Other Questions.
6 Mr. Broughan asked the Minister for Finance if, in view of recent statements made that the State is one of the largest users of telecommunications services and should use this power to promote competition on voice and data telecommunications and lower prices, the measures he intends to take to achieve this result; and if he will make a statement on the matter. [10206/04]
Amharc ar fhreagraMy Department has policy responsibility for the public sector usage of telecommunications services. It does not have powers relating to regulation and pricing. Questions in that regard should be directed to my colleague, the Minister for Communications, Marine and Natural Resources, Deputy Dermot Ahern.
My Department is, effectively, a customer availing of telecommunications services and, similar to all other customers, is dependent on prevailing market conditions in the telecommunications sector. In addition, my Department, like all Government bodies, is obliged to comply with EU procurement law by sourcing its telecommunication services requirements through open competitions. As a result of taking this competitive approach, Government bodies avail of services provided by all the major telecommunications companies offering services in Ireland.
My Department has implemented all the measures it can implement at this stage to ensure that Departments, offices and non-commercial State agencies have as much access to competitive provision of telecommunications services at best prices as is possible.
My Department sources, negotiated and now manages the Government's virtual private network, VPN, contract which facilitates a range of voice and data telecommunications services, including secure inteconnectivity between public bodies. The contract, or elements thereof, are available for drawdown by any Department, office or non-commercial public body. The contract was awarded to a consortium comprising Eircom and Vodafone Ireland in 2002 on foot of an open EU procurement exercise operated by a cross-sectoral procurement working group. The aggregation of public sector telecommunications demand under the VPN contract ensures that the public service receives maximum value for money and substantial savings in its telecommunications expenditure as a result of the significant discounts available. As a result of this, all other major providers have also reduced their costs to public service bodies.
Although fixed voice services and data services relating to e-Government are mandatory under the VPN contract, all other services are at the discretion of individual bodies. Consequently, my Department has ensured that all other major telecommunications service providers can connect to the Government VPN to allow for the maximum competition in the provision of these services to public bodies.
I expect that we will be able to enhance this situation significantly once framework procurements become possible under the new procurement legislation. This legislation is expected later this year.
This question was originally put to the Minister for Communications, Marine and Natural Resources, Deputy Dermot Ahern, by my colleague, Deputy Broughan, and it was not our decision to transfer it to the Department of Finance. I am concerned by the Minister's comments. He has not provided figures and I would be grateful if he would do so. What is the value of the total contracts awarded by his Department and among how many companies are the contracts spread? My understanding is that there is now one major——
The Deputy should confine herself to questions. Other Deputies are offering on this question and I wish to facilitate them.
Is it true there is now one major provider of services to the Department of Finance and the Government? Effectively, we are back in a monopoly situation. However, while it was a public monopoly during the Telecom Éireann era, it is now a private monopoly. Will the Minister provide figures on the number of suppliers and the percentage such suppliers hold? Does the Minister agree that many providers in this market are concerned they are not being successful in accessing the provision of services to his Department? The field is dominated by one party so that, effectively, there is a private monopoly.
I accept the Deputy's point that this question was originally put to the Minister for Communications, Marine and Natural Resources, Deputy Dermot Ahern, and was transferred to my Department. I do not have the relevant figures but my officials will communicate with the Deputy to make them available to her.
I may be able to help Deputy Burton in providing the figures as I am in possession of the replies to a series of questions asked last year on the question of percentage of market share. The Minister will be pleased to hear that his and a number of other Departments, including the Department of Enterprise, Trade and Employment, which one would expect to promote competition, were almost 100% users of supplies from one incumbent monopoly company. This is surprising given the——
Has the Deputy a question?
I do. When is the virtual private network, VPN, next up for review? Will the new legislation, which referred to European legislation, allow for competition issues to be taken into account when considering the best price offer? If the best price offer must be accepted in each case, the incumbent provider obviously has a massive advantage in terms of economies of scale and current dominance in the market, and will always be able to undercut any other bid. Is the Minister allowed to take into account the necessity of introducing competition in the market when making policy decisions? If not, would new legislation allow him to do this?
