Dáil Éireann - Volume 460 - 31 January, 1996
Financial Resolutions, 1996. - Financial Resolution No. 7: General (Resumed).
Debate resumed on the following motion:
That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(Minister of State at the Department of the Taoiseach, Deputy J. Higgins).
An Ceann Comhairle Seán Treacy
 An Ceann Comhairle: I call Deputy Quill who is in possession.
Miss Quill Miss Quill
Miss Quill: The Progressive Democrats are not calling for cutbacks in the public service pay bill. We are asking for a curtailment to avoid a cutback in public finances which could be held and pegged at their present level. We are being told constantly that we cannot afford tax reform as if it were some type of luxury. Real tax reform is possible provided we manage our public finances in a prudent and sensible way. For example, the Government is planning to increase spending this year by almost £600 million or more than twice the rate of inflation. If the Government had been able or had chosen to keep the growth in spending in line with inflation it would need to extract £300 million less in income tax. That money could have been used to transform the position of the hard-pressed PAYE taxpayer and would have allowed the Minister for Finance to introduce a different budget last Tuesday. Instead of the penny pinching changes he made, he could have chosen to cut the basic rate of income tax from 27 per cent to 23 per cent, he could have halved the rate of employees' PRSI or, if we were serious about helping low paid workers struggling with the burden of the PAYE system, he could have increased the basic tax allowance by £1,000 for single people and £2,000 for couples. That last measure alone would have given a person on the average industrial wage of £270 per week an extra £8 in his or her take home pay.
Because of the spendthrift way the Government deals with taxpayer's and other people's money, next April the average worker here will continue to pay tax at 48 per cent whereas his or her counterpart in Northern Ireland with the same income will be paying tax at 24 per cent.
How can we create additional, real jobs when we continue to tax work as if it were a luxury? How can we encourage inward investment when, a few miles over the Border, it is now infinitely  more rewarding for an investor to invest, set up business and create jobs? How can we compete with the neighbouring State across the Border? That is the bottom line as far as this budget is concerned. It has been pathetically hopeless in its attempt to tackle our two main problems which are unemployment and crime. Those two problems are not unrelated because much of the second stems from the first. How can we tackle those two main problems besetting us when we are not prepared to implement radical, job-creating tax reform?
In my party's document Tax and Spend we have pointed the way, how it can and must be done but my sad admission now is that it will not be done by this three party Government. That being the case, I am not optimistic about the future of this country, because valuable time is being lost. The economic factors confronting the Minister for Finance preparing this budget may never again be so favourable to afford him to put in place a long-term, strategic budget whose provisions would begin to dismantle our taxation system and put in place a system leading to the creation rather than the destruction of jobs, one that would reward work and encourage enterprise. That did not happen. Since the process of radical reform was not put in place this year when all the internal and external economic factors were so favourable, with so much easy money available that will not be available in three or four years' time, I have grave fears for the future. I fear that our best talent, brains and young energy will continue to emigrate and the working economy will shrink further.
For every person contributing to the Exchequer there are 22 drawing out; that is a very dangerous set of circumstances. Unless we can get people back to work in gainful employment, when they can contribute to the Exchequer rather than drawing from it, I have very grave fears for the future.
I am particularly upset at the one specific, direct measure introduced by the Minister for Social Welfare in  relation to crime, that is the offer of a tax rebate of £800 for elderly people wishing to install a security system in their homes. The Minister for Social Welfare is totally out of touch with the reality on the ground because the people I know most in need of that type of installation to protect themselves are not in the tax paying bracket, or in a position to avail of this meaningless gesture. That gives one an insight into the lack of proper thinking and planning in this budget. It is an absolute scandal that a Government that spends £1 million a month on consultancy fees, public relations exercises and back-up services finds itself so totally out of touch with the reality on the ground. I contend this budget will do nothing for unemployment, nothing for crime and, as such, is a failed one.
Mr. Shatter Mr. Shatter
Mr. Shatter: I wish to share my time with my colleague, Deputy Crowley.
An Ceann Comhairle Seán Treacy
An Ceann Comhairle: I am sure that is satisfactory and agreed. Agreed.
Mr. Shatter Mr. Shatter
Mr. Shatter: I shall confine my remarks on the budget to the narrow area to which Deputy Quill has just referred comprised of its allocations to the Department of Justice and the proposals to tackle our crime problem. I shall do so not simply because of the public focus in recent days but because there are a number of serious issues that need to be raised and debated in this House in a more considered way than the type of contributions we have heard in recent days and in interventions on the Order of Business.
Deputy John O'Donoghue and the Leader of the Opposition, Deputy Bertie Ahern, have a lot to answer for, as have past colleagues of theirs such as Deputy Gerry Collins who spends most of his time in the European Parliament and Deputy Geoghegan-Quinn, who is currently unwell and whom I wish a speedy recovery. In the context of recent events I have been reading comments of Deputies Bertie Ahern, John  O'Donoghue and Máire Geoghegan-Quinn. The brass neck award for January 1996 should be awarded to those members of the Fianna Fáil party because many of the ills within the administration of our criminal justice system are the responsibility of the Fianna Fáil Party who were in Government from 1987 until just over a year ago. Under successive Fianna Fáil Governments, when there was Fianna Fáil alone, Fianna Fáil in Coalition with the Progressive Democrats and Fianna Fáil in Coalition with the Labour Party, the difficulties so starkly evident in our criminal justice system were not addressed or dealt with. Even worse, a former Deputy and Minister for Justice, Pádraig Flynn, now European Commissioner — having escaped from this House — and Deputies Gerry Collins and Máire Geoghegan-Quinn presided over the commencement and development of the revolving door prison system. It must be the only door opened by any Minister of Government that has not resulted in a plaque being erected to commemorate its opening, accompanied by a cheese and wine reception, to which members of the relevant Minister's party were invited to celebrate their contributions to political life.
Mr. Cullen Mr. Cullen
Mr. Cullen: The Deputy is now scraping the bottom of the barrel.
Mr. Shatter Mr. Shatter
Mr. Shatter: The revolving door system, in all its beauty, began in 1987 and 1988 to be used by a series of Fianna Fáil Ministers for Justice as a means of extracting people who had been sentenced to terms of imprisonment from the prison system as a means of making places available. That revolving door system has undermined the authority of the courts, demoralised the Garda, resulted in offenders regarding their sentences as something of a joke, giving them a feeling of immunity from being brought to book for crimes they commit. It has been a stark illustration of the contempt shown the victims of crime. Central to the present problems  within our criminal justice system is that revolving door system.
Mr. Cullen Mr. Cullen
Mr. Cullen: Nothing on the bail laws.
Mr. Shatter Mr. Shatter
Mr. Shatter: I welcome the announcements made by the Minister for Justice last evening but, of themselves, they will not resolve this problem Fianna Fáil bequeathed the nation.
Mr. Cullen Mr. Cullen
Mr. Cullen: That is nonsense.
An Ceann Comhairle Seán Treacy
An Ceann Comhairle: No doubt Deputy Cullen will have an opportunity of contributing to this debate. In the meantime he should desist from interrupting.
Mr. Shatter Mr. Shatter
Mr. Shatter: It is of vital importance that the revolving door system be abolished so that those convicted of offences by our courts will be left in no doubt that the sentence imposed will be fully implemented. They must know that when they enter the prison system they will not be allowed out for holiday periods at Christmas. At present, if they decide not to return behind bars nobody will greatly care because that will make another place available for some other offender. It is time we applied the sentences imposed. In addition to ending the revolving door system there is a need to bring forward a whole series of urgent reforms not yet spoken of by Government. We need to provide an integrated prosecution service as suggested by the Director of Public Prosecutions on a number of occasions. There is no sign that the necessity for this has been understood. There is a need to provide a modern court and Garda communications system and the records of criminal offenders should be computerised.
When a person is being sentenced it should be possible for the courts to be aware not simply of what sentences have been imposed for past offences but the length of time served. On conviction when gardaí or prosecutors are asked to tell the court of previous offences, it is  not unusual for some convictions not to be brought to the attention of the court. When a person appeals a conviction for a violent criminal offence, he should not be released pending appeal. There has been a series of instances where people convicted of horrendous violent offences have been released pending appeals and then committed other offences. To ensure injustice is not perpetrated we should provide for a speedy appeals hearing but convicted criminals should not be released into the community.
In the context of the courts system the bail issue is a hardy annual that is regularly produced. It is an issue with which people play political games and it is not understood by the public. The debate about bail and the manner in which it is being conducted is a nonsense. If we do not have enough prison places for people already convicted of criminal offences, what is the purpose of amending our bail laws to compel us to jail people who have not yet been convicted? Can anyone in this House address that commonsense issue instead of simply dealing with knee jerk reaction headline-catching statements when a problem arises?
Mr. Cullen Mr. Cullen
Mr. Cullen: Complete Castlerea.
Mr. Shatter Mr. Shatter
Mr. Shatter: Why suggest at this stage that people charged with offences be put in jail when we are putting out of our prison system people already convicted? We have hundreds of people within the community who should be behind bars.
Mr. Cullen Mr. Cullen
Mr. Cullen: I agree.
Mr. Shatter Mr. Shatter
Mr. Shatter: It was the considered policy of a succession of Fianna Fáil Ministers to implement that approach. The present Government has been in power for a year. Members of Fianna Fáil and, indeed, the Progressive Democrats whose party was in Government with Fianna Fáil, have been telling us there is something new and terrible happening. What they are not saying is that  their parties in Government laid the foundation for the problem.
In the context of the bail issue I have listened with interest to commentators on the report of the Law Reform Commission asking when will the Minister for Justice do something about bail and if she has implemented the report. How many Deputies opposite and how many of these commentators have actually read the report of the Law Reform Commission? It is a very interesting report. What it emphasises is not that we need a constitutional amendment, to put behind bars people charged with criminal offences, but that there is a series of alternatives available to tackle the difficulties being experienced, which are caused by people charged with committing further offences before they are brought to trial.
The Law Reform Commission emphasises that a principal problem in this area is the length of time it takes for trials to be heard and recommends that additional judges should be made available. I understand those appointments are being made in the next two to three weeks. The Law Reform Commission talks about aspects of our criminal procedures being cumbersome and productive of delay. We need to tackle that. The courts are currently suffering gridlock not only because of the absence of judges and judges being overworked in the whole panoply of the civil and criminal justice system but because of the cumbersome nature of our legal procedures, some of which are a throwback to the 19th century. Immediate reform of those procedures is required. A reduction in delay in the prosecution of offences would substantially limit and reduce the problems caused by people committing offences who are already charged with offences. Eliminating the revolving door system will end what we have witnessed in recent months. Cases have been highlighted where people released early from prison have during the course of the so-called temporary release committed other crimes.
