I welcome the Minister of State, Deputy Brian Hayes.
Budget 2014: Statements
I welcome the opportunity to speak in the Seanad and contribute to this debate on budget 2014. Earlier today the Ministers, Deputies Michael Noonan and Brendan Howlin, presented to Dáil Éireann the Government's third budget. This is yet another milestone in repairing Ireland's public finances, supporting our emerging economic recovery and crucially a further step to exiting the EU-IMF programme at the end of this year and regaining our full economic sovereignty.
Much has already been done in repairing the public finances and we are now seeing the fruits of this. On the basis of the measures outlined in the budget, we are likely to see a small primary surplus next year; in other words, once debt-servicing costs are excluded, we are once again paying our way.
Effectively, we will be taking in more tax than expenditure when one takes away the cost of paying the national debt. This is a primary surplus and I gather this is the first time it has happened for some years. It is a positive development because once that happens one begins to reduce the stockpile of national debt vis-à-vis GDP and that will be a major and important step along the road to recovery.
As I have stated before in the House, the budget is not only about consolidation. It includes measures that will help to support and drive forward the economic revival of the country. It is about building on the progress that we have seen this year in the economy, the public finances and especially the labour market. Before turning to the specifics of the budget for next year, 2014, I will set out the economic and fiscal background that underpins the budgetary arithmetic.
This year, GDP is projected to increase at 0.2% over the year. At first glance, this may appear at odds with labour market data which have been strong in the opening part of the year. As the Minister for Finance stated, we are creating jobs at a rate of approximately 3,000 per month. This apparent puzzle is explained, at least in part, by the so-called patent cliff in the pharmaceutical sector. Although the sector has been a large weight in GDP and exports, its share of employment is relatively low, meaning that the impact on the domestic economy is relatively contained. Importantly, there are increasing signs of a stabilisation and indeed modest growth in domestic demand, in other words, in consumer spending and business investment. This is in contrast to previous years when the growth was driven by the export sector. This is encouraging because it is growth in domestic demand that people will more readily identify with, in other words, it is jobs-rich and as a consequence, it is more tax-rich also.
For next year, the budget arithmetic is based on GDP growth of 2%, a figure in line with the prevailing consensus. This is based on the assumption of a further, albeit moderate, improvement in domestic demand, combined with a recovery in our exporting performance. The rebound in exports is contingent upon a recovery in our key export markets. The recent data in the United Kingdom, the USA and the euro area have been reasonably encouraging in this respect.
The competitiveness improvements that we continue to achieve will also stand to us. According to the European Commission, we will have seen a relative improvement in our unit labour costs of over 20% between 2009 and 2010. This is significant. Let us consider the unit labour costs throughout the eurozone economies as a whole. I understand they have gone up by 8% in the course of the past three years. In respect of the economy, because people are more productive and competitive and wage price inflation is not a problem, unit labour costs have gone down by almost 14%. There are two important points to note in this regard. First, it suggests we are producing more and we are more competitive and, as a consequence, this has led to a restructuring of the economy. Second, from the point of view of IDA Ireland, which is trying to sell the country and get jobs to the country, the reduction in unit labour costs is a key determinant upon which businesses decide to locate in Ireland. Not only has the consolidation been necessary, because we could not continue to borrow on the basis of the deficit, but it has also had the greater macro effect of making Ireland a more attractive place to do business. Often we do not give due cognisance to that fact in trying to sell the country to the foreign direct investment sector.
In the labour market, thankfully, employment is now increasing again after several difficult years. Annual employment growth averaged 1.5%, the equivalent of 27,000 jobs in the first half of this year. In the past 15 months the net new employment in private sector jobs has been 47,000. This is significant and it is down to the strong exporting sector but also speaks to a rebounding of the domestic economy. The fact that we have seen a net improvement in private sector jobs by approximately 47,000 is most encouraging. The Pathways to Work initiative, spearheaded by the Minister for Social Protection, Deputy Joan Burton, has been significant in shaking out the labour market and ensuring that where there are opportunities, people will go back to work.
I now turn to the budgetary position and today's statements confirm Ireland remains on track to reduce the deficit to below 3% of gross domestic product, GDP, by 2014. Next year, as the Minister, Deputy Michael Noonan, has stated consistently, a deficit of 4.8% of GDP is being targeted, which is well within the 5.1% GDP ceiling imposed by the ECOFIN Council in December 2010 when Ireland entered the EU-IMF programme. As the Minister outlined to the Dáil earlier today, this target is based on consolidation of €3.1 billion, comprising €2.5 billion in tax and expenditure measures and a further saving of €600 million in other areas. As has been the case in recent budgets, the consolidation is concentrated on the expenditure side in order to underpin the emerging recovery in domestic demand and to support job creation.
I wish to highlight to colleagues two crucial developments. First, as I alluded to, the Government is targeting a primary budgetary surplus for next year. This will be the first such surplus since the crisis in Ireland's public finances began and means that leaving aside interest costs, we will finally be paying our way again. This is an important achievement and is due to the painstaking support and patience of the people. Second, our gross debt-to-GDP ratio is set to peak this year at 124% of GDP, with net debt of less than 100% of GDP. In respect of net debt, when talking about the amount we owe, we often forget the amount we have. If one adds up the amount of money held within the National Treasury Management Agency, NTMA, - the Minister for Finance referred recently to the €25 billion Ireland had in cash reserves - and when one takes out that amount, which is an asset, albeit one which is in a deposit account through the NTMA as a buffer to exit the programme, Ireland's debt-to-GDP ratio is approximately 100%. This ratio is not all that dissimilar from virtually all eurozone economies, which have debt-to-GDP ratios of close to 100%. Markets look at such indicators. They watch closely the implications of a surplus and how Ireland is faring on the deficit.
It is also worth stressing there are significant cash reserves which enhance our position as we approach the year ahead. There is no point in leaving a programme only to go back into another programme shortly thereafter and as Ireland leaves this programme, it needs cash buffers within the NTMA that are evidently in place. The really important development this year in respect of the NTMA, as I am sure Members have noted, is that for the first time in six years, Ireland has got away a ten year money bond. Significant buffers have been built into the NTMA figures for next year and ultimately, I believe such things make a difference in ensuring the yield on Irish ten year bond rates is reduced. I believe the rate this morning was at 3.6%, which is a rate lower than that of Italy, Spain, Greece or Portugal. This really is the test of creditworthiness, namely, where the market determines the cost of ten year Irish debt to be. As Ireland returns to the market on a more long-term and sustainable basis, keeping the interest rate low and the cost of Ireland's ten year money will be extremely important.
I now turn to the specific tax and spending measures contained in the budget. Were I to choose three words to describe the objective of this budget, they would be jobs, jobs and jobs. As the Minister outlined to the Dáil earlier today, since taking office the Government has been looking at the economy sector by sector, building on the strengths of those sectors that are doing well and repairing the damaged sectors. The objective is to support businesses, create jobs and get people back to work. For the tourism sector, the VAT rate has been reduced. Moreover, a ten point tax plan to support the SME sector was introduced last year, 20 measures were introduced to support the financial services industry and a number of initiatives have been introduced to support the property sector. Taken together, all these measures are playing a significant part in the recovery in the jobs market, as is now evident. The 2014 budget seeks to build on this with the introduction of 25 pro-business and pro-jobs measures, which on the tax side amount to more than €500 million on a full-year costed basis. For instance, the 9% VAT rate for the tourism sector is being continued, the air travel tax is being reduced to zero from April next year and a home renovation tax incentive scheme is being introduced to help the construction sector and, in particular, to help those who may be in the black economy at present to be fully compliant within the tax regime.
To further underpin job creation, a number of measures under the Build your Business initiative are being introduced to support entrepreneurship, innovation and investment.
The small and medium-sized enterprise sector is the biggest employer in Ireland. We need to build on this and encourage people to set up their own businesses and to expand existing businesses. Access to finance is crucial for the sector and the Government has been very proactive in this regard, with measures in the 25 point strategy designed to finance growth in the SME sector.
Protecting and creating employment is also at the heart of everything that we try to do. Today my colleague, the Minister, Deputy Brendan Howlin, announced that a further €200 million in capital spending arising from the balance of the lottery licence proceeds which we took to this House some months ago would be used to support local economic activity and job creation. The money will help to fund road maintenance and repairs, a new round of sports capital grants, the better energy programme, and housing adaptation grants for older people and those with a disability.
The Government is transforming the National Pensions Reserve Fund into the Ireland strategic investment fund to invest on a commercial basis in projects in Ireland that support economic activity and employment. The value of the NPRF discretionary portfolio at the end of June 2013 was €6.4 billion.
Overall, the Government is reducing public spending in a balanced, strategic and responsible way. Of course, there must be reductions in spending, but it is being done in a way that minimises the impact on the people. When one adds the capital and current expenditures as proposed for 2014, I think that the total consolidated amount is €53 billion. We are projecting that the total tax take for next year will be €42 billion. One does not have to be a mastermind to work out that the deficit problem has not gone away. We still face a difficulty in terms of a fundamental distinction between tax and expenditure. Even though we have bridged the gap - and we expect growth will fill the gap in a way that it did not this year - it is important to say we still have a difficult budgetary situation that must be corrected. For those on the hard left and hard right who argue that those in the troika should take away their money, were that to happen they would go and they would take away their money. That would have meant that the adjustment would have happened overnight or over a two year period. Such a move would have left the country in an economic Armageddon and I do not think that anyone would have wanted that scenario.
Before concluding I take the opportunity to highlight some of the recent reforms of the budgetary process. I know colleagues in the House have very forcefully spoken about reform in the past while. In particular, as part of the improvements to economic governance at a European level, euro area member states are required to have their economic forecasts, upon which their budgets are based, endorsed by independent authorities. The rationale behind this is to provide for greater transparency and ensure budgets across the euro area member states are not based on optimistic or overly optimistic economic projections. The Irish Fiscal Advisory Council has been tasked with assessing the economic forecasts of the Department of Finance. It concluded that the forecasts are "within the range of appropriate projections" for this year and next which Senators will see in the accompanying documentation. I refer to a letter by Professor McHale and his colleagues at the end of the book that was published today by the Department of Finance.
In addition, the Government has moved, in line with European arrangements, to an October budget which is important. In recent years ongoing speculation mania started and ended in December that left people frightened to spend money. Therefore, it is good that such mania is now over because now there is certainty on income and where we stand as we go into next year. I hope the measure will help, particularly the Christmas market, to encourage people to spend the money that they have in terms of retail Ireland and the domestic economy.
The 2014 budget represents the penultimate step in bringing our deficit below the 3% GDP threshold. We are consolidating the public finances, while at the same time supporting jobs and growth and ensuring fairness. We are all making substantial progress, especially the people. The Government has renegotiated the bailout programme, achieved an extension to the maturities and a reduction in the interest rates on our European loans, as well as the replacement of promissory notes with Government bonds that will serve to reduce future financing needs and galvanize investor sentiment. The Government has also reached agreement with the troika that half of the proceeds from the sale of State assets can be used for capital investment. The minimum wage has been restored when we were told it would not happen. Anglo Irish Bank has been liquidated. We are creating jobs for the first time since 2007 and the measures outlined in the budget will build upon this recovery. We are supporting important jobs-rich sectors of the economy as seen by the fact that we can continue with a 9% VAT rate for the hospitality industry.
