Dáil Éireann - Volume 680 - 09 April, 2009

Financial Resolution No. 11: General (Resumed).

Debate resumed on the following motion:

THAT it is expedient to amend the law relating to inland revenue (including value-added tax and excise) and to make further provision in connection with finance.

—Minister for Arts, Sport and Tourism (Deputy Martin Cullen).

  Deputy John McGuinness: I wish to share time with the Minister of State at the Department of Finance, Deputy Mansergh.

  An Leas-Cheann Comhairle: Is that agreed? Agreed.

  Deputy John McGuinness: I wish to raise a number of issues in terms of this budget and support the measures that have been debated here since Tuesday. I will start by commenting on “bags” gate about which the Fine Gael leader went on when I was not here. I wish to correct some of the issues recorded by the Fourth Estate regarding what went on. In terms of the reform of Government business, the Ministers of State were not sacked — we resigned.

[257]   Deputy Dan Neville: They were told to resign. What is the difference? The Taoiseach brought them all in and told them to resign.

  Deputy John McGuinness: It provides the Taoiseach with the appropriate framework to deal with those positions as he pleases. It is a sign of co-operation and what we need to do in terms of understanding the economy with which we are now dealing. There is a need for reform of structures within Government to deal with the issues that face us today in a very different way from before. We had 12 years of sound economic development. We are now part of a global downturn. It is good for us to look at the way we do our business. The media have also indicated that we are lobbying hard for our positions. That is not the case. The decision will be made and will be made without that. Of course Deputy Kenny omitted a number of the other quotations from the interview I gave, which perhaps would have put it in context. It shows how far or little we have travelled in terms of our attitudes in this House to what goes on and what comments are made. I like to tell it as it is. I like to give my own view and be honest with the electorate. If that view brings in an act of contrition or a U-turn for something that we have done or have not done, I do not see anything wrong with that.

In that interview I said: “This budget is not so much about the two Brians. It is about Ireland. It is about this country. It is about where we’re going and it will be a defining moment for the economy.” I went on to say: “We have to impress those that will give us money that we’re not a basket case”. If Deputy Kenny were to be fair politically, as I asked him after he made the comments, he would have put it in context. However, he was too quick to respond to a text message from my constituency, from what he described as his “communications unit”. Enough of that.

  Deputy Dan Neville: It is not made up of 84 people like the Government’s one.

  Deputy John McGuinness: This morning Peter Sutherland made an important contribution in the context of the debate on where we are going. He said that Ireland’s economy is not the basket case that is being presented at home and abroad. He went on to say that we have a major budget deficit problem and we know the difficulties of getting out of that are considerable and much pain will be involved. He acknowledged that our industries are basically modern — associated with pharmaceuticals, information technology and services, which is a strength, and that in many ways the Irish economy was very resilient. That was Peter Sutherland speaking and not anyone from the Fianna Fáil benches, including me or any other Minister. That is very important because it feeds into our international credibility and what we have been trying to do in the context of the budget. It puts it in place in a non-political way. It allows us either to debate that approach to politics and the economy or to be locked into the narrow view that was presented in Deputy Kenny’s comments.

I prefer to view my glass as being half full. I prefer to look at the positive aspects of what we are trying to do in a very difficult time. In doing that a number of weeks ago I suggested in the course of another debate that we should have a property bank or an asset management bank. I am very pleased to welcome what the Minister for Finance has done regarding the property assets held by our banks. I hope we can quickly establish the agency to look after this and to move it on. I do not welcome it on the basis that it is a good thing for the banks or the well-off — sometimes described as the fat cats. I do it on the basis that we need a sound financial structure. We need to release the banks from their present position. We need to encourage them to begin to do business all over again in a way that will support the SME sector, the micro sector and businesses generally so that they in turn can create the jobs and complete the projects in which they were engaged to encourage employment.

[258] If we are to get out of this we need to create jobs. Creating those jobs and creating exports will give us the best advantage when the upturn comes. To do all of that for the citizens of this country and not only for the well-off we need to create the type of management structure for that agency as outlined by the Minister for Finance. As I said in the course of a debate last week, the SME sector and the micro sector are almost being prevented from doing business because the banks will not lend money. They are so unsure about their own asset base and the values of the properties they hold at present that they are not doing business as they should be.

The fear experienced by those in business and those employed by enterprise should be removed by giving the banks the opportunity to do that business in every parish in the country. While we establish this agency, businesses must continue to operate, trying to deal with their overdrafts and the cost of doing business. I hope the agency will be established quickly to prevent further damage to the business sector resulting in further job losses because businesses are finding it difficult to manage and to get funding from the banks.

It is necessary also to examine the cost of doing business here. This budget goes some way towards dealing with that cost but we need to do much more and to be specific about it. As much as I want the Government to tell the banks to open up and do business, I want it to tell organisations such as the ESB directly to reduce their costs by at least 25%. That is essential if we are to do business.

The Government needs Departments that reflect the reality of business. They should be able to respond quickly and deal with the issues of the day in a way that allows business to be done. When the Irish Financial Services Centre was established every roadblock was removed to ensure it could do business and that Ireland could take its place in that sector as quickly as possible. That can continue to grow if Government has the right infrastructure to reflect what is needed.

