Budget Statement 2005: Motion.

Wednesday, 7 December 2005

Seanad Eireann Debate
Vol. 182 No. 17

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Ms O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  I move:

Minister of State at the Department of Finance (Mr. Parlon): Information on Tom Parlon  Zoom on Tom Parlon  I am pleased to have the opportunity on budget day to outline the provisions of the 2006 budget to Senators and to listen to the debate. The measures announced in today’s budget build on the sound economic policies consistently pursued by this Government over the past nine years.

As the Minister for Finance, Deputy Cowen, emphasised, this country has made remarkable economic and social progress. This budget aims to consolidate this progress and to provide the right framework for continued prosperity for future generations. It strikes an appropriate balance between the objectives of promoting sustainable economic growth and improving equity and opportunity for all our people.

The budget prioritises measures to meet these objectives through a strategy with the following key elements — investment in infrastructure and education; addressing the needs of older people; supporting the less well-off and helping those on average and lower incomes; targeting families with children in a new five-year child care package; introducing measures to safeguard the environment; and promoting equity in the tax system through changes to tax reliefs and reducing tax and other burdens on the enterprise sector, particularly smaller firms.

Before outlining the main budget items, I will set out the broad economic outlook for Ireland. As a small open economy, our fortunes are determined to a large extent by developments in the international economy. The good news about the international economic situation is that commentators are forecasting strong global growth over the next few years. This should mean that markets for goods and services produced here in Ireland will grow more strongly. The challenge for us is to manage our affairs so we can avail of these opportunities. The budget aims to create and maintain the right framework conditions so that Irish firms and employees can exploit these opportunities.

While the overall international outlook is a positive one, there are risk factors which could throw this off course. The oil market remains tight and further price rises cannot be ruled out. The imbalances in the global economy, including the US, continue to persist and widen. There are [290]signs of a pick-up in the euro area but this remains somewhat fragile. All of these factors are outside our control. We must remain vigilant and ensure that we retain the necessary headroom and flexibility to cope with any adverse external shock. We can take encouragement from the fact that our economy showed its resilience and flexibility in the international downturn at the turn of the century. The budget will support and nurture these features of our economy.

Turning to the domestic situation, it is clear that the economic background to this budget is a very favourable one. Economic growth remains strong, with GDP growth this year estimated at 4.6% and GNP at 4.8%. In the stability programme update published today, the Department forecasts continued robust growth of between 4.5% and 5% over the 2006 to 2008 period. The economy’s ability to create jobs continues to exceed expectations. With Central Statistics Office employment data now available for the first three quarters of 2005, it is estimated that total employment will grow by 89,000 or 4.7% for the year as a whole. The total number of people at work in the economy is now approximately 2 million, which is a remarkable performance. Strong growth is projected in 2006 and later years and the economy will maintain its effective full employment status. Inflation has come down. This year, the Department expects that our inflation rate will be in line with, or even slightly below, the euro area average on a comparable basis. Over the next few years, low inflation is expected to prevail, with the consumer price index rising by 2.5% on average. The public finances are sound. We will achieve our budget targets for 2005. Our debt-GDP ratio will be 28% at year end, compared with over 63% in 1997.

The budgetary targets are for a general Government deficit next year of 0.6% and a debt-GDP ratio remaining at 28%. Total public expenditure will exceed €50 billion. Capital spending will be close to 5% of GNP, the highest rate in the EU. With such a high level of planned expenditure, the Minister rightly put significant emphasis on the Government’s intention to ensure value for the taxpayers’ money and drew attention to the measures he has recently put in place to bring this about.

The Minister devoted a considerable proportion of his statement to the priority area of investment in infrastructure. As Members will have noted, he announced a total funding envelope of some €43.5 billion for investment over the period 2006 to 2010. Of this, some €5.5 billion will be funded by public private partnerships, thereby harnessing private sector involvement and expertise in the task of improving our capital stock. This funding will support investment across a range of key economic and social infrastructure areas including health, housing, culture, transport and education.

[291]Of particular note was the Minister’s announcement of a new €300 million, five-year innovation fund for the higher education sector. Coupled with an allocation of €900 million for investment in university and institute of technology facilities, the Government has committed some €1.2 billion to this sector up to 2010. This investment is a critical plank of the Government’s strategy to promote the knowledge economy.

The overall funding envelope announced by the Minister also includes some €14 billion for the first five years of the recently launched Transport 21 plan. This shows the Government’s commitment to this vital plan, which aims to develop a world-class transport infrastructure for our country. This commitment of resources means that the implementation of the plan can get under way in 2006. The Minister gave examples of the many critical road and public transport projects in Dublin and throughout the country where work will commence or continue in 2006.

On the subject of capital investment, I will take this opportunity to say a few words about the plans of my own office, the Office of Public Works, which continues to deliver many capital and construction projects. The OPW capital budget for 2006 is €400 million, of which just over 50% is in respect of decentralisation.

As Members will be aware, the decentralisation programme is by far the largest and most wide-ranging in the history of the State, involving the relocation of over 10,000 civil and public service jobs to some 53 locations in 25 counties. A capital envelope of over €800 million has been set aside over the next number of years for decentralisation. As it falls to me to oversee this programme, I am pleased to inform the Seanad that a considerable amount of work has already taken place.

Ms O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  Hear, hear.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  In many cases, sites have been acquired, and as Members are no doubt aware, some contracts have already been placed. Tenders for construction on a design-build basis have been sought in a number of cases, including the OPW in Trim, County Meath. Members can expect to see a constant flow of tender invitations over the coming months.

The implementation of the staffing side of the decentralisation programme is also proceeding steadily. To date, decentralising staff have already moved in advance parties to five locations around the country. These locations are Portlaoise, Sligo, Na Forbacha in Galway, Thurles and Tipperary town.

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  Hear, hear.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  Further staff will move to a wide selection of locations in 2006, including 130 staff [292]of the Department of Finance who will move to Tullamore.

The level of interest in decentralisation continues to be very strong and the central applications facility remains open for new applications. An average of 100 new applications have been received every month for the past 14 months. These 1,400 new applications are in addition to the 9,200 applications received in the priority period up to September 2004. New applications are expected to continue as preparations for the individual moves intensify within decentralising organisations. Many people have transferred to the decentralising organisations in preparation for the transfer to the country. To date, over 800 staff have been assigned to their new decentralising posts. In the meantime, staff wishing to remain in Dublin have moved to posts which will not transfer. I emphasise again that the Government will ensure that the entire programme proceeds.

Ms O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  Good.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  With regard to social welfare provisions, the Minister emphasised his belief that a primary function of Government is to protect and support the weaker sections of society. He backed up his words by announcing a social welfare package with a full-year cost of some €1,120 million. The Minister reaffirmed the Government’s commitment to supporting older people. He announced an increase of €14 per week in the old age contributory pension, bringing it to €193.30 per week. We are now well on our way to meeting the commitment in the programme for Government to increase the State pension to €200 per week by 2007.

A particularly imaginative feature of the Minister’s statement was the announcement of a package of measures to provide care and support services for older people in their homes and communities. For those in need of nursing home care, the nursing home subvention scheme will also be improved. At a full year cost of €150 million, these measures should go a long way towards improving the quality of life for older people.

As regards other social welfare recipients, the Minister announced an increase of €17 in weekly rates. This works out at an increase of 11%, some four times the projected rate of inflation. On child benefit, the Minister increased rates to €150 for the first and second child and to €185 for third and subsequent children. This fulfils the commitment given by the Minister in last year’s budget.

The needs of carers have also been acknowledged in this budget. The carer’s allowance has been increased as have the income disregards associated with the allowance. Carer’s benefit has been extended and will be payable for up to two years and there is a 20% increase in the respite care grant to €1,200.

This generous and innovative package of improvements will go a long way towards reliev[293]ing the pressures faced by families, older people and those on low incomes. I recall that in the debate in this House on the budget last year, Senators expressed a degree of disappointment with the Government’s approach to the child care issue. It is appropriate therefore to devote some remarks to this area, one of the highlights of this year’s budget.

The Minister outlined the wide range of considerations to be borne in mind in addressing this complex and multifaceted issue. He announced an integrated strategy comprising measures to increase the supply of child care places and to assist parents in meeting the substantial costs involved. On the supply side, the five year national child care investment programme will build on, and expand, the successful equal opportunities child care programme leading to the creation of an additional 50,000 child care places by 2010.

The Government plans to spend almost €800 million on this programme in a mixture of capital and current funding over the period 2006-10. The obvious need this will generate for further qualified and expert child care personnel will be supported by increased funding for training, which will facilitate the training of more than 17,000 workers over the period.

Mindful of the importance of the first year of life to a child’s development, the Minister also announced a phased extension of paid maternity leave to six months by 2007. In addition, unpaid maternity leave is also to be increased by eight weeks over 2006 and 2007. Of course, these measures, particularly those dealing with supply, will take some time to come to fruition.

The Government was also concerned to provide assistance to the parents of younger children, who can find themselves under particular financial pressure. Having examined all of the issues carefully, the Minister announced a new early child care supplement of €1,000 per annum in respect of all children under six years of age. By any standards, this is a generous response to the child care needs of parents.

The effect of both this measure and the increased rates of child benefit is that, for example, a family with two children under the age of six will receive a total amount of €5,600 per annum. I look forward to hearing the reaction of Members to a comprehensive and integrated approach to this complex issue.

Expenditure measures are not the only means to assist people on low incomes. This budget continues the Government’s approach of using the tax system to target those on the minimum wage and on average incomes. Through a combination of increases in both the employee and basic personal tax credits, the Minister has ensured that those on the current minimum wage will stay outside the tax net in 2006. He also increased the income tax exemption limit for persons aged over 65, again illustrating the depth of the Government’s commitment to supporting older people.

[294]For those on average earnings, the Minister has raised the standard rate income tax band by some €2,600, well ahead of inflation. This should ensure that those on the projected average industrial wage in 2006 will pay income tax at the lower rate. The increases in tax credits for widowed persons, blind persons, incapacitated children, dependent relatives and those aged 65 or over are further evidence of the Governments commitment to supporting the most vulnerable in Irish society.

The tax allowance available for the employment of a person to care for a family member has also been increased significantly to €50,000 per annum, an increase of over 60%. The total cost of these measures, plus others announced by the Minister, is €900 million on a full year basis.