The VPN contract was awarded to a consortium comprising Eircom and Vodafone in 2002. I think it runs for five years but will confirm the details and make them available to the Deputy.
7 Mr. R. Bruton asked the Minister for Finance if he has undertaken an evaluation of the performance of PPP projects which have been put in place. [12878/04]
Amharc ar fhreagraThe role of the central PPP unit in my Department is to provide guidance on best practice in the appraisal and procurement of PPP projects with a particular focus on establishing and providing value for money. Guidance issued to date, which will be elaborated further over the current year, places a particular emphasis on establishing the business case for a project and on the further steps to be followed to ensure a value for money approach is taken at each critical stage of the procurement of the project. The evaluation of the performance of individual PPP projects is a matter in the first instance for the Minister with primary responsibility for the areas to which these projects relate.
PPPs as a method of public procurement are subject to an open and transparent tendering process in accordance with national and EU procurement rules. The reporting and other accountability arrangements for PPPs fall to be dealt with under the general financial procedures for capital investment. In addition, expenditure on projects is liable to scrutiny by the Comptroller and Auditor General and the Committee of Public Accounts. The Deputy may be interested to note that the Comptroller and Auditor General is currently undertaking a value for money audit of the bundle of schools pilot PPP project. This was the first of the approved pilot PPP projects for which a contract was signed.
PPPs offer a real prospect of enabling Departments to deliver infrastructure projects on a value for money basis by taking a whole-life approach and allocating risks to the party best placed to manage them. For example, the roads PPPs signed so far have demonstrated the potential for real risk transfer-——
There was no risk.
——--and value for money outcomes for the Exchequer. Indeed, from a public sector perspective, the N4-N6 Kilcock-Kinnegad PPP contract was awarded the Project Finance international infrastructure deal of the year for 2003 and the Euromoney-Project Finance transport deal of the year for Europe for 2003.
It comes as a shock to many people that the Department of Finance takes no interest in evaluating whether any of these projects are a success. Is it not the case that the Department of Finance is essentially driving the idea of PPP as best practice? The Minister has given a strong thumbs up to the idea in the House. On what evidence does he do so?
Have the five schools been a success in the Minister's view or has he sought information to ascertain whether this is so? Before deciding to embark on PPPs as the main vehicle for decentralisation, has the Minister sought the views of the Comptroller and Auditor General on the likely success of that approach? If the Minister is working to a three-year limit on decentralisation and has made it a significant political priority for the Government, is there not a danger that by taking the PPP route there will be such political determination to get a result the Minister will agree regardless of what terms are offered? Is it the case that the Government can still borrow money at less than 5% on the markets but that most private financiers will be looking for 15%?
With regard to the last point, the Government will always get the best deal when borrowing. The best public company in Ireland will not be able to borrow at the rate at which the Government can. While it could happen that the Government's financial policies would become daft, that is not expected, despite the requests of those on the left of the House. Therefore, the Government will always be in that position as a borrower.
However, there are many other reasons PPPs should be the approach. The bundle of schools project is being evaluated and the outcome will be available to everyone in due course. Regarding decentralisation, I will quote from the decentralisation implementation group report, chaired by Mr. Phil Flynn, which stated:
It allows for the transfer of significant risks to the developer, such as planning risks and responsibility for any cost and time over-runs: the developer is better placed to mitigate the risk and produce a lower cost solution.
The report continues with many reasons for taking this particular approach.
The Deputy asked the obvious question as to what would happen if the private sector does not provide a value for money solution for the decentralisation programme. He should remember that we measure such performance by taking a public service benchmark in regard to a Department or agency and then comparing this to the private sector. If the private sector does not provide a value for money solution, we will have the option of returning to the traditional approach.
Will it all be open for us to see?
Of course.
Does that include benchmarking?
If we were to make public service benchmarking details available at any particular time, competing private contractors would know of that. Therefore, we do not make such details available.
There is no accountability.
Has the Minister or his Department had an opportunity to review or consult with the National Audit Commission in the UK regarding its recent reports and evaluations on PPPs? I am referring to the reformed UK structure as everybody acknowledges there were problems with the early UK structure and that the Irish model set out to avoid these. Does the Minister have access to the reports? Is he aware of the number of PPP contractors going into liquidation and walking away from the later stages of PPP contracts? What steps has he taken to ensure this will not happen in this country?