I have not seen a speech so badly quoted as the one I made about the public sector last September. Members of the Opposition have quoted it at public meetings, out of context and wrongly. Members of this House have misquoted it to poke fun at others. In that speech I acknowledged those who do a good job in the public sector, and that the front line services act almost as a band aid for a sector that is not able to function because the culture and management systems need to be modernised and freed up to allow real participation by the individuals that help to make the country work daily.

Reform does not involve taking a chunk of people out of a sector and jobs. It involves creating the systems and management that allow them to function in a modern economy that is challenged as this one is. It involves examining procurement across the public sector, how we do business, freeing that from EU regulations. We need to tailor the cloth to suit our measure because within procurement there is an industry worth many millions, if not billions, of euro that can support and help to develop the SME sector, which is not allowed under EU regulation. I am delighted that the Minister of State at the Department of Finance, Deputy Mansergh, is involved in the reform package in that area and that small businesses will be allowed to engage with local and national government, and other organisations or State agencies, to get the business they require so that we can stand over a developing SME sector which can get business from Government or State agencies and provide value for money.

The smart economy involves reducing costs and bureaucratic structures and having a light regulatory hand on business while regulating the banks to make them answerable and more accountable than they have been over the past 12 years. It involves deciding whether to accelerate the development of wind and wave energy or nuclear power and deciding what policies are necessary to ensure that we get new thinking, value for money and apply best practice and [259] technology in that area to reduce the cost of doing business. That will ensure that Irish businesses grow and prosper, being supported by a county enterprise board system which has proved its value. In the face of the present economic challenge they will prove their value even more. Small businesses should engage with the enterprise boards to examine how their goods and services can be commercialised and internationalised. As we fund research and development of large multi-million euro projects we should examine how to commercialise the results so that companies can be created to bring those products and services to international markets, thereby creating jobs.

We need to reward the patience of the public that we represent by bringing about real reform and engaging with it to ensure that it receives an active response when it comes to any agency, Department or this House. The public will then see the changes we want to bring about that are so necessary for modern Ireland as we develop structures in a new world trade and a differently regulated global economy. The public’s general acceptance of this supplementary budget, which is difficult for families and others, including businesses, who must pay more, will appreciate it better if its outcome provides value for the taxes invested. It will support the changes we are trying to bring about if it sees systems with which it can engage.

The tax base adjustment for intellectual property is essential for the next steps in developing a knowledge-based economy. Every region should be closely linked to business and academia and there should perhaps be a centre of excellence similar to the Irish Financial Services Centre. This could encourage research and development and attract large international companies. That would put Ireland at the front of the knowledge-based economy, with research and development, and create new jobs associated with the pharmaceutical industry, information technology and functional foods. We need to use the foundation created by the supplementary budget to create an enterprising nation. This is vital for our future.

  Deputy Martin Mansergh: The coming together of financial, banking and economic crises, part-global, part-domestic confronts this State with one of the biggest challenges to its independence that it has ever faced. In its suddenness and scale of overall impact it came upon us completely unexpectedly, even if a few people had anticipated individual elements such as the housing crash. The supplementary budget involves maintaining, in so far as it is possible for any government in a globalised and interdependent world, control over our own destiny rather than throwing in the towel and becoming helplessly subject to the dictates of outside agencies with few sensitivities to our values and priorities. If we had failed to act in an appropriate and credible way and to assert our determination to master this crisis we would have run the risk of making the past sacrifices to achieve and maintain national independence seem largely in vain.

Looking north of the Border to murderous attacks by splinter groups on the peace that has been successfully established one is struck by the utter irrelevance of their actions to the different acute economic challenges now facing the survival as a credible political entity of a sovereign independent Ireland. We should not underestimate our strengths in coming through this situation or the many solid advances that were made during the Celtic tiger era. If we have an ability as a people it is in battling and overcoming adversity, refusing to be beaten and being able to call on remarkable resources of community solidarity. The prerequisite for changing any adverse situation for the better is a realism in analysing it and assessing what is needed to correct it. Leadership is also needed and it took political guts to bring in a budget such as the day before yesterday’s, which had no parallel even in the early 1980s. Conspiracy theories always beloved by Oppositions and which have undeniable public appeal regardless of the truth, will not distract the Government from what needs to be done.

[260] Between 1987 and 2007 we all succeeded in bringing our national finances back within what appeared to be prudent parameters with even a significant margin of safety. Yet in the past 12 months our finances have experienced a severe deterioration, carrying us far outside the agreed Maastricht guidelines of a 3% Government borrowing level for eurozone members. As the Taoiseach said yesterday morning, the Exchequer cannot go on borrowing €20 billion without severely undermining our’s and our children’s future. Corrective action is essential but the scale of the problem is such that it cannot be all accomplished at once. We are not pursuing a policy that would lay waste to all we have achieved in employment growth, improvements in living standards and better public services to achieve a predetermined but elusive cyclical budgetary target.

The essence of what we are attempting to do is to ensure the minimum necessary cuts in expenditure and increases in taxation fall as far as possible on those who are able, perhaps, with some difficulty to bear them rather than on the weakest and most vulnerable sections of our society. Nobody is minimising the fact that this has had to be a tough budget if we are to hold the deficit within bounds and begin to arrest and reverse what has been its alarming runaway growth. The lesson of the mid-1980s was that carefully chosen expenditure cuts have a less damaging impact on the economy and confidence than a strategy based purely or mainly on increasing taxes.

