Thursday, 2 December 2004
Dáil Eireann Debate
Minister for Transport (Mr. Cullen): Of the € 7.7 billion for roads, most of the projects are outside the greater Dublin area. The funding provided for my Department in 2005 will enable record infrastructure investment by Government in rail, road and bus transport in the year ahead. This, taken with the capital envelope developments, will benefit jobs, the regions, commuters and businesses.
Among the highlights of the Government’s transport spend for 2005 are the continued construction, planning and design on nearly 400 km of new roads, 103 new rail carriages, €5 million for commencement of work on a new rail station in Dublin’s docklands, major benefits for the western line for Maynooth commuters, Sligo users etc. and relief capacity constraints on Connolly Station. Five new quality bus corridors for Dublin, three new green routes for Cork and one quality bus corridor for Galway will be provided in 2005. Up to 40 new DART carriages for 30% capacity increase will be supplied.
The sum of €10 million will be spent on a special programme for improving public transport accessibility for people with mobility and sensory impairments. This is in addition to ongoing investment in public transport infrastructure for accessibility. The sum of €9 million will be provided in 2005 to deliver integrated ticketing. Smart cards will be launched on Luas in early 2005 to be followed by Dublin Bus later in the year at a projected cost of €29.5 million. The rural transport initiative will receive €3 million.
Next year will see significant further improvements in public transport. The additional capacity and increased frequency of services already in evidence as a result of the massive investment of €1.6 billion since 1999 will be further augmented by an investment of €686 million in 2005. The Government is building roads because they protect and grow job opportunities and community life. Over €1.3 billion will be invested in roads in 2005 alone. I have committed €24 million for regional airports in the year ahead.
There will be an increase of 6%, to €686 million, in investment in the public transport system for 2005. The highlights for the coming year include the introduction into service of 36 additional diesel railcars which will increase capacity on the Sligo line and on Maynooth suburban rail services. There will be an increase for DART, phase one, with 30% increase in DART capacity, and for the commencement of phase two, involving upgrade of signalling to give increased train paths across Dublin city. Up to 67 intercity carriages for the Dublin-Cork line will be delivered and introduced, improving service quality on the line and allowing Iarnród Éireann to cascade existing rolling stock to other lines and remove from service older, life-expired carriages.
The Cork commuter rail project will commence in 2007, involving relaying of track from Cork to Midleton and development of a number of new stations from Mallow to Midleton. Work will commence on a new rail station in Dublin’s docklands to relieve capacity constraints on Connolly Station and allow for increased service, particularly on the western suburban line. The roll-out of traffic management schemes in Dublin will continue, including the introduction of new quality bus corridors. There are nine quality bus corridors in Dublin, five of which are in the course of construction and will be opened in 2005. In Cork, the first two green routes are due to be completed before the end of 2004. A further three are due to be completed and opened in 2005. Work is proceeding at different levels on another five routes and the programme is due to be completed by the end of 2007. In Galway there is one quality bus corridor under construction, while in Waterford and Limerick they are at planning stage. As part of the phased roll-out of smart cards for passengers under the integrated ticketing initiative, smart cards will be launched on Luas in early 2005 to be followed by cards on Dublin Bus services later in the year.
The total spend on the national roads programme sees an increase in 2005 of 7% to €1.319 billion. This together with a carryover of approximately €40 million and €245 million of public private partnerships funding will maintain the high level of investment in this major infrastructural programme.
In line with the programme for Government, the NDP and the economic and social infrastructure operational programme, the development strategy for national roads is focused on the completion of the five major inter-urban routes to motorway or dual carriageway standard, completion of the Dublin Port tunnel and the M50, including upgrade, major improvement works on other national primary routes and pavement restoration on national secondary routes. Specifically, 2005 will see the commencement of 17 national roads projects, including phase 1 of the M50 improvements, the N25 Waterford city bypass, the N77 Kilkenny ringroad extension, the M3 at Clonee south of Virginia, the Edgeworthstown bypass and the M1 from Dundalk to the Border road. Construction continues on a further 21 projects, including the M1 Dundalk western bypass, the N4-N6 Kinnegad-Enfield route, the N8 Fermoy bypass, the N2 Monaghan bypass, the N15 Ballyshannon-Bundoran bypass and the N21 Castleisland-Abbeyfeale road. The completion of seven projects is scheduled, including the M50 south-eastern motorway, the N4 Sligo inner relief road and the N6 Loughrea bypass. Funding of €24 million will be provided for regional airports in 2005, of which €20 million is to meet the public service obligation programme for regional services. The remaining €4 million is allocated for capital expenditure.
I turn now to the post-2005 period. The Government recognised in the national development plan and the capital investment framework announced in last year’s budget the importance of a long-term strategic and funding framework for the upgrading of our physical infrastructure. This is especially true in sectors such as transport in which major investment programmes are being undertaken over an extended period. Capital projects in the transport sphere are multi-annual in nature, involving long planning lead-in times and substantial construction phases. Given the time considerations, the scale of the projects and the investment involved, the Government considers an extended capital envelope to be appropriate in the transport sector. In this context, my colleague, the Minister for Finance, announced yesterday that he agreed in principle to an extended capital envelope of ten years. This radical departure in forward budgeting will afford the Government greater flexibility and clarity in the planning and delivery of infrastructure necessary in a modern economy.
Investment in road safety is of vital importance. The recently published road safety strategy established the primary target of a 25% reduction in road collision fatalities by the end of 2006 over the average annual number of fatalities in the period 1998 to 2003. This ambitious target will require a strategic, integrated approach by all road safety agencies. The success of implementing road safety policy as set out in the road safety strategy is critically dependent on major investment in resources by various Departments and their agencies. The Government remains committed to providing ongoing support in the pursuit of road safety policies.
The 2005 Estimates include increased provision for all road safety agencies under the aegis of my Department. The National Safety Council and the Medical Bureau of Road Safety will share €5.37 million in funding next year which represents an increase of 176% on funding provided for the agencies in 1998 when an allocation of €1.942 million was made. The level of investment in road safety measures since the introduction of the first road safety strategy in 1998 has increased significantly. Since then, the implementation of road safety policy has resulted in a 29% reduction in road deaths.
Minister of State at the Department of Foreign Affairs (Mr. C. Lenihan): I thank the Leas-Cheann Comhairle for the opportunity to speak during this budget debate. It is a great pleasure to be able to defend this excellent budget which places the Fianna Fáil Party and the Government of which it is a part in a strong position in terms of the next general election.
The most important aspect of the budget as it relates to my area of responsibility is the significant increase in the level of overseas development aid. The budget provides for the largest single transfer of resources to the overseas development aid fund in the history of the State. The Development Co-operation Ireland programme celebrates its 30th anniversary this year, in the context of which the funding increase represents a momentous feat. It is remarkable that in the short period since 1974, when it could first afford a programme, Ireland’s involvement in overseas aid provision has seen it move from a position of virtual inconsequence to one of great significance. Ireland is the seventh largest per capita overseas aid donor in the world. The significant increases have only occurred in the period since the Government took office in 1997. Thanks are due to the Taoiseach’s enormous wellspring of idealism and his commitment to the achievement of the very ambitious contribution target of 0.7% of GNP. The largesse and sheer magnitude of the budget allocation indicate that we will do so, if not in the timeframe initially set out. We cannot be blamed for failing to keep to the timetable as we lost two years of contributions as a result of the events of 11 September 2001 and the consequent Exchequer reversals.
The budget provides for increases of €190 million over three years. The entire development sector was clear and unanimous in its key demand of the restoration of the multi-annual envelope. I regard the meeting of this demand as a personal negotiating triumph. I thank the Minister for Finance again for consenting to the provision. Typically, Ministers for Finance do not easily make the concession of a three-year, multi-annual programme. That the multi-annual funding device has otherwise been employed only in the areas of disability and capital funding demonstrates the significance of the Government’s commitment to overseas development aid. Ireland remains the world’s seventh largest donor on a per capita basis.
I hope as we increase the sums we make available for overseas development aid, we will become the world’s leading donor. It is not an unreasonable objective. If one calculates Ireland’s per capita contribution on the basis of the State contribution to the official overseas development aid programme and the private contributions of citizens, one could argue that Ireland is already the largest donor. There is a significant wellspring of goodwill within the Irish community towards the developing world and we must capitalise on it to a greater extent in the years ahead. Overall, Ireland will spend €1.8 billion, which includes significant increases of €60 million in 2005, €65 million in 2006 and a further €65 million in 2007.
As ever, The Irish Times is inaccurate in its reporting of what has occurred in this area. Scepticism was expressed in its pages today about the Department of Finance’s overseas development aid target of 0.52% of GNP. I am fully confident that we will reach this target in 2007 and, possibly, exceed it. It is only right and proper that we do so. The Taoiseach shares this ambition with me as it is by achieving or slightly exceeding the 0.52% target that we will come within what I described during my first two weeks in office as “striking distance” of the 0.7% figure. By first achieving the 0.52% target, we will get within the striking distance necessary to honour our very strong commitment.
The significance of the multi-annual package has been ignored by Opposition speakers and in some of the comment on the budget from non-governmental organisations. While the multi-annual funding is ring-fenced, it is not capped. There is a Cabinet commitment to me as Minister of State with responsibility for Development Co-operation Ireland that the fund can be increased. There is no golden cage from which one cannot climb. I am very confident we will be able to increase the funding allocation in the multi-annual programme in next year’s Estimates and budget. The €60 million target for 2005 and the €65 million target for the following year can be exceeded. We will go forward bearing in mind that we can exceed the 0.52% of GNP in 2007 and, consequently, achieve the 0.7% figure.
I believe, and I put this out merely for debate and not as a statement of policy, that we must look realistically at the following five years, which appears to be the average life span of a Government, as the period within which we can achieve the 0.7% figure. I am open to persuasion on the point that we should legislate for that commitment when we reach the 0.7% target. It would be appropriate to legislate for it then because it would not be open to other Governments to reduce the amount of money we spend on overseas aid.
To that end and because of the issue of the timeframe within which we achieve our target figure of 0.7% of gross national product, I will publish in January an invitation to the public to make submissions on the White Paper I have flagged in the area of overseas aid. The purpose of the White Paper is to inform the public of the amount of money we spend on overseas aid and also to ask people for their views on how we should spend that money going forward in the context of those amounts increasing dramatically. As Members will be aware, if we were to achieve the 0.7% figure tomorrow, it would mean a doubling of the level of aid from its current level of €475 million to approximately €1.1 billion. That is the amount of money that will be spent and it poses the question about capacity constraints and the ability to spend that money in an efficient manner so that taxpayers are assured they are getting value for money and that it is not being wasted on administrative overheads or projects that cost too much.
We should be mindful of that because even in our country, not to mention what happens in developing countries, there has been criticism of the public capital programme in respect of roads etc. to the effect that we did not get the best value because a good deal of money moved into the system very quickly but the project management skills and the spending controls were not in place. That point has been made by the Committee of Public Accounts and the Comptroller and Auditor General and we should learn from that lesson, particularly when we are spending valuable taxpayers’ money in developing countries which would not have the sophisticated systems of budget audit control that we have here.
