Dáil debates
Wednesday, 8 December 2010
Financial Resolution No. 34: General (Resumed)
10:30 am
Brian Cowen (Laois-Offaly, Fianna Fail)
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This budget is being introduced at a time of great uncertainty across the economies of the developed world. We are living through an economic crisis with few parallels which is impacting in new and unpredictable ways on people, businesses and entire countries. Ireland has been affected more than most, partly because our economy is so dependent on international trade and investment and partly because of the scale of the fall-out from an overheated construction sector. It is the responsibility of those holding elected office to focus their energy on the future and to take action to solve the problems facing the people who elect us. That is the focus of the national recovery four year plan.
This budget makes the practical but difficult decisions that must be implemented to ensure Ireland recovers as quickly as possible. These decisions are not taken lightly. The Government is fully aware of the impact they will have on families across the country and has carefully considered all options and possibilities. We have taken these decisions in a way that balances the need to protect the most vulnerable, the need to meet our international obligations and the need to promote economic growth and employment.
The budget bears evenly on people and strives to share the burden fairly. Having stabilised the deficit this year, we have to take an important further step towards narrowing the large gap between what we, as a State, spend and what we take in. If we had taken no action, this gap would have grown again in 2011 from â¬18.7 billion to â¬22 billion. Our aim next year is to reduce the general government balance from 11.6% to 9.4% of GDP. As with paying a mortgage, the later steps will become progressively easier. With the budgets of the past two years, we were halfway along the path, with a â¬14.6 billion reduction since 2008. With this budget we are now two thirds of the way through the necessary adjustments.
Looking back, I doubt that any Government has acted so decisively and with such energy in a short period or done so much political heavy lifting.
Alan Shatter (Dublin South, Fine Gael)
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No Government in the history of the State has perpetrated so much destruction.
11:00 am
Brian Cowen (Laois-Offaly, Fianna Fail)
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It must be clearly understood that if we are to be in a position to borrow to maintain our public services, State pensions, unemployment benefits, schools and hospitals and pay those who work in them, we must adhere strictly to the agreed parameters of the national recovery plan we have drawn up and agreed with the European Union, ECB and IMF. The plan is the sole basis for drawing down the financial facility these bodies have made available to us. The front-loaded â¬6 billion cut in the deficit is the first and most crucial instalment.
There is no alternative option of â¬4.5 billion. If the Labour Party in government were to attempt to draw back from any aspect of the EU-IMF programme for financial support for Ireland without putting forward a full equivalent alternative, eurozone Finance Ministers would point out to it, in no uncertain terms, that it is bound by the scale of the commitments which underpin the agreement to provide support. If not, assistance would be suspended. Deputy Gilmore would do well to recognise his potential responsibilities and stop pretending to people in either a naive or deceitful way that his party has some other way.
Despite the adjustments made to date, the economy is emerging from recession. There have been significant improvements in our competitiveness, as Ireland prices itself back into international markets. Our exports are performing strongly and have increased by 7% in the first half of the year. We are moving into a balance of payments surplus in 2011. Tax returns for 2010 are expected to be â¬450 million ahead of projections, while economic growth will also exceed forecasts. Unemployment has stabilised and the live register has fallen in each of the past three months.
When considering the challenges that lie ahead we need to remember how far we have come and the resilience shown by Irish people over the past two years. It is this resilience which gives confidence that we will emerge from this crisis quicker and more strongly than many commentators expect.
The national recovery plan published by the Government on 24 November is the basis for sustaining recovery. The plan outlines a pathway to restore the public finances by returning tax and expenditure levels to close to those of other European countries. Some â¬10 billion or two thirds of the budgetary adjustment will be achieved through reduced expenditure, with â¬3.9 billion of this figure being achieved in this budget. This means that by 2014 gross current expenditure will be back to 2007 levels.
Total Government voted expenditure as a percentage of GNP will be reduced from 49% to 36% by 2014. The remaining one third of the adjustment - â¬5 billion - will be achieved through taxation. The focus will be more on broadening the tax base than increasing tax rates, which is a more effective way of achieving revenue targets.
Tax receipts in 2010, nevertheless, will be 35% lower than in 2007, reflecting the over-dependence on property and construction-related revenue sources at that time.
A fundamental principle of the reform outlined in this plan is that all taxpayers must contribute according to their means. Those who can pay most will pay most, but no group can be entirely sheltered. The changes in the plan will bring the income tax structure back nearer to what existed in 2006. This budget is the first phase in this fundamental restructuring of the public finances, bringing them back to a sustainable position, while maximising the economy's potential to grow and again create jobs.
We cannot afford delay. As of now, the parties opposite are not agreed on how much needs to be done or how it is to be done, as our previous exchanges amply illustrated. We do not have the luxury of time to allow all that to be worked out. Completion of the first steps towards the agreed target deficit of 3% of GDP by 2014 or, at the latest, 2015, will create the necessary breathing space, so that an election can be held and a new Government formed. We will not shirk our responsibility for the welfare of our people in the meantime. All sides of the House and people outside it need to be aware that restoring our country's credibility, including re-building the confidence which is essential to recovery, depends on our being able to follow through swiftly on the commitments we have made.
The main task of the Government I have led has, from the outset, been to secure the best interests of the nation in the most challenging times. We have made hard choices and taken unpopular decisions in the interests of the security and well-being of our people. As a Government, we did our best to resolve both the banking and the deficit situations on our own. The interdependence of the modern world as well as our membership of the eurozone and large market movements have, in the end, put some of the solutions beyond our control.
Both the EU and the eurozone are themselves facing fundamental challenges in devising a fair and equitable response to a financial crisis situation, present and future, that may, in a chain reaction, adversely affect several member countries. That our domestic measures did not prove sufficient does not mean they were not necessary. It was essential for us to make the maximum effort, which will now be supported by the European Union, the European Central Bank and the IMF. We are in a different territory from when such interventions were made in the past, for example, when Britain in 1969 and 1976 made application to the IMF at a time when we shared a common currency with it. For a small country, in particular, economic sovereignty has in practice always been somewhat circumscribed.
If we are to recover greater freedom of action in the future, as we all wish, it will not be done by a foolish and petulant unilateral repudiation of our obligations, for which there is no successful precedent anywhere, nor by a refusal to accept any share of responsibility for our collective actions in the boom years. Our situation will only be improved by following the route set out in the national recovery plan, of which the budget is the critical first instalment. Principally, what we must do to put our economy and our finances back on an even keel is to correct the overshoot wherever that occurred. A limited sacrifice in recent improvements in living standards will put us back on a path we can sustain. It is not about reverting to where we were ten or 20 years ago, rather, in most cases, to where we were only a few years ago.
I accept the argument that we have to start at the top. The Taoiseach's salary is being reduced by a third compared to what it was in 2008, with net pay down 45%. The future salary for the President will be set at the new public sector ceiling of â¬250,000, which, when existing top level contracts in the semi-State bodies expire, will apply across the public sector, including to judges. I wish to acknowledge the President's announcement that she will, on a voluntary basis, apply this new rate as she has accepted previous reductions. Ministers will have seen their net take-home pay reduced by 36%, while Deputies' net salaries will have been reduced by a third.
Pension lump sums will be taxed above â¬200,000, and the public service pension will be reduced by an average of 4%. New entrants will enter at a 10% lower starting income. With the important exception of education, public sector numbers will fall back to lower levels by 2014, though much of the improvement in services will be broadly maintained. A more competitive economy has to reduce its overheads.
The cumulative impact of budgets since budget 2009 has been highly progressive, taking welfare and tax changes together. Changes in the pension regime are mainly focused on the highest earners. Twenty-four reliefs and exemptions are being terminated or restricted, including property reliefs. The cap on employees' PRSI is being removed, as has long been advocated. In making the adjustments in this budget, we have protected the vulnerable as much as possible while continuing to incentivise work, jobs, and growth, on which their incomes depend.
Everybody pays something, but the better-off pay most. At present, the top 8% of earners pay 60% of tax. After this budget, the top income earners will continue to pay, proportionately, the most. Much criticized tax breaks which mainly benefit high earners will be largely eliminated. While it has been necessary to cut working age welfare payments, the 2011 rates will still be more than double the 1997 levels, compared to a consumer price index or price increase of 45%. Child benefit rates will be three times higher than in 1997.
To put all this in context, tax measures over the four years of the national recovery plan will bring us back to 2006 levels. After this budget, 38% of people will still be outside the tax net. The increase in numbers of people coming into the tax net at present is 45% and will be 38%. The new minimum wage level, designed to increase the availability of jobs, will not be in the tax net. The sum of â¬306 for a 40 hour week compares favourably with a single person's job-seeker's benefit of â¬188. Despite the reduction, the minimum wage will still be considerably above the level in the UK and Northern Ireland.
In the debate, I cannot overlook the fact that the Labour Party is seriously at odds with Fine Gael as to the proportion of the adjustment that would be met from additional taxation. The Labour Party's tax policy is closer to Sinn Féin's than it is to Fine Gael's. Fine Gael's commitment is to confine tax measures to one-third of total cuts from 2011-2014. The Labour Party proposes that half of the adjustments will come from more taxes. It is worth pondering what the outcome of the Labour Party's proposal of increased taxes might mean for average working families. If the party had its way on raising â¬2.5 billion in taxes as it proposed last week, and given that it voted against our proposals, this could, for example, involve a 2% increase on the standard rate of income tax, a 5% increase on the higher rate, or 1% on the lower rate and 3% on the higher rate in addition to a further 2% increase on the standard VAT rate to 25% with implications for competition across the Border, as well as a site value tax of â¬400, not the â¬200 average. In spite of claims that the target would be the well-off, experience shows that the average PA YE taxpayer has always fared worse when the Labour Party was in Government.
Brian Cowen (Laois-Offaly, Fianna Fail)
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A priority for this Government is to protect the most vulnerable in our society, while ensuring that those of us who can afford to carry the heaviest burden do so. An additional â¬10 million has been provided for the disability sector. We have also prioritised the free pre-school education programme. We have not reduced the contributory old age pension in order that those in our elderly community who are unable to work to improve their incomes are protected. We have also increased funding by â¬8 million to allow for more home help packages in 2011. We have provided increased funding of â¬115 million for an additional 120,000 medical cards next year, and additional funding for the following key priority services: older people - ⬠14 million; the fair deal - another â¬6 million; cancer - â¬8 million; child protection, as per the Ryan report recommendations - â¬9 million and suicide prevention - â¬1 million.
The reductions in many social welfare payments are a regrettable but necessary, part of this adjustment. Budget 2011 has to be seen in the context of the recently published National Recovery Plan 2011-2014. As the Department of Social Protection is the biggest spending Department, accounting for approximately 38% of total gross Government expenditure, it is not possible to stabilise and reduce our public spending without there being an impact on that Department's budget. Failure to take action now in regard to the level of expenditure by the Department would mean that supports to pensioners, carers, people with disabilities and jobseekers, among others, would become increasingly unsustainable.
There was a common consensus to protect State pensions and we did that. However, that narrows the range of where we can make savings. Jobseekers have already borne a burden in terms of cuts, but the more areas are exempted the more are jobseekers put in the firing line for greater cuts. The unvarnished facts are that to avoid cuts in widows' and widowers' pensions, blind pensions and long-term invalidity, disability and carers' payments, it would have been necessary to implement a far higher cut on the jobseekers' payments.
Denis NaughtenBrian Cowen (Laois-Offaly, Fianna Fail)
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"So what?" somebody says. One would be talking about a cut of approximately â¬11 per week on jobseekers' payments instead of the proposed â¬8 per week, which would involve a â¬19 cut for a couple. Where else in the social welfare budget, over and above what we have done, would the Opposition make these cuts?
The Government, in a hugely challenging budgetary environment, has done its utmost to protect the most vulnerable in our society in these circumstances. The adjustments we have made cannot be viewed in isolation and must also be seen in the context of the fact that over the past decade the Government has trebled the social welfare budget, whereas, over the same period, prices of goods and services have increased by less than a third. The total increase in social welfare expenditure has gone from â¬6.7 billion in 2000 to a total expenditure of â¬20.9 billion in 2010. In that time, the Government has significantly extended coverage, removed barriers and increased entitlements, such that the level and extent of social support payments has been transformed beyond recognition.
We have maintained the half-rate carer's payment for those who have another social welfare payment and find themselves in a caring position. We have maintained all of the innovations that were introduced by the late Mr. Seamus Brennan when he was Minister for Social and Family Affairs. We changed the system fundamentally so that a person is only entitled to one payment from the system. We made carer's allowance the highest rate of social welfare payment in the social welfare code because we recognised-----
Brian Cowen (Laois-Offaly, Fianna Fail)
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Rightly so. We did it, and I am proud of the things we did during those years.
Terence Flanagan (Dublin North East, Fine Gael)
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Why is the Government cutting it?
Brian Cowen (Laois-Offaly, Fianna Fail)
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I am proud of the fact that in regard to education in the disability sector we spent â¬1 billion of an â¬8 billion budget in mainstreaming people with disability into our education system. While some say I should be ashamed, I am proud of all of those progressive social policies. The situation, and what we need to say to the public, is this - despite the economic tsunami that hit this country a couple of years ago and from which we are still trying to recover, all those social gains did not go out with the sea. Many, if not all, can be retained and many can be regained and improved upon when things pick up again in the years ahead.
While that is a commitment we can all make, we have to be straight about it. In their analysis of yesterday's budget, on the one hand, Fine Gael says there is no need for any income tax increases and, on the other, the Labour Party says there is no need for any welfare cuts.
Enda Kenny (Mayo, Fine Gael)
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It is a big change for the Taoiseach to be straight.
Brian Cowen (Laois-Offaly, Fianna Fail)
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That is simply an incredible position to take 12 hours after one of the most important budgets in the history of the State being brought into this House and, thankfully, passed as a result of the democratic process here last night.
The levels of income support provided by the State to those on welfare are still among the highest in Europe, of which we are all proud. People who live in Border counties know what the social welfare payments are across the Border. Many in the North used in the past to look towards the Republic and suggest patronisingly that we were not capable of looking after our own people. The social policies we introduced in recent years were the right thing to do. When else were we going to be able to do this? If we take the decisions now, we can maintain much, perhaps as much as 90%, of those gains. However, if we play the game the Opposition want to play - the game of "No, there is some other soft option available. No, we have a solution here that does not involve you or the next person being affected" - then the rate of cuts will become far greater and more unsustainable far more quickly, apart from the fact we need to ensure the programme we have agreed is implemented as quickly as possible.
We need to provide an input of confidence and to let people see that the Government, the country and the Dáil, however hot and heavy our debates get, are prepared to take the decisions that are necessary for this country to come through. That is what people going to work or staying at home today want to hear from us.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Let us have our differences but let us not get into a stupid debate or descend into the foolishness of suggesting there is an alternative Government available to this country in the months ahead that will neither increase tax nor cut welfare during the course of the coming year. It is patent nonsense and it needs to be seen for what it is.
As Taoiseach, I am deeply conscious that the adjustments in social welfare expenditure in this budget will affect the living standards of many of our citizens in the short term. However, if we put off these changes, there will be a greater burden in the future on all those who can least bear it. What is most important now is that we can sustain a strong welfare system into the future. These adjustments mean we have cut back slightly but they protect people from the risk of more severe cuts in the future.
We are keeping those who have lost their jobs as close to the labour market as possible. We are providing 15,000 extra activation places at a cost of â¬200 million on a skills and internship programme, a work placement programme and a community work placement scheme which supplement the existing level of activity. Since this crisis began, we have doubled the number of training places from 66,000 to over 130,000. To this can be added the thousands of people on the back to education scheme as well as the private sector labour activation scheme introduced by the Tánaiste when she held that Department, which is a good scheme and one which can be expanded and be part of how we deal with this situation for people who want to stay active and up-skill. Under the Department of Social Protection, there are 55,000 more places for people on community employment schemes, the community support programme and the rural social scheme.
Taking all of that, there are 205,000 places, together with the 15,000 announced here. When one considers that 290,000 people in this country are signing on for unemployment full-time, five days a week, it gives an indication of the level of response we are trying to achieve in very straitened and difficult circumstances.
Brian Cowen (Laois-Offaly, Fianna Fail)
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If the Deputy wants to be patronising about it, that is his problem. The facts are that these decisions were taken by Government at a time of great economic difficulty.
David Stanton (Cork East, Fine Gael)
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Tens of thousands of young people have emigrated. What about them?
Brian Cowen (Laois-Offaly, Fianna Fail)
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Everybody recognises we have to provide as much support as we can. I looked at some of the proposals from other parties in regard to this matter in their pre-budget submissions, and they are broadly in the same territory both in terms of scale and objective.
We are extending the employer job incentive scheme to the end of 2011 and transforming the business expansion scheme to incentivise firms to employ staff. We are undertaking a number of key strategic initiatives to create new jobs and get people back to work. The business expansion scheme and the new employment incentive announced by the Minister yesterday require state aid approval, which should be forthcoming in the normal time period in the coming months. The issue is we are making sure that, as we close down the tax shelters in other areas, we provide an opportunity for people to invest in those entrepreneurs, businesses and enterprises that require assistance and funding at this time. We are increasing the amount one can invest in overall terms to â¬10 million, and â¬2.5 million annually, where the current limit is â¬1.5 million, and dealing with a complaint from business regarding some of these issues. People are out there creating jobs in terms of the certification process being more streamlined and user friendly. We want to broaden the areas of activity the business expansion scheme at present includes and the areas where investment can be made. That is a good initiative and it is the right thing to do. Those with investment income are being channelled into those areas of best employment effect in the public policy area.
At almost â¬35 billion, we are maintaining proportionately one of the largest capital investment programmes in Europe. We will spend â¬4.7 billion next year on the capital programme. When we consider the difficulties we have faced, to listen to some of the commentary and analysis from Members, which for some reason they think is a good idea, they suggest that due to the economic tsunami we have lost it all. Have we been knocking down the new hospitals? Are the new schools being closed? Have the extensions to all the basic infrastructure developments in our towns and villages throughout the country been closed up? The answer is "No". They have added to our competitiveness, and the people driving around the country today know this. To spend billions of euro in these areas was the right thing to do.
In current circumstances, as we know, there is greater value for money to be had given the more competitive position, with tender prices down by approximately 30%. We are continuing to work in that area. With regard to the â¬4.7 billion, whether it is the â¬400 million for our health programme, the â¬383 million going into capital spending in our schools, the â¬500 million being invested in our water services programme or the â¬500 million being invested in our housing programme, including for regeneration in Ballymun and Limerick, which is much needed, as we saw again on recent programmes on RTE, these are important initiatives. The Government is seeking to address issues constructively and is prepared to invest in the country at a time of difficulty. That is what we are doing.
With regard to semi-State bodies, the amount of investment that will be undertaken by the utilities, telecommunications and broadband companies, including those in the private sector, will be of the order of â¬2 billion next year.
Frank Feighan (Roscommon-South Leitrim, Fine Gael)
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That is what the Government is supposed to do.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Total expenditure on capital programmes through commercial semi-State investment and the public investment programme will be â¬6.5 billion next year.
Brian Cowen (Laois-Offaly, Fianna Fail)
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That should not be regarded as something just to be sniffed at. It is important work building on all the investments we have made in the past. Unprecedented capital investment has changed the face of and transformed this country, much for the better.
David Stanton (Cork East, Fine Gael)
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What about the ghost estates?
Brian Cowen (Laois-Offaly, Fianna Fail)
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If the capacity was such, it happened in the private sector.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Taxpayers' money was invested in schools in the Deputy's constituency and he has been trying to take credit for this for the past ten years. Taxpayers' money ensured serious investments were made. Why can the Deputy not simply acknowledge that and move on to the debate about the future?
Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy's problem is that he is not able to move on because he does not have a policy framework that stands up.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I do not know whether the finance spokesperson heard his leader this morning.
Brian Cowen (Laois-Offaly, Fianna Fail)
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He suggested that Deputy Noonan would not have to raise any money in income tax to make a cut of â¬6 billion.
Seán Barrett (Dún Laoghaire, Fine Gael)
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The country is booming.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Is that true? Could that be true? I refer to the man who was supposed to have brought some gravitas to the finance spokesmanship in recent months and who was ensuring the leader could step back a bit-----
Simon Coveney (Cork South Central, Fine Gael)
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Says the man who cannot move on.
Brian Cowen (Laois-Offaly, Fianna Fail)
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-----that we might hear a bit of common sense.
Brian Cowen (Laois-Offaly, Fianna Fail)
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In the past 25 minutes, there has been a need to get an editor for him.
Enda Kenny (Mayo, Fine Gael)
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If the Taoiseach wants to be straight with them, he should be straight with them.
Brian Cowen (Laois-Offaly, Fianna Fail)
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He has really gone overboard this time.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Our five-year integrated plan for trade, tourism and investment will create 300,000 jobs and boost exports by one third. This is based on the figures of the IDA and Enterprise Ireland and on the spillover effect that can happen. We must be conveying to the public and investor community that we seek investment income for productive areas of the economy, not only at home but also abroad. If we are to continue to talk about economic corpses and state the country is banjaxed, that we should forget about it and that it will all change when the Opposition gets into power, we will not be productive.
If Deputy Gilmore is the good guy, we must be in bigger trouble than I believed we were in. Certainly, working people will know how the Labour Party dealt with PAYE taxpayers when it was in Government. This is because that party will not take the decisions to cut back on the services when those decisions are necessary. It piled the tax on working people. When Deputy Gilmore asks me to wait until the Labour Party is back in power, he should note that when he was in Government, he taxed people who earned above â¬7,000. He started taxing people earning â¬120 per week.
Seán Barrett (Dún Laoghaire, Fine Gael)
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We left the country in credit.
Brian Cowen (Laois-Offaly, Fianna Fail)
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We made changes yesterday.
Seán Barrett (Dún Laoghaire, Fine Gael)
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It took the Government 13 years to bust the country.
Brian Cowen (Laois-Offaly, Fianna Fail)
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One will have to earn â¬16,300 before one starts contributing to the tax system. This is because we wanted to ensure people on low incomes are helped, avoid poverty traps and maintain the incentive to work. Even after yesterday's budget, in respect of which every superlative one could think of has been used in an effort to say how terrible it is-----
Paul Kehoe (Wexford, Fine Gael)
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What is the Taoiseach's legacy?
Brian Cowen (Laois-Offaly, Fianna Fail)
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Yet, 38% of people going to work today will not be in the tax net after this budget.
Paul Kehoe (Wexford, Fine Gael)
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What is the Taoiseach's legacy?
Brian Cowen (Laois-Offaly, Fianna Fail)
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That is our commitment to these people. I will discuss that with the Deputy any time.
Paul Kehoe (Wexford, Fine Gael)
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What is the Taoiseach's legacy?
Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy does not have to engage in defence. The wry smile of the finance spokesperson said it all for me.
Paul Kehoe (Wexford, Fine Gael)
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What is the Taoiseach's legacy?
Brian Cowen (Laois-Offaly, Fianna Fail)
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We have set up an innovation fund of â¬500 million-----
Paul Kehoe (Wexford, Fine Gael)
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The Deputy is laughing at the Taoiseach.