In this budget, expenditure is cut by a further €1.4 billion, making nearly €5 billion in total since the 2009 budget was first introduced last autumn, with revenue raised by a further €1.8 billion. Because of increases in certain categories of Government expenditure in a recession — social welfare, medical cards, etc. — known to economists as automatic stabilisers, gross Government expenditure will still increase by 2.2% against a background of a fall in prices of nearly 4%. In this budget, expenditure is cut by a further €1.4 billion, making over €4 billion in all since the first spending adjustments were made in July of last year.

It is accepted that the cost of overheads in Government expenditure had to be tackled. The political system has to give leadership and show example. I am on record since January as suggesting the number of Ministers of State could be reduced to 15, corresponding with the number of senior Ministers and I reiterated that view only a fortnight ago during the debate on the Fine Gael Private Members’ motion while stressing that this decision was for the Taoiseach and the Government. There is no doubt that the tasks of Government have increased and despite public and media perceptions to the contrary, existing Ministers of State are kept fully occupied and have important sectoral and delegated responsibilities. That was the justification put forward when the rainbow coalition increased the number of Ministers of State by two to 17 in December 1994 and it was the justification when they were further increased by former Taoiseach, Deputy Bertie Ahern, to 20 in 2007, a situation inherited by the present Taoiseach. Circumstances have compelled a review of this situation. The reduction in the number of Ministers of State will also be accompanied by a reduction in a variety of Oireachtas allowances and paid positions. These reforms are welcome as they change for the better, aspects of our mode of operation which detract from public regard for the Oireachtas so we can respond more firmly to those who would denigrate our core democratic institutions.

The Minister, in his speech, made a point of potentially as much significance as any of the specific measures announced when he said he had asked the review body on higher remuneration in the public sector to undertake a full review of top-level payments to take account of the changed budgetary and economic circumstances and the changed private sector environment, and to benchmark rates against those of other EU countries of comparable scale. He believes pay at leadership levels in the public sector should be more in line with pay in other [261] countries rather than with top-level private sector pay in this country, which had become over-inflated in recent years and is now falling.

The Minister has defined in a nut shell what has gone wrong over the past decade. The the late 1990s private sector pay at higher levels was powering ahead and those in the public sector felt they were losing out, with those at the top feeling they were of as much value to society, if not more, as many of their private sector counterparts. Whether that was true or not, such benchmarking was misguided and those who work in public service must return to the ethos that it has an intrinsic value that can never be measured by salary levels, bonuses or other perquisites. When I joined the public service by open competition in 1974, there was no such thing as bonuses and the public service was the better for it.

The one area where there have been no serious, let alone deep, cuts has been social welfare. Last autumn, welfare rates were increased by approximately 3.5% for a year when the cost of living is expected to fall by approximately 4%. Taking account of the cancellation of the Christmas bonus for the time being, that represents a real increase. For a long time there was a debate on the cost of child care, whether there should be a direct payment, tax credit or pre-school provision. I am personally delighted the Government has opted for a free early child care and education year, which is most progressive as well as effecting a net saving. If I remember correctly, that was also the drift of Labour Party policy. This will also address some of the operational problems facing community child care facilities in a context of rapidly rising unemployment and help secure their future in which a great deal has been invested. As one resigned Minister of State to another, I add my congratulations to the Minister of State, Deputy Barry Andrews, on an important political achievement in the best traditions of Fianna Fáil.

  Deputy Dan Neville: What did he do?

  Deputy Martin Mansergh: While capital investment is important, the severity of the deterioration in the public finances inevitably means there will be a significant delay in the delivery and completion of the national development plan. When we had the resources over the last ten years, it enabled us to go full speed ahead on improving many deficient aspects of our infrastructure. The completion of the national motorway network in particular will be one of the principal permanent legacies of the Celtic tiger era, but there have also been great improvements in public transport, including rail and the Luas. The cutbacks in maintenance need to be temporary if the investment and public safety are to be protected, and this applies to both road and rail.

The OPW has seen a 25% reduction in its nominal budget since last summer but the falling costs would have softened the impact of that to some degree enabling us to achieve more with less, for example in flood relief schemes. It has taken on additional functions such as responsibility for coastal flooding and the establishment of a national public procurement operations unit, on which the previous speaker, the Minister of State, Deputy McGuinness, spoke.

While there is a voluntary retirement scheme for over 50s in the budget for public servants and arrangement for more flexible working including unpaid leave, which have been cautiously welcomed by the public service unions, and there is some parallel with the voluntary redundancy scheme in the 1987-89 period, the preservation of jobs for those who have and need them has taken precedence over the preservation of income levels, which was the reason for the pension levy. The tax provisions for the budget are onerous but fair and can legitimately be described as highly progressive. All those above a minimum threshold contribute something, but those on higher incomes contribute more. It is not viable to maintain approximately 30% of the population entirely tax-free, although the small contributions asked at lower levels will be compensated for by the drop in the cost of living.

[262] There is no doubt that the additional impositions will put a serious strain on family finances in very many cases, but at least most of those concerned are in jobs with reasonable incomes. The purpose is to protect all our futures and to hasten some recovery from which we will be in a position to benefit. We need to begin to get our economy and public finances on the road to convalescence and that is in the interests of the future protection of everybody in this society.