The budget provides further clarity and certainty to the people and addresses many of the most pressing issues facing the economy today. It strikes the appropriate balance between repairing the budgetary position, on the one hand, and supporting the recovery in domestic demand, on the other. As always, I look forward to the constructive comments from Senators on all of these matters.
I welcome the Minister of State. This is an historic event. He has ad-libbed plus used his iPad which is a first for the House, as opposed to his reading a script or ad-libbing. I am glad that he is here to listen to the points of the Members of this House. It is regrettable, however, that his ministerial colleagues, Deputies Brendan Howlin and Michel Noonan, left their stations before listening to the entirety of the Opposition's lead spokespeople. That is unfortunate and does not augur well for the cognisance by Government of the points that may be made. The Minister of State is not going to do that because he has kindly agreed to attend here.
The Taoiseach and the Tánaiste were there.
I am pleased that the Taoiseach and the Tánaiste were there, but the Minister for Finance and the Minister for Public Expenditure and Reform should have been present. It was an insult in the extreme to the shadow spokespeople in that regard.
I welcome some of the measures in the budget such as those for renovating homes, making homes greener and those kinds of points that have been included in order to get people working and encourage people to spend on necessary works on their homes. The measures will be of help and will create employment, which is welcome.
Obviously I do not welcome many measures contained in the budget. I appreciate that it is difficult to find consensus on cuts but, in any respect, it is hard to find two people to reach agreement. One wonders how any Cabinet can manage to do so. That said, I must speak in terms of my interpretation of the budget. I am baffled as to why we consistently ignore people who earn over €100,000. The people I know in that income category were conditioned last year to take a hit of a few per cent and they were conditioned this year to take a hit of a few per cent. That measure would have easily cancelled out some of the more mean-spirited measures in this budget. I say that not just to score political points. I refer to the bereavement grant which I mentioned on the Order of Business, plus the fact that cuts were leaked throughout the newspapers. Most of the budget was leaked in the media today. I ask the Minister of State to convey upwards that leaks are disrespectful to the Houses of Oireachtas. I do not think there was a measure of surprise in today's speech by either Minister.
A bereavement grant of €630 was introduced in 1999 when the cost of running the country was €25 billion. I understand the grant is now at the substantially higher rate of €850. Today the grant is being cut completely when the cost of running the country is €52 billion but the average funeral cost is €3,000 outside Dublin and €4,500 inside Dublin. Such a measure is mean-spirited and kicks in €40 million. Would such a cut have been missed by the category of people earning over €100,000 who were conditioned to expect a percentage cut? Yes, it would hurt that income category to pay an extra 3% or whatever, but they would be better placed to shoulder an additional burden than most others.
With regard to the telephone allowance, how much will be saved? We are talking about a minor enough amount considering the impact it has on the lives of elderly people.
There have been changes in terms of eligibility for the medical card.
In recent weeks Members on all sides of this House have highlighted consistently that while the greater number of people have medical cards, the Government is homing in on people in their 70s and 80s. They are receiving forms in the post telling them to fill in this or that and are losing their medical cards, which is creating a serious and difficult situation for them. Moreover, in the case of those suffering from chronic diseases, on first entering office the Minister for Health, Deputy James Reilly, indicated he would deal with this issue by legislating for the provision of medical cards. As this legislation never transpired, are Members to believe the same will be the case for the medical cards for the under-fives for which legislation is required? Members have been told the chronic diseases could not be provided for in legislation because of difficulties. Will it be the same for the under-fives? As for the reaction of the general practitioners, GPs, to it, there has been no engagement with them. This does not surprise me because another aspect of the budget on which there was no engagement concerns the assistance to those who are unemployed and wish to start up their own business, but I will revert to that issue. One wonders how this proposal will be carried. Last year I mentioned how, when in opposition, the Minister for Finance, Deputy Michael Noonan, asked what the then Minister, the late Brian Lenihan, had against the third child. In the other House, the question was asked as to what this Minister has against young mothers. This is of critical importance, on foot of the taking effect of additional taxation earlier this year, which has now been followed by an overall reduction in maternity benefit. There certainly seems to be an issue in this regard. To return to the issue of discretionary medical cards, no clinical panel has yet been put in place in this regard. The only panel I can discern to be in place regarding the interpretation of people's eligibility for discretionary cards is that of the bottom line and of saving money. Unless people meet the financial criteria, they will be off the list. Before the Government rushes into the provision of free GP care to the children of the Michael O'Learys of the country, perhaps it should focus on those who have multiple sclerosis, cancer or other serious chronic diseases. What is this clinical panel doing and is it in place? Who is on the panel and how and to what criteria are they operating? Perhaps consideration should have been given to such questions.
When looking through the various booklets handed to Members as the budget speeches were being read out, one saw the headline amounts of savings that were confusing and one in particular jumped out at me. The Minister of State has mentioned specifically additional expenditure pertaining to road maintenance and repairs involving shovel-ready projects and getting people back to work. However, if one looks under the transport section of the speech by the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, it states there would be savings of €50 million this year in respect of the National Roads Authority and road surfacing. How can one save €50 million on road surfacing, on the one hand, while, on the other, there will be additional expenditure? Everyone is in favour of more sports capital programmes, particularly in the run-in to an election. There will be a big hurray from all the counsellors nationwide in that regard. Moreover, the better energy programme also is to be welcomed. However, if the Government was seeking to give respite to people directly into their homes, how could it so do to every single home in the country? Nothing has been done with the price of petrol. The cost per litre is approximately 69 cent and the amount the Government adds on to that amounts to 130% of the cost. In the case of an average family with a mileage of 12,000 miles per year and an average consumption rate of 30 miles per gallon, that costs €240 per month.
If the Government intended to give something back directly to each family in the home, why could such a measure not be considered? Instead, it has come up with ridiculous job activation measures in which it is telling the unemployed that if they are long-term unemployed and if by some fluke of reality they set up a business that manages to make money in the first two years, the Government will give them that money tax-free. I know a little about business and can tell anyone in this Chamber who knows anything about it that one may as well tell the national lottery to announce the first person to come in with both parents who are older than 105 years can have the winning lottery numbers. I predict confidently that no one will qualify for that scheme. Whatever civil servant is responsible knows only the inside of a Department and knows nothing about business. This is window-dressing in the extreme that will do nothing for anyone. As for young people and the cuts to social welfare, what does one really wish to do to get people out there? The Government is making it more difficult for them to get into internships. If they have been out of third level education for a year having already completed a level 5 course, they will not be allowed back in again. All these measures are designed in some way to look less harsh but, in reality, will not apply to anyone in practice. That is my difficulty with these measures. On getting enterprise going again, I would love to see the creation of an Industrial Credit Company-type financial institution. It should be given €200 million, 20 good underwriters should be picked and they should be set to work. People should be encouraged to borrow money, to set up business and fail thrice but succeed once. That is what is needed, not some harebrained design of a scheme for which no one can apply, because that is what the aforementioned €40,000 a year tax-free scheme is.
While I appreciate the Ministers have done their best in a difficult environment and on the basis that I admit everyone would have a different approach and a different set of cuts he or she would make, a number of these measures are extremely superficial. A number of measures needlessly are far too harsh, yet the Government continues to ignore those who are best heeled, that is, those earning more than €100,000, in terms of them taking a bigger hit. They would not flood out of the country and specifically, were they told that an additional 4% to 6% was needed from them for five years to help to look after the relative security and health of the least well-off, the elderly and the infirm, those people would respond. I believe they were conditioned to respond to such a request in last year's budget, as well as this one. I only hope this can be effected through the forthcoming legislation to back up these budgetary measures.
I welcome the Minister of State. Listening to Senator Mrk MacSharry, it is somewhat akin to picking a football team in that no one would pick the same team or the same slew of cuts and expenditure changes. However, one point that gets lost on each budget day concerns the actual headline figures. According to the explanatory booklet from the Department of Finance, the deficit for this calendar year is €12 billion. In other words, we will have spent €1 billion more each month then we have taken in. The deficit for next year will be €9.8 billion or 5.8%. These are the real figures and they simply cannot be ignored regardless of one's desire to so do or whether the troika is present. That is completely irrelevant because even if the troika is not present, the markets will be. According to the budget for 2014, the State next year will collect €42 billion in revenue and, as I stated, will spend more than €51 billion. If one considers the tax items, the biggest category is income tax at almost €17 billion, which is coming from those were working. The next biggest tax item is VAT at €11 billion, which comes from everyone. Excise duty will raise €4.8 billion and then corporation tax will yield €4.4 billion. The latter, in conjunction with income tax, VAT and the excise duty, make up €38 billion of the €42 billion that will be collected. Those four large big-ticket items alone will do so and this simply cannot be ignored. On the expenditure side, the two biggest areas of expenditure are social welfare and health. Again, there are no circumstances in which those areas can be left to spend such quantities of money without being affected. However, the other figure that has been left out to an extent in today's conversation is the interest on the national debt, which is projected to be almost €9 billion for 2014. It is an absolutely huge amount, which is approaching what is being collected in VAT and is more than is being collected in excise duty and corporation tax. This is the reality of our current position. As to how we got there and while I am not trying to be political about this, in 2010, the previous Government ran a deficit of 30%. A banana republic would not run a deficit of 30% and the comparative analysis of the Fiscal Advisory Council of the position before the crash and our present status shows that each citizen of the country now owes more than €30,000 more than was the case in 2008. This does not include what was owed at that time but amounts to an additional €30,000 per head.
Specifically within the budget, I greatly welcome the retention of the 9% VAT rate for the hospitality sector. However, I have a concern in thiat regard and as the Minister of State is aware, I always raise such concerns. In this case, Senator Darragh O'Brien also voiced this concern at the time of the rate's introduction.
The 0.6% levy on the pensions sector paid for the retention of the 9% VAT rate and that was agreed. It was agreed that it would conclude in 2014, but there appears to be some confusion about it. There is a 0.15% levy from 2015, but a concern I have is that a temporary tax measure becomes a permanent tax measure on far too many occasions. The 0.6% levy will end in 2015, but it will be at 0.6% plus 0.15% for 2014. If that is the case, that is not a clever way of doing this business. We were itemised worldwide. We were one of the few countries ever to put our hands into the pension pot and take money out. I have a concern about that and hope the Minister of State will address it for me.
It is welcome that the Minister will undertake the analysis in terms of the agrifood sector because it is an area that is jobs rich, in particular in the dairy sector. The arable sector is not as jobs rich as it once was because the machinery is so capable of getting over ground but the dairy sector is an area that is labour intensive. I am hopeful we can channel the funds towards where the jobs are located in the agrisector.