In his statement, the Minister also announced the results of the major reviews of tax undertaken over the past year. The review process involved detailed examination of the various reliefs as well as extensive public consultation. In reaching decisions, the Government had to balance the imperative that all tax residents should pay tax appropriate to their ability against the need to use the tax system to promote development.

The result of the review process is the termination of several reliefs that have either served their purpose or are no longer cost effective in meeting their objectives. The decisions taken reflect the consideration that much has been achieved in the areas and sectors supported by these tax reliefs, and their greater capacity to support investment without such incentives in the future.

The reliefs in question are largely property based. In view of the importance of the construction sector for economic activity and employment, the Minister has wisely put in place transitional measures. The gradual phasing out of reliefs over the period to 2008 will ensure that we do not do anything unhelpful to employment in this important sector of our economy. As well as terminating some tax reliefs, the Minister also took action aimed at avoiding circumstances where high-earners reduce their taxable income to nil through the use of certain reliefs.

There has been much talk recently at home and abroad about the role of agriculture in developed economies such as Ireland’s. The Minister in his speech highlighted the vital contribution of the agriculture sector to our economy and to enriching Irish life in general. I wholeheartedly echo the Minister’s views. The Estimates and the budget continue to recognise this vital contribution and offer significant support to farmers to safeguard the future of the sector at a time when there are significant external pressures to reduce certain supports and open markets fully to competition.

At €1,280 million, the multi-annual capital framework 2006-10 for the Department of Agriculture and Food represents an increase of €175 million on the corresponding framework for [295]2005-09 published in last year’s budget. Within the envelope significant provision has been made for improvements to the farm waste management scheme to support farmers in meeting the cost of on-farm investment required to achieve the targets set in Ireland’s nitrates action plan.

The package of tax reliefs for farmers that the Minister announced today are wide-ranging and will offer support to farmers, in particular young farmers. The package comprises the following measures — the extension of the young trained farmer stamp duty relief for a further three years; separate reliefs on capital acquisitions tax, capital gains tax retirement and stamp duty in respect of the EU single farm payment entitlement scheme; an increase in the farm pollution control relief to a maximum of €50,000; and an increase in the exemption for income from certain farm leases to €12,000 per annum for leases of between five and seven years and €15,000 for leases of seven years or more. This package will cost over €22 million next year and is further evidence of the Government’s continued strong commitment to the agricultural sector in Ireland.

Farmers are key guardians of our countryside. I am pleased that the Government’s package of measures to support the safeguarding of the environment also presents opportunities for them, in particular the measures announced by the Minister to encourage the use of biofuels.

Members will have been interested to hear the Minister’s intentions for the reform of the budgetary process. His proposals include the discussion of a three-year economic and fiscal outlook with the Oireachtas Joint Committee on Finance and the Public Service in January, and the publication of an update of these projections in the autumn by the Department of Finance. From 2007, the proposals also envisage the publication of annual statements by Ministers on their Departments’ outputs and objectives and of the out-turns from 2008. The relevant Oireachtas committees will examine these statements. These proposals will increase the opportunity for the Houses to debate the important issues around the generation and use of taxpayers’ money. I hope these proposals will be welcomed all round.

The budget presented by the Minister is one that provides the basis for continuing improvements in our economy and society. As the Minister said in his address, today’s budget is progressive. We are not resting on the laurels of Ireland’s recent economic success. This budget is balanced, not only in the fiscal or financial sense but also in advancing the aspirations of our people. Through substantial investment in infrastructure, the budget will secure our future and provide the basis for sustained economic growth and improvements in quality of life. Through generous improvements in social welfare and changes to taxation, it will help build a fairer and more inclusive society.

[296]In short, the budget embodies a vision of continuing to improve the quality of life for all Irish citizens. This is the most obvious and important measure of our success.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  I welcome the Minister of State at the Department of Finance, Deputy Parlon, to the House. His presence here on statements on the budget is becoming an annual event. I am conscious that tonight several television news programmes will have polls on the budget. I hope the Minister of State or any of his colleagues do not have their mobile telephones with them.

Ms O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  The Fine Gael Party has a fair hand at polls too.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  TV3 will have a poll tonight on public reaction to the budget. I hope the Minister of State and his support group will not be engaged in manipulation of any of these opinion polls. I am glad to note the Minister of State has turned off his mobile telephone in the Chamber.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  There is no doubt the Senator will be encouraging his own people too.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  Not surprisingly, I am not as overawed or impressed as the Minister of State is with the budget measures. We are disappointed in that what was promised on different items was not in the final budget. The scale——

Ms O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  That side is disappointed because it is such a good budget.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  ——and depth of commitment given by the Government to different initiatives is disappointing.

The Minister of State is correct in stating that the public finances have never been better. The amounts of money coming into the State coffers on a weekly basis have never been more. However, the cynicism and the justified criticism of the public towards Government spending have never been higher. I will not rehash the various incidents of scandalous waste of public funds that the Government has engaged in over the course of the last 12 months, let alone the past eight years. However, I see nothing in this budget which leads me to believe there will be a significant improvement in that regard.

Several announcements are welcome such as the Minister for Finance going before the Oireachtas Joint Committee on Finance and Public Service in January to discuss the budget measures. This reform of the budgetary process is a step in the right direction. However, there is no fundamental change as to how public funds are spent and often scandalously misused.

There was a brouhaha about child care on the Order of Business. I noted, at one point, Senator White was rapturous in the Gallery during the Budget Statement. However, I am flatly disappointed by what the budget contains for this area. [297]The promises of what parents of younger children were led to believe would come in the budget have not materialised. I acknowledge the €1,000 payment is a significant step in the right direction, but it is a mere drop in the ocean when compared with the amounts of money young families must fork out for child care facilities.

The Minister of State referred to decentralisation. However, it is clear that what was promised in the budget before the last local elections has not been delivered. It now cannot be delivered because the timeframe has elapsed.

Ms O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  Is the Senator in favour of decentralisation?

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  I am in favour of decentralisation. On that budget night I supported it in my speech. However, it illustrates a sincere commitment being made with a timeframe being put in place but still not delivered upon.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  The timeframe is spot on.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  We are now asked to believe this five-year plan for child care and the ten-year plan for Transport 21 will be delivered on time and within budget. The Minister of State must understand the degree of cynicism on the public’s part that these initiatives will not be delivered upon within the schedule announced today. While the announcement on child care is a step in the right direction, it may, like decentralisation, simply end up stumbling from one crisis to another.

The increase in the carer’s allowance was another slightly welcome announcement as this group was particularly neglected and forgotten. The Government led many in carers’ organisations to believe the means test issue was to be tackled, but it has not been. The majority of those who care for people in their own home are not eligible for a carer’s allowance because of the current means test. Today, this could have been dealt with in the budget by the Minister.

I welcome the reduction in duty on home heating oil, which is another positive move. I have often asked the Minister for Finance to increase the fuel allowance. While it was raised significantly today, sadly it was not enough. The cost of most fuels has almost doubled in the past 18 months. It will not meet the increase in fuel costs faced by the elderly, resulting in the increase being wiped out even before people have got it in their pockets.

The changes in VRT relief for flexi-fuel cars are like Alanna McCree’s dog, it goes a bit of the road with everyone. This is a slight step in the right direction but just a little nudge forward.

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  That was Deputy Noonan’s cliché year in, year out in the Dáil.

[298]Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  I must bow to the Senator’s superior knowledge on that as that was before my time.

Ms O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  The Senator will be right for the child benefit package.

An Cathaoirleach: Information on Rory Kiely  Zoom on Rory Kiely  Senator Phelan without interruption.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  It is a tiny step in the right direction but in light of recent revelations in the media and the high level of VRT, there is a strong case for its reduction. If there is to be another budget from the Government——

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  There will be.

Ms O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  There will be six more.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  There cannot be six more before the next election.

Ms O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  Well, we will win the next election so that will give us five budgets and then there is the one remaining budget.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  I suspect the Progressive Democrats are interested in being in Government after the next election but with a new partner. However, they will have to sort this out themselves.

An Cathaoirleach: Information on Rory Kiely  Zoom on Rory Kiely  The Senator must stick to the Budget Statement.

Mr. Minihan: Information on John Minihan  Zoom on John Minihan  Senator John Phelan is stuck for words.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  I have always highlighted the increases faced by motorists in duty and motor tax. The VRT regime must be rebalanced, whereby those who use their cars more, pay more, while those who use them less, pay less. A flat charge for all car users is inequitable and must be examined.

I was amused when the Minister claimed that because the Government did not raise the VAT rate this year, it showed its commitment to keeping inflation down. Ireland has one of the highest VAT rates in Europe. While the Government does not like to admit it, it increased the rate in its period in office. This was an area that could have seen useful changes.

The Government’s main failure is not giving a commitment to reduce the number of those paying income tax at the higher rate. There was some tinkering around the edges today. The Government committed itself to having 20% of the working population paying tax at the top level. As matters stand, approximately 35% of employees pay tax at the top rate, a figure which will not be significantly reduced by today’s announcement. This is another example of a broken Government promise.

[299]Contrary to the image projected, almost €4,000 in additional taxation has been imposed on every household this year. Notwithstanding all the spin, this budget will not significantly reduce this figure and households will continue to face increased charges. I hold up my hands and admit the budget makes some steps in the right direction but considerable room for improvement remains. If the Minister had focused his attention on two or three areas rather than trying to satisfy everyone, he could have achieved a hell of a lot more.

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  There is a heaven of a lot in this budget and as Government finance spokesperson in the Seanad, I am proud to speak on it. This budget has few downsides, as it contains no indirect taxation increases and includes some tax cuts. I suspect part of the motive for these cuts was to eliminate smuggling on the Border and build a single energy market on the island, a project on which the Leader worked as Minister for Public Enterprise.

The budget is a reflection of the excellent management of the economy over a long period. In only one year since 2002, including the current year, has there been a general Government deficit and even that was small. Growth rates, at 5% in 2004 and 2005 and with a projected figure of slightly under 5% for 2006, are highly satisfactory. The workforce has increased to almost 2 million and we will soon have 1 million more people in work than in 1987. Inflation is under 3%. As we saw in Britain just two days ago, budget-making in most countries is a struggle to make ends meet and one which governments frequently barely accomplish. Governments here knew all about this problem in the past.