In the 1980s there were constant complaints about the limited contribution company and capital taxes were making to our economy. With the high level of activity and the reform of those taxes, both came to make a very important contribution to Revenue. The reliance on them has greatly diminished and alternative sources must be found. The marginal increase in capital gains tax to 25% will not seriously discourage such transaction activity from taking place but is an expression of social solidarity. With falling asset values, a lower and less overly generous approach to capital acquisitions tax with a higher rates and lower thresholds is justified.

4 o’clock

The NTMA was created about 20 years ago and has proved to be of invaluable assistance in managing public debt and performing other challenging tasks given to it by Government. The management of the NAMA is probably its biggest challenge to date. Given the responsibility of the parent organisation for borrowing on markets abroad and the need in that context to maintain Ireland’s creditworthiness, it has a keen interest in making a success of what will be a closely watched operation. As a sovereign country, we are able, in consultation with international agencies, to devise an innovative approach that addresses our problems. In this supplementary budget we are not simply imitating any other country but are trying to avoid approaches that would have a probability of creating even greater difficulties.

Politically, Governments in the 1980s had difficulty maintaining the support necessary to carry corrective measures. Two Governments fell in 1982 because of that and another coalition broke up at the beginning of 1987. With the benefit of a steady majority and solid partnership, the Government will provide the stability needed over a full term to carry us through to the other side without shirking necessary actions at any point along the line. The costly escapism of calls for elections or predictions of public disorder would not help anyone’s situation. Policies sketched out in Opposition bear little resemblance to what any party would actually have to do in government.

As underscored by the Minister for Finance, part of getting back on track will involve affirmation of our willingness to be fully committed members of the European Union on the basis of a treaty negotiated and agreed by all EU Governments. We cannot expect to restore confidence in the Irish economy if serious question marks are allowed to remain about the future extent of our membership of the European Union. The European mainstream is the social market economy, not the socialist command economy nor, on the other hand, the lightly regulated neo-liberalism which carried to extremes, has caused much of the current disaster. We need to manage the balance between Frankfurt and New York.

A United Irish patriot from a Tipperary family who subsequently became Attorney General of New York, Thomas Addis Emmet, told a secret committee of the old Irish Parliament in 1798, by way of justifying Ireland’s dream of republican independence, “America is the best market in the world and Ireland the best situated country in Europe to trade with that market”. That largely sums up our economic position today.

  Deputy Dan Neville: I wish to share my time with Deputies Breen and Durkan.

[263]   An Leas-Cheann Comhairle: That is agreed. Is the Deputy also sharing his time with Deputies Kehoe and Feighan, as they are also on my list as sharing time with him?

  Deputy Dan Neville: No. I understand we will each have ten minutes.

  An Leas-Cheann Comhairle: Very good.

  Deputy Dan Neville: I am concerned that the Government’s approach to the provision of mental health services is such that it will be confined to the bottom of the bundle of matters to be addressed on the Government’s desk. In his Supplementary Budget Statement, the Minister for Finance said:

I will terminate the property-related accelerated capital allowance schemes in the health sector. This scheme covers private hospitals, registered nursing homes, convalescent houses and associated residential units as well as mental health centres.

I have two questions for the Government, which I am sure the Minister of State, having regard to his portfolio, would not be in a position to answer. How much has been allocated for capital allowances on mental health centres? How many mental health centres have been funded through that means? I know of none. I welcome the fact that schemes for palliative care units and child care facilities will remain in place. I respectfully suggest that the schemes for mental health centres and the private mental health institutions, if they were developed, should remain in place, as well as the two other schemes I mentioned, to support the delivery of mental health services. The private sector has not been involved in the mental health sector in the way it has been involved in the general health service. In terms of the need for places and the availability of them in other institutions, the relationship between HSE public sector mental health institutions and private institutions and the non-profit institutions has been non-existent.

In regard to services for the elderly, the HSE contracts out beds for the elderly in private nursing homes. Such an arrangement can work well. Periods of respite care are also provided in private nursing homes. That also works well. Some 28 beds lie idle today in St. Patrick’s Hospital in Dublin, the non-profit psychiatric hospital, while there are waiting lists for psychiatric care. Has the Minister for Health and Children and the Health Service Executive considered contracting beds from the psychiatric services to provide for people on those waiting lists similar to the arrangement that operates in the general health service? There seems to be a barrier to doing that. I do not believe that has ever been explored and now the Minister for Finance has said that the property-related accelerated capital allowance schemes for mental health centres will be terminated. I would like a response to that; a letter from the Health Service Executive in the next week would suffice, that would indicate the number of mental health centres that have been allocated capital allowances under the scheme and the cost involved. I believe it will probably be nil. If that transpires to be the case, I question why the allowance schemes are being abolished.

I tabled a parliamentary question to the Minister for Health and Children in the past ten days on the percentage of the total health budget the allocation for mental health services for 2009 represents. I was informed it is 6.7% of the total. Bearing in mind that one in four people at some stage in his or her life will suffer a mental health need, that allocation is abysmal and a disgrace. It is neglectful of those who have a psychiatric illness and their families that only 6.7% of the total health budget is allocated for mental health services, bearing in mind that in the 1960s the allocation was 25% of the health budget and in the 1980s it was 18%. In England and Wales, 12% of the total health budget is allocated to psychiatric services and in Scotland [264] the allocation in that respect is 18%. With our allocation of only 6.7%, we are ignoring the needs in this area.