The Fine Gael Party has made up its mind on this issue but I do not know if other parties have. Are we in favour of the PPP approach?
It is not an ideological argument.
The Minister to continue without interruption.
There will be successes and failures. It is inevitable that some projects will be done better by the PPP approach and that sometimes it will not work very well. We have tried to learn from the failures of the United Kingdom as well as its successes. This is not the only country which has adopted such an approach. Many countries have successes in this regard and many will have failures. What we are trying to do is eliminate the failures.
One of the main criticisms from the private sector about the PPP approach is that the State has been too pernickety and demanding in regard to such contracts. It states we have been so severe in beating companies down that some of them will no longer play the game. We have not left enough jam on the table for them. There is a balance to be struck at all times. In some instances public private partnership is the way to go but on many other occasions it is not. The question of finance is just part of the overall package. There are many reasons for adopting the PPP approach, which we try to incorporate in the value for money approach. There was an article recently in a very reputable magazine in which it was stated the State was taking such a severe approach to PPPs that it was killing it. In striking a balance, there will be successes and failures.
I call Deputy Costello on Question No. 8.
May I ask a brief supplementary question?
I am sorry, Deputy, but we have gone two minutes over time on this question. There are six minutes allotted for each question. There are two minutes allotted for the Minister's initial reply, one minute for a supplementary question, one minute for a reply from the Minister, one minute for a further supplementary question and one minute for a reply from the Minister.
Where did the final minute go? We had one minute. The Opposition has two one minute slots.
I would like to make another point. If Deputies confined themselves to asking brief succinct questions, there would be more time for supplementary questions. However, if they continue to make statements, it will take up time.
At the moment, a Cheann Comhairle, you are giving the Minister four of the six minutes allotted.
The reality is that the Minister did not take his two minutes on that question. The Deputy took well over one minute to ask his supplementary questions. Deputy Burton took well over one minute to ask hers and the Minister took two minutes to reply, which brought us over the six minutes allotted. However, we do not want to delay time on questions.
8 Mr. Costello asked the Minister for Finance when he intends to implement the commitment given in An Agreed Programme for Government to remove all those on the national minimum wage from the tax net; and if he will make a statement on the matter. [12971/04]
Amharc ar fhreagraThe position is that when the statutory minimum wage came into effect in 2000, less than 64% of the annualised figure of €11,330, or £8,923, was exempt from taxation. In budget 2002, 90% of the minimum wage became exempt from tax and in budgets 2003 and 2004, this position has been maintained, even though the minimum wage was increased in October 2002 and February 2004. It currently stands at €7 per hour, having been increased from €6.35 per hour on 1 February 2004. The annualised equivalent of the minimum wage is €14,196.
The Government programme, An Agreed Programme for Government, states that over the next five years the priority will be to achieve a position where all those on the minimum wage are removed from the tax net. The five year period mentioned commenced two years ago when the Government was elected to office. The commitment to exempt the minimum wage from tax is given in the context of a broader economic and budgetary strategy which provides, among other matters, that the public finances will be kept in a healthy condition and that personal and business taxes will be kept down in order to strengthen and maintain the competitive position of the economy.
The current national partnership agreement, Sustaining Progress, contains a commitment in generally similar terms. Accordingly, exemption from tax for those on the minimum wage will be a matter for consideration in the context of the annual budgets over the next number of years consistent with the Government's overall economic and budgetary strategy and commitments mentioned.
Is the Minister not embarrassed that, as a consequence of the increase in the minimum wage, anyone who works a 40 hour week at €7 an hour earns €280? Those are caught in the PRSI and income tax traps. The Minister has stoutly defended very rich non-residents for tax purposes. He has stoutly defended the reason he will not review residency rules to allow them to exercise fidelity to the State and pay income tax here. Will he not equally review the position of the lowest earners? Those on the minimum wage of approximately €280 a week do not just pay tax, they also pay PRSI. In addition, their medical card is withdrawn — a triple whammy by this mean and miserable Government.