While the credit for the current financial position stretches back through all the Governments that have been in power over the past 20 years, the current incumbents have been in charge for the past eight years. The credit must also be shared with the social partners. I have the highest admiration for the social partnership process which has repeatedly, even in the most recent times, proved its usefulness and value. I hope the budget, together with the discussions taking place on Irish Ferries, will be the prelude to the start of new social partnership negotiations.

I am sure other Senators wish to speak about the child care initiative, the centrepiece of the budget. I pay tribute to Senators, particularly my colleague, Senator White, for highlighting the issue of child care. Senator Minihan also deserves thanks.

Mr. Minihan: Information on John Minihan  Zoom on John Minihan  I am happy to be an afterthought.

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  Child benefit has increased to €150 per month for first and second children and €185 per month for subsequent children, a signifi[300]cant improvement on the 1997 figures of £30 and £39, respectively. The budget also provides for a special payment for children aged under six years. Increases in paid and unpaid maternity leave mean women may take practically a year off work following the birth of a child. The budget also includes an important child care investment programme and having been present at the opening of family resource centres around the country, it is clear the programme will play a significant role. The €10,000 tax-free exemption for people who mind children at home has not yet been highlighted but may be as significant as any other measure in this area. In a sense, this initiative formalises the informal economy but there is no harm in that.

Contributory pensions have been increased by 8% to close to €200 per week, while the non-contributory pension has been increased by 9.6%. With increases in another lower social welfare payment of €17, the Inchydoney agenda clearly continues. The percentage increase in social welfare benefits of 11% is far ahead of inflation. All of us will remember that, with the exception of the late 1980s and early 1990s when a Fianna Fáil Government took steps to fulfil the recommendations of the Commission on Social Welfare report, general social welfare increases prior to 1997 tended to be between 2% and 4%. We have greatly exceeded this range which is an excellent development.

The focus of tax measures is to remove the lower paid from the tax net. As the figures demonstrate, every budget since 2002 has been strictly progressive. In the past three years, the European Commission has stated several times that Ireland has the most favourable taxation system of any country in the European Union for those on low to middle incomes. However, the Fine Gael spokesperson is worried about the poor people earning high incomes.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  I am concerned about those whose income is barely above the threshold for the top income tax rate.

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  Anyone who is barely in the higher band will only pay the top rate on a tiny amount of income. The Senator should consider his logic.

Ms O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  I would not worry about them.

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  I am glad we did not hear anything about stealth taxes because if one measures the expansion of the standard rate band from this budget back to 2002, one finds it is fully in line with the rate of inflation. It is prudent that Governments maintain a certain degree of flexibility to increase bands above or below the rate of inflation, depending on the circumstances.

[301]A marked feature of the budget, which should particularly recommend itself to more left-wing minded Senators, is the decision to phase out or cap the various tax incentives to ensure wealthy people contribute to the tax yield. To be fair to most wealthy people, they contribute a great deal in taxation, as most figures indicate, but there are some who use tax incentives to avoid paying any income tax. Two incentives on which there has been particular focus are the tax exemption for artists and writers who will now be able to earn €250,000 tax free, a change which substantially leaves the spirit of the exemption intact, and the phasing out of the exemption for stallion fees. The regime to replace this exemption must, I regret, be negotiated.

On the Order of Business this morning, the House discussed rail services, on which the Budget Statement includes a number of specific announcements. I am pleased the Minister of State at the Department of Finance, Deputy Parlon, referred to the decentralisation programme, including decentralisation to County Tipperary. In recent days, a sustained attempt has been made to rubbish the programme but it is on track, certainly as far as County Tipperary is concerned, and has delivered substantial benefits. May that continue.

Mr. O’Toole: Information on Joe John O'Toole  Zoom on Joe John O'Toole  I welcome the budget and I also welcome the opportunity to say a few words about it. It is always difficult to assimilate such an enormous amount of information in such a short time, but there are certain matters we sought on the record and against which we can measure to see where we currently stand.

In the main, I welcome this budget as a progressive measure containing some important steps forward that we had sought. I do not agree completely with Senator Mansergh on the transport provisions. There were specific references to transport, but they are vague and it is difficult to understand quite what they meant. Specific projects were mentioned, but the budget speech was less than specific in terms of the level of support to be provided for them.

I raised specific requirements on the issue of child care in the House recently. I stated that at the end of the day I was looking for five things. The first two things I sought were an increase in maternity leave to 26 weeks and an increase in unpaid paternity leave to 26 weeks also. I am delighted that a commitment has been given to do that over two years, and that half of it will occur this year. That step is progressive, important and welcome. Many people will certainly look forward to it.

Senator John Paul Phelan referred to the €1,000 supplement as a payment, but I presume it is vouched for against a payment for child care as opposed to a cheque that is being handed out. [302]Either way it is important because for those seeking child care payments it represents close to €2,000 before tax, which is what they would have had to pay for that previously.

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  I think it is a cheque.

Mr. O’Toole: Information on Joe John O'Toole  Zoom on Joe John O'Toole  Whichever way it comes, it saves them €2,000 of after tax income, which is important.

Ms O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  Yes.

Mr. O’Toole: Information on Joe John O'Toole  Zoom on Joe John O'Toole  I also think the €10,000 relief is welcome. Whoever tried to work out the cost in the Department of Finance, however, I would bet my house that they have underestimated it. Nobody knows the way that Irish people can flexibly use that kind of an arrangement and it may well be for use in their own houses. It is good, however, because it legitimises something that people have been forcing themselves to do.

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  Quite.

Mr. O’Toole: Information on Joe John O'Toole  Zoom on Joe John O'Toole  I welcome those aspects of the budget. The Minister did not mention any proper accreditation system for the child care package. This is very important because once we start creating choice for parents, we must ensure that some checks and balances are included. Both Senator O’Meara and myself have regularly raised that important point. I note from the Budget Statement that people availing of the €10,000 break on taxation must register with the county committee on child care, or whatever its official title is.

Ms O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  That is right.

Mr. O’Toole: Information on Joe John O'Toole  Zoom on Joe John O'Toole  That is a welcome step. The Minister also said that the county committee on child care would be in a position to give information, support and small grants in order to make it happen, but we need to hear more about that. I have no doubt that Senator O’Meara will have questions to ask about this as well. I would like to know how that proposal will work. I am glad there is a registration process, but I would look for an awful lot more.

More than anything else, I regret that there is no clear commitment or objective to introduce some process for a formal, structured pre-school arrangement. The Department of Education and Science is mentioned, but such a process is missing and should be included. While I welcome some aspects of the budget, I feel that other matters are lacking.

I note that the proposal to create 50,000 child care places is scheduled to occur over the next four years up to 2010, but I do not know how that will work and I certainly want to hear more about [303]it. It seems to be a tax break of some form or another, but I am not a bit convinced by it.

The Leader will recall that recently when we discussed the OECD report on tertiary education, I had some grievous problems with it. One of my objections to the report was that it restricted PhDs to universities. I think Senator Mansergh agreed with me at the time that there was a strong case for linking the institutes of technology into it, as that is where the research and development will take place. I am glad to see that, according to my reading of what the Minister has said in the budget speech, he is now putting it up, as it were, to pitch for it——

Ms O’Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  Yes, that is right.

Mr. O’Toole: Information on Joe John O'Toole  Zoom on Joe John O'Toole  ——and create what he describes as fourth level education, which I am somewhat amused by. Whatever fourth level might be, I would like to see it established that institutes of technology have as much access to PhD courses as traditional universities. That is very important. As a representative of graduates, I liked the Minister’s positive words about the quality of Irish graduates. I always knew my electorate were fine people and it is nice to hear that confirmed.

Over the past two years, I have asked that the minimum wage be taken out of the tax net. Last year and the year before, I deplored the fact that this was not done. I note that those on the minimum wage are out of the tax net this year. While I welcome that step, I think it is too late. One may say that I am being curmudgeonly about this, but nonetheless, this measure will give confidence to lower paid workers. I wish that the provision had come in last year’s budget but, late as it is, I do welcome it as a positive step to which people will look forward.

In as much as I welcome the minimum wage being taken out of the tax net, I have also criticised the Government for the fact that the super rich could get themselves into a situation of paying no tax at all. I welcome the fact that that loophole is now being closed off, although I am not sure how. As I recall it, the Minister referred in his budget speech to complex legislation that would be necessary to achieve this, but I am convinced that he will do it. The matter needs to be examined.

Senator John Paul Phelan welcomed the budgetary measures concerning home heating oil. I hope he is right in what he said, but I thought the Minister referred specifically to kerosene and LPG while not mentioning diesel, which is the main home heating oil. Have I missed something or is it a typographical matter? Did the Minister refer to kerosene as including diesel? I would like to know what the situation is in that regard.

[304]Twice in the past month, I spoke about the need to provide grants for alternative domestic energy. The Minister referred to this in his speech and stated:

The important word there is “domestic”, which should mean that if someone wants to install a waste water management system, solar panels or thermal heating in his or her home, a grant will now be available to do so. Senator Ryan has also referred to this point. Such a system might now be introduced in the same way as people received home improvement grants under certain conditions in the 1970s and 1980s. I think that is what the Minister was saying, but I would like it to be confirmed.

I agree with Senator John Paul Phelan that an opportunity was missed to reduce the extraordinarily high rate of VAT. That could and should have been done and this budget was the time to do so because it was probably the best opportunity we will ever have.

I welcome two aspects of the budget concerning openness. I am attracted to the new process of budgetary reform, which gives an impetus to legislators and other elected public representatives to become involved in it. I am also attracted to the idea in section B of the report, which outlines the views of consultants and others who examined the various tax-break schemes that are now being wound down. It is important for us to see that. I am sure that when we get down to examining the detail it may be overly selective, but nonetheless it is important.

I do not have the option to deal with many other issues. I am not quite clear, for example, how proposals for the elderly will work out in operation. Overall, however, I must say that there is far more to welcome than to criticise in the budget. It is a progressive budget which takes the direction I have been advocating for the past year. I am supportive of it, although there are some issues about which I am unclear and others about which I am unhappy.

Mr. Minihan: Information on John Minihan  Zoom on John Minihan  I welcome the Minister of State to the House and I am glad of the opportunity to speak on this year’s Budget Statement. I welcome wholeheartedly the measures announced this afternoon. Over the past 20 years, the Progressive Democrats have determinedly pursued the following objectives — economic and social policy aimed at maintaining full employment; strength[305]ening the competitive position of the Irish economy; keeping taxes on labour low; and focusing on the low-paid, the elderly and the vulnerable. Today’s budget reflects that approach very clearly.

