Thursday, 16 October 2008
Dáil Eireann Debate
Deputy Michael Noonan: I will proceed to specific issues that arise from the budget. We had a good rehearsal of the issues surrounding health this morning. I stated yesterday evening that this was a rough budget and that it was particularly rough on the elderly. This, as we all know, implies that people over 70 are to lose their medical cards. This was debated this morning and I will not elaborate on it.
The Tánaiste offered the Members on the Opposition benches tutorials to inform them of the issues. She said the matter was very simple and that the €100 million comprised €86 million paid to doctors and €30 million paid to chemists. The sums of €86 million and €30 million amount to a little more than €100 million and, therefore, one wonders who needs the tutorials. It is a rough-hewn budget and there is no doubt but that it was thrown together. Ministers are unable to explain its details in the House or answer the questions being put legitimately by the Opposition.
I have two local issues to raise, the first of which is the impact of the travel tax on Shannon Airport. I do not understand why the cut-off point for the €2 travel tax was pitched at 300 km. If one is travelling from Dublin Airport to Blackpool, Cardiff, Glasgow, the Isle of Man or Manchester, one pays €2 but if one is travelling out of Shannon to any airport in the United Kingdom, one must pay €10. A Government that is supposed to be committed to regional policy should not apply travel taxes in an arbitrary fashion such as this. The only place to which one can travel from Shannon for €2 is Dublin Airport. One can make all the internal flights from Dublin for €2 and one can also go to the aforementioned locations in the United Kingdom. This information is in the summary to the budget. It seems the Ministers from my side of the country were asleep on their watch because they do not seem to stand up for the interests of the region, even in respect of issues such as this, where a clear competitive disadvantage is being written into the budget.
My final question is for the Minister for the Environment, Heritage and Local Government, Deputy John Gormley. There was great publicity surrounding the new regeneration programme for Limerick city. North side and south side agencies were to change the face of the city and enormous sums of money were committed. I have searched the 2009 Estimates and the only Vote I can find related to this matter is Vote 25. Under subhead H3, it is stated that €20,153,000 was allocated for urban regeneration in 2008, principally in Dublin. The allocation for 2009 has decreased to a notional sum of €1 million, which represents a reduction of approximately 95%. Is the Limerick regeneration project to be stopped or is it to be funded in some other fashion that is not transparent in the Estimates? Is there some kind of block grant being allocated to the local authorities? There is certainly no money in the regeneration Vote in the budget and there is no statement that corresponds to the promises made. There are people whose houses are literally being knocked down and we need capital funds to replace them in the parts of the city that are affected.
Deputy Leo Varadkar: Over recent years, we have witnessed a classic example of “boom and bust”. The Government pursued an economic policy the reverse of the one it should have pursued during the boom, which was caused by both domestic and international factors. Spending was increased and taxes were cut and the boom was fuelled at a time when a good Government would have taken the foot off the accelerator and pulled the reins a little. I accept that one or two steps were taken in this regard, for example, investment in the National Pensions Reserve Fund. However, this is the smaller picture; the bigger picture shows much more was injected into the economy in the past four budgets than was invested. I refer to the budgets of the Taoiseach, Deputy Cowen, which helped create the recession and certainly created the deficit. Spending increased at twice the rate at which the economy was growing.
Anyone who understands anything about budgeting, even household budgeting, will understand that when an economy is growing, one does not increase spending at twice the rate of economic growth. As some Members opposite stated, one or two prudent steps were taken but, in the main, the budgets of the past four years were imprudent. Had they been prudent and had spending been kept under control, increasing at a rate of no more than 5% or 6% per year, we would not have half the deficit we have today.
There are one or two good points in the budget that should be acknowledged. The increase for the schools building programme is worthy and I hope the Department will achieve better value for this money than it achieved in the past. There is a tax break for new businesses, which is welcome, and initial steps, albeit tiny, have been made towards reducing the number of State agencies and quangos. I hope these changes will be made and followed by a much greater cull.
By and large, the budget does everything it should not do. Pretty much every mistake is made in it and it is certain that it will deepen and prolong the recession and make recovery harder. They have increased taxes, which will take money from people’s pockets, depress the economy further and damage consumer confidence. More than anything anyone might suggest, taking money directly from people’s pockets will damage the economy, and taking it from the poor will damage it most. Instead of introducing the Lenihan levy, if the Government had increased the higher rate of income tax, it would have focused on money which would potentially have been spent on products such as foreign holidays, cars or luxuries. When money is taken from the pockets of the poor, which has happened to those on the minimum wage, pensioners and others, it applies to money which generally would have been spent in the domestic economy. This is why the tax increases in the budget make no sense.
In addition to the Lenihan levy are the VAT increases. We should cut VAT, not increase it, because this will have a damaging effect on business. I do not know whether black hair dye is included at the higher rate of VAT but even that seems to be going up in this budget. There is no increase in the tax credits, which again particularly hits those on middle to low incomes. It would have been better had the credits been increased and the bands widened if that was the choice that had to be made.
Deputy Noonan referred to the travel tax. This will do more damage to Shannon Airport than the abandonment of the Heathrow routes and will potentially kill the Ryanair operation at Shannon. If the Government had to introduce a travel tax, the better option would have been to apply it as a percentage of the airline ticket price. In this way, people flying to Hong Kong with a €300 ticket would pay more than those flying on short Ryanair flights from, for example, Shannon to Carcassonne. This was a big mistake.
We do not know how the car parking tax will work but I am sure it will increase every year if it comes in, and the same applies to the property tax. There are indications that more will follow next year, for example, that the PRSI ceiling will increase, the property tax will be expanded and the carbon levy will be introduced. All the mistakes of the 1980s are being repeated. It is sad that politicians never seem to learn from history.
The Government made a huge mistake in cutting the capital programme. It has cut back on transport and has cut back on broadband by 25%, which is a particularly bad mistake. If Ireland is to recover and if there are to be any benefits from the upturn, when it comes in five or six years, we will have to be ready to compete in the modern knowledge economy. This is why we should look to countries like South Korea, for example, where broadband speeds are 30 times faster than they are in Ireland.
If we want to make Ireland part of the new economy, where instead of being the bridge between Europe and America we become the attraction centre and the European centre of operations for Asian companies, we cannot be backward. We must invest in areas like transport and broadband. People who come here from Malaysia, South Korea or Taiwan are shocked when they arrive. Dublin Airport is a mess, there is no metro from the airport, they have to spend a fortune on taxis travelling through traffic-clogged streets and their 3G mobile phones do not work. From being a country that used to be ahead of the world ten years ago, we are falling behind at an alarming rate, which will damage prospects for future growth.
The failure to close the deficit is the worst aspect of the budget. Despite all the tax increases, cutbacks and pain, the Government is still planning to borrow more money next year than it did last year. The deficit will increase from 5.5% of GDP to 6.5% and the Government will borrow €1 billion more next year, based on its very optimistic projections that the economy will only shrink by 1% and that unemployment will only rise to 7.3%. The ESRI suggests that unemployment will rise to 8% and Davy Stockbrokers suggest the economy will shrink by
3%. If the truth is halfway in between, the budget deficit next year will be €20 billion, more than the entire value of the National Pensions Reserve Fund. That is where we are heading. It would not surprise me if we are heading for a mini-budget before the summer. I will return to the issue of the deficit later.
The sad point about all the tax increases and cuts is that they did not have to be made. The Government could have followed the Fine Gael alternative budgetary proposals, among which were the scrapping of decentralisation. The Minister, Deputy Ó Cuív, stood in the House yesterday to praise himself and the fact decentralisation was continuing. I would invest in broadband and transport any day before I would invest in decentralisation. This could have been done. A windfall tax on the ESB and the other energy generators could have been introduced. The Government could have used the National Pensions Reserve Fund to invest in the economy and infrastructure.
There is no evidence yet that there is anything behind the talk. The Government talked about going after waste but there is no evidence it intends to do so. The proposed levy on the banks that will be introduced tomorrow is €500 million a year. The Minister, Deputy Brian Lenihan, in one of his many untruths, promised in the House last week that this would be charged at the commercial rate. At a conservative estimate, the commercial rate of that guarantee would be 0.5% on wholesale deposits and 0.25% on retail deposits, which would bring in €1.5 billion a year. This has not been done. If the banks could not pay €1.5 billion, that is fair enough — the Government could take equity in exchange. Instead, the Government will allow the banks to steal money from us by charging them so little for such a valuable guarantee.
The most important issue, which needs to be addressed, is that the Government failed to make decisions that had to be made in regard to public sector pay, which accounts for 60% to 70% of the current budget. Spending cannot be brought under control if the Government does not go after this. It could have done this by implementing a public sector pay freeze but it did not do so. Next year, not only will there be a 3.5% increase in August, when half a year’s worth will have to be paid, all staff will also get their annual increments. For example, if I was not a Deputy — I point out I am taking the pay cut — I would still be a doctor in the HSE. I would get my annual increment in July, which is worth 2% or 3%, and I would get a pay increase in August of 3.5%. This would be on top my junior doctor’s salary, which at that stage was approximately €65,000. Only in Ireland would people believe a 5.5% increase represents a pay pause. It does not. There is no public sector pay pause. It is totally phony. The Government could and should have done this. If it had, we would not need these tax increases and cutbacks.
The Government could also have stopped recruiting to the public service. I have learned that this year alone an extra 8,000 public servants have been taken on unnecessarily. If the Government had taken the hard decisions that need to be made in regard to public sector pay and the numbers in the public service, we would not have needed these tax increases and cuts. Instead of doing what was needed, the Government went after the old, the poor, the sick, the middle classes and those on the minimum wage.
The Government will not do what needs to be done, which is challenge the social partnership structure. I am not ideologically opposed or ideologically committed to social partnership. In the past, it may have been useful. In the late 1980s, certainly, unions, employers and Government came together to make decisions in the interests of the nation and to make patriotic decisions. Since then, social partnership has become something very different. It has become an industry of its own and a system by which the social partners meet on an almost annual basis to distribute the proceeds of the country’s wealth among themselves. If social partnership is worth anything, it must be able to respond to the needs of the nation in times of crisis. That means the social partners agreeing to a pay freeze on this occasion.
Let us not forget who are the social partners. Social partnership is a nice term but it is a media or a PR term. The correct term for social partnership is of course corporatism or tripartitism, as it is called in Germany. The social partners are Fianna Fáil, the Government, the public sector unions and the employers, such as IBEC, the bankers, the builders and so on. Let us be honest about who the social partners are. What we demand from the builders, bankers, other employers, public service unions and Fianna Fáil is that they respond to the call to patriotism which the Minister, Deputy Brian Lenihan, made in his budget speech and agree to a pay freeze. We can then reverse these tax increases and cuts.
The deficit projections are optimistic. It is probable the deficit next year will be more than €13 billion and could be between €16 billion an €20 billion. It could be so big it will be a third of what we spend. Members opposite no longer come out with the nonsense about the fundamentals of the economy being sound. However, they liked to boast about the fact the national debt was reduced in recent years, which was correct and one of the good things done in recent years. The national debt is now 25% of our national wealth but the Government is now to reverse this trend, just as it reversed all the other gains that have been made in recent years, such as medical cards, employment and so on.
On the Government’s figures, the national debt will rise to 43% of our national wealth this year but I believe it will be close to 50%. It is almost certain that by 2010 or 2011 the national debt will be a higher proportion of our GDP than when the Government came into office in 1997. Within a few months there will be more people on the live register than in 1997. Within a year the percentage of people unemployed will be higher than it was at that time. Already the stock market is lower than it was when the Government came to office in 1997. It is an appalling record that after ten years of gain the Government has managed to reverse it all in approximately two years. That would not surprise me. I have often heard Members opposite talking about Fine Gael doubling the national debt in the 1980s because it would not take the tough decisions that had to be made. It took former Taoiseach, Garrett FitzGerald, five years to double the national debt, and he was in coalition with the Labour Party. The Minister, Deputy Brian Lenihan, will do it in two years. What an appalling indictment of the Government’s economic policy.
We have a budget but no plan. It is a bit of this and a bit of that, tax increases, the odd cut here and there but no overarching strategy as to how we will get the country out of the mess. What we need to is a four year plan showing how we will reduce the deficit, keep tax under control and restore competitiveness so that we can grow our way out of the recession. Thankfully for Ireland, an alternative exists. Fine Gael has an alternative set of policies and it will provide an alternative political leadership. I have no doubt the only solution, given the failure of the Members opposite will be for the public to turn to Fine Gael to fulfil our historical role, which is to clean up the mess the Government has made.
Deputy Martin Mansergh: The backdrop to the budget is the serious financial situation at home and the turmoil on the global markets. Even after the budget measures are implemented the projected general Government debt is €12 billion or 6.5% of GDP. If nothing had been done the deficit would have been 8%. That has necessitated serious expenditure reductions but also €2 billion in tax increases. It will take us until 2011 to get back on track in terms of getting the deficit down below the 3% threshold. Growth should resume when the contraction in the housing sector is out of the system.
The prosperity of the past 20 years was based on the decision in 1987 and 1988 to put the public finances on a healthy footing. The credit for that goes to the then Taoiseach, Charles Haughey, and the then Minister for Finance, Ray MacSharry, with the support of Alan Dukes and the Tallaght strategy from the Opposition benches, given that there was a minority Government. The public finances went remarkably quickly on to a solid foundation. That has been one of the principal bases for the spectacular employment growth, the substitution of a low tax system for a high tax system and the vastly increased expenditure and improvement in public services. I make that point to underline the fact that we have to pull back the rapid deterioration and not allow it to become a runaway horse, otherwise we will spend years trying to correct the situation, as happened through most of the 1980s.
At the same time, the Government does not want to put the economy into a deeper depression. The budget has involved difficult and painful decisions. It is undoubtedly an observable fact that different sections of the community and different interests of all types always feel they are a special case and that the burden should fall on somebody else. The favourite scapegoats seem to be either the rich or, increasingly, the public service. The reality is it falls on everyone to make a contribution. I understand the Opposition parties feel no particular obligation to come up with a coherent alternative concept and Governments are there to take responsibility. However, I certainly find the Fine Gael position as incredible as the Taoiseach did yesterday.
Deputy Martin Mansergh: I well remember in 1994 the Fine Gael Party opposed the then partnership agreement and when, unexpectedly, it came into office the following year it executed very smartly a complete U-turn on the subject and supported the agreement. The reality is that the Fine Gael position——
Deputy Martin Mansergh: ——for people over 70 years. Even with this measure the cost of medical cards will rise by 14% next year. I favoured its introduction, mainly on grounds of the reassurance it would give to people whose medical problems, on average, increase with age.
Going back to the 1940s and the 1950s the medical profession mostly opposed, with success, the introduction of a universal health care system here such as the national health service across the water. As Parliamentary Secretary, Dr. Ward, was responsible for pioneering the health service here from 1932 to 1946 but he was brought down by a so-called scandal induced by medical interests. A few years later Dr. Browne was also effectively brought down by the same profession that earned, and still does earn, a very comfortable income from the better off members of the community.
For better or for worse, therefore, we did not opt for an NHS-type of service, although those systems also have plenty of problems of their own, as do mostly private or insurance-based systems. We ended up with what can best be described as a dual, mixed system with considerable overlaps. Approximately 50% of the population, if not more, have health insurance assisted by tax breaks together with some public entitlements. Should this system be departed from, let us say for the under 18s or the over 70s the case can certainly be made, especially when resources are abundant, but there is also an argument as to whether either constitute the best use of resources. The medical card was introduced a few years ago for the over 70s but it faced palpable reluctance from the medical profession then led by an IMO president who is now the Fine Gael health spokesperson, who insisted on disproportionate compensation.
Deputy Martin Mansergh: It is not simply a question of the €100 million which will be saved this year, but the prospect of escalating costs in future years. It is important that those who left VHI schemes should be able to return without delay and with minimum difficulty.
Deputy Martin Mansergh: People comfortably situated, owning their own home with no child dependants and an income well above the State pension, can continue as previously with insurance and the various schemes that limit, reimburse or give credit for higher levels of medical expenses. I accept in individual cases financial difficulty, worry and sacrifice may be involved.
Deputy Martin Mansergh: Ultimately, it is a question of what level of social services we can provide with the sort of finances available. I regret that some people of a certain age group were given expectations which it is now not possible for us to fulfil, and this is a warning to those on all sides of the House——
Deputy Martin Mansergh: Another controversial issue is the 1% levy. This was introduced albeit with a threshold both in 1983 by the Fine Gael and Labour coalition and in 1993 by the Fianna Fáil and Labour coalition.
Deputy Martin Mansergh: This is because if one has a small income, the amount is only nominal. Let us say one works two or three hours per week outside of other entitlements and earns, for example, €60. The 1% levy amounts to 60 cent. The idea that this will bring ruin and tribulation on anyone is not the case.
Deputy Martin Mansergh: At higher levels it does, which is the whole point. It raises substantial amounts of income. If one earns €100,000 per year, the levy raises €1,000 and if one earns €200,000, it raises €3,000. It is calculated on gross income and there are no allowances, exemptions or whatever to get in the way of collecting the money.
Deputy Martin Mansergh: It brings home the point that we all benefit from society and all must contribute in however small a way. I welcome the budget measures which mean that, apart from the levy, those on the minimum wage will stay outside the tax net. Similarly, those on the average industrial wage will be exempt from the standard rate band.
Deputy Martin Mansergh: The affirmation of no change to the corporation tax rate is very important in retaining Ireland’s attractiveness for inward investment and, given the other tax changes, it is important to state this fact. This has been amplified by the research and development incentive which will reduce the impact of the 12.5% corporation tax in real terms. I am pleased that substantial funding continues to be provided for research, infrastructure improvements and school buildings among the budget priorities. Since June 2007, several thousand extra teachers have been recruited.
Deputy Martin Mansergh: In comparing the situation to the past, one needs to take into account that there has been much improvement and we now have special assistants, resource teachers and so on. They alleviate the burden on the classroom teacher.