For those reasons, there will be a White Paper process which will have a duration of perhaps a year, but in the calendar year 2005, on foot of the White Paper consultation, we hope to publish a White Paper along the lines of that published, and to good effect, by the former Tánaiste and Minister for Foreign Affairs, Dick Spring. He engaged in a valuable process of consultation which led to a White Paper on foreign policy. All Members of this House would be fair-minded enough to accept that was a healthy process. The public was invited, for the first time ever, to enter what was then the closed world of diplomacy and foreign affairs which was dominated by elite groups, be they politicians, administrators or diplomats, who had colonised the area, so to speak, kept it to themselves and did not invite the public’s view. That process initiated by the former Tánaiste, Dick Spring, was of enormous value because a much more active foreign policy debate is now taking place. The Oireachtas has a Committee on Foreign Affairs and, generally speaking, one can talk now about a public policy formulation process that is more open both to the public and to the elite.
Mr. D. Wallace: I congratulate the Minister, Deputy Cowen, on his first budget which was widely welcomed throughout the community. Any analysis of the 2005 budget will have to take account of the parameters under which the financial decisions were taken. It is important to note that the decisions taken in yesterday’s budget are a continuation of the careful management of the finances of this country that has been a hallmark of this Fianna Fáil-Progressive Democrats Government for the past seven years. The development of our economy into one that is the envy of every one of our European neighbours occurred not by chance but by sensible and prudent management of our finances. In that regard, it is important to acknowledge the role of the former Minister, Charlie McCreevy, in maintaining the public finances in good order during his stewardship in the Department of Finance and in handing over the responsibility for the Government finances to the Minister, Deputy Cowen, in good shape.
As we look forward to the coming year, it is important that we maintain strong economic growth and underpin competitiveness and jobs. It is equally important, however, that we confirm our commitment to social inclusion and helping, in a real way, those who are less well off. The OECD report of this week, which predicts strong economic growth of 5% per annum over the next two years, is a welcome development. Equally important, however, with employment expected to grow by 35,000, will be the need to encourage more women and older people to enter the labour market to ensure there is a ready stream of suitably qualified labour to supply the expanding market. In that regard, I particularly welcome the Minister’s initiative on taxation and the lower paid, which will act as an incentive for people to return to the workforce.
The Minister’s taxation policy will encourage people back to work, and also acknowledges the importance of removing as many people as possible from the tax net. The widening of the tax band and the increasing of the employee tax credit will assist all workers but, crucially, it will result in 650,000 of the lower paid in society being removed from the tax net altogether. This policy will also ensure that no person on the minimum wage will pay tax. The widening of the tax band by €1,400 will also remove many taxpayers from the higher rate of tax. This is a continuation of the successful policy to reward workers for their contribution to the development of the economy and augurs well for a continuation of the growth levels that have come to be the norm in this country. Our ability to look after the less well-off in society is directly related to the level of growth in the economy and, because of these growth levels and other Government initiatives, additional funds are available to cater for this sector of the community.
Expectations have been created that real and telling increases in social welfare rates would be provided to help people who are dependent on the State. I am delighted the Minister has not disappointed in this regard. If anything, he has surprised many people with the level of the increases that will apply to pensioners, unemployed people and parents in receipt of children’s allowance. A €12 per week increase for pensioners, a €14 per week increase in unemployment benefit and increases of 7% in child benefit are meaningful and will improve the quality of life for all people in receipt of those benefits. It is also worth noting that these are just the first such increases the Minister proposes to make as he has made it very clear that he will revisit these areas in his next two budgets.
Ireland has a higher percentage of home ownership than most other states in the western world. It is a unique feature of life in Ireland that most people strive to own their own home. Unfortunately, in the recent past, because of the rate of house price inflation, it has become increasingly difficult for first-time buyers to get on the bottom rung of the ladder and purchase a property. The Government attempted to address this area with various initiatives, including shared ownership, the affordable housing scheme and the serviced land initiative. All these schemes have had a certain amount of success and will in time lead to an increase in supply.
Yesterday’s announcement that first-time buyers are to be given a significant concession on stamp duty will undoubtedly be the single greatest incentive in recent times for young people in the marketplace. The financial benefit to a first-time buyer of this measure could be up to €11,000, and this will ease much of the hardship associated with buying a secondhand house. It will also make available to first-time buyers properties that were heretofore outside their reach and, unlike other previous schemes to incentivise first-time buyers, the benefit is immediate. This measure is a clear sign of the Minister’s commitment to helping those who are in a position to help themselves and should be welcomed by all sides of the House. There is no greater start in life for young people than to own their own home and any assistance that can be given to support this process deserves to be welcomed.
The most pleasing aspect of this budget for most people is the commitment by the Minister, Deputy Cowen, to put the care of the disabled on a sound financial footing once and for all. The representative groups for disabled people have for many years lobbied for such an approach. The allocation of €900 million for the years to 2009 will provide the necessary services for individuals and their families to receive the care and services that any modern society should strive to provide for its disabled citizens. This funding will undoubtedly ease much of the hardship for families throughout the country and should provide the necessary reassurance to elderly parents that their disabled children will be properly looked after by the State.
The system of multi-annual budgeting using the envelope system of funding, which was introduced last year has proven successful. The fact the Minister has seen fit to extend this system to a ten-year timeframe for transport projects is welcome. The ongoing development and expansion of our economy is as much tied up with the ability of our workforce to adapt as it is with our ability to develop our infrastructure. We have been hampered in the past by our inability to address issues in the long term and the most successful developments have taken place when the proper planning and research was done in advance. This new measure will allow us to avoid the pitfalls of trying to develop our infrastructure in a piecemeal basis and will ensure we benefit from economies of scale by adopting a ten-year approach to our roads and transport network.
The benefit of the works that have been completed include a reduction in journey times on major roads and safer driving conditions on new roads. It would have been unthinkable a few years ago to imagine that one could travel from Portlaoise to Dundalk without leaving a dual carriageway but this is the reality. The road between Cork and Dublin is constantly improving and the money being spent on airports and the rail network under the national development plan will serve the country well. We can build on this progress and further enhance our infrastructure over the next few years with a consequent positive spin off for the economy.
The budget should be acknowledged as one that has, as its primary focus, the requirement to cater for the needs of those most in need in society. The various measures will help to alleviate hardship, offer hope and improve quality of life for people from many different backgrounds. It will do so through the provision of better services and a fairer distribution of available resources. However, the provisions contained in this budget will ensure this can be achieved while fostering enterprise and promoting all that is good about economic life in Ireland. It is a proactive budget to benefit all the people of the State and I am happy to support it. I congratulate the Minister on the budget.
I am glad to have the opportunity to address aspects of the budget relating to my brief. The budget has received a mixed response from a broad range of commentators. I congratulate the new Minister for Finance, a fellow midlander, on jumping his first major hurdle, which must be a significant ordeal on a personal level. However, my reaction to the budget is also mixed as it was something of a curate’s egg — good in spots.
Like most people, I welcome the social welfare increases and the programme set out for people with disabilities, which is significant. While the social welfare changes are welcome, the increase in the qualified adult dependant allowance is askew because many qualified adult dependants are women who worked hard in the home rearing families and who are asking why they should not qualify for the same amount as others. The trend has been to increase the allowance to a certain percentage of the original payment. I urge the Government to proceed in that direction, even though it had an ideal opportunity to reform this payment. More work must be done to recognise the tremendous role of people within the home.
The Government has made commitments to people with disabilities, which are both laudable and ground breaking, but the Government and its predecessor made many other commitments over the past seven years, which were subsequently dishonoured. Its actions over the next few years regarding the disabled will be closely monitored. If economic circumstances are not as favourable next year or the year after, I suspect the Minister for Finance will prove as good at the Fianna Fáil wriggle as the Taoiseach, who has become a socialist overnight.
I refer to the savage 16 social welfare cuts about which I took a great deal of flak last year. I was described as sensationalist and alarmist and it was stated that I did not know what I was talking about. I never visited a personal slight or insult on a Member and all my comments are made on a political basis. However, I recall the Minister for Social and Family Affairs taking great umbrage at a number of points I made. I did not make them on a personal basis, particularly as one could not deal with a more personable Minister than Deputy Coughlan.
However, I knew she had been sold a dummy by the former Minister for Finance, Mr. McCreevy, the greatest right wing doctrinaire and ideologue in the State, who had able allies in the Progressive Democrats. He left the Minister for Social and Family Affairs €58 million short in her budget. I was extremely disappointed that the Fianna Fáil Ministers did not come to the aid of the Oireachtas Joint Committee on Social and Family Affairs and the Labour Party. We were first to highlight the impact of those insidious, nasty and mean spirited cuts, which visited hardship on the marginalised and the poor and we were attacked for being sensationalist.
Mr. Penrose: Yes. If the Minister of State wants a history lesson, I will tell him a thing or two he might not like to hear. He did not support decoupling when I sought it back in the mid-1990s. He ran with his tail between his legs and he was glad to accept it afterwards. I will give him a lesson in history if he wants it.
The new Minister for Social and Family Affairs listened, even though he is a compatriot of the right wing ideologues, because he had no choice. The Society of St. Vincent de Paul spent €32 million last year looking after people and it would be a shameful and sad indictment of a Government if it did not listen. The SVP is a voluntary organisation, dependent on the public for significant funding, but it spent €600,000 a week last year fighting poverty and social exclusion. We were told we were off the wall. The Society stated social exclusion is not just a snapshot of inequality as it encompasses material deprivation certainly and it denies people the opportunity to participate fully in society.
The Government has made a half hearted attempt to address social exclusion but nobody should be fooled because it made 16 savage cuts. The National Widows and Widowers Association subsequently savaged the Government, which we indicated would happen.
Mr. Penrose: I identified the 16 cuts, which were hidden and masked. It took me 72 hours but I found them. I was told they did not exist and, lo and behold, they were itemised, one to 16, by the Minister yesterday. However, I know more about social welfare than many people think. The widows and widowers undertook a campaign and the cut aimed at them was reversed.
Is the Minister trying to tell the House the back to education allowance has been reversed? The qualifying period used to be six months but it was increased to 15 last year. It was reduced by three months yesterday to pretend that the cutback had been reversed. The measure was meddled with and touched up around the edges to pretend it would be reversed. It is absolutely essential that the qualifying period should be reduced to the original six months. I had a case involving a young girl who was 11 months into the qualifying period last September. I applied for the grant on her behalf. She was not abusing the system, as she was returning to a third level institution to become a graduate, but, even though she is from a poor family, she was denied the allowance. If that is a reversal, I know nothing about the English language.
I refer to the one-parent family allowance. Claimants lost out when they took up employment and their earnings were in excess of the upper threshold of €293 per week. I accept that half a loaf is better than no bread. I come from that sort of environment and background. However, nobody should mislead the public, the community, voluntary organisations or any other recipients. It just needed another €50 million to reverse the cuts, but that money could not be found.
Mr. Penrose: The Minister could not find €50 million for this. That money will never be found because these are the kind of people for whom the Minister of State has no time. His type of ideology would push them out of the system. These people were not looked after.
There are all sorts of half promises of further reviews. Time will tell. We will come back to this. Let us see for example what funding will go to dietary allowances and the MABS supplement. An additional €700,000 is allocated to MABS to deal with major problems. A MABS supplement was available where people with difficulty meeting their commitments could get €20 or €35 to keep them away from money lenders or high borrowings. This supplement facilitated people and kept them on the straight and narrow. That was removed and the Minister says this allocation is the best way to deal with the matter.
Representatives from MABS made a presentation in committee in which they indicated that few of the people who avail of MABS advice could participate in SSIAs. They suggested that a scheme should be set up for these people to save an amount such as €100 a year, just €2 a week, and that they should then be given a top up by the Government. MABS wants such a pilot scheme or prototype set up. If the Minister does not want to restore the system to the way it was, he should explore this avenue. This is a positive suggestion and I hope he considers it, although I come from a different perspective than him. The Minister has at least started a process. However, I call on him to continue the process of reversal of cutbacks in a meaningful rather than half-baked way.
