Seanad Éireann díospóireacht -
Wednesday, 24 Nov 2004

Vol. 178 No. 17

Book of Estimates 2005: Statements.

Minister for Finance (Mr. Cowen)

I am delighted to have this opportunity to outline to Seanad Éireann the Government's public spending plans as set out in the 2005 Estimates. In my budget next week I will set out the full details of the Government's economic and fiscal strategy for 2005, including further spending measures and taxation.

In framing the 2005 Estimates the Government was conscious that the funds being spent are provided through the taxes paid by workers and businesses. It is important that these taxpayers can see real value for their taxes and that Government priorities in spending reflect this as much as possible. Accordingly, the Estimates are about ensuring, for example, that ageing members of families are better cared for, that children have better facilities in which to learn and develop and that those who are disadvantaged progress through tangible improvements in their lives. The Estimates and the budget must also contribute to our general economic and social development.

It is the objective of the Government, by making the correct decisions in the Estimates and budget, to promote sustainable economic growth so we have the resources to spend money on the social needs of our society that help enhance the dignity and quality of life of those who require our help and support. It is through the implementation of the correct economic policies and the creation of an efficient and enterprise friendly taxation system that we can best provide the funds that help advance these objectives. On an objective analysis, I strongly contend that the Government's management of the nation's finances has been excellent in both good and less favourable economic times.

As a result of an international downturn that began in 2001 we have had to keep a relatively tight rein on public spending in recent years. Accordingly, we have reduced the gap between revenue and public spending growth and managed to consolidate our fiscal position. Managing public spending growth broadly in line with the growth in resources and in a manner sustainable in the medium term remains essential. The Government intends to continue with this general approach so as not to undermine the hard work of the past few years, which ensured that we are now better placed than most to take advantage of the current international economic upturn.

While the world economic outlook is now improving and we are experiencing an economic upturn, our economy will not return to the high growth rates we saw in the period up to 2001. The consensus among most commentators is that economic growth in 2004 will be approximately 5%. This is a continuation of last year's positive trend. There are, however, a number of risks to our economic performance next year. These include oil prices, the dollar and a possible weakening of the US economy. A combination of these events could lead to a slowdown in domestic economic activity. Despite these risks, however, I believe the economic prospects for 2005 and beyond are quite positive.

The Government's successful management of the public finances and the economy has resulted in a major reduction in the debt burden, with the general Government debt falling from a level close to 100% of GDP in the early 1990s to its current level of approximately 31% of GDP. Similarly, the cost of servicing debt has reduced significantly in terms of the resources available. The cost of servicing the national debt in 1990 took up 29% of tax revenue; it is expected to require approximately 7% of tax revenue this year. Reducing debt has turned debt interest payments into money which is available on an ongoing annual basis for funding real improvements in public service provision.

Large surpluses enjoyed until 2000 are now replaced with a position much closer to balance. When the downturn came, the general Government surplus of €4.5 billion for 2000 turned into a deficit of €300 million in 2002, showing how important it is to be prudent in managing public services at the top of an economic cycle so that services are not totally disrupted and set back when the downturn sees tax revenues ebb away. Due to higher than expected economic growth and, consequently, higher tax revenue buoyancy, 2004 is turning out approximately €2 billion better than had been budgeted. However, a significant element, some €670 million, of this improvement is due to the Revenue Commissioners' special investigation receipts which are once off in nature.

While making significant progress in managing the public finances, the Government has more than doubled total spending on public services to over €41 billion between 1997 and 2004 and has managed to do this without recourse to large-scale borrowing or increased taxes. Our aim is to continue to support economic growth and employment while generating resources for key social and economic public services and investment priorities. To achieve this objective, there must be a correlation between the growth in spending on public services and the growth in revenue, while seeking to address priority areas where Government responds to particular service pressures.

I intend to maintain this balanced approach and this is reflected in the 2005 Estimates. An expenditure spree in buoyant economic circumstances would simply overheat our economy, lead to inflationary pressures and excessive wage demands and cause serious damage to our international competitiveness. Throwing money at problems exclusively will not resolve those problems either in the short term or on a sustainable basis. Targeted resources and reform in service delivery with everyone working for shared objectives and placing a quality service to our citizens at the centre of our concerns is the best guarantee of an improvement for all. We also have to strike a necessary balance between allocating additional resources to priority needs while continuing to promote sustainable economic growth and avoiding inflationary pressures.

In the current year, public expenditure is expected to grow by 7.5%. This compares with a projected economic growth rate of 5% and an annual inflation rate of 2.2%. Overall, there is a forecast saving of €150 million on gross spending for 2004. Higher receipts of €100 million across a few Departments will result in a net total forecast saving of €250 million between current and capital. This equates to approximately 0.4% of the total gross provision in the 2004 Revised Estimates volume. Of the €150 million saving overall on gross spending, a saving of €70 million is forecast on current spending.

The Exchequer provision for capital expenditure in 2004 was €5.6 billion. When account is taken of €248 million capital carryover from this year to next under the multi-annual capital envelopes announced in last year's budget, there is a small saving on capital of €80 million. Some €46 million of this will be used to fund current spending on justice and transport. I will return to the subject of capital carryover when I deal with investment for 2005.

We are providing for an increase of €2.5 billion in gross spending on public services in 2005, bringing the total cost to €43.6 billion for the year. This represents a 6% increase on a pre-budget basis. The Government's approach to formulating the 2005 Estimates has been to allocate resources to priority needs, while being consistent with an overall public finance position that promotes sustainable economic and employment growth. We have allocated particular priority to spending on health and education in the pre-budget Estimates. Accordingly, we have provided almost €11 billion for health, an increase of €915 million, or 9%, and €7.1 billion for education, an increase of €530 million, or 8%.

The increased provision of €915 million for health will fund improved access to primary care, high priority disability services such as day care facilities, respite services and dedicated units and other initiatives in acute hospital services. The cumulative increase in gross expenditure on health during the period 1997 to 2005 will amount to 205%, representing an additional €7.4 billion. It is important to put on record that this massive level of increased provision has led to improved services. Staffing levels have increased by almost 50% from a base of 66,000 in 1997 to almost 98,000 this year. This major increase in staffing levels has included a significant increase in frontline service staff; an additional 6,500 nurses — representing 21% of the increase in staff numbers — with further additional staffing increases in the provision of therapists, dentistry and orthodontic services, medical professionals and social care professionals.

There has been a concomitant increase in service delivery with an increase of 30% since 1997 in the number of patients treated in hospitals as inpatients and day care patients and a reduction in waiting lists, with 80% of patients now waiting less that one year — a development on which we will improve further. There has also been an increase in the elective surgery rate in public hospitals of 85% between 1995 and 2002. Furthermore, there is a marked improvement in the wide range of community services provided by the health services throughout the country.

The gross education and science allocation will increase by €530 million, or 8%, to €7.1 billion in 2005. The cumulative increase in gross expenditure on education during the period 1997 to 2005 will amount to €3.9 billion. This represents a rise of 218% over the period. Again, this has resulted in significant improvements in services. Since 1997, there has been a significant increase in the number of teachers employed in our primary and secondary schools. The provision of educational services for children with special educational needs has been transformed since the Government entered office. From a base of 400 in 1999, there are now over 4,000 resource and learning support teachers. In addition, there are almost 6,000 special needs assistants employed in our schools. The latter should be measured against a base of fewer than 300 such assistants in 1998.

Capital investment in our schools has also been transformed with the introduction of focused schemes to redress the historic under-investment in our schools. Initiatives such as the summer works scheme and the programme for the development of small schools — known as the devolved scheme — have been introduced to ensure quicker delivery of improved schools.

As regards third level, the Government has ensured that the programme for research and technology in third level institutions has been funded to provide a firm foundation for our future economic success. This programme complements the work of Science Foundation Ireland in the research and development area.

The gross allocation for social and family affairs is €11.4 billion on a pre-budget basis. On budget day I will announce the provision for increases in social welfare payment rates next year. Evidence of the Government's commitment to the needy in society is that it has doubled spending on social welfare since entering office. In the same period, the unemployment rate has fallen from over 10% to less than 5%. This represents a significant improvement in real terms in the level of social welfare provision. The provision of child benefit expenditure, which has been identified as a key mechanism for reducing consistent poverty in Ireland, has been supported significantly by the Government. Expenditure on child benefit has increased from under €500 million in 1996 to a pre-budget allocation of €1.8 billion this year.

A particular priority for the Government is services for people with disabilities. The 2005 Estimates provide over €2.8 billion for disability specific services. This represents an increase of €290 million, or 11%, on the 2004 provision, almost twice the general overall increase in expenditure, on a pre-budget basis, of 6%. During the period since we re-entered office in 1997, €230 million in additional funding has been provided for the maintenance and development of services to people with physical and sensory disabilities. Furthermore, an additional 1,700 residential places for people with intellectual disabilities and almost 3,000 new day places have been provided.

When the Disability Bill was published, the Government committed itself to the introduction of a multi-annual investment programme for high priority disability support services which would involve both capital and current spending. In the budget I will announce details of the additional current expenditure which the Government will provide in the years 2006 to 2009 for high priority disability support services. I will also include an additional capital allocation for disability services as part of a revised multi-annual capital envelope for 2005 to 2009.

Overseas development aid has also been accorded a very high priority by the Government since 1997. We are providing an additional €60 million, or a 15% increase, on the current year's allocation for ODA. That will bring our contribution to some €535 million next year. This represents an increase of 240% since 1997 and it is a remarkable achievement, particularly when one considers that the equivalent provision in 1997 was only €158 million.

The gross provision for Exchequer funded public service pay and pensions is €15.3 billion, an increase of €1 billion, or 7%, on 2004. The increase makes full provision for the carryover of the first phase of Sustaining Progress, the payment of the final tranche of benchmarking and the increases due in 2005 under the mid-term review of Sustaining Progress.

In budget 2003, in order to control public service numbers, the Government decided to cap numbers at the existing authorised level and to reduce numbers by 5,000 by the end of 2005. As part of our commitment to address priority areas of service, we have subsequently agreed some adjustments to the figures for health, education and the Garda in respect of frontline staff. Outside the health and education sectors, the numbers serving in 2004 indicate that this year's targets for a reduction in public service numbers will be met. I emphasise that the Government remains committed to the control of public service numbers, particularly in light of the size of the public service pay and pensions bill as a component of overall Government expenditure, and is determined that the full effect of the reduction in numbers will materialise in 2005 and 2006.

In last year's budget, my predecessor, Deputy McCreevy, announced the introduction of five-year rolling multi-annual capital envelopes designed to improve the efficiency and effectiveness of the planning, management and implementation of capital programmes and projects. As part of this initiative, Departments were permitted to carry forward to the next year capital savings up to a maximum of 10% of voted capital. The facility will operate for the first time this year.

The carryover facility means that Departments and implementing agencies do not have to surrender this money and it avoids the potential for wasteful end of year expenditure inherent in an annual allocation system. The total amount of capital carryover from 2004 to 2005 is estimated at close to €250 million, or 4.5% of this year's voted capital allocation.

