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Financial Resolution No. 15: General (Resumed) (Continued)

Thursday, 6 December 2012

Dáil Éireann Debate
Vol. 785 No. 3

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Deputy Seán Kyne: Information on Seán Kyne Zoom on Seán Kyne In February 2011, the Government - Fine Gael and the Labour Party - received a mandate from the people to regain our economic sovereignty, restore our economy, jobs and investment, and put our country back on the right, sustainable, compassionate path. Budget 2013, although undoubtedly difficult, is part of the process. The Government faces the most challenging task it could face: to rebuild our economy on solid foundations of jobs, enterprise, exports and innovation rather than the old, shaky foundations of property speculation and financial trickery.

We are a long way from the days of Charlie McCreevy’s giveaway budgets when populist but short-sighted measures were compounded by the squandering of public money, which often found its way to those in society who least needed it. Unfortunately, every decision in budget 2013 has been drawn up in one context, the reality that must be clear to everyone inside and outside the House. The painful reality is that the country is spending close to €17 billion more each year than we raise through taxes and revenue. This is not sustainable and cannot continue.

Some in society would prefer deep cuts in social welfare and other spending areas while others prefer higher taxes or levies. The challenge we face is to listen to the different interests and to reach a compromise rooted, first and foremost, in fairness. Despite the denials, our tax system is the most progressive in Europe, a fact espoused by the OECD, the ESRI and the European Commission. Those most able to pay taxes and charges in Ireland do so and budget 2013 continues this. For example, capital gains tax, capital acquisition tax and DIRT have all been increased by 3% following last year’s increases. Tax relief on pension contributions has been significantly reduced and capped, and PRSI and the tax base have been broadened with unearned income now subject to tax. However, despite these new measures, the primary weekly rates of the many social welfare benefits and schemes have been protected. I believe in the safety net social welfare provides as it is a system on which all citizens will depend at some point in their lives.

The confirmation of no income tax increases, no reduction in tax credits and no changes to tax bands as well as no VAT increases is welcome news to workers grappling with the effects of the recession. To help as many citizens as possible reduce their need for social welfare, a Government must support job creation and small to medium-sized enterprises. Budget 2013 achieves this with the ten-point tax plan for SMEs to help reduce administration costs, to protect and increase cashflow and to assist Irish SMEs compete on the global stage. Competing abroad requires efficient transport systems, and the rebate on diesel for our hauliers will help achieve this. The positive support the tourism industry has received will continue with the retention of the lower rate of VAT introduced in the stimulus plan of 2011.

Repairing the damage takes time but it also requires reform in order that we learn from the mistakes of the past. The Government has begun fundamental reform in the delivery of public services to safeguard essential services while maximising value for public money. Public representatives, Deputies and Senators cannot be, and are not, immune from reform. Budget 2013 is the first in many years to specifically cut public representation expenses, abolish ministerial severance payments and inject much needed transparency by abolishing entirely the system of unvouched expenses.

This budget is unquestionably a difficult one. However, there was not a credible, workable alternative put forward by any Opposition group in Dáil Éireann. The fact that no Opposition group sought the assistance of the Department of Finance for costing and estimating proposals is proof of this. Budget 2013 will be difficult for all as we try to maintain public services while closing the gap between State income and spending. We are on the correct path and about 85% of the measures needed to restore sustainability and economic confidence have been put in place. To succeed, everyone – young and old, public sector and private sector, urban and rural-based - must work together. The future of the country depends on it.

Deputy Maureen O'Sullivan: Information on Maureen O'Sullivan Zoom on Maureen O'Sullivan I propose to share time with Deputy Joan Collins and Deputy Tom Fleming. I listened to the tones of assurance and confidence with which Ministers spoke yesterday and the conviction that the decisions they were making were the right ones and the positive language, such as "success", "growing and developing economy", "well on the road to recovery" and "protecting the most vulnerable to the greatest extent possible". There was a disconnect between hearing that and the reality on the ground. I left the House at 5.30 p.m. to attend two community meetings in Dublin Central. I looked at the reality from the point of view of those groups. A number of the people involved were senior citizens. While the primary weekly rate for older people is maintained at current levels, such people will have to pay more out of the amount because of the reduction in the household benefits package. People were delighted the free travel scheme was kept but they were particularly mad about the trebling of prescription charges. Low-income groups and the unemployed are disproportionately affected by the budget. I think of families struggling in communities across Dublin Central who see few, if any, real benefits to them. Instead, they must contribute more and, at the same time, the quality of services in health, social protection and justice are further stretched.

The reduction in child benefit is particularly hard because it is not fair. It targets everyone the same, regardless of their circumstances. The sum of €10 will hit the less well off much harder than those on high incomes. I acknowledge the effort to offset this by the provision of child care supports for lower income families and disadvantaged communities, but the sum of €10 is gone immediately and the supports may take a while and involve bureaucracy before they materialise. This time last year we heard about the Scandinavian early school model but we are still waiting to see it in action.

With regard to corporation tax, no one wants to drive multinationals out of the country but we want multinational companies making billions in profits to pay their fair share of tax. If we are interested in transparency and accountability, we will show exactly how much corporation tax is paid. The Chairman of the Committee of Public Accounts is just back from Africa where he investigated corruption and possible fraud. The Committee of Public Accounts in Westminster called in multinationals to meetings in Westminster to examine the billions of pounds of profits and systematic underpayment of taxes. Our Committee of Public Accounts is more concerned with ensuring money going to Uganda and Mozambique is monitored and accounted for. That is all very well because no one wants to see the money being wasted. However, what about what is happening in our country? We are not getting the full 12.5% which, if collected in full, would more than cover the €10 being taken from child benefit.

Yesterday, the European Commission presented a package to fight tax evasion and aggressive tax avoidance by multinationals. It estimates that European countries lose €1 trillion in much-needed revenue every year. Our tax revenue cannot be used to reduce the overall tax bill of transnational businesses. Apart from ethical considerations, there are economic benefits to Ireland. Even a modest financial transaction tax would bring in much-needed revenue.

Despite submissions from reputable organisations and a report by the Commission on Taxation in 2009, the site value tax was not considered. If the recommendations in the Kenny report of 1973 had been adopted, we might have been spared the reckless planning and crazy rezoning that took place when landowners and property speculators made huge profits. We must stop the possibility of another property bubble and a site value tax would have gone a long way towards preventing it. It would also have been a fairer way of assessing value and reducing dereliction.

The Minister mentioned seeking targeted incentives in already identified regeneration areas. Three such areas exist in Dublin Central: O'Devaney Gardens, Dominick Street and Croke Villas. Regeneration is not just about houses but also facilities and services.

We should have a draft budget some months before in order that we can have a real debate. There should be equality proofing in order that there is social impact analysis alongside each spending measure or reduction. We need specific policy measures on women and children with disabilities and young people. At the heart of every budget should be the principle of not increasing inequality. A social impact analysis would show what taxes on the wealthy would introduce. Alcohol and tobacco are costing enormous amounts in the health budget so it is very disappointing that nothing was done on minimum pricing of alcohol or a social responsibility levy on alcohol sales and betting transactions.

The building of youth facilities will take people out of St. Patrick's Institution. Where are the resources to ensure they do not end up in those places? We note the proposed changes and the increase in the numbers of people on community employment schemes, but some of the programmes are unlikely to attract those who most need them, namely, lone parents. The number of lone parents in Dublin Central is far above the national average. Community employment has been very progressive in moving people into second chance education and training. I welcome the development aid budget and the mental health budget and while the sum of €35 million is ring-fenced, we need to see movement on it if it is to be spent where it is intended to be used.

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