With your permission, a Leas-Chathaoirligh, I wish to share time with my colleague, Senator Bradford.
Adjournment Matters.
Sugar Beet Industry.
Is that agreed? Agreed.
The purpose of raising this matter on the Adjournment is to get further information on the current position vis-à-vis compensation, primarily for producers but also for contractors, for the sugar beet sector. We have had many debates and arguments in this House about how the Irish sugar beet industry ended up going into decline and closing, and we on all sides of the House very much regret what happened.
It was disclosed a few of months ago that a number of funds would be put in place for distribution from the European Union to those who were involved in the sugar beet industry in this country. There is a fund of in excess of €140 million for restructuring which includes a proviso that a minimum of 10% be given to producers and contractors, and a €45 million fund for diversification. In addition, of course, the single farm payment applies for producers into the future.
Those involved, as farmers in producing the crop and as contractors in extracting and transporting sugar beet from different parts of the country to the two last plants in Carlow and Mallow, have a considerable interest in knowing how exactly those two funds will be distributed. The Minister for Agriculture and Food, Deputy Coughlan, has tried to say that she is not in full control of this matter but my understanding is that the final decision rests clearly with her. I have been told that in late summer or early autumn a decision will be made and that at present she is in receipt of representations from different interested groups and parties.
It is my firm view that virtually all of both funds should go to the producers and the contractors rather than to Greencore, which appears to have an entitlement to the restructuring fund of over €140 million. It would be a travesty if the company which has played a major part in the downfall of the sugar industry in this country were to be the main beneficiary of the restructuring fund. I urge the Minister to ensure that is not the case, and that the primary producers and contractors would benefit most from any restructuring fund when it is eventually disbursed.
I thank Senator John Paul Phelan for sharing time with me. I share the sentiments he has expressed in terms of how the compensation should be allocated. The Minister has advised that decisions may not be made before the autumn. The one issue that was clarified by Brussels is that a minimum of 10% of the restructuring fund must be given to producers and contractors. We certainly want to see that 10% more than exceeded and the closer the figure is to 100%, the better.
I seek clarification from the Minister of State on one issue. The Minister spoke on this point previously, as did the EU agriculture Commissioner when she addressed the Dáil some weeks ago. Under the disastrous agreement signed in Brussels to shut down the Irish sugar industry, we also appear to have agreed to a provision whereby, if the Mallow plant is not physically razed to the ground, the €145 million restructuring fund will not be paid in full and a deduction would be made from it. This is inexplicable and the matter requires to be urgently reviewed
A declaration was made at the last EU summit by the Taoiseach, Deputy Bertie Ahern, and his colleagues across Europe that one of their political and economic priorities for the current year would be the support of alternative energy projects. While that statement was laudable, it appears that European Ministers for agriculture have signed up to an agreement to the effect that farmers in the State would be penalised if we tried to use our decommissioned sugar factories for the purpose of producing alternative energy. We could validly ask if some derogation could be provided from this agreement. The majority of the fund of €145 million must be paid to the farming community which produced the sugar beet and the contractors whose livelihoods have been ruined.
The Mallow plant could be used for the production of alternative energy. This possibility is now being examined by Cork County Council. The IFA has also set up a committee to investigate alternative energy projects. All of this is welcome but it is impossible to defend the decision that in order to claim the full amount of compensation we must not just decommission the factory in Mallow — which has already happened but raze it to the ground and return the area to a greenfield site. I urge the Minister of State, Deputy Parlon, to use his good offices and that of his senior Ministers to try to bring about a change of heart in the European Commission in terms of that particular decision.
The Minister of State is aware from his current and former jobs that the aim of the sugar proposals was to reduce the production of white sugar in Europe. Ireland is now reluctantly playing its part in that respect. We will no longer produce white sugar and our sugar industry is, effectively, finished. The factory has been decommissioned for the purpose of processing white sugar but it defies logic that a factory which with a certain degree of modification could lead the production of biofuels in this country must be knocked to the ground in order to qualify for full compensation. I ask the Minister of State to reflect on this matter and see if we could make some sense out of that nonsensical provision.