The home renovation tax incentive is very welcome. There is an enormous black market in that area and it is getting bigger year on year.
On the corporation tax rate of 12.5%, I have posed the question: if we raise it a small amount would it scare the horses? That will not happen, but something the Minister addressed in his statement earlier that is very important is our reputation. We have suffered reputational damage internationally because of the United States congressional hearings and because of some of our European partners who tend to be somewhat belligerent about our 12.5% tax rate.
It is important to note also that the Minister is moving towards the analysis of the stateless companies and that something will be done in that regard. We cannot do it on our own but it must be done on a global basis. It is important to put on the record of the Seanad that the US Securities and Exchange Commission has closed its review of Apple's tax filing for 2012 and it has found nothing improper about Apple's disclosures and policies. It has adhered to US laws and in terms of international laws and it is something we should note. It is welcome that the Minister is moving to deal with it.
On the two year income tax break for the unemployed, I disagree with Senator Mark MacSharry. If people are given the opportunity to earn money by way of a two year tax break and they are not prepared to take that up, they will never do so.
The national debt peaking at 124% of GDP is a real concern. It is one of the highest internationally in western Europe. The Minister addressed the question of the National Pensions Reserve Fund having significant moneys on account. That must be taken into consideration. The levy on the banks is welcome.
I welcome the excise on the old reliables - cigarettes, wine and beer - but with a caveat. It is an issue I pushed the Minister on, in particular with regard to the supermarket trade for off-licence beers, in particular. The Minister informed us that the one euro levy on a bottle of wine brought in €45 million in extra income. That is to be welcomed. If somebody wants to buy a bottle of wine the extra euro will not stop them doing that. In the same way, if a euro is put on a six pack of beer, on the 24 pack carry-out it is an extra four euro raised by way of taxation. I know there are difficulties in this area. A case in the Scottish jurisdiction that has gone to the European Court of Justice is yet to be determined, but we should have been inventive in that regard. The lid tax could have been considered in that there was a prospect of taxing an unopened vessel, whether it is a tin or a bottle.
I welcome the €200 million stimulus from the sale of the licence for the national lottery. I do not see anybody here from the Department of Finance and I am wondering to whom I am making this request.
The Senator can request me; I will answer as best I can.
We need to be inventive in how we reinvigorate those areas that have over-developed too fast. Of that €200 million, I am hopeful, before the ink is dry on anything, that instead of it simply going for X, Y and Z as we have itemised we should initiate a number of pilot projects both in urban and rural Ireland in terms of towns and villages that over-developed. The developers are bankrupt and are in NAMA but NAMA does not or will not provide the funds, whichever is the case. In conjunction with funding from NAMA we could advance a number of those pilot projects to show the people in those areas that have been over-developed without the correct services, including footpaths and street lighting, that the local authorities do not have the funding to put in place. If we put a pilot project in place we could put a larger scheme in place from that. That would show the people living in poorly developed areas that the State will intervene. I ask the Minister that this be considered for the future, as well as allocating a few million euro to the pilot project.
I welcome the Minister of State. I will premise my statement by underscoring the importance of addressing today's budgetary measures and fiscal adjustment, the sixth in line of extremely difficult budgets since 2008, and the context of their cumulative impact since this is the reality of the way they are being experienced by people.
As a Senator, this is the third time I have made a statement on the budget and it is safe to say - no doubt the feeling is shared by many members of the public, - that my sense of disillusionment and powerlessness has been compounded on each occasion. It is a sense that nothing has changed about the way we do our business. I welcome what the Minister said about the European aspect, but as far as we do our business, I do not believe anything has changed.
I have said on numerous occasions in previous statements on the budget and in response to various social welfare provisions that Ireland, while on the road to recovery, is still in serious financial difficulty and money must be saved and generated but how this money is saved, be it from cuts to existing provisions and services or exploring alternative revenue-generating measures such as tax increases and against whom the cuts are made, are ultimately political decisions. There is a strong public perception that the decision has been made to persistently target vulnerable groups and re-hit already stretched and hard-pressed families.
Accusations have been made that such decisions are made with political capital considerations in mind. There is a certain class of people that have remained largely unscathed by successive budgets. They are young employed individuals without children and without a mortgage. Effectively, that grouping has remained unscathed. I have spoken with many of those people in the course of my work and have heard time and again that they are willing to shoulder their share of the burden more fairly. After each budget they are grateful they did not get hit.
It is a mark of a decent and humane society to ensure those with the lowest income and least resources are protected from further cuts. I recall when dealing in April 2012 with the impact of the provisions on lone parents in the Social Welfare and Pensions Bill 2012 feeling that anything I had to say was futile since the relevant decisions had already been made. It almost felt disingenuous to be kicking up a fuss knowing that whatever I said, nothing would change, but I spoke to the groups advocating for lone parents on the ground and they convinced me of the importance of ensuring their voices and those of their constituents made it onto the record.
The voices of civil society organisations and NGOs on the ground which witness the impact of the decisions and cuts we debate in these Chambers must be heard. We need to reconsider our mechanism leading up to the budget, to have a greater engagement with those organisations and not have a showpiece hearing where the relevant decision makers are not present. That is also why I feel so strongly about the move to restrict the access of the NGOs to the AV room to have political briefings. We need to be very careful about our decisions. We should not close off or close down dialogue and open ourselves to accusations that political decisions are being made in a vacuum.
Moving to today's budget, I very much welcome the decisions made, particularly in the Department of Children and Youth Affairs, and the additional funding of €6.7 million in 2014 to reform child protection. I know that money will go to the new Child and Family Agency. It is really positive that it is being moved into the Vote of the Department of Children and Youth Affairs. I am very concerned at the talk that the new agency will start with a deficit. The agency will be taken out of the HSE and created, and there is talk of transferring a deficit. That will be regressive and I will watch it closely.
I welcome the implementation of the preschool quality agenda for which there is funding of €4.5 million. Additional inspectors will be recruited. There should be nationwide coverage. I wholeheartedly endorse the idea of a preschool mentoring service. We need mentoring in that sector to bring quality up to a consistent level and not to see more scenes such as those we saw in the "Prime Time" programme entitled Breach of Trust. We need to support staff training.
I also welcome the initiatives to tackle child poverty at a local area level. A cut of €3 million in youth work funding was projected for 2014, and we are supposed to heave a sigh of relief that it is only €2 million. This sector has been disproportionately cut. We know that for every €1 the State invests in youth work it saves €2.22 in the long run. Youth work organisations around the country are under huge pressure. The youth council proposed the introduction of a 1% social responsibility levy on drinks manufacturers. I notice in the budget that €145 million is saved in the excise duty added to alcohol. Why can youth workers not receive some of that additional money? They do not take funding from drinks companies. All too often we hear it said of the sports organisations "Oh dear, they cannot afford to let go of the drink sponsorship.. Youth organisations say "No" to drinks companies because of the ethos of their organisations. They work with young people, as do the sports organisations. Youth organisations say "No" and I do not see why a measure like that cannot be found for them. I welcome and note the increase in tax on tobacco.
If one is in the 18 to 25 year age category, one had no hand in creating the situation in which we now find ourselves yet there is a disproportionate reduction in the jobseeker's allowance. That is very tough on young people. Yes, they should be encouraged into education and training but the reality is that the places are not available for them.
There is a 100% increase as announced today in the budget in places for that age cohort.
The places are not available. There is an urban-rural divide. I hear all too often that young people are being forced back into the family home. Once again, there is a geographical lottery.
On the tax exemption for starting one's own business, does someone need to wait to be unemployed for over 15 months? We know most businesses do not make money in the first two years. I wonder what this measure solves.
It is great that the €14 million youth guarantee has been announced. I am, however, a little concerned about the figures and will study this issue more closely. It seems very low. Much of this is based on the Swedish model but the Swedes estimated that it would cost €6,600 per participant. They estimate that it will cost €273 million to implement in Ireland, based on their figures. That is phased over several years but €14 million seems very low, given that we need to spend it before we recoup it from the European Union. While it seems like a large sum it is too low to implement the youth guarantee as it is envisaged-----
Is it not matching?
No. The Government must spend it first then recoup it. That is why I am concerned about the €14 million because we must spend it before we recoup.
I warmly welcome the free GP cards for children aged five years and under, but we must ask ourselves about the discretionary medical cards. What children will lose out? In the Irish Examiner there is a very good case study profiling some of the cases that have lost out. It is excellent to have a rights-based approach to introducing the free GP card and they should not be confused with one another. I am concerned about this and I am hearing these concerns from parents around the country. I welcome the grant for the protection of the homeless.
I am concerned about the tax credit for the one-parent family. I want to explore it further to see what implications it has for families. I hear that the mental health budget has been reduced. We never seem to be able to spend the money-----
It has been increased by €20 million.
I hear that the overseas development aid budget has been reduced by €14.1 million. I have a difficulty with the kind of society we are creating. I have voted for tax increases. I voted for property tax.
It is not enough.
Some 3% on those over €100,000.
Senator Darragh O'Brien and I have put forward ways in which the Department of Health can save a significant amount of money on children with life-limiting conditions. The Minister of State should not talk to me about solutions. I keep putting them forward.
It is not enough.
I keep putting them forward. The Minister of State has not even taken one step in the right direction on that issue. I have concerns about maternity and adoptive benefit. I ask the Minister of State to look at my record. I have offered solutions in this House. I have tried to be fair and equal in what I have said. Some of the measures are hidden. These small cumulative cuts will affect people.
I welcome the Minister of State. I listened to my colleague, Senator Mark MacSharry, who made some relevant comments on the budget and I am sure that the Minister of State will respond to them. I was, however, struck by his comments versus those of his colleague in the Dáil who engaged in what I would call the most ridiculous rant I have ever heard in my life, suggesting to the older people of Ireland that they could not rest easy in their beds after the Government had finished with them today.
I would like to deal with one or two issues raised about the bereavement grant. I practised as a solicitor. As Senator Mark MacSharry's colleague pointed out, this was introduced by a Fianna Fáil Government in the 1990s when it was buying votes in each successive budget with this type of nonsense measure. They were layers of an onion, one upon the next, and the next, with absolutely no economic rationale to support them whatsoever.
The Senator should justify that claim.
For example, it is a benefit to those who inherit wealth. That is the bottom line. It has nothing to do with the means of the person who has died. I have administered estates where people have inherited €2 million and received a bereavement grant. Let us be realistic when we talk about this here. Incidentally, the Minister for Social Protection has said that the needs of any families in difficulties will be met by an exceptional needs payment. Let us stop scaring the people of Ireland with nonsense comments-----
The Senator should talk to the Minister of State. It is his budget.
-----and get down to the real issue of how this country takes a necessary €2.5 billion out of the economy without hurting te people who need care the most.
I need some protection, a Chathaoirligh.
The Senator has indicated that he wants to speak.