As Chairman of the Joint Committee on Social and Family Affairs I am appalled at the Minister’s failure to deliver anything of significance to carers. If he goes down the country and meets individual carers they will explain the situation. I received a press release from the Carers Association which was disgusted by the Government’s failure to deliver on its pledge to support carers. My colleagues on the joint committee and in the Carers Association, who made agreed recommendations on what needs to be done and prioritised for carers, call on the Government to formally recognise the extent of the contribution made by family carers.
We introduced a carers’ Bill dealing with needs and assessments. Such legislation has been introduced in Northern Ireland and throughout the United Kingdom and is working well. We also called for a national strategy for carers. Every organisation that made presentations for the proposed legislation made this call. Such a strategy would help reduce costs and bring savings in the health budget if implemented. It would certainly ease the pressure on carers.
Carers save the State a fortune. According to the CSO there are 150,000 carers, some full-time and others part-time. They save the State up to €2 billion annually. We suggested that the means test should be abolished for carers. The carer’s allowance was €139.40 but with the increase it is now approximately €150. Abolishing the test would cost approximately €220 million, just a little over 11% of what it would cost the State if all the people being cared for were transferred into institutional care. That is one of the most positive cost savings the Government could get. It has missed a golden opportunity to recognise the work of carers who give of themselves 24 hours a day, seven days a week and 52 weeks of the year.
I acknowledge the increase in the respite care grant of €165 bringing it to €1,000. The Minister has provided an extra €9 million to widen eligibility for respite care. How will he evaluate who will benefit from this? He said that 32,000 carers can now avail of this but this figure only represents a small proportion of those who classify themselves as carers. The grant is essential and we recognise the increase to €1,000. However this is only €18 a week and does not take effect until June 2005. I am interested to see how the Minister will deliver this and who will benefit.
The Minister missed a golden opportunity to make people happy in the context of dual eligibility and on the basis that he cannot pay two social welfare payments. We indicated that at least 50% of the carer’s allowance is paid to those who may be widows, widowers, one-parent families or others in that situation. The Government learned a lesson to its cost when it denied the 50% unemployment or disability payments to widows and widowers. It had to row back and pay the 50%. The Government has the opportunity to row back now and, at no great cost, recognise carers.
We all get phone calls from the many widows and widowers who have been carers for 20 or 25 years. For example, a married person on a low income who gets the carer’s allowance under the disregard scheme for looking after a mother or mother-in-law, will lose that income if his or her spouse dies. They now lose that income and just get the widow’s pension and end up worse off at a time when they are most vulnerable. We set out a pathway to ensure people in this situation would be helped.
When we contrast carers with high income earners, some of whom do not even contribute to tax revenue, it is clear the Taoiseach’s professed socialism is spurious. He has promised another review. I know some taxation measures and tax shelters are needed to promote industrial development and economic growth in particular areas. Some of them have outlived their usefulness and it is obviously time for a review. Some will continue to be required and some should never have been introduced.
Those schemes are there for everybody and I understand why people avail of them. However, it is time to re-examine them. It is time to introduce a minimum effective tax rate. Everybody should make a contribution. Just because somebody is a millionaire should not mean he or she need not make 1 cent of a contribution. All workers must make a contribution. I am delighted people on the minimum wage are being removed from the tax net. I applaud that. However, I am concerned that when they get their 5% or whatever under Sustaining Progress next February or March, they will return into the net. I know it is a cycle and appreciate it is difficult to deal with, but it should be looked at. At least the effort was made to remove them from the net. We really have to get down to business on that.
The Taoiseach tried to put some distance between himself and the benevolent treatment of taxation freeloaders. He expressed outrage at the freeloaders and then said sanctimoniously that the Government would deal with them in the next budget. The well known prayer of St. Augustine is: “O Lord make me virtuous, but not yet.” We wanted this to be done in a transparent manner so that people could see exactly what the schemes are, why they were brought in and what benefit has accrued from them. Any scheme that is not of real economic benefit, that does not lead to industrial activity or economic growth should be re-evaluated and got rid of. The public expects this to be done. We want this examination to be carried out in public.
In the budget, the Minister sought to make a move in the direction of correcting the total imbalance introduced by his predecessor in the finances of the State where the rich and the horses and greyhounds were favoured far more than the underprivileged. I have been involved with horses and, unfortunately, I back them as well, which is not——
Mr. Penrose: ——a very good occupation. Some of these schemes were introduced in the 1960s and served a purpose. The Minister of State, Deputy Parlon, is aware that I know some horse breeders down the country. We are not talking about those people who produce jump horses and so on, they are all right, but there are breeders who get in the region of €65,000 or €70,000 per service. I would not mind if some breeders were exempt but this area needs to be examined closely.
I have a particular interest in the one-parent family allowance. The maximum earnings allowed under the one-parent family allowance has not been reviewed since January 1997 when it was introduced by Proinsias De Rossa. It is essential that this matter is examined. I accept the premise that the best way out of poverty is to get people working, but in this regard we need to increase the income disregard limit to €400. Nothing was done in regard to the fuel or living alone allowances either.
I am glad of the social welfare increases but I draw the attention of the Minister of State, Deputy Parlon, to the fact that a married couple aged 66 on invalidity pension will have a weekly income of €264.30, but the new medical card threshold for this couple is €222. They will be €42.30 above the threshold for the medical card. We must ensure this threshold is adjusted upwards so that medical cards are not taken out of the hands of invalids. The same is true of a single person living at home who is entitled to €154.30 but the medical card threshold is €136, which is €18 above the limit. We must adjust the limit to ensure nobody loses a medical card unnecessarily.
The budget document has some positive proposals but also some missed opportunities. I am glad the Minister of State, Deputy Parlon, is here because some of the points I make will be in areas of which he has an understanding. The most important aspect of any budget is that prosperity and capacity for economic growth must not be threatened. In this regard, I welcome the statement of the Minister, Deputy Cowen, early in his speech yesterday that our economic strength must be protected as it gives us the leverage to create social reform. That is what Government wealth is about, having the leverage to improve life for the weaker elements of society.
The key tool for economic management available to the Government is taxation. The ability of the Government to make its own taxation decisions must be protected in an EU context and I hope I will play my part in doing that.
Let us look at the taxation package from yesterday’s budget under two headline measurements, the first being competitiveness promotion and the second quality of life support. In regard to corporation tax, the Government’s continuation of the low corporate tax rate in Ireland is to be welcomed. In the past, the low corporation tax rate alone was sufficient to make Ireland competitive as a destination but we need to look for new ways of doing that as many of the new central European Union members are adopting a similar approach to corporation tax.
In regard to income tax, an increase in tax credits to remove people on the minimum wage from the tax net is welcome, but I signal to the Government that the minimum wage is likely to increase over time and while we have economic buoyancy it is a good benchmark and guideline for Government in each year’s budget to have taxes kicking in at the minimum wage so that people above that level of income have to pay some tax but those on it do not.
In regard to the tax bands, people earning up to €29,400 do not have to pay tax at the higher rate. The average industrial wage is in or around that figure and, as was pointed out yesterday by the Labour Party, 50% of taxpayers pay tax at the higher rate. I was glad to hear the Minister of State’s colleague, Deputy O’Donnell, say that she would insist, through the Progressive Democrats, that there would be a significant widening of the tax bands next year. I would like to see the Government follow through on that policy, which would not be before time.
We should not entirely disregard the idea of having a middle tax band, as was promoted by Deputy Noonan when he was Fine Gael spokesperson on finance. There is something wrong with a system whereby somebody who is earning €32,000 or €33,000 pays tax at the higher rate on the portion of his or her income that is above €29,400, the same rate as somebody who is earning €80,000, €100,000 or €300,000. There is room for a middle tax band, perhaps for people earning under €50,000, allowing for a higher rate of tax for wealthy people who earn more than that.
Fine Gael welcomes the fact that stamp duty has been removed for first-time buyers of second-hand houses, up to a value of €317,000. This is not before time. We have been calling for this for the past five years or so. However, there is a problem with it, especially in regard to Dublin, as the Minister of State, Deputy Callely, will know. The number of second-hand houses below the value of €317,000 is relatively small. Although many first-time buyers will not be able to afford that anyway, we could have raised the bar a little higher to ensure first-time buyers would have a competitive advantage when bidding against people who are selling one home to buy another or, for that matter, bidding against developers.
In regard to tax shelters the 12-month review before next year’s budget is a bit of a cop-out. The Minister, Deputy Cowen, played it safe for his first budget. He could have targeted some tax shelters that are no longer necessary. I am not a person who takes the populist view that all tax shelters should be abolished — I totally reject that approach — but tax should be used strategically to promote development in areas and industries that are not developing, which I will come to in a minute, and to promote elements of society that need support. Tax should be used and the Government should not be afraid to do that, but it needs to justify any tax shelter or tax incentive scheme it introduces.
In regard to indirect taxation, particularly excise duties, it was a popular move not to target drink or cigarettes. However, I disagree with both of these decisions. We should have targeted certain drinks in terms of excise, though I do not know if that is possible. Alcopops in particular make a major impact on binge drinking by young people. Apparently, it is not possible to target alcopops without targeting other drinks, but the Government should examine ways in which it can be done.
Mr. Coveney: Yes, but we need to be consistent and continue the policy. I accept that people are getting browned off with anti-smoking measures introduced by the Government, but they are working. Cigarette sales are down 15% this year, so let us continue with these moves and ensure that reduction next year is another 15%.
Mr. Coveney: It is the result of a combination of measures. The smoking ban in pubs, in particular, had a significant impact. The Government is correct not to increase excise duty on fuel as fuel costs are increasing by themselves owing to world oil prices. In this context, the Government has missed a major opportunity, which I hope it is possible to address in the Finance Bill. It should have given a tax incentive by reducing excise duty for environmentally friendly fuels such as bio-diesel and ethanol as a replacement for petrol. If we took a proactive approach in this area, we would see a major new industry developing on Irish farms which could grow energy crops such as oil seed rape and sugar beet for ethanol. It would be mainly on set-aside land, but it is to be hoped that it would also be on land outside that too. Some states in the US and countries in Europe have insisted on a certain percentage of ethanol being included in petrol. This automatically creates an ethanol industry which could be a boost for sugar beet growers in Ireland. We need to pursue other alternatives.
The other significant missed opportunity in the budget is in regard to child care. Dublin Chamber of Commerce announced today that one third of workers in Dublin pay more for child care than for their rent or mortgage. The Government has given these people just €10 per month in extra child benefit to deal with this expense. The time has now come for young working families to be allowed to write off against income tax at least part of the cost of child care when it is €600, €700 or maybe even €1,000 per month. This would be a brave decision and it is one which must be taken.
Mr. Parlon: Yesterday afternoon, the Minister for Finance, Deputy Cowen, presented his first and this Government’s eighth successive budget to the House. This budget, the third since the 2002 general election, is an important milestone on our progress to achieving the commitments made by the Progressive Democrats and Fianna Fáil in An Agreed Programme for Government. In keeping with that programme the budget has four key objectives, namely to protect and encourage employment in a more competitive business environment, to increase investment in infrastructure so as to guarantee future productivity, to focus our efforts on those in need, in particular those with disabilities, and to distribute the benefits of our economic success in an equitable manner.
This budget is based on sensible policies and realistic targets. It is based on the need to consolidate the gains that have been made in recent years. It commits the Government to low taxes on capital and labour as the proven recipe for a high employment and high growth economy. It recognises that such an economy is the only reliable engine for sustainable social progress.