Turning to the capital provision for 2005, the 2005 pre-budget Exchequer capital allocation in the abridged Estimates volume is €5.7 billion. In addition, Departments will have the €250 million of carryover savings from 2004 available to spend in 2005. When taking this into account, Departments will have, on a pre-budget basis, some €730 million additional cash for capital spend or 14% higher than in 2004.

The 2004 budget envelope provided for total capital investment in 2005 of €6.3 billion, comprised of €5.715 billion Exchequer and €0.585 billion PPP funded by annual Exchequer payments. The Exchequer figure included an unallocated reserve of €120 million. On budget day I will announce a revised multi-annual capital envelope for the period 2005-09 and in the process will allocate the €120 million reserve in 2005.

It is now clear that there will be a major shortfall on the 2005 PPP component of the existing envelope. The new five-year envelope for 2005-09 which I will be announcing on budget day will take into account the cash already available to Departments in 2005, the PPP situation and the overall budgetary situation. It will also include a multi-annual provision for disability services.

The 2005 Estimates provide for an extra €2.5 billion bringing total planned expenditure on services to over €43.5 billion. By any standards this represents a substantial commitment to spending on public services. I have emphasised to all ministerial colleagues that we must continue to seek better value for money in delivering public services. The taxpayer and citizen demand no less. Departments and offices must therefore intensify their efforts to prioritise spending and to continually re-evaluate spending on existing programmes, projects and services in order to ensure that available resources can be directed to the areas of greatest need. While continuing to allocate resources to priority social and economic needs as resources permit, the Government will seek to ensure that better value for money is achieved from the increased expenditure.

In summary, the 2005 Estimates allocate significant provision for the key areas of health, education and infrastructure provision while retaining a prudent approach to overall expenditure policy. In conjunction with the resources I will be announcing on budget day, the Estimates focus on the areas of concern to the people and will promote economic and social development. I believe they deserve the support of the House.

Mr. J. Phelan

I welcome the Minister to the House. He has gone through the Estimates in detail and I wish to deal with the allocations for the different Departments. I was struck by some of the Minister's remarks. Those who have examined these Estimates and those announced by his predecessor over the past six or seven years have remarked that they show a lack of any obvious effort at improving the standard of public service and any root and branch reform of the public service as delivered to the consumer. Both the Minister and his predecessor have failed to make any genuine effort at reforming the critical public services of health, education and justice. The Minister stated in his opening remarks that throwing money at problems will not resolve them. He is right and everybody in this House would agree with that comment. However, in his remarks he made a great play on the fact that in the time the current Government has been in office, it has more than doubled public spending. The Minister cannot have it both ways. However, it is nothing new for this Government to try to have its bread buttered on both sides.

The Minister outlined the 32,000 extra positions that have been created in the health service. He found no difficulty in stating that only 6,500 of these were new nursing positions. Where are the other 75%? The vast majority consist of administrative staff in the health boards. Consumers of the service in 1997 and those who are still using it today would say the service has disimproved. Why has that happened during a period when there has been such significant increase in public funding for the health service? Why has it happened that the health service workforce has increased by 50% yet the service has disimproved? How is it when one walks into an accident and emergency department in this city or anywhere in the country, one would be lucky to get a seat in a waiting room let alone a trolley in a corridor? However, money is being lashed at the service. To make the remark that throwing money at problems does not resolve them is something with which we all agree but the Minister should put it into practice. His Department and other Ministers in the Government should also put it into practice. Deputy Cowen is a former Minister for Health and Children.

The Minister spoke about the value and importance of child benefit. Over the past two budgets since the Government was re-elected it has reneged on the commitment to increase child benefit. It has not done what was promised in An Agreed Programme for Government and in the election manifestos. These Estimates are big on talk and low on delivery.

In 2005 there will be a total of 92 extra gardaí on the streets despite all the waffle and hot air from the Minister for Justice, Equality and Law Reform about the 2,000 extra gardaí he promised to deliver. The extra allocation of money to the general medical service will at best raise the number of persons under 70 with some access to primary care from 23% to 28%. This is far short of the position in 1997 when 31.5% of this group qualified for the full medical card. Primary care will still remain a costly luxury for the low paid. The capacity problems in our hospitals are not being confronted, with capital budgets down sharply for a second year in a row. The often-repeated commitment of the Taoiseach to deliver on our commitments in respect of overseas development aid has been abandoned and cast adrift. The Government's capacity to deliver in the infrastructural area is unravelling. For the second year in a row there will be a real cut in the amount of infrastructural investment. Last year the Government proved unable to spend almost €350 million of the budget assigned for critical infrastructure.

Those who hoped that the era of stealth taxes was over will be disappointed by these Estimates. The imposition of a substantial real cut in the funds available to local authorities, will lead to substantial increases in commercial rates, possible increases in development charges and other charges by which local authorities will seek to gain revenue to make up the balance that has been lost in these Estimates. These Estimates do not mark a period of serious reform in the approach to public spending. The same problems that have made budget day such a charade, persist. All the focus is on small changes in individual budgets rather than root and branch reform.

The Estimates will bring the increase in current spending by this Government to €21,000 million since 1997, as outlined by the Minister in his opening remarks. The only innovation in this year's budget will be the announcements in respect of capital spending projects. There is an even further move away from the notion of an integrated infrastructural plan centred on the spatial strategy, with projects selected on the grounds of sound appraisal. Instead these capital projects are now to be thrown around the Cabinet table in a horse trading exercise with Ministers jockeying to be the first to the local newspapers with the happy announcement. This happened last year in the Minister's own constituency in the case of Deputy Parlon, his ministerial colleague.

I wish to refer to specific Departments. The increase in health spending in the Estimates is just over €7,045 million. As outlined by the Minister, much of this money will be spent on administration instead of on frontline delivery. The Government has failed to target resources to the people who are in real need. After seven years, the Government has finally acknowledged that its own spin has been a lie. The Opposition has been consistently told that the reason over 100,000 medical cards were withdrawn and the promised 200,000 medical cards were not delivered was because of the economic success of this country. The Government has finally acknowledged that it has participated in denying access to primary care to 230,000 people since it came into power. While economic progress has been achieved, inflation in the area of medical care has been much steeper than any economic progress in that same period of time. The Government seems to have finally come around to the Opposition's point of view on this subject. Increased funding for the acute hospital sector and the health boards will be largely spent on pay rises and benchmarking awards, resulting in few improvements in the level of public services provided in the acute hospital and community care sectors.

Yet again the Government has resorted to increasing charges in the health area. The 25% increase in charges for private beds will ultimately be covered by higher health insurance premiums. Those without health insurance will face significantly increased costs for hospital stays and patients with a high medication need will face a drugs bill of more than €1,000 per annum.

The Estimates show an increase in permitted total expenditure for local government of just 1%. This will not cover inflation, let alone the increased wage bill local authorities face as a result of the benchmarking award which would necessitate an increase of 3%. The net result will be higher charges to households, increased waste and development charges and higher levies.

This so-called caring Government has shown its true colours in its treatment of the disabled and elderly. In 2003 the number of disabled person's grants approved was 6,153, at an average cost of slightly below €6,100. In July this year more than 11,000 persons had applied to local authorities for the grant. If 10,000 of these applications are approved at the same average cost as in the previous year, the Minister for the Environment, Heritage and Local Government, Deputy Roche, will need to allocate €61 million, rather than the €52 million he has been allocated in the Estimates.

The paltry increase of 3% in funding for the task force on special housing aid for the elderly is barely enough to cover inflation. The allocation of an extra €348,000 would only cover 116 grants for the installation of central heating. I could name 116 people in County Kilkenny who should receive this grant, yet this allocation is proposed to cover the whole country.

Taxpayers, the disabled and the elderly are all victims of the new strategy of the Minister for Finance. The former Minister, Deputy McCreevy, may be a Commissioner but his thinking has not gone away.

Earlier, the House divided on the issue of overseas development aid. Overseas aid is not an abstract concept or simply a column in the Estimates but the most practical way in which people, through their Government, can assist those who need help most. More than 1.3 billion people globally live in severe poverty, 800 million do not get enough food and 500 million are chronically malnourished. Of the 23 million people with HIV-AIDS, more than 93% live in the developing world. It is shocking that over the past decade 2 million children have died in armed conflict.

Ireland's commitment to meet the target for overseas aid was made before the United Nations four years ago and has been restated many times since, notably during the UN Secretary General's recent visit to Dublin. This commitment has come to nothing, however, in light of the statement by the Minister for Finance that he has lowered his target for development aid to 0.5% of GDP, far below what was promised. He has not even indicated whether a new date has been set to achieve the target level of 0.7% of GDP or whether the commitment has been shelved indefinitely.

The marine area will also suffer as a result of the Estimates. The Government has shown its indifference to the marine tourism sector by not allocating a cent in funding for the marine and natural resources tourism programme. While the Estimates indicate that €2 million has been allocated to the sector — a cut of 30% — this money will not be spent as it is ring-fenced for four infamous marina projects at Kenmare, Roundstone, Rosses Point and Cahirciveen, which were given the green light without EU approval by the former Minister for the Marine and Natural Resources, Deputy Fahey. The allocation is unlikely to be spent because of the major difficulty created in Europe by the manner in which the former Minister announced the four marina projects in question. They did not form part of a €25 million EU approved programme to develop and transform coastal tourism in Ireland shelved two years ago because of the economic climate at the time. With public finances showing an improvement, surely the Estimates provided an opportunity to dust off the scheme. The new Minister of State at the Department of Communications, Marine and Natural Resources, Deputy Gallagher, who has responsibility for the marine, fell at the first hurdle due to his abject failure to secure funding for this vital sector.

The Estimates show that the position with regard to the provision of adequate school buildings is deteriorating. Cuts are indicated in all divisions of the schools building programme because the Government has demonstrated in recent years that it cannot spend the moneys allocated for new buildings. In 2003 the underspend of the Department of Education and Science on school buildings amounted to more than €60 million, while the equivalent figure this year will be €50 million. Given that children continue to be taught in damp and dilapidated conditions, in some cases without adequate toilet or physical education facilities, it is a disgrace that the Government is not sufficiently committed to spend the money allocated to provide proper school accommodation.

Where spending increases are indicated they are welcome, particularly in the provision of assistants for children with special educational needs. The Minister for Education and Science, Deputy Hanafin, will be measured by what she achieves in tackling ongoing educational problems, rather than by how much she spends.

As matters stand, the number of children failing to make the transition from primary to secondary school is growing at an alarming rate, as is the drop-out rate at second level. No proper system is in place to quantify whether the schemes in place are meeting the needs of the disadvantaged. It is clear that the appalling rates of literacy difficulties in our schools are not being tackled. The Minister for Education and Science will have to set real targets to ensure that funding allocated in 2005 reaches those who need it most and delivers tangible results.

