3 o’clockPrelude
Business of Seanad.
Order of Business.
Quarterly National Household Survey: Statements.
Tax Code: Motion.
Hospital Staff.
Social and Affordable Housing.
Sugar Beet Industry.
Chuaigh an Cathaoirleach i gceannas ar
2.30 p.m.
An Cathaoirleach: I have received notice from Senator McHugh that on the motion for the Adjournment of the House today, he proposes to raise the following matter:
I have also received notice from Senator Morrissey of the following matter:
I have also received notice from Senator Phelan of the following matter:
I have also received notice from Senator Bannon of the following matter:
[1066]I have also received notice from Senator Feighan of the following matter:
I regard the matters raised by Senators McHugh, Bannon, Morrissey and Phelan as suitable for discussion on the Adjournment. I have selected the matters raised by Senators McHugh, Morrissey and Phelan and they will be taken at the conclusion of business. Senator Bannon may give notice on another day of the matter he wishes to raise. I regret I have had to rule out of order the matter raised by Senator Feighan as the Minister has no official responsibility in the matter.
Ms O’Rourke: The Order of Business is No.1, statements on the quarterly national household survey, to be taken on the conclusion of the Order of Business and to conclude not later than 5 p.m., spokespersons have ten minutes, other Senators have seven minutes and Senators may share time, with the Minister to be called on to reply not later than five minutes before the conclusion of the statements; and No. 18, motion 24, to be taken at 5 p.m. until 7 p.m.
Mr. B. Hayes: I begin by congratulating the Government on yesterday’s re-announcement of a series of projects it promised the people in 1999 and 2001. If ever there was an example of reheated porridge in the Irish political system, it was yesterday’s series of announcements. If all these projects were implemented on time and on budget, it would be important for public transport users. However, the reason there is so much scepticism in the country about yesterday’s announcements is that the very people who have been part and parcel of this issue for the past nine years have got it so badly wrong when it comes to delivering projects on time and developing a quality, integrated public transport system in this and other cities. That scepticism must be recognised.
Will the Leader organise a debate, perhaps next week or the following, on yesterday’s announcement to identify the substance behind it as against the allegation that it is nothing more than electioneering? Having read the document yesterday, I saw no reference to the Clare Street initiative which we debated two weeks ago. However, the Minister of State at the Department of Transport, Deputy Callely, will have his day again.
[1067]Mr. B. Hayes: Exactly. It is about traffic calming in Clare Street.
Last week the Taoiseach wrote to the party leaders in the other House concerning a proposal to allow Northern MPs to speak in the Dáil, although we have no jurisdiction in regard to this issue. Will the Leader state on the record whether, to the best of her knowledge, a secret deal has been done between the Taoiseach and the Sinn Féin leadership offering Seanad seats? The process of Seanad reform is important and I recognise it is an issue Senator O’Rourke has championed since becoming Leader. However, it would colour the continued participation of my party in trying to work out a reform process if it thought a commitment was given behind its back to offer Seanad seats to the Northern parties. We must tread very carefully on this issue. Our main objective at this time must be to put the Good Friday Agreement back in place and re-establish the institutions to ensure full confidence in Northern Ireland.
Mr. Norris: I wish to show the independence of the Independents by saying I do not entirely agree with my distinguished colleague, Senator Brian Hayes. I was at the launch of Transport 21 yesterday in Dublin Castle and I found it a most invigorating experience. We had to push hard to get items such as the metro included and this House played an instrumental role. When the five Independents had the balance of power I used the opportunity to amend the Transport (Dublin Light Rail) Act. The Leader, not only as Leader but as Minister for Public Enterprise, was open-minded and clear about the metro. The part she played will be a part of history.
It is remarkable that the Government has the courage to involve itself in this very significant expenditure of €34.4 billion. We have the money and now is the time to put it into transport. It is a wise investment. Everything said about the metro suggests that it would be a negative economic indicator not to include it in the plan.
We should continue to monitor the situation regarding the transport plan. I was a little worried talking to some of the senior people after the launch. I said to one of them that the timescale was still quite extended and I asked if it could be shortened. He said the soil mechanics and the geology of Dublin are unique. I have heard this argument until I have become ill from it. I said I would bet him €1,000 that no geological structure is found under the streets of Dublin which has not been encountered in one of the thousands of cities throughout the world which have put in such infrastructure.
The other good thing about the plan was that it was not only Dublin-centred. The western rail corridor was included and railways all over the country will be opened up. It is an incremental plan and we should not be begrudging about it. [1068]As an Independent, I welcome the plan but we must monitor its implementation to make sure there is no waste. It was a good day’s work.
I also wish to raise the Ferns report. I do not wish to appear to gloat, as I do not enjoy the discomfiture of the official church. It is a tragic situation, particularly for the many good, decent, young religious and the faithful. However, if we are serious about addressing the issues raised, we should examine our own record and I will table a motion in this regard. I mentioned last week that respectable, decent people, even including myself, as I was once a teacher, could be fired from a teaching post because the churches, in particular the Roman Catholic Church, were granted exclusions from the operation of equality legislation. If the past few weeks teach us anything, it is——
Dr. Mansergh: All the churches were excluded.
An Cathaoirleach: Senator Norris, without interruption.
Mr. Norris: I made that point but it is particularly dangerous in the case of one church, which has a track record. That is the position I would take and I would be prepared to argue it but not, I hope, in a contentious or nasty way. However, the power that raised the churches above everybody else in our society should be re-examined by Government to see if it is appropriate in this day and age.
I would also like a debate on Middle East issues. The statement by the Iranian President last week was chilling. The Iranians tried to row back on it but the President has reiterated and reinvigorated the statement.
We also need to have a debate on 1916. I may be a dissenting voice in my approach to it but it would be welcome and useful in advance of creating the new festival. We should hear all voices on this important subject.
Mr. Ryan: We would all want to be careful because, within six months, if Mr. Blair has his way, we could all be arrested if we say something about 1916 in the British jurisdiction, as it may be regarded as a criminal offence of glorifying what the British call terrorism. I would hate to see Senator Norris arrested if he crossed the Border.
There have rarely been moments in a country’s history when so much money was proposed to be spent with so little paperwork to back it up. I said to Senator Brian Hayes before proceedings began that the last time I saw so much money and so little paper was when the woman in Limerick won the lottery. A sum of €34 billion will be expended. I am an engineer and I expect things to be done properly.
[1069]Dr. Mansergh: Senator Ryan is unique in his profession.
An Cathaoirleach: There should be no comparison.
Mr. Ryan: I do not trust this plan. No engineer would stand up and justify it as the basis for spending €34 billion. It is a considerable achievement for this Government of wasters to convince the people of Cork that an announcement, which delays the introduction of suburban rail in Cork, is good news. Two years ago, it was announced that suburban rail would be in place by 2007 but now it will not happen until 2008. I was promised five years ago that a motorway would be built between Dublin and Cork by next year but it will not be completed until 2010. The best thing about the Atlantic corridor is the name, although I did not think the Atlantic touched Waterford. The road must reach Waterford for obvious reasons. Timescales or costings have not been provided. As the man said on television last night, we have also been presented with the western rail cul-de-sac, which will terminate at Claremorris. I have great respect for Claremorris but it should not be the terminus for many journeys when building a rail network. Could we have a debate on this plan? Could we also have all the background documentation from the wonderful Department of Finance to establish the costings, rationale and basis for the plan? We do not know how the officials arrived at these figures but we deserve to know.
I seek a debate on the Ferns report. The irony of the dismissal of a teacher in Enniscorthy in the Ferns diocese dawned on me last week because she committed the heinous sin of living with a man who was not her husband and having a baby with him while others carried on for years and years in the most scandalous way. We need to get a handle on this so that we are not diverted into a debate on what the State did wrong. The only thing the State did wrong was to succumb to the pressures of the leaders of the Roman Catholic Church to leave them to do what they told everybody they were better at than the State. We must reassert that no one has the right to demand flexibility in the law of the land.
I may be in a minority in believing from the outset the invasion of Iraq to have been immoral and illegal.
Mr. Norris: Hear, hear. The Leader thought so too.
Mr. Ryan: There is a journalist from RTE embedded in an illegal occupation army, the British force of occupation, giving us soft focus pictures of Irish soldiers working there. RTE has no business taking an editorial position that diminishes or dilutes the fact the war was illegal, is [1070]immoral and is disapproved of by 85% of the population of Iraq.
Dr. Mansergh: We should all cautiously welcome the LVF announcement that it is ceasing all activities and hope this is a harbinger for other loyalist organisations to follow suit. Two reports have studied the matter of access to democratic institutions. One was produced by the Oireachtas Committee on the Constitution, chaired by the Minister of State at the Department of Health and Children, Deputy Brian Lenihan. The other was by the Seanad reform committee. Both reports were unanimous and I would like to think the spirit of unanimity might continue rather than be used for party political purposes.
Mr. B. Hayes: Senator Mansergh should ask his Government partners.
Mr. Ryan: The Taoiseach should have consulted his partners in Government before writing the letter.
Dr. Mansergh: I welcome the transport announcements made yesterday and we will have an opportunity to debate this matter tomorrow.
I was very surprised to hear Senator Ryan echo a phrase used in a radio interview by someone with a very different political philosophy from his. It is very wrong that the Taoiseach be abused by someone with money, wealth and commercial success in terms that should not be used.
An Cathaoirleach: Is Senator Mansergh seeking a debate?
Dr. Mansergh: I am seeking a debate and basic respect for the democratic institutions of the State is needed from the most wealthy, successful businessmen. They should remember the Taoiseach has presided over a highly-successful economy that has been in the public service rather than the private service.
Mr. Finucane: Six years ago, in November 1999, the National Development Plan 2000-2006 indicated unprecedented investment in rail and roads. Six years ago, dual carriageways or motorways from Dublin to Galway, Cork, Waterford and Limerick were promised as well as unprecedented development in rail. Rail lines from Navan to Dublin and from Midleton to Cork were also promised. Is the transport announcement not rehashing these issues? The Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, displayed notices in Navan stating “Dempsey delivers”. Dempsey delivers six years late, in a manner similar to Deputy Parlon in Laois-Offaly in respect of decentralisation.
[1071]What has happened to decentralisation? It is a myth in many areas and many of the areas earmarked in the transport plan have been rehashed. The Government has put a jigsaw puzzle together on this occasion.
An Cathaoirleach: Is Senator Finucane seeking a debate?
Mr. Finucane: At the recent Ard-Fheis the Minister for Finance, Deputy Cowen, said everything will be costed in the future. There are no costings in this plan. It is a fairytale, similar to Disneyland.
An Cathaoirleach: Senator Finucane——
Dr. Mansergh: We will debate the record of Senator Finucane’s party.
Mr. Finucane: It is only after the next election these projects will progress.
An Cathaoirleach: Senator Finucane——
Dr. Mansergh: What did Senator Finucane’s party do?
Mr. Finucane: The only thing that will happen between now and the next election is a new railway station in Portlaoise.
An Cathaoirleach: I would appreciate it if Senators would speak through the Chair instead of talking to one another across the floor of the House. It is disorderly to do so on the Order of Business.
An Cathaoirleach: Order, please. Many Senators are offering but I will only be able to take the Senators who have already indicated before we conclude the Order of Business.
Mr. Glynn: At about this time last year, I referred to certain instances pertaining to the use of fireworks. I am not a killjoy but there is more need now than ever to enforce the law. I am not calling for new legislation but the existing legislation should be enforced. There is a strong case to be made for local authorities to organise firework displays in their administrative areas. In that way the use of fireworks could be brought under control because the current situation is outrageous. Sparklers and other fireworks are being thrown through old people’s letterboxes and they are living in fear and trepidation in their own homes as a result.
I ask the Leader to arrange a debate on men’s health and type 2 diabetes. On a local radio station today, a representative of the Diabetes [1072]Federation of Ireland was articulating the dangers associated with type 2 diabetes and the possibility that a large section of the community is unaware that it has the condition. I urge such a debate to be scheduled as soon as possible on these important issues.
Mr. Quinn: On many occasions I have raised the number of deaths occurring on our roads. Last week, however, there were four workplace deaths. Two people were electrocuted, one in Laois and one in Leitrim, and two drownings occurred at work, one in Donegal and the other in Carrick-on-Suir. Will the Leader establish that the Health and Safety Authority has enough power to influence this situation? If we ignore what is happening such fatal accidents may increase, as happened with road deaths, because we did not pay enough attention to them at first.
Last week, a Donegal man going on holidays to the United States was stopped by the immigration authorities before he left. The reason, apparently, was that he had been tried in court and later acquitted. He claims that information on the Garda file was made available to the American authorities. I do not know if this is correct, but I would like the Leader to establish that such information on Garda files is not made available to others, particularly to those outside the State.
Labhrás Ó Murchú: In recent years there has been a much improved working relationship between the North and South of this island. In many ways it is extraordinary and not many people could have foreseen the progress that has been made in a relatively short time. For too long we have been dealing with megaphone diplomacy which was not often diplomatic. There is also an improved working relationship and interaction between Ireland and Britain. Given the spirit of the debate on Seanad reform, I thought we would all welcome the opportunity to debate positively with representatives from the North of Ireland face to face. I would like to see that idea being expanded as soon as possible because we must build on the current foundations. Looking back, Senators from the North made particularly good and positive contributions during debates in this House.
Labhrás Ó Murchú: I hope the Government and the Oireachtas generally will support any move in that direction.
Mr. Coghlan: I was unaware that Kerry had declared UDI.
An Cathaoirleach: Does the Senator have a question on the Order of Business?
[1073]Mr. Coghlan: I have, it concerns the so-called Atlantic corridor. There is not even a spur to Kerry from it. It is ridiculous. When will they stop treating us like second-class citizens? When will the pre-war rolling stock be replaced by decent trains between Cork and Kerry? These are important matters, yet they were not mentioned in yesterday’s announcement.
An Cathaoirleach: I know they are important matters and I am sure there will be a debate on transport.
Mr. Dardis: Kerry is what we are debating.
An Cathaoirleach: We can discuss that during the debate. We cannot debate it during the Order of Business.
Mr. Coghlan: I appreciate that.
An Cathaoirleach: The Senator can raise the matter but cannot debate it.
Mr. Coghlan: With the help of the Cathaoirleach, I would like to receive clarification on this matter. Much of the content of the transport plan suggests its title is a misnomer, although it has been described otherwise.
Dr. Mansergh: What about improvements to the N71?
Mr. Coghlan: Perhaps the Leader will clarify whether there is any Government thinking on the south west.
Mr. J. Walsh: I join those who have called for a debate on the recently announced new transport policy. It presents a vision that is necessary to meet the infrastructural deficit.
Mr. J. Walsh: I am not in the least surprised at the opposition from Fine Gael and, in particular, the Labour Party. I recall leading a deputation to Deputy Quinn 22 years ago in respect of building motorways——
An Cathaoirleach: Order, please.
Mr. J. Walsh: ——between the major population centres. At that stage, members of the transport section of the European Commission acknowledged to me privately that the failure of the then Government was a very significant factor in the failure to implement the proposals. When Members on the other side of the House talk about waste, they should reflect for a moment on the period 1982 to 1987. In five years——
[1074]Mr. B. Hayes: Four years before that——
Mr. Finucane: What about the sale of the century?
An Cathaoirleach: Order, please.
Mr. J. Walsh: May I also ask the Leader——
An Cathaoirleach: The Senator is seeking a debate on the transport plan.
Mr. Finucane: No rates, no road tax.
Mr. J. Walsh: ——to consider having a debate on Seanad reform. Last week and this week, I have listened to the partitionist views of Members on the other side of the House——
Mr. J. Walsh: ——who oppose people from Northern Ireland participating in these Chambers.
Mr. B. Hayes: On a point of clarification——
Mr. J. Walsh: As one from a republican party, may I say that——
Mr. B. Hayes: On a point of clarification——
Mr. J. Walsh: ——I look forward to the day on which it will happen. Anybody who aspires to national unity should support this.
Mr. B. Hayes: My party signs up to those agreements on an all-party basis. Senator Jim Walsh should remember that the Progressive Democrats and other parties are against the proposal.
An Cathaoirleach: I call on Senator McHugh. I ask Senator Brian Hayes to resume his seat.
Mr. B. Hayes: The only partitionist mentality that exists is demonstrated by certain people who continue to pander to Sinn Féin and the IRA. The Senator is once again pandering to the IRA.
An Cathaoirleach: I call on Senator McHugh.
Mr. B. Hayes: I am not surprised by him.
Mr. McHugh: By way of trying to dig up a few positive aspects of the transportation plan, I acknowledge the Atlantic corridor proposal in terms of its facilitating access to counties Cork and Waterford. However, the corridor does not deal with the issues facing Donegal people. Some [1075]140,000 people have highlighted on an ongoing basis that they need direct access from Letterkenny to Dublin. One should try telling them that a plan will be implemented which will require their having to deviate a little on their way to Dublin and head via Cork or Waterford.
There is absolutely no plan in the document with respect to the cross-Border issue and the A5 in Northern Ireland. The N2 is highlighted. I want the Minister of Transport to state what negotiations took place at cross-Border and North-South ministerial levels. What meetings took place and what commitments were given?
Mr. B. Hayes: That is the result of the partitionists.
Mr. McHugh: I want a record of every minute of the meetings that took place.
Senator Norris stated he found the launch of the transport document “invigorating”. Try telling that to the cancer patients coming from Donegal to Dublin.
Mr. McHugh: It takes them six hours in an ambulance.
An Cathaoirleach: The Senator has made his point adequately.
Mr. McHugh: Senator Norris should try telling them it is invigorating. The only people travelling by road who have direct access to Dublin are those who travel after midnight, at which time there is not much traffic, such as tractors with slurry tankers. It is a disgrace.
Mr. Norris: That was invigorating.
An Cathaoirleach: Order, please. Time is running out on the Order of Business and some Members will be disappointed. The interruptions are not helping.
Ms O’Meara: I am not seeking any debate on the transport plan because it is a complete myth. We should not waste our breath on it.
Mr. K. Phelan: Just like the Labour Party child care policy.
Ms O’Meara: Not only is the plan a complete waste of time, it is also a complete waste of money.
[1076]An Cathaoirleach: In that case, the Senator should raise a matter relevant to the Order of Business.
Ms O’Meara: Senator Mansergh should note that the use of the term “wasters” refers to this Government’s extraordinary, scandalous and unadulterated waste of public money.
An Cathaoirleach: The Chair does not recognise this as a question. Does Senator O’Meara have a question?
Ms O’Meara: Could the Leader schedule a debate on the Ferns inquiry report as soon as possible? It is probably the most important matter requiring discussion. I was a member of the all-party committee chaired by the Minister of State at the Department of Health and Children, Deputy Brian Lenihan, which has been referred to in this House. The fact that we produced a unanimous report then should not be taken to mean that a proposal coming from the Taoiseach or any source should not be closely debated. Such a report should not be a behind-the-scenes bargaining tool to either keep Sinn Féin on side in the event that it is needed after the next general election or, like the proposals regarding the commemoration of the 1916 Rising, to neutralise Sinn Féin in some way.
Ms Terry: While I welcome the menu of projects announced yesterday I do so grudgingly because we have heard these promises before. It will be scant comfort to commuters in Navan and in my own constituency of Dublin West because they will be forced to wait several years before any improvement is made to the transport infrastructure. The Minister for Transport should remember that it is possible to fool some of the people some of the time but not all the people all of the time. If the Minister and the Government believe this series of projects will be accepted by people, they are fooling themselves. We cannot wait until 2015 for the delivery of many of these projects.
An Cathaoirleach: We cannot debate this issue on the Order of Business.
Ms Terry: The timeframe for the delivery of this infrastructure must be short if it is to have any effect but we have heard these promises before. It is a case of too little, too late.
Mr. Bannon: I support the call for a debate on Transport 21, which is a rehashed document. The Government may have pulled the wool over the eyes of the citizens of Dublin but it has not done so with the citizens of the midlands.
[1077]Mr. B. Hayes: Hear, hear.
Mr. Dardis: Senator Bannon can do that for them.
Mr. Bannon: This document neglects the midlands and does not mention the continuation of the Mullingar to Longford dual carriageway to Carrick-on-Shannon.
Mr. Glynn: What did Fine Gael do about the Sligo line when it was in power apart from——
An Cathaoirleach: Is Senator Bannon seeking a debate?
Ms Feeney: Senator Bannon has probably never been to this place.
An Cathaoirleach: Senator Bannon can raise these points in a debate but it will not take place on the Order of Business.
Mr. Bannon: The document does not mention the upgrade of the N55 or the N63.
An Cathaoirleach: We will not have a debate on the Order of Business. Does Senator Bannon have a question for the Leader?
Mr. Bannon: The Leader should invite the Minister for Agriculture and Food to the House for an urgent debate on the crisis facing Irish agriculture. Agricultural enterprises are in a very depressed state.
Mr. Bannon: The IFA, which is meeting today in Buswells Hotel, will make a pre-budget submission that should be taken on board in the interests of the future of Irish agriculture.
Mr. J. Phelan: I agree with the views expressed by colleagues about the Government’s new transport policy, which was announced yesterday. The new policy is a rehash of previous broken promises which will not be realised on this occasion. I am disappointed by the manner in which the announcement was made and the Government still does not appear to comprehend the idea of value for money, particularly regarding the delivery of transport initiatives.
Senator Jim Walsh made a very interesting contribution to today’s Order of Business.
An Cathaoirleach: There will be no debate on the Order of Business.
Mr. J. Phelan: I agree with Senator Norris’s previous remarks about the Order of Business. We should extend the timeframe available to [1078]Senators to debate issues on the Order of Business.
An Cathaoirleach: That decision has been made.
Mr. J. Phelan: It is the best part of the day in which to raise topical issues.
An Cathaoirleach: That is not the purpose of the Order of Business. It is about the Order of Business.
Mr. J. Phelan: In the period between 1982 and 1987 the Fianna Fáil Party engaged in certain activities, particularly in regard to the Anglo-Irish Agreement, which showed distinct partitionism and opportunism. If I was in that party I would not recall that period. I also recall the 1987 election when Fianna Fáil adopted the slogan “Health cuts hurt the old, the sick and the handicapped.” As soon as the party got into power it made serious health cuts.
Dr. Mansergh: The country has never looked back.
Mr. J. Phelan: Yesterday we received a series of rehashed broken promises on transport.
Senator Bannon raised the issue of agriculture and it is important that we discuss this, particularly in view of the World Trade Organisation talks and Commissioner Mandelson’s scandalous approach to them. He seems prepared to raise the white flag even before the talks commence and to think that agriculture can be flushed down the toilet in pursuit of other economic objectives. This approach poses serious problems for us. The Cathaoirleach will agree with my request to the Leader to arrange a debate with the Minister for Agriculture and Food where we can vent our feelings on this issue before the discussions take place.
Mr. Feighan: We have to welcome a promise to spend €34 billion on infrastructure. However, I am sceptical because this Government reminds me of RTE in the bad old days airing repeat programmes. I am sick of listening to repeats. This money will not address the infrastructural deficit in this election.
Dr. Mansergh: Will Senator Feighan’s party stop it altogether if it comes into Government?
Mr. Bannon: We will get in without the support of the Progressive Democrats.
Mr. Feighan: It is being spent on the next general election for this Government.
[1079]An Cathaoirleach: Does the Senator have a question?
Mr. Feighan: The people of the west have been let down again. This was an opportunity to re-open the Claremorris to Sligo route but it has been put on the long finger.
