Wednesday, 7 December 2011
Dáil Éireann Debate
The Taoiseach: This Government came to office at a time of unprecedented challenges for the economy and the people. It took office with great ambition for this country and its people. It was voted into office, with the largest ever majority, by the people to restore our economic sovereignty, get Ireland working again, return our economy to growth and to radically reform our politics and public services. This week, we have taken another major step in delivering on this for our people. We will not stop until we have delivered on these objectives.
The Government has just announced its first budget. It is a jobs budget from a Government focused on delivering jobs. Since being voted into office, this Government has had jobs at its very heart. It has been the focus of the programme for Government and directed Government action. We committed to a major jobs initiative within 100 days of taking office and we delivered on it. The initiative included a range of actions across Government to stimulate the economy and specific sectors to help get people back to work. The key elements of the jobs initiative include reaffirming, as the Minister for Finance repeated yesterday, that our 12.5% corporation tax rate remains sacrosanct; a temporary reduction in the lower rate of VAT, from 13.5% to 9%, on restaurant and catering services, hotel and holiday accommodation and various entertainment services; the halving of the lower rate of employers’ PRSI on low paid workers; shifting capital expenditure towards more job intensive projects in the areas of education, local and regional roads and sustainable transport projects; additional funding for energy efficiency schemes; the provision of an extra 20,900 activation places for the unemployed, including 5,000 work placements and 6,000 new training-reskilling places targeted at people who have lost jobs in sectors with high levels of unemployment, such as construction; a national internship programme, which has already placed 3,000 people, with many more posts currently advertised; the extension of the requirement for public bodies to pay suppliers within 15 days; and improvements to the research and development tax credit scheme.
The Government has now extended the 15-day prompt payment requirement beyond central government Departments to include the HSE, the local authorities, State agencies and all other public sector bodies. It has already started to deliver for the economy. Overseas tourist numbers for the first eight months of this year are up 11% on the same period in 2010. The number of visitors from mainland Europe and North America is up 13% and 12.6%, respectively.
In September the Restaurants Association of Ireland reported that almost 94% of restaurants had passed on the VAT reduction. Almost half of all restaurants have seen their business turnover increase in the past eight months compared with the previous year.
Figures published in September show that Ireland’s slide in the global competitiveness ranking has halted. Our exports increased by 7.3% in the first six months of 2011 compared with the same period in 2010. Since 9 March, companies supported by the IDA have announced a total of 4,770 jobs.
The jobs initiative was only a beginning — a statement of intent. Jobs have been at the core of this Government since then. Ministers have been busy working on developing new schemes and policies to get Ireland back to work, including a new €10 million overseas entrepreneurs fund to attract mobile international entrepreneurs to start their businesses in Ireland and ensure that the world-leading companies of the future can come out of Ireland; a second call under the €125 million Innovation Fund Ireland which to date has announced three investments, including in the first high calibre Dogpatch Business Incubator Lab outside the USA, which I recently visited and where I met a number of young entrepreneurs; a Government cloud computing implementation strategy to ensure Ireland takes full advantage of the 8,600 job potential of this global industry; and new technology centres in energy smart grid and cloud computing aimed at turning good ideas into good jobs, in which sector there will be good a future for young people in the decade ahead.
Work on new jobs policies is continuing with budget 2012, another step in getting Ireland back to work. The Government will shortly publish a major policy statement on labour market activation, Pathways to Work. This will set out our strategy to reduce and prevent the drift into long-term unemployment to ensure people are assisted and incentivised to move off the live register as jobs are created. It will set out targeted measures and major institutional reforms to help people who are unemployed get the training and work experience they need. Furthermore, the Minister, Deputy Bruton, is preparing an action plan for jobs to be launched early next year setting out key actions to be delivered over the course of 2012 to target new jobs and sectors. Getting Ireland back to work cannot be delivered in one budget announcement but will continue to be the priority over the lifetime of this Government.
The priority on jobs is linked to the ultimate goal of rebuilding our economy and restoring faith in Ireland at home and abroad. We have taken necessary steps to improve our collective situation. Despite the naysayers we have significantly improved the terms of the EU-IMF programme and have delivered a reduced interest rate on our loans, resulting in a saving of €10 billion for the taxpayer over the lifetime of the programme. We have taken big steps to reform the banking sector so that it can begin to serve the people again. Recent private sector investment in Bank of Ireland is a reflection of renewed confidence in Ireland, something unimaginable this time last year.
We have largely rebuilt our international reputation through constructive engagement with our European partners and other friends further afield. We are now known and seen internationally as a country that is serious about its economic recovery efforts, one that is very much open for business, which is reflected in international business and political comment in Europe and beyond.
This message came across clearly to me in my conversations with participants at the Global Irish Economic Forum last October. It is also reflected in Ireland’s continuing success in attracting foreign direct investment. As for investment from the United States in particular, business and investment interests there were happy to have clarity and decisiveness on the part of the Government in respect of Ireland’s corporation tax rate. This confidence has been reflected in bond yields, which clearly differentiates us from other programme countries. The economy has returned to growth this year after three years of contraction and small though that growth may be, it is heading in the right direction. Moreover, the forecasts confirmed by the Minister for Finance yesterday are for this growth to continue next year. Our exports continue to perform well and this strong performance is expected to continue despite the slowdown in global markets. However, given growing uncertainty in global markets, we must focus all our efforts on sustaining what is a fragile recovery. The objective of budget 2012 is to build on these achievements and set out a clear, consistent pathway forward for the economy.
The Government has been unwavering in its commitment to return the public finances to good health and bring the debt below 3% of GDP by 2015. Returning the public finances back to good health was the ultimate legacy of the former rainbow coalition. It created the solid base from which the so-called Celtic tiger emerged before it was hijacked by the “show time” of irresponsible economic policies. The Government’s ultimate goal is to regain our national sovereignty by maintaining its fiscal commitments in the years ahead.
Creating new jobs will at the core of correcting the public finances and restoring sovereignty, the reason the budget has jobs at its core. The Government values work and what it means for people and, therefore, is delivering on its promise not to increase taxes on incomes from work. We came into government determined not to repeat the disaster of the universal social charge, which was disastrous for consumer confidence, spending and the incentive to work. That is the reason for the decision of the Minister yesterday to exempt 330,000 people with incomes of less than €10,000 from the universal social charge. This is a statement of the value the Government attaches to work. Moreover, this decision will affect a great number of part-time workers to their benefit. This is the reason the Government has ditched its predecessor’s plans to further cut take-home pay for all those at work, including the lowest paid.
High taxes on work kill jobs; the more one taxes something, the less one gets of it. This is supported by evidence, both international and Irish, and the reason the Government will not repeat the mistakes of the past by killing off investment and entrepreneurship through penal tax rates. The top marginal income tax rate is already 52% for PAYE workers and 55% for the self-employed. Increasing it further would have had a very damaging effect on indigenous entrepreneurship and the flow of jobs from foreign direct investment into Ireland. That is the reason the Government has chosen instead to tax wealth rather than work. It has found ways to ensure a fair distribution of the burden of adjustment that does not put at risk its core objective of growing our way out of the debt crisis. Protecting the take-home pay of those at work will ensure work continues to pay and will make it affordable for people to move off welfare and into jobs when opportunities and career opportunities arise. At the end of the first 100 days of the Government, I indicated there would be no increases in income tax and yesterday that commitment was delivered on. It was essential for people and families to plan for the future in the knowledge that their take-home pay in December would be the same as in January. Therefore, it is vital that in the coming years tax on work be kept to a minimum, the reason future increases in income taxes will be avoided.
Despite the difficult financial circumstances in which we find ourselves, a significant capital expenditure programme has still been provided that will deliver real jobs. The Government is maintaining a capital investment programme of approximately €17 billion over the period of the programme ahead. This plan is based on what the country can afford. The Government has prioritised the investments most needed. Some other very good projects have had to be changed, put on hold or deferred until the public finances have improved. There will be an increased focus on delivering work-intensive local projects such as schools, health care centres and local job supports. The Government has also delivered on its commitment to establish NewERA and created a new strategic infrastructure fund which will support further investment in Irish infrastructure, in particular through the semi-State companies. All of these investments will play a vital role in getting people back to work. When I met representatives of ICTU with the Tánaiste and Minister for Foreign Affairs and Trade, one point stressed by them was the Government should encourage and do whatever it could to induce pension funds that had invested abroad to invest in infrastructure in Ireland. This is an issue to which the Government intends to apply itself in the new year.
The budget supports business to create new jobs. IDA Ireland, Enterprise Ireland and the county enterprise boards have maintained their high budgets, despite pressure to reduce spending across government, and will continue to provide essential financial and soft support for businesses, which is extremely important. The capital budget of the Department of Jobs, Enterprise and Innovation will hit its highest ever level, with €1 billion being provided in the next two years. This is solid evidence of where the Government’s priorities lie. Yesterday the Minister for Finance, Deputy Michael Noonan, announced new initiatives to attract new investment and new high value jobs. The changes to the research and development tax credit provided by the Government will be welcomed by dynamic domestic and international businesses. In addition, the Government is introducing a new special assignee relief programme to help businesses attract key people to locate in Ireland. The point is often made by international companies that when people with particular expertise of exceptional quality come to Ireland, it often leads to further research, whereby others work with these persons to make further advances. For this reason, a special assignee relief programme will be available to such companies for people who have yet to come to Ireland. This will be of particular benefit to the international financial services industry and there will be further measures in the finance Bill to help create jobs in this sector.
There is also good news for small business, with the corporate tax exemption for new start-up companies being extended for the next three years. It will be available for companies which commence trading in 2012, 2013 and 2014. Moreover, to support new exporters who are very important to take their first tentative steps in the world market to sell Ireland to growing new markets, the Government has announced that smaller companies will be able to avail of the planned foreign earnings deduction when they expand their export markets into the BRICS countries, that is, Brazil, Russia, India, China and South Africa. This means that special exemptions will be given to young people given responsibilities to sell new products in new markets in the BRICS countries, once they have spent 60 days selling for Ireland. It will be a real challenge for young people to be involved in these new markets with obvious potential for further exports and production here in Ireland. I have met business people all over the country since coming to office and these are some of the supports they need and for which they have asked to grow and prosper.
There is, however, a recurring problem that has arisen time and again, that is, the difficulty in accessing credit. All Deputies will understand this and have heard how people cannot get credit or a loan. The Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, therefore, has recently announced specific measures to address this problem, including a micro-finance loan fund which will generate up to €100 million in additional micro-enterprise lending and benefit at least 5,000 businesses in the next decade. Another measure involves a temporary partial credit guarantee scheme to assist commercially viable businesses which are having difficulty in securing credit but which, owing to particular market failures, cannot secure this credit. Having attended a range of financial meetings recently, what people really want is a banking system they can trust, that operates properly and effectively in the economic interests of the country and for which people should have respect. However, all of this has been lost for a variety of reasons. The variety of people working in these banks did not have anything to do with this but have taken the brunt of the hit. There has been a rebalancing in this regard. I note Bank of Ireland secured its remaining core tier 1 capital recently, a sign of direct investment into the bank from abroad. Together with the Tánaiste and Minister for Foreign Affairs and Trade, I will meet the banks again early in the new year to ensure they deliver on the targets agreed for SME lending. We will discuss lending principles and structures, access to credit and so on.
The budget also builds on the fabulous growth figures for the agrifood sector which is reaching new heights in exports. Ireland has been exceptional in agricultural production and building on this success will sustain jobs in every townland across the country. The sector exports to approximately 170 markets worldwide. This year Irish food and drink exports are expected to reach an all-time record of €8.9 billion, an increase of almost €1 billion, or 12%, on last year’s levels. There is additional capacity, of which young farmers are gearing up to avail when quotas are abolished on foot of CAP reform. Five of the top 20 exporting companies located in Ireland are in the agrifood sector and agrifood companies account for 60% of manufacturing exports by indigenous firms. New actions by this Government will encourage the development of the next generation of farmers focused on exploiting the opportunity to export more Irish food around the world for which there is constant demand now because of the brand of quality and excellence Irish food and its reputation has gained around the world.
Preparing the budget that supported jobs but respected our goal to restore the public finances was not easy. It involved long and often complex debates at the Cabinet table. The production of this budget was very different from the years of the so-called Celtic tiger when the question asked of Ministers was how much can one spend, not how much can one cut. However, I believe with this budget we have struck the right balance, not just for 2012 but in the decisions we have taken for the period to 2014. We have taken some very difficult decisions in order to cut public spending and reduce costs. Some of the measures we are introducing will cause difficulty and hardship for some of our citizens. I wish this were not the case but to deny it would be not to speak the truth.
Some 80% of our current expenditure is on social protection, health care and education. It is not possible to reduce spending without affecting these areas. However, we have focused our limited resources on those with genuine need. The lowest paid, 330,000 income earners, will no longer be liable for the universal social charge. There are no changes to core social welfare payment rates or State pension rates in this budget. We have protected the take-home pay of workers by avoiding increases in income tax in the budget.
We are assisting vulnerable homeowners by increasing mortgage interest relief to 30% for first-time buyers between 2004 and 2008. This meets a core commitment of the Government to help the generation worst affected by the collapse in property values. The Minister for Finance has outlined that there will be other announcements in regard to mortgages and mortgage distress in the near future.
We are providing additional funding to develop community mental health teams and services. I am glad to note that the Minster for Health and the Minister of State, Deputy Kathleen Lynch, have secured specific funding for the mental health area to make it central to the normal part of the delivery of health services.
We have made sure to safeguard our children and our young people from the brunt of the cuts. The basic rate of child benefit has been maintained. Schools in disadvantaged area will continue to be prioritised for targeted supports. The overall number of resource teachers and SNAs is being maintained despite all the controversy about that some weeks ago. We have committed to building the national children’s hospital. As I announced this morning, the chairperson of the advisory group on taxation and social welfare is examining the question of the issue of the domiciliary care for a specific cohort of young people.
This economic crisis, however, should not be wasted. It presents an opportunity for Government to fundamentally reform the manner in which our public services are delivered. For too long, reform of Government was ignored and sidelined. Lack of political leadership at the top stood as a barrier to delivering an efficient public service that met all the needs of its citizens. A leaner, smarter and better public service is one that promotes job creation, is more flexible to the changing needs of citizens, and plays a central part in Ireland’s recovery story. The establishment of a new Department of Public Expenditure and Reform, with the Minister, Deputy Brendan Howlin, is a clear sign of intent from the new Government that reform will continue to be a priority across the entire Government.
This Government is a reforming one. We have shown that change must be led from the top. Since coming into office we have reduced the pay of the Taoiseach and that of senior Ministers, halved the cost of ministerial transport, introduced new pay ceilings for senior public servants and published legislation to significantly reduce future public service pension costs. We have reduced the cost of advisers by 30%. Former taoisigh are having their staff and phone entitlements withdrawn with effect from 1 January 2012. Next year we plan to reduce public service numbers by 6,000. This will mean a real saving of more than €400 million in the public service pay bill. We are targeting a reduction of a further 23,500 staff by 2015 over what was planned by the previous Government. When delivered, this will have reduced our gross pay bill by more than €2.5 billion, or 15%, since 2008.
We have introduced a new and expanded programme of State agency rationalisation. This will rationalise 48 bodies by the end of 2012, with a further 46 to be critically reviewed by June 2012. We have cancelled the costly, opportunistic and misguided decentralisation programme announced by a previous Government.
The Government has high expectations for what can be delivered through the Croke Park agreement. It must facilitate this reduction and restructuring of the public services with minimal impact on front-line services. It will be also used to deliver significant further savings through reduced overtime and allowances. The fiscal challenge we face next year, and in the period to 2015, requires the public service to deliver change in a way it has never done before. These reforms are essential if we are to keep costs to a minimum and to avoid additional tax increases which would serve to act only as a disincentive to job creation and investment.
An essential part of public sector reform will be to change the way we manage our national budget to ensure that mistakes of the past cannot be repeated again. The truth is that our budgetary systems were not fit for purpose. This year has already seen significant reform of the budgetary process. We have established an independent Fiscal Advisory Council and a fiscal responsibility Bill will be published shortly. We will build on this with further reform of the expenditure and Estimates process. We will ensure that all programmes are regularly evaluated to ensure they deliver value for money. Where they are not delivering, that must be exposed to full public scrutiny. There also will be an enhanced role for the Oireachtas because this Government recognises that everyone has a part to play in our path to recovery.
There are a few crucial days ahead in Europe. The Government, which I am proud to lead, will play its part and will constructively contribute to solutions which will restore stability to the financial markets, while safeguarding the legitimate rights of the Irish economy and the Irish people. Our ability to effectively represent Ireland on the European stage is greatly enhanced by the actions we have taken at home and abroad. Since taking office, and in this budget in particular, we have been clear about our economic strategy. We have set out a clear pathway to overcoming the fiscal, banking and employment difficulties we inherited. We have been honest and open with the people about the challenges that this country faces and how we will overcome them. We thank the people for their continued patience and understanding of the difficulties in which our country finds itself and their co-operation, challenge and comments in respect of decisions being taken by Government.
In keeping with the Government’s philosophy, this budget is fair, balanced and focused on jobs. I told the people on Sunday night that this Government is determined that the necessary decisions and changes are made to ensure that an economic crisis on this scale is never allowed to be inflicted upon the Irish people again.
The Taoiseach: That right now is our most important responsibility, to do what must be done to get our economy back on its feet and to leave a legacy where the young people of the next generation will have a better, brighter and more prosperous future.
Minister for Communications, Energy and Natural Resources (Deputy Pat Rabbitte): I do not stand here today to make the claim that this is by any means a great budget. I do not seek to pretend that this is a budget which will instantly fix the problems faced by our economy or the problems faced by so many families across this country who are going through difficult times. What I do say is that this is a necessary budget — it is as good as it can be in the circumstances in which we find ourselves — a budget that prioritises jobs, a fair and balanced budget, an honest budget and a reforming budget. It honours the political commitments the Labour Party made not to cut welfare rates and not to increase income tax on working people — to protect carers and standardise child benefit are considerable achievements. It is a budget that will move our country closer to economic recovery and the restoration of our sovereignty.
I, like all my colleagues in the Labour Party, believe that the task of the Government is to build an Ireland which affords more opportunity, more social solidarity and a fairer society. However, to realise those ambitions, to create that better future, we must first rescue our economy from this crisis, create jobs and restore our economic sovereignty.
History will some day record the full extent of the crisis this country faced at the time of the general election. The banking system was broken, the public finances were in tatters, Ireland’s reputation was at its lowest ever ebb and national morale was devastated. Hard-working families were, and still are, suffering as a result of unemployment, distressed mortgages and loss of income. At that moment, the Labour Party had a choice. We could have walked away. We could have chosen to sit on the Opposition benches and to avoid the duties of government. Or we could roll up our sleeves and set to work in fixing the problem in the full knowledge that it would take not one budget or one year, but several over several years before our economic problems would be resolved. In this situation, there is only one option that the Labour Party would ever take. For nearly 100 years, the instinct, tradition and spirit of the Labour Party has been to work to make this a better country. This is what we are doing in the budget. Our over-riding commitment to the Irish people is to restore the economy, promote job creation and restore our economic sovereignty.
A crisis with so many components has required the Government to work on several fronts at once. Shortly after coming to office, we re-constructed the banking sector and provided the banks with the means to lend, even if they are still limiting their response. We brought forward a jobs initiative, with a particular focus on tourism and hospitality. We implemented the difficult budget for 2011 that had been left behind by the outgoing Administration and which had significant gaps in its arithmetic. We also reversed the cut to the national minimum wage.
In addition, we began a major campaign to restore Ireland’s reputation abroad, through ministerial and official endeavours. At the same time, we brought a new strategic focus to economic governance and management, through the establishment of the economic management council. Twelve months after the arrival of the EU and IMF we have seen some improvement. Our position has stabilised. In fact, while 12 months ago we were Europe’s problem, now the European problem hangs over our recovery.
We are pulling out all the stops to ensure the decisions we are taking, tough as they are, are as fair as we can make them in the circumstances. We are making progress. Ireland will see a return to economic growth this year and next. Our exports are performing well. Tourism is recovering. The banking sector is managing to raise modest amounts of funding without Government guarantees and our bond-spread has fallen significantly in secondary markets. Our reputation abroad has been tremendously enhanced.
To move forward now, we must make further progress on a number of fronts. It is clear that the continuing turbulence in the eurozone is placing a limit on our progress. It is urgent that we find a resolution to the crisis at European level. While the export sector is booming, in order to achieve a broad-based recovery and employment growth we need to restore our domestic economy. This requires action to boost both investment and consumption, including direct measures to promote investment and to restore confidence among consumers and investors.
We need to reform our welfare and training systems, so that people who lose their jobs do not drift into long-term unemployment. We need to shift from a passive welfare system to a far more active approach. As the Taoiseach stated, the Government will shortly publish Pathways to Work, which will set out our approach in this area and which is designed to ensure that when recovery comes those on the live register can take up the work that is being created.
We need to continue to rebuild our reputation abroad and to work on expanding our trade links into new markets. As the global centre of economic gravity shifts to the east, Ireland must be ready to build new trade links with emerging economies. We need to continue restoring our financial position, in respect of our public finances and in implementing our reforms of the banking system.
We have been forced to make difficult and unpalatable decisions. However, the Government is committed to being honest and upfront with people in the hard choices that we must make. Our country has suffered the greatest economic crisis in living memory, leading to a huge fall in revenue. Tax revenues fell from more than €47 billion in 2007 to nearly €31 billion in 2010, a fall of one third in three years. We are now rebuilding but the truth is that we do not have the resources to fund all the services we would like to provide.
Ireland’s deficit for 2012 stands at approximately €16 billion. To fill this gap between our spending and our revenue, we have had to borrow from the European Union and the IMF. The previous Government was forced into that deal because, given its disastrous mismanagement of the economy it had created, no private financial institution would lend to this country. The reality is that the loans financing our day-to-day spending are subject to the condition that we reduce our deficit to 3% of our gross domestic product by 2015. At present, our deficit stands at 10.1% of GDP. In order to reduce this deficit, the further reality is that we have no alternative but to reduce spending and to raise taxes. For 2012 the combined measures in this budget must add up to €3.8 billion.
Both parties in government resisted pressure to make additional adjustments to achieve savings of as much as €4.4 billion. This would have been too much for the economy to bear and would have placed too great a strain on people who are already struggling. Having identified the need for savings of €3.8 billion, our only room for manoeuvre was to strike a balance between reductions in spending on our public services and increases in taxation. Of this €3.8 billion, we decided on a reduction of €750 million in the capital programme. This means that projects like metro north and the A5 road through Northern Ireland will have to be put on hold. We did, however, prioritise spending on job intensive and vital projects such as school building. The remainder of the €3.8 billion adjustment is made up of current spending reductions and tax increases.
Fianna Fáil’s plan was for cuts to be double the amount of tax increases, a 2:1 ratio. The Labour Party resisted cuts on this scale, because we believed that doing so would mean we could not provide for necessary front-line services. In the event, the Government decided on a ratio of 56% spending cuts to 44% tax increases.
In the budget for 2012, the Government has protected the most vulnerable in our society, namely, children, the elderly and people with disabilities by not increasing income tax for working people, maintaining core social welfare payments including jobseeker’s allowance and State pensions, maintaining the family income supplement and carers’ entitlements, maintaining our support for special needs children in our schools, maintaining the pupil-teacher ratio in the primary sector and ensuring that disadvantaged schools will be exempt from staffing schedule changes. In deciding this budget and given our strategic imperatives, the Government has used the resources it has to prioritise jobs, reform and fairness.
Jobs are central to everything we do in government. Creating more employment is critical to the success of our economic strategy and to improving the position of families in difficulties. Our job is to get the country to recover. We have stabilised the patient and now we need to get it into recovery. This will be done by keeping people working and getting others back to work. Already the Government has provided for a capital programme next year of €3.9 billion, restored the minimum wage, invested €500 million in the jobs initiative, reduced VAT for the tourism sector, extended incentives for research and development and increased investment in the Better Energy retrofit scheme.
The clear focus of the budget is on protecting family incomes as part of a strategy to restore confidence in the domestic economy. It is well known that the savings ratio has increased rapidly in recent years and is now a drag on growth and employment. By protecting family budgets, and by not increasing taxes on work, we will provide space for a return of confidence and spending.
While we will never see a return to the construction boom of the recent past, the normalisation of the property sector is still an important part of restoring the domestic economy. The measures taken by the Minister for Finance in the budget will assist that sector on the path to normalisation and encourage a greater level of activity.
The Government has also taken a number of other steps to encourage investment through its strategic investment strategy. We have established NewERA and the strategic investment fund, which will be the forerunner of a strategic investment bank, and we will work to use these mechanisms to channel investment into the domestic economy.
Building on that in this budget, the Government has decided not to increase income tax for working people and to ring-fence €20 million for a new labour market activation fund targeted at the long-term unemployed. This fund, which will be specifically targeted at the long-term unemployed, will deliver upward of 6,500 places next year. What is critical in this area, however, is the implementation of a new and integrated approach to service delivery.
Reforming how Government works to reduce costs and protect front-line services is also a guiding principle. This Government is a reforming one. Several key decisions have been taken as part of our reform agenda while reducing costs and protecting front-line services. Already this year, the Government has reduced the pay of the Taoiseach and Ministers, abolished severance payments for retiring Ministers, changed pay and conditions for senior public servants, introduced a significant programme of agency rationalisation and cancelled many parts of the ill-conceived decentralisation programme. In addition, it has announced the most ambitious programme of public service reform since the foundation of the State in order to improve customer service and reduce costs.
Throughout the budgetary process, the Government has been determined to ensure that, despite the difficult decisions that must be made, those decisions are fair. The burden of recovery must be shared fairly and we need to maintain social solidarity in the face of these difficult times. The Government has therefore decided not to reduce any weekly rate of social welfare payment and not to reduce the rates of child benefit for the first and second child. The core child benefit remains intact at €140 per month.
We have delivered on our commitment to maintain social welfare rates. There have been no income tax increases for working people and we have removed the lowest paid from the universal social charge. Pensions have been protected and people with disabilities have received top priority from this Government.
The vast bulk of the Government’s current spending is accounted for by the Departments of Health, Education and Skills, and Social Protection. Together the three Departments make up over 80% of total current spending and it is therefore impossible to make the kind of necessary savings needed without touching on those sensitive policy areas.
The demand for health services has increased and the number of medical card holders has increased by more than 400,000 since 2007. While reducing spending, the Department of Health will reduce the negative impact on front-line services while allowing real reform. Doing so will improve the quality and quantity of services in the coming years.
In the education sector, demographic pressures mean that we need more teachers and more classrooms to accommodate more children. This is unavoidable. The Department of Education and Skills is committed to prioritising its limited resources on programmes that will deliver the best results for children and parents from all backgrounds. Capital funding has also been promised for more than 200 schools.
The pressures on our social welfare budget are enormous. The financial allocation for jobseeker’s payments alone has increased from €1.4 billion in 2007 to €3.9 billion this year, which is an increase of 176%. The provision for State pensions has increased from €3.75 billion in 2007 to €4.7 billion this year. We will need to continue to increase this financial allocation year on year due to our demographic profile. In 2012, an additional allocation of €175 million will be required.
The budget also marks a new direction in the approach to taxation. One of the great lessons of the boom years is that good public services must be based on sustainable tax revenues. The dislocation of our economy and the curtailment of services in recent years have been the direct result of enhancing public services on the back of unsustainable revenues. For the future, we must move to a revenue base that is both economically and environmentally sustainable.
Fairness and sustainability also require that we broaden the tax base to keep rates as low as possible, while ensuring everyone makes a reasonable contribution to society. Above all, the greatest inequality in our society is the divide between those who have work and those who do not, or who have had to leave this country to find a job. By rebuilding our revenue base in a more sustainable manner, we can support work and employment creation, now and in the future.
This budget marks a significant departure in tax policy towards a broader and more sustainable revenue base. At the same time, the budget includes a number of important measures to enhance the fairness of the tax code. There is a tendency in debates on taxation to focus solely on rates of tax, as though that were the only measure of fairness. By that rubric, the tax code is now strongly progressive. The key issue, however, is to ensure an equality of treatment of different income sources and to ensure that high rollers cannot shelter their income from fair taxation.
While reducing spending and increasing the tax take, we have a duty to protect the most vulnerable in our society and to provide the safety net of social protection in these challenging times. To do so, difficult choices must be made to help reduce the budget deficit.
We have already had to take decisions that none of us ever thought we would have to make, but progress is being made. We will see a return to economic growth this year. We have drawn a line under the banking crisis. We have renegotiated the interest rate on Ireland’s bailout, even though some said that it could not be done. We have ring-fenced €17 billion for investment in capital projects, including the national children’s hospital and 200 primary and secondary schools. We have ensured that the trend for exports remains positive. We have introduced labour activation measures in training and education which will continue into next year, with a focus on the long-term unemployed. In addition, we have stimulated the job-intensive sectors of the economy such as tourism, services and energy efficiency.
