Full text follows video clips. Apologies for shakiness in the first recorded section.

When I saw the Fianna Fáil Deputies jumping up and down there I wondered if the Taoiseach had borrowed some of the meters used by the American on “The Week in Politics” to measure how well the Minister, Deputy Cowen, was doing. Perhaps the person who received the highest rating might have a chance at a junior Ministry. The Taoiseach wishes to allocate one before Christmas.

Today’s show is all to do with floating voters and how they turn the dial. The Minister is like King Croesus, his pockets bulging with the people’s money, earned through hard work. The budget’s measure is how fair he has been in distributing the people’s own money among them. Fair is fair, and when I heard him commit himself to significant improvements in old-age pensions, I recognised that they were well deserved, since it was the pensioners who made this country what it is today. They need the extra money to meet our very high and inflationary cost of living, not least the cost of heat, gas and electricity, not to mention the VAT of 21% that they pay on almost everything.

A dependent pensioner, usually the married woman, is worth a great deal less than her husband in pension terms. The husband will receive €209 per week, on which I congratulate the Minister, but the dependent woman is worth only €173 a week. I thought that the Minister might have reformed that, and I am sorry that he has not taken the chance offered by the vast sums of money flying around to address the issue. I welcome the increase in the fuel allowance of €4 to the princely sum of €18 a week. It is approximately the cost of a bag of coal and half a packet of fire-lighters but welcome for all that.

I want to mention something about a group more or less forgotten in today’s budget but whom Deputy Bruton mentioned earlier. The position of a married, one-income family, usually where the mother, but nowadays increasingly the father, remains at home to look after the children, has worsened considerably under the Government. It was one of former Deputy McCreevy’s policy changes when Minister for Finance to individualise the tax regime. More than 75,000 such households now pay tax at a marginal rate of 41% because of the Government’s individualisation.

For the most part, they are families with children where one parent has opted to stay at home to take care of children or other family members. The economist Jim O’Leary wrote a very thoughtful piece on the subject in The Irish Times last week. They have lost out and would need an increase of almost €11,700 before today or €13,700 afterwards to return to the relative position they occupied in 2000, before former Deputy McCreevy acted to their disadvantage. That is how far back they have fallen.

It is important, as we celebrate the gains for the high rollers from the cut in the top rate, that we think of the single-income families who did not share to the same extent in the largesse the Minister offered today. It is worth pointing that out.

When I heard the Minister speak of prudence, I thought of John Lennon’s son Julian, who said that his father’s favourite Beatles song had been the one with the chorus “Dear Prudence”—–

It seems that she did not want to play, and so the Minister’s flirtation with Ms Prudence has proven rather shortlived. He decided that he had an election to win, and so prudence was left on the shelf. When I hear Fianna Fáil Ministers assure us that they will be prudent in an election year, I inject a dose of scepticism. In my bones, I know the opposite to be true. One cannot get a leopard to change its spots; when Fianna Fáil sees an election around the corner, its first instinct is to buy it.

This budget is not as crude as that for the election year of 2002, but when the sums are done, one sees that it is not that far out. This is the fifth budget from the Government since the last general election, and we are entitled to consider its overall record and not simply the measures announced today.

The plain truth is that the tax justice agenda was stalled for the first three budgets since the last