Years ago we complained about trans-European networks. If I want to go from Sligo to Waterford I will not go through Galway, Limerick or Cork but through Athlone. This is not an Atlantic corridor or Pacific highway, or whatever it is called in the United States, it is a ministerial corridor. The Ministers had their snouts in the trough and ensured the route went through their constituencies. That is the problem with this plan.
Ms Tuffy: I support Senator Feighan’s comments about the west being left out of Transport 21. It makes me think that Fianna Fáil assumes its seats in the west are safe. By contrast, the party must be very worried about its vote in Lucan because we are getting the Luas, metro and a train service all at once.
Ms Tuffy: However, that does not wash with me and will not wash with the voters.
Dr. Mansergh: Why does the Senator not treat the plan on its merits instead of using it as a political football?
Ms Tuffy: A project announced for completion in Lucan this year was relabelled and re-announced for five years hence in yesterday’s plans.
An Cathaoirleach: Does the Senator have a question on the Order of Business?
Dr. Mansergh: No she does not. She wants to make a political point.
Mr. Finucane: Does Senator Morrissey have anything to say? I am amazed by his silence.
Ms O’Rourke: Oh that one should be so lucky as to live in Lucan. Senator Brian Hayes used the awful phrase, “reheated porridge” and said there is extreme scepticism about the way we plan debates. I do not agree, everybody to whom I have spoken is very happy about it all.
Mr. Finucane: The Leader recalls when she was the centre of transport issues.
Ms O’Rourke: The Senator wants to know whether the Taoiseach made a secret deal with Sinn Féin. He did not. Senator Mansergh mentioned the constitutional review group and the [1080]Seanad reform committee but I imagine Senator Brian Hayes was speaking about the other House. The Cathaoirleach would not allow a full discussion on that point. To allay the Senator’s fears, however, the Taoiseach has not made a secret deal with any party leader.
Senator Norris shows what it is to be an Independent Senator. I thank him for his invigorating response to the transport plan. I recall being here to discuss the plans for the Luas when everything but bread rolls was thrown at me. I am speaking metaphorically. Senator Norris was always very open and upfront about what should happen regarding the Luas and the metro.
Mr. Dardis: He is the leader of an underground movement.
Ms O’Rourke: The amount of money promised for transport spending represents a very significant investment in this country. It is wonderful. It is not an investment in wasting. The word “wasting” was used this morning by that aviation bootboy, which is all I can call him.
Mr. Finucane: He might know more about the metro to the airport than the Leader.
Ms O’Rourke: It is interesting that many Senators are very enthusiastic about him lately.
An Cathaoirleach: We cannot refer to people by name.
Mr. Finucane: The no name club.
An Cathaoirleach: The Leader’s description of the person is not proper.
Ms O’Rourke: Everybody knows who he is. The unnatural alliance between him and some members of a political party using the same terminology is quite amazing, but one makes one’s choices.
Senator Norris raised the matter of the equality legislation and the exception made from its operation. I understand that all churches received exemptions from the equality legislation but that the Educate Together schools, who do a very fine job, are not exempt.
Senator Norris also noted the statement by the President of Iran. We spoke last week to the Minister for Foreign Affairs, Deputy Dermot Ahern, after a debate in this House, and that afternoon he made a statement. I note, however, that the President of Iran has been reinvigorated and has issued another outrageous statement.
Senator Ryan used the “w” word to describe the Government.
[1081]Ms Terry: He used the term “a crowd of wasters”.
Mr. Ryan: The other gentleman is copying us.
Ms O’Rourke: I do not like the term because that man used it.
Senator Ryan called for a debate on the transport plan, along with a timescale and costings. This morning we sought a debate for next week but I understand the Minister for Transport, Deputy Cullen, who is responsible for Transport 21, will be away next week. The diary is also full for the following week.
Mr. Bannon: He cannot be found.
Ms O’Rourke: In three weeks’ time we will have a full debate in the House on Transport 21.
The Ferns report was mentioned. I remember well the secondary school teacher mentioned, Eileen Flynn, on whom the world ganged up.
Mr. Ryan: They could not sack her when they wanted to.
An Cathaoirleach: Her name should not be mentioned in the context of the Ferns report.
Ms O’Rourke: She is long off the scene, no doubt. We will not mention her. She was a secondary school teacher.
Senator Ryan asked about the RTE reporter being filmed with the British troops in Iraq and suggested he was giving credence to reports. The Senator described the war in Iraq as illegal and immoral. I too described it in that way, and got my knuckles rapped. I still believe that war is illegal and immoral.
Senator Mansergh said we should cautiously welcome the LVF announcement, which we should. He noted that two reports have studied the matter of access to democratic institutions. One was by the Oireachtas All-Party Committee on the Constitution and the other was the Seanad reform committee. Senator Mansergh also welcomed the transport plan.
Senator Finucane said the transport plan was a rehash of fairytales which we all heard some time ago. I never heard of all the new Luas lines, nor of the two metro lines.
Mr. Finucane: Mention was made of them in July 2001.
Ms O’Rourke: Cherrywood was mooted.
Mr. Finucane: Previous reference was made in November 1999.
Ms O’Rourke: It is quite clear the Opposition does not want the investment. I am quite amazed.
[1082]Mr. Finucane: The investment is all we want.
Ms O’Rourke: Do we take it that if the improbable happened, and the Opposition got into Government, it would scrap the investment? Oh dear. The electorate should know that.
Senator Glynn called for the law regarding fireworks to be enforced. That is the word of the day. I agree that older people are terrified and living in fear. The Senator also called for a debate on men’s health and type 2 diabetes.
Senator Quinn noted that four workplace deaths occurred last week and asked if the Health and Safety Authority has enough power to influence the situation. Fines on employers who flout the health and safety legislation have risen substantially. Senator Quinn also spoke of the Donegal man who claimed that information about him on a Garda file was given out. In certain circumstances such information must be handed over, though I am not referring to that particular situation. It is needed to combat terrorism but that is not relevant to the man from County Donegal.
Senator Ó Murchú would welcome opportunities for Northern politicians to speak here because of the positive contributions they could make. Senator Coghlan wants County Kerry to be provided with new rolling stock. The county has his services anyway.
Mr. Coghlan: I am looking for a spur from that expensive corridor.
Ms O’Rourke: The Senator raised the possibility that County Kerry will opt out of the national grid.
Mr. Coghlan: We are not opting out, we are being excluded.
Ms O’Rourke: I concur with Senator Jim Walsh’s desire for a debate on transport. I was interested in his comments on the period between 1982 and 1987 because I remember a document, Building on Reality, which was published while Garret FitzGerald was Taoiseach.
Mr. Ryan: It was written by Charlie Haughey. He knew the reality of the situation.
Mr. B. Hayes: Ours was entitled, Courage to Succeed.
Ms O’Rourke: The document, which was published in 1986, described the then Government’s decision not to make any further investment in railways.
Mr. B. Hayes: That was thanks to the previous Government.
[1083]Ms O’Rourke: It is a pity the Opposition has reverted to that policy.
Mr. Dardis: Convenient amnesia obtains.
Mr. B. Hayes: There was 14% unemployment at that time.
Ms O’Rourke: There was 18% unemployment. As Senator O’Meara does not want to debate a myth, she will have to absent herself when the matter is discussed.
Mr. Ryan: So the Government’s policy is a myth.
Ms O’Rourke: We have received a commitment that a debate on the Ferns report will be held in two weeks.
Senator Terry grudgingly welcomed the provisions of the transport plan and raised the concerns of her Navan constituents. The Minister for Transport, Deputy Cullen, will come to this House to debate that matter.
I concur with Senator Bannon’s remark that the people of the midlands will not be fooled. They will have good representatives to ensure they are not. The Senator wants to debate pre-budget submissions with the Minister for Agriculture and Food.
Senator John Paul Phelan discussed the issue of value for money. Speaking yesterday in Dublin Castle, the Minister for Finance, Deputy Cowen, was vehement that every project will go to the Cabinet table to be costed and realistically appraised. The Minister does not throw money around. Senator Phelan also remarked on the period between 1982 and 1987 and called for a debate on agriculture before the next meeting of the WTO.
Senator Feighan welcomed the provision of €34 billion but claims the west of Ireland has been let down. The people of that region will not be so affected because they will have great representatives after the next election.
Senator Tuffy discussed the delights of living in Lucan, which will have many transport options.
Mr. Ryan: She will have free travel before that happens.
Ms O’Rourke: Senators are very skittish today.
Minister of State at the Department of Enterprise, Trade and Employment (Mr. M. Ahern): I apologise for being late. I mixed up the times.
[1084]I welcome this opportunity to address the House on the quarterly national household survey results. It is important sometimes to reflect on our achievements and to pause for a moment to understand what is happening in our economy. The figures published by the CSO last month tell a compelling story of transformation in our economy.
The figures from the latest quarterly survey are marked proof of the effectiveness of Government policies in the areas of employment and the labour market. Our recent economic success has been remarkable. The so-called “jobless growth” of the early 1990s has long since been replaced by consistent employment creation.
Employment increased by 93,000 in the 12 months to August 2005 bringing the total at work to 1,929,200. This is the highest annual growth rate in five years and is an increase of 31% or 461,500 since 1997. Women have particularly benefited from the very significant growth in employment during this period. The number of females in the workforce has increased by 39% since 1997, while the number of male workers has increased by 26%.
The figures also show a strong regional performance with employment in the Border, midlands and western regions increasing by almost 6%, giving employment to an additional 26,000 people. Moreover, we have seen employment increase in most sectors of the economy with financial and business services showing strong growth. This strong employment growth has been based on a strong and vibrant economy. With favourable economic growth forecast to continue, the indications are that employment growth will be maintained in 2005 and 2006. Employment is forecast to grow by approximately 2.9% in 2005 and by 2% in 2006.
Unemployment continues to be maintained at a low level of 4.2% and is forecast to remain close to this level into next year. Our unemployment rate is currently less than half the EU average of 8.6%. Our current rate compares with an unemployment rate of 10.4% in 1997. The numbers unemployed have decreased by 50% in this period, from 171,200 to 85,600. Long-term unemployment has dropped from 90,000 to 27,000, a decrease of almost 70%. It now stands at 1.4%, which is approximately one third of the EU average.
The consensus approach, under social partnership, of involving employers, employees and the Government has been a major contributor to Ireland’s economic success. This has been backed up by a well-balanced suite of employment rights legislation, which together with measures designed to stimulate employment, provide an appropriate framework for the purpose of achieving an efficient and competitive business environment.
[1085]In addition to employment growth, the partnership agreements have also been effective in securing improved economic performance and raising living standards. In the ten years to 1987 inflation was running at an average of 12%, while the current rate is just 3%. The pay terms of the two most recent national agreements have given workers pay increases of almost 30%.
The Government will continue to implement policies that lead to higher levels of employment. We will strive to reach and, if possible, exceed, the EU employment rate targets for 2010 of 70% for overall employment, 60% for female employment and 50% for employment of older workers.
As pointed out by the enterprise strategy group, the policies adopted to date have proved very successful but if we are to move forward in the context of a knowledge-based, innovation-driven economy a new set of challenges awaits us which require a different approach. In the labour market context this means that we need to maintain a strong focus on education and training, including lifelong learning, to ensure the development of a highly skilled, adaptable workforce. We must ensure an adequate supply of labour to meet the needs of the economy and to sustain economic growth. Labour will be supplied through a number of sources, namely, the underlying population increase, increased participation by the unemployed and those outside the labour force, and migration.
Education and training have been central to our economic success. Our future prosperity will depend on workers acquiring the knowledge, skills and competencies required to compete in an increasingly global economy. The enterprise strategy group’s recommendations made it clear that lifelong learning will be key, as the nature of the workplace requires that workers be ever more flexible and adaptable. More than in the past, people will need to upskill and reskill throughout their working lives. This can only be achieved by introducing new approaches and by putting in place the necessary delivery structures. The One Step Up initiative, which I announced recently and have substantially resourced, is an important element in this process. This initiative will promote lifelong learning, in-company training and upskilling of our workforce by providing easy access to a range of training and learning initiatives, including tutor-led training and e-Iearning. It will also assist employees to obtain a recognised qualification within the national framework of qualifications.
Attention must be devoted to ensuring an adequate supply of labour. To increase the numbers at work in the context of the decreasing numbers of young people coming into the labour market, we will need to mobilise labour supply from other sources. This will mean encouraging increased participation in the domestic labour market. It will also mean adjusting economic [1086]migration policy in Ireland to address identified labour shortages and skills needs.
Migration, combined with the natural increase in the population, has resulted in an increase in the population by 87,000 to over 4 million in April 2005, the highest it has been in almost 150 years. This is an historic milestone. It is a very positive trend for Ireland in view of our labour and skills shortages. The high level of immigration in the past year, with over one third coming from the ten new member states, is a result of our non-restrictive policy to those who wish to work in Ireland from these countries. There is no doubt that for most of our skills shortages, appropriate EEA workers are available.
The total population today is the highest since the census of 1861. The historic nature of this population increase should not be lost sight of. The CSO estimates that in the next 15 years, our population may reach 5 million. The Employment Permits Bill 2005, which was introduced in the Dáil last month, includes provision for a more managed economic migration policy, including a continual assessment of skill and labour needs. Research carried out by the expert group on future skills needs will continue to inform Government policy in this area. The focus of this policy will be to facilitate efficiently and effectively the entry into Ireland of people with skills that we need, but which we cannot source from either within Ireland or the EEA.
The high growth in employment indicates how well the economy is doing and how important it is that we can absorb increases in the labour force both from the domestic front and from abroad. The strong employment growth suggests we have put in place the right enterprise policies to build a strong economy. Through lower taxes, we have given individuals more choice over how to spend their incomes and we have nurtured a culture of enterprise where people with new ideas can see those ideas turn into value. We are seeing the growth of an enterprise culture everywhere from software to sandwiches, which shows that innovation is not just the domain of research scientists.
In a decade, our approach to risk-takers has changed and no longer are entrepreneurs left with the option of having to emigrate to innovate. Ireland has been transformed from a country where many young people had to leave to find jobs to one where young people from across the world are now contributing to our economy. We have implemented broad economic polices that have changed the business environment. This is not just our own analysis. After eight consistent years of managed growth and prosperity, the International Monetary Fund is still able to commend Ireland’s continued impressive economic performance, the result of sound economic policies.
[1087]In the space of fewer than 15 years, we have built a very different economy, one that has the inherent capacity to sustain growth rates that are the envy of some and a sought-after example for others. At the root of this exceptional employment performance is a deeply-embedded commitment to pursue policies across Government that boost our competitiveness. This is underpinned by recognising that we must constantly change, adapt and reform if we are to stay ahead. I am realistic enough to know that keeping, let alone expanding, our share of world trade and investment will not be easy. Our competitors are no more than a mouse click away.
Competitiveness is as easily lost as it has been hard won. While we are no longer a low cost economy, the recent annual report from the National Competitiveness Council recognises we retain some fairly impressive and significant national strengths. For example, we have achieved remarkable rates of economic growth over the past decade and we have recorded one of the best economic performances in the world. From 1997 to 2004, Irish GDP grew by an average of more than 7.5%, compared with an average of just over 2% in the EU I5. Under the sustainable growth heading, Ireland’s living standards as measured by GDP per capita,the NCC calculates we come first out of 15 countries and for GNP per capita we are sixth out of 16 economies it looked at. GNP per capita has almost doubled since 1997.
However, it is not all about arcane economic numbers. Real progress has been achieved in improving living standards and this is reflected in Ireland’s strong performance in the UN’s Human Development Index, which is a good indicator of general quality of life. Here we came fifth out of 15 comparable countries. In addition to the decline in unemployment and long term unemployment, the ESRI has shown that, over the period 1994-2001, life chances improved significantly. This is a trend directly related to declining unemployment and reduced levels of dependence on social welfare in a period of economic boom.
Maintaining our competitiveness is of great importance for Ireland because we are one of the most open economies in the world. In terms of trade performance, we come second out of 16 nations in the NCC’s league table, with much of this driven by our strengths in the foreign investment sector. We have one of the most favourable taxation regimes in Europe and have put in place enterprise policies that support investors. This makes Ireland a secure and profitable location from which to do business globally. The combined effect of these policy strands has ensured that Ireland has consistently been an attractive location for foreign direct investment for a considerable period and we have successfully won [1088]more global and EU foreign direct investment than our size would naturally suggest.
Our commitment to developing a modem high technology and competitive economy is winning where it counts — in the marketplace. The export performance of the high technology sector is powered by the skill and ingenuity of a productive and competitive workforce. Chemical, pharmaceutical, medical devices, electronic and e-commerce sectors would not consistently choose Ireland as an investment location if we did not provide solid competitive advantages. We all know that global competition for prestige and high value mobile investment is intense, yet global businesses continuously choose to invest here because we are competitive for these high end industries.
Not only is foreign direct investment crucial to maintaining economic vitality, how we manage the transition to a different portfolio of foreign investors is a key challenge that we are meeting. Manufacturing is still the engine driving our economy and represents by far the greater part of the exports of €68 billion and local economy expenditure of €15 billion by overseas companies in Ireland each year. The type of manufacturing investment being secured for Ireland has changed. Many Western-type economies are seeing a gradual loss of low level, labour intensive operations to lower cost countries. However, innovative economies, like Ireland, continue to attract advanced manufacturing operations that are at the cutting-edge of technology, where high productivity output is heavily reliant on the skills and capability of a highly educated and agile workforce. These investments may not have the headline grabbing head count of previous years, but their massive capital investment per employee shows that we are serious contenders when it comes to winning sophisticated, technology-driven, mobile investment.
We will continue to encourage manufacturing. It provides the test bed for innovation and ingenuity. Developing new products, creating new processes and achieving greater productivity is an integral part of manufacturing today.
Helping us further along the road of transformation, the enterprise strategy group’s analysis of our enterprise performance made a very strong case. It showed us how and where we need to be creative in policy thought and deed. I referred earlier to the One Step Up initiative and the upskilling of the workforce and population. This is one part of our response to the enterprise strategy group.
A second key plank in our response to the O’Driscoll report has been the new Enterprise Ireland strategy to help transform Irish indigenous enterprise. The vision set out in the strategy is the support and creation of a dynamic indigenous firms sector engaged in high value added activities. Enterprise Ireland’s clients will become [1089]more intensely market focused and innovative, providing new and proprietary products at premium prices. The strategy has a heavy emphasis on research and innovation, exports, competitiveness and entrepreneurship to deliver greater numbers of new high growth companies with strong potential to win increasingly profitable contracts in global markets. It aims to help Irish companies grow into self-sustaining enterprises of sufficient scale to compete internationally.
Driving the competitiveness agenda and keeping us ahead of the curve was very much at the heart of the ESG’s recommendations. We have a broad and diversified enterprise base that has expanded with the help of constructive economic and business policies and we have one of the best possible international locations from which to do business. As I want to keep it this way, I am determined we maintain this competitive advantage.
I wish to recall the important contribution the European Union has made to the economic and social transformation in this country. Our membership of the Union has been an important catalyst for the broadening of our export markets and has created common rules which benefit citizens and business. Moreover, the Union has brought significant benefits, not just to the performance of our economy, but also the welfare of citizens. I only need to mention decent working hours, safer food, portable pensions, cheaper flights and cleaner beaches to give some idea of the benefits Europe has brought to citizens.
There has been much comment on the sluggish performance of the EU as a whole. Growth in 2005 is expected to be somewhat over 1%. While some of the larger member states are undoubtedly underperforming, we should not lose sight of the spectacular successes. The recently published world competitiveness rankings show that 13 of the EU member states, including Ireland, are in the top 30 and the three Scandinavian member states of Finland, Sweden and Denmark are in the top five. The UN Human Development Index, published earlier this year, ranks 12 EU member states, including Ireland, in the top 20 in terms of quality of life. Clearly, the EU is doing something right.
We can be justly proud of the achievements of the past decade. There is no greater indicator of success than being a sought after location in which to work and live. The total migration flow to Ireland in the 12 months to April 2005 is estimated at 70,000, the highest figure on record since migration estimates began in 1987. As a corollary, emigration is at it lowest since then.
The challenge is one of preparing now for the prosperity of next generation and to manage the transformation of our economy through that process. This demands hard choices as we must at the same time seek to further improve the life chances for all our citizens, not just those in [1090]employment. From my perspective, a successful society needs a dynamic economy, which constantly responds to the evolving demands of international competitiveness. We have proved that we can meet this challenge.
Mr. Coghlan: I welcome the Minister of State to the House and I thank him for his speech, even if I cannot fully accept his analysis. There is no doubt that these are exciting times for Ireland. The CSO reports that the population of this little country has breached the 4 million mark, standing at 4.13 million people. Following the Famine and the relentless flight of young people from our shores in the proceeding century and a half, we can finally look to inward migration as a sign that the hard and painful economic reforms put in place by successive Governments have worked. We are richer, more confident, outward looking and self assured, yet there remain a series of key challenges to which we are simply not facing up. Unless we start identifying problems, coming up with solutions and implementing those solutions, we await a world of pain in the coming years.
According to the Forfás expert group on future skills needs, the list of professions facing a skills shortage is staggeringly long. It includes bricklayers, plasterers, carpenters, floorers, painters and decorators, accountants, actuaries, financial analysts, investment and risk analysts, fund managers, engineers, welders, computer analysts, chemical engineers, doctors, dentists, dieticians, radiographers, nurses, social workers, HGV drivers, sales staff, chefs, credit controllers, security guards, waiters and waitresses, warehousemen and women and care assistants. As the economy grows, so too will the need for these jobs. It is a worrying prospect that if we are having difficulties at this stage, we are facing much greater difficulties into the future.
The Employment Permits Bill 2005, while welcome, does not go far enough to alleviate these shortages. The Minister has failed to explain adequately why he has decided to retain the current system of granting permits to employers rather than employees. He has also failed to explain why he has not bothered even to refer to the issues of family re-unification and of the employee holding his or her own permit. There are 137,000 migrant workers in Ireland representing 7% of the labour force. Over the period 2000-05, over 100,000 persons from outside the EEA came to Ireland for employment purposes. This is in addition to the substantial numbers of EEA nationals, with estimates of over 90,000 having applied for PPS numbers since 1 May 2004. We do not have the legislative infrastructure to maintain that situation and the new Bill, unless it is amended along the lines we have proposed, will not solve the problem.
The Immigrant Council of Ireland has pointed out that we have developed and are perpetuating [1091]a two-tier system of migrant workers. On the one hand, we have those on work visas who are generally in better jobs with their families by their side, who are better paid and valued by the State. On the other hand, there are individuals with no families, who are lower paid and not here in their own right, but rather in the gift of their employers. This is ridiculous. The Minister talks about a green card system, but it is nothing of the sort. A green card system gives the individual the right to search for work, apply for residency and aspire to citizenship. The Minister has shown scant regard for any of those things. I remind the Minister that Forfás states baldly: “While the EU and EEA counties will provide a substantial proportion of Ireland’s low-skill requirements, continued non-EEA immigration will be needed to meet some of Ireland’s high skill demands over the next number of years”.