I draw these percentages to the attention of the Minister, following the debate that has taken place on the supplementary budget. Is there any point in raising this issue any more with the Government? Is there any hope of a response from the Government to the needs of those suffering from a psychiatric condition and their families? In times of plenty we raised this issue repeatedly and got little or no response. Will the Government at least say to me there is no point in continuing to raise this issue because in the current climate the provision for psychiatric services will be ignored?

Last Friday a report of the Committee of Inquiry to Review Care and Treatment Practices in St. Michael’s Unit, South Tipperary General Hospital, Clonmel and St. Luke’s Hospital, Clonmel, including the Quality and Planning of Care and the Use of Restraint and Seclusion, which reported to the Mental Health Commission, was published. If this publication was made in any other area of the health service, there would be a furore over it by everybody including the press and there would be Government statements and responses to it. The Minister of State, Deputy Moloney, in his statement in response to it said that he accepted most of the criticisms of it.

I listened to an interesting comment on the report by Fergus Finlay on the radio programme “Drivetime”, which encapsulated the views of those of us who have read the report. It is a complex report running to some 196 pages and one has to read through it to get the salient points. In his contribution Fergus Finlay spoke about what the reaction to this publication would be if it were about cats and dogs suffering from cruelty in Ireland, caged up for weeks on end with no company, never allowed fresh air or exercise, with their pens not properly cleaned out and the animals dosed with drugs to keep them quiet. He went on to say that if it had happened in a cats and dogs institution, the story would have exploded all over the news and excited a good deal of anger. He said we would all want to know who was responsible and the Garda would investigate the conditions in which the animals were kept, especially if they were injured. He referred to a news story last week that featured prominently in some newspapers, while it was tucked away in others, about the treatment of psychiatric patients in that institution. It was aired on the RTE News at 6 p.m. but not at 9 p.m.

The Mental Health Commission’s investigation of this undermines any claim that we are a civilised society, given that we treat human beings in the manner as outlined in the report. One cannot read the report and conclude that those people’s lives matter to anybody in authority, whether the Minister for Health and Children, the Department or its agencies. A report published in 2004 highlighted an unusual pattern of injuries to patients. There were many fractures, the incidence of which was highest among local hospitals. These were unidentified non-accidental bone breakages which were detected later in X-rays.

I ask the Minister of State whether the Government will respond to the issues I have raised. When the Dáil returns it should give an hour or two of Government time to discuss the report in detail so that the relevant agencies in the Health Service Executive can respond, and the Minister, Deputy Harney, the Minister of State, Deputy Moloney, if he is in situ, or whoever, can make a statement on the matter to the House. All parties should acknowledge that this type of treatment of human beings is unacceptable and should not happen in a civilised society.

  Deputy Pat Breen: I am delighted to be able to speak on the motion before the House this afternoon. I am disappointed, however, that the Minister of State, Deputy Finneran, is the only [265] Member from the Government side in the Chamber. They cannot all have returned to their constituencies, because I am sure most of them would not be welcome there, following the most severe budget of all time. They must be hiding somewhere, whether in the House or elsewhere. Of course there was not the same applause for the budget on this occasion as there was last October. It was a muted response, very different from the celebrations last October.

The Minister for Finance claims the budget sets out a plan to renew our economy over the next five years and those who have most must give most. The budget is bereft of ideas. In my constituency, County Clare, for instance, nearly 10,000 people are out of work and unfortunately the budget contains no measures to deal with this crisis. It contains no measures for employment creation, no stimulus package and the reality is that those with the least will pay the most while, once again, the Galway tent syndicate will be bailed out.

How can the Minister claim this budget is fair when workers earning as little as €289 a week will have to pay an income levy, following the decision to reduce the exemption threshold from €18,304 to €15,028. The only disincentive to work should be its unavailability. However, because of this budget people on low incomes will be forced to remain on social welfare and driven into the black economy — that is the reality. One of my constituents told me after the budget that the difference between him going to work and staying at home was €5. He asked why he should get up out of bed in the morning for the sake of €5, and I believe that is the position of many people on low incomes. I am pleased, however, that the Government did not hit carers who play an invaluable role in Irish society. I hope more funding will be given to them next time around.

I want now to deal briefly with a very important issue affecting my constituency, which has to do with resources, namely, publication of the HIQA report. The report was supposed to provide answers for the families of those patients whose cases of cancer misdiagnosis led to the inquiry. Unfortunately, however, there were no answers and instead the report endorsed the policy and objectives of both the HSE and the Minister for Health and Children, Deputy Harney, namely, the implementation of the Teamwork report and the further downgrading of Ennis General Hospital. That is regrettable, in the same week when the accident and emergency services at Ennis General Hospital saw its doors being locked at 8 p.m. The report claims that the current 24-hour emergency care is unsustainable and should be discontinued. It recommends that we should have a day-time minor injury-led service. In the context of the resources, I was told today that it was up to the HSE to make them available. I appeal to the Minister for Health and Children and to the Minister for Finance to make available the necessary resources to upgrade the hospital. This is extremely important, as we have had so many promises down through the years. Unfortunately, the essential resources have not been put in place and this is a very sad day for the dedicated staff of the hospital and the people of County Clare. It is the wrong way forward and sounds a death penalty for the hospital.