Once again, the bad deal brokered by the Government with the religious orders is costing the taxpayer dearly. Following the increase of €115 million in funding for the Residential Institutions Redress Board this year, a further €50 million will be allocated under this subhead in 2005. Despite everything we have heard from the Minister in recent weeks about a major increase in funding for education, the latter figure accounts for one tenth of the overall increase in the Department's budget for 2005.

The Fine Gael Party is disappointed the OECD review on third level education policy was ignored in the Estimates. The results of the sharp cuts in funding for third level institutions in 2003 and 2004 will not be reversed by the paltry increases signalled in the Estimates.

A close examination of the Estimates reveals that the provision of an additional 2,000 gardaí, as repeatedly promised by the Minister for Justice, Equality and Law Reform, Deputy McDowell, is not even close to being delivered. The Minister reiterated this promise a couple of weeks ago but there is nothing in the Estimates to indicate any significant move to recruit 2,000 extra gardaí is likely. The meagre 5% increase in the allocation for Garda salaries is largely consumed by inflation and existing pay agreements. The Minister's claims of 2,000 gardaí are nothing more than a hollow promise.

The provision for Garda equipment has increased by a paltry 2%. Taking inflation into account, this figure amounts to a decrease in real terms. Members will have heard stories of gardaí using their personal mobile telephones rather than the equipment provided by the Department. The 2% increase under this heading is clearly insufficient. The wages and overtime allocation for the Prison Service has increased by a staggering €37 million, despite the much-vaunted assault on costs in this sector launched by the Minister for Justice, Equality and Law Reform last year.

I have significant problems with the Estimates, as presented. How rich do we have to become before we leave a lasting improvement in public services? I am not convinced the Estimates, as published, will provide a solution.

Dr. Mansergh

I look forward to seeing and reading the Fine Gael Party's root and branch reforms of public spending. It will be interesting to note the extent to which such reforms will be agreed with other possible partners.

I warmly welcome the Minister and the Book of Estimates. The Estimates form part of a four stage process, the next stages of which are the budget, followed by the Revised Book of Estimates and, finally, the Finance Bill. We cannot usefully discuss the important area of capital spending today as it is mainly based on the 2005 envelopes. In response to the previous contribution, I have never known a year in which so much infrastructure, including a further section of the M50, the Monasterevin and Cashel bypasses, the Luas and so forth, has come on stream. These developments are making a major difference in terms of improving our infrastructure. We are in a very strong economic position and the Estimates are designed, as no doubt will the budget, to consolidate so that we can move forward smoothly and steadily. The Minister's most significant comments were to the effect that the speed with which a surplus turned to a deficit in 2000 showed how important it is to be prudent and to manage public services at the top of an economic cycle so that services are not totally disrupted and set back when the downturn comes and these tax revenues ebb. This has been a constant theme since the Minister's first interview on being appointed to the finance portfolio. He has emphasised the importance of stability.

As an approximate benchmark, growth plus inflation produces spending power which in this case is 6%, pre-budget. Our resources are increasing by double digit figures and what is provided in the Estimates could not possibly satisfy all needs. Trying to go faster than a certain pace creates inflationary pressures and less value for money. One must adopt a steady approach.

There has been much debate recently about the ideological colouring of the Government and the Taoiseach. Any Government that achieves near full employment; the end of emigration; introduces a minimum wage; by and large has profitable State companies with one or two exceptions; has the lowest impact of tax on the lower paid anywhere in the European Union; is overseeing a steady improvement in services; and has coffers overflowing with capital and corporation taxes——

Mr. Bannon

The Senator can dream on.

Dr. Mansergh

Any socialist would be proud of that.

Mr. J. Phelan

I thought the Senator was a socialist.

Dr. Mansergh

Those things have not always been achieved by socialist methods. For example, the cutting of capital gains tax from 40% to 20%——

Mr. Bannon

We will see the conversion of sinners.

Dr. Mansergh

——goes completely against the grain of a certain type of thinking although it produces far more revenue. The philosophy behind such thinking is that if it does not hurt it does not work and if the pips do not squeak that is not good enough. The Taoiseach's basic point which the media did not pick up well, is that one creates wealth first and then redistributes it.

Mr. Bannon

The Senator can blame the media.

Ms Feeney

Senator Bannon should listen to Senator Mansergh.

Dr. Mansergh

One does not redistribute first and regard wealth as a given or as something to be considered afterwards. To be fair to the old Workers Party, it attached significant importance——

Mr. Bannon

Why did the Senator not join it if he thought that?

Dr. Mansergh

——to economic policy even if it was State enterprise-based.

The Minister makes a valid point that social welfare has increased despite the drop in unemployment from 10% in 1997 to 5%, which underlines the substantial increase in resources. For example, since 1997, child benefit has increased from €500 million to €1.8 billion. The Minister also referred to the extra spending on health and disability. I will not comment on the disability issue because the budget will deal more fully with that. The increase was not simply an extra 6,500 nurses in frontline staff, the Minister also mentioned extra therapists, dentists, orthodontic services, medical and social workers and so on. It is too easy to say they have all gone into redundant administration.

Another fallacy being put about is that there is a real cut in the health services because medical inflation is 10% and the increase is only 9%, ergo there is a cut. Medical inflation is in the cost of drugs, which is quite a small element in health spending. It does not apply to nurses. One hears critical comments about benchmarking but how can we recruit the nurses we need unless they are at least as well paid as at present, and possibly somewhat better? I welcome the medical card initiative. It is a step and although it does not necessarily go the whole way it may reduce pressures in accident and emergency departments. At least it relieves people of the cost of consulting a doctor about their problems.

The school building investment programme is very important and valuable. It has not all been spent. In response to the argument that we need value for money, that means money is not spent immediately because one must see that it is put right. The heads of the universities may be jumping the gun somewhat. Reading between the lines I understand that the matter of concern to them may be dealt with further in the budget.

There is, very properly, a large jump in funding for science research and development. Arts and sports have done exceptionally well again, with a 17% increase in arts funding and a 19% increase in the amount available for the Arts Council.

Mr. J. Phelan

That follows a major cut in funding for the arts last year.

Dr. Mansergh

Those are very real achievements. The sports programme is of great benefit all around the country including in Senator John Paul Phelan's constituency. I am glad to see increased funding for the RAPID programme and for community employment.

Mr. Bannon

The Senator is getting carried away.

Dr. Mansergh

If the Senator looked a little more closely at the Book of Estimates he would see that income for local government is up 5% not 1%.

One will not find the cost of 2,000 fully employed gardaí in the Book of Estimates. Some of them are coming into training. I have no doubt about the Government's determination to raise the number of gardaí to 14,000.

Mr. J. Phelan

That is rubbish.

Dr. Mansergh

I do not know how many extra gardaí were brought in when the Senator's party was last in Government, which was rather a long time ago.

Mr. J. Phelan

The Government must build the building first. It does not even have the building in which to train them.

Dr. Mansergh

A ministerial statement said that to put the scale of activity in the housing market in perspective, almost one third of the country's housing stock will have been built in the ten year period 1997 to 2004. My only criticism of that statement is that 1997 to 2004 is not ten years but local authority housing is up by 10%.

I am strongly committed to overseas development aid funding, as no doubt is the Minister. That is to increase by €60 million and then by two further tranches of €65 million. It has been an ongoing problem to meet the target for overseas development aid funding, especially in periods of high growth. In his autobiography Garret FitzGerald refers to his introduction of the bilateral aid programme adding that in 1973 the Government decided to raise overseas development aid by 0.05% per year. He then explains that unfortunately because of various economic circumstances it was not possible to do that. I then looked at facts about Ireland in 1995 when Deputy Burton had responsibility for overseas development aid. The official book published by the Department of Foreign Affairs at the time stated that total expenditure in 1995 was expected to amount to IR£89 million, approximately €114 million. Next year it will reach €535 million, which is a four-fold increase in real terms. It is true that Ireland, along with 21 of the 24 OECD countries, has not yet fulfilled the 0.7% pledge. All Governments have been over-optimistic about how quickly this can be done. We are in a double bind because if the economy goes flat there is much pressure on resources and it is difficult to increase the aid, even though it would be easy to do so in terms of GNP. When the economy is growing by 5% to 10% there will be a substantial real increase in inflation in ODA spending, but it will be very difficult to achieve an increase in such spending as a percentage of GNP. Deputy Burton had this difficulty between 1995-97. The Government has not abandoned its pledge to commit 0.7% of GNP to overseas development aid. I hope that we will achieve this as soon as practicable. If it is at all possible in light of the budgetary figures, I appeal to the Minister to do a little bit more next year. I am glad we are back to a three-year allocation, as the development assistance committee of the OECD recommended.

I look forward to the budget, the Finance Bill and the rest of the budgetary process, all of which will help strengthen our economy and push it forward.

Mr. Quinn

I welcome the Minister to the House. I envy him as well, as all former Ministers for Finance must given that he is €2 billion better off than last year. I take his point that €670 million of that is a one-off that should not otherwise be used. It is also fair to say that he is the envy of every finance Minister in Europe and our role today is to steer the use of these finances in the correct direction. It was interesting to read the supplement on Ireland published last month by The Economist which mentioned the luck of the Irish. I suggest that luck has nothing to do with it. The figures given show that GDP per person rose from 69% of the EU average in 1987 to 136% today. This shows that a great achievement has occurred. We have also done well in the case of GNP. It seems that we have succeeded by having a very steady hand on the tiller, in bad times and in good. This happens to be one of the good times, so let us make sure that the steady hand remains and that we use it to invest in the future rather than overcome immediate problems.

There is something fundamentally unrealistic about this annual song and dance we go through about the Book of Estimates. The discussion tends to fall into two categories. One is to compare what a particular Vote got this year with what it got last year. Success in this area is judged by how big an increase a particular spending area managed to squeeze out of the Department of Finance. The other is to compare the different areas of spending and pit them against each other in a race to see which arm of Government gets to spend the most. That is the way it has always been, but I suggest that we must change. This issue gets the most attention and consumes the largest amount of newsprint and air time because it sets all the people with particular special interests in a great struggle against each other. This struggle keeps the mandarins in Merrion Street very happy, because as long as people are fighting each other for a share of resources they do not have time to address more fundamental questions.

The kind of question that gets ignored in this annual struggle is the issue of value for money. The Minister mentions value for money twice in his 14 page speech and I am glad he did so. However, in deciding how much a particular Vote is to get, the system never asks if the public get value for this spending. Will we get a better return on our money if we spend it on this rather than on that? Instead of questions like that, we hop up and ask questions like the one I am about to ask. How can we be serious about making Ireland a leader in the knowledge society if we do not fund our universities properly?

In the past two years, the Book of Estimates has seen cuts in the amounts made available for third-level education. There is provision for some increase this year, but not enough to repair the damage that has been done. It is certainly not enough to provide the quantum leap in third-level funding called for in the recent OECD report. That report very effectively called our bluff. It stated that if we want to be world class, we must put our money where our mouth is, which means much more money than is being made available now.