Brian Cowen (Laois-Offaly, Fianna Fail)
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-----that will support enterprise development and job creation by drawing top venture capitalists to Ireland. It is interesting that the first tranche has attracted 23 expressions of interest. That is the way we can get capital into high-technology companies that are presently short of resources and which find it hard to bank their projects because of the nature of the activity in which they are engaged. The research element must be borne in mind.
A â¬32 million labour market activation fund is targeted at specific priority groups among the unemployed, and is supporting almost 60 projects and 11,000 participants this year. This is an important point to make. The fund represents a good initiative that marries public policy objectives to private sector initiatives.
Under the four year plan, we will use moneys from the national pensions reserve fund for projects such as the water metering programme and retrofitting. Our low corporation tax rate of 12.5% is the cornerstone of our economic policy. Foreign direct investment supports 240,000 jobs in this country.
Both AIB and the Bank of Ireland are to make â¬12 billion available to SMEs over the next two years. We have remained true to our ambition to make Ireland a global innovation hub, a country that can support high-value jobs based on innovation and knowledge. It is something to be said for our country that, at a time of such difficulty, it was first in the foreign direct investment stakes per head of population last year. Last year was one of the most difficult years we have ever had. We were so successful because, despite the difficulty and contraction of the economy, we continued to create an environment here that promotes enterprise and jobs and, importantly, looks to our own resources.
The tourism sector, for example, will benefit from a programme worth over â¬200 million. If one considers the change to the travel tax, which will cost the taxpayer approximately â¬65 million-----
Simon Coveney (Cork South Central, Fine Gael)
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Why have a travel tax?
Brian Cowen (Laois-Offaly, Fianna Fail)
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That is one aspect. With regard to promoting the tourism product in Ireland, the sum in question amounts to over â¬100 million. There is expenditure of over â¬40 million on tourism marketing. In this area, a serious, focused effort is being made to increase tourist numbers.
Enda Kenny (Mayo, Fine Gael)
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The number of tourists has decreased by 2 million.
Brian Cowen (Laois-Offaly, Fianna Fail)
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With regard to agriculture, in respect of which I will be glad to hear from Deputy Stanton, we have a strategy in place-----
Brian Cowen (Laois-Offaly, Fianna Fail)
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-----and confidence has returned to the sector. I recall meeting worried representatives of the agri-food business at the height of this crisis, at which time it was suggested that up to 40% of its base would disappear because of factors exacerbated by the exchange rate problem. This is because many of our goods and services in this area go into the sterling area, as the Deputies know. All of them have come through and all have growth strategies. I am thankful that primary producers such as farmers have had a much better year this year than in the preceding two. There is now leadership. I acknowledge the leadership in the farming community and agri-food sector. People in the sector are getting on with their work and saying we must move on and increase our output and job content. These are our own natural resources.
Seán Barrett (Dún Laoghaire, Fine Gael)
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Why did the Taoiseach call in the IMF?
Brian Cowen (Laois-Offaly, Fianna Fail)
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There will be considerable investment next year in the forestry sector. Shouting at me will not change this. Deputy Barrett should give me a shout when he is to make his contribution and I will come down and listen respectfully to what he has to say. He cannot make his contribution at the same time as I am making mine.
Seán Barrett (Dún Laoghaire, Fine Gael)
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Why did the Taoiseach call in the IMF?
Brian Cowen (Laois-Offaly, Fianna Fail)
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That is just not the way it works.
Paul Kehoe (Wexford, Fine Gael)
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That is the Taoiseach's legacy.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The Government is investing over â¬570 million in science, technology and innovation next year. We are continuing with that. When one considers the budgets for the IDA and Enterprise Ireland, one will note the total budget for enterprise support next year is â¬508 million. It will rise by â¬50 million in 2012 and 2013 because that is the commitment we are making in terms of focusing on the promotion of growth and job creation.
When people talk about the need to put jobs and growth at the centre of our economic agenda, we agree with them, but one cannot just ask where the stimulus is. The stimulus is that our competitiveness is improving and that we are investing â¬6.5 billion next year through commercial semi-State companies and our public investment programme. By any rule of thumb, that amounts to the maintenance of over 65,000 jobs.
If one considers the activation area, what is occurring under the business expansion scheme, the supports from Enterprise Ireland and the IDA, the areas of science, technology and innovation and the work of Science Foundation Ireland-----
James Reilly (Dublin North, Fine Gael)
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And then look at what is happening to the country.
Brian Cowen (Laois-Offaly, Fianna Fail)
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-----one will realise we have a real economy that is forging ahead if we give it the chance. Exports have increased by 6% and merchandising exports have increased by 12% in the past three months. We will have a balance of payments surplus next year. While we must do our job in this House, namely, fixing the public finances, we must also ensure that enterprising, entrepreneurial businessmen and businesswomen, both at home and abroad, are supported in every way, including economically, diplomatically and by way of marketing. All the State agencies must be motivated to support Ireland in selling its goods and services globally such that there will be demand for them when we set the right price. This is what we have been able to do as a result of the policies we have been implementing. That changeover has happened.
Science Foundation Ireland will be maintaining 29 top-class research centres in 2011 and it continues to work with over 400 industry partners. This is important if we are to sustain growth. It is in this area that we must invest now if we are to secure the new jobs and services of the future.
Enterprise Ireland will help approximately 1,200 companies with research and innovation activities in 2011. It will also support 85 high-potential start-up companies next year, rising to 100 by 2015. I refer to scale-up companies in addition to start-up companies, as mentioned by Deputy Gilmore a few days ago. The number of industry-led competency centres will be doubled to 16 by 2015. Innovation Fund Ireland will grow to â¬500 million, attracting leading international venture capital companies to Ireland; and the IDA will continue to attract new investments, nearly half of which were research and development related this year.
Ireland is developing a strong international reputation for innovation and high tech start-ups. The smart economy can be an important part of our economic recovery, and the budget positions us to take advantage.
We are introducing incentives to bring confidence to the housing market, including a reduced flat rate 1% stamp duty rate on residential property transactions up to â¬l million; an improved tenant purchase scheme available now to 45,000 more tenants in this country who can obtain the ownership of their home based on a much improved and far more attractive scheme brought forward by the Minister for housing, Deputy Michael Finneran; measures to help registered tax compliant contractors; and tax incentives for retrofitting home energy efficiency measures are a way of ensuring that we reduce the black economy and make sure those who are compliant and are running their businesses properly, ethically and in a business like fashion are supported. By reducing the relevant contracts tax from 35% to 20% we greatly improve the cash flow of those businesses that are compliant and ensure we are able to deal with those who are trying to play it both ways using the system.
Brian Cowen (Laois-Offaly, Fianna Fail)
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We are supporting tourism by reducing the air travel tax to â¬3, and the DAA will be incentivising carriers to bring in additional airline passengers.
I have made the point about the capital investment programme. It is critical. While difficult decisions have been made in this budget, and further challenging measures will be put in place over the lifetime of the four year plan, we have retained the vast majority of the benefits of the boom.
The tax measures over the four years of the national recovery plan will bring us to 2006 levels. Spending levels will be brought to 2007-08 levels. However, spending on the productive capacity of the economy will continue apace.
During the good times, we used the fruits of the boom not only to reduce our national debt to very low levels but we also invested wisely in the productive capacity of the economy - in schools, roads, public transport, communications, research and innovation, and housing. We retain this infrastructure, and that is helping to grow the economy once again. Anyone visiting this country now would see how much better served we are by that infrastructure compared to the 1980s.
We had one of the highest rates of public investment in Europe over the past ten years and we still have that now.
We retain a high level of capital investment by international and historical standards - nearly â¬16.5 billion in the period up to 2014. That will be invested in projects which support economic growth and employment.
Next year alone we will invest â¬4.7 billion. This will allow several new road projects to start, support major regeneration projects in Ballymun and Limerick, sustain the school building programme, and progress high priority health projects, particularly in the mental health area.
Dan Neville (Limerick West, Fine Gael)
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You are making up for it.
Brian Cowen (Laois-Offaly, Fianna Fail)
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There is a major allocation for the new national energy retrofit programme. This will combine existing domestic energy efficiency initiatives, supporting jobs for former construction workers and making sure that the tax credit is available as well as the direct grant-in-aid through the various schemes. The tax credit scheme will be of wider application and bring in more types of remedial and improvement works, which I believe is necessary as people look now to improve their own housing situation rather than buying up. This programme will be complemented by a new tax credit for domestic energy efficiency improvements.
Most important, we have prioritised spending on enterprise supports. At a time of major crisis, it is appropriate to draw on all our resources.
We will continue to bring forward public private partnerships in transport, education and health. We will help to identify public investment opportunities for the National Pensions Reserve Fund and other private investors, and we will support major investments by our commercial semi-State companies - more than â¬2 billion in the energy sector alone in 2011.
The Government remains convinced that North-South co-operation is a central element in the push for economic recovery. Budget 2011 has maintained overall funding levels for North-South co-operation, with a total allocation of over â¬110 million.
The increased allocation of â¬14 million for cross-Border transport initiatives will help promote jobs and economic recovery in Border communities and the wider economy. This includes the necessary funding to meet the Irish Government's commitment to the joint projects to upgrade the cross-Border road network, and we stand by those decisions.
The budget also includes funding of almost â¬80 million for the North-South bodies. Of course, like all other public sector bodies they will see reduced budgets, but this substantial funding will enable those bodies to continue their essential work.
The future prosperity of the island economy is essential to building on the peace we have achieved and to creating economic opportunities for a new generation that can enjoy that peace. We will not let our economic difficulties distract us from that core mission of this Government.
As well as the work of the North-South bodies, areas of co-operation such as health and education, and joint investment projects, there is an increasing range of shared economic concerns between North and South in areas such as banking, energy and research development. I look forward to discussing these issues with colleagues from the Northern Ireland Executive at the British-Irish Council meeting next week and at the next meeting of the North South Ministerial Council, which I expect to be held shortly.
Our economy retains very significant strengths. We have the youngest population in Europe, with one in three under 25; we have the highest proportion of graduates among the 25 to 34 age group in the European Union; our exports are performing strongly; we are the ninth best country worldwide in which to do business-----
Brian Cowen (Laois-Offaly, Fianna Fail)
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-----according to the World Bank; Ireland's stock of direct inward investment is five times greater than the OECD average; our competitiveness has significantly improved; we have clusters of the world's leading multinational companies, and continue to attract high levels of investment. Almost 1,000 companies, including household names such as IBM, Google, eBay and Facebook, have chosen Ireland as the hub of their European operations.
Brian Cowen (Laois-Offaly, Fianna Fail)
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A fair and effective budget will boost confidence and jobs. We need to start believing in ourselves again, particularly in the public arena-----
Brian Cowen (Laois-Offaly, Fianna Fail)
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-----and to communicate that with confidence to the outside world. I commend the budget to the House.
Pádraic McCormack (Galway West, Fine Gael)
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Does the Taoiseach's own party have confidence? There is not much confidence behind the Taoiseach.
Enda Kenny (Mayo, Fine Gael)
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That was a speech of desperation from the Taoiseach.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy should make his own speech.
Paul Gogarty (Dublin Mid West, Green Party)
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It was a rollicking speech of desperation. The Deputy skipped that bit.
Pádraic McCormack (Galway West, Fine Gael)
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The baby is there again.
Enda Kenny (Mayo, Fine Gael)
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Anybody listening to that speech who was not acquainted with the true facts of what is happening in our country would assume we had a balance of payments in surplus, full employment and that we were leaders on a world scale.
The Taoiseach has not been straight with the people. He started off this morning by saying it is important to be straight with people. The Taoiseach was not straight in terms of the fundamental question about banks when he was asked if Anglo Irish Bank was a question of liquidity or solvency. He said liquidity, and his Minister for Finance said that also, but that was not the case. He was not straight with the people when he said that the ECB and the IMF were at our shores to take away our economic sovereignty, cast away by his party, the great Republican party, after all these years. He has not been straight with the people in telling them about what he calls employment stabilisation. That is the new term for emigration, and our people are in Canada, America, Australia and every other country. They are going, going, going, as the poet said, and we cannot bid them stay. That is because of the direct failure of the Taoiseach's Government and his inability to deal with the problems of our country or to face the crises he has let develop over the years. If anything is eating away at the internal dynamics of this Government it is the Taoiseach's own failures and his lack of recognition of those failures in the past number of years.
The Taoiseach said this morning that he cast doubt on Fine Gael's numbers and that they did not add up.
Enda Kenny (Mayo, Fine Gael)
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They were costed by the Department of Finance and not a single journalist or economist has cast any aspersions on those-----
Brian Cowen (Laois-Offaly, Fianna Fail)
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No. The Deputy got his sums wrong again.
Enda Kenny (Mayo, Fine Gael)
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-----but what the Taoiseach did not admit was that there was a fairer way of dealing with achievement of the targets we have accepted in the national interest. The massive income taxes on low and middle income families in the budget are expected to raise â¬830 million for the Taoiseach's Government next year.
Dick Roche (Wicklow, Fianna Fail)
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Tell us about the Labour tax proposals and how they compare to the Deputy's.
Enda Kenny (Mayo, Fine Gael)
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The cuts to payments for the disabled, the blind, the carers and widows are saving a further â¬90 million. We pointed out that those savings, and more, could have been achieved by different methods including an additional â¬260 million in public service payroll savings, including bigger cuts at the top, and a more ambitious rationalisation programme than this Government is intending to achieve through the Croke Park deal. An additional â¬340 million could be saved by closing tax breaks for the rich, including an immediate suspension of legacy property based reliefs for developers which was extended by the Taoiseach as Taoiseach and as Minister for Finance, and an additional â¬700 million from cutting the cost of pensions tax relief, particularly for the well heeled. These figures were costed by the Department of Finance, and they add up.
Perhaps we should suspend all business and just talk about what is contained in page 15 of the Taoiseach's script. It reads: "Our five year integrated plan for trade, tourism and investment will generate 300,000 jobs and boost exports by one third." How is that being straight with the people? Where are the statistics to back up that?
Brian Cowen (Laois-Offaly, Fianna Fail)
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IDA and Enterprise Ireland.
Dick Roche (Wicklow, Fianna Fail)
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A total of 150,000 jobs-----
Enda Kenny (Mayo, Fine Gael)
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It refers to 300,000 jobs but there are 429,000 on the live register.
Mary Coughlan (Donegal South West, Fianna Fail)
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The Deputy should read Horizon 2020, which I launched.
Enda Kenny (Mayo, Fine Gael)
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The Taoiseach says his plan will generate these jobs but there are no backups-----
Mary Coughlan (Donegal South West, Fianna Fail)
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I will get the Deputy a copy.
Enda Kenny (Mayo, Fine Gael)
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-----to any of those figures. The Taoiseach is not being straight in that regard.. For instance-----
Dick Roche (Wicklow, Fianna Fail)
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Deputy Kenny did not show much competence.
Enda Kenny (Mayo, Fine Gael)
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-----as was pointed out yesterday by Deputy Noonan, many of the figures contained in this budget document are not backed up by any policy decisions. Page B.15, on activation measures, states that a reduced live register from a more intensive labour activation strategy will yield â¬100 million. Where is that? On administrative efficiencies, it states that there will be a reduction in expenditure on departmental administration yielding â¬11 million. What is that about? On other measures, it states that a range of other measures relating to control, eligibility and structural reform will be announced at a later date, yielding â¬49 million.
Olivia Mitchell (Dublin South, Fine Gael)
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They are all talking about that in town.
Enda Kenny (Mayo, Fine Gael)
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In the Department of Communications, Energy and Natural Resources, â¬6.2 million will be saved on the Vote in respect of TG4. The administrative efficiencies in the Department of Community, Equality and Gaeltacht Affairs amount to â¬10 million. There is â¬380 million from the Department of Health and Children in demand-led schemes savings - is that generic drugs? - and other procurement and non-core pay savings of â¬200 million. There is an estimated payroll saving from the voluntary exit package of â¬123 million.
In the Department of Justice and Law Reform, the Taoiseach might explain the Garda management efficiencies of â¬20 million. What is that about? Where is the policy decision that underlines that so that people can understand what it is that he is being straight about with them?
Brian Cowen (Laois-Offaly, Fianna Fail)
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The Minister for Justice and Law Reform will give all of that detail.
Noel Coonan (Tipperary North, Fine Gael)
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A pub with no beer and a college with no students.
Enda Kenny (Mayo, Fine Gael)
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On regional airports, for the Tánaiste, it states that curtailment of support for regional air services from mid-2011 will yield â¬5 million. That directly affects Donegal, Sligo, Knock, Galway and Kerry. The Tánaiste might explain that when she speaks.
(Interruptions).
Enda Kenny (Mayo, Fine Gael)
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Yesterday was the Minister for Finance's fourth budget in two years. It is my sincere hope that it will be the Taoiseach's party's last budget for many years to come for the party opposite has shown that it is incapable of learning from its mistakes. This budget, like the Minister's previous efforts, is devoid of hope, ideas and imagination. It is a budget devised by bean counters to meet the fiscal targets set by outsiders. It is the product of a Minister who knows the price of everything and the value of nothing.
The Irish people do not need to be told just how bad things are. They know it only too well from their daily lives. Because they know times are tough, they never expected that this budget would be easy but the very least they expected was that the budget would be fair. Instead, they got a series of proposals from the Minister that widened the gap between those at the top and those at the bottom. The statistic I quoted earlier makes it clear. Before this budget the Taoiseach's salary was 13 times the minimum wage and after this budget his salary is 14 times the minimum wage. How can he possibly justify such unfairness in a situation like this? That is not the worst of it.
Buried in the numbers is a savage reduction of â¬8 per week in the income of carers, of widows, of the blind and of those with a disability. We all remember the posters from Fianna Fáil that read health cuts hut the old, the sick and the handicapped. The â¬8 reduction hurts the quality of the lives of the carers, those with a disability, the blind and the widows. Let us be clear about this: there is absolutely no economic, moral or social case for cutting the income of vulnerable groups such as these, especially when there is a clear alternative. The exclusion of all these would have cost the State â¬96 million. This would have been paid for by the proposal from my party to completely overhaul the welfare system and establish a single payment and entitlement service. The Taoiseach may well laugh, smirk and grin at it, but he is responsible for deliberately driving a wedge-----
Brian Cowen (Laois-Offaly, Fianna Fail)
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Deputy Kenny would never cut welfare.
Enda Kenny (Mayo, Fine Gael)
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-----and a stake through the quality of life of so many-----
Pádraic McCormack (Galway West, Fine Gael)
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There are only disciples left. The Taoiseach should be careful.
Enda Kenny (Mayo, Fine Gael)
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------hundreds of thousands of low and middle-income families.
Brian Cowen (Laois-Offaly, Fianna Fail)
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No tax increase, no welfare cuts. It does not give Deputy Noonan much room for manoeuvre.
Enda Kenny (Mayo, Fine Gael)
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It is the Government who has taken the cut in income from widows, the blind, those with a disability and carers.
Michael Noonan (Limerick East, Fine Gael)
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They are watching the Taoiseach.
Enda Kenny (Mayo, Fine Gael)
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The Taoiseach may cast them aside. He may think it is funny. It is not.
Enda Kenny (Mayo, Fine Gael)
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The Government has chosen the easy way out again. It chose to target the vulnerable rather than risk upsetting the powerful vested interests by introducing radical reform.
This budget is incredibly harsh on low and middle-income families. Under the Government's proposal a family with one earner and three children earning â¬40,000 a year will see its annual income fall by almost â¬1,700. The same family's after-tax income would have been â¬1,500 per year better off under Fine Gael's alternative plan, which also saw the deficit being reduced by â¬6 billion. The Taoiseach did not give any credit for the acceptance of the targets over a four year period by my party.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Setting the targets is the easy bit.
Enda Kenny (Mayo, Fine Gael)
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Our four year plan was costed by the Department of Finance.
Brian Cowen (Laois-Offaly, Fianna Fail)
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There is a bigger target.
Enda Kenny (Mayo, Fine Gael)
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Where is the fairness in targeting hard-working families who may be burdened with negative equity and who have rising utility bills and the prospect of even more expensive mortgages?
Ireland also desperately needed a budget with a clear and credible plan to grow the economy and give our young people some hope for the future. What we got instead was a budget that contains no strategy for growth, no strategy for reform and no strategy for jobs beyond the bland statement which is here, which the Taoiseach has repeated on a dozen occasions in the past 12 months, that his plan says 300,000 jobs over the next five years. The Taoiseach has never backed up any one of those jobs with concrete evidence.
There is nothing in this budget that comes any way close to matching either the scale or the ambition of Fine Gael's NewERA stimulus plan to create jobs and to improve competitiveness. Likewise, there is no plan to reform the public sector or to change the way the political system works. These are three fundamental failures of the Government. Even relatively minor proposals, such as Fine Gael's suggestion that the jobs tax on low-income employees should be reduced, have been rejected even though we have shown how they could be paid for through aggressive cost reductions in the public services.
This stale, unfair and out-of-touch budget confirms one point clearly. The Government is exhausted, jaded and out of ideas.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Is Deputy Kenny exhausted saying the same thing every year?
Enda Kenny (Mayo, Fine Gael)
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It has run out of ideas and it is run out of time. It has locked itself away in a bunker of its own making, afraid of change and suspicious of any new thinking that comes from the outside.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Who is writing this stuff?
Enda Kenny (Mayo, Fine Gael)
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The best and final service that the Taoiseach and his Minister could render now is to allow the people to give a new Government a fresh and clear mandate, which issue now rests entirely with the Green Party which is absent from the House.
Pádraic McCormack (Galway West, Fine Gael)
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Deputy Gogarty does not count.
Enda Kenny (Mayo, Fine Gael)
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Gabh mo leithscéal, nà fhaca mé suas ansin é. Tá an Teachta Gogarty chomh fada suas ansin.
Paul Gogarty (Dublin Mid West, Green Party)
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Is mise an crisis boss inniú.
Charles Flanagan (Laois-Offaly, Fine Gael)
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Like Deputy Mansergh, a new vegetable.
Enda Kenny (Mayo, Fine Gael)
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The people will have a number of choices. They can vote for the Fianna Fáil Party that has devastated the economy, undermined the Republic and cast away our economic independence, the party which, egged on by its former allies, introduced all of the worst excesses of the free market to Ireland. Alternatively, they can vote for parties of the left, which have committed in some cases to massive tax increases but have not yet spelled out the details of their plans for the way ahead, or they can vote for my party whose plan to rebuild the country rejects simplistic notions on a political spectrum of right and left, a party whose only allegiance is to the people and which is not tied, either to big business-----
Paul Gogarty (Dublin Mid West, Green Party)
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Then stop taking political donations from it.
Enda Kenny (Mayo, Fine Gael)
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-----or powerful unions. Fine Gael, in government, will keep taxes as low as possible, not for any ideological reasons but because international evidence shows quite clearly that this is the best way to create jobs and to generate growth. As Deputy Noonan pointed out yesterday, no country has ever taxed its way back to prosperity.
This party will also reform government and make it leaner, not because of any hostility to the public sector but because we can only protect front line services if we reduce costs and increase efficiency. I have listened to people making wild statements that Fine Gael wanted to get rid of 30,000 front line teachers, nurses and gardaÃ. How stupid can they be? The point is that we respect the work of public services and our proposal is based entirely on the retention of front line services such as those provided by nurses, gardaà and teachers.