Despite the tough decisions we have had to take, we have not increased income tax for working people. We have maintained core social welfare payments, including jobseeker’s allowance and State pensions. We have maintained the family income supplement and carers’ entitlements. We have maintained our support for special needs assistants in our schools and the pupil-teacher ratio in the primary sector. We have also ensured that disadvantaged schools will be exempt from staffing schedule changes.
Turning briefly to my Department, a gross provision of €437 million has been made. As regards capital spending, €76 million, inclusive of a €13 million carryover, is provided for energy efficiency measures in 2012 and will support 4,500 direct and indirect jobs.
I am especially pleased to have secured funding for the roll-out of 100 mbps broadband to second level schools. I believe that over the coming years this scheme can make a real contribution to the promotion of a knowledge society by equipping our second level students with the necessary digital skills and, in the process, improving overall competitiveness.
For 2012, we have preserved the split in licence fee revenue between RTE, TG4 and the sound and vision fund. During 2012, however, I will have completed the review of funding of public sector broadcasting. The big project next year is the switch-off of analogue on 24 October. Some €3 million is being provided to ensure a comprehensive information campaign to promote a smooth transition to digital terrestrial television.
It should be noted that the vast bulk of capital investment in energy comes from our State energy companies, while in the case of telecommunications the private sector is investing between €400 million and €500 million per annum. In the specific case of broadband, while real strides have been made, we have a deficit, especially in the availability of high-speed broadband, which must be addressed.
The task force on next generation broadband access, which I chair and which also comprises the CEOs of the major telecommunications companies, will report before Christmas or early next year. There is a strong commitment in the programme for Government to accelerate the roll-out of high-speed broadband nationwide. Informed by the work of the task force, I will bring proposals to Government early next year on implementing the commitment in the programme for Government.
I note that Fianna Fáil has discovered a new, clean-cut spokesman with an accountancy degree. In his speech, I also noted that he could not believe the scale of the crisis visited on this country, and nobody has bothered to explain to him how it happened. None the less, he sticks to the new Fianna Fáil mantra: “This Government can no longer blame Fianna Fáil”. Why not?
Deputy Pat Rabbitte: Is there a serious suggestion that this Government would introduce a budget such as this if we were beginning from a clean sheet? We are attempting to cope with the disastrous legacy left behind by Fianna Fáil——
Deputy Pat Rabbitte: While retaining the populist rhetoric, the new Sinn Féin now accepts that €3.8 billion must be taken from the public finances, even if it has no credible idea of how it should be done.
Deputy Pat Rabbitte: The nasty and mean-spirited speech by Deputy Doherty last night was a diatribe of criticism and abuse without a single positive idea other than to raid what is left in the national pension fund.
Deputy Micheál Martin: For many reasons it is highly appropriate that Deputies have paid tribute to the late Brian Lenihan during their contributions to this budget debate. No Minister for Finance has ever faced the combination of dramatic challenges which confronted him during his two and a half years in that office. The scale of the problems and the speed with which they kept changing placed an enormous burden on him. Nonetheless he confronted them with urgency and vigour. He always acted in good faith and was motivated by the republicanism which has always been a proud hallmark of his family. In preparing last year’s budget he, along with all of his colleagues, was determined to set out a clear framework for restoring Ireland’s fiscal and economic health.
The Minister for Finance, Deputy Noonan, and the Minister for Public Expenditure and Reform, Deputy Howlin, together with the Taoiseach, the Tánaiste and Minister for Foreign Affairs and Trade and the Minister in the Chamber, Deputy Rabbitte, have spoken repeatedly of how the budget announced last year has succeeded in showing the world that Ireland is on the right track in consolidating its budget. They have also pointed out how economic growth returned while that budget was in operation. Of course, they have not managed to acknowledge that they voted and campaigned against the budget that they now spend so much time claiming credit for. Although in a position to do anything they wanted, they chose to leave it unaltered in any significant way.
It is impossible to listen to the Government contributions to this debate and fail to remember what the same people were saying when they were looking for votes. Last year the Taoiseach stood in this spot and condemned the budget as “stale, unfair and out of touch”, “devoid of hope, ideas and imagination” and he of course called for the immediate burning of bondholders. On Sunday he praised that budget for having “restored confidence”. Before he assumed his current responsibilities, the Minister, Deputy Howlin, said of the budget, “I have listened to many budget speeches in this House over the years but none was more disingenuous and more dishonest”. He attacked education charges and said the claims made for the budget reminded him of the theory of “the big lie” as contained in Mein Kampf. On Monday that budget was, for him, merely a “first step”.
The truth is that over the past nine months this Government has taken few significant decisions and has coasted on the back of plans already in place or ready to go. Its most hyped initiative, the downgraded jobs budget, has damaged investment and cost jobs. In spite of having a secure majority, which will survive even in the unlikely event that more Labour backbenchers remember the policies they stood on, the Government has been timid and obsessed with political manoeuvring. Never before has a Government spent so much time praising itself while actually doing so little.
At the end of a long month of leaks and press conferences we have in the last two days finally seen exactly how Fine Gael and Labour intend to govern. We have finally seen them move from vague generalities to taking real decisions. We no longer have to take them at their word, and we can see the cold, hard facts of what are their priorities. This is their budget. They spent six months preparing it and have rolled out the largest number of media briefings, both official and anonymous, ever used to promote a budget. The Minister, Deputy Howlin, has said that he personally examined every area of spending and that the decisions taken are based on political priorities. The Minister, Deputy Noonan, has confirmed that the Government was entirely free to make its own decisions within a set deficit target. Both the Taoiseach and Tánaiste and Minister for Foreign Affairs and Trade have confirmed that they support this target and would want to hit it irrespective of where the State is borrowing its money.
The Government has choices to make and is accountable for them. Through the mountain of detail and the hours of announcements, what has emerged is a deeply unfair and damaging budget. This budget is the most regressive in years, it will cost jobs, it breaks an unprecedented number of promises made only months ago and it may lead to a serious shortfall in Government revenues as soon as early next year. It will not promote recovery, it will endanger the achievement of fiscal targets and it will shift an unfair burden on to groups which are least able to manage. It shows a Government which is wasting an enormous amount of public goodwill as it shows a self-righteousness which is on display every day in this Chamber.
The single most important element which will create jobs and ease fiscal pressures is overall economic growth. We support the fiscal target set in the budget. It is a reasonable compromise between the need to get to a sustainable deficit level and to protect the potential for growth in the economy. We set out a detailed series of budget proposals that were constructive and credible and which had been costed. Some of them have been adopted by the Government, which we welcome. We accepted fully that unpopular choices were required and rejected the tactics followed by the Government when in opposition of pretending that there were easy solutions to even the hardest of problems.
Within the overall target for next year, many approaches can be taken. Measures could be targeted in order that they would do as little damage as possible to the potential for growth and job creation. Last week I directly asked the Taoiseach about the Government’s forecast for growth in 2012. The Taoiseach and the Minister for Finance, Deputy Michael Noonan, confirmed that they were sticking to a growth target of 1.6% as per the forecast made. Yesterday the figure was reduced to 1.3%, which was probably justified by the latest forecasts for the European and global economies. It is unclear why it took until yesterday to announce this. Perhaps Ministers were concerned that it would raise too many questions during their cavalcade of press conferences in recent weeks.
Of much more serious concern is the fact that the measures announced in recent days are likely to cause further downward pressures on growth. When it comes to spending cuts and revenue raising, not all measures have the same impact on the broader economy. A consistent theme of the spending plans and tax measures proposed is that they include nothing significant to promote growth. However, they include many measures which might cause serious damage. The accelerated cut in capital spending, the undermining of investment by pension funds and the VAT increase are highly likely to depress economic activity beyond the figures produced yesterday. Everyone knows that VAT returns pose the biggest concern for the Exchequer. They are well behind projections, while underlying consumer confidence is weak. The overall deficit target cannot be met if VAT returns continue to underperform and if the increase drives consumers away from already hard-pressed shops.
We are now in the bizarre position where the Government is making directly contradictory claims about VAT changes in different parts of its budget. When it was cutting VAT for selected industries in June, it claimed that thousands of jobs would result. It stated cutting VAT was the best way to create jobs. Now, when it is front-loading VAT increases of 2% on a much wider range of goods and services, it claims there will be no impact on the economy. The Minister has claimed that he is increasing VAT because of the extent to which he cares about jobs. The failure to include any economic impact of the VAT increase in the budget figures directly undermines their credibility. The Government predicts the increase will yield €670 million but does not take into consideration the impact of the increase on sales, which will be particularly evident in Border counties. This has arisen solely because Fine Gael wants to be able to claim it has left income tax untouched. Instead of targeting revenue measures at the highest earners as we proposed, it was decided to rely on the most regressive tax, the one which, increasingly, is under-performing. This has introduced uncertainty into the programme of fiscal consolidation which the Government may come to rue.
There is a complete lack of a stimulus or investment in the growth potential of the economy. Fine Gael’s €7 billion NewERA is missing, as are the billions which the Labour Party stated would be pouring into the economy from its strategic investment bank. There will be projects bearing these brand names, but they will be minor side projects with no serious national impact. If the Government wants to promote growth, it should adopt our policy and replace the pension levy with an investment fund which would combine a compulsory investment by the pensions industry with State resources. The billions involved would stop damage being caused by the levy and provide major resources for job creation investments. It would also yield a return for the industry rather than penalising pensioners of Tara Mines and other companies. Effectively, the Government’s policy on growth is to hope it turns up in the international economy and helps our exporters, at which point it will no doubt be ready to claim credit for it. In other areas the budget will have an active and immediate impact, mostly for the worse.
All Ministers have claimed that creating jobs is a core objective of the budget. Unfortunately, that is nonsense. The net effect of the budget will be, unequivocally, the loss of more jobs. A contraction of net employment in 2012 is confirmed in the budget documentation. This is more of what we heard from the Government at the time of announcement of its downgraded jobs budget. The net €250 million the Government took out of the economy this year, especially from pensioners, has cost jobs. In spite of the clear evidence to the contrary, the Taoiseach claimed on Sunday that tens of thousands of jobs had been created when unemployment had grown consistently in the past nine months. The obsession with trying to spin its record to date has led to the ludicrous claim that the jobs initiative has had a big impact on tourism. First, the increase in tourist traffic began well in advance of the announcement of the jobs initiative. Second, a major factor is the absence of an ash cloud this year. The Minister for Transport, Tourism and Sport, Deputy Leo Varadkar, has many talents, but the ability to control Icelandic volcanoes is not one of them.
Deputy Micheál Martin: The measures announced in the past two days to aid the export and construction sector are welcome, but, once again, they are being over-spun. They are so small that the budget documentation shows them as having no impact on growth or employment. They are also accompanied by an accelerated cut in capital spending. The €750 million being cut is substantially bigger than any stimulus package announced yesterday. The net effect of the changes will be a further fall in construction employment, which no amount of spinning can cover up.
Minister after Minister has appeared in recent days to say job creation is the number one priority, but that does not stand up to even the most basic scrutiny. Members of the Government have also been active in saying fairness is at the heart of the budget. The bluster fell apart within minutes. This is by far the most regressive budget in some time. The spending cuts and tax increases will fall, directly and disproportionately, on the weaker and poorer sections of society. As every independent study has shown, after a period during which budgets were highly progressive, the Government has chosen to take exactly the opposite approach. Its single largest decision was to concentrate new taxes in a way that would have the biggest impact on poorer groups in society.
In what can only be described as a deeply cynical move, the documentation published yesterday did not provide any serious detailed assessment of the impact on various social groups of the announcements of both the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, and the Minister for Finance, Deputy Michael Noonan. They could easily have shown the impact of all changes on the standard of living of households, but they chose not to. The welcome but minor change to the universal social charge was clearly intended as a distraction to hide the much deeper impact of the VAT increase on poorer households.
For many years the Minister for Social Protection, Deputy Joan Burton, and the Tánaiste and Minister for Foreign Affairs and Trade spent budget night coming up with new ways of describing changes in social welfare as savage. They spoke at length about “the dirty dozen,”“the savage seven” and even “the treacherous 30.” When attacking a €7 increase in welfare payments in 2009, the Tánaiste and Minister for Foreign Affairs and Trade described it as “the meanest possible increase,” and said that if the budget were the Titanic, it would be a case of “women and children last.” He also demanded higher fuel allowances.
Deputy Micheál Martin: The Labour Party Ministers for Social Protection and Public Expenditure and Reform negotiated together and came up with a set of cuts which are deeply mean-spirited and cruel. They go well beyond anything ever proposed by the party which the Minister of State, Deputy Ciarán Cannon, used to lead. The proposed cut to payments for young people with disabilities is callous and unnecessary.
Deputy Micheál Martin: To single out this group for such a cut says a lot about the priorities of those who made the decision. The targeting of young people with disabilities is another example of a broken promise, but it is much more than this. When asked during the general election debate what the number one social justice priority would be if he were elected to government, the leader of the Labour Party, now Tánaiste, said, “I think it would be looking after people with disabilities ... The first area that Labour in government would address in terms of equality and in terms of giving decent supports to people would be people with disabilities. I think, as a country, we have to make that the priority.” The leader of Fine Gael, now Taoiseach, followed quickly with the words, “That’s very laudable and I share that.” That is what the Taoiseach and the Tánaiste said to the people a short nine months ago, yet at the first opportunity to turn these words into action——
Deputy Micheál Martin: That is an extraordinarily negative signal to send to people with disabilities. The Government has also begun to shut the door on educational opportunities by cutting the third level disability fund by 20%. Why did the Government do that? Deputy Cowen raised that matter again this morning. It is an unfair and unnecessary cut. We had made great progress over the last decade in facilitating access to third level education for people with disabilities. We made transformative progress.
Deputy Micheál Martin: The Taoiseach should stop using words. When he is cutting welfare he should not pretend it is about incentivising work, cutting undeserved payments, standardising payments or bringing people into line. That language drives people mad. They prefer plain speaking. The Government should say it as it is and stop pretending.
The Minister for Social Protection has given many extreme examples to justify her choice of cuts. If this agenda had been followed by any other party, Fine Gael and Labour Deputies would have been screaming blue murder in the House. In fact, they did so last year.
The end of lone parents payments will cause serious problems for many families if extra funding is not provided for training and child care for those affected. This is one of the sharpest cuts and has not, so far, got the attention it deserves. Again, it targets a vulnerable group. The restrictions for people with limited social insurance payments will be felt most by women.
Last year, Deputy Noonan enjoyed his joke about third children so much he repeated it four times during his speech. This year, he and his colleagues have implemented a bigger cut and have done everything possible to avoid talking about it.
The welfare measures in the budget are driven by the Labour Party’s desire to say that the biggest welfare payments are unchanged. As a result, the Government has adopted an approach of finding cuts that are deeply unfair and which carefully target smaller benefits on which vulnerable groups rely.
Every party was elected on a platform of giving education a clear priority in public spending. Previous plans showed specific measures to protect school staffing and supports for pupils with special needs. In April, Fianna Fáil put down a Private Members’ motion to this effect, which passed unanimously. Unfortunately, the details announced on Monday show a significant increase in the pupil-teacher ratio for primary and second level schools. It was camouflaged in language. As with everything else, these were cynically hidden in the middle of words claiming everything would be fine.
Cuts to smaller schools will directly impact on communities most dependent on them. The abolition of support for career guidance is a shocking decision. Its impact will be felt in all schools, but most of all in schools serving disadvantaged communities. It represents a cut of between 800 and 900 teachers and will mean a cut of two teachers in many large schools.
Deputy Micheál Martin: It is another con-job presented in the guise of the career guidance service, which is a clear dismantling and devastation of that service. In reality, it is a cut of 900 teaching posts from schools.
Deputy Micheál Martin: It means the posts will go from ex quota to in quota. It will be a case of last in, first out. Career guidance teachers will teach economics, history or geography. The Taoiseach should stop the pretence, be honest and say the Government is cutting teachers in second level schools. That is the impact on the ground.
Deputy Micheál Martin: He is pretending this is not even a cut. It cannot be done in a group setting or in an ad hoc way. It is at this age that young people face the most pressure and are most in need of someone to talk to. The Government is going back 30 and 40 years.
Deputy Micheál Martin: Their pupils depend on expert advice to help them make the critical move from school to higher education. It is not a joking matter. Ministers are displaying classic arrogance and cockiness. This is a serious issue that will impact on young people in our schools.
Deputy Micheál Martin: The schools are not in a position to absorb this cut in their staffing or to fund it in some other way. The decision is deeply regressive and short-sighted and it should be reversed.
The issue that has served to expose the cynicism of the Government parties’ election campaigns more than any other is student charges. The solemn pledge not to increase them which the Tánaiste and Minister for Foreign Affairs and Trade and Minister for Education and Skills, Deputy Quinn signed, was part of a direct campaign to win student votes. Four days before polling day Deputy Quinn went to the gates of Trinity College and signed that pledge. He looked into the eyes of the students of USI and said Labour would deliver the pledge in Government. Deputies Quinn and Gilmore were fully aware of the State’s financial position when they made their pledge.
With this increase and the move to reduce student voting by holding elections on Thursdays, students are now fully aware of what the Labour Party really thinks of them. Of all the broken promises, that was one of the most cynical. It reinforces the sense among many young people about politics and their cynicism towards it. It damages politics for the younger generations to come.
Several weeks ago the Minister for Education and Skills briefed a newspaper about a plan to abolish grants for postgraduate students. That announcement was probably another exercise in manipulating expectations through the media, so that people would be relieved when the Minister abolished only the maintenance element of the grant. This decision was on no one’s agenda before the election. It will limit access to postgraduate studies for students from poorer families or will force them into extra part-time work which will undermine their studies. This runs against all strategies for increasing access, meeting skill needs and developing the knowledge economy.
This change also fits into a consistent pattern across Departments where rural areas will feel a disproportionate share of the burden. Rural schools are being targeted to lose hundreds of teachers. The extra charge for rural school transport, condemned last year by Fine Gael and Labour as an outrage, is not only being retained, it is being doubled. Rural students, who are those more likely to qualify for maintenance grants will have less access to postgraduate study. Rural Garda stations will close in higher numbers than elsewhere. The means testing and income criteria changes to farm assist will hit poorer families. Changes to REPS and the disadvantaged areas scheme will hit the most vulnerable farmers.
We welcome various changes announced yesterday which will help in the transfer of farms and we welcome the Government’s stated commitment to continue implementing our strategy for creating jobs in the agrifood sector. However, the accumulated impact of the changes announced this week makes very bad news for rural areas. In areas like south-west Cork, where the Government controls 100% of Dáil representation, Government Deputies will have a difficult time explaining how their constituents will disproportionately feel the impact of cuts to schools, Garda stations and health facilities.
In the early stages of the general election campaign, Fine Gael spent much effort telling people with mortgage and rent pressures that a vote for them would bring thousands of euro in reliefs. Many people fell for those promises, and the measures announced yesterday come nowhere near meeting the urgent needs of a section of society facing enormous pressures. The Minister said he will soon get around to dealing with the Keane report on mortgage arrears. There is no need to wait. A Bill is on the Order Paper, and has passed Second Stage, which could be quickly adopted and begin to help these families. If the Taoiseach really believes in Dáil reform and in taking on board meaningful suggestions, Deputy Michael McGrath’s Debt Settlement and Mortgage Resolution Office Bill is worthy of implementation and should be taken on board. The Government is prevaricating too long on the Keane report itself.
The Minister’s announcement that there are now insuperable legal barriers to ending upward-only rent reviews is, again, a deep blow for many businesses who listened to Fine Gael and Labour promises for immediate abolition.
Deputy Micheál Martin: The law has not changed since the promise was made. Either the Taoiseach did not check whether it could be implemented or he made the promise regardless of advice. Retail Excellence Ireland has criticised what it described as “the scandalous Government U-turn”. It said “the Government has lied to every commercial tenant and retail employee in the country”. That is what Retail Excellence is saying about the Government.
Deputy Micheál Martin: That is a disgraceful way to treat an industry that has lost over 50,000 jobs in the past four years. As the Taoiseach has said many times in the Dáil, Fine Gael and the Labour Party do not really feel bound by their election manifestoes. No matter what commitments were made, be it on the back of a lorry in Roscommon or in front of Trinity College, they are not to be held to them.
Deputy Micheál Martin: Never before did parties have such detailed access to public finances before an election. In April, the Taoiseach tried to claim that things were much worse than expected, but he was undercut by the Minister for Finance, Deputy Noonan, when he said that the books were “better than on target”. This was confirmed again yesterday.
Deputy Micheál Martin: This week and for the past nine months, there has been a steady escalation in the amount of praise which the Government has lavished on itself. In this process we are getting to the stage where words such as “reform”’, “radical”’, “fairness”’ and “job creation” are being reduced to a level of Orwellian news speak.
In area after area, supposed “proof” of the Government’s effectiveness is based on manipulating baselines and brazen exaggeration. For example, 80% of the cuts in ministerial pay and 90% of the reduction in public service numbers being cited by the Government were in place before it took up office.
Deputy Micheál Martin: The Taoiseach is getting better. We have heard a series of speeches this week with claims that the Government had “negotiated” a €10 billion reduction in interest payments while the facts show that it was a pan-European deal which was over four times the size of what Ministers were actually negotiating for.
Tomorrow the Taoiseach will attend a European summit which will take decisions vital to the economic future of Ireland, Europe and perhaps even much of the world. Since the Dáil returned in early September, I have been asking the Taoiseach to outline his position on changes to the economic governance of Europe. Since much earlier, I have been pushing him on the issue of the flawed policies and damaging behaviour of the ECB. On the eve of this vital summit, he still refuses to outline a single proposal he has suggested. He will not circulate the proposals of other countries and he will not say what his negotiating position is, other than in the most banal generalities. The record shows that none of the taoisigh who have discussed major European reforms have ever taken such a dismissive approach to the Dáil and the Irish public. No matter how the Taoiseach is asked questions here, he will not even provide the information being briefed to journalists by his staff.
What is now deeply worrying is that the Taoiseach has signed up to the idea that the core problem for Europe is the need for stronger fiscal controls. This is the very agenda which has turned a challenging situation into a crisis which threatens the future of the euro.
Deputy Micheál Martin: It has been caused by market concerns that the ECB might be willing to see a country fail to refinance its debts. The Taoiseach is so blinded by his partisan agenda in domestic politics that he cannot see the reality that is now accepted by most experts, that the Irish and Portuguese bailouts were required by a policy which has failed and which Europe is trying to find a way of abandoning.
Deputy Micheál Martin: Under the targets agreed before the bailout and supported now by both Government parties, Ireland’s debt is due to peak at a level below many countries that have no problem raising funds in the markets. The same applies for Portugal and other countries which are facing problems. Investors have fled the bond market because they believe that the ECB will not help countries to raise new finance. If this does not change at this week’s summit, whatever emerges will be another short-term fix which will fall apart and cause immense damage. Tighter fiscal rules are reasonable, but only if accompanied by a change in ECB policies, an EU fund large enough to help stimulate economies in need and tight, unified financial regulation. A control-only fiscal union would just entrench flaws which even Jacques Delors says were caused by politicians looking for the quick fix rather than the right solution. Every piece of major progress seen in Europe has come from solidarity and respect between nations. There has been precious little of either in recent months.
This is a time of unprecedented challenges, both here and throughout Europe. It is not a time for the short-term political manoeuvring. There are choices to be made and if we want to restore growth and jobs we need them to be the right choices. Unfortunately, both in this budget and in the agenda for the EU summit, the right words are being used to cover the wrong policies. The budget, which has been announced at great length and with much fanfare, is deeply unfair and will cost jobs. This was avoidable, but the Government chose to put winning a few headlines about income tax and welfare payments ahead of a fairer and job-supporting approach. The measures being implemented pose a direct threat to existing growth forecasts and to tax revenues, raising major concerns about whether the targets it sets out can be met. It is truly a missed opportunity in these difficult times for our nation.
Deputy Gerry Adams: After weeks of cynical Government leaks and scaremongering, the Government has produced a budget which is devoid of hope for working people, lower and middle income families, the elderly, children and the poor. It targets some of the most vulnerable in society for cuts and stealth taxes. Gheall an Rialtas buiséad bunaithe ar chothromas, poist agus athchóiriú, ach ní dhearna sé sin.
A family of two adults and three children with a household income of €150,000 a year will lose €1,052 as a result of this budget. The same size family on social welfare will lose more —€1,078. Where is the fairness in that? Nuair a rinne an Taoiseach a chraolachán, dúirt sé go raibh poist le cruthú, thagair sé do phoist cúig uaire déag agus labhair sé faoin ghá atá ann obair a chruthú. Dúirt sé: “Work provides focus. Work gives us independence. Work gives our families hope.” Ach ansin, chuaigh sé in aghaidh post a chruthú.
The €750 million cuts to the capital budget will mean the loss of between 6,000 and 9,000 jobs. The Government is also committed to cutting 6,000 public service jobs. The money taken out of the pockets of low and middle income families is money taken out of the community, out of local shops and businesses. This will also cost jobs. The Government has already accepted, in its medium fiscal report published four weeks ago, that there will be 390,000 people on the dole in 2015. The jobs crisis would be much worse but for emigration. Since the start of the year, 54,000 of our mainly young people have left for foreign shores. Today there are 444,000 citizens on the live register. That is more than when Fine Gael and Labour won the election with an entirely different manifesto and it is an indictment of their policies and a reflection of their failure. It makes a nonsense of any commitment they have expressed to create jobs.
As for reform, the big wages of the political elite have hardly been touched. A token sum was taken from their super pensions. That is hardly reform. In Opposition, Fine Gael and the Labour Party railed against Fianna Fáil, but in government they seek to emulate them by delivering a budget in which the young, the elderly, the sick, those on disability, lone parents, students and part-time workers are expected to pay for the greed of the golden circle, the political elites, the developers and the bankers. Despite all the pre-election promises, child benefit has been cut. That cut will cost a four-children family €432 in 2012 and €768 in 2013. “Protect child benefit. Vote Labour” declared the Labour Party posters before the general election. “We will maintain social welfare rates” declared the Fine Gael-Labour Party programme for Government. In 2009, the Minister for Social Protection said “Child benefit is keeping many families afloat. It is keeping bread on the table, and it is paying the food bills of a huge number of families.” I agree with her. She was right then but she is wrong now. During the general election campaign, the Tánaiste and Minister for Foreign Affairs and Trade went as far as to say that cuts to child benefit would be a make or break issue for the Labour Party in coalition.
Since then circumstances have worsened for families and, in particular, for children. Child benefit is of even greater importance now than when the Government assumed office but that has not stopped Fine Gael or the Labour Party doing yet another U-turn and breaking yet another election promise.
The fact is these reductions in child benefit are an attack on children in low-income families. The poorest families in the State have been hardest hit by the budget and lone parents have been deliberately targeted. Under the budget, the upper age limit for the youngest child for new claimants of the one parent family payment will be reduced to seven years on a phased basis. This means that by 2014, lone parents of children aged seven will be deemed available for full-time work, despite the fact we are in a recession. There are no jobs and there is no comprehensive affordable child care or after school care. How can these parents go out into the workforce? The budget also reduces income disregard, that is, the amount a lone parent can earn while still being allowed to claim the full one parent family payment. That means parents who parent alone will have to give up part-time, low-paid jobs. It removes the incentive to work.
Fine Gael and the Labour Party promised a new Ireland based on an end to cronyism. We all know now that it is still jobs for the boys at the top as Fine Gael and the Labour Party have appointed more than 20 people with connections to both to senior positions on State bodies and within the Judiciary.
Deputy Gerry Adams: Moreover, on 14 occasions Ministers and the Taoiseach have breached their own pay cap to award higher salaries to their special advisers. Just this week we saw the controversy in regard to a former Fine Gael director of communications and now special adviser to the Minister for Jobs, Enterprise and Innovation, Deputy Bruton. The Taoiseach saw fit to intervene directly to seek this pay rise of €35,000 for a party crony, which is more than the average industrial worker could expect to earn in a year. This is not just a one off. This is a consistent practice of this Government.
The Taoiseach has two special advisers on salaries of €168,000 a year which is more than double the first point of the salary cap his Government set agus déanann siad é seo an fhad is atá ciorruithe millteanacha á ghearradh ar thuistí aonaracha, ar theaghlaigh agus ar dhaoine míchumasaithe. This is cronyism of the most blatant kind. It is hypocrisy. The Taoiseach does this while he imposes savage cuts on lone parents, the disabled and on families.