I want to nail on the head a fallacy  that is abroad. The fallacy is that all the problems in this area will be resolved if only we repeal our bail laws and put behind bars all of those people who are being prosecuted for alleged offences.
Mr. Cullen Mr. Cullen
Mr. Cullen: Nobody suggested that.
Mr. Shatter Mr. Shatter
Mr. Shatter: The fallacy, which is a dangerous one, is that we should move away from the principle that people are innocent until proven guilty. Has anyone in the House looked at the official Garda statistics of the number of offences committed by people on bail? In 1983 there were 8,295 offences committed by people who were on bail. The Criminal Justice Act, 1984, sought to impose on the courts an obligation, where someone committed an offence on bail, to impose a consecutive sentence rather than a concurrent sentence. It was felt in the 1970s and in the 1980s that once a person was charged with one offence it was open to him to commit whatever further offences he wished until his case came to trial. Having, perhaps, secured some substantial financial security for the day of release from prison one could plead guilty to all charges and get a concurrent sentence. The 1984 Act required the imposition of consecutive sentences. In 1983, 8,500 offences were committed by people on bail. In 1994, according to the statistics, 4,416 offences were committed by people on bail. Approximately 4.5 per cent of the total known offences committed in 1994 were committed by people on bail. In 1983 approximately 8.5 per cent of the offences committed were committed by people on bail. Why are we now having hysteria about the bail issue? What we need to do is implement the other reforms to which I have referred. We need to ensure, as the Law Reform Commission says, that the courts make greater use of the 1984 Act. There has been a tendency for the courts in some of the recent court decisions delivered not to impose consecutive sentences when they should have done so. The Law Reform Commission say we should  legislate to stop that happening and it is right.
The bail issue should be taken further than the debates and comments and some of the asinine short quotes given recently for the sake of headlines by members of the Opposition Parties. I fully accept the view that a multi-faceted approach is required on this issue. I accept, as the statistics show, that crime is prevalent in some sections of the community more than in others.
I do not subscribe to the view that we should look into the social background and family circumstances of people who commit crime and say, “God help them, they could not help it given the circumstances in which they lived or were brought up”. It is time we took the clear view that people must exercise individual responsibility for their actions. People who resort to crime and attack and inflict appalling injury on elderly people in isolated areas in their homes late at night must take responsibility for their actions and accept the consequences when arrested and convicted. We should not make allowances for that type of behaviour. We need an efficient criminal justice system which allows those people to be brought to book.
In the context of the announcement by the Minister yesterday, there is a need to ensure that we have a more community oriented policing approach. It would be a good idea if Members and the Department of Justice looked at what happened in the United States over the past two years where cities which were racked by crime have been changed dramatically by a form of community policing in which police were taken out of their patrol cars and central police stations and small substations were set up in communities which have major crime problems.
Mr. Cullen Mr. Cullen
Mr. Cullen: New York is the best example.
Mr. Shatter Mr. Shatter
Mr. Shatter: There are good examples of this in many cities. Two years ago the Clinton administration was told that this innovation would not work but it has  proven to be dramatically successful. That is the sort of innovation we need but we are not discussing it.
In addition to modernising our police procedures and adopting the other proposals to which I referred it is time we codified our criminal law which is stretched through a labyrinthine series of Acts of this Parliament and Westminster which go back over 200 years. We do not have a modern code of criminal law. Rather we have a code of criminal law which is changed in a piecemeal fashion on an annual basis depending on the perceived crisis within the political world in a particular area. It is time the Department of Justice started putting together a modernised codified code of criminal law. If the Department lacks the resources to carry out this work it should employ the necessary experts to ensure it is done so that within the next 18 months we can bring before the House a code of criminal law which not only sets out the law but which updates the fines and other penalties which have long since lost touch with the reality of the pressures of the modern world and of crime in urban and rural communities.
Mr. Crowley Mr. Crowley
Mr. Crowley: I wish to refer to three specific issues — agriculture, social welfare and law and order. There is now greater confidence in the agricultural industry than at any time in the past. The increases in VAT refunds, reductions in PRSI and the other changes in the budget have been of benefit to people working in this industry. It is probably difficult to justify the sale of land for £4,000-£5,000 an acre but it is indicative of the confidence in the industry and the good job being done by the Minister, Deputy Yates. The relationship between the Minister and the farming organisations is unique and it can do nothing but good for the industry which can look forward with confidence to the future. I wish the Minister well.
Last year the Minister for Social Welfare was criticised day in, day out, particularly by members of Fianna Fáil,  for not giving adequate increases in social welfare and not spending more on education, agriculture and health. However, this year they said the Government had done a bad job because it spent too much money in the budget. It is a mystery how they can equate those two statements. I welcome in particular the increases in payments to the elderly who have been given their due reward for their contribution to the country. I also welcome the scheme for the unemployed which will give hope and confidence to those people who have been unemployed for three years.
One of the major topics of discussion today is law and order. An article in today's edition of The Irish Times states that it is difficult not to feel sympathy for the Minister who is reaping the whirlwind of her predecessors' neglect and shortsightedness. One need not say any more. Having listened to the remarks made by Deputy O'Donoghue over the past two or three weeks one would think that up to 14 months ago there were no crimes or murders committed and no people in jail. This kind of hypocrisy does not go down well with the public. It is wrong for any Opposition party to hype up an issue of such importance to everyone.
I agree that prisons may be too comfortable and people do not mind being sent back to them. It is time changes were introduced in this area so that prisoners pay the full price for their crimes. It is crazy deploying thousands of gardaí in the collection of unpaid fines for minor traffic offences when they could be doing the job they are expected to do, to fight crime.
We have heard about some of the shocking crimes committed by people on bail and it is evident that the bail laws need to be changed. The Garda must be given more power and the public must be given a greater say in this area. It seems to be very difficult to secure a conviction in the courts, the law seems to be more focused on the rights of the criminal. This is difficult to understand and we must consider giving the  Garda more power so that it will be easier for them to secure convictions. I am not talking about false convictions or anything like that. I am merely saying that they must be given some help and encouragement to secure convictions in cases where they know the person is guilty.
The Victim Support group, which is doing wonderful work, should be given greater help by the Government. I have no time for prisoners' rights groups but I have great time for the Victim Support group and if it was given more help and support we would all be better off.
Virtually every shop, supermarket and drapery in Dublin, Cork and other cities have to hire security men. It is sad that the owners of shops can no longer rely on the Garda to carry out this job. I am not blaming the Garda who are doing a tremendous job but we have failed those people by compelling them to provide their own security. This is wrong and it must be changed.
The Minister for Justice, who inherited all these problems, has carried out remarkable work over the past 12-14 months. The changes she announced yesterday, such as increasing the number of prison places, are a major step in the right direction. The Minister is doing a remarkable job when one takes into account the problems she inherited.
I would be wrong if I let this opportunity pass without paying tribute to the Garda Síochána, which has had some remarkable success stories. For example, it picked up culprits involved in a County Tipperary break-in a few hours later at Dublin port. We do not hear enough about these successes. As a rural Deputy, I would like to see grants made available to members of the Garda for building houses to live in rural areas. When gardaí live in a locality they have a greater awareness of what is going on there. This would be much more effective than what is happening at present.
I also feel strongly that the right to silence must be changed. I do not know of anyone with a clear conscience who would not answer any questions put to  them by a garda. If a person does not respond to questions put by a garda, it should be taken into account and added to whatever charges they may already face. We should pay more attention to those refusing to answer questions in custody. They should be able to answer if they have a clear conscience.
Deputy Quill spoke at length about law and order and fiscal rectitude. Fianna Fáil has also been talking about all that is wrong with our justice system. It was in Government long enough. Why did it not solve these problems or at least make an effort to do so? The current situation is not much worse then when Fianna Fáil was in power. Its crocodile tears should dry up.
Mr. Cullen Mr. Cullen
Mr. Cullen: It is interesting that the previous two Government speakers spent the past half an hour trying to shore up the Minister for Justice and promote the adding of some steel to her Department. It was also interesting to listen to Deputy Shatter. I remind both him and Deputy Crowley that it was the Minister for Justice who, on the public airwaves not long after she was appointed to office, made having an immediate referendum on the bail laws something akin to a pillar of what she wanted to achieve in her Department. It was not raised as an issue by this side in that instance, although we were aware of it since the Law Reform Commission was looking into the matter. The Minister felt she had found the Holy Grail and that she would deliver on it. However, the Government, in the absence of the Minister, cancelled the construction of Castlerea prison and the women's prison at Mountjoy. It is worth reminding the Government that it was the combination of those issues and a range of promised legislation by the Minister on which she failed to deliver that captured the mood of the public arena. When the Government's stated primary objectives were not beginning to be realised, questions rightly began to be raised.
I have been in this House for nearly ten years and over the past 12 months I  have never seen any Opposition spokesman on Justice contribute as much by way of legislation as Deputy O'Donoghue. His record speaks for itself. The Government has accepted his Private Members' Bills on two occasions and I commend it for that. However, that effort had to be made, given the Government's failures in Justice over the last 12 months. It is only after incredible pressure from the public that action is now beginning to be taken. It was the Minister's failure to deliver on the announcements she made that contributed greatly to the concern felt in the public domain.
When he was Opposition spokesperson for Finance, the current Minister for Health, Deputy Noonan said, "The Minister's Budget Statement clearly demonstrates again that we are living in a society which has been suffocated by a false consensus where creativity and initiative are covered by a thin veneer of political platitudes which mask fundamental disagreement”. How prophetic are those words. It is now clear the Minister was referring to the future position of Fine Gael in this Government.
It is extremely interesting that Fine Gael lectured when in Opposition on what it would do about fiscal policy, tax and PRSI reform and how it saw the collapse in the jobs market as central to those issues. However, it ceded the Department of Finance to the Labour Party when coming to Government because it learned from its past mistakes. Every time it held the reins of the Department, it failed objectly to deliver in that arena. On this occasion, it is happy to wash its hands of that Department in the hope that the blame will not be laid at its door for the fiscal policies being pursued. This is sad. Maybe it was wise of Fine Gael to take that approach.