Returning to the budget debate, I believe lessons had to be learned from the October budget, but unfortunately, the Government has not learned them, particularly as regards older people. The decision to withdraw medical cards from the over 70s has been a complete fiasco. Many older people have had their medical cards wrongfully removed and now the HSE is extending the deadline by three months for returning these medical cards to them. Many older people in my county live in fear, especially those who live alone in isolated areas. The Minister of State will be aware of this scenario, since he lives in Roscommon where there are many rural areas. The provision of the panic button and the personal alarms was a great support for older people and a source of comfort for them and their families. This scheme is now to be axed and that is wrong. The Government got it wrong last October and it has got it wrong again. I appeal to [266] the Minister of State, Deputy Finneran, as a good friend of mine, to review this decision and not force our elderly people to live in fear of their lives in their homes.

Many of those on social welfare will get another hit at Christmas, when their bonuses will not be paid. Many people looked forward to that bonus. It was an opportunity for them, perhaps, to give a present to a loved one at this joyous time of year, which now, unfortunately, will be a sadder time for a great many people, especially with the rising cost of living. It will be difficult for people to cope with the adjustment to the cost of living.

The farming community, too, is in the firing line once again, as it has been over the course of successive budgets introduced by this Government. Some 12,000 farmers have signed up for REPS 4. The Minister for Agriculture, Fisheries and Food, Deputy Brendan Smith, had committed a budget of €355 million for REPS this year. In spite of the fact that farmers have now signed up for a five-year contract, they are once again being hit by a 17% cutback in this scheme. That is incredible and wrong because they will also have to pay their income levy. The budget measures hit farmers not just once or twice, but in all the other areas in which costs have increased. It has become expensive for farmers to produce beef and other food, particularly because of the increasing price of fertiliser and animal feed. The abolition of the €14 million fund for the fallen animals scheme is also worrying. This scheme compensates farmers for the cost of removing dead animals. Forestry supports are being reduced by 8%.

My constituency office has been contacted by a number of farmers who have been crippled by this budget. There is no incentive to encourage young people to take up farming because profits are already limited and the budget only presents further obstacles. The removal of installation aid from young farmers in last October’s budget was anti-farming.

The Government will be hit in the local elections on 5 June. I do not know if I feel sorry for the Fianna Fáil candidates who will face the people’s anger when they knock on doors. The €150 million reduction in the local authority roads fund will have significant implications for rural areas and road safety. Rural roads accounted for more than 70% of fatalities in 2007. God help the county councillors who will be elected in June because they will face major challenges. Fine Gael is opposed to increasing rates because they will have a huge impact on small and medium-sized enterprises which are already struggling to survive.

The budget represents a lost opportunity. People no longer have faith in the Government and they do not believe it is capable of leading the country out of recession. Strong leadership is required but this is not coming from the benches opposite. We cannot afford failure because the future of our country is at stake. The Government should step aside because it is failing the people. I could say more but I must give way to my colleague, Deputy Durkan.

  An Leas-Cheann Comhairle: Deputy Durkan has ten minutes.

  Deputy Bernard J. Durkan: I am delighted to have the opportunity to contribute to this debate. Like other Deputies, I could speak for much longer than ten minutes. I would not lose inspiration after several hours given the importance of the issue before us.

My response to this budget was not joyous given that it represents the third attempt since December to solve our economic woes. I do not address my remarks specifically at the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Michael Finneran, who is sitting opposite because, like all Members of this House, he is a decent individual. Unfortunately, however, the issues we have been raising for the past six [267] years were ignored. We were ridiculed and told that we did not know what we talking about. The experts should put their hands up and admit they were wrong to ridicule us.

The public is about to be severely punished for eight years of mismanagement. It has never happened previously in the history of this State that a succession of punishment beatings were meted out on the public. They did not cause the problem, however. The Government may claim it is part of a partnership but management is supposed to manage. It is like the old story of management blaming unions because the show went off the rails. Unions have a job to do but management has ultimate responsibility for taking decisions. Unfortunately, in this case, the management wilted. This budget comes hot on the heels of its predecessor and the public has not yet recovered from the last punishment beating. People have just begun to see the impact of the last intrusion on their wage packets.

I do not think the Government fully appreciates the grave danger we face that the economy will come to a total halt. It is not possible to generate industrial and commercial activity by taking so much money out of the economy. It was agreed that tough decisions had to be taken but a competition seems to be under way on who can generate the most pain. Adlai Stevenson used the phrase “no gain without pain” but the only gain in this budget is pain. What is even worse is that we have nothing in the pipeline except more of the same.

I have serious doubts about the future. We may face another budget in three months time in a further attempt to put the economy back on the rails. We will be much worse off by that stage. I contest the notion that the budget announced by the Minister for Finance will work because similar proposals have failed everywhere else.