I can do special pleading as well as anybody else, but I also want to focus on a basic challenge we face in running this country. Where is the money going to come from to pay for all that we want to do? In this vast sum of €38 billion provided in the Book of Estimates, we can see that the three big areas of Government day-to-day spending are in health, education and social welfare of one kind or another. Each of those areas gobbles up a sizeable fraction of that €38 billion. However, what those areas share, apart from the fact that they cost a lot, is that each of them is failing to do the job we expect and need it to do. No one can argue that our health services are satisfactory or that our health system provides for all our citizens in a fair and equitable manner. No one can argue that our education system is appropriate to our needs. Quite apart from the need to resource third-level education properly, there are major gaps in the provision at all levels of the system. Too many of our children suffer educational disadvantage and have their potential in life restricted as a result. Too many of our children go to rat-infested primary schools where the roofs are falling in. Too many children, at both primary and secondary level, do not receive the kind of individual attention that will bring out the best of their abilities. Nobody can argue that we have eliminated poverty in this affluent country. Not only have we failed to do that; we have actually widened the gap between the haves and the have-nots. Whenever the time comes to tighten the belt, it is always the have-nots who are squeezed the most.

We are not doing a good enough job in these three big spending areas. The obvious response is to say that each needs more money, but before we do that, let us consider the reality that faces us. Over the past decade, we have moved to a low-tax society and have reaped the benefits of that approach. However much we might argue on a philosophical plane that we should raise more of our national income through taxation and spend it on better services, the political reality is that this is simply not on. Senator Mansergh has already stated that we have shown that a lower tax rate actually increases the amount of tax raised and the amount of money available to us. No political party that seriously wants to get into office would dare suggest we turn our backs on the low-tax society we have created in this country over the past decade. As we look into the future, this puts a serious constraint on the money we have available to spend.

The returns from our economic growth will create more resources in the form of taxation. We should recognise, however, that there is a limit to that growth. There is no serious possibility of greatly increasing the amount of money available for expenditure because it is unlikely that any Government in the foreseeable future will be able to find a solution. Raising taxes does not appear to offer such a solution. Our dilemma is that we are not doing the job we want to do adequately — we have heard already today from some of the many people who are screaming for more resources — and the total amount of funding which is available is increasing only at a modest rate. What can we do? If we want to come to grips with the challenges that face us, we need to find ways of spending our money better. It is as simple as that — there is no alternative.

I have previously spoken in the House about the crazy way we spend money in trying to run this country. We can talk about spending €38 billion a year without seriously considering the concept of value for money. The Minister referred to it twice in his speech, but when the fight for resources starts, the Department of Finance says "No" all the time. Those who wish to squeeze money out of the Department shout loudly and use as much political clout as they can. It happens in this House and in the Dáil. As a consequence, money is allocated not on the basis of where it will be of most benefit or provide the greatest return on taxpayers' investment, but on the basis of political considerations which do not relate to value for money. There is no follow-up after we have spent the money, which is even worse. If something fails, that is seen as a reason to throw more money at it.

There is no systematic effort to measure the results of the money we spend. There is no system in the public service to ensure we get better and better value for each euro the taxpayer invests in running the country. I suggest that the money is forgotten about after it has been allocated. Businesses assess the cost of achieving certain goals and objectives and decide whether to pursue them on the basis of whether they represent good value for money. We have heard in recent days of instances in which money which was allocated was forgotten and not spent at all. If we continue to run the country in such a spendthrift way, we will not achieve the great things we want to do. If we stop the annual Book of Estimates charade and turn our attention to getting better value for what we spend, however, we will have taken a step in the right direction.

I congratulate the Minister for Finance on the steps he has taken so far, but I would like him to devote his attention to a different way of doing things in the future. I ask him to concentrate on value for money, in particular. I thank the Minister for staying in the House to hear my contribution.

Mr. Minihan

I welcome the Minister of State, Deputy de Valera, to the House and thank her for her attendance. We have faced a challenging set of economic circumstances since the 2002 general election. I am delighted that it has been predicted that economic growth will be approximately 5% in 2004. We are experiencing an economic upturn at present, but it would be unwise to think we will return in the short term to the high growth rates we enjoyed before 2001. The Government should be congratulated on steering the country through the downturn of recent years in a prudent and pragmatic manner.

Many major international considerations have a direct effect on our economy. The American boom has slowed markedly, the German economy, which is the largest in the euro zone, is almost stagnant and there is hesitancy in international markets. The climate of uncertainty has been exacerbated by the conflict in Iraq. When one considers the increase in oil prices, the fall in the dollar and the uncertainty in the US economy, it is possible that there could be a slowdown in 2005. The impact of recent events on Ireland is clear — the pace of economic growth has moderated. In that context, the figures announced in the Estimates are welcome.

The Government's prudent management of the public finances has ensured that the economy has continued to support economic growth, promote employment and generate the necessary tax revenues for key social and economic public services. The Progressive Democrats Party has played a key role in the formulation of economic policy since it returned to Government in 1997. I do not think anybody denies that its policies have worked. The policies have brought the country from mass unemployment to full employment, virtually eliminated long-term unemployment and ended the curse of emigration, which was a blight on this country for many years.

I would like to reiterate what Ireland's economic priorities should be in the next four years. The first requirement — to secure and preserve prosperity — has been achieved. It took us a long time to get the monkey of unemployment off our backs and it would be a tragedy if we allowed it to return. It took a great deal of effort to put in place this country's pro-employment tax system. Our key objective must be to retain that system, in the face of the temptation to raise personal taxes. I welcome the Minister's declaration that a key part of the Government's successful management of the public finances and the economy has been to avoid large-scale borrowing and increases in taxes.

I agree with the Minister that excessive public spending could add to the inflationary pressures on our buoyant economy. It could place upward pressure on wage demands and erode Ireland's competitiveness in global markets. The Minister is right to suggest that growth in public spending should be correlated with revenue growth if it is to remain at a sustainable level in the medium term and that any temptation to do otherwise must be resisted. Full employment was a prize worth fighting for and is a prize worth defending, but if we want to defend it we will have to keep taxes down. We know that the low-tax formula works so we should retain it.

It is imperative that the Government should invest in the economy. For example, it needs to invest in key infrastructural projects which are essential if we want to keep the country moving and ensure that it stays competitive internationally. We have set about correcting our infrastructural deficit. Eight decades after independence, there is no proper road running between Dublin and Cork, our two major cities and economic centres. Our transport infrastructure is literally kilometres behind the rest of the European Union. We are making progress, however; record sums of money are being invested in the National Roads Authority, which is responding to the challenge.

There will be a transformation of the national roads system over the next three years. The motorway link between Dublin and Dundalk has been completed and the motorway project between Kilcock and Kinnegad, which is a vital part of the link between Dublin and Galway, will be open in two years. There is a continuous stretch of motorway and dual carriageway between Dublin and Portlaoise, following the completion of the Kildare and Monasterevin bypasses. The Cashel bypass has been finished. Such impressive achievements will bring badly needed relief to road users throughout the country and improve significantly the quality of life of those living in the towns which are being bypassed. We need to maintain the pace of investment, for example by continuing to invest in the national roads programme, if we are to provide the kind of transport system this country needs.

Public investment is also needed in other areas, such as hospitals, schools and railways. Investment costs money, which has to be prioritised, but long-term investment should not fall foul of short-term pressures. The Progressive Democrats Party has always favoured prudent borrowing to fund capital spending. It would be foolish to reduce investment now, only to find when economic buoyancy returns that our congestion and public facilities are even worse than before. Prudent borrowing for public investment makes eminent sense. It is what the Irish economy requires now because it smoothes the economic cycle and helps to avoid boom-bust economics.

I welcome the publication of the Book of Estimates, which provides for public spending next year of over €43.5 billion, money that has resulted from the hard work of the Irish people. The Government's first job is to manage and invest public money wisely on behalf of all citizens, which involves delivering the public services they expect. It means getting value for public money and spending it within a sustainable social and economic strategy. With these Estimates, the Government has set priorities with limited and precious public resources. Public spending is being increased at a moderate rate that will not put a strain on jobs or the economy. Steady progress is being maintained within the limits for our economy. There is no exaggerated spending and no exaggerated curtailment in spending.

To grow public spending in line with our economic ability to pay puts the focus on the policies to achieve our economic potential. The Government has shown in recent years that economic performance is the engine of social justice, public resources and sustainable public services. The Government will continue to give priority to policies and actions that maximise our economic growth potential, including investment, competition and low taxes.

I note in the Estimates that the Government has prioritised investment in our social and economic future in the areas of health, education, persons with disability and infrastructure. I welcome the increase of €530 million, or 8%, in education, bringing total spending to €7.1 billion. When one looks at gross expenditure on education from 1997 to 2005, one sees an increase of €3.9 billion, or 218%, over the period. I also welcome the fact that the Government has ensured that the programme for research and technology in third level institutions, or PRTLI, has been funded. That investment is key to our future development as a knowledge-based economy by providing the necessary graduates and postgraduates to complement the many initiatives and programmes delivered by Science Foundation Ireland. That will deliver long-term rewards for the people of this country.

Health spending will increase by €915 million, or 9%, to just under €11 billion. The cumulative increase in gross expenditure on health from 1997 to 2005 will amount to 205%, representing an extra €7.4 billion. No other European country has increased health spending at that rate. In France, for example, the Government stated that there were "particularly steep increases" in health spending in 2002 and 2003 of 4% at constant prices.

The Government is making the investment. It has brought forward the reform package, and now is the time for action and results. I am confident the Government is absolutely determined to implement the health reforms that put patients first. It will be a step-by-step approach, beginning now and continuing over the coming years, backed by sustained political will. I welcome the Tánaiste's announcements in that regard, in which she has clearly set out a targeted and focused programme that will be the start of delivering these reforms.

Those who express opposition to the proposals based on their own vested interest and short-term gain do not have the long-term interests of the people of this country at heart. Credible opposition to this point of view should be expressed with credible alternatives; to date I have seen none. I congratulate the Minister for Finance, Deputy Cowen, on the Book of Estimates and congratulate his predecessor on his management of the Irish economy over the past few years. I am confident that in these Estimates the Minister has shown his commitment to ensuring that the decisions now being made are in the overall interest of the Irish people in the short, medium and long term and must be viewed as such.

Mr. McDowell

I believe that Senator Mansergh mentioned in his contribution the renewed debate of recent weeks about the ideological colouring of the Government or, more specifically, the Taoiseach. He is right, since there is no doubt that there has been something of a change in the mood music surrounding the Government in the past three or four weeks. The Taoiseach has rediscovered his socialist roots, something he does periodically. Of course, we must look a little more carefully at the numbers before us today and what the Minister for Finance, Deputy Cowen, has been saying, to see whether there is any reality in it. The truth is that there is not.