To do anything else would have left it open to the same results it achieved in past Governments when it had control of that Department by substantially increasing spending and the national debt and doing little else. Fine Gael is part of a Government which is doing the  same but the only excuse it can offer on this occasions is that for the first time it does not control the Department of Finance, either in name or practice, despite being the largest party in Government. That has now led to those failed left wing socialist policies, akin to those followed by eastern European countries some years ago, of increasing public expenditure and borrowing at a time of sound economic growth, coupled with giving no return to the taxpayer.
When the Minister for Finance outlined his budget speech, he referred to three pillars which were the main objectives of the budget — to reward work, promote enterprise and strengthen social solidarity. He failed, however, to do anything concrete to bring them to fruition. Given the comments of trade union and employer representatives and various independent political commentators in the past week, as people have had time to consider the effects of the measures announced in the budget, the promise to reward work rings hollow.
Sleight of hand appears to be the hallmark of this three card trick Government, as I described it some time ago. It is worrying that it is attempting to hoodwink the public. One can only wonder if it possesses the ability to introduce any worthwhile measures.
The employees' PRSI allowance is to be increased from £50 to £80 per week. In other words, the first £80 of earned income will be exempt. At first sight this appears to be a positive move — in recent years high PRSI rates have contributed to our inability to secure employment growth — but the Minister went on to announce that the £140 income tax PRSI allowance was to be scrapped and the PRSI ceiling raised from £21,500 to £22,300, an increase of £800. The net effect will be negligible. How can the Fine Gael Party of all parties tolerate this nonsense? One can only conclude that the Government has little or no interest in tax reform given that there is to be no change in either the lower or higher tax rates and the tax bands are to be widened by a miserable  £1,000. The real tragedy is that it will cost employers, particularly small businesses, more to make these minuscule adjustments than they will receive in benefits.
When the increases in indirect taxation, on petrol and cigarettes, are taken into account we will all end up paying more. This will have a devastating effect on the labour force who were asked from 1987 onwards to accept that there was no choice but to include fiscal rectitude on the agenda because of the policies pursued by the Fine Gael led Government in the mid-1980s. The benefits began to be reaped in 1994 and 1995.
We should all be concerned about what we might face in two or three years' time as a result of the policies being pursued by the Government, the effect of which is being masked by the high growth rates and the economic boom, which we welcome. I — and others — have complained bitterly that it has failed to devise a forward looking fiscal policy to tackle the issues of public expenditure and tax reform. It is proceeding on an ad hoc and year on year basis. There is no vision. It will be left to whoever is in office in two or three years' time to make the necessary adjustments, as happened in 1987 when two of the principal players in the Government left office.
The standard rate of employers' PRSI is to be reduced from 12.2 per cent to 12 per cent. That is an extraordinary approach to tax reform. The lower rate is to be reduced from 9 per cent to 8.5 per cent and the lower rate band widened by £1,000, from £12,000 to £13,000. That negates the increase of 0.2 per cent.
The tax wedge has been the subject of discussion for many years with particular emphasis on the question of whether some body would be better off taking up low paid employment. I wish to broaden the debate by suggesting that there is a social welfare wedge. It has never ceased to astonish me that obtaining the medical card is considered akin to finding the Holy Grail. It has a  value way beyond its true worth. That is not to say it is not important or that some families do not have a genuine need for it, but until the tax and social welfare systems are integrated, it will not be made attractive for those on social welfare to take up low paid employment. One cannot suggest that there is a tax wedge only and concentrate on making marginal adjustments in the budget at the lower end of the scale.
That will not work. All one is doing with such adjustments is moving the goalposts of the tax wedge. When somebody earns over £13,000, the cost of PRSI jumps phenomenally so we are back to the same problem. It will be masked for a year or two by moving the goalposts but one ends up achieving nothing by making ring fence adjustments that are false in the first instance and which do not contribute to long-term planning. That is very sad. Only when the two systems are approached in an equal sense and when there is a marrying of the two at the lower end so that there is a smooth transition from one to the other will we begin to achieve the removal of the social welfare and tax wedges. However, the ring fence approaches in the budget will not achieve anything over a period of a few years.
The other offer from the Government is the proposal to pay £80 per week to employers who recruit somebody who has been unemployed for over three years. I can understand why one would want to do something such as that, why one would consider it a positive thing to do or believe that it can help. However, I have spoken to a number of employers about the proposal and there have been two responses. In the first place, an employer will only employ somebody if there is a real job available and if the person can contribute as a profit centre to the well-being of the company. The market is too competitive for employers to take on people in the hope that the subsidy will cover their costs while they need only make a contribution. Anybody who is employed in a company nowadays must be part of creating  enough profit for further reinvestment by the company in further expansion so that the company can compete and survive in the marketplace.
Employers have told me that companies in the past have tried these schemes for taking on the long-term unemployed. They have found that although they employ the person, the new employee knows in his or her heart and soul that the job is not a long-term prospect so they do not generate an allegiance or the real work ethic that is necessary within the company. Many of them end up, not through their own fault, causing more problems within the company because they have no real interest. They do not see any future or prospect of long-term employment; they know their job is heavily subsidised so they do not have the commitment. Employers, large and small, have told me that they will not base their decision to recruit somebody on the basis of an £80 per week subsidy but on purely competitive criteria which result in real jobs.
Another aspect of the scheme which astonished me is the fact that there is no requirement on an employer to pay at least the average industrial wage to secure the £80 per week. I would have thought that a minimum requirement on any employer who receives such a large subsidy for taking on somebody would be that the employer is obliged to pay the average industrial wage. In other words, the contribution from the employer would be at least greater than that of the State. Such a requirement would be logical. However, there does not appear to be any such requirement. If that is the case and if it is not changed the Government will be wrong. It will be wasting money.
If somebody gets into a company paying the average industrial wage, the prospect may exist, no matter how limited, of a future chance of real employment. However, the £80 could be seen by some employers as a means of taking on people and paying them £100 per week so that the employer's contribution is only £20 or £30 per week. It is  a good deal because if the person only spends their time sweeping up and doing odd jobs, at least the employer is getting something out of it and the State and everybody else is paying for it. Of course, the person who is taken on knows from the beginning that there is no long-term prospect in the company so their real interest simply does not exist, which is tragic. Many of these schemes — not all but some — contribute to the disappointment, lack of self-worth and hopelessness that many people feel when they seek real employment and are offered these jobs which, in reality, do not exist. Many of them feel they are pawns in a game to massage the employment figures.
I was in the House when the Minister of State, Deputy Gilmore, made his speech on the budget. It was an interesting speech which underpinned the Government's philosophy and certainly outlined what Deputy Gilmore believed to be the Government's philosophy. One sentence of his speech summed up the philosophy of Democratic Left and the philosophy of this Government. He said: “Extra disposable income does little to improve the quality of our lives”. It is an extraordinary statement. The view of Deputy Gilmore and Democratic Left and, I take it, the Government, is that the people do not have the ability to make decisions for themselves as to how to spend their income. The inference, of course, is that only the State has the capacity to make such decisions. It is an extraordinary statement and I was stunned by it.
Mr. Costello Mr. Costello
Mr. Costello: The Deputy will have to take it up with the Minister of State; he is a masochist.
Mr. Cullen Mr. Cullen
Mr. Cullen: It stopped me in my tracks. The Minister of State went on to say that if one gives people extra income they will have to spend it on private insurance schemes, private security and so forth. Why should people not have the right to make those  choices? Is the Minister of State saying that the State is the only body that can make those choices for everybody?
I am not surprised that such statements are emanating from Deputy Gilmore and Democratic Left although I am, perhaps, surprised that he put it in print. However, what really made me think is that this underpins the philosophy of the Government. This is the influence of the Democratic Left on fiscal policy. What that party believes in materialised in the budget. It encapsulates everything I oppose. It encapsulates everything that has collapsed in eastern Europe and shows the outdated, left wing, socialist philosophy — that has contributed nothing to any country except broken the backs of the people who lived in those countries — which still pervades Democratic Left today and which is the philosophy of the Government. “Extra disposable income does little to improve the quality of our lives" expresses more eloquently than I could, the philosophy of this Government.
We have seen with absolute clarity that the view of the Government is not to increase net take home pay, not to allow people to think for themselves and not to give people the ability to make decisions. Its view is the opposite — it says that the State is the only body that can provide the funds, make the decisions and know what is best for people. It is a little like the syndrome described in "Animal Farm" by George Orwell. It is extraordinary but we should be alert to it. This is the sort of nonsense that ruined the country ten years ago, even though Democratic Left was not part of it. During a binge in the mid-1980s Fine Gael and Labour decided to spend and borrow their way to heaven and as a result the country went bankrupt in 1987.
Mr. Carey Mr. Carey
Mr. Carey: The Deputy should start at the correct year.
Mr. Cullen Mr. Cullen
Mr. Cullen: I am starting at the correct year.
Mr. Carey Mr. Carey
 Mr. Carey: What about 1977?
Mr. Cullen Mr. Cullen
Mr. Cullen: I accept that the events of 1977 did not help and I did not agree with them. However, what Fine Gael suggested it would do to get into power at the beginning of the 1980s was unacceptable. The Labour Party destroyed the Fine Gael Party at that time. It is interesting that history is repeating itself, but on this occasion Fine Gael had the foresight not to allow itself be blamed for the Government's financial policies by allocating responsibility for the Department of Finance to the Labour Party. However, the public look to the Fine Gael Party, the largest party in Government, to maintain sanity.
I wish to make a point, with which I am sure Deputy Ferris will agree, to the Minister for Enterprise and Employment. I will not accept the downgrading of the south east region by the IDA. To have the effrontery to suggest that combining the south east and south west regions with a headquarters in Cork is an improvement, is to stand logic on its head. Cork will look after itself and will then look to the west. It has never looked to the east. There are two major components of the economy, the ports of Rosslare and Waterford, located in the south east region. The chambers of commerce and major industries in the region are flabbergasted at this decision. They will not accept it and the Minister for Enterprise and Employment, Deputy Bruton, must be made aware of that.
Mr. Ferris Mr. Ferris
Mr. Ferris: I wish to share time with Deputy Costello.