On income tax, social welfare, pensions, child care and care of the elderly, the Government is delivering both the right policies and on the commitments outlined in the programme for Government. First, regarding taxation, the Government is committed to a tax policy that will expand our economy, reward work and alleviate the burden on taxpayers, especially those on lower pay. From today, we will see a €270 increase in tax credits for PAYE workers. That means that a single person on the minimum wage of €15,818 will pay no tax. The standard-rate band has been increased by €2,600 to €32,000 for a single person and to €41,000 to a married one-income family and €64,000 for a married two-income family. Thus, no one on the minimum wage will pay any tax in 2006, and no one on the average industrial wage will pay tax at the higher rate.

In 2006, a person on the average industrial wage will have seen his or her take-home pay rise by €12,600 since 1997, but that person’s tax will have been cut by over €400. After today’s budget, for a person on the average industrial wage, the average tax rate will be 12% lower than in 1997, at approximately 15%, compared with over 27%. For 2006, the average industrial wage will be taken out of the higher rate of tax altogether.

Those measures are further evidence of our strong commitment. The Progressive Democrats have long espoused the view that the best defender against social injustice and poverty is a job. It is the responsibility of the Government to provide a climate where the economy prospers and people are given the opportunity to create their own wealth and shape their own futures. Hard work and endeavour must be rewarded. The more jobs we create, the more revenue is generated for the vulnerable of society and to develop public services. That is the Progressive Democrats’ idea of social justice.

Certain parties, particularly those of the so-called left, claim exclusive ownership of the social justice agenda. Their response to meeting social challenges often involves increasing the tax burden on Irish families, however covertly. In criticising the approach of the Progressive Democrats, and the approach taken in today’s budget, they are criticising Irish working people for not wanting to pay more in tax.

The people of this country work hard. They must get maximum reward for their efforts and sacrifices. The Opposition decries that as the pursuit of a liberal agenda. For once, ironically, it is right. Liberal economic policy means having faith in people. The Progressive Democrats believe that people themselves are best qualified to [306]decide how to run their own lives and spend their own money.

Mr. Ryan: Information on Brendan Ryan  Zoom on Brendan Ryan  The Senator is 200 years out of date.

Mr. Minihan: Information on John Minihan  Zoom on John Minihan  I commend the Government on framing a budget that seeks to expand our economy further, promotes enterprise, rewards workers and alleviates the burden on taxpayers, particularly those on lower pay.

With regard to the review of tax schemes and measures, the Minister has today announced appropriate changes to how those will operate. A variety schemes that have served their purpose will cease or be phased out. Furthermore, a cap will be placed on the amount of relief that any individual can claim in respect of various schemes, including the artists’ exemption scheme. That applies to people with incomes in excess of €250,000. The effective tax on high-income earners will increase towards a minimum of 20%. In 2006, 40% of all tax will be paid by those earning more than €100,000.

As I said at the outset, the Progressive Democrats support fair tax and low tax, not what has been termed “no tax for higher earners”. I welcome the changes announced by the Minister in that regard.

The approach correctly chosen by the last two Governments has been to promote and support economic development and prosperity, but not for its own sake. As I said, the people of this country work hard. The more that they are encouraged to work hard and prosper, the more the economy prospers and the more revenue is generated for the vulnerable of society.

The contributory old-age pension has been increased by €14 per week to €193.30. The non-contributory old-age pension has been increased to €182 per week. Furthermore, for people in receipt of the non-contributory old-age pension, earnings from employment up to €100 will be disregarded for means tests. Basic social welfare payments will be increased by €17 per week, from €148.80 to €165.80. That represents an increase that is more than four times the rate of inflation.

I hope every Member will join me in welcoming these steps and congratulating the Government on taking them. There are two key areas on which I wish to focus before I conclude, child care provision and services for older people. On child care, the Government is acting wisely and fairly by reducing the burden borne by families in respect of costs. The Progressive Democrats and I have long sought taxation measures to help increase the supply of child care places. More places mean lower costs for families. Thus, I particularly welcome the €10,000 income disregard for child care providers announced by the Minister today.

[307]The rate of child benefit is to rise to €150 per month for the first child, and €185 per month for subsequent children. A €787 million child care investment programme will create an extra 50,000 child care places. Members across party lines — Senator White, Senator O’Meara and I — have promoted and contributed to the child care debate. The Government is to introduce a phased increase in paid maternity leave from 18 to 26 weeks. There will also be a new child care payment of €250 per quarter in respect of all children under the age of six.

Unlike the approaches proposed by certain people, in so far as a coherent policy can be discerned, the Minister has considered all family configurations and choices. The Progressive Democrats and I have long made clear in our policy documents that we support increasing child care supply and choice for families, in conjunction with steps to alleviate the financial burdens on them. In that context, I welcome the steps outlined in the Minister’s speech and congratulate him on them.

Perhaps of most significance are the measures announced for home-delivered services and care for the elderly. Our older citizens deserve the best possible care. The Progressive Democrats have set out in its manifestoes that care for older people is a basic social duty. We first campaigned for and delivered a €100 per week pension. The old-age pension is up, from €99 in 1997 to €193.30, announced today, meaning that it is well on the road to the €200 target set out in the programme for Government.

  6 o’clock

International research suggests that the life of a person can be extended by up to two years if care is delivered in the home, and I welcome the new measures outlined for the elderly in today’s budget. The new €150 million per annum package to support care for the elderly in their own homes represents a sea change in approach. It is the single largest increase in such funding ever. I pay tribute to the Tánaiste and Minister for Health and Children for her dedication in this policy area. Among all politicians and policy-makers involved in ensuring the best care for older people, she has proven herself the most determined and effective, and I congratulate her on her work in promoting the measures included in today’s budget.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  She has done nothing for home helps.

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  What about the cost of nursing?

Mr. Minihan: Information on John Minihan  Zoom on John Minihan  The Tánaiste will speak in greater detail about those measures in the coming days. In conclusion, I welcome the Budget Statement delivered today by the Minister for Finance.

[308]An Cathaoirleach: Information on Rory Kiely  Zoom on Rory Kiely  The Senator has exceeded his time.

Mr. Minihan: Information on John Minihan  Zoom on John Minihan  It is another important step in sustaining prosperity and helping the vulnerable.

Mr. Ryan: Information on Brendan Ryan  Zoom on Brendan Ryan  I would like to share my time with Senator O’Meara.

An Cathaoirleach: Information on Rory Kiely  Zoom on Rory Kiely  Is that agreed? Agreed.

Mr. Ryan: Information on Brendan Ryan  Zoom on Brendan Ryan  At a time of such prosperity, it would be impossible for even the most incompetent Government to introduce a budget without something that we would all welcome. I welcome the aspects of the budget that are a step in a direction we agree with, and others which are at least a recognition of problems the Government pretended for years did not exist. It is fascinating that after seven years of “McCreevyism” the Government has discovered the possibility that the rich might not be paying any tax and that after one year of “Cowenism” it has discovered a way to deal with a problem Charlie McCreevy apparently failed to notice for seven years when he was running an economy in worse shape than Deputy Quinn had done in his three years as Minister for Finance. Growth was higher——

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  No, it was not. There was 10% growth in 2000.

Mr. Ryan: Information on Brendan Ryan  Zoom on Brendan Ryan  The average growth rate under Charlie McCreevy was lower than the average——

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  That is statistical juggling.

An Cathaoirleach: Information on Rory Kiely  Zoom on Rory Kiely  Senator Mansergh, please allow Senator Ryan to continue.

Mr. Ryan: Information on Brendan Ryan  Zoom on Brendan Ryan  For a Government that is interested in multi-annual budgeting, it is extraordinary that it does not like multi-annual comparisons.

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  Almost all of them are in our favour.

Mr. Ryan: Information on Brendan Ryan  Zoom on Brendan Ryan  Over the coming days we will be presented with multi-annual figures for various expenditures of a capital nature which people will try to pretend all relate to this year. In fact, many of them have to be divided by five to figure out what is going on. I have no problem with multi-annual budgeting but we should not get involved in arguments about statistical manipulation with a Government that is very good at manipulating the presentation of the issue of multi-annual budgeting to its own devices.

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  Multi-annual social welfare payment comparisons perhaps.

[309]An Cathaoirleach: Information on Rory Kiely  Zoom on Rory Kiely  Senator Ryan without interruption.

Mr. Ryan: Information on Brendan Ryan  Zoom on Brendan Ryan  I welcome a number of measures in the budget, particularly the recognition that the rich were paying no taxes. Until recently the Government’s position was “let them at it, let them rip” but after a few electoral rebuffs it rediscovered its concern for equity in the tax system. That is most welcome. I recognise the delicate sensitivities of the super-rich when they hear it will be some time in January 2007 before they feel the pain of tax. That is not the timescale applied to other people when some of the lesser benefits are being cut back.

I am also intrigued by the announcement of the number of schemes in the construction area which have turned out not to be worthwhile. Is it true that for the past seven or eight years nobody in the Department of Finance examined the internal rate of return and economic benefit to the State from a raft of programmes which are now to be abolished? Is it the case that they were in place for a few years to look after the buddies——

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  They served their purpose.

Mr. Ryan: Information on Brendan Ryan  Zoom on Brendan Ryan  ——and now that the buddies have got rich and are spending their money outside the country, there is not much point in continuing them? One wonders about the strategy in the same way that one wonders about many other things.

There are welcome aspects to the budget. Any attempt to reduce the burden of tax on people on middle incomes is very welcome but we must remind ourselves that the Government said only 20% of people would pay tax at the higher rate. That is a reasonable position. It has singularly failed to do it and has done that which it accused others of doing.

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  We concentrated on the lower paid.

An Cathaoirleach: Information on Rory Kiely  Zoom on Rory Kiely  Senator Ryan without interruption.

Mr. Ryan: Information on Brendan Ryan  Zoom on Brendan Ryan  Senator Mansergh is upsetting me. The Government has done what it accused the rest of us of doing. It has picked on the middle income earners and made them the major source of revenue in the same way that the charges for waste disposal and all the other charges will suddenly——

Dr. Mansergh: Information on Dr Martin Mansergh  Zoom on Dr Martin Mansergh  Good environmental practice.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  The ESB and VHI charges.