Changes in the social welfare package amounted to €0.5 billion. The main increases were more than 3%, ahead of the rate of inflation. This amounts to an 8.4% increase in social welfare spending, which allowed the pension to increase by €7 to €230 per week. I also welcome the changes, if modest, in the fuel allowance. The significant improvements made in the past ten years in child benefit and the introduction of the early childhood supplement have, for the vast majority of people, been maintained. There has only been a little trimming at the edges.
Deputy Martin Mansergh: The increase of 8 cent on petrol will be avoided by those with diesel vehicles and it will encourage a movement in that direction. This is one of many environmental measures and incentives in the budget.
I return to the subject of the public service. There is a notion propagated, more outside the House than inside, in certain newspapers that we have a vast, bloated public service. The reality is that compared to other countries the numbers in the public service are limited. It is barely more than 10% of the workforce, or if one includes teachers and those who work in hospitals, between 14% and 15%. There is an ideological bias and I am sorry that Fine Gael seems to have bought into this thinking to a certain extent.
Deputy Martin Mansergh: I had an opportunity to observe this at close quarters when attending the IMF World Bank meeting in Washington in recent days. Officials there worked in tandem with officials on this side of the Atlantic in preparation for a meeting in Paris. Along with the political leadership given, we have been very well served in underpinning and sustaining our financial system under remarkable pressures. Some people talk about the public service without having any close experience of it.
However, the public service is facing reform, but it is not a short-term exercise. The budget is reducing and amalgamating several agencies. This is not a reflection on the people involved or the good work they have done in the past, but a question of how the work is best carried on in future with the amount of resources available. I am also pleased to say something which is only half comprehended by some organs of opinion and some people in the House. The decentralisation process has been consolidated. Some 6,000 jobs will be decentralised. It was originally planned to relocate approximately 11,000 jobs.
Deputy Martin Mansergh: There are many projects in progress. They are of significant value to the towns in which they are located. Deputy Varadkar said he would prefer to scrap decentralisation and concentrate on broadband. While broadband is important, that view is not shared by the people of my home town.
I am glad the budget for flood relief works has been maintained. The Office of Public Works will continue to service its various properties through its heritage service. Like all other budgets, the arts budget has had to bear some sacrifices. The allocation that has been made will help us to maintain a broad range of cultural activity and employment. I wish to pay tribute to the Ceann Comhairle for the work he did when he served as Minister for Arts, Sport and Tourism. The Government recognises that the arts are integral to the well-being and identity of our society, rather than an optional extra or a luxury to be dispensed with in difficult times.
Minister of State at the Department of Communications, Energy and Natural Resources (Deputy Seán Power): The budget measures which were introduced this week by my colleague, the Minister for Finance, constitute a necessary response to the serious economic downturn Ireland is experiencing. The budget represents the best possible way of tackling the challenges we face within the limited resources available to us for the coming year. It has been devised to place the public finances on a stable and sustainable path. It will protect the most vulnerable people in society from the expenditure adjustments which have to be made. The Government will continue to invest in a way that leads to sustainable economic development. When this country faced similar circumstances 20 years ago, Charles Haughey was Taoiseach and Ray MacSharry was Minister for Finance.
Deputy Seán Power: Alan Dukes was Leader of the Opposition 20 years ago. He recognised the difficult position the country was in. He understood what was at stake. He supported the Government’s strategy, in principle. The personal sacrifices he was making were not appreciated by many of his colleagues at the time.
Deputy Seán Power: Fine Gael’s approach at that time contrasts with the position it is taking now. The Leader of the Opposition is making policy on the hoof. When he was on his way to a press conference last week, he heard the Government was planning to reduce ministerial wages by 10%.
Deputy Seán Power: Deputy Kenny should have consulted his party before making any decision. I know how the Deputies on the Fine Gael benches feel about this matter. They do not need to come here and try to put on a different front.
Deputy Seán Power: As Minister of State with responsibility for natural resources, I recently learned of the discovery of a new species of wasp in the west of Ireland. We are going to call it the Kenny wasp because——
Deputy Seán Power: When one is in government, one does not mind listening to such criticism because it is part and parcel of the job. However, one expects the Opposition to make some real proposals for dealing with matters of this nature.
Deputy Seán Power: He has won that crown over recent weeks. The Government has had to make difficult decisions on expenditure and tax. It has decided to maintain investment in certain key productive areas. Such investment will continue in the sectors of communications, energy and natural resources. My colleague, the Minister, Deputy Eamon Ryan, has given the House details of vital investment projects in areas like energy efficiency, renewable energy and broadband.
Deputy Seán Power: The projects will play a major role in promoting sustainable development and competitiveness. Ireland is not alone in facing a severe economic downturn. As a small open economy, it is particularly vulnerable to the downturn. The Government is tackling the challenges we face in a prompt and decisive manner. It is asking everyone in Ireland to make a sacrifice, which we hope will be of a temporary nature. The Government has shown leadership in this regard. It is natural that tough decisions will create certain hardships for people. There are no easy solutions in these difficult times. It has been necessary to take steps to achieve savings in the 2008 and 2009 budgets of the Department of Communications, Energy and Natural Resources and its agencies. The 2009 allocations demand that certain efficiencies be achieved in the area of current expenditure. These efficiencies will be delivered to ensure we live within our budget. I acknowledge the responsible role that has been played by the Green Party in recent times. As Deputies are aware, this is the Green Party’s first experience of government. It has had to take tough decisions and live with them. I am sure some of those decisions have not pleased its supporters. I acknowledge that it has done what is right, in the national interest.
Members are aware that the Government has decided to restructure certain State agencies. Under the restructuring programme, the central and regional fisheries boards are to be replaced by a single national fisheries authority, in line with a recommendation made in the 2005 Farrell Grant Sparks report on the fisheries sector. This measure will promote greater flexibility in the use of inland fisheries resources and maintain a regional focus on such matters. The rationalisation will strengthen this valuable sector, which plays an important role as the guardian of our inland fisheries’ environment. Attention must turn immediately to the implementation of the Government’s policies in this area. It is obvious that such implementation will require new primary legislation, which will be drafted and enacted as soon as possible. In the meantime, the Minister and I want interim steps to be taken with a view to providing for a smooth transition to the new structure. I assure staff that the new structures will be designed to consolidate and strengthen the service and improve its efficiency and effectiveness. Discussions on the implementation of this Government decision, and its implications, will take place in due course. The Minister, Deputy Ryan, and I will meet the chief executive officers of the fisheries boards tomorrow to initiate the transition process.
I wish to mention the salmon hardship scheme in the context of the inland fisheries budget. By the end of this year, over €24 million will have been paid out under the scheme. The allocation for the scheme in the Department’s 2009 Vote is €4.7 million. When the payments which are due in 2010 are made, the €30 million hardship fund that was established by the Government will have been brought to a successful conclusion. I am pleased this year’s budget makes provision for the continuation of the national seabed survey, known as the INFOMAR project. The survey, which is being undertaken by committed and dedicated people, is producing valuable and useful information. This important strategic programme provides vital baseline mapping for a range of offshore initiatives, such as the marine renewable energy developments which are supported by the Department of Communications, Energy and Natural Resources. It underpins activities such as offshore exploration, fisheries, aquaculture, aggregates and safety. This project is acknowledged as being best practice worldwide and is carried out by the Geological Survey of Ireland in conjunction with the Marine Institute. It has been run very efficiently and within budget for its first three years. It is the envy of many countries around the world and we are aware of several that are trying to replicate what we are doing here.
As Minister of State with responsibility for the knowledge society, I am acutely aware of the importance of encouraging people to participate in the knowledge society. What we call “e-inclusion” has the potential to be positive in many ways. Information and communication technologies have transformed the lives of many people and they make it easier, quicker and sometimes cheaper to access services. If we are to ensure that this country thrives again, it is necessary that we use information and communication technology in the best and most efficient way possible. As we develop such technology, it is important to ensure that nobody is left behind and that it is made available to everyone. That is why we are keen to see the roll out of broadband around the country.
Only 18% of Irish people between 65 and 74 have used the Internet. Older people represent a key group that is in danger of being left behind in the knowledge society, and most do not have the experience of using technology and are not in a position to pay bills, book tickets on-line or avail of other advantages like the rest of us. Many of these people do not realise the extent of the potential benefits they are missing. That is something we want to change and I acknowledge the tremendous contribution that voluntary organisations are making around the country in educating older people in this area. We will be more than happy to continue our support for them in providing this technology.
It is often with trepidation I talk about a budget in the House, because I read the budget in the Evening Herald last year and this year, long before it was delivered in this House. No responsibility was taken and no inquiries were made about this, but in my time many inquiries were made about how such sources of information emerged.
Deputy Phil Hogan: I note the budget information was reported word for word. The hypocrisy in this House from time to time is quite interesting. Deputy Mansergh also shed some crocodile tears about the over 70s and their medical cards. He has reflected the double speak that we will hear over the next few days until the Government has a rethink about this issue. There is no justification for getting this policy position wrong. People over 70 were automatically entitled to a medical card. It did not cost an awful lot of money. There are high rollers given tax exile status in Ireland who are well able to pay, but they have not been touched at all.
Deputy Phil Hogan: It is in the Finance Bill, but I have not brought it with me. They are well off people and they are enjoying the status they have obtained, due to decisions made in the House with which I do not agree.
Deputy Phil Hogan: The Minister for the Environment, Heritage and Local Government throws money away on discredited voting machines at a cost of €52 million, as well as a cost of €500,000 per annum for storing them. Why not provide savings from the e-voting fiasco by financing better housing insulation through the warmer homes scheme that only got €1 million extra and thus save money on energy bills for those who participate in the scheme? What is stopping the Minister from selling off those machines? It has perplexed me and the rest of the public. Has he not received permission from Fianna Fáil to do so? Why is that?
The people of Ireland expected that the participation of the Green Party in Government would mean a genuine change in patterns of behaviour relating to the environment. We were told that the party had a solemn commitment in the programme for Government to a green energy revolution, that we could expect to see radical policies to tackle climate change and that the tax system was to be used to drive change and reduce our greenhouse gas emissions. We were all told that climate change is one of the most important issues to face the planet. However, all we have seen in this budget is a change in the tax code at the behest of the Green Party to provide relief to the purchase of a bicycle to the value of €1,000. The Green Party has signed up with Fianna Fáil to increasing taxes on everything and on everyone, including the income of the lower paid, and on withdrawing medical cards from pensioners over 70 years of age.
The Minister of State, Deputy Mansergh, mentioned the considerable progression of the 1% income levy that was implemented in 1983 and 1993 by successive Governments, in which the low paid were exempted. There was no question of doing that this time because the Minister for Finance needed the money. He took the easy option to tax everybody irrespective of means, including people on the minimum wage. I wonder how that will give people an incentive to work.
The Green Party leader has justified his mantra of tax increases for commuters in this budget by extolling the decisions to raise motor tax, to raise tax on petrol, to impose car parking charges wherever he can, especially in the private sector, to introduce a new airport tax and to cut the public transport investment programme by €70 million. At a time when the people of the commuter belt are stressed enough, we are saddling about €2,500 in taxes per annum on families who are struggling to make ends meet. These are the coping classes of our country and they are certainly going to suffer as a result of these decisions.
At a time of increasing costs in business and employment, Fianna Fáil and the Green Party announce a car park levy of €200 for workers, but did nothing about the €9 million in expenditure for renting 4,000 spaces for public servants. Instead of starting with the private sector with a car parking levy, why not start with the public sector? The Minister should clarify to the House how this €200 per space scheme will be administered, because I believe that it will be an administrative nightmare. We would have looked very carefully at the need to introduce a scheme where we could save the taxpayer a considerable amount of money on spaces for public servants, rather than implementing it in a ham-fisted way in the private sector.
The Minister should have aimed to make an impact on national carbon emissions. The national climate change strategy, revealed before the last general election, should be torn up at this stage. It is well out of date and the policies being pursued are doing nothing to hit the 3% average reduction in greenhouse gas emissions that was promised in the programme for Government. We could do a lot more by getting more buses on the road and by allowing bus competition. The buses are there, but the political will is not. We should not be scaling back on public transport investment programmes and cutting back on the national development programme, which we were told was sacrosanct by the then Minister for Finance before the last election. We in Fine Gael have pointed out ways in which we can bring income into this programme, but that has been ignored by the current Minister for Finance.
The Minister for the Environment, Heritage and Local Government was quite boastful in the last budget about the level of support he was giving to the Environmental Protection Agency and the National Heritage Council, who were doing outstanding work. It is regrettable that he has agreed to impose substantial cuts in respect of those agencies in 2009. The Minister also spoke at length on the issue of public transport last month and stated that the Green Party’s priority was to invest heavily in public transport and away from roads. His comments in recent days suggest that he has given up on that priority as well. We all hear about plans for metro north and metro west, but we all know that these projects are being put back and will be staggered over a period of years rather than receive any meaningful expenditure in the short term. That may be the right thing to do, but we cannot promote public transport and implement policies for commuters when they have no option but to use a car. If the Minister, Deputy Gormley, and the Green Party get their way, those people will have no option but to go on a bicycle. That seems to be their priority.
This budget has received a lot of air time and mileage in the media. A surplus of €3 billion was turned into a deficit of €16 billion in a matter of three years. People are asking where all the money went. Where did it all go wrong? We cannot blame international factors all of the time for the fact that we have such a gaping black hole in our nation’s finances. There was an opportunity over the past ten or 15 years to invest heavily to cure the deficits in our infrastructural capacity and to build a platform of sustainability. The Government refused to do that because it was hell bent on making sure that the investors in housing stayed in the market place. The Government was hell bent on ensuring we had 25% of all our tax take in the construction sector.
Many people have been disappointed by this budget with regard to the pupil-teacher ratio in education, cuts in the early retirement scheme and the farm installation aid scheme for young people in agriculture. There have been cutbacks in many of the promises that were made only a short time ago. I refer to the budget speech made by the then Minister for Finance, Deputy Brian Cowen, when he stated that the fundamentals of the economy were strong, that we were in a stable financial position, that the nation’s finances were on an even keel and that no adjustments were required. We now see that the chickens have come home to roost. The wrong emphasis and the wrong policies were pursued for short-term gain. In the run-up to the two elections in 2002 and 2007, the public expenditure which was out of control on those occasions brought about a situation where public servants were pumped into the Departments for political expediency. Those people are now coming under the microscope and will be taken out of the system by possible generous redundancy packages to be announced in due course. The question of public sector reform is an issue that is high in the minds of the Taoiseach, Deputy Cowen and the Minister of State, Deputy McGuinness who accused people of being square pegs in round holes. However, the budget speech contained nothing about public service reform. There were no plans announced to give people an incentive to give greater productivity in both the public and private sectors. This is the challenge for the future if we want to bring our nation’s finances back on an even keel.
It is ironic and interesting that the problem for the Fianna Fáil backbenchers of the over-70s medical card comes from the same ministry where in 2001 the Minister did not know the extent of the problem with regard to the financing of nursing homes. That Minister, Deputy Micheál Martin, was a man who did not read his brief properly.
Deputy Billy Timmins: This Government makes Houdini look like a one stroke banjo player. How it could turn a surplus of €3 billion into a deficit of €16 billion over a few short years is nothing short of remarkable. Perhaps when the Government Deputies, Fianna Fáil, the Green Party, the Progressive Democrats and others, were giving a standing ovation to the Minister for Finance, Deputy Brian Lenihan, it may have been in recognition of how he performed the magic trick of turning the finances around so quickly.
During that standing ovation, I had in mind the images of polling day in 2002 and in 2007. I was outside the polling station in Greystones on both occasions. I observed the young people going in to vote for the Government. The people living in the Dublin commuter belt came in their droves in the last hours of polling day to vote for the Government during the good times. I had another image of the public spending for 2001 and 2006. There is a strong correlation between the outcome of those elections and the public spending in the years preceding them. In many respects this is a lucky Government. There is a current global crisis which in part disguises the mess the Government has made of the public finances. The Government has contributed greatly to the crisis by allowing a money bubble rather than a property bubble to exist and develop. We allowed a money bubble to develop by a failure to regulate and to take measures to deal with it. We failed to see what was coming down the line because we were too busy partying, too busy spending the public’s money.
I read the first paragraph of the Taoiseach’s article in today’s newspaper. He wrote about the stark choices facing the public. We have always had choices and over the past 11 years this Government availed of the choice to spend like a drunken sailor as if there was no tomorrow. It is not as if people were not articulating an alternative view. My party leader, Deputy Enda Kenny and the finance spokesperson, Deputy Richard Bruton, have for the past six years outlined the dangers coming down the track but their voices were drowned out by the applause and the popping of champagne corks.
The waste has been unbelievable and we have only seen the tip of the iceberg. The programme-makers in “Prime Time Investigates” need not worry about finding subject matter for several years, with PPARS and e-voting and many new projects coming on stream.
My constituency has suffered as a result of the waste of public money. I am sorry that the Minister of State, Deputy Mansergh, has left the Chamber. He arrived in Arklow a few weeks ago to inspect the water. He was the fourth Minister over the past 11 years to inspect the flooded households in Arklow but nothing has been done. In 2002, the then Minister for the Environment, Heritage and Local Government, Deputy Cullen, gave a commitment that if a scheme and a report were produced, funding would be available for flood relief but nothing has happened.
The Minister for Transport, Deputy Dempsey, has withdrawn funding for the N11. The former Taoiseach gave a commitment in the weeks preceding the last general election that this very dangerous stretch of 11 km or 12 km from the Beehive pub to the Arklow bypass would be dealt with. This is one of the most dangerous stretches of road in the country where people have lost their lives. However, the work has been shelved. The commitment was given but it was broken. I will not list all the school building projects. One small rural school in Lacken was granted €800,000 to build a school. They employed architects, obtained planning permission and the agreement of local landowners but the project was shelved. The farming community has been decimated. In the budget of 2001, the roll over relief and disease levies were withdrawn and farmers reacted with a tractorcade. I am sure the farming community is feeling pretty sore this morning.