These Estimates are particularly conservative. Senator Mansergh is right in his assessment of what we have to spend, which is roughly growth plus inflation, bringing us to about 7.5% or 8%. The Estimates, which are not the final numbers, provide for increases of 6% in spending, a fairly conservative figure by any standards. The Minister's contribution today has been reflected in everything that he said, including, I gather, in the course of his press conference where he introduced the Estimates. It has all been standard departmental fare and is fairly conservative, being all about prudent fiscal policy and the usual matters of which we hear from the Department. I do not blame the staff, since I would probably write the same thing if I worked there. My point is that there is no suggestion of a departure, a change, increased spending or changed priorities. It is a case of "Steady as you go, lads", with no significant change in policy, good bad or indifferent, since the days of the Minister's predecessor, Deputy McCreevy.

One of the real problems has been that the Department always writes the same script. It talks about prudent fiscal management regardless of whether it is spending 20% or 3% more. One has to examine the numbers to divine what the reality underpinning them is. I will cut to the bottom line. Senator Minihan rightly said that those of us in the Opposition must say what the alternative is: I believe that we can spend more this year. I will put that into some sort of historical context. In the few years after the last general election we went on an extraordinary splurge that we should never repeat. The Government has probably cut back a little more than necessary in the past two years, though in broad outline I would not disagree too much with what has been done since the general election, notwithstanding the fact that it completely contradicted what the Government said it would do. I accept that it has done a reasonable job of managing our way out of the downturn.

We must now examine the present position and what fiscal policy should be for the next two or three years. The bottom line is that these numbers are quite good. We are currently in a fairly healthy state. Growth of 5% at this point in the economic cycle is very good and affords opportunities. It is appropriate for those in the Opposition to say that we should consider spending a little more. It would be reasonable for us to aim for an 8%, 9% or perhaps even 10% increase in spending this year. That would increase the overall GNP share of spending by 1% or 2% — perhaps slightly less. It is not too ambitious, and I do not advocate the 20% splurges of 2001. It is a minor but nonetheless significant increase above that suggested by the current Government.

The numbers are very difficult for anyone to comprehend; one looks at them and wonders what on earth they mean. The first recourse for someone such as me is to look at the departmental statements, which at least give one some sort of notion as to exactly what lies behind them. I spent this morning examining the websites of various Departments to see what they say we will get as a result of the spending increases in the Book of Estimates. The Department of Finance was a particularly interesting case. I was half hoping that the Leader would be here, since I have got a few nice quotes from her a few years ago. I examined the statement of the Minister for Transport, Deputy Cullen, last week, when he detailed how the increase would be spent in his Department. The first detailed matter that he mentions is €9 million in 2005 to deliver integrated ticketing, an issue to which I will return presently. He goes on to talk about new roads, more rail carriages, increased capacity on the DART, park and ride, five new QBCs for Dublin, and a few other matters.

I mention that in detail because anyone who has been reading such statements, whether for three years or nine, will think that it sounds fairly familiar — and it is. Virtually all those matters have been announced before, some several times before. Some that sounded fairly simple have been flogged to death in an almost embarrassing fashion. I researched integrated ticketing, the first matter of expenditure appearing on the list of things to do issued by the Minister for Transport, Deputy Cullen. I found on the Department's website a statement made by the former Minister responsible for transport, Senator O'Rourke, on 29 September 1998, when she announced the accelerated implementation of integrated ticketing in Dublin. A few months later she announced that she had detailed plans to do it using smart cards and expected to have it in place in 2001. Thereafter it seems that the Government set up a committee to examine in detail how it should be done and decided that it should happen in 2002. When that year came, it announced that it would probably be done by the end of 2004. The important point here is that some of the announcements were matched with money or announcements of money that would be set aside.

Others announcements made on publication of the Book of Estimates are not matched by funding — integrated ticketing, for example, has not been introduced. While this is a minor issue, there are many others. The Minister announced accelerated development of QBCs to complete all 12 promised in the Dublin Transportation Office study in 1998. There are nine currently and another five are promised. There was supposed to have been 12 by the end of 1998 but it was announced last week that five more will be added to the nine in operation.

One wonders what is happening. A total of 3,000 park and ride spaces were promised in 1998. I would be surprised if a tenth of that number has been provided but funding is still being announced for additional spaces, notwithstanding that the tax break provided in this regard has generated no additional spaces. The Government made a definitive announcement in 2000 that a metro would be built and this was followed by a procurement process that went nowhere. The former Minister for Transport, Senator O'Rourke, even announced four or five years ago that Aer Lingus would be floated but we know what happened to that decision.

Are we being taken for a ride? Wonderful statements are made every year on the publication of the Book of Estimates, which contains grand plans, for example, in this case to improve public transport but if one reviews them shortly afterwards, most of the plans are not implemented. A few buses and DART carriages have been provided. I live on the DART line and use it occasionally. Platform extensions and resignalling projects for the DART have been announced annually since 1997 but trains are not running at weekends currently and the projects have not been completed, yet more money will be provided next year. People are entitled to be a little sceptical when they read departmental statements at this time of year announcing grand old plans.

While the announcements indicate a lack of competence in delivery, they also reflect a failure in the political system in that we do not pick up on this. Ministers should be required when they seek money for a project in a given year to come to the House and outline what they did with the funding approved in the current year. Our system does not allow us to do so. Former Ministers, would-be Ministers, all Senators and most civil servants agree the system should be changed but that will never happen because it suits the incumbent. However, the system of planning and overseeing expenditure is rendered a complete nonsense as a result.

I am interested in the Tánaiste and Minister for Health and Children's proposal regarding general practitioner cards. It represents progress but I am not sure where it is going and it depends on whether one is looking at half full bottles or half empty bottles. It is progress in so far as 200,000 people will have free access to primary care but they will not have access to the free drugs to which they are entitled under the medical card scheme. The Government is resiling from its commitment but this represents progress in some direction.

However, the proposal creates a problem in that it will lead to a four-tier health system. Absurdly, it is easy to say that in the House because every Member has private health insurance but the 50% of the population that does not will be split into three distinct categories — those who have medical cards, those who have GP cards and those who have no cover. One will pay for GP services, drugs, overnight stays in hospitals or consultants' services depending on the category into which one falls. The system has become incoherent, largely because the Government does not know what system it wants.

The Tánaiste, on her first outing in the House, stated the State should have a welfare role, picking up the tab for those who cannot afford to pay. That is a distinct ideological view, which I respect but with which I disagree. The State's role in the provision of health services, for example, primary care, should be to provide a good quality universal service, perhaps not entirely free, at the point of delivery.

However, the health system is an extraordinary hybrid under which certain sections of the population have different entitlements. This causes problems at the margins in terms of entitlement with potential employment effects and it creates inequities. In addition, institutional pressures are being created between different people which is evidenced by the competition for public beds between private and public patients. The Government has provided in the Book of Estimates for an increase in the charge for the use of public beds by private patients.

It is interesting to examine the philosophy underpinning that proposal. On the one hand, officials from the Department of Health and Children inform us, usually in private, that the introduction of a charge is intended to reclaim public beds from private patients but, on the other, they do not want to do so because what is referred to as a "health crisis" is not a crisis for people with insurance. The last thing they want to do is introduce a waiting list for those who are insured because there would be genuine problems within the service in the form of political pressure on the Government.

A statement of where the Government wants to be is needed. Is it intended to extend the proposed GP card scheme to others? Is this a step towards awarding the 200,000 medical cards, as promised two years ago, or will it result in the permanent institutionalisation of a four-tier system?

There is a consensus in both Houses on the overseas development aid commitment, which was not a normal commitment. The Taoiseach made a solemn commitment to the international community at an international forum four years ago, not only on behalf of the Government but also the people. The former Minister of State at the Department of Foreign Affairs, Deputy O'Donnell, is correct that the ODA commitment is our foreign policy and represents our intervention in Africa. Ireland cannot do anything by force or through political pressure because it does not have the clout. Our statement of what we believe and how we want to operate our foreign policy is the ODA commitment. It is a disgrace that the Government has rowed back on it, not least because the extra mile involved would not have cost a significant amount. It is a great pity that, for the sake of an extra €150 million over three years, Ireland is resiling from an international commitment, of which most Members are proud. It is regrettable that we find ourselves in this position.

We have choices to make and the social insurance fund must be examined in this context. The fund was in serious deficit for many decades but it has been in surplus for the past three or four years and it currently has a surplus of almost €2 billion. Given that approximately 1.8 million people are in employment, we have an opportunity to re-examine the operation of the fund. We should move to the notion of statutory entitlements and a more transparent system to operate the fund should be put in place. Trustees, drawn from the social partners, should be appointed to advise, though not control, the fund.

Work also needs to be done on how pay-related social insurance is charged because the current system is an unmitigated mess involving exemptions, thresholds and ceilings with the result that few people know the rate. In addition, a health levy is also collected, which is totally inequitable because it is not related to income and is levied at a flat rate on all income above a certain threshold. There is a need and an opportunity to re-examine the fund in terms of how it is levied and managed and I hope the Minister will do so over the next while.

I refer to capital spending. Senator Minihan stated the Progressive Democrats have never objected to the notion of borrowing for productive investment but the former Minister for Finance, Deputy McCreevy, made it clear that he thought any such reference would mean a return to the bad old days of the 1970s and 1980s when, typically, the Labour Party and Fine Gael could be blamed for borrowing money and getting the State into major debt. I thought the Progressive Democrats agreed with that but we must consider whether money is being spent well and there is evidence to the contrary. It is surprising that we were not able to spend the full allocation this year and that there is a €250 million run-on to next year, notwithstanding the fact that some projects finished early. I am not sure how it balances out. I assume the moneys for Monasterevin, for example, would have been budgeted for next year rather than this year. Therefore, they have been paid out of the allocation early. This clear failure to spend money is a bit worrying notwithstanding that we have improved delivery of roads projects on five years ago.

We must also consider whether the 5% allocation is sufficient. We are not making progress quickly enough on many capital projects, whether roads, broadband or the capital project needed to invest in the health service. We need to spend more if we can afford it. The 5% is a reasonable benchmark if we do not have more but we have more and should spend it. However, we should not spend it if we do not have the mechanisms and ways to spend it and cannot ensure we get what Senator Quinn referred to as value for money.

I have not done enough study on PPPs to be sure and confident of the reality of the story. However, the failure to attract private money into large infrastructural projects is worrying. I know there are pressures and that it is easy for financial institutions buying through private investors to stand back and put pressure on Government by not coming across with funds. There is evidence they have been able to put pressure on Government by saying they are not getting a sufficient cut of the action. I do not suggest the Department or Government should rush to meet all the demands of financial institutions because their only interest is the profit they make in the long or short term. It is nonetheless worrying that we have not managed to come remotely close to meeting the targets.

PPPs are not appropriate for everything. I have always had doubts that they are appropriate for educational projects and certainly doubt they are appropriate for health projects. However, I have no problems with them in terms of major infrastructural projects, in particular those where user charges can reasonably be imposed, for example, roads and public transport. The issue is worthy of debate. It is worrying that we have not succeeded in doing better in terms of attracting private money into the many decent projects around.