[310]Mr. Ryan: Information on Brendan Ryan  Zoom on Brendan Ryan  The greatest act of fiction I have read in a long time is the Minister of State’s remarks on decentralisation, which is not happening.

It is astonishing that there is no longer any mention of waiting lists in Government budgetary expenditure because the Government has abolished the term “waiting lists”. It no longer talks about them. The 3,000 beds we were promised have now disappeared off the agenda. In a caring budget that is an astonishing admission.

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  I will confine my remarks to the issue of child care because there is no question that this is the child care budget. It is long overdue for this Government to act. The big surprise in last year’s budget was that it contained little or nothing on child care but the pressure has built up in the meantime. I and others have played no small role in ensuring——

Ms White: Information on Mary M. White  Zoom on Mary M. White  The Senator is not in Government. She can do nothing about it.

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  ——the pressure was applied to force the Government to act. Thanks to the publication of policies like those of our party, the Government has finally been forced to act. What has been presented today, however, falls far short of any indication that the Government has any idea of what it is doing on child care.

When is a child care policy a child care policy? In the first instance it is about children and child care but something that is missing in today’s package is any mention of pre-school education. Our proposal — others have also suggested it — is that all three-year-old children be entitled to a place in pre-school, the benefits of which are well known. The OECD called for that as did other bodies, including the competitiveness council, but there is no sign of it in the budget. That is one way we know this child care package is not about children.

The Government made a big issue of the supply side. That is the second place we would look to ascertain if this package is about children. One of the problems being faced by parents and children is finding quality, affordable child care places. This Government talks about increasing supply but the figures and the investment fall far short of what is needed. The equal opportunities childcare programme is delivering at some level in terms of bricks and mortar. Many fine child care centres are being built throughout the country with capital funding from the equal opportunities childcare programme but the problem of staffing then arises. These centres are dependent on the use of FÁS schemes to keep them staffed. Their costs are barely being met by the fees they are required to charge parents. In many cases, they are barely able to meet their obligations in [311]terms of the disadvantaged and poorer parents. There is nothing in this budget about that. More capital investment is welcome but where is the evidence of the level of funding that is needed to improve these facilities and deliver for parents and, in particular children?

The extension of maternity leave by up to six months by 2007 is welcome. Unpaid leave is to be extended also. We had a debate on parental leave in this House. Ireland has the worst record in Europe on parental leave. We do not have paid parental leave. Parental leave is not just about parents; it is about children also. The Minister paid some lip service by saying that the first year of a child’s life is the most important. That is the case but not the first half year; the first full year. Unpaid leave in the second half of the year is useless to many parents because they cannot afford to take unpaid leave. The notion of extending unpaid leave, therefore, is useless and is an insult to many families. That is another indication that this is not a child-driven, child care package.

The early child care supplement is very similar to the phrase we used in our document. It is clear that the Minister is trying to appear to be doing something but €1,000 a year is less than €20 a week — it is €19 a week. Has the Minister any idea how much people are paying in child care? It is much more than that. This supplement will barely put a dent in it.

There is very little done for private providers in this budget. I am aware from the feedback I am getting that many private providers are operating on very tight margins. I am concerned that the €19 a week will be passed on. The cost of child care will go up by about that much.

Ms White: Information on Mary M. White  Zoom on Mary M. White  That is a terrible thing to say.

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  It is not a terrible thing to say. I object to that remark by Senator White.

Ms White: Information on Mary M. White  Zoom on Mary M. White  I object to Senator O’Meara’s remarks about private providers.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Allow Senator O’Meara to continue without interruption; Senator White will have a chance to speak.

Ms White: Information on Mary M. White  Zoom on Mary M. White  She has exceeded her five minutes.

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  I thank the Leas-Chathaoirleach. My concern is that private providers are so hard pressed at present that they will be forced to take on board this €20 per week. It will, therefore, be obliterated overnight.

The tax exemption for the home-based childminders, which we proposed, is welcome. However, those on social welfare incomes, [312]including single parents, who want to be in this area, will be hit.

Ms White: Information on Mary M. White  Zoom on Mary M. White  The Senator should conclude.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  I am chairing these proceedings.

Ms White: Information on Mary M. White  Zoom on Mary M. White  Opposition Members stick together like glue. I wish to draw Senator O’Meara’s attention to page——

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Before she begins I remind Senator White that she must speak through the Chair.

Ms White: Information on Mary M. White  Zoom on Mary M. White  I cannot. It is difficult to look into the Leas-Chathaoirleach’s eyes. He is distracting me.

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  It is very difficult.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  All discussion should be conducted through the Chair.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  Senator Minihan stole Senator White’s thunder.

Ms White: Information on Mary M. White  Zoom on Mary M. White  The Leas-Chathaoirleach knows what I am talking about. He is a flirt.

I refer the House to page A.15, which states: “Between now and 2010, some 65,000 additional places will be funded, including early childhood, pre-school and school-age places.”

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  Live horse and you’ll get grass.

Ms White: Information on Mary M. White  Zoom on Mary M. White  After last year’s budget, I needed to open this book and correct Senator O’Meara.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  It will be 2010 before the places become available.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Senator White without interruption.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  We are living in 2005.

Ms White: Information on Mary M. White  Zoom on Mary M. White  Last year I corrected Senator O’Meara’s inaccuracy. There will be 65,000 new places by 2010 in these categories.

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  Has the Senator any idea how many are needed?

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  I remind Senator O’Meara that Senator White is speaking.

Ms White: Information on Mary M. White  Zoom on Mary M. White  Why did the Senator not sit in the Gallery in the Dáil and listen to the Minister?

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  I did.

[313]Ms White: Information on Mary M. White  Zoom on Mary M. White  The Senator missed the section on pre-schools.

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  I did not.

Ms White: Information on Mary M. White  Zoom on Mary M. White  I must put on record that Senator O’Meara put her heart and soul into trying to place the issue of child care on the agenda. I am only teasing her.

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  I know.

Ms White: Information on Mary M. White  Zoom on Mary M. White  She put in considerable effort. Approximately one and a half years ago I began engaging in the issue of child care and produced a document entitled, A New Approach to Childcare? I held a public meeting——

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  I remind the Senator that she cannot display the document in the House.

Ms White: Information on Mary M. White  Zoom on Mary M. White  I held many public meetings, visited community and private crèches during mornings, met their owners and interviewed hundreds of parents. The Budget Statement tracks my document on the proposals as it includes a mixed group of propositions to tackle the whole issue of child care. One cannot pick out a single proposition and say “That is very small”. The budget has a five year strategy, as I did in my document. Am I allowed to hold up the Budget Statement?

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Yes.

Ms White: Information on Mary M. White  Zoom on Mary M. White  On the issue of supply——

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  Where is it in the statement? Is the Senator lost?

Ms White: Information on Mary M. White  Zoom on Mary M. White  I am grand. The statement reads: “As part of the overall child care strategy I am today announcing a major new five year strategy.” If one wishes to run a business or Government policy efficiently, one needs a strategy, including short-term, medium-term and long-term plans. It is the ideal way to deliver the goods at the end of the day. In five years we will have 50,000 more places. The additional new places will be helped by “enhanced capital grant aid to private providers, the limit for which will double to €100,000, and continued support to community providers of up to €1 million per facility subject to a maximum grant per place of €20,000”.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  What page is that?

Ms White: Information on Mary M. White  Zoom on Mary M. White  We will supply 65,000 new places by 2010. One method of dealing with the complex issue of child care is through the supply side. The law of economics is supply and demand. If one increases supply, price decreases.

[314]Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  Hopefully.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  It will not.

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  It is an expensive, labour intensive industry.

Ms White: Information on Mary M. White  Zoom on Mary M. White  In my document I also drew attention to disadvantaged children. I encouraged the Government in this area. A total of 312 schools are designated disadvantaged by the Department of Education of Science. I called for the roll-out of the Early Start programme for those schools.

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  Hear, hear.

Ms White: Information on Mary M. White  Zoom on Mary M. White  Today, the Minister said, “we will continue to support the Department of Education and Science in targeting early childhood education in disadvantaged areas”.

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  Where? How many?

Ms White: Information on Mary M. White  Zoom on Mary M. White  He said we will do it and we can keep at it him until he does so.

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  He has been saying it forever but has not done so.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  Does Senator White have her next item?

Ms White: Information on Mary M. White  Zoom on Mary M. White  I do but I will not read a speech written by someone else. I write my own speeches.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  Senator Minihan——

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Senator White without interruption.

Ms White: Information on Mary M. White  Zoom on Mary M. White  One of the six propositions of my document was quality assurance of provided child care facilities. The roll-out of places “will be complemented by an intensification of training arrangements to support quality child care delivery. It is expected that 17,000 child care workers will be trained in the period”. The following is the crunch:

[315]If a group of people, each of whom minds three children in his or her home, does not earn more than €10,000 per year, those people will be drawn into the child care committees’ nets. It is a network wherein people can be advised on nutrition, education, hygiene and so on. We are bringing the people who mind children in their own homes into the county child care committee’s network of professionalism. It is an imaginative and innovative move. Like the others, it makes a contribution, although no contribution on its own would be adequate.

Regarding maternity leave, the Budget Statement reads: “From March next, mothers of newborn children will have an additional four weeks paid maternity leave, extending the duration of such leave to 22 weeks.” I called for this in my document.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  The Senator has one minute remaining.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  Did the Senator write this section?

Ms White: Information on Mary M. White  Zoom on Mary M. White  The Taoiseach congratulated me last Friday and said I could take the credit for this provision today. Children’s allowance will increase to €150 for the first child and to €185 for subsequent children and there will be a direct payment of €1,000 per child under the early child care supplement. Rather than giving tax reliefs to parents who pay for child care, this cuts out bureaucracy and administration, which Senator Quinn and I greatly desire. The budget provides for, “a direct payment of €1,000 per year available equally to all parents regardless of their labour force status, for each child up to his or her sixth birthday”.

Also to my heart’s delight is a proposition on new child care arrangements, which was my final proposition. Child care and family issues span 11 Departments. To implement the five-year national child care strategy, the Minister stated that the Government will be introducing new administrative arrangements to streamline the functions relating to child care.

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  In which Department?

Ms White: Information on Mary M. White  Zoom on Mary M. White  The statement does not say.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  I ask the Senator to conclude.