Deputy Hogan alluded to the fact that most of the details of the budget appeared in the newspapers in days preceding its announcement. Before the Budget Statement was read, the Ceann Comhairle issued a warning that all the contents of the Minister’s speech were confidential and should not be divulged outside the House until the Minister had delivered it. Yet, virtually every aspect of the budget had been available in the weeks beforehand. This gives me cause for concern because I am conscious of the strict rules about Cabinet confidentiality, as epitomised by the Ceann Comhairle’s warning, but these rules are completely blown away. I ask the Taoiseach to come to the House and along with the Minister for Finance, to outline how these details were made public.
Mistakes have been made in the budget and these have been highlighted by many speakers. The Executive is too powerful in this Parliament. The Oireachtas has virtually no power because all power lies with the Executive. The Fine Gael finance spokesperson put forward proposals that the budget details should be debated beforehand and there was no debate on the Estimates this year. An open and frank debate is desirable. The confidentiality issue is clearly irrelevant because the information is given out to the media beforehand. If we had debated the issues the Government might not have run into the difficulty over the medical card issue. I am sure the vast majority of Members disagree with the proposal introduced by the Executive. It gives rise to a poor democracy when an Executive can overrule the views of the majority of the Parliament. Although I am not privy to what happens at the meetings of the parliamentary parties of this House, I could confidently predict that if there was an open vote on the medical cards issue it would not get through this House. We must examine this. Instead of investing all the power in the Executive, we should have a more open debate on such issues and the Government should be willing to chop and change. Budgets are about stark choices, especially this one. It did not have to be a stark choice. It was a stark choice because when the Government looked at two roads in a yellow wood it took the road that was more, not less, travelled by. It made no difficult decisions. It has bought and appeased the electorate over the past decade, bringing in many measures that were unsustainable in good or bad times.
In many respects the medical card is a very emotive and serious issue. To me it is the red flag issue in this budget but it disguises very serious issues elsewhere. The 1% income levy is the most draconian measure in the budget. Let us assume the Government had to get the funding that would bring in. Why did it not develop it differently by starting the 1% at €40,000 or €45,000 and move on to 2% after €60,000 or €70,000? Someone on the basic industrial wage will be hit by a 1% levy. Despite claims that this budget protects the most vulnerable, the 1% levy does not; it treats rich and poor almost equally. The Government should have examined putting this on a band level, rather than the 1% catching everybody up to €100,000. It is completely unfair and I ask the Minister for Finance to go back and examine restructuring this 1% levy, notwithstanding that we on this side of the House do not agree with the increased taxes.
The capital gains, the levy, DIRT, VAT and the increase in petrol tax will all contract the economy and help dampen consumer confidence. When we want to reward confidence, enterprise and innovation the Government has come with draconian measures to further suppress the economy. Foreign affairs was one of the few areas that went untouched, albeit funding for overseas development aid was reduced.
Tax relief has been provided for cycling to work. I questioned the Minister here and sought to provoke him into giving me an explanation on how this will operate. It sounds nice in the budget but I predict it will never come to fruition because it cannot be managed. How will we manage a tax relief for cycling to work? I see Deputy Sargent coming in with his bicycle and holdall bag. I see Deputy Gormley hopping on his bicycle and coming into Government Buildings. Conveniently he always seems to cycle towards the cameras. How will this operate? If a provision is in the budget the Government should be able to outline how it will operate, not say the Department is devising a system. How can one make an announcement without knowing how it will operate?
I will make another prediction: the €200 charge per car parking space will not come to fruition. It is virtually impossible to police and to draw up a guideline for it. There are many people in this city who go to work at certain times for whom there is no way to get to work other than by car. Again, I call on some Government speaker to outline how these proposals will be implemented. They cannot and will not. Those measures are there as a kind of psychological sop to the green element of this budget.
There have been massive increases in school transport, particularly at primary level but also at secondary level and this flies in the face of the so-called attempt to cut down on the use of private transport and use public transport. College registration fees have increased from €900 to €1,500. The Minister for Education and Science, Deputy Batt O’Keeffe, need not worry about reintroducing university fees because they are being brought in by the back and front doors.
The first time I spoke on a budget here I welcomed certain aspects of it, but there is nothing in this budget I can welcome. It will help ensure the economy contracts further. It will dampen consumer confidence. Over the last year Fine Gael has outlined what should have been done through our document Recovery Through Reform. This Government has made one more mistake and I only hope the public remembers what it has done. I will finish where I started, saying the Government put Houdini in the halfpenny place.
Deputy Pádraic McCormack: This budget was brought forward by two months. It was a rush job and, like all rush jobs or rushed legislation, it turned out very badly. It is clearly a budget drawn up by civil servants. The Minister who presented it clearly did not understand it or its implications. I will cite some of the Minister’s indecisive waffle. About the public sector pay bill he said others might want to consider a pay cut. About spiralling HSE staffing levels he admitted that 1,900 administrative workers had joined the HSE, but offered no solutions. There were no measures on the decentralisation programme. He said he would decide on the future of the programme in 2011. There was no move on payments of child benefit. He said he would examine proposals the Commission on Taxation may have in this area. On student fees, the Minister, Deputy Brian Lenihan, said the Minister for Education and Science, Deputy Batt O’Keeffe, would draw up appropriate legislation to ensure students contribute to third-level education. It is all very vague.
This is a lazy budget brought in by a lazy Minister who read out the script he was given. I will deal with a few points in the script, for example the 1% levy on all workers. This is a very unfair tax on the lower paid. If one earns €100 per week one pays 1% and if one earns €30 per week one pays the same proportion. That is very unfair. The 8 cent per litre tax on petrol is another anti-worker penalty and is a penalty on every worker driving to work. In areas such as Galway city people drive from a 50 mile radius from places such as Clifden, Lettermore, Carraroe and Clonbur. They have no other option. Deputy Gormley says they should cycle to work. It is much he knows about it. I would like to see him cycling from Clifden to work in Galway on a windy day. When they arrive in Galway to work at a factory, county council, hospital or school, the Government will charge them €200 for parking there. Another tax on the list is 4.5% added to their motor tax. It is a complete penalty on the worker driving to work.
I will deal with another list of charges in this budget. Accident and emergency charges are up €34 to €100. Charges for public beds in hospitals are up €9 to €75. Charges for private beds in public hospitals are up by 20%. Long-stay charges are up by €31 to €151. Higher education registration fees are up from €900 to €1,500. The pupil-teacher ratio in primary schools has increased, although they are already over-crowded. This means pressure on teachers teaching in big classes. Medical cards for the over-70s will be means-tested, which I will deal with. Child benefit for over-18s is to be halved in 2009 and eliminated in 2010.
Now for the cruellest decision of all: the withdrawal by means test of medical cards to over-70s. They are the fathers and mothers who have built this country and who deserve more respect than they are given by this Government. In this budget the Government wants to penalise them for its mistakes. There is one more mean provision in the budget that will cost the over-70s €100 million per year, as well as the stress and worry about what will happen to them when they get sick or have to go to hospital. The over-70s have had the benefit and comfort of a medical card since 2001 and the Government wants to take it back. A good many years ago when I first started school we had a nursery rhyme in the school yard when a child gave one something and wanted to take it back after a couple of days:
What will happen to those senior citizens approaching 70 or over 70 who have their life savings put by for a rainy day? Fearing the new means test, they will withdraw their savings, with all the added danger and worry that will bring. They will keep their savings in their homes because they will be means tested for the medical card.
There was no need for the Government to make that decision. There were many other ways to save €100 million without launching this attack on a vulnerable section of our community who the Government promised would not be affected by the budget. It is no good for the Minister for Finance or the Minister for Defence to lay the blame for this on the Minister for Health and Children. This was a Government decision. Where is the collective Government responsibility in this matter? Where now stand the Government backbenchers who gave a standing ovation to the Minister at the end of his speech? They are now saying that they do not agree with this decision. However, they voted several times this morning to support that move and will be given the opportunity to vote on it when the necessary legislation comes before the House. I can tell them all they will be watched.
I appeal to the Government to withdraw this measure. Information on the effect of the measure is being drip-fed to the public. Indeed, the entire budget is being drip-fed, with bits of information here and there and no coherence. I telephoned the HSE a number of times since the budget announcement but have not been able to obtain clear information on the guidelines for the over-70s medical card. This is driving people silly. My office has been inundated with calls from people wanting to know how they stand with regard to the medical card. The Government is making it up as it goes along. That is just further proof that the Government does not know what it is doing.
I appeal to the Minister to let common sense prevail on this matter and to ease the worries of our senior citizens, who deserve our support. They worked hard for this country in bad times to enable us, the generation that followed, to enjoy the good times that we have enjoyed in recent years. This is the most cruel aspect of the Minister’s budget.
The Minister of State, Deputy Seán Power, asked the Opposition to be constructive, although he was not very constructive during his contribution. I will be constructive and outline what Fine Gael would do in these circumstances. My party took the unprecedented step, before the budget, of spelling out what we would do, were we in government, including implementing a 3% reduction in current spending for 2009, with the exception of the Department of Social and Family Affairs. We would impose a fee of €1.5 million on banks using the Government guarantee scheme. We would also freeze public sector pay and increments for 12 months for those earning over €50,000.
Deputy Pádraic McCormack: My party would switch off the life support machine for the decentralisation programme, which the Government is still pursuing. We would eliminate 30 quangos and their annual budget of €50 million as well as incentivise research and development, upskilling and retraining programmes. We would double support for distressed home owners and increase the winter fuel allowance by 50%. That is what my party spelled out——
The future requires us to compete internationally in a global and increasingly knowledge-based world economy. It requires that we return to sustainable growth fuelled by our capacity to trade competitively by offering the world competitive and innovative goods and services. This budget sets us on that path.
The pace of growing international competition has created pressure for greater efficiency, quality and productivity. We are in the midst of a difficult international financial situation, as we all know, but in such times, the pace of change and the demands of customers become even more important and require Irish business to be creative, flexible and adaptable.
In response to competitive pressures of recent years, our economy has changed radically and continues to do so. It is with our eyes fixed firmly on the future needs of this country that the Government remains so committed to supporting Ireland’s capacity to compete as a knowledge economy.
As Minister of State with responsibility for science, technology and innovation, I strongly welcome the provision for science, technology and innovation provided in this year’s budget for the Department of Enterprise, Trade and Employment of €335 million, an increase of 3% on the 2008 allocation. We must appreciate that this allocation is over nine times what it was as recently as 2000 when we had an allocation of £27 million for Enterprise Ireland and an allocation of just £400,000 as a precursor investment to the establishment of Science Foundation Ireland.
I also welcome the allocation within the Department of Education and Science Vote of €265 million, an increase of 44%, for infrastructural investment for higher education, including additional capital funding for strategic research as part of the strategy for science technology and innovation, as announced in the budget.
These allocations are synergistic and my assignment to both Departments as Minister of State reflects the critical whole-Government approach. Critically, this budget also enhances the fiscal environment for research and development in Ireland, a point to which I will return later.
This budget and the Estimates announcement are the third in a series that clearly demonstrates the Government’s commitment to investment underpinning a clear and cohesive Government strategy for science, technology and innovation. This budget in particular, set as it is against the backdrop of extreme financial difficulties, sends the strongest signal possible of the determination of the Government to maintain the already substantial effort to build a knowledge economy in Ireland. The Government has placed research and development at the heart of its economic development strategy because the ability to create and exploit knowledge is an essential feature of an advanced economy.
The level of support provided in the budget for the augmentation of research and development programmes sends a clear signal to Irish businesses that the Government is continuing to support their efforts to develop new products, to stay competitive and win new markets in a challenging environment. The process of developing and exploiting new ideas has a crucial role to play in bolstering Ireland’s economic and social advancement. The Government’s strategy for science, technology and innovation is driven by the principle that we must produce and attract world-class talent and have dynamic firms that use that talent to innovate and compete on world markets with world-class products and services.
Wealth and employment creation in Ireland will be achieved in global markets by Irish companies that are operating at the cutting edge. The strategy has a strong focus on the role that research and development can play as a provider of innovative, market-led products and services that are essential for economic competitiveness and growth. We have committed the economy to a high level of investment in innovation in all its forms with the aim of making Ireland a dynamic, knowledge-driven economy. The Government sees this investment as a priority to underpin Ireland’s competitiveness in a knowledge-driven global economy and has delivered on this commitment in the budget.
The investment provided for in the 2009 budget will continue to drive our targets under the Government’s strategy for science, technology and innovation. The funding will be used by the development agencies, Science Foundation Ireland and Enterprise Ireland and will be supplemented with IDA Ireland funding to increase in-company research and development; help small and medium enterprises to innovate and remain competitive; continue to build Ireland’s third level research base; strengthen collaboration between industry and the education sector; promote the commercialisation of research; and bring the outputs of Ireland’s growing research base to the marketplace.
Three State agencies under the Department of Enterprise, Trade and Employment, namely IDA Ireland, Enterprise Ireland and Science Foundation Ireland, are responsible for delivering the science and technology strategy to the business and research communities. Funding is provided for Science Foundation Ireland and Enterprise Ireland for research and development through the allocation of €335 million under subhead F of my Department’s 2009 Vote, while IDA Ireland research projects, which are expected to involve support of about €50 million, is provided for separately under subhead D.
Funding allocated to Enterprise Ireland will be used to transform research and development activity in enterprise to drive productive collaborations between industry and enterprise and secure the commercial potential of Ireland’s research community. In 2009, Enterprise Ireland will receive a science, technology and innovation budget increased by 1.5% over the 2008 level at €134.5 million. The funding allocation to Enterprise Ireland will enable the agency to focus on growing the quality and quantity of research and development performed in enterprise by supporting collaboration between its client companies and third-level institutions and maximising the commercial outputs such as spin-out companies and intellectual property licences from the enhanced research activity in third-level institutions.
Enterprise Ireland is charged with the particular responsibility of delivering support to Irish enterprises in what are termed “close to the market” activities. Enterprise Ireland will continue to work with industry and with the universities and institutes of technology to foster research and development activity through financial support and advisory assistance. This funding will build a robust research system and supports the efforts of the enterprise community to stay relevant and competitive in a harsher global environment.
By encouraging greater investment in research and development and through building effective collaboration between industry and third level research, small and medium enterprises in our country are helped to innovate and stay competitive. The development of an international reputation for familiarity with cutting edge technology means foreign direct investment companies are attracted to establish a research base here, often in collaboration with Irish home-grown companies.
Science Foundation Ireland funding will increase by 4.3% to €191.5 million. The focus of Science Foundation Ireland is on research excellence to enhance Ireland’s human capital in strategic areas of scientific endeavour relevant to the future competitiveness of industry and enterprise. Since its establishment, the remit of Science Foundation Ireland has been in the areas of information and communications technologies and biotechnology. In May, its remit was expanded to include the area of sustainable energy and energy efficient technologies. Science Foundation Ireland will continue to add world-class principal investigators and their teams to those already established.
Science Foundation Ireland will continue to support strategic partnerships between industry and academia through centres for science technology and engineering, referred to as CSETS, and strategic research clusters. These Science Foundation Ireland funded projects involve partnerships with more than 300 distinct indigenous and multinationals companies.
The rapidly growing reputation of Ireland’s research base and the availability of world-class researchers, high quality graduates and our increasing PhD output is greatly assisting IDA Ireland in winning highly competitive research investments for Ireland. In 2007, the IDA supported 45 research and development projects and the figures for 2008 and 2009 are expected to be close to 60. Global leaders now choose this country as a location for cutting edge research and development activities, a testament to the Government’s foresight and clear evidence of the long-term dividend to Ireland of this investment. The companies established here during the past year include Business Objects, IBM, Boston Scientific, CITI, Pfizer and Houghton Mifflin Harcourt.
It is critical that the fiscal environment encourages private sector investment in research and development and for this reason I strongly welcome and endorse increasing the research and development tax credit which can be offset against a company’s corporation tax liability from 20% to 25%.
This measure will enhance our competitiveness as a location for new internationally mobile research-related investment, and also encourage existing overseas and indigenous firms to add research functions to their operations in Ireland or to increase their level of research activity. This initiative is particularly significant for Ireland as the level of research and development undertaken by business here has traditionally been low for an economy whose output and exports are dominated by high technology sectors.
Private sector investment in research and development has begun to increase significantly since the tax credit was first introduced in the Finance Act 2004. Research and development performed in the business sector rose to an estimated €1.56 billion in 2006, almost double the level recorded in 2000. While this represents a significant investment and achievement, unfortunately our level of expenditure is still below the OECD average of 1.54%.
The Finance Act 2004 introduced a 20% tax credit, which is now 25%, for incremental expenditure on research and development. It also provided that where a company incurs expenditure on the construction or refurbishment of a building to be used for research and development, the company is entitled to a tax credit on the cost of construction or refurbishment. The credit is in addition to any normal tax deduction available to a company for research and development expenditure and is additional to and complements the various direct research and development grant supports, which are also available through agencies.
Subcontracting research and development work to unconnected parties qualifies under the tax credit scheme up to a limit of 10% of expenditure incurred by the company in any one year. This is also true of sums paid to a university or third level institution to carry out research and development, provided the amounts paid do not exceed 5% of the total expenditure incurred by the company on research and development.
Investment in research and development helps us to compete in highly competitive global markets and grow quality employment and productivity in innovative firms. As we enter a difficult economic period and face higher costs, the need for firms to innovate and add value across all aspects of business is greater than ever. Past experience has shown us that countries with long-term competitiveness have high levels of research and development and have dynamic firms which use their talents to innovate and compete on world markets with world-class products and services. There is clear and encouraging evidence that the investment being made is helping Ireland to compete. This is the route the Government must support so the Irish economy can return to export-led growth in the years ahead. I commend the budget to the House.
Minister of State at the Department of Health and Children (Deputy Barry Andrews): It is a great honour to speak on the budget for the first time as a Minister of State with responsibility for children and youth affairs. As Members know we presented the budget on Tuesday at an extremely difficult time for the Irish and global economy.