Under Fine Gael and the Labour Party’s watch, a former Secretary General received a golden handshake worth a whopping €713,000, including an annual pension of €142,000. Each time Sinn Féin questions the scandalously high pay and pension arrangements for the top people in the public sector, Ministers excuse it on the basis that they are worth it. Paying off failed senior civil servants with bumper pension pots and plum jobs in Europe is a scandal.
It is Fianna Fáil all over again — massive salaries to Ministers, special advisers, judges, hospital consultants and Secretaries General. However, it is clear none of the protected elites is worthy of such high pay at this time of economic crisis.
Under this Government’s watch the tax take is down, the cost of living is increasing, unemployment is rising and Fine Gael and the Labour Party have just extended the failed banking guarantee. On what planet does the Taoiseach think he is worth €200,000 a year? On planet Enda.
Deputy Gerry Adams: If the Taoiseach wants to table a debate on this in the Government’s time, I would be very happy to facilitate it. At the moment I want to talk about the Government’s budget but he does not want me to talk about that.
Deputy Gerry Adams: The Minister for Finance, Deputy Noonan’s, budget announced yesterday was a stealth tax budget. Of the €1 billion he raised, the massive bulk of it came from stealth charges — the VAT increase, the household charge, carbon tax, motor tax and excise duties. It was an anti-jobs budget. It is a pro-landlord and pro-property speculators budget.
The Government has protected property reliefs and allowed capital gains exemptions for people who buy commercial property and do not sell for seven years. This will encourage speculation if people do not have to pay capital gains tax on the profit of a property they sell. It protected the remaining section 23 reliefs rather than abolishing them, as the Labour Party had proposed. It will not go after the upward only rent reviews. Ní fhoghlaimíonn sibh aon rud. It is happy to forego tax coming into the Exchequer by amending these tax measures and to compensate for this, it cut child benefit, disability allowance and closed community nursing homes. Mo náire sibh.
The universal social charge is another unfair tax. Sinn Féin opposed it from the outset. The budget lifted those earning up to €10,000 out of the universal social charge but left all those earning up to the minimum wage still in it. Sinn Féin would have abolished this unfair charge. The Government kept one promise. It did not go after the high income earners. Tax rates and bands remain unchanged and those on high incomes are protected.
We know that indirect taxes hit the poorest hardest. That is a fact and the Taoiseach knows it. The decision to cut the fuel allowance by €120 is scandalous. This cut will hit older people and those with disabilities worst. This decision follows cuts of up to 25% to the fuel allowance and the household benefits package imposed by the Government in September and it comes at a time when fuel prices are increasing sharply. We know that 2,000 people, mostly elderly, die here every winter as a result of cold related illnesses.
The savage cut of €543 million in the health budget for 2012 will devastate the health services. When added to the existing HSE deficit the real level of cuts for 2012 will be over €850 million. Hospitals and other services across the State are under enormous pressure and these further attacks will only deepen the crisis.
The Government trumpets allocating €35 million to mental health services with one hand and then with the other strips €50 million from disability, mental health and children’s services, each of which are worthy causes. Mental health is the Cinderella of our health service. Will we develop a proper strategy for suicide prevention or self-harm when the Government is taking so much money out of those services?
Deputy Gerry Adams: The Minister for Health, Deputy Reilly, confirmed on Monday that more nursing homes will be closed in 2012. This is dreadful news for elderly people and their families as we approach Christmas. The way in which the Government has approached this issue has been sleekit. The names of 80 nursing homes which may be closed was leaked to the media, including two in my constituency of Louth, St. Joseph’s in Ardee and the Cottage in Drogheda.
The cuts to the disability allowance payment from €188 to €100 for 18-21 year olds and €144 for 22-24 years olds are outrageous. They sparked anger and outrage among the public and scared Labour Party and Fine Gael backbenchers. In response to my question on one of these issues the Taoiseach mentioned that the social welfare Bill would not include the budget proposal, but it does. What sort of Advent is this?
Deputy Gerry Adams: The Taoiseach has stated the entire Cabinet took the decision and that the matter will be referred for review. I asked whether the Government equality proofs proposals. In response, our resident clown, the Minister for whatever it is, Deputy Pat Rabbitte, stated——
Deputy Gerry Adams: ——the Government did not have a machine through which to run the budget to equality proof it. However, €150,000 is allocated in the budget to the Department of Justice and Equality for equality proofing. What about joined-up, transparent and better government?
Deputy Gerry Adams: The Government may have paused the cuts, but it chooses to take money from the disabled. This is evidence of how far it has sunk and the Labour Party has strayed from its socialist and James Connolly roots.
The cuts to education amount to €316 million. The Taoiseach was waving bits of paper about, but this document tells us we need to know everything about the Government’s attitude towards education. The Tánaiste and the Minister for Education and Skills, Deputy Ruairí Quinn, gave an unqualified commitment to campaign against any new third level fees, if elected, including student fees, graduate taxes and a further increase in the student contribution. They stated: “We pledge to use our position in Dáil Éireann to protect the Higher Education Maintenance Grant from any and all cuts.” I will not read it all, as the pledge is available to everyone.
Deputy Gerry Adams: Increasing the student contribution fee by €250 will make higher education the preserve of the elite. I spoke to the Taoiseach about what constituted a republic. It is based on citizens who should have the right to access education at all levels.
The Government plans to cut guidance counselling services, which will have far-reaching consequences for young people who need support at school. The cuts mean that many students who require emotional and psychological support will have nowhere to turn to in a time of crisis, as the Taoiseach must know from his former career.
Deputy Gerry Adams: This is set against the alarming backdrop of increasing rates of suicide, self-harm and depression among the young. Added to this is the challenge faced by teachers who must deal with bullying in the classroom. Now more than ever we need guidance counselling services in schools.
Deputy Gerry Adams: This appalling decision under a Labour Party Minister makes a mockery of that party’s past commitment to ensuring young people attending school would have the proper supports available to them to reach their full potential.
In recent days the EU President, the French President and the German Chancellor have proposed wide-ranging changes to the EU treaty. They are not hiding behind anyone and have clearly set out their goal, that is, to control the budgets of member states. The Government refuses to share the Van Rompuy report with all the political parties in the Dáil — so much for transparency, a new way of working and political reform. It has refused my calls in recent days for an urgent debate before it discusses these vital matters in Brussels.
Deputy Gerry Adams: Sinn Féin fundamentally rejects any further loss of fiscal powers. We will oppose efforts to facilitate this and demand that, despite clear efforts by the EU leadership and the Government to avoid holding a referendum, citizens have their say. If the Government was clear on these issues and stood up for Irish interests, it would have spelled out its position, but its refusal to do so indicates that it will acquiesce to the diktat of the European superpowers and larger European states.
Deputy Gerry Adams: In our debate last week the Taoiseach indicated his willingness to concede even greater fiscal sovereignty to the European Union. On Sunday night he stated he wanted to be the Taoiseach who returned Irish economic sovereignty.
There can be no recovery without job creation and an economic stimulus. Metro north, the DART interconnector and the N2-A5 road project have been cut. These vital projects would have created thousands of jobs and placed the economy in a strong place for recovery.
Deputy Gerry Adams: Our capital investment proposals would significantly contribute to Ireland’s competitiveness, as well as developing a sustainable, performing economy. Investment in infrastructure not only benefits job creation in the immediate term, it also supplies side benefits for businesses and the State. For those who want to listen, we would fund these proposal from the remaining €5.3 billion in the NPRF and with €1.7 billion from the EIB. As the Taoiseach stated before the general election, we would not put money into criminally bad banks or pay unguaranteed bondholders.
Let me remark on one other aspect of bad policy and bad manners on the Government benches. The actions of Government backbenchers during the budget day speeches demonstrated the Government’s cynicism. Rather than listen to criticisms and constructive proposals from this side of the House, they heckle, harangue and shout down other Deputies. Ministers are generally listened to respectfully by Sinn Féin Members, no matter how provocative they may be, but Government Deputies, including, occasionally, the Taoiseach, find it difficult to contain themselves when Sinn Féin Deputies are speaking. The occasional witty intervention, even the odd heckle or spontaneous remark, may liven things up, but the concerted efforts to shout down, bully or silence a speaker are unacceptable.
Deputy Gerry Adams: There are repeat offenders, habitual serial shouters who have nothing of substance to say and there is no willingness to listen to what others might have to offer. It is little wonder George Lee left.
Deputy Gerry Adams: Sexism is alive and well in the Dáil, as was demonstrated clearly during Deputy Mary Lou McDonald’s response to the Minister for Public Enterprise and Reforem, Deputy Brendan Howlin, on Monday. She was interrupted 65 times during her 30 minute speech. One Fine Gael misogynist interrupted 27 times. These are not my figures; they were given to me by a Government Deputy with whom I spoke about this issue quietly. He had checked the figures.
Let me give the Government benches notice. Section 31, internment without trial, special courts, death squads — many members of my party have been killed in the North and County Donegal — heavy gangs, decades of vile propaganda, demonisation and revisionism did not silence Sinn Féin.
Deputy Gerry Adams: Be sure that a motley crew of bad mannered amadáin, lobby fodder for the Government, will not silence us. We have a mandate to be in this Chamber and will make our voices heard clearly. Deputy Caoimhghín Ó Caoláin beat me to it the other day when he told us that he had heard the North mentioned more often in the past nine months than he had at any other time in his 15 years in the Dáil. Sadly, this newfound interest springs from the desire to distract attention from the Government’s policies. It is not a concern for anyone in the Six Counties. Sometimes it is expressed as part of the general juvenile bubble that I have just spoken of, other times it comes from Ministers, including the Taoiseach, and usually the remarks are self-serving, inaccurate and incorrect. Such remarks diminish him and his office. The Taoiseach and Ministers know that the Executive in the North does not have fiscal autonomy. It cannot raise revenue through taxation and I would welcome the support of the Government parties for a campaign to take fiscal powers for the Executive from London to Belfast.
Deputy Gerry Adams: Maybe that is too much to ask. At a time when Sinn Féin in the North is attempting, with the active assistance of the DUP, to wrest such powers from London, Labour and the Fine Gael are preparing to give away fiscal powers to the EU. The Taoiseach knows that the cuts in the North come from the Tory budget and it demeans anyone here to use a British Tory Government’s cuts inflicted upon citizens in the Six Counties to distract attention from what we are trying to say and what the Government is doing. The Ministers in the North set themselves the task of protecting the most vulnerable and creating jobs. That is the task the Labour Party should have set itself if there is any rationale for Labour being in government. That is one of the many key differences between the Labour Party in this Government and Sinn Féin in the Executive. Among other positive measures by the Executive, Sinn Féin has blocked the introduction of water charges, invested more in infrastructure and education than previously in the history of the State and introduced free prescriptions. This Government has cut fuel allowance, cut child benefit, cut payments for lone parents, cut jobseeker’s allowance for part-time workers, cut €475 million out of local economies, cut the disability allowance and cut funding for North-South co-operation in the Department of Arts, Heritage and the Gaeltacht. I could go on but I think the Government is aware of the hypocrisy and posturing on these matters. It is little wonder there is disappointment in people who tuned in hoping to hear solutions. We produced a pre-budget submission and I made sure it was sent to the Taoiseach and the Minister for Finance. We were open to discussing it at any time. The Government did take in some of the small measures we advocated.
Does the Taoiseach remember the five-point plan? Our five-point plan is like a five pointed star, it gives light, clarity and direction. The Taoiseach has lost even that. This is a bad budget but it is his budget. It is the budget of Labour and Fine Gael, not the budget of Fianna Fáil and the Green Party is not here. This Government consciously made a choice to introduce the measures applied this week. This budget represents the worst of bad choices. If the Taoiseach makes the same bad political choices at the EU Summit, the consequences will be every bit as severe as the decisions made by the Taoiseach’s predecessors 90 years ago in other negotiations.
Deputy Joe Higgins: I propose to share time with Deputy Finian McGrath. The thrust of this budget, a further instalment of savage austerity by the Fine Gael-Labour Party Government, must be seen in the context of the global crisis that erupted in 2007 on the collapse of the mountain of toxic debt built up in the financial systems of the US and Europe following decades of deregulation and neo-liberal capitalist policies that permitted an orgy of speculation by the world’s biggest banks, marauding hedge funds and obscene speculation. The budget must also be seen in the context of the ignominious collapse in Ireland of the speculationfest in the form of the manipulation of the property market in this State, which drove the price of building land and homes to stratospheric levels, reaping obscene profits for speculators in the form of Irish banks, property developers and major builders. This was underwritten by massive loans from European banks, all at a huge cost to a generation of young working people forced to buy homes at ruinous prices and saddled with ruinous mortgages, whose lives were decimated by the legalised gangsterism that pervaded the system.
This disastrous speculation, which dislocated the entire economy, was underwritten not just by the policies of Fianna Fáil and the Progressive Democrats but acquiesced in by Fine Gael and never seriously or radically challenged by the Labour Party despite some verbal objections.  What we are dealing with today is not just the consequences of the inevitable collapse of this national pyramid scheme of speculation but, more specifically, the policy response to it by, first, the Fianna Fáil-Green Party Government and now the Fine Gael-Labour Party Government. That policy has plunged our society into unprecedented crisis with disastrous consequences for our people. It was a criminal policy decision that tens of billions of euro of debt run up by private financial corporations, both Irish and European, should be placed on the shoulders of the Irish people as a whole. The Government that took private losses by private speculators for private super profit and saddled the present and future generations of Irish people with this was guilty of heinous treachery. However, a new Government calculatedly taking this policy in its totality is guilty of equal treachery, equal if not greater because the trenchant rejection of the policy registered by the Irish people in the rout of the previous Government in the general election on 25 February could have been and should have marked a cosmic change in policy.
Instead we have a Fine Gael-Labour Party Government, coming into power promising real change but slavishly following the previous Government’s policy. That policy has been dictated by the IMF, the EU and the ECB not to bail out the Irish people but to salvage German, French, British banks and those of other countries from their disastrous and frenzied embrace of Irish bankers and speculators in the Irish property market bubble. It is criminal that an Irish Government would ever slavishly agree to make a vassal State of the Republic of Ireland and its people, to squeeze tribute from our people to save the capitalist banks of Europe and in doing so destroy the lives of hundreds of thousands of our people now plunged into unemployment, financial hardship and social dislocation.
In this budget and the past four years the austerity policy means €25 billion has been reefed out of the Irish economy in pursuit of a policy of cringing acceptance of the diktats of the financial markets. Can this Government not see that, not only is this immoral and unjust in the extreme, it is decimating the domestic economy? As we are tired of pointing out, if we savage the ability of the majority of our people to purchase goods and utilise services, then tens of thousands of workers depending on this demand for their jobs will be thrown on the scrapheap of unemployment and, tragically, that is what is happening. All the key indicators in the domestic economy show the abject failure of austerity. Private investment has collapsed, VAT receipts are more than €400 million behind and unemployment has risen by thousands since this Government entered office. Much is made of the growth in exports. Every job in the export sector is vital and we defend it but the type of investment and the capital intensive nature of the investment that goes into exports means that it is not where the hundreds of thousands of jobs we need will be created in the next period of years.
On the other hand, taking €670 million from the pockets of ordinary people through the VAT increases and taking other money in the cuts in child benefit and elsewhere will further add to the downward spiral of austerity. The interest relief for householders who are trapped in the nightmare of negative equity and extortionate monthly mortgage payments will be welcomed to a degree but is dismally inadequate. That generation of workers who are trapped in this nightmare are victims of the extortion perpetrated on them in the housing market by the immoral speculators legislated for by Fianna Fáil and the PDs. The huge proportion of their incomes that continues to go to the banks massively dislocates the economy. Otherwise those funds would be going to the purchase of goods and services in the domestic economy, stimulating demand and sustaining tens of thousands of jobs for tens of thousands of people who are now on the dole, unfortunately.
This budget is designed to operate within the straitjacket of the capitalist financial market system, putting the interests of the sharks in those markets first because our political establishment, like that of the European Union, is part of that system. That is why this is a right wing budget through and through.
A radical budget would approach the crisis in a radical way. The United Left Alliance has highlighted the massive accumulated wealth in this State that is untouched by taxation. The Central Statistics Office calculated in 2010 total financial assets at €311 billion and non-financial assets at €351 billion. When we subtract financial liabilities of €194 billion, we get net wealth in the State in 2010 of €468 billion. Here is the crucial factor. Credit Suisse, a multinational financial services company, and no socialist organisation for sure, in its global wealth report published in November 2011 calculated the wealthiest 5% of adults in this State own 46.8% of the wealth. Do the maths; this gives the wealthiest 5% of adults in this state €219 billion worth of net assets. Not a cent is levied on this in wealth tax. For every 1% tax levied on that wealth, the yield would be €2 billion. A modest 5% levy would yield €10 billion. Why was this not targeted by the Government rather than children, students and the disabled?
There is a myth propagated by the millionaire-owned media, which suits the millionaires, that high earners in the State are taxed to the hilt. This is not so. From the Revenue Commissioners, we know that in 2009, the highest paid 10,677 units, which could be couples, earned €6 billion and 29% of that income was paid in tax after tax breaks. On average, before tax each unit earned €563,000 and after tax was left clear with €400,000. Taking this into account, and graduating downwards through other very wealthy income earners, the United Left Alliance realistically suggests €5 billion extra tax per annum from this sector. That would be €15 billion in 2012 that could be raised from wealth and the wealthiest in our society.
Eyebrows of course are raised when we mention figures like this. The idea that the super-rich should pay more is considered scandalous. It is fine, on the other hand, to cut the heating allowances of the elderly, the incomes of lone parents and disabled people. It is fine that special needs assistants should be removed from schools. I noticed in the leaders’ contribution by the Government earlier, much was made of the fact it had maintained many of them but the 470 who were removed have not been restored and now 700 teachers are in effect being taken out of the system with the new provisions in the budget.
What is the alternative? A socialist alternative would tax the huge accumulated wealth instead of devising further attacks on the working class. A socialist policy would take all the major banks into public ownership, not under the bail-out nationalisation of a sort we saw here, but one where the financial system would be placed under democratic control and management and directed for the benefit of society, not the private profit of speculators and major shareholders. We would begin the regeneration of the economy by major programmes of public investment, especially in infrastructure that would put tens of thousands of our people to work. The United Left Alliance outlines in its budget statement clear examples of where critical infrastructure is necessary, such as the replacement of leaking water infrastructure and other examples, that would take tens of thousands off the dole and begin to regenerate the economy.
All over Europe, especially in Greece, Italy, Spain and Portugal, working people and the poor are being crushed on the alter of the speculators in the financial markets, with livelihoods destroyed, small enterprises wiped out, public services slashed and unemployment spiralling. The economies of Europe are held to ransom by these markets, unelected and unaccountable. The political leadership of Europe prostrates itself at their feet. It is breathtaking that the political leadership of Europe, a so-called zone of democracy, dictates at the behest of the financial markets the unelected personnel of the Governments of Greece and Italy. Unbelievably, the Irish Government raises not a word in protest at this.
The Irish people should make common cause with the ordinary people of those countries of Europe now suffering the consequences of the massive crisis of capitalism and the ravages of the speculators in the financial markets, like James Connolly who, in 1914 faced with a horrendous war in Europe, rather than lying down and doing like other leaders, falling in behind their national establishments, put out a call to the working people of Europe that they should come together and rise up in opposition until, he said, we have “a European conflagration that will not burn out until the last throne and the last capitalist bond and debenture will be shrivelled on the funeral pyre of the last warlord.” What a tremendous visionary socialist he was, calling on the working class people of Europe to rise together in opposition to those who were visiting disaster on the Continent, on their lives and their societies. How different to the cowardly approach of the Irish Labour Party today and of this Government generally.
Therefore, the United Left stands in absolute opposition to this budget. It has been vindicated in its condemnation of the disastrous policy of austerity and outlines a left and radical alternative that can provide the basis for a solution to this crisis. As the next one, two and three years pass and the disaster is more clearly revealed to our people, there will be more and more support for those policies.
Deputy Finian McGrath: I thank the Chair for the opportunity to respond to the budget presented by the Minister for Finance and the Minister for Public Expenditure and Reform. It is important for all of us to deal with this budget and the current economic crisis in a fair and balanced way. We all know we live in very difficult times and we knew that prior to the general election. Let us not pretend that the Government did not know and let us be straight and honest with the people. We need to deal with our national finances, but we also have a duty as Members of the Dáil to ensure that all of our citizens are treated with respect and dignity. Sadly this budget does not do that. I will deal with the details later in my contribution.
We all know difficult decisions need to be made. Difficult decisions about the distribution of resources often raise awkward questions for the State, for many Deputies and for society as a whole. How is the tension between the rights of the individuals and the overall good of society to be resolved? There has been rapid change here and across the world. Budget day is the time to address these matters head-on and set out the economic agenda for the next 12 months. Any true democrat or anyone who believes in a real republic and a new Ireland, must put justice and equality at the top of the political and economic agenda. Many people believe equality is for another agenda, but it should form part of the political and economic agenda.
It is not possible to run away from this nor can any government fudge, hide, duck or dodge it. The unemployed, the disabled, the sick, the elderly and the young should be protected at all costs. If we are serious about a just society or a real republic, these people must be protected. Imposing extra charges on young householders with all of their housing and mortgage problems will not get us out of this economic mess. Hammering our people with disability in the budget was an absolute disgrace. It was shameful to target these people. I understand the Minister for Finance, Deputy Noonan, has now said that it is worth reconsidering this aspect of the Social Welfare Bill. If that is factual, I welcome it. It is important not to attack people with an intellectual disability by taking €88 from them.
I often wonder what planet some Ministers live on when they attack a person with a disability. Do they understand the feelings of such people and their families? The range of disability includes mild, moderate and severe. I have personal experience in the moderate area as I have a daughter with an intellectual disability. I also have many friends with severe disabilities and this cut is a gross attack on those families. I commend the many Opposition Deputies who spoke on the issue yesterday and this morning and put this matter back on the top of the political agenda. If the Government is serious about justice and equality it will reconsider the issue in the House.
This morning it was remarked that the IMF had something to do with this disability issue. I do not know where those remarks came from. The disability issue has nothing to do with the IMF and the Government needs to reverse this cut. The Taoiseach also said the current situation will remain in place until the review. The Government needs to reverse this cut which is wrong. Government backbenchers know it and the Opposition parties have united on the issue in seeking reversal of the cut. Things are very bad for families with disabilities and I can give more details later with regard to respite and residential care.
We also need to consider the 23,000 on the speech therapy waiting list. These are the issues for many families. I received many letters and phone calls from parents of people with disability. The first one stated:
The person asked me to use my voice to speak up for the most vulnerable people in society such as her son. These are real stories from real parents. I urge the Government to get on and do it. I accept that a number of Deputies have raised the issue for which I thank them. I would be very concerned about a review and we need to get on with it now.
Earlier I understand the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte had a go at the Technical Group, which outraged many in the group. The Technical Group comprises the United Left Alliance and Independent Deputies who were elected by the people. It is not any kind of ragbag group and has the right to be respected as Members of the Oireachtas. The Minister’s remarks on this issue were totally out of order and will not be forgotten.
Deputy Finian McGrath: During his speech on Monday, nobody noticed that the Minister for Public Expenditure and Reform, Deputy Howlin, said the Government would “secure 2% efficiencies in disability, mental health and children’s services, saving €50 million.” This means taking 2% from services for respite and residential care, with which I am familiar. The Government might believe it is smart to take 2% from these services and save €50 million. However, in approximately six months it will discover the implications of taking away the respite care for families or reducing the hours to achieve this 2% cut. When there is a crisis and the parent, who could be in his or her 80s or 90s, of an adult with a disability dies, and a service such as St. Michael’s House does not have a place, it has to franchise it out resulting in additional cost. Where is the economic sense in this? Regardless of the justice and equality issue, it will cost more money. I have direct experience of this because I meet the managers regularly. While 2% might sound small it creates a major issue.
I know a woman in her mid-20s who is in respite care. I met her on Monday at a disability event in Clontarf. Her father died last year and her mother is now seriously ill in hospital. If it were not for that respite service, that person and her family would be in serious trouble. When the Government makes such cuts, it should think of the effect on people on the ground. Even if it does not give a damn, it should consider the economic cost. That cut of €50 million will end up costing €56 million in the end because when the crisis starts, those service providers get private companies to take over the care of adults with an intellectual disability.
We have the details of the debate. I again thank all the Opposition parties and groups for highlighting this issue. The families involved have been hurting in the past 12 hours and appreciate the voices raised on their behalf and this is my first opportunity to do this. I urge the Minister to reverse this cut which accounts for a small amount of the overall budget. I am available to him should he wish to know from where he can get the €7 million required to reverse it.
There has been much talk about the Government’s priority being job creation. The first email I received today was at 7.30 a.m. from the Northside Centre for the Unemployed in Coolock, a community in which there is a high rate of unemployment. That email reads:
Cuts to child benefit and fuel and disability allowances have been announced. As previously stated, if the Government were to introduce a wealth tax, it would raise €800 million. If it were to end property tax reliefs, it would raise €450 million. If it reduced landlord interest relief, it would raise €400 million, while a 35% minimum tax on all high earners would raise an additional €100 million.
On jobs, there is a proposal on the table of the Minister for Agriculture, Fisheries and the Marine, Deputy Simon Coveney, in relation to an excellent project which would create 5,000 jobs in the sugar beet industry. I urge the Minister to look favourably on this proposal which has been costed. It has received much support and would receive cross-party support in this House, given the major crisis in the country in sugar production.
It is important that we look at the budget in a balanced and objective way. It is also important that Ministers listen to the criticisms and sensible proposals made by Members of the Opposition parties, in particular in respect of people with disabilities. I have major concerns about the budget, in particular in regard to the core issues of disability, health, education and job creation. There was an opportunity to provide for real and radical reform and the Government to assist the most vulnerable and children living in poverty, yet it did not go for this. As this is not a budget I can support, I will be voting against it.
Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton): This undoubtedly has been a difficult budget and it has had to be so. The new Government has inherited a situation in which spending is running more than 40% ahead of what is being raised in taxation. Ireland is locked out of all the borrowing markets and is in a position in which the only source of borrowing now available to us is from the European Union and the IMF and even then only on the strictest conditions. Consequently, the Government does not have available to it the options of postponing adjustments or considering options that many would like to pursue. It was never going to be easy to raise €3.8 billion, as the Minister for Finance was obliged to do in this budget. However, it is important that this budget is not simply about austerity. Were the Government to approach its challenges simply in terms of austerity and fixing the banks, as had been the dominant theme of the years before the formation of the present Administration, it would sell the people short. As a nation, the most profound challenge we face is how to confront the huge jobs challenge before us. This budget, as with every action by the Government, must be about jobs and growth, as well as about meeting the important fiscal targets that are essential to our economic survival. This is the context that has shaped the thinking behind this budget.
The jobs challenge is a profound challenge for this country. In the last three years, 350,000 jobs have been lost, more than two thirds of which have been lost by people under the age of 30. In any normal assessment of an economy, that is an extremely grim picture. These are the young, talented people who are the future of the economy. Sadly, many of them are finding their futures in other countries. Hopefully they will return but certainly one of the most profound challenges we face as a nation is to match the needs of people who wish to continue to work and to give of their talents here. The challenge is to build a strong nation here at home that can meet the ambitions of which the Taoiseach spoke in his address, namely, of being the best small country in which to do business, to be a good country in which to grow old and to be a good country that commits itself to high standards and decency in the manner in which it treats people.
This is the reason that employment has shaped every element of this budget. Recovery and employment creation are shaped to a considerable degree by the sort of decisions a Government makes on both spending and taxation. As for taxation, the Government consciously has made the decision not to impose further tax on work or business profits in this budget. The Government is aware, as every independent expert will confirm, that if one loads tax on work and on profits, one will stifle recovery. Consequently, the Government has been obliged to consider other ways. It is highly significant that this year, the Government has sought to raise taxes from property, which in many ways is a new departure. It has increased the tax rates across the board in respect of capital acquisitions tax, CAT, capital gains tax, CGT, and deposit interest retention tax, DIRT. It also has introduced a household charge. In total, the Government will raise almost €400 million in taxes on capital or property in some form. This constitutes a significant broadening of the tax base and avoids the necessity of going back to penalising work, which has been too much of a feature of budgets in recent years. Approximately 80% of the tax raised in recent years has come from tax on work and this has not been good for our economic recovery. This year, the Government consciously is focusing on raising money from items that do not damage economic prospects, such as property, as well as picking indirect taxes. It is known that where one raises money from indirect taxes, people at least still retain the income with which to make their own decisions. Families who are under severe pressure, as many are, at least have the choice of how to apply that income to meet their mortgage, health and education commitments, areas where there has been no tax increase on their spending.