Acting Chairman (Mr. T. Foxe) Acting Chairman (Mr. T. Foxe)
Acting Chairman (Mr. T. Foxe): Is that agreed? Agreed.
Mr. Ferris Mr. Ferris
Mr. Ferris: The only point in Deputy Cullen's speech with which I could agree is his final one. There is general consensus in the south east region on this matter. Those in the western part of south Tipperary, in particular, feel neglected by the proposed revision. The  Minister informed us that it is not a ministerial decision and he has been requested to ask the IDA to explain its decision. South Tipperary, Wexford and Waterford would have a better chance of being serviced from Dublin than from Cork.
We are proud that for the first time in the history of the State the Minister for Finance is a member of the Labour Party. He is an excellent Minister, one of the best, and his balanced budget will retain a strict control on public finances and out-perform budgets in recent years. I am sure, because of the decisions he inherited from his predecessor, he had little input to his first budget. However, this budget was stamped with expertise, caution and, as the Tánaiste requested, was one without gimmicks about which the media could have a field day. It was planned to take account of what is happening in the economy. However, irrespective of the type of budget it will present difficulties for the Opposition and some of their comments were amusing.
The increase in public expenditure announced in the Estimates last year proved that we have had the lowest level of public expenditure for many years. Government expenditure as a percentage of GDP is among the lowest in Europe and is lower than that which pertained when the Progressive Democrat Party was in Government in 1991 and 1992. As Deputy Cullen left that party to join Fianna Fáil it is difficult to know from where he gets his ideology. What annoys most Members of the Opposition is that these figures were achieved while the standard of services provided by the State were improved.
Of course, disposable income is important for those who have it and for those who aspire to have more of it, but in controlling public expenditure under the Maastricht guidelines it is imperative that the State not only regulates the economy but provides for the underprivileged and those on the margins. The Labour Party is proud of its performance in the Education portfolio. The State must be involved in areas  such as health services, housing and local authority matters. Those services have been improved and are essential for an acceptable standard of living. While the Opposition's frustration is understandable, it is pointless achieving record levels of growth if it cannot be used to improve essential services, particularly for senior citizens.
As the 1994 labour survey indicates, we have at last broken free of the cycle of growth without employment. Last year the IDA produced figures of approximately 40,000 new jobs and the latest predictions indicate this trend will continue for the next two years. The number of people entering our labour force each year is higher than in any other European country. In the past the economy has had to grow for employment levels to even remain static. However, we accept that the level of long-term unemployment remains unacceptably high. There is a cancer of long-term unemployment in my constituency, particularly in my home town. We recently lost a US service industry which exacerbated the problem. Areas where advance factories are located but which have not benefited from the economic boom should be given preference by the IDA when industry is locating here.
The Government is concerned about long-term unemployment and has correctly identified that employers respond to incentives. It is amazing that any Member should claim that employers do not welcome incentives. The Government expanded the back-to-work allowance scheme and there has been a further reduction in employers' PRSI, as the Opposition requested.
It has also increased the PRSI allowances for employees in a measure that is unlikely to be called anything but a form of tax reform — any tax reform introduced by either Fianna Fáil or the Progressive Democrats made no money available to the lower paid in particular, nor did it address any of the poverty traps referred to by Deputy Cullen. The  decision to allow the long-term unemployed to retain some of their secondary benefits is essential. The medical card can be retained for three years after taking up a job and I am pleased that the Minister for Health, Deputy Michael Noonan, has improved the guidelines for medical cards and announced them in the House in reply to a question I asked yesterday. There is a continuation of understanding by the Government of the essentials if we are to make sure there are no disincentives to returning to the workplace. It is also important that dependent allowances paid to social welfare recipients will continue to be paid for a number of weeks after they take up a job. All these measures will prove effective because they have been identified as being necessary by people in the Combat Poverty Agency and the Conference of Religious of Ireland etc.
For years we have had evidence that educational achievements are central to the employment prospects of individuals. I am delighted that the vocational training opportunities scheme has been expanded by another 1,000 places in conjunction with the continued priority assigned to schools in disadvantaged areas by the Minister for Education, Deputy Niamh Bhreathnach. We are getting to grips with this problem in a way that was not done before.
Another bar to people entering the workplace, which we have acted on, is lack of work experience. The community employment programme, which is often denigrated by people in Opposition and by trade unionists on the ground, has played an important role in getting people off the unemployment register and giving them experience in the workplace where they can have a level of camaraderie with people and feel they are doing something in their community which is of benefit. The number of places in this category has been increased by 1,000 and the people taking part in community employment schemes are treated as properly employed people because class A contributions are applied to them. This  means that when the scheme is completed in a year, or two or three years in some instances, they can go back into benefit and not just sign for the dole, go into community employment, and back onto the dole again. This was frustrating and also a disincentive because they lost some of their benefits by taking part in employment schemes and subsequently were treated as long-term unemployed.
I commend the number of small businesses that have been involved in trying to ensure that people get employment. Last year was a particularly good year. Such businesses will have their tax bills reduced this year by almost £4,000 under a proposal in the budget. The battle against long-term unemployment will not be won in one budget, but I am happy that we have made a start. Neither have we succumbed to the notion that people must be penalised to encourage them to work. Some commentators, particularly on the right, have suggested that we should threaten withdrawal of benefits to get people back to work. My experience as a public representative is to the contrary, that people will work for a very small amount of money over and above the social welfare limits if they are given the opportunity and privilege of working. The British Tory Party in particular believes that people will only look for work if they are penalised or threatened with withdrawal of their allowances, but we have adopted a different approach.
The increased benefits are important. The Minister for Social Welfare was criticised by the Opposition because he fought, as a Cabinet Minister, to ensure that he got as much as possible for people at the margins. I have no doubt that the people he took into account will appreciate the fact that he has given an increase of 3 per cent in general payments in particular areas over and above the rate of inflation. The people who will benefit from this are the people we should be concerned about. We should not worry about calls for public expenditure control from members of the Opposition who then, in Private Members' motions and on every  county council, urban council and corporation in the country call for additional expenditure. We have a problem, but the Opposition has a bigger problem than anybody else because of its attitude to public expenditure.
I commened the Minister for Defence. In my constituency he has been subject to the criticism that the voluntary retirement package for the Defence Forces will be the death-knell of the Army. I am glad the Minister confirmed this morning that this voluntary redundancy package will be of benefit to older serving members of the Defence Forces and it includes a scheme of recruitment. This should dispel any doubts that the Government is committed to having a new, younger Defence Force, properly equipped and retaining the Army barracks in Clonmel and other areas. I hope the people who purport to represent the Army and the serving members of the Defence Forces will realise that we are serious in what we are trying to do.
I will not take up much more time because I must share with my colleague, Deputy Costello, but there are many other things I would like to say, particularly about the performance of the Opposition. The record will show that on this matter, the Opposition are on a twin-track approach — they complain about spending and then they want more of it.
Mr. Costello Mr. Costello
Mr. Costello: I welcome the opportunity to speak in this debate. I congratulate my colleague, the Minister for Finance, on delivering a budget which is fair and balanced. The focus of the budget is on long-term unemployment in terms of extra spending and in broader terms also. The Opposition have not appreciated this. They are being hypocritical. In the past they castigated the Government for not doing enough about long-term unemployment, but now that there is a central message in the budget about long-term unemployment they are not prepared to see it.
 The proposals on long-term unemployment constitute a firm and focused strategy. In the first instance, there are incentives to employers to take on long-term unemployed people. It is trite to say that incentives are not needed. Who will employ somebody who has been unemployed for three years or more when they can take on somebody who has just come out of school or college? They do need an incentive. We must winkle out and reduce the large numbers of long-term unemployed, and the subsidy of £80 is an essential incentive. We could go down the road of looking for a pro rata return from the employer in terms of the remuneration given to that employee, and I would like to see a development in that direction. The reduction of employers' PRSI in the case of the low paid and in employees' PRSI will lead to an increase in the number of people employed.
Secondary benefits may be retained for three years. People who have been out of work for over three years will retain their medical cards for a further three years after obtaining employment. This is an extremely important incentive because a medical card is a major financial bonus for those working and who have families. The reduction in PRSI is an added bonus.
The budget focuses on young people who are at risk of drifting into long-term unemployment. After six month's unemployment they are to be given a five weeks' course during which their situation will be reassessed. Both long-term unemployment and the risk of drifting into such unemployment are being tackled.
The local employment services, which were introduced in last year's budget, are extremely important. They are now coming on stream and providing a coal face approach and direct intervention between those on the long-term unemployment lists and the business community. This is one of the critical ways of dealing with long-term unemployment.
 The 1,000 permanent jobs in the community employment schemes have been sought by the 40,000 people who have been on them. They wanted recognition to be given to the schemes and jobs to result from them. The 1,000 permanent jobs are the first step in that direction. The social insurance benefits which are to be given to people when they complete schemes will be a tremendous bonus to them.
We must consider the budget in the prevailing economic context. Some ten years ago people would have been laughed at if they said Ireland would be preparing to enter the 21st century with one of the most buoyant economies in Europe. However, this is the enviable situation in which we now find ourselves and this is due in no small measure to the presence of the Labour Party in Government since 1992. Any comments on the budget which do not recognise the Government's obligation to introduce a budget which would not undermine our current economic situation are devoid of credibility.
This budget reaffirms all for which the Government stands. It reaffirms the three main objectives of last year's budget and is, therefore, continuing that direction. These objectives are to reward work, promote enterprise and strengthen social solidarity. These are hardly anti-business and anti-wealth creation principles, as Deputy McCreevy claims. The Government is and always has been pro-employment. The budget is an illustration of its ongoing commitment to this principle. The Minister for Finance delivered a budget which was aimed at underpinning the distribution of the benefits of economic growth, notwithstanding the criticism the Opposition has laid at the door of the Government over the past week.
As a result of sound financial management, the economy has the confidence of foreign and domestic investment. During 1995 45,000 new jobs were created. Some four times more jobs have been created over the past five years than over the preceding 30 years.  Employment has grown four times faster in Ireland than in the rest of the EU in recent years.
The Government has also arrested the level of public spending, which absorbs the benefits of growth, thus ensuring that these benefits are instead distributed throughout society. The 2.5 per cent real increase in spending for 1996 contrasts with an annual average increase of 5.5 per cent over the preceding five years. During the Fianna Fáil-Progressive Democrats coalition, public spending increased annually by approximately 6.5 per cent. Deputy Cullen might have something to say about this, having crossed the divide between the two parties. The budget is hardly a basis for saying the Government was remiss because the figures are exceptionally good.