I am pleased with the progress made on taxation since becoming Minister for Finance. The facts are that following budget 2004, 35% of income earners — 668,700 — will be exempt from paying taxation compared to less than 25.5% of income earners — 380,400 — in the 1997-98 tax year. I am equally pleased that in the OECD area and in the international context it has been pointed out that in 2003 Ireland had the lowest tax wedge for a single person on the average industrial wage, that is, income tax levies and employer's and employee's PRSI as a percentage of gross income in the European Union and one of the lowest in the OECD.
For the average industrial worker, married with two children, with a carer in the home, Ireland has the lowest tax wedge in the European Union and perhaps the entire OECD. Recently released OECD data indicated that the tax wedge for such workers was followed most starkly in Ireland than in any other OECD country, reflecting the progress the Government has made in this area. I am absolutely thrilled that the tremendous achievements in this area of taxation have been recognised.
Since the Minister said he had no shame, perhaps we might get him to admit to a small degree of embarrassment. I remind him that he gave back on an annual basis €7,000 to single persons earning €100,000 or more. At the same time, he could not see his way to remove those on the minimum wage from the tax net. How can he justify giving an additional €7,000 per annum to those earning €100,000 or more when he cannot give a relatively small amount to those on the minimum wage? After all, they are at the bottom end of the income scale and surely deserve to be taken from the tax net.
My party introduced the concept of the minimum wage. It was a commitment given in the 1997 Fianna Fáil election manifesto. The concept was brought forward many months prior to that election by this well known right-winger. I made a speech during the winter period that it would be a Fianna Fáil commitment. The then rainbow Government of Fine Gael, the Labour Party and Democratic Left said it could not be done. None of these parties included it in their election manifestos. The concept was introduced by me and Fianna Fáil.
The Minister is taxing the people concerned.
All of the figures, including the analysis done by the ESRI post the last and previous budgets, indicate that the benefits of the taxation changes made during my time as Minister for Finance have assisted those on the lowest incomes more than anyone else.
That is not true.
These are the facts.
The Minister to continue without interruption.
The proof of the pudding is that for those on the average wage, there is a lower tax take by the Exchequer than in any other country in the European Union. It is one of the lowest in the OECD. This has been the success of our taxation policy which is recognised internationally.
The Minister's achievement is that the majority of PAYE taxpayers pay tax at the rate of 42%.
Sorry, Deputy, we have already gone over time on this question.
That is the Minister's achievement and it is nothing to be proud of.
A brief final reply from the Minister.
He has achieved stealth taxes.
I am well aware that at least some journalists are more literate than they are numerate. The figures to which Deputy Burton referred are a statistical abomination.
They are in a report from the Minister's Department.
On that basis, if I were lucky enough, for instance, to leave just 5,000 people in the tax net with more than 1.5 million outside it, with 1,000 of them paying tax at 20% and 4,000 paying at 42%, Deputy Burton and some commentators would state that 80% of taxpayers were paying at the highest rate. The more people I leave out of the tax net, the lower my figures will be. I have seen some of the most ridiculously innumerate commentary in this regard recently. There is a strong case for bringing back the primary certificate and including arithmetic again.
Carbon Tax.
9 Mr. Gogarty asked the Minister for Finance the situation regarding the introduction of a carbon tax. [12959/04]
Amharc ar fhreagra34 Mr. P. Breen asked the Minister for Finance if he is committed to the introduction of a carbon tax in 2005. [12906/04]
Amharc ar fhreagra54 Mr. Sargent asked the Minister for Finance if his attention has been drawn to the fact that growers in the glasshouse sector depending on gas for heating need to discuss the extent to which they avail of CO2 emissions to assist in their produce growing and the need to take this into account before carbon taxes are levied. [9204/04]
Amharc ar fhreagra65 Mr. Penrose asked the Minister for Finance the progress made by his Department in its consideration of the consultation papers on carbon taxes; and if he will make a statement on the matter. [12989/04]
Amharc ar fhreagraI propose to take Questions Nos. 9, 34, 54 and 65 together.