I have only arrived in the Chamber. Senator Aideen Hayden seems to be very exercised. She is obviously trying to defend the indefensible.
Please allow her to speak without interruption.
It does not make a great deal of difference.
The Minister for Social Protection has also said that nobody in the country needs to fear or be at risk because of the withdrawal of the telephone allowance. Let us stop sending the elderly people of Ireland to bed scared tonight because Fianna Fáil could not come up with better critiques of the budget.
The Senator obviously did not listen to the speech.
I have a headache after listening to it.
I have a headache right now. The Senator should just carry on.
At a broader level, the budget comes at a critical time for the economy. After successive years of taking money out of the economy this is the last of the austerity budgets. The Government has made a commitment on that point. I believe we are at a turning point in the history of the country. The Tánaiste, Deputy Eamon Gilmore, said recently, "We are now creating 3,000 new jobs every month, the economy is seeing modest but all-important growth, our national finances are largely back on track, Irish exports have now exceeded even their pre-crisis levels and we are about to successfully exit an EU/IMF bailout."
Great credit for that is due to the Tánaiste, the Minister for Foreign Affairs and Trade. He has been on one trade mission in 12 months.
The challenge in the budget was how to tackle austerity fatigue which is dragging the country down, while at the same time making sure we exited the bailout appropriately and on time.
I am not sure whether Members opposite share my view, but it is important to me that the country regains its sovereignty. It is important to me that this time next year, Fine Gael and the Labour Party are engaging in discussions on social democratic politics, for example, versus the politics of Fine Gael and its spending priorities, rather than dancing to the tune of the troika.
The bottom line is that we had a challenge in this budget to protect the most vulnerable while continuing to grow the economy. It was a difficult balancing act. How would we take out €2.5 billion without damaging modest growth? How can we facilitate a return to the markets? How do we ensure we do not hurt people who are most in need? It was a difficult challenge, but the budget has succeeded in achieving that balance.
I have not heard mention thus far - it is something we are inclined to forget - that there was a major discussion as to whether the adjustment should be €3.1 billion or €2.5 billion. If the Minister of State does not mind, I will claim that as a Labour Party win. Without the reduction in the adjustment to €2.5 billion-----
The adjustment is €3.1 billion, including savings arising from the Haddington Road agreement.
-----we would have been obliged to find an additional €400 million in expenditure savings. Let us not forget that for every €1 spent on social welfare, there is an impact of €7 for the domestic economy. That is a very important statistic. There are many people sitting at home today who are relieved there are no increases in the universal social charge, in the significant VAT rates or in excise duty on petrol, diesel and home heating oil as we face into the winter. None of these points has been made by the Opposition.
Reference was made to our success in protecting the 9% VAT rate for the tourism sector, which has generated 15,000 jobs to date.
That certainly was a very good initiative by the Minister, Deputy Leo Varadkar. A good Fine Gael initiative.
Members on the other side forgot to mention many of the relevant features of the budget.
I am trying to work out what input the Labour Party had.
There have been no cuts to child benefit.
That is not true.
The changes were announced last year and will take effect from January. The Senator should read the Budget Statement.
There are no additional cuts to child benefit this year.
Many families will be affected from January.
Senator Aideen Hayden should be allowed to continue without interruption. Other Members will have an opportunity to respond in due course.
There have been no cuts to important supports such as rent supplement, other then the €5 per couple per week.
Did the Senator read the Budget Statement?
The Senator will have an opportunity to have his say. Senator Aideen Hayden to continue, without interruption.
All of these factors have been overlooked on the other side of the House. I particularly welcome the decision not to impose any cuts on the budget for services for homeless people.
I also welcome the inclusion of incentives for the construction sector. We have gone from an economy in which 20% of GNP came from that sector to a situation where the figure is now between 6% and 7%. One in four people formerly working in the construction sector is on the dole. In that context, the incentives to which I referred represent some of the most progressive measures included in the budget.
I very much welcome the commitment to engage with private investment in the area of the provision of services for the homeless. I also welcome the initiative on VAT credit, which will be available to people who engage in home improvements. The budget recognises, for the first time, that we are facing a housing supply issue. The commitment that NAMA will find 4,500 additional units in the Dublin region which is on the cusp of a serious housing crisis is welcome.
As a social democrat, there are issues I would like to see addressed in the next budget. I am concerned, for example, that the levels of capital gains tax and capital acquisitions tax were not raised. It is very unfair that somebody who works an additional hour in a supermarket pays a higher rate of tax than a person who inherits wealth, for instance, or profits through speculation on the stock exchange. The tax system must be more progressive and I look forward to measures in that regard in future budgets.
A measure that seems to have gone largely unnoticed is the provision relating to survivors of the Magdalen laundries. The decision by the Government not to tax the payments to those women will be welcomed by all.
I welcome the Minister of State, Deputy Brian Hayes, and thank him for his speech. The first point to make is that we are making progress. The situation remains difficult, however, and we are relying on luck that the 0.2% growth to which the Minister referred will increase to 2% next year. There are many imponderables, including what will happen in the United States and the rest of the European Union. We certainly require a degree of good fortune.
Some 1.7 million people are in receipt of medical cards on income grounds, of whom 540,000 were granted cards in the past five years. I would not have chosen to extend the medical card to all children aged under five, regardless of their parents' income in a situation where 1.7 million have been shown by means testing to require them. This particular provision gives cause for concern. As the Brennan commission reported, the extension of medical cards to over 70s some years ago was expected to benefit 39,000 people at a projected annual cost of €19 million. As we know, however, it ended up applying to 77,000 people and costing €51 million. Perhaps the costs have been more carefully calculated in the case of universal provision for the under fives, but we all know that when one reduces the price of something to zero, the demand is bound to be greater. In addition, GPs are saying that the Government has not engaged in negotiations with them on implementing the new system. In the case of the over 70s, even very wealthy older people were eligible to avail of the scheme. It is a shame we have taken the same tack once again. When we engage in social expenditure, it should be biased towards those who are objectively in a state of need. In this instance, all children under five would not have been my target group.
I heard Seán Whelan on the radio earlier today pointing out that €3.1 billion would be realised by the interest reductions plus the €2.5 billion adjustment set out in the budget. If Mr. Whelan is making that statement on the airwaves, it is good news for the Government in that the €3.1 billion target has been reached.
I welcome the abolition of the air travel tax and the retention of the 9% VAT rate for the tourism sector. The Department of Finance must ensure there is joined-up thinking in this area. The remaining obstacle to attracting tourists back into this country arises out of the decision to increase airport charges by 44% when the new terminal at Dublin Airport opened. In fact, the previous Minister for Transport, Tourism and Sport overruled the regulator on that occasion - the Commission for Aviation Regulation was effectively rendered useless - by insisting the charges be increased to recoup the cost of the new terminal. I hope the airlines will enter into the spirit of this - including Ryanair, which is the largest. I commend the Government on its efforts in the area of tourism.
The budget makes provision for an increase in the DIRT rate to 41%. The Minister for Communications, Energy and Natural Resources, Deputy Pat Rabbitte, said recently that he was somewhat annoyed that the banks had intervened to reduce the rate of interest paid on post office deposits on the basis of there being unfair competition. I took up that issue with representatives of the banks at a meeting of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform. Surely an organisation like An Post which is solvent should be able to pass on some reward to its savers, compared with those banks which are insolvent and made the country insolvent. A 41% rate of DIRT comes on top of the virtually non-existent interest rates being paid by the banks. The post office would like to pay more and the Minister, Deputy Pat Rabbitte, would like to see it paying more. As it stands, we are cleaning out savers with the reduction in interest rates and the imposition of DIRT at 41%.
The pension levy has been up and down, rising to 0.75% but with the promise it will reduce to 0.15%. The stamp duty on financial institutions will probably be passed on-----
To clarify, the pension levy will come down the following year.
Yes, it is like a yo-yo. I hope the Government's strategy works.
I welcome the comprehensive review of expenditure and I am of the view that this must be maintained. I also welcome the cap on health insurance contributions. When the Minister of State brought the Finance Act before the House, we raised with him the fact that the Milliman report shows that people in Ireland spend up to 11.6 days in hospital for treatment whereas the average length of stay internationally is 3.7 days. As a result, the tax break must be removed. I hope Pat McLoughlin who is investigating this matter will submit his report soon and that it will be debated in the House. We have been funding an excessively expensive health insurance system and there should have been much more competition than has been the case.
I welcome the review of the capital investment programme. It is welcome that growth has returned and that an additional 33,800 jobs have been created in the private sector. I suspect much of this is due to the degree to which wages have fallen during the recession.
Yes.
While it may seem harsh, there is a case to be made that people should not start their working lives on the dole. It would be a welcome development if the money saved from reducing the relevant rate could be spent on education or training. That would be better than just paying people to turn up on a Tuesday or whenever to sign on. I accept that it might sound harsh, but perhaps the worst thing we can do to young people is give them a payment for doing nothing. Perhaps the money saved might be channelled into areas in which we can develop their skills, etc., in order that they will be ready when the economy takes off again.
I have referred to the Minister of State's contribution and will now comment on the Minister for Finance's contribution in the Dáil. The investigation into the tax reliefs and incentives for agriculture and agrifood is a good proposition. Many of the subsidies and tax breaks in question are capitalised in higher land prices and this makes it more difficult for young people to become involved in agriculture. I look forward to what the review might have to say in this regard.
On tackling stateless companies in the context of corporation tax on profits, I support the retention of our 12.5% rate but we must ensure people pay it. The existence here of companies that are stateless for tax purposes caused Ireland damage when the relevant congressional hearings took place in America. I am glad that the Minister, Deputy Michael Noonan, is tackling this problem.
I was glad to discover that a number of houses in Monaghan sold for €30,000 each recently. NAMA should dispose of more assets because that is how we will get the cost base down and encourage the kind of growth in jobs to which the Minister of State referred.
On procurement and the need to make savings, the House will discuss amendments made to the Taxi Regulation Bill 2012 by the Dáil. I do not know why buses are being dealt with in the context of that legislation, which contains a provision relating to the retention of monopolistic routes and direct-award contracts rather than competitive tendering. The whole concept behind what is being done in this budget is that there should be competition in respect of procurement. However, some Departments are not listening and what is contained at the tail end of the Taxi Regulation Bill is something of which the Minister of State should be aware. He should encourage the Department of Finance to hound the relevant individuals in order to discover how the relevant provision got through. There must be competitive tendering and there cannot be monopolies. As part of legislation relating to taxi regulation, the bus monopoly could be preserved for a further five years. I do not believe anyone wants that. We want value for money. I support the Minister of State in this regard.
Should we hunt the relevant people down using hounds or hawks?
Both.
I also welcome the Minister of State. I stated earlier that the atmosphere around the Houses today was much calmer than in previous years. This is due to the fact that the Government has gradually and slowly brought the country back from the brink. Today's budget builds on the positivity we have seen in the past year, during which 34,000 new jobs have been created. The public finances are on target and there is economic growth for the first time in several years. As the Minister for Finance stated in the Dáil, we are on the cusp of exiting the bailout, regaining our economic sovereignty and returning to the markets. However, as previous speakers noted, we have a long way to go before we reach a position where our expenditure will equal our income on an ongoing basis.