The budget is pro-business and pro-employment. It is an important component of the Government's ongoing approach of encouraging business, generating employment and tackling unemployment, particularly long-term unemployment. The Minister for Finance included measures in the budget designed to address all these important issues. By improving the benefits of work and easing the transition from unemployment to work, more people will be encouraged to accept employment.
The central tenet of the budget is tackling long-term unemployment. By supporting employers who recruit people who have been unemployed for a long time and by easing the transition back to work for those on social welfare, the Government aims to ensure that the benefits of our recent economic buoyancy are distributed widely throughout society. In rewarding those at work, the Minister has increased the gains from working. The increase in the employee PRSI exemption limit from £50 to £80 per week is an integral part of our pro-employment strategy. The new £80 per week recruitment subsidy will encourage employers to take on people who  have been unemployed for a considerable time. Measures such as the retention of child benefit allowance for 13 weeks and of medical cards for three years by unemployed people after they take up work will be enormously helpful in tackling long-term unemployment.
All these measures are aimed at impacting on this pressing problem. Ireland has one of the most severe long-term unemployment problems in Europe and this needs special intervention, as stated in the conclusion of the report of the task force on long-term unemployment, which is based on the proposals of the National Economic and Social Forum, which gave rise to the measures in the budget and the local employment service which was introduced in the previous budget.
These measures also form a major component of the Minister's promotion of social solidarity. This side of the House does not support the promotion of purely individualistic principles, which are supported by many on the Opposition benches. We believe in sharing the fruits of economic growth throughout society and not just among a chosen few, as the Progressive Democrats wish us to do.
The Progressive Democrats would have us believe that the budget is a failure because it did not include its policy of large scale tax cuts. However, they failed to inform the public that such cuts would have to be paid for by wholesale spending cuts. This is the type of society they would inflict on the people, one based on inequity and élitism, where the few are rewarded at the cost of the many. This is nothing short of a recipe for social suicide. To go down this path would lead to social disintegration and increasing greed and naked individualism. As the Minister of State, Deputy Burton, pointed out, it is natural for people to wish for lower taxes. However, this should not be pursued at any cost. The Labour Party is committed to ensuring that all members of society share in the fruits of the economic buoyancy which Ireland has enjoyed in recent times.  The Government has succeeded where many Governments failed miserably. I include in this category the Fianna Fáil-Progressive Democrats coalition. Economic management under the Minister for Finance is not only exemplary but unprecedented in recent times and this is an embarrassment to Fianna Fáil and the Progressive Democrats.
The Government created 45,000 new jobs in 1995. In recent years employment has increased four times faster in Ireland than in the rest of the EU. Mortgage and inflation rates are at an historic low. The Government has managed to gain control over public spending, which absorbs the benefits of growth. The real increase in current spending in 1996 will be only 2.5 per cent. This contrasts with average annual increases of 6.5 per cent during the Fianna Fáil-Progressive Democrats coalition. Notwithstanding restraining growth in expenditure, the Government introduced free third level education, approved the largest programme of capital spending in health and introduced a comprehensive programme for women's health. The Minister for Justice announced measures yesterday concerning the expenditure on prisons as well as other spending in the Justice domain.
This budget is well balanced and fair, its overall aim is to tackle the problem of long-term unemployment while rewarding those at work. Another objective is to promote social solidarity while recognising the individual input of every citizen. The criticism levelled at the Government in general and the Minister Deputy Quinn in particular rings hollow, particularly when it is juxtapositioned with the achievements of the Government and the budget the Minister has presented. Ireland has a steady economy which is currently one of the best in Europe. We have low inflation and mortgage rates and have introduced measures to deal with the outstanding problem of long-term  unemployment, which no Government in the past seriously addressed.
This is the first time the long-term unemployment problem has been the main focus of a budget. I am delighted to support the measures announced in the budget to tackle it. They arose out of consultations with the National Economic and Social Forum, which represents the social partners, representatives of the Government and Opposition parties as well as various organisations representing the unemployed, women, travellers and the disabled — all the people who had been consigned to the long-term unemployment heap.
These measures will make a substantial dent this year in the number of people who are long-term unemployed. I look forward to further proposals from the National Economic and Social Forum in the coming year and I hope the Minister, Deputy Quinn, will include them in next year's budget.
Mr. Browne (Wexford) Mr. Browne (Wexford)
Mr. Browne (Wexford): I wish to share my time withe Deputy Sargent.
Acting Chairman (Mr. McGrath) Acting Chairman (Mr. McGrath)
Acting Chairman (Mr. McGrath): Is that agreed? Agreed.
Mr. Browne (Wexford) Mr. Browne (Wexford)
Mr. Browne (Wexford): I listened with interest to the various contributions from Deputies this morning, particularly Members from the Government benches who are doing their utmost to defend a budget which has done little for any section of the community.
Listening to the Minister's budget speech last week, we were not surprised because for three weeks prior to budget day there were inspired leaks from the three Government parties, all of whom were trying to claim the high ground. Democratic Left got credit for this, Labour got credit for that and Fine Gael seemed to get very little credit for the measures introduced in the budget. The two parties of the left appeared to be stealing what Fine Gael perceived to be the good news.
Government parties trying to upstage each other do not fool the public  which is discerning, well educated and capable of assessing measures announced in a budget. Everybody knows that the country's finances are in a reasonably good condition. As a result people expected the Minister to introduce a positive budget which would include measures to reform the tax system, generous social welfare increases and an onslaught on the problem of unemployment. Many people looked forward to changes in the PRSI system as well as to incentives to help employers create more jobs and get people back to work. Unfortunately, this budget cannot be described as radical or of major benefit to any section of the community. It contains some welcome measures but in general it has done little to address any of the problems currently facing the country.
Crime is one of our major problems but we cannot over-hype it because we may generate further fear in our communities. I welcome some of the measures announced by the Minister for Justice yesterday but I become concerned when I hear about measures involving additional appointments at the top level of an organisation. If there is a problem in the health service, for example, additional administrators, chief executives or nursing officers are appointed in an effort to deal with it. The measure announced by the Minister for Justice yesterday involving the appointment of additional assistant commissioners will probably result in additional chief superintendents and superintendents being appointed.
I am a little cynical of that whole exercise because it will make our police force top heavy and it will not create one extra garda vacancy in rural areas. Various reports to the present and previous Ministers for Justice indicate that what is needed to address the problem of crime is more gardaí on the beat in our communities and more gardaí working with young people and various organisations. In that way they can keep in touch with the people in their communities and allay the fears, particularly of those living in rural communities.
 I appreciate the Minister is trying to reorganise the Force but I cannot understand how the appointment of additional assistant commissioners will do anything to allay the fears of people living in rural communities. The Minister must seriously examine how the Garda operates, the number of additional gardaí required to deal with this problem and how those who are doing less meaningful work can be redeployed in the community. It is not good enough to use gardaí to serve summonses on people who do not have dog licences when they could be engaged in far more important work.
The lack of action in regard to the building of Castlerea prison has been highlighted over the years. One could almost describe Castlerea as a lego prison. It is being built bit by bit just as children playing with lego make toys bit by bit. The wall of Castlerea prison was built two years ago and prison spaces are now to be provided, according to the Minister's announcement yesterday. Perhaps in a few years, another part of the prison will be built. Eventually we may have a prison in Castlerea but people are not willing to wait another two or three years to have it built.
There are many large building contractors both here and in the UK with whom the Minister could enter into negotiations to have this prison built and leased to the Department of Justice over a number of years. Such a system has operated in other Government Departments and it is common in other EU countries. In that way. Castlerea prison could be built within the next year or 18 months and I am sure there is sufficient ingenuity in the Department of Justice to negotiate such a contract thereby enabling the building of this prison go ahead as quickly as possible.
The announcement in the budget of tax relief to enable people over the age of 65 purchase an alarm indicates how out of touch this Government is with the real Ireland. If the problems facing old people living in rural communities were not so serious, this measure could be described as the joke of the year.  However, 95 per cent of old age pensioners will not be able to avail of the tax relief announced in the budget because they are not in the tax net. It is hard to believe that not one member of Cabinet was prepared to question this proposal when the Taoiseach and his 14 Cabinet Ministers discussed the budget on the eve of budget day. This is a cynical exercise at the expense of old age pensioners. It is farcical that three to four days later the Minister for Social Welfare should advertise in all the weekend newspapers requesting community groups and organisations to put forward ideas on a proper security system for old age pensioners. In many towns and villages there are already security systems in operation.
In Enniscorthy for the past 20 years they have a simple alarm system which works very well and probably does not cost more than £100 to install. Recently I visited an old age pensioner near my home who has had the simple bell alarm system installed by the local community services council. If she is in the kitchen, sitting room or bedroom she can ring the bell which tingles in the next door neighbour's house and the people there can come immediately to her assistance. The Minister for Social Welfare could have asked any community services council how its system operated without going to the expense of advertising in the newspapers. Usually when a task force or review committee is set up, there is a long lead in time before action is taken by the Department. This badly thought out exercise is very cynical and shows how out of touch the Government is with the general public.
This year's 3 per cent increase in social welfare is certainly better than the 2.5 per cent derisory increase last year, the lowest for 30 years. One would expect at a time of high growth, low inflation and low interest rates — buoyant times as described by the Minister for Finance — that widows, pensioners and other social welfare recipients would be better looked after. The 3 per cent increase is not 3 per cent in real  terms if one takes into account that the Government is already talking about an increase in ESB charges and the TV licence fee. As Deputies know, if social welfare payments increase, local authority rents increase also. By the time social welfare recipients get the increase next June, the 3 per cent will practically be written off and they will have no increase in real terms.
During the middle to late 1980s and the early 1990s people in this category were told they would have to make sacrifices because of the Government's decision to balance the books to create a buoyant economy and that things would get better when the good times come. I listened to Deputies on the far side saying our economy is the best in Europe. We may have the best economy in Europe, but what does that mean? If we have the best economy in Europe, social welfare recipients should get higher increases, there should be greater incentives for job creation and better work incentives right across the board. This Government obviously does not believe in that philosophy, given that this is a “give a little, take a little” budget. There is nothing radical in it that will change the direction in which we are going.