The priority of job creation has had a profound mark on the tax selections in the way in which the Minister for Finance has sought to incentivise opportunity here, and particularly to promote employment creating opportunities. He announced a suite of measures yesterday across a range of enterprises, and at their heart is making the setting up of a new business much easier. Last night, we gave effect to an initiative that, to be fair, was started by Fianna Fáil when it was still in government, that allows an individual who wants to set up a company to claim up to €600,000 in income tax that he or she paid during the past six years to put into the business as equity. The Minister also indicated that this company would be free of tax for the first three years of its operation. That is a clear signal to people that setting up a business is favoured and will be supported by the Government to the best of our ability.
The Minister has also given a clear signal that the future of companies with the capability to expand will rest with their investment in innovation and their willingness to enter new markets. He has given explicit recognition to that in the tax relief on research and development and for placing staff in the new BRIC countries — Brazil, Russia, India and China — where we need to build new export markets because of the profound shift in future purchasing power away from our traditional markets.
Another thing that has characterised this budget is the determination to spread the load in a fair way. With the raising of taxes on wealth, whether they be CAT, CGT or DIRT, the money is coming from people who can afford to pay. That has allowed us not only to protect other incomes from increases in taxes but also to introduce something that I believe will be universally recognised as fair, namely, removing people earning under €193 a week, or €10,000 a year, from having to pay the universal social charge. Anyone would recognise that the limits set by the previous Government were simply too low. Having people pay the universal social charge on an income as low as €80 a week simply was not fair, equitable or fitting in terms of any normal view or approach.
The budget has also been important in that the Government has kept commitments it made to the people. We kept the commitment that we would not raise income tax, that we would protect basic rates of social welfare and that we would provide relief to those who purchased their homes when prices were most expensive between 2004 and 2008. We also kept the commitment to extend free GP services to people who have the most important need, that is, those with a long-term illness whose condition will not simply go away. We kept our commitment in regard to literacy and numeracy, with which the Minister, Deputy Quinn, will deal. We also kept our commitment to provide for mental health, which has been a much neglected area in our health services.
I believe this budget has struck the right balance. Certainly it is not an easy budget and all of us would like to be doing things that are not possible, but we have protected resources for creating employment and for those who are willing to commit to and take the risk of creating an enterprise that wins exports and rebuilds our economy.
We have tried even in these very difficult times of limited resources to share the burden in a way that would be seen to be fair. I do not expect any applause from people for this budget but I think people will recognise that this is a workman-like commitment to reform on a road that will be difficult for everyone in this country. I believe we have the ambition to create a strong economy built on strong enterprise, winning back our export markets and providing employment here at home. That is a vision and an ambition well worth fighting for. This is the first step in that respect.
Minister for Education and Skills (Deputy Ruairí Quinn): I am amazed, given all the noise Opposition Deputies demonstrated outside this Chamber, that none of them, bar the exception of the honourable Member from Limerick, has come into this Chamber today.
Deputy Ruairí Quinn: I propose, with the agreement of the Leas-Cheann Comhairle, to address the audience in the Gallery, rather than the non-audience in the Chamber. I will tell those of the school-going population in the Gallery who are perhaps in second year or third year what I will do over the next four or five years and what will be changed for them and their brothers and sisters who will follow them through the school system. First and foremost, the days of doing 12 exam subjects in the junior certificate are over. We will bring it down to eight subjects. We will change it from the system of being a mini-mac of the leaving certificate into a much more different grade system such that when students get their junior certificate and a person asks them how they did, they will not say they got so many points but will say what grades they got. We will learn how to teach ourselves differently and not what to remember but how to think. These students will be tested on their ability to think as young adults, not as young automatons on what they have remembered.
I wish to make another point about the change in the junior certificate which will affect examinations with effect from 2017, by which time I suspect, these students will have moved on in their studies. The name of the examination will not be the junior certificate. I have asked Leanne Caulfield, the President of the Irish Secondary Students Union, to come forward with a new name for a new examination which will be different. At present, there is a terminal examination at the end of third year and 100% of the marks goes to that examination, but that will change. Some 60% of the marks will go to that examination and 40% will be based on portfolio work that students will have done from the beginning of second year right through to Christmas or thereabouts in third year, and that will be filed electronically and assessed electronically. Students will be pushing it up into the clouds, as it were, wherever they happen to be at school and it will be assessed in real time by people who will be able to assess it, perhaps by people teaching in another part of the country who will have no notion of the students but will be able to assess their work.
The second issue I wish to address is to examine how we can maximise our experience of transition year, which is considered by most people to be a very good experience but which varies from school to school. I will be talking to students and teachers about what they think could be better in the transition year programme. The way the points systems distorts the way in which students study the leaving certificate and the way their teachers have to teach them will also be changed. The predictability of examination subjects will be totally changed. When students read newspaper results in June 12 months about the junior certificate or the leaving certificate, they will not read stories to the effect that it was a good exam, there were no surprises and that it was as predicted. They and their teachers know what that means. It means that from the beginning of the course, the teachers say that Heaney will come up as the poet this year or the French Revolution will come up as the major subject so they will disregard the entire rest of the syllabus and train the students like talking and remembering monkeys to write down the answer that they can learn off to ensure they get the right marks and grades for the question on the French Revolution, Seamus Heaney or whoever. That is not education, it is memory training and it will finish under this Government.
We are going to say to the universities to stop manipulating the points system which they own. When I became Minister I thought that the points system was part of the parcel of the State examination system but it is not. It is a private company. The CAO is a private company owned by the seven universities. They allow the other institutions to come in and they take the A and A1, B and B1 and C grading of the leaving certificate and put mathematical values on every 5% high grade in that examination and come up with the points system. The points system was introduced in the 1990s and since 1999 onwards the number of course options, which these students or their older sisters or brothers will be looking at in February when they come to fill out the forms, has increased by 300%. Instead of the option to study German or law, they have the option to study German and law, law and French or law and Sanskrit, and the universities do not tell students, even though they are obliged by law to do so, how many spaces there are in the different courses. What the universities are doing is competing for the brightest of students in terms of points so that they can say that in their college or university, for a student to get into a course, he or she needs 510 points, nearly 550 points or 400 points.
We will make the universities end this nonsense, as was done in Australia. The University of Melbourne stated that a 17 or 18 year old person cannot decide prior to entering third level what detailed course he or she wants to do. The guidance councillors of the students in the Visitors Gallery will probably tell them that less than 15% of students who put much effort into this know exactly what they want to study at that time. The University of Melbourne has gone back to basics with seven or eight foundation courses, such as in science, arts, languages, medical biology foundation and engineering. The UCD school of engineering is around the corner from here. If one does not know whether one wants to be a structural, mechanical or hydraulic engineer but one knows one wants to be an engineer, one’s foundation course in first year will be simply engineering. There is a hell of a difference between the maturity of a 17 year old and that of a 19 year old and after this first year one can decide on the path one would like to explore.
We must regain the third level education system. We have a very good primary school system and we have very good infrastructure at third level. Of the 15,000 universities that exist in the world the seven universities in this small State with a population of 4.5 million are in the top 300. We need to maximise the value they have by ensuring when students such as those in the Visitors Gallery go through the leaving certificate that they are taught how to think, reason, rationalise and argue for themselves and are not just tested to see how much they can remember in a two-hour exam after two years of study.
A student will make a rational choice on whether he or she is scientific, mathematical, good with people, good with numbers or making things and choose the course that makes sense. The student will then study the foundation course and after a year of reflection about how he or she wants to progress, at the age of 19 or 20, which is very different to the 16 or 17 year old student, he or she will decide in which direction to go. These are the changes the Government will make in our education system in the next four years.
The budgetary measures I introduced in recent weeks, which were enacted yesterday and which will be carried through, will enable me to ensure the basic building block of learning to read and write in our school system will be reinforced. It is a truism to state it, but we go to school to learn to read so that we can read to learn. If one does not know how to read well at the age of ten or 11 and goes from sixth class to first year and so finds it difficult to keep up with the learning process one will start to head towards the departure lounge after the junior certificate. The students in the Visitors Gallery know people like this; they have sat beside them.
The new money for literacy and numeracy will ensure this deficiency in our education system will be reduced. Prior to handing over to my colleague, the Minister for State, Deputy Ciarán Cannon, I want to tell the House, now that we have two Opposition Deputies in the Chamber——
Deputy Ruairí Quinn: I am very proud to be part of this Government. I am proud that we have put through a budget and that in a difficult time when we have been able to find savings and reductions in the totality that I have allocated additional resources in the areas where it is important. The country needs to transform its economy and the only way to do this is to transform the next generation of young people coming into the labour market. I am proud to be in a position to help to do this.
Minister of State at the Department of Education and Skills (Deputy Ciarán Cannon): When the Taoiseach spoke to the people on Sunday night he stated clearly that jobs are the top priority for the Government and will be at the centre of the Government’s four year plan as we embark on the long road to recovery. Central to this plan is an effective, efficient and clearly focussed further education and training sector that assists many people on their individual journey on the pathway back to work or to further education. A highly educated and skilled workforce is essential for Ireland’s competitiveness and growth and for job creation. Without a highly trained workforce, our companies will innovate less, our economy will grow less and our country will be less competitive.
The total amount available in 2012 for FÁS training is €322 million compared to the projected outturn of €332 million in 2011. This 3% decrease is mainly due to a reduction in the number ofnew apprenticesregistering with FÁS, and price savings being achieved on the delivery of training. To assist redundant apprentices to complete their apprenticeship programmes, FÁS will target additional resources from its budget to support the redundant apprenticeship programme in 2012.
FÁS savings for 2012 also include €1.1 million achieved through the reduction of training allowances in respect of 16 and 17 year old participants in community training centres from €76.65 and €95.75 respectively to €40 per week. This reduction will also apply to Youthreach participants where there will be a saving of €1.7 million in 2012. This revised rate will apply to new entrants from 1 January 2012.
Capitation payments for further education programmes will be reduced by 2% in 2012. This reduction in capitation will be implemented across the entire education sector, in schools and in further education. Despite this reduction, I am confident the level of provision in further education in 2012 will be maintained at 2011 levels, with approximately 170,000 full-time and part-time places annually. The additional investment we made in further education as part of the jobs initiative whereby we allocated an additional 1,000 full-time post leaving certificate places and 3,000 part-time back to education initiative places will be consolidated and sustained.
The budget announcement also indicated that €20 million will be provided under the national training fund for a new labour market activation fund targeted at the long-term unemployed. This will deliver upward of 6,500 training places in 2012. A recently completed evaluation of the labour market activation fund for 2010 by PA Consulting Group found it to be an efficient, effective and cost-competitive project and concluded that there was a strong case for continued use of this model of funding. My officials are working on the detailed arrangements for the new scheme and I hope to be able to make a further announcement in this regard early in the new year.
It is very interesting to note the outcomes of the research carried out by PA Consulting Group. The projects involved were requested to capture material in respect of the progression of their clients. The consultants were able to access such information in respect of 5,361 clients with very positive outcomes. Of these clients, 42% achieved employment; 43% continued their education; and only 15% remained unemployed. The short timeframe since the completion of courses has limited the extent to which follow-up monitoring has been undertaken. The nature of the progression pathway involved in the programme means there is often a lag before further education and training or employment opportunities are secured following completion of the initial activation programme. This partly accounts for the 47% of participants whose current status is unknown. The findings of the consultants’ evaluation on both the strengths and the weaknesses of the model will be considered in the design and delivery of the 2012 initiative.
The education and skills profile of people who have lost their jobs as part of this recession is very different to the profile in previous recessions and the Government is committed to providing access to a range of upskilling and reskilling supports which are appropriate to the diverse needs of unemployed people. The higher education system also has a key role to play in this regard as is evidenced by the continued growth in adult student numbers. In particular, 17.5% of the 40,000 new entrants to full-time undergraduate programmes last year received support through the back to education allowance scheme to leave the live register and return to full-time education.
A total of €10 million is being provided from the national training fund to support a further roll-out of part-time higher education opportunities in 2012 through the Springboard initiative. Since Springboard was launched as part of the Government’s jobs initiative in May 2011, almost 5,000 unemployed people have been supported to reskill in areas where there are identified skills shortages and where job opportunities are arising now and will arise in the future. The majority of Springboard participants will graduate by June 2012 with awards ranging from certificate to masters degree level.
An evaluation of the Springboard process and initial outputs to date is already under way with a view to informing the tendering, selection and eligibility criteria for the new call for proposals, which will issue in the first quarter of 2012. The precise number of places to be provided will be determined by the results of this competitive call for proposals, which will be managed by the HEA on behalf of the Department. There will be close collaboration between the expert group on future skills needs and the enterprise sector in the design of the call to ensure that programme proposals are closely aligned to identified skills needs.
An allocation of €14.5 million, the same amount as in 2011, is being provided by my Department to Skillnets in 2012 from the national training fund. The Skillnets training model centres on the training networks programme. A Skillnets network is a group of companies that comes together to carry out cross-organisational training-related activities, which may not be possible on their own. Skillnets networks arrange relevant, cost-effective and innovative training courses for member companies who operate on a regional and on a sector-specific basis. Since its foundation, Skillnets has focused much of its energy and support on facilitating networks to engage SMEs in the training process.
Skillnets continues to play a crucial role in supporting the training needs of employers and of those in employment in many different sectors through facilitating enterprise-led training and upskilling of the labour force. It is also true to say that during its years in existence, Skillnets has also fostered a new belief, particularly amongst our indigenous SME sector, in the value of ongoing training and upskilling of workers.
As well as providing training for those in employment, in recent years Skillnets programmes have been designed to provide relevant training for the unemployed through initiatives such as the job-seekers’ support programme.
In 2011, Skillnets launched an initiative to respond to labour market needs as identified by industry and policy-makers, and also in response to the changing employment profile in Ireland. A new future skills needs programme fund has been established with the strategic intent to upskill current and future employees in six targeted high-growth sectors as identified by the expert group on future skills needs.
Skillnets also administers a specific training networks programme entitled Finuas, which provides its training networks programme services to the International Financial Services sector. Since mid-2009, some 2,730 persons have been trained through the Finuas programme across 22,643 training days. My Department will continue to engage with Skillnets with a view to maximising the contribution Skillnets can make to addressing unemployment.
In July of this year, the Government announced the establishment of SOLAS, the new further education and training authority. I chair the implementation group which has been set up to oversee the establishment of SOLAS. An action plan is being developed by the group, which will set out the objectives and identify the key tasks and milestones along the road to achieving this significant programme of change. As part of the development of the action plan, it is intended to hold a consultation exercise with key stakeholders and interested parties. It is expected that the consultation process will take place early in the new year.
The heads of the Bill to create SOLAS are due to be circulated shortly to Departments and to the Attorney General. A dedicated transition team has been established in FÁS to work on the significant change programme that will be required in the context of the establishment of SOLAS and the transfer of the FÁS training division to the VECs.
The establishment of SOLAS has the ultimate objective of strengthening the further education and training sector, and enhancing services to learners with particular emphasis on the needs of the unemployed. Notwithstanding the challenges inherent in the reform programme a key objective will be to maintain and enhance services for clients in the interim.
Deputies will no doubt be aware of the requirement, under the four-year recovery plan, to deliver savings of €17 million on the school transport budget. Despite this serious challenge, I have confined the budgetary changes for 2012 to an increase in the primary charge from €50 to €100 for eligible primary pupils and an increase in the primary maximum family charge from €110 to €220. This level of charging, which equates to 55% per day, per eligible child for a return journey to school, is still very modest compared to the unit cost of some €1,000 per year for every primary child transported.
Furthermore, to support the most needy families, it continues to be the case that eligible primary pupils who hold medical cards, and children with special educational needs, will be exempted from paying any charges. That represents about 30% of primary school children. In addition, this measure will be offset by a reduction in the charges for primary children availing of school transport on a concessionary basis from €200 to €100, in line with the new primary charge. This means that from September 2012, ineligible children — for example, those who do not meet the requisite primary distance criteria of 3.2 km — may apply for spare bus seats on a concessionary basis at a cost of €100 per annum, rather than the €200 charge payable up to now. In essence therefore, we have complete equity in terms of access across the primary school transport network at this point. I am happy to say that charges at post-primary level remain unchanged at €350 per pupil, and the overall family maximum payable is also unchanged at €650.
Deputy Willie O’Dea: I am sorry that the young people in the Visitors Gallery, whom the Minister for Education and Skills addressed a few minutes ago, have now left. I notice, however, that another group of young people are in the Visitors Gallery. I would say this them: we have just had a talk from the Minister for Education and Skills who is now leaving the Chamber. He boasted about all he was going to do for education in future, but this is the Minister who solemnly signed a pledge not to increase registration fees before the eyes of the whole country.
Deputy Willie O’Dea: He brazenly reneged on that promise within weeks of making it. I hope all his fine promises about what he is going to do for education will come to pass. That is the context in which he must be judged.
When the Government introduced its jobs initiative last spring, it had only just taken office. At the time, I took a constructive approach and I think it will be judged as such. The Government had only just been elected and I wished them a fair wind. I had reservations on how they were going about job creation, but nevertheless I was prepared to give them a chance. I praised what I agreed with in their approach and said I hoped it would work out because, God knows, it is in all our interests that this country should be able to create jobs thus enabling our people to work again and have a good standard of living here. At the time, the Government thanked me for my constructive approach and said they were willing to be judged on the results. We are now beginning to see the results but, unfortunately, some of my worst fears have been realised.
The objective of a jobs strategy it to reduce unemployment but since that strategy was introduced unemployment has risen by almost 10,000. That is not counting the increased number of people who have gone on the various job training schemes the Government has set up. Nor does it include the accelerated rate of emigration at the rate of 100 per day, according to all the anecdotal evidence. Some bodies are predicting that emigration could rise to as much as 200 a day over the next 12 months. It would appear therefore that the Government’s jobs strategy has flopped faster than a fat man chasing a moving vehicle. The Government’s jobs strategy is a miserable, abject and pitiable failure. That has now been demonstrated beyond any shadow of doubt by the figures we have from the Central Statistics Office.
Do not take my word for it. Mr. Mark Fielding, the CEO of ISME, represents the small and medium business sector employing 665,000 people. In a statement issued on 24 November, after the Government had announced its micro-credit scheme for the 129th time, Mr. Fielding said:
That quotation is not from me or other members of the Opposition, it is from someone representing 665,000 people in the small business sector. The clue to the Government’s strategy — or, rather, the lack of it — can be found by comparing the Fine Gael and Labour Party election manifestos. Everyone, with the possible exception of Sinn Féin — I cannot speak for them — agrees with the debt reduction strategy that has been imposed on us from outside. We have choices, however, as to how we reduce the deficit by balancing tax increases against expenditure cuts. The Fine Gael election manifesto proposed a ratio of 75:25 for expenditure cuts and tax increases.
The Labour manifesto proposed a 50:50 ratio, with 50% coming from expenditure cuts and 50% from raised taxes. The result, believe it or not, is a division of 62.5% coming from expenditure cuts and 37.5% coming from taxes, an almost exact splitting of the difference. In other words, it is a squalid compromise. Instead of any coherent strategy, what we have is a strategy that can be agreed by a majority of backbenchers on both sides. It is not budgeting by strategy but budgeting by horse trading. One would find no more coherence in the Government strategy than one would in a bunch of fireworks.
In my praise for the Government’s jobs initiative, I should have remembered the words of Jonathan Swift, who said “Expect nothing and you will not be disappointed.” We have a compromise rather than a coherent strategy at a time when the country is in great peril. Deputies do not have to take my word for it as The Irish Times, no friend of Fianna Fáil, had an editorial yesterday stating “the eventual [budgetary] package had more to do with conflicting ministerial and backbench demands than economic vision.” It went on to describe the budget as “underwhelming” with “little or no sense of unified vision” and so on. Yesterday, the Irish Independent described the budget as a “mishmash” of measures to which the two Government partners could be persuaded rather than a coherent strategy. Deputies do not need to take my word on the matter.
I have heard my constituency colleague, Deputy Noonan, when on this side of the House describe various budgets as pantomime horses and such. This is not even a pantomime horse and it would be an exaggeration to describe it as a pantomime donkey, with the two ends ungainly parcelled, sticking out with a vacuum in the middle. If the Government had a strategy — it argues that job creation is central to a strategy — how can we explain such wonderful job creation wheezes as the 2% increase in the VAT rate? In introducing the jobs initiative earlier this year, the Government stated that the panacea would be a reduction in VAT. We are told this is a job creation budget but central to revenue raising measures is an increase in VAT. Was the Government wrong then or is it wrong now? The two strategies contradict each other directly.
Conventional wisdom would indicate that consumption taxes are less destructive of employment than direct raising of income taxes, and I agree with that. The circumstances of each case must be considered separately. I listened to the Taoiseach this morning but I do not believe he fully comprehends this matter. The export-led growth strategy is beginning to falter seriously, and all one must do to see evidence of it is consider the diminishing trade balance. A couple of years ago the trade balance of exports over imports was 52% but it decreased this year to approximately 4.5%, which is a third of what was provided for at the start of the year. The export boom is beginning to peter out.
There has never been a time in our history when it has been more vital to stimulate the domestic Irish economy. Retail sales have fallen for 44 successive months, and one would imagine this is hardly the time to impose a hike of 2% in the VAT rate. Not only is this taxation strategy economically illiterate in Ireland’s current financial circumstances, it is also socially unjust. There are many people on social welfare or on very low incomes, who do not have a taxable income and cannot avoid paying VAT. By definition, it is a regressive tax, and the poorer a person, the greater the percentage of income paid in indirect tax. That is an economic reality that is widely recognised.
This time last year the current Minister for Social Protection, Deputy Joan Burton, when speaking from the Opposition benches rejoiced in the fact that the then Minister for Finance, the late Mr. Brian Lenihan, had rowed back on an earlier budgetary strategy. She said it was “with his tail between his legs” that he removed the 0.5% VAT increase which she had described as the “single most disastrous action he took in the 2009 budget.” It was a disastrous and Earth-shattering mistake for the late Mr. Brian Lenihan to increase VAT from 21% to 21.5% but there is now no problem in increasing VAT from 21% to 23%. That is raising hypocrisy to the level of a crusade.
The Sunday Business Post, which is an objective observer, stated on 4 December that the decision by the Government to increase VAT smacks of a calculation about the impact of income taxes on electoral fortunes rather than a coherent plan to revive the economy. That newspaper has no axe to grind. The Taoiseach recently suggested there was no difference in the choice of increasing income taxes and increasing consumption taxes. He suggested that hikes in VAT would give people more choice. I know the Taoiseach personally and he has always had his feet on the ground since coming to the House. I am sorry to see that after nine months in office, he is suffering from a degree of delusion that would make the great Walter Mitty look unimaginative.
Deputy Willie O’Dea: That is how detached from reality the Taoiseach has become. The increase in VAT is just one job creation wheeze, and another is the savage cut in capital expenditure as a proportion of total expenditure cut. I will again refer to a person in the media who has no axe to grind, Mr. Dan O’Brien, the respected economic commentator in The Irish Times. On 5 November, referring to the Government’s plan outlining the capital and current expenditure cuts, he indicated:
The new plan contains little indication of radical departures. For instance, the Government has made much of the need to make “strategic” capital investments, both as a means of raising the economy’s growth potential and of creating jobs. The coalition — rightly or wrongly — believes there are plenty of projects that can achieve both objectives. Despite this, capital spending is to be cut sharply, having already been cut much more than other areas of expenditure. A radical Government would have cut less productive spending and shifted the money saved into the capital budget but that is not going to happen.
It is interesting that very famous politicians here, until very recently, were vehemently opposed in principle to the entire notion of cutting capital expenditure. For example, in July last year, not so long ago, a famous politician, when capital expenditure was to be reduced to a higher base than it is currently, stated:
Another fantastic job creation wheeze is the notion of pushing the cost of redundancy on to employers. Companies are downsizing and I know a number of small and medium enterprises which are losing money and reducing costs to survive. The Government sees businesses in a bad position and losing money so it will put extra costs on them.
Deputy Willie O’Dea: What the Government does not seem to realise, unfortunately, is that the rebate on redundancy payments comes from the social insurance fund, and who pays into the social insurance fund by and large but employers. Employers who pay into the social insurance fund are now expected to pay on the double to the extent of 85% when someone becomes redundant. I cannot calculate the exact sum but it is roughly estimated that this could impose up to €250 million on the backs of small, struggling SMEs at a time when they are literally surviving from week to week if not from day to day. The Government has sought to justify it on the basis that there is no rebate in the UK, but the rates of redundancy there are far less, and even with a 60% rebate it was costing far more to make a person redundant in this country than it was in the UK. Now it will cost two and a half times as much to make a person redundant in this country than it does in the UK. That is a comparative disadvantage. It must be seen as a competitiveness issue——
Deputy Willie O’Dea: It is blatantly thoughtless and anti-competitive. The Government also mentioned such countries as Sweden and the Netherlands where there is no rebate, but there is no redundancy system similar to this country in those countries. The system there is entirely different. By comparing apples with oranges one is trying to defend the indefensible. It will now cost two and a half times more to make a person redundant in this little country than in the country just across the water.
Deputy Willie O’Dea: The Government is apparently relying on austerity by itself without any stimulus, plan or job creation measures to get this country through the current crisis. It is like a medieval doctor who used invariably to treat patients by applying leeches to suck out the blood of patients. If the patient did not recover, one got another leech to suck out the blood again.
Deputy Willie O’Dea: That is the Government’s strategy for pulling the country out of its present economic travails. Let us face it; it will not work. Everyone agrees that austerity alone will not do the job. That is widely accepted by all economic commentators on all sides of the political divide. When Roosevelt took America off the gold standard, he was influenced by the advice of one of his top advisers who said that America could not be crucified on a cross of gold, but Ireland cannot be crucified on a cross of austerity either. What we need is austerity with imagination.
Deputy Willie O’Dea: The reaction of the various members of the Government to the situation is instructive. In recent weeks the Minister for Social Protection, Deputy Joan Burton, has been behaving like a modern day version of the 1960s character, Maxwell Smart, hiding in corridors waiting for a journalist to pass——
Deputy Willie O’Dea: ——to say that by the way the Labour Party is stopping Fine Gael doing A, B and C and to make sure to print that Labour did it and that the Minister, Deputy Joan Burton, led the charge.
Deputy Willie O’Dea: The Minister for Transport, Tourism and Sport, Deputy Varadkar — the man who seems to be permanently poised between a platitude and a peccadillo — is turning himself into a latter day Marie Antoinette and giving a modern day version of “Let them eat cake”.
Deputy Willie O’Dea: This morning, unfortunately, after a long period of absence and I presume inactivity, because I cannot remember what he is responsible for, the Minister for whatever, Deputy Rabbitte, came to the House and proceeded to laugh and sneer at our questions about the disabled, guidance teachers and how the poor are impacted on——
Deputy Willie O’Dea: I remember when Deputy Rabbitte ceased to be a Minister. He was the dumb waiter in the Government led by the then Taoiseach, Mr. John Bruton. He was the super junior Minister who could not talk at Cabinet meetings.
Deputy Willie O’Dea: He was there without any great effect and when he ceased to be a Minister, one of his media groupies wrote an article about him to the effect that there is one thing one could say about Deputy Pat Rabbitte, that he grew in office. He is growing again but the economy is shrinking.
Deputy Willie O’Dea: The Minister, Deputy Rabbitte, looks very tired because he has been on a long journey. It is a long journey from left wing, revolutionary Marxist to chief cheerleader for the right wing of Fine Gael. I will hand over to my colleague, Deputy Kirk.
Deputy Seamus Kirk: I have limited time to contribute to the debate. I will begin by identifying the principal features of budget 2012, which are child benefit cuts, an attack on higher education, rural Ireland being hit hard by covert cuts, cuts to the lone parent allowance, fuel allowance cuts, lack of employment measures, the fact that front-line health services are to suffer, an increase in motor tax and VAT levels, the introduction of a carbon tax, a U-turn on rent reviews, the introduction of a property tax, disability allowance cuts — I accept that the latter is to be reconsidered — and redundancy rebate reductions. There may be other issues that I have not listed.
The rate of child benefit for third and subsequent children will be standardised over the next two years at €140. For a five child family that will mean a monthly loss of more than €100. That makes a mockery of Labour’s red-line approach on child benefit reductions. Only last February the Tánaiste and Minister for Foreign Affairs and Trade, Deputy Eamon Gilmore said: “[Things] like not cutting child benefit any further. Enough is enough. Families can take no more,” were a fundamental prerequisite of entering into government with Fine Gael. That is just one of many broken promises on social welfare rates, fuel allowance and one-parent families.
The programme for Government stated that it would “maintain social welfare rates” and that “over time, One Parent Family Payment will be replaced with a parental allowance that does not discourage marriage, cohabitation or work”. Now the Government is introducing an age limit for the lone parent allowance. The current limit of age is 14. Next year it will be 12 and by 2014 it will be reduced to seven.