Paul Gogarty (Dublin Mid West, Green Party)
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Count the teachers.
Enda Kenny (Mayo, Fine Gael)
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I might add that, as has been pointed out by many, if it costs â¬90,000 to train a young Irish nurse who is one of the best qualified in the world, and they all have gone away and some returned to be employed on an agency basis, what the Government has done has been to allow proliferation of administrative bureaucracy that is to the detriment of those front line services which the Government has always cut as a first instance.
Frank Feighan (Roscommon-South Leitrim, Fine Gael)
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Hear, hear.
Enda Kenny (Mayo, Fine Gael)
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We have also pointed out that it is important to lead from the top and the front and deal with the issues of the Houses, this Chamber, Government, the cost of governance and the way it operates. A story is circulating that the Cabinet has discussed the abolition of the Seanad by referendum on the day of the general election. This is some conversion on the road to Damascus if it is true, as the Taoiseach and his Ministers have vehemently rejected the proposal during the recent period.
Fine Gael in government will tackle the deficit, not because we believe in austerity, but because Ireland can regain its sovereignty only by returning to the international money markets as soon as possible. Almost two years ago, the Taoiseach informed the House, "as long as I am running this Government I will run the Government as I see fit".
Frank Feighan (Roscommon-South Leitrim, Fine Gael)
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I will do it my way.
Brian Cowen (Laois-Offaly, Fianna Fail)
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How would you run yours?
Pádraic McCormack (Galway West, Fine Gael)
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We will find out shortly.
Enda Kenny (Mayo, Fine Gael)
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I will certainly run it in a very different way to yours, Brian.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Someone else's way - Eamon's way.
Frank Feighan (Roscommon-South Leitrim, Fine Gael)
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Frank Sinatra.
Enda Kenny (Mayo, Fine Gael)
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The Taoiseach's absent colleagues have no faith or confidence in him and want him out. The Minister for Environment, Heritage and Local Government wants the election by the end of January. Wait and see. If the Taoiseach decides to be on this side of the House, then fair enough. He will see what a good government will do in the interests of the people and not carry on the way he carried on for the past ten years.
Enda Kenny (Mayo, Fine Gael)
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As one of the Ministers said to me previously, when one is on antibiotics one becomes immune to things after 13 years. That is what is wrong with the Government. It is flattened, jaded, exhausted, out of ideas and out of time.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Arrogance? Presuming on the people's decision?
Enda Kenny (Mayo, Fine Gael)
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This is why we accepted the overall targets set out. This is why we accepted a â¬6 billion adjustment for this year and a â¬9 billion adjustment over the next three years. Not only did we accept this, but we put down our four year plan costed to deal with it. When we met the IMF and the ECB, they made it perfectly clear that in the context of the plan approved and signed off by the Taoiseach - not in my name or in the people's name but by the Government - they are quite prepared to listen to alternative proposals that can be stronger, better and more inventive in the interests of the country than what the Taoiseach put into it.
Brian Cowen (Laois-Offaly, Fianna Fail)
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They will have a lot of confidence having heard the Deputy this morning - no tax increases or social welfare cuts. The Deputy will get a very warm reception.
Enda Kenny (Mayo, Fine Gael)
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I stated there would be no income tax increases for 2011. It could have been done a different way. Ask the thousands of middle-income and low-income families being fleeced by Fianna Fáil.
Pádraic McCormack (Galway West, Fine Gael)
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The Taoiseach is very upset, whatever is wrong with him.
Paul Gogarty (Dublin Mid West, Green Party)
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Deputy Eamon Gilmore will double those tax increases.
Enda Kenny (Mayo, Fine Gael)
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The point is that the Taoiseach did not tell people the truth. He was not straight with them about the IMF or the ECB. These people have now taken away our economic independence. The Taoiseach cashed in our sovereignty and it is our job to see they are sent home as quickly as possible.
Enda Kenny (Mayo, Fine Gael)
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The Taoiseach's first mistake was to believe his own party's propaganda and to believe that investors would reward Ireland if the Government, as he once said, just wrote whatever cheques were necessary for the banks. As Fine Gael predicted on more than one occasion, this blank cheque policy has failed completely. A few months back, in an article in The New York Times, a reporter asked whether one bank could bring down a country. Unfortunately, we now know the answer. By pouring so much money into Anglo Irish Bank and by failing to insist that bondholders should share in the pain of rescuing the banks, the Taoiseach turned a banking crisis into a national crisis and every person in the next generation will have this responsibility on their shoulders. If it were not for the Government's failed banking policy, it is highly probable that Ireland would not have needed the IMF bailout.
The Taoiseach asked me how this party would have handled it. It would have been handled very differently. We would have used the period of stability provided by the bank guarantee to restructure the banks and impose losses on banks' investors. From the start we were the first party to recognise that Anglo Irish Bank could never survive as a commercial entity and needed to be wound down. The Taoiseach scoffed at that. We were also the first party to argue that it was completely unfair for the Irish people to shoulder all of the losses for our banks, and that it was only fair that the people who had lent recklessly to the banks should share in that pain. As the Taoiseach knows, it is a basic rule of capitalism that if one lends recklessly to failed institutions, one must take the consequences - a basic rule that he deliberately decided to ignore. Two half years on, we still have not been able to break into the encrypted files in Anglo Irish Bank. Nobody has been sent to jail, nobody has been prosecuted and nobody has been brought before the courts where the law of the land should apply.
The Taoiseach's second mistake was to believe that spending cuts and tax increases could by themselves fix the deficit. However, as Deputy Michael Noonan pointed out yesterday, no country has ever taxed its way out of recession. Nations have only ever grown their way out of recession. This is why Fine Gael developed its NewERA stimulus plan, which the Minister for Finance originally welcomed and then rejected. The results have been all too predictable, miserable economic growth necessitating even more spending cuts and tax increases. The recent decision by the European Commission to revise down its growth projection for Ireland in 2011 confirms that it too lacks any sense of confidence in the Government's growth policies.
These mistakes can be laid directly at the Taoiseach's door and the door of the Minister for Finance. They have destroyed our economy and the morale and confidence of the Irish people. There is nothing in the budget speech or in the Taoiseach's contribution today that reaches out to those young people pondering their future and wondering what subjects they should take to leaving certificate so that they might have a job in 2018. Those now being forced to leave again are getting no response from the Government about a future of any confidence for them and neither are those young people in limbo with regard to the right to finish their apprenticeships clearly and confidently so that they have a certificate that stands up all over the world if they want to go. The Taoiseach has not done anything in respect of the 60,000 undocumented in the United States. He speaks a lot about them but not much is happening. The Irish people are angry and very afraid. They are afraid for their future because the Government offers no hope, confidence or vision. What was done in yesterday's budget was to consign thousands of middle and lower income families to further penury, pressure and stress.
Our economic sovereignty has been seriously eroded. It is humiliating for a proud country like this to be placed in this position by an incompetent Government and reckless activities. However, now is not the time for despair nor the time to sink beneath waves of disillusionment and despondency. This is a time for a change of emphasis, direction and motivation to galvanise our people, as they have often done in previous times of adversity, to rise to meet this challenge, as we can.
I have defended the Taoiseach and his Government and our foreign direct investment programme in the United States and in Brussels on more than one occasion. We support very strongly the 12.5% corporation tax rate. I have made this point in Brussels and I will do so again. The Irish people signed it into the Lisbon treaty; it is a cornerstone of our investment programme. We all know the projections for many multinationals are very strong for the future and we must support this. However, the loss of competitiveness in our indigenous manufacturing sector and the lack of confidence that the Government has engendered in the spirit of our people are doing down our country and the Government will never recover or be able to recapture that type of enlightened attitude from our people because it has let them down and hurt them in their pockets and hurt their spirit. It has failed in its duty in this regard.
The only response of the Minister for Education and Skills to the international education assessment published recently which showed Ireland slipped to 15th or 17th place in the European league was to state we must do more to improve literacy and numeracy.
Mary Coughlan (Donegal South West, Fianna Fail)
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I said a bit more than that.
Enda Kenny (Mayo, Fine Gael)
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This is like her predecessor speaking about happy parents, happy teachers and happy families. Huge amounts of rent are being paid for prefab buildings in dilapidated conditions. So much more could have been done.
Mary Coughlan (Donegal South West, Fianna Fail)
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We have converted them-----
Enda Kenny (Mayo, Fine Gael)
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They were the Minister's words yesterday. She stated we must do more and make a major effort in literacy and numeracy.
Mary Coughlan (Donegal South West, Fianna Fail)
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Deputy Kenny forgot about the speech last week about teacher education and competence and professionalism, and about literacy and numeracy. He forgot all of that. He is a former teacher.
Enda Kenny (Mayo, Fine Gael)
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The evidence internationally is that our teenage students have slipped in the area of literacy for which the Minister, Deputy Coughlan, is now directly responsible. In every Ministry she has held, she has failed to live up to the reputation with which she came.
Fine Gael will continue to set out its own strategy, which will be about changing the way our politics work and will ask the people for the opportunity to abolish Seanad Ãireann. It will reduce the number of Deputies and change this theatre here and make it a place where the big announcements are made, where transparency is evident, where accountability is had and where Ministers respond to legitimate questions from Members. We will implement our NewERA stimulus plan to provide over 100,000 jobs through commercial entities dealing with water, communications and renewables. We will reform the banking system so that we will never again have a situation where greed and incompetence will bring down the entire country. We will reinvent Government and transform our health system by bringing the Dutch model of health care to Ireland.
For all of this to happen, Ireland needs the kind of rational, reforming Government that Fine Gael provided in the past and will provide again in the not too distant future. What it does not need is a continuation of an incompetent Government of abject recklessness that lacks compassion for the people and the times in which they now live. These times are too dangerous. The problems we face are too serious for a Government that continues to cripple the spirit of Ireland and our people and which continues to destroy any prospect of growth with sky high taxes and to leave in place waste and inefficiency. There is nothing in the Government's document about real reform of the way we deliver our public services.
I speak to multinational companies or small businesses and explain our clear aspiration that by 2016 we should demonstrate that Ireland is the best small country in the world in which to do business. I ask the big firms what Government could do to help them improve the atmosphere and environment in which they do business, whether through planning, transport, communication or energy costs. I asked the person in a small sweet shop in Donegal what he wanted or would like to see a Government doing for him, and he mentioned the abolition of PRSI for lower paid employees and a number of other areas where help could be provided. However, he also pointed out that for his little shop, he needed 21 different licences to operate as a retailer, because of the tunnel vision of all the different independent systems that have no interconnection.
The budget announced yesterday by the Government has completely failed to understand the savings that could be made, the efficiencies that could be created, the respect that could be generated for public services and the dignity of those working in those services who want to give of their best for their country, but cannot because the system the Government has allowed to develop over the years strangles their initiative, creativity and willingness to contribute to their country. I urge the Taoiseach never to forget that the people of this country are pragmatic. If we explain the scale and nature of the problem and the timescale for dealing with it, they will want to contribute, provided their contribution is respected and fair. What was done in yesterday's budget is palpably unfair. When I asked the Taoiseach a question on it earlier this morning, he did not answer it. Carers, the disabled, the blind and the widowed are all affected and because of all the time the Taoiseach spent dealing with the political issue of the pension problem, he forgot there was a better way to do things. He need not have imposed these cuts on carers, disabled, blind and widowed to save â¬96 million if he had taken the advice we offered him.
I see nothing in the budget to repair the damage done to Ireland's international reputation. I have with me a letter from Japan describing how taxi drivers in Osaka speak about Ireland in a negative way because of their perception of our country. The credit of people in the wholesale and retail business is being cancelled in Egypt, India and China because of the situation the Government has allowed to develop. As far as I can see, this budget does not deal with the central issues of vision, growth, job stimulus and investment. It imposes further taxes on jobs and does not deal with the future potential of our country. I decry the continued pathetic attempts of the Government. It is time for it to go and for it to give the people an opportunity to have a say with a new Government.
Eamon Gilmore (Dún Laoghaire, Labour)
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I wish to share my time with Deputy Brendan Howlin.
Joe CostelloEamon Gilmore (Dún Laoghaire, Labour)
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The arrogance of Fianna Fáil knows no bounds. It is an arrogance which comes from being in Government for too long - in Government for the past 14 years and for 22 out of the past 24 years. It is an arrogance which is expressed most eloquently by the Taoiseach himself and we got a fine example of it earlier this morning. That arrogance says to us that it does not matter what Fianna Fáil did, it should never say "sorry" or never admit a mistake. It is an arrogance that says that only Fianna Fáil can rule and that the Opposition is always wrong. That arrogance was brought to a new level today. We have a Government that turned an economic boom to a bust, made a most calamitous mistake in how it handled the banking crisis and refused to accept it got it wrong, and which has presided over the worst economic crisis that this country has faced. Then, in the final months of its life, it went and negotiated a bad deal with the international institutions. I suppose it is fortunate for the Government that the snow over the past week or ten days has prevented the deal from getting the kind of scrutiny it might otherwise have got. Having negotiated that bad deal, the Government has now come back to us and told us that we are all bound by it, that a new Government cannot change it and that it is done and dusted.
Eamon Gilmore (Dún Laoghaire, Labour)
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The Government has told us at the same time that there is no surrender nor loss of sovereignty in the deal and that it complies with our Constitution. That is an arrogance that has now fired the first shots of its general election campaign and which demonstrates that Fianna Fáil wants to fight it on its distorted version of what Opposition parties are saying. I advise the Taoiseach that he is going to fight this election on his miserable record.
Brian Cowen (Laois-Offaly, Fianna Fail)
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What will Deputy Gilmore fight it on?
Eamon Gilmore (Dún Laoghaire, Labour)
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Yesterday's budget was the most severe we have ever seen, but it did not sound like it, because in his budget speech, the Minister managed to avoid announcing most of the bad news by occasionally referring to the details in the accompanying budget documentation - a victory for tone over content. It is, therefore, a budget that will take some time to sink in. The Taoiseach gives the impression that the Government is protecting working people from tax increases and suggests that the Labour Party would tax them even more. Let us see what working people will say and how they will feel when they see their first pay packets in the new year. They will then realise the full combined impact of the reductions in tax credits and in the standard band, the loss of rent relief and the measures that will oblige working mothers to pay for benefit in kind for employer provided child care.
The budget may have passed in the Dáil last night, but its impact will only grow with each passing week in the new year. This budget is the itemised bill for the utter failure of Fianna Fáil's economic mismanagement. It sets out who pays for the abject failures of a succession of Fianna Fáil Ministers for Finance and years of complete incompetence.
As usual, people on low and middle incomes will have to pay. Pensioners on modest incomes will pay when the age exemption is cut and passport fees are applied. A pensioner couple on â¬40,000 will face â¬2,000 in additional taxes. Families with children will pay when child benefit is cut for another year, bringing the total cut for a family with three children over two years to â¬88 per month, in addition to the loss of the early childhood payment. Tax credits are being cut by â¬360 for each earner in the household and new fees are being applied to school transport. Young people looking for work or training will pay when their jobs seekers allowance is cut, a â¬200 fee is applied to further education courses and third level fees go up again. The people who have lost their jobs will pay when welfare is cut by â¬8 per week on top of the â¬8 cut last year. There is no compensation for the loss of child benefit. The low-paid worker will pay when the minimum wage is cut and income levies reach down to low levels of earnings.
Who will not pay? The highest earners pay more PRSI but are compensated by the cut in the top rate of levies. The 7% universal charge is replacing a combined 11% health contribution and levy. The high income earners in property schemes do not pay, or at least not yet, because their tax breaks are to be phased out gently rather than abolished. The tax exiles will not pay. We are still waiting for them to fork out a single cent from the measures introduced in last year's budget. In times gone by, we used to talk about the old reliables of excise duties on beer and cigarettes. Today, the old reliables are the tax breaks that Fianna Fáil continue to defend for the vested interests.
This budget is based on a strategy that has already failed. It has been constructed more on injured pride than on logic and more on ideology than on common sense. It is a budget based not on sound economics but on bad politics and failed diplomacy. It was not written in the national interest but as part of negotiations with the European Union and the IMF. It is part of a bad deal achieved for Ireland by Fianna Fáil in an attempt to write not just this budget but the next four budgets and to tie the hands of the next Government to its failed strategies. Labour will not be bound by its failures, however.
Let us be clear as to why the Government has brought in a budget that will take â¬6 billion, or almost 4.7% of GNP, out of the economy in a single year. The single most important decision that brought us to this budget is the blanket bank guarantee. That decision bound the Irish taxpayer to the losses of the banks incurred as a result of a property boom stoked by Fianna Fáil at every opportunity and its utter failure to regulate the banks. The blanket guarantee fundamentally undermined the creditworthiness of the State and led to a catastrophic loss of confidence in Irish bonds. That was the key decision from which there was no return.
It took a hard neck for the Minister for Finance to pretend yesterday that the need to seek help from the IMF only arose in the latter half of 2010. Listening to his speech, one would almost believe that the Irish economy met with an unfortunate accident during the summer holidays. We are here today as the direct result of the blanket guarantee and a series of profound errors that occurred prior to it and afterwards. Over the two years that followed the blanket guarantee, Fianna Fáil failed to get a grip of the banking crisis. NAMA, the strategy that was to save us, was always a getaway car and had the effect of crystallising losses in the banking system for all the world to see. Fianna Fáil constantly over-promised to the market but it under delivered. In doing so it fundamentally undermined confidence in this country and its creditworthiness.
Just as the game was up and bond yields were rising, a last ditch attempt was made to convince investors that they should lend to the State. Budget 2011, we were told, would make budget adjustments of â¬6 billion. This number was supposed to sufficiently impress the markets that they would agree to lend us money at reasonable rates again but nobody bought the story. Markets shied away because they could see the risk to growth of an adjustment of that size. The ECB's patience came to an end and Ireland was forced to go cap in hand to the IMF and the European Union for a loan. That is the basis for the â¬6 billion figure. It is a figure that was supposed to convince the markets but it failed to do so. It is a figure that was supposed to get the deficit in Ireland below 10% of GDP because the Minister insisted 10% was the magic number for the markets. Ireland, of course, is no longer in the market but having conceded the â¬6 billion figure to the European commission, Fianna Fáil now believes it cannot back away from it.
In fact, the analysis presented by the Department of Finance to the Labour Party was clearly intended to show that an adjustment of more than â¬4.5 billion would be self-defeating because it would not reduce the overall quantum of adjustment needed to get the deficit down to 3% by 2014. While the Commission continues to argue for the â¬6 billion adjustment, its own economic forecast shows a growth rate of half the Government's projected growth rate and a deficit that falls short of the so-called magic number of less than 10%. The logic for â¬6 billion has evaporated. It must now be asked who the â¬6 billion is supposed to impress. It is interesting to compare the economic forecast of the Government with that of the Commission. The Commission forecasts growth of 0.9% in GDP because it believes that exports will expand by 4.5%, imports will remain muted and domestic demand, that is, consumption and investment will fall by 3.2%. The Commission predicts that consumption, which is worth about 50% of GDP and is jobs intensive, will fall by nearly 2%. The Government, however, expect exports to grow by 4.9% and that consumption will remain static in volume terms. Even though the Commission wants to stick to the â¬6 billion figure, it is not prepared to endorse the Government's forecast for the impact of a â¬6 billion adjustment on the economy.
The truth is that nobody knows how the economy will perform next year. Macro-economic forecasting is at best a form of educated guess work. Like opinion polls, macroeconomic forecasts are estimates which are subject to a margin of error, although economists rarely speak of them in that way. One can of course construct a forecast that indicates the economy will grow by 1.7% next year after â¬6 billion is removed from it but this comes with risks attached on the downside.
There is a lot we do not know about how the economy will perform next year. We are in uncharted waters. Ireland has suffered recessions in the past but none like this. Ireland has had a debt crisis before but it was not coupled with a banking crisis and an international recession. With the banking sector deleveraging and consumers paying off debts and adding to savings, there is every reason to be concerned about domestic demand next year.
In that context of uncertainty and downside risks, â¬6 billion is the wrong judgment on the scale of adjustment. We have been told in the four year plan that confidence is the key. What Paul Krugman calls the "confidence fairy" is going to make everything better if we take enough medicine. Confidence is important and it needs to be restored but the non-Keynesian confidence effects are speculative and unpredictable while the normal Keynesian effects of taking that much money out of the economy are far more mechanical and obvious. Equally, what should have been learned from this mess - but was not - is that restoring confidence is as much about restoring growth as it is about headline figures on deficit reduction. In the end, this is a question of judging risk and the risks of this adjustment are too high.
This is not an academic exercise. Ireland is not a laboratory for economists who want to conduct interesting experiments and write conference papers afterwards. We are speaking about people's jobs, their livelihoods and their homes, and whether their children will get jobs in this country or their grandchildren will grow up here. One does not take risks in those areas. One does not take risks with people's homes because one cannot own up to having made mistakes, with people's jobs because one cannot stand up to the Commission, or with the life chances of thousands of young people because one is part of a cosy ideological consensus that deep down believes austerity is good. It is not. It is sometimes necessary, but it has real consequences for real people in real life.
That is why Labour has proposed to keep the adjustment to â¬4.5 billion. It is still a demanding figure, but it leaves some room for growth and employment in 2011. It leaves some room for the economy to show growth, and for the Irish people to feel that we do actually have a prospect of turning the corner.
Labour stood alone in this House in opposing the blanket guarantee. We were right. Labour opposed NAMA. We were right. We are right in opposing this â¬6 billion adjustment, because it is not in the national interest, and because it is simply too dangerous.
The sad reality is that this budget is constructed on exactly the same kind of conservative consensus that got us into this mess in the first place and that says the market must always be free to do what it likes and that Government should get out of the way. Let us be clear too. The conservative consensus has no strategy for growth. This budget has no growth strategy, and it shows a vacuum in economic thinking about how an economy like Ireland can grow in the years to come.
Ireland is a small, open and flexible economy that has a proven capacity to trade successfully in world markets and, in doing so, to provide high and stable living standards for our people. To succeed in that objective, the role of Government is not marginal. It is critical, not in the sense of directing individual decisions about investment and production, but in the modern sense of supporting a network of institutions that support and nurture enterprise, and support and nurture people.
If this crisis has taught us anything, it is that failures of regulation can be catastrophic for all of us. It has also reminded us of how much we depend on each other. What we are living through is the first global crisis in global capitalism. We will get out of it, but it won't be the last recession. What matters for growth, and what matters for securing the living standards of our people, is that we have a growth model that combines both opportunity and security.
The conservative consensus just doesn't get that. They persist in the notion that social protection is purely a cost, that when you want the poor to do something you take something off them but when you want the rich to do something you give them more. What does it say about the Irish as a people, and what does it say to people who are asked to contribute to the social security system in the future, that as soon as trouble comes, rather than rally round to protect each other, we will mark out welfare as the target for cuts? It is a folly, and a short-sighted one at that.
The conservative consensus continues to insist that there is some kind of macroeconomic up-side in basing adjustment on cuts, rather than revenue raising. It is a political argument dressed up as economics. It is an argument that utterly fails to understand the medium-term needs of a small open economy, or the need for adjustment to be economically, socially and politically sustainable.