Deputy Barry Andrews: As I mention the global economy, Deputy Bannon should be aware this is not confined to Ireland and anybody who is not wearing blinkers like Deputy Bannon is fully aware of it. The Irish people are aware of it as are those with common sense. Some, like Deputy Bannon, would like to fool a few people with their narrow vision of what the problems are but most of us realise we are in a difficult time.
Deputy Barry Andrews: I would like to outline the key aspects of the budget that impact on the Vote for my office as the Minister with responsibility for children and youth affairs. A key area of Government policy implemented by my office is the National Childcare Investment Programme 2006-2010, NCIP, which has a total allocation of €575 million over the period 2006-10, of which €358 million is in respect of capital and €217 million is for current funding.
This programme was launched in December 2005 as a successor programme to the equal opportunities child care programme which was introduced in 2000 and continued to operate until the end of 2007. The introduction of the NCIP at that time and its inclusion in the national development plan demonstrated a clear and ongoing commitment by the Government to meeting the needs of parents and their children for quality child care services.
The commitment to the NCIP and to funding commitments until 2010 will continue to be met. However, in the context of a reduction in public expenditure during 2009 and 2010, it is considered appropriate to target the programme’s resources in a way which ensures the continued delivery of quality child care services as well as ensuring sufficient resources to meet existing capital commitments. As a result, the current funding allocation of the national childcare investment programme is being sustained in 2009 at its full 2008 level of €73.578 million. This will enable my office to continue to support child care across the State, as well as providing sufficient funding for the community child care subvention scheme. This scheme enables disadvantaged parents using community-based child care services to avail of reduced child care fees. There is already a significant commitment of over €50 million per annum to the community child care subvention scheme from 2008 to 2010.
The current funding allocation will be accompanied in 2009 by a capital allocation of €60 million. This capital allocation will meet the expected capital funding requirement expected to arise in 2009. Capital expenditure under the national childcare investment programme in 2008 is expected to amount to less than €80 million.
Capital expenditure to develop a quality child care infrastructure will continue under the national childcare investment programme and grant applications will continue to be processed by my office. The intention is to extend the capital programme beyond its original timeframe of 2010. This approach was adopted under the Equal Opportunities Childcare Programme 2001-2006, which was extended by an additional year to 2007. This allowed the programme to provide additional flexibility to child care projects, in particular those in the community-based not-for-profit sector who qualify for large-scale grants of up to €1.2 million.
These applicants generally require a significant period to bring their proposals for grant funding through to the point at which they are in a position to draw down funding. Extending the timeframe for expenditure is also likely to bring each year’s allocation of funding more closely in line with the actual demand for grant draw-down each year, thereby ensuring all the capital allocation for that year is fully utilised.
The national childcare investment programme is well on the way to achieving its targets of creating 50,000 additional child care places. A total of some €200 million has been approved to date in capital grant funding and will result in approximately 30,000 additional child care places being created and a further 44,000 existing places being supported. Over the next four years, I hope to see the programme’s capital allocation being fully utilised with many more capital projects approved and completed.
In addition, more than €16.6 million is provided under national childcare investment programme current funding to support the network of 33 city and county child care committees and eight major child care organisations, such as the National Children’s Nurseries Association which I met today. The extension of the national childcare investment programme will continue this support during 2011 and 2012. The child care committees are an important support structure for the implementation of the national childcare investment programme at local level and work closely with the child care organisations supported under the programme. As is the case across the board, in 2009 the support funding provided to the child care committees and the organisations, will be subject to a reduction of 3%.
As the national childcare investment programme is expected to continue in place until the end of 2012, the review process proposed for 2010 to consider any successor programme is expected to be undertaken in 2012. In this regard, the development of future policy for early years care and education will benefit from the additional expertise which will be available to my office following the closure of the Centre for Early Childhood Development and Education.
The location of this expertise within the early years policy unit of the Department of Education and Science, co-located in my office, will provide a clearer focus for early years care and development at central level. I have already asked officials in my office to draw up proposals which will ensure a more effective use of our existing framework and resources, taking account of the deployment of this expertise.
A further important area of direct support which my office oversees for parents with young children is the early childhood supplement. The supplement was introduced in 2006 as an additional and direct quarterly payment, in arrears, of €250 per quarter, or €1,000 per annum, to parents of children aged under six years. This payment was increased in January of this year by 10%, bringing it to a payment of €275 per quarter, or €1,100 per annum. This payment will continue to be made to assist parents with the high costs associated with caring for young children in their preschool years.
Arising from the budgetary changes which have been introduced, with effect from January 2009, the supplement will move to monthly payments. This change should make it easier for parents to manage their ongoing costs in providing for the care of their children, many of which are incurred on a monthly basis.
As a result of this change, parents will receive a supplement payment for January 2009 in February and so forth rather than having to wait for the three payments to be made as one single payment in April. As the monthly payment will be rounded up to €92, the annual payment will increase to €1,104. It is proposed to have the payments made to parents on the second Monday of each month.
As the supplement was implemented as a quarterly payment, it was decided that the quarterly payment in respect of the final quarter of each year, October to December, would be paid in December rather than January. As the payment from January 2009 will be made on a monthly basis, the question of making an advance payment for the final quarter will not arise. As a result, a once-off saving to the Exchequer amounting to €40 million is expected to arise in 2009.
In addition, as a quarterly payment, despite being a payment made in arrears, the decision was taken to assist parents during the first quarter of their child’s life. As a result, parents received the payment in respect of both that first quarter and the quarter in which their child ceased to qualify. As a monthly payment, and like child benefit, this issue will not arise. This is expected to result in an annual saving to the Exchequer of €18 million.
Savings arising from moving the early childhood supplement to a monthly payment have made it necessary to introduce a further budgetary change to the scheme. This is expected to yield a further saving of €35 million in a full year. This saving will be made from the reduction of the period for which children qualify for the payment, from zero to six years to zero to five years and six months. This change has been introduced having regard to the fact that the early childhood supplement was introduced as an additional, targeted measure supporting parents caring for young children in their preschool years.
In general, children start primary school at the age of four or five years and their parents will continue to receive early childhood supplement payments for them during this period. Given that the compulsory age to commence primary school is six years, all children aged more than five and a half years in September of each year, are school-going. This measure is not, therefore, expected to impact significantly on parents of preschool children.
An increased resource allocation of just over €3 million is being made available from the dormant accounts fund to support a range of targeted measures for children and young people. The additional funds, bringing the total allocation to €6.15 million in 2009, will assist in supporting the continuation of the prevention and early intervention programme and the implementation of the national play and recreation policies.
The prevention and early intervention programme, initially announced in 2006, is primarily aimed at promoting better outcomes for children through innovation and improved planning, integration and delivery of services. The programme uses international evidence of what works to support activities chosen. This requires a range of statutory and non-statutory agencies, working across sectors, to collaborate in both service design and interagency delivery.
The programme is being managed by my office and the administration of funds overseen by it. It will run for five years with a fund amounting to €36 million in total, of which €18 million is being provided by the Government and the balance by The Atlantic Philanthropies. The Government agreed the best use of this funding would be to focus initially on a small number of projects in severely disadvantaged areas. Accordingly, the funds have been committed to projects in Ballymun, west Tallaght and Darndale-Belcamp based on plans drawn up over a two-year period by local statutory and community bodies. Some €4.9 million has been allocated to this programme in 2009.
Initially, we will focus on a small number of projects. In general, service implementation for the three projects will typically require action among a range of local service providers in collaboration with their local communities. This will entail a range of statutory and non-statutory agencies, working across sectors, collaborating in both service design and interagency delivery. A key element of the programme will be the ongoing monitoring and evaluation of both the outcomes of the activities undertaken and learning from the individual projects. This will provide an important input to policy and service development. If these projects prove successful, the results will provide the basis for policy changes which will improve the outcomes for every child.
There has been growing recognition in recent years of the importance of play for children’s development. Ready, steady, play, the national play policy launched in 2004, aims to improve the lives of children through creating more and better public play facilities for them. To date over €28 million has been expended on improving play infrastructure. This has resulted in an increase from less than 200 to over 500 playgrounds with a further 116 planned over the next two years.
I am pleased to say that the additional resources being made available in 2009 through the dormant accounts fund will provide €300,000 towards the playbus scheme, initiated this year in the national play policy. The scheme is intended to provide interventions that support the family unit, particularly those parents and children experiencing social exclusion, through play development and parenting development outreach services in disadvantaged and isolated areas. The funding measure aims to provide a play area for children to support spontaneity and creativity, and a resource area on the bus for parents and guardians in order to support skills development. A resource allocation was made available to cover costs associated with the adaptation and/or purchase of a bus to meet agreed standards suitable for play for children and for the provision of parenting supports.
In building on the success of the national play policy, which was instrumental in improving the national play infrastructure for children in Ireland, Teenspace — A National Recreation Policy for Young People was launched in September 2007. The policy provides a strategic framework for the promotion of positive recreational opportunities aimed principally at young people aged 12 to 18.
The launch of the policy highlighted the Government’s commitment to the development of youth cafés. In this regard, a sum of €750,000 is being made available in 2009 to support the development of a structured youth café programme for young people. There are already a number of youth cafés in operation around the country. Funding for these existing initiatives is provided through a number of bodies, including local city and county councils and the Health Service Executive. The Department of Community, Rural and Gaeltacht Affairs also operates a number of relevant funding programmes aimed at supporting community development, locally based community and voluntary groups, as well as programmes aimed specifically at supporting projects for disadvantaged youth.
At this stage, the focus is to bring better coherence to the approach taken to date, retaining the strong inter-agency element and identifying an appropriate model or models for youth cafés for future development. In recent months my office has undertaken a small survey of some of the existing cafés looking at mission statements, objectives, management and organisation, service levels and the role played by young people.
The National Children’s Advisory Council recently completed research on the development of a youth café model and the report is currently under consideration. This work will guide the Government in ensuring that funding is targeted and co-ordinated most effectively on a model or models of youth cafés which meet the needs identified by young people themselves. Discussions are under way with relevant Government Departments regarding a youth café programme and appropriate funding mechanisms. Consideration is being given as to which agency could best lead on the programme and how to ensure any funding which might be made available will augment, without displacing, the existing inter-agency resources.
A sum of €8.114 million is being made available in 2009 to support costs associated with the national longitudinal study of children in Ireland, and a range of other programmed activities by my office to support the implementation of the three goals of the national children’s strategy. My office is fully committed to implementing goal one of the strategy, which states, “Children will have a voice in matters which affect them and their views will be given due weight in accordance with their age and maturity.”
Goal two of the national children’s strategy provides that “Children’s lives will be better understood; their lives will benefit from evaluation, research and information on their needs, rights and the effectiveness of services.” This goal is to achieve a better understanding of how children grow up in Ireland, including both their individual and shared needs.
“Growing Up in Ireland” is the Government’s landmark national longitudinal study of children in Ireland and is the most important of its kind ever to take place in this country. The study will follow the development of two different age groups of children: 10,000 nine-month-old infants and 8,500 nine-year-old children, thus yielding important information about each significant transition throughout their young lives. “Growing Up in Ireland” reached its first major milestone in September 2008 by completing the first wave of data collection. The funding provision to support the study in 2009 is €4.852 million. A sum of €3 million has been allocated to support costs which may arise in connection with the holding of a constitutional referendum on children’s rights in 2009.
The joint committee submitted an interim report to the Oireachtas on 11 September 2008, which recommended that the Government establish a statutory scheme for Garda vetting, for the regulation of the collation, exchange and deployment of hard and soft information for the purpose of child protection. I am glad to see that the committee is making such rapid progress on achieving consensus on these complex issues.
As regards the rationalisation of agencies and further to the OECD report on public sector reform, the Children Acts Advisory Board, CAAB, is to be subsumed into my office. I take this opportunity to thank the staff of CAAB for all the work they have done since the board’s establishment, in particular, Ms Jacinta Stewart and Mr. Aidan Browne.
Deputy Martin Ferris: The first measure I wish to note in the budget is the 13% cut in the allocation to the Department of Agriculture, Fisheries and Food. Almost the entire burden of that cut falls on the programme side of that Department. The largest cut in administration is to laboratory equipment, which presumably reflects the curtailing of research and training where the allocation is down by over €5 million.
The closing off of the early retirement scheme and installation aid for young farmers represents a saving of over €9 million. That is certain to have a malign impact on those farmers in the process of transferring responsibility for the family farm. It may be a small cut in the overall scheme of things, but it is significant nonetheless. Earlier I was contacted by the chairperson of the IFA in Kerry. He brought to my attention the impact these cuts would have on one family farm over a ten-year period which, with the early retirement scheme — plus installation aid, transferred to his younger son — amounts to €165,000. Where is the incentive for an elderly farmer to hand the farm over to a son or nephew, as has been the case in recent years due to the early retirement scheme, if that is no longer the case? All it will do is ensure that will not happen. It will be totally counterproductive.
However, it is in the area of programmes designed to develop the farming and fisheries sectors that the axe has fallen most heavily. Teagasc, in particular, has played an invaluable role in providing up-to-date research and practical support for farmers. At a time of radical change within the sector, which is subject to the pressures of structural change and challenges presented by the reformed Common Agricultural Policy, in addition to facing possible further changes under the health check, it is vital that the research and development resource, mainly centred on Teagasc, is capable of rising to those challenges.
Much has been said about the potential for farmers to expand into new areas of production, such as energy crops. While that potential exists, the level of participation to date has been low. That is why it is all the more important to encourage this through the provision of information and practical assistance. The cuts made in Teagasc will severely curtail that ability. Some will defend the cuts on the basis that savings need to be made. In reality, however, by reducing the research and development capacity of the sector one is actually creating further negative impacts downstream.
In a period of international economic recession and the pressures placed on an economy such as Ireland’s by the vagaries of international fuel supplies and costs, it makes sense to ensure that we will have a viable domestic renewable energy sector based on the processing of crops suitable for the production of biofuels. Apart from the issue of supply, investment in that sector, which includes the grant scheme for growing energy crops, can help to stimulate production and processing, thereby creating new indigenous enterprise and employment. A short-term saving is, therefore, closing off a potential avenue to encourage localised economic growth. However, as Deputy Morgan stated in his reply to the budget, that is applicable to other sectors as well. There is clearly a strong argument for using the relatively healthy position of the State regarding foreign debt to borrow, if the money borrowed is used to stimulate the domestic economy and concentrate more on indigenous enterprise, rather than the increasingly precarious world of foreign direct investment.
While reading some of the submissions to the report compiled by the Committee on Agriculture, Fisheries and Food, I was struck by references to that issue. For example Tuatha Chiarraí Teoranta’s submission made the point that while 21% of those in employment in Kerry are working in IDA supported firms, Leader-supported enterprises actually employ more people in the county and have a 70% success rate. That figure is even more remarkable given that Leader does not take in the whole county. That indicates that the Leader programme has succeeded in identifying indigenous enterprise that is not only effective in providing jobs and profits, but is for the most part sustainable. That clearly points to the opportunity that exists in promoting such enterprise on a wider scale and perhaps shifting some of the resources targeted through IDA Ireland at foreign business into the domestic sector, particularly at a time when there are grave concerns over the security of many of the jobs currently in foreign-owned businesses and especially those most vulnerable to the current financial crisis.
Such a shift in policy could have been made part of the strategy that underlies this budget, if one exists, but it should certainly have informed official thinking on the economy over the prosperous years of the Celtic tiger when successive Governments and successive Ministers for Finance had the luxury and the revenue flow to attempt a different approach, namely, to address the imbalance in the economy in favour of foreign direct investment supported by public money.
Another proposal which Sinn Féin made in our pre-budget submission, referred to by Deputy Morgan in his speech, is that in return for the State’s intervention to support the banking sector through the Credit Institutions Bill, the State should take a stake in the Irish banks which, in combination with a levy on their turnover or profits, would ensure that the State is adequately compensated for its provision of such a vital service to the private banking sector.
The notion of bailing out banks is far from popular with many people who have been supporting the banks most generously for a number of years through mortgage and loan repayments, not to mention random and regular increases in alleged service charges. The notion of the State intervening in such a way would have been unthinkable up to a few weeks ago, but several states have gone further than the Government in doing what we propose, in taking a stake in those institutions, even to the extent of effectively taking them into State ownership. Not only would our proposal provide a guarantee of a future payback, assuming the banks recover, but it would also provide the State with leverage on some of the issues to which I referred, including bank charges, the way in which they handle credit and mortgages and the large dividends that accrue to top bank officials and major shareholders.
The fact that governments, which are far from being ideologically disposed to nationalising or taking a major stake in the banking system, have proceeded in that direction is an illustration of the seriousness of the crisis and there is nothing to prevent the Government from taking such steps. Indeed, there are good precedents from the history of the Fianna Fáil Party for such bold interventions. The Minister referred on Tuesday in his opening remarks to the role played by the Seán Lemass led Government in the late 1950s in attempting to stimulate economic development. He could have gone further back to the 1930s when his party also gave the State a leading role in such matters.
The reason they did so was not that they were ideologically committed to State-led development but to compensate for the failures of native capitalism and capitalists who, as the late Kevin Boland once said, thought that patriotism consisted of breeding the winner of the English Derby. The people who had money in this country in those days — their successors are among our current banking dynasties — simply had no interest in this State. They much preferred to invest their money in the London Stock Exchange than provide much needed capital for industrial development here, so successive Governments had to compensate for that through State investment and attracting foreign investment.
In the banking system in this State and further afield the priority is to maximise profit only and the banks have no scruples in playing roulette with hard-earned savings of decent people or in abusing the victims of their scrupulous greed. Now the same people have landed themselves in a terrible mess, after a period in which they got more than their fair share of the wealth produced during the boom years. They ought to be damn grateful, therefore, to the people for helping them out of this jam, something few bankers are willing to do when the boot is on the other foot. We have seen daily the repossession of homes of people who were experiencing difficulty in repaying their mortgages, but no such flexibility or sympathy is shown to them. In case the bankers forget about us, the best way to ensure a return is surely for the State to take an active stake in the Irish banks and ensure that part of their profits will flow back into the Exchequer.