We have a duty to protect those who are keeping this country going, yet we witness the Polish edition of Newsweek reporting that Ireland was a “living hell” for many Poles, who arrived expecting to be able to pick and choose jobs and instead found themselves sleeping rough and living on charity. The Polish Embassy has suggested that around 10,000 Poles living in this country are experiencing difficulty. In my own town of Killarney, the local population, council and the churches have extended a warm welcome to the Poles and have organised some social integration. There is a Polish mass once a month in St. Mary’s Cathedral and a social interchange among the Polish community in Killarney, which is very welcome. Nevertheless, there have been shocking reports of exploitation in Gama, Irish Ferries and elsewhere while the Government reacts to events rather than shaping them, typified by its announcement of an extra few staff members for the labour inspectorate after the event.
Ireland is new to inward migration. We have the almost unique opportunity to avoid the pitfalls of the US and the UK, where an enormous underclass of immigrants and their children has developed. In these countries, an entire generation of children has grown up knowing nothing but social deprivation and poverty. The link is made to the fact that they are of foreign parents, and their situation is often linked to the colour of their skin or their religion. As a result, an almost ingrained distrust of the institutions of state, including the police, becomes the norm. As with all communities suffering poverty, crime can become rife. The misconception that immigrant communities are inherently more crime ridden than the native born population begins to find favour. All of this will happen here if we do not, at this early stage, wage war on any trend towards the ghettoisation of immigrant communities, be it in the geographical or economic sense.
[1092]We must ensure that we manage immigration as part of a comprehensive policy and view it as a social phenomenon and not merely an economic one. The Government needs to develop a policy to stamp out racism, promote multiculturalism in schools, consider hate crime legislation, examine the extension of citizenship, eliminate abuse of the system and prepare us for the huge increase in population that we inevitably face in the years to come. It is crucially important that people who come to our shores to gain employment must be integrated as part of society, to head off the race problems that occur in other jurisdictions. This will not happen by accident and the education system will have to play a role in ensuring people are tolerant of migrants.
Figures in the quarterly national household survey paint a rosy picture overall, but there are some worrying trends. The number of people classified as unemployed has risen, while those employed in both agriculture and manufacturing continues to decline. An action plan for both these sectors of the economy is vital. As an economy or a society, we cannot exist within the service sector. We must do what we can to maintain a manufacturing base because it is the key to spin-off development of ancillary services and industries. We must not allow the flight from the land to continue unabated. We must find roles for people in agriculture or on the land to play in the development of rural communities. We cannot leave the people employed in those sectors to the vagaries of globalisation.
The competitiveness agenda has been allowed to slip. We were fourth in the OECD world competitiveness forum ranking in 2000. We are now 26th which is evidence we have slipped. It has been recognised in numerous studies that there is a competition deficit in this country. Across key sectors of the economy, including many directly controlled by the State, there is an absence of a competitive dynamic which would provide consumers of services with a sufficiently wide choice.
Approximately half the workforce is not in a pension scheme and I am sure the Minister of State would agree this is a serious challenge. Figures from the Irish Association of Pension Funds show the average contribution to pension schemes is 10%. However, to maintain an adequate income on retirement, the figures should be between 15% and 25%. The Government is discussing this issue and I expect it will have a statement to make on it in the context of the forthcoming budget. This is an issue for which we must definitely plan ahead.
Yesterday I read that Mr. Robbie Kelleher, the chief economist at Davy Stockbrokers, pointed out that the Minister for Finance will have a €2 billion net giveaway in his December budget, and I have no doubt he is correct given his authority on the subject. That allows plenty of room for manoeuvre. Given that half the workforce is not [1093]in a pension scheme and so many who are pay in so little, there is much to make up in that regard. The Leader is on record as favouring a splurge when the special savings incentive scheme accounts mature. That will not do the economy much good, or perhaps it will. Views are divided on that issue. It is important incentives are provided in respect of pensions because we are all lecturing each other about the shortage of pensions. This is a great opportunity for the Minister for Finance to do something good and concrete about it, which I would encourage.
Mr. Leyden: I welcome the Minister of State, Deputy Michael Ahern, and wish him continued success in his Ministry. I also welcome the opportunity to contribute to the debate on the quarterly national household survey. These figures are marked proof of the effectiveness of Government policies in the areas employment and the labour market.
Our recent economic success has been remarkable. In the second quarter of 2005, there were over 2 million persons in the labour force which represents an annual increase of 94,500, or 4.9%. This is the highest year-on-year increase recorded in absolute terms since the quarterly national household survey commenced, surpassing the record annual increases attained at the end of the last decade.
Over this past ten years, since Fianna Fáil and the Progressive Democrats have been in Government, the labour force has grown by 556,000 people, or over 38%. The number of females in the workforce has increased by over 300,000, or almost 55%, while the number of males has increased by 254,000 or 28%. For every five people entering the workforce, three are female. This is a remarkable opportunity which has been created by the Fianna Fáil-Progressive Democrats Government. There are 165,000 companies operating in Ireland compared with 147,000 ten years ago. Indeed, the Minister of State has contributed greatly to that in his work as Minister of State with responsibility for trade. Trade is vital to the development of these companies. The major growth in our economy over recent years has been accompanied by a rise in corporate profits due to increased exports and import markets. The fact that corporation tax is at a particular level has been a major benefit to this country.
Unemployment is at an all time low and the total number of income tax payers has risen substantially since the early 1980s. Apparently, we face a period when we may not be able to recruit enough workers to staff the expansion in our economy, which is good thing. The Employment Permits Bill 2005, introduced in the Dáil last week, includes provision for a more managed economic migration policy, including continual assessment of skill and labour needs going forward. The focus of this policy will be to effec[1094]tively and efficiently facilitate the entry into Ireland of people with skills which are needed but which we cannot source from within Ireland or the EEA. This is a very progressive policy brought forward by the Minister of State and his colleague, the Minister, Deputy Martin.
The high growth in employment indicates how well the economy is doing and how important it is that we can absorb increases in the labour force both from the domestic front and from abroad. This would have been an unthinkable prospect in the 1980s when all one seemed to hear were news reports from around the country of more business closures and towns losing their big employers. The figures from the latest report are marked proof of the effectiveness of Government policies in the areas of employment and the labour market. Our recent economic success has been remarkable.
Sustaining economic growth is crucial to our capacity to tackle poverty. It provides both jobs and resources which are required if poverty is to be tackled in the years ahead. To maintain economic and employment growth policy makers must ensure Ireland’s competitiveness in a global economy and continue public and private investment in public infrastructure and productive activities. That is why I particularly welcome the launch yesterday of Transport 21. It is a brilliant plan for the 21st century and I compliment the Government on this €34.4 billion transport initiative.
Mr. Bannon: Is the Senator aware Roscommon was let down yesterday?
Mr. Leyden: This is a mid-term review of Government in action. It is a manifesto of success and is an encouragement to those working with the Government. Ministers, Ministers of State, Deputies, Senators, councillors throughout the country involved in local government and others share in this success story. The public servants working with and advising the Government should all take a bow.
Mr. Bannon: Senator Leyden is blinkered today.
Mr. Leyden: This survey should be circulated to every household in the country. Fianna Fáil and the Progressive Democrats are not wasters, as alleged by the Labour Party. It has been exposed by its non-appearance in the House for this debate. It is not prepared to debate this issue. I hope the Labour Party Senators are listening on their monitors and that they might attend because I am sure the Minister of State would like to hear the views of the Labour Party on this issue.
Ireland has performed remarkably well by comparison with other countries in terms of increased employment levels and living standards. More broadly, continuing improvements in [1095]life expectancy and income per capita also supports Ireland’s strong performance in the UN’s human development index, which is a good indicator of the general quality of life. Ireland’s strong economic growth rates over the past decades are likely to reflect a number of national strengths.
The transport plan announced yesterday is a considerable proposal and is extremely worthwhile from the point of view of the west as well as everywhere else. The proposed opening up of the western rail corridor is an enormous achievement which has been brought about by constant lobbying. The Leas-Chathaoirleach would have been supportive of this move. I put on record my congratulations to all concerned, particularly Fr. Michael McGreal SJ who continues the work of Monsignor James Horan in the west. This news shows the quality of his work. He is a member of a religious order and this is a boost to his profession given events last week.
Fr. McGreal, who is chairman of the western inter-county rail committee, believes involvement in this area is very important to the development of the west and has welcomed the investment and the decision to open up the western rail corridor. The Minister of State, Deputy Killeen, who has joined us, had an input in this regard and will welcome this development, which is a major boost.
Major investment in the Atlantic road link was announced and it will materialise. It will be a boost to the west. I am sure anyone who reads these proposals will be satisfied with them. They will be implemented by a Fianna Fáil-led Government, which is a vital ingredient. Only Governments led by Fianna Fáil have succeeded in securing proper investment.
Mr. Bannon: The Senator will be appointed a Minister in the next Government.
Mr. Leyden: Even when the Labour Party was part of a Fianna Fáil-led Government, progress was made through the abolition of third level fees and the launch of Teilifís na Gaeilge. Those policies were implemented by a Fianna Fáil-led Government.
Mr. Bannon: What is the Senator talking about?
Mr. Leyden: We abolished section 31, which was introduced by a previous coalition Government.
Mr. Bannon: The Senator is in dream land.
Mr. Leyden: We should take a bow in this regard.
[1096]Mr. Bannon: The Senator is bowing all his life and getting nowhere.
An Leas-Chathaoirleach: Senator Leyden, without interruption.
Mr. Leyden: That is why we are delighted with these surveys, which are worthwhile.
Prior to the budget, we have an opportunity to assist the less well-off in our society. A total of 285,000 people are in receipt of the fuel allowance but costs have spiralled. The price of 1,000 litres of oil is €660 while a bag of coal costs €6.50 and a bale of briquettes costs €2.85.
Mr. Bannon: The Government parties have not increased the fuel allowance for five years. The Senator should be ashamed of himself to be part of a Government that has not delivered for our elderly.
An Leas-Chathaoirleach: Senator Leyden, without interruption.
Mr. Leyden: The allowance amounts to approximately €9 per week. Revenue is accrued from oil and petrol sales and this should be redistributed, not to us but to those who need it most. This would be quickest way to give support to those who need it most. This will be a winter of great difficulty for people unless support is given to those who need the fuel allowance. I call on the Minister for Finance and the Government to support this scheme.
Mr. Bannon: The Senator is in Government one minute and the next he is looking in.
Mr. Leyden: The only financial support available to those on low incomes to meet the cost of fuel and heating their homes is the fuel allowance. This payment by the Department of Social and Family Affairs is available to long-term social welfare recipients and is paid on a weekly basis. The onset of winter and ever increasing fuel costs will inflict hardship on the less well off in society. I seek an immediate and substantial increase in the fuel allowance. Fuel poverty is the result of poor energy efficiency of homes, low household incomes and high fuel prices. All those factors should be addressed to eliminate fuel poverty permanently.
I welcome our great success story but the Government has an opportunity in the budget to tweak and improve services. The Government parties introduced the largest increase ever in the old age pension, child benefit and one-parent family allowance. That was achieved through a caring, socialistic approach on the part of a Fianna Fáil Administration.
[1097]Mr. Bannon: Where are the Progressive Democrats in all this?
Mr. Leyden: We have been the most caring of Administrations and we will continue to demonstrate that in the forthcoming budget. The Minister for Finance will give an outstanding performance again before the Dáil and the country. I hope the budget will be geared towards those most in need, the elderly and people with disabilities.
Mr. Bannon: I welcome the Minister of State to the House. The quarterly national household survey meets the requirements of EC Council Regulation 577/98, adopted in March 1998, which necessitates the introduction of quarterly labour force surveys in EU member states. The current survey, allied with the annual population and migrations estimates, paints a picture of a country with an expanding population of almost 4.13 million people, which is finally looking to inward migration, in place of the well documented horrors of our history of emigration.
Taken regionally, employment grew by 26,600, an increase of 5.7%, in the BMW region and by 66,400, an increase of 4.9%, in the southern and eastern regions in the year to the second quarter of 2005. The bulk of the annual increase in unemployment occurred in the southern and eastern regions with 1,600 extra signing on while a slight fall of 200 was experienced in the BMW region. This is despite the lack of infrastructure, which is crippling that region. No solace in this regard was provided in yesterday’s Transport 21 report. Members of the Government parties stated a dual carriageway would be built between Mullingar and Longford within five to six years but there was no sign of it in yesterday’s report nor did it refer to the upgrading of the midlands north-south route, the N55. It has been left in abeyance even though it was supposed to be upgraded when Athlone was granted gateway status and Longford hub status in the national spatial strategy. Politicians in the north midlands stated at the time this route would be upgraded but no provision was made yesterday. Similarly, no mention was made of the upgrade of the N63 between Longford and Roscommon, which contains several serious bottlenecks. The Government has no plan to improve the road structure. What has happened regarding a midlands regional airport? I have called for this on a number of occasions in the House and other fora at which I represented the people of the midlands. The Government has again neglected the midlands in this regard.
For the first time, the quarterly national household survey for March to May 2005, highlighted that the number of women in the workforce exceeds the number of women not in employment. The majority of women are in the CSO classification of employed or available for work [1098]at 51.4% compared with 35.7% ten years ago. There are many reasons for this change, with the main cause probably being the cost of a family home with the ensuing mortgage costs being taken on by couples to get a foot on the property ladder. However, this change is also driven by highly-qualified women who want to pursue careers outside the home.
I refer again to the urgency for effective child care policies to be implemented. The profile of child care needs has changed beyond recognition and Government response can no longer be put on the long finger as the response to last week’s debate shows, even from within the Government’s ranks. Throughout Ireland, the traditional working week is close to extinction, with almost half of our workforce working on Sundays and holidays. According to the most recent Central Statistics Office survey, almost 42% of our workforce is scheduled to work on Sundays and bank holidays, of whom, the highest number, 268,000, work in the retail and wholesale trades, including 84,000 in Dublin alone. Health sector workers comprise the second largest group at 186,000 nationally, followed by 116,000 workers in the transport and communications sector, 112,000 in the hotel and tourism trade and 115,000 workers in other service industries.
The extraordinary popularity of Sunday shopping, which makes it one of the busiest days of the week for many retailers, has forced many workers to forego their traditional day off. Other businesses, which were closed on Sundays, such as hairdressers and driving schools have been forced to follow the trend. In the UK, banks open on “bank holidays” but, to date, there is no sign of Irish banks following suit. Consumers are forcing the pace, with a 24/7 working week being their expectation, but pay and conditions for workers do not match the anti-social working requirements. When Sunday trading was first introduced in this country, workers were offered up to three times their regular pay to work such anti-social hours. In many cases this has been reduced to time and a half or even regular pay. Many workers have approached politicians to discuss this trend. The matter has gone from bad to worse and is not helping the overall situation.
Over the past 18 months the economy has been influenced by a flow of immigration, which is difficult to assess in terms of our national output. In the period from March to May 2004, 27,000 people living here had been usually resident in eastern Europe 12 months earlier and just under half of these were from Poland. The quarterly national household survey for 2001-02, showed that 36% of people entering Ireland worked in managerial jobs and 50% of them had a third level education, compared with one third of the Irish population. Some 10% worked in clerical positions, 10% in craft occupations, 24% in the [1099]services sector and 20% in semi-skilled or unskilled jobs.
As my colleague, Senator Coghlan, pointed out, things are not all rosy for Polish workers coming to this country expecting to pick and choose jobs but instead finding themselves without a roof over their heads and living on charity. Some 10,000 Poles living in this country are experiencing difficulties. The reports of exploitation, including by Gama, Irish Ferries and others are shocking. At this early stage of immigration to this country, it is important the Government puts together, sooner rather than later, a comprehensive policy to deal with all aspects of the lives of immigrant workers to facilitate integration and pre-empt the possible pitfalls of non-intervention in terms of anti-racism, extension of citizenship, and multiculturalism in education. I am pleased a food store that will accommodate the needs of Polish workers has opened in Longford.
Figures in the quarterly report paint a rosy picture overall but there are some worrying trends. The number of people classified as unemployed has risen, while those employed in both agriculture and manufacturing continues to decline. Fine Gael calls on the Government and the Minister to adopt an action plan for both these sectors of the economy. We must no longer permit the flight from the land to continue unabated. Rather than driving them off the land we must find roles for the agricultural workers to play in the development of rural communities. An example would be the extension of the REP schemes. Realistically, the farmers of this country are the only ones who can be said to be working a 24 hour day.
Another issue of grave concern is the fact that half our workforce does not contribute to a pension scheme. Figures from the Irish Association of Pension Funds show the average contribution to pension schemes is 10%. However, to generate the adequate income in retirement, the figure should be more like 15% to 25%. I am aware that the Government is discussing this at present and I hope the fruit of these discussions will be reflected in the forthcoming budget.
Mr. Hanafin: I welcome the Minister of State, Deputy Killeen, to the House. The quarterly national household survey brings more good news. We should never be embarrassed by good news from The Economist, which described Ireland as the best place to live. The quarterly national household survey shows how well the economy is going. It is backed up by the National Competitiveness Council and by further indices outside Ireland.
Such is our remarkable progress, our biggest worry is that some commentators may expect our economy to levitate. We have achieved remarkable rates of economic growth over the last dec[1100]ade and recorded one of the best economic performances in the world. From 1997 to 2004, Irish GDP grew by an average of over 7.5%, compared with an average of just over 2% in the EU 15. The National Competitiveness Council calculates that under the sustainable growth heading, Ireland’s living standards as measured by GDP per capita means we come first out of 15 countries while for GNP per capita we are sixth out of 16 economies examined. GNP per capita has almost doubled since 1997 but it is not solely a matter of arcane economic numbers.
Real progress has been achieved in improving living standards and this is reflected in Ireland’s strong performance in the UN’s Human Development Index, a good indicator of general quality of life. Here we came fifth out of 15 comparable countries. In addition to the decline in unemployment and long-term unemployment, the ESRI has shown that over the period 1994-2001 life chances have improved significantly. This is a trend directly related to declining unemployment and reduced levels of dependence on social welfare in a period of economic boom.
This Government has contributed greatly to economic growth and the benefits that have accrued. More importantly, it has contributed to the quality of life and will continue to do so. I look forward to the next budget and welcome yesterday’s transport plan, which sees Ireland into the 21st century. We will have integrated systems, a metro, extra capacity on the Luas and more national roads and rail. This will meet needs in a positive way. The new rail stock is a credit and will be efficiently run. Fianna Fáil has a vision for the economy, the country and the people.
What does an increase of 400,000 in jobs since 1997 signify? It means we have put in place the right enterprise policies to build a strong economy. Through lower taxes, individuals are given more choice over how to spend their incomes. A culture of enterprise has been nurtured where people with new ideas are not stymied at every turn. In a decade, our approach to risk takers has changed and entrepreneurs are no longer left with the option of having to emigrate to innovate. Ireland has been transformed from a country where many young people had to leave to find jobs to one where young people from across the globe are now contributing to our economy.
In an age when we see resentment bubbling against migrant workers, we must ensure people know the value migrant workers bring to this country. We must ensure they are cared for. It is the Government’s policy that every worker receives céad míle fáilte.
The Government has implemented broad economic polices that have changed the business environment. This is not just our own analysis. After eight consistent years of managed growth and prosperity the International Monetary Fund [1101]is still able to commend what it refers to as Ireland’s “continued impressive economic performance, the result of sound economic policies”. The employment figures published last month by the CSO tell a story of transformation. The figures from the latest quarterly national household survey are marked proof of the effectiveness of Government policies in the areas of employment and the labour market.
Our recent economic success has been remarkable. The jobless growth of the early 1990s has long since been replaced by consistent employment creation. Employment increased by 93,000 in the 12 months to August 2005, bringing the total at work to 1,929,200. This is the highest annual growth rate in five years and is an increase of 31%, some 461,500, since 1997.
Women have particularly benefited from the very singificant growth in employment during this period. The number of females in the workforce has increased by 39% since 1997 as against the 26% increase in male workers. More needs to be done if we are to continue to attract women into the workforce. The upcoming budget will include child care measures that will play an important role. Yesterday’s transport initiative will provide better services and make it easier for people to commute within a reasonable time.
The strong employment growth has been based on a strong and vibrant economy. With favourable economic growth forecast to continue, the indications are that employment growth will be maintained in 2005 and 2006. Employment is forecast to grow by around 2.9% in 2005 and by 2% in 2006.
The biggest threat to our economy in 2006 is that it will overheat. There was a time the Irish Central Bank had control over interest rates but that no longer applies and there are benefits to the euro. We cannot slow down the economy and the Government is aware of the threat of constriction in the market, brought about by too few workers and too many jobs. Unemployment continues at a very low level of 4.2% and is forecast to remain at around that level into next year. Our unemployment rate is currently less than half the EU average of 8.6%, compared with a rate of 10.4% in 1997. The numbers of unemployed have decreased by 50% in this period, from 171,000 to 85,000. Long-term unemployment has dropped from 90,000 to 27,000 — a decrease of almost 70%. It now stands at 1.4% which is about one third of the EU average.
The benefits to the economy outlined in the quarterly national household survey are clear. The Government is proud of its achievement and will continue its good work in that regard.
Mr. P. Burke: I welcome the Minister of State, Deputy Killeen, to the House. I am glad of the opportunity to speak on this important issue. There is no doubt that the country is doing [1102]phenomenally well and great credit for that is due to many people. Having listened to the speech by the Minister of State, Deputy Michael Ahern, earlier, and other speeches by Government Senators, one would think that the world began in 1997.
Mr. Coghlan: In fairness to the Minister of State, he knows that it did not.
Mr. P. Burke: We should cast our minds back. Quite a number of people played significant roles in shaping the economy. Great credit is due to Mr. Alan Dukes who took a courageous decision to support a minority Government back in 1987. Credit is also due to Mr. Ray MacSharry who was Minister for Finance at that time. In addition, great credit is due to the rainbow Government which was in office from 1994 to 1997. In 1996 and 1997 the economy was creating 50,000 jobs per year, compared with an annual figure of 70,000 jobs now.
Dr. Mansergh: It is 93,000 actually.
Mr. P. Burke: It may be 93,000 this year, which is probably the highest. In 1996 and 1997, however, an additional 50,000 jobs were created, which was the start of the economic surge we have witnessed over the past number of years. When the current Taoiseach was Minister for Finance, he presided over the highest interest rates in the history of the State. As a businessperson, I remember paying 23% and 24% interest, although we currently have low interest rates. At that time, however, there was pressure on the former Minister from the Opposition to devalue so that interest rates would decrease. It took him a considerable period to do so and a certain amount of damage was done to the country in 1993 due to the delay in taking the correct decision.
I welcome the Minister of State’s speech but I am worried about the BMW region. The Minister of State said, quite rightly, that some 461,500 jobs have been created since 1997. In addition, the number of women in the workforce has increased by 39% in that period. In the BMW region, however, there has been an increase of only 6% — some 26,000 jobs since 1997. We can go back to 1997 if the Minister of State so wishes.
In recent weeks, we have witnessed an underspend of €200 million in the BMW region. It is disgraceful to think that while almost 500,000 jobs have been created in the economy since 1997, only 26,000 of them were in counties Clare, Galway, Mayo, Roscommon, Sligo, Leitrim, Cavan, Monaghan, Donegal, Longford, Westmeath, Laois, Offaly and Louth. That represents less than 2,000 jobs per county created by the [1103]Government that claims to have done so much for the country since 1997. We all know about the jobs that have been lost in County Donegal in recent years.
