sacrifice their careers on the basis of a local government manifesto for Fianna Fáil.

What we have seen today in regard to social welfare is a serious disappointment. I spoke on this issue a couple of weeks ago during Private Members' business when the Minister Social and Family Affairs, Deputy Coughlan, was present. I said – the Minister seemed to agree – that we would be entitled to judge this on the basis of the programme for Government which stated that it would make serious progress towards meeting the target of having the lowest rate of social welfare at approximately €182 in 2007. That requires a real rather than an actual increase of approximately one quarter over the four years in between. What we see today just about marks time with inflation and does not greatly exceed the increase in other incomes. We will not make any progress on the Government's targets set out in the programme for Government which refers to €182 as being the lowest rate of social welfare benefit in 2007.

The situation in respect of income tax is much the same. It is reasonable to point out that the Government has often stated its target to reduce the number of people paying the higher rate of tax at 20%. This budget will actually increase the number, although I will not weep many tears about that. However, I am critical that many years after the Government first stated it as a strategy, there is a significant number of people on the minimum wage paying income tax. It is not sensible to say on the one hand that from February next, it is unreasonable for employers to pay employees less than €7 per hour while, on the other, taking some of it from them by way of tax. If we state that €7 per hour is an acceptable basic minimum entitlement, we must say, as a corollary, that we will not tax it. The Government has done nothing better than mark time with its 90% from last year. That is a pity because it is clear from the Exchequer returns we saw yesterday that there would have been the capacity to go a little further, or probably the full distance, in terms of taking those earning the minimum wage out of the income tax net.

I remember attending this debate last year when Senator Quinn, whose contribution this evening I did not hear, warmly welcomed the Minister's commitment to introduce a carbon energy tax from the following year. I thought it remarkable that during his 45 minute dissertation in the other House, the Minister did not mention that commitment. I would be interested to know where that commitment stands. I for one have never believed the Minister was in any way committed to a carbon energy tax or that he cares a toss about the Kyoto Protocol and our commitments under it. I regret that his silence today has proved that he cares little for what are solemn international treaty obligations.

There is a commitment in the budget for multi-annual budgeting for capital purposes, the capital envelope of three to five years. In principle, I accept it is right, but it is not the first time something of this nature was announced. Something similar was announced and even tried a number of years ago. However, the Department is not much given to this type of idea, certainly not in practice whatever about in principle. The proof of the pudding will be in the eating. I like the idea that one can carry over up to 10% of one's budget if it is unused. Provided that is not reflected in a reduction in one's budget for the following year, it clearly makes sense. In terms of infrastructural development and capital spending, we need a much more sensible way to do things than the stop-go way we have seen heretofore.

I am reluctant to go down the road of trying to reply to the political points made, although I wish to make two points. I have the greatest respect for Senator McDowell, who has great expertise. He was also his party's finance spokesman and there is a possibility that at some point in the future, he may again become Deputy McDowell and may end up as Minister for Finance.

I am afraid that for those of us from the country—

Senator Mooney, your time is limited.

—it will be a cold House for people from the country—

Speak to the motion, please.

—coming up looking for—

Speak to the motion.

I am speaking to the motion because an attack was made on the decentralisation policy that has been pursued by every Administration since the foundation of the State and which has not been implemented until today. It will be implemented within the timeframe. It is a happy day for the people of County Leitrim. My late father sat in this House and on many occasions, along with his contemporaries, sought the decentralisation of Departments to rural areas. I did not believe I would see the day it would happen. There will be 265 jobs in Carrick-on-Shannon. Senator Leyden said it already in respect of Roscommon, but I compliment my parliamentary colleague, Deputy Ellis, who fought for decentralisation and the staff of Leitrim County Council who prepared and laid the groundwork for today's momentous announcement. The county manager said earlier when I gave him the news that the site located in Carrick-on-Shannon will fit adequately the jobs that will be provided there. We are ready, willing and able to take on the challenge and will do so with enthusiasm. I compliment the members of Leitrim County Council and especially the representatives from the Carrick-on-Shannon electoral area who fought assiduously for it. There were times we thought it would never happen, but it has happened and will take place.

Who would have thought that the local election campaign would start today.

I compliment the Government and the Minister of State, Deputy Parlon. I hope he will also ensure that the relocation of the sections of the Department of Agriculture and Food from Sligo to Leitrim will take place. The site has been purchased in my home town of Drumshanbo and is now at the conveyancing stage. That decision was pursued by the Government not as part of a decentralisation decision, but as a result of long recognised overcrowding at the Department offices in Sligo. I hope the Minister will be able to pursue it to its conclusion on the basis that we have the decentralisation programme in place.

The county also welcomes the extension of the rural tax scheme but I hope the Minister takes this suggestion on board regarding what happened with the coastal resort scheme and unfortunately with the tax incentive scheme in County Leitrim. A report published earlier this week showed the stark reality that 72% of the houses built in County Leitrim over the past three to four years have been second homes. The tax incentive scheme was set up by the Government to help the repopulation of rural areas and not to provide second homes for wealthy people. I suggest that in the context of the guidelines awaited by Leitrim County Council there should be a more focused approach for the remainder of this incentive scheme. It should focus more on town and urban areas to ensure there will be repopulation. At the same time, the guidelines must ensure that the people in my county and other rural parts of Ireland who wish to build houses on their own land will be allowed to do so without fear or favour from An Bord Pleanála or any other outside agencies.

I understand and appreciate that the Opposition must make their political points but Senator Bannon made a sorry case for the Opposition. His speech could have been written in 1932 instead of 2003. It painted doom and gloom. No wonder the people voted to put Fianna Fáil back in Government.

Be careful, it might just come back.

It is no wonder when we have to listen to him paint a picture of dismal gloom to a point where I was almost in tears until I woke up and realised he was not talking about Ireland 2003 but about some never never land in which Fine Gael resides. The circle is complete. Fine Gael lives in the past and we have a putative Minister for Finance who does not believe in decentralisation. I will be happy to tell the Labour Party candidate in Leitrim at the weekend that his colleague in Dublin said in the Seanad that he is not in favour of decentralising Government offices to County Leitrim.

Question put and declared carried.

When is it proposed to sit again?

At 10.45 a.m. on Tuesday, 9 December 2003.