Ms White: Information on Mary M. White  Zoom on Mary M. White  We are speaking about the principal office.

Ms O’Meara: Information on Kathleen O'Meara  Zoom on Kathleen O'Meara  I know.

Ms White: Information on Mary M. White  Zoom on Mary M. White  I was only pulling Senator O’Meara’s leg earlier as she has put her heart and [316]soul into this issue. We were a team here in the Seanad. I am delighted with this announcement today. It is a complex issue. I am thrilled about it. I never thought it would be so good. I was quite pessimistic but the Government had the political will to take this——

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  I would ask Senator White to conclude. There are a number of other speakers offering and we must conclude by 7 p.m.

Ms White: Information on Mary M. White  Zoom on Mary M. White  This will be a major contribution to the many hard-working families in this country.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  I welcome the Minister of State, Deputy Parlon, who is fresh from the midlands. I understand he was down there delivering leaflets all afternoon, as he usually does on the day of a budget.

Ms White: Information on Mary M. White  Zoom on Mary M. White  Senator Bannon is jealous.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  Senator Bannon is misinformed.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  According to George and Wilding in Welfare and Ideology, public choice theorists stress two forces driving interventionism forward: first, the competition between parties for votes — we had an example of that here this morning between Senators Minihan and White — which stimulates parties to promise more and more, and, second, the self-interested budget maximising behaviour of bureaucrats and professionals.

This Government has taken the making and breaking of promises to an unprecedented level, as never envisaged by the above-mentioned authors. If ever there was a model of a self-interested budget, it is budget 2006, not budget 2010 of which Senator White gave us a preview. The budget was written with more than one eye on the polls and is designed to restore the faith of the outraged voter in this lame-duck Government, if such were possible.

However, this is not the full picture of Government duplicity. Electioneering at the expense of the taxpayer and in contravention of the rules governing elections is rife. Staff employed by Fianna Fáil and Progressive Democrats Ministers are being used to make telephone calls to radio stations in a blatant contravention of electoral rules. I know for a fact that the Minister of State, Deputy Parlon,——

Mr. Brady: Information on Cyprian Brady  Zoom on Cyprian Brady  Senator Bannon is such a hypocrite. It was to do with the budget.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  Senator Bannon’s party does it on a regular basis.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Senator Brady cannot call the Senator a hypocrite. It is unparliamentary language.

[317]Mr. Bannon: Information on James Bannon  Zoom on James Bannon  ——who is here with us this evening, was in touch with a radio station in the midlands yesterday and I want to know how many other Ministers and Government Deputies are doing the same at the taxpayers’ expense.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  Senator Bannon would want to ask his own people that question.

Mr. Brady: Information on Cyprian Brady  Zoom on Cyprian Brady  What has this to do with the budget?

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  It is they who are the real culprits and we have evidence. The Minister of State did not deny it this morning on the radio.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  Of course I did not. Is Senator Bannon stating that his party does not do it?

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  The Minister of State did not deny it this morning on the radio.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  Is Senator Bannon stating his party does not do it?

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Senator Bannon without interruption.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  We in the midlands have had several quick fixes by the Minister of State in recent times. The leaflet drops before the budget was even announced——

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  That is wrong.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  Most definitely, that is correct. I saw them before the budget was even announced.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  I was not in my constituency today. Senator Bannon is incorrect again.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  Housing is one area on which the Government is not singing loud self-praise. Even the Government cannot spin that one. As I have stated many times in this House, every morning as I walk towards Kildare Street I pass at least half a dozen people sleeping in doorways, victims of a system that favours the rich at the expense of the poor and the vulnerable in society. This heartless Government is doing little for these people. Significant steps could have been taken in this year’s budget to address the inadequacy of social provision by improving the allocation for social and affordable housing but instead the homeless got very little.

There are currently close to 50,000 households on the waiting lists for social housing. The National Economic and Social Council in a recent study estimated that Ireland would need an additional 73,000 social housing units by 2012 but where is the provision in this budget for these units? Instead of making significant inroads into meeting this target, the Government has, once [318]again, heartlessly turned its back on this needy sector of our society.

The provision of social housing must be addressed by continual and sustained increases in social and affordable housing construction, which would lead to increased access to quality housing for those most in need. Currently, the Government is spending nearly €400 million on rent supplements which could be ploughed into social and affordable housing. This is typical of the short-sighted actions of the Government’s record of wasting millions of euro of taxpayers’ money that has been highlighted in a number of well documented cases over the past year.

Deputy Bruton intervened today and pointed out this wastage to several Ministers when he spoke in the Dáil. He spoke of the wastage in the Departments of Health and Children, Transport, and the Environment, Heritage and Local Government. All this was pointed out. Some €500 million was wasted by the shabbiness of the Government in the past 12 months. Fine Gael opposes the Government’s six-month rule on rent supplements and all the other welfare cuts that will drive more people further into poverty and homelessness.

I am extremely disappointed that the tax relief incentive on commercial developments was not extended for a further five years. This particularly affects my county. I felt that it should have been extended. The space allowed for completion is too short for many developments and the Government’s timescale for people to complete major commercial developments is unrealistic. There is an extension from July until December 2006 but that is totally inadequate. To state that reliefs have achieved the objectives set for them or are no longer considered to be cost effective is totally without foundation.

There was no reduction in the high rate of VAT, which was very disappointing. Local authority funding cuts over the past number of years will not be undone by today’s small increase in funding. In fact, it will bring further stealth taxes in its wake, a continuation of the Government’s policy of hitting taxpayers from every angle. There have been increased charges for refuse collection, electricity, gas, VHI, television licence, etc. I could continue until 7.30 p.m. outlining the stealth taxes the Government has imposed since it came into office. There have been several charges in the area of health.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Senator Bannon has one minute left.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  Since 1997, there has been a series of stealth taxes imposed by this Government.

Grants, such as the disabled person’s grant and the essential repairs grant, are now an insult to the people who rely on such provisions. In my [319]constituency, one disabled man who qualified for a necessary extension to his home received builders’ quotes of €32,000, €34,000 and €35,000. The grant he received was less than €8,000, which is less than a quarter of what it will cost to construct this necessary en suite bedroom.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  I must ask Senator Bannon to conclude.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  What has this budget done to end the 11 years of waiting for the completion of phase 2B of Mullingar hospital? Eleven years of budget after budget and the same old song, but nothing copperfastened and nothing was done in today’s budget. As the people in the Longford-Westmeath are only too aware, rumour has it that the Government plans to string us along until after the general election and then pull the plug on Mullingar. This budget, like every other since 1997, has done nothing to allay the fears of the people of Longford-Westmeath. Continued representations on my part have failed to get a timescale for the completion of phase 2B from the Tánaiste and Minister for Health and Children.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  I must ask Senator Bannon to conclude.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  We have taken to the streets in protest during the summer and will do so again because they have neglected the midlands, and particularly the north midlands. The Minister of State, Deputy Parlon, will get his answer when the general election comes around.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  Senator Bannon is a failure.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  He, like many others, will be booted out by the electorate of the midlands.

Mr. Bannon: Information on James Bannon  Zoom on James Bannon  Senator Bannon has not delivered.

Mr. Brady: Information on Cyprian Brady  Zoom on Cyprian Brady  The Government must be doing something right to exercise the other side so much. I congratulate the Government and the Minister, Deputy Cowen, on producing a progressive and far-sighted budget. It is a budget that will build on the significant strides forward that we, as a country, have taken in a relatively short space of time. These strides do not happen by accident. Over the two previous budgets, the Opposition was baying that we were cutting back on this, that and the other instead of, as we saw it, prudently managing our resources. When the economies of other countries in Europe, in particular, and throughout the world were faltering — some of them are still doing so, with rising unemployment figures — we managed to maintain a steady course over the past two or three [320]years, and that has brought us to today’s budget where we have €43.8 billion to put back into the economy. The Government and the present Minister must be congratulated on achieving this at a particularly difficult time.

I want to focus on a couple of areas in particular. The first is the environment. Again, the Minister has proved that the Government takes our environment, and that of our children, extremely seriously. I welcome the exceptionally progressive steps being taken, particularly in respect of incentives for the promotion of biofuels, which will have an immense benefit in the long run for our whole community, including farmers. Farmers play a particular role in this regard and the incentives announced today will be of great benefit to them. Our children’s future is extremely important to us and today the Government has proved that its concerns regarding the environment and its obligations, particularly under the Kyoto Protocol, are genuine. The Government recognises that serious measures must be taken to protect our supply of energy, while simultaneously protecting our environment for future generations.

The issue of carbon emissions is a major talking point at present. The Montreal discussions are under way and this is a challenging issue. The establishment of a carbon fund is the first step in what promises to be a comprehensive approach to this issue. The multi-annual funding, starting with €20 million in 2006 will ensure that we can build on this. The development of biofuels is an emerging area of expertise and it is essential if we are to come anywhere close to our targets. The level of excise relief which will start at €20 million this year, with €30 million next year and €50 million in each of the three following years, will support the production and use of hundreds of millions of litres of biofuels per year. The input of the farming community will be essential in this respect and will provide opportunities. While the environment will benefit, we will also benefit from the creation of jobs. Research and development in this field is a significant industry and we have only begun to tap into it. We have a young, well-educated population and have proved in the past that we can hold our own, particularly in areas such as pharmaceuticals and technology. This is another area where I feel we can make major strides in the future.

Moreover, the extension of VRT relief for hybrid fuel cars is to be extended to flexible fuel vehicles, which is another step forward. This is the future for Ireland. If we are to maintain the progress we have made to meet our obligations, particularly under the Kyoto Protocol, this is a particularly good start. It shows our seriousness about the environment and our willingness to take exceptional measures and progressive steps to try to fulfil those obligations.

[321]Although it only formed a small part of the Budget Statement, I also welcome the social finance initiative, which will encourage banks and other institutions to become involved in social inclusion and community development throughout the country. In particular, the banking community will be given a chance to build relationships and participate in the community as never before. While there has been much negative publicity, particularly in respect of banks and building societies, this will provide them with an opportunity to become involved. It will entail the provision of seed funding and expertise for various community projects and other institutions will be invited to participate. This excellent and welcome initiative will provide an opportunity for these institutions to become involved at a local level in their communities.