On behalf of my colleague, the Minister for Agriculture and Food, I welcome this opportunity to give Members an update on the implementation arrangements for the compensation package negotiated in the context of the reform of the EU sugar regime.
The new sugar regime comes into effect from 1 July 2006. The compensation package as a whole is worth an estimated €310 million to Irish stakeholders. The package is composed of three elements. The first element is the compensation to beet growers of up to 64% of the reduction in the minimum price for beet. This compensation, which is being incorporated in the existing single payment scheme and is payable from 2006, is worth approximately €123 million to Irish beet growers over the next seven years.
The second element of the compensation package is the restructuring aid covering the economic, social and environmental costs of restructuring the sugar industry, involving factory closure and renunciation of quota. In Ireland's case, this will be worth up to €145 million. The third element of the package is the diversification aid, which is worth almost €44 million in Ireland's case. This will be drawn down in the framework of a national restructuring programme to be elaborated in due course.
Currently, interest is focused on the second element of the compensation package — the restructuring aid — which is to be drawn down by means of an aid application to be submitted by the sugar processor following consultations with the beet growers. Following Greencore's decision to cease sugar production, it is anticipated that the company will submit an application for restructuring aid in the first year of the new sugar regime. The relevant Council regulation requires that such an application, including a detailed restructuring plan for the industry, must be submitted by 31 July 2006. A decision on the granting of the aid must then be made by the member state by 30 September 2006 at the latest. The timescale for implementing the restructuring scheme is very tight where restructuring takes places in the first year of the new regime, as in Ireland' s case.
The Government is committed to ensuring that the restructuring aid is implemented in a fair and equitable manner and strictly in accordance with the relevant EU regulations. The Government has appointed lndecon International Economic Consultants to provide it with independent expert advice on matters relating to the implementation of the restructuring aid. Last month the Department issued a public call for submissions from interested parties in regard to the implementation of the aid and these submissions will be subject to scrutiny by Indecon. The deadline for the receipt of submissions was 2 June.
The Council regulation provides that at least 10% of the aid shall be reserved for sugar beet growers and machinery contractors who have worked under contract with their agricultural machinery for the growers. That percentage may be increased by the member state after consultation with interested parties, provided that an economically sound balance between the elements of the restructuring plan is ensured. A decision on the percentage, taking account of all relevant factors, will be made in due course after the consultation process has been completed, the submissions have been examined by Indecon and following the adoption in the near future of the Commission regulation laying down the detailed implementation rules.
Senator Bradford raised the issue of the decommissioning of the Mallow plant under the terms of the EU package. He is aware that if the plant is not fully decommissioned, 25% of the aid will be lost. There is no consensus to the effect that this is the approach that should be taken.
While I have not been briefed, I am aware from my interest in alternative fuels that there is a question mark over the viability of sugar beet as a raw material for ethanol production. That is the reason we are losing our sugar industry. We had the option of continuing to grow sugar beet at the new price that would be available to us from the European Commission but it was deemed to be unviable by Irish beet growers. That is why major consensus was achieved in terms of adopting the package.
Search and Rescue Service.
I welcome the Minister of State, Deputy Parlon. I wish to raise this important matter which I have previously raised in the House. It relates to the provision of a station house at Doolin, County Clare, for the coastguard search and rescue service. This issue was brought into sharp focus last November when four young men lost their lives in the Atlantic ocean off the Clare coast. While it is very clear that the existence of a modern station house would not have saved their lives, it would certainly have helped to alleviate the trauma suffered by the rescue team and the families of the victims who were involved in a very prolonged search for the bodies. This search went on for over a week, creating major difficulties, particularly for the rescue team and the families and members of the public who assisted in the search.