Many of the 250,000 people who are unemployed have been unemployed for many years. The Government introduced an £80 employment subsidy which I welcome but it must be strictly monitored. In the past a certain number of employers abused the subsidy system. They laid people off who had been in employment with them long-term, replaced them with young people for whom they got a subsidy, and when the two year or three year period was up they were let go and others were employed. The subsidies paid to employers, to employ young people or those who have been unemployed for three years must be strictly monitored. It is not good enough that an employer should decide to let someone go and then three months later recruit a new employee for whom he will receive an £80 subsidy. There should be strict  monitoring of employers availing of this scheme so that the number employed at the end of January in one year will have to be static for the firm to be eligible for a subsidy for new staff.
The IDA has shown no interest in creating jobs in County Wexford. Daily I read denials that the IDA south east region will be amalgamated with the south west region, although I have had the amalgamation confirmed by my investigation. If this continues the south east region will be totally isolated and written off by the IDA. This is an outrageous decision by IDA management with the support of the Minister. It may put one or two persons in the office in Waterford but there will be no one capable of making a definite decision on industries in Wexford, Kilkenny, Carlow and Waterford. That is an issue I will continue to raise until we in County Wexford get satisfaction from the IDA.
The budget is not inspiring and will not do anything for the thousands who are unemployed or on social welfare. The Minister for Finance, Deputy Quinn, had a tremendous opportunity, when one considers the state the finances were in, to change direction in those areas but he has failed to do that. The people will have to wait patiently until Fianna Fáil is returned to Government at the next election to battle on their behalf.
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: Patience, that is the key — Fianna Fáil will have a long time to wait.
Mr. Sargent Mr. Sargent
Mr. Sargent: Ba mhaith liom buíochas a ghabháil leis an Teachta de Brún as a chuid ama a roinnt.
Bhí mise ag súil go mór leis an gcáinaisnéis seo. Tá brón orm nach féidir liom a bheith chomh dóchasach anois agus a bhí mé roimh an cháinaisnéis. Tá an dóchas ídithe cuid mhór mura bhfuil sé scriosta ar fad. Bhí anseans ag an Rialtas cáinaisnéis réabhlóideach agus lán de nua-smaointe a thabhairt isteach a bheadh in ann dul i ngleic leis na fadhbanna, go mór mhór  na fadhbanna dífhostaíochta atá as cuimse a gcomparáid le méid na tíre.
Those signing on the dole and available for work awaited the budget with great expectation. Following last year's budget when the Government declared that children would benefit from a system of revised allowances, a move heralded as an interim step towards a full guaranteed basic income for adults and children, many expected this budget to further develop the idea. Unfortunately that did not happen. It was reasonable to expect that something along those lines would be developed especially as the ESRI analysed and reported on the feasibility of a completely revised scheme of support which the guaranteed basic income scheme represents. That was before there was any mention of shifting taxation from labour to finite resources, which must occur if the incentive to work is to be maintained and increased.
It was reasonable for people to await the budget with great expectation when we consider the individual policies of the Government parties. I took great interest in Fine Gael policy when that party espoused the guaranteed basic income scheme and saw it as a feasible and timely change in our economic support systems. Democratic Left continues, at least in the back rooms, to espouse such a policy. Leading members of the Labour Party attended conferences on this matter at which I was also present and have shown great interest in such a concept. I am baffled that nothing in the budget reflects the vision, imagination or declared policies of the parties.
When will the Government realise that society is changing rapidly? GNP based economics benefit the few and many are left high and dry, unable to benefit from the so called “good” indicators. We do not have an indigenous enterprising society but depend on transnational corporations, which are reducing their workforces worldwide, to play an important role in providing employment. Much work is left undone as it would not pay anyone to do it and  people do not have time to do it on a voluntary basis. Many children are neglected — I refer to those “latchkey” children who come home from school and fend for themselves until their parents come home from work. Many elderly people live alone and are vulnerable to horrific attacks by ruthless criminals. The urban drift continues unabated and people in rural areas are often lonely and isolated. All these issues can be related to the economic policy we pursue.
Dependency on private transport contributes to the imbalance in the balance of payments and to the fact that public transport is not viable. The low usage of public transport increases the risk of attack on drivers. Long-term unemployment places unimaginable strains on relationships as was highlighted in the recent divorce debate. Desperation silences concern about many international moral dilemmas. The arms trade provides employment but sales have reduced by half. How will the Minister for Foreign Affairs respond when our EU partners call for increased arm sales to boost their employment figures? Lack of security of income resulting from short-term insecure work is becoming commonplace. We have a wasteful consumer society. Disposable goods are bought in preference to ones that last because they are cheaper. People do not insulate their homes and this results in heat loss and waste.
Every Member is spared the desolation the Government failed to address in the budget. I did not seek a rise and I was surprised to read about it on the back page of the Irish Independent. The Minister did not mention it in the House.
Mr. Broughan Mr. Broughan
Mr. Broughan: Dublin Deputies did not get a rise.
Mr. Sargent Mr. Sargent
Mr. Sargent: I stated that it was a general rise. Neither I nor my party are prepared to sentence the unemployed to a Government economic regime that flies  the flag of schemes, incentives and concern while it and its Progressive Democrat-Fianna Fáil look-a-likes know that all it is prepared to do is minimally reduce the unemployment figures in advance of the next inevitable recession.
I hoped this Government would rise to the vision and challenge of revising the rights of citizens. Our social welfare system is an amended form of the English poor law system from famine times. We must face up to the need for radical change such as the guaranteed income scheme would bring about. I agree it will not be a panacea until the tax burden is shifted from labour and part-time work is afforded the statutory protection given to traditional full-time work. More and more people are forced to take up part-time employment. Sometimes it is a suitable form of employment, particularly for those rearing a family.
In the Netherlands, Finland and Germany the guaranteed basic income is known as citizen's dividend or citizen's income. In Finland a study found it to be revenue neutral. Such a concept could be introduced quickly and would revolutionise our perception of ourselves and our fellow citizens. Unlike the dole, with a guaranteed basic income the unemployed person is free to work. As was stated in a recent issue of The Big Issues magazine what the unemployed need is a hand up not a hand out. It is a right and not charitable assistance. It would replace the tax allowance for those in employment and the bulging plethora of benefits which continue to confuse the unemployed. The battle lines between those who are overworked and overtaxed and the unemployed, poverty stricken dole claimants could be erased through such a scheme that would reveal the real gremlins in our economy.
There is a failure to shift tax from plentiful resources, such as human labour, to reduce the working week, fix minimum wages, particularly for less attractive work, to protect the rights of part-time and seasonal workers, and to renegotiate the chronic debt — £10,000  is owed by the Government for every man, woman and child. This budget leaves in place the fundamentals of a divided society. It concentrates power in the hands of an authoritarian State apparatus which trickles down a few pounds here and a few pence there. No amount of tinkering with the social welfare system will stop its affront to the dignity of those who have recourse to it, particularly in its means tested elements. Only a commitment to guaranteed basic income will assure people that their dignity, in employment, sickness and old age, is respected by the State.
If this is the Minister for Social Welfare's budget, as many Fine Gael backbenchers say it is, it falls short of an achievement worth celebrating. It falls short of replacing the intrusive social welfare assistance system and the tottering social insurance system with a single integrative guaranteed basic income for those who constitute the fabric of our society. That is a move with which I expected Deputy De Rossa would agree. This is a budget that will keep the information industry occupied and the poor atomised, individuated, incohesive and confused.
This is a technically written, politically multi-faceted budget, which should be welcomed, but its lack of vision is unfortunate in that it offers no great hope. The budget fails to tackle the root causes of division and strife in society. It fails to tackle centralisation — it adds to it — and it fails to simplify the State's services — it creates further layers of complexity. Post offices are now seen as dole offices and very often social welfare offices are demeaning. The budget fails to recognise that the State should have a certain humility as well as responsibility. In that regard it is important to recall the comments about the awful measure to encourage people to install alarms in their houses when they are so poor that they are not even in the tax net.
I wonder if any farmer was consulted about the number of tomato growers who will be unemployed and left on the  human scrapheap as a result of our unwillingness to help, as the Belgians have done, in terms of the exchange rate debacle with the Spaniards. Will the Government lay down the law to ensure banks help rather than hinder small and medium enterprise who, according to the Small Firms Association, even though they provide much employment, get a much tougher deal than the big operators?
The scale of the challenge facing Irish society is not appreciated. Almost one-third of the population lives below the poverty line. Based on the labour force survey, if unemployment is to be eliminated by the year 2000 we need a net gain of 412,000 on the present number of jobs available. Job numbers must therefore increase by 33 per cent in the next four years if unemployment is to be eliminated. This budget predicts that jobs will increase by 31,000 this year, and the Government is boasting about that. A more radical response is necessary.
Minister of State at the Department of Agriculture, Food and Forestry (Mr. Deenihan) Jimmy Deenihan
Minister of State at the Department of Agriculture, Food and Forestry (Mr. Deenihan): I wish to share my time with Deputy Broughan.
Acting Chairman Acting Chairman
Acting Chairman: Is that agreed? Agreed.
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: In the past week I was amused by the contradictory statements from a number of speakers, particularly in the Fianna Fáil Party. Depending on whether they are addressing the Dublin Chamber of Commerce, speaking to the Business and Finance magazine or a community group in Ballymun, their attitude to the budget varies. On the one hand they say the Government is spending too much money while on the other it is not spending enough on social welfare, health, education and so on. I would like Deputy O'Dea, an honest, straightforward man, to spell out clearly where Fianna Fáil stands in terms of public spending. As his leader Deputy Ahern said, we have identified savings in many areas, but when asked to spell  them out he said that would be a hornet's nest. People will want to know before the next election exactly where Fianna Fáil stands on his issue.
Mr. O'Dea Mr. O'Dea
Mr. O'Dea: They will be told.
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: We are aware of the Progressive Democrats stance on the issue — it would give no social welfare.
As a person who has played on teams all my life, I believe that this three-party Government is the best team ever put together in politics. They are very cohesive, play very well together and are never ruffled by the Opposition. In sport you listen to your opposition ranting and raving and you come back at them with hard policies. That is what this Government is succeeding in doing. I compliment the captain and his two vice-captains on this very well balanced budget.
Mr. O'Dea Mr. O'Dea
Mr. O'Dea: Which one is the captain?