The Government is trying to avoid headline changes while cynically introducing cutbacks through the back door by changing criteria. Because of changes to criteria and income eligibility, the Government has cut welfare payments to one of the most vulnerable sections of society. These reductions come at a time when one-parent families are at a significantly higher risk of poverty.
The programme for Government outlined, “We will complete and publish a strategy to tackle fuel-poverty.” No strategy has emerged, only cuts. The Government has reduced the fuel allowance period from 32 weeks to 26 weeks. Only last year the Tánaiste and Minister for Foreign Affairs and Trade, Deputy Eamon Gilmore, bitterly criticised a rationalisation of the fuel allowance period declaring:
These cuts leave old age pensioners and welfare recipients increasingly exposed to poor weather conditions and heating cost increases. The previous Government gave those in fuel poverty an additional €40 for the cold weather.
The Labour Party said only nine months ago that it would, “reverse the €500 increase in the Student Services Charge” and that it was “opposed to third-level fees by either the front or back doors”. They were promises made in full knowledge of the fiscal situation. Now the Government has made four decisions that will significantly restrict the ability of young people and the unemployed to get into third level: increasing the student contribution fee by €250 in 2012; abolishing supports for postgraduate students entering college next year, apart from some limited circumstances; cutting student maintenance grants by 3%: and the introduction of a capital asset test in 2013, thus making it more difficult for farming families and the self-employed to qualify for any student support.
The increase in VAT from 21% to 23% will have a serious impact on the livelihoods and prospects of many businesses in County Louth. A cursory glance at some of the items that will increase in price as a result of this anti-business move shows how out of touch the Government parties are becoming. The list includes toilet rolls, toothpaste, towels, soap, shampoo, detergents, pet food, children’s toys, examination papers, cooking foil, fruit juices, spectacles, false teeth and coffins. Which of these does the Government consider a luxury? That these basic essentials are being described as discretionary spending by Ministers and backbenchers gives a clue to the level of thought being put into the plight of many of the most vulnerable citizens.
This decision will stretch the already limited budgets of families, forcing them to shop elsewhere, and will have a disastrous impact on towns, villages and businesses across the Border counties and further afield.
I am long enough in politics to remember the ebb and flow of trade North and South. The challenge for the Government at any given time is to ensure the trading equilibrium is reasonably balanced between North and South. This increase in VAT will seriously distort that trading balance and will force many shoppers to go northwards to shop for those essentials I have just mentioned. That will have an impact on the domestic economy. Most commentators, and most Members of this House, agree that the domestic economy is the area where, with stimulation and re-invigoration, we can create much needed employment. This measure will be counterproductive in terms of cost competitiveness and employment creation potential.
Rural Ireland will be hit hard by these covert cuts. Changes to the income criteria for the farm assist scheme will hit farmers struggling to make a living, as will changes to the disadvantaged area scheme, DAS, and the rural environmental protection scheme, REPS. Farmers across County Louth, but particularly those who are living on the least profitable land in the northern part of the county, will be hit hard by these changes which will have the effect of damaging the agricultural industry as a whole.
The Government will double the school transport charge from €50 to €100 and double the primary maximum family payment to €220. Phased staffing cuts in small schools with fewer than five teachers will also have a direct impact on these rural areas. Rural Ireland will be also affected by the decision to close 31 Garda stations. The abolition of the local improvement scheme for rural roads will further hit isolated communities and households.
Drivers who bought low emission cars on the basis of the tax regime in place at the time will be angry and disappointed today. Vehicle registration tax on band A is being increased from €104 to €160 and on band B it is being ramped up from €156 to €225. These massive €56 and €69 hits on drivers who bought low emission cars is a further indication of the lack of appreciation of the importance of these areas and of the impact they will have on transport costs, whether for social travelling or for the movement of goods and services around the country.
Deputies on this side of the House accept that the austerity programme must, unfortunately, continue. Simultaneous to an austerity programme, we must look at those areas of the economy where there is potential to develop and stimulate economic activity and employment opportunities. There are such opportunities. It is good to see the Minister for Agriculture, Food and the Marine, Deputy Simon Coveney, in the House. There is potential for development in areas under the aegis of his Department. I am sure the Minister appreciates that. I hope the necessary proposals will be brought forward to ensure the development potential of that industry, the primary industry in the country, is stimulated and will realise its full potential.
Deputy Simon Coveney: Despite the need to reduce expenditure in my Department, as in others, due to the serious difficulties in the public finances, Monday’s expenditure announcement for my Department and yesterday’s budget were a strong statement of the Government’s support for the agrifood sector. The budget recognises the contribution the sector can make to economic recovery and future growth in the economy. From the outset of the budget negotiations, my priorities have been to protect farm incomes by targeting existing resources at active farmers, especially those in vulnerable sectors; to support productivity and the up-skilling of farmers and the food sector generally; to ensure the development of the agrifood sector incorporating investment in research and development, food safety, animal welfare and enterprise development in line with the Food Harvest 2020 plan; and reform and continued drive for efficiency and better service delivery within the Department and associated agencies linked to it.
The budget sends out a positive message about the agrifood sector. I hope farmers, their families and the farm organisations will see it as an indication that the Government has confidence in the ability of the sector to do much more in terms of generating growth and employment.
The taxation measures announced in budget 2012 reflect the Government’s commitment to the agrifood industry and in particular to the expansion planned in the Food Harvest 2020 strategy. The measures announced have been designed specifically to encourage farming as a career for young people, to incentivise farm partnerships and greater productivity at farm level, to stimulate land sales and land transfers, to facilitate new enterprise opportunities in farming and to help agrifood businesses innovate and export.
The main measures in the budget which will benefit the agrifood sector are as follows. First, it will incentive farm partnerships. One of the most significant new measures introduced in the budget is the new stock relief incentive to encourage farm partnerships. For registered farm partnerships, the current rate of 25% stock relief will increase to 50%, and for certain young trained farmers entering such partnerships, a rate of 100% stock relief will be available. This new incentive will run until December 2015.
I am supporting farm partnerships because I believe collaboration through partnership can improve farm structures generally, facilitating farms to operate more efficiently, increasing scale on farms and bringing more innovative and energetic young prospective farmers into farming. More farming partnerships are required to increase productivity and to meet the Food Harvest 2020 targets. I am confident that providing an additional incentive to farm partnership formation will encourage farmers to consider more closely the benefits of farm partnerships to their farming business and in providing a better work-life balance.
Second, I am particularly pleased that the budget reduces the stamp duty rate on agricultural land from 6% to 2%, with immediate effect. Half the rate, or 1%, will be applicable on transfers to close relatives until the end of 2014. This change will substantially reduce the stamp duty payable on transfers of farm land by gift or by sale. It should stimulate a stagnant land market. Currently only 0.5% of total agricultural land is offered for sale annually and land prices are far too high. It will also promote intergenerational transfer, as the cost of lifetime transfer to transferees who do not qualify for the young trained farmer stamp duty relief has reduced considerably. I am confident this measure will give younger, progressive, commercial farmers a greater opportunity to purchase land and thereby increase their farm size, which will make the farm more competitive.
Third, the budget has restructured the retirement relief available on capital gains tax to incentivise the earlier transfer of farm assets to the next generation and to encourage the sale of land by those farmers with no successors. As of 1 January 2014, for those farmers aged 66 and over, an upper limit of €3 million will be introduced on family transfers, compared to an unlimited amount currently. On non-family transfers, the current upper limit of €750,000 will be reduced to €500,000. Applying the new limits from 1 January 2014 allows farmers already aged 66 and over to plan for an orderly transfer of assets in advance of that date.
It is important to note that these new measures do not mean a farmer has to cease farming altogether beyond the age of 66, but it allows him or her to plan for a phased gradual transfer of assets to the next generation. We are restructuring retirement relief to encourage farmers at the normal retirement age who have successors to transfer their land and holdings to young, ambitious prospective farmers. This restructuring will also encourage farmers with no successors to sell some of their land, if they choose to do so. This measure will encourage an improvement in the age profile of farmers and should ensure farmland is put to more productive use.
There has been some criticism of the increase in the rates of capital gains tax and capital acquisitions tax from 25% to 30% and the reduction in the capital acquisitions tax-free threshold for group A from €332,084 to €250,000. These changes are necessary in view of the economic situation facing the country. However, it should be noted that there has been no change to the very important 90% agricultural relief on capital acquisitions tax, CAT. This means that farms worth up to €2.5 million will continue to be fully exempt from CAT with regard to transfers to a son or daughter or to a “favourite nephew or niece”.
There are other significant tax changes that will benefit the agrifood industry. The budget includes additional supports which will benefit the food industry including improvements to the research and development tax credit and a foreign earnings deduction to apply when an individual spends 60 days per year developing markets for Ireland in the BRIC countries, Brazil, Russia, India and China, and South Africa. That is a particular benefit to the agrifood sector. Second, the VAT rate applied to open farms, such as pet farms, will be 9% rather than the new standard rate of 23%, with the obvious benefits that come from that. Third, the exemption rate for the universal social charge has been raised from €4,004 to €10,036. This will be of particular benefit to low-paid seasonal workers in the farming sector.
Consistent with the commitment in the programme for Government on carbon tax, farmers will be allowed a double income tax deduction in respect of the increased costs arising from the change in carbon tax announced yesterday. Finally, an amendment to the VAT refund order for farm construction will allow farmers to claim a refund on wind turbines purchased from 1 January 2012. This will encourage farmers to invest not only in agriculture but also in sustainable energy projects on their farms.
Total funding of €1,312 million is being provided in the Department’s Vote in 2012. On the capital side, the 2012 capital allocation represents an increase of €18 million on the national recovery plan, NRP, expenditure ceiling and this will be boosted by a further €27 million by way of carry-over of savings from 2011 to provide total capital funding next year of €195 million. This is a very substantial increase on the original NRP allocation of €150 million, to which the last Government committed, and will allow a very worthwhile capital programme to be implemented next year. The funding announced in the 2012 Estimates does not include the €1.3 billion in payments under EU funded schemes which are administered by the Department, and it is important not to forget that when calculating the amount of money going into farming.
With regard to Food Harvest 2020 related measures from an expenditure point of view, I am pleased to announce a range of measures which will support that strategy and its objectives. The suckler cow welfare scheme will continue to be fully funded from national funds. In particular, despite the financial constraints, I will continue to provide the necessary funds to meet all payments in 2012, as I said I would. I am anxious to prioritise the suckler beef herd for future growth and development. In that regard I have allocated €5 million towards the establishment of a beef technology adoption programme which will build on the work done to date under the better farm programme. The roll-out of the beef discussion groups will give beef farmers access to a range of additional skills to increase productivity. This programme was a key recommendation of the beef 2020 activation group and will be modelled on the dairy discussion groups which worked so well.
I am re-opening the targeted agricultural modernisation schemes, TAMS, which had been suspended earlier in the year because of the uncertain budgetary situation. I am providing funding in 2012 to enable all of the schemes to re-open — poultry and pig welfare, dairy equipment, sheep handling and rainwater harvesting schemes, as well as the bio-energy scheme. In addition to providing an incentive for farmers to invest in their enterprises and secure their futures, these schemes will make a worthwhile contribution to job creation and to the maintenance of existing jobs in rural areas.
In forestry, I am anxious to deliver on the Government’s commitment to afforestation and to support a sector which contributes to job creation and the maintenance of jobs in rural areas and which has a vital climate change role. Overall expenditure for forestry will be higher than the published figures and will amount to €111.76 million when the published Estimates of €84.86 million are boosted by a further €27 million by way of carry-over of savings from 2011. The premiums and the afforestation planting grants are maintained and we will plant 6,500 hectares of trees next year. That is a good news story and a strong injection of confidence into the sector.
With regard to seafood, I am increasing funding to BIM next year as it is involved in crucial work at present to develop the seafood sector and add value to seafood product when it is caught and farmed. I am confident it will be able to do that. There is a reduction in the capital available for fisheries harbours next year, but it still amounts to €6 million, which is a significant amount.
As regards the proposal of a milk levy to allow Bord Bia to actively market and develop new markets for the increasing volume of milk we will have after 2015, I will consult with the industry to develop that in a way everybody will find acceptable. On animal health initiatives, we will financially support the BVD eradication programme. This is being worked on with the farming organisations.
We have had to make savings in the disadvantaged areas schemes but no active farmer in disadvantaged areas will lose payments. We have changed the qualification criteria for the payment and increased the stocking rate requirement, but the new stocking rate is still only two sheep per hectare. That is less than one sheep per acre. If one does not have a higher stocking rate than that, it is difficult to make the case that one is farming in a significant way. If one is required to have lower stocking rates because of a commonage framework plan, for example, one is exempt from any changes in one’s payments. We have consulted closely with farm organisations to try to get the disadvantaged areas payment eligibility criteria right.
With regard to the rural environment protection scheme 4, REPS 4, I acknowledge there is a straight cut. We had to make some savings and I believed the REPS 4 payment could take some level of cut because it is a very strong and generous scheme. I would prefer if it had not been necessary to do it, but if one must choose to save money in an area, REPS is a reasonable place to start.
I am confident the positivity and growth potential of the agrifood sector that we have seen this year and last year will continue into next year. I do not believe I have ever heard a Minister for Finance mention agriculture and farming as often in a Budget Statement as I did yesterday. That is a strong signal of intent, and we heard it again from the Taoiseach today. Agriculture and the agrifood sector are very much part of the Government’s economic policy to generate growth, job creation and wealth creation in this country again. I look forward to leading that growth in the future.
Minister for Health (Deputy James Reilly): I am very pleased to have this opportunity to address the House on the 2012 health Estimates. The gross current budget for the health sector in 2012 is €13.644 billion. When account is taken of additional private health insurance income of €79 million, this is equivalent to a net reduction of €183 million compared with the 2011 allocation of €13.748 billion. However, additional funding of €310 million is required to meet unavoidable cost increases, superannuation, demand-led schemes and the fair deal. A further €50 million is required in 2012 to implement priority programme for Government commitments in mental health and primary care. Therefore, the total savings required in 2012 to deliver on the cash savings target, meet the unavoidable costs and the programme for Government commitment is €543 million but as everybody knows, that is not the full story.
The HSE is carrying an underlying deficit into 2012 which, as of today, looks like it will be approximately €149 million. The health service will also have to cover other unavoidable costs within its lower allocation, such as increments, general non-pay inflation, the EU directive on agency workers and the VAT increase. The service will also have to cope with the increase in health and social care needs arising next year from population growth, ageing and increased disease incidence.
The combination of these factors and the reduction in the health service numbers recently approved by the Government will result in reductions in services in 2012 and beyond. The extent and nature of the impact on services will fall to be addressed in preparing the HSE’s national service plan for 2012. All programmes will come under scrutiny as a result of the reduction in expenditure announced yesterday.
The nature and range of the savings measures taken in recent years means that it has become increasingly necessary to focus on the way services are organised and delivered. This is entirely appropriate and in keeping with the focus in the programme for Government on reforming the way health services are funded and delivered to achieve greater productivity and more cost effective services.
The national service plan will be submitted to me before Christmas, after which I have 21 days within which to approve the plan or direct that it be amended. It is my intention, however, that this process will be concluded by the end of the year. My Department and the HSE are working collaboratively to develop the plan in the context of the comprehensive review of expenditure, the programme for Government reform agenda and commitments for mental health and primary care.
The plan will also take account of unavoidable cost increases and the saving measures agreed by Government and will indicate at a high level how these will impact on the various service care areas. The savings measures agreed by the Government include further reductions in numbers employed, in the volume of overtime, in premium payments and in agency working; an increase of €12 in the drugs payment scheme monthly threshold; various measures to reduce drug costs, including the negotiation of a new agreement next year with the pharmaceutical manufacturing companies and the introduction of reference pricing and generic substitution; the introduction of legislation next year to allow public hospitals to raise charges in respect of all private patients even if they are not in a designated private bed — if they choose to go public to the consultant, they will be treated as public patients in the public hospital but if they chose to go private to the consultant, they will be charged as private patients of the hospital; extra efficiency targets for disability, mental health and child care services; and savings in my Department’s budget.
I wish to correct a typographical error which appeared in the documents circulated yesterday and on Monday. In regard to the employment control framework — pay cost containment, the putative cost put in for a full year was €219 million when it should have read €179 million. One will see the figure of €219 million appears again under the issue of demand-led schemes. The figures at the end are correct and there is no miscalculation. There was a typographical error in the Department for which my Secretary General offers his apologies.
I wish to acknowledge the great commitment of staff in the health service to serving the public and the part they have played in maintaining service delivery in the face of major reductions in budgets and staff numbers. None the less, as part of the Government’s strategy to control public expenditure, we must further reduce health service staff numbers and pay costs. The sectoral target for 2012 encompassing the HSE, the providers it funds, the other statutory health agencies and my Department is approximately 103,800. Within this number, numbers in the HSE and the service providers it funds must be brought down to approximately 102,000. This represents a reduction of 2,000 on current actual numbers as the service is already well under its current employment ceiling.
The health sector has already made considerable progress in doing more with less and in providing various flexibilities in line with the Croke Park agreement. However, the reductions in funding for 2012 will pose major challenges and will require an acceleration of the reform programme. In particular, action will be needed in the areas of rostering, skill mix, redeployment, reductions in agency working and implementation of HSE clinical programmes which are widely acknowledged to be resulting in service improvement and cost savings. The Government has also decided that the pay bill for overtime allowances and premium pay must be the subject of particular attention. In 2012, the health sector must reduce its pay allocation for overtime by 10% and spending on allowances and premium payments by 5%.
Although not all of the numbers reduction will have a consequent superannuation cost, there is no doubt that there is likely to be a higher than average pension and lump sum cost next year due to the arrangements whereby public servants can retire on the salary rates applicable prior to the pay reductions once they retire before the end of February next. It is understood from early data from the HSE that in the region of 1,200 people have applied to retire on or before 29 February 2012, although this is based on data which have to be validated and confirmed. Furthermore, it is open to people to withdraw their application up to the end of February. Indeed, the number could increase over the next two to three months as additional employees give notice of their intention to retire in advance of the end of the grace period. Given the uncertainty around numbers, additional funding of €97 million has been ring-fenced for lump sum payments next year.
The challenge for the health service in 2012, therefore, is not only to reduce staff numbers and associated pay costs but to continue to adapt to minimise the impact of the reductions on services to the public. The public service agreement is pivotal in this regard.
Given the pressure on the State finances, it is also necessary to take further measures to reduce costs in 2012. This includes increasing the monthly threshold for the drugs payment scheme from €120 to €132 per month with effect from 1 January 2012. This scheme ensures that individuals or families do not have to pay more than the monthly threshold on approved prescribed drugs, medicines and certain appliances. The estimated saving to the Exchequer of this measure is around €12 million.
A number of measures have been taken in recent years to reduce the price of drugs and it is essential we take further steps to reduce costs if we are to continue to afford reimbursement of new medicines coming on stream, many of which will have a significant budgetary impact.
In January of this year, members of the Irish Pharmaceutical Healthcare Association, IPHA, agreed a series of measures to deliver savings on drug expenditure of €200 million in 2012. As a result, the prices of more than 1,000 medicines have been reduced since January of this year. Further discussions will take place with IPHA aimed at reductions in the price of patent protected drugs in 2012.
Reductions in the price of generic medicines were implemented in August 2011 following discussions with the Association of Pharmaceutical Manufacturers in Ireland. Further reductions are expected following the introduction of reference pricing and generic substitution in 2012.
The Government approved the general scheme of the health pricing and supply of medicines Bill at the end of September. This legislation will be published in 2012 and will introduce a system of reference pricing and generic substitution for drugs prescribed under the General Medical Services scheme and community drugs schemes. These reforms will promote price competition among suppliers and will ensure that over time, lower prices are paid for these medicines, resulting in significant savings for taxpayers and patients. We will also take initiatives in regard to over-prescribing to identify at GP and hospital level where there are issues in respect of particular drugs and where cost efficiencies can be achieved.
It is also intended to increase income by €143 million next year through a combination of increased charges for private patients, improved collection of income and changes to legislation to allow for the charging of all private patients irrespective of whether they occupy a private bed but only if they choose to go privately to the consultant. This represents a loss of income to the public hospital system and provides a significant subsidy to private insurance companies. I intend to introduce legislation next year to allow public hospitals to raise charges in respect of all private patients in public hospitals. While I acknowledge the new regime will have a significant impact on private health insurance premiums, it must be accepted that the new arrangements would provide much needed extra income for the public hospitals. The new system is fair and in keeping with the changes required along the road to universal health insurance. Removing the subsidy to private patients will help to protect services for public patients. The increase in the existing daily charges levied on private patients only requires secondary legislation and, therefore, will come into force on 1 January 2012. The increase is likely to be of the order of less than 4%.
I intend to move from the current method by which we charge private health insurers for hospital services. Instead of a per diem or daily charge, we will move to a system of charging per procedure. This will allow for a much clearer accounting system and should help the insurers to drive down the cost of care. I am most unhappy that the costs relating to private health insurance are not being addressed aggressively enough, but I assure the House that I intend to ensure costs decrease. There will be a renegotiation by VHI with hospitals early next year. There will also be a renegotiation of consultants’ remuneration by insurers, particularly VHI. I would like it if procedures that could be carried out in primary care settings, particularly in some of the new primary care centres, would not attract the same consultant fees as apply when carried out in hospitals, where side room fees are also charged.
It is worth remembering that, while VHI may have 60% of privately insured patients on its books, it has 80% of the muscle in negotiations, as it carries 80% of the costs. I require it to use that muscle and more imagination to force costs down. I have asked my Department and VHI to engage with the actuarial experts Milliman to carry out a new review aimed at cutting costs in private health insurance. Milliman produced a report on this field last year, but the new report will identify methods for achieving the multimillion euro savings Milliman’s original report claimed were possible. Combined, these initiatives should reduce greatly the cost to insurers and, thus, the insured and minimise any increase in premia. In the light of this, I see little to support the recent claims by some insurers regarding the need for a 50% hike in premia or anything remotely like it.
Efficiency targets have been set for the disability, mental health, children and family directorates. These targets will, undoubtedly, prove challenging, as the services will also need to make provision for savings in employment and procurement costs. While we have set demanding savings targets in respect of the General Medical Services, GMS, and community drugs schemes, it remains necessary to provide some additional funding in 2012. This subhead will need to meet the cost of the ever increasing volume of items being prescribed and dispensed and the extra costs arising from the entry of new products into the market. There is already pressure to approve a number of new and expensive products that are becoming available.
Some €55 million is being made available for the fair deal scheme. However, 2,600 people are being looked after in long-term residential care at a cost of €1 billion, while 10,000 people can be looked after through other initiatives in their homes, which is where they prefer to be, for €125 million. We will need to examine how to balance these sums.
I am pleased that the programme for Government provides €15 million for the extension of the medical card scheme to those with long-term illnesses. This will allow more people access, particularly those with chronic illnesses, to free general practitioner, GP, care, which is far more cost effective and convenient for patients. We must move away from the current approach, whereby we treat episodic illnesses in hospitals in which service provision is expensive, to one in which chronic illness care is delivered in the community, whereby we can monitor and help to keep people well and avoid the outbreaks of illness that cause them so much pain and anguish and cost the taxpayer so much money.
Unfortunately, I must defer the removal of the 50 cent prescription charge which was one of my goals when entering office. The difficult budgetary position means it is not possible at this time, given that it raises €27 million annually.
My Department will continue to work closely with the HSE on addressing people’s needs and meeting our allocated Vote. In this regard, a supplementary budget of €148 million has been sought from and approved by the Exchequer. This amount comprises €58 million to cover the shortfall in funding provided earlier this year in respect of the 2010 voluntary exit scheme and €90 million towards easing service pressures, of which €40 million is being provided by my Department.
Reform of the health service will save us money, that is, ensuring more patients are treated more quickly. I have been greatly encouraged by the co-operation of hospital staff with the special delivery unit in implementing some of the early necessary reforms. The year ahead not only represents a significant challenge but also an opportunity to change the way we work in order that we can deliver the health care we all desire for citizens.
Deputy Jonathan O’Brien: I wish to share time with Deputies Stanley, Colreavy and Ellis. I will take ten minutes, while the Deputies will take ten minutes, five minutes and five minutes, respectively.
Deputy Jonathan O’Brien: Many who sat at home listening to the speeches by the Ministers, Deputies Howlin and Noonan, on Monday and yesterday, respectively, found themselves in utter despair at what the next few weeks, months and possibly years would be like for them. The comprehensive expenditure reports were published this morning and read like a litany of punishments to society’s least well-off. Carers, the disabled, children, migrants and women are being punished for the sins of others. These sections of society received little or nothing during the Celtic tiger years and will continue to receive little or nothing other than more political rhetoric from the Government. It will tell them that, although the deep financial trouble we are in is not of their making, they will be responsible for paying for it. They are on the margins of society and must shoulder the blame for what a small minority has inflicted on us. There is no doubt in my mind that the budget was designed cynically to protect that small minority at the expense of the most vulnerable. I reached this conclusion in listening to the two Ministers’ speeches and reading the material provided.
Let us consider carefully the Minister for Finance’s comments on last night’s “Prime Time”. They were telling where the Government’s attitude towards the less well-off is concerned. They were also telling in respect of the Minister’s attitude towards former members of his party. He referred to a mysterious group of lobbyists who had approached the Government to seek a reduction in payments to young people with disabilities. He had the cheek to call them wayward children. I hope he apologises for that disgraceful comment.
I began to wonder about who the mysterious group of lobbyists were. We found out from the Taoiseach during Leaders’ Questions today and yesterday that the lobbyists were the parents. As we have rules on parliamentary language, I will not call anyone a liar, but someone is, undoubtedly, telling an untruth. In my 11 years as a local councillor on Cork City Council and in my nine months as a Deputy, not once have I received a lobbying e-mail, letter or telephone call from the parent of a disabled child asking that his or her income be cut. I doubt whether any Deputy has received such a request. I do not believe the Taoiseach and the Minister when they suggest those who lobbied for changes were parents of disabled children. It does not make sense. The Taoiseach has confirmed that the proposed changes to the disability allowance are now on hold. This is welcome. Let us be clear, however, that the review does not mean a reversal which is needed. The Taoiseach spoke about a review taking place, but there was no indication of how long it would take. Perhaps a member of the Government might confirm how long it will take and when a decision will be taken on whether the cut should be reversed.
I have listened to some of the reasons given for the increase in VAT. The Minister for Finance implied that those on lower incomes spent a higher percentage of their income on items such as cigarettes, public transport and alcohol, while those on higher incomes spent a greater proportion of their income on pension schemes. Taking this into account, I conducted some research on the VAT figures. The poorest 10% of the population spends 14.9% of their income on VAT, of which more than 75% is at the higher rate, while the richest 10% of society pays 7%. These figures show that those on lower incomes will be hit by the rise in VAT. There is no doubt in my mind that the budget has been designed by people who talk about eliminating poverty but who have no political ambition, will or policy to achieve it. There is no doubt that the less well-off in society receive the minimum and that sometimes they do not even receive their basic rights, as we saw in the case of disability allowance.
When I read it, I thought about the current economic position and it is great to see Fine Gael has stayed true to its politics. It now sees emigration as the only safety valve and solution to our economic woes, in other words, out of sight, out of mind.
I refer to the role of the Labour Party in the budget. There were prolonged backroom discussions during the negotiations in the drafting of the budget. Some elements of the Government considered they had to protect the wealthy rather than the less well-off. Sinn Féin Deputies were not privy to that debate, which is a shame because if we had been privy to it, we would not have rolled over as easily as the Labour Party on some issues. I can picture the scene, with the Minister for Education and Skills, Deputy Ruairí Quinn, in one corner sulking at being forced to accept Fine Gael’s way rather than Labour’s way on the subject of registration fees. He is probably thinking that Frankfurt’s way is probably not as bad as Fine Gael’s way. I can see the Minister for Social Protection, Deputy Joan Burton, attempting to make her position on disability services as Thatcherite as humanly possible in a cynical attempt to endear herself to the Taoiseach. In another corner I can see the Minister of State, Deputy Kathleen Lynch, trying to work out how she would explain away the changes to the disability sector which she had allowed to happen on her watch.
The changes to disability allowance are not the only attack on the disability and equality sector in the budget. The funding for disability awareness initiatives was cut by 72%, for the National Disability Authority by 5% and for victims of crime by 12%. The Minister for Justice and Equality is present in the Chamber. The funding for crime prevention measures was cut by 28%, on top of the closure of 31 Garda stations. SAFE Ireland, a group which represents domestic violence refuges, had its core funding cut by 100%. This follows last week’s news that People with Disabilities in Ireland had its funding cut by 100%. These are disgraceful measures and there is nothing in the budget to which anyone on social welfare, low and middle incomes can look forward. A family on social welfare with three dependent children is subject to the same cut in income as a family with three children on a gross income in excess of €150,000. There is nothing fair or equal about this.