The Minister of State is aware that there was great momentum to resolve this issue, which has been ongoing for over eight years, in the aftermath of this tragedy. I thank the Minister of State for his involvement, for meeting with the delegation from the group in Doolin and for the interest he has shown in this case. He is aware of the complication that arose in respect of the identification of a site, which has now been resolved and, more importantly, the purchase of this site. The Department of Finance, through the Office of Public Works, is responsible for the purchase of this site. I understand that the coast guard has already assigned a budget towards the construction of the station house on the site. Therefore, the major issue concerns the acquisition of the site.
There are a number of volunteers involved in the service who work tirelessly throughout the year. They are called out on rescue missions approximately 30 times a year, which is a fairly high call-out rate across the network of rescue services around the country. The Minister of State will know from his meeting with the group that the current building dates back to the 1920s and contains no toilets, showers or a command station for the effective operation of a rescue mission. The building is subject to flooding and volunteers are sometimes forced to sandbank doors, which is unacceptable.
Critically, there is no capacity to store the rescue boat or any other rescue equipment on the site. The lifeboat is currently stored one and a half miles away from the launch point in a location that means it must be drawn through the main street. At this time of the year, Doolin is very busy with tourists. It is blatantly obvious that if there was a requirement to launch the boat in an emergency, critical time would be lost in getting it to the launch point. I do not wish to be alarmist but this may lead to loss of life, which might not occur if the boat could be launched from the nearest position. This is probably one of the critical issues. Volunteers are seeking the facilities but the critical factor is the fact that the lifeboat is not located at the launch site.
I am aware that there have been various complications in respect of the identification and valuation of the site. As the Minister of State is aware, a specific site has now been identified. The landowner has agreed to sell the site and I understand that money has been set aside by the coast guard out of its budget to build the facility. All that is needed is for the Department of Finance to purchase the site. I ask the Minister of State to do all he can to create the impetus within the Department to resolve this matter. We are now heading into the summer period. The good weather we have enjoyed, particularly over the last weekend, has brought into sharp focus the dangers that exist, particularly given the greater use of the Atlantic and the central role played by the search and rescue service in Doolin in protecting the people who enjoy the water facilities in this area. I hope that the Minister of State can indicate where matters stand in respect of this project and I thank him for the efforts he has made during his period in office.
I thank Senator Dooley for raising this issue. The Commissioners of Public Works work closely with the Irish Coast Guard service in respect of the provision of suitable facilities around the country. In this regard, they have been seeking a site for Doolin coast guard station for some time. This has proved to be a long drawn out process due to the lack of availability of suitable sites. A site has now been identified and the Commissioners of Public Works inform me that their valuers are in negotiation with the landowner in question in respect of a conditional offer for sale received from him. It is difficult to predict at this stage how long these negotiations could take. However, I wish to assure Senator Dooley that every effort is being made to bring the negotiations to a successful conclusion.
I thank the Minister of State for his reply.
Does Senator Dooley have a question for the Minister of State?
Depending on which side one talks to, it has been suggested that there has only been vague contact between an individual in the Department of Finance negotiating on its behalf and an agent representing the landowner. I do not know the departmental official in question. Time has elapsed. I am aware that the Minister of State understands the need to ensure that there are no further incidents which could lead to loss of life as a result of the lack of this facility. I am aware that money is involved and that the State has a duty to the taxpayer to ensure it gets the best value for money but what is the best value for money at this stage?
We are heading into a period where a life could be lost in the time it takes to bring the lifeboat from its current location to the launch point. If such a tragedy occurs, I have no doubt money will be thrown at the problem, the valuers pushed aside and a decision made. Given that he is responsible for the Office of Public Works, I ask the Minister of State to ensure this decision is taken. I am not suggesting he does anything improper in respect of State finances but the matter must be weighed up in terms of the value of a life, the potential for loss of life and the associated costs. I appeal to the Minister of State to work to bring about the acquisition of this site without delay.
Does the Minister of State wish to respond?
I assure Senator Dooley that no stone will be left unturned to try to bring a successful conclusion to these negotiations.
Tax Code.