If the State takes a substantial stakeholding and imposes a levy, hundreds of millions of euro would accrue to the State. The relevance of that in the current budget is obvious as it would mean that many of the inroads into ordinary people’s standards of living made this week would not be necessary. Instead of having to save €100 million by denying people over the age of 70 a medical card, the State, while at the same time underwriting the private banks, could ensure a revenue income far in excess of that brought about by attacking the most vulnerable in society.
This is the most disgraceful measure taken since I came into this House. Many people today and yesterday withdrew their savings from the banks for fear of losing their medical card. Many had health insurance up to the age of 70 and then, having had the comfort of knowing that their health would be protected by the medical card, find themselves today between a rock and a hard place.
The Government must revisit this matter and look at the enormous pain and anxiety being caused to the elderly in society. It is a shame that a government would attack the most vulnerable in society as this Government has done this week. I know full well from backbench Deputies on the Government side of the House that they have been inundated with telephone calls from the elderly all over the country. These are people at the end of their lives who have supported this State, who have built this State and who contributed to the Exchequer in recent decades and they now find themselves victims of a greedy unscrupulous Government which mismanaged the economic boom. It squandered billions of euro, yet penalises the most vulnerable, the poor and the aged.
The 1% levy applies effectively down the line to people on the minimum wage and below it. Whereas the 2% levy means absolutely nothing to multi-millionaires, the 1% levy is a significant imposition on the most vulnerable in society. Fianna Fáil once stated it was the party of the poor, but it is now, with the Green Party, the party of the rich. Robbing the poor to support and pay the rich is what was done in this budget.
I spent half of this morning in contact with farmers all over my county and, indeed, in other parts of Munster. They are devastated with the significant cuts to the Department and to the future of Irish farming. The Government has almost written off the fishing industry. What has happened and what has been done here this week is a shame. It is the worst undertaking that I have ever seen a government attempt.
The Minister stated that he personally believes senior bankers should receive no more than €500,000 per year, and here we have the Government penalising old age pensioners. Surely in the current situation, with the Irish taxpayers basically saving their necks, he might do more than hint. After all, the Minister did not hint to the over 70s that they might not be entitled to a medical card, nor did he hint to people on the minimum wage that they might like to pay tax, which is what the income levy is. Indeed, if one misses a mortgage repayment or a loan repayment the banks do not send a letter hinting that you might like to catch up on it whenever you feel like it. They send a solicitor’s letter stating that they are foreclosing on your mortgage and repossessing your property.
No one denies we are in a crisis that requires addressing, but while we are doing so we must ensure that those who have benefited most from the good times and those whose greed was in large measure responsible for ending the good times pay their fair share, and not place the burden on those who even in the best of times were struggling, such as people on low wages, the elderly and working class people employed by those such as developers who made vast profits. The elderly are now to be denied a medical card as well. This budget, what has been proposed and what has been done in the past couple of weeks in this House has done nothing for the betterment of the people most in need in our society and in our communities.
Deputy Aengus Ó Snodaigh: Is trua nach bhfuil níos mó ama agam mar tá muid ag déileáil le buiséad atá chomh dona sin gur chóir dúinn mionscrúdú a dhéanamh air. Is ar éigean a bhfuil aon rud maith sa bhuiséad, rud nó dhó anseo agus ansiúd, ach seachas sin is ceann de na buiséid is measa riamh é. Tuigimid ar fad go bhfuil cruachás ann faoi láthair, ach bhí seans ag an Aire athruithe bunúsacha a dhéanamh i dtaobh maoiniú na n-eagras deonacha timpeall na tíre. D’fhéadfadh sé difríocht mór a dhéanamh dóíbh siúd atá bocht nó i gcruachás. Sa tslí sin d’fhéadfadh sé athrú a dhéanamh ón mbun aníos agus cuidiú leis na daoine is leochailí sa tír. Ní dhearna sé sin. Uair amháin eile tá an Rialtas tar éis buiséid a thabhairt isteach a thugann buntáistí don lucht saibhir.
Over the last three days my colleagues have dealt in detail with various aspects of this bad budget. I will not repeat what they have said. As Sinn Féin spokesperson on justice, equality and human rights, I will focus on those areas. What does the budget mean for equality and human rights and the organisations that promote them? It is a roll back from where we had reached as a society. Progress had been made but it will be undermined and those groups who are most vulnerable to discrimination will become more vulnerable as a result.
What does the budget’s rationalisation of State agencies mean for equality and human rights? The Combat Poverty Agency, a protector of the poor, has been axed. The Equality Authority and Human Rights Commission, and their facilities, back office, administrative services and access for citizens, are to be fully integrated. This is combined with a budget cut of over €3 million. The two organisations had an allocation between them of €8 million in 2008, so there is a 40% cut in funding. The Government claimed it had withdrawn its proposal during the summer to merge the two agencies, but the consequence of this budget is akin to an amalgamation which, with the budget cut, will dilute the ability of these important watchdogs to carry out their functions and will restrict their activities.
What did the Human Rights Commission do to deserve such an assault on its budget and independence? It put Government complicity with serious human rights abuses under the spotlight. Its recent report on extraordinary rendition and Shannon Airport springs to mind. What will the 43% cut in funding to the Equality Authority mean? The ESRI has demonstrated that just 6% of those who report discrimination make a formal complaint or take legal action. In 2007, the Equality Authority dealt with 737 case files, yet that represented only a fraction of those who contacted it for assistance. The 43% cut means that the gap between the high level of need in seeking redress against discrimination and the level of advocacy available will grow even further.
There is a 5% cut in funding for the free legal advice centres. Some might consider that small but given that the centres were already underfunded it means important legal rights to equality will simply not be realised. The budget means that important cases will not be brought before the courts to protect fundamental public interest issues. Public interest cases that highlight and force progressive changes to legislation and policy might never be taken. Cases that oppose discrimination on age grounds, such as the prohibition on persons over 70 serving on juries, cases that oppose physical barriers to persons with disabilities, such as the failure of pubs and hotels to provide accessible toilets, cases that force the provision of education to children with special needs and cases aimed at achieving legal recognition for transsexual people might never be taken if the Minister proceeds with this punitive budget cut. The budget jeopardises the future of public interest legal activism. It means that more people, who are by definition vulnerable because their fundamental rights have been compromised, will have to fight their battles alone, if at all.
The Children Acts Advisory Board is to be subsumed into the Office of the Minister for Children. This is regrettable as the independence of this important statutory body may be compromised. Hopefully, it will not. The Minister has the best interests of children at heart but it is often difficult for an organisation or body that is subsumed into the Department to have the same independence. I notice a theme to the Government’s rationalisation agenda — it is to sideline or subsume oversight functions.
With regard to funding for disabilities under the Department of Justice, Equality and Law Reform Vote, there are cuts across the board and in terms of service delivery. The Minister for Health and Children, Deputy Mary Harney, has also announced monumental cuts. In 2005, the Government detailed a multi-annual funding package which committed €50 million to disability and mental health services. This was a sop to make up for its refusal to give services as a right to the disabled. However, only €10 million is being allocated in budget 2009. This reduction is additional to the €83 million earmarked for these services but which were redirected elsewhere in the black hole of the HSE last year. As was highlighted by the Disability Federation of Ireland, the impact of the promised €10 million will be wiped out by the 1% cut in the funding allocation for voluntary service providers, which was announced by the HSE earlier this year. Deputy Finian McGrath, who is propping up this Government, should take note of my remarks.
Funding related to gender equality and women’s issues is also to be cut. Grants to national women’s organisations are down 5% and funding for equality proofing is down 30%. Interestingly, funding for the new COSC office to address domestic, sexual and gender based violence is down 18%, while funding for equality monitoring is down 8% and funding for gender mainstreaming and positive action for women is down 45%. This is happening at a time when the gender pay differential remains high, women still get sacked for being pregnant, the rate of attrition for sexual offences is unrivalled and domestic violence continues to be a common occurrence.
The right to privacy and to the protection of one’s identity is also on the chopping block. Resources for the Office of the Data Protection Commissioner are being cut by 9% despite weekly revelations of departmental laptops going missing, failures by Departments, State agencies and private companies to encrypt sensitive personal data and Garda warnings of identity theft. Ever greater quantities of personal data are being retained by more agencies, from more people, for longer periods. Data is being transferred across borders at an unprecedented rate without adequate protection. To pare back resources for this office is to expose innocent people to serious risks with little hope of redress.
Another victim of the budget in the human rights area is the Garda Ombudsman Commission. The various reports published this year, including the Morris reports and Hartnett report, demonstrate the indispensability of an effective and independent mechanism to deal with complaints made against the Garda Síochána. The Garda Síochána Ombudsman Commission is vital to the recovery of public confidence in the Garda, to the prevention of Garda abuses and to redress where they occur. As a result of inadequate funding the commission is not capable of carrying out its mission. The 5% cut to its budget will compound the problem. It has been so under-resourced that it has been mooted that proposals have been made to lease back responsibility for investigation to the Garda itself. This must not happen. The commission was set up because the existing body, the Garda Complaints Board, was so ineffective as to warrant no expenditure. The Government should increase funding for the commission substantially for the good of communities and for the force itself.
I will turn now to the speech of the Minister for Justice, Equality and Law Reform, Deputy Dermot Ahern. Yesterday in the Dáil he engaged, not for the first time, in the worst type of gutter politics and used parliamentary privilege to repeat lies published in a Sunday newspaper. I remind the Minister that Sinn Féin is the only party to publish its audited accounts on an annual basis. It is Sinn Féin that has been calling on the Government to publish legislation to compel political parties to publish their accounts. Fianna Fáil has rejected this.
Where are the Fianna Fáil accounts? Why is it afraid to publish them? Who are the people filling the coffers of the Fianna Fáil party? Should we just look to those who benefited most from the most recent budgets? Sinn Féin will not take any lectures from a Minister in a Government that has just condemned, in the budget, the most vulnerable people in our society to pay for its economic incompetence. It is not just a reaction to a global economic downturn because particular problems have arisen in Ireland as a result of economic incompetence on the part of successive Fianna Fáil-led Governments.
Aside from that nonsense, the Minister had precious little to say for himself and on behalf of his Government yesterday. He had nothing to say about the implications of the budget for equality and human rights, the implications of which I have just outlined. He could not defend the indefensible. He did say that his “greatest priority is the fight against crime” and that this was why he “put the money where it should be”. I beg to differ.
Crime prevention measures are being cut by a whopping 32%. The Minister has made much in recent months of his so-called victims initiative. Rather than attacking long-established and fundamental due process rights, he would do better reducing the number of victims in the first instance through investing in the prevention of crime. Ultimately, investing in crime prevention would more than pay for itself.
The prisons budget is to remain unnecessarily high. Had the Government progressed the long-promised enforcement of fines Bill instead of kicking it to touch, as it did again by way of the legislative programme, spending on prisons could have been greatly reduced. That Bill could have provided alternatives to incarceration for the non-payment of fines. Community service orders cost a fraction of their custodial equivalents and have also been proven to more effectively prevent re-offending, thereby offering the potential of significant savings. Instead, the Government dumped that Bill from the legislative programme for this session and is now cutting the allocation for probation services for offenders by 7% and for the probation and welfare service as a whole by 3%. This is a foolish and expensive policy choice. The Government has consciously chosen to pursue this costly and ineffective approach to crime with taxpayers’ money, which is criminal.
I would like to have had the time to address the scandalous cuts associated with medical cards. Drugs are at the root of so much crime that any effective approach is necessary. It is a testament to the failure of the Government that cuts in the order of 5% are to affect the drugs initiatives and young people’s facilities and services fund at a time when drugs are becoming increasingly rampant. The funding should have been increased by 100% or 200%. Not doing so demonstrates how ineffective and stupid the Government is in its approach to the budget. I condemn it.
Minister of State at the Department of the Environment, Heritage and Local Government (Deputy Michael P. Kitt): I wish to share my time with Deputy Cyprian Brady and the Minister of State at the Department of Foreign Affairs, Deputy Peter Power.
Deputy Michael P. Kitt: I am glad of the opportunity to speak on the budget. There was a general welcome for the fact that it has been brought forward to address matters in a decisive manner. There is need to restore order and stability in the public finances and that is why it was announced on 14 October this year.
Deputy Michael P. Kitt: ——pursue prudent and sustainable policies that will help us through this extremely challenging period. I particularly welcome the fact that the Department of the Environment, Heritage and Local Government is continuing to prioritise areas in which I have responsibility, including fire services, the rural water programme and library services. The funding provisions reflect continued Government support for these very important areas.
There is an increased allocation for the Department’s water services investment programme. In respect of the rural water programme, there will be an ongoing campaign to provide all group schemes with quality water supplies. We will continue to push this forward in 2009 and the years thereafter. Funding for water services will consolidate the substantial advances being made with the provision of new treatment facilities for sub-standard group water schemes and will ensure further improvement in compliance with drinking water standards in 2009. I welcome this in particular because the water supply in County Galway has been the focus of much criticism recently.
The objective of the current rural water programme is to provide all group water schemes falling within the remit of the drinking water directive with a quality treated water supply. The rural water programme is being implemented under a partnership framework involving the National Federation of Group Water Schemes, rural organisations, including the IFA, ICMSA and ICA, and local authorities and the Department of the Environment, Heritage and Local Government. I commend all the organisations, which have worked so closely to meet the targets under the programme.
Capital funding of €135 million has been provided for the water programme in 2008 and there are now over 5,500 group water schemes throughout the country. Some 728 of the schemes use private water sources and, where they do not have proper water treatment and disinfection equipment, an upgrade is possible under the rural water programme. Of the 728 group water schemes, 545 have been completed to date and 87 are under way. Other schemes are in the planning stage and will begin in 2009, which I very much welcome.
The rural water programme comprises a number of measures. Group water schemes constitute the first and involve the provision of a supply for new groups, the treatment of water in existing schemes, the provision of connections to the local authority mains and, importantly, the taking in charge of schemes by local authorities. The programme also includes group sewerage schemes and small public water and sewerage schemes, with a particular focus on their upgrade. Where there is neither a public nor a group scheme, grants are available to individual houses from local authorities to assist with the provision or upgrade of their water supply. I very much welcome the increases provided under all the headings pertaining to the rural water programme.
I launched the national fire safety week on Monday, 6 October in the Dublin Fire Brigade training centre in Marino. The launch was a joint venture with the Northern Ireland Fire and Rescue Service. The theme of the week was “Fire safety is your safety”. Some key messages were emphasised at the launch, particularly that there are still homes without working smoke alarms and that a routine fire safety check only takes a few minutes but could mean the difference between life and death. The event was well advertised in the media, particularly on RTE’s “The Afternoon Show” and “About the House”, and fire safety leaflets, booklets and posters were supplied to fire authorities throughout the country.
Unfortunately, on average 46 people die in Ireland each year from fire, with house fires accounting for the majority — more than 90% of fire fatalities. In most of these incidents, a level of fire safety education and awareness could have prevented the loss of life in a fire or limited the damage.
At the end of September I launched a fire safety DVD for primary schools entitled “Tinteán Slán” or “Safe Fireplace” at Galway Educate Together primary school. The DVD contains five stories with specific messages on different aspects of fire safety and a demonstration on how a school fire drill should be carried out. I am glad to note the DVD will be distributed directly to every primary school in the country in the coming weeks. Through this programme children will learn to protect themselves and others from the terrible consequences of fire. The material is suitable for middle and senior classes but can also be used for first and second class.
The Department has given much attention to the fire services programme. We want to maintain a modern and well-equipped fire service, which is essential to safeguarding and protecting the community. The service is operated at local level through 37 fire authorities.
The Government has overseen substantial capital investment of more than €174 million in the fire and rescue services in the past decade, and this investment programme will be maintained in the coming year. The capital provision of €23 million in 2009 will enable new fire stations to be built and facilitate the purchase of fire appliances and specialised ancillary equipment. It is anticipated that up to 26 fire appliances will be delivered to fire authorities during the coming year with a further five stations built or upgraded. The Department’s fire service capital programme is designed to put in place the infrastructure, including stations and fire appliances, to support the local fire authorities in the development and maintenance of a quality fire-fighting and rescue service.
This commitment to and increased investment in the fire service has brought major improvements in the fire service infrastructure nationally. The capital programme for fire station building and refurbishment and new appliance acquisition is financed from the Exchequer grant. In the past 25 years, almost €247 million has been provided to local fire authorities under the fire service capital programme for the provision of new and refurbished fire stations and the purchase of fire appliances and other equipment.
In recent years there have been significant improvements in library developments both in terms of facilities and service. Some 72 library buildings, co-funded by the local authorities and my Department, have been built or are at construction or planning stages.
Deputy Michael P. Kitt: Some 52 grant-aided libraries, including nine headquarters, are providing a much-needed service to the public. This is a huge boost to the delivery of a vital public service at community level and, within the resources available to me, these developments will continue to have my support in future years.
The capital allocation of €10 million for 2009 will enable the Minister to provide funding for the commencement of some library building projects around the country. The Department is currently examining the priority projects proposed by the various local authorities in the context of the capital available for allocation. It is anticipated that the Minister will be in a position to announce a list of targeted library projects to be included in the capital programme 2009-12 towards the end of the current year.
Minister of State at the Department of Foreign Affairs (Deputy Peter Power): The budget allocation for Vote 29, overseas aid and international development, amounts to €753,942,000. This represents a hugely important statement by the Government at a time of economic difficulty at home and abroad. Administration of the budget amounts to €35,642,000, which represents 4.6% of the budget and, by international standards, would be considered positive. Bilateral and other co-operation grant-in-aid amounts to €516,150,000, emergency humanitarian assistance amounts to €87 million and payments to international funds amount to €31 million. Contributions to the United Nations and other development agencies amount to €84,350,000. This effort means Ireland will remain at the forefront of the fight against global poverty and hunger.