The elements of a growth strategy for an economy such as Ireland are not complicated in theory. The problem is that they take years to build up and can be quickly eroded. The future of our economy depends on having a set of interlocking economic policies that promote the following - competitiveness in the short run and knowledge based productivity growth in the long run; a strategy for investment in infrastructure, in people and in knowledge; an enterprise strategy that plays to our natural and accumulated comparative advantages; a labour market strategy that fits the skills of our people to the needs of the economy and of society; a functioning banking system that provides credit and supports entrepreneurs; and stability in the public finances and fair taxation
Throughout this crisis, we have seen an obsession in Government with the banking system and the fiscal crisis, and no attention being paid in either the short term or the longer term to economic growth. We have had a lot of glossy guff about the smart economy, when what we actually need is a coherent jobs strategy that will translate into knowledge based productivity growth in all sectors.
There is no strategy in this budget, or in the four year plan, that meets these needs. Competitiveness is reduced to a low wage strategy focused on a cut in the national minimum wage. The strategy for investment is an announcement about the pensions reserve fund being prepared to finance public private partnerships, and is clearly not intended ever to be carried through. Enterprise strategy is about more tax breaks. The budget contains nothing on credit for small business and there is no labour market strategy worthy of that name.
What the conservative cheerleaders do not understand, or do not want to understand, is that this is a small island that cannot afford the social division they seek to promote. We cannot afford to portion off a sector of our society and say they do not matter. If we are to succeed as a people, we must harness the talents of all of our people. It is not just morally right, but economically necessary that no child is left behind.
So, why is it that the four year plan has imposed a cut in the educational psychological service? How can any Minister come into this House and talk about the smart economy, when the OECD tells us that the literacy standards of 15 year olds have fallen from ranking fifth out of 61 countries, to trailing in at 17th. In maths and science, Irish 15 year olds have fallen from 17th to 26th place. According to the same report, one in five 15 year olds does not have the maths or reading skills to participate fully in society or in future learning, yet this Fianna Fáil Government plans to take 1,200 teaching posts out of the system between now and 2014. The majority of these relate to disadvantaged children, such as Traveller children, newcomer children and students doing a vocational leaving certificate. On top of this, the 150 extra teachers the Green Party claimed as a victory in their renewed programme for Government last year are to be shelved.
As a country, we like to tell ourselves that we have a great education system, and we do. But there are holes in it, that swallow up the life chances and the potential of too many children. You cannot build a smart economy in a society where children cannot read, nor can you build a smart economy by placing further obstacles in the way of young people who already struggle to finish school or to go on to further education. We cannot have obstacles such as cutting the budget for programmes to prevent early school leaving by 5%; cutting the student grant, and raising the student registration charge by a further â¬500; or placing a â¬200 charge on a post-leaving certificate course. This charge is like slapping a â¬200 toll on a pathway to further education that is used disproportionately by students who need a second chance. It is a false economy, that will discourage people from participating in further education.
As ever, what this Fianna Fáil-Green Government takes from the education budget, families will have to reach into their pockets to replace. They must find â¬50 per primary school child just for getting the school bus, and â¬350 per secondary school child. There will be a cut in the day-to-day running costs of schools of â¬10 per child. In an average-sized school, that is another â¬2,000 shortfall parents are going to be asked to make up. Investment in education is not a drain on the Exchequer; it is an investment in our collective future.
This budget is based on a notion that somehow, public expenditure in all its forms is the problem. Labour says that we must have reform of public spending. Labour says that we must have reform of how public expenditure is managed, but we also need to have a view of why we are spending money in the first place. Our view is that public services - reformed and well managed - are a vital part of our strategy for economic recovery in delivering on the strategic imperatives I have outlined and in providing the social glue that will keep us together as a people. That is why, rather than lurching from budget to budget, and from one crude set of cuts to the next, we need a comprehensive spending review. Current spending does need to come down, but it needs to come down on the basis of a coherent multi-annual plan, that has buy-in across Government.
In my speech to the House some weeks ago, I set a target of achieving at least a 3% reduction in non-social welfare spending each year for three years. We do not need a set of ad hoc cuts served up by a hired consultant, but a considered view of where expenditure matters, and where it is less important. The approach favoured by Labour is a comprehensive spending review, based on the Canadian model, where the goals and means of delivering each spending programme are reconsidered.
The review should be based on the following objectives: prioritising education, as the link to our future; maintaining front line public services while reducing the cost base, particularly in the health service; maximising savings through efficiency and reform; and increasing public sector productivity, by delivering the same or better services with fewer staff.
Labour has said before that it is an absolute necessity that we achieve savings through reform, including the process of reducing numbers in the public service. After months of asking the Government for figures, the four year plan finally gives some details of what can be achieved. The target reduction in the pay bill of â¬1.2 billion is not, in my view, sufficiently ambitious. We need to achieve at least â¬1.4 billion in savings in the period 2011 to 2013, including a reduction in numbers of some 15,000 to 20,000, through a combination of natural wastage and voluntary redundancies.
The Labour Party has also accepted that Ireland can no longer afford a capital programme that is greatly in excess of the European norm. However, in bringing down the level of capital spending, we need to promote alternatives to the traditional Exchequer support for capital projects through the establishment of a strategic investment bank. The proposal in the budget for greater involvement by the National Pensions Reserve Fund is the same empty promise that has been made year after year.
Yesterday, the House was treated to another display of the kind of falsehoods that Fianna Fáil likes to peddle, especially when there is an election in the offing. The Taoiseach tried to tell us that Labour's tax proposals would hit hard-working families harder than Fianna Fáil. He tried again today by trying to invent tax proposals which the Labour Party never made and then attacking those proposals. Labour's tax proposals were largely centred on eliminating tax expenditures. How many average hard working families have investment in property-based tax schemes that we said should be abolished? How many hard-working families have invested in car parks or hotels? How many hard-working families have huge pension pots, such as the ones we said should have limits applied for the purposes of tax relief? Yet, the Taoiseach decided to roll every proposal Labour made into one and to claim that ordinary families would be worse-off as a result. Clearly, we are going to be treated to the same old Fianna Fáil distortions for the entire election campaign.
In respect of taxation, a number of measures in the budget are in line with Labour Party priorities. For years, Fianna Fáil scoffed at the idea that there was any money to be found in reducing tax expenditures. Now, it would appear, it has discovered that this was wrong. They have made some modest changes that are welcome, but, once again, the poor must pay now while the better-off are given more time. It is necessary to curtail tax relief for pensions, although Labour has a strategy that would be fairer and would retain maximum incentive for people to save for their pensions on an ongoing basis. While it is reasonable to have some phasing-in of change in this area, the proposal in the four year plan to cut tax relief for pensions over four years makes no sense. All it is doing is encouraging people to take more money out of the economy in 2011 and 2012, rather than just getting on with needed reform.
In last year's budget, the Government signalled its intention to introduce a universal social charge and the idea featured again in the four year plan as a medium-term objective. There is merit in this idea, since it provides for the simplification of a complex tax structure. However, it must be pointed out that the original idea of the universal social charge was to include PRSI as well as the income levy and the health contribution and to deal with the associated entitlement issues. In the recent ESRI study, the benchmark figure of a 7.5% charge was based on a revenue-neutral change, including PRSI. It was in this context that Labour's proposal for a third rate of tax of 48% was framed, which would have meant a maximum income tax rate of 55%. This detailed work, however, has not been done and PRSI has been excluded from the 7% universal social charge, while the PRSI ceiling has been abolished. This significantly changes the context for future reform.
The Minister for Finance, in his speech to the House yesterday, wanted to re-write history before he packs up his boxes for the new year. I am afraid it is too late for that. History will judge Fianna Fáil for its destruction of the good economy it inherited. We have heard much today about the future from the Taoiseach. The Labour Party believes that we will only solve our economic crisis if we pull together, if we provide a floor of social protection, if people can be sure there is a reasonable health service, if we protect the family home and if we keep our eyes fixed on the future and on a better life for our children. This budget has no such strategy. Once again, the future is put on hold as children are made to pay for the mistakes of the Government. Labour passionately believes that as a country, our best days are still ahead of us. We believe that as a people, we can do a lot better. Labour believes we can restore confidence, build enterprise, expand trade, train and educate our people and create a stable and prosperous future. We can meet the aspiration that is deeply ingrained in the Irish people â that the future for our children will be better than today. This budget is the last act from the worst Government in the history of the State. The next Government will have hard decisions to make, but from here on, at least we can begin to build the future.
Brendan Howlin (Wexford, Labour)
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I have listened to many budget speeches in this House over the years but none was more disingenuous and more dishonest than the one I listened to yesterday. The House listened in stunned silence and many of the media commented upon that fact. They listened in stunned silence to the last will and testament of a disastrous Government. A decade of mismanagement and incompetence has led our nation to this.
The Minister for Finance charged yesterday that other parties could have done no better. In truth, no group of people picked at random off the street could have done worse in the past decade. The Minister's speech was merely a glimpse of the savagery that was planned by this Government to impose upon the beleaguered people of Ireland. Like a rotten onion, the details that were never revealed in the banal speech delivered by the Minister for Finance have been peeled away, layer by layer, each new layer revealing more unfairness and more pain. There are more layers to come as we trawl through the budget announcements coming from each Department. We will see the details of the Social Welfare Bill, yet to be debated, today. There is much more harm and much more hurt to be endured.
The fundamental failure of the budget can be summed up in a single word, "unfair". The budget is simply unfair. How can taking â¬8 per week from a carer providing full-time care and support for a disabled child or an elderly person be justified? That is a reduction of â¬8 in a total income of â¬212. How can taking â¬8 per week from a widow or a blind person, leaving a residual payment of â¬188 per week, be justified? The elderly were exempt because the State pension was exempt from the cut only because the elderly of this country engendered fear into the hearts of the supporters of this Government. Carers are too busy, too preoccupied and too consumed in their 24-hour, seven day duty of providing essential care to mobilise. They are not visible and they did not make it onto Deputy Healy-Rae's mercy list. They are expected to endure in silence.
Deputy Gilmore, our party leader, spoke about the education cuts. The Green Party, whose raison d'être was to protect the environment - it cannot even produce climate change Bill-----
John Gormley (Dublin South East, Green Party)
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The Deputy will see that Bill.
Brendan Howlin (Wexford, Labour)
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-----and to protect education.
John Gormley (Dublin South East, Green Party)
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Yes, we certainly did that.
Brendan Howlin (Wexford, Labour)
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They protected education by charging â¬50 for a primary school child to get to school in my rural constituency. They charge â¬350 for a secondary school pupil to get to his or her school. They charge the children to get to the school and then reduce the services available in the school when they reach the school door.
Michael D HigginsBrendan Howlin (Wexford, Labour)
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Teddy Roosevelt said of America, "This country will not be a good place for any of us to live in unless we make it a good place for all of us to live in". That should have been the principle that characterised this budget, but in the opposite principle was at its heart. The template of the budget was unfairness. We were told that the new universal social charge was a proposal to simplify the taxation system by amalgamating the income levy and the health levy. In fact it is a device to bring the lowest paid, who were heretofore exempted because of their low pay and vulnerability, into the tax net. In a perverse proposal it hauls in the lowest paid who were exempt up to now and lessens the levy burden of the highest paid. What perverse thinking could come up with that?
The Minister for Finance and his Government colleagues have introduced their last budget. However, uniquely in the history of this State they have sought to do something quite extraordinary in seeking to leave as their legacy the script for the next four budgets. They have sought to tie the State and its people into a binding fiscal straitjacket. No incoming government, they believe, can undo their work. While I accept that no incoming government can undo the scale of debt they have left as their legacy, a different Government can make different, better and fairer decisions on how that debt can be addressed.
Hitler, in his 1925 book Mein Kampf, coined the phrase "the big lie", a lie so colossal that no one could believe that somebody would have the impudence to distort the truth so infamously. The big lie is now being peddled again by the Government. The big lie that will probably form the backdrop for our debate in coming weeks in the course of the general election is as follows: we as a nation somehow fell into a state of fiscal chaos; some gaping hole opened up and we stumbled into it; the Fianna Fáil and Green Party Government were mere onlookers to this disaster with no function in creating the hole in the first place; no alternative Government could have done any better; and no alternative future government will do better. It is a big lie that will not be swallowed by the people. The Government has taken them and their gullibility far enough and they now want rid of it.
The Taoiseach wishes to emphasise the differences between Labour and Fine Gael, and there are differences. They are the differences we will lay out in great detail to the people because we have different policy platforms and the people will be asked to make choices, as is their democratic right. If the parties, Labour and Fine Gael, have a majority in the next Dáil the proportion of policies will be determined by the proportion of Deputies elected, as is the people's right. It will not be convoluted or distorted in a big lie from that side of the House.
The Labour Party will set out its programme based on recovery, reform and renegotiation. We believe that the EU-IMF deal can be re-addressed and that there are fairer ways of making the awful decisions that need to be made. To borrow a much abused phrase, we can ensure we are genuinely in this together.
Our party's track record on reform is second to none. We believe that fundamental reform of public administration and how the country is governed is required, and we will set out our stall clearly and comprehensively for the people to judge. We have a view of a model for the country we can create with a health service that exists to serve the people and not to make profit, an education system whose reason for existence is to give every child and young adult the ability to reach his or her full potential and share the burden of building the nation, and a jobs strategy that values work and not speculation as the engine of growth. In truth the best thing the Government could do would be to step aside, let our beleaguered people make a choice for change and put competent people at the helm of our nation.
John Gormley (Dublin South East, Green Party)
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I welcome the opportunity of contributing to this debate both as leader of the Green Party and as Minister for the Environment, Heritage and Local Government. For some time we have known that the budget for 2011 would be very tough. The reality is that our public finances are badly depleted and the country has had to resort to international help from the European Union and the IMF. There are many aspects of the budget, not least welfare cuts and tax hikes for working people, that I dislike.
It is a matter of great regret to my colleagues and I that we, the Irish people, find ourselves in this very difficult situation. Most of us now know that hard budget choices were unavoidable, but in preparing it we have worked to protect key areas of expenditure. Overall and given our very limited room for manoeuvre, we have striven to protect the most vulnerable and provide measures to aid an early recovery. Despite all the reverses suffered in recent weeks, I retain the hope that this recovery can happen sooner rather than later.
The budget priorities the Green Party identified were as follows: protecting investment in education; reducing the costs of the political system; maintaining support for people who are homeless; sustaining forestry investment; defending arts funding; meeting our international obligations; and stimulating jobs and enterprise. I have listened to Deputy Howlin speak about education and a number of issues need to be clarified on this matter. Across all the areas I have mentioned either we have ensured no cut at all or that the cuts were less than those imposed elsewhere. In education, despite massive pressure, we protected the pupil-teacher ratio; we kept the capitation reductions very low; and ensured that third level tuition fees did not return. Ensuring good quality education is a priority for development of our economy and society, and increases the life chances for our children. Increases in the charges for third level students are much less than had been speculated as a result of us holding firm and we are pleased that the increased charges will apply to only one student in any family. I am very grateful for the very tenacious approach adopted by my parliamentary colleague, Deputy Gogarty, in defending education spending. He has remained largely unfazed by criticism in this regard and today can claim a good deal of credit.
Jan O'Sullivan (Limerick East, Labour)
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He has failed miserably.
John Gormley (Dublin South East, Green Party)
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He has not. I would like to see how the Labour Party handles the sort of pressure that will be put on the pupil-teacher ratio. Deputy Gogarty has done an outstanding job in his role. The teachers' unions will state that the Green Party has done a good job in this regard. Will the Labour Party maintain the pupil-teacher ratio because I do not believe Fine Gael will?
Joe Carey (Clare, Fine Gael)
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The Minister should hold on and give us a chance.
John Gormley (Dublin South East, Green Party)
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There will undoubtedly be that tension. Having listened to Deputy Noonan last night I get the clear impression that many teachers will be for the chop because it is a way to save money.
John Gormley (Dublin South East, Green Party)
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It is not a way to advance the cause of education in this country.
Joe Carey (Clare, Fine Gael)
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The Minister should not try to spin it.
John Gormley (Dublin South East, Green Party)
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That is the reality; I am responding having listened to what was said yesterday evening.
Jan O'Sullivan (Limerick East, Labour)
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What about the National Educational Psychological Service?
John Gormley (Dublin South East, Green Party)
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Since entering Government we have argued publicly and privately that politicians must give an example to people facing tough times. Our political system must cost less to taxpayers and these measures are an important step. I welcome the ministerial pay cuts. A Minister's take home pay has decreased by 40% over recent budgets. Tax and PRSI changes for senior officials and public representatives, the creation of a ministerial car pool and not replacing a government jet are all matters which may in themselves not add up to a great deal in terms of expenditure but, in terms of symbolism, they are extremely important for the people.
On the question of welfare, I said previously and I say again that welfare cuts are a matter of regret to my party. We fought to avoid them but when we saw they were utterly unavoidable, we fought to keep them to a minimum and to protect the most vulnerable. Overall, we can take some small solace from noting that welfare payments are on average â¬2.20 higher than in 2007. The â¬40 cold weather fuel allowance payment is directly linked to the Green Party's role in the renewed programme for Government negotiations a little over a year ago.
These welfare cuts have become inevitable given the huge hole in the public finances and we know the reasons for that. The public finances are in a difficult situation. I listened to some of what Deputies Kenny and Gilmore said and in many cases that analysis is correct. We know, and it is recognised by people on the Government side as well, that these financial difficulties were caused by the property bubble and by the reckless lending of the banks. We also know that some of the policy decisions made in the past were not ones that should be repeated.
On the question of homelessness, something that is close to my heart, my commitment and that of this Government is to reduce the number of people who are homeless. That remains a priority despite the very severe financial difficulties. It is a strong feature of budget 2011 with an overall allocation of â¬53.4 million and while the overall housing provision has had to be significantly reduced over successive budgets, provision to tackle homelessness shows only a small reduction in 2011 and is down by â¬2.6 million. This will not affect the front line services because we are ensuring, through rationalisation, that we will provide a quality service. This is something that I know my colleague, the Minister of State, Deputy Finneran, is keen to pursue. I am proud of the sustained funding for anti-homelessness initiatives of â¬56 million in 2010 and â¬56 million in 2009, and in 2008 the funding level was â¬53.2 million. These were all years in which funding for most projects were radically cut.
On the other side of the equation, I am pleased about the inclusion of many of the tax reform measures recommended by the Commission on Taxation, which was set up at our insistence. Working families will consider anxiously today the tax changes. There is no disguising that they contain income losses for people already struggling to make ends meet, but independent observers, including the ESRI, have already commented that we have done a great deal in the past three and a half years to shift the taxation burden to higher earners. Some 25 tax reliefs, which have cost taxpayers millions in lost revenue each year, will be brought to an end.
John Gormley (Dublin South East, Green Party)
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Others already earmarked to be ended will be phased out more quickly. We welcome moves to reform tax on private pensions, particularly a decision to tax high lump sum pay-offs. The pension changes for higher civil servants and for those in public life are significant. They help to reduce unacceptably high costs.
I will comment on our international obligations because I do not believe it has been mentioned by any of the previous speakers. Even in these straitened times we cannot forget our continued obligations to the poorest of the world's poor. Our overseas development aid spending in 2011 will be â¬668.2 million.
Joan Burton (Dublin West, Labour)
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That is a cut of â¬35 million.
John Gormley (Dublin South East, Green Party)
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That is a minimal cut on the 2010 allocation-----
Joan Burton (Dublin West, Labour)
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It is a cut of â¬35 million
John Gormley (Dublin South East, Green Party)
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-----and this is a source of some pride to the Green Party in government.
Joan Burton (Dublin West, Labour)
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A source of pride? A cut of â¬35 million is source of pride?
John Gormley (Dublin South East, Green Party)
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Yes. We hope this reduction can be made up from administrative savings and other cost saving measures. Even this afternoon I will introduce a Supplementary Estimate for fast-track financing for climate change adaption, something to which we gave a commitment just over a year ago. That will be an extra â¬30 million in total and that is not included in this figure.
Even in these current difficulties our overseas development aid spending in 2011 will stay on target at 0.52% of GNP, ahead of the EU stepped target of 0.51% for 2011. For the coming year Irish aid is in line with our longer-term EU and international target of 0.7% GNP in aid by 2015. This is still well ahead of most OECD countries. We have exceeded the EU target of 0.51% in 2011. It will be up to the next Government to ensure that we hit the target of 0.7% in 2015.
Since entering government in June 2007 the Green Party has fought hard to defend overseas aid spending. Despite mounting domestic financial problems, we have ensured that proportionately we stayed broadly the same. It means Ireland is still on line to meet it overall targets. In reality, we are slower than had been hoped in meeting our ambitious targets, but it is a good record of defending the world's poorest people. This must continue. It will be interesting to see if this item of spending is defended in the same way in future Governments because, as we know-----
Kathleen Lynch (Cork North Central, Labour)
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The Minister will have plenty of time to observe that.
1:00 am
John Gormley (Dublin South East, Green Party)
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We should be honest in admitting that there are no votes in this respect and where there are no votes, people will say that we can afford to cut expenditure in that area. That would be the wrong attitude because politics has to be underpinned by a set of principles and values and defending the world's poorest is something that needs to be maintained going into the term of the next Government.
On my Department's Estimates, reflecting the extremely difficult position in the public finances, and in common with other Departments, budget 2011 sees a reduction in the financial resources available to my Department â down from â¬2.2 billion in 2010 to â¬1.6 billion in 2011. In response to the new financial situation since 2008, the Department has in its programmes developed and maintained a strategic focus on contributing to economic recovery, assisting those in need of support and protecting and enhancing the environmental resource base on which economic progress ultimately depends. This strategic focus will continue in 2011, using the significant resources that are still being made available.
The budget provides for Department current spending of â¬599 million in 2011 compared to â¬686 million in 2010. The reductions in the 2011 Vote on the current side mainly affect Exchequer support for the local government fund and savings in the environmental and built and natural heritage areas. Certain areas of Vote spend will be substituted by expenditure from the ring-fenced environment fund, which will amount to â¬101 million in 2011. The budget provides for Department capital spending of â¬1.002 billion in 2011.
While there is a significant reduction in overall terms, the main effect will be to extend the timescale for full implementation of programmes, while taking account of refocused priorities in the current economic context and getting greater value for money, through more competitive tendering and greater efficiency, from the â¬1 billion which will still be invested in Department capital programmes in 2011.
Turning to water services, there has been a radical transformation in water services infrastructure in Ireland in recent years. More than â¬5 billion has been provided by the Exchequer for water investment in the period 2000 to 2010. This has enabled some 476 major projects to be completed in the period 2000 to 2009, resulting in an increase in water treatment capacity equivalent to the needs of a population of 1.1 million and an increase wastewater treatment capacity equivalent to the needs of a population of 3.7 million.
Compliance with EU urban waste water treatment directives on secondary waste water treatment facilities now stands at some 92%, whereas at the beginning of the decade the figure was approximately 25%. The provision of â¬435 million in my Department's 2011 Estimate to fund the provision of water services infrastructure must be seen against this backdrop and the much more competitive tendering environment in the past two years, which has led to significant reductions in the tender prices for water and waste water schemes. This level of investment in these difficult times is a clear statement of the priority which the Government is giving to preserving and protecting our water resources, meeting EU standards for drinking water and waste water treatment and providing critical infrastructure that will ensure ongoing support for economic development.