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: The maintenance of low inflation and low interest rates is the cornerstone of the Government's policy. Mortgage rates are at their lowest sustained level for almost 30 years, which is a major achievement, and short-term interest rates are at their lowest levels for 20 years. If, for example, mortgage rates were at 12 per cent, as they were in January 1991 when the Fianna Fáil-Progressive Democrats Government was in power, the cost of a £50,000 mortgage would be £2,000 per annum or £38 per week more expensive that it is today. Such low rates are of real benefit to taxpayers and outweigh any tax relief contemplated.
Inflation was 2.5 per cent in 1995 while the EU average for the past five years was 4.1 per cent. Inflation is expected to remain at about 2.25 per cent for 1996. Low inflation and low interest rates provide a platform for economic growth. The economy grew by 7.75 per cent last year, the highest in Europe. The EU average has been 1.5 per cent per annum during the past five  years. It is expected that GDP will increase by 5.7 per cent during 1996, well ahead of the EU average. The Irish economy has grown at a faster rate than the economy of any other OECD country. Per capita consumption has increased by 11 per cent, twice that of our fellow EU citizens, in the last five years.
Let us analyse the fruits of our economic growth. As a result of sound financial management the economy has the confidence of foreign and domestic investors. As I am sure the Deputy is aware, people who come here to consider opportunities for investment are very impressed with the way we are handling our financial affairs. When I was in Opposition I always pointed out the positive indicators in the economy, but the present Opposition has not the generosity to accept that the economy is going well. While it is the Opposition's duty to identify weaknesses in the economy, its attitude that everything the Government does is wrong is unacceptable. I would like to hear a more positive approach from Deputy O'Dea today.
As a result of sound financial management of the Irish economy, foreign and domestic investors have confidence in it. During 1995, 45,000 jobs were created. Four times more jobs were created during the past five years than during the preceding 30 years. I recognise Fianna Fáil's contribution to that achievement and the contribution of the Progressive Democrats and Labour when in power with it. We also made a substantial contribution to it last year. Employment has grown four times faster in Ireland than in other EU countries in recent years. The Government has arrested the level of public spending which absorbs the benefit of growth and statistics are proof of that achievement. The real increase in public spending in 1996 will be 2.5 per cent which contrasts with an annual average of 5.5 per cent during the proceeding five years.
During the Fianna Fáil-Progressive Democrats coalition public spending  grew annually by approximately 6.5 per cent in real terms. While succeeding in controlling public spending we were able to introduce free third level fees for the first time. That proposal was promised by Fianna Fáil before the last election and Deputy Brennan presented a paper on it, but that party did not deliver. We, together with the Labour Party, have delivered on it.
We have also approved the largest programme ever of capital spending in the health area. Secured through investment in education the highest numbers of pupils ever now remain in school until leaving certificate level. We have also introduced for the first time a comprehensive programme for women's health.
In the budget we introduced a cohesive plan targeted at releasing people from long-term unemployment to which I am sure nobody would object. It is cynical to hear people question the feasibility of spending such a large sum on releasing people from the trap of unemployment. I welcome the proposals in the budget to break the vicious circle of unemployment. I hope these measures will enable some of the unemployed to get back into the workforce.
As a result of the budget, a further 18,000 people will be taken out of the tax net. That measure will benefit the lower paid in particular and the majority of taxpayers will pay less tax.
Overall, the budget is a comprehensive effort by the Government to address a multitude of problems which we are tackling in a positive way.
In September 1995 our unemployment rate was 12.9 per cent compared with an average 10.6 per cent for the EU as a whole, a difference of more than 2 per cent. Given that the gap in unemployment figures between Ireland and the EU in 1992 was 6.1 per cent, we are winning the battle and, hopefully, we can sustain this effort.
I wish to deal with the agri-food sector which falls within my area of responsibility. The budget has been framed in a way that improves work  incentives for the long-term unemployed and promotes enterprise and the competitiveness of indigenous industries. There has been considerable growth in the economy in recent years but long-term unemployment has remained at unacceptably high levels. The budget measures aimed at improving the work incentives for the unemployed will have an impact on the uptake of employment opportunities as they arise. The measures that provide for the retention of the medical card, the increase in the threshold of the family income supplement as well as the retention of the child dependant allowance will make a considerable contribution to job take up in rural areas, particularly in the agriculture and horticulture sectors.
The taxation and other measures in the budget are intended to enhance the cost competitiveness of indigenous industries. Measures designed to improve the cost base of the agri-food sector include an increase from £12,000 to £13,000 in the income threshold for employer's PRSI, a reduction from 12.2 per cent to 12 per cent in the standard employer's PRSI rate and a decrease from 9 per cent to 8.5 per cent in the lower employer's PRSI rate. Those changes will benefit in particular labour intensive prepared consumer food companies and will dovetail the existing measures in place in the national food strategy to promote this important subsector of our food industry.
Small indigenous service companies in the agriculture and food sectors will further benefit from the targeted reduction in corporation tax from 38 per cent to 30 per cent on the first £50,000 of income. By releasing additional funds for reinvestment in these companies this measure should assist enterprise development in rural areas.
On structural reform, one of the impediments to the development of a more competitive agriculture sector is the age profile of farmers and farm size. The early retirement scheme is one of the measures that will improve farm structures. That scheme is designed to  encourage the transfer of holdings by older to younger farmers, especially dynamic young trained farmers.
The budget introduced a series of changes to the taxation regime that should encourage early transfer of land to younger farmers by way of gift, inheritance or under leasing arrangements. The tax exemption on income from land leasing was increased from £3,000 to £4,000 for five and six year leases and from £4,000 to £6,000 for leases of seven years or more. Those changes should encourage longer-term leases and come at a time when the purchase price of agricultural land is becoming costly for new entrants and existing farmers wanting to enlarge their holdings. As part of the land policy we will be introducing shortly, we are encouraging people to lease land to younger participants. We are also assuring farmers that from a social welfare or taxation viewpoint they should not be fearful about leasing land. That measure is very much a part of Fine Gael's land use policy.
There has been an increase in the standard business relief for capital acquisitions tax. Farmers subject to gift and inheritance tax on the transfer of land, buildings, livestock and machinery should benefit as a result of this concession. The new arrangements will not replace the existing generous ones that apply to gift transfers for farmers. The removal of the anomaly whereby farmers transferring their assets on retirement could become liable for tax on paper profits on the difference between the written down and market value of the transferred stock is welcome. That change should further encourage land transfer, especially under the early retirement scheme.
The fact that income from REPS of up to £2,000 will now be ignored for the purpose of means testing for agricultural assistance should help a large number of farmers, especially those along the western seaboard. It removes a barrier which prevented farmers participating in that scheme. I am delighted the  Minister for Finance accepted this proposal and I thank him for doing so. It should benefit smaller farmers in the west of Ireland, on islands and throughout the country as it removes a significant barrier to participation in that scheme.
Regarding reduced excise duty on LPG, pig and poultry farmers, in particular, have benefited from this provision in the budget. The reduction by 2p per gallon in the excise duty on nonautomotive LPG should go some way towards improving the competitiveness of these sectors and should ease the competitive pressure from Northern Ireland and the UK which has intensified during recent years as a result of lower wage costs and exchange rate differences.
The increase in the VAT refund rate for farmers from 2.5 per cent to 2.8 per cent will be significant for those farmers not currently registered for VAT but who are required to pay VAT on their inputs. The cost of this concession will be £6.3 million this year and £9 million in a full year.
I noticed that the farm leaders decided to ignore that very positive provision when commenting on the budget.
For the first time the Votes for Agriculture, Food and Forestry have been combined in line with Government policy to develop an integrated approach to rural development, thus maximising the potential and productive capacity of rural resources while having regard to the importance of protecting our rural environment.
The prospects for agriculture generally in 1996 appear to be quite promising in the dairy and sheep sectors and I hope the present problems in the beef sector will be overcome. In addition, in 1995 indications were that the rate of decline in agricultural employment slowed considerably, total employment in that sector between the years 1994 and 1995 fell by only 1,000, a creditable performance, and reflecting the range of policies put in place to support rural enterprise and the farming community.
 Overall this is a very good budget, with many positive provisions to help agriculture and rural communities in general which should be recognised by the Opposition.
Mr. Broughan Mr. Broughan
Mr. Broughan: Many Members interested in economics eagerly awaited the Progressive Democrats's document entitled “An End to Tax and Spend” which transpired to be a very flimsy Doheny and Nesbitt school of economics production that did not address the central problems of tax equity and reduction within our economy. There are many objectives in that document with which I agree — it is insane that someone with a salary as low as £250 weekly should be subjected to a marginal tax rate of 57 per cent. In addition, clearly it is wrong that ordinary workers should support up to five different levels of tax on their salaries.
Nevertheless, the basic sums in the Progressive Democrats' document simply do not add up. Deputy Michael McDowell either is a dunce or, in some future Fianna Fáil-Progressive Democrats Coalition Government, is prepared to ruthlessly wield the knife, perhaps as a “Mac the Knife” Progressive Democrats Minister for Finance, causing devastation for the weakest sections of our society. In recent days I have begun to wonder whether Deputy McDowell is not the Steven Forbes of Irish politics.
Acting Chairman Acting Chairman
Acting Chairman: Might I remind the Deputy to refer to Members of the House by title, please.
Mr. Broughan Mr. Broughan
Mr. Broughan: ——whether Deputy Michael McDowell is not the Steven Forbes of Irish politics, who, as a wealthy politician, advocates a flat rate tax, implying to hell with all the weaker sections of society.
The sums in this Document An End to Tax and Spend simply do not add up. They clearly imply ruthless cuts in health, education and welfare, these being the prescription of any Government that would seek to adhere to the figures outlined in it up to the year 2000.  Undoubtedly the Progressive Democrats also fully intend to implement a remorseless programme of privatisation, not only of our commercial semi-State bodies but of a significant proportion of our Civil Service by contracting out at all levels within those sectors to find their planned budget figures.
On page 23 of that document I notice a sanctimonious reference to the electricity and water industries being unsuitable for privatisation, no doubt based on the fact that everybody will have witnessed its disastrous consequences in Britain.
The old Progressive Democrats' tax mantra is also just not true. For example, in terms of tax-GDP ours is a medium-level tax country. In The Revenue Statistics of OECD Member States some years ago, ours was 13th out of its 24 member states in terms of tax to gross domestic product. In terms of the ratio of tax to gross domestic product we observe that the 1996 £12.5 billion budget has been drawn out of a gross domestic product of £36 billion, thus maintaining that ratio.