Another section of the speech pertained to property-based tax schemes. I am particularly interested in two of them. The first is the park and ride scheme which has not proved to be as successful as was hoped. It is prudent to remove it and opt for State funding in this regard as it will be an essential part of the implementation of Transport 21. I remember that it was mooted in the early 1980s as part of the Dublin Transport Initiative. One of its main planks was the provision of park and ride facilities. A start has been made at the Red Cow roundabout in conjunction with the Luas, as well as in a number of locations on the outskirts of the city. It will be worth investing money in this respect because it will prove to be beneficial in the future.

I welcome the retention, to a great extent, of the urban renewal schemes. I have seen their benefits at first hand, particularly in the inner city of Dublin. In some areas, they have completely transformed communities. They have had a catalysing effect on development and regeneration and some of the most deprived and rundown areas of the city have been transformed. Through the integrated area plans, in conjunction with Dublin City Council, councillors, public representatives and the communities themselves, many areas have improved dramatically. The plans are crucial to the development of districts in an integrated and community-friendly manner. By taking the needs and views of local residents into account, they have led to major improvements in the design of urban dwellings and of housing in particular, as well as the provision of facilities at community levels. I welcome this budget’s retention of the urban renewal schemes.

The Government must be doing something right to have the Opposition so agitated. This is a progressive, far-sighted budget which I warmly welcome.

Mr. Quinn: Information on Fergal Quinn  Zoom on Fergal Quinn  I welcome the opportunity to speak and welcome the Minister of State at the Depart[322]ment of Finance, Deputy Parlon, to the House. I have a suspicious mind and regard a budget to be part of a wider story. Sometimes its effect, if not its actual purpose, is to divert attention from the wider story. In most years, including this one, I regard the Minister as being akin to a baker who bakes a cake and puts beautiful icing on top of it. Consequently, when one buys the cake, one’s attention is distracted from its ingredients by one’s concentration on the icing. Hence, for the 13 years in which I have been a Member of this House, I have looked with suspicion on every budget I have encountered, including this one.

Consequently, I have devised a sort of wish list which I consider, acting somewhat like a school headmaster, to ascertain how many marks I would award to its various aspects. The first item on the wish list concerns the long term. Recently, I spoke in the House in another debate on the danger of complacency, of beginning to believe that the Celtic tiger will continue and that we can take it easy. I am quite concerned about the long term and I have considered the budget to gauge whether there is a danger that the Minister is complacent. On the basis of this budget, my mind has been put at rest to a large extent, particularly, as Senator Brady noted a few minutes ago, with regard to climate change, the Montreal conference, the Kyoto Protocol and the steps the Minister has taken in respect of biofuels. He has taken a long-term view and is taking such matters into account.

The second point I considered in that regard was the question of tax reliefs. In contrast to Senator Bannon’s remarks on tax reliefs, I am impressed by the Minister’s plans in this respect. He will publish the performance of the various schemes in the Finance Bill to assess whether they work. I gather that he has had consultants conduct an examination of the schemes to establish which are worthwhile. I believe that on examination, a great number of them will be found to be working and to have worked well.

The danger is that because they have been used to enable some people to avoid paying a great deal of tax, particularly wealthy people, a degree of envy has led people to believe they should be stopped because they are unfair. While they may not be entirely fair from a taxation point of view, they have facilitated development in a large number of the intended areas. Hence, while the Minister has questioned whether tax relief on hotels, urban renewal and other areas is still required, he has provided time for such schemes to be completed. It seems to me, particularly in the case of student accommodation, that when it is examined, it may turn out to have been a good investment which should be continued on that basis.

My second wish list item concerns the minimum wage. I am concerned that a large number [323]of people never progress from unemployment. To an extent, this is influenced by the minimum wage and some jobs do not exist at a certain rate. Hence, it seems to me that removing everyone on the minimum wage from the tax net is a great achievement, which I welcome. The National Economic and Social Forum recently produced a report on unemployment which referred to these people who are continually left at the bottom of the pile and never get a job. They are always left out.

My third concern is education. I must give the Minister full marks in this area, particularly with regard to third level and the new term “fourth level” which I had not heard before. He deserves full marks for the recognition of incentives for third level and the fourth PhD level, and the inclusion of the institutes of technology and other third level educational institutions.

However, he gets zero marks for educational disadvantage. There is no mention of it in the Budget Statement. This really concerns me because when I speak about the people who are left out of employment, who never got onto the first rung of the ladder, these are the people who fell behind at school. We must invest far more but we are not doing it. There is no mention of it in the statement. That is important for the long-term unemployed and those who never got into employment. That should be mentioned but the Minister has not done anything about that area of education.

Neither was there any mention of broadband even though Forfás recently published a report on broadband coverage in Ireland. We are at the bottom of the pile in Europe. I am not sure how the Minister will solve this but we have discussed it in the past. Ten and five years ago we discussed how Ireland had the opportunity to be to the forefront in this area. The governments of South Korea and Singapore determined that their priority would be to put their countries at the top of the information society and they did something about it. However, this Government has turned its back on the issue. It appears to have fallen over the horizon and the Government has not noticed. It is not mentioned in the budget. We are at the bottom of the pile and we can and must do something about it if we are to compete in the future.

My fifth concern was child care. My concern was that with so much noise being made about child care, the Minister might be in danger of taking steps that were against the interests of those who decide to stay at home to mind their children. The danger was that the Minister would get the balance wrong. There is a serious problem with child care. The Minister has got the balance right in this area. The ideal from society’s point of view is that the parents of children are given [324]options. In this case, the Minister appears to have got the balance right and to have given options. For those who wish to go out to work, there are clearly steps in the right direction. There are also steps in the right direction for those who wish to stay at home and mind their children.

My final concern is how well we spend our money. There was some reference to it in the budget but I am disappointed that we have not provided a good response to that issue. It has not been given priority in the budget. I believe that, by any standards, we get bad value for the money we spend on the health service, infrastructure and across the range of public spending. The Minister for Finance has a comforting mantra about this which we heard again this afternoon but there is little evidence that he is doing anything about it. In the past the former Deputy and Minister, Mr. McCreevy, put this high on his agenda. He spoke strongly about value for money. I might be wrong but I did not see it get any priority today. Until we have in place a system that guarantees to deliver better value for money from public spending, any budget exercise such as today’s will largely be a waste of time.

Taking on the role of the headmaster in my school, I decided what marks to give the Minister. I will not give them in figures but when I was in school I received a report which stated: “Tries hard; could do better.” That is the case with this budget. I measured it against my wish list of six main points, and each of those contained two or three minor points as well. It is comparatively easy for the Minister to do the right thing with the bountiful amount of money available to him. It is easy for him to be generous. It is also easy, however, to do the wrong thing, as I have seen happen in the past. In general, the Minister has got it right. He left out some areas on which I would like him to concentrate but it is not too late to do something about them in the Finance Bill.

Mr. Moylan: Information on Pat Moylan  Zoom on Pat Moylan  I congratulate the Minister, Deputy Cowen, the Minister of State, Deputy Parlon, and the Government on the budget that was presented this evening. Tremendous credit is due to the Department’s officials and the Ministers. I have been involved for many years in public life at local authority level and one regularly watched budget announcements to see what improvements they would offer. This is probably the greatest budget I have seen.

I listened to other speakers refer to disabled persons’ grants, hospital completions in Mullingar and so forth. One does not need a great memory to be aware of what happened in Mullingar or with the disabled person’s grant under previous Administrations when we did not have a bob to do anything. In the case of the disabled person’s grant, adequate funds have been made available by the Department to the local authorities but, [325]unfortunately, most local authorities do not take up the funds for the people who require and deserve the construction of extensions and so forth.

I particularly welcome the announcements on child care. The people I have spoken to since the Budget Statement was made are elated with the performance of the Government in this area. Many people put down markers on what was required but I compliment the Government for listening to what they said. There are times when one is unable to do certain things when the money is not available but now the money is available and the Government has made excellent choices in ensuring that people who are working and making a valuable contribution to this country will have access to adequate child care. This will also open up more opportunities for people to provide child care throughout the country.

Great work has been done, as can be seen in the announcements made by all Departments. Look at what has happened with housing, social welfare and how the Government has brought unemployment to the lowest recorded level. A number of years ago people did not think this could happen but it has. I welcome the Minister’s remarks about involving the banks in the community. Many people and banks are cash rich and they can now get involved in local communities. There is an opportunity here for others, such as local authorities and local companies, to get involved in providing infrastructure and facilities in areas where they are required. For example, there is a need to provide playground facilities in towns and villages for our young people. This is an opportunity for those institutions to get involved with local authorities in providing those facilities.

There has been much comment on education and the new fourth level. We are moving ahead. When I was young one did well to complete the group certificate or leaving certificate. That was the maximum achievement for most people. Few people in rural parts of Ireland got the opportunity to go to third level. Now, every school has the opportunity to send its students to third level and there is demand for a fourth level. The Government must be complimented on moving and thinking ahead in this regard.

The extension of the rural and town renewal schemes is excellent news. People were being pushed to the limit to get the works completed but the extension provides them with light at the end of the tunnel and allows them to proceed. When those schemes are complete I hope the Ministers, Deputy Cowen and Deputy Parlon, will have an opportunity to examine the valuable work that was done and introduce similar schemes in other areas that will give them an opportunity to develop. I particularly mention the [326]tax designation in the upper Shannon region where much work and development took place. I hope in the future it will be extended to the area I represent, and with which Deputy Parlon is only too familiar, south of Athlone in the Shannon basin.

There are tremendous improvements in farm pollution grant aid, giving farmers an opportunity to develop and come on side regarding REPS. The increase in tax exemption for income from farm leasing is very welcome. One could go on, but time is limited as another Member wants to speak on this. Senator Quinn asked how one would score this budget. Having read through it and listened to the Minister in the Dáil today I would give it ten out of ten and I compliment the Minister and all associated with it.

Mr. Bradford: Information on Paul Bradford  Zoom on Paul Bradford  I am glad to have the opportunity to speak on the budget. I have been around both Houses long enough to know how these things work — the Government says one thing, the Opposition says something else, then the roles change and the merry-go-round starts again. However it is important that we have an opportunity to comment on what the Minister presented to the other House. While it is impossible to sum it up in the limited time available, I want to comment on a few of the issues highlighted in the Minister’s Budget Statement today.