The budget is designed to create growth in the economy and to get people back to work. I welcome the introduction of a tax package of €500 million and of 25 new measures to support entrepreneurs and SMEs. One of the headline items in the budget relates to the fact that the VAT rate for the tourism and hospitality sector will remain at 9%. The Minister's move to reduce the rate to this level last year gave rise to the creation of in the region of 15,000 jobs. There is a real commitment on the part of those in the tourism and hospitality sector to acknowledge the fact that the rate will remain at 9%. In that context, we can build on the work achieved as part of The Gathering and other initiatives during the past year. I welcome the investment of €8 million in the Wild Atlantic Way tourism route. I also welcome the abolition of the 10% travel tax. It is probably no coincidence that almost immediately after the announcement of the latter, Ryanair indicated it will be making available 13,000 new seats on aircraft flying on routes between Knock international airport and London during the remainder of this year and in early 2014. I hope this will lead to many more English visitors coming to Ireland during the winter months. The €50 million allocated in respect of road maintenance will obviously help create employment and stop further deterioration of roads throughout the country.
The incentive relating to the renovation and maintenance of homes is wonderful. The Minister has taken this initiative as a result of prompts he received from many Members of this House. The economy will never return to stability until there is a certain level of activity in the construction sector. The initiative to which I refer will encourage many homeowners to carry out improvements. It will also create a significant level of employment for tax compliant builders and tradesmen and allow legitimate operators to compete. I hope this will lead to the shadow economy being taken out as a result. The Minister's initiative will create an opportunity for tradesmen such as carpenters, blocklayers, plasterers, etc., to come together and pool their resources and operate successful businesses. Some people who emigrated in recent times may return to Ireland as a result of this initiative. I am informed that there is a scarcity of tradespeople in the building sector. I am aware of one or two individuals who have indicated that they may return from Australia in order to avail of possible opportunities in the construction sector.
I welcome the Living City initiative, which is being extended to all properties built prior to 1913. This initiative is being extended to my home county, Galway. I also welcome the Build Your Business initiative which is designed to promote entrepreneurship and support SMEs. I particularly welcome the two year income tax exemption for long-term unemployed persons who start their own businesses. Some of those in the construction sector will slot nicely into this initiative. The increase in the VAT receipt threshold to €2 million will be of benefit, as will the improvements to the research and development tax credit.
There are some good initiatives in the budget in the context of creating employment. The budget also strikes a balance and I welcome the fact that headline social welfare payments and pensions are being protected for the third consecutive year. There will be no cuts to child benefit this year and I welcome the introduction of free GP care for those under five years of age. Families that are under pressure to pay medical expenses and bills will welcome the latter. It is also welcome that there will be no change to the fuel allowance. In addition, there will be no increase in income tax or the universal social charge, USC, for people at work. I welcome the additional €20 million being allocated in respect of mental health services.
The Senator is way over time and must conclude. Other speakers are offering.
This is a well constructed budget which will restore confidence in the country and assist in the creation of much needed employment.
The Minister, Deputy Richard Bruton, has predicted that 48,000 jobs will be created during the coming year.
I welcome the Minister of State. I am sure it is a bitter-sweet day for him today to come back to the Seanad.
I have never been happier to be back.
I am personally delighted the Minister of State is back. I note he is much better behaved here today than he was on the last occasion he was here. He is always very welcome.
I will commence with a few positive points. I welcome the retention of the 9% VAT rate. It was a Government initiative that I welcomed at the time it was introduced and it has worked.
The Senator was totally against it.
What is the Senator talking about? That is stupid. I welcomed it at the time it was introduced and it has worked. I remind the Deputy that other initiatives were paid for by the pension levy - there were other elements of it. This measure worked but others did not. That aspect is certainly to be welcomed and there is no question about it.
The removal of the travel tax is also a welcome measure. The home renovation initiative is to be welcomed. Many of us proposed its introduction over a number of years, even during the term of the previous Government, pointing out that it would help to reduce the number of people operating in the black market. All those measures are to be welcomed.
In reality, this budget was never going to be an easy one. I was astonished by the spin, particularly coming from Fine Gael, during the past week that we would be surprised at the good news in this budget, but I do not see where that is.
There are five pages of it.
What I note from this budget - I will go through some of these points - is how irrelevant the Labour Party has become. It is irrelevant in government. It has not been able to bring forward any measure whatsoever. It has had to stand over another €113 million worth of medical card cuts - these are called "medical card reviews" or, as the Civil Service has said, "probity reviews on medical cards". This at a time when it has already presided over 22,500 people - some 400 people a week - losing discretionary medical cards. It has presided over further reducing the income thresholds for the over 70s for medical cards. The rug has been taken from under the medical cards for the over 70s.
I was interested in points made by Senator Aideen Hayden. Reference has been made to her track record on housing, which is admirable, and I often listen to her speak. It was interesting to hear Senator Michael Mullins mention the measure announced in this regard and welcome it, but Senator Aideen Hayden said nothing about it. Only €30 million has been allocated for social housing this year, yet NAMA has made €2 billion worth of vendor capital available for purchases of commercial property in Ireland.
That is 2,500 units.
Only €30 million is going to be allocated for social housing. That is pathetic.
The telephone allowance is being abolished with the Government having taken more than €26 per month from people. That is real income for old age pensioners. For pensioners who are solely dependent on their old age pension or for those who may have also some small residual pensions, that is a big deal. Let us be honest about that and not say it is not a big deal when it is.
The abolition of the bereavement grant is also a big deal. What Senator Aideen Hayden, others and the Labour Party obviously want is for people having buried a loved one to go straight down to the community welfare officer and show them their receipts, what they paid for paid for the coffin, and point out what their income is. It is ridiculous that the grant is being abolished for a saving of €17 million. It makes no sense because there were alternatives.
What does the Senator think one would bury with the amount of €860? He should get real.
The Senator does not consider that allowance is relevant. That is fine and she can tell anyone who contacts her that she does not believe it is important.
I will tell anybody who contacts me that there is an exceptional needs payment to cover it.
Fewer and fewer people will be contacting the Senator after this budget.
The Government had options. Fine Gael has been strong in its record during the years on protecting the wealthy and the privileged in society. The Government has done that again. Fine Gael was the party that stated there would be not be any income tax increase. The Labour Party barked like a poodle last year about the application of an additional 3% universal social charge levy to incomes over €100,000. We believe that should have been done; it should have been done this year. Those who can afford to pay should pay and in that way the Government would not have to remove the telephone allowance from an 85 year old widow or remove the bereavement grant. These are choices that the Government is making.
The Senator's time is up.
I will finish on this point. I put it to the Minister of State that there is a bomb waiting to go off in the Department of Health. It is all over the place and all of those in the Government know it. I refer to the fact that there are €600 million to €700 million in additional cuts which the Minister for Health cannot deliver and he has had to bring in the Taoiseach, the Tánaiste and every other Minister on this. It is a bomb waiting to go off. The €113 million savings on foot of the discretionary medical cards that will be taken off people next year and the additional €25 million worth of medical cards that will be taken off the over 70s will come back and bite the Government big time. The Minister of State should not come in here and say this budget is fair. It is not fair. The last two budgets the Government introduced were seen as the most regressive, unfair budgets of the last six. That is what the ESRI said. This budget is incredibly unfair. The Government could have gone after people who had money, but it did not because Fine Gael protects the wealthy and the privileged and the Labour Party does not have the guts or gumption to stick that to it and make sure it protects the people it supposedly serves.
The Senator is way over his allotted time.
I will finish on this point.
The Senator is way over his time.
A child benefit cut will come into force on 1 January for the fourth child and subsequent children. That will happen; therefore, we should get real about this.
That was a measure-----
It will take effect this January. Let us get real about this budget.
I welcome the Minister of State back to the Seanad and thank him for coming to the House. I wish to address one point that my good friend and colleague, Senator Darragh O'Brien, made. It is certainly a novel and unique way of supporting a measure by voting against it. I could read his contribution to him if he would like.
Yes. Go ahead.
I will not waste my time doing so now, but I will read it on the Order of Business tomorrow.
I am glad the Senator read my speech-----
Since the Government was elected, every budget we have had to introduce has been a difficult one. We accept this. When I say "difficult," I mean it has been difficult for the people. Some €31 billion has been taken out of the economy since 2008. That has been a staggering blow to the people, but it has been met with fortitude and resilience. People have endured austerity, but, unlike what many people will try and say here, austerity is not a policy. It is a necessity after the previous Fianna Fáil-led Government, of which my two friends were members, drove this economy on to the rocks and destroyed it. Therefore, what could we do but only try to retrieve an almost hopeless situation. I remember when we came in here first and were informed of exactly how bad the situation was, I, for one, was shocked to my core at how bad a state the economy was in. Addressing that necessitated raising taxes, cutting services and all sorts of other awful measures. With this budget, the deficit is now approaching 4.8%, down, as my colleague Senator Michael D'Arcy said, from over 30% when we came into government.
It is worth repeating that Fianna Fáil left the public finances 30% in deficit. Senator Michael D'Arcy described it charitably as banana republic politics. That is what it was. How did we recuse it? It has been done with the greatest of difficulty. The Opposition said at the time that it could not be done. People made great sacrifices to achieve it and we must be conscious of this. We must also be conscious that further difficulties lie ahead. We can say and I believe we can be confident in doing so that the worst is over, that next year's budget will be one devised by ourselves when we will have the control of the economy and our destiny in our hands. My personal opinion is that Fianna Fáil people who drove this country onto the rocks should never again be let near the reigns of power or government.
If they change party, are they allowed?
That is a decision for the people to make, but that is my opinion.
Some measures announced in the budget are difficult but necessary and I will deal with one or two of them in the short time available. Nobody would argue that young people are not better off being in education, training or employment. There has been an extension, unfortunately, of the €100 reduced jobseeker's allowance to new entrants below the age of 24 years. Over a full year that will probably affect up to 40,000 people.
We have to look at this in the context of the €46 million that is being put into the youth guarantee and the extension of the back to education funding. This is good in that context. No parent would want to see his or her children signing on the dole. Members of Sinn Féin are probably the only people who might want to see that because they might get some electoral advantage from it. I say that on the basis of what we constantly hear from Sinn Féin. We are more ambitious for our young people. The provision of youth guarantee schemes that will encourage them to go back to education or back to work is the way to go forward.
Most of the scaremongering with regard to health has been led by Fianna Fáil, which is very good at it. Fianna Fáil's power base is based mainly on the idea that it can deliver goodies to constituents regardless of whether they are entitled to them. It is no wonder that Fianna Fáil is screeching the loudest about our decision to make a structural change in the qualification and eligibility criteria for medical cards.
We do not know what the changes are.