Deputy Peter Power: Over the years, in difficult and in good times, the Irish people have demonstrated their generosity and their commitment to the world’s most vulnerable people. They have contributed as individuals and as communities with their time and their financial resources. The Government has matched this commitment and, with the budget for 2009, has underlined our clear view that the poorest and most vulnerable people of the developing world must not become the chief victims of the international economic downturn.
Deputy Peter Power: On the basis of the budget allocations, we are moving towards our commitment to spend 0.7% of GNP on overseas development. On current estimates, we will spend some 0.54% of GNP on overseas development aid in 2008. I am confident our spending on development assistance will maintain our position as the sixth most generous donor in the world in per capita terms, which has been confirmed by the OECD for 2007.
The overall focus of the Irish aid programme is on global poverty reduction, in line with our commitment to the Millennium Development Goals which aim to halve global poverty by 2015. I attended the high level Millennium Development Goals event in New York last month with the Taoiseach and the Minister for Foreign Affairs. There was a clear recognition there that more needs to be done by the international community if the ambitious goals are to be achieved. We committed the Government to ensuring Ireland plays its part and takes a leadership role in the world in this area.
Our priorities in the coming year will continue to focus in particular on the poorest countries of sub-Saharan Africa, on the hunger crisis, on investment in education, health and the fight against HIV and AIDS, and on good governance and the promotion of gender equality. We are determined to concentrate on those areas which affect those least able to cope, namely, the world’s poorest people.
Ireland’s aid programme, Irish Aid, has grown significantly and consistently over the last decade. We now have bilateral programmes of long-term strategic development assistance in nine priority countries. These programmes support the provision to millions of people of basic but life-saving services, such as health care, education and sanitation. We have effective partnerships in place with NGOs and missionaries to aid their important work on the ground. At an international level, we are playing our part in funding the development work of the United Nations and the European Union. The scale of this commitment to international development should not be underestimated.
In difficult budgetary times, Ireland remains one of the world’s most generous donor nations. The provision of €754 million to Vote 29, international co-operation, of the Department of Foreign Affairs emphasises the growth in terms of quality and volume of the aid programme administered by Irish Aid. Taken together with an estimated aid contribution of €137 million from other Departments, Ireland’s overseas aid total in 2009 will be €891 million, approximately the same overall level as for 2008. This is more than twice the aid budget in 2002, only six years ago.
With this commitment we are seeing real progress in many of the countries in which we operate. Let me give some examples of what Irish taxpayers’ money is achieving. Our support for the Global Fund to Fight AIDS, Tuberculosis and Malaria has allowed 6.4 million people in Uganda to receive HIV testing and counselling in recent years. In Zambia, Irish Aid has financed a programme of well and borehole building, providing a long-term source of clean water to more than 100,000 people. In Lesotho, our support has helped the government increase primary school enrolment by a third over the last decade.
The allocation in the budget will allow us to support further progress in these countries and to respond to humanitarian disasters as they occur in 2009. It will allow us to maintain and develop our successful partnerships with Ireland’s NGOs and missionary organisations engaged in overseas development.
The major international conference organised by Concern in Dublin, at which I spoke this morning, highlights the growing scandal of global hunger, which has been the subject of an important initiative by the Government in the past year. We recently received the hunger task force’s report on world hunger. Although we contribute generously to the poorest of the poor in the world, 862 million people will go to bed hungry tonight. We are taking a leadership role on the world stage in this regard. We launched the report of the hunger task force three weeks ago before the Secretary General of the United Nations at its headquarters in New York. Leaders of multinational organisations were also present. That is a measure of our contribution to the international aid effort. The report of the hunger task force, which was agreed by all parties in the House, challenges us all to focus more effectively on the hunger crisis. I said it before, but it bears repeating — it is simply unacceptable that more than 862 million people go hungry every day. The Government is now examining the important recommendations made by the task force with a view to deciding how they can best be addressed across the Irish aid programme and in our international engagements.
We face difficult times at home but we must remain committed to helping the most vulnerable across the world, whose lives remain on a thread every single day. Irish people have a long and proud history of commitment to alleviating the problems of the poorest of the poor. Notwithstanding the difficult circumstances in which we now find ourselves, it is not a time to let down those who are in an infinitely worse position. I am sure Members will agree that no matter how challenging we perceive the situation, we should not let down those who would give everything, no matter how bad their circumstances, to put themselves in our position. Taxpayers have a right to be proud of the contribution they make and the leadership role we play on the world stage. Ireland is recognised as one of the top countries for international aid, not alone in terms of the amounts we give but because our programmes are recognised internationally as some of the most effective in the world. I am proud that the commitment remains at the highest levels to build on the achievements of the Irish aid programme to date, to protect its strong international reputation and to deliver value for money to the taxpayer as we work towards the millennium development goals. I am confident that the measures taken by the Government in Tuesday’s budget will put Ireland in a stronger position to restore economic growth and protect future funding of our aid programme. Ireland will continue to demonstrate leadership in development and in solidarity with the world’s poorest people.
We meet in extremely difficult and challenging times as most economies will be heading for recession in the next 12 months. These are unprecedented times and there is unprecedented turmoil in the financial markets. Difficult policy choices will need to be made and have been made. The Taoiseach stated earlier in the week that the choices we make now represent a defining moment for our country. We must remember that this is not the first time we have been in this position. Our country has faced serious challenges in the 1950s, the 1970s and especially the 1980s. The economic cycle is a fact of life. It comes and goes. We have had 15 years of some of the most unprecedented economic boom, which could not last forever. That is an economic fact.
Deputy Peter Power: That has brought huge benefits to our economy but it also carries huge risks. The key question is how we react and how we position ourselves. History has shown that we must learn from the lessons of the past. If we shirk difficult decisions, they will become more difficult to take and more painful for our citizens. Painful though they are now they would become infinitely more painful in the years to come. That is why we have made our choices. It behoves the Opposition to say how it will achieve its stated policy position of a 5.5% Government deficit next year. No member of the Opposition has stated in his or her contribution what he or she would do to reach the 5.5% rate.
Deputy Cyprian Brady: I am delighted to make a contribution in support of the budget. In time to come it will be seen as one of the most important measures introduced by the Government. Two weeks ago our economic system was on the brink of an abyss and decisive and clear action was taken at that time. We are now facing into a very difficult period. The budget is about stabilising our economy and putting in place measures that will enable us to take advantage of conditions when they improve. Anyone with a basic knowledge of economics realises that economics is about a series of peaks and troughs.
Deputy Cyprian Brady: We are currently in a trough. Not even the most pessimistic of commentators on any side of the House anticipated the current slowdown. The national development plan was based on a forecast of economic growth of 4.6%. That figure was a median based on the projections of a variety of commentators. We are now facing negative growth and must reprioritise accordingly, but we must continue to help those less well-off in society. I am pleased that despite the current difficulties the Minister announced increases in social welfare and other areas.
Deputy Cyprian Brady: In this digital age, in recent weeks we have watched events unfold on a daily basis in world financial markets. The global credit crunch is affecting the entire developed world. Rising fuel and food prices and volatility in financial markets is having a negative impact on growth in the United States, the United Kingdom and mainland Europe. The adverse changes in exchange rates and the weakness in sterling and the dollar compared to the euro are also hurting Irish exports and impacting on the real economy.
As a result of the global slowdown, this is the first year in the past 11 years that the tax take, which is the income that accrues to the Government, is larger than Government expenditure. The main reasons for that are external and outside our jurisdiction and control. As a small, open economy we are subject to what happens outside our borders. The stupidity and greed of certain bankers which led to the sub-prime mortgage crisis and increase in foreclosures in the USA has had a major impact on our economy. However, in the budget, we are putting in place measures to help stimulate the economy. We must do this and look forward to where we will be in six months, one year, 18 months and two years’ time. Such measures as corporation tax remaining at 12.5% will send a strong message to foreign multinationals wishing to do business, and to maintain business operations, here. Foreign direct investment, FDI, remains strong here and FDI will play a key role in driving the economy in 2009. As the Minister for Finance stated, we continue to attract a disproportionate amount of all foreign direct investment in Europe. We must continue this and take measures to sustain it. As the Minister of State, Deputy Devins, stated earlier, the increase in funds in research and development are welcome and will also help stimulate the economy.
Such measures as the tax credit for research and development will increase from 20% to 25% and will increase Ireland’s attractiveness as a location for such activities as it has done in recent times. We are also trying to encourage new and start-up companies here and, in this respect, we have introduced remission in corporation tax and capital gains tax for such companies in their first three years of operation. Despite everything that has been said, this is not about trying to prop up anyone in the economy. This is about creating jobs and keeping them here for the young, well-educated people coming out of schools and colleges and this will continue for some time to come.
I also welcome the reduction in stamp duty on commercial property, as this will help stimulate business activity and lead to job creation. These overall measures will stimulate the economy and will allow us to take advantage of the upturn when it occurs. We examine news around the world every day. Consider how other countries have reacted to the current crisis and the $700 billion bailout plan passed by the congress in the USA and the funds committed by the ECB last weekend. These should help stimulate activity in the global markets and help unfreeze the credit markets which at the moment are suffering a severe lack of liquidity. This, in turn, is making it more difficult for businesses and people here to take out mortgages and loans. In the budget, measures were put in place for first-time buyers which will encourage activity in this area and help such buyers to get onto the property ladder.
For 2009, the Government is allocating over €1.65 billion in Exchequer funding for a range of housing programmes. First-time buyers will now get tax relief at 25% instead of 20%. Many affordable housing schemes in place will now be revamped and a single umbrella system known as the Government equity initiative will be set up. Under this scheme the Government will help people who need affordable housing by providing an equity share and the maximum loan available to people who cannot get financing for a new home will also be increased.
In the budget there is continued investment in infrastructure. Despite the economic downturn, gross expenditure for the Department of Transport in 2009 is €3.613 billion. This is evident in my constituency where there are several projects which are in the planning stage and others which are under way. For instance the metro north project is still in planing and will go to tender in 2010. The Luas extensions will be completed this year and next year. The rail interconnector which is a sizeable plan for the north docks area of Dublin will link into the rail system and progress continues. There is a new signalling system planned for Dublin city and integrated ticketing will come into effect next year. These are all sizable projects that have an ongoing input into how we do business in the city and country. Despite everything, it is commendable that these plans are continuing.
Despite the challenging outlook, there have been large increases in such areas as social welfare and this will continue. Gross current spending will grow by no more than 3.6% in 2009. However, spending on social welfare will grow by 8.4% to €19.6 billion and the education and health sectors will also see an increase.
Deputy Cyprian Brady: Overall, I believe the budget is fair given the current circumstances. We are facing turbulent times and we must act accordingly. I believe the budget will restore order and stability in the public finances and despite the feigned outrage from the Opposition, we will continue to support the sections of the community that need support.
Deputy Michael Ring: Last Tuesday, when the budget was announced, what sickened me most was seeing the Fianna Fáil backbenchers and Independents standing up and clapping the Government. The only thing they did not do was sing the song of the Fianna Fáil choir, “Sinne Fianna Fáil”. They were so delighted about the budget I thought they were going to start singing. When they go home this weekend they will not be singing that song. They will be singing sad songs because they will have the blues.
Deputy Michael Ring: Yes, “Where is my money gone?”. The pensioners, people who will have to pay the 1% levy, people on social welfare, the sick and the underprivileged of the country will be waiting for the backbenchers and the Fianna Fáil Ministers. By next week, the over 70s will have their medical cards back because when these backbenchers go home next weekend, they will get the backlash from the people. The backbenchers will not be clapping and they will not be singing “Sinne Fianna Fáil” in the Dáil with the Fianna Fáil choir that was here last Tuesday.
I remember when the Deputy’s colleague from Cork, the Minister, Deputy Micheál Martin, introduced the medical card scheme in 2001. Deputy Martin was one of the greatest disasters as a Minister in the Departments of Education and Science and Health and Children. He announced free medical cards for the over 70s and he told the people of the country this would happen before reaching a deal with the doctors. They are paid €197 for a person under 70 years who has a medical card but over €640 for a person over 70 years, which is a scandal. It is no wonder that country is in this mess.
The Government is responsible for one scandal after another. Consider the nursing home debacle where the Government took money off pensioners; it must return that money now. Consider the people who prop up the Government on a weekly basis, namely, the Fianna Fáil backbenchers and Independents, Deputies Finian McGrath, Jackie Healy-Rae and Michael Lowry. I say to those who will be talking to the Fianna Fáil backbenchers in the coming days that these people said before the election that this would not happen. They said last week it would not happen. However, on Tuesday the Minister for Finance came to the House and targeted the people that suffered in this country. These are the people who in the 1930s, 1940s and 1950s paid 60% and 70% tax when the country was going down the drain. What happens when the time comes that such people need something back, such as their medical card? It is taken off them.
I look forward to talking to my colleagues after they go home this weekend. I suspect what they will hear is something like the calls my staff and I have received in my office or the discussions on national and local radio. People are appalled that the great republican party, Fianna Fáil, which has always said it would look after the old, sick and weak, is looking after the builders and the bankers again this week. There will be legislation tomorrow to save the bankers.
Deputy Michael Ring: I would love it if the officials from the Financial Regulator and the Central Bank who did not do their jobs were sacked. Fianna Fáil will never sack anybody. I do not know why. Although I would not like to name anybody outside the Dáil, I probably know why certain people are paid massive money for jobs they cannot do.
The Government’s next scandalous attack will not take place until the new year. It will be the meanest of the mean. I do not understand why the income levy is not confined to people earning more than €70,000. People earning less than €100,000 will be subject to a levy, or double taxation, of 1%. Those earning more than €100,000 will have to pay 2%. The Government should have attacked the super-rich. Young people often take jobs in supermarkets to pay for their education or help their families. They will have to pay the 1% levy, even though they might earn as little as €3,000 a year. It is the greatest scandal of all time. Middle class people, who are already under pressure to pay for health care, education, child care and mortgages, will face major difficulties as a result of this decision.
The Dáil will meet in January or February, when people are starting to realise that money is coming out of their pay packets. The levy will affect their ability to meet their fuel costs and pay their mortgages — in other words, to keep their families going. Meanwhile, the taxpayers will have to keep the banks afloat, whose chief executives earn more than €1 million per annum.
My constituency colleague, Deputy O’Mahony, mentioned a scandal affecting my part of the country which I planned to raise this evening. What does Fianna Fáil and its Government partners have against the west of Ireland? Why do they always keep us down? Why are we always blackguarded? I refer on this occasion to the scheme the Government has drawn up to charge people to leave this country from our airports. If one travels from Dublin Airport to Glasgow, London or Edinburgh, one will have to pay €2. If one travels to the same locations from Knock Airport, one will have to pay €12. What kind of thinking is that? Where are the Fianna Fáil backbenchers from County Mayo? What will Deputies Calleary and Flynn do about this scheme? Will they allow the Government to put Knock Airport at a disadvantage once more? Why is the Government doing this? Many people had to emigrate from this country in years gone by. Now that the ship is sinking once more, thanks to Fianna Fáil, those who are emigrating will have to pay the Government €12 to leave the country.
Deputy Michael Ring: Last year, the Department of Health and Children spent €61,000 designing and printing a national action plan. I do not know what the plan was, but it certainly did not work because the Department is in disarray. A further €57,000 was spent on a booklet giving people information about the family income supplement. The Department of Communications, Energy and Natural Resources spent €72,000 on a booklet explaining the “makeITsecure” campaign. The Department of Agriculture, Fisheries and Food spent €1 million on mobile phones. In light of the information I have given, it is a disgrace that the Government is trying to take medical cards from those over the age of 70. When the Fianna Fáil backbenchers go home this weekend, they will know all about it.
Deputy Michael Ring: I will talk about child benefit, a matter the previous speaker would not understand, if the constituency he represents is anything to go by. I am sure he is always talking to builders, attending race meetings and associating with the super-rich. The half-rate child benefit payment will no longer apply to those aged 18 and over and those who have moved on to third level education. An increase of €7 in child benefit is proposed at a time when inflation is 4%. I note that Deputy Ned O’Keeffe is in the Chamber. I am surprised he will allow his Government colleagues to take the medical card from the over 70s. This afternoon, the Minister for Health and Children gave the Deputy’s backbench colleagues the wooden spoon on the backside and they had to take it. The Minister, Deputy Harney, told them to sit down and be quiet. It is no wonder the Progressive Democrats are in disarray. They are almost gone. After this week, we will not hear “Sinne Fianna Fáil” any more. We will say goodbye to Fianna Fáil because that party is on the way out as well.
What does the Government have against farmers who have had to endure one cut after the other? The only increase the Minister, Deputy Ó Cuív, has secured in the Department of Community, Rural and Gaeltacht Affairs relates to the payment given to those who teach Irish outside the Gaeltacht. There have been no increases in any other schemes. The budget of the Western Development Commission has been cut by almost half. The allocations to all the other rural schemes have been cut by half. The payment given to people to heat their homes has been cut. I do not know where the Ministers, Deputies Ó Cuív and Smith, were when these cuts were agreed. Perhaps they were not at the Cabinet meeting that day. If so, they are like their ministerial colleagues who claim they were in Ireland when EU directives were being agreed in Europe. Some Ministers complain when we refuse to offer them pairs for Dáil votes, even though they are not always present at the EU meetings they are supposed to be attending.
This is the cruelest, meanest and lousiest budget this State has ever seen. I do not mind when the rich are affected by budgetary changes, but I hate it when the Government targets the poor. The rich are always looked after. The rich get richer as the poor get poorer. Fianna Fáil’s new policy is to keep the working class down. We will have many more debates on this budget. I assure Deputy Ned O’Keeffe, in case he is worried, that Fine Gael will table a simple motion on medical cards next week. I am sure many Members of this House, including Deputies Healy-Rae, Finian McGrath and Lowry and some of their Progressive Democrats and Fianna Fáil colleagues, will go on local radio this weekend to tell their constituents they do not agree with the proposed changes to the medical card system. Next week, we will give them an opportunity to vote against the proposals when we table a simple motion.