Hardly a single job has been created in my own county of Mayo since 1997 when Deputy Enda Kenny, the leader of Fine Gael, was Minister for Sport and Tourism. We can see what the current Minister for Arts, Sport and Tourism, Deputy O’Donoghue, has done. He does not have an idea. No anglers are coming to the country despite the fact that we have the finest rivers and lakes in Europe. English anglers have boycotted the country this year and therefore I must treat the Minister of State’s speech with a fair degree of scepticism. While the outlook for the country is great, there is no regional balance, particularly in the BMW region. It has all been spelled out for us today.
Yesterday, we heard all the bluff about the Atlantic corridor but no costings, good or bad, were included in the plan. We do not know whether that corridor will comprise a single or dual-carriageway system, nor do we know how much of that work has been carried out already. Some parts of that road have already been completed, yet the Minister for Transport gave the impression yesterday that a new route was being created from Derry to Cork and Waterford.
Mr. Coghlan: The Atlantic corridor bypasses Kerry.
Acting Chairman (Mr. Bannon): Senator Paddy Burke without interruption.
Mr. P. Burke: We do know the priorities for the five interurban motorways which will link Dublin to Galway, Limerick, Cork, Waterford and Belfast via the Border. No costings have been done on anything, however. In his reply, will the Minister of State outline what will happen to the BMW region? If only 26,000 jobs have been created in the past eight years of unprecedented growth, it leaves much to be desired. The Government has done a lot for the country but it has abandoned the BMW region.
Dr. Mansergh: I know it will be no comfort to Senator Paddy Burke, but I am booking a week’s holiday in County Mayo with my extended family next year.
Mr. P. Burke: Good. We will welcome the Senator with open arms.
Mr. Coghlan: We thought he was going to come back to Kerry.
Dr. Mansergh: To be fair to the Fine Gael Party, it is participating in this debate. If the [1104]Labour Party stands for anything, it is employment. Unemployment held this country back for decades, but so far the Labour Party does not seem to have any interest in the subject of this debate.
The growth of 93,000 jobs is clearly a major achievement. My economic perspectives go back to 1987 rather than 1997. The year 1987 was, like the 1957-58 period, a major turning point in the country’s economic fortunes. Back in the mid-1980s total employment was just under 1,080,000, while currently it is approaching 2 million. On the Order of Business, there was a reference to the achievement of a Government in doubling the national debt at that time. I look forward to the day when we will be able to say we have doubled employment over the preceding 20 years — I accept we will not have done so on our own.
It is important that we be accurate in our description of our economic history. There was a major turnaround in confidence in 1987. Ray Mac Sharry’s name has been mentioned, and that of Alan Dukes has also properly been mentioned. The then Taoiseach, Charles Haughey, should also be remembered given that he led the recovery.
Reference was made by Senator Paddy Burke to devaluation being delayed. Our holding out for some time, as opposed to the approach in Britain, was the key to confidence afterwards. There was a very rapid decline in the high interest rates the Senator mentioned. One should remember there was a European currency crisis in which every country was affected. It was after this period that the Celtic tiger took off.
I am glad to welcome Senator Ryan, who has just entered the Chamber. Given his presence, I withdraw my preceding remarks.
Mr. Ryan: What was Senator Mansergh saying?
Dr. Mansergh: I believed the Labour Party might have been boycotting this debate — that is all.
The Celtic tiger took off in 1993-94 under the Fianna Fáil-Labour Party Government. To be fair to the rainbow coalition, it can be said that it sustained the growth. Growth was prolonged until 2001, which was far beyond what anybody could reasonably have expected. One can argue on the basis of the figures that such growth is evident again, albeit in a slightly more modest form. This should be celebrated.
I am a little puzzled by Senator Paddy Burke’s remarks — I do not have the relevant statistics to hand. The increase in the order of 26,600 jobs pertains only to the past 12 months. The quarterly national household survey indicates that growth increased in the BMW region by 5.7% compared with an increase of 4.9% increase in the southern and eastern regions. I take the Senator’s point and agree——
[1105]Mr. P. Burke: It does not say that.
Dr. Mansergh: ——there is a problem with regional balance.
Under the rainbow coalition, practically all IDA funding in the period 1995 to 1997 was invested in the greater Dublin region, apart from a major investment in Clonmel and another investment in Cork. However, none was invested in the regions. I hope yesterday’s announcement will contribute to more balanced development.
Senator Paddy Burke is quite correct in saying the Atlantic corridor is not a new motorway from Letterkenny and Derry. Substantial parts thereof are already in place, including the Limerick-Ennis section. The Ennis bypass is being built and the Cork-Mallow route has been developed. It is a question of completing this standard along the whole route.
We now have a very low long-term unemployment rate, namely, 1.4%, which must be nearly as low as is possible. We have the second lowest unemployment rate in Europe. The only country with a lower rate is Cyprus, which has a rate of 4.3%. This statistic pertains to the second quarter of 2004 — we do not have the most recent figures with which to make an international comparison. Our low unemployment rate represents a great achievement by everybody. The Government is entitled to some of the credit and the social partners are entitled to a considerable share of it. They will be conscious of the contribution they have made to transforming this country.
Reference was made by the Minister of State to the importance of educational investment. I fully agree with him in this regard.
I welcome the survey, which shows the progress we are making. It indicates we are basically on the right track but of course we can always do better.
Mr. Ryan: I will have to check the record to see what Senator Mansergh was saying about my absence.
Dr. Mansergh: I was not referring to the absence of Senator Ryan in particular but to that of Labour Party Members in general.
Mr. Ryan: The degree to which Fianna Fáil worries about the Labour Party is one of life’s more touching manifestations——
An Cathaoirleach: Senator Ryan should address the subject under discussion.
Mr. Ryan: Senator Mansergh felt free to make remarks about——
Dr. Mansergh: I withdrew my remarks.
[1106]An Cathaoirleach: Senator Ryan has only ten minutes.
Mr. Ryan: The first point that needs to be made on reading the quarterly national household survey, or the Minister of State’s speech thereon, is that we should all celebrate. Before I talk about the good and bad aspects of the report, I must say I would rather have the Ireland of today, with its particular problems, than the Ireland that existed when I joined the Seanad nearly 25 years ago. Perhaps I will list the present problems later but I will restrain myself to a degree and will not point fingers at those responsible. However, one should bear in mind that the country was in a mess in 1981. It was in a mess for a considerable period and stabilised in the period 1983 to 1987 in the teeth of considerable international problems. This was due to a combination of Mr. Haughey’s leadership — I concede this — and that of a succession of good Governments up to 1997, in addition to the leadership of a Government which at least did not spoil it all from 1997 onwards.
The most fundamental point, with which Fianna Fáil has a considerable problem, is the degree to which consensus was built. Fianna Fáil has a difficulty with this because it likes consensus only when everybody agrees with it. It is not very keen on consensus when it is in Opposition. I remember the famous slogan that health cuts hurt the old, sick and poor, which was emblazoned on posters across the nation in 1987. When Fianna Fáil came into office, all the health cuts that had hurt the old, the sick and poor were not only retained but also made worse. Reference was made to the existence of a better approach but I remember the immortal words of a very well-known Member of this House who responded that Fianna Fáil said there was a better approach but did not say it would be easier. That Member is not present.
The problems of which we speak are the problems of prosperity. However, let us not listen for too long to the view that something dramatic happened in 1997 such that the country suddenly took off on a new track. No Government in the history of this State inherited an economy in better shape than the economy Fianna Fáil and the Progressive Democrats inherited in 1997. Some 50,000 jobs were created in 1997 and there was a budget surplus. Deputy Quinn’s three years of stewardship in the Department of Finance resulted in an average growth rate higher than that which obtained during the period in which Mr. Charlie McCreevy was Minister for Finance. Deputy Quinn’s term in office resulted in a lower average inflation rate than that during Mr. McCreevy’s term in office.
We can all play games with the statistics and choose data selectively. For example, the Government likes to talk about the unemploy[1107]ment rate in 1997 but one does not have to have a degree in economics to realise there is always a lag between the beginnings of good performance in an economy and the reduction in unemployment — one has only to read and keep in touch with world developments to realise this.
Order in public finances, which results from a well-run economy, and business confidence must be restored because they are necessary preconditions for a thriving economy. They permit the gradual expansion of public services, leading to greater employment in the public sector, and the creation of a climate of confidence within the economy which encourages employers to employ more people and creates a climate in which it is possible to attract foreign direct investment. Foreign direct investment in turn generates employment. The achievement of business confidence is more difficult than creating order in public finances but is equally important.
I do not dispute the fact that the first two years of the Labour Party-Fianna Fáil coalition Government achieved many things. The portion of level-headedness contributed to Fianna Fáil by the Labour Party undoubtedly helped to produce rational economic policy.
Mr. Ryan: There is no disputing that Labour’s experience in coalition with Fianna Fáil meant that it achieved even more success in its later coalition with Fine Gael, which is possibly a less exuberant and irrational party than Fianna Fáil. Both coalition Governments were successful and political scientists will be preoccupied for many years with the intriguing question of how this latter Government lost the 1997 general election.
Dr. Mansergh: I will explain it to Senator Ryan.
Mr. Ryan: Senator Mansergh undoubtedly has an explanation for it.
Mr. P. Burke: He knows all about such matters.
Mr. Ryan: Matters which can be explained by Senator Mansergh are one of life’s great entertainments but he usually produces a good quote or historical analogy to lighten proceedings.
The tragedy lies in the degree to which a Fianna Fáil-led Government was led down a cul-de-sac fashioned by the Progressive Democrats, which had between four and eight Deputies at different stages, for a considerable number of years. The priority given to exuberant tax cutting and inflation in the construction industry and the ideologically driven belief that the way to carry out business was through the private sector produced a paralysis in Government at a time when it was clear that resources were available. An [1108]example of this thinking can be seen in the provision of public transport and airports. The Government showed a disinclination to spend available resources and a most peculiar set of priorities. I do not wish to rehearse today’s Order of Business but a significant number of the most highly trumpeted transport initiatives outside Dublin, such as interurban motorways, will now be four or five years late.
Other examples of these transport initiatives include the questionable decision to develop a radial motorway rather than a network of motorways to balance development. The overarching ideology was that of the Department of Finance, which has always believed that infrastructure should follow the market rather than create it. This is where the fundamental difference in policy between the Labour Party and the Government parties lies.
Mr. Leyden: What slogan will the Labour Party use in the next general election?
Mr. Ryan: Our first slogan will be “It’s not fair and we’ll make it fair”, while our second slogan will be “Let’s get rid of the wasters”.
Mr. Leyden: What would happen if the Labour Party went into coalition with Fianna Fáil?
An Cathaoirleach: Senator Ryan without interruption.
Mr. Ryan: The fundamental problem in Ireland is the deeply held perception of ordinary people that the way the country is run is unfair. Ordinary people on ordinary incomes — the 83% of taxpayers who earn less than €50,000 a year — believe that while the country got rich, matters worsened for them. The price of houses and child care has risen, the pressures people face in terms of commuting time have increased and they face problems caused by the appalling road and public transport infrastructure. All these factors add up to an unequivocal belief by ordinary people that the current situation is unfair, which is crystallised in the phrase “a rip-off republic”.
Mr. Leyden: A better way will not be achieved under a Labour Government.
An Cathaoirleach: Order, please.
Mr. Ryan: Nobody wishes to return to the way we were but there are problems that could have been anticipated, should have been planned for and should not have been allowed to multiply the way they did. The Government allowed these problems to multiply and it will pay the price for this by losing the next general election in a substantial fashion.
[1109]Minister of State at the Department of Enterprise, Trade and Employment (Mr. Killeen): I would like to thank Senators and my colleague, the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Michael Ahern, for their contributions today. It is an important debate, not least because population and migration are not issues that we consider every day. These CSO figures show Ireland at a turning point and give us cause to reflect as a society on how we should build a sustainable future for both citizens and business.
The transformation of our economy that we have seen in these CSO figures shows that we have provided all our citizens with the opportunity to live and work here — emigration is, thankfully, no longer a necessity. Growth and prosperity have provided the country with a newfound confidence, while enterprise has the capacity to invest for the future and the confidence to be less risk-averse.
The latest 12-month employment numbers show that in the year to May, the economy created a further 93,000 jobs. This is the highest annual growth rate in five years, while unemployment is less than half the EU average. Long-term unemployment has been reduced by 70%. Cautious management of success has and will sustain our ability to make sustainable growth achievable.
The long stretch of prosperity has helped society. Life chances have consistently improved as growth has opened more varied opportunities for disadvantaged and vulnerable groups in many different aspects of the economy. The population figures and projections for the next 15 years also give us cause to reflect on the needs of our economy into the future.
Yesterday, the Government launched a major transport infrastructure plan. Modern economies depend on efficient transport networks to reinforce competitiveness. The level of infrastructure investment helps drive economic and enterprise performance and consolidates our attractiveness as an investment location. The roads programme announced yesterday will have the flexibility to address the access requirements of major new industrial enterprises as well as meeting transport needs around the country. I particularly welcome the announcement to proceed with the western rail corridor, which will meet the needs of communities from Ennis to Claremorris.
Sometimes, it is important to pause for a moment to reflect on what one is doing correctly. We can be justly proud of the achievements over the past decade. There is no greater indicator of success than being a sought-after location in which to work and live. The total migration flow to Ireland in the 12 months to April 2005 is estimated at 70,000 — the highest figure on record since migration estimates began in 1987. As a cor[1110]ollary, emigration is at it lowest since the series began.
The challenge is one of preparing now for the prosperity of the next generation and to manage the transformation of our economy through that process. This demands hard choices as we must, at the same time, seek to further improve the life chances for all our citizens, not just those in employment. From the Government’s perspective, a successful society needs a dynamic economy, which constantly responds to the evolving demands of international competitiveness. We have proved that we can meet this challenge.
We would do well to remember that 80% of the current workforce will be in employment in 12 years’ time, which is an enormous figure. It is clear that a large portion of these people will not be in their current employment, therefore there is a continuing need for people to upskill and prepare themselves for different kinds of employment.
I will refer briefly to points made by various Senators. Senator Coghlan referred to the need to maintain a strong manufacturing base. I can assure him that this is a key priority for my Department. Some low-skill traditional manufacturing is under threat and there have been considerable job losses in this area. However, we have proved our capacity to upskill our workforce and participate at far higher levels in manufacturing than before. It requires a capacity to innovate, retrain and be open to new challenges, which, fortunately, we have shown ourselves to be more than willing to do. We have a vibrant export sector which is, to a considerable extent, dependent on the activities of the foreign direct investment companies. We will continue to develop that sector.
I welcome Senator Leyden’s lengthy comments on the transport plan. We have a good deal of catching up to do in this area and will need to frontload investment across a range of infrastructural services, particularly transport. I also welcome yesterday’s announcement by various Ministers. We have gradually gained the confidence to believe not only that we have the capacity to pay for the infrastructure but to build on it and create a more successful economy and country.
Senator Bannon referred, among other points, to the need for greater participation in the pension scheme, with which I strongly agree because participation is worryingly low. I welcome the proposals from the Minister for Social and Family Affairs to develop this in the coming months but we must do considerably more.
Senator Hanafin mentioned various indices, apart from the quarterly household survey, which show Ireland performing well. I was surprised when I began to attend European Council meetings to discover the extent to which Ireland’s success is admired by most of our European counter[1111]parts, particularly by the representatives of the accession countries.
Some of the traditionally strong European economies are experiencing grave difficulty in regard to unemployment and are examining closely the background to our success. I will do my best not to enter the debate which flowed back and forth between Senators Ryan and Bannon on one side and Senators Mansergh and Leyden on the other about the genesis of our success.
Senator Paddy Burke raised the issue of the performance of the BMW region. He assumed that the figure of 26,000 applied over several years, whereas Senator Mansergh may be correct in saying that it applied to only one year up to the end of last May. A figure of 26,000 out of 93,000 shows that the region is performing a little above its population base when compared across the economy, which is an extraordinary achievement.
Like many Members of both Houses, Senator Paddy Burke thinks that Clare is in the BMW region. It is not, for a variety of reasons.
Dr. Mansergh: That is a good point.
Mr. Killeen: He also said that angling tourism has suffered some difficulty but that is being addressed. It is a serious challenge to reach a consensus on dealing with all areas where there is difficulty.
The only point in the debate with which I disagree is Senator Ryan’s comment that Fianna Fáil is not a party of consensus. When I turned the corner of Merrion Square today I saw the Labour Party’s “Wasters” poster on display for the first time. That is hardly indicative of any great consensus.
Mr. Ryan: It is a very striking poster.
Dr. Mansergh: It shows a consensus with Michael O’Leary.
Mr. Killeen: The poster prompted several thoughts including that its timing is good because we have 18 months to point out that it is incorrect. Senator Ryan made the reasonable point that many people feel the system is not exactly fair. It is a challenge to address that perception, if it exists. It does not reflect the major success of the economy, for example, the significant pay increases which have happened simultaneously with a drop in the level of the PAYE tax rate. Meanwhile, the rate of inflation has dropped quite appreciably.
Mr. Ryan: It has gone up again.
[1112]Mr. Killeen: They are extraordinary achievements. Like Senator Mansergh, I look at the 20 year period, from the mid-1980s to now, rather than the shorter one fashionable in some circles. This period illustrates the country’s great economic capacity to improve and to achieve levels of employment which we would have thought impossible at that stage.
The high rates of unemployment in the 1980s and early 1990s were artificially low because many young people emigrated at that time. Had they been here the level of unemployment would have been far higher than it was. Unfortunately, because those people emigrated and made new lives in the countries to which they went, their potential contribution to this economy and society is lost.
One of the great advantages of the present situation is that we retain a high proportion of young people. With the exception of a few disadvantaged areas we are persuading them to stay longer in education than their parents did, and that educational attainment will benefit them in future. I am confident that those who will lead our society in a decade or so will move us on to the next plain. When we did not have them there was a significant deficit in our society.
Great credit is due to the leaders of the mid to late 1980s — Charles Haughey and Ray Mac Sharry made difficult choices in Government, and Alan Dukes in Opposition adopted a strategy which did not ultimately serve him well as an individual politician but served the country well.
Mr. Ryan: He got no thanks for it.
Mr. Killeen: The country occasionally illustrates a capacity for consensus, dramatically so in the context of social partnership. Hopefully, it will be possible to enable the participants in social partnership to chart a way forward for the next three or four years, or whatever will be the length of that partnership.
I worry when people attack social partnership because I have never heard any of them present an alternate model that might come near replicating the success of this model. Surely the short-term difficulties at Irish Ferries and others, including Gama Construction, should be addressed by being put into the melting pot of the new social partnership arrangement. It is fair to say social partnership was critical to the economic improvement of the country and had a positive impact on workers’ conditions, wages and on return for employment. It benefited employers equally by enabling them to make profits, some of which were re-invested and so on.
Partnership illustrates our capacity to widen what used to be a national wage agreement discussion into a social plan charting the way forward. Some of our colleagues in both Houses have reservations and suggest that some of the [1113]achievements and business of social partnership might more properly be the business of a parliament. The challenge to extend democracy is well met by including the social partners and the trade unions, which represent many people, making them centrally involved and influential in a way not possible in the narrow parliamentary tier.
The other social partners, the farming pillar and the community and voluntary pillar, can make a positive contribution in the next phase, quite different from that which they made in previous phases. Perhaps the challenge to them and Government will be to bring together the other partners at the employer and trade union level which are much further apart than was traditionally the case.
I welcome the excellent figures provided by the household survey and the range of other factors at play. These give us cause for considerable confidence and optimism, as long as we adopt a consensus approach and have the capacity to address difficulties arising from time to time.
—notes the Government’s commitment to keeping the public finances in a healthy condition and keeping down personal and business taxes in order to strengthen and maintain the competitive position of the Irish economy;
—supports the primary aim of current tax policy to expand our economy, reward work and alleviate the burden on taxpayers especially for those on lower pay;
—commends the Government on creating the most generous tax and welfare system in the world for single income families on the average industrial wage;
—notes that over 656,500 income earners are now out of the tax net compared with 380,000 in 1997;
—recognises that the Government parties have delivered dramatic reductions in taxation over the last eight years, a policy that has helped to generate unprecedented growth in the Irish economy, a spectacular increase in the number of people at work and the effective elimination of long-term unemployment;
—welcomes the announcement last December of a thorough evaluation of the effect of all relevant incentive reliefs and exemptions and the intention to bring forward proposals, which would achieve the correct balance [1114]between the benefit to the investor and the good of the community;
—notes the intention of the Minister for Finance to include appropriate follow-up measures in the upcoming budget; and
—asks the Minister for Finance to examine measures to preclude some of the wealthiest individuals in Irish society from availing of property and other tax incentives so as to avoid paying any income tax while at the same time enjoying facilities and services provided by the State, and to consider capping the total allowances a person can claim from property and other relevant tax incentives.
It would be tempting to move the motion and then just sit down and see what might happen. I know that has happened in the past. I welcome the Minister of State at the Department of Finance, Deputy Parlon, and I hope his colleague, the Minister for Finance, Deputy Cowen, can join us at some stage.
I am delighted to move this motion. Virtually every topic discussed in this House, certainly in recent years, can be reduced to the issue of choices or priorities. What priority do we place on health spending above education, above social welfare, above child care, above infrastructure and many other competing issues?
The former US President Bill Clinton is famously said to have had a sign in his office reading “It’s the economy, stupid”. It may be debatable whether all politics boils down economics, but I doubt anyone in this House would disagree that the distribution of limited resources, by which I mean Exchequer funds, is at the heart of most political debate. It is also at the heart of this motion.
Under this Government, two fundamental things have happened, namely, the spectacular increase in the number of people at work and the effective elimination of long-term unemployment; and, consequently, the resources available to the Exchequer are not as limited as they otherwise might have been.
Among the explicit commitments in An Agreed Programme for Government between the Progressive Democrats and Fianna Fáil, is the one outlined at the beginning of this motion. This commitment is to “keeping the public finances in a healthy condition and keeping down personal and business taxes in order to strengthen and maintain the competitive position of the Irish economy”.
From the public’s point of view this must look like an odd commitment for a Government to make, or have to make. Should it be considered a given that the Government of the day would work to keep the public finances in a healthy condition? Why would there be a need for an express commitment? The answer is simple. As I stated, the resources currently available to the [1115]Exchequer are not as limited as they might have been, thus allowing us greater choice. This is a result of the careful and efficient management of the economy by the Progressive Democrats and Fianna Fáil in Government. The explicit commitment is in An Agreed Programme for Government, and is not considered a given because careful and efficient management of the economy by certain parties in Government cannot be always taken for granted.
Since 1970, there have been just five years when Ireland saw real income per head go backwards. Coincidentally, the Government parties in those five years were Fine Gael and the Labour Party. At the last general election, just one party proposed to increase public spending more than anyone else, and it is not widely recognised that this party is Fine Gael. The party planned in 2002 to spend €130 billion, €7 billion more than the planned spending under the 2005 budget. Today, however, Fine Gael talks about curbs on Government spending, without identifying a single specific area where it would cut spending. The Labour Party on the other hand wants to increase public spending.
These types of innate, inherent and irresolvable differences between the Opposition parties have led in the past to careless and inefficient management of the economy. That is why we have the explicit commitment in An Agreed Programme for Government. The record shows that careful and efficient management of the economy cannot be taken as a given when the parties in Opposition are in office.
In contrast, the years in which the Progressive Democrats have been in Government have been periods of unprecedented growth, coupled with tough steps to contain Government spending. This is unique to the Progressive Democrats. Establishing the Health Service Executive, ending prison overtime and disposing of surplus State assets are just some examples of measures we have taken to carefully manage Exchequer spending. One can compare this with the Labour Party’s panacea of simply spending more money.