Deputy Brian Stanley: The times we live in are challenging and difficult and require leadership, inspiration and decisions to improve quality for life for people. On all three counts, the Government has failed. The budget will serve to bring further stress and conflict to families and communities. It will further undermine the years of good work done by community activists. Community development projects are not to be found in every community because they are not needed in every community. Community-based projects provide services that the private or public sectors cannot or simply will not provide. There are no community development projects in Blackrock or Foxrock because they are simply not needed there. People living in more affluent areas have better access to private and public services.
The communities the Government has attacked in the budget depend on services which are already overstretched and underfunded. Public services in working class communities are under strain because of ongoing funding cuts and the moratorium on public service recruitment. The community sector must take up the slack at a time when they have seen their funding disproportionately cut in comparison to the overall cut in Government spending. The Government has attacked every aspect of the community sector. The nature of the sector means that funding comes from several Departments, each of which has introduced cuts which are a massive 24% in the case of the Department of Education and Skills in respect of local drug task forces, 20% in respect of services to tackle educational disadvantage and 43% in respect of the provision of training by FÁS, yet funding for the Secret Service remains untouched. I often wonder on what that money is spent — it may be on hard hats, high collars and dark sunglasses for spies. Perhaps the Minister for Justice and Equality might tell us.
The local drugs task forces have seen their budgets cut by 7%, or a total of €2 million. Projects have already suffered serious cuts in the past three budgets, many of which will be compounded by cuts to HSE mainstream funding. The Government has purposely targeted those who were long-term unemployed or in recovery from drug addiction. It has slashed the budgets for community employment schemes. The effect of these cuts will be felt by those providing essential services in communities and receiving vital training and education services. The Government is cutting the training and materials grant by 66% to €500 per participant in community employment schemes. This will have a serious impact in trying to move people from unemployment to employment. The Government managed to increase the funding for the Tús scheme which has no training and education component. It also increased the funding for JobBridge which has turned out to be a failed entity. The community employment scheme, however, which has been tried and tested has fallen victim to the axe and the funding for the community services programme is being cut by €2 million. This programme provides services, including community resources centres, sports centres and senior citizens care services.
The list is long and the cuts are callous. The Government must also understand cuts do not occur in isolation. Those who fell victim to the cuts in social welfare, reduced health services and increased class sizes all depend on these services more and more. The decisions will affect marginalised communities far more than the communities from which many Government Ministers come. The cuts are happening while €82 million lies untouched in the dormant accounts fund. The Government can rest assured that people are hurting, but they are not beaten yet. I pay tribute to the communities which will have to endure the cuts and the community activists who work day and night to protect, defend and sustain their communities. In many cases, they are the glue that keeps families and communities together.
I had the honour and privilege yesterday of meeting a delegation of young children from the Kilbarrack community development programme. They visited the Dáil and presented us with “A Book of Grievance and Hope” which includes the thoughts, hopes and fears of young children. One child wrote, “We can’t send money to Trócaire this year.” One of the saddest thoughts reads, “My mam is sad all the time,” while a little girl called Chantelle wrote, “All I want for Christmas is fairness.” Finally, a young child from this city wrote, “My family is having a poor Christmas this year.” The budget will only increase the level of poverty and unfairness, but Sinn Féin will rise to the challenge of working with these communities.
The budget proposals announced by the Minister for Public Expenditure and Reform on Monday attempted to bankrupt local government, which Sinn Féin supports, as it is an essential part of democracy and provides services for local people. Local authorities have become over-dependent on the grant from central government to provide these services. The fund was essential, but now it has been cut by a massive 84%. This cut is made even greater when account is taken of the added cut of €4.5 million in the allocation for local roads and the cancellation of the local improvement scheme for roads. These cuts allow the Government to introduce the draconian household charge. Next week the Household Charge Bill will be introduced by the Government and Sinn Féin will do its utmost to stop it becoming law. The Government is attempting to force it through the Dáil before Christmas. This poll tax will be actively opposed by the public the length and breadth of the State. The household charge is unjust, unsustainable and unforgivable. On the one hand, consecutive Governments ensured local councils became dependent on central government for their funding and now the Government is cutting virtually all funding to councils. The Government’s own calculations would have us believe the household charge, if operational, will raise €160 million. This is a huge gamble. Any serious non-payment campaign will reduce this amount. Sinn Féin proposes a progressive tax system should fund local government and that it should be done on a phased basis.
The budget is a death sentence for many local authorities which are struggling to balance their books. This was proved only this week when the largest local authority in the State, Dublin City Council, decided to sell off the domestic waste collection service so as to raise much needed funds. This was done against the wishes of city councillors who on no less than three occasions voted to retain the service in council ownership. The irony is that Labour Party councillors voted in favour of the Sinn Féin motion but their masters in government subjected the city council to huge cuts in funding. It is both ironic and hypocritical.
The Government has cut funding for water services by 14% when we are supposed to be stopping leaks. This comes at a time when the Government is committed to introducing water rates. The capital budget for the Department of the Environment, Community and Local Government has been cut by €287 million. This includes cuts in the investment in water services of €65 million and in the rural water programme by €10 million, while there is no commitment to investing in water harvesting which aims to reuse rain water.
I take the opportunity to add my voice to those demanding that the Government reverse the cut in disability allowance. I received a telephone call from a constituent who is also a member of the National Disability Authority, urging the Government to call off its review and simply reverse the cut. We cannot cancel the need for equality. I notice that Deputy Kathleen Lynch, Minister of State with responsibility for disability services, has cancelled tomorrow’s meeting with the National Disability Authority. It is said a week is a long time in politics; it has been a long week for the Labour Party which is beginning to feel the heat.
The budget is a cold, callous and premeditated attack on jobs, the disabled, working families and marginalised communities. The challenge for us is to organise with the people to ensure the Government gets the same short, sharp shock Fianna Fáil received in February.
Deputy Michael Colreavy: I welcome some of the provisions related to agriculture in the budget. The encouragement provided to transfer farms to younger people is good, while the encouragement to form farm partnerships can be built on. However, the 10% reduction in the REPS, when added to stealth and other charges, will have a major impact in rural areas. It will make matters much more difficult for small farming families.
I regret that there is no commitment to the AEOS in 2012. The Government talks about people having certainty about the future, but there is no certainty for those coming out of the REPS who would have hoped to transfer to the AEOS. The reduction in the capital allocation for harbours is small compared to what the Government should have done — revise the upward only rent review legislation. This has been the cause of dereliction near harbours.
I want to paint a picture of the impact of the budget on ordinary people in counties Sligo and Leitrim and other rural areas in the north west. Those dependent on social welfare will be hit hard by fuel increases and septic tank charges. Some Members had a good laugh at this, but it is no laughing matter for someone facing a bill of up to €10,000 to replace a system.
People will be hit hard by household charges and are looking at a budget that includes no initiative aimed at job creation. Students from the region who attend Sligo IT will lose more than half of the grant they had last year because of the change to the proximity rules. Registration fees will increase and, unfortunately, we are getting back to the days where a quality education will only be accessible by the sons and daughters of the very wealthy. Is this what the Government really wants in Ireland in 2012?
Parents of children attending small schools — there are many throughout the north west — will fear the closure of these schools as they read the details of the budget. The Minister of State, Deputy Perry, promised publicly — I have a recording of it — that no small school would close on his watch. I will be watching to ensure he sticks to this commitment and hope he will deliver on it better than he did on his commitment to retain cancer services in Sligo General Hospital. Elderly people and their families are living in fear that the public nursing homes will be closed and that private nursing homes further away from their families and loved ones will be their only options.
Parents of young children will dread the reopening of schools because they will have to clothe their children and pay increased transport charges to get them to school. Young school leavers will decide to check their options to see what they will have to do to get to Australia. I do not believe the Minister’s colleagues in Cabinet understand the impact of cuts on community groups in rural areas. People getting a FÁS payment will now be disqualified from getting part of the disability allowance, which will mean some people will stay at home rather than go out and be activated and motivated among the community.
I predict there will be another set of unintended casualties in four years’ time for whom I have no sympathy — the Deputies who voted for these measures, particularly Labour Deputies. On Monday I watched with interest the body language as a Labour Minister presented harsh proposals for cuts in public expenditure. He outlined his attacks on the most vulnerable people in our society. Fine Gael backbenchers applauded him strongly while Labour backbenchers sat on their hands. Well done to Fine Gael and shame on Labour. What will they do in the budgets for 2013, 2014 and 2015 in order to continue to pay the ransom demanded by speculators? Over the next four years what damage will they do and to whom?
Deputy Dessie Ellis: Tá sé deacair a thuiscint na ciorruithe atá sa bhuiséad seo, go háirithe na hionsaithe ar dhaoine bochta agus ar dhaoine atá ag streachailt. There are few things that public representatives who seek to give leadership to their communities must always strive to avoid — they must avoid being callous, lazy or inconsiderate. The Government in this budget has shown it has forgotten these rules.
This budget is a failure. It fails the many people throughout our countryside, towns and cities who are struggling to hold their families, their communities or even just themselves together. It fails the masses of talented, motivated and proud young Irish people who see no option but emigration. It fails their parents and their friends. It fails the child who had it bad in the good times and now goes to bed without enough food in his or her stomach or enough heat in the house. It not only fails them but it says to them they do not matter, that all that matters are the numbers we can hand back to the ECB and the IMF and say: “Aren’t we the best boys and girls in the class?”
One prime example of how at the stroke of a pen Labour and Fine Gael wreaked havoc is the case of Finglas Meals on Wheels, which serves 600 meals a week to the vulnerable and marginalised in our society. It has been doing so for nearly 18 years and is now expecting not to be in operation come January. Finglas Meals on Wheels has 27 community employment scheme workers among its 33 staff. A massive 66% cut in the training and materials grant means the group will lose €27,000 euro from its break-even budget. Elderly people, and people with disabilities and mental health problems, which make them unable to supply themselves with a hot meal everyday, are the casualties of this stroke of the pen from the Ministers, Deputies Noonan and Burton. Last year in the cold snap Finglas Meals on Wheels did not fail to deliver one meal. Its workers pulled together and gave their all. They fulfilled what they see as their responsibility to these people and they did so with pride. If we had such selfless dedication, the same pride in the job of helping others and a feeling of responsibility in the Government as we have in the workers of Finglas Meals on Wheels, I guarantee this State would be in much better shape.
I also wish to raise the issue of the closure of Garda stations around the State including in my own area at Whitehall as well as the almost halving of opening hours at Santry Garda station. This will be done on the back of no impact analysis whatsoever. Dublin North West is an area plagued by the parasites of organised crime who live off the social and economic disadvantage rife in many parts of it. The closure of Garda stations and reduction of service provision in these areas will do very serious damage to the great efforts by local people to protect communities and make their areas safer. It will also make the job of gardaí much harder. It is also planned to have the same opening hours reduction in neighbouring Cabra which has also suffered from organised criminality and anti-social elements. In the 1980s my home place of Finglas and other working class areas of Dublin were left to the ravages of criminals and drug dealers, and the Government seems intent on giving history the chance to repeat itself.
Sinn Féin showed in its budget plan, which the Government had plenty of time to read, that these kinds of cuts were not needed. Drugs task forces are to be cut, as are youth services and community projects, some by as much as 7%. The Government now appears to be rowing back on cuts to young people on disability benefit following the pressure that was applied, but what was it thinking about when it made this announcement in the first place?
Minister for Justice and Equality (Deputy Alan Shatter): The justice and defence sectors, like all public sector areas, must contribute their share to the measures necessary to put our public finances in order. I will address the various constituent parts of the justice sector first and thereafter the defence organisation.
The justice sector has sustained significant reductions in expenditure in recent years, but I am pleased that, even in the current straitened economic circumstances, it has been possible to provide a gross budget of €2.317 billion to the sector for 2012, based on the Estimates published on Monday. The current expenditure budget is €2.261 billion and the capital provision is €56 billion.
There is, of course, a very high proportion of payroll expenditure across the entire justice family. Some 75% of all current expenditure is either pay or pension related and this portion increases to 90% in the case of the Garda Síochána. The remaining 25% of current expenditure is mainly operational in nature, accounted for by the running costs of the Garda Síochána, the Irish Prison Service, the Courts Service, the Property Registration Authority and the Department itself, together with a relatively large number of organisations and agencies which fall under the remit of the justice Estimate. In addition, the limited non-payroll budget must also meet the costs of demand-led areas across the justice sector particularly in criminal legal aid, immigration and compensation payments.
As in other sectors, there has been a reduction in justice sector expenditure in the period 2008 to 2011 in accordance with the Government’s overall fiscal target. The budget of €2.261 billion for 2012 will reduce to €2.198 billion in 2013 and to €2.083 billion in 2014. As a consequence, it has been necessary to make reductions across a broad range of areas within the justice family.
Significantly, despite the reductions effected in 2011, the most recent crime statistics from the Central Statistics Office for the third quarter of 2011 show decreases in 12 of the 14 crime groups for which figures are given, compared with the same quarter in 2010, including a 42% reduction in homicide, which includes a 9% reduction in the number of murders recorded; a 15% reduction in the categories of controlled drug offences; and an 11.3% reduction in weapons and explosives offences. The Garda is placing a particular emphasis on preventing and reducing burglary and providing a targeted response, having regard to locations, times, offenders and victims.
Fiscal sanctions and their enforcement are the responsibility of the Minister for Finance together with the Revenue authorities. However, the Garda Síochána continues to work in close co-operation with the Revenue Commissioners in tackling excise crimes, such as fuel laundering and cigarette smuggling, which have serious consequences for genuine businesses and for our communities in terms of longer-term availability of Exchequer funding for our social programmes. In addition, the link between such activity and the funding of organised criminal gangs continues to raise serious concern. During the course of this year, the Garda has been particularly successful in targeting these criminal gangs. The close relationship and co-operation between the Garda and the PSNI have played a particularly important role which, of course, is also of vital importance in countering the threat from the small number of subversives who continue to engage in acts of criminal terrorism.
For comparison purposes, and allowing for some technical adjustments around the transfer of functions between agencies in the past year, the justice Vote shows a €97 million reduction, 4.1%, on the corresponding allocation for 2011. Very challenging budgetary targets have been also set for the two following years. There is a significant transformation programme in place across the justice sector, including in all the main operational areas. The programme, which links closely with the Government’s reform agenda, is examining every aspect of how work is done and resources are deployed.
The programme for Government sets out a detailed legislative programme for the justice sector. We have moved quickly over recent months to drive forward key elements of the programme. For example, the Legal Services Regulation Bill, which was published by the Government on 12 October last, gives effect to key structural reforms of the legal sector, including those set out in the programme for Government. These structural reforms, which build on the recommendations of the legal costs working group and the Competition Authority, are also part of our national EU-IMF-ECB undertakings. When I briefed the troika recently on the Bill, they welcomed it as having met both the spirit and the letter of the EU-IMF-ECB memorandum of understanding concluded last year.
A new framework of independent regulation, together with many other modernisation measures in the Bill, represent an opportunity to bring the provision of legal services in the State out of the 19th and into the 20th century. The Bill will address the stark and pressing challenges of structural reform, national competitiveness and economic recovery that we, as a nation, face at this time. The Second Stage debate on this Bill will commence shortly. Its substantive provisions provide considerable protections for the consumers of legal services, greater transparency in relation to legal costs and a new modern framework for legal costs adjudication where disputes arise. It also provides for new structures through which legal services can be delivered, an independent disciplinary structure to address allegations of misconduct by members of the legal profession, and removes many of the restrictive practices from another century which to this day remain unchanged despite recommendations for reform made some years ago by the Competition Authority. The benefits of these reforms were well described by Isolde Goggin of the Competition Authority in last Sunday’s edition of The Sunday Business Post.
Following publication of the Bill, I arranged that copies of it be furnished to the Law Society and the Bar Council and invited both organisations to furnish to me any constructive amendments they considered desirable to improve the Bill. I also invited them to meet me. It is disappointing that seven weeks after publication of the Bill, no substantive proposals of any nature have been received from either body. I await with interest any submission that either may make. It is most disappointing that, rather than constructively engaging, both bodies have launched a campaign of opposition to the Bill. I note from newspaper reports this week that instead of constructively contributing to its development, both bodies joined in a conference alleging that the legal profession is under attack and that the Bill poses a threat to its independence. Neither is the case. There is nothing contained in the Bill which in any way prevents members of either profession from continuing to, as they currently do, provide legal services, but the alternative business model options contained in the Bill provide significant opportunity of employment not alone for currently unemployed solicitors and barristers but for those currently employed who are struggling to make ends meet. It also provides alternative mechanisms through which consumers can obtain legal assistance. There is nothing contained in the Bill which in any way interferes with the freedom of lawyers to represent their clients fully and properly and to take any action required in their clients’ interest, including actions against the State. It is time that both professions realised that self-regulation is no longer acceptable and that independent regulation is in the public interest and is Government policy. The constant refrain that all proposals of reform affecting the legal profession are a threat to its independence is rapidly becoming a debased currency.
Unfortunately, it has not proved possible to bring the proposed landlord and tenant (business leases review) Bill before the Dáil. Earlier this year, I brought before Government proposals to provide relief for tenants whose businesses might otherwise be viable were it not for the adverse impact of the commercial rent paid by them being significantly above prevailing market levels. However, it was the view of the Attorney General that this particular approach gave rise to significant constitutional difficulties. The Government was advised that any model would require the payment of compensation to landlords whose rights were infringed to ensure that the proposal would be compatible with the Constitution and the European Convention on Human Rights. Given the current economic circumstances, the Government is strongly of the view that payment of compensation to landlords in such circumstances could not be justified.
The Minister for Finance spoke yesterday of the role that NAMA can play in dealing with the problems caused by upward-only rent reviews where they apply to NAMA properties. NAMA has now published its policy guidance which provides it with an opportunity to approve rent reductions where rents are in excess of market levels and the viability of a tenant’s business is threatened. The policy provides for the appointment of an independent valuer to ascertain current market rent. I welcome NAMA’s pragmatic approach to this matter. It is a model which I would commend to those landlords who have yet to engage with their tenants and yet to accept the fact that current market realities require a greater measure of flexibility than has been shown heretofore. I hope that the now announced decision will remove the uncertainty for those contemplating investment in the commercial property market and bring about renewed activity in this sector.
The personal insolvency Bill will provide for a new framework for settlement of debt and for personal insolvency. The commitment under the EU-IMF programme of financial support for Ireland is to publish the Bill in the first quarter of 2012. The heads of the Bill are at an advanced stage and I will be presenting them to Government later this month for approval and formal drafting by the Office of the Parliamentary Counsel. It is also my intention to refer the scheme of the Bill to the Committee on Justice, Defence and Equality for consideration. Reform of our insolvency law was recommended in the recent Keane report as one of the critical elements which could contribute to assisting certain persons in mortgage arrears difficulties. I anticipate that the development of new statutory approaches to insolvency will encourage financial institutions to adopt more realistic alternative methods of reaching agreements directly with their clients who may be struggling with significant debt problems.
The Garda Síochána budget for 2012 will be €1.425 billion for gross current expenditure and €20.4 million for capital expenditure. This is a reduction on the budget for 2011. I fully recognise that it will be challenging. The Garda Síochána participated in the comprehensive review of expenditure which recently concluded. The review provided a basis for the Garda Commissioner to assess how policing services are currently delivered and to identify the scope for introducing new efficiencies. As the Garda Commissioner has stated, the Garda Síochána, like every other part of the public service, has had to examine how it does its business to identify savings within a reduced budget and to provide a policing service with greater efficiency.
The Garda Commissioner’s examination covered every aspect of policing activity, including courts, escorts, protection posts, training, civilianisation and specialisation, as well as the opening hours of Garda stations in Dublin and across the country. Arising from that examination, the Commissioner submitted to me his policing plan which details his priorities for 2012 and provides for the closure of 31 Garda stations throughout the country and for a reduction in public opening hours of ten Garda stations in the Dublin metropolitan region. It also formally recognises the closure of eight other Garda stations which, while still listed as Garda stations, are already non-operational and will not re-open.
The policing plan has been laid before the House and I have made public the details of the stations to close and those with reduced opening hours. These changes are part of a process of reform designed to ensure that resources are focused on front-line operational services and that the best possible policing service is maintained. The Garda Commissioner has publicly stated that resources could be better deployed and more effectively used on the front line if these particular stations no longer had to be staffed and maintained. Those who argue against any station closures must contend with the professional judgment of the Garda Commissioner that the closures will result in a better use of resources.
Ten Garda stations in Dublin, currently open to the public on a 24 hour basis, will from January next be open to the public from 8 a.m. to 10 p.m. daily, the hours when the vast majority of visits to Garda stations are made. This means gardaí, rather than being behind the public counter in stations at night when there is very little demand for that service, will be freed up for front-line operational duties. The number of closures is small compared with the 703 Garda stations listed throughout the country, including 47 stations in the Dublin area. These are high figures by international standards. They have hardly changed since the foundation of the State despite huge advances in transport, communications and technology in recent years. I expect that there will be further rationalisation of Garda stations in the years ahead.
In the context of a reduction in Garda numbers, it should not be forgotten that there are 2,141 whole-time equivalent civilians working in the Garda Síochána who not alone bring hugely valuable skills to the force but also make it possible for gardaí to be released for front-line policing, thus increasing Garda operational strength. In addition, we have almost 900 members of the Garda Reserve who are not a replacement for gardaí but an extremely valuable support, freeing up gardaí for more front-line policing. The Garda Síochána now has much better equipment and technical capability than in past years. In particular, the PULSE system has been developed into an extremely effective resource for every member, while Garda communications have been transformed by the recent introduction of a digital radio system. These are all factors which must be taken into account when considering a reduction in Garda numbers. We will still have a strong and capable force which will have a presence throughout the country, but it will be a force which will be deployed more efficiently and which will deliver a policing service more effectively.
The prison Vote, the gross allocation for which is €336 million, is made up of current expenditure of €312 million and a capital budget of more than €24 million. Despite significant efficiency savings through revised staffing arrangements and other savings in areas such as procurement, the demands on the Prison Service continue to grow.
There has been a constant increase in the total prisoner population in Ireland over recent years, with dramatic increases in the number of sentenced prisoners and those being committed on remand, as well as a trend towards longer sentences. The number of sentenced persons committed to prison annually has increased by 145% since 2005, rising from 5,088 then to 12,487 now. The average numbers in custody rose by 11.84% between 2009 and 2010 and while the increase in the current year is not as dramatic, the trajectory is still upward.
It is crucial, therefore, that the outstanding progress being made under the transformation programme in the Prison Service be sustained. Under the programme, the service will deliver savings of €21 million in payroll costs alone in terms of cost avoided due to increasing prisoner numbers and new prison spaces coming on stream. In other words, in the absence of the transformation agreement, the Exchequer would have been obliged to provide an additional €21 million in payroll funding because of the increased demands on the Prison Service. I refer to costs of €10 million in 2011 and €12 million in 2012, rising to €21 million for each of the years 2013 and 2014.
It already is known the Government next year is not in a position to proceed with new construction works at the Thornton Hall site or at Kilworth in Cork. However, it has been possible to make provision in the 2012 estimates to complete the current construction work in the Midlands Prison and in the Dóchas Centre, which together will provide approximately 370 much-needed additional prison spaces.
The Courts Service’s current expenditure allocation of more than €98.39 million for 2012 shows a reduction relative to 2011. The service also has available a capital allocation of €7.7 million for 2012. The Courts Service is undergoing a multifaceted transformation programme including the restructuring of court offices into unified multi-jurisdictional structures, for example, through combining District Court and Circuit Court offices, the rationalisation of court venues, the centralisation of certain functions, the greater use of information technology systems in court proceedings and the development of the role of county registrars. The Courts Service also is reviewing on an ongoing basis the network of court venues it provides. While the provision of court venues obviously is a matter for the Courts Service and board, I fully support this review, particularly in the current financial climate, when we must find all possible ways to optimise the use of resources.
The justice and equality Vote has a gross allocation of more than €395 million available in 2012, as well as a carry-over of unspent capital from 2011 of €460,000, which is being allocated to the Forensic Science Laboratory. The justice Vote covers nearly 60 subheads and includes allocations of funding to agencies and organisations in the areas of integration, equality, disability and human rights, charities, youth justice and others. The allocation for 2012 represents a reduction of €15 million on the 2011 figure and, in allocating the available funding, priority will be given to those organisations that are actually providing front-line services. This means there will be limited funding available for non-governmental organisations that are largely engaged in an advocacy role.
It is, therefore, with regret that I have had no option but to reduce funding to bodies such as the National Women’s Council of Ireland and have withdrawn funding from the umbrella group, People with Disabilities Ireland, where a disproportionate amount of funding was absorbed by administrative overheads, so that funding may be maintained, in so far as possible, for other bodies supported by my Department in providing front-line services tackling complex and difficult issues such as domestic and sexual violence and to organisations providing assistance to victims of crime such as, for example, Women’s Aid, AdVIC and Support after Homicide. The National Women’s Council of Ireland has now received considerable philanthropic funding to support its work and I believe the reduced contribution from my Department is adequate to enable the council to contribute on behalf of the women of Ireland to the ongoing programme of Government activities that aim to achieve de facto gender equality, principally through the implementation of the national women’s strategy.
It has been possible to increase the provision for some areas, such as the Forensic Science Laboratory, the Criminal Assets Bureau and State Pathology Service, relative to 2011 expenditure levels. I am determined, in so far as possible, to maintain the funding levels in these key areas, which are crucial in the fight against crime. The Criminal Assets Bureau, for example, together with other specialist Garda units, is to the forefront in the fight against serious and organised crime and utilises the proceeds of crime legislation and other legislation to appropriate the ill-gotten gains of criminals for the benefit of the State.
I also am conscious of the need to maintain funding for the probation and youth justice services at in or around 2011 expenditure levels because of the very important work these organisations carry out. The Probation Service provides cost-effective alternatives to custody that I am determined to continue and grow during my time as Minister. The Youth Justice Service, while providing places of detention for young offenders, also administers and funds a range of essential diversion and community-based programmes. These programmes aim at deterring young people in particular risk categories from getting involved in crime.
The challenges in the justice Vote are reflected in the budgetary reductions in areas such as criminal legal aid and the immigration and asylum areas. In 2011, the former Minister for Finance made available €47 million for the criminal legal aid scheme. The estimated outturn at the end of this year will exceed €57 million, approximately €10 million more than budgeted for at the start of the year. The need to contain the costs of the criminal aid scheme in the public interest, while also ensuring that the rights of alleged offenders are fully protected, resulted in my being obliged to reduce fees payable under the scheme this year. However, following the Director of Public Prosecution’s decision also to reduce fees payable to prosecuting lawyers, parity of fees was maintained as between the prosecution and the defence.
A provision of €47 million has again been allocated for criminal legal aid in 2012. Given the likely outturn for this year, this allocation represents a considerable challenge to achieve essential savings. In this context I find the threatened strike action from the newly formed Criminal Law Practitioners Organisation, CLPO, to be absolutely extraordinary. This organisation, last September, expressed concern that the principle of parity in respect of legal fees would no longer apply to lawyers representing both the prosecution and the defence. As previously explained, this concern proved groundless. Until the formation of this new organisation, issues of this nature were addressed by my Department in dialogue with the traditional representative bodies of the legal profession, namely, the Law Society of Ireland and the Bar Council of Ireland. Although both bodies have naturally represented the interests of their members when cuts have arisen, both bodies, and indeed their members, generally have demonstrated the responsible attitude one would expect from the legal profession in these very difficult times.
The contrasting approach of the newly formed Criminal Law Practitioners Organisation has been marked. Bearing in mind its leadership comprises some of the highest earners in the criminal legal aid scheme, I must deplore the threat made last Friday to withdraw services tomorrow from criminal legal aid clients. Although I believe that with more than 2,000 solicitors and 850 barristers on the legal aid panels there will be adequate representation available, I am concerned and astounded by this proposal to withdraw services from clients who have been granted criminal legal aid by the courts and assigned legal representation and who have an expectation of being appropriately represented by their legal team in court. I should add that whether lawyers are entitled under the law to undertake this kind of action is extremely questionable. I understand the Competition Authority wrote yesterday to the CLPO expressing concern about a potential infringement of the Competition Act. I have previously invited the Criminal Law Practitioners Organisation to furnish its proposals for reducing the cost of criminal legal aid, while continuing to ensure the rights of defendants are properly protected. To date, that organisation has failed to furnish me with any substantive response to this request. The conduct of this organisation to date starkly illustrates the need to implement reforms with regard to the legal profession and to enact the Legal Services Regulation Bill to ensure proper competition in the provision of legal services.