Investment in water services must strive to ensure that it meets demand in critical locations for industrial and commercial development in order to facilitate economic recovery. That is why my Department carried out a root and branch review of the water services programme in 2009. A new carefully targeted programme covering the period 2010 to 2012 was published in April this year and I am confident that the contracts included in the programme are well aligned with economic and environmental objectives.
There are currently 120 major water services capital contracts in progress and these will continue to be funded up to 2011. New work in 2011 will be targeted on key projects in the programme required to meet the strategic needs of gateways and hubs, critical mains rehabilitation, improving drinking water supplies with identified risks and upgrading of waste water infrastructure required as a result of European Court of Justice cases and the measures required under the Water Framework Directive.
My Department's rural water programme continues to make very good progress in bringing rural water supplies, particularly in the group water scheme sector, up to standard. In recent years, we have been concentrating on carrying out improvements to group water supply schemes which were identified as in need of improvement following the European Commission case against Ireland on non-compliance with drinking water standards. Thanks to the substantial progress made on these works the Commission closed the case last March. The main priorities under the programme in 2011 will be providing the funding necessary to complete any remaining works; continued special funding to allow for remedial works to public water supplies identified by the Environmental Protection Agency as having potential issues regarding the safety and security of the supplies; and the improvement of small public water and sewerage schemes.
As the House is aware, the Government has decided that domestic water charges for households connected to public water supplies will be introduced in the next few years, preceded by the roll-out of a programme of metering. As indicated in the National Recovery Plan 2011-2014, the metering programme will be funded by the National Pensions Reserve Fund. The installation of water meters in households will strengthen the capacity of local authorities to manage their water distribution networks; it will also provide an incentive for consumers to reduce their consumption of water and should, as a consequence, reduce both the operational and capital costs for local authorities.
In addition, metering will provide an opportunity to address customer-side leakage, leading to both improvements in the networks and further cost savings. The move to universal water metering will lead to a transformation in the way people use water, improve value for money and lead to a customer service focus in the provision and management of these services. It will also significantly change how these vital services will be funded in the future. The labour-intensive metering programme itself will have the key advantage of providing badly needed jobs in the construction sector.
Turning to housing, my Department's capital resources are being scaled back for 2011. The year will see continued restructuring of the social housing investment programme towards greater levels of delivery under the rental accommodation scheme and leasing, and with a lesser need for capital finance. While this shift in emphasis is being accelerated by the current economic and financial climate, it is a change that my Department has been developing for some time on the basis that it is right to work towards a system of graduated and flexible housing supports to meet the varying needs that exist at the different stages of the life-cycle. We are maintaining in 2011 a continued strong commitment to economic, social and physical regeneration of the country's most disadvantaged communities through the provision of â¬172 million towards major regeneration projects and remedial works, including Limerick regeneration and the Ballymun work.
In Limerick, for example, this will allow significant progress be made following the approval by Government in June this year of the phase 1 implementation plan. The planning and design stages for a number of new housing developments are being fast-tracked to have construction commencing as early as possible in 2011. Given that some 500 houses have been demolished or boarded up at this stage, there will be a strong emphasis on building replacement units in the early stages of phase 1. In addition, 2011 will see the provision of â¬32 million in dedicated funding to support labour-intensive efficiency improvements of the public housing stock through the retro-fitting programme. In addition to the main capital programmes, we are also making a provision of some â¬47 million in respect of the smaller capital programmes in the fire, heritage, libraries and other areas.
As the House is aware - we considered it in a debate last week - we have witnessed very severe weather in many parts of the country recently. Local authority staff have been working around the clock with other State bodies and transport agencies to minimise disruption and to ensure society functions as close to normality as possible. I again thank all involved for their exceptional efforts and the spirit of public service that they have so clearly shown.
In recognition of the severity of the issue, I am pleased that I have been able to make available an additional â¬15 million in contingency funding for those local authorities most in need of supplementary funding. This is aimed at covering exceptional costs for them associated with the extreme weather experienced.
Looking ahead, all parts of the public service must operate within the very difficult financial realities we face. The local government sector must continue to play its part by curtailing and reprioritising expenditure in common with the approach of central government. While I will continue to support local authorities next year through significant general purpose grants from the local government fund towards the cost of providing their day to day services, it must be recognised that the financial pressures we face in central government will impact on the grant allocations that I will be in a position to make to individual authorities.
The Government must make savings in its expenditure programmes and the Exchequer contribution to the fund is not immune. Exchequer support for the fund is set at â¬164 million in 2011, in addition to income from motor tax of â¬950 million. In addition to the water charges that I mentioned earlier, the National Recovery Plan2011-14 provides for a new site value tax. A flat rate "household charge" will be introduced in 2012 as an interim measure. It will be followed in 2013 by a final site value tax, which will be introduced when valuations have been completed.
The new tax will offer a more stable, sustainable and reliable source of local government finance. The initial estimated yield from the household charge is â¬180 million in 2012; this will rise to â¬530 million on full introduction of the site value tax, or an average of just over â¬200 per dwelling or site. Whereas the measure will involve additional costs for consumers, it will also widen the financing base for local government, which provides essential services in the community.
Although the 2011 local government fund Exchequer contribution is down, it will be supplemented by the pension-related deduction that was introduced in 2009. Local authorities continue to retain the full proceeds of the deduction, which are estimated at approximately â¬80 million in 2011. Revenue from the charge on non-principal private residences will provide additional income to local authorities in 2011 of over â¬60 million.
I have not listed many of the areas in the Department of my colleague, the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan. Great strides have been made in investment in renewables and retro-fitting programmes, and the Minister has repeatedly stated that these produce jobs for those in the construction sector while reducing significantly our carbon footprint. I have had the opportunity to listen to the contributions of Deputies Kenny, Gilmore and Howlin, who made reference this morning to climate change legislation. I am pleased to tell him this will be published shortly.
I had an opportunity to reflect on the contributions made this morning. As I stated, the analyses of the budget, including those of commentators, are undoubtedly correct in many instances. This is a difficult budget. The question members of the Opposition must answer is exactly what cuts they would reverse if they were in government. In all likelihood, the Fine Gael Party and Labour Party will have overwhelming numbers to form a Government shortly. I listened to contributions of Opposition Deputies and did not hear what measures they would reverse. Would the Opposition reverse the reduction in the minimum wage? I do not believe it would do so. Deputy Joe Carey appears to be indicating it would but I doubt it.
The Opposition parties know from the meetings they had with the European Commission, International Monetary Fund and others that this eventuality is extremely unlikely. Let us have a little honesty. The Opposition should inform people which of the draconian cuts, as it described them, it would reverse. I do not believe it would reverse any of them.
We heard about heavy lifting. The heavy lifting has been done. It is unprecedented in Irish economic history to remove â¬14 billion from the economy, followed by a further â¬6 billion. To lift a heavy object, two people need to work in unison. I fear the Fine Gael Party will go in one direction-----
Joe Carey (Clare, Fine Gael)
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Are the Green Party and Fianna Fáil Party working in unison?
John Gormley (Dublin South East, Green Party)
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Having listened to Deputy Howlin, I regret there are no Deputies from the Labour Party present.
Joe Carey (Clare, Fine Gael)
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The Minister should do the decent thing and hang up his boots.
John Gormley (Dublin South East, Green Party)
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Deputy Howlin stated that despite the considerable constraints which will face a new Government, it will make different and better decisions. While it is only right that a political party would implement its policies, I return to my earlier question as to which of the cuts in the budget it will reverse. I suspect it would reverse few of them. This is the type of honest debate we need in this Chamber and elsewhere in the coming weeks.
The circumstances in which the Government drafted the budget were far from ideal. However, by combining the making of the necessary decisions with the introduction of a number of targeted initiatives, we have given cohesion to the budget. This will allow us to build on our considerable economic strengths and aid a faster and stronger recovery.
We hear a great deal about the need for confidence. There is confidence. People want hope and there are signs that we can make the transition. While it will be difficult to do so, this can only be achieved if we continue to make difficult choices. If we do so, the country will have a good future.
Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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This is a disastrous budget. It is an anti-people, anti-democratic budget, which is clearly the product of a sell-out of Irish sovereignty to the International Monetary Fund and European Central Bank. It is an effort by a totally discredited Government with no mandate and in its dying days to impose a Thatcherite economic strategy on the people. The result of this cruel strategy will be to heap even more poverty, unemployment and social misery on our people. It is an attack on the mass of people who are on low to middle incomes, with those most vulnerable to be injured most. The wealthy are to escape yet again. All of this has been done to bail out bank bondholders and do the bidding of the European Central Bank, European Commission and International Monetary Fund.
The basis of the budget, IMF-EU deal and four year plan is the belief that taking â¬15 billion out of the economy between now and 2015 will bring us out of recession. By the Taoiseach's own admission, â¬15 billion has been taken out of the economy since 2008. With what result? If there is growth in the economy, as the Minister for Finance, Deputy Brian Lenihan, claimed in his Budget Statement, the budget will stem it and suck the oxygen out of the economy.
The recession is not over but continuing and deepening. For month after month, we have consistently had more than 400,000 people unemployed. There was nothing in the budget to sustain existing jobs, not to speak of creating new jobs, because the Government does not have an employment strategy. In desperation it tries to portray any marginal reduction in the live register figures as a sign of recovery when such reductions reflect the growing numbers of young people taking the option of leaving the country for opportunities overseas.
In his Budget Statement last December, the Minister for Finance stated we were on the road to economic recovery. "The worst is over", he declared, adding that "we are turning the corner". In his speech introducing the 2011 budget, the Minister spoke of "clear signs of hope" and "returning to growth after a deep and prolonged recession". His words are even less credible this year than they were in December 2009.
In his budget speech the Minister served up a large dollop of historical revisionism. With a straight face, he stated that the â¬19 billion budget deficit was created because the Government, during the boom, was "seeking, with the full support of those opposite, to spread the benefits of the boom across every section of the population". The reality was that the Government refused to spread the benefits of the boom across society and refused to share the wealth. Sinn Féin stood alone among the parties in this House in arguing against any reduction in tax levels or bands in a succession of general elections, including in 2007.
The Minister stated, "households and businesses continue to work off the excesses of the boom". This is to suggest that every household grew fat during the boom or, as the Minister stated last week, we all "partied". That is a parody of the truth and an insult to thousands of households which are struggling to make ends meet and survive week on week, even before yesterday's budgetary measures take effect.
Last year, I described as reminiscent of Margaret Thatcher the Minister's argument that the social welfare system can trap people in joblessness. The only thing trapping people in joblessness is this Government, which has wrecked the economy and failed to present a strategy to create real jobs and sustain existing employment. At that time, I also warned that, after the attacks on people on social welfare and low income in budget 2010, the minimum wage would be next in line. That is precisely what occurred 12 months later. My prediction came to pass in this budget, which launched a further all out attack on people dependent on social welfare, with the slashing of the minimum wage scheduled to follow in March.
The result of this cruel budget will be poverty, unemployment and social misery. The cuts to social welfare are savage - there is no other way to describe them. They are absolutely savage and it is people on social welfare who will bear the brunt of this budget. The Minister, Deputy Lenihan, tried to justify these cuts by claiming there was low inflation. That was a pathetic effort to defend the indefensible. The very budget that cuts social welfare also raises a whole range of costs that will be borne by people on social welfare and other low to middle income families. According to the consumer price index, prices rose by 2% in 2010.
The real effect is that the basic social welfare rate is being cut by â¬416 per annum. A couple dependent on social welfare will be down â¬691 per annum. When child benefit cuts are added an unemployed family with three children will be down over â¬1,000 in actual cash available to meet the family's needs each year. Most social welfare recipients will have â¬8 per week, or â¬416 per year, taken out of their pockets by this budget. Jobseeker's allowance has been reduced by â¬8 to â¬188 per week for those aged over 25. For people between 22 and 25 years of age the rate drops by â¬6 per week to â¬144. In a budget with no jobs strategy the Government's message to the unemployed, especially the young unemployed, is very clear - subsist on less or emigrate. That is the message this Government is delivering to the young people of Ireland today.
In budget 2010 the Government's cruellest cut was to carers. People on carer's allowance lost â¬8.50 per week and those on carer's benefit lost â¬8.20. It is reckoned that more than 160,000 family carers provide over 3.7 million hours of care each week. On top of the heartless cuts in 2010 budget 2011 now takes another â¬8 per week from the carer's allowance and carer's benefit, or a weekly cut of â¬16.50 and â¬16.20, respectively, in the space of just over a year. It is an absolute disgrace. This budget cannot be taken in isolation from the series of austerity budgets introduced by this Government during a period of almost three years
The weekly â¬8 cut slashes the invalidity pension, one-parent family payment, disability allowance, widows' and widowers' pensions, disability pension and the blind pension. As Inclusion Ireland has pointed out, these cuts are completely at variance with the national disability strategy which is often cited by Government as evidence of its commitment to people with disabilities. This is an anti-children budget and undoubtedly will increase child poverty. The â¬10 reduction to child benefit for the first and second child, â¬20 for the third and another â¬10 for the fourth child will penalise poorer families most. That is obvious and is also shameless.
As the European anti-poverty network has pointed out, statistics for 2009 released last week by the Central Statistics Office show that levels of consistent poverty in this State rose from 4.2% in 2008 to 5.5%, while the numbers unable to afford basic requirements went up by 25%. These figures reflect a situation even before the impact of the budget cuts of last year, let alone of the budget introduced yesterday, are taken into account. Let us make no mistake - the situation is very serious and the poverty trap is deepening.
Cutting social welfare should be the last thing a Government does in a time of economic difficulty. Cutting social welfare payments will have a detrimental effect on the economy and society because those payments are always returned to the economy. They are not salted away in savings or invested overseas but are spent on rent, mortgages, food, utilities and all the other essentials people need in life's daily requirements. Cutting welfare is a false economy, the only tangible result of which is misery for those on the receiving end. If less money is spent, the economy will contract, businesses will struggle and more jobs will be lost. More people will be reliant on social welfare. Local economies will suffer especially badly and communities struggling out of poverty and marginalisation will be pushed back.
Last month a survey conducted by Sinn Féin with 278 social welfare recipients demonstrated that families on welfare simply cannot afford to take this hit. On the current welfare rates almost 90% of those surveyed will go without something essential this Christmas, be that food, home heating fuel or Christmas presents. Respondents also confirmed that more than half of welfare recipients may borrow money to see themselves through Christmas. Ultimately, the only stimulus in this budget is for loan sharks and money lenders.
I stated that this is an anti-children budget and this is carried through into the cuts to education. Education has taken a disproportionate hit. I am glad that the leader of the Green Party, the Minister for the Environment, Heritage and Local Government, Deputy Gormley, is present. In times of recession education could and should be used as a tool for economic recovery. It should be the gateway to growth and revival. Of course, the Government's approach is the exact opposite. Instead of investing in and growing the education sector this Government has reduced education spending year after year. It seems intent on making education a preserve of the rich. Gone are the days of free education, in are the days of under-funded schools and exorbitant fees. There isan overall reduction of 21% in capital expenditure for education in the coming year; 9% for primary schools and a whopping 20% for secondary schools. This is inexcusable and makes a laughing stock of the Government's claim to be building a knowledge economy. Children will continue to go to school in prefabs rented from private concerns at exorbitant long-term costs. Classes will be unable to cope with more children and less room. A Government with a sound education strategy and a job creation strategy would have invested in school buildings, creating much-needed employment in the construction sector and providing long-term upgrading of our educational infrastructure. The 5% cut in capitation funding for primary schools will penalise all schools but especially the most disadvantaged which depend more on Government funding. Schools are already struggling with high class sizes and limited resources. Children and families in rural Ireland will be worst affected by the new â¬50 primary school transport charge. Add to that the â¬50 increase in the secondary school transport fee to â¬350 per child per year and the impact on families with children is very substantial. In addition, rural farming families have been hit again with the â¬36 million reduction in the REP scheme.
No-one can accuse the Government of lacking imagination or innovation in this budget. It has come up with another innovative barrier to education. Which member of Government was responsible for authoring a new â¬200 per annum fee for post leaving certificate courses? This anti-education Government has increased third-level registration fees by â¬500 to â¬2000 and has reduced student grants. It has cut grants to secondary schools by 9% and taken 3% from the vocational education sector. A cruel Government has again cut support for children with special educational needs. Sixty per cent is to be cut from educational disadvantage funding.
Aengus Ó SnodaighCaoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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That is absolutely deplorable. All in all this is a shameful showing. I am delighted the Minister, Deputy Gormley, is present because the Green Party has presented itself as the saviour of the education sector. Time after time, it has said its defence of the education sector was a major part of its whole contribution to the formulation of this budget. If that is the case, what can I say about the Green Party's input into the formulation of this budget which, at the end of the day, is an attack on the education sector?
Public services are being demolished by this budget. Health cuts of â¬765 million in current spending in 2011 will result in bad outcomes and even the deaths of patients across the system. Over 1,500 beds in our public hospitals have already closed due to cuts and the further cuts in this budget will close hundreds, if not thousands, more beds - make no mistake. The Minister for Health and Children, Deputy Mary Harney, and the HSE have slashed services in local hospitals such as Monaghan, Dundalk, Navan, Nenagh, Letterkenny, Ennis and Sligo, and other hospitals are in their sights such as Clonmel, Roscommon and others. The budget will undoubtedly see more hospital services slashed, hospitals closed and patients facing long journeys to attend centralised and over-worked hospitals.
The recruitment ban in the health services means that trained health professionals are being educated here at great cost and to the highest standard but they cannot offer their talents to our hard-pressed public health services. The budget will give thousands more young nurses and doctors a one way ticket out of this country at huge cost and huge loss to our health services and economy. The â¬920 million cut from social protection, the â¬765 million cut from health and the â¬170 million cut from education combined come to 85% of the entire â¬2.2 billion cuts across all Departments.
We have heard Ministers quite rightly praising local authority workers and the emergency services for their excellent work during the recent harsh weather. I join with that praise in offering my thanks and that of my community not only in terms of my constituency, but those I know the length and breadth of the country, to those who are at the coal face, dealing with these difficulties. However, how many of those workers will still be in their jobs and how many of those services will be lost next winter with the budget's cut of 28% in funding for local authorities? Communities will be hit badly by that cut, as they will with the cut of 44% from the RAPID scheme, 15% from regeneration projects, a whopping 63% from the drugs task forces and â¬9 million from community development projects. It is some list - a litany of shame. There is a massive 36% cut to social housing. It is a recipe for community denigration and degeneration, not regeneration.
The Government has attempted to portray the tax changes in this budget as reforming and progressive. They are nothing of the sort. There is no wealth tax. There is no new higher rate for those with individual incomes of over â¬100,000 per annum. In Sinn Féin's economic recovery plan, "There is a Better Way", which is costed by the Department of Finance, we show that such a new top rate of 48% would raise â¬410 million, well in excess of the â¬397 million the Government is slashing from social welfare for people of working age in this budget. There were choices and choices were made - made by Fianna Fáil and the Greens. They have made the damn worst choices of all.
Instead, this budget brings more people on low income into the tax net and more people on middle income into the higher tax rate, as well as creating new inequities. The new universal social charge may prove more regressive than the current income and health levies. At present, a person earning â¬25,000 pays nothing on the health levy and â¬500 on the income levy. Under the new system in this budget, the same person earning â¬25,000 will pay â¬1,069 in the universal social charge. Those are the facts. A single person with no children, a PAYE employee in the private sector and a PRSI contributor, with a gross income of â¬25,000, will see a reduction in net income of 4.6%, while an individual in the same circumstances with a gross income of â¬175,000 will see a reduction in net income of only 3.9%. How can that be explained as equitable?
The tax increases are across the board â they fail to target those who have the ability to pay. This is a big mistake, and one that will be damaging for the economy and consumer spending. The minimum wage drops by 12% but the Taoiseach's salary drops by less than 6% - think about it. The Taoiseach will earn 13.8 times the salary of someone on the new minimum wage. I welcome the reduction in the Taoiseach's and Ministers' salaries and the â¬250,000 per annum cap on public sector pay, but it is too little, too late. If the Government had capped the salaries of public servants at â¬100,000, as we in Sinn Féin had argued, this would have saved â¬350 million for the State per year â nearly half of what is being cut out of the health budget alone.
The CEO of the HSE earns in excess of â¬300,000 a year. The heads of our semi-States earn more again. Padraig MacManus of the ESB is on over â¬700,000 per year. Even with the pay cut taken by the Taoiseach, Deputy Brian Cowen still earns â¬36,000 more than David Cameron, the Secretary General of the Department of Finance still earns more than the Permanent Secretary of the British Treasury and the CEO of An Post still earns more than the managing director of the Royal Mail. So much for those comparisons. It is interesting that it is such comparisons between the two islands that the Government relies on when it is talking about social welfare payments, but let us look at this at all the levels.
The Government will defend international bank bondholders but it will not defend its own citizens. This budget will not fix the economy. It will cause poverty and hardship and it will contract the economy further. Not one cent in tax raised in this budget nor one cent cut from public spending will be used to reduce the deficit next year. It will all go to servicing the debt incurred by the Government's disastrous banking policy. The Taoiseach yesterday tried to claim that the deficit was totally separate from the banking black hole. It was a statement without a shard of credibility.
The charade continues that we must take these harsh measures because, after years of excess, we have a burgeoning deficit. We are actually being foisted with these measures because our banks and their investors took a massive gamble and they lost. This has to be emphasised time and again - they lost. Why are we, the people, then having to bail them out? The budget is, of course, the opening salvo of a four year plan which is destined to fail because it is premised on policies of slash and burn which have already failed spectacularly. If spending cuts worked, the deficit would already be reduced. The Government talks of stimulus but it does not provide the funding for it, so its growth predictions are wildly optimistic. In addition, this four year plan ignores the growing threat to the State's very financial existence from the Government's bank policy. This policy assumes we can and should protect banks and their investors. It assumes there will be no more loan defaults on the banks' books. It is a policy that is clearly bankrupting this State and its citizens.
There is no real stimulus in this budget. Some â¬200 million in so-called activation measures were announced but the Government slashed the capital budget which would have created jobs. The so-called activation measures are about getting people off the dole into low-paying or, indeed, no-paying jobs. Unemployment stands at over 13% and we are facing mass emigration. The depths of misery behind these statistics cannot be exaggerated. The State is now a major owner of property - hotels, office blocks and ghost housing estates throughout the country - yet there is no statement as to how economic value might be obtained from these assets. The austerity measures in this budget, which are legion and which include the increase in VAT, taxes for those on low and middle incomes, the cuts in welfare and the planned cuts to the minimum wage, will further depress the economy and cause more jobs to be lost. Can the Government not grasp that simple fact?
Cuts to the local government budget will force cash-strapped local authorities to raise rates for businesses and service charges, hitting the public with a double whammy. This has yet to present itself. Let us be clear that there can be no recovery if jobs are not created. They must be created if we are to reduce the social welfare bill, increase the tax take, restore people's standard of living and quality of life, and grow this economy. Those are the facts of the matter.
Sinn Féin has proposed a once-off transfer of â¬7 billion from the National Pensions Reserve Fund for a jobs stimulus. This is equal to the investment at the beginning of this year by the State in Allied Irish Banks and Bank of Ireland. Instead of having such a stimulus, the Government, in agreement with the IMF and the European Union, is proposing to take billions of euro from the same fund to put into the black hole that is the banking system. With the right policies and supports, jobs can be created in sectors such as the agri-food, tourism, IT and green technology sectors. We can have a new generation of entrepreneurs and revitalise the co-operatives sector.