The significant gains made by Ireland in recent years are in no small part due to the Government’s sound budgetary policies. The proof of these policies is in the Government’s achievements. Over the course of the past decade, a thriving economic climate has been created in Ireland and we have recorded one of the best economic performances in the world. Between 1997 and 2003, Irish gross domestic product grew by an average of almost 8% compared with an average of just over 2% in the EU.
The fruits of this economic success have been put to good use. The taxation system has been significantly reformed, in particular personal taxation, in an effort to enhance incentives to work. Public services have been improved. Provision for the future has also been made with the establishment of the national pensions reserve fund. Our public finances are on a sound and sustainable footing with the general Government debt at just 30.5% of GDP, the second lowest in the European Union.
This budget aims to build on these successes and strengthen the resilience of our economy. However, the double digit growth of the past decade is a thing of the past and we are now moving towards lower and more sustainable levels of growth. We have the potential to grow by approximately 5% per annum if we remain competitive. Expectations will have to be managed within the context of lower growth. We expect gross national product growth of 4.7% next year. Even at these lower rates of growth, we are well above the European average. The European Commission expects eurozone growth to average 2% next year.
As a small open economy, Ireland’s growth performance is closely related to the overall strength of the global economy. We must continue to compete not just to sell our goods and services abroad but also to continue attracting foreign direct investment and creating high quality jobs. In assessing Ireland’s growth prospects for the year ahead it is important to note the situation in the major world economies and reflect on the risks to our economy. The main risks are the sustainability of the international economic recovery, any further rises in the price of oil and other commodities, any potential correction in the dollar exchange rate, and the evolution of interest rates. Any significant negative developments under these headings could impact on the domestic economy. In this context, the challenge for policy is to secure a stable and sustainable growth performance to enhance both social and economic progress into the future.
In 2005, we expect the economy to continue to perform well, assuming no major shocks arise from the risks I have just outlined. Irish GDP is forecast to grow by 5.1% and GNP by 4.7%, employment to continue to grow strongly with around 35,000 new jobs created, unemployment to remain at historically low levels at 4.4%, and inflation to average 2.5%, close to the European average. Our economic record is one of which we can be proud. It far outshines that of our main European partners and has left us well placed to deal with the current economic challenges.
The moderate level of inflation we have seen recently will average 2.5% next year. This is a positive development for our competitiveness. We must continue to focus on competitiveness because it creates jobs and wealth and generates the resources needed to build the sort of society we all want. The Government has made a major contribution to maintaining competitiveness through its decision to bear down on inflation by not increasing indirect taxes in the budget.
The Government is committed to providing public services which are of a high quality but also offer value for money. Since 1997, there have been substantial increases in public spending on social welfare, health, education and infrastructure. The Government continues to provide substantial funding for these key priority areas. In 2005, gross voted spending will be almost €45 billion. This is more than €3.7 billion greater than the figure in 2004. We must be clear about our priorities so that we direct the resources we have available to the best use. We must also focus to a greater extent on achieving more efficiency and effectiveness in the delivery of public services.
The Government is committed to pursuing policies which improve social inclusion, protect those most in need, reduce the numbers living in poverty and raise living standards for all. This budget builds on our work to date and provides substantial funding for the most vulnerable in society. In line with this commitment, a major new disability multi-annual funding package of almost €900 million for the period 2006 to 2009 was announced yesterday. Together with the 2005 funding, it is estimated that by the end of 2009, more than 4,500 extra residential, respite and day places for persons with an intellectual, physical or sensory disability or autism will be provided, approximately 600 persons with intellectual disability or autism will be transferred out of psychiatric hospitals and other inappropriate placements, approximately 1.2 million extra hours of home support and personal assistance will be provided for persons with physical or sensory disabilities, and 400 new places will be provided in community-based mental health facilities.
Mr. Parlon: This new funding package will have a real impact on the lives of disabled persons and their carers and proves this Government’s commitment to helping the most vulnerable members of our society.
The increases in social welfare that have been announced are a significant step toward the implementation of the Government’s commitments in An Agreed Programme for Government. Despite the need to control public spending this year, we have not shirked our responsibilities to those most in need. The improvements announced by the Minister yesterday provided for increases in social welfare payments in 2005 which are €874 million higher in a full year. All the social welfare rate increases in this budget are well ahead of projected inflation. Moreover, the lowest social welfare rates will be increased by more than four times the expected rate of inflation.
Old age pensions will be increased by €12 a week. This brings the old age contributory pension to €179.30 per week and the old age non-contributory pension to €166 per week. In 1997, the old age contributory pension was €99.04 per week; in 2005, it will be €80.26 higher — an increase of just over 80%. These increases will mean that we are well on our way to achieving the programme for Government commitment to increase the State pension to €200 per week by 2007.
The monthly rate of child benefit for the first and second child will increase by €10 to €141.60 and for the third child and subsequent children the rate will increase by €12 to €177.30. This Government has substantially increased the rates of child benefit. The monthly rate for the first and second child in 1997 was €38.09 and in 2005 it will be €103.51 higher, an increase of more than
270%. All other non-old age pension personal weekly rates will be increased by €14, bringing the lowest full personal welfare rate to €148.80 per week. The lowest personal social welfare rate was €83.04 in 1997 and in 2005 it will be €65.76 per week higher, an increase of just under 80%.
In addition, €5 million is being provided to support the development of community services in disadvantaged areas and to complement the contribution of workers employed under the social economy and job initiative programmes operated by FÁS. Improvements in the support provided to carers are also being made. The respite care grant will increase to €1,000 and it is expected that over 9,000 new recipients will benefit from the grant.
The Government has delivered dramatic reductions in personal taxation over the past six years. This policy has helped to generate unprecedented growth in the economy, a spectacular increase in the number of people at work and effective elimination of long-term unemployment. Changes introduced in this budget will ensure that all those earning the minimum wage are fully outside the tax net. The employee credit and the personal tax credit are being increased. This will benefit all workers and ensure that all those on the minimum wage are fully out of the tax net.
The main personal tax changes are: the standard rate band has been increased by €1,400 per year for all earners; the employee tax credit is being increased by €230 to €1,270 per year; the personal tax credit is being increased by €60 single and €120 married, bringing them to €1,580 and €3,160 per year respectively; the health levy threshold is being increased by 12.5% and the incapacitated child credit is being doubled to €1,000 per year. The primary aim of our tax policy has been the use of the tax system to expand our economy, reward work and alleviate the burden on taxpayers, especially for those on lower pay. The changes in this budget will mean that over 650,000 of the 1.9 million income earners will be exempt from paying income tax on their earnings.
This is a strong farming budget. A strong farming sector is vital to maintaining a vibrant rural community and to encourage better utilisation of our agricultural land resources a number of tax measures have been introduced. I particularly welcome the measure to assist farm consolidation by way of a special stamp duty concession to ensure there is no charge for two years on exchanges of farm land for consolidation purposes.
Mr. Parlon: The stock relief for young farmers is being extended for a further two years while the farmers’ flat rate VAT is being increased from 4.4% to 4.8%. I also welcome the accelerated capital allowances on the much needed investment in pollution control.
Minister of State at the Department of Agriculture and Food (Mr. Browne): I welcome the budget announced by the Minister, Deputy Cowen, yesterday. It is a wide ranging and imaginative instrument that will enhance the well being of every person in society, including farmers, who form an important part of our community. The continuing care for the management of the public finances has remained a priority of this Government, as well as meeting its commitments to health, disability, welfare and improving infrastructure.
Expenditure by the Department of Agriculture and Food this year will be €3.3 billion, the highest level ever. This record level of expenditure is made up of an Estimates provision of €1.4 billion and EU funded direct payments and other market supports of €1.9 billion. This brings support for the agricultural community to record and historic levels never previously achieved. In addition, the budget provides a further €20 million in specific farm tax measures that will facilitate structural adjustments and investment in necessary pollution control facilities in the challenging times that lie ahead.
The specific farm tax measures include the option of averaging FEOGA direct payments paid in 2005 in respect of entitlements established in 2004 in three equal instalments over 2005, 2006 and 2007 for tax purposes; the renewal of both the general and young trained farmers stock reliefs for a further two years; a reduction in the write off period from seven to three years for the accelerated rate of capital allowances for pollution control facilities; stamp duty relief in the case of land swaps; and increasing the flat rate VAT refund from 4.4% to 4.8%. In addition, the Minister, Deputy Coughlan, intends to ask the Oireachtas to reduce by one third the animal disease levies paid by farmers to reflect the continuing improvement in the general animal disease situation. This is worth approximately €5 million in 2005.
Legislation for trade and the expansion of the EU will offer growth opportunities for Ireland. However, the challenge is to retain and enhance our competitiveness across all levels of the chain, from producer to processor to exporter. This Government’s tax strategy of keeping both income and corporation taxes low will benefit all those involved in the agri-food sector and help maintain employment in the sector. The farm measures announced by my colleague, the Minister for Finance, will be of assistance to farmers who wish to increase production, purchase more stock, consolidate their holdings or invest in pollution control facilities.
The introduction of the single farm payment next year will lead to a once off boost of approximately €500 million to farm payments in 2005. This arises as farmers will receive outstanding premia entitlements from 2004 while they will get their full entitlements under the single farm payment in December next year. To allow farmers optimise the benefit of this once off adjustment, all farmers will be allowed to average payments received in 2005 in respect of their 2004 entitlements in three equal instalments. This will be available to all farmers, both full-time and part-time, and will be of most use to farmers who wish to have a consistent income stream.
The renewal of stock relief is an important concession in this budget. It is of benefit to farmers who expect their production levels or the value of their trading stock to increase over coming years. Both a general 25% rate of stock relief available to all farmers and the special 100% relief for young trained farmers have been renewed for a further two years. These reliefs, worth €2 million in a full year, allow farmers write off some or all of the increase in the book value of trading stock for income tax purposes. These reliefs will provide assistance and motivation for those investing for the future.
In addition to full stock relief being available to young trained farmers, a sum of €10 million has also been provided in the 2005 Estimates for the installation aid scheme. The full take up of these funds will benefit 1,000 young trained farmers entering agriculture, an increase of one third on 2004. Again, these are significant measures to encourage young people to enter the farming industry.
The stability and simplicity afforded through the new single farm payment system will help maintain farm numbers and farmer confidence. There is, however, a second strand to this equation, that is, the need to allow farmers to move or consolidate their holdings in a cost effective manner. To assist land consolidation, the Minister for Finance announced in his Budget Statement stamp duty relief for land swaps. This relief, worth €1 million in a full year, will benefit all farmers who wish to swap land parcels to farm more efficiently.
The substantial increase in the flat rate VAT refund from 4.4% to 4.8% will ensure farmers are fully compensated for VAT paid on business inputs next year. The increase also takes account of the revised figures published in June by the Central Statistics Office on agricultural outputs, inputs and income. This is worth €16 million to farmers in a full year.
Farmers are, correctly, required to meet the changed expectations of our modern society with regard to matters such as food safety, environmental concerns and animal welfare. Next year, cross compliance, which includes the nitrates directive, will impact on the agriculture sector. Cross compliance will require beneficiaries of the single payment system to comply with 18 statutory requirements set down in EU legislation and oblige farmers to keep land in good agricultural and environmental condition. These requirements cover animal and plant health, animal welfare, food safety and the environment.