There has been little enough economic opportunity since the last general election, but we are coming once again to a time of opportunity. It is appropriate that we use this opportunity in a managed and reasonable way. We do not need a splurge or a spree. However, we need a managed increase and improvement in the amount of money we spend on public services. I hope the Minister will take the opportunity to do that. Frankly, I see little evidence from the Estimates he has introduced that he wants to do it.

Mr. Kenneally

I welcome the opportunity to contribute to the debate on the Estimates. I welcome the Minister of State, Deputy de Valera, to the House. The Estimates have become far more important than in the past. I have been a Member of the Oireachtas since 1989. For a long period, even though we had the Estimates and the Finance Act, everybody watched out for the budget. Over the years the Estimates have become more important, as we can see from the attention paid to them over the past week, which is probably deserved.

To a large extent the budget deals with personal matters, for example, social welfare increases and personal taxation. However, the Estimates are more a mark of the direction the economy is taking and how we are managing it. It is right that they get a greater priority than they did in the past.

I compliment the Minister on keeping expenditure increases at 6%. I am not one of those who agree with the tax and spend philosophy. I neither believe in absurdly low taxation nor a high tax regime. We almost have it right. Taxation aimed at bringing in extra revenue in order to increase spending is always highly inflationary. This has caused us problems in the past and is not the right way to go. The Minister has got it just about right.

I never worry about capital expenditure. I worry when we run away with ourselves on current expenditure but not so much with regard to capital expenditure because it has no long-term implications. Capital expenditure is an investment in our future and there is scope for further investment as the Minister has €120 million of an unallocated reserve, the spending of which he will announce in the budget. I hope he will announce it because I have no concern about spending in that area.

I notice there is a capital carryover of €250 million from last year. This is a welcome innovation. Previously, any unspent moneys at the end of the year were returned to the Department of Finance. In many areas, because Departments knew this would happen they rushed and spent the money rather than return it. Sometimes it was not spent wisely. The carryover gives some breathing space and should be of benefit.

I will make a few brief comments on the Estimates with reference to communications, the marine and natural resources, my area of responsibility. I am glad to see an increase of 22% in the Estimates for coastguard and maritime safety. I welcome this emphasis on safety. As an island nation we have had too many tragedies. Anything that can be done to heighten safety awareness, to provide grants for safety appliances on vessels or to beef up the emergency services can only be good.

The capital funding for fisheries harbours is down slightly but this does not unduly worry me. It can happen that some big project finishes before another is ready to get going. There will always be peaks and troughs in this area. I hope the considerable sum of €19 million provided in the budget sees the start of the development of the almost completely new harbour in Dunmore East. I hope some of that money will be spent towards the end of 2005 on that project and that sufficient finance will be provided in 2006 to complete it.

It is not unexpected that a buyout of salmon drift net and draft net licences is not mentioned in the Book of Estimates. This has not yet been agreed and the Minister cannot provide for it until it happens. It is inevitable it will happen. Approximately 70% of the drift net and draft net fishermen are interested in proceeding this way. They pay for licences each year but are getting no return on them. We are the last in Europe to allow this, so it is inevitable there will be a buyout. I hope the finances will be made available at the appropriate time.

The spending for programmes on information and communications technology is up by 13% to €36.6 million. This increase is to speed up the roll out of broadband. Unfortunately, we have been playing catch up in this regard and are behind the take up in some of the other developed countries. This is surprising as we have been ahead in all other technological areas. We are catching up and I am glad the Minister is continuing to make finance available.

The social welfare provisions show this is a caring Government, despite what others have said. Over a period unemployment has fallen from 300,000 to 150,000. Despite this fall in unemployment, spending in the social welfare area has continually increased. Since Fianna Fáil came into office the unemployment rate has fallen from 10% to 5%. However, spending on social welfare has doubled. The money has not been clawed back and returned to the general pool but has been left in the social welfare area and redistributed to help people who cannot help themselves, for example, the carer's allowance. I was a Member of the Dáil when the carer's allowance was first introduced. The budget for the first year was £8 million. That budget has increased substantially since, but there is scope to go further. The means test for the allowance should be removed but when we suggest that we are told the costs involved would be too high. However, there is still scope to go further. I would like to see the removal of any means testing. We are told that to do this would entail a cost, but that is a cost accruing to social welfare. This highlights one of the flaws in the system of accounting that we use in the public sector. I believe there would be a significant saving in the health area if social welfare was to absorb this cost but the system we use does not appear to be capable of taking that into account. On several occasions I have asked for this change but I do not think any study has been done on what could be saved in health expenditure if this money was given to social welfare. Interaction across Departments does not appear to take place but it should happen.

Significant increases have been made to the old age pension. We fulfilled all the commitments we made in the past, such as the pledge to raise the old age pension to £100 per week. The Government has committed itself to raising it to €200 per week, which we will achieve and go beyond. That is only right. These people helped to build up the economy and I am pleased this caring Government is giving back far more than the minuscule increases they got under previous regimes when Opposition parties were in Government.

Child benefit has quadrupled since the days when the Minister was a member of the Opposition. This is an important payment which generally goes to the woman of the house and, in most instances, is applied in a proper way.

I do not know what the Minister will do in regard to personal allowances in the budget but the carer's allowance must be significantly increased. It was introduced at the time of individualisation, of which I was never a great fan and I said so at the time. The main reason it was introduced was to try and get stay-at-home spouses back to work, which it has succeeded in doing. However, at present single income households where one spouse is at home are finding it difficult. Two earners in a household take longer to get into the higher tax bracket than if there is one earner. This matter needs to be looked at and it could be tackled through the carer's allowance.

To be consistent with what I said earlier, we should not tamper with the current income tax rates of 20% and 42%. The lower rate should certainly not be amended, although there may be a case for bringing the higher rate down from 42% to 40%. Significant progress will have to be made on income tax bands which have not been widened sufficiently in recent years. Many people are getting into the higher tax bracket far too early and I would like to see that addressed.

The Minister spoke at the launch of the Book of Estimates about value for money. As always, we must examine if we are getting value for money in our health service. We have trebled the amount being spent on health in eight years to €11 billion. Even if we were to spend a further €4 billion that would still not solve the problems in the health service. The previous Minister, Deputy Martin, tried to address the fundamental difficulties that exist in that area and I am sure the Tánaiste will continue this process.

Health appears to have an ability to soak up money. Part of the problem is that health inflation will always be higher than inflation in general because so much new technology has to be dispersed to various areas. A few years ago everybody in my area requiring dialysis had to travel to Dublin for three days of kidney dialysis per week but this service is now more widely available around the country, which costs money.

I am very pleased with the announcement regarding medical cards. The 7.5% increase will lead to 30,000 new medical cards. I have heard it said that people would still have to pay for their medicines. At the moment they pay for medicines and GP visits so it is a significant improvement for them. It will also help take pressure off accident and emergency units.

I spoke on cancer services during an Adjournment debate last week. When speaking about the Estimates for her Department, the Tánaiste and Minister for Health and Children referred to the expansion of cancer services. Radiotherapy is badly needed in the south east. It is a nonsense to have two of the three disciplines for cancer treatment, chemotherapy and surgery, but not to have radiotherapy. I hope this will be achieved under the planned expansion of services. There is also a need for a dedicated oncology ward and for the BreastCheck programme to be expanded.

When speaking on the Estimates, most people have a shopping basket for their own area. I have referred to a couple of things already. The Minister for Finance was in Waterford recently at a chamber of commerce dinner. The deputy mayor spoke eloquently and let him know the requirements for the south east so I will not take up time in the House putting it on the record as the Minister is well aware of it.

Ms Terry

I welcome the Minister of State, Deputy de Valera, to the House. It is good to have her here. In his opening statement, the Minister, Deputy Cowen, said that the Estimates and budget must "contribute to our general economic and social development." He also said: "It is the objective of the Government, by making the correct decisions in the Estimates and budget to promote sustainable economic growth so we have the resources to spend money on the social needs of our society that help enhance the dignity and quality of life of those who require our help and support." I concur with these sentiments. It is a very commendable statement with which nobody here would argue.

However, the Government does not stand up to scrutiny in regard to it. We heard from the previous speaker, Senator Kenneally, what the Government really thinks about helping enhance the dignity and quality of life of those who require our help and support. He advocated that we must not tamper with the lower tax rate but we should tackle the upper rate. That says it all for the Government's attitude, that we should continue to widen the gap between rich and poor ——

Mr. Kenneally

I also said we should widen the tax bands.

Ms Terry

—— and that we should continue to help those who are well able to help themselves while once again ignoring the less well-off in our society. This reflects poorly on the Government.

Mr. J. Phelan

Hear, hear.

Ms Terry

I will try to elaborate on why I believe the gap has widened between the haves and the have-nots.

I accept the Minister for Social and Family Affairs will make his announcement in regard to social welfare benefits on budget day so we cannot comment on that today. This is in stark contrast to what happened last year in regard to the Estimates when the Minister announced the introduction of reviewed and adjusted schemes which subsequently became known as the "savage 16" cuts. That is one of the more important aspects of the Estimates which has been overlooked. I hope the Minister will reverse those cuts on budget day but we have not been given any indication that this will be the case. I urge the Minister of State to make representations to him that those cuts should be reversed as they affected the most vulnerable in society. They did not affect the well-off but those who are less able to help themselves.

The national anti-poverty strategy states that people are living in poverty if their income and resources — material, cultural and social — are so inadequate as to preclude them from having a standard of living that is regarded as acceptable by Irish society generally. Our society should be judged on how we look after our elderly, our children and people with disabilities. These people are not being adequately looked after in many respects. I acknowledge that old age pensions and child benefit have increased in recent years but at least 66,000 children still live in consistent poverty and 237,000 live in households with incomes below the poverty line. We also have households headed by people who are ill or disabled and which have a relatively high risk of consistent poverty. Where a household is headed by someone who is unemployed, the risk to that family is far greater than a family whose head has a job.

The poverty risk for single adult households has also become an increasing trend in Ireland. This mainly comprises single adults living alone, a high proportion of whom are women. Another area in which the gap has widened is the increasing number of people on housing waiting lists in every local authority area. There are currently more than 50,000 households on waiting lists for social housing in a year in which only 315 social houses were built. When will we ever catch up and provide some hope for such people? The Government looks after the wealthy and is encouraged not to tamper with the tax code for people on the lower rate.

A Combat Poverty Agency study in 2001 showed that there is a link between low income poverty and ill health. Two thirds of 30 families in the study had some health problems. People affected by ill health are more likely to live on a low income because they were unable to gain employment or because their employment experiences were likely to be sporadic due to ill health. Stress, isolation and depression were induced by lack of money. Inadequate income made a healthy diet difficult. To find people living in deprived communities, I need only look to west Dublin to see how deprivation and disadvantage has had an effect on a community. The Government is doing little to tackle such difficulties and the problems are increasing on a weekly basis.