In coming months, right up to the next general election, Fianna Fáil has the fundamental choice of either travelling the harsh Progressive Democrats road — of course, when many members of the Progressive Democrats left the Fianna Fáil Party there were rumours that other, now prominent, Fianna Fáil front benchers would also become Progressive Democrats — and support this policy or supporting social solidarity. Let the electorate beware after the next election, the smiling poster face of Deputy Bertie Ahern will be transformed into the harsh unforgiving features of Deputy Michael McDowell, if current trends continue. That is the reality and the electorate had better face it.
In regard to macroeconomic and fiscal policy, the Minister for Finance deserves enormous congratulations on his first year in office as the first Labour Minister for Finance. The figures he presented to the House, with one exception, represent the best performance in  our economy since 1922, with employment rising by 45,000 and, by the end of this year, forecast to be just in excess of 1.25 million people which, if my memory serves me correctly, would represent the highest number of citizens at work in the history of the Republic. Like the Minister of State at the Department of Agriculture, Food and Forestry, Deputy Deenihan, I hope the Government will aim at our second All Ireland in a year or one and a half years' time because Government performance, in particular that of the Minister for Finance, has been remarkable and is deserving of congratulation.
Also to be borne in mind are the advantages, our lowest ever level of interest rates afford householders and small businesses and our low inflation rate, well below the European Union average, in respect of which the Minister for Finance has performed creditably and in which his party and Government take pride.
One of our newspapers characterised this budget as a Maastricht budget. Indeed the overall Maastricht fiscal parameters are very tight for any Minister for Finance. If the Maastricht criteria develop and we adopt the euro, we must ensure that compensatory mechanisms are in place for us as a peripheral member state; in other words, full economic union which would be disastrous for us. Indeed, the example of many other countries in terms of social solidarity should be examined by Irish policy makers.
Many Members have been struck by a new book on Japan entitled “Blindside” which appears to imply that the regrouping Japanese economy is based on the fundamental solidarity of all classes and sections of Japanese society who ruthlessly support “Japan Incorporated”, the pay-off being a job for everybody. Likewise is the case of our Labour counterparts in Australia over the past ten or 12 years, Prime Ministers Paul Keating and Bob Hawke. Australian Labour invented the famous job contract. The Australian White Paper of  the mid-1980s, drafted largely by Paul Keating, specified that every long-term unemployed person, through co-operation between the Government and private sector, should be given a job. That is another proposition the Minister for Finance, his Opposition counterpart, Deputies McCreevy and Mr. Michael McDowell might examine for the future.
I welcome all the positive measures taken by the Minister and Government to alleviate the huge problem of unemployment, such as raising the £50 exemption in the calculation of PRSI contributions to £80 per week and raising the threshold of employers' PRSI to £13,000 per annum in terms of employees' weekly earnings. Many businessmen in my constituency have informed me that that will be of considerable assistance to them.
In addition I welcome the extension of the community employment scheme and the reservation of a quarter of its places for the long-term unemployed. I also hope that the Minister for Enterprise and Employment will speedily implement the £80 subsidy scheme and request him to invite some key, private employers — for example, within my constituency, Cadbury's — to participate, thus deliberately targeting the older, long-term unemployed. All Members will have met people who have been unemployed over a six to ten year period who, if given some hope, would constitute a major step forward.
I also welcome the proposed improvements in the personal tax regime. Next year perhaps the Minister for Finance will examine an even more fundamental, radical step in this area. For example, a basic rate of 25 per cent and a top rate of 45 per cent could be achieved for a cost of £280 million. Of course, in the 1970s the Labour Party invented the 20 per cent rate. Long before the Progressive Democrats ever thought or spoke of such a basic rate. One of my predecessors, former Deputy Michael O'Leary advocated and helped implement it, another proposal worthy of examination for the future.
 I note the local employment service will again receive approximately £6 million under this budget. I ask the Ministers for Finance and Enterprise and Employment to examine any methods by which the amount of money available for this purpose could be increased.
The National Economic and Social Forum advocated a sum of £30 million for the local job placement service a number of years ago. In my constituency of Dublin North-East — Coolock, Kilbarrack, Donaghmede, Raheny — many of my constituents hope the funding of £4 million currently allocated to the Northside Partnership for the five years, 1995-2000, will be significantly increased. I have discussed this matter with the Minister of State, Deputy Gay Mitchell and the Taoiseach. The Northside Partnership was the model. The local employment service, with which I am proud to have been involved, was stablished as a result of intense efforts by local businesses, trade unions and community groups during the past eight or ten years. The Northside Partnership now deals with an area inhabited by 108,000 people. The programme which the Northside Partnership board want to implement would cost about £10 million so I would ask Ministers to re-examine this allocation.
I welcome the new measures for the development of enterprise, in particular the measures on corporation tax which will certainly be of great assistance to smaller service companies. I congratulate my colleague the Minister for Social Welfare, Deputy Proinsias De Rossa, on his continued reforms and developments in the social welfare area. I welcome the child benefit initiatives and that resources are being directed towards children in poverty. Deputies have always had difficulty in dealing with the calculations for unemployment assistance for those in part-time employment. A few years ago, at a meeting of the Committee of Public Accounts with the Secretary of the Department, Deputy Rabbitte and I found it difficult to explain the operation of certain disregards. I notice the  Minister for Social Welfare is at long last modernising this and making it a weekly rather than a daily system. I welcome also the proposal to allow unemployed people returning to work retain medical cards for three years. These are all great initiatives.
As I have said three years running in my budget debate contribution to this House the absolute levels of social welfare payments are still sadly low. The basic £64.50 rate for a single person, or just over £100 for a couple is unacceptably low. In its budget submission, the Conference of Religious in Ireland criticised all parties in the House in respect of the levels of social welfare payments. Even an increase of 3 per cent does not make that much difference to those rates.
I welcome the fact that the Minister for Social Welfare, Deputy De Rossa, has set up a new national poverty strategy. The total social welfare budget of just over £4 billion now supports a population of more than one million people, but there are 3.5 million people in the State. We earn £36 billion which means we give the poorest, comprising more than one-third of the population less than a ninth of our national income. That is disgraceful. Governments, through employment and other initiatives should ensure as few people as possible are on the lowest levels of social welfare. I agree with Deputy Sargent that this is an area we have to address. Obviously, the demographic factors which have hindered us in the past will improve and I hope we will be able to allocate more resources to the poorest people in society.
I welcome all the achievements of the Government in the areas of health, the environment and in education where pre-schools, primary schools and the introduction of free third level education benefits — despite what the Opposition have said — many poorer and working class parents. I notice, on the capital side, the Government is borrowing £647 million. My rural colleagues will be pleased that some of that  will be allocated at long last to improve the road infrastructure.
I congratulate the Minister for Finance, Deputy Quinn, on the budget. His ideas on multi-annual budgets are also valuable and should be progressed. To some extent, this Minister for Finance has demythified the budget process. I look forward to his vision of 2010 and our society being as wealthy and as developed as the rest of Europe.
Mr. O'Dea Mr. O'Dea
Mr. O'Dea: There is an air of unreality about this debate. I have to keep pinching myself to remind myself that today is only 31 January. The more I listen to Government speakers the more convinced I become that it is April, fools day.
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: The Deputy is the last man I would consider a fool.
Mr. O'Dea Mr. O'Dea
Mr. O'Dea: I have asked the Taoiseach on a number of occasions on the Order of Business when the Government intended to bring forward the promised legislation to deal with fraud which would allow people to be properly pursued and convicted.
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: We had enough fraud in the Deputy's time.
Mr. O'Dea Mr. O'Dea
Mr. O'Dea: I suspect now that the reason for the delay is that if we had such legislation on the Statute Book, the entire Government would be in the dock and would be convicted——
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: The Deputy would not be here.
Mr. O'Dea Mr. O'Dea
Mr. O'Dea: ——because this budget and its accompanying hype is nothing other than a series of loosely connected frauds which the Government is attempting to perpetrate on the electorate. I will deal with them separately. There is a double fraud relating to taxation. The first fraud is a minor one, a summary offence which would only result in the Government being fined or  serving a short term but the second is much more serious. The first fraud relates to the figures in the Principal Features of the Budget which tell us that in terms of a reduction in net income, people on various amounts of gross income will be 1.6 per cent, 0.7 per cent, 2 per cent etc. better off. Those tables are fraudulent because they deal with a rare individual or couple. They point out the changes in gross income for a person who does not pay a mortgage, does not pay VHI, does not smoke, does not use ATM cards, does not drive or engage in any other form of activity that would attract increased indirect taxation.
Mr. Broughan Mr. Broughan
Mr. Broughan: That person sounds like a typical Fianna Fáil member.
Mr. O'Dea Mr. O'Dea
Mr. O'Dea: Even leaving out those factors, the net gains, as outlined in the Principal Features of the Budget, are 0.7 per cent, 0.6 per cent, 2 per cent, 1.9 per cent, 1.8 per cent, 1.7 per cent, 1.5 per cent and back to 0.8 per cent and so on. A number of accountancy firms and financial journalists who have factored in the mortgage and VHI changes arrived at figures such as 0.25 per cent, 0.2 per cent, 0.1 per cent. That is the reality. As the Minister will be aware it is not mathematically possible to factor in the indirect tax changes. I am afraid the net result of the tax changes, as opposed to the tax give aways, leaves the taxpayer, in net terms, roughly where he or she was prior to the budget being introduced.
The more serious fraud in the taxation provisions of the budget lies in the Government propaganda that all forms of tax, including income tax would be reduced. Even factoring in the changes to which I have referred there would be the minimalist reduction in the total tax take if income stood still, but it will not. We estimate income will increase to the rate of inflation by 2.5 per cent to 3 per cent. The reality is that income will increase and the tax yield will increase, in percentage terms, by much more.
 By its own admission, the Government plans to extract £730 million more in taxation this year from the people than in 1995. I am not asking members of the Government side to take my word; it is clear from the Budget Statement. That is £2 million more in taxation for every single day of the year. If we assume there are one million taxpayers, that amounts to £14 per week more tax for every taxpayer.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.
Dáil Éireann 460 Financial Resolutions, 1996. Financial Resolution No. 7: General (Resumed).