Ireland recently launched a national action programme with the European Commission in respect of the nitrates directive. This programme sets out, among other items, specific requirements relating to the storage periods for animal manure. The Government is aware that this will have financial implications for farmers. To assist them to build adequate animal manure storage facilities during the four-year period of the action programme, the option of writing off the capital costs at a rate of 33% per annum over three years has been provided for in the budget. Farmers who wish to avail of the existing flexible writing down arrangement in respect of €31,750, or 50% of expenditure, whichever is the lesser, in any one of the three years can do so. This relief is estimated to be worth €4 million in a full year. I encourage farmers who need to invest in storage or other facilities to do so and to avail of the flexible relief being provided during the four years of the action programme. We recognise that certain farmers need to invest, and this budget specifically assists those farmers in achieving their agri-environmental goals.
I have responsibility for forestry and I remind the House that there is a provision of €106 million for it in this year’s Book of Estimates. This is in addition to a carry-over of €12 million which was unspent on forestry in the current year. The total amount provides for a planting programme of between 13,000 and 14,000 hectares in 2005. I strongly encourage farmers considering forestry as a land use option to recognise the opportunity presented. The benefits provided for the public by investment in forestry make public investment in this area a legitimate expenditure.
We must continually upgrade our natural environment and gain maximum value for the non-timber benefits forestry represents. I refer here to recreational and tourism benefits. In the financing programme for forestry in 2005, we will continue the support programme for forest roads, nature woodland, the neighbour wood scheme and reafforestation. I wish to take some new initiatives in the areas of wood as renewable energy and in increasing public awareness of the multiple benefits of forestry.
I am pleased to announce the Minister’s intention to reduce by one third the disease levies paid by farmers. This follows a 25% cut in the same levies last year. The new rates will be €2.54 per head for cattle slaughtered or exported and 11 cent per gallon of milk. This levy reduction will be worth approximately €5 million in 2005. It reflects a welcome reduction of diseases in the national herd and I expect this trend to continue next year. I am also pleased to report that the number of TB reactors has declined steadily from 45,000 in 1998 to under 28,000 last year.
I welcome the budget, particularly the concessions granted by the Minister for Finance to the agricultural sector. I look forward to farmers investing in the area of nitrates in particular during the coming year.
Minister of State at the Department of Transport (Mr. Callely): I welcome the opportunity to participate in this debate on the budget. I congratulate my good friend and colleague, the Minister for Finance, Deputy Cowen, on the presentation of his first budget.
The purpose of this budget is to copperfasten the economic stability that has been so successfully manipulated in recent years by Fianna Fáil-led Administrations. This year’s carefully crafted budget is more visibly the old Fianna Fáil philosophy of expanding the economy and using the wealth generated to look after the weaker sections of our society.
Mr. Callely: Our great country has enjoyed its longest period of sustained economic growth and is now stable, wealthier and in a far healthier position to face the global challenges of the 21st century. Under the stewardship of the Minister for Finance, Deputy Cowen, we have new confidence in our economic potential with a fresh resolve to make the right decisions and reforms to achieve best practice in the implementation of our Government programme, which was set out in June 2002. Some may challenge us on the ambitious targets we set in that programme and I will accept that there are very ambitious targets contained in that programme. Equally, however, let us consider where we have come from. I refer here to our good proven track record in terms of fully delivering on the 1997 programme for Government. It is our intention to deliver on the 2002 programme.
She goes on to refer to many other things, including “Imagine Ian Paisley in Dublin for talks with an Irish Taoiseach” and “Imagine the Kildare by pass and the Drogheda by pass, and the Athlone by pass and the restoration of tram lines in Dublin, and bus lanes, dirt cheap air travel and great big cars with DVDs.”
Mr. Callely: There is no doubt we have come a long way and have witnessed a transformation of our great country, particularly during the past seven years. In terms of tackling unemployment, there are an additional 420,000 people at work and unemployment figures have been slashed from double digits to 4%. In real terms, we are at full employment.
Our economy will enjoy 5% growth this year, is growing three times faster than the European average and has the second lowest national debt. We have the lowest tax wedge in the EU for workers on the average wage. A third of all income earners are outside the tax net as compared to the huge numbers of ordinary people paying the unacceptably high levels of taxation that were demanded on the most recent occasion Opposition parties were on the Government benches. To put it in clear terms, a worker on the average industrial wage in 2005 will earn €11,300 more and pay less tax than he or she would have done in 1996 or 1997. In 2005, every worker will benefit from the second phase of Sustaining Progress, and the budget 2005 tax package will mean that every worker will be better off next year.
In terms of social progress, there has been a comprehensive expansion across all areas and we have some of the most progressive social measures in the EU. I am pleased that with a spend of €45 billion, budget 2005 places great emphasis on even more social progress. The approach in the budget is fully in line with the commitment contained in An Agreed Programme for Government to deliver “further real improvements to pensioners and to people on low income and to achieve a position where all those on the national minimum wage are removed from the net.”
I am pleased to note that the average tax rate has fallen by almost 10% for all categories of taxpayers. I particularly welcome the package of measures for older people, from social welfare increases to support grants for organisations for older people, the tax exemption limits, the carer’s grant improvements, the additional day care and residential places, and the additional home support and community-based facilities. I fully support the high priority given to this area.
As Minister of State at the Department of Transport, I welcome the budget allocation of €10.2 billion in respect of investment in transport infrastructure. In 2004 my Department enjoyed the first move to a multi-annual capital envelope and will soon enjoy an extended ten-year capital envelope. This will accommodate greater flexibility and clarity in the planning and delivery of an integrated and visionary transport infrastructure which both I and my colleague, the Minister for Transport, Deputy Cullen, intend to deliver.
I am happy to record progress on public transport services. The DART system is a tremendous success story. Daily passenger numbers have increased from 35,000 to nearly 90,000. The greater Dublin area has benefited to the sum of €1.3 billion from this budget. Thirty-eight additional DART carriages have been procured. DART trains will be increased from four to six-car units, increasing capacity by 50%. My Department has supported Iarnród Éireann’s plans to completely upgrade and refurbish the entire infrastructure of its lines. Phase one of a programme to extend DART platforms is under way to accommodate eight-car trains, upgrade power supply, replace certain track work and overhead cables and improve accessibility on all transport. I welcome the allocation of €10 million for the provision of accessible transport.
Phase two of the programme will improve and replace signalling in Connolly Station which will greatly assist in the number and capacity of trains on the loop line, from 12 to 16. Investment has been made in upgrading the service at a cost of approximately €76 million. All south side station platforms have now been extended to accommodate eight-car DART trains and associated overhead electrical wiring works have also been renewed. Work is now under way on the northern line to Malahide and to Howth. When completed next year, the project will see capacity on the DART and commuter service grow by over 100% since 2000.
Other new developments are taking place on the DART and other suburban services. Demand for services on the outer suburban routes from Dundalk, Maynooth, Gorey and Kildare has been growing steadily over recent years. Iarnród Éireann has responded by increasing train lengths and extending platforms. I intend to continue this level commitment to increasing capacity on all services. Some projects such as Luas have enjoyed great success. I hope to see an extension of that service. The Railway Procurement Agency is advancing plans for further extensions. I commend the budget to the House.
Mr. F. McGrath: I wish to share time with Deputies Cowley, Eamon Ryan and Crowe. I am grateful for the opportunity to speak in this important debate on the budget. The duty of an Opposition Deputy is to oppose, challenge, criticise, examine and push the important issues in politics. This does not rule out commending someone from whatever party if they try to do something that is right and good for the people. This is the reason I commend the Minister for Finance, Deputy Cowen, on beginning the process of putting the disabled and social welfare at the heart of this budget. I am the parent of a daughter with a disability and have been a disability rights campaigner for ten years. I sense a genuine interest in the issue on the part of the Minister and I commend him.
This budget is a step in the right direction but it is also a compliment to all the disability groups, parents’ groups and disabled people themselves for their hard work and struggle over the past ten years. I emphasise the disability groups. Their work and dedication is bearing fruit. I have raised health and disability issues over the past two years in this House, as have my Independent colleagues.
Progress has been made and it is important that we declare that openly and honestly. I welcome the multi-annual investment programme which is being introduced to support the development of high-priority disability support services over the period 2006 to 2009. This will involve almost €600 million in current spending and €300 million in capital spending over these four years.
I also welcome the provision of 875 additional residential, respite and day places each year on top of 760 new places in 2005 for persons with an intellectual disability and those with autism, giving a total of 4,260 places. An additional 80 residential places each year will be provided for persons with physical or sensory disabilities on top of 60 new places in 2005, giving a total of 380 new places. There will be provided 250,000 extra hours of home support and personal assistance each year, to support independent living for persons with a disability on top of an extra 200,000 hours in 2005, giving a total of 1.2 million extra hours. I welcome the 100 new places each year for community-based mental health facilities, giving a total of 400 extra places. These are important services for people with disabilities and their families. It is essential to remind ourselves that these are people with needs and that broader society has a duty to support them.
I offer the Minister a word of caution. I do not want to see money wasted on needless situations. I want to see the extra finance spent on people with disabilities and on services for them. This will be the real test of this budget. I will judge the extra investment next year by an increase in services and a reduction in waiting lists for residential, respite and day care. It is all very well to have the extra spending and all the fanfare of the budget but the real test will be the services in the community for people with disabilities.
Two objectives in this budget were to distribute the fruits of growth to all the people through better services and fairer sharing of resources and to redouble our efforts to help those most in need, particularly those with disabilities. This budget is a start and is a step in the right direction but the results will be judged in 12 months’ time and by the reaction from the disabled people.
I ask the Government to go one step more and listen to the concerns of the disability groups on the Disability Bill. If it does this, it will earn real respect from these citizens. I accept it will take courage and vision but there is no longer any reason not to guarantee rights and services for all people with disabilities.
I welcome the extra help for those on welfare, low pay and the €63 million reduction in stamp duty rates for first-time buyer owner-occupiers of secondhand residential property. This Government needs to face up to the fact that we have a housing crisis in the State with 60,000 on local authority waiting lists. Most young couples cannot afford to buy a home of their own in their own city. The reduction in stamp duty will assist some but we cannot allow the Government to keep its head in the sand regarding the housing crisis.
I welcome the €12 weekly increase in the old age pension and the child benefit increase of €12. However, this Government needs to face up to the child care issue and the urgent need to assist young couples. Many now pay the same amount for child care as for a mortgage. This is not good enough in an economy where economic growth is over 5%. These families need to be helped now.
I hope the extra €111 million will be spent wisely and effectively. The first issue is to resolve the accident and emergency crisis and the lack of beds. The Minister can then move on to deal with the other issues. I emphasise the urgent need for reform and investment in our health services. One without the other is a nonsense and will not do anything for patients on trolleys.
This budget is a significant start in the distribution of wealth in our society. The Independent Deputies have argued this point for over two years. The real test of this budget over the next 12 months will be the delivery of services to the people.
Referring to the current debate on the definition of socialism, it is important to remember the advice of Karl Marx when he observed that philosophers have only interpreted the world. The point, however, is to change it. This budget has the potential for change. I wait to see whether it can deliver services for people.
Dr. Cowley: I am glad to speak in this debate. Some commentators have stated the budget was so good it put the Opposition and Independents in the shade. That is patent nonsense. It provides welcome improvements for the less well-off, old age pensioners and so on, and introduces a sea change in disability payments. Fair play to the Minister in that respect but no provision is made for adequate child care provision and the inequalities, which ensured I was the first Deputy elected in County Mayo, remain. When the people decide, as they are entitled to, the same inequalities will ensure that I am elected first again.