If these savage cuts are not reversed this year, it will be a dreadful indictment of the Government. The back to education allowance has more or less been abolished at third level, saving just €2.2 million. The conditions for the rent supplement scheme were severely curtailed and restricted. Many of us have read the report by CentreCare, the agency which deals with the homeless, which outlines the severe impact these cuts are having on homeless people. Restricting people from rent allowance by ensuring that they are resident in rented property for six months before they can receive it is outrageous. Families need rent supplement in the first place. How can they possibly afford to live in rented accommodation and pay full rent if they are in need of rent supplement? I ask that this cut be reversed.

The crèche supplement for child care was another dreadful cut, particularly given that we are trying to encourage young parents, particularly young mothers, to get back into education. They know the only way out of poverty is through education and employment. Surely, our job is to encourage such people to go back to work and give them whatever assistance we can, but cutting their benefits is doing nothing to assist people in the lowest income group.

The earnings threshold for disability and unemployment benefit was to increase from €88.88 to €150 per week and, as a consequence, increase the thresholds for the three bands used for the purposes of these graduated rates. This measure is, in effect, an adjustment of the threshold in line with inflation. The gross savings were estimated at €14.3 million, with 10,300 people affected. Other cuts included the dietary supplement, the half rate child dependant allowance and others of which the Minister of State is well aware.

The money to be invested in the equality area as outlined in the Estimates is inadequate. Crime against women in the first half of 2004 has seen a percentage increase compared with the first half of 2003. The rape of females increased by 27%, rape under section 4 increased by 22% and aggravated sexual assault increased by 175%. This demonstrates a worrying trend in crime against women. However, very little funding is being given to the organisations involved in tackling crime against women and domestic violence.

Senators will have heard that Women's Aid was unable to respond to a large percentage of its telephone calls because of lack of resources, leading to people in the office being unable to take calls. An increase of 1% is being given to the Equality Authority, 3% to the National Women's Council, 2% for equality proofing, 3% for gender mainstreaming and 3% for the National Consultative Committee on Racism and Interculturalism. If we are depending on the Minister for Justice, Equality and Law Reform, we will wait for a very long time before we see equality in our society. Not only does it not come second on the list of priorities, it does not even come third, fourth or fifth.

Ms Ormonde

I wish to share time with Senator Maurice Hayes.

An Leas-Chathaoirleach

Is that agreed? Agreed.

Ms Ormonde

I welcome the Minister of State to the House. I congratulate the Minister for Finance, Deputy Cowen, for introducing a quality Book of Estimates. It is based on having money and deciding how to allocate the resources. I am pleased that there will be increases in the areas about which Senator Terry has expressed concern. I, too, would be concerned if the disadvantaged were not looked after, if adult education was not looked after and if the community employment schemes were not restored in areas in order that we can have a good quality of life in our communities. However, this will happen this time, which is what I like about these plans. They focus on areas of quality of life for children, the disadvantaged, the elderly and people who need help in their homes in the form of respite care and so on.

I have read through the various programmes and am pleased that the Government will announce a quality of life budget next week.

Ms Terry

Will the cuts be reversed?

Ms Ormonde

The statements are in the Book of Estimates. More than €460 million will be spent on disadvantage next year. That is a colossal amount by any standards. There is an 8% increase in spending on adult education. There will be an increase in the quality of adult guidance, adult literacy, the VTOS programme and child care facilities. This is mentioned in the Estimates. I worked in that sector and I am aware that there was a slowdown in the programmes. Thankfully, however, the money is available now and it will be focused on this area.

The health sector is also a serious concern of mine. I am delighted with the increase in medical card services. People will be able to attend a general practitioner rather than accident and emergency departments. There is also an increase in the number of frontline staff, such as nurses, dentists, orthodontists and so forth. These are areas which required attention and I congratulate the Minister on the fact that they are detailed in the Book of Estimates and that they will receive attention.

I wish to put down a marker regarding the radiotherapy unit in Waterford. I am a native of Waterford and I ask the Minister of State, Deputy de Valera, to convey a message to the Minister for Health and Children. This unit is necessary for Waterford.

Mr. J. Phelan

Hear, hear.

Ms Ormonde

I make no bones about that. I come from a medical background and I am aware of the consequences of not having a radiotherapy unit in Waterford and not being able to provide this necessary service. The Tánaiste is sensitive about this matter and is giving it detailed consideration.

Another matter that deserves consideration is the interaction between the Department of Health and Children and the Department of Education and Science. There is not enough co-operation in health and education areas, particularly in the primary education sector, which is the first step on the education ladder. This is where there might be problem children who require the services of both the Department of Health and Children and the Department of Education and Science. There is a lack of educational psychologists to detect the problems that arise in children coming from dysfunctional backgrounds. If they are not caught at that early stage, it can be detrimental for their future. I urge the Minister to ensure there is a complementary overlap between education and health. It is an area in which there is duplication yet the child in the centre can sometimes lose out.

I could say a great deal more on this issue but my time is limited. I am pleased with this Book of Estimates. The quality of life issues are now taking root in our thinking. The money is available to implement a focused budget which will ensure that the disadvantaged will have a better quality of life.

Dr. M. Hayes

I am grateful to Senator Ormonde for sharing time. It means I will have to cut down on the pleasantries but the Minister can take them as delivered.

I speak not as a consumer of the services dealt with in the Estimates or with a constituency interest but to offer some general comments on two areas. I will focus on the research capacity of higher education but, with regard to health, I would be disinclined to put any more money into this sector until the systems are put in order. When one puts more money into a black hole, one simply confirms people in their behaviour. Money could be focused on getting and keeping people out of hospital.

I welcome the extension of the medical card scheme. It is a pity the Minister could not go a little further and cover the cost of drugs which are very expensive. There should be more generous treatment of the chronically ill. For some time, a number of Members have been making representations to the Department of Health and Children on behalf of the small and declining number of people who are survivors of the polio epidemic in the 1950s. The Department seems to be entirely incapable of comprehending the possibility that they might be registered as chronically ill users of drugs.

The economy and future development of this country requires that we have at least one research university, whether it is a single free-standing facility or a combination of what we have. We need a research university that is in the world's top rank. Otherwise, our young people will leave to go to the good laboratories. They will go to the facilities with the good teachers and the people who write the books. Our good teachers will follow them and most will not return.

In future, industrial jobs will go to low-wage economies and service jobs will follow them. If Ireland is going to build on the wonderful advance that has been made, it will be in the knowledge-based industries, in research and development and in similar areas. A list was published recently — and one might query the criteria that were used — ranking universities internationally. In the first 200, Trinity College, Dublin, was 89th and Queen's University, Belfast, was 147th. The rest of our universities were absent. It is not an issue of scale or population because there were three Australian universities in the first 20. Unless Ireland can develop that type of capacity, where our institutions are in that first division or, at least, in the first 50, our industrial and economic future is in peril.

I hope there will be a further debate on this issue, as has been sought by a number of Members. This is the one item missing from the Estimates. I hope it will be possible to seriously examine the university sector, particularly with regard to research which is very important.

Apart from that, the Minister's speech was extremely encouraging. Undoubtedly, he will bring to this portfolio the same quality and pertinacity which he brought to his last position. However, there must be further consideration of the needs of higher level education.

Mr. O’Toole

I wish to share time with Senator Henry.

An Cathaoirleach

Is that agreed? Agreed.

Mr. O’Toole

I welcome the Minister for the Environment, Heritage and Local Government. I would be pleased if he would stay for the Private Members' debate but that environmental issue appears to have been grabbed by the Department of Transport. I believe the M3 should be the concern of the Minister for the Environment, Heritage and Local Government rather than of the Minister for Transport but that is a matter for another debate.

The Estimates cover so much it is hard to deal with them in detail so I have selected a few issues which I wish to discuss and examine carefully. The Estimates are only a forerunner of the budget. Whatever happens in the budget is the real game. That is where the Estimates stop being a drama and become real. I believe that the first move on taxation should apply to the lower paid. People on the minimum wage should be outside the tax net. I make no apologies for saying that this is where our priorities should lie. The Minister hinted that his thinking lies in that direction.

Doing what I suggest, in conjunction with the indexation or widening of the tax bands, is the way to ensure that there will not be a huge number of people at the higher rate. I re-emphasise, however, that the most important factor is that people on the minimum wage should be removed from the tax net. I give full credit to the Government for the number of people who, during the past ten years or so, have been removed from the tax net. That is important and we should recognise and acknowledge what has been done. We should continue to remove those on lower incomes from the tax net because it will give them the motivation and incentive to work.

We need to be understanding in terms of our perception of the growth rate. At times during the 1990s, there was a growth rate of 10%. For a large part of that decade, growth rates reached between 6% and 9%. Ireland cannot cope with such high rates of growth because they lead to the creation of congestion and levels of demand we cannot meet. They also make the population extremely unhappy. I have stated on many occasions during the past ten years that — this is an instinctive or intuitive response because I cannot prove it — in terms of my experience of negotiating and the consideration of economic factors and underlying economics, a growth rate of approximately 4.5% is the highest with which we can cope and sustain. The rate is likely to be over 5% this year and, in my opinion, this will lead to our encountering difficulties again.

The Minister commented on a number of occasions recently about the importance of the development of road infrastructure. On the radio this morning, he stated that he is of the opinion that our road infrastructure will come right in the next few years. He also intimated where investment is being made. That is another matter with which we will deal during Private Members' time. We are happy about some but not all of this investment. I would like to see a greater investment in rail infrastructure. A telling comment was made on the Order of Business last week by Senator Kitt who referred to morning reports about the level of traffic entering Galway and stated that a first class rail service from Tuam to Galway city could be operational within six months, whereas it would take six years to put in place a road of motorway quality on the same route. We should bear that in mind when considering the position of Navan.

In the past two years, there has been a great deal of criticism about the Government's commitment to benchmarking. I wish to place on the record the fact that the period in question has witnessed the least ever disruption in the civil and public service. When we set about instigating benchmarking, it was our goal to achieve the great prize, namely, industrial peace and stability within the public sector. The latter has been achieved at good value to the State.

There has been much discussion about overseas development aid since the relevant Minister of State, Deputy Conor Lenihan, was appointed. ODA is extremely important but there is another issue of similar importance which relates to matters outside of this jurisdiction, namely, our commitment to everyone on this island. We should consider, within the debate on the Estimates, making a significant investment in the peace process in terms of bridge-building and cross-community operations on both sides of the Border in order to ensure that the said peace process finds roots among members of ordinary communities. The DUP has stated that £1 billion should be invested in the North. In my view, some of that money should be invested in the peace process by means of supporting groups such as Co-operation Ireland and others which are doing extraordinary work in that area.

As regards education, the Minister for Education and Science has given a clear indication that she will be giving specific consideration to primary education. I would like her to give a commitment to get rid of all untrained personnel from primary schools. That should be one of her first priorities. She should also give a commitment to deal with children with special educational needs by making an investment in that sector. Class sizes must also be reduced, which would mean the provision of additional teachers. There will, therefore, be a need for a concentrated building programme to keep these matters moving in parallel.