As I stated in my budget speech on 4 December 2002, Ireland has international obligations under the Kyoto Protocol to reduce greenhouse gas emissions. For this reason, the Government asked the relevant Departments to advance the plans for a general carbon energy tax, with a view to introducing it from the end of 2004. I also said that there would be full consultation with interested parties on the design of a carbon energy tax.
In July 2003, I commenced this consultation process and made available a carbon energy tax consultation paper prepared by my Department. This consultation paper was designed to facilitate discussions on the introduction and design of the carbon energy tax while recognising that there are divergent views on the issue. The paper gave a concise overview of the issues relevant to consideration of the proposal. Submissions in response to the paper were invited from interested parties to be received in this Department by 30 September 2003, but extra time was given where requested by organisations to complete their submissions. A total of 117 submissions were received by my Department in response to the carbon taxation consultation paper. As part of the consultation process, these submissions are now also available publicly on my Department's website.
A large proportion of those who made these submissions did not wish to see a carbon tax imposed in the State. A significant number who might agree in principle wanted exclusion or exemptions for themselves. Others raised serious misgivings about the impact of a tax on inflation, competitiveness and the poor.
The current step in this process is the examination of submissions received in my Department. This is being assisted via the green tax group, which is an interdepartmental group chaired by my Department, comprised of relevant Departments with an interest in environmental tax issues.
With regard to the specific question on growers in the glasshouse sector, I am aware that a submission was made on this issue by the IFA horticulture committee and it is currently being examined with all other relevant considerations in the context of the development of the carbon energy tax proposal. It would not be appropriate for me to comment further on this or any other issue at this stage.
This is one of the most important issues facing us in an environmental as well as tax context. When will the Minister give the Government's position on the issue? Do we have to wait until budget day 2004 and have a short, one month gap before it is introduced? I imagine the companies which will be affected by this will need to have advance notice of when it will be introduced and in what form. The Minister stated that we are in extra time in examining the submission, but we are well beyond it, the game is over and the crowd has gone home, yet the Minister is still prevaricating over whether we will introduce carbon taxes.
Does the Minister have full agreement among his Cabinet colleagues on the issue or is there division between him and, for example, the Tánaiste and Minister for Enterprise, Trade and Employment? Has the matter been brought to the Cabinet yet for approval? Has the Minister decided the manner in which revenues from such a tax will be used? Whatever about the plight of the greenhouse growers in Fingal, about whom he seems to be concerned, has the Minister set out a definite policy about how the revenue will be used? Will he give a commitment that the revenues from any such tax will be recycled through lower PRSI contributions, lower VAT rates or higher social welfare payments to offset some of the consequences of the tax on people with low incomes or does he see the revenue being used for general Government spending?
In my budget speech in December 2002, I stated that the Government would consider the introduction of a carbon energy tax by the end of 2004. Consequent to that, we have invited submissions and, as I pointed out, of the 117 submissions, 42 are in favour or could accept the tax, 53, or 45%, are not in favour of the tax, 11 would like their own company or sector to be exempt and 11 did not comment on whether they were in favour.
Is this how we decide policy?
As the Deputy can see from the submissions received, there is a considerable divergence of views on this issue, as there will be among members of all the political parties in the House.
Not among the Green Party, we are fully in favour of it.
Deputy Ryan, I ask you to afford the Minister the same courtesy you received. We cannot have a situation in the House in which Members submit a question to a member of the Government and do not allow the Minister to reply.
The Minister stated that——
It does not matter what the Minister stated, he is entitled to reply to your first question without interruption.
The Deputy raised a number of issues in regard to whether, if there is to be a carbon energy tax, it would go into the general maw of the Government or would be specifically linked to changes in PRSI or specific actions affecting some of the poorer sectors of society. This is a very involved area and the Government will give it further consideration in the coming months.
I am sure the Minister will know Edmund Burke's famous saying: "To tax and to please, no more than to love and be wise, is not given to men." Is the Minister applying this a little too acutely to his situation by continually postponing a decision on this important issue? Will we wait until budget day next year before we hear of the Government's decision or will there be Government proposals in the nature of a White Paper or similar, whereby there can be a reasonable and sensible debate in the House about solid options the Government proposes to implement? We have seen the discussion document and the submissions, but we want to engage at the level of a White Paper.