The Government can always find additional billions for the banks but it says it cannot find money for recovery. We have shown where it can be found. This is outlined in our document. We do not claim to have a monopoly in regard to all the measures that could be taken but we have demonstrated definitely what is possible. This has been acknowledged by a variety of voices, throughout the country and internationally, who have had no truck with Sinn Féin historically.
There is no detail in the budget on the Government's plans for State assets, but we all know what is coming. The decision to sell off State assets to fund the growing bank debt is a crime. This is a classic example of the short-sighted policies that we have come to expect from the Government. In the good times, the Government sold off companies such as Eircom. Look where that got us. It resulted in a decade of poor and often non-existent broadband provision, certainly in my constituency.
State companies should be kept in State ownership. We could even ask the more profitable of these companies to front-load some of their dividends to us for the next few years to help improve the public finances. In every country where the IMF has interfered, the modus operandi has been to strip it of its assets and privatise them. The IMF is not facing much opposition from the so-called leaders of the two main Opposition parties. Fine Gael has even provided it with a blueprint in its so-called NewERA plan. Sinn Féin will resist the selling off of State assets to fund a private banking crisis and it will be calling on all those progressive forces who also oppose this policy to support it.
One issue that has seldom been mentioned in our current crisis is the massive asset lying off our west coast and currently being exploited with no benefit to the Irish people. I refer to the oil and gas reserves, which by right belong to the Irish people and which are estimated to be worth in excess of â¬500 billion. These were disgracefully given away to multinational corporations by corrupt Irish Governments. It is time they were reclaimed.
Náire ar an Aire. Beidh na mÃlte Ãireannaigh, fir agus mná, ag fulaingt mar thoradh ar an bhuiséad seo. Tá slà nÃos fearr ann. Chuir Sinn Féin an plean sin os comhair an Rialtais ach nÃor éist sé. Mholamar cáin ar shaibhreas, teorainn ar ioncaim ag na ndaoine siúd ag an leibhéal is airde sa tseirbhÃs phoiblÃ, deireadh le scannal na dtuarastal ró-ard agus na gcostas ag prÃomhfheidhmeannaigh na gcomhlachtaà Stáit. NÃor éist an Rialtas. In ionad chothrom na Féinne sa bhuiséad seo, tá an Rialtas ag cosaint na ndaoine atá ar barr arÃs agus ag déanamh ionsaà ar na ndaoine atá ar bun.
Cé bheidh ag Ãoc as an pholasaà tubaisteach chun bancanna teipthe agus an uasal-aicme a chosaint? Na daoine a bheidh thÃos leis ná teaghlaigh óga, sean-daoine, na glúine daoine óga nach mbeidh an dara rogha acu ach imeacht as an tÃr seo. Na banaltraÃ, na muinteoirÃ, na hoibrithe sna húdaráis áitiúla, na comhraiceoirà dóiteáin - beidh siadsan thÃos leis chomh maith. Mar an gcéanna, na daoine atá ag braith ar leas sóisialta, na tuismitheoirà aonair, na daoine mÃchumasaithe agus na daoine atá tinn.
Tá scrois déanta ag an Rialtas sa bhuiséad seo agus is cuma leis cén toradh a bheidh ann do na gnáthdaoine atá ag obair agus dóibh siúd nach bhfuil postanna acu.
NÃl ciall na réasún leis an bhuiséad seo. Tá an tAire ag déanamh ciorraithe ar ioncaim na ndaoine a chaitheann an t-ioncam sin sa gheilleagar áitiúil, ag tacú le gnóthaà agus ag cruthú fostaÃochta.
NÃl iarracht sa bhuiséad seo chun postanna a chruthú. Má cheapann duine gur féidir linn teacht as an mheathlú seo trà chiorraithe a chur i bhfeidhm agus gan stráitéis chun postanna a chruthú tá an tAire as a mheabhair. Cuireadh ciorraithe i bhfeidhm i 2007 agus tá an meathlú nÃos measa anois agus tá ard-cheannas eacnamaÃochta an Stáit seo dÃolta ag an Rialtas don IMF agus don ECB. Má tá an toil ann, is féidir postanna a chruthú. Tá sé léirithe ag Sinn Féin conas is féidir é sin a dhéanamh, ach is léir nach bhfuil an toil ag an Rialtas seo.
The Government has consistently been offered opportunities to lift this State out of crisis. Instead of taking them, Fianna Fáil and the Green Party have pushed us further into crisis. Even the most right-wing commentators in this State and internationally are questioning their slavish desire to appease the bank bondholders. The Financial Times â God bless the mark, to have to quote it of all vehicles - has questioned why the Government is so willing to sacrifice the Irish taxpayer to protect bondholders who knew exactly the sort of risk they were taking when they bought bonds in our banks. They contributed to and benefited from the bubble. Therefore, they should equally be able to accept the consequences of the bust and be responsible for them.
This banking policy is madness and the domestic finance policies pursued in this budget will ensure the economy collapses completely. We will not have a cent to deal with any of the costs the State is incurring, let alone the money to run the State. The Government, which has no mandate and which we challenged on this matter 12 months ago, knows this. That is why it has run to the IMF and European Union to negotiate one of the worst deals ever done by any Government internationally. This deal allows for a certain percentage for the banks. The rest is for all the future deficits the Government's policies will create. What a legacy the Government is leaving us. Leave us it must.
People will suffer grievously as a result of this budget; that much is clear. What is not clear is the reason the Government insisted on introducing this budget before giving up and calling a general election. It should have spared us all this spectacle and should have recognised that it has no right and mandate to do what it is doing. It is acting in contempt of the electorate and it is clear that the latter has nothing but contempt for it in return.
We can only hope that the Government will be out of office very soon. It is imperative for whoever forms the next Government, and those who sit in opposition, to ensure this deal is abandoned, to devise a banking plan that will actually work, to reverse these ideological and irrational cuts and to introduce a strategy for real growth.
I am appealing to all the voters listening to proceedings here today to base the decision on how they cast their vote on what they have heard and, more important in some cases, on what they have not heard. Sinn Féin has been honest in our proposals. We are not appealing to people's greed but their sense of what is right and fair. We cannot offer everybody something. What we can offer is honesty. We can offer them economic proposals that make sense and will fix this crisis. We can offer them a new and fairer society, and that is where we need to be arising out of all of this debacle.
In the past few weeks we have seen thousands of people brave the weather to come out and voice their opposition to this budget. I applaud those who gathered outside the gates of this institution last evening. Well done to each and every one of them. In Donegal South West, the people gave their verdict on this Government by endorsing Sinn Féin and our alternative proposals. They also rejected the so-called opposition of Fine Gael and Labour and their consensus for cuts.
The one thing we can take from this budget today is that it will hopefully act as a long overdue wake-up call to the Irish people who have had about as much as they can take. People power should never be underestimated, and it is people power that will eventually oust this Government. We are calling on every party seeking to enter government in the next Dáil to commit to reversing the decisions made in this budget. They should spell out exactly what they intend to do.
When the Irish people kick this shower out of office because of this budget and their litany of economic disasters over which they have presided or breathed oxygen into, let the people be very clear about who they are supporting in their place. No party entering power after the next election can claim a mandate to implement these cuts. Sinn Féin is committed to reversing these cuts and getting the IMF the hell out of this State.
We call on Fine Gael and Labour to commit to reversing these budget cuts and rejecting the IMF-EU sell-out deal. I appeal especially to the Labour Party to halt before rushing headlong into a coalition with Fine Gael. It is clear that the Fine Gael Party wants this savage budget passed so that it does not have to pass it itself early in the new year. Perhaps some in the Labour Party share that view but I believe that most do not. The coming general election may well be the greatest opportunity for the left in Irish politics in a generation, or it may be another case of Labour propping up Fine Gael yet again.
For our part, we in Sinn Féin are quite clear. We have rejected the consensus for cuts. We have put forward a fairer, better way to deal with the economic challenges we currently face. We are committed to producing a new banking strategy that puts bank debts back in the hands of the banks, not on the Irish taxpayers' shoulders. We are committed to protect the economically vulnerable and to require those who can afford it to contribute more.
This budget is still not a done deal. The four year plan is not a done deal, and the IMF-EU sell-out is not completed either. If there is anyone with a shred of conscience left among those who have hitherto supported this Fianna Fáil-Green Party Government, now is the time for them to act in the true national interest, a much abused term on the floor of this House in the recent past. Let those who speak of the national interest reject this Bill, reject this budget and reject this Government.
Brendan Howlin (Wexford, Labour)
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In accordance with the order of the Dáil of this day the session stands suspended for 60 minutes.
Eamon Ryan (Dublin South, Green Party)
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I met an official who works with me this morning, Mr. Eoin Sweeney of the Marine Institute. He was saying that he was over in Europe last week where they were offering him condolences on the conditions in Ireland, and he came back with an optimistic line. He said to them that we are undoubtedly going through a very hard winter but what we know from experience, and what there is a sense of in this country,-----
Eamon Ryan (Dublin South, Green Party)
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I wish to share with the Minister for Foreign Affairs, Deputy Martin.
Séamus Kirk (Louth, Ceann Comhairle)
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Is the Minister of State, Deputy Finneran, in the slot as well?
Eamon Ryan (Dublin South, Green Party)
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And the Minister of State, Deputy Finneran.
Séamus Kirk (Louth, Ceann Comhairle)
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Ten minutes each, in any event.
3:00 am
Eamon Ryan (Dublin South, Green Party)
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Ten minutes each.
I was quoting a colleague, Mr. Sweeney, who was using the metaphor that we are in a very hard winter but the sense in this country is sometimes one can get a good summer and the land will recover, that we have real capabilities in this country that will thrive after we get over some of the mistakes, some of the dead wood of the past that we must remove.
We are starting to see some of that dead wood removed in this budget for we have had, as the Minister for Finance stated, a taxation system that was not fit for purpose in a range of different ways. First, as stated by the Commission on Taxation, which we appointed and which has done its good work, it was too narrowly focussed on property taxation, short-term transactions and income taxes, and within the income tax system, too narrowly based in terms of who is paying. There was a large section that was not included within that. As difficult as it is to broaden the tax base, it is, as the Commission on Taxation and others have stated, the right thing to have done.
It would also be right for us to do what the Commission on Taxation recommends, to avail of this opportunity to broaden the tax base into other areas, including more stable forms of property taxation that will not get us back into a bubble and bust territory. That also is something towards which we are moving in this budget. The change in the stamp duty arrangements which was recommended by the commission - it recommended a zero rate but to reduce it to 1% is close - is a step in the direction. It is to be followed in subsequent years with other measures and this will lead to a more sustainable property tax system, which we urgently need and which was one of the main reasons we got into such difficulties. That is something I welcome, particularly for those who are caught in difficult mortgage situations today. It, among the other measures that we have made, may help them to trade down and get out of the debt difficulties they have.
We also had too narrow a tax base in that the very wealthy in this country were not paying their fair share. Following yesterday, on the back of other changes and further ones to come, there will be a significant increase in real taxation payments by those who are very wealthy who in the past were able to avoid paying their fair share of tax by using tax reliefs and the special pension arrangements. That is a critical and important change that we have agreed in this budget.
We must also generate our wealth in a much broader way and get away from our obsession with property.
This is also facilitated in the budget in the way in which spending on enterprise, research and development and education have been maintained. At a time when we are making very difficult decisions to cut back areas, it was a critical strategic decision to state we will try to maintain spending in these areas in recognition that such enterprise from educated people is the best way of us developing sustainable economic recovery.
This involved incredibly difficult policy decisions because not cutting as severely as one could in areas such as education means in other areas, such as social welfare in particular and health, reductions are being made for which it is very hard for anyone to argue in favour. I can only state that we do it not in the interests of creating a less equal society but in a real attempt to try to get our public finances working and to get our economy and jobs working so people will not be reliant on social welfare payments. For those who require it, there will still be maintained a basic protection in our society recognising that those who cannot work their way through enterprise or by other means do have to be protected, be they pensioners or other people in similar categories who cannot rely on their own endeavours. These changes are very difficult; they were not easy to make but it was done in this context.
There are other changes we need to make and deadwood we need to remove. The most significant of these is that we need a change in ethics, particularly in Irish business. We got into banking difficulties and difficulties with the property bubble because people were thinking of themselves and not of the consequences of their actions. People chased targets such as performance bonuses and high pay returns rather than thought about the consequences of the business decisions they were making. This will have to change in Irish business as we move out of the Celtic tiger period into a new period where we seek new growth.
People in this country will be forced to ask hard questions and look at the detail. In this country, we have a habit of saying things will be all right. There is an attractive aspect to this but things were not all right. In the boardrooms of senior companies and particular banks and in our regulatory system people were not willing to ask the hard questions. This will have to change. Paying attention to detail and getting the detail right in everything we do in the public and private sectors is also a consequence. Changes will have to come out of this unfortunate lesson we have learned in the past three, five and ten years.
There will also have to be consequences. It is deeply frustrating and difficult for those in the political system to see our legal system not being able to state that certain actions taken were wrong and should be punished in an appropriate way. We need this to happen. In this country, we operate under a system of freedoms provided by a Constitution which recognises individual rights. For all the flaws in our Constitution the rights protected in it and by our legal system are crucial freedoms which we need to maintain and protect while at the same time seeking justice so that people face the consequences of what has been done. I hope we can get this balance, difficult as it is, right. There is also freedom of speech in this country, which is important. Our press is free to report as it sees fit. It can also lead people to a better understanding of what is happening through the freedom it can exercise.
We need a change in politics away from the politics of populism which got us into some of these difficulties. The easy solution was to state that money was available and one might as well spend it. As we in the House all recognise, too often we work on a constituency-oriented basis rather than on a policy-based basis. This was one of the primary causes for us failing to see the policy mistakes that were taken in recent years and to adjust accordingly. This will have to change. We will also have to change so there is no question of undue corporate influence clouding political policy judgment. I am very keen to see the Government delivering on its commitment to end corporate donations so that a hint or possibility of such influence does not exist. These are some of the key changes we need to make if we are to learn lessons from what went wrong in recent years.
More than anything, we need politics in which hard policy choices are made. We need the public service to be managed in a very effective way. Whoever is in Government faces a huge challenge in the daily business of politics to drive our public services, to take risks and to manage resources more effectively. From my vantage point as a Minister with responsibility for areas of economic development, I see real opportunities for development in the new digital economy, in a green economy, in our food industries and in our financial services industry. It is possible, but first and foremost it needs political change and political responsibility. As the Minister for Finance stated in his speech yesterday, it requires confidence in ourselves.
Yesterday, I was somewhat encouraged and some confidence returned to me when I saw the response in the Chamber to the Budget Statement. Other commentators wondered why it was so muted compared to the usual Punch and Judy show we have on budget day. I took it as a sign of optimism that there is recognition on all sides of the House of the seriousness of the situation and the responsibility we all share to start addressing it. I listened to Deputy Michael Noonan and I very much empathised with his quoting Michael Collins on the need to grow again our country and have that sense of love returned to it. At lunchtime, I listened to the Taoiseach on the radio stating rightly that love of country is instilled in every one of our parties. We need to use this common cause - this common love and affection we have for our country - to provide clear and practical politics to help us out. As the Taoiseach stated, we cannot rely on false promises.
We need to work in detail on the changes not only in this budget but in the next three or four budgets to come to get us out of the difficult times we are in and the hard winter we are having, into a spring which can grow. I am confident we can do this. Parties on all sides of the House, and my party in particular, have a role to play because those green shoots will and should be green.
Micheál Martin (Cork South Central, Fianna Fail)
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I welcome this opportunity to make my contribution to the budget debate along with my colleague, the Minister, Deputy Ryan. The key imperative facing the country is to chart a credible pathway over the coming years towards economic recovery and towards emerging from what is an unprecedented economic crisis. We have not seen the likes of this globally or in Ireland since the great crash of the late 1920s. It has taken a collective effort by the nations of the world to prevent the collapse of the global economy. There is significant interdependence in the world economy today that perhaps did not exist in earlier decades. It is important that this European and global context is not lost sight of in terms of where Ireland now finds itself. Since we joined the monetary union and since the phenomenon of globalisation, the world is a much smaller place; it is far more interconnected and the impacts of decisions we take here and elsewhere can influence Ireland and Europe. This is particularly true with regard to banking. We cannot act unilaterally with regard to banking as some people have suggested or superficially put forward as panaceas for the banking crisis. We cannot act unilaterally in this regard. That is very clear.
Some people sneered at the Minister for Finance for suggesting there was a turning point, but if one looks at the sheer decline in 2009 and the contraction in GNP and GDP terms and then looks at 2010 when that situation flattened and there was 0.3% growth in GDP, it is clear that there has been a substantial stabilisation of the economy. If one adds to this the modern dimension of our economy, namely, the industrial and export sectors, the economy showed significant resilience in the eye of the storm during the crisis itself when we witnessed a decline of 4% in exports in 2009 when other countries witnessed export declines of up to 16%. This year our exports have shown significant growth as they have increased by 7% in real terms in the first half of this year. This is a significant indicator of activity, productivity and regained competitiveness in this sector of the economy which, everyone agrees, is the engine of growth for the future and the way towards economic recovery. Manufacturing output was up 12% in the third quarter, export orders remained strong in October and the live register figures are down for the third month in row. Another key factor in terms of the public finances is that the underlying budget deficit stabilised at approximately 11.6% prior to the budget. This is important, because many people have suggested that the â¬14 billion correction that has occurred since 2008 has not worked or that it was unnecessary. If we had not made that correction, we would not have up to a â¬20 billion deficit but would be in a completely unsustainable position in terms of the public finances. That would threaten the very fabric of our social security and welfare systems and our health and education services. The answer does not lie in the wholesale reversal of the programme of getting our public finances in order. As our colleagues across Europe have said, we need deeper and more rapid action on a number of fronts.
The Labour Party has suggested that we could, for example, have worked on a â¬4.5 billion cutback this year. That argument is disingenuous because nobody has mentioned the growing nature of debt servicing costs. The longer we postpone the change, the more costs we build up down the line and that is the major problem with the Labour Party's â¬4.5 billion approach or with the idea that we can continue to delay corrective action. Both the Labour Party and Fine Gael have questioned the growth rates that underpin the budget and the four year plan. I suggest it is no longer enough for the Opposition parties just to question the growth figures. The plan the Fine Gael Party put forward accepts the Government growth figure and it forms the basis of the Fine Gael projections for the next four years. The figure also forms the basis of the Labour Party budget. The Commission has a different growth perspective.
Micheál Martin (Cork South Central, Fianna Fail)
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If that is the case, I suggest Fine Gael should adopt its own growth estimate.
Bernard Durkan (Kildare North, Fine Gael)
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The Minister should not worry, I will.
Micheál Martin (Cork South Central, Fianna Fail)
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This is a transparent process and there are many different economic models. It is not enough for people to play it both ways or for them to pencil in our growth figure, but doubt it will happen.
Bernard Durkan (Kildare North, Fine Gael)
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Fianna Fáil has pencilled in its figures for the past ten years.
Micheál Martin (Cork South Central, Fianna Fail)
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If Fine Gael doubts the projected growth will happen, it should put forward its growth figure based on its economic modelling and on the variety of perspectives and economic models there are and base its four year plan on that.
Bernard Durkan (Kildare North, Fine Gael)
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From here on in we will.
Micheál Martin (Cork South Central, Fianna Fail)
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I have noted that the Fine Gael four year plan accepts the Government's growth targets as the basis for what it has put into its plan.
Bernard Durkan (Kildare North, Fine Gael)
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The European Union did not accept the growth figure.
Micheál Martin (Cork South Central, Fianna Fail)
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The competitiveness agenda is very important in terms of job creation and of ensuring we have an economy that responds to the need to increase exports. We export goods and services and we must ensure that those goods are world class in terms of quality and technology. In many instances, they represent solutions to global problems, be they related to energy, climate, businesses, agriculture or food. Some very exciting companies have emerged over the past decade with the support of Enterprise Ireland and the pro-business environment in Ireland that has facilitated the growth of a significant number of new types of SMEs in the food, technology, life science and digital areas and in internationally traded services. We must continue to pin our hopes on these areas, which is the reason we have put such significant investment into the enterprise Estimates for the next three to four years. It is also the reason we are not just maintaining the level of investment in research and development area but are making modest increases in it over the next number of years. We want to ensure that the critical mass of research capacity we have built up can be deployed to ensure greater commercialisation of research and new products and services that will bring about new jobs and greater exports.
Notwithstanding all of the challenges we face, it is important to acknowledge that over the past ten years we have transformed the research landscape in this country. In 1997 when I became Minister for Education, there was no research budget. We have transformed the situation, particularly in terms of the campuses of our universities, institutes of technology and specialist research centres. We have also transformed it in terms of the quality of personnel, both home grown and those from overseas. The evidence in terms of how the IDA's portfolio of inward investment has changed bears this out. As the Taoiseach mentioned this morning, some 50% of the projects run by the IDA this year are research-based projects. Prior to this we had seen growth to approximately 40% of new projects coming in being based on research. These projects are not just involved in research for its own sake, but underpin the high end manufacturing presence we continue to have in Ireland in many sectors, but more specifically in the life sciences and ICT. These remain strong sectors for our economy and we must continue to focus on them as a basis for growth. As a result of the development of the export sector, domestic demand will return in time to sustainable levels.
Finally, we need a change in politics and in our political system and it is important we do not return to "politics as usual".
James Reilly (Dublin North, Fine Gael)
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We need a change of Government.
Bernard Durkan (Kildare North, Fine Gael)
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It is not the system we need to change, but the people in government.
Micheál Martin (Cork South Central, Fianna Fail)
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However, I am a bit more pessimistic as a result of what I witnessed yesterday in terms of protestations. I get the sense from the Labour Party that its basic political objective is to win as many votes as it can at all costs and to take the consequences after the election in terms of the implementation of policy and the harsh realities.
Bernard Durkan (Kildare North, Fine Gael)
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I thought that was the Fianna Fáil philosophy.
Micheál Martin (Cork South Central, Fianna Fail)
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I acknowledge the Fine Gael four year plan has some credibility, but I feel that the Fine Gael leader probably did not mean what he said this morning when he said there would be no income tax increases under the Fine Gael Party in 2011. That is not credible and it undermines the centre piece of the plan Fine Gael published last week. The nit-picking that is going on suggests to people that there are alternatives. If one signs up to a saving of â¬6 billion, that must involve pain and must impact on people, unfortunately. I acknowledge this is difficult and tough for people at all levels.
There should be political reform. I agree with my colleague, the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, on the issue of corporate donations. The legislation on that will be progressed by Government and should be in place before the calling of the election, because that is important in terms of the conduct of the election.
Bernard Durkan (Kildare North, Fine Gael)
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I would love to be a fly on the wall when that discussion takes place.
Séamus Kirk (Louth, Ceann Comhairle)
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Deputy Durkan, please allow the Minister continue. We have many people offering to speak and the Deputy's interruptions are holding up proceedings.