Deputy Jimmy Deenihan: When one shares a speaking slot with Deputy Ring, one has to be ready to bring the tone down a little. Having listened to several Government speakers over the course of the afternoon, it seems to me that they are almost trying to blame Fine Gael for the current crisis. They suggest in some way that Fine Gael Deputies should vote in favour of the Government’s budgetary policies.
Deputies referred to the 1980s. I remind the many Fianna Fáil Deputies who were not in this House at this time that Fianna Fáil was in power for five and a half years in the 1980s. When Fianna Fáil went into government in 1977, the national debt was approximately £4 billion. When that party left office in 1981, the national debt had increased to £12 billion. Previous speakers mentioned that the national debt doubled under Fine Gael in the 1980s, which is fair enough, but I remind them that the increase resulted from the economic policies pursued by Fianna Fáil when it was in government between 1977 and 1981. We all remember the auction politics of 1977. I was a young teacher at the time, so I was delighted not to have to pay tax on my car or pay rates on my house as a result of the give-away budget of 1978. When Albert Reynolds was interviewed not long after he became Taoiseach, he dissociated himself from the budget in question. History is being repeated. The reckless decisions made since 1997, when Fine Gael was last in government, are coming home to roost. This crisis has resulted from the bad governance of the past ten years.
I accept that the banking crisis is having an effect throughout the world. It is worrying to note that Bank of Ireland’s share price, which was almost €20 at one stage, decreased to €1.85 today. The Irish banks, with the full encouragement of the Government, gave money to Irish speculators and investors so they could become the main competitors for property in places like Manhattan in New York, London, Los Angeles and eastern Europe. Now that the property bubble has burst, the banks in question are left with very bad debts. I hope we will not have to come back here in a few weeks not to merely secure the banks’ loans, but to invest money in the banks to keep them afloat, which is what other European countries have had to do. I will get a chance to comment further on the issue of economic recklessness during tomorrow’s debate.
I will pick up on a point made by Deputy Ring. I hope the people the Government intends to appoint to supervise the banks will be the best people available. I accept that some of those who work for semi-State and State bodies are good at their jobs, but one of the reasons this country is facing such difficulties is that most of the people in question were appointed because they are affiliated with Fianna Fáil. I was in Government for a short period as a Minister of State. I had responsibility for the appointment of one chairman of a State body. I thought I made a good decision and I did not even ask the man his politics. That is not the case with Fianna Fáil Governments, as they make sure that their appointments are of the right colour most of the time. I hope they put the right people in these banks in future.
The percentage of GDP spent on defence in Ireland is the lowest in Europe. After this budget, it will have been reduced to 6.5%. We were actually spending more on defence 20 years ago as a percentage of GDP than we are spending now. There are some aspects of the defence budget to which I would like to refer. It was announced in the budget that the barracks in Longford, Monaghan, Rockhill and Lifford will be closed. There may be some merit in closing barracks due to the pressure on the Defence Forces to provide personnel. However, the staff in these locations have been told today that they must be out of the barracks by the end of January. That is just 14 weeks to close these barracks. Many of these barracks have been in place for a long time. No consideration has been given to those who will have to travel to places likes Finner Camp in Donegal, even though it will involve a round trip of 150 miles for some of the people involved. There is no consideration at all for family disruption and for the changes in living circumstances.
Some of these barracks contain cavalry squadrons and equipment will have to be moved. The staff of Clancy Barracks were transferred to the Curragh ten years ago, yet there is still equipment that remains to be transferred. However, the Government expects the 650 army personnel to move in 14 weeks. This is disgraceful. It is an awful way to treat people who have served the State very well. There is a proposal to decentralise the Department of Defence to the Curragh. The preparations for this have been ongoing for four years, but not one person has been moved yet. It just does not add up and the military people are absolutely disgusted at what is happening.
There are no living quarters in Finner Camp, so many of the people being forced to move there will eventually be moved to Ballyshannon and Bundoran. That will mean changing schools and houses, and this will cause major disruption in their lives. There are also personnel from these barracks who are overseas. Will the Minister allow them to come back so that they can make arrangements? The whole thing is very badly thought out, and I would like the official here tonight to deliver that message to the Minister, who has admitted before that he would prefer to be in some in other Department. Every Minister should be enthusiastic about his or her Department, no matter what one it is. However, the current Minister for Defence has shown total indifference to this major issue.
The Government has been asking us to come up with proposals to save money. I have a proposal for the Minister of State here tonight, Deputy Kelleher, and he is a practical individual. The Asgard II sank off the coast of France. Fortunately, nobody was injured and there was no loss of life. The Asgard II lies about 70 metres under water off the French coast and it will be very difficult and expensive to salvage. According to the newspapers it would cost €5.6 million to replace the ship, but we already have a superior ship. The cost of building the Jeanie Johnston was the subject of much criticism when it was launched in 2002. The Dublin Docklands Development Authority now owns the ship. It is an ideal opportunity for this ship to become the State training vessel. It would save the State more than €5.6 million and we would get value for the investment in the Jeanie Johnston. The ship has figured prominently in many of the major sailing events all over Europe and the world. It sailed via the Canaries and the Caribbean to the east coast of the US, and then came back across the North Atlantic. It was hit by very hard winds and sailed through tough maritime conditions, but it survived and showed itself to be a very sturdy vessel. This is an ideal opportunity for the Government to use the ship.
There is a decrease of around 11% in the arts budget this year. The Estimate for the Department last year was €85 million, but it is marked down here as €82 million. I remember the Minister bringing in a supplementary budget before Christmas of €3 million, which was added to the arts budget. Therefore, the reduction is closer to 11% than the 8% stated. The Arts Council will be under major pressure to keep its programmes going. The time to invest in arts is when our economy is in trouble, because it is an investment in creativity. We are looking at high-end jobs. What better way to obtain that creativity than by investing in the arts?
Deputy James Bannon: I feel I am addressing a wake. There has undoubtedly been a death and, as everyone knows, this is a case of murder most foul, a deliberate act that has left the mourners lost and suffering. Everyone knows the identity of the guilty parties — Fianna Fáil and the Green Party. The death I speak of is that of the Irish economy, which was in robust health and well tended by the hard work of the Irish taxpayer, until it was wantonly and ruthlessly brought down by the current Government. This death was no accident.
Previous speakers have spoken at length about Government blame and about the harsh realities of the budget cutbacks. I would like to look at the threat to our heritage posed by a wilting Green Party Minister for the Environment, Heritage and Local Government, who has failed yet again to take measures to protect our cultural and historic past, our environmental future and who allowed the Minister for Finance to strike a stunning blow to our heritage.
I am particularly disgusted that the Army barracks in Longford is to close as part of cutbacks to make good the Government’s squandering of the wealth of the boom years. However, the people of Longford have fought to save the barracks before and we will fight again. We will take to the streets in protest. The voice of the people will be heard. Connolly Barracks is an essential part of the economic profile of County Longford and its closure, with the removal of 180 jobs, plus 160 reserve personnel, from the local economy is equivalent to the loss of two major industries in the county.
The people of Longford have been let down by Fianna Fail’s Deputy Peter Kelly who, on several occasions and in the company of the Minister for Defence, gave assurances that the Barracks was secure as long as he was in the Dáil. Deputy Kelly said this on more than one occasion.
How could the Deputy and the Minister for Defence, Deputy Willie O’Dea, be such hypocrites? If our economy was dependent on the so-called help of Deputy Kelly, Longford would be on the breadline. Shame on him for letting his Government treat the people of Longford in such a way. He has pulled down the shutters on Longford. Ballymahon lost ten jobs today. This proves again that this Government is not committed to Longford.
With jobs going in Longford, perhaps Deputy Kelly’s should be the first to go. He got away with another gimmick in the run-up to the 2002 general election when he promised that an American company, Cardinal Health, would deliver 1,300 jobs to Longford. This never materialised and he never explained to the people of Longford why this did not happen. The loss of 180 jobs, plus 160 reservists, plus ten jobs in Ballymahon, at a time of major economic downturn, will impact on all sectors of our community. Local shops, restaurants, hotels and bars will feel the knock-on effects of the departure of these personnel, with long-term implications for our economic well-being.
As a working barracks situated in an historic building of note, Connolly Barracks generated tourism income, which will also be lost to the area. There was a very small reduction of eight jobs in the live register figures for September with the August figure of 3,286 unemployed standing at a revised figure of 3,278. This hope of improved times ahead has been dashed by the loss of the 180 jobs at the barracks plus ten jobs, leading to a revised figure of 3,468 jobs lost to Longford.
Generations of soldiers and their families have lived and worked in the barracks since the foundation of the State. It is part of the local community. As well as its military role, the barracks is used for many important community and charitable functions.
Connolly Barracks has also played an important part in the history of County Longford. It was established as a cavalry barracks in the 18th and 19th centuries and was renamed Seán Connolly Barracks in 1922. It is currently the home of the 4th cavalry squadron. The barracks is one of the oldest buildings in Longford and is located on the site of the original castle and market house which were erected in 1619.
Granard courthouse was earmarked for closure and now Longford barracks is to go, all this because the Government squandered billions of euro of the taxpayers’ money and wants them to make good its losses at huge expense to the local communities. It is disgusting that Longford is being stripped of these unique heritage assets and local employment. It has contributed to the well-being of the area for many years and has been such an important part of the county’s identity. Such cutbacks will see the pattern repeated throughout the country, as my colleague, Deputy Deenihan said.
The Minister’s disregard for our heritage, which is demonstrated by the 40% budgetary cutback in funding, is also set to affect an unusual historical artefact. The preserved animals in the National Museum of Ireland have fallen victim to recession and cut-backs and will not now get their restorative touch up, leaving rarities such as extinct dodos, who many people insist are alive and well and living in Leinster House, and which has been amply demonstrated by the Government, forced to wait for essential restoration despite their attraction both at their home base and for tourists.
This budget is merely the preliminary round in a succession of measures designed to launch what will be called the Cowen great depression of the new millennium’s first decade, caused by Government squandering and wasting the years of plenty, to be followed now by years of famine. We have no cheer to look forward to. The winter of discontent will in due course come to its natural conclusion at the polls.
As things stand, it looks like the grey vote will be the driving force behind the Government’s downfall. Thousands of pensioners who have previously held a medical card have had it whipped out of their hands by a heartless and uncaring Government which is now demanding €100 per hospital visit from the sick and vulnerable. How does that balance out with a meagre €7 increase in pensions?
There is huge discontent within the Government ranks, with Ministers falling over themselves to justify the indefensible. How can any Government justify saving €100 million at the expense of the deaths of pensioners unable to afford medical care? The opportunity cost for many pensioners of purchasing medical care will be food and fuel; the opportunity cost of food and fuel will be medical care. This is a lose-lose situation. The Government, however, will bring itself down, with Deputy Brian Lenihan blaming Deputy Mary Harney and so on. I predict they will shaft Deputy Mary Harney——
Deputy James Bannon: I am thinking here of a letter I received recently from a lady whose son will graduate from a special school next June and, much to her despair, there is no guarantee of funding for him beyond this date. There is no guaranteed respite services, no funding for the opening of residential services and no future for either this boy or his parents.
Deputy James Bannon: There is further bad news concerning education. The Minister for Education and Science had the power to remove the onus on middle income earners and re-introduce third level fees for top earners. Instead the reality is a shameful half measure of increasing registration fees, which will once again adversely impact on middle income earners who are already bearing the brunt of this budget.
Deputy James Bannon: This Government backed off once again from making the wealthy pay their way. So much for the promise that any increase would only impact on those on an income in excess of €120,000.
As we are all only too well aware, the events of the last few weeks in the international financial markets are without precedent in modern times. The prevailing economic and fiscal environment is more adverse than any we have faced for many years. As the Minister for Finance made clear yesterday, across all areas of public spending, we now need to consolidate the gains we have made in recent years in transforming the economic, social and environmental well-being of the country——
Deputy Michael Finneran: ——by ensuring we are clear about the areas of greatest priority that have to be the focus of our attention in the period immediately ahead. In short, dealing with a recession does not mean we have to stop trying to build a fairer society. Even in difficult and uncertain times, there are certain priorities which must always remain at the top of the political agenda. When we speak in times like these of prioritisation, the reining in of public spending, tightening our belts and so on——
Deputy Michael Finneran: ——we must always be mindful that for the most vulnerable in our society, the phrase book of recession rings hollow if front line services on which they depend are seriously compromised. Our focus in shaping the overall financial provision for housing in 2009 is on utilising available resources in a way which will most benefit those households facing the greatest challenge in meeting their own accommodation needs.
Against the background of the overall fiscal environment, next year’s housing Estimate provides a very credible basis for achieving this. The total Exchequer provision for housing in 2009 will be almost €1.66 billion in current and capital finance. This represents a reduction of 4% on the record provision for 2008, which, it is worth recalling, was an increase of 16% on the 2007 Estimate. In addition and in line with my objective of prioritising the needs of the most vulnerable households, the social housing budget across capital and current funding is facing a reduction of just 1.7%. In the circumstances, this is a good outcome, particularly when account is taken of the fact that we have taken some of the pressure off the programme in 2009 by securing an additional €80 million of investment this year under the capital loan and subsidy scheme for voluntary housing. This means funding for affordable housing and other private housing measures is facing, proportionally, a more significant pulling back. However, significant resources have been provided in this area in recent times and the main housing market has, in parallel, gone through significant change. I will return to this issue later.
By any measure, the provision for 2009 is very significant. Representing an average of over €4.5 million per day, it gives a clear signal of the continued priority attached by the Government to housing in general. It is also a reflection of our continued determination to build on the considerable progress made in recent years in meeting the needs of households through a range of social and affordable housing programmes. In total last year over 13,000 social and affordable homes were delivered and, overall, the needs of almost 18,300 households were met through the broad range of social and affordable housing programmes. That represents a very significant increase of 24% on the level of needs met in 2006 and marks a major advance towards meeting our commitments. The record resources available to us this year allow us to build very significantly on this progress and I am confident that the €1.66 billion provided for in next year’s Estimates will ensure we maintain strong momentum towards meeting our commitments in Towards 2016 and our longer-term goals under the national development plan. In earmarking the resources available to us in 2009, I will ensure the most vulnerable sections of society from a housing perspective, namely, the homeless, Travellers, the elderly and people with a disability, are accorded very clear priority.
I will turn to some specific areas of focus within the housing provision for 2009. While I have worked hard to minimise the impact of the tighter financial situation on the social housing programme, clearly even small-scale reductions present challenges for us and for local authorities in maintaining current levels of activity. Therefore, we must make every effort to optimise the use of available resources, particularly in light of the 2008 local authority housing needs assessment which, when finalised, is likely to show a substantial increase in net need. The extent of current housing need, notwithstanding the debate around how we best define it, demands a flexible and imaginative response to the structuring of our investment programme. In the context of a difficult economic transition, we must seek to maximise the return on public investment, as measured by the extent to which we are meeting housing needs.
More than ever we need to question the accepted ways of doing things. One option which my Department will be pursuing over the coming months will be the use of long-term lease arrangements for social housing purposes to supplement traditional local authority construction or acquisition. This would provide a more cost effective, targeted approach, in line with the principles of the life-cycle approach endorsed by the social partners. It also presents an opportunity for local authorities to get more for less, to take advantage of the greater value to be had in the current market. We must always aim to achieve value for money, but the tightened financial position, combined with the likelihood of our funding now going further, make it even more pressing.
Output under the voluntary housing programmes will again form a major part of the overall social housing investment programme. The capacity of the voluntary sector has been ramped up incrementally in recent years to such an extent that output in 2007 was ahead of the Towards 2016 targets. This year looks set to be another very successful year based on activity levels to date, which, as I indicated, have been bolstered beyond what was planned through an additional €80 million of investment under the capital loan and subsidy scheme. The overall social housing provision for 2009 will ensure that the capacity that has been built up in the sector will continue to be deployed to the fullest extent possible.
At a broad level, I will be continuing to maintain a high level of ambition for the regeneration and remedial works programmes of local authorities in 2009. The communities in regeneration areas are clearly deserving of support; they deserve to live in vibrant, sustainable communities. Nevertheless there are significant competing demands on the resources likely to be available for regeneration in 2009. Alongside existing projects under way, I am particularly keen to engage with the Limerick regeneration agencies as they bring the initial, crucial planning phase of their work to an advanced stage. Notwithstanding the difficulties experienced in certain public private partnership projects in recent times, notably in Dublin, it is important that we continue to explore ways in which we can secure private finance to supplement public funds. This is crucial not just from a funding point of view, but also because of its capacity to deliver the mixed development that is so crucial if the communities that are rebuilt are to be truly sustainable for the long term.
As I indicated at the outset, prioritisation of the most vulnerable in society will be an overriding objective in how we use the resources available to us next year. Against that background and with new Traveller accommodation programmes to be adopted by local authorities in early 2009, I will maintain a strong financial commitment to meeting the accommodation needs of Travellers in 2009 by matching the provision for 2008.
Tackling homelessness, undoubtedly one of the most complex areas of my overall brief, will also continue to be one of my top priorities in 2009. When I launched the Government’s new homeless strategy in August, I outlined my vision for ending long-term occupation of emergency accommodation and the need to sleep rough, two challenging but achievable targets. Like any strategy, its success will be determined primarily by the effectiveness of its implementation. For my part, I will ensure that the resource requirements of the new strategy are taken into account when it comes to the distribution of funds from within the overall housing budget. I will therefore be increasing the provision for homeless services by over 5%. However, I am equally concerned to ensure that we use our resources efficiently and achieve optimum value for money, and I will be placing considerable emphasis on that in the months ahead.
Adaptation grants for older people and people with a disability play a vital role in the context of an overall continuum of care for the groups at which they are targeted. The high level of publicity surrounding the revised grant schemes since their launch in November 2007 has led to an increased level of activity being experienced by local authorities this year. I fully appreciate the importance of these schemes in supporting independent living at home and an 8% increase in funding for their operation in 2009 demonstrates the Government’s concern for protecting the vulnerable in the challenging times ahead.