Those who think our economic problems can be solved without first dealing with our empty housing stock are codding themselves. The budget proposes to deal with this issue gently at some time in the future. The Tánaiste made an interesting remark on today’s Order of Business in response to an Opposition suggestion that the Government intended to cushion the impact on those who used to frequent the tent. She claimed that the reverse was the case because bank share prices have fallen. That argument does not stand up to scrutiny.

The Government is pushing different buttons and hoping for a result. It looks at the board and asks us to agree that the colours are bright and wonderful but it is causing huge pain and the public are scared that worse will come next year.

This crisis presents opportunities for those who have for many years nurtured hate lists. We see this in the proposed abolition of child benefit. This has been on the agenda for years but it is extraordinary that it is being introduced at a time when most other European countries have taken measures to encourage population regeneration. The women of Ireland are being punished for having children on the grounds that millionaires’ wives should not receive child benefit. At our current rate of progress, we will soon have very few millionaires left. Child benefit was intended as a recognition of the work done by mothers in rearing children. I am totally opposed to any attempt to interfere with the payment because of the negative social impacts and the implications for household budgets. It is an anti-family proposal and an exercise in bureaucratic bookkeeping.

Another proposal coming down the tracks — or down the tubes, as the case may be — is the Green Party’s wish list idea for a carbon tax. It is being introduced in the current climate as a necessary evil. We are told we must have this carbon tax because we need money. We are also told that it will be hugely beneficial in dealing with the carbon footprint, but that is rubbish. The tax has been introduced in other jurisdictions, yet the carbon footprint has not disappeared and nothing has changed. It just meant that a means was found, under another guise, to extract [268] taxes from the unfortunate motoring community. If we continue along this route it will not be necessary to introduce incentives to put people on foot or on bikes. They will be reduced to that anyway because they will have no other means of transport. This proposal is not part and parcel of what is required at the present time.

We have had a number of years of the Celtic tiger and we commonly hear that we were all responsible, but were we? Were all the people of this country responsible? Some people never benefited from the Celtic tiger, which has come and gone.

  An Leas-Cheann Comhairle: The Deputy has only one minute left.

  Deputy Bernard J. Durkan: In general, the public is now receiving one beating after another for something it did not do or call for, but unfortunately the Government abdicated its responsibilities through mismanagement. The Government continually said that the fundamentals of the economy were correct. That phrase has gone now, however, to be replaced by “We are all responsible”. The Government wants to share the burden with the Opposition and every poor victim in the community. In a moment of generosity, the Government wants to share its incompetence with everybody in the country. What an appalling scenario.

  Deputy Michael Finneran: As was made clear by the Minister for Finance on Tuesday and in the weeks leading up to the budget, the decisions taken by the Government on measures to help restore balance to the public finances have been extremely difficult. They are necessary and have not been undertaken lightly. It is fair to say that they are among the most difficult economic decisions any Irish Government has faced and our deliberations have taken place against the backdrop of the most severe global economic crisis since the 1930s.

The Minister for Finance has already outlined how the difficult decisions focused on revenue raising will impact on the standard of living of all our citizens. Of course, raising revenue is just one side of a difficult budgetary equation. The other involves achieving expenditure savings across all areas of public policy and in every Department.

The budget of the Department of the Environment, Heritage and Local Government has had to play its part in this process and the housing area, in particular, is taking on a significant proportion of the Department’s burden. Given the levels to which investment in housing supports has increased in recent years, it would be unrealistic to expect otherwise. However, it is important to bear in mind that the achievements we have secured on foot of that investment mean that we face into the challenges of 2009 and beyond from a position of relative strength.

The expenditure adjustments required will create challenges — challenges for my Department, for the local authorities who deliver the bulk of housing services to households who need them, and for the voluntary and co-operative sector, which has radically stepped up its level of activity in recent years, supported by significant Exchequer investment.

Foremost among the challenges faced by all of us involved in the housing area will be how the adjustments that must now be made are applied to those households that depend on the services being provided. The clear objective will be to ensure that we minimise the effects of the expenditure adjustments on those whose support needs are most acute and reorientate other programmes that can better adapt to the changing circumstances.

Notwithstanding the scale of the deterioration in the public finances, the Government’s commitment to responding effectively to a range of housing needs remains solid. The Government has provided record levels of resources for social and affordable housing, improvement prog[269] rammes and regeneration measures in recent years, including some €1.73 billion in Exchequer funding in 2008 alone.

Investment on a scale like this has enabled us to achieve record levels of activity, with the needs of some 19,500 households, in total, met last year through the full range of social and affordable housing programmes. Now however, as other Ministers before me have acknowledged, we are operating in a significantly more constrained environment. At the same time the increase in net need for social housing over the period 2005-08 reinforces the ongoing need to prioritise the provision of housing supports.

The Exchequer provision for housing for 2009 reflects these facts. While down on the provision for 2008, it still represents a significant level of investment. However, the extent of social housing need demands that we strive to maintain the momentum we have built up, that we try to deliver more for less, and that we continue to develop flexible and imaginative approaches to respond effectively to the diverse housing needs that exist today.

The adjusted housing provision for 2009 — at €1.412 billion — shows a reduction across current and capital funding of some €240 million from the provision announced in October last. As I have already said, while there is no doubt that a reduction of this level will require difficult adjustments across a range of social and affordable housing programmes, in the circumstances in which we find ourselves it still represents a significant level of investment by the Government in the delivery of a diverse range of housing supports.