Regional development is as unbalanced as ever and underinvestment in the infrastructure of the BMW region remains. The Indecon mid-term review of the national development plan identified that just 69% of the amount which should have been invested in the BMW area has been spent. This underspend compares to a figure of 134% in the south and east. Nothing has changed to help make the BMW region more competitive and retain its people.
West Mayo, in particular, the north-west of the county, is still the most socio-economically deprived area in Ireland and its depopulation continues. By the end of the century the county will have been completely depopulated west of a line running from Killalla to Newport. Approximately 60% of its graduates move to the greater Dublin area to add further to its congestion and the weight of people sinking the east into the Irish Sea. The mother of all traffic jams continues to grow daily in the east as traffic reaches epidemic proportions.
While travellers through Dublin Airport face ever increasing delays, Knock Airport lies virtually fallow. Despite the glut in Dublin and Cork airports, a second terminal in Dublin Airport is under consideration. Cork and Dublin airports have a throughput of 20 million passengers compared to projected passenger numbers of 400,000 at Knock Airport. It would make much more sense to divert passengers to the wonderful airport at Knock and the BMW region. Nothing will change while the Government refuses to sanction the €40 million investment required to adequately develop Knock Airport and attract more visitors to the west. With more visitors using the west’s quiet roads, congestion in Dublin, where people must endure an ass and cart pace of traffic, would ease.
In the Budget Statement, the Minister for Finance, Deputy Cowen, indicated that his aim was to improve the equity of the taxation system and added that he had taken into account the social and economic benefit of reliefs in delivering investment in housing, enterprise, urban and rural renewal. He stated:
What about balanced regional development? I agree the Minister should take his time but he must also take a careful and considered approach to balanced regional development and the BMW area, which has been neglected. That would help everyone. He must give us the roads, broadband and power infrastructure we need to make the region competitive. He should help us to keep our children locally and stop IDA grants to the overpopulated east and confine them to other areas, particularly the BMW region. He should give County Mayo tax free status, a special incentive scheme to encourage the development of the BMW region. The Minister must not tell us this cannot be done. Where there is a will, there is a way, as his predecessor demonstrated with regard to the horse and film industries. Horses are better looked after than people. I ask the Minister to look after homo sapiens, an endangered species in the BMW region.
Health apartheid also persists. I was suspended from the House recently because I raised the issue of an embargo on the recruitment of four nurses to provide an extra dialysis shift in Mayo General Hospital. This would prevent seven people having to bypass the state-of-the-art dialysis unit in Castlebar to attend a facility in Galway, as a result of which one man who is not fit to travel has been condemned to death. I was informed that more nurses had been recruited for certain services in County Mayo. Removing nurses from one area to provide a service elsewhere is not the solution. In another case, a man has been waiting for eight months to have a probable cancerous lesion of the kidney attended to in Galway. This is unacceptable. The budget did nothing for him.
Mr. Eamon Ryan: I do not know what to make of this Government. If asked what it represented or stood for, I do not believe its members would know the answer either. They would look to the latest focus group findings from the Fianna Fáil and Progressive Democrats parties’ central offices. During its first five years, when Mr. McCreevy was Minister for Finance and we took from the poor to pay the rich, this Government was the most right-wing Administration in the history of the State. To buy us off, it then introduced an inflationary budget prior to the general election.
Since the general election we have had three budgets. The first was a hairshirt budget to correct the incredible splurge in spending the Government used to buy the election. After that, the Government ran out of ideas. The only innovation it could produce last year was the mad-cap decentralisation plan which has nothing to do with proper regional development and will not, incidentally, deliver anything to County Mayo. I agree with Deputy Crowley that development must be concentrated outside Dublin. The national spatial strategy and the decentralisation plan will not achieve that objective. We need to develop alternative centres to attract development elsewhere.
Mr. Eamon Ryan: Nothing of this nature emerged from last year’s budget. Instead, the Government proposed a ridiculous plan which was already falling apart as the former Minister, Mr. McCreevy, headed off to Brussels.
The Government’s latest budget idea is to have socialist government. I do not know what this means nor do I believe the Taoiseach knows what it means. His version, like mine, allows for wealth generation. Although I want a market economy, I do not want society to be nothing but a market economy, which is one of the criticisms one can level at the Government.
Thank God for CORI and the disability groups to which Deputy Finian McGrath referred. If the Government does not believe in anything, at least these groups were able to tell it where it had failed in the past seven years and what groups it had forgotten and ignored. At least the non-governmental and civic organisations were around to hold the Government’s hand and point out some areas on which we need to catch up. I am suspicious of and concerned about the Government’s new approach because it is not a product of conviction, political ideology or vision.
If the focus groups are not responsible for the Government’s position, the alternative source of policy appears to be the partnership process, which the Taoiseach regards as one of his great successes and the reason for tremendous economic growth in the past ten years. The reasons for our economic growth can be traced to investment decisions made 40 or 50 years ago by individuals, workers, management and politicians of all hues. While the partnership process has its uses and has delivered benefits, it has several key failings.
One welcome aspect of the Budget Statement, in the Minister’s closing remarks, was the recognition of the massive amounts of money spent in the multi-annual programmes established in various Departments. However, we have no political vision as regards the reasons for this expenditure, nor has the House debated whether spending strategy is correct. This amounted to an admission by the Government that it does not know what we are doing with all the money we have generated. It has found itself in a fortunate position of being in power during a period of economic boom but is not sure how to spend the wealth the economy has generated.
One of the failings of the partnership process is that it does not provide a good strategic direction or vision by which one can analyse Government spending. One does not seek answers from IBEC or ICTU to questions on how we should spend money. Our transport investment programme, which I often raise, is the glaring example of this problem. There is no doubt that the roads programme, which has been allocated the significant sum of €16 billion, was devised and cooked up in partnership meetings without analysis. The strategy that came out ran directly contrary to the only analysis that had been done at that time, which was the national road needs study. No assessment was done of where it would lead, other than the M50, as all these roads lead to Dublin. The Minister speaks about decentralisation away from Dublin. Why are we then building every single motorway in the direction of the capital? This will suck life into the capital no matter what the Minister tries to do.
Mr. Eamon Ryan: The experience internationally shows that if major motorways are run into the capital city, it will do nothing but strengthen the core rather than the periphery. That is what is happening and if the Minister cannot see that, he is blind. The reality is that the Leinster counties surrounding Dublin are now a part of Dublin. How many commuters in the Minister’s constituency town of Portlaoise are leaving every day? The Minister thinks that this strengthens Portlaoise as the commuters drive to Dublin and back.
Mr. Eamon Ryan: The Minister’s statement on public infrastructure investment and this ten year programme is interesting. I look forward to seeing the details, but I think I have a fair idea what will happen. Lo and behold, the Government will be in favour of public transport, but not quite now. It will widen the M50 and spend another €1 billion in Dublin, despite the fact that it will be clogged the minute it opens. When it comes to the metro, the western rail corridor, rail extensions in Cork or the myriad of other public transport projects, this new ten year programme will be an opportunity for the Government to put off hard decisions on public transport until after the next election. Before the last general election, it promised a myriad of public transport projects but not one of them has been pursued. This ten year programme is a chance for the Government to put the public transport projects back to never-never land, projects that it has been promising to deliver for the past ten years.
I criticise the partnership process in that there is nothing on the environment in this budget, because no one represents the environment. The Taoiseach parades his disregard for it. He jokes about how the swans on some road have never been so happy. How funny of him. The whole issue about diversity of life and the protection of nature is of crucial importance in this century. The Government seems to parade its disregard for the protection of our environment. It is one of the big global issues that should shape any budget, yet it is completely ignored, which is a disgrace. It is ignored within the partnership process, which explains why the Government has nothing to do with it.
I do not believe the partnership process takes the needs of our children into account. The Government funnels massive amounts of money into the IBEC vision of what child care should be, which is the development of employee based crèches. Much as we welcome the introduction of tax credits, the Government is still one of individualisation. For one person of a married couple to stay at home and look after their children is a great investment, is the type of investment that parents have made throughout the years to develop the economy. If parents make that choice today they lose out because a couple where both spouses work get two tax credits. The Government has yet to show vision or initiative towards linking up our social welfare system in a way that might recognise that work and that might give a payment towards the person who stays at home. Raising children is a useful, productive and creative investment in this society. The Government cares not one whit for that, nor does the partnership process.
There is nothing in the budget about enterprise. The Government thinks we should keep chugging along the way we have been doing. We have a very successful economy. However, a Government with vision would not be so arrogant to believe that it solely caused it. It would look at the threats on the horizon referred to by the enterprise strategy group, but the Government does not believe in that. It believes that it is so successful that we need to do nothing but continue on our merry little way. Such a policy and such a Government will lead this country into trouble — a Government with vision would steer us away from that.
I lament the fact that the Government stands for nothing other than what it believes will get it elected in the next election, what the focus groups tells it and what IBEC and ICTU tell it to do. That is not good government. That hollowness and lack of vision comes through in this budget.
Mr. Crowe: I welcome many aspects of the budget, such as multi-annual budgeting and the money directed towards the disability sector, as well as the increase in social welfare payments. While the budget is a step in the right direction, it is another missed opportunity. The Government has had many opportunities since 1997 to produce a balanced budget but on each occasion it decided to reward the haves rather than the have nots. It is only now, after it got a wake up call in the local and European elections that it has decided to use this budget to soften its appeal. The electorate can congratulate themselves on bringing about this change in Government policy. However, it is not quite the U-turn that is required to deal properly with the inequalities that have been created by the previous seven budgets.
Before the budget, there was the impression that the Government had finally acknowledged the widening gap between the rich and the poor, and that it would use this budget to address these issues. While it has taken a step towards addressing these issues, it has missed the opportunity to prioritise the poor over the rich. The social welfare increases are to be welcomed but they do not go far enough and they do not even meet the Government’s targets. As a measure to tackle child poverty, the Government set a target of €149 per month for child benefit by 2005 and it has clearly failed in that regard. The increase of €10 falls well short of what was promised and will be cancelled out by the increased cost of living in Ireland.
The rights of children seem to have been sidelined by this budget to keep the rich happy. The extremely wealthy have not been affected by this budget and many of them will continue to pay little or no tax in 2005 while the commitments on child benefit fail to be realised. We are the wealthiest country in Europe, yet children still go to school hungry. Some 66,000 children live in consistent poverty in Ireland but this budget will do little to reduce that number. The child dependence allowance is a support for some of the poorest families and it is a disgrace that it has remained unchanged for the past 11 years while the cost of living has greatly increased.
I am very disappointed that the Minister missed the opportunity to reverse the savage 16 cutbacks that were introduced last year and are regarded as among the most draconian cutbacks in recent times. One of these cutbacks was the back to education allowance which had its qualifying period increased from six months to 15 months. The Minister gave us a bizarre reason at the time. She spoke of European tourists abusing the scheme so that they could have the craic in Ireland. The reality was that people used this scheme to get back into education. Although some progress has been made, I appeal to the Minister to scrap these cutbacks.
The real surprise in this year’s budget is that it contains little on social housing. This is disgraceful at a time when waiting lists for social housing have reached record levels. Those working with the homeless, who have long argued that an increase in the provision of social housing is the key to eradicating homelessness, have spoken of their severe disappointment with this year’s budget. Daithí Downey of Focus Ireland stated that there are nearly 6,000 homeless people and a record 48,000 households on local authority housing lists, but these key areas were not referred to in the Minister’s speech. Threshold stated that people on housing waiting lists have been ignored.