Micheál Martin (Cork South Central, Fianna Fail)
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We are committed to reform. I am committed to a regime which will change dramatically the whole practice of large corporate donations to politics. All the analysts say we need to change our politics. Let us not lose the opportunity afforded by this watershed period in our history in terms of economics to do the thing properly.
Bernard Durkan (Kildare North, Fine Gael)
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We need to change the Government.
Séamus Kirk (Louth, Ceann Comhairle)
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Please allow the Minister to conclude.
Micheál Martin (Cork South Central, Fianna Fail)
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My concern is that the type of exchange Deputy Durkan requires does not fill me with confidence that change will happen
Séamus Kirk (Louth, Ceann Comhairle)
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Deputy Durkan's opportunity is coming up. He will have his opportunity to contribute shortly.
Micheál Martin (Cork South Central, Fianna Fail)
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To be fair, Deputy Durkan's opportunity has been coming for a long time. I will now hand over to my colleague, the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Finneran.
Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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I am glad of the opportunity to comment and make some input into this debate. I am here to discuss the significantly reduced provisions for the Department for 2011. As the Minister, Deputy Gormley, has already outlined, the Department faces a combined cut across both capital and current spending of â¬595 million, equivalent to a 27% reduction on our 2010 provision.
As the largest programme area within the Department, the housing budget must shoulder a significant proportion of the overall burden of the adjustment, of some â¬350 million, with the bulk of the saving coming from the main local authority programme. However, this figure really only tells half of the story. If we measure success by how much money we throw at a problem, social housing some tough years ahead, because the moneys that were available in recent years will no longer be available for the construction and acquisition programmes to which we have become accustomed. Fortunately however, long in advance of the downturn in the public finances that gave rise to this tough budget, the Department has been putting in place a programme of reform that has started to transform the way in which housing supports, social housing supports in particular, are delivered. At the heart of this transformation agenda lie equity, fairness, choice and value for money. Its delivery was always anticipated to yield major savings in the housing budget as reliance on the tried and tested forms of provision decreased and more flexible and cost effective mechanisms which are more adaptable to the different phases in the life cycle were developed. The scale of the adjustment required to restore the public finances may have added further impetus to the process of change my Department has already been driving but let no one claim that fiscal expedience is driving this programme reform.
Similarly, focusing only on the extent of the reduction being applied to one area of the housing budget ignores the fact that in the areas which are focused most sharply on meeting the needs of the most vulnerable and the most disadvantaged households, the provision will be maintained and, in some cases, slightly increased. In a budget delivering cuts of more than â¬6 billion, this is a remarkable demonstration of my deep commitment to sparing pain from those who can least take it.
I will now outline some of the main elements of housing provisions for 2011. The Minister for Finance indicated to the House that I will explore changes to the tenant purchase arrangements. I will introduce revisions during 2011 to the existing tenant purchase scheme to make it more attractive, particularly for longer term tenants. Throughout 2011 tenants will be able to avail of a discount of up to 45% on the market price. This is an increase from the maximum 30% discount normally available.
A key aim of Government housing policy is to support the development of sustainable communities with a mix of residents and in so far as possible in the tenure of their choice. The tenant purchase scheme has made a significant contribution in this area. The more favourable tenant purchase scheme will offer a significant number of long-term social housing tenants better opportunities to purchase their homes. My Department estimates that 45,000 people qualify for the scheme.
My Department is currently working to ensure that full details of the scheme, including details in respect of the loan finance which will be available from local authorities, will be made available in the coming weeks to permit the expanded scheme to be introduced from 1 January next.
One of the key areas where this Government can be justifiably proud has been our determination to tackle homelessness. This commitment was enshrined in our strategy document on homelessness, "The Way Home", which I launched in 2008. Despite the fiscal difficulties encountered in recent years, my Department maintained funding levels in this sector in 2008 and 2009. I am glad to report that our continued commitment to tackling homelessness will see our expenditure in 2011 exceed â¬53.4 million. This is a nominal reduction from approximately â¬2.5 million but in real terms we are maintaining our level of commitment.
I strongly value the unique contribution the voluntary and co-operative housing sector makes to the provision of social housing generally and especially to households with particular needs. Tremendous results have been achieved over the years through our partnership with this sector. This is reflected not just in the levels of financial support but in the numbers of houses provided or supported.
Next year, I will provide within the overall funding for the capital assistance scheme a dedicated pool of funding for mixed funded social housing projects in the voluntary and co-operative housing sector. A total of â¬15 million will be provided as a capital element to be used by approved housing bodies to leverage private loan finance from the Housing Finance Agency and other lending institutions. Combined with a further â¬75 million directly invested under the capital assistance scheme, this will ensure that the momentum built up over recent years by the voluntary and co-operative sector can be continued with a particularly active role under the social housing leasing initiative.
Since the launch of the new suite of adaptation grants for older people and people with disabilities in late 2007, the level of demand and activity across all local authorities has been considerable. This is testament to the importance of grants as part of an overall continuum of care and support for independent living at home among target groups. This year's allocation of â¬65 million, along with the competitive rates that prevail in the building industry, will provide assistance to more than 11,500 households. The total provision in 2011 will be almost â¬82 million when the local authority contribution is taken into account. This reveals a clear commitment to protecting the most vulnerable and disadvantaged households.
We will continue to be ambitious in local authority regeneration and remedial works in 2011. More than â¬120 million will be invested in this area and we hope to start construction on a number of schemes in Limerick in 2011.
Long-term leasing delivered 3,000 units thus far but more should have been delivered. Greater energy will be invested in this area by local authorities in the coming years. We have a great opportunity to build houses to meet the needs of people on housing lists.
Even without recession, the way in which we deliver on social housing needs would have been further reformed. In the context of the recession, financial constraints allied with favourable market conditions have accelerated those reforms but that does not make them less necessary. Without hesitation or reservation, I commend the budget, the 2011 Estimates and the significant Housing provisions contained therein to the House.
Séamus Kirk (Louth, Ceann Comhairle)
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The next speakers are Deputies James Reilly, Fergus O'Dowd, Catherine Byrne and Phil Hogan. Deputies Reilly, O'Dowd and Catherine Byrne will each have eight minutes while Deputy Hogan will have six minutes.
James Reilly (Dublin North, Fine Gael)
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The inimitable and irreplaceable Deputy Durkan will speak in Deputy Hogan's slot.
Bernard Durkan (Kildare North, Fine Gael)
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The Ceann Comhairle would not agree with that description.
James Reilly (Dublin North, Fine Gael)
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We listened to the Minister for Communications, Energy and Natural Resources as he spoke about how the summer can bring new life to the ground after a hard winter. I remind him that he and his Green Party colleagues have aided and abetted the Government in introducing a hard winter of discontent for the people. They will not be forgotten for that.
The Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Finneran, referred to the heart of this budget. The heart of this budget is hard, cold and deaf to the needs of the vulnerable. It flunks the job creation challenge while hitting the most vulnerable and putting yet more pressure on low and middle earners. For the second year in a row the Government has decided to punish carers, those with disabilities, blind people and widows. Out of a budget of â¬6 billion, it could not find an alternative to taking â¬90 million from this vulnerable group.
Taxes on low and middle incomes have increased dramatically. Fine Gael would not have increased income tax rates in 2011. The minimum wage is being cut while the public sector wage cap, at â¬250,000, remains too high and will not affect State owned banks. If the Government wants moral authority, it must lead by example. The Minister for Finance suggested that the Taoiseach's salary has been reduced by â¬90,000 but, given that it has decreased from a peak of â¬285,000 to â¬214,000, I do not understand how he did his maths. Deputy Kenny noted this morning that the Taoiseach now earns 14 times the minimum wage compared to a multiple of 13 prior to the budget.
Public sector reform has been shelved, resulting in lost savings, poorer service and even more of the cuts to the front line for which this Government has become renowned.
A three child family with a single gross annual income of â¬50,000 will face a cut of almost â¬1,800 per year. The same family would have been better off by â¬1,600 per year under Fine Gael's alternative plan based on more ambitious cost reductions and reforms in the public sector. Public sector reform and job creation are the keys to our recovery. My friends in the Labour Party wish to increase taxes. Fine Gael wants to increase jobs. I was struck by a number of points made by the Taoiseach in his speech. He said: "We are helping the unemployed." I wonder how he is doing that. He then said: "We already have jobs and growth plans in place." How often have we heard this from the Government? Plans for tomorrow are a substitute for action today. Where is the cut in employers' PRSI to take on new employees earning up to â¬354 per week? Where is the reduction in VAT from 13.5% to 12% to encourage more service orientated jobs? Why cut the minimum wage? This action merely makes the poverty trap worse.
The Government has excelled at conning the people. Three years ago we had an accident and emergency crisis and a ten point plan to remedy it, but nothing happened. We were told 1,000 extra beds would be put into the hospital system under co-located hospital plans. Not a single sod has been turned, not a brick laid or a bed delivered.
Last July, the Minister for Health and Children, Deputy Mary Harney, sat where the Minister of State, Deputy Mary Alexandra White, is sitting now and scoffed at the notion of â¬200 million being saved on drugs. Yesterday, she announced, with great aplomb, that â¬200 million is to be saved on drugs. There is consistency.
Why does the Government take these actions now? Why did it wait until the IMF was at the door? The sheriff has not merely come to the door, he is now in the living room, eyeing up the various bits that must be taken away. Why was this not acted upon two or three years ago when it was suggested on this side of the House? The Government saved â¬90 million by depriving widows, the blind, the disabled and carers, when â¬200 million could have been saved through drugs reference pricing. These are the real hard choices that should be made by a Government that cares, is in touch with the people and listens, not one that is deaf.
Not a single banker has been jailed, although we are three years into this crisis. A banking policy was launched with great aplomb by the Minister for Finance, who said we would make a profit from it. Later he said it would cost us â¬4 billion, then â¬16 billion and now it is â¬50 billion. This is like "Casino Royale". The money just keeps going up and up and no one knows where it will stop.
A fair and effective budget will boost confidence and jobs. As the Taoiseach said this morning, in the public arena we need to start believing in ourselves again and to communicate this with confidence to the outside world. All that is true, but he left out a very important word. We need more than confidence. We need credibility, of which there none in the Government. It has no credibility with the people of the country, the markets or the international community. That is why the IMF is here to ride shotgun, to look over the Government's shoulder and make it report weekly, monthly, quarterly and annually.
Greed, bred with incompetence, spawned the catastrophe the Government caused to befall the country. The Government has crushed and crucified the country. It has poleaxed the people, eviscerated the economy and ruined our reputation. There has been no Government responsibility, transparency or accountability and no fairness.
An election is coming and the people will have their say. Fine Gael has the policies to get the country back to work. We have the people with the courage, the confidence and the competence to implement those policies. Fine Gael will reclaim this Republic for the people, for it is the people's Republic. We need a Government that listens to the people and speaks to the people and for the people.
Fergus O'Dowd (Louth, Fine Gael)
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My colleague, Deputy Reilly, likened Government policies to "Casino Royale". I understand we may have a new casino in Tipperary North. That is, no doubt, why the dissolution of the Dáil has been delayed for another month. When they get the casino, they might put Bertie's safe into it to keep the national debt. Unlike the money he put into his safe, it may reduce overnight to a less significant figure.
The Government's politics are a joke. The Green Party, which campaigned against going into government with Fianna Fáil, is tied irrevocably to them. The disaster that will befall the Green Party is of its own doing. It could have stood on this side of the House and fought this appalling Government every day and month.
If there is to be a future for the country and if we are to reclaim our place in the world and stand shoulder to shoulder with other nations, without the IMF or the ECB on our back, let us do it with the best educated and most talented young workforce, which we have. We have received a disgraceful result in the OECD-Pisa survey, which is an international comparison of students aged 15 years throughout the world. After the boom and as we face into the Fianna Fáil bust, we are left with an appalling situation. Irish education has regressed under Fianna Fáil since 2000. The biggest fall in literacy attainment in the OECD countries is in Ireland. We are doing worse than any other country since 2000 in our literacy skills. It is not easy to accept that. It is appalling, given the situation we are in.
We need a really big shake-up of the Government and of the Department of Education and Skills. They have been sitting on their butts for too long. The Government is not at the races when it comes to making sure there are fundamental changes in our education system that encourage young people to learn more and put us back at the top, where we were. We are in an appalling situation. Yesterday, The New York Times said the results were weak, as usual, in the United States. They are, unusually, appalling in Ireland. The New York Times compared the US results to the outstanding results in all fields in Shanghai, which participated for the first time. The newspaper remembered the United States's Sputnik moment when the USSR launched a satellite into space, showing its science and technology was advancing on America's. We are having a Sputnik moment. This is our wake-up call. Ireland is falling behind. The regions that performed outstandingly in international education were Shanghai, Hong Kong, Singapore, Taipei and Macau.
We have to change the way we are doing things. The reading results for low achieving boys in Ireland are serious and depressing. In mathematics, we have fallen to below the OECD average in overall performance. The proportion of top performers is dismally low, compared to our competitors. Lots of explanations come from the Minister. She even got Canadian consultants to interpret what was going on. However, the facts speak eloquently. This is a reflection on primary and secondary education, which is the very foundation of the Irish education system. We need to change, and change utterly.
This budget should be driving forward the improvements in education that are not happening. We need to look again at what is happening in many of our schools, particularly in urban areas where we have a large immigrant population. In some schools, 35% of the intake come from homes where English is not the first language. Cutbacks in education affect resources as children move up through primary school. Special resources teachers are not being provided. This means students do not perform as well as they should. A crippling burden is placed on students who do not have English as a first language and also on the students who do. I accept that the allocation of resources must be examined. However, we will never improve our scores if we allow this to happen.
Between 2000 and 2009, Ireland fell from 5th place among 39 to 17th place. More than one in six children in Ireland is estimated to have poor reading skills. A total of 17% are low achievers in reading. Almost one quarter of males received an average score which is considered to be below the level of literacy needed to participate effectively in society.
One of the key problems resulting from this economic disaster is that 180,000 people in the workforce with third level qualifications who need to be upskilled to fourth and fifth levels. This problem will be exacerbated by the policies of the current Government. In the area of mathematical education, Ireland's place has fallen from 16th to 26th place in just three years, the second biggest fall in the survey. We have significantly fewer students attaining proficiency levels higher than the OECD average, at 6.7% compared to 12.7%. Generations of Irish students will now have to pay for the disastrous decisions of Fianna Fáil Governments. This report shows students are already suffering by falling behind their international counterparts. If Ireland is to compete for jobs in the international marketplace and in the new economy this is where the fundamental changes must take place. For the short time left to her in office, I suggest the Minister re-examines the reallocations to primary education within her Department and re-examines the policy for students who are not speakers of English as their first language and the impact of this on the primary curriculum.
I have attempted to obtain clarification from the Department of Education and Skills on a matter regarding the budget but nobody in the Minister's office can answer my query. I ask that the Minister of State explain a note on the Minister's website. It refers to a change in the qualifying distance criteria for entitlement to the higher non-adjacent rate of grant for third level students. She has increased the qualifying distance from home, from 24 km to 45 km. I have been informed today by the Union of Students in Ireland that this change could affect up to 18,000 students. It will mean an adverse change in the income of each student of â¬1,900. They will each lose almost â¬2,000 in grants they would have received if the grant system for distance travelled from home remained in place. The key question to be clarified is whether this affects existing third-level students. Will such students lose that grant in the new academic year? Will the new proposal apply to existing grant holders as well as new students? This is a very serious issue which will cause problems for families and for young people who live in remote rural areas which do not have the public transport links such as exist on the east coast.
Catherine Byrne (Dublin South Central, Fine Gael)
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This budget has been a long time coming and people were right to be fearful of the tax increases and spending cuts enforced by Government in an effort to find â¬15 billion worth of savings. At this time of great anger and worry, we need to be calm. The Taoiseach shouting across the Chamber does not solve the country's problems but instead only adds to them and makes people more fearful. What is needed is a general election. We need to focus on giving people hope and giving young people the necessary education and skills to breathe new life into families and communities which were forgotten in the Celtic tiger years.
Yesterday's Budget Statement by the Minister for Finance, Deputy Brian Lenihan, did not inspire us, nor did it offer us any hope that the Government will bring this country out of recession and get people back to work. Instead, the Minister for Finance doled out a brutal list of cuts to social welfare which will cause great financial hardship for the lower paid and those who rely on social welfare supports to survive. I listened in disbelief as the Minister said yesterday that over the past two years the Government had worked hard to get its spending back under control. This is a joke. Up until a few weeks ago, the Government wanted us to believe there was no problem and that the public finances were well. Now that the Government has finally admitted there is a problem, the taxpayer, the low paid and the unemployed, are being asked to fix it.
People who were previously earning too little to be considered for tax have suddenly found themselves in the tax net and more people will be paying both the standard rate of tax of 20% and the higher rate of 41%. A reduction in tax credits and the new universal charge means even further cuts to income. The abolition of tax reliefs is a necessary evil. However, reliefs such as those for child care will put more pressure on young parents who are struggling to meet all their household bills, mortgage and child care costs.
I am pleased to hear that this budget will not inflict a cut to the State pension. In recent months, there was a genuine fear among the elderly that their pensions would be cut. I hear this regularly on the doorsteps. While the Minister avoided cutting the old age pension, he did not spare their children or their grandchildren. He will be remembered as the Minister who took the widow's mite and cut the widow's pension.
Social welfare payments are to be reduced by 4%. This means that most payments will see a cut of â¬8 per week. Those in receipt of widow's pension, invalidity pension, blind pension, one-parent family payment, disability allowance, will all receive a reduced payment. I am in a state of disbelief that the Minister has decided to cut carer's benefit and carer's allowance by â¬8 for people under 66 years of age. This was a mean decision. These people are the backbone of their families. They provide care 24 hours a day, seven days a week. They may have given up employment to look after their loved ones at home. There are no Christmas holidays for carers. They have devoted their entire lives to care for their loved ones, young and old. They have sacrificed a lot to provide around-the-clock care, which saves the State millions of euro each year.
The Minister has decided to make a â¬10 euro cut across the board in child benefit. I do not believe that this is a sensible approach because it means that high earners still retain the payment. The budget refers to savings of â¬30 million in the area of energy and communications in the household benefits package, but no further detail is available. This is a real worry for people who rely on social welfare credits for their electricity and their phone bill. We urgently need clarification on changes in this scheme.
The one positive element in the area of social welfare is the increase in the fuel allowance. An extra â¬14 million has been allocated to this payment which means households will now receive â¬40. While this is a welcome change, we should not forget that fuel is expensive and in this bitterly cold weather, our fuel consumption will increase dramatically and â¬40 will barely cover the cost of a sack of coal.
The introduction of a new community work placement scheme is too little, too late, for the growing number of young people who are unemployed. This budget does not provide for any new initiatives to get young people back to work. There is a big gap in the so-called national recovery plan. We need to support enterprise and small business and to create new jobs. We need to look after the many thousands of apprentices who are unable to finish their FÃS courses because they are unable to find work placements.
The budget also cut funding for social housing provision and supports by 36%. Does this mean that people will have to stay on local authority housing lists forever? As we all know, there are thousands of empty properties littering the Irish landscape, yet there is no initiative from the Government to use these properties to facilitate those in urgent need of housing and the homeless.
Another group of vulnerable people who will suffer as a result of this budget are those with addiction problems. These people have been forgotten. Funding to drugs initiatives in the Department of Community, Equality and Gaeltacht Affairs is to be cut by 7%. There will be further cuts of 63% from the Department of Education and Skills. This will have a devastating impact on local services. There have been cuts in the areas of family support and counselling services. The effects of the cuts are visible in the closure of methadone clinics and needle exchange programmes and among the community workers who help young families and grandparents to deal with the addiction in their homes and communities.
The budget will put enormous pressure on charitable organisations such as the Society of St. Vincent de Paul. The Minister has practically made that society a semi-State body because of the number of people who will be forced to turn to it for help this Christmas and in the coming year. The future of this country needs to be placed in the safe hands of people who will form policies to protect the weak and the poor. Yesterday's budget showed the Government up for what it is - out of touch with people and consumed by thoughts of its own self-preservation. The Minister for Finance and his fellow Cabinet members should hang their heads in shame. This is not a budget of fairness but a budget of injustice which totally lacks any sense of solidarity with those in need of help. I do not support the budget and the cruel, heartless measures it has introduced that will affect the many people living in poverty.
Bernard Durkan (Kildare North, Fine Gael)
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One of the things that was heralded in the approach to the budget was that it would be tough but fair; that is what everybody felt, but unfortunately that is not what we got. Whatever the reasons and regardless of whether we like it many people are waking up to the fact that it is a sneaky and deceptive budget that will show up many cuts people have not yet seen. For example the Government took great pleasure in claiming it has protected those on pensions when it has not. Unfortunately those on pensions will find that out in the weeks to come. It has made numerous crosscutting attacks on various income groups who are dependent on a fixed payment because of the economic situation. I will deal with who is to blame for the economic situation shortly.
I have to laugh when the Government starts attacking the Opposition and blaming it for the present state of the country. Some commentators pick it up and add to it by stating that the Opposition could not do any better, but the Opposition was not in government and had nothing to do it. The Opposition pointed out all the things that would happen long before they happened, but the Government said nothing, did nothing and has no intention of doing anything because despite what some Ministers will claim the only intention the Government had was to get in and stay in as long as possible, which has resulted in our present crisis.
I hope the lesson for us all is that when a government or a party remains too long in power, it loses touch with the people, which happened a long time ago. I bear no malice towards Ministers and other Members on the other side, who are decent people, but they were wrong and misread everything. They claim to have called upon expert opinion but the way to deal with expert opinion is to judge it for oneself and then take responsibility. That has not happened here for a long time.
Let us consider what has happened to a number of different people. What did the carers do wrong to get hammered? It is generally recognised that the carers provide considerable support for people who might otherwise be institutionalised. However, they have been hit in such a fashion because of bad Government. In the weeks to come the elderly will feel the swingeing cuts and find they are being blamed for what went wrong. It is only a few years since the previous Fianna Fáil-led Government handed out free medical cards to people over 70, which was hastily withdrawn. Recently the Minister for Social Protection - which should be called social destruction - said that many pensioners are very wealthy. I do not know whether they were wealthy when the Government came into office, but they are certainly not wealthy anymore. How many people were told they should invest their retirement lump sums in high-return investments that turned out to be worthless? They have not just lost their meagre savings, but were also encouraged to borrow and invest more by financial advisers.
Let us consider the young. What has a widow with three or four children done wrong? Why should she be punished for the antics we have seen unfold before us in recent years? She is caught on two counts, first, her own pension and second, child benefit. Many people, including widows and widowers, when paying what little they can of their mortgages are dependent on the child benefit alone. I do not believe the Government recognises the size and scale of the negative impact on that group of very vulnerable people. In recent times it seems to have become fashionable to target the unemployed. The Taoiseach said this morning-----
Séamus Kirk (Louth, Ceann Comhairle)
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The Deputy has one minute left.
Bernard Durkan (Kildare North, Fine Gael)
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The Taoiseach got to make a longer speech. He said the Government was helping the unemployed, which I am glad to hear. I would hate to see what the Government might do to them if it was hindering the unemployed because it is attacking them. It has become fashionable to point to the unemployed as the cause of the problem and claim there is social welfare fraud. On a daily basis the Government claims one group or another should not be getting whatever it is they have and the Government has set about taking it off them, which is an appalling state.