The Government correctly employs tax policy to expand our economy, reward work and alleviate the burden on taxpayers, especially those on lower pay. While parties opposite refuse even to say what exactly their tax polices would be, the record is clear. We have significantly cut tax rates. In 1997 the top income tax rate was 48%, today it is 42%. The standard income tax rate eight years ago was 26%, now it is 20%. The respective 1997 and 2005 figures for capital gains tax rate are 40% and 20%.
It is because of careful and efficient management of the economy that we have had the resources to do more for the vulnerable in our society. Spending on health has tripled while spending on education and social welfare has more than doubled. Notwith[1116]standing these increases, the Progressive Democrats continue to argue that the best defence against poverty is a job. Government taxation policy over the past eight years has helped to generate unprecedented growth in the Irish economy, a spectacular increase in the number of people at work and the effective elimination of long-term unemployment.
While the Irish economy merely goes backward only under Fine Gael and the Labour Party ——
Mr. Dardis: —— over 450,000 net new jobs have been created in Ireland under this Government. Total employment has grown from 1.4 million in 1997 to 1.9 million in 2005. In contrast, when Fine Gael and the Labour Party were last in Government together, unemployment was more than twice the present level.
Mr. J. Phelan: We were creating 1,000 jobs weekly when we left office.
Mr. Dardis: I said at the outset that much of government comes down to choices. This Government has chosen and implemented policies that simultaneously generate growth, prosperity and employment while creating the most generous tax and welfare system in the world for single income families on the average industrial wage.
This is a question of fairness. The Progressive Democrats’ income tax strategy is aimed at maintaining full employment and strengthening the competitive position of the Irish economy by keeping taxes on labour low. However, it is also a policy which includes a particular focus on the low paid and the elderly. The system must be fair, and that is the crux of the motion before us this evening. We must ensure that the system remains fair.
Government policy has allowed the export-oriented private sector to propel the growth we have experienced in recent years. At the same time, the sheltered private sector and the public sector can hinder further gains. I note with concern reports in the weekend’s newspapers which imply that one particular party is considering economic policies to in some way counteract foreign investment and promote some form of self-sufficiency. That was a failed approach of the Ireland of the 1930s. Those of us old enough can remember the economic war and the consequences of protectionism.
The view of the Government is that while the system of tax incentives has made an integral and positive contribution to development of our economy and society, we must make sure it operates fairly. To this end, we must welcome the announcement last December by the Minister for Finance, Deputy Cowen, of a thorough eval[1117]uation of the effect of all relevant incentive reliefs and exemptions. Most importantly, we must look forward to the proposals that emerge to achieve the desired balance between incentivising investment and development, and the wider good of society. My colleague, Senator Minihan, will later expand upon this aspect.
On the general point of the tax burden, over 656,500 income earners are now out of the tax net compared with 380,000 in 1997. That is in the context of nearly 500,000 more people at work. We have uniquely managed the massive increases in social spending which I have mentioned, while continuing to reduce the tax burden. During their 11 years in office, the Progressive Democrats and its Government partners have delivered 12 tax rate decreases and no increases. In contrast, Fine Gael and the Labour Party in their combined 17 years in office delivered four decreases and 12 increases. The Green Party seeks a range of new taxes, such as carbon, site value and housing land taxes. Sinn Féin wants to tax everything that moves.
Mr. Feighan: The new coalition partner.
Mr. Dardis: The policies of maintaining full employment and strengthening the competitive position of the Irish economy by means of low labour taxes has worked for Ireland. The take home pay for the average industrial earner has increased by more than €11,000, or 82%, since 1997 and far greater numbers of people are at work.
Strangely, the Opposition claims that this reduction in taxes has been detrimental to public services. When I first entered this House, the standard argument against tax reduction was that it would lead to the diminution of public services. No one accepted that it would lead to an increase in revenue, yet that subsequently transpired. The Opposition would allege that spending on public services will inevitably deteriorate if people keep more of their wages. It is a strange claim because, while take home pay has significantly increased, average annual health spending per citizen has also increased to €2,500, average annual education spending per person in full-time education now exceeds €7,500 and average annual social welfare spending per recipient now exceeds €12,500. This has been delivered by the careful and efficient management of the economy.
It is often easier to look at specific taxation policies in isolation or juxtaposed with the specific challenges that unquestionably still remain, such as those that arise in terms of poverty, exclusion and alienation. This will undoubtedly be the subject of many of this evening’s contributions. However, it is a flawed approach and does nothing to allay the fears of the public regarding Opposition taxation policy, if such a policy actually exists. It is wiser, if more difficult, [1118]to take a nuanced view of tax measures by asking how they fit within the overall plan. Rather than staring at the trees, can one step back and look at the woods, that is, the goals for the economy and society?
Sustaining Ireland’s strong economic growth and employment performance cannot and must not be taken for granted. The reduction in our unemployment rate over the past ten years from almost 15% to 4.4% is the single biggest political achievement of this generation. Among its positive effects on society were the opportunities it gave us to tackle the aforementioned challenges and to end the exodus of Irish people to other countries.
Contrary to some claims, the facts show we now have a tax system that benefits lower income earners over higher earners. Higher earners, rather than those who are on modest or low incomes, pay the majority of tax. The top 25% of income earners now pay 80% of all income tax raised by the State. The Government pursues a fair tax system. The Progressive Democrats support low taxes but not the payment of no tax regardless of high income.
It is in this context that I move this motion. I am proud to be associated with a Government that has transformed this society for the better so that we are now confident, outward looking and conscious of the needs of those who are disadvantaged and need protection. We wish to provide the resources made available from taxation to offer that protection.
Mr. Minihan: I am delighted to second this motion but would like to expand on a few specific points. The motion, which is concerned primarily with taxation policy and issues of fairness, gives us an opportunity to inject some reality into the debates about our choices for society and sustaining our recent progress.
There is no doubt that a dose of reality is required. For example, the Opposition recently referred to the “PD-ification” of society. Apparently this refers to planning around the priority of getting everyone into the workplace and an electronic and closed gate society. The Opposition would have us believe that the Progressive Democrats should not be surprised that social capital has been broken up and the sense of community has been reduced because that was our intention. While this wacky view is more to be pitied than ridiculed, more sinister allegations have been made in the other House to the effect that tax breaks have been sold to consultants and developers by the Tánaiste.
This debate allows us the opportunity to clearly and unequivocally reject these sinister and erroneous claims. Most important, the public and taxpayers deserve to know which party’s policies have served this society well and which have endangered the prosperity and progress achieved [1119]by the Irish public. The Progressive Democrats recognise the important role the tax system has played in transforming our economy. That economic transformation has brought increased employment, higher incomes and living standards and reduced poverty.
However, that same tax system should not permit a wealthy person to avoid paying income tax. For this reason, we seek the examination of measures to preclude some of the wealthiest individuals in Irish society from availing of property and other tax incentives so as to avoid paying any income tax while at the same time enjoying facilities and services provided by the State. Progressive Democrats also seek a cap on the total allowances a person can claim from property and other relevant tax incentives. As Senator Dardis clearly noted, we support low tax but not a situation where no tax is paid regardless of income.
The Opposition would have us believe that hard pressed lower and modest income families bear the tax burden in this economy and that hundreds, if not thousands, of fat cat high income and tax savvy individuals are availing of tax relief schemes to dodge tax. Who can blame it for these claims? It needs them to be true in order to convince the electorate, which I suspect is more sophisticated than the Opposition credits, to reverse our progress. However, the Opposition is wrong.
The Revenue Commissioners’ annual statistical report reveals that higher earners pay far more than lower earners. By reforming the tax code, we have restored a situation last experienced in the 1960s. Higher earners, rather than those on modest or low incomes, pay the majority of tax. The top 25% of income earners pay 80% of the total income tax revenue.
Many of the tax reliefs referred to by the Opposition are inherent to the tax system and have been designed to provide some relief for the taxpayers in whose interests the Opposition claims to act. Examples of these include mortgage interest and medical expenses reliefs and pension contributions. Which of these tax loopholes would the prospective alternative Government close off? Other reliefs on depreciation, interest and accumulated trade losses protect and promote employment and enterprise. Which of these unjust tax schemes would the allegedly pro-business parties opposite discontinue?
No doubt the Opposition will call foul and will claim that the €8 billion cost of tax relief schemes is exploited exclusively by the aforementioned tax savvy individuals. The reality is that ordinary taxpayers and business people avail of these schemes. Nevertheless, there are schemes, reputed to cost €200 million per year, which are designed to incentivise economic and social development.
[1120]As the motion makes clear, we welcome the announcement last December of the thorough examination of the effect of all the relevant incentive reliefs and exemptions and the intention to bring forward proposals to deal with any problems. I remind Members of the call for “Low tax, yes, not no tax for the highest earners”.
On the issue of high earners, I read with my usual scepticism of Sinn Féin’s reported economic policies, which include a 50% tax rate for those earning more than €100,000 a year. Do these economic gurus realise that the economic progress and prosperity propelled by our tax system has seen the number of workers earning more than €100,000 a year multiply dramatically in recent years? There were 13,200 such earners in 2001. Now more than 50,000 workers earn more than €100,000 a year. We can imagine how thrilled those 50,000 individuals and their families must be to read Sinn Féin’s proposal that they pay a 50% tax rate.
Mr. McDowell: Are they not the Senator’s colleagues.
Mr. Minihan: If the Labour Party wants to join it in respect of that proposal, that is fine.
To return to the real world, the schemes to incentivise economic and social development were introduced at a time when promoting such activity was a national imperative. Governments of all make-ups devised, operated and expanded these schemes. However, this fact does not suit the Opposition.
Policy point-scoring aside, there is a fundamental issue of fairness at the heart of this debate. No one party, group or section of society has a monopoly on fairness.
Mr. J. Phelan: The Senator’s party has claimed it. Having listened to the last two speeches, he and Senator Dardis have claimed it.
Mr. Minihan: Although the age-old debate of equality of opportunity versus equality of outcome rages on, equality remains the objective. The tax system is a central plank to achieving that objective.
I welcome the Department of Finance’s work in examining the equity of these tax reliefs and support the Minister in his efforts to achieve the fairest and most equitable tax system possible. Unlike some others, I am satisfied that achieving that system does not necessarily mean either jeopardising our prosperity or allowing high earners benefit unfairly.
Mr. J. Phelan: I move amendment No. 1:
[1121]—notes the increase in stealth taxes introduced over the last three years;
—expresses concerns at the erosion of our international competitiveness as a result of the increase in our cost base caused by those stealth tax increases;
—notes that those on the national minimum wage remain in the tax net;
—notes that those on the average industrial wage remain in the higher tax bracket;
—notes that while the tax burden on low and middle income earners remains high, our tax system allows the extremely wealthy to avoid the payment of tax; and asks the Minister for Finance to,
—remove those on the minimum wage from the tax net;
—remove those on the average industrial wage and lower from the higher tax bracket;
—introduce measures to preclude the wealthiest individuals in Irish society from availing of property tax incentives so as to avoid paying tax while at the same time enjoying facilities and services provided by the State;
—cap the total allowances a person can claim from property and other relevant tax incentives; and
—examine the circumstances whereby Irish citizens are currently entitled to claim non-residency tax status under the existing Finance Acts.
I welcome this opportunity to speak on financial issues. A number of Private Members’ motions have dealt with this area and Minister of State, Deputy Parlon, is back in the House to take this matter. He is a regular in the House at this stage. I welcome the opportunity to have this discussion.
To follow up on Senator Minihan’s concluding remarks about no group or party being able to claim credit on the issue of fairness, it is clear from the context and wording of the motion and from what I have heard so far that one party is claiming sole credit for what has happened here over the past 20 years. We have achieved major economic success but that comes down to the work of ordinary decent individuals and taxpayers. The Progressive Democrats have been in Government for a period of that time but it is wrong for them to claim full credit for that, as its members seem to be doing tonight and have done on many previous occasions.
Senator Dardis referred continuously to efficiency and to the Government’s efficient management of the economy. However, nothing could be further from the truth, particularly when [1122]the scandalous waste of public resources in various areas has been highlighted in recent months. During the last session we had a discussion with the Minister of State, Deputy Parlon, on a flood relief scheme in Kilkenny, which has since received notoriety. It is a good example of overspending. That scheme was originally estimated to cost €14 million but ended up costing almost four times that amount. Such overspending has been sadly repeated across the board in various sectors.
Senator Dardis devoted a large part of his contribution to outlining the increases in spending that have taken place. While there have been significant increases in spending on public services, the services have not improved to a corresponding degree. In some cases they have disimproved, noticeably in aspects of the health service. While spending on the health service has trebled in the past eight years, the service in many areas is worse, and in some areas much worse. It is unjustifiable for members of this component of the Government to congratulate themselves on those disimproving statistics.
I am disappointed at some of the wording of the Progressive Democrats’ motion. It refers to the necessity to examine tax reliefs. Such an examination was announced by the Minister for Finance in last year’s budget. The time for examining these tax reliefs is past, it is time to implement the changes that need to be made to them. Some of the property and other tax reliefs were introduced for an important purpose and I acknowledge they served that purpose, but they are now part of the problem rather than part of the solution in some cases. Those reliefs need to be seriously changed. Examining them indefinitely is not a substitute for their change and modification. There has not been enough of that during the past seven or eight years. The motion, as worded, is insufficient in that respect.
A subtle trick was played by the Minister for Finance when he announced in last year’s budget that those earning the minimum wage would be removed from the tax net, knowing full well that the increase in the minimum wage during the year would bring those earners back into the tax net. That is the reason we included in our amendment a request that those earners would be genuinely withdrawn from the tax net. Furthermore, any proposed increase in the minimum wage should not result in those earners automatically re-entering the tax net in the next 12 months. It is also wrong that those people earning the average industrial wage and lower should continue to pay tax at the top rate, the rate at which millionaires and significant earners are supposed to pay but often do not pay because they avail of the various legitimate tax reliefs.
In recent years heightened emphasis has been placed on the number of high earners who avail of the various schemes and pay significantly [1123]reduced, if any, rates of tax. I urge the Minister for Finance to seriously examine and address that issue in the forthcoming budget. It is wrong that certain people who have significant earnings do not contribute any tax to the coffers of this State. The basis of any taxation system is that it is inherent that equality and fairness applies. It is not equal or fair that the highest earners do not pay any income tax.
A popular myth exists, and has been perpetuated by the Government, that this is a low tax country. This is a low direct tax country. Taxes on income are quite low and the Progressive Democrats Members who spoke prior to me outlined that fact. However, in terms of indirect taxation this is not a low but quite a high tax economy. Senator Dardis referred to the reduction in tax that took place during the time the Government has been in office. He failed to mention the increases in VAT and the price of fuel introduced in the budget a few years ago. There have been significant tax increases under the management of the Government while it has been in office and Progressive Democrats Members should be prepared to acknowledge that fact.
Mr. J. Phelan: There have been reductions in income tax but the myth that this is a low tax economy needs to exploded. This is not a low tax economy; it is low in terms of direct tax but quite high in terms of indirect taxation. Indirect taxation is the most unfair taxation of all.
The biggest scandal perpetrated by the Government in taxation policy and public finances is in regard to the tax bands. A commitment was given in the previous programme for Government that the tax bands would be index linked and that this would be done at every budget following on from that programme for Government, but that has not happened. That is another broken promise by the Government. I am disappointed at Progressive Democrats Members taking the high moral ground on this issue. There was a great deal of hot air before the last general election about what would happen following the election. The Government increased spending across the board. As soon as the election had taken place and it was re-elected, spending was significantly reduced across the board. Commitments were entered into in the programme for Government regarding medical cards and increasing the numbers of people eligible for same. Those commitments have not been honoured. Commitments were also given to increase the numbers of gardaí on the streets but they too have not been honoured.
It would be more realistic and appropriate to have a genuine discussion on the broken promises of this Government since re-election. I appreciate [1124]the opportunity to participate in this debate and fully support the Fine Gael amendment.
Mr. Feighan: I second the amendment tabled by Fine Gael and welcome the Minister of State, Deputy Parlon, to the House.
I am an optimist by nature. I normally consider the glass to be half full rather than half empty. The Progressive Democrats’ motion is aspirational in nature. However, if this discussion was taking place in five years’ time, I would prefer to see the PDs in Government with Fianna Fáil rather than the latter party’s favoured coalition partner, Sinn Féin. In that respect, the glass is half full and matters could be worse.
This Government is like a business and what it is doing, very often, is disregarding the core fundamentals of business. What this Government has done, with the PDs, is lease out everything. It has leased everything out to other interests and to consultants and is not dealing with the core business.
I come from a small business background and I see many small businesses which cannot compete anymore. They cannot compete because of high stealth charges. Bin charges rose by 29% in 2002 and have increased further. Yesterday I had to write a cheque for the private bin collection operator in my area, for 18 months service. The operator collects cardboard and general rubbish from small newsagents. The bin charge was €4,100. How can any small business survive in the face of such escalating costs?
Bank card charges have risen by 108%. The minimum wage was introduced, which I welcome, but it means that many smaller businesses cannot compete. Rates and insurance have also increased, though admittedly they have been scaled back somewhat in the past year.
In the past five or six years many small businesses, including pubs, shops; and small manufacturers, have gone out of business. If one looks around Ireland, and particularly Dublin, most of the small corner shop owners consider it better to lease their premises rather than continue in business. This Government has leased its responsibility to other departments. Now shop owners are lucky if they can lease their premises. They are deciding not to carry on in business and are leasing their property for apartment developments or to another agency to run a business.
If people visit me in my office and tell me they are thinking of setting up in manufacturing or setting up their own business, I tell them not to bother. I tell them if they can get elected, that is fine, but if they can get a job in the health service, the local authority or with the Government, they will have paid holidays, a pension and benchmarked pay increases, without anybody asking them to improve their service delivery. That is what is wrong. This Government has leased out responsibility.
[1125]Minister of State at the Department of Finance (Mr. Parlon): People are not visiting the Senator looking for a job. They all have jobs, unless they are one of the 30,000 foreign nationals who come here every year.
An Leas-Chathaoirleach: Senator Feighan, without interruption.
Mr. Feighan: The Minister of State is being very flippant about the backbone of this country. As someone once said, Ireland is a nation of small shopkeepers. They are the people who created the employment ——
Mr. Dardis: That was said about the British, actually, and it was Napoleon who said it.
Mr. Feighan: They are the people who set up this country and who employ people. This Government has turned its back on small businesses and created an environment where bigger is better and only large businesses can avail of economies of scale. If there is a downturn in this economy, there will be no small businesses left, which are its backbone.
Irish competitiveness has been seriously eroded by a sharp increase in the overall cost base, according to Mr. Jim Power, chief economist with Friends First, in its quarterly economic outlook for February 2004. He went on to argue that it is essential that investment in education, to upskill the workforce, and a correction of the damaging infrastructural deficit are given immediate and real priority, not just lip-service. Yesterday, lip-service was given ——
Mr. Parlon: Did the Senator not hear about the €45 billion investment announced yesterday?
Mr. Feighan: That was lip-service. I have heard it ——
Mr. Parlon: Investment of €45 billion was announced yesterday.
Mr. Feighan: I have heard it so often.
Mr. Parlon: It is easy to simply dismiss.
Mr. Feighan: There are 156,400 people on the live register. How can the Minister of State explain that? I do not think he can.
Mr. Feighan: There are 156,400 people on the live register as and from 7 October 2005.
Mr. Feighan: That is the CSO analysis of the live register.
[1126]Mr. Parlon: It is the lowest in Europe.
Mr. Feighan: The figure is 156,000 and the Minister of State is trivialising the amount of people on the register. Some 30,000 manufacturing jobs have been lost over the past three years, by 23 August 2005 ——
Mr. Dardis: What about the amount of people working in the economy?
Mr. Feighan: These are CSO figures ——
Mr. Dardis: An extra 450,000 people are working in the economy.
Mr. Feighan: These are CSO figures with which the Senator cannot argue.
Mr. Dardis: Yes, but they are for one sector. The job losses are only in one sector.
An Leas-Chathaoirleach: Senator Feighan, without interruption.
Mr. Feighan: With regard to benchmarking ——
Mr. Dardis: Sorry, there is the agricultural sector as well. I forgot about the job losses in agriculture.
Mr. J. Phelan: Senator Dardis forgot about agriculture?
Mr. Feighan: Benchmarking should have been renegotiated to ensure real reform of the public sector. Years ago, politicians had an input, or at least people thought they had, into the health sector. Now they have no input. The Government has created a junta whereby Departments, health services and local authorities have their own power, which they can abuse. People in such bodies have given themselves extraordinary pay increases without any benchmarking against service delivery.
Everything is going fine at present, while we have an economy that is robust and is moving forward. However, if that economy suffers a downturn, who will watch the people who are running the Departments? I do not believe anybody can. The Government has let such people get out of control. If anyone approached me for advice on setting up a business, I would tell him or her to forget it and get a job where there is no responsibility, where he or she is answerable to nobody and will get pay increases every year.
Mr. Parlon: Does the Senator want to bring back the health boards?
Mr. Feighan: I did not suggest bringing back the health boards ——
[1127]Mr. Parlon: He is giving the impression that is what he wants.
Mr. J. Phelan: The health boards are still there.
Mr. Feighan: I cannot get through on the telephone to, or get a letter answered by, the Health Service Executive.
Mr. J. Phelan: The health boards are still there, with another layer of bureaucracy added.
Mr. Feighan: At one time one actually received a reply from the health board and politicians had a say on those boards. Now we have transferred power to bureaucrats and people who have no responsibility to the electorate. This is another example of the Government’s leasing out policy.
Mr. Parlon: Does the Senator want to bring back the health boards?
An Leas-Chathaoirleach: I must ask Senator Feighan to conclude.
Mr. Feighan: The fee for a standard, ten-year passport has increased from €55 to €75. If a person wants to get a passport quickly ——
Mr. Dardis: At least such people will be coming home, not leaving permanently as they were when the Senator’s party was in power.
Mr. Feighan: If a person wants a passport quickly, he or she must pay an additional €50. It is embarrassing.
Mr. J. Phelan: We created 1,000 jobs per week when we were in power.
Mr. Feighan: I agree with the points made by Senator John Phelan and second the amendment.
Ms Cox: I am delighted to welcome the Minister of State and to take the opportunity to share my thoughts on some of the issues on which we should focus in the upcoming budget. First, however, I would like to address some of the points made by the Opposition in the past few minutes.
It is nice to hear indirect taxation actually described as indirect taxation. The use of the politicised term “stealth tax” is not fair. It creates a situation where people believe their money is being stolen from them. If we pay more VAT or more money to the Passport Office, we are paying indirect taxation. We need to stand up and say that. No one should be ashamed to say there is indirect taxation in this country. There is nothing wrong with it. We have a low tax base in terms of corporation and capital gains tax, of [1128]which we are proud. A significant percentage of people are outside the income tax net. There is a 20% standard income tax rate and a 42% higher tax rate, of which we are proud. These are the building blocks and the foundation for the success of the economy. There is nothing wrong with indirect taxation. People are now going on holidays three of four times a year. These people are buying passports at whatever cost. There was a time when people leaving the country had to pay €5 tax. This is no longer the case, but if it were, we would make a fortune because people are going on holidays several times a year.
Mr. J. Phelan: Will the Government reintroduce it?