The changes in stamp duty will be welcomed, but will mean nothing to those who are on social housing waiting lists. Many of those waiting for social housing are living in overcrowded conditions, with three generations often living in the one household. Adults with children continue to live in cramped conditions in their parents’ house while they wait in vain for social housing. I refer to people on the lowest incomes, those on the minimum wage whose only hope of securing housing is by obtaining social housing.
The attempt by the Minister for the Environment, Heritage and Local Government to blame local authorities for the shortfall in the construction of social housing is not good enough. No analysis is given regarding why delays have occurred. Is it because councils are unable to secure land for housing at a cost they can afford? We simply do not know. The Minister of State, Deputy Noel Ahern, has continually given unclear and confusing answers to the Dáil regarding levels of construction of social housing. We need a national housing strategy and agency to co-ordinate all aspects of housing provision. A substantial injection of funding is required if the 48,000 people on local authority waiting lists are to have any hope of being housed.
Sinn Féin has, for a number of years, demanded a comprehensive review of the tax regime. I welcome the Government’s commitment to this and again congratulate the electorate for, as my colleague Deputy Arthur Morgan put it, scaring the living daylights out of the Government. It is clear this is the significant factor behind its change in direction. The review of the tax system must involve all social partners, be time limited and seek to formulate proposals for a truly equitable system. The tax system must be reformed and restructured with the aim of increasing overall tax take to increase social spending and infrastructural development. This must be based on equity and efficiency. It involves removing loopholes and ensuring those clearly in a position to do so pay their fair share.
Mr. Crowe: The budget has done much for the usual people. It has not gone far enough to eradicate poverty. We were told this budget would put forward proposals to eradicate poverty, but I cannot see them. It should be a goal of any self-respecting Government. The past seven years have been geared towards the more well-off in society. We do not need to go far to see those whom society has failed. There are areas in our constituencies where we see people trying to make things better for their children. However, there is no structure surrounding this budget that will move them out of the poverty trap. It is a missed opportunity, although I welcome aspects of it.
Much has been said about the issue of disability. I recently attended a conference and met a disability activist who spoke about social housing. This person said the Government’s answer was affordable housing or shared ownership. This person said the majority of people with disabilities in Ireland live in poverty and rely on social welfare entitlements. They would love the opportunity to apply for social housing or shared ownership, but it is not open to them. The only way they can get accommodation and afford independent living is through social housing. However, the Minister for Finance has ignored the issue in this budget. While he is concerned about the matter and has done much about it, a lot more can be done.
Mr. J. Brady: I am sharing time with Deputies O’Connor, Dennehy, Callanan and Mulcahy. Deputy Crowe spoke of the electorate scaring the life out of the Government. Members of his party scared the lives out of many people in their time. However, they will not scare the parties in Government on this side of the House. Sinn Féin talks about the less well-off sector of society. I remember people in my part of the country who were involved with and hung around Sinn Féin and the IRA. They were quite poor and some of them did not even have a bicycle. They are very wealthy people today. The rest of us did not get as rich as they did. However, Sinn Féin is very concerned about the less well-off. How did some of its people who were less well off get rich so quickly?
I welcome the changes to personal taxation and the additional €682 million in a full year. I also welcome the removal of the minimum wage from the tax net. The former Minister for Finance, Mr. McCreevy, started this initiative and the current Minister, Deputy Cowen, has carried it through. Other tax measures include a comprehensive review of all tax reliefs and exemptions, tax relief on rent paid by private tenants, an increase in tax relief for third level fees and a €63 million reduction in stamp duty rates for first-time buyer owner-occupiers of secondhand residential property.
The Government has been caring with regard to social welfare issues. An extra €874 million in a full year has been provided for all areas of social welfare, including old age pensions, family income supplements, and for an increase in income disregard and the respite care grant. A multi-annual investment programme has been introduced to support development of high-priority disability support services over the period 2006 to 2009.
Farm taxation measures include the option of averaging certain FEOGA direct payments paid in 2005 in respect of entitlements established in 2004 in three equal instalments over 2005, 2006 and 2007 and the renewal of both the general and young trained farmers’ stock for a further two years. It is important we keep young farmers on the land.
Other measures include a reduction from seven to three years in the write-off period for the accelerated rate of capital allowance for pollution control facilities as well as stamp duty relief in the case of land swaps. Many of my constituents will be affected by the new M3. They can now swap land without parting with money. In the past, even though they did not part with money, they were eligible for stamp duty. This relief is beneficial for the farming community. There is also an increase from 4.4% to 4.8% in the flat rate of VAT. Woodlands are a source of renewable energy and there is increasing public awareness of the multiple benefits of forestry.
The Minister for Agriculture and Science, Deputy Coughlan, intends to reduce by one third disease levies paid by farmers. This follows a 25% cut in the same rates last year. The new rates will be €2.54 per head for cattle slaughtered or exported and 0.11 cent per gallon of milk. The levy reduction will be worth approximately €5 million in 2005. This reflects the welcome reduction in disease levies in the national herd and it is to be hoped the trend will continue.
The number of TB reactors has declined steadily from 45,000 in 1998 to fewer than 28,000 last year. This was the lowest number of reactors in the past 20 years. The trend is continuing and the best estimate for 2004 is that the number of reactors will not exceed 25,000.
Real progress is being made in relation to brucellosis for which the number of laboratory positives have fallen from 6,400 in 1998 to 900 last year. The number of cattle slaughtered under the programme during the same period fell from 30,000 to 14,700. This positive trend is being maintained in the current year and a further reduction of more than 20% is expected.
In light of the reduced disease levels, and consequently lower Exchequer costs, the Minister for Agriculture and food, Deputy Coughlan, intends to ask the Oireachtas to agree to the new rates of levy on a budget neutral basis. At the new rates the levies are expected to yield approximately €10 million in 2005 or 50% of the projected cost of compensation in 2005.
I have been listening with great interest to today’s debate and have been wondering from where some of my colleagues are coming. I was asked earlier why I read the Evening Herald every night and I told the person I do so because it gives me a good perspective and because it could never be accused of being a strong Fianna Fáil supporter. In that regard, I am interested in what today’s Evening Herald has to say about the budget. I will quote from the article because I want to put into context what the Opposition has been saying all day. It states: “It is almost impossible to fault this budget which has basically decided to distribute some of the wealth gained by the Celtic tiger in recent years to the less well-off.” It goes on to state:
Mr. O’Connor: I have only four minutes to contribute and the Deputy should relax. Opposition Deputies are working themselves into a tantrum trying to find fault with the budget. They have nothing to say and are no longer credible.
Mr. O’Connor: I do not need the Chair’s protection. The budget is a tremendous Government initiative. The Government has listened to what people have been saying. If the media and people in the street welcome the budget, the rest of us should sit up and take notice. That is not to suggest the job is done, of course it is not.
Mr. O’Connor: There is a lot to be done and this Fianna Fáil-led Government will continue to do that. It does not matter what myth is created, the Fianna Fáil-Progressive Democrats Government, led by the Taoiseach, Deputy Bertie Ahern, with the Minister for Finance, Deputy Cowen, clearly doing his job, will deliver what the people have asked us to deliver.
Mr. O’Connor: The Government made a very strong move towards eradicating poverty, removing inequality and ending social exclusion. I represent a constituency, like every other constituency, where social exclusion is a strong issue. People speak to me about these issues as I go about my business in Tallaght in particular and in Firhouse, Greenhills and Templeogue. They believe that some of the issues dealt with in yesterday’s budget will bring us towards the type of society we want, where social exclusion is dealt with in a definite way.
Mr. Dennehy: Like other speakers, I am happy and proud to have an opportunity to speak on this motion. As Deputy O’Connor said, if one wants to look for signs that this is a successful budget for all sectors one has only to note that the House rose at 8 o’clock last night rather than 12 midnight.
Mr. Dennehy: The Deputy should show a little respect. He is forever telling us for how long he has been a Member of the House and that he was once a Minister. He should learn the rules of the House.
Mr. Dennehy: We will repeat what we have to say outside. The Deputy cannot stop the truth coming out. Despite what Fine Gael might do, it cannot stop the truth coming out. Who saw during the week the book on how well we have done during the past 25 years? The years 1986-87 feature prominently in it so the Deputy should not draw me out on that topic. He was not around but some of his colleagues were and they are partly to blame for almost bankrupting the country.
Mr. Dennehy: I will put the Deputy back in his box very quickly. I would like to comment on a number of issues, such as tax breaks and shelters. There is a degree of hypocrisy about this issue. Those who received a fair amount of headline on this issue during the past couple of weeks and who were most vocal about it are those who last year led the lobby to obtain that break for the film industry. Many of us subscribe to the need for that, but they were to the forefront and led the lobby. They now pick out one item and disagree with it. This issue is being looked at. Many of us know these breaks have run their course.
The spokespersons for Fine Gael and Labour said that the Government refused to spend €4 million to assist old age pensioners from Ireland now living in Europe — I compliment the former Minister for Finance, Mr. McCreevy, on the work he did in this area — but that, too, is hypocrisy. I campaigned through the 1980s and 1990s for recognition of pre-1953 pension payments by people who are all now old age pensioners. Some 28,277 of these people are now in receipt of a pension thanks to a change made——
Mr. Dennehy: It was lamented that these people sent money home in the past. As far as I was concerned it was an entitlement. I will name the Fine Gael Minister who refused the scheme when I originally put the case forward. I am glad the former Minister for Finance, Mr. McCreevy, was soft-hearted enough to pass the scheme. I am now told by the Fine Gael Party’s spokesman that it is a half pension. However, his party’s Members raised this issue with the Committee of Public Accounts to ridicule the former Minister, Mr. McCreevy, and the Fianna Fáil Party.
Mr. Dennehy: I have the record of those Members raising it on the committee. The pre-1953 pensions were never promised in any previous Government programme. The scheme was introduced last year by the then Minister for Finance.
Mr. Dennehy: It was introduced after many years of campaigning. It was originally granted by the then Minister for Finance, Mr. McCreevy. Following lobbying from within the Fianna Fáil Party, it was extended to Irish pensioners in other countries.
Mr. Dennehy: As the Taoiseach said earlier, a strong economy can be coupled with social advances. One example of this is the scheme just outlined for 28,000 pensioners. Wealth cannot be taken as a given. That is why it is important that we are successful in attracting floating foreign investment. We have done this five times better than any of our EU colleagues. It was achieved because of the Government’s taxation policies, which have been attacked for the last seven years by the Fine Gael Party. Our taxation policies are why unemployment has been kept below 5%.
Mr. Dennehy: When the unemployment rate is near 9% in Germany and France, this little country has managed to keep it down. Employment has grown by one third, at over 400,000 jobs. It is hard for the Opposition to get a mental grip on this since it was in Government last.
Mr. Dennehy: The figure of 400,000 jobs is incredible when one considers a small country like ours. It has been achieved due to prudent management, good policies and our confidence in the future. It was the first Government to run its full course and we will do that again. I am as concerned about where we get the money from as how we spend it. I am delighted that employment grew by 43,000 new jobs in the last 12 months. We do not want it all just for Fianna Fáil people. We want to share it with our brethren in the smaller parties. I commend the budget to the House. It is the best one I have seen since I entered the House in 1987. I am happy to be part of the major party that drafted it.
Mr. Callanan: I congratulate the Minister for Finance, Deputy Cowen, on his first budget. This is a good budget, reflecting many issues brought up by backbenchers. This budget helps PAYE workers, farmers, the unemployed, pensioners, children and especially the disabled. A €900 million extra package for disability will be spent from 2006 to 2009, on top of the €2.8 billion to be spent in 2005. This is an increase of €290 million over last year. A total of 1,635 residential respite and day places will be available in 2005 for people with intellectual disabilities and autism, bringing a total of 4,260 new places by the end of 2009.