There is a grave danger that this society might turn on itself. We are on a knife edge and it is a serious situation. As the people groan under the burden that has been unleashed on them, they will tend to become cynical. While I hope that does not happen, all the signs I see are the signs of social upheaval which if visited upon this society will make matters even worse than they are at present. At this stage I would have thought that the Government would have stood up, taken responsibility and said: "Listen, we can't do this." During the good times it gave huge increases in social welfare, which was great, but now it wants to take them all back in the bad times. It is like taking away the umbrella when the thunder shower appears. A strange and extraordinary situation is now developing. I hope our society can withstand the weight and savagery of the burden placed upon it.
Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I wish to share time with Deputy Johnny Brady and the Minister for Enterprise, Trade and Innovation, Deputy Batt O'Keeffe.
Brendan Smith (Cavan-Monaghan, Fianna Fail)
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During the course of his introductory and concluding remarks, the Minister for Finance referred to the continuing strong growth in export orders for both goods and services and the opportunities to further develop sustained, balanced, export-led growth in the economy. In this context the Minister referred to the important contribution of agriculture and the agrifood sector. I fully endorse the Minister for Finance's comments and wish to refer in some more detail to the key role which the agrifood industry can play in economic recovery, as identified in the Government's national recovery plan and based on the potential identified in the Food Harvest 2020 report which I along with the Taoiseach launched in July. The Food Harvest 2020 report sets the scene for the development of our agrifood, drinks fisheries and forestry sector for the next decade. Getting our future priorities right will be fundamental to growing our most valuable indigenous industry. The report captures the considerable scale and complexity of this indigenous sector. It underlines its unique and special position within the economy and illustrates the potential to grow even further. I am particularly pleased that the report contains concrete suggestions towards which Government and private enterprise can work.
The title of the report, "Food Harvest 2020", defines the potential of the sector to deliver real returns and be at the forefront of our economic recovery. If we make the correct decisions now, then the harvest will indeed be great and the report sets out a comprehensive and considered roadmap for the development of Ireland's key indigenous sector.
The targets set are challenging but they are also achievable. This will not happen by chance. We all have to be committed to make it happen and to achieve the goals which this report sets out based on a vision based on smart, green growth. Ireland's agrifood sector has always been associated with green natural and sustainable production but we cannot take this association for granted. At a time when these qualities are increasingly demanded by both society and consumers, it is vital that we are more proactive in demonstrating our green credentials. We must prove that what we are doing is sustainable and then deliver our green message to the rest of the world in a co-ordinated and targeted fashion. That is why we are developing the Brand Ireland concept.
"Acting Smarter" is also a key feature of the approach to be adopted to future development. It should help to dispel the myth that building a smart economy involves concentrating on one or two of what are generally considered to be the high-tech industries. Modern agriculture is technically advanced and cutting edge technology is used to add value to the food we produce. We have invested heavily in research and facilities over the years so that now our farmers, fishermen and food companies are among the most technically advanced in the world.
This is an industry where we have real strength and real opportunities. This, more than any other reason, is why we must support its growth and development. The challenge is to build on this existing knowledge and capability so that our industry remains at the forefront of our international competitors. Acting smarter also means rethinking our business relationships, targeting new customers, increasing skill levels and being innovative along every part of the supply chain, from farm to fork.
We must also improve our competitiveness. The report deserves to be carefully studied by everyone in the agrifood sector as a plan in which everyone in the sector has a role to play. The report identifies how existing resources, both public and private, can be better utilised. In this regard, we all will need to play a part. Government alone cannot deliver on this vision.
For the Government's part, I have established a very focused high-level group to ensure effective, joined-up implementation, including consideration and prioritisation of how best to pursue to recommendations made. This group will also act as a clearing house for the wide range of issues that arise in regard to the development of the sector, as recommended in the report.
As Minister for Agriculture, Fisheries and Food, I am committed to leading and driving the implementation of this report by bringing together all of the relevant arms of the State in pursuit of the one goal. I will also fully involve sectoral representative bodies and other external expertise as required. Our approach to implementation will be flexible. I am open to new ways of interacting and doing business, which will achieve results. Importantly, the approach will also be transparent and accountable.
I am pleased to say that the budget introduced yesterday and the 2011 Estimate for my Department recognise the contribution of the agrifood sector to the economy, especially the rural economy and society and represents a vote of confidence in the potential and ambition which is clearly set out in Food Harvest 2020. In summary, the main elements of the budget for my Department are that there will be no change in payment level for the main agricultural schemes, the agri-environment options scheme will re-open in 2011, farm waste management scheme payments will be brought forward to this month, and total Department expenditure in 2011 will be â¬1.644 billion, which, when added to EU-funded expenditure, will mean expenditure by the Department in support of the agriculture, food, fisheries and forestry sectors of almost â¬3 billion next year.
The Minister for Finance set out the current harsh reality of our economic circumstances and the difficulties in the public finances and my Department, like all others, has had to adjust to cuts in the resources available. The Department's Vote for next year shows a net reduction of 11%. However, to a large extent, this is accounted for by a reduction in payments under the farm waste management scheme. I am pleased to report that spending on a range of areas, including the disadvantaged area scheme, agri-environment schemes, forestry and fisheries is being maintained at or very close to this year's levels.
Before I deal with a number of specific points, I want to comment briefly on the presentation of the Estimate for my Department which appears for the first time in a new format. In addition to the traditional subhead-by-subhead presentation, the 2011 expenditure is also shown across the Department's four strategic programme areas into which the various subheads are grouped. My Department is the first line Department to present its Estimate in this format. However, I expect that this form of presentation will become the norm in future. On this occasion, the traditional presentation is also included in the Estimate for comparison purposes.
I am particularly pleased that the Government and the Minister for Finance have provided the resources to maintain a number of important schemes and the disadvantaged areas schemes in particular at existing levels in 2011. These payments, which have been issuing from the Department in recent weeks for this year, make a very significant and increasingly important contribution to family farm incomes in the less-favoured areas.
On the important point of payments to farmers, I remind the House that every effort continues to be made to clear all payments due under the single payments scheme, which is EU-funded and does not appear in the Department's Estimate. Despite a substantial review of eligible areas, by year end, total payments will be well in excess of â¬1.1 billion, and I am remain committed to expediting all outstanding payments as quickly as possible.
We have also provided for an increase next year in agri-environmental schemes from â¬330 million to â¬337 million. REPS payments will continue at current rates and funding is provided in 2011 for those participants who joined the new agri-environment options scheme last May. This is a more targeted scheme than REPS and has proven very attractive to farmers, especially those who are out of contract under REPS. I am pleased that with the agreement of the Minister for Finance and within the financial ceilings set out in of the National Recovery Plan 2011-2014, I intend to re-open the agri-environment options scheme next year. As indicated when the scheme was launched in 2010, I intend to review the experience of the 2010 scheme before the launch again in the early part of 2011. Participation levels will be capped at 10,000 and maximum payment levels will be capped at â¬5,000. This level of participation is roughly equivalent to the number of REPS participants who are currently out of contract or whose contracts will have concluded by 15 May next, the date by which applications must normally be submitted for participation in any agri-environment schemes. This level of participation is similar to that which applied this year.
Funding of â¬119.8 million is being provided for forestry and bio-energy expenditure. While this represents a small reduction over this year's level, I am satisfied that this level of funding will allow new planting well in excess of 7,000 hectares in 2011, and is evidence of the Government's commitment to afforestation.
The fishing sector makes a critically important contribution to the economies of coastal communities and expenditure on fisheries at â¬19.3 million is essentially being maintained at this year's levels. Funding for food processing and aquaculture development is being maintained and while there is a small reduction in the capital allocation for fishery harbours, the funding will continue to make a valuable contribution to essential infrastructure provision. Funding will be provided through Enterprise Ireland, with the assistance of the Minister, Deputy Batt O'Keeffe, to many agrifood enterprises during the course of 2011. I recognise the huge success for the diary industry of the announcement by Danone last Saturday of a â¬50 million investment. I pay tribute to my colleague, the Minister for Enterprise, Trade and Innovation, Deputy Batt O'Keeffe, my Department officials and officials in the Enterprise Ireland who worked tirelessly along with myself to ensure that investment came to County Cork.
The Estimate also provides substantial funding for investment in the future by way of capital investment on farms and in the food processing industry. The Minister for Finance has agreed that savings which are available in our Department's Vote this year of up to â¬100 million can be brought forward into the current year to pay the final instalment of the farm waste management scheme, which was due to be paid early next year. By the time the final instalment is paid in full, well over â¬1.1 billion will have been paid under this scheme, all of which is Exchequer-funded. Apart from being a most welcome development for the farmers concerned, this greatly reduces the burden on the Estimate for 2011 for our Department.
The capital budget includes provisions of â¬19 million for the targeted agricultural measures, which are focused on supporting productive investment. The schemes include a new scheme for dairy farmers to adjust to expanding dairy opportunities, aid for sheep fencing and handling facilities and animal welfare grants for pig and poultry producers in the area of enhanced housing facilities. These schemes have been launched and will encourage and assist farmers and producers who are interested in developing their enterprises. A total of â¬35 million is again provided for marketing and processing grants to meet commitments made under the beef, sheep and dairy rationalisation programme. This is an ongoing commitment to the development of the food industry, which is fully in keeping with the aims and ambitions of Food Harvest 2020.
I am also pleased to announce that the provision for horticulture is being maintained at this year's level.
An essential contributor to our future prospects, which was highlighted in Food Harvest 2020, is research and development and I am glad that expenditure in this important area is also being maintained at this year's levels.
The 2011 Estimate also provides for bringing forward â¬32 million for the suckler cow welfare scheme into 2011 to ensure that the Department can make the 2010 and 2011 payments during the course of 2011. The practice has been to pay a year in arrears and the arrangement for 2011 is evidence of the Government's commitment to the beef sector and will be a timely boost to those farmers who are determined to improve animal welfare and quality.
The State bodies make a major contribution to the development of the agrifood sector and, in aggregate terms, the funding which is to provided in 2011 has been increased. However, I want to emphasise that this is not to say that the agencies under the aegis of the Department, namely, Teagasc, Bord Bia, the Marine Institute, Bord Iascaigh Mhara and the Sea Fisheries Protection Authority, will be exempt from cutbacks. All of the agencies will be obliged to reduce current expenditure and seek administrative savings and efficiencies. However, the Government has also had to provide for pension costs which must be met and, in the case of Teagasc in particular, this is an important issue. There will be a 3.3% reduction in the allocation in 2011- down from â¬59.3 million to â¬57.3 million for Teagasc.
Responsibility for the Horse and Greyhound Racing Fund transferred to the Department in May 2010 and funding of â¬57.29 million will be provided in 2011. This reflects the importance of the horseracing and bloodstock sectors, particularly in the provision and support of 16,000 jobs, many in parts of rural Ireland where alternative employment opportunities are limited. The Minister for Finance announced yesterday the Government's intention to include provisions in the finance Bill and to revise the Betting Act 1931 to apply betting duty to offshore betting, which will benefit the industry in our own country.
Substantial savings have been made in the Department's administrative budget and payroll costs in recent years and further significant savings are forecast over the period of the Government's national recovery programme from 2011 to 2014. The departmental staffing level will fall by approximately 240 this year and this rate of reduction is set to continue next year. I am determined to manage the business of the Department as effectively and as efficiently as possible and to ensure effective service delivery with ongoing reductions and staff resources.
I take this opportunity to pay tribute to officials in my Department working throughout the country. With reduced personnel they are still delivering services to the farming community and food sector in an exemplary fashion. We are to the forefront in having payments made in the most efficient manner throughout the entire European Union.
Johnny Brady (Meath West, Fianna Fail)
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This budget is the first phase in the fundamental restructuring of the public finances in returning them to a sustainable position while maximising the economy's potential to grow and create jobs again. The main task of the Government has been to secure the best interests of the nation in challenging times. The Government has made hard choices and taken unpopular decisions in the interests of security and the well-being of our people.
I am glad the provisions of the budget protect older people as far as possible. Fianna Fáil has always worked hard to protect the elderly and vulnerable in our society. When resources were available we invested heavily in improving social welfare rates. Over the past ten years our social welfare expenditure increased from â¬6.7 billion to â¬21 billion. There has been no reduction in the old-age pension and the free travel scheme and household benefit package of allowances for a television licence, telephone, gas and electricity will be maintained at current levels.
As we all know, the recent freeze has had a serious impact on everybody and I am glad that a once-off additional two weeks payment of the fuel allowance, worth â¬40, is to be made to those entitled to it in the next few weeks. I also welcome that the half carers' allowance will continue to be paid to people who are full-time carers and who receive another welfare payment. The extra payment for caring for more than one person will also be retained and carers will also continue to get an annual respite care grant of â¬1,700 for each care recipient. The weekly carers' allowance rates for carers aged 66 and over of â¬239 will not be changed.
The agri-food sector is also protected in the 2011 budget, with measures recognising the key role to be played by the sector in driving the country's economic recovery. I welcome the promise to increase spending in the agri-environment schemes such as the rural environment protection scheme and the agri-environment options scheme, which will move from â¬330 million to â¬337 million. Spending on the disadvantaged areas scheme will be maintained at â¬220 million for the year.
Bringing forward the payment of the final instalment of the farm waste management scheme from early next year to this month is most welcome. This will be a boost to farmers and their families as they face into an expensive Christmas period. I am calling for the minimum delay in the processing of those payments. Additionally, the 25% stock relief for farmers and the special incentive stock relief of 100% for young trained farmers will be extended for a further two years from January 2011.
I welcome the measures to provide â¬32 million for the suckler cow welfare scheme in 2011 to ensure the Department can make the 2010 and 2011 payments under the scheme in 2011. Previously, the practice had been to pay a year in arrears. I am delighted the work of farmers has been recognised in the budget. As the Minister for Finance noted in his budget speech, our agriculture and agrifood sectors have been among the most successful areas of the economy during the course of last year. It is important we recognise the effort and bring forward measures to help consolidate the work during 2011. It is important to note that despite the many difficulties facing the economy, our farming sector and the elderly have been protected in the budget.
Batt O'Keeffe (Cork North West, Fianna Fail)
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I am delighted to have the opportunity to make some remarks on the 2011 budget, particularly its impact on Ireland's enterprise sector and the crucial innovation agenda. Yesterday's budget strikes an important balance between achieving the necessary adjustment of â¬6 billion in 2011 and doing so in a way that ensures that we continue to invest in our two most important objectives, which are economic growth and job creation. The budget will see â¬508 million in capital spending alone dedicated to driving GDP growth through increased exports, more foreign direct investments and building our smart economy credentials via significant investments into research and development.
There is a critical point that must be made here, a point I believe has been lost in some of the rhetoric following the Minister for Finance's statement yesterday. For example, the Labour Party stated that the Government has chosen a budget that will not promote economic growth and employment, and Fine Gael indicated last night that the budget fails the job creation challenge. I want to put an end to these false claims here and now.
As I stated, yesterday's budget provides capital investment of â¬508 million for 2011, up from â¬480 million in 2010 and rising again to â¬558 million for the following three years. That is a clear and unambiguous investment of â¬2.2 billion in jobs and growth made by this Government through the budget. This multi-billion euro capital investment in growth and jobs is routed through my Department and its agencies, including IDA Ireland, Enterprise Ireland, Science Foundation Ireland and the enterprise boards. That is a point missed by Members opposite, as these enterprise agencies already support 82% of all exports, some 500,000 direct and indirect jobs, or around 30% of the entire work force in the economy today.
The investment we committed to yesterday in the core programmes of IDA Ireland and Enterprise Ireland is fundamentally important because it enables the agencies to win more global investments, grow exports and provide essential supports to help businesses improve their products and productivity. This is done for one simple reason, as it will deliver nearly 30,000 new jobs in 2011 just from the IDA and Enterprise Ireland client base alone, and 300,000 jobs altogether from the enterprise and tourism sectors, as well as food and agriculture, over the next five years.
There is a negative thread running through much of the commentary on both the budget and the four year plan for recovery. The thrust of this analysis is that Ireland is a growth taker, and that we can do nothing to stimulate GDP growth from our own endeavours as a people. I utterly reject that view. I accept that global trading conditions are important but it is equally true that the investment we make in enterprise will deliver GDP growth as well as jobs. I will outline the reasons. Ireland's GDP growth will come via export growth. The client companies of IDA Ireland and Enterprise Ireland already provide â¬126 billion of the â¬153 billion in goods and services we export. When the Government commits â¬2.2 billion to the enterprise agencies we are, therefore, investing in jobs and growth and saying to the world-----
Simon Coveney (Cork South Central, Fine Gael)
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It is not only a matter of spending money. That is part of the problem.
Batt O'Keeffe (Cork North West, Fianna Fail)
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-----we can drive economic growth from within this country and be growth makers. We have the track record, talent, technology and tax regime to do so. I do not agree with the Members opposite who believe Ireland is merely a growth taker. This country is capable of much more than that. It has proved it is able to do more than merely hold its own among trading nations. While the rest of Europe was suffering a double digit collapse in exports - Denmark's exports declined by 16%, Austria's by 20%, Sweden's by 24% and Finland's by 31% - Ireland's exporters were resilient and experienced a fall of only 4% in the teeth of a global recession.
The contribution of net exports to economic growth increased in 2009, with our agency supported exporters spending a staggering â¬38 billion on payroll and purchasing materials and services in Ireland. This is a key economic point that is frequently overlooked. By making our investments in winning foreign direct investments, growing indigenous exports and increasing research and development activity, we are not ignoring the domestic economy but investing in it also.
Along with direct investment in enterprise, there is one other critical aspect of how we are driving economic growth and job creation, namely, our continued strong investment in the smart economy. The development of a smart economy is a key component in the Government's economic renewal plans. The allocation of â¬161 million to Science Foundation Ireland means an increase of â¬11 million for the provision for research grants. This increase will enable SFI to stabilise the number of researchers and research teams and strengthen industry collaborations. This is vital to ensuring Ireland will retain the excellent science base we have built over the past decade. It will also send a strong message nationally and internationally that the Government's focus on driving the smart economy is on track.
The Government's investment has been critical to IDA Ireland's capacity to secure research and development related investments which run at â¬500 million annually. Five years ago foreign direct investment had a 10% research and development attachment. Today, this attachment stands at 50%. The IDA also supports indigenous companies reliant on knowledge for growth and job creation. In yesterday's budget, Enterprise Ireland received â¬130 million for activity in the area of science, technology and innovation. This is an increase of â¬9 million or 7% on the 2010 level. It is an investment that will put Irish companies ahead by enabling them to develop the competitive edge that innovation delivers. We are ensuring we have the optimal business environment for innovation, exports and job creation.
The tax environment is also an important element. Budget 2011 successfully balances new taxation measures with the need to do least harm to the businesses that will drive exports, growth and jobs. While the budget measures will result in taxation contributing â¬1.5 billion to the overall â¬6 billion adjustment, this will be done in a way that is least harmful to enterprise. Our competitive 12.5% corporation tax rate will not change, our top marginal tax rates will not be disimproved and our tax wedge will remain internationally competitive.
The budget does more than confirm our commitment to investing in jobs and growth through exports. It provides for targeted stimulus measures, including the extension of the corporation tax exemption for small firms, the modernisation and extension of the scope of the business expansion scheme and tax changes to improve contractors' cash flow. For instance, a withholding tax of 20% will apply to registered contractors in contrast to the 35% rate applied to non-registered contractors. The budget also extends the PRSI exemption scheme and car scrappage scheme, reduces the air travel tax and provides for energy efficiency measures. All of these measures will generate jobs and growth in the economy. Moreover, investment in the construction of schools and other infrastructure will continue.
The programme of activation measures set out in the budget will keep people close to the labour market and ready to take up the job opportunities that will arise as the economy recovers. The programme includes 15,000 activation places, reduces labour costs and provides for structural reform to incentivise people to take up employment. People will ask what is being done for the unemployed. Thousands of unemployed people are entering full-time third level education and thousands more are entering the VEC sector. In 2009, training supports were available for 65,000 people. In 2010, the figure was increased to 165,000 and we are making further provision for job placement in 2011. Specifically, we are making provision for graduates to gain nine to 12 months experience with multinational companies and other private firms. This initiative will ensure the programmes graduates have pursued are embellished with the experience they gain with private companies. Graduates and their parents will welcome this development. The Government will continue to address such issues as they arise.
While the budget is difficult, as Minister for Enterprise, Trade and Innovation, I am satisfied the Government has delivered the necessary investment to support Ireland's enterprise sector, the engine for economic growth and job creation that will benefit every sector and town.
Michael Ring (Mayo, Fine Gael)
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Yesterday's budget was savage. There is great anger all over the country today, as there has been for the past two years. People are angry with those who caused our current problems, namely, the Government, developers and banks. They are angry that the Government did not seek a mandate from the people for the budget or to bring in the International Monetary Fund. They want an opportunity to express their views on the Government.
Every Sunday one reads in national newspapers about developers such as Sean Dunne building holiday homes in the United States and other individuals who were involved with Anglo Irish Bank having a great time playing golf. We have not yet seen a banker, developer or anyone else guilty of wrongdoing brought before the courts. People are asking why those on social welfare must pay when developers and bankers are building holiday homes and having a great time as they laugh at Irish citizens.
The Government wonders why people are angry and are protesting outside the gates of Leinster House. They are angry because they do not see justice or fair play only the poor, the weak and the sick having to pay for all this. It is a disgrace.
Yesterday's budget offered further dishonesty. For the past ten years, since I entered the House, the Fianna Fáil choir has been up and clapping the different Ministers for Finance, Charlie McCreevy and Deputy Brian Lenihan, who were singing and dancing about the great budgets we had. They told us about all the increases and good things in the budgets. However, yesterday the Minister, Deputy Lenihan, made the shortest speech ever made in this House. There was no detail in it. One had to go to accompanying documentation to find out what was happening. That is further dishonesty. People might have respected the Government yesterday if the Minister had admitted that as well as other cuts, the social welfare and health budgets were being cut but that was not what happened. There was talk about the future and the economy but nothing about what the Government was doing to the people. That is why people are angry. The Government still believes it is codding the people of this country and taking them for fools. However, the people are not fools and are waiting for their opportunity.
This Government is finished and must go. Its sell-by date is past. That should have happened two weeks ago when what I will call the "Yellows" pulled out of Government. I would not call them "Green". The "Yellows" should have called a general election on that day. Now they are talking about supporting a third Taoiseach. We already have one Taoiseach without a mandate but now the Green Party - or the "Yellows", whatever one wants to call them - talk about supporting a third Taoiseach. The people of this country want an election and want to give this Government a lesson it will never forget.
Yesterday's budget was a missed opportunity. There was nothing in it about job creation, nothing for small businesses. There was only hardship and by God, there is a great deal of hardship in this budget. Later, I shall have an opportunity to speak on the Social Welfare Bill and will outline our position on it. It is a sad day for the country. I never thought the day would come when the great republican party, Fianna Fáil, the "wrap the green flag around me party", would bring in the IMF, get rid of our sovereignty and our republic and hand them over. My grand-uncle and people like him had to die to get freedom for this country. Shame on Fianna Fáil and this Government. It should leave office and allow in a new Government that has a mandate.