Senator Sean D. Barrett has raised concerns about the extension of universal medical cards to those under the age of five years. The Government believes this measure will cost €37 million. When Fianna Fáil extended medical cards to those over the age of 70 years, it was a blatant attempt to buy votes without doing any mathematics. As the Senator suggested, this was wrong.
I suppose I should not have said so much about Fianna Fáil because I have run out of time. It is necessary to kill certain ideas, such as the idea that the bereavement grant has been reduced. Senator Mark MacSharry said the grant was €4,500 in Dublin. He does not know what he is talking about. The bereavement grant is €850. Senator Thomas Byrne and everyone else in this Chamber who has dealt with this matter will have seen that the money needed in these circumstances is better and easier accessed as an exceptional needs payment. Like Senator Aideen Hayden, I have seen this done in my constituency. The structural change that is being made is to be welcomed.
I would like to share time with Senator David Norris.
Is that agreed? Agreed.
The Minister of State is very welcome. I welcome his words also. We were not sure what was going to happen in this budget. There was a great deal of talk in recent weeks, but we were not sure where it was going to go.
I must say I was concerned when I heard the Minister, Deputy Michael Noonan, speaking about creating jobs. I have a real fear when Governments believe they should create jobs. I am delighted that the Minister for Finance is not emphasising that particular area and is instead speaking about allowing businesses and entrepreneurs to create jobs. When the Minister, Deputy Brendan Howlin, mentioned creating jobs, it seemed he was talking about public service jobs. I am not sure that is right.
I welcome the extension of the 9% VAT rate that applies to tourism. I have heard that Ryanair has already reacted positively to the decision to reduce air travel tax to 0%. The home renovation scheme is certainly worthwhile and is to be recommended. The same thing applies to the so-called build your business initiative.
I have a concern about the 41% rate that now applies to DIRT and pensions. It seems wrong that someone who has worked the whole way through and saved their money or put it into a pension now has to pay the 41% rate, compared with a rate of 23% five or six years ago.
I think the exemption that will apply to self-employed persons who start their own businesses should mirror the corporation tax exemption. It seems that one will need to have been unemployed for 15 months to avail of this scheme. Why not incentivise people who are currently working, rather than just the unemployed, to start new businesses?
There are many good things in the budget. Our main aim has to be to get people working again. Rather than relying on the Government to do that, we must ensure we get people working through the creation of jobs by businesses and entrepreneurs. Employment is certainly going in the right direction. I congratulate the Minister on the steps he has taken in that regard.
I would like to speak about foreign direct investment. A genuine question must be asked about whether the Government has blinked in relation to multinationals and international tax avoidance. I can understand why the Minister has said that, in the future, companies will have to be resident in some jurisdiction instead of using various jurisdictions to be stateless, but I hope this step does not act as a disincentive and does not result in companies that might have engaged in foreign direct investment here deciding to go somewhere else.
I thank Senator Feargal Quinn for sharing his time with me.
I think we are just piddling around here, in a way, because if America goes over the cliff on Thursday, we are all banjaxed. The entire international financial system is rotten. As I said on the Order of Business this morning, tens of thousands of people in Spain are being forcibly evicted, people in Portugal are starving and people in England are collecting food in supermarkets to feed the hungry. I have railed about the conditions in this country for a long time. The screw is turning and turning.
It is interesting that the Government apparently wants to discuss a salt tax. There are rumours around the place. Certain economists have been discussing the possibility. The French Revolution started after such a tax, the gabelle, was introduced. It was the last straw that broke the peasant's back. The peasants revolted. I am waiting for that to happen all over Europe. I do not think there is any equity.
I would like to discuss the cut of €20 in the long-term unemployment payment. How are people in such circumstances supposed to be able to access education? If everybody is satisfied, why am I getting heartbreaking letters and e-mails all the time? FÁS apprentices are being asked to contribute, but how can they do so? I just do not understand it.
Who is making the decisions on medical cards? I do not believe they are being made very often on medical grounds. I do not think I should get a medical card because I have a good income and I am comfortable now. I have cancer and will be 70 years old very shortly. I approve of means testing. I do not think people like me should get a medical card. I am not bothered about it. It is important that the means test is set at a level that ensures the vulnerable are protected.
The decision that has been made with regard to the death grant is a howl. They tax the bejaysus out of one while one is alive. When one kicks the bucket, they give one a present of €800 to thank one for doing the decent thing and sparing the economy. I am not interested in this. I will pay for my own funeral.
I wish to mention an initiative that might be expensive but would help to create jobs. Perhaps the Government might have the courage to introduce social protection for people who create jobs. I refer to the self-employed and to employers in small businesses who look after their employees. The employees get benefits, but the poor unfortunate people who go bankrupt get nothing. That really needs to be looked at.
I have referred to part of the brief I have for pre-budget submissions. I apologise to all of the organisations. I will work in my own way when these issues come up. It would be impossible to list them in two and a half minutes. I hope some of the points I have made will strike home. It is a global situation. There is no real European solidarity. An opinion poll has shown that the Germans are saying, "Great for Angela Merkel, we are okay, and hump the begrudgers." I ask the Minister of State to think about protecting those who give jobs and create employment. They need to be brought in and encouraged. They will have the courage to start a job if they know they will be protected if they lose that job.
Before I call Senator Terry Brennan, I acknowledge the presence in the Vistiors Gallery of Mr. Fintan Coogan from County Galway, a former Member of this and the Lower House. He is very welcome.
Ba mhaith liom fáilte a chur roimh an Aire go dtí an Seanad. As I said in thie House earlier today, 34,000 jobs have been created in the past year. I am glad that job creation is the priority in this budget. The budget confirms the Government's commitment to job creation. I welcome the decision not to change the weekly fuel allowance rates. I am glad that no income tax or universal social charge increases are provided for in this budget. I am particularly pleased that the 9% VAT rate that applies to the tourism and hospitality sector is to be retained. As we are all aware, some 15,000 jobs have been created in this sector in the past two years. The retention of the 9% VAT rate will ensure further job increases in this sector.
The incentive of up to €4,000 for renovation and maintenance work is to be applauded. Many homeowners will welcome this initiative. The build-your-own business initiative to promote entrepreneurship and support SMEs, including those who encourage unemployed people with ideas to start their own business, is to be applauded.
In respect of the award of the national lottery licence for a figure in excess of €400 million, I welcome the announcement that €200 million of this dividend will be ring-fenced to ensure the construction of the long-awaited national children's hospital and that a further €200 million in capital spending arising from the balance of the proceeds will be used to support local economic activity and job creation. A sum of €200 million will be invested in 2014 and will include the continuation of a new round of sports capital grants. As we all know, many clubs, sports organisations and communities throughout this island have benefited from these grants in recent years which have improved sports facilities and dressing rooms for the benefit of all.
I welcome the housing adaptation grants for older people and people with disabilities. This wonderful initiative will help to revitalise the building industry. I note that €10 million will be provided for an unfinished housing estate resolution initiative and this is to be welcomed in every county with unfinished estates.
As I stated earlier, job creation is and will continue to be the top priority for the Government. I am glad to state and others have referred to the fact that the unemployment rate is now down from 15.1% last year to 13.3% this year. The Government will continue to invest in the people who through no fault of their own find themselves out of work. We are continuing on the right road. Táimid ar an mbóthar ceart gan dabht ar bith.
I am glad that Senator John Gilroy has mentioned that he is ambitious for young people. I am also glad that when we held the EU Presidency, we championed the youth guarantee and that it was agreed under the watch of our Ministers. As an EU member state with one of the highest rates of young people not in employment, education or training, it is fitting that we would lead the charge to help young people. However, I found that once the parades were over and July came and following the fanfare, the press conferences, the ministerial meetings and the passing of the mantel, we dropped the ball spectacularly through what was announced by the Minister today.
The Minister for Finance opened his speech with a quote from a poem by W. B. Yeats and I will do the same. I know I have used this quote a number of times. Yeats mentioned that this is "no country for old men" but this budget proves that it is no country for young men or women. Some of the rhetoric that has been uttered in the past couple of months relating to youth unemployment and the youth guarantee makes it look like Ministers and the Government have been talking out of both sides of their mouths. We heard about the need for a well resourced guarantee, that young people were our future and that youth unemployment was such a plague on our society and economy that we needed to address it urgently. The talk was of giving young people their say and their independence and preventing emigration, the loss of skills and talent and a lost generation. We spent the past six months talking the talk on the youth guarantee and youth unemployment but when it came to walking the walk, the Government fell over the boots for which it has become too big.
What made my stomach lurch more than anything earlier was when I heard that the allocation for the youth guarantee was only €14 million. Only a number of months ago, Senators in this Chamber and Deputies in the other House welcomed the report I produced on the youth guarantee. It was a cross-party report built on consensus and input from youth organisations. We called for the Swedish model of the youth guarantee to be followed. That would have involved the allocation of €6,600 per participant, as Senator Jillian van Turnhout referred to, but what did we do? As I mentioned, we championed this guarantee, yet we allocated €260.22 per young person officially unemployed. Those quarterly national household survey figures are relatively conservative and do not take into account young people who are not engaged with the public employment services.
Why is it that a person aged between 18 and 25 years can vote, pay taxes, contribute to society in other ways and be held responsible for his or her actions but is treated completely differently from someone who is ten, 20 or 30 years his or her senior when it comes to being impoverished and in trouble? This is discrimination in its most blatant guise. The Minister of State with responsibility for trade and development, Deputy Joe Costello, was right when he said of the Social Welfare Bill of 2010, which contained cuts to jobseeker's allowance for young people, that: "A whole generation of young people are being shunned by the Government of their country. They are being told that they are a burden and not wanted. They must leave the country or live in dire poverty." Who thought a Labour Party Minister would perpetuate this policy of age discrimination introduced first by Fianna Fáil and slash jobseeker's allowance for young people again? The Minister for Social Protection was right when she asked, "What else has austerity done? It has brought the return of the emigrant aeroplane." It is good that the air travel tax was cut today because the emigrant aeroplane is back again and the Government has made sure those who can afford to leave will do so, while those who cannot afford to leave - we must remember that emigration is not open to everyone - will live in poverty.
In September 2013 the leader of the Labour Party, Deputy Eamon Gilmore, made a promise to young people across the State. He said the generation that had done so little to create this crisis should not be the onee to pay the highest price. Today, just over one month later, a Labour Party Minister has done the complete opposite. He has not only punished young people for a crisis they did not create, but he has also ensured the only guarantee the Government will give to young people is emigration. Today is a bad day for Fine Gael and the Labour Party, the country and young people.
I wish to share my time with Senator Marie Moloney.
Is that agreed? Agreed. Is it equal time?
Yes, equal time.
I rebut Senator Kathryn Reilly who has said this is not a good day for young people. I beg to differ. As spokesperson on education, I will focus on ten positive points for education that we have got out of the budget today. The first is the biggest criterion people look for in education, namely, the pupil-teacher ratio. That is being preserved. There will be no increase in the pupil-teacher ratio in either primary, post-primary or fee-paying schools.