A significant transformation programme is in place right across the justice sector and in this context, I am pleased I already have got a number of initiatives off the ground that are aimed at ensuring more streamlined interaction between the various areas in the criminal justice sector. A programme of structural reform also is being furthered in the immigration and asylum areas with the objective of achieving a more streamlined and cost-effective operation, while also maintaining the transparency and high standards pertaining to our current immigration process. A key catalyst for further measures in this area will be the passage of the residency and immigration Bill through the Oireachtas in the new year.
In line with the Government’s proposals for the rationalisation of State bodies, the arrangements for the merger of the Equality Authority of Ireland and the Irish Human Rights Commission are proceeding. It is expected that the pooled resources of the organisations will provide a strong and vibrant body that will promote human rights and equality issues in a more effective, efficient and cohesive way.
Arising from one of the proposals in the comprehensive review of expenditure report, the funding provision for the Legal Aid Board has been streamlined in the current Estimates, with the allocation for the Refugee Legal Service being amalgamated with the grant-in-aid provision for the board. In this context also, €2.8 million has been included in the Legal Aid Board subhead for the Family Mediation Service, which reflects the change in responsibility for this service in November this year. I am pleased we are able to maintain funding in 2012 for civil legal aid and for the Free Legal Advice Centres, FLAC, at 2011 levels.
Turning to the defence area, it faces difficulties that are very similar to those in justice, when it comes to maintaining operational effectiveness within reduced budgetary allocations. The defence organisation has a proud record of reform and modernisation, unique within the public service. In the past decade defence expenditure has reduced in real terms while capabilities and services have been improved. The task in 2012 is to make the changes necessary to maintain operational effectiveness within a restricted financial allocation. Achieving this task will require a firm commitment to change, prioritisation, cost reductions and effectiveness. I know the Defence Forces, in which we should take great pride, are up to this task, and will in 2012, with courage and dedication, continue to play an important role in peacekeeping duties abroad and in their domestic duties at home when required. Because the Defence Forces have downsized faster than the rest of the public service and are already 11% below the 2000 strength level, the Government has decided that there will be no further reduction below the strength level proposed in the comprehensive review of expenditure. While the strength will be maintained at 9,500 there will be a major streamlining of the organisation.
The reorganisation of the Defence Forces in the context of the reduced strength will prioritise front-line service delivery. This will include a reduction from three to two in the number of Army brigades, which will free up military personnel from administrative and support functions. The reduction in the number of Army brigades will require a redefining of territorial areas of responsibility. Further barrack closures are not envisaged as part of this process. I have asked the chief of staff and my Secretary General to prepare reorganisation proposals for my consideration. This will also include proposals relating to the Reserve Defence Force, which is currently organised along similar lines to the Permanent Defence Force.
The recently announced barrack closures are a key element in absorbing the reductions in the strength of the Defence Forces while minimising the impact on front-line services. The consolidation of the Defence Forces formations into a smaller number of locations has been always a key objective of the defence modernisation programme. The location of personnel in a large number of locations has created major difficulties in the provision of collective training, while the manning and security of non-essential barracks takes personnel away from operational duties. It also imposes unnecessary costs and overheads on the Defence Forces in terms of barrack management, administration and maintenance.
In addition to the reduction in strength, a range of cost reduction measures are being introduced to deliver savings. These include the reprioritisation of equipment plans and associated planned reductions in procurement expenditure. A recent re-examination of the defence ten-year equipment plan has identified the minimum priority equipment required up to 2017 which will inform equipment purchases in 2012. The procurement of the two naval vessels will continue from within the reduced defence allocation. The first new naval vessel is scheduled for delivery in early 2014 with the second following one year later.
There is no escaping the fact that difficult decisions will continue to have to be made until we get our public finances back in order. That being said, I am confident that, with the resources available and through the changes in the way in which both sectors do business, we will maintain viable and effective justice and defence sectors in the challenging times ahead.
In the context of the defence sector, I am glad the Government has made a decision to ensure that the strength of our Defence Forces remains at 9,500, that there will be no further barrack closures in the next number of years, and that planning to switch from a three to a two brigade structure can take place in a certain environment in which the funding available to the defence establishment for the next three years is clearly known and where there is a degree of certainty with regard to numbers and barracks, and that there are no further issues of barrack closures arising for members of the Defence Forces, save for the four already announced.
Deputy Maureen O’Sullivan: I listened to the budget speeches delivered by the Minister, Deputy Howlin, and the Minister, Deputy Noonan and, as usual, I listened with an open mind. Because I am on this side of the House does not mean I will automatically disagree with everything I hear from those on the other side. There seemed to be principles around which the budget would be based, namely, fairness, reform, social inclusion, protecting the most vulnerable, dismantling barriers to employment, openness, transparency, accountability, ensuring a fair distribution of the tax burden and to get Ireland working again, all of with which I agree. It appeared we were moving in the right direction towards a more equal society, but it was a different story when it came to the small print, the further details in the comprehensive expenditure report and the budget. It is difficult to reconcile those principles with what is contained in those two documents. They both seem to be guided by so-called “obligation to pay €1.25 billion to unguaranteed senior bondholders” while many cuts are being imposed that will hurt the poor and the vulnerable. I read an article by Brother Kevin of the Capuchin Day Centre in Dublin which feeds several thousand homeless people in this city. He made the point that two or three years ago the centre gave out approximately 400 food parcels of a morning; last week it gave out 11,000 on one morning. I share his concern that the Government will penalise the underprivileged.
If we continue with the payment to bondholders, could we not at least tax the transaction of the transfer of the money? This group of bondholders are earning money, so they should pay tax or at least give a percentage back if the Government is to continue paying them. After all, the bondholders are getting all this money but they are certainly not creating jobs.
Multinational companies and very large Irish companies have set up businesses here. They can transfer profits to an Irish company in a tax haven with even more liberal laws than we have. Again, at a minimum could we not impose a tax on transactions transferring this money? This brings me to the issue of corporate tax. Could we at least ensure the full 12.5% is collected? It is difficult to get specific information on this. I tried to find out exactly how much corporate tax TalkTalk in Waterford paid but without success. Seemingly it was worth €3.9 billion in 2009 and that is when it was not all being collected. Some multinationals pay, on average, between 4% and 7% corporate tax here. I spoke on this issue in the last Dáil and I was the only person with any reservations about corporate tax. My concern is that we have become a tax haven for countries that do not pay their just taxes in the country of origin and now we are also allowing companies to avoid paying their just taxes in this country.
Turning to education, I thought it was great that the pupil-teacher ratio was being maintained but I received telephone calls from five junior primary schools in Dublin Central who will all lose teachers in the next few years. They will lose their support teachers and a few of those schools will lose that special teacher who deals with students with emotional distress. They face a dire situation. Those schools were fortunate in having quite a number of additional programmes which greatly benefited the literacy and numeracy skills of their students but that is now being undermined. There are no reductions in the overall number of special needs assistants and resource teachers, but fee paying schools are still being funded disproportionately compared to schools in disadvantaged areas.
Having worked as a guidance counsellor as well as having taught a subject, I know the work of a guidance counsellor very well. In a sense all teachers have a guidance role because teaching is not only about imparting knowledge or skills but about the well-being of the student. The guidance counsellor has a particular role. There was a battle to get the position ex-quota with an allocation for schools with under 500 pupils but that is now lost. The Government can dispense with guidance counsellors if the Department can provide the support services that every school needs to deal with the problems, behaviours and the issues presented by students. Schools do not have the services of psychologists, therapists, counsellors, career advisers and support groups; the guidance counsellor provides an invaluable service in that regard. With the plans for guidance counsellors, extra pressure will be put on schools. In practically every school I know the students are under additional emotional stresses and psychological distress, and they are now being abandoned. Yet we continue to go along with the quango of the Teaching Council and I have yet to meet a teacher who considers the fee of €90 a year to be value for money.
I welcome the capital programme, that schools will be built and that plans are being made to accommodate extra students. I hope that Gaelscoil Bharra which has operated from prefabs for many years will finally get the school that has been approved.
I cannot understand how a government would target a cut at any person with a disability, regardless of his or her age. It is most inhumane. I have said consistently that those with mental health issues, disabilities and their carers should not have an additional stress regarding the budget. They should be sacrosanct and I welcome that the Government is re-examining this. However, it should not have been in the budget in the first place. There are people with severe disabilities and multi-disabilities who will not work and they are entitled to an allowance that will permit them to live in dignity. Losing €88 a week and €44 a week is very significant for these groups.
The cuts in grants for community employment schemes will have detrimental and disastrous effects. These grants were used for materials and training to facilitate the delivery of courses in personal development, education, parenting, after-school services, services to the elderly and the disabled. Many on these schemes were early school leavers who got caught up on drugs or were homeless. The community employment schemes were a real way for people to train and acquire skills and were an opportunity for second chance education and to acquire literacy and numeracy skills. Many people have used it as a first step on the ladder to further education. The effect is that lone parents or those with a disability allowance will not be able to keep their allowances if on a community employment scheme.
Yesterday, I attended a lunch for senior citizens who were generally optimistic. They stated that they were prepared to take their cut, but the fuel allowance is a serious matter because they fear they will not have enough and this is causing distress. They will hold on to what they have in the fear that it might run out and this is causing many problems for them.
I voted in favour of the increase in excise duty on cigarettes and I would have supported an increase in excise duty on alcohol to address the availability of cheap alcohol. Every report, committee, community, health service and addiction service is in favour of this. Cheap alcohol, illegal cigarettes and regulated tablets are leading to shattered lives in Dublin’s north inner city. Alcohol Action Ireland states that an increase would have generated €178 million.
I welcome the additional €35 million for mental health services to further advance A Vision for Change with the emphasis on eating disorders, early intervention in psychosis and suicide prevention including self-harm, which are areas which have long been neglected. I hope the HSE will take on the good practice of organisations such as Pieta House, the Oasis Deora project, Bodywhys and the eating distress counselling service in Fairview. I do not think the budget was fair and this is the bottom line.
Deputy John Halligan: The budget will be best remembered as an attack on the little people. These are low and middle income families, lone parents, the disabled, the elderly and small business owners. The budget will leave a legacy of fuel poverty. A generation of lone parents and families are being abandoned by the State and less well-off students are expected to survive on just more than €1 per day. This makes a mockery of the notion that education is the right of children. The resounding message is that the poorest will pay the most.
Once again the burden of adjustment falls disproportionately on those less able to bear it. Our most vulnerable are taking the pain for the greed of the ruling classes. I ask the Government to please not blame it on the EU and IMF. They did not tell the Government to cut child benefit for the third child or to reduce fuel allowance. The proposed 2% cut in funding to higher education is contrary to IMF policy which states that investment in this area helps future recovery in countries in economic difficulty.
Some weeks ago Social Justice Ireland, a respected and highly regarded organisation, made its budget submission. I have been informed that it has not even been given the courtesy of a response by a Minister. This is no wonder given the statistics it presented. A total of 628,781 people, 210,000 of them children, live in poverty, with hundreds of thousands more living on the edge. How can this be? How did it come to this? Ireland is now the seventh wealthiest out of 27 EU countries according to EUROSTAT 2011. It has the second highest proportion of millionaire households in the EU according to a Boston Consulting Group report of 2010. The 300 richest people in Ireland have a combined net worth of €50 billion according to the Sunday Independent rich list of 2010. The number of high net worth individuals rose by 5% last year according to the global wealth report.
Who speaks for the hundreds of thousands in the categories of the marginalised? Who speaks for the low paid, the single mothers, the elderly and the unemployed? It is certainly not the so-called pillars of society namely the trade unions, the major political parties and the church.  They have been abandoned by these groups who see no injustice, speak no injustice or hear no injustice. This is why so many are in the cold grip of helplessness. With the exception of small groups such as the Society of St. Vincent de Paul, Social Justice Ireland and those of us on the political left they have no voice. Many of those struggling to survive have given up on politics, which suits the large political parties as very many of them do not vote and if they did they would probably vote against the status quo.
The trade union movement will not march on the Dáil on behalf of these people. Come to think of it, the trade union movement will not march on anybody’s behalf; it would be an embarrassment to the leadership whose ideology is probably most linked to Fine Gael, the Labour Party and Fianna Fáil as it has spent so many years snuggling up to successive Governments. The church spends most of its time promoting a mythical Shangri-La in the next life instead of dealing with the harsh realities of how people live in this life, and it calls them its flock. With no leadership from the aforementioned many decent people are bewildered and demoralised.
The Manic Street Preachers sang, “If you tolerate this your children will be next”. What we have tolerated is gambling and robbery from the banks, greedy developers deliberately inflating house prices, corrupt politicians, austerity measures which have destroyed people’s quality of life and broken promises that continue with the present Government.
The previous and present Governments have picked a fight with children through cuts to back to education allowances, fuel allowances, disability payments and child benefit. The Government has waged war on the most vulnerable in our society who cannot fight back. They cannot threaten to take their money from the country or to cease to give political donations. This Government, like the previous one, is bleeding families dry.
I have addressed many meetings in my constituency and believe the tolerance level of people is wearing thin. The man working all week with a wife and children at home does not even have €10 disposable income at the end of the week; the aspirations of a young couple in love are shattered because they cannot afford a house; a mother and father cannot properly feed and clothe their children; and a Waterford Glass worker made redundant after working 30 years had to wait six months for a social welfare payment and a year for redundancy payment, and suffered a pension cut.
The day might very well be fast approaching when the hundreds and thousands of people unjustly treated in Ireland may not need the trade union movement, the church or the political parties to rise up and vent their anger and frustration on this unjust society. This day will come. I have always believed that the quality of life in any country is not judged on its wealth, its historic sites or its beautiful scenic places. It is judged on how people live and the quality of their day-to-day life. Ireland today is not a good country in which to live.
Deputy Seamus Healy: During the course of the general election we were told time and again, particularly by the Labour Party but also by Fine Gael, that the vulnerable would be protected by the Government. However, this budget gives the lie to this. It is a vicious assault on the elderly, the sick, the disabled and middle and low income families. It is a massive reneging on promises made during the general election. The Government is pursuing the very same failed policies of Fianna Fáil and the Green Party and is making middle and low income families and the poor pay for a recession they had no hand, act or part in creating. The Taoiseach stated recently during his television address that they were not responsible for this recession. However, he did not tell them they would still have to pay for it. Austerity is not working. It is driving down domestic demand as well as creating mass unemployment, high welfare costs and low tax revenues. That is being done to pay borrowed moneys to bondholders and speculators, and make interest payments. The wealthy are being protected while working people and the poor are being made to suffer. That is based on a policy that is deepening the recession and making the economic crisis worse.
The Government claims it has no alternative to this, but there are choices. The super-rich are being protected while those on low and middle-incomes, and the poor, are being made to pay for this recession. There are choices. The Government could have chosen to tax the super-rich but chose not to. It chose to allow a golden circle — the top 5% of super-wealthy cronies — to get off scot free. There will not be an additional cent of taxation from this very wealthy section of society.
I put on record the proposal I and members of the United Left Alliance made concerning a wealth and assets tax. We believe €10 billion could be collected from the top 5% of the very rich — people who have €219 billion of personal assets. Even if taxed to the tune of €10 billion, they would still be among the super-rich and have in excess of €200 billion of assets. This wealth tax is practical, workable and, above all, fair. It would make very wealthy people pay their fair share of taxation.
Ireland is not a poor country. There is huge wealth but it is distributed badly and in favour of wealthy people. I will cite figures which are not mine or those of any partisan, political party, organisation, group of individual. They are independent figures from our Central Statistics Office, which is a Government service, and the Revenue Commissioners. They are bang up to date from the end of 2010 and have only been recently published. According to the CSO figures, the earnings of the richest 20% in this country have risen from 4.3 to 5.5 times those of the lowest 20%. That is unprecedented in recent decades. There is a huge growing gap between rich and poor.
The CSO also tells us that financial assets in 2009 and 2010 have increased by €45 billion. Credit Suisse’s global wealth report, published last month, states that the top 1% of super-rich in Ireland have assets of €131.5 billion. That report also says that the top 10% of super-rich in Ireland have assets of €219.3 billion. Yet not a cent in tax has been taken from them in this budget. These are personal assets, not business ones.
In proposing this wealth and assets tax we are not talking about ordinary people whose life savings are invested in the local credit union, bank or any other financial institution. Neither are we talking about someone with a lump sum from a redundancy or retirement package. We are not talking about those who may have bought a house, or even two houses, to provide for their family in retirement. We are talking about people who own apartment blocks, shopping centres, yachts and helicopters. Even if €10 billion in tax was taken from these super-rich people, they would still be super-rich with assets of more than €200 billion. We will exempt those with incomes of less than €100,000. Therefore the tax would only apply to people earning more than €100,000 and with assets in excess of €1 million. It would exclude the family home and family farm.
This tax has been, and is being, operated in other European countries, such as Norway, Switzerland and France. Fine Gael introduced such a measure in the 1970 budget via the then Minister for Finance, Mr. Richie Ryan. It was subsequently abolished by the people in Fianna Fáil who are not even here to listen this evening.
Deputy Thomas Pringle: This budget is testament to putting things on the long finger and is simply pushing everything down the line. It lacks leadership, insight and foresight. The good-cop/bad-cop routine played out over two days in soap-opera style — so bad, they had to play it twice — did nothing except to pick on the same old reliables: low income earners and vulnerable families. It demonstrated the inability to think, decide and govern in an appropriate manner befitting this country. It also lacks fairness. The budget will be economically unproductive, just as the tax estimates for November were undershot by €500 million.
There is no emphasis on job creation, but the budget is full of tokenism. Between consumer stealth taxes and VAT increases, everyday household bills — such as telephone bills, home heating oil and petrol — an average household could face increased outgoings from €900 to €1,000 next year. This comes with an increase on school travel and the Minister for the Environment, Community and Local Government, Deputy Phil Hogan’s, €100 household charge is all disgraceful.
Cuts to the fuel allowance and reducing the winter-time period are an absolute disgrace. The Government is saying that people may freeze, rather than burn the bondholders. Yesterday, a book of grievance was delivered to Leinster House from the Kilbarrack community development project, an after-school children’s project. It is part of the community and voluntary sector’s nationwide campaign. Seven children came up to the Dáil gates, representing 63 families. These are two comments from the book: “Not a lot of people have money, and they have no jobs”, said Jodie, aged eight. “We cannot afford to write Santa a letter; my Mam lost her job as an SNA”, said Lauren Carroll, also aged eight. These are the people whom this budget is directly affecting.
With no increase of tax on high earners, the Government’s own €100,000-plus advisers will not take any pro rata burden sharing. The proposed cut to disability payments was a slur and an insult to human rights. I recognise that the Minister is now indicating that this measure will be withdrawn but it beggars belief that it would even get in there in the first place. This was a headline cut.
Parents with adult children in third-level education will be brought to the edge with fee increases and a reduction in the maintenance grant of 3%. Abolishing foreign language teaching in schools when we need it most, is especially ill thought out and regressive. Now, more than ever, we need people to be able to talk to Sarkozy and Merkel in their languages. How do we expect to produce graduates by attacking students and cutting guidance counsellors in schools? This beggars belief.
This budget will create unemployment. Between 15,000 and 20,000 jobs will be taken out of the economy due to the end of capital investment projects. Some 6,000 public sector jobs will also be gone. That is an estimated 20,000 plus extra people on social welfare, at least.
The rebuttal of duty in opting out of rent reviews has been cowardly. This is a huge issue but the Government opted out and put it into NAMA, which is the new bogeyman in Ireland. In conversation, did the Ministers, Deputies Noonan and Shatter, consider how to get rid of the local butcher, baker and candlestick maker who cannot afford the rents anymore? Did they stick them into NAMA so that nobody would know what to do? Businesses and livelihood are going bust every day because of these rent reviews, to the shame of the Government.
The motor tax increase is a knife in the back to all, especially those in rural constituencies like Donegal South-West where people will be broken by fuel costs and a lack of public transport. The Government does not have to look too far for an example of how much travel is required in Donegal, as a Minister of State, Deputy Dinny McGinley, has repeatedly been in the top ten claimants of mileage expenses; the people of Donegal and the rest of the country cannot claim their mileage.
Deputy Thomas Pringle: It flies in the face of recent launches of the Minister for Transport, Tourism and Sport, Deputy Leo Varadkar, who in promoting tourism asks people to visit Ireland but they should not drive or hire a car or bus because they simply cannot afford the petrol and diesel.
The amnesia of the Government is palpable as it holds the export economy as the bedrock of growth. It must have forgotten that exports need to get to sea ports and airports, and we will watch as this erodes the haulage and export markets. I put it on record that this coalition Government has just kept saying that the problems were not of its doing, and this mantra will be followed with weakness when we need strength. The protection of vested interests will be continued. Bankers and chief executives of State and semi-State agencies who decried salary caps have not been touched. They are not carrying their share of debt. This budget stands as testament to the smoke, mirrors, spin and downright lies told to the people on the canvass last February.
Deputy Leo Varadkar: As the Minister for Finance recalled in his speech, yesterday was the 90th anniversary of the signing of the Anglo-Irish Treaty and the restoration of Ireland’s independence as a nation. This time last year, Ireland lost her sovereignty and was forced to enter into a programme of financial support provided by the IMF and EU following a decade of greed, excess and misgovernment. The task that falls to this new Government is evident. It is to restore Ireland’s independence in the short term and our prosperity in the long term. Ninety years since independence, this new Government faces a challenge almost as daunting as that faced by our forbearers, who founded this State and provided its first Government. Some — one as recently as last night — shirk that challenge but in contrast, we welcome it.
No Government wants to raise taxes or reduce spending. It will not make us popular and we are not doing it because we believe that it will create jobs or stimulate the economy. We are doing it because we cannot afford to fund the State. We have a structural deficit of €12 billion, which has nothing to do with banks, bondholders or even the interest on our national debt. The €12 billion figure is the gap between what we take in taxes and other revenues on the one hand and what we spend on public services, pensions, welfare and infrastructure on the other. The IMF and our EU partners are making up the difference but they will not do so forever and we will have to get by with reduced support in 2012. We have to wean ourselves off borrowing, not because the troika say we have to but because it is in our best interests to do so before our debts overwhelm us, and that is what this Government intends to do.
The budget deficit fell to 10.1% of GDP in 2011, ahead of target, and as a result of the measures in this budget will fall to 8.6% of GDP in 2012. Despite the fact that there were almost €6 billion in adjustments in the 2011 budget, the harshest budget ever, the economy returned to growth. If any in this House still believes that we cannot have austerity and growth at the same time, this is their answer. The only recovery that really matters is one in which employment increases and living standards rise, and that is some way off.
A major newspaper today led with the headline that “The Government had decisions to make but made the wrong ones”. That is an opinion but the decisions we made in the 2012 budget flowed from the mandate given to us by the Irish people in the general election. We said that we would continue the work of reducing the deficit through a combination of growth, taxes and reductions in spending, and we are doing so. We said we would do this through a greater share of reductions in spending and a lesser share of tax increases, and that is what we are doing. This budget contains €1 billion in new taxes and €2.2 billion in current and capital spending reductions.
We said we would protect incomes by not increasing income tax, PRSI or the universal social charge. We have done better than that by removing the universal social charge from more than 300,000 low income, part-time and seasonal workers and by avoiding any reductions in basic rates of social welfare including jobseeker’s, pensions, carer’s and disability allowance for existing recipients. We said we would increase mortgage interest relief for those hard-pressed first-time buyers who bought a home between 2004 and 2008, when the property bubble peaked, and we have been true to that promise.
It is worth recalling that the alternative four-year plan put forward by Fianna Fáil and the Greens and agreed with IMF and EU would have resulted in more than €800 million in social welfare cuts rather than €475 million announced this week and would also have resulted in an increase in income tax for almost everyone. The alternatives put forward by other parties envisage a world that does not exist, as it would have no financial markets and wealth would not have to be created and distributed. In the Government we do not have that convenience, and we must deal with the world as we find it.
I will now turn to the detail of my Department’s Estimates for 2012. My Department engaged with the Department of Public Expenditure and Reform in the comprehensive review of expenditure undertaken this year. In accordance with that process, a detailed review was undertaken of all of the spending programmes falling within the responsibility of my Department. The submissions made as part of that process, which provides the backdrop against which the 2012 Estimates were agreed have been published on that Department’s website and that of my Department. Throughout this process I have recognised the need for my Department to deliver on its share of the required reduction in public expenditure. Ministers should not operate in silos and all Ministers must see the bigger picture. Our role is not to act as a lobbyist on the behalf of the sectors which our Department covers and our responsibility is to do the best we can for the public in general.
The current expenditure provision for my Department for 2012 is €786 million, which is a reduction of €69 million on the current year Estimate. Following adjustments of the order of €5 million for one-off items in the 2011 Estimate, the reduction of €64 million represents a package of net expenditure cuts of €45 million. This is because it is anticipated that some additional revenue will accrue from the local government fund in the form of motor tax receipts, which are shared between the Department of the Environment, Community and Local Government and my Department in a ratio of roughly 2:1. For this reason, I cannot say for certain how great the cut in funding for the maintenance of regional and local roads will be, but it will be modest.
Our local and regional roads have benefited from an additional €60 million which was reallocated from within my Department’s Vote as part of the jobs initiative earlier this year. People driving around the country in recent weeks will have seen much of this work being done. It will not be possible to avoid making some expenditure cuts. It is therefore proposed to discontinue grants under the local improvements scheme, achieving a saving of €5 million. I am aware of the importance of this scheme to rural communities and in assisting local development projects on private roads but the maintenance and improvement of these roads is, in the first instance a matter for the relevant landowner. Given that there are barely sufficient funds to maintain public roads it is not appropriate to spend public money on works for private roads. The community involvement scheme will be retained. The Department’s grants are not and never were intended to provide for the full funding of regional and local roads. Local authorities have other revenue sources, including the new household charge.
The €45 million in savings will be achieved in a number of ways. With roads and public transport, there will be an 8% reduction in subsidies for the CIE group saving €21 million in 2011. This will result in an increase in fares to be determined by the National Transport Authority, the transport regulator, in the coming weeks. I have indicated to CIE that a further reduction in subsidies of approximately €32 million will occur between now and 2015. I have asked the CIE companies to develop business plans to achieve these savings and to concentrate on reductions in cost and the achievement of enhanced efficiencies ahead of any further fare increases or reductions in services. This will be difficult as such savings will have to be on top of the significant savings and efficiencies delivered by the CIE companies in recent years.
A similar reduction of 8% will be applied to rural transport, saving €850,000. Maintenance of the national road and motorway network will be reduced by 1%, saving €633,000, some €6.5 million will be saved in reduced operational payments for public-private partnership roads and €3.5 million will be saved from efficiencies and greater use of information technology in vehicle and driver licensing. The allocation for the Road Safety Authority will be reduced by €4.5 million or 20%. This will not result in an overall reduction in the RSA’s budget as the agency has benefited from an increase in revenues from the national car test and will take on the role of providing the new plastic card driving licence by 2013. It is anticipated that the RSA will become self-funding in the longer term. Another €3 million is saved from reductions to the administrative budgets of the National Roads Authority, Railway Procurement Agency, Railway Safety Commission and MBRS. These will be of the order of 7% to 10%.
Funding for the green schools programme will be maintained at €1.9 million. Notwithstanding recent concerns about the misuse of some funds, the programme is a success and it is intended to maintain funding at this level through to 2015. The Minister of State, Deputy Kelly, will expand on some of these points in his speech.
A total of €5.3 million will be saved on civil aviation through reductions to operating subsidies paid to regional airports. This reflects savings that follow from decisions I made earlier in the year to cease funding for Sligo and Galway airports from the end of the year. Funding for Ireland West Airport Knock, Waterford, Donegal and Kerry Airports will remain, but it must be constrained as funding will be reduced by at least another €1 million to €9 million per annum in 2014.
I intend to maintain funding for the Irish Coast Guard at €3.4 million per annum through to 2015 in view of the essential role played by it in search and rescue services at sea and on land. This is separate from the provision made for the search and rescue, SAR, helicopter contract which will rise from €27.9 million in 2011 to €33.4 million in 2012, €53.3 million in 2013 and €58.9 million in 2014 and 2015. Similarly, funding for the Royal National Lifeboat Institution, RNLI, mountain rescue, weather buoys and the Marine Casualty Investigation Board will be maintained at current levels through to 2015, all things going to plan. The Irish Coast Guard responds to 2,000 incidents annually, peaking in the late summer. Of the average 3,500 persons assisted, it is considered that 160 would perish but for Irish Coast Guard intervention. The Irish Coast Guard makes maximum use of voluntary services, with 900 Irish Coast Guard volunteers, 2,000 RNLI volunteers, 300 community rescue boats and 500 mountain and cave rescue volunteers providing an on-call service day and night to respond to emergencies at sea, on cliffs or coasts. That service would be unaffordable if carried out by full-time staff and is admired by other states. For that reason, I propose no reductions in spending for any of these bodies in any year between now and 2015.