Ms Cox: It will not reintroduce it. However, if I can pay €500 for a second holiday in the year, I will not mind paying €5 or €10 at Dublin Airport if I feel the tax is being well spent.
I would like to take this opportunity to share with the Minister of State some of the issues that are being raised with me on a daily basis. First, I would like to focus on stamp duty. Last year, the Government abolished stamp duty for first-time buyers of second-hand houses which cost up to €317,500. I suggest to the Minister of State and the Government that we should remove stamp duty on family homes or first homes. If an investor buys an investment property, that person should pay more tax. If one is lucky enough to be able to afford a €1 million family home, it is good because if one is working hard and making the money, one should be entitled to spend it. If it is a family home, it should not be subject to stamp duty. Abolishing this tax would protect families and young first-time buyers.
I would make no apology for increasing stamp duty on investment property. If one can afford to buy a second house, one should be able to pay the relevant tax. All I ask is that the family, first-time buyers, single people and young married couples who want to buy their first home are exempt from stamp duty.
I have no doubt that officials in the Department of Finance will be able to work out what this initiative would cost. According to the Permanent TSB-ESRI house price index, the cost of houses for first-time buyers is increasing at almost twice the rate experienced by second-time buyers. The price of houses for first-time buyers increased by 9.4% for the first nine months of this year. If we remove this false level of €317,500, there will be no increase in prices. When this figure was announced, first-time house prices increased from €250,000 to €260,000 and €270,000, and now it is practically impossible to buy a house for €317,500. This was a false inflation. If stamp duty is abolished, there will not be false inflation, and people will pay for the real [1129]value of the house rather than inflated prices as a result of stamp duty.
Senator Dardis’s motion refers to the high rates paid under our fine welfare system. I would like to refer to maternity benefits. Paid maternity benefit has now been increased to a maximum of €249. If the maximum amount is not increased, I would like to see the payment extended. A plan should be put in place whereby paid maternity benefit is extended from 18 to 20 weeks, to 24 weeks and then to 26 weeks, even if it is increased by two weeks a year. By the end of 2010, people who have a baby should be paid maternity benefit for a minimum of 26 weeks.
In parallel with this, the issue of parental leave should be addressed. The Parental Leave (Amendment) Bill was debated in the Dáil last week. Parental leave is being amended so that one can take a minimum of six weeks of the 14 weeks unpaid parental leave. As in the case of carer’s benefit and maternity benefit, parental leave should be capped at a small amount for six weeks to begin with. If children and the family are the core of our Constitution, we should be protecting them during the most important and vulnerable time in their lives. We should deal with the issue of child care during the first year of a child’s life. I would like to put down a marker in regard to maternity leave and parental leave.
I would also like to refer to the environment for businesses, to which Senator Feighan referred. I was disappointed to hear him say he feels like telling people who say to him that they are thinking of setting up their own business that they should get a comfortable pensionable job in a local authority, the health service or whatever. I do not believe this is the Ireland of the future. We must continue to foster entrepreneurship by creating and maintaining the proper environment for all those involved in the economy.
I read with horror recent reports in The Irish Times regarding proposals to increase corporation tax from 12.5% to a possible 17.5%. I have no knowledge of this — perhaps the Labour Party is considering it. I am the owner and manager of a small business. I was involved in running a business in this country when corporation tax was over 50%. One had to work hard to make money, employ people, pay 65% in tax as a PAYE worker and then pay 50% to the Government on the profit. This will not work in the future. While corporation tax on manufacturing and foreign investment was increased from 10% to 12.5%, other taxes decreased. This is why I as a business person, or as an individual working in this State, have no difficulty paying tax at a rate of 12.5%.
I also have no difficulty paying indirect taxation, which is not stealth tax. At least I can now choose how I spend my money. I can choose whether to spend it on holidays, insurance or whatever, because I have a job and I am contributing. I do not mind working hard. People who run [1130]small businesses must work very hard. They make many sacrifices in their family and business life. They may not have 20 or 25 days holidays in a year like people who work in the public sector. They work very hard and pay a fair share of tax at 12.5%. I do not agree with the suggestion that we should increase corporation tax from 12.5% to 17.5%. That would ruin whatever economic gains we have made in this country over the past ten or 15 years.
We have moved away from a 50% tax rate. What did this prove? People were not happy to pay 50% tax. Those were the days of the cheats, when people made up stories and pretended they did not make that much money. Is this what we want to return to?
Mr. J. Phelan: Some of them are still hiding.
Ms Cox: Some of them are still hiding. Many of those in the construction industry are still hiding. However, while there is no place for tax cheats there should be a fair taxation system.
I do not think it right that a small number of people have not paid any tax on very high earnings. However, the Minister should not even think about the 17.5% corporation tax, which will ruin us. He should look at stamp duty, as well as the issue of parental leave and maternity leave.
Mr. McDowell: The main focus of interest this evening is on the Progressive Democrats motion. It gives an obvious flavour of what we can expect from them in the upcoming general election. There is merit in debating the individual issues, but it also entails debating a bit of history, which I find a bit tedious. At a recent debate in Trinity College with Senator Minihan, I made the mistake of allowing him have his way with the history, so I will not do it again. I want to stitch a few obvious historical facts into the record before I get into the meat of the debate this evening.
The Progressive Democrats would have us believe that everyone else has always made a mess of the economy and that they do it brilliantly. They would also have us believe that low taxes form a significant part of the economic growth that we have had in the past ten years. The stability in the national finances came about largely because of what happened between 1987 and 1992. During the Fianna Fáil and Labour Party Government of 1992 to 1994 — when the Progressive Democrats skulked on the back benches of the Opposition due to the row between Des O’Malley and Albert Reynolds — we got into a period of jobless growth. Economic growth was really high, but we did not get the growth in employment. Between 1994 and 1997, we began the current period when we had high levels of economic growth and serious levels of employment growth as well. I have been abroad with Senator Dardis and we have been regularly asked [1131]about the cause of the Irish economic miracle. We give the stock answer about social partnership, foreign direct investment, the low rate of corporation tax, the highly educated workforce that we had in the late 1980s which was largely unemployed, as well as the investment that was made in education prior to that.
By and large, there is consensus in this House about these issues. However, in the past two or three years, the Progressive Democrats have started retrofitting low income tax into this argument. It was not there previously and it should not be there now. Low income tax rates are a result of what we could afford because of economic growth, but they did not bring about economic growth in the first place. Any sensible economic commentator looking at the facts knows that is the case. The fact is that growth had started and was well under way long before we were able to afford to reduce income tax rates. Increases in employment levels were well under way before we were able to afford the reductions in income tax rates. We are into a serious chicken and egg business and the Progressive Democrats cannot be allowed to rewrite history in the fashion they choose.
Having got that out of the way——
Mr. Dardis: Does the Senator feel better now?
Mr. McDowell: I do. I get very tired of this particular argument.
Mr. Minihan: The Senator lost the debate in Trinity College and he cannot win tonight.
Mr. McDowell: Since the Progressive Democrats never tire of trawling through the history books, we must stitch the truth into the record every now and then. I have got bad news for them. The next election will not be about tax, because we will not let it be about tax. I am not telling them many secrets here as we are not stupid. Before the last election, the Labour Party committed itself not to increase the rates of income tax. Our leader said so in the meantime, as did my colleague, Deputy Burton. We will say it again before the next general that we will not increase the rates of income tax.
Mr. Dardis: What about capital gains tax?
Mr. McDowell: The Labour Party was party to the decision to set the corporation tax rate at 12.5%. It is true to say that some of us might have liked to see it at 15% or 17.5% and there was a debate in the Government at the time. The debate was settled and it is over. There will be no proposal from the Labour Party to increase the 12.5% rate of corporation tax.
[1132]I dispute the history of capital gains tax as written by the Progressive Democrats and Fianna Fáil. It is true to say that stockbroking revenues had already started to increase by a considerable amount before the reduction in 1998. It is also true to say that the number of people paying CGT in any given year has not increased as substantially as revenue. In other words, we are still getting only a relatively small minority of people paying CGT, but each individual files returns for much more. We must look into the issue to find out whether there is a migration of income tax into CGT, which can then be paid at a lower rate. I know that the Department of Finance is concerned about that and it should be. If something is a genuine capital gain, then well and good. However, there is no doubt that there are people who are hiding income and making it look like a capital gain so that they can reduce the rate of tax. I do not know what conclusion Deputy Burton will make when she looks at it, but we will let the Government parties know long before the next general election. The next election, as far as we are concerned, will not be about tax. The next general election will be about how we have used the tax. It will not be about whether we have €40 billion to €44 billion to spend in any given year, but about how it is used and what we can get for it.
It was somewhat depressing to read the economic commentators of the various stockbroking companies in The Irish Times today. They were again complaining that the Minister had €2 billion to give away and suggested various ways in which this could be given back to taxpayers, such as tax reliefs, social welfare benefits and so on. That is fine in so far as it goes, but we never seem to be capable of raising our eyes a bit. We should say that there are certain things we want to achieve, such as having a wider provision of medical cards. When will we hear these stockbroker types tell us that we can now afford to do this due to economic growth and because of increased tax revenues? Everything is debated in terms of money which the Minister can give back. I find that very frustrating in the way it determines the argument.
I do not take a deeply ideological view about tax reliefs and exemptions. One must be pragmatic and examine what these breaks are looking to achieve and decide whether they are achieving that. Nonetheless, there is now a consensus that we cannot allow a certain small percentage of high earners to pay no tax at all. That may be dealt with by limiting the scope of individual reliefs or the amount that can be claimed in respect of individual reliefs, or it may be dealt with by the American alternative minimum tax system. I do not have a strong view on that. It may have to be done with a mixture of both.
In 1998, the then Minister for Finance limited to £25,000 the capital allowances that could be written off against non-rental income. That was [1133]an important start, although there are still people who are claiming capital allowances which predate that measure. I suspect that we will need an underpinning provision that a minimum rate of tax will be payable. It must be a simple system and the minimum rate must be just that and not a maximum rate. The basic principle is extremely important and it is one of fairness. It must underpin the taxation system, because if it is not a generally accepted principle then people will cheat and will not pay their fair share of tax, or any tax at all.
I do not have any difficulty with the Fine Gael amendment to the motion, nor does the Labour Party. It is worth emphasising a couple of points that are made in the amendment. The Minister deserves to be commended in taking the minimum wage out of the tax net. It is important that that remains the case and as the minimum wage increases, the minimum tax credit and the exemption limits should also increase. It was always absurd that we would decide by law that it was unacceptable for people to be earning less than a certain amount, yet take some of that away from them. It took the Government seven or eight years to correct that position and it would be unacceptable if it now turned its back on that achievement before the next election.
Where does individualisation stand in the Government’s tax priorities? The Labour Party and I opposed it at the time, but I must confess that my views migrated a bit and I no longer oppose it. However, we are now left with a hybrid system which is pretty senseless. I urge the Minister to finish off the job and to individualise tax completely, while individualising the social welfare system at the same time, where we still continue to treat dependants as just that, rather than as individuals in their own right.
I wish to come back to the point I made earlier. There is, by and large, agreement on where we stand in terms of income tax, corporation tax and capital gains tax. Whether or not the Progressive Democrats like it, the next election will not be fought on these issues. It will be fought on the basis of what we do with the €45 billion in tax revenues we have. On that issue, this Government is extremely vulnerable and will lose very badly.
Mr. Brennan: I wish to voice my support for the motion. Previous speakers have spoken about the importance of our taxation system to sustaining our economic development. Reference was also made to the fundamental importance of a fair system. Rather than repeat what others have said, I wish to discuss fairness, especially for older people. As my colleague, Senator Minihan, correctly stated in the past, a progressive tax system is based on the ability to pay. We all recognise that some older people find themselves unable to [1134]pay all of the bills and charges with which they are presented.
The Government has committed itself to implementing a full range of policies aimed at supporting older people, including delivering decent pensions and greatly improved care services. Progress on this commitment is welcome — for example, the €12 per week increase for the old age pensioner in budget 2005, the proportionate increase for contributory pensioners on reduced rates, the additional revenue funding allocated to services for older people from 1997 to 2004 of €286 million and the additional €15 million allocated for services for older people in 2005. There are, of course, many other initiatives which benefit older people from various Departments and agencies.
I am concerned, however, that there are areas of expense for older people which need to be looked at again — for example, the cost of domestic waste disposal. There is now a wide range of charging regimes and costs in respect of waste management. The introduction of measures such as a broad increase in the old age non-contributory pension to address this issue is not feasible. The challenge is to design a system to assist older people who rely on private domestic waste collection which takes into account the different local arrangements.
The Minister for the Environment, Heritage and Local Government correctly states that the setting of waste management charges and the introduction of waivers in respect of waste charges is a matter for each local authority and I accept a number have done so. My main concern is the ability to pay. In an area where a private operator handles waste management, there may be no waiver available. This can place older people in a difficult situation. For many older people, they must have a physical disability to avail of this service. Where no waiver exists, we effectively have a regressive charge if ability to pay is not considered. The sense of fairness is diluted. There is a case to be made for old age pensioners. The Department of Social and Family Affairs should include a refuse charge allowance under the free schemes in operation such as free travel, ESB allowance, telephone rental, television licence and fuel allowance.
I applaud the Minister and his Department on the progress which has been made but I hope that in time when the balance of tax schemes and incentives are being evaluated, the difficulties of systems such as waste charges are also kept in mind. I would like the relevant Minister to look at local authority charges, especially where group housing is concerned, to question the eligibility of that scheme and to see if it is legal. I wish the Minister well in his forthcoming budget.
Mr. Ryan: The trouble with following my colleague, Senator McDowell, is that he is so good [1135]at developing points in a logical and calm way that I must restrain my usual style and fit in with his logical and calm way of dealing with things.
Mr. Minihan: The Senator is illogical.
Mr. Ryan: When one is trying to deal with the massive contradiction which is the Progressive Democrats, it is very difficult to be logical because of its aspirations to be the party of social justice, of low taxes and its determination to be the party which looks after the rich. It is very hard to reconcile the three aspirations sometimes and, therefore, one is tempted to be illogical and follow it down the illogical cul-de-sac into which it has got itself.
There are two ways to look at taxation. One can look at it through the eyes of an economist or at the political realities. The political realities are that I do not believe anybody in this country with a serious hope of being in Government can do other than say income tax rates will not be raised. Therefore, I have no problems with my party’s position on that. Similarly, we have come to a political consensus on the nature and rate of corporation tax, and I accept that. However, I do not believe there is an overwhelming or, indeed, an economic argument that there is a level of income taxation and of corporation tax below which one gets enterprise and above which one does not.
I am intrigued by two things which show up as huge deficits in our society. The first, incidentally, is the absence within the Roman Catholic Church of an educated laity. One of the scourges of the present problem is that there is no lay intellectual movement within the Catholic Church to challenge everything that has happened. The second is the absence of any real original thinking in our academic economics departments. We will not produce Nobel prize winners in economics because every academic economist of whom I am aware is a replicator of other people’s thinking.
There are no universal laws of economics. There are things which work and things which do not. The things which work differ from country to country and society to society. The Swedish consensus on taxation would never work in the United States where well-off middle-class areas do not have public lighting because the public has decided it does not want to pay taxes to provide it. One cannot produce a single model. The naivety and the manifestation of the ideological rigidity of the Progressive Democrats is that it goes from particular successes to try to produce some general arguments. It is a logical flaw. In my first year of two years of a novitiate I was taught that moving from the particular to the general in an attempt to prove some universal law is nonsense. It continues to be nonsense.
[1136]Mr. Dardis: There are universal laws of economics.
Mr. Ryan: I do not believe there is a single universal law of economics. I will tell the Senator why——
Mr. Dardis: Newton’s law is a universal law of economics.
Mr. Ryan: I am an engineer and, therefore, something of a scientist. I am sceptical as to whether science knows any laws of nature. All we have are the best approximations of what currently is known and many of those will be revised. Newton’s laws are crude approximations of Einstein’s E=mc2. We spend our lives relearning and rewriting. If it is not true in the physical sciences, it is most surely not true in the so-called science of economics. As somebody said to me, economics is related to science in the way astrology is related to astronomy. One is an abuse of the term, the other is something real.
The point I make is that economics is not something which can be picked. There are people, most notably in the IMF and the World Bank, who seem to believe there are universal prescriptions which one can apply everywhere. Over and over they have been shown to be wrong. It took a number of years for the World Economic Forum at Davos to begin to accept that one could not measure competitiveness by the level of public expenditure. It used to classify any country with a high level of public expenditure as being inherently uncompetitive until it discovered that some countries with high levels of public expenditure, such as Denmark, Finland, Sweden and others, were extraordinarily competitive. It accepts, therefore, there were different ways and its reports refer to good and bad public expenditure. Given the wasteful nature of the Government and the number of times it has got the timing and costs of projects, etc., wrong, perhaps it ought to accept it is on the wrong side of the argument regarding public expenditure and competitiveness. We will not hold our breath. Perhaps the Government will get it right this time on transport, as it makes a second attempt to do what it tried five years ago. One can only hope the Government will.
I am glad my colleague, Senator McDowell, mentioned capital gains tax. I do not know whether there is an optimum rate of CGT or whether there is a universally applicable rate. Varying rates of CGT could be charged in different circumstances to achieve different objectives in terms of revenue and incentive. The notion of a standard flat rate, therefore, is questionable while a standard low rate is even more questionable. Senator McDowell also raised the issue of income being declared as a capital gain because it can be taxed at a lower rate than, for example, [1137]the income of someone on the minimum wage, which is not right.
The graph of capital gains tax returns over a number of years highlights that revenue does not correlate with the CGT rate. It correlates with economic activity and other factors but CGT revenue increases and decreases. I examined this because a colleague on the Independent benches stated the greatest argument for the low rate was the increase in revenue. However, the figures indicate that it is a simplistic analysis to say the return on CGT is entirely a product of the rate at which it is set.
The amendment refers to Irish citizens who claim non-resident tax status. The US has taken the correct view whereby if one holds an Irish passport, one is taxable in Ireland. The State should not allow its citizens to be taxed twice. If one pays higher taxes in the country in which one lives, that should be recognised so that people are not taxed on the double. The notion that one can hold a passport without being obliged to pay tax is questionable. As a first step, the Minister should amend the law to ensure it is up to people claiming non-resident status to prove they are not resident rather than it being up to the State to prove they are resident. In other words, the burden of proof should lie with the person who is non-resident to satisfy the Revenue Commissioners that he or she does not reside in the State.
It is good that there is cross-party consensus that everybody in the State should pay a minimum rate of tax and that nobody should be able to use a combination of schemes, exemptions and incentives to avoid paying income tax. I am glad there is also an aspiration that people on the minimum wage should not pay income tax. It is a pity they were the last priority in the Government parties stage by stage reduction in income taxes. They commenced with the well off and concluded with a concession to those on the minimum wage. People earning €6.50 or €7 an hour were the last to receive a generous change in their income tax status whereas those on much larger incomes such as myself and most Members of the House benefited initially. That is a peculiar set of priorities for people who are strong on the rhetoric of equity and social justice.
Minister for Finance (Mr. Cowen): I am glad there is a consensus that there should be a minimum wage in the first place since we introduced it. The Opposition parties had three years to introduce it but did not.
Mr. Ryan: We were cleaning up Fianna Fáil’s mess.
Mr. Cowen: When they were in office, the entry point in the tax system was €98 per week, which is a little over €2 an hour.
[1138]Mr. Ryan: We are talking about the present.
Mr. Cowen: Yes, and given that Senator Ryan brought the House through astrological eras, I can refer to the last few years as a more realistic timeframe in which to assess one’s commitment to social justice.
I am grateful for the opportunity to address the motion. Over the past eight years, the Government’s clearly focused tax policy has proven to be a remarkably successful economic tool and has undoubtedly been a major contributory factor to our economic growth. The move to a lower direct tax burden for individuals and for business was a key element of the fiscal approach outlined in the previous Government programme, An Action Programme for the Millennium. The present programme, An Agreed Programme for Government, maintains the momentum in this regard. The motion acknowledges the commitment set out in that programme to keep down personal and business taxes and to strengthen and maintain the competitive position of the economy.
While there is a consensus in the House on these low tax rates, they were opposed consistently following every budget in which they were introduced by a Fianna Fáil Minister. Perhaps we should not pass too many remarks on the voting records of Opposition Members, if that is their stated position.
To put the progress we have made in context we should examine a few facts. Between 1982 and 1988 the standard corporation tax rate was 50% while, during the same period, the top rate of income tax was never less than 58% and it reached 65% in 1984. When the Government parties took up office in 1997, the rates of business and personal taxes were still high compared with current rates. The standard corporation tax rate was 36% and income tax rates were 26% and 48%, respectively. Over the past eight years, corporation tax has been reduced to a standard 12.5% and the income tax rates reduced to 20% and 42%, respectively.
Senator Ryan stated he did not feel a specific rate denoted enterprise. However, as a member of the Government, I have met foreign direct investors in many countries over the past number of years. The corporate tax rate is a landmark issue for them. A move from a rate of 12.5% would be regarded negatively by international mobile investment in terms of how the country is viewed for further investment. There is a rate beyond which a strategic direction would be detected by international investors as being less favourable than the current rate. That is one of the reasons we have stoutly defended tax sovereignty in the European Union debate. That is of fundamental importance to us.
With regard to personal income tax, since 1997 the tax bands have been widened and the system of tax allowances has been replaced by tax cred[1139]its, favouring those on lower incomes proportionately. The value of the main personal credits has increased significantly to take many more people out of the tax net. The Government introduced the minimum wage in 2000 and, consistent with the Government programme, exempted it from tax in the last budget. We increased the exemption rate in previous budgets until the last budget when we were in a position to take those on the minimum wage out of the tax net altogether. Last May, we further increased the value of the wage to €7.65 per hour, which is the second highest minimum wage in the European Union. In 1997, when Deputy Quinn was Minister for Finance, the entry point to taxation for a single PAYE person was under €98 per week. Following budget 2005 the entry point is €274 per week, an increase of almost 180%, a not inconsiderable achievement. By comparison, inflation since 1997 is projected to be approximately 31% to end 2005.
With regard to individuals on the average industrial wage, our tax policies have meant that take home pay has increased by more than €11,000 since 1997, an 82% increase, and the average tax rate for a single PAYE person on the average industrial wage has been reduced by more than ten percentage points from more than 27% in 1997 to less than 17% in 2005. The same person has seen his or her after tax income increase by about 40% in real terms since 1997. About half of this increase is due to lower taxes.
The motion before the House refers to the generous tax and welfare system for single income families on the average wage. The latest data available from the OECD relating to 2004 indicate that a married couple of one earner with two children on the average production wage in Ireland in fact receive more money in cash transfers from the State than they pay out in income tax and social security contributions. This is an important indication of the levels of social justice we are achieving through tax policies that have been misrepresented by the Opposition as against the poor or those on average wages. The contrary is the case.
Only Luxembourg is in the same league as Ireland in this respect. The OECD figures do not take account of the further improvements we made in the 2005 budget. Since 2000, Ireland has had the lowest tax wedge in the 15 EU member states before enlargement for the average single worker. Workers can keep more of what they earn and for employers the cost of employing staff is kept down. The tax reforms have been functional in providing more employment and dealing with the tax and wage problems inherent in our system from previous eras.