Support for first-time buyers also remains a significant priority for the Government. However, despite almost two years of cooling in the housing market which has seen house prices moderate significantly, returning to 2005 levels, there is still a widely held view that the process of correction is ongoing. It is vital that we do not arbitrarily interfere with that process. Sentiment in the housing market is heavily dependent on wider sentiment in the economy. Our approach must therefore be to focus on getting the broader economic fundamentals right and ensuring ultimately that the housing market is underpinned by these rather than by artificial interventions which are questionable in principle and dubious in terms of their likely impact in practice. In other words, given the current market situation, it is important that prospective purchasers are not incentivised into making decisions to enter the housing market at a time that would otherwise not be of their choosing.
While affordability may have eased significantly, the ongoing tightening in credit markets has resulted in a situation where people, who would previously have had ready access to a mortgage from one of the financial institutions, do not have such access. As the Minister for Finance announced yesterday, the Government decided to extend a line of credit to first-time buyers affected by the credit squeeze by introducing a new mortgage product for a limited period until the credit situation eases. The new home choice loan will be available to first-time buyers of new properties subject to a maximum loan of €285,000 and a maximum loan to value ratio of 92%. The scheme will be operated on a regional basis by a small number of local authorities, four in total, with support from the affordable homes partnership. A website at www.homechoiceloan.ie and a telephone line providing preliminary details of the product are live as of today. Prospective applicants can register their interest now and the final details and arrangements relating to the loan product will be finalised in the coming weeks, with a view to its full introduction from early November. This arrangement is designed to respond to a very specific set of circumstances in the housing market, fully in line with the Government’s policy of only intervening in a targeted way, to achieve specific outcomes. It is about facilitating, rather than incentivising, first-time buyers who wish to purchase a home.
I will also be bringing forward significant changes to the way in which affordable housing is provided. A new single, streamlined, Government equity product is to be introduced. Under this new approach, the purchase transaction would be largely unchanged from the purchaser’s point of view. However, instead of selling the units at a discounted price with the value of the discount to be subject to a reducing clawback, the Government would take an equity stake in affordable units sold, which the purchaser can either buy out in steps or at the end of a fixed period. This will replace the current approach through which affordable housing is made available under Part V, the 1999 affordable housing scheme and the affordable housing initiative. Its implementation will introduce greater equity into the system and provide a basis for achieving greater consistency across the schemes and across different areas of the country. The greater protection of the State’s investment will also mean that funds would be recycled in order to assist further households with affordable housing. The issue of introducing an open market component of the scheme will be kept under review in light of developments in the housing market.
The introduction of the new home choice loan and changes to the provision of affordable housing will ensure that there is now a closed loop in terms of housing supports and appropriate housing responses in place to respond to the needs of households from across the low to middle income spectrum, by enabling them to withstand the worst effects of the economic downturn and the credit crunch.
For disadvantaged households at the lower end of that income spectrum, the continued strong output from the social housing investment programme will provide access to a quality housing environment in sustainable communities, with a possible subsequent avenue to home ownership through tenant purchase. A further route to home ownership will also be provided for low-income households through a new incremental purchase scheme. This will support home ownership for existing social housing tenants and households qualified for social housing support, whose incomes are too low to qualify for affordable housing but who could, over time and with appropriate supports, become the outright owners of houses newly built by local authorities or voluntary bodies. For households ready to take the step into home ownership but who require a modest level of support, the various affordable housing schemes provide a welcome means of bridging the affordability gap. The changes I have announced today to affordable housing delivery will provide a more equitable basis for the operation of the schemes and achieve greater consistency of implementation nationally.
Finally, for middle-income households at the far end of that spectrum who can afford to enter the market now and to service a mortgage of close to €300,000, but for whom home ownership is currently closed off due to the so-called “credit crunch”, the new home choice loan provides a targeted and time limited option to get over a temporary accessibility issue. Of course, all of these provisions are in addition to the various priority supports for the most vulnerable sections of society from a housing perspective, that is, the homeless, Travellers, the elderly and people with a disability.
As I have already made clear, the current economic pressures require a prioritisation of funding and difficult choices to be made. My focus has been on maximising resources available for social and affordable housing next year. To achieve this and to ensure consolidation in the Department’s other key funding programmes, a deferral of the new urban renewal programme for 2009 is required. I will be working next year to ensure that the new programme can be triggered early in 2010. I will also ensure, in collaboration with my colleague, the Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív, that the programme is structured to complement his Department’s rural development programme so that both programmes are deployed in a way that has maximum effect on the ground.
Even in a buoyant economy, there is always a need to find smarter, more cost-effective and quicker ways to deliver schools, community facilities, parks, as well as the basic water and access infrastructure to support the development of new sustainable communities. This need is even more pronounced in the context of the budgetary pressures that we face. Under the developing areas initiative, we have put in place a sound basis for the future planning for our schools, in collaboration with the Minister for Education and Science and local authority managers. We are focusing now on the other areas and developing better processes and co-operative models of planning and delivery between central and local government and between the public and private sectors. I expect to be able to advance further proposals for action under the initiative by the end of the year.
Looking forward, it is clear to everyone that we are facing serious constraints on public expenditure in comparison to recent years. We have to cut our cloth to suit our measure and must do this in a targeted and prioritised way. We must also place a strong focus on obtaining value for money within the resources available and likely to be available to us.
We will be judged as a Government and as a nation by how we use the phenomenal gains we have made in the last two decades to protect the most vulnerable in our society over the coming years. The financial provision for housing for 2009 reflects the fact that we are in a phase of prioritisation, but above all it reflects our determination to maintain complementarity between our economic and social objectives.
Minister of State at the Department of Enterprise, Trade and Employment (Deputy Billy Kelleher): I spoke in the Seanad yesterday about the issue of unemployment, on a motion tabled by the Opposition. I will now take this opportunity to highlight some of the issues to which I referred during that debate.
The global economic environment is very different from what it was in the very recent past. The environment is much more challenging and Members from both sides of the House will accept that much of what is happening now was unforeseen, particularly the global credit crisis. Coupled with that credit crisis is a downturn in the global economy, with some countries slipping into recession. As a small, open economy, trading on the international markets, the environment is particularly challenging for Ireland.
In the context of the Minister’s budget speech, it is important that we send out a positive message about Ireland. Our low corporation tax rate, at 12.5%, is a fundamental plank of this Government’s policy, and that of many Governments since the 1950s, of ensuring that we attract a lot of foreign direct investment. This tax rate, coupled with our highly educated, skilled and motivated workforce, which is extremely flexible, are important factors in attracting inward investment. It is incumbent on all Members, in whatever context, to highlight the positive aspects of investing in Ireland. Emphasis should be placed on our low corporation tax rate, our infrastructural investments and, primarily, on our human capital, to which I will return later.
Tomorrow we will debate the scheme devised by the Government to safeguard the liquidity of Irish banks. The Minister’s decision in this regard was a very brave one. Most Members agree that the legislation drawn up is fundamentally important to ensure the survival of the banking sector in this country. It is important to point out that we are not bailing out the banks. In order to have a functioning economy, with capital and funding available to businesses, we must have a banking system that has liquidity and access to capital.
Deputy Billy Kelleher: It is very important that the banks realise that they are in a very different relationship with the Government, the Houses of the Oireachtas and the Irish people, a relationship that was never envisaged heretofore.
Deputy Billy Kelleher: It is incumbent on the banks to ensure that when they are attempting to claw back credit to balance their books they do not go chasing the overdrafts and current accounts of small businesses.
Deputy Billy Kelleher: I will be watching the banks very closely to ensure they do not target those small and medium sized businesses which are finding it difficult to survive at present and which need access to credit.
Deputy Billy Kelleher: The banks should not try to claw back on the overdrafts of such companies to make their own accounts look good and to cover up for the deflated property assets they have on their books. This is fundamentally important and I urge all sides to ensure this is the case. I know the banks will listen to the views of the House and this is one fundamental issue we must address.
Deputy Billy Kelleher: This budget had a backdrop of challenging times. However, it protected the vulnerable against inflation which is welcome and shows the commitment of the Government not only to sustaining sound public finances but also to ensuring resources are made available to the most vulnerable in society. We are changing and it is regretted that unemployment is rising and is projected to be at 7.3% next year. This will cause major challenges not only for the Department of Social and Family Affairs but also for training, upskilling and redeployment of people who find themselves unemployed.
As Minister of State with responsibility for labour, I am conscious of the importance of ensuring we do not spiral into the situation we had in the 1980s when people entered long-term unemployment with no training, upskilling or potential for other job opportunities. We are working with State agencies, particularly FÁS, to ensure that when people go on the live register, training and upskilling opportunities are made available to them along with redeployment into other areas of the labour market about which they would not have known much. We must be committed to this to ensure we do not have people spiralling into long-term unemployment.
Last March and April we took part in negotiations on a European directive on equality for temporary agency workers. Ireland was never opposed to the fundamental principle of equality. We wanted to ensure we had a level playing pitch with other European states which have collective bargaining in place. We wanted to ensure that temporary agency workers, who are a fundamental plank in the flexibility of our labour market, have protections while at the same time ensuring Ireland has equality with other European countries in order that we are not at a competitive disadvantage.
With regard to the social partnership process, I urge the social partners to consider what we achieved in the negotiations at EU level and recognise that we now have in place a system whereby the social partners decide the priorities with regard to temporary agency workers and in many other areas. We should be proud of this achievement. However, it is now up to the unions, employers and other stakeholders in social partnership to sit down and analyse how best to ensure equality of treatment and protection of workers’ rights while ensuring the flexibility in the labour market which is fundamental to our success in trading and competing with other countries in the global market. I urge them to examine the challenges in the coming months and ensure we have competitiveness, protection of workers’ rights and flexibility.
In recent days, a great deal of misinformation was put out about medical cards. When the Minister for Finance announced in his budget speech the withdrawal of medical cards and a means test for those aged over 70 it led to a great deal of concern. It was churned and used emotively by Members opposite which did a disservice to the calm and rational debate we wanted to outline the changes made by the Government with regard to means tests.
For those aged over 70, the income limit will be €240.30 for a single person and €480.60 for a couple. This is the same as the highest amount of the State contributory pension following the increase in the budget. A single person whose sole weekly income is €240.30 or a couple whose sole weekly income is €480.60 or less will qualify for a medical card. Other social welfare payments such as fuel allowance or the living alone allowance are not counted in the means test. A person whose income is more than these amounts will be asked for additional information.
I am sure many people contacted Members on all sides of the House with regard to the means test. It is important that we put the facts in front of the people. The means test income is income after expenses. Full account is taken of the real expenses a person can expect to have in the following year, such as rent, mortgage, GP costs, medicines, medical appliances, nursing home fees, maintenance payments, income tax or PRSI. It is fundamentally important that when people speak on these issues that they speak in a factual way and do not strike fear into people.
The Government has explained the reasons for introducing means testing for those aged over 70. The majority of people who received medical cards after a means test will not even be contacted by the HSE. It is those who acquired them by reaching 70 years of age who are involved. Queries were also raised with regard to the health levy and whether people would pay it. The health levy will not be payable by people aged 70 and over.
When we debate in this House it is important that we debate the facts and not ramp up emotive debates for cheap political gain. There was a reason for making the changes and when people analyse the decisions taken in the budget and the clarification in the guidelines for means testing they will see we do not want to take from those on social welfare payments. The guidelines published today show the sliding scale from medical cards to GP only medical cards to the grant of €400 for medical expenses for people who do not qualify for either medical card.
I compliment the Minister for Finance, Deputy Brian Lenihan, on the budget. He took difficult and brave decisions. We know the backdrop and the challenges we face. In the coming years this budget will be seen as having been taken in difficult circumstances to ensure sound finances and, most importantly, to protect our competitiveness. An upturn will come, although we may face challenges in the foreseeable future, and the budget will ensure we are well placed to take advantage of it. In the meantime, we will protect the vulnerable and invest in infrastructure, health and education as was outlined in the capital spend of the budget. We know where we are and what we want to achieve in the coming years. The budget is the first step in weathering the difficult storms out there and it will leave us in good stead in time to come.
I am glad to have an opportunity to make a few points on the budget introduced by the Minister for Finance on Tuesday. We were well conditioned in recent months by the Government telling us about the difficult conditions of the economy. A few moments ago, I heard the Minister of State, Deputy Kelleher, tell the House that the vulnerable, the old and the education sector would be protected.
We were assured that because of the importance of education to our economy and the need for a well-educated workforce that few cutbacks would be made in the sector. How naive were those who believed this? We were also told prior to last year’s general election that there were no problems and that the good times would continue to roll.
I will concentrate on the serious effects on education following the announcements made in recent days. The devil is in the detail and there seems to be a new budget emerging each time we seek clarification. Class size has been an emotive issue for many years. Prior to last year’s general election, the present Government’s Fianna Fáil Members made solemn pledges in halls packed with parents throughout the country to reduce class sizes gradually over the next few years.
Deputy John O’Mahony: Not only have these promises been reneged on, but class sizes are increasing. We cannot even compete with eastern European countries who are in the early stages of development. How can we claim we have the best education system in the world if we have the largest class sizes in Europe? I will not spend too long discussing the reduced schools building programme because those from rural Ireland did not have to wait until the budget to realise this. In County Mayo thousands of children attend classes in either prefabs or rooms with Third World conditions with no prospect of getting a new or refurbished school building even though they have been waiting for more than ten years.
However, it is some of the smaller cutbacks in courses, subjects and critical posts that so far have gone unnoticed. These will have serious implications for the delivery of a top-class education system. Grant payments for physics, chemistry, home economics, the leaving certificate vocational programme and transition year are all being abolished. At national level these cutbacks amount to €5.35 million. While it may seem a small amount in the big picture, it is a vital amount to each school and teacher working in these areas. In recent times there has been much ado about encouraging students to take science subjects at post-primary level with moneys being allocated for roadshows and so forth. The budget cutbacks will make it difficult to deliver on this.
Obesity is a problem with younger generations. We need children to eat the right foods and stay active. Yet the vehicle which could have delivered that knowledge to students, the home economics grant for equipment, has been withdrawn. When I was teaching, we were told the chalk-and-talk era was coming to an end and there needed to be more emphasis on practical teaching. A good and well-resourced home economics course would be more than just a subject; it would prepare students for a healthy lifestyle. These courses could easily be delivered with less money but instead full cutbacks have been introduced.
Leaving certificate applied and transition year programmes are provided to encourage students to complete school programmes. In the process they become more mature and experience the workplace. Is there any joined-up thinking in cutting these back? On the one hand, the Government promotes certain ideals but then puts obstacles in the way of the cheapest and most successful delivery of them.
Under the budget, teacher substitution arrangements are not allowed even for school business absences in post-primary schools. The real truth of this cutback is that in-service courses are now withdrawn. Another hidden cutback in the latest information we have received is that home-school liaison officer posts will go in schools which lost their DEIS status prior to the general election but were allowed to keep them when a furore was created at the time. Nine such schools will be affected in the Mayo constituency alone when these cuts are implemented. The officers provide not just an education but a social service. The officers can be the first to notice dysfunctional families, acting as a sort of early warning system in that respect.
The increase in the registration fees for students entering third level is the re-introduction of fees by the back door. Those parents forking out for these fees will already have been hit with the increased charges for transport, etc., at second level. The back to education grants were already restrictive in the case of young people who left school early to join the workforce in the now dead and gone Celtic tiger. Many of these young people are now unemployed with no prospect of a job. Many of them will have to wait six months before they can apply for the grant. On top of that, there are 500 fewer places available.
We all expected some pain in the budget but the least we could have expected was that it would be implemented with some equity. Under the travel tax proposal, €2 will levied on a journey less than 300 km and €10 for a journey over 300 km. A flight from Ireland West Airport Knock to Liverpool, Glasgow or Manchester will be taxed at €10 but a similar flight from Dublin Airport will be taxed only €2. Where is the equity in that? This is anti-competitive and anti-west.
This morning I was glad to hear the Minister for Finance, Deputy Brian Lenihan, say on radio that any anomalies in the medical card provisions will be ironed out. I presume the same will apply to the travel tax.
Deputy John O’Mahony: I heard the Minister speaking about this on “Morning Ireland”. The west has suffered long enough. If budgetary pain is to be imposed, it should be done so with some equity. The travel tax will affect all regional airports and it should be changed.
Earlier, I took a telephone call from a farmer in my constituency who was concerned about the reduction in the disadvantaged area grant. He stated his income for next year will be reduced by €2,500. Cutbacks are acceptable if they are fair and equitable. Many of those announced in Tuesday’s budget were not.
Deputy Bernard J. Durkan: I welcome the Minister for Finance back to the House. I am sure he was taking the reaction to the budget in the community and on the European scene. I know there is some considerable turmoil outside the House but there has been turmoil here today too. Confusion exists about some of the budget’s provisions and I hope the Minister will shed some light on them.
“Health cuts hurt the elderly, the sick and the handicapped” was an election slogan some years ago. It was before the Minister first entered the House so I cannot accuse him of drawing up the slogan. However, he and his colleagues have been the beneficiaries of an electoral advantage gained from policies pursued over the past seven years. One of the Minister’s predecessors, Charlie McCreevy, knew before the 2002 general election of the spree in public spending. However, he could not arrest it until after the general election. I remember the pilgrimage to the plinth from the backbenchers on that side of the House to protest at the callousness of the then Minister for Finance as he attempted to haul the public finances into proper kilter. He failed and that is where it all went wrong six years ago. The Government can claim all it likes that these current public finance problems are all part of an international crisis. While it is an added difficulty, these problems originated in this country. Some of the remedies proposed will cause further difficulties.
I have every respect for the Minister of State at the Department of the Environment, Heritage and Local Government with responsibility for housing, Deputy Michael Finneran. Any attempt, however, to off-load over-priced housing on to the already hard-pressed consumer will simply be regurgitated in 18 months as negative equity. That is a dangerous route to follow. I accept there are compelling reasons to tackle housing such as the large number of people on local authority housing lists. Over the past several years large numbers of people could have availed of housing but were not facilitated. If they had been, we would not have the bank of closed down building sites as we now have in my constituency and in the Minister’s.
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