The Minister’s proposal on biofuel and alternative energy is important. All parties have sought this over the past 12 to 18 months as a result of the massive fuel price increase across the globe. Both environmental issues and fuel costs must be addressed and the Minister’s proposals can be helpful in that regard. It is important that we drive those proposals forward as quickly as possible. Unfortunately our public administration has a history of bringing ideas forward but failing to make them happen as quickly as they should, and this is the fault not of the civil servants but of the politicians. It is vital that we put effort into ensuring the biofuel proposals are implemented. In view of the ongoing crisis debate on the future of Irish Sugar, and the strong possibility that sugar beet may not be grown in the future for the production of sugar, we have the possibility here of solving both problems by ensuring crops will be grown for biofuel purposes. I hope we look seriously at that.

I want to comment on the Minister’s statement on the stallion tax. As I have the Seanad nomination of the Irish Thoroughbred Breeders Association and am involved in a small way in the breeding of thoroughbreds, my views are biased. I would have strongly defended the stallion tax exemption. I note that it is to end in 2008 due to pressure from Brussels but I hope we will try to ensure a system of support is put in place to keep a strong Irish industry strong. We should not [327]apologise in this House or elsewhere for the fact that over the past 30 or 40 years we have developed in the Republic of Ireland the premier horse breeding industry in the world. Rather than hiding that away as something of which we should be ashamed, we should be proud of it and all who have contributed to it. The stallion tax exemption was a major help in that regard. If, as the Minister advised today, it is to end in 2008 we should ensure that measures are put in place to keep that fine industry at its maximum strength.

The Minister of State, Deputy Parlon, was the person most associated with the decentralisation announcement two years ago. I noticed a few lines on decentralisation at the back of the booklet. We have debated it here with Deputy Parlon previously and he knows that politicians across all parties support the concept of decentralisation but are bitterly disappointed with the lack of progress. This is the second anniversary of the December 2003 announcement made in advance of local elections. Maybe it was ambitious at the time but it is important for the future of rural Ireland and from a social and economic perspective that we implement a programme of decentralisation. We now hear about plans that will take five to nine years. It is disappointing that we have made so little progress. I know the Minister of State is in the midst of controversy today about a local radio poll. That does not concern me. I want to see action on the implementation of decentralisation. If it needs to be reviewed and restructured, so be it; we could all live with the political consequences for a few months. For the good of rural Ireland and for the capital city, let us see the programme realised. Deputy Parlon must take a stronger approach to it over the next 12 months. We do not want to look back in five or six years time on a lost opportunity.

The Minister of State is aware of the issues facing agriculture and the reliefs announced in the budget. One of the issues on which we all receive representations, and which does not appear in the budget, is the case for tax relief for farmers trying to consolidate their lands. I ask that something be done in the Finance Bill. That case is reasonable and has been made very strongly to us. It would lead to better farming, in some cases better environmental practice and road safety would be improved as farmers would not have to travel miles to reach separate parcels of land. The Minister of State should consider some tax relief for this.

A budget is no longer the big political event it was. The Estimates have been published and the Finance Bill will follow so we will debate this again. I hope the positive aspects of the budget will be acted on quickly. The major fault of the Government over the past seven or eight years has been its failure to deliver on commitments [328]and overspending in many areas. Without being too party political, that needs to be tackled. I refer to the Minister’s concluding remarks about the need to be more transparent in the budgetary process and to have more dialogue and debate within the political system. That would be good for politics because it would allow the public not just to see what is on offer at election time but to engage in the broader debate and see the political and financial choices available.

Mr. J. Walsh: Information on Jim Walsh  Zoom on Jim Walsh  Like the other speakers I welcome the budget. It is remarkable that we have a budget based on income generated from economic growth rather than increased taxation or excise duty. I am not sure if it is unique but it has not happened very often. The economic growth we have experienced — last year it was 4.6% and the projections for the next few years are 4.8% and 5% — is impressive. One of the most impressive statistics in the budget is the increase in employment in 2005. Employment is up approximately 50,000 on the projections at the start of the year with 89,000 new jobs created. The projection for the coming year at 3% and 60,000 new jobs is also impressive. It shows the way the economy is going and how necessary it is to keep the ship on an even keel so the benefit of recent economic growth is continued without interruption.

Inflation is currently 2.5% and is projected to rise to 2.7%. It is on the high side when compared with our EU partners. We should be mindful that although the rate is at an historical low in Ireland, we should maintain every effort to keep it low if at all possible.

  7 o’clock

It is good to see taxation as a focus of the budget. People on the minimum wage are being removed from the tax band, an action that other Senators and commentators have sought and one which is welcome. The restrictions regarding capital allowances and other tax reliefs, particularly for very high income earners, are also welcome. I was somewhat surprised in reading the budget document to find one can carry forward unused capital allowances from one year to the next. Although this is standard practice, I wonder if it is advisable.

I take issue with the fact that loans for companies which are used for property rental will not be allowed to people who invest, either through shares or by extending a loan to a company. I have argued the point with previous Ministers for Finance that there is an inequity in that process. Most tax advisers will advise people to hold property outside a company as it is more tax efficient. Those who put capital into a company, for the protection of limited liability, for example, should not be penalised as a consequence. Any income generated within the company attracts a surcharge, so these are not moneys which can be [329]retained. There is only a small saving of perhaps €15 million on the matter. It would be useful to examine the issue again.

An increase in stamp duty to 9% is high in comparison with other countries within the EU.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  Hear, hear.

Mr. J. Walsh: Information on Jim Walsh  Zoom on Jim Walsh  If nothing can be done on the percentage amount, action should be taken on thresholds. This relates in particular to first-time buyers of property or even people moving up in the property market. This is a significant add-on to the already high price of property, although it is generating revenue. I agree with the thrust of economic policy in that we should have low income taxes, which we have, and the corollary is higher taxes in other areas. The issue should be examined.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  I ask the Senator to conclude.

Mr. J. Walsh: Information on Jim Walsh  Zoom on Jim Walsh  Public sector wages need to be tightly controlled. If benchmarking is to recur, it should be related specifically to quantifiable productivity. There should also be some type of programme for the eradication of waste in general public expenditure.

To echo everybody else who has spoken, I welcome the significant increases for all people in receipt of social welfare, particularly old-age pensioners. A focus on these people shows an ethos that is essential in a growing economy, where many people are much better off than they were previously. It is imperative to ensure those at lower income levels are looked after in a way that gives these people a better quality of life.

Minister of State at the Department of Finance (Mr. Parlon): Information on Tom Parlon  Zoom on Tom Parlon  I will make a brief comment as there has been a general appreciation of the budget and the positives therein. It is important to note that the budget maintains the Government’s policy of sound economic management. Were it not for this good management, we would not have had the resources in this budget to distribute the benefits of our prosperity across all of society. In any budget, but particularly in this budget, sustaining economic growth and improving equality and opportunity for all is most important.

I remind Members that since 1997, the numbers of those in the tax system who pay no tax has increased from 380,200 to 741,000. Approximately a third of workers pay no tax, a further third pay at the lower rate and less than a third pay at the highest rate.

Senator John Paul Phelan was critical of the value for money aspects of public expenditure. This is unfair, as the Minister placed particular emphasis on this issue previously and in his [330]Budget Statement, referring to a number of specific measures. In particular, these are the new forms of contracts for construction projects; the new requirements for evaluation of projects costing more than €30 million using cost-benefit analysis; and the tighter monitoring of spending by the Department and its agencies.

Senator O’Toole queried the early child care supplement. I confirm this particular payment will be in respect of each child under six years of age. It is universal and not tied to any child care costs. It is not a voucher approach and it will be paid to everybody.

Senator O’Toole also asked why the reduction in excise for heating oils did not apply to diesel. The answer is reasonably straightforward, as marked gas oil, or green diesel as it would be termed in rural areas, is most commonly used in tractors for agricultural purposes. Some people use it for heating purposes, although green diesel is a very different product from kerosene. There is a host of issues that can then arise, with the Revenue Commissioners having a constant fight to avoid green diesel being used illegally. It would be difficult to apply excise at differentiated rates, and green diesel also has a higher sulphur content than kerosene, making it less environmentally friendly. These are valid reasons the reduction has not been applied to diesel.

With regard to decentralisation, I thank the House for its support on the programme. I reject any comments that it is not progressing, as it is well managed.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  It is going backwards.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  It will provide a good infrastructure for our civil servants around the country. It will give civil servants time to get their own arrangements in place, as it is a voluntary process. One cannot simply click one’s fingers and create a building.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  The Minister of State clicked his fingers two years ago.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  The programme is proceeding apace. Senator O’Toole was enthusiastic about the budget, asking a range of detailed questions about the initiatives announced today, particularly with regard to high earners. I cannot clarify the issues at this time, but measures will be announced in more detail by relevant Ministers in due course. The detail of tax measures will be elaborated on in the forthcoming tax Bill.

Senator Bannon was excited about the issue of social housing and homelessness. The Government is fully committed to ensuring that housing needs are met in a comprehensive and effective way. The current national development plan allocated €9 billion for this area from 2000 to 2006. The Government is fully aware of the recent [331]recommendations from NESC, and we will take these into account with the new NDP for 2007 onwards.

A number of people referred to the issue of tax reliefs, and there was general appreciation that they were being dealt with. These have been evaluated rigorously both within the Department and by external consultants. Schemes that have served their time and are no longer proving cost effective are being eliminated. Transitional measures to ensure that no undue negative implications arise, particularly in the construction sector, will be put in place. I have covered the majority of the issues raised by Senators.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  What about roll-over relief?

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  I assume that will be dealt with in the Finance Bill.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  I hope the Minister of State’s assumption is correct.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  I, like Senator John Paul Phelan, have made strong representations regarding that issue. In general, this budget has received a warm reception, particularly from the public. I glanced briefly at “Six One News” on RTE, which reported widespread support for this enlightened budget that will enhance the well-being and quality of life of all our citizens.

Mr. J. Phelan: Information on John Paul Phelan  Zoom on John Paul Phelan  The Minister of State at the Department of Transport, Deputy Callely,
welcomes this budget.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  I thank Members for giving me the opportunity to outline the budget’s main provisions.

Question put and agreed to.

An Cathaoirleach: Information on Rory Kiely  Zoom on Rory Kiely  When is it proposed to sit again?

Mr. Moylan: Information on Pat Moylan  Zoom on Pat Moylan  At 10.30 a.m. tomorrow.


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