I also welcome the huge boost to home support in the budget. Provisions have been made with the total of 450,000 extra hours of home support and personal assistance. This works towards a total of 1.2 million extra hours by the end of 2009. It recognises the tremendous contribution that families and carers of those with disabilities play. On social welfare the increases show an extra €1 billion to be spent in 2005, bringing the total spent on social welfare to €12.25 billion, a 8% rise and more than three times the rate of inflation, affecting 1.2 million people.
I congratulate the Minister for Social and Family Affairs, Deputy Brennan, for looking after the less well-off. I welcome the increase of €12 for old age pensioners, bringing the new rate up to €179. This is on target for the Government’s promise to bring the old age pension up to €200 in its lifetime. The increase of €14 on all social welfare is welcome. Child benefit is also increased by €10 for the first and second child and €12 for the third and other children. This brings the new rate for one child up to €141.60 per month and a family of four children to €637.80 per month. Family income supplement and maternity benefit have also increased.
There is good news for carers. The weekly income discard for a single person has been increased to €270 and €540 for a couple. This means that a wife, whose husband’s income is €540, can now qualify for a full carer’s allowance. The respite grant has increased to €1,000. Carers looking after someone needing full-time care, regardless of income, will qualify for this respite grant. This grant is expected to be paid out to an additional 10,000 carers. For all social welfare means-tested payments, the capital assessment is eased, as the first €20,000 of capital is disregarded. An old age pensioner can have a considerable amount of money and still get a full pension. Many other changes in the social welfare budget will help many people.
On taxation, the Minister has taken all workers on the minimum wage out of the tax net. This is a great decision as it encourages people on low pay to work and not be taxed. First-time buyers of secondhand houses will not pay stamp duty on houses up to the price of €317,000 and will pay a sliding scale of stamp duty up to €650,000. This is a great help to first-time buyers as it will mean a saving of €11,500 on a €310,000 house.
Tax relief on farm pollution control has been introduced. Stamp duty relief has also been introduced for the exchange of farmland between two farmers who wish to exchange farmland for farming purposes. This is a great help for farmers who have split holdings, giving them an opportunity to bring these holdings into one farm. Stock relief will continue for two years. I welcome the new rural social scheme for farmers on farm assist.
I welcome the decision by the Minister for Enterprise, Trade and Employment, Deputy Martin, to allow those over 55 with three years employment on FÁS schemes to go back on schemes for a further three years. I welcome the increase in the health and education budgets and the ten year rollover funding for roads. I commend this budget to the House. The Minister for Finance has done a fine job.
Mr. Mulcahy: I join with my colleagues in congratulating the Minister for Finance on the budget. He has been a Member since 1984. However, I have only been a Member since 2002, although I was a Senator for three years in the 1990s. Rarely has a budget been so well received by the public and the press. It was very difficult for the Opposition to say anything negative about the budget as almost everything about it was positive. The Opposition was right not to call votes.
Mr. Mulcahy: We should echo the Minister for Finance to the effect that it is the revenue generated by economic activity which keeps public services going, not higher tax rates as some would have us believe. The budget has sounded the death knell of the high tax and spend philosophy which got this country into serious difficulty many years ago. The philosophy was adhered to by several Governments of different parties.
Mr. Mulcahy: I welcome the change in the stamp duty regime which I have sought for a long time. The Fine Gael leader, Deputy Kenny, made the very good point that the change could have gone a little further. I agree with him. While I heard an economic commentator on the radio say that in his opinion property prices will increase as a result of the change, it is more likely that the opposite is the case. Many properties in the €320,000 to €330,000 bracket will be sucked down into the bracket below €317,000 because of the zero stamp duty regime.
I welcome the 20% increase in capital expenditure for 2005. It has not been referred to enough. I am glad there is a Minister of State in the House to listen to me say we must complete our roads infrastructure as quickly as possible. Ireland is choking on gridlock.
Mr. Mulcahy: While we have made great progress, I want to see the process of infrastructural provision sped up and a fast-tracking of project completion to end all roadblocks. We require the provision of a non-stop ring of roads from Dublin to Cork, Cork to Galway, Galway to Dublin and Dublin to Belfast.
The emphasis on disability services in the budget is revolutionary. No budget since the foundation of the State has been dedicated to such an extent to disability services. The provision of a €900 million programme of funding over four years underlines the Governments firm commitment in this area.
Mr. Mulcahy: Fianna Fáil is a broad church and, if any spokesman feels genuinely suicidal, he or she can apply for membership. We would gladly let a spokesman become a member if he or she agreed with our philosophy and the positive development of the country. I felt very sorry for the spokesmen last night and especially for one of them who is present.
Mr. Crawford: I must respond to Deputy Mulcahy’s last comment which was the saddest which could have been made in this House. On two occasions last week, I raised the issue of suicide. One of my closest friends took his own life. It is not a joke.
Mr. Crawford: Every year, 450 lives are lost due to some problem in society. Despite all the money in circulation, people do not believe it is worth living. It is a serious situation and not something about which to make a joke.
Mr. Crawford: The Dáil did not sit past 8.15 p.m. yesterday for the simple reason that there was only one motion on tax to discuss. It involved the matter of VAT and I will refer to it again later. It is sad that the surplus time available last night between 8.15 p.m. and 11.30 p.m. could not have been used to debate the budget given that we are running short of time now. It would have been useful to discuss last night the need to reduce petrol and diesel prices which have moved beyond reach. The Government could have used the budget to offer some relief to the hard-pressed transport sector. It would certainly have made us more competitive. It must be remembered that Ireland is becoming one of the least competitive countries in the world.
Mr. Crawford: If Deputy Mulcahy were to talk to ordinary representatives of the furniture, food and other industries to find out about the pressures they face, he would know exactly what I am talking about. Stealth taxes have driven people out of business.
Mr. Crawford: As I have some responsibility in the context of agriculture, I wish to raise some relevant issues. While any reduction in stamp duty is welcome, I became greatly concerned when listening to the Taoiseach that the amount of red tape involved will mean the reduction is worth very little. I await the Finance Bill at which stage I will discuss the matter in more detail.
Mr. Crawford: While the capital allowance provisions should prove worthwhile, few full-time farmers will be able to gain from them in the areas in which significant storage is required to comply with the nitrates directive. This is because they are not taxable.
Mr. Crawford: While stock relief is beneficial and I welcome the budget’s provisions in this area, we must ask how many young farmers can increase stock under the quota and other regimes. While there will be no major benefit from the budgetary provisions, I welcome that at least the current relief has been retained.
I welcome the provisions on averaging without reservation. It is an absolutely necessary and beneficial allocation. I have already spoken about the flat-rate refund and will not spend much more time on it. While I welcome the provision, I note that we lost €30 million because it was not adjusted when it should have been when VAT was increased two years ago. I guarantee the Minister of State that Fine Gael will support the Government’s action on the disease levy.
I listened with interest to the Minister of State, Deputy Browne, speaking about his great success in the forestry sector. Between 13,000 and 14,000 hectares will be planted in 2005 but that is because the targets were not reached last year. When the plan was drafted by the former Minister for Agriculture, Ivan Yates, in 1996, he stated 25,000 hectares should be planted per year.
Mr. Crawford: It was not. Mr. Bacon, who was employed by the Government, made the same recommendation, yet only 14,000 hectares will be planted next year. It must be ensured that if the land is not being planted, it should be used for biomass plants to generate electricity, heat and power.
I welcome the abolition of the stamp duty on secondhand homes for first-time buyers. When Fine Gael made a similar proposal before the local elections, we were ridiculed and told the market would be destroyed. However, I thank the Minister for Finance for adopting our policy, which I welcome.
I also welcome the Minister’s statement regarding people with disabilities but I am slightly anxious that the funding will be spread over a long number of years. The extra €900 million will be provided between 2006 and 2009. The Minister means well in regard to people with disabilities but we will watch with interest how the implementation of the programme progresses.
While I acknowledge the increases in social welfare, why did old age pensioners who built the State receive lower increases than other groups? I also query the changes in the tax allowances. I am glad the departmental officials supplied examples with the Budget Statement because they make interesting reading. A self-employed man on tax schedule D earning €35,000 who is married with two children will gain €300 next year as a result of the changes. Another example is Aidan, a single man with a daughter, who will gain a total of €350. While the adjustments are welcome, they have not gone far enough. More needs to be done to take account of the failure to index the tax bands over the past year and the various stealth taxes that were introduced.
I refer to the carer’s allowance. I was a member of the Oireachtas Joint Committee on Social and Family Affairs for a number of years and there was unanimity that something radical and realistic needed to be done for carers. However, the Minister for Finance only provided for minor increases in the income disregard and the allowance. He did not go in depth into the proposals put forward by the joint committee. We sought the provision of at least half an allowance to widows or widowers who are left to care for an elderly or disabled parent or relative. Not a single cent has been provided to them despite the committee making a strong recommendation in this regard.
I welcome the increase in the respite care grant which, according to the Budget Statement, will benefit 9,000 people. Is the Government suggesting that only 9,000 people care for the elderly and people with disabilities? That is a serious issue. No help was provided for child care providers. A sum of €2 million was needed to fund the rural bus service but that was not provided. The decentralisation programme has been allocated the same amount as the package for the disabled but no jobs have been transferred to Cavan, Monaghan or even Donegal. Ulster has been left out.
Mr. O’Dowd: The budget is important. Given that the coffers have never been so full and many people are in employment, one would expect much better delivery of services, particularly in local government. However, the increase in the local government fund was fixed at 1%, which means that local authorities will receive less money next year than they did this year. I do not know what the Minister for the Environment, Heritage and Local Government was doing at the Cabinet table but he was not speaking out loud. The Estimates provide that the increase in permitted total expenditure to local authorities is only 1%. The net result will be higher charges for householders, higher rates for local businesses and a continuation of the stealth taxes introduced by the Minister for Finance’s predecessor. Service charges and local authority rents will increase.
The Progressive Democrats Party stated in its general election manifesto that it would introduce a waiver scheme for local authority charges for everybody on low incomes, whether the service was supplied by the public or private sector.
Mr. O’Dowd: I asked the Taoiseach about this on the Order of Business earlier. The answer was there was nothing coming because the Progressive Democrats Party was not delivering. It delivered nothing in the budget.
Mr. O’Dowd: The abolition of stamp duty for first-time buyers of secondhand homes is Fine Gael policy and we are glad it has become Government policy. However, every first-time buyer of a house in Dublin will pay stamp duty because the ceiling of €317,000 set by the Minister is the average price of a house currently. This will not benefit people in Dublin city.
Mr. O’Dowd: This is the first generation of young people who cannot look forward to buying their own homes. They cannot do so unless their parents help them or they wait many more years than we had to.
Mr. O’Dowd: Stamp duty will have to be paid on all secondhand houses sold in Dublin. The Deputy should cop on and learn. The Government is neglecting the most important people in this city and is doing nothing for them.
I challenge the Minister of State at the Department of Health and Children to explain what he is doing for people with disabilities. For example, sufficient money was not provided in the Estimates for the disabled person’s grant. In 2003, 6,153 grants were awarded at an average cost of €6,094. By July 2002, 11,393 people had applied for the grant. If only 10,000 were successful, the Minister of State would need an extra €10 million, which was not provided in the Estimates. He is surrounded by clap-happy Deputies who are not examining the reality of the budget. This grant is disgracefully underfunded.
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