I welcome the Minister of State to the House. I tabled a parliamentary question through Deputy Paul Keogh last March in respect of the tax relief available for people paying maintenance for their children. I highlighted a case involving a married individual who fathered a child outside marriage and pays maintenance for that child but does not receive tax relief. I am now confused because the reply to my question informed me that there was no tax relief in respect of maintenance payments. However, the person tells me that friends of his who pay maintenance for their children are availing of tax relief.
Are these people categorised in different tax bands? Why am I being told on the ground that people are receiving lump sums in the region of €4,000 while I am officially informed that they are not receiving such tax relief? Why is the individual to whom I referred being told that if he was single or separated and paying maintenance, he would be entitled to some tax relief but the fact that he is still married but paying maintenance for a child fathered outside marriage means he cannot receive tax relief? I believed my parliamentary question would clarify matters but it has only confused matters. The Department of Finance is saying one thing but the exact opposite appears to be happening on the ground.
I am informed by the Revenue Commissioners that there is no tax relief for maintenance payments towards the upkeep of children, including children born outside marriage. The effect is that the payments are treated in the same way as if the taxpayer was providing for the child out of his or her after-tax income. The position in respect of the tax treatment of maintenance payments for separated spouses is more complex.
A one-parent tax credit can be claimed by a single parent, regardless of whether he or she is widowed, single, deserted, separated or divorced, who is not living with another person as man and wife and who has a qualifying child resident with him or her for the whole or part of the relevant tax year. A qualifying child means a child who is born during that tax year or is under 18 years of age at its beginning, is over 18 years of age and receiving full-time education or undergoing a full-time training course for a trade or profession for a minimum of two years or is permanently incapacitated, either physically or mentally, from maintaining himself or herself and becomes so before reaching 21 years of age or has become permanently incapacitated after reaching that age but while he or she has been receiving full-time education.
The payment or non-payment of maintenance by such a single parent is not a determining factor in the entitlement to the one parent family tax credit. Senators may also wish to note that as a result of an entitlement to this credit, a person may also be entitled to an enhanced standard rate tax band valued at €36,000 in 2006. This is €4,000 greater than the standard band for a single person. A person in receipt of the one parent family tax credit in respect of a child who is incapacitated may also be entitled to receive the incapacitated child tax credit, which is worth €1,500 in 2006. The latter is not dependent on receipt of the former.
The tax treatment of maintenance payments for separated spouses is a complex area and I hope Senators will bear with me as I try to explain the position clearly. In general, separated couples are treated for tax purposes as if they are unmarried. However, where a legally binding maintenance arrangement is in place, they may elect to be treated for tax purposes as if the separation had not taken place. This election is not a right of one spouse and must be claimed jointly by both spouses. Where such an election is received, the couple continues to be treated as a married couple for tax purposes and any maintenance payments have no tax consequences.
The general position in the case of legally enforceable maintenance agreements is that where the couple is treated for tax purposes as if unmarried, a tax deduction for maintenance payments for the benefit of his or her spouse is granted to the paying spouse, but the payments are taxed in the hands of the receiving spouse. However, if the spouses jointly elect to be treated for tax purposes as if the separation had not taken place, the payer does not receive a tax deduction for the maintenance payments and the receiving spouse is not taxable on them. Non-legally binding maintenance payments are not taxable in the hands of the receiving spouse but the paying spouse cannot claim a tax deduction for them.
The Government acknowledges the continuing cost pressures on parents, particularly those with young children, and that the direct expenditure approach is the main way in which the State provides support to parents. The Government has substantially increased child benefit since entering office in 1997. Senators may be interested to hear that overall expenditure on child benefit has increased by 279%, from €506 million in 1997 to almost €2 billion in 2006.
A new early child care supplement of €1,000 in a full year for each child up to his or her sixth birthday was announced in the budget. This payment will commence shortly and is exempt from income tax. With the increases in child benefit announced in the budget, this will bring the amount a family will receive in direct financial support for each of the first two children under the age of six years to €2,800 per year, equivalent to more than €50 per week. This will be even higher where a family has more than two children under the age of six years.
The Seanad adjourned at 9.05 p.m. until10.30 a.m. on Thursday, 8 June 2006.