Not for smaller primary schools.
Recruitment of up to 2,800 staff will take place between 2013 and 2014. This is significant and good news for young people who are the ones we need to value most. Two thirds of those jobs will preserve class sizes and ensure that class sizes are kept down. The other third will be for resource teaching. The fact that €1.3 billion will be protected for supports for children with special educational needs and that an additional €33 million will also go into the budget is fantastic. This is great news for children.
The spending on the overhaul of the junior certificate, which was €1.4 million, will be increased to €4.8 million in 2014. Again, it comes back to comments made by Senator Darragh O'Brien. It is very easy to be in opposition and to slam and take everything out. One must acknowledge the good points that are there and allow Senators time to speak. The money that will be put into the roll-out of the junior certificate reform is good news. Senator Darragh O'Brien said the Labour Party was inconsequential and had done nothing. One must look at the work done by the Minister for Education and Skills in the field of education which must broadly be welcomed by everybody, especially in view of how far-reaching it is. I know from going into and teaching in schools that they acknowledge the work that is ongoing.
A total of €9 million will be available to continue rolling out numeracy and literacy initiatives.
It is good news that €15 million will be allocated over the next three years for book rental schemes for all primary school children. The roll-out of high speed broadband will continue in order that all schools will have access to it. That is another good move by the Government.
I will not speak in detail because I do not doubt we will debate the Social Welfare Bill in depth when it comes before us. I disagree with Senator Darragh O'Brien's suggestion that the Labour Party has no presence in government. A Labour Party Minister managed to reduced the cuts in the social welfare budget from €440 million to €290 million, of which €220 million will affect recipients. A Labour Party Minister found other ways of making cuts to social welfare. A Labour Party Minister came up with the provision whereby an insurance company will deduct the amount it pays to a claimant if social welfare has already been paid out. Is the Minister for Social Protection not right to go after the insurance companies to ensure they compensate her Department for the money it paid to a claimant who has paid his or her insurance? Why have we waited so many years to come up with this measure? It should have been introduced years ago. The Labour Party has had an impact in government and we will continue to do so. One cannot remove €220 million from the social welfare budget without pain and unsavoury decisions. I hope, however, we will get this country back on track in order that we can revisit these areas in due course.
The Senator has 15 seconds remaining.
It is so unfair that we have such limited time. We will debate these issues in detail in the context of the Social Welfare Bill but there is good news for the social welfare budget such as the extension of the youth guarantee. The social welfare rate of €100 has been extended to recipients up to the age of 25 years, but the Government is investing more in job activation, education and training than it is taking out. The intention is to get our youth activated. We must change the attitude of employers towards youth in order that they are not tasked with copying figures from one sheet to another. They have a lot to offer.
As a number of Senators wish to contribute, I ask the Senator to conclude.
I will conclude, but we will discuss these issues further in the context of the Social Welfare Bill.
I apologise to the Senator, but six Senators have indicated that they wish to speak and we have less than 20 minutes left because the Minister of State will be responding at 6.50 p.m. I ask other speakers to stay within the five minutes allocated to them.
There is no doubt that the budget has been prepared with a view to picking people off and pitting one section of society against the other. It is also clear that one of the major spending Departments, the Department of Health, does not have a clue about what is going on. The Labour Party should investigate what is happening before it attempts to deny that assertion. Many of the children who will receive the under fives GP card will in the process lose their medical cards because the overall cuts to medical cards are far greater than the allocation for GP cards. The Senators opposite shook their heads two years ago when I warned them about small school class sizes because they did not look at the details. That is still happening.
Was the Senator a member of the last Government?
The removal of the telephone allowance is a particularly cruel attack on the elderly. It equates to €10 per month, which is crucial to those who depend on a communication lifeline to keep them in touch with neighbours and friends.
The Minister for Social Protection has already indicated that will be protected.
The telephone allowance is being abolished. Is the Senator contradicting me?
I am telling the Senator that the Minister has given an assurance to the effect that nobody will go without a security device.
The security devices will be dependent on the telephone systems which people installed based on having this allowance. At the same time as the Government is proposing to make this cut, the Department of Finance is increasing its own post and telephone budget by 33%. The Department of the Environment, Community and Local Government is increasing its office equipment budget by 41%.
The Senator is desperate.
The Government Procurement Service is increasing its office expenses by 107%. These figures are all in the Estimates. The Department of Health is increasing its office expenses by 16%. The President's Establishment is getting an increase of 12% for travel and subsistence. The Department of Public Expenditure and Reform is getting an increase of 150% for consultancy services and an increase of 4% for travel and subsistence. At the same time the most vulnerable in society - elderly people living alone - are losing their telephone allowance. The Senators opposite can shake their heads, but these figures come from the Estimates of expenditure.
A budget speech without mentioning the budget.
Government Members can laugh all they like at the disabled and the elderly who will lose their medical cards next year, but the figure is €113 million. The Minister for Health could not say at his press conference how many people would lose cards, but he intends to review them. We saw last week what had happened as a result of previous reviews.
What about the dead people on doctors' registers? Will we continue to pay for their medical cards?
Labour Party Senators can laugh all they like, but they are supporting these cuts. They think they are engaging in a probity review of people who are defrauding the medical card system. They are now claiming sick and dying people are fraudsters.
We are not calling people that.
That is the description in the Minister's speech.
Fianna Fáil spent 14 years fooling people.
What signal does it send about the Government that it is abolishing the mortgage interest supplement?
The Senator is questioning a direct transfer of the State's money to the banks.
It sends the signal that the Government does not care about people in mortgage difficulties. That chimes with the Land and Conveyancing Law Reform Act 2013, which allows repossessions and facilitates the issuance of tens of thousands of letters to people in trouble.
I am pleased that the Minister for the Environment, Community and Local Government, Deputy Phil Hogan, was able to include Kilkenny on the list for the Living City initiative because it is a worthy participant but larger towns with significant numbers of older buildings, such as Drogheda, Navan, Ennis and Bray, should also be considered.
That matter can be debated in the context of the Finance Bill.
Bray, in particular, could do with some kind of incentive scheme. All of these towns are larger than Kilkenny, even if they are not called cities, and deserve to be included in the initiative.
I am astonished by the amount of misinformation provided on medical cards in the past three weeks. The reality is that an additional 253,000 medical or GP cards were granted between 2011 and 31 August 2013. The number of medical cards reached more than 2,100,000 in June 2013. Prior to the election, Fianna Fáil Deputies were contacting their local HSE offices to get medical cards for constituents whose income was several hundred euro above the threshold. One such individual who came into my office had a medical card for several years, despite having a weekly income of €300 above the qualifying threshold.
Last week I dealt with a couple of people who earned €1 above the limit.
This individual had no medical condition of any description. He had a medical card because local representations had been made to the HSE.
I would like to see that allegation substantiated.
I have the evidence. The people who are entitled to medical cards are getting them. When the changes announced in this budget are introduced, over 500,000 more people will have medical cards or GP cards. We are managing to do this, despite our current financial difficulties because we are getting better value for money for what we deliver.
The Irish Examiner claimed the Government was in denial.
The figure is 253,000. That is the reality. If the Senator comes along to next Thursday's meeting of the Joint Committee on Health and Children, he will get further clarification of the matter.
I welcome the proposals on job creation. It is important that we encourage businesses and people to take the risk. The two year income tax exemption for people who start up their own businesses is welcome. Capital gains tax relief affects people who are prepared to put their money where there mouth is and do something instead of just talking about what should be done. We should encourage such individuals.
The health innovation hub is important for my city and county, as nine of the world's ten top pharmaceutical companies are based within 50 miles of University College Cork. Funding for that hub is vital. Eli Lilly, Schering-Plough, Pfizer and Johnson & Johnson are outstanding companies and employers and we must encourage their research and innovation. This part of the budget is welcome. Support is also being provided to Science Foundation Ireland which plays an important role in developing new projects and research.
IDA Ireland's target is to create 12,000 jobs in the next 12 months. Enterprise Ireland's target is also 12,000 jobs. The budget's provisions on the building industry will undoubtedly create more than 10,000 jobs in the next 12 months. This is welcome. The budget is concerned with the creation of jobs, through which there will be a lesser demand placed on social welfare and taxes will be accrued to support the services needed for the less well-off, including health services that can continue to be improved.
I welcome the budget. It is well planned, well developed and well delivered.
Three Senators have indicated, but we only have approximately seven minutes left.
We could use five minutes of my time.
Is that agreed? Agreed.
The Minister of State is sharing time with Senator Averil Power.
That is a first, although I did have two Ministers share time with each other during Private Members' business on a section 37 Bill, which was also a first.
I join Senator Darragh O'Brien in welcoming elements of the budget, including the retention of the 9% VAT rate. The rate has been a lifeline for tourism businesses and will more than pay its way in supporting job growth. The home improvement scheme is a positive initiative. As Senator Mary Moran pointed out, the cuts to education were not as bad as we had anticipated. However, pupil-teacher ratio increases in smaller schools will come into effect in the next school year, but the expectation of harsher cuts has not been realised. This is welcome and is a direct response to the campaign that was mounted by parents and groups during the summer to highlight the importance of education to this country's future in social terms and in getting the economy back on track.
Senators were also involved in campaigning.
Senators from all parties.
Exactly. It was cross-party work. We were doing what the Seanad is supposed to do best.
Indeed. However, it must be noted that one sector that has been badly hit by the budget is that of further education. Last year the Minister stated there would be a one-off funding reduction of €25 million. Today, he announced that last year's guarantee did not count, as the sector is getting hit for €25 million again. From the Estimates, it is clear that the overall reduction is much greater, given the difference of €62 million for higher education between this and last year. The €25 million accounts for some of that reduction, as does the €18.5 million in the increased student service charge and the savings to be gained from the Haddington Road agreement. Some people from the higher education sector have asked me to check whether the Minister can offer an assurance that an increase in the core grant is not hidden in the Estimates. It is unclear from the numbers. The Minister for Education and Skills has not provided the details. As it is there is a great deal of concern in the further education sector about how it is meant to maintain quality and compete internationally when its budget has been reduced so much in the past three years.
One group that has been hit hard in recent years is people under the age of 25 years. I mentioned the increase in the student service charge. Despite the Labour Party's pre-election promises, the Minister for Education and Skills, Deputy Ruairí Quinn, will have presided over a doubling in that charge if the Government runs its course. It was €1,500 when he entered into office and will be €3,000 in 2015. This increase has hit low-income families hard, those who are just over the threshold for the grant and must pay for that education themselves.
Postgraduate grants have been completely removed, meaning that people from poorer backgrounds are no longer able to access postgraduate courses. This is one of the most scandalous cuts, yet it has not received as much attention as it deserves. It has deprived people of a necessary opportunity, given the increase in the standard of education among people competing for jobs. When the Minister of State and I left college, the standard was an undergraduate course. Now, people are expected to have postgraduate qualifications. It is unfair that this standard has been put beyond the reach of many young people.