We need to appoint an additional 500 teachers in order to eliminate the use of untrained personnel. In terms of class sizes, we will need to appoint a couple of thousand teachers over a number of years. There has been a major row about whether the Minister can meet the promise of the Government to achieve this within its term of office. Rather than getting hung up on how long it will take to achieve, I would prefer if a structured process to implement all that is contained in the programme for Government and to meet the other needs relating to primary education was put in place. If it took a year longer to achieve the relevant goal, people might argue about it but they would be happy once they see progress being made.

The progress to which I refer will be measured by the employment of additional teachers and by ensuring that the colleges of education take on as many students as possible, that the postgraduate qualification is put in place and that a conversion course — which was approved by the then Minister, Deputy Martin, many years ago but which was subsequently blocked at some point — for post-primary teachers who want to continue their careers by becoming fully-qualified primary teachers is instituted. The latter could be achieved very easily by the provision of a series of short-term modular courses. Such a course would eliminate many problems and provide greater flexibility between the primary and post-primary sectors. People may not be aware that a significant number of qualified and trained post-primary teachers are working in the primary sector. Unfortunately, these individuals are considered unqualified in the primary sector and they would welcome the opportunity to become fully qualified. These small matters to which I refer could be dealt with in the context of the Estimates.

Dr. Henry

I thank Senator O'Toole for being so generous in sharing time. I wish to address the issue of overseas aid. As Deputy O'Donnell so eloquently put it in today's newspapers, our commitment to providing such aid is how we are known abroad. This issue is extremely important for the countries to which we have been providing assistance. I refer, in particular, to the priority countries in Africa, three of which, Ethiopia, Uganda and Zambia, I have visited on several occasions. I am aware of the high regard in which people in these states hold Ireland. Not only does Ireland give generously in terms of providing aid but that aid is not tied. That latter point is important because some countries provide aid but this is tied to the purchase of food and services from such countries which is then given to recipient countries. Ireland buys food and services on the spot, which is extraordinarily important.

I hope we have enough money to continue to provide bilateral aid. I am disappointed that we will not be in a position to meet our target of 0.7% of GDP for overseas development aid by 2007. The Taoiseach promised the United Nations that we would meet this target by that date. Developing countries took it as a promise which was sincerely made and which would be kept. Everyone thought it would be kept. It will not be kept because we have discovered that we are so rich and that, as a result, the amount involved will be much higher than originally envisaged.

I ask that the Minister give particular consideration to the area of multi-lateral aid. When it comes to how they intend to spend their budgets, governments are frequently much more influenced by multinational organisations such as the United Nations, the World Bank, the International Monetary Fund, etc., than they are by small countries such as Ireland. I implore the Minister to ensure that the level of money given to UNFPA will not only be maintained but that it will be increased. As he will be aware, the United States has withdrawn funding to that organisation. Our increase last year was extremely important. I applaud the former Ministers of State with responsibility in this area, Deputies Tom Kitt, O'Donnell and Burton, for what they tried to do. Their actions made a difference to the countries to which I refer.

Unfortunately, the maternal mortality figures for sub-Saharan Africa, in particular, and the remainder of the continent in general are not improving much. The UNFPA's report for last year shows that the improvement was marginal in most African countries. The position in respect of HIV-AIDS is getting progressively worse, despite the enormous amount of money that is being spent. I include here the well-spent money from the global fund, to which Ireland contributes.

Irish people have a great respect for mothers. We were always very proud of our obstetrical and gynaecological care. I would like to see Ireland helping to reinforce this care in other countries, particularly in those developing countries which are recipients of Irish aid. I hope there will be no question of any cutbacks.

I warmly welcome the wise words of Senator Maurice Hayes. I chaired the association and trust in Trinity College which is one of the fund-raising organisations for the college. I seemed to spend more time imploring and beseeching people to give money to the university than doing anything to encourage academic research or teaching, which is not as it should be.

Minister for the Environment, Heritage and Local Government (Mr. Roche)

In framing the 2005 Estimates and the budget, the Government's primary aim is to continue support for economic growth and employment as a way of making further progress. As a result of the Government's successful management of the public finances and economy, we should remind ourselves of what we have collectively achieved because it is not just a case of Government achievement but rather of what we the people have achieved.

The general Government deficit has been lowered from close to 100% of GDP in the early 1990s to the current level of 31%, which is an extraordinary achievement. The country has enjoyed improvements in economic growth and the Government has certainly improved the revenue position. However, the Government is not just running an economy but also a State. These improvements are aimed at assisting the people. The Exchequer outturn for 2004 is now projected at approximately €2 billion better than the deficit of €2.8 billion for 2004 which was forecast in last year's budget. There is practically full employment with the unemployment rate less than 5%, which is a remarkable achievement given the situation in the not too distant past. The inflation rate at the end of 2004 will be of the order of 2.25%. It is worthwhile reminding ourselves of these matters and of what we have achieved as a nation.

Public sector expenditure is now double what it was in 1997 and has risen to €41 billion. The Government is prioritising spending in areas such as health, education, social welfare and investment in infrastructure. The Government will increase its spending on health in 2005 to €1.4 billion on a pre-budget basis. In the past four years, the Government has invested an average of approximately 5% of GDP in addressing the infrastructural deficit. This is a very important point. Senator O'Toole spoke about quality of life and this is how it is improved. I have been concentrating on the inputs and that is only one part of the story. The economy is now more viable and more progressive than one could have imagined or hoped for less than ten years ago.

The spend on the key economic and social infrastructure under the NDP is at record levels. By June 2004, the Exchequer will have provided €1.8 billion more than planned. The resources are being provided and the outputs are coming.

I ask the House to consider some of the Government's achievements in the past few years. Some 47 major roads projects were completed between 2000 and 2004. Approximately 291 km in total will be completed under the national development programme by mid-2004. Motorway standard roads to a total of 76.7 km will be completed; dual carriageway completed will be 51.8 km and single carriageway, 155.4 km.

I am aware this cannot be done without causing controversy. Some of the controversies have been extraordinarily hyped. It has been suggested that instead of looking to push the emotional button, people should adopt a logical approach. The M1 motorway to Dundalk is the longest stretch of motorway in the country and includes the very impressive Boyne cable bridge. This shows infrastructure can be fitted into sensitive environments in an attractive manner of which one can be proud. The Dublin light rail system is now operational. The Dublin Port tunnel will be incredibly important in terms of the quality of life in the city and will be completed by the fourth quarter of next year. A Dublin Bay water treatment plant costing €300 million has been installed which gives the capital a world-class water treatment facility. I ask Members to remember the situation less than ten years ago when there was an open cesspit on the outskirts of the city. Senator O'Toole referred to the rail network in which there has been a major increase in investment. In 1997 the Government of the day invested €7 million; last year the Government invested €329 million. This is probably not enough investment but it is a lot more than €7 million.

I wish to deal with some of the issues raised by Senators during the debate. Reference was made to the low level of increase in the local government fund. This is neither a fair nor an accurate observation. The 2005 Exchequer allocation for the fund is €488 million, compared with the previous year's figure of €453 million, an increase of €35 million or 8%. I am as interested in this fund as any Member of this House. I believe more efficiency can be squeezed out of the public services at local government level. By putting €488 million of taxpayers' funds into these services I will expect a better delivery of services and I am not prepared to accept the old arguments and the old shibboleths that we did not get enough. We have enough now and it is up to us to do the job in local government, both at central and national level.

During the period 1996-2004, the Exchequer contribution to the local government fund has actually increased by 150%. I am not prepared to listen to people saying we are not doing enough when not too long ago the same people, when in Government, did an awful lot less. In the area of local government, social housing is of particular interest to me. The figure this year will be €1,206 million. I remind Members and, through them, members of local authorities, that I am carrying out an analysis of performance in local government housing. It would be quite shocking and not a little embarrassing for people to look at the returns in their own local authority areas. It will come as a shock to most Members to learn that very few local authorities have met the targets set for them over the past ten years. It would be unfair of me to draw attention to one or two years but over the past ten years, if one examines the total number of allocations, the total amount of money given to local authorities to produce local authority houses, very few local authorities have come up to 100% over a ten-year period. The divergence between the targets and the reality is even worse in the short term. Adequate funding is being provided. I will be driving this particular area because I believe the Senators who made the point of the importance of this sector are correct. The Government is putting in a significant sum of money; €1.2 billion is not peanuts in anybody's language. I will expect public representatives at local government level and those on the ground to drive this issue and make sure we have delivery. I cannot go next year to the door of the Minister for Finance and look for money if I am returning €300 million or €400 million on any account.

The issue of education was raised by a number of Senators. The total increase is €544 million. We could spend the rest of the day discussing this subject on which we all have views. I share the concern expressed by Senator Maurice Hayes about research carried out in universities. I am not sure that the entire answer is to push more resources from taxpayers into the sector. Senator Henry also touched on the subject in her contribution. In my view, industry has a role to play because it should see that university research is the seed stock for future development. I agree absolutely with the point made by both the Minister for Education and Science and Senator O'Toole that primary level should receive resources. The Minister has stated she wants to promote the inclusion, participation and achievement of people from socio-economically disadvantaged areas and that is as we would all wish.

I am a little surprised at some of the comments made in this House and elsewhere on the issue of tax. On the issue of disparity, the reality is that no Government should apologise for allowing people to spend their own money. PAYE workers were crucified in this country in the past. Those PAYE workers on the average wage are now paying significantly less tax than they paid prior to 1997. In the period since 1997, the average industrial wage has increased by approximately €10,000. A person earning the average industrial wage currently pays almost €270 income tax per annum less than a person earning the average industrial wage seven years ago when it was €10,000 lower than now. These are real achievements. The best thing a State can do is keep its hands out of people's pockets, so to speak, although this is necessary to some degree to pay for vital services.

Let us take a couple of examples to highlight our recent economic performance. The average rate of income taxation for a family with one income of €50,000 fell from 33.5% in 1997 to just under 21% in 2004. This is progress because it allows people to make their own decisions and choices. In the case of a family with two incomes the figure is more dramatic, with average income taxation falling from 33.5% to 14%. As a result of the Estimates, the pre-budget gross expenditure on public services will be €43.5 billion. I could cite statistic after statistic but time is short.

The Government has prioritised the areas of importance to Senators and others who believe in education, health and welfare services. We will continue to allocate resources on the basis of priorities in the social area.

I thank Senators from all sides for their contributions. We will never be completely satisfied as to reach that point would indicate we had lost our grip. I am satisfied that this Government and its immediate predecessor have achieved a vast amount. The economy is in a good state.

Mr. J. Phelan

A lot done, more to do.

Mr. Roche

I agree with the Senator. While I would never be complacent, as a nation we have achieved a great deal.

Mr. O’Toole

Does the Government need another term?

Mr. Roche

Senator O'Toole took the words out of my mouth. He also made a point earlier which rings true with me. Public servants have delivered and part of the reason we are in our current position is due to the politically courageous decisions we took and our excellent public service. I have little time for begrudgers who suggest benchmarking or the public service pay awards were not a good deal. Our public servants are among the finest in the world and we should be prepared to pay them what they are worth.