The motion also refers to the high numbers of income earners who are now out of the tax net. The latest information from the Revenue Commissioners indicates that over 720,000 income [1140]earners are likely to be out of the tax net this year. This is one in every three income earners and the lowest third of income earners are removed from the tax net. This compares with 380,000, or one in every four income earners, in 1997 when Fine Gael, the Labour Party and Democratic Left were in Government. This is clear evidence of our proven commitment to those on lower incomes and an indication of our commitment to and achievement in improving social justice.
For the economy, the impact of a lower tax burden at personal and company level, combined with a number of other factors, has contributed to higher levels of investment from abroad and to economic growth being sustained at levels higher than our EU counterparts. The other relevant factors include greater investment in education and training, favourable demographics, a well-developed social partnership process and a relatively light regulatory regime.
Allow me to outline some facts and figures that demonstrate the success of this Government’s economic and taxation policies. As measured by GNP, the economy grew by almost 28% in the first five years of this decade up to 2004. This year my Department expects growth of around 5% meaning the economy will have grown by one third in cumulative terms since 1999, a significant achievement.
This economic growth, underpinned and supported by our employment-friendly taxation policies, has led to strong job creation. In the five years to the March to May quarter of this year, total employment in the economy grew by over 250,000 to reach almost 1.93 million. In the face of a rapidly growing labour force, now over 2 million, we have maintained close to full employment. Our unemployment rate stands at just 4.2%, compared with an EU average of approximately 9%. It is no wonder the Opposition has given up on the ideological battle and these facts show how the economy is doing.
We have consistently pursued a disciplined fiscal policy. Between 2000 and 2004, our average general Government balance was in surplus to the extent of 1.3% of GDP. Our general Government debt ratio has fallen from 48% of GDP in 1999 to an estimated 29% by the end of this year. This Government’s economic policies have worked. The economy has performed very well and delivered in terms of growth, jobs and higher living standards.
This is not just my view but that of respected and authoritative international commentators. I was happy to hear the governor of the European Central Bank recently citing Ireland as a “magnificent performer” when he was making the argument for structural reform in the EU and euro zone economies. It is not a coincidence these taxation reforms have delivered the lowest unemployment rate in the European Union. The struc[1141]tural reforms necessary in many larger EU states are evident. We have observed the difficulties they have had in dealing with this issue. Ireland has an economic model that works far better by providing more employment, more take home pay, the second highest minimum wage in Europe and a taxation system that ensures the lowest third of the workforce is exempt from the tax net.
In its recent review of the Irish economy the IMF commended the continuing impressive performance of our economy which it said was “the result of sound economic policies”. If the IMF or the European Central Bank governor were saying other things, these would be quoted to me. These statements give an indication of the comparative performance of the Irish economy vis-à-vis our competitors.
Economic developments have continued to be positive this year, especially in respect of jobs. The most recent data from the CSO show that employment up to May grew by some 93,000, or over 5%. Many of these jobs were in high-skilled, highly-paid sectors, for example, employment in the financial and other business services sector grew by 20,000. Another positive this year has been our inflation performance with the rate of increase in prices here likely to be no higher than the euro zone average for the year as a whole. This is an important milestone and one we need to build on in the years ahead.
The motion before the House also refers to the comprehensive programme of reviews of a broad range of tax incentive schemes and tax exemptions which I announced last December in my budget speech. The vast bulk of taxpayers in this country pay their fair share. It is unacceptable that some of the wealthiest residents in Irish society should be able to use property and other tax incentives to avoid paying any income tax while at the same time enjoying the services provided by the State. The tax system must be seen to be fair and must apply to everyone, regardless of their contribution to the development of the economy or more generally to society.
Accordingly, I put the programme of reviews in place last year. The purpose of the reviews is to evaluate the impact and operation of relevant tax reliefs, including their economic and social benefits for the different locations and sectors involved and to the wider community. The reviews are also examining the degree to which these schemes allow high-income individuals to reduce their tax liabilities. A number of the schemes are being reviewed internally within the Department of Finance and the Office of the Revenue Commissioners. Following a competitive tendering process, two external consultancy firms were retained to conduct reviews of the range of property-based tax incentive schemes. The complete report from the consultants is being finalised. On this basis, the reviews are being [1142]completed in time for consideration in the 2006 budget and the Finance Bill.
Let there be no doubt that properly structured tax incentives can make a positive contribution to economic and social development by directing private capital to areas of wider community benefit as well as providing a benefit to the potential investor, without which an investment would not be made. However, I have signalled that I intend to address any abuse of such property and other tax incentives in the forthcoming budget.
I will also consider the need for horizontal measures such as a cap on the total allowances which will limit the amount any individual can claim from these incentives. Any decisions in this regard will be taken in a thoughtful and balanced manner. I am glad to note the agreement in this House on the need to do this in order to minimise the impact on employment, particularly in the construction sector and with a view to ensuring that the positive role tax incentives can play in social and economic development is maintained.
There are grounds for cautious optimism in respect of the economic outlook for 2006 and beyond. This is not just my view but also that of other domestic and external commentators. In its recent world economic outlook the IMF projected GDP growth of 4.9% here in 2006. I am mindful of a number of risks facing the economy including: the possibility of further increases in oil prices from their current elevated levels which would adversely affect international trading conditions and inflation; the imbalances in the international economy including the twin deficits in the US economy and the risk of a sharp fall in the dollar and appreciation of the euro; and in the domestic economy, the rate at which the house-building sector adjusts to a normal or sustainable level of output remains an uncertainty.
We cannot do much about some of these factors, some of which relate to international conditions outside our control. We must retain the disciplined policy mix that has worked so well and won the endorsement of key international bodies, to which I referred earlier. We must also seek to reinforce and improve our competitive position.
When addressing this House last year, I made the point, which remains the case today, that low personal and business taxation have been good for economic growth. They are a key part of our overall economic policies which have been proven to work well and which make us the envy of other countries in Europe and elsewhere.
I am glad the old political canard is no longer being trotted out here by the Opposition — at least in that part of the debate I have heard so far — that is, the myth in Irish politics that if one wants to show a commitment to public services one must believe in a high tax economy. The fact is that lower taxes have brought greater resources and greater economic activity, as well as sus[1143]tainable improvements in public services beyond our thoughts or dreams less than a decade ago. That is an important point and I welcome the fact that it is no longer being contested. The evidence is clearly against those who might seek to contest it. People talk about the difference in capital taxation rates, but I do not agree with the assertion that there was not much greater activity when the rate went from 40% to 20%. I can forward the details to the Senators concerned. From memory, however, if one goes back to 1995 or 1996 there were about 7,000 notices of assessment at the 40% rate bringing in £158 million. In the 2000-01 period, one is looking at 24,000 notices of assessment bringing in far greater amounts than that. Currently, we have a tenfold increase in capital taxation as a contribution in terms of volume, quite apart from the increase as a percentage of the tax take. That should be welcomed by those who want to see capital taxes making a greater contribution to the State’s total tax take. The tax take, not the tax rate, is the issue. If I want to bring about a greater contribution of capital taxes, I want to know what it is as a percentage of my total tax take in any given year, and whether it is a greater tax take than was the case in the past. The answer to that question is “Yes, it is a considerable improvement”.
If one goes back to the period when the Opposition parties were in office, only €1 in €25 was being collected in capital tax, whereas the current figure is approximately €1 in €11, or even less. I will have to check those figures, however, as I am working form memory.
Mr. Ryan: It is not quite as clear as the Minister makes it out to be.
Mr. Cowen: I can give the Senator the exact figures.
Mr. Ryan: No, there is more to it than that.
Mr. Cowen: The reason I like coming to this House is that I can have a debate.
Mr. Cowen: I can get the exact figures for the Senator, however.
Mr. Ryan: It appreciate that and that is why I do not wish to interrupt the Minister.
Mr. Cowen: The generality of my argument is correct. The tax take in capital taxes with lower rates is far greater than the tax take as a percentage of total revenue with higher rates.
[1144]Mr. McDowell: How much would it take in tax?
Mr. Cowen: I would have thought that for those who espouse social justice, it is an argument that would allow them to change their minds.
Mr. Ryan: We have heard the argument, but is it income masked as capital gains? That is the argument.
An Leas-Chathaoirleach: The Minister without interruption.
Mr. Cowen: No, it is capital tax. I have indicated that the greater number of assessments accepted as capital gains, and liable for capital gains tax by the Revenue Commissioners, increased by a factor of almost four over an eight-year period from 1995 to 2002. I can forward the details to the Senator but the facts speak for themselves.
Our remarkable economic growth has enabled us to invest greater amounts in public services and infrastructural development. The major Transport 21 investment programme, worth €34.4 billion and launched yesterday by the Government, is one example. My aim is to get clear value for money for what we spend and the 12-point plan which I introduced recently has a key role to play in that regard.
When it comes to tax incentive schemes and reliefs, the Government is determined to get the balance right — to encourage worthwhile development on the one hand while at the same time ensuring that all high-income earners who can do so, make a real contribution to funding the national budget.
As a committed pragmatist, I agree with whatever gets me most money and that is why I agree with lower taxes.
Mr. Dardis: Hear, hear. That is fair comment.
Dr. Henry: I thank the Minister for attending the House and I welcome his address, which was extremely clear. It would be churlish of me not to say that I have enjoyed the tax regime of the past few years. I was one of those who warmly welcomed Mr. McCreevy’s individualisation plan, having for decades been assessed — as someone in the Revenue once said — as though I were a wholly-owned subsidiary of my husband. That was not a remarkably cheerful thing for a professional woman to be told. I welcome the fact that now I have never paid less tax proportionate to my income in my life. I do not know whether or not it is just that this should be so, but I have found it to be an extremely agreeable experience.
I wish to refer to a few matters that are sometimes overlooked. Some people get into difficulty when trying to follow the Government’s instruc[1145]tions as to how they should lead their lives. Even though they may be well off, they find themselves in a serious situation regarding money and taxes. I am glad the Minister said he would try to ensure that some of the wealthiest individuals in the country, who are currently avoiding tax, will end up having to pay it. It has been said to me that the latter group is treated preferentially while others are treated badly.
I will cite a case in point for the Minister. It concerns an elderly couple, with a good income, where the husband worked all his life and paid a considerable amount of tax, while the wife always stayed at home. When both were in their mid-70s, the man suffered a stroke. We are advised to try to keep family members at home as much as we can. The Department of Health and Children certainly wants people moved out of acute beds into rehabilitation beds and then back home. This is what my friends tried to do. They sold their house for well over €1 million and bought a small ground floor apartment. The man is incapacitated, but his wife was keen to have him at home where she could look after him. When the money they had left over from the house sale was invested, even with his good pension, they had a totally inadequate income to pay for health services at home. Let us say that they had an income of €40,000, which is considerable, while their outgoings for health services alone were €50,000. It cost over €1,000 per week to pay an agency for help. I thought this was bad enough but this was not the poor woman’s complaint. She is prepared to sell her shares and the income is declining and her husband may live for a very long time. Her complaint, however, is that she must pay 21% VAT on the agency fees, which I find almost unbelievable.
Their children are prepared to give their parents money. However, the children can only give €3,000 each from their taxed income towards the health care of their incapacitated father. After €3,000 that money is also taxed, which the woman involved is also upset about. Very wealthy individuals may be paying no tax, and while the couple I mentioned are not poor, their children are anxious to do the best they can for their father. Nonetheless, their children appear to be heavily penalised for what they are trying to do. Will the Minister examine why individuals must pay tax on attendance fees charged by nursing agencies or others who are not even nurses? In this situation, it appears that the money will run out at some stage whereupon the man will become a charge on the State. The woman is well able to maintain herself and her house but, as she told me, only 13% VAT is charged on hairdressing.
I wish to raise another point which is important from the point of view of international competitiveness and which should really come under the heading of stealth taxes. It is the question of [1146]encouraging people to take out private health insurance. The Minister for Health and Children, and her party colleagues, frequently point out with some satisfaction that 52% of the population is now paying for private health insurance.
That is not to be rejoiced in as it is a sign of a lack of confidence in public health care. Public health care, if one can get it in this country, is extremely good. It has been put to me that some firms are paying employees’ private health insurance. When I mentioned this to owners of Irish firms, some of whose firms are small and employ 20 to 40 people, they said it is an absolute disaster and that it would amount to a terrible cost to them if they had to do so.
In the United States it is the norm when looking for a job to try to obtain from one’s prospective employer a package in which private health insurance will be included. If this practice continues in Ireland we will run into very serious problems in terms of international competitiveness. I was in the United States some weeks ago and noted the cost of private health care is rocketing. The VHI is a not-for-profit organisation. BUPA has community rating at present but it is very important to remember it is not community-rated in the United Kingdom. If we start this race for the top in private health insurance, it will result in serious added costs for industry. I hope the Minister will try to calm the enthusiasm for making private health care part of the package that makes a job all that much more desirable. Private health insurance should be acquired by individuals if they want it. Public health care in the Republic should be considered adequate for everybody. Of course it has problems but it is good and will be supported.
Another area I hope the Minister will examine is the building of private hospitals. He must have noticed the concern expressed by some in the private hospital sector over the number of private beds we propose to build. At present, the private beds are being well-supported by taxpayers through the National Treatment Purchase Fund. The funding in this regard comprises a very important part of its income. I have been told by some of my colleagues that it is sometimes hard to accommodate paying customers of some of the health care organisations because the beds are taken up by National Treatment Purchase Fund patients. We should be very careful when considering the economics of this matter or we will end up paying on the double. We will be giving tax relief to the hospitals for which we are providing public land and at the same time we will be paying the very same people who built the hospitals for taking care of people who should be taken care of in the public system. While the current proposals in this regard might sound fine and dandy, it should be noted that certain people with much experience in this area are genuinely con[1147]cerned. The Minister should reconsider the matter.
Dr. Mansergh: I warmly welcome the Minister and his officials. I agree with Senator McDowell that it is important to get the history right. Of course I welcome the motion under discussion and I am glad that keeping the public finances in a healthy condition is put first. In 1987 there was some argument as to whether one should cut taxes first in the hope that the public finances would return to a state of order because of the stimulus involved, or whether one should freeze all tax reliefs and concentrate on putting the public finances in order. The latter was what happened first. In 1989, Albert Reynolds, who was part of a Fianna Fáil minority Government, cut the standard rate of tax by 3% and the higher rate by 4%. This policy continued under the Fianna Fáil-Progressive Democrats Government between 1989 and 1992 and was resumed after 1997.
On the question of income tax, it is striking that there has been a reduction of 31 points in rates of taxation since 1987. Governments involving Fianna Fáil Ministers for Finance have been responsible for 30 of the 31 points. The Progressive Democrats, while in coalition with Fianna Fáil, have been responsible for approximately 25 points while Fine Gael and the Labour Party were responsible for just one.
Perhaps Senator Ryan is being a little optimistic. I accept that there is now much broader acceptance and consensus that low tax rates are to the benefit of the economy but it is clear that the Labour Party is making noises about capital gains tax that suggest it is not fully convinced it should remain at 20%. The party disliked it intensely initially. I am sure people in business will duly note that. Prospective partners such as the Green Party are very keen on carbon taxes and——
Mr. J. Phelan: The Senator’s partners in Sinn Féin are very keen on a few things as well.
Dr. Mansergh: ——rocketing up the price of transport and motoring. It is still advocating this despite the fact that oil prices have increased enormously. Confidence in who will keep tax rates low will very definitely be an issue in the next election.
I agree we are generating sufficient revenue to do what we need and want to do. Yesterday’s Transport 21 investment plan is a clear illustration of this fact. Obviously, it is necessary that a tight rein be kept on expenditure to maintain its efficiency.
Sometimes I would like if Ministers boasted not about how much more than others they had spent but about the amount of taxpayers’ money [1148]they had succeeded in saving. Apropos the transport plan, Senator Ryan mentioned that some of the ideas were delayed for five years. That may be so but much is happening. I do not remember any transport plans in the rainbow coalition’s election manifesto. At least an enormous amount is being done.
I will use my remaining time to discuss a few matters relating to the forthcoming budget. The Minister was quite correct to point out that this Government, in its previous reincarnation, introduced the minimum wage in the first place. Last year a major priority was to take people on the minimum wage out of the tax net. Some of them fell back in. It would be worthwhile for the Minister to complete this process and, if possible, leave a margin of safety so employees do not fall back within the tax net. Having said that, it must be pointed out that not everyone on the minimum wage is poor. In some cases, they may be students trying to earn a bit of extra income and therefore one should not be too simplistic about the matter.
Child care is clearly a major priority for the budget, irrespective of how it is approached. I envisage reliefs in this regard as taking precedence over other tax reliefs. As the Minister is probably aware, many of us met IFA representatives in the course of the day. The first item on their agenda has a good deal of merit. They advocate that where landholdings are being consolidated, they should be free of capital gains tax, except where people are putting money into their pockets as opposed to restructuring those landholdings. This also has an animal health dimension.
We all wish the Minister well regarding his plans for tax incentives for the construction industry because it is booming and not all of these tax reliefs are needed. The Minister should carry through his intention to limit these tax reliefs.
The Minister should tighten up definitions in the artist’s exemption scheme. I am not convinced that the scheme was intended to include political memoirs written by Members of the Oireachtas and there are other works that should not be included in the scheme.
Mr. B. Hayes: It depends on how good these memoirs are.
Dr. Mansergh: Does Senator Brian Hayes mean that it depends on how fictional they are?
Mr. Cowen: It depends on how creative they are.
Dr. Mansergh: Before a change is made in the stallion tax relief scheme, we should examine where tax sovereignty begins and ends and where State aid applies. We should bear in mind that this scheme has existed since the late 1930s rather than 1968 or 1969, when it was ring fenced. I am [1149]sure the Minister will approach the question of tax residency in a strictly pragmatic fashion because it is the economic interest of the country that counts. If the period of 180 days is reduced to, for example, 40 days, this is the amount of time people would have to spend their money.
Mr. B. Hayes: I welcome the Minister to the House and look forward to this debate, which has been ongoing since 5 p.m. I thank Senator Mansergh for his advice, which we will follow closely, about our prospective partners. Fianna Fáil’s prospective partners recently produced a very fanciful economic portfolio and list of proposals and I would be wary of their proposals regarding a new tax rate.
Dr. Mansergh: To which party is Senator Brian Hayes referring?
Mr. B. Hayes: Sinn Féin, the other republican party.
Mr. B. Hayes: I thank Senator Mansergh for his very useful advice. Everyone knows that average taxpayers saw their tax bills rise after the last general election. The reason for this rise in the first two budgets after the general election was the Government’s failure to index the tax bands. It failed to do this because for an 18-month period before the last general election, there was a giveaway involving a ratcheting up of current expenditure, which had to be paid for and which was paid for in the first 24 months after the last general election.
In his first budget, the Minister took action regarding the indexation of tax bands but it was the largest single increase in tax after the last general election. As someone who did not favour tax individualisation, I was heartened when the Government initially introduced the home carer’s tax credit. It introduced this measure as a compensation mechanism to help single-income couples who decide that one spouse should look after the children at home. Why has there been no increase in the home carer’s tax credit in the five consecutive budgets since its introduction by the former Minister for Finance, Charlie McCreevy? There has been no increase in this tax credit for five years. Why has there been no increase in this benefit when we are supposedly serious about recognising some families who choose to have only one income?
While many workers gain financially through overtime payments, much of this money is taken back because the additional income is taxed at the top tax rate of 42%. ICTU introduced a proposal a few years ago to tax overtime payments at a rate between 20% and 42% as a means of cushioning additional payments received by less [1150]well-off workers throughout the year. This proposal was endorsed at the time by Fine Gael’s finance spokesperson and I would like to see a debate on it. There is a considerable jump between 20% and 42%. It is not considerable for a person earning over €70,000 a year but it is for someone on a much lower income. If we are serious about having a fair and equitable tax system for working families and individuals, we must realise that the existing jump between 20% and 42% is far too significant and might well be overcome by the introduction of a third rate that is between 20% and 42%.
I agree with colleagues who argued that it is absurd that very wealthy people with Irish passports pay no tax, although I accept that the number of such individuals is quite small. At the minimum, we need a basic level of tax which every citizen pays. It is wrong that people can shelter and hide their income as a means of not paying tax. I ask the Minister not to carry out further examinations but to take decisive action in the next budget to ensure that people with very substantial incomes cannot offset their income against tax. From the figures cited this evening, it appears that the Minister will have somewhere between €1.5 billion and €2 billion to hand out on budget day.
There is a large degree of consensus on capital and income taxation. The issue has largely been put to bed because of the resources the State has at its disposal. When Fine Gael was last in Government, it had less resources to offset against reductions in tax than the Government which followed Fine Gael’s economic platform after the 1997 general election. The success of the economy is based on trying to reduce taxation, thereby increasing the amount of revenue available on the capital side and for other worthwhile projects. Despite the efforts of our friends on the opposite side of the House, the focus in the next general election will on competence and how much has been wasted over the past nine years by a Government that has been unable to deal with all the demands our modern economy presents rather than on tax.
Mr. Dardis: I am sorry I could not get my briefing from the Minister. I thank all those who participated in this debate, particularly the Minister for Finance and the Minister of State at the Department of Finance, Deputy Parlon, for their attendance and contributions to the debate. Several requests for a debate of this nature have been made over the past few weeks and I am glad that this evening’s Private Members’ business could facilitate it and raise some of the wider issues and philosophical questions surrounding the matter. I will not venture as far into philosophical matters as Senator Ryan did because one enters the existentialist spectrum at that point.
[1151]Mr. Ryan: Senator Dardis should not insult existentialism by associating me with it. There are far more serious people involved in it.
Mr. Dardis: I accept that economics is not an exact science but we can say with certainty that the reduction in personal tax rates led to increased revenue and economic activity and that the reduction in capital taxes also led to increased economic activity. I accept the point made by Senator McDowell that wider factors, such as the social partnership, also helped the economy. However, the reduction in personal tax rates was an essential brick in the edifice that created the economic miracle of modern Ireland.
When these arguments began in the late 1980s, there was a universal chorus that if personal tax rates fell, revenue would fall and the services the State provided for its citizens would be drastically affected. The opposite has happened. The reduction in personal tax rates allowed us to create the conditions which give us the capacity to deal with social problems and look after the most vulnerable people. I reject Senator Ryan’s proposition that the Progressive Democrats or any other party was interested in looking after the rich. This is not true.
Mr. Ryan: It is why they vote for the Progressive Democrats.
Mr. Dardis: We attempted to create the wealth that would give the State the revenue to carry out the measures that are essential for the most vulnerable people in our society.
Mr. B. Hayes: That is a Stalinist argument.
Mr. Dardis: There are two sides to the argument concerning capital taxes. One relates to capital gains tax, while the other relates to inheritance tax and other capital taxes. They are not at a level that would be a disincentive to farmers. The Minister rebutted Senator Ryan’s point. There is a level, although I do not know what it is, at which taxation is a serious disincentive to people to act and put money into the economy, and to inward investment.
It is important that farmers are able to transfer property to the next generation, without undue burden, during their lifetime. The inflating value [1152]of land reflects developments in the construction industry and elsewhere and feeds back into rural society, which requires examination. A case ran for several years about siblings living in expensive dwellings in Dublin, whereby one sister died and the surviving sister, living in the house, was subject to such high capital tax that she would have to sell the house. That was remedied, rightly so, because there can be hardship in such cases. Anything that can be done to ensure the transfer of land and farms to the next generation, on the consolidation issue to which Senator Mansergh referred, should be done.