Funding for the Irish Sports Council will be reduced by 5% from €46.8 million to €44.5 million in 2012, with a further reduction to €42.1 million in 2013 and €40 million approximately in 2014 and 2015. The Minister of State, Deputy Ring, will expand on this further. Funding for the national sports campus will be maintained at €1.5 million per annum.
In the tourism area the budget for Fáilte Ireland will be reduced by 5% to €59.4 million, saving just over €3.1 million, with a further reduction to €56.3 million planned for 2013 and €53.2 million in 2014. However, a special allocation for the Gathering will be made later in the year which will mean that overall funding for tourism will only be reduced slightly in 2012 and 2013. The tourism marketing fund will be reduced by 5%, or €2 million, to €39.3 million, while Tourism Ireland’s administrative budget will be reduced by €500,000, or 3%.
Investment in capital infrastructure will be scaled back significantly in the next five years. The five year capital investment plan represented an overall cut of 18%, or just over €1 billion, on the national recovery plan allocations published in November 2010. Specifically, capital expenditure confirmed today for my Department in 2012 will fall by €267 million to €1.231 billion. Cuts of this magnitude necessitate that some very good and worthwhile projects had to be curtailed or postponed, not because these projects did not have merit but because we could not afford them.
My aim has been to get the maximum return for the taxpayer from the considerable investment in transport, tourism and sport that is still planned. In making these decisions my first priority has been to ensure the investment made to date is protected and that safety standards are maintained. This accounts for the bulk of the available funding provided in 2012 and beyond. Where possible, funds have also been provided for a limited number of projects which offer the best return in terms of their contribution to economic recovery and job creation.
Funding for road restoration and improvements will fall from €680 million in 2011 to €605 million in 2012, €278 million in 2013, €288 million in 2014 and €253 million in 2015. As I have stated many times in the House and the media, there will only be sufficient funds for roads already under construction or which are out to tender, as well as for the restoration of existing roads. While some very minor safety and online improvements might be affordable, there will be no money for major new multi-million euro projects during the term of the Government with the exception, I hope, of the N11 to Newlands and Gort to Tuam PPPs, depending on private capital market conditions.
The budget provided for capital funding for regional and local roads will fall from €330 million in 2011 to €280 million in 2012, saving €50 million on the capital side. Funding will fall to €255 million in 2013 and €240 million in 2012. Again, the bulk of this, approximately 85%, will be required for road restoration. A small number of already planned strategic regional road projects can still be progressed. In addition, the NRA will end the practice of paying €5,000 per acre in goodwill payments to landowners. This will result in significant savings when large-scale land acquisition commences again. For example, when the suspended Cork to Limerick M20 project proceeds to land acquisition stage, the decision to end goodwill payments will result in savings of approximately €4 million. The goodwill payments will remain in place for those projects for which the notice to treat has already been served.
Funding for smarter travel and carbon reduction measures shall be €65 million between now and 2015, with €17.4 million provided in 2012. With regard to public transport, funding provided for the National Transport Authority for capital projects in the greater Dublin area will fall from €216 million in 2011 to €116 million in 2012, reflecting the decision to suspend metro north and other rail projects. A total of €111 million will be provided for the railway safety and minor capital programme, a reduction of €27 million. Approximately €16 million will be provided annually for public transport projects in the regional cities through to 2016. In particular, funding will be provided for key existing public transport programmes such as railway safety, bus fleet replacement for PSO routes, traffic management programmes, including quality bus corridor, QBC, upgrades, as well as to facilitate the advancement of Luas BXD. Funding will also be provided for the completion and operation of the integrated ticketing project in the greater Dublin area and traffic management projects, including QBCs in the regional cities.
The envelope for capital funding for regional airports shall be limited to the funding of necessary safety works only. A total of €36 million is provided for capital infrastructure for the Irish Coast Guard between 2012 and 2016, with €10 million provided in 2012, thus allowing Killybegs Irish Coast Guard station to proceed in the first half on 2012 and the Doolin Irish Coast Guard station thereafter. A total of €2 million is being provided for the Commissioners of Irish Lights in 2012 and an envelope of €8.3 million through to 2016.
Expenditure on regional harbours has concentrated on essential remedial works, pending transfer. Nine out of a total of 13 harbours have transferred to local authorities, including the transfer of the Tralee and Fenit Harbour Authority in October. Agreement has also been reached to transfer three of the four remaining harbours — Kinsale, Baltimore, and Arklow — in 2012. Many of the regional harbours have no resources to carry out necessary works and requests for funding are normally far greater than the budget allocation. My Department will continue to provide much needed funding for essential works at these harbours for a two year transitional period totalling €6 million in 2012, €6 million in 2013, with a reduction to €1 million in 2014, and a cessation of funding by 2015.
A sum of €21 million is being provided for sport in 2012 and an envelope of €64 million through to 2016 for the funding of sports facilities. A total of €16 million is being provided for the national sports campus.
In tourism there is a €77 million envelope for funding through to 2016 the upgrading of existing attractions and the part funding of new ones. It should be noted that the vast majority of the money is committed already.
In recent weeks I have taken time to review the budgetary proposals of Sinn Féin and Fianna Fáil. The economic and budgetary fairytale of the United Left Alliance does not deserve the respect of detailed consideration. Neither Sinn Féin’s nor Fianna Fáil’s proposals delve to any great extent into current spending under the Department of Transport, Tourism and Sport, but they do give us much to ponder on capital expenditure. If we start, first, with Sinn Féin’s contribution, I note that it implicitly accepts the Government’s decision to defer funding for metro north, the DART underground, the Navan railway line, the N2, the A5 and the western rail corridor projects, as its proposals do not provide for any funding in 2012 or in its three year capital investment programme for transport. This latter decision is particularly stark when one considers that Sinn Féin’s three year capital investment programme involves an additional €7 billion in capital spending. However, none of that money would go towards projects within the remit of the Department. Certainly, if the Government did have an additional €7 billion for capital projects in the next three years, there would be additional spending on key transport projects.
If we turn to Fianna Fáil’s contribution, it must be acknowledged that it is, at least, consistent. Fianna Fáil in opposition is engaged in the same game of smoke and mirrors as it played in government. Within its proposals it makes great play of the allocation of an additional €250 million in 2012 for capital spending. However, there is no detail of how this additional capital expenditure would be spent, whether it would be on third level education facilities, hospitals, roads or railways. The failure to do so is a device to allow Fianna Fáil Deputies and Senators to travel around the country and suggest that if they were in power, project X, Y or Z would be going ahead. This is the old politics of raising expectations and stringing people along.
Deputy Leo Varadkar: I took the decision that because we could not afford to bring projects to construction, it was better to be honest and upfront about it, rather than stringing people along by spending millions on planning and the design of projects which we did not have the funds to construct. Unfortunately, Fianna Fáil still wants to play that old game. When it was in power, it spent more than €200 million on planning and the design of projects such as metro north, the M20 and the DART underground, among others, but it delivered none of them. I will not repeat its mistakes and seek to mislead people by telling them that their projects are alive by spending a few million here and there on planning. Rather, I have stopped work on the projects which have been deferred because there is no prospect of funding being made available for their construction in the foreseeable future.
Minister of State at the Department of Transport, Tourism and Sport (Deputy Alan Kelly): I propose to outline the main policies being pursued within my areas of responsibility as Minister of State at the Department of Transport, Tourism and Sport. It is a financially challenging environment and reductions in expenditure are necessary because of the dreadful legacy we have been left. However, we are maximising our resources and, in many ways, will enhance the lot of commuters, cyclists and transport users, despite these pressures.
The sustainable travel and transport agenda is, fundamentally, about the travel choices we make on a daily basis. We have continued to prioritise this area. Between workers and students, approximately 400,000 people travel 4 km or less to work, school or college by car every day, distances that are very amenable to cycling or even walking. Let us consider the progress we could make on a range of agendas — health, competitiveness, congestion and climate change — if these commuters could be persuaded to travel by bike or even to walk.
This ambition underpins all our funding in sustainable travel and, where practical, we need to get people out of cars. People need infrastructural incentives for that. We will continue to invest in these key projects and schemes, such as the national cycling policy, the smarter travel areas, smarter travel workplaces and green schools and look to extend the city bike scheme.  All of these will continue to encourage and facilitate modal shift away from the car. Our work to date has shown that major progress is being made on this front.
Already through the jobs initiative we have provided more than €20 million to improve our walking and cycling infrastructure while creating employment with shovel-ready projects. This is funding that would simply not be in the economy without a change of Government. Despite severely constrained Exchequer resources we will continue to invest and enhance bike week, where this year more than 30,000 people took part in events throughout the country. We will continue to progress the national cycle network and invest in off-road cycle routes. The long-term goal of having a world class cycle network is still a real ambition for the Government. We will continue to seek to extend the Dublin bikes scheme to other cities. We are seeing evidence in Dublin of a welcome return to cycling. I am convinced that the Dublin bikes scheme has played a role in bringing this about.
The capital funding budget secured for smarter travel over the multi-annual funding framework could allow for Exchequer investment in establishing schemes in the other cities. However, we will need private sector support to achieve this. In this regard, four symposia were held in the regional cities to explore possible funding options and work is ongoing in this regard.
What we see from this is that cycling and sustainable travel continue to be at the heart of Government’s policy in transport and real achievements will be made despite the difficulties. Whether it is through green schools, smarter travel workplace measures or through the smarter travel areas scheme, we will make major progress in getting people to use and consciously think about more sustainable forms of travel.
I will now discuss the public service obligation, PSO, subvention. Since November 2009 it is the responsibility of the National Transport Authority, NTA, to contract for PSO services with the CIE bus and rail companies on the basis of total funding advanced by my Department. In recent years the total subvention paid to the three CIE subsidiaries has been reduced by 15% from a high of €308 million in 2008 to €263 million this year. Despite our economic problems and the reduced sums available for capital and current expenditure, the Government will continue to prioritise the role of public transport. Unfortunately, the amount that can be made available for the PSO subvention must be reduced again and it will be reduced to €242.32 million, a reduction of 8% next year.
As the Minister for Transport, Tourism and Sport has already indicated, we will expect the NTA to take a hard look at the scope and value for money of the PSO contracted public transport services in the light of reduced resources. The CIE companies have been very effective to date in delivering such savings without having too adverse an impact on services. It will be a challenge to retain services at current levels. Nonetheless, the focus should be on the achievement of cost savings and maximising patronage of the public transport system rather than simply cutting services. However, we can and are taking steps to make public transport more attractive to soften the impact of the reductions.
The introduction of automatic vehicle location, AVL, real time passenger information, RTPI, and integrated ticketing will have a significant positive impact on the passenger experience. Very shortly, it will be possible to check in real time on our phones when our next transport service is due and use the same ticket in our wallets to switch between bus, rail and Luas in Dublin. That was simply not possible under the previous Government. While I am not suggesting it is the solution to our transport problems, they are still solid, practical and workable achievements. It shows we are focusing on real deliverables for passengers and commuters. The integrated ticketing project will soon be delivered and the Leap card will be in shops shortly. It will also be one of the cheapest ways to use public transport in Dublin. It has been one of my top priorities as a Minister of State and it is certainly a welcome achievement, ten years after it was first promised by previous Administrations.
A review of taxi regulations is being undertaken at present. We are giving serious priority to the taxi sector, which was completely ignored by previous Administrations. On 8 June I announced the terms of reference for a review of the small public service vehicle, SPSV, sector in line with a commitment in the programme for Government. Specific recommendations will be made on matters concerning licensing, enforcement, vehicle standards, supply issues in rural and urban areas and future dialogue with the taxi sector. The review will enable the necessary further reforms of the sector to allow consumers to have confidence in the taxi system while ensuring that legitimate and competent operators and drivers can be rewarded by operating fairly under a regulatory framework that is adequately enforced. Good progress was made on the review and I envisage that the review steering group, which I am chairing, will sign off on its report, including a list of proposals for enhancement of the SPSV sector in the very near future. Publication of the review will be subject to Government approval and I expect to submit the review proposals to Cabinet quite soon. It is my ambition that the review will put the taxi sector on a much more solid regulatory footing which will benefit operators and consumers.
We need to make sure transport is not just seen as an urban issue. In rural areas people have great difficulty accessing basic transport services. Without proper transport, people will be isolated. Transport is necessary for an inclusive society giving people access to work, education, medical and social services and access to family and friends. I am happy to say the Government has maintained funding for the Rural Transport Programme, RTP, in 2012 at some 92% of the 2011 allocation. Essentially, €9.77 million will be made available for the RTP next year and this should facilitate the maintenance of on-the-ground transport services in rural areas in 2012.
However, the importance of achieving greater efficiencies in the administration costs associated with implementing the RTP has to be stressed. As much as possible of the programme funding should be concentrated on the provision of transport services. My Department is currently looking at the issue of efficiencies that can be made by bringing together aspects of HSE transport, school transport, the Rural Transport Programme and other transport services. The overall aim is to reduce duplication and costs while increasing efficiency and maintaining service provision. The future direction of rural transport needs to be as part of a wider integrated local transport service in the country and work in that regard is proceeding.
We are in a difficult financial environment. However, we are doing far more than just cutting. We are actively protecting services in urban and rural areas, improving the passenger experience through technology, incentivising cycling and walking and we will put the taxi sector on a more solid regulatory footing. We are picking up the pieces of a fragile economy, left to us by Fianna Fáil, but the other Ministers in the Department and I are intent on delivering results, which we are doing to date.
Minister of State at the Department of Transport, Tourism and Sport (Deputy Michael Ring): I am glad to see that tourism figures are up this year, for the first time since 2008. I take this opportunity to compliment everyone involved in tourism, particularly the agencies, Tourism Ireland and Fáilte Ireland.
This year, the Minister for Transport, Tourism and Sport and I decided we would hit the four main tourism markets. The Minister gave me the opportunity to go to America and France. Both these markets have done very well for us. The Minister went to Britain and Germany. This year has been good, overall. We must build on it next year.
I am delighted that we are to get funding for the Gathering. I will ask Deputies and everyone in the country to play their part in the Gathering. This will be a very important event. We will contact the diaspora all over the world and get everyone involved, whether tidy towns committees, sporting and cultural organisations or any other group. Any group in Ireland that has a sister or brother organisation in any part of the world will be asked to make contact with them and get them to Ireland for 2013.
Tourism has been good this year. I thank all the Irish people who made a conscious decision to holiday at home this year. I compliment them. Two thirds of bed nights in Ireland are filled by Irish people. The domestic market is very important. Irish people responded to the call to spend their holidays at home. We have never had a better tourism product. People can go to any part of Ireland and enjoy themselves. Costs have never been so low. Hotel beds have never been so cheap. This has been proven by statistics. It is important that we promote Irish tourism.
I ask the media to give the Irish tourism product, particularly the Gathering, positive publicity. I ask media people to do this for the sake of the country. I do not ask them to do it for the Government, but for the country. We must try to get people into the country to spend money, and to come back because they have had a good holiday.
The Government made a conscious decision to reduce VAT from 13.5% to 9%. I compliment the Minister for Transport, Tourism and Sport who fought very hard for that measure at Cabinet. I compliment the restaurants and hotels who passed on the saving.
The extension of UK visas to include Ireland is one of the greatest things to happen since the creation of the single market. It will give us an opportunity to touch the Asian market. In recent years people, particularly from Asia, have found it difficult to get into Ireland. The new arrangement will be in place on a trial basis for the 2012 Olympic Games. I hope it will work and that we can build on it and touch the Asian market, which is a massive market. If we could get a share of that market, it would be good for the country.
I would like to touch on the issue of sport, which is so important for this country. Sport has lifted the morale of people over the past while, particularly since the recession. I compliment the Irish soccer team on qualifying for the European championships. I compliment the Irish golfers who have done so well all over the world. With regard to rugby, I thank the Irish team for the joy and pleasure they gave us in the recent World Cup tournament. Not alone do I compliment these sports people, I compliment all the sports men and women in the country who have brought joy to us. They lift morale on many occasions.
The Department sees sport as important and this is something I keep emphasising. When I made the case for funding to the Department of Finance this year, we did not do too badly, although there have been small cutbacks to the Irish Sports Council which distributes the funding it receives from the Department to national organisations. Sport is very important. If we had more people taking part in sport, we would need fewer hospitals, doctors and consultants. What we as a society need to do is to try to get more people involved in sport. I am glad to say the sports capital programme will open again in the new year for the first time since 2008. It will target disadvantaged areas and smaller sporting organisations in particular and we will give everybody the opportunity to apply for funding. We will not be able to facilitate every application, but we will at least give people the opportunity to put their case and will try to select the best ones possible. Deputy Calleary knows how important sport is and we looked after his area. He talked about the swimming pool in Ballina for many years and I am delighted to say we were able to refurbish it this year. What we have done with regard to smarter travel and the opening up of new walks is also important for the country and I compliment everybody involved in this and in the sport area.
Nothing would happen in Ireland without our volunteers and this is the European year of the volunteer. If we did not have volunteers, there would be very little sport taking place here, we would not have a Tidy Towns competition and we would be without many other activities.  On behalf of the Government, I thank all the volunteers in the country who make such a contribution to society and sport. They give of their time and I thank them.
Deputy Dara Calleary: I will share my time with Deputies John Browne and Timmy Dooley. I welcome the Minister of State’s announcement of the reintroduction of the sports capital programme. I know he has fought hard to achieve that and I look forward to fairness in its dispersal. I am sure he will not keep it all in Westport.
In the past two days, we have been asked by the Government to measure the budget in terms of jobs, reform and fairness. In any discussion about a budget at this time of year, it is appropriate that we recall the memory of our late colleague, Brian Lenihan. It is hard to believe that it was only one year ago that he delivered the last budget and that he is no longer with us. Much of the trumpeting from the current Government about the progress achieved by this country was achieved because of the work of Brian Lenihan.
On reform, I welcome the new format and have found the two-day exercise interesting. It has given people a chance to look at the issues in more detail than previously, rather than having to look at a tsunami of information. My political self must compliment Fine Gael on the manner in which it dispatched the delivery of the bad news to its colleagues in the Labour Party. As a result, the Minister for Finance, Deputy Noonan, had relatively few announcements of bad news to make in his presentation. He managed to be the good cop in the good cop, bad cop routine. Was that by design? If so, c’est la vie.
However, where the reform has fallen down is the manner in which the run-in to the budget was conducted. The manner in which specific measures were leaked was disgraceful. It was as if when Ministers lost battles around the Cabinet table, they then decided to take to the airwaves and newspapers to try to win their battle in public. The difficulty with that is that when they throw a measure out there that affects somebody’s payments, accommodation such as nursing home accommodation, or other areas, they scare people. The people are not in a good place now and do not need that. I suggest that next year Ministers should fight their fight at the Cabinet table and not go running to the newspapers.
On Monday, the Minister of State, Deputy Kelly, and I were out in RTE trying to give our reaction to the budget and it struck me that we still have the system where Ministers brief the media. I know Fianna Fáil Ministers did the same, but I do not defend that. What would have been worthwhile in terms of Dáil reform would have been for the Minister to give his speech and then for the relevant committees to meet to be briefed by the Ministers. That would have put the Oireachtas at the centre of the budgetary process and perhaps it is a suggestion that will be taken up next year. The Minister for Public Expenditure and Reform, Deputy Howlin, is open to change and perhaps next year he will come in earlier in the morning and give his speech and then allow the various Ministers appear before the relevant committees to allow Members the opportunity to quiz them. There is significant detail in the Budget Statement and it would have been far better to follow that procedure rather than wait until the committees meet in January, February and March, long after the crime scene is closed and it is too late to do anything. I suggest the Government should consider this proposal for next year.
On jobs, the Minister for Finance, Deputy Noonan, had some good news to announce yesterday. The reduction of stamp duty on commercial properties is welcome. I also welcome the relaunch of the labour market activation scheme. This scheme has achieved significant good and while a €20 million investment is small, it can be targeted and is measurable. The incentive for companies exporting into the BRIC countries is particularly welcome as this is an area we need to open up to. I reserve comment on the credit insurance scheme which has been announced on a number of occasions but the detail of which or the proposed budget for which we still have not seen. Traditionally, the Department of Finance has vigorously opposed this scheme, so I congratulate the Minister, Deputy Bruton, on finally getting it through the Department. However, I will not comment further until we see the specific details of it.
We must also look at the flip side of the budget. Up until last week, Ministers were promising there would be action on the upward-only rent issue. One Minister, in a meeting with Retail Excellence Ireland this day last week, told them action was imminent and that he was getting very frustrated with his colleague, the Minister for Justice and Equality, for not bringing it forward quickly enough. However, it has been clear for some months that there is a difficulty. In fact, it was always clear. In the run-in to the election, the parties now in Government were told by the former Minister, Dermot Ahern, that there was a constitutional block in connection with the issue, yet they insisted on making specific promises on the issue. The Minister for Finance, Deputy Noonan, put it out yesterday that it will not happen because of the constitutional problem. That is unfair. The manner in which people were led up the garden path is unfair. This evening, one Minister more or less acknowledged that in the nine months since the Government took office, there have been huge delays in concluding deals and that there has been a serious blockage in terms of moving commercial property because people did not know where they stood on this as the Government tried to make up its mind. At least that is solved now. However, the Government has completely burned its promises on the rent issue — remember the big banners in Grafton Street and the various endorsements from retail organisations — which is not good, particularly when the advice was available on the issue.
I do not understand why the Government has hit redundancy rebates so savagely, from 60% to 15%. The Minister of State, Deputy Kelly, is a Labour Party man and he may shake his head and speak about TalkTalk. He is right that big companies should not get those rebates. However, the small man in Nenagh is not TalkTalk or Dell. He has a right to get some sort of protection. The Minister for Public Expenditure and Reform, Deputy Howlin, pointed out that Sweden and other countries do not have these provisions. The United Kingdom does have this provision. The reduction is so big and to make it in just one night is just not fair on business. These business people are the ones we expect to create jobs. We could make similar comments with regard to the VAT increase of 2%. I know the Minister is committed to changing the VAT rate, but 2% in one go is too much. The Minister, Deputy Noonan, made a comment yesterday, which he got away with, that it was not a €500 cost on every house because business would pay for it.
These business people are the people we expect to create the jobs we need, yet we expect them to pay the 2% VAT increase and to take a huge hit on the redundancy rebate without them getting any real relief on rent if they are stuck in a lease. They also face reductions in the reliefs for pension contributions. I do not doubt at all that members of the Government want to create jobs, but the rhetoric and commitment do not match the reality of the measures taken in this budget. We must join the two in some way so that what they talk about is helpful and delivers.
The Minister commented yesterday that it was very difficult to put job targets beside initiatives. He is dead right; it is. I am glad some Ministers have had the guts to say we cannot do it anymore, but they were doing it up to a few weeks ago, saying we would create a certain number of jobs through this initiative. If we are to have a discussion on job creation in the next while, that is good.
The budget fails the test of fairness in so many areas — one would need nearly a week to go through it. It is welcome that the Government is rolling back on the decision on disability benefit. I do not know how it got through a Cabinet with so-called socialist Ministers sitting around the table. One would have expected it from the Progressive Democrats, but even they had a bit of a conscience and would never have done this. Again, it is welcome that it is being reviewed and the measure will not be included in the social welfare Bill.
I particularly welcome the ringfencing of funding in regard to A Vision for Change. Aside from the economy, mental health presents our biggest challenge. The resources of the political establishment were mobilised in the mid-1990s to resolve the Northern Ireland issue. We need to do the same in regard to mental health, on which we need to open a discussion. I congratulate the Minister of State, Deputy Kathleen Lynch, and the former Minister of State, John Moloney, who really led the way on this issue. When one sees a target in the health Estimate to achieve a saving of €50 million through additional efficiency measures in the mental health as well as various other sectors, one is a little scared about what will happen to organisations working in that area. Efficiency measures are Sir Humphrey-speak for the closing of services, the closure of beds and the withdrawal of funding. There are no details included, which is the difficulty. There is reference to efficiency and procurement measures in every Department with big figures included. However, no details have been provided. This makes me wonder about whether the figures will add up or whether we will be back sometime next year with Supplementary Estimates coming through like trains on tracks or, God forbid, an entire new budget because there are so many fluffy headings.
The fuel allowance will only be payable for 26 weeks and is in addition to the cut in the number of units made so slyly earlier in the year. The massive increase in the number of contributions required to receive widow’s or widower’s pension from 156 weeks to 520 is not fair.
The Minister of State, Deputy Alan Kelly, and I discussed the following issue on television the other day, but the Department of Education and Skills has confirmed my fears. Using Sir Humphrey-speak again, it stated there would be phased adjustments from 2012 to 2013 to staffing schedules in one, two, three and four teacher primary schools by raising the minimum number of pupils required for the allocation of teaching posts. The Minister of State said this did not relate to mainstream teaching posts but to resource teacher posts which are still important. However, on Monday night the Department stated it did and that schools should perhaps be asked to consider their future. One sees this thrown in with the career guidance provision changes. The Government is running around telling us there will be no change to the pupil-teacher ratio, but schools will lose 800 positions owing to the changes to the career guidance provision. A saving of €76 million in one year will result from all these measures. That is serious and means the pupil-teacher ratio will increase and marks the beginning of an attack on rural schools, which is not fair.
The registration fee has been beaten to death in the past 48 hours. Four days before the general election the Minister for Education and Skills signed a pledge, yet when he got into government, he did the exact opposite. The maintenance grant has been cut by 2%, with further cuts planned next year. The budget attacks students and the third level sector generally and has failed in terms of job creation and fairness.
The Minister of State, Deputy Ring, rightly acknowledged all the progress made in tourism. I pay tribute to all those involved, including the staff of Tourism Ireland in North America. There was a fantastic announcement, with which the Minister of State was involved, on Ryanair and Knock Airport. We have superb staff working in the tourism and job promotion agencies, as well as in Bord Bia, who are selling Ireland across the world.
Deputy Dara Calleary: What we need is a commitment to match the rhetoric. People talk about jobs and a budget that has been job creation proofed. Those who create jobs should be given some protection. There is no protection in the budget for them, in fact, they are paying the bills.
Deputy John Browne: I would need a lot more than 17 minutes to give out about the Government. However, I welcome the opportunity to speak about the budget. There has been a lot of talk in the media and criticism across the board about the unfairness of it. Most of the bad news was given out on Monday by the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, who represented the Labour Party. The Minister for Finance, Deputy Michael Noonan, received all the kudos in the newspapers today for being more fair. It seems strange that the Labour Party is not more concerned about the less well-off and poor people in society.
I have served with the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, in County Wexford for the past 29 years when we both became Members of the Houses of the Oireachtas. I have always worked reasonably well with him and we have always worked for the betterment of the ordinary people of County Wexford. That is why it baffles me that he made a statement on Monday that he was cutting the payment to people with disabilities — in some cases, by almost 100%. I am glad the Minister for Finance said last night that the Government would look at the issue again. This morning the Taoiseach said young people reaching the age of 16 years and moving from domiciliary care allowance would receive disability benefit.
I have an interest in this matter in that I have a daughter in a wheelchair who is in receipt of disability benefit. She said to me on Monday night that she thought this decision was very unfair, even though she would not be affected by it. Many people in wheelchairs and with disabilities depend on this money for reasons different from those of able bodied people. Many of daughter’s friends spend a lot of money on taxis because they are not able to drive. Some of them also have special food requirements, while others need the extra few bob for different reasons.
I spoke to the Minister for Public Expenditure and Reform yesterday evening about this issue and welcome the fact there is to be a change. As I do not think there has been a complete change, I urge the Taoiseach, the Minister for Finance and the Minister for Public Expenditure and Reform to row back completely on this decision.
It is almost impossible for people to find jobs, but it is completely impossible for people with disabilities to find them. Very few in the disability sector would be in a position to find a job. I asked the Minister for Public Expenditure and Reform last night to look seriously at increasing the quota for people with disabilities in local authorities, other public bodies and Departments. Currently, it stands at 3%, but many Government organisations and bodies and local authorities are not meeting that figure which I hope the Minister will increase to perhaps10%. The embargo on recruitment should not apply to people with disabilities and there should be a special interview process throughout the country. Local authorities and Government bodies should be encouraged to employ people with disabilities.
It is welcome that a decision has been made to row back some of the way on the issue of disability benefit. I hope a decision will be made in the coming days to row back fully on it. I am amazed by the Minister for Social Protection, Deputy Joan Burton, and the Minister for Public Expenditure and Reform being members of the Labour Party. I remember last year when the previous Government cut the rate of disability benefit from €196 to €188, the same individuals jumped up and down and said we did not care about people with disabilities.
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