Is the Minister concerned that the system in place in respect of carbon tax and emissions trading is having the perverse effect that polluting industries have no incentive to conform but rather wait for their next emissions allowances to be issued to them? Does he believe we have a coherent policy in this area to achieve the Kyoto objectives and how does the carbon tax fit in?
If Deputy Bruton is making the point that there is not one simple solution in regard to carbon energy taxes, I agree with him. Some people have taken a very simplistic view of this over the past few years when there is no simple answer. The Government will consider the matter further in the coming months and will decide what to do. The matter has not yet been considered by the Government. The emissions trading issue was decided by the Government in recent months.
I am only asking about the process. Will there be a White Paper and a debate?
I have put no proposals to the Government in that regard. As the Deputy well knows, I am not in a position to tell him what I might put before the Government, but it will consider the matter in the coming months and I will take on board some of the ideas the Deputy has put forward.
In regard to the permit structure of carbon emissions trading, has an evaluation been made of the announcements made by the Minister for the Environment, Heritage and Local Government, Deputy Cullen, in regard to their impact on Irish industry, in particular the structure for new large-scale incoming foreign direct investment, such as Hewlett-Packard or Intel? Those have high, energy requirements and, under the scheme, they may in future have to purchase such permits from older industries in the State, which may be relatively heavy polluters.
I repeat a question I asked the Minister before. Has his Department carried out any further evaluation of the impact of the proposed carbon taxation structure on older people? I refer to the lack of insulation in many old people's homes and the impact on them of increased prices for turf and coal.
The question on emissions trading would be more properly addressed to the Minister for the Environment, Heritage and Local Government, who has dealt with this matter.
I am asking about the financial implications.
When considering the emissions trading issue, the Government considered all these matters. The issues referred to by the Deputy were considered by the Government and, in particular, by the Department of Enterprise, Trade and Employment in its contribution to that debate.
Deputy Burton referred to a carbon energy tax and, if one were to be introduced, the effect it would have on older and poorer people would certainly be examined by the Government. With respect to Deputy Ryan's party, which has campaigned forcefully for a carbon energy tax for several years, all those issues must be considered. This is not a simple issue, as is evidenced by the submissions we received. Even if we had received no submissions, people would come to realise that this is a difficult issue.
I want to ensure the Minister is aware of Green Party position on this. To take the ESRI line, the revenues from a carbon tax should be fully recycled into lower employers' PRSI payments, lower VAT, increased social welfare contributions and a fund for cleaner technology. That is exactly what we will be looking for from the Minister.
The Minister said this is a complex issue, which it is. There is not one solution. Is the Minister's Department beginning to investigate the scientific analysis presented at the Environmental Protection Agency conference last week, that Ireland and other western states will have to examine an 80% reduction in our CO2 emissions in the short to medium term to address the climate change fears of the scientific community? Given the complexity of the issue, how does the Government justify its massive roads expenditure? That will lead to high emissions growth in the transport sector. What role does that expenditure have in terms of energy policy when we have a block on the development of renewable energy sources? If this is a complex issue with multiple and variable responses, what is the Department of Finance's role in the investment and funding decisions we make for a lower-emissions future? Why in God's name are we investing so much in roads when we will have to shut them in 20 years' time because of emissions from the transport involved?
Does the Minister have any proposals for the promotion of alternative energy as another way of reducing our emissions levels?
The original question related to the carbon energy tax. I am conscious of climate change and our obligations under Kyoto. Deputy Ryan is correct if he is putting forward the view that we will have to take some dramatic action in reducing these pollutants. We will have to do that but is a carbon energy tax the way to do so? That will have to be addressed.
Taxation certainly plays a part in preventing people from creating pollution. I accept that. However, as I have pointed out previously, this area is complex because of the other issues it raises, which leads me to Deputy Burton's supplementary question. There may be other incentivising steps we could take to achieve what she suggested, but this question related to a carbon energy tax.
Written Answers follow Adjournment Debate.