I come from County Kildare where the bloodstock industry is very important. There is a perception that the mega-wealthy gain from this. A few do but many small breeders have benefited from the tax exemption which applies only to stallion fees, although it is represented as an exemption on all the breeders’ activities. This is a flagship industry. It is mobile because the stallions can travel around the world, and it would be unfortunate to lose good stallions by removing the exemption.
While I understand the pressure coming from the European Commission on this matter, the exemption is positive. Perhaps the way to deal with it is as the Minister has suggested for other exemptions, namely, by applying a cap. Everything above the ceiling would be liable for tax and everything below would be exempt.
This has been a useful debate. Senator Feighan seemed to suggest that the minimum wage affects our competitiveness. The converse is to abolish the minimum wage, which I am sure Senator Feighan would not do. We saw on television last night children in Bangladesh breaking bricks. That is a good example of what could happen if the minimum wage were abolished. That is where unfettered competitiveness leads.
Mr. Dardis: It is proper that we have a minimum wage and it has not affected the competitiveness of the country.
Mr. B. Hayes: The Senator is yet another socialist.
[1151]The Seanad divided: Tá, 18; Níl, 25.
| Tá | |
| Bannon, James. | Bradford, Paul. |
| Browne, Fergal. | Burke, Paddy. |
| Coghlan, Paul. | Coonan, Noel. |
| Cummins, Maurice. | Feighan, Frank. |
| Finucane, Michael. | Hayes, Brian. |
| Henry, Mary. | McCarthy, Michael. |
| McDowell, Derek. | McHugh, Joe. |
| Norris, David. | Phelan, John. |
| Ryan, Brendan. | Terry, Sheila. |
| [1153]Níl | |
| Brady, Cyprian. | Brennan, Michael. |
| Callanan, Peter. | Cox, Margaret. |
| Dardis, John. | Dooley, Timmy. |
| Glynn, Camillus. | Kenneally, Brendan. |
| Kett, Tony. | Kitt, Michael P. |
| Leyden, Terry. | MacSharry, Marc. |
| Mansergh, Martin. | Minihan, John. |
| Morrissey, Tom. | Moylan, Pat. |
| Ó Murchú, Labhrás. | O’Rourke, Mary. |
| Ormonde, Ann. | Phelan, Kieran. |
| Scanlon, Eamon. | Walsh, Jim. |
| Walsh, Kate. | White, Mary M. |
| Wilson, Diarmuid. | |
[1153]Tellers: Tá, Senators Cummins and J. Phelan; Níl, Senators Minihan and Moylan.
[1153]Amendment declared lost.
Question, “That the motion be agreed to”, put and declared carried.
An Cathaoirleach: When is it proposed to sit again?
Ms O’Rourke: At 10.30 a.m. tomorrow.
Mr. McHugh: I welcome the Minister of State, Deputy Brian Lenihan, to the House. I am delighted he is present to consider this important matter with respect to the permanent appointment to Letterkenny General Hospital, first, of a consultant breast surgeon. Currently there is an interim appointment of an acting surgeon on a temporary basis. Second, there is an identified need for a consultant colorectal surgeon as there is a vacancy in that position. Third, there is a great need for a permanent consultant radiation oncologist. Currently, a surgeon from St. Luke’s Hospital attends Letterkenny General Hospital one day per week.
I will expand a little on the issue of breast cancer services at Letterkenny General Hospital. In light of the O’Higgins report, there is a need to centralise services as a consequence of demographics, which is a quite natural economic assumption. At the same time, however, a county such as Donegal, with a border extending 144 miles from Ballyshannon to Malin Head, is a very extensive, peripheral and isolated county, and it is very much the desire of the people of Donegal to hold on to regionalised services. The consultants, medical and administrative staff of Letterkenny General Hospital and the people of Donegal are not looking at Letterkenny in isolation. They are looking at an east-west scenario [1154]between Altnagelvin and Letterkenny and also north-south between Letterkenny and Sligo.
A think-tank is examining many of these issues, including the retention of cancer services in Letterkenny General Hospital. The local community and the hospital staff are working to ensure that cancer services are not depleted, centralised and moved away from the region.
I am delighted to raise this issue in the presence of the Minister of State because the Donegal action for cancer services group, which recently formed in the county, has been fighting for action on a consistent basis over the past year. This lobby group must be taken seriously as it represents the entire Donegal community from Malin Head to Ballyshannon.
The cornerstone of the issue is bed capacity. There has been considerable procrastination on the part of Government and the Department of Health and Children in expediting the bed capacity at Letterkenny General Hospital. There is a magical formula of 70 extra beds, which will result in extra medical beds and an enlarged accident and emergency department. An interim solution would involve the provision of 30 to 40 extra beds, representing an increase of 10% on the existing 300 beds. Increased bed capacity in Letterkenny will justify the demands made for extra surgeons. Staff at administrative, consultant and nursing levels have lobbied for this but are becoming tired of shouting. A regional approach is needed so that County Donegal can retain services. Fears exist that the downgrading of services will impinge on the welfare and health of the people of County Donegal.
I ask the Minister of State to endeavour to ensure that the people of County Donegal do not have to endure any further downgrading or take second best in terms of cancer treatment services. I ask him to listen to the people and, as a matter of urgency, make contact with the HSE about their concerns.
Minister of State at the Department of Health and Children (Mr. B. Lenihan): I thank Senator [1155]McHugh for raising this matter on the Adjournment of the House. I would like to take this opportunity to set out the current position with regard to cancer services in the north-west region. The Government is committed to making the full range of cancer services available and accessible to cancer patients throughout Ireland, including the north west, in line with best international standards.
In recent years, considerable investments have been made in the development of cancer services in the north west. Since 1997, there has been a cumulative additional investment of approximately €48 million for the development of appropriate treatment and care services for people with cancer. This funding has provided for the approval of an additional eight consultants in key areas of cancer care. The funding has also provided for the appointment of 22 cancer nurse specialists across the north-western area. The development of a dedicated oncology ward at Letterkenny General Hospital is expected to be completed before the end of the year. This represents a significant commitment to the development of cancer services at the hospital.
The development of services for women suffering from breast disease is a major priority in the development of cancer services. National policy on the development of symptomatic breast disease services is based on the report on the development of services for symptomatic breast disease published in 2000. The report recommends the establishment of specialist breast disease units throughout the country, with each unit providing services to a population of 250,000 to 300,000 people. The report expects that there will be a minimum of 100 new primary breast cancers per annum treated in each unit. The objective is to improve the quality of care provided to patients throughout the country.
The report states that the population of the north west supports one breast disease unit. However the report, having regard to the geographical considerations and to the fact that Letterkenny General Hospital does not have a sufficiently large volume of patients with breast cancer, proposed that linkages be established with Altnagelvin Hospital in Derry. I understand that discussions are currently taking place involving clinicians and managers at both hospitals to develop these linkages. In this context, the HSE has advised the Department that an application for a consultant general surgeon with a special interest in breast disease for Letterkenny General Hospital is currently under consideration by the National Hospitals Office. The HSE has advised the Department that any proposals or application for the appointment of a consultant general surgeon with a special interest in colorectal surgery will be given due consideration by the National Hospitals Office.
[1156]The national plan for radiation oncology services announced by the Tánaiste last July provides for an integrated network of radiation oncology services that will ensure equitable access for patients throughout the country. The network will, beginning in 2008, deliver a substantial increase in current radiation oncology capacity by providing additional capacity to the equivalent of 23 linear accelerators nationally by 2011.
Patients in the north west are currently being referred for radiation oncology treatment to the recently established radiation oncology department at University College Hospital, Galway, and St. Luke’s Hospital, Dublin. A new radiation oncology centre is being provided at Beaumont Hospital on Dublin’s northside as part of the national network for radiation oncology services. This centre will also cater for the needs of patients in the north west. The precise patient referral pattern will be a matter for the HSE and will be factored into the planning of the national network. The HSE has advised the Department that it will consider proposals for the delivery of radiation oncology services to patients in the Letterkenny area in the context of national policy.
The Government is also considering options to facilitate access for patients in the north west, and primarily in County Donegal, to radiation oncology services as part of North-South co-operation on cancer. The Tánaiste has already met with the Minister for Health for Northern Ireland, Shaun Woodward, MP, to discuss access for patients in the north west to radiation oncology services at Belfast City Hospital. This state-of-the-art facility is scheduled to open in March 2006. The Tánaiste will be meeting again with Mr. Woodward to further progress the Government’s position on radiation oncology. Officials of the Department will also meet with officials from the Department of Health, Social Services and Public Safety, Northern Ireland.
BreastCheck, the national breast screening programme, commenced in 2000 and is available to women in the 50 to 64 age group in the eastern, north-eastern, midland and part of the south-eastern regions. Planning is under way for the national roll-out of the programme to the remaining regions. The Department of Health and Children has been working collaboratively with BreastCheck in progressing the roll-out. Detailed planning for the development of essential infrastructure has commenced in order to roll out the programme to other regions from 2007.
I have set out in broad outline the considerable investment and improvement in cancer services that have taken place in the north west in recent years. This reflects the considerable commitment of the Government to this region.
Mr. McHugh: I thank the Minister of State for his response. Political capital should not be made [1157]of an issue as sensitive as this. Cancer is becoming too common among communities in County Donegal and the issue is of concern to every family.
While the Minister of State set out some new information with regard to proposals by the HSE, a change in mindset is required. Patients from Malin Head face a long journey to Letterkenny and a longer trek to St. Luke’s Hospital or Galway. The people of County Donegal pay their taxes and deserve a service. I ask the Minister of State to keep this issue on the table.
Mr. B. Lenihan: I assure Senator McHugh that this issue, which I discussed recently in a different context, is on the table. It is clear that the Tánaiste has taken a personal interest in the matter. Greater North-South co-operation on health matters is vital for the future health of the people of County Donegal because, as the Senator correctly notes, long journeys to St. Luke’s or other destinations in the South will not provide a permanent solution.
Mr. Morrissey: I thank the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Noel Ahern, for coming to this House to address this matter on the Adjournment. With regard to provisions for social and affordable housing, it is time to consider the progress made on the delivery and implementation of housing units under Part V. The original Part V provisions introduced in the Planning and Development Act 2000 did not make lands for which planning permission was granted before housing strategies were adopted subject to the current Part V. However, all lands for which planning permission has been sought since then have been subject to Part V. For that reason, we can expect a lot of houses to become available from this year.
Against that background, I would like the Minister of State to address a number of issues, one being the one size fits all approach to the drawing up of individual strategies by local authorities. While there will always be a need for social housing nationwide, the need for affordable housing is not significant in large parts of the country but is probably most acute in certain locations such as Dublin and parts of Cork and Galway. Where local authorities do not identify a need for affordable housing this should be fully reflected in their housing strategies. It is important that local authorities do not over-estimate the demand for affordable housing and thereby increase their landbanks.
Many builders find that the interpretation of the provisions of Part V of the legislation vary considerably throughout the country. Why is this the case? Furthermore, is it not the responsibility [1158]of the Department of the Environment, Heritage and Local Government to issue clear guidelines on how the provisions can be interpreted and implemented? Considerable time and energy are being expended on negotiating agreements between builders and local authorities to such an extent that the implications for the delivery of some social housing units could be cause for concern.
Reaching agreement on the rate struck for the purchase of social and affordable housing units by the local authority and the passing of those units on to approved tenants seems to be a contentious issue. I have heard that an agreement on the price of a three bedroom, semi-detached house on the market for €300,000 can vary by as much as €50,000, with the builder asking a price of €250,000, a discount of 17%, and the council offering it to a tenant for €200,000. There are many examples of this practice throughout the country. In some premium locations, the difference in price can be much greater. We have expensive social and affordable housing units in the docklands area and in other premium locations in Dublin. The question must be asked as to whether such housing provision in those areas represents the best use of resources.
The eligibility criteria for such housing is also a matter of concern. To be eligible an applicant must meet certain criteria. Where there is excess demand for affordable housing units in some premium locations, or in specific locations where there is a requirement for social housing, how can we ensure the allocation of such units is transparent? Dún Laoghaire-Rathdown County Council introduced a lottery system. I heard of a case where a single person was offered an apartment in an urban area outside Dublin and refused it because he wished to be allocated a three bedroom house so he could rent out two bedrooms. Is that person acquiring an affordable house or becoming a landlord? I would like the Minister of State to address that question because many of these units will come on stream in the foreseeable future, which is noteworthy. I would like the Minister of State to address the points I raised.
Minister of State at the Department of the Environment, Heritage and Local Government (Mr. N. Ahern): I thank the Senator for raising this matter.
Part V of the Planning and Development Acts 2000 to 2004 is fully operational and all relevant residential planning applications are now subject to a Part V agreement. Apart from the provision of housing units to the local authority on-site or off-site, an agreement under Part V may provide for a range of other options. Notwithstanding the availability of these options, my Department’s stated preference, which has been communicated to local authorities, is for the provision of housing units, whether on-site or off-site.
[1159]Under Part V agreements with developers, a total of 809 affordable housing units and nearly 500 social housing units have been acquired by local authorities up to the end of June. Approximately 1,500 units were in the course of acquisition and approximately 2,500 units were earmarked for acquisition on foot of Part V agreements with developers. In addition, 17 land transfers to local authorities have been completed involving 14 hectares, a further 169 partially or fully-serviced sites have been transferred to local authorities and voluntary housing bodies, and more than €18 million has been received in payments in lieu and under the withering levy. It is clear that there has been activity in all the city and county councils under some of the options available for complying with Part V.
While this is significant progress, this output must be viewed in light of the fact that there are many developments, to which pre-Part V planning permissions apply, still being built. That might be the situation for some time, particularly in the case of some of the large developments for which planning permission has been granted for a ten-year period. Part V does not apply to developments consisting of four or fewer houses, or for housing on land of 0.1 hectares or less or on unzoned land. Unlike the position in Dublin, much of the land surrounding smaller country towns and villages is unzoned. Therefore, the planning permissions granted to the builders of small developments would not include a Part V content because such developments are built on unzoned land. That is the practice and custom in those areas. Accordingly, Part V does not apply to a considerable element of housing output in many counties. However, more and more permissions for residential development with a Part V agreement are commencing and I am confident that output and activity, as indicated previously, is now firmly on a upward spiral.
We envisage that some 6,000 social and affordable units will be delivered under Part V between 2005 and 2007. Additionally, payments in lieu, which are ring-fenced for housing capital purposes only, together with land and sites accruing from the take-up of the alternative options, will further supplement the overall provision of social and affordable housing.
I remind the Senator that Part V is not the sole mechanism for the provision of affordable housing. He referred to the strategies of local authorities. If there is not a need for affordable housing units in a local authority area, that authority should not provide such units, rather it should concentrate on the provision of social housing units. Such an authority might make such affordable housing units super-affordable, so to speak, and offer an incentive to local authority tenants who, if offered a super-affordable housing unit, could become a homeowner rather than a person [1160]on the local authority housing list. It is a matter for local authorities to decide that matter.
Since the introduction of the Part V provision, some 4,000 housing units have been provided under the 1999 affordable housing scheme. Furthermore, substantial progress continues to be made under the affordable housing initiative. More than 70 sites have been identified on State or local authority lands. In accordance with Sustaining Progress, these sites and the output from Part V have a potential yield exceeding 10,000 affordable housing units, meeting the target proposed by the parties to the pay agreement.
The various affordable housing schemes are all contributing to the Government’s strategy for social and affordable housing and will deliver substantial output over the coming years. We estimate that more than 12,000 units in total will be delivered from all the affordable schemes between this year and 2007.
Part V is now fully operational in all local authorities. However, some further operational issues, for example, direct sales of Part V affordable units by developers to eligible applicants nominated by local authorities and the standardisation of the costs of Part V units, are being considered by officials in conjunction with other interested parties, including the Irish Home Builders Association.
I agree that one hears complaints that there is a delay in a local authority buying units from a developer and a delay in the local authority selling them on to the client. We are examining how that can be streamlined. It is only the local authority which can decide who is eligible for such a housing unit. We are examining the possibility of putting in place a system to break the logjam, whereby a client could obtain a document from the local authority indicating that he or she has been approved in accordance with the criteria laid down and the client could then buy the unit directly.
I am satisfied that Part V is contributing significantly to the provision of social and affordable housing going forward. Its operation is kept under continuous review and this will continue. We have issued detailed guidelines, although there may be some slight difference in their interpretation in terms of how such schemes are operated locally.
The final say as to how the developer pays the dividend, whether in cash or with sites, is for the individual local authority manager. Housing is a very important part of the local authorities’ function and we have to give them some power, but within very strict criteria and guidelines. The guidelines are very thorough and detailed. I accept that different managers might see the issue slightly differently and one hears of cases of varied interpretations. However, it is beginning to settle down. Developers who fought against it very strongly now accept that it is the law of the [1161]land and it will be a major contributor to social and affordable housing as time goes on. Obviously we are watching the situation closely but we are not considering any overall change to the system at this stage. We are considering some of the ideas from the Irish Home Builders Association regarding direct sales and are examining a number of other teething problems that have arisen.
Mr. J. Phelan: I welcome the Minister of State, Deputy Browne, to the House. Coming from Wexford, he is familiar with the problems that have developed over the last number of years in the sugar beet sector. Many producers in his neck of the woods in Wexford and in my area of Kilkenny and Carlow, have been affected by these problems, not least by the closure of the sugar factory in Carlow.
There are a number of important issues that must be resolved as soon as possible. The Government retained its golden share in Greencore after its privatisation in early 1990. My understanding, and that of most farmers at the time, was that the share was kept as an insurance policy, to influence the future direction of the company and to ensure that sugar beet production remained a profitable and important part of the agricultural sector. However, it became clear, following the announcement of the closure of the factory in Carlow, that the golden share had no real effect in terms of influencing the decision made by Greencore. Why was it necessary to keep the golden share if it did not have any bearing on the outcome or, if it did have some bearing, why did the Minister for Agriculture and Food not use her position to ensure that the plant in Carlow remained open? It is clear that it was a profitable business which had an important economic impact on Carlow, its immediate surroundings in the south east and, indeed, further afield. In fact, it was also important for beet producers throughout the northern part of the country.
The ownership of the quota is an issue which has still not been resolved. It is an issue that must be resolved urgently and as favourably as possible, vis-à-vis the producers. It is apparent to me and to all sugar beet producers that the ownership of the quota rests with them. However, there is a question over whether the Government, Greencore or the producers own the quota. Approximately four years ago, a scheme was introduced whereby people purchased quota from those who wished to get out of sugar beet production. At that time, a number of people sold quota, received payment and paid tax on the earnings from the disposal of their quota. Following from that, it seems clear that the quota is an asset that belonged to those producers. It is [1162]important that it is sorted out, for once and for all, and that the ownership of the quota resides with the producers and not with the company.
Another area of concern is the World Trade Organisation talks, which will resume shortly. It was reported in the media yesterday that, rather than seeking a 39% price cut from producers, the European Commission will set a new target of a 50% price reduction, as part of the WTO negotiations. Whatever about production continuing with a 39% drop in price, it is obvious that if prices drop by 50% the sugar beet sector in this country will disappear completely.
The major problem I have with the decision to close the Carlow plant is that it was taken prematurely. It was taken before the sugar beet proposals had been finalised. In effect, Greencore held up the white flag before those talks were concluded. In doing so, it has put the sector and the producers on the back foot. The Minister of State will be familiar with the situation that has arisen from the plant closure. Producers are being forced to transport sugar beet themselves from the point of production to Mallow, which is a considerable distance from where I come in south Kilkenny. I spoke to a contractor yesterday who told me that he and his son drove from the village of The Rower in south Kilkenny to Mallow, on tractors, with a load of sugar beet each and returned that night. That is an uneconomic prospect for producers in that part of the country. It is an extremely long round trip to undertake.
The Government must be under no illusion about the significance of this sector and the urgent need to answer the vital questions still hanging over the heads of the producers.
Minister of State at the Department of Agriculture and Food (Mr. J. Browne): I thank Senator John Paul Phelan for raising this matter and am pleased to have the opportunity to clarify several issues.
The Minister for Agriculture and Food holds a special share in Greencore PLC. That share has the same monetary value as any other share in the company but has conditions attached which prevent the company from engaging in a number of activities without the prior written consent of the Minister. In summary, the purpose of the special share is to prevent the disposal of the controlling interest in Irish Sugar Limited, or a certain percentage of the sugar assets, and to prevent a single shareholder or group of shareholders from gaining control of Greencore PLC.
Under the EU sugar regime, each member state has a quota for manufactured sugar. There is no quota for sugar beet. The EU regulations stipulate that the quota must be made available to the sugar manufacturing enterprises in the member state. Accordingly, in Ireland the entire sugar quota is processed by Irish Sugar Limited, which is the only sugar manufacturer in this coun[1163]try. Irish Sugar Limited places annual contracts with farmers to grow a specific tonnage of sugar beet sufficient to manufacture the sugar quota.
Ownership of the sugar quota had never been an issue in the past because the relevant EU regulations do not provide for the buying and selling of quota. Speculation about quota ownership only arose when the Commission, in July 2004, raised the possibility of cross-border quota mobility, in the context of its initial thinking on reform of the EU sugar regime. Several member states, including Ireland, voiced strong opposition to the idea of cross-border mobility and I am pleased to say that it does not form part of the Commission’s legislative reform proposals, which were published in June. In any event, the European Commission has confirmed, in the context of the proposals for reform of the EU sugar regime, that the quota is not an asset owned by the member state or any other party but is simply a mechanism for regulating the market.
The Commission’s proposals for sugar reform were discussed at the Council of Ministers meeting last month. Ireland is among 11 member states that have major difficulties with the proposals and, in this context, we submitted a joint ministerial letter to the Commission in advance of the formal discussion at last month’s Council meeting, setting out our objections to the proposals. Negotiations will become more intensive over the coming weeks and the proposals will be considered by the Council again later this month. Given their severity, it is clear that the negotiations will continue to be difficult but the Minister will resolutely pursue our overall objective of achieving a more balanced agreement which will take Irish interests into account.
Mr. J. Phelan: I accept that the Minister of State may not be in a position to respond on behalf of the Minister for Agriculture and Food [1164]but I feel that the presence of the golden share gave her an opportunity to become more involved on the issue of the closure of the plant in Carlow and to ensure that the sector remained viable, rather than raising the white flag, which is what happened with the plant’s closure. I urge the Minister to maintain the pressure and up the ante in this regard.
This product goes right back to the foundation of the State. The people who originally set up the sugar industry had a vision to try to develop agriculture in this country. This was a success from the time the sector began in the 1920s. It is still a big part of the business activities of a large number of farmers. We cannot lose sight of the fact that the interests of these people must be protected at all times. I urge the Minister to maintain the pressure on her colleagues in Europe to ensure production in this country is secured into the future.
Mr. J. Browne: As someone who comes from one of the great beet growing areas in the country, I attended many meetings with the Minister. These included meetings with Cork beet growers, Wexford beet growers, south-east beet growers and the IFA regionally and nationally. The Minister is very aware of the importance of the sugar beet industry to farmers generally, the beet growers, which is a viable industry, to workers, contractors and hauliers. It is a unique industry in that whatever negotiations the Minister concludes in Brussels, which I hope will be in the best interests of Ireland, she must take into account all the different sectors involved in the industry.
I appreciate the Senator’s support and I assure him that the Minister will be fighting on behalf of the Irish beet growers and farmers on 22, 23 and 24 November.
The Seanad adjourned at 7.55 p.m. until
10.30 a.m. on Thursday, 3 November 2005.
