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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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(Speaker Continuing)

[Deputy Éamon Ó Cuív: Information on Éamon Ó Cuív Zoom on Éamon Ó Cuív]  More seriously, the overall economic performance was glossed over in the Budget Statement by the Minister for Finance. He blandly stated that we had achieved a debt-to-GDP ratio of 8.2% and that this was beneath the troika target. He did not expand on how that was achieved despite the failings of the budget last year.

The budget normally concerns itself with tax revenue and voted Government expenditure. When we look at the voted Government expenditure for the past year, we see that the sums were on the wrong side by an alarming amount. The only way the Government half saved the day was by cutting further into the capital allocations. When we look at the Exchequer returns at the end of November and the projections for the end of the year, we see that the capped expenditure - the one that is productive - is way under target but that the two big Departments are operating as runaway trains. Between the Department of Health and the Department of Social Protection we, without very much debate, passed supplementary budgets of about €1 billion. The problem is that this is not a one-off occurrence but must be carried forward into the new year.

As I have pointed out time after time, there is a hidden time bomb in respect of the Department of Social Protection because it is storing up ever more applications that must be back paid to the day of application when approved. For example, it has one year's worth of applications for carer's allowance on hand. That is not accounted for because we do not have an accrual system. Therefore, what we are getting here is a potential liability because if all of these applications are approved - the vast majority will be - we will find there is a significant charge on the Exchequer. Similarly, invalidity and disability reviews are being rejected by the Department and the appeals process takes a year and a half. The Minister cannot go on forever extending the date of the processing of applications so some day this cash flow management will fail. Let us not talk about the obscenity of having people wait that long for a decision. There is also the issue of the effect of the pent-up demand on these Votes that is not taken into account because of our accounting system.

On the tax side, we see that income tax receipts are falling below targets. When we take the total tax bundle into account, we can see it did not raise the revenue expected this year. A similar failure next year if one did not have the lucky dip of getting extra non-tax receipts, particularly this year from the Central Bank and the guarantee, would lead to a failure to reduce Exchequer borrowing. This will lead us from the current stagnation into total recession. I am concerned that this Government has massaged the figures but that sooner or later, the financial chickens will come home to roost.

I accept that we must close the gap between expenditure and income and have no problem with taking hard decisions. It is well known that I believe it is imperative that we do a deal on bank debt and I would have thought that last spring was the opportune moment. What I do not understand is the obsession with hitting families. What has the Government and the Minister for Social Protection in particular got against ordinary families who are struggling? The entire budget targeted them, as last year's budget targeted rural people and women. I do not know what this Government has against people in rural Ireland and women and particularly struggling families.

I will give the Minister an example. The tax rises tend to have an effect on a household, therefore irrespective of the wealth of the household, the tax and social welfare changes have an equal effect per household with possibly a slight variation in the household charge. Let us take a couple with three children. What did the Government do? It hit child benefit by €9 per week, while the household tax will come in at, say, €8 per week. Motor tax increases will add €1 per week where one person is working and €2 where two people are working. PRSI increases will be €5 if one person is working and €10 per week if two people are working. We must remember that this PRSI chips in regardless of whether one gets €400 or €4,000 per week. That means that an average household is now facing an extra cost of €23 per week before it has any social life and the odd pint of beer or glass of wine. If one adds them in, it comes to a minimum of €25 per week. A sum of €25 per week comes to €1,250 per year but to have that money to spend, one would need a salary of double that, at about €2,500 in a one-income family and over €3,000 in a two-income family. The Government can say it did not hit income tax but it hit them on the come down. It hit virtually every household with children in the exact same way irrespective of their ability to pay. It is totally regressive.

On the other hand, if the burden had been imposed on the top end of income tax and, for example, if an extra charge on the PAYE worker earning over €100,000 was imposed, the extra revenue generated would amount to €200 million. Therefore, this Government seems to have an obsession with hitting families. Let us look at the situation of a single person or a person who does not own a house with an excellent job. The Government has hit the drink and increased motor tax by €1 per week and PRSI by €5 per week and it stops there. Who has more disposable income? Let us take the case of the couple who have paid the mortgage on their house and whose children are grown up and compare them with the household whose children are in college. Over three years, the Minister of no fees has added €750 per year for a student starting college. This adds to the bill I have outlined. In three years one will need another €1,500 in gross income to pay the bills. This Government is completely anti-family and I do not understand the logic behind it.

I give credit to the Minister for Agriculture, Food and the Marine because he took on board some suggestions I made to the agriculture committee. I took the risk of engaging in the process and he did listen. I would not agree with everything he has done. The suckler cow scheme at €20 is too low. I do not agree with the changes he made to the disadvantaged area payments but I recognise that he did not hit the farmers in the mountains this year and for that I am grateful. What is wrong with the Minister for Social Protection and what has she got against rural people?


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