Therefore, while the inevitable impact of the reduced level of financial resources will move us from a period of significant expansion of housing activity into a period of consolidating activity around current levels, it is important to bear in mind that activity levels are now at a level that is catering for the needs of more households than ever before. In other words, if we are required by our current economic and fiscal position into a period of consolidation, it is far better to be consolidating record gains, as we are.

The way in which the adjustments to the provision announced in October are to be applied is guided by a number of key strategic objectives. First, while recognising that the pool of resources available to us has reduced, we will continue to prioritise as far as possible activities focused on meeting the needs of the most vulnerable and disadvantaged in society.

Second, we will be endeavouring to make the most significant adjustments in areas where we believe that the changed housing market environment provides the greatest opportunities for new and flexible approaches to programme delivery. This will allow us to lessen the impact of the more constrained resource environment to a greater extent than would otherwise be possible. The roll-out of the new long-term leasing initiative for social housing is a prime example of this, allowing us to match up a significant social housing need with the increased availability of good quality homes available on the market.

Third, the Government recognises the significant labour intensity of particular programmes and their capacity for maintaining and supporting employment. In that regard we will, to the greatest extent possible, be reflecting this in our ongoing commitment to regeneration and remedial works projects. Recognition for labour-intensive activities is a common thread across many decisions in this budget.

I would like now to outline some of the details of the adjusted 2009 provision. Homelessness is, of course, the most extreme manifestation of housing deprivation. I have outlined in this House, and beyond, the priority I personally attach to tackling the causes and effects of homelessness. I need not do so again now, but I should re-emphasise that funding for the provision [270] of accommodation and related services for homeless persons and households is being increased in 2009 by over 5% above the 2008 figure.

In the context of the wider budget, in which the two central themes have been revenue raising and expenditure saving, this is a significant achievement at a pivotal moment in the implementation of the Government’s strategy on homelessness, entitled The Way Home. Demand under the revised suite of adaptation grants for older people and people with disabilities has been exceptionally strong since its introduction in late 2007. This is due in part to publicity surrounding the launch of the revised schemes, a widening of the eligibility criteria for the target households, an expanded range of works to include improvements as well as more essential basic repairs and higher levels of grant-in-aid.

Funding pressures arising from this emerged in a number of local authorities last year and demand under the schemes this year looks set to be strong once again. An increased Exchequer allocation of €75 million for these schemes in 2009 was provided for in the October budget. However, conscious of the deteriorating economic position later in 2008 and the risk that this could ultimately impact on the 2009 budgetary provisions, further Exchequer funding of €12 million was provided towards these schemes in the final quarter of 2008, ensuring that many local authorities were facing into 2009 in a better position to respond to existing and new demand.

As a consequence, this allows scope for the provision for the schemes in 2009 to be reduced from the initial €75 million. We will still aim, however, to provide a similar or even higher Exchequer allocation for the operation of the grants schemes in 2009 than the initial allocation for 2008. This is another good outcome in the circumstances, which will allow for the payment of grant aid to an estimated 12,000 of the most vulnerable and disadvantaged households. In many cases these grants will enable people to continue to live independently by avoiding the need for long-term residential care or in other cases facilitating discharge of such households from long-term care.

An evaluation of the grants schemes is under way. The conclusions that emerge from the evaluation will be crucial in helping to ensure the schemes can continue to focus on the needs of the households most in need of support, taking account of the terms of the schemes and the more constrained resource environment.

We have all seen the extent to which trends in the overall housing market are being reflected in the affordable housing area. These trends have changed dramatically the landscape for affordable housing in a short space of time. Just a few years on from the Towards 2016 agreement, with lowering prices in the wider market eating into the differential between affordable and market prices, we find ourselves with a slower uptake of affordable housing and an increase in the stock of affordable housing units on the books of local authorities.

I am taking prompt and appropriate action to respond to the new affordable housing context. Only yesterday, my Department communicated a comprehensive strategy to local authorities to assist them in ensuring that available affordable homes are brought into use as soon as possible in the most appropriate and effective way. The Government remains committed to supporting the home ownership aspirations of the greatest possible number of households. However, with national affordability levels back to 2003-04 levels and affordability in Dublin back at levels last seen in the late 1990s, the number of households which need support in realising those ambitions is decreasing.

[271] In the circumstances it is appropriate, therefore, that the financial provision for affordable housing be adjusted to reflect diminishing demand in many areas in order that the burden of adjustment required under programmes targeting lower income households can be reduced.

We will again provide significant levels of investment to support the activity of the voluntary and co-operative housing sector in 2009. While this will not match the levels provided last year, it must be borne in mind that the 2008 provision was boosted over the course of the past year by the provision of an additional €80 million of investment beyond planned levels under the capital loan and subsidy scheme.

The consolidation of activity under the schemes this year comes in the wake of record levels of investment which have secured record levels of output from the sector in recent years. Notwithstanding the funding pressures, significant output will again be delivered this year, meeting the needs of disadvantaged households and communities throughout the country, while supporting employment in the construction sector. The voluntary and co-operative sector remains a key partner for the Government and for local authorities and the funding being provided means voluntary housing programmes will continue to form a major part of the overall social housing investment programme.

Debate adjourned.