Senators referred to the cut in jobseeker's support for people aged under 25 years. When it was first cut for younger people, I viewed it as a positive initiative, as it is not right that an 18 year old should walk in and be put straight on the dole. Some are brought in by their parents and are members of families in which there is generational dependence on social welfare. They are brought down to their dole offices on their 18th birthdays and told to sign on as if that was their future. This should not be our expectation for our young people regardless of what area of the country they are from. However, there is a significant difference between such people and someone who is 25 years of age may have already been in college for six or seven years, may have a high level of education and cannot find a job. The rate of youth unemployment is at least 30%. This is the official figure and does not account for emigration. The reality is that one in two young people who finish college cannot get a job. The Minister referred to back to education, but that is a lower level of education than many of these people have already attained. The Minister of State can reply in his five minutes.
The youth guarantee-----
The back to education allowance is €160.
Only if people go on that scheme, but why would a 24 or 25 year old who has already been through the education system and might even have a masters go onto a back to education scheme? He or she probably would not qualify due to being above the educational threshold. This provision has not been thought through. The number of places being offered under the youth guarantee is only a fraction of those who will need it. This is clear from the figures that have been published today. There are 2,000 people on the education side, a few more in JobBridge and other schemes, etc. The upper age threshold is unfair. I ask that this issue be examined.
I am sorry, but I must be fair to other Senators.
I thank the Minister of State for the opportunity to make my points about education.
As there are only seven minutes remaining, I ask Senators Michael Comiskey and David Cullinane to share that time.
We will and I will be brief.
I welcome the budget in general. All of the vibes so far have been positive, especially from the point of view of agriculture. There is good news for the suckler welfare scheme which will now be called the genomics scheme, under which €60 will be paid for every calf that is born from 2014 onwards. The old suckler welfare scheme has left the scene. Farmers were worried that the sector would be undermined by a lack of confidence. The new scheme is a positive measure.
The disadvantaged areas scheme is crucial in my part of the country in the west. It has been in place since the early 1970s. In 2009, €1,000 was taken out of it. Thankfully, the scheme is being maintained this year and there has been no further cut. This will give vital confidence to farming families that depend on the scheme to maintain their incomes.
The sheep grasslands scheme will provide €1,000 to people who undertake training and discussion groups with Teagasc. They will gain a great deal of expertise.
Younger farmers who have been trained and are taking over or inheriting land from older farmers will be charged no stamp duty.
That is very positive. We want to see a cohort of younger farmers coming through the system. Now that agri-colleges are full we will have more educated farmers. It is important we support them and ensure they get off on the right footing. This will drive the economy. The possibilities in terms of the agrisector are massive. Currently, 300,000 people are employed in the sector which is also growing at the rate of 12,000 to 14,000 jobs per annum. This boost will provide additional confidence. Taken in conjunction with the CAP reforms which will kick in in 2015, the future for the sector is exciting and positive.
I cannot let this opportunity pass without welcoming the additional investment in the Wild Atlantic Way, a tourism project along the west coast. Another positive initiative is the retention of the 9% VAT rate, in respect of which I have received many positive calls. I welcome today's budget, which is positive. I am delighted to be here to share this news with the House.
I genuinely believe many families were expecting something different or to be given a break. The families who have borne the brunt of the past six austerity budgets had hoped the Government would put more money back in their pockets, thereby giving them a break and enabling them to pay their mortgages and bills and provide for their children. Unfortunately, not only have the vast majority of these families not been given a break or had money put back in their pockets, the Government has taken more out of their pockets.
Regardless of how many times Senators, including from the Labour Party and Fine Gael, say this is a good budget, the reality is different. The devil is always in the detail. Let us look at what, according to Labour Party Senators, is good and great in this budget. Prescription charges have been increased from €1.50 to €2.50. Is that good and great? The telephone allowance for elderly people has been abolished. Is that good and great? The bereavement grant has been abolished.
It has been incorporated into other schemes.
I did not interrupt any Senator. Senator John Gilroy continues to act like a Jack in the box when other Senators are speaking. He is not prepared to listen. He should sit and listen to the truth.
Should I sit and listen to my betters?
Senator David Cullinane to continue, without interruption.
The Senator should listen to what was in the budget.
The Sinn Féin truth.
Senator David Cullinane is wasting time.
That is what is contained in the budget. The drugs funding initiative has been cut by 7%.
The Senator should ask Gerry Adams about it.
Labour Party Members engaged in the same heckling in the Dáil. Are they not prepared to listen to people? Can they not sit and listen and show some respect for speakers? Do they have to continually interrupt? I understand the Labour Party is on the floor and that in terms of this tough budget it has again sold out to Fine Gael. Please listen and do not continue to interrupt when other people are speaking.
Jobseeker's benefit for those under 24 years of age has been cut. Is that good and great? How is that good for young people? What hope is there for those whose benefits have been cut? Perhaps some of the Senators opposite or the Minister of State, Deputy Brian Hayes, would explain the logic of targeting those young people. When Fianna Fáil reduced jobseeker's benefit, Fine Gael and the Labour Party opposed it. The only logic for that cut is that the Government wants to force more young people to emigrate. Perhaps it is because the Government believes this group are people who will not fight back or stand up for themselves that they have been targeted. The Minister of State might explain the logic of that cut, which I cannot understand.
I do not believe this budget is fair. Independent analysis carried out by a range of organisations and agencies shows that the previous two budgets introduced by this Government were the most unequal, even more unequal than previous Fianna Fáil-Green Party and Fianna Fáil-Progressive Democrats' budgets. The Government has not stood by working or young people. It has not given people hope. There is nothing in this budget which indicates the Government is serious about job creation or reducing unemployment and emigration. It is more pain for people at the bottom. While there has not been an increase of even one cent in income tax for those earning over €100,000, €200,000 or €300,000, for an elderly person dependent on the household benefits package the telephone allowance has been cut and for a young person jobseeker's benefit has been cut. It is shameful that Members opposite can stand over this and that the Government has again missed an opportunity to introduce a fair budget.
I thank all my colleagues who contributed to this debate. I know it is difficult to respond so quickly after the speeches in the other House have concluded. Many of the issues raised will be clarified in the course of the next few days.
On the assertion that one party in government has sold out to the other, that is not how I see it. This is a national Government of the two largest parties in the State which have come together in a moment of economic crisis. This is the third of five budgets the Government hopes to present to the Houses. The Government is made up of the centre left and centre right, representing a broad spectrum of opinion in this country. Despite all of the difficulties faced by the Government since taking office, I am proud of some of the things we have managed to do, in particular as mentioned by Senator Mary Moran, the retention of the current pupil-teacher ratio. We now have more teachers in schools than was the case last year and the year before that. This is an example of the fairness which this Government has put at the centre of its policy platform. We stand over the following: that we managed to re-establish the national minimum wage, which was previously abolished by Fianna Fáil; the exemption of 320,000 people from payment of the universal social charge and the charge on private patients, which contributes to the cost of public patient care in public hospitals; and the taxing of people at the high end in terms of pensions cover. All of this illustrates that fairness is at the heart of Government's decision making.
I accept the most recent budgets have been difficult, in particular the VAT increases. However, it is logical. When the crash occurred, Ireland was spending approximately €50 billion per annum. In 2008-09 the tax yield was only €34 billion, leaving an enormous chasm of €16 billion. It was inevitable, even for the previous Government, that the first necessary step was to increase tax and reduce expenditure. The truth is that the totality of budgets introduced thus far by the Government have been broadly progressive. The view of the OECD which has no axe to grind one way or the other is that of the 36 member states of the OECD, Ireland has the third most progressive taxation system. The European Commission has stated that of the four countries currently in a programme, Ireland's adjustment programme by way of tax rises and expenditure cuts is the fairest. It was inevitable that during the early days of the programme there would be radical tax hikes. We are now working on the expenditure side. The decisions being made are very difficult ones given much of the fat has been already taken out. Ministers are at the pin of their collar trying to identify additional savings.
As I stated previously, we have a very high taxation burden. The top 10% of income earners in this country pay 60% of the totality of income tax. It is not credible to suggestone can continue to kick these people around and get even more from them and that this would solve the problem. The problem is that we do not have enough wealthy people in the country. Currently, every €1 over €32,800 is taxed not at 41% but at 52%, plus 7% and 4% in USC and PRSI, respectively. Self-employed persons pay up to 57% in tax. It is Alice in Wonderland economics to suggest we can continually take more from these people in order to secure savings. It is not possible and everybody knows that, including Sinn Féin and the people who are smart about these things, to whom the people listen. It was inevitable that the tax increase agenda would come to an end. Sinn Féin wants the Government to abolish the universal social charge, which would cost approximately €3 billion.
The Senator also wants to reduce VAT from 23% to 21%, which would cost a further €1 billion. The hole in his party's budgetary arithmetic is not €2.5 billion but approximately €7 billion. That is the truth.
While I do not wish to interrupt the Minister of State, that is not the truth. He is blatantly misinforming the House.
The leader of the Senator's party has told us the troika can go back whence it came and take its money with it. The logical outcome of that argument is that the troika will take its money and instead of the adjustment we have suffered being €28 billion over five years, it would be an equal amount over 18 months. That would create an economic wasteland. Overnight, Ireland would become a new Argentina but without Eva Perón and the Perónists. As the Senator knows, that will not happen. If the Communist Party of Ireland or even Sinn Féin were in government, they would face the same reality my Government must face. Sinn Féin has to cut budgets in Northern Ireland and it does so quite well.
People need a break and must be given hope. We have had reduced budgets for five or six years or for as long as the Second World War. If, as we hope, all the targets for next year are reached, we will have 95% of the overall target. The Central Bank has indicated GDP growth will be 2% next year. Every 1% in GDP growth delivers approximately €1.6 billion in revenue. A growth rate of 2% next year would, therefore, give us €3.2 billion in additional resources. The adjustment for next year, as set out in the memorandum of understanding, is €2 billion. If we were to achieve 2% growth, next year's budget would not entail an adjustment. That is the prize we must all try to win, irrespective of which party is in government.
The Government and its predecessor have had to grapple with many issues arising from the crash. We are halfway through our term of office and our approach has been proportionate and fair. Ireland was the second country to enter a programme and will be the first to exit a programme. I argued the case for public private partnership investment in Ireland with 250 bankers at a recent meeting in London. They told me they could not invest in countries that are in programmes. As soon as we exit our programme, Ireland will, they said, become a realistic investment prospect. One must only consider Standard & Poor's recent statement on the Irish rating in respect of investment. We are moving away from the negativity surrounding Ireland. If we exit the programme and manage to stay out of it, the big win will not be securing funds to finance our debt but securing investment in the country. We are on the right track and I hope, with the support of my colleagues who have made constructive remarks, that we will be able to give people hope that the country will emerge at the other end to a prosperous future.
When is it proposed to sit again?
At 10.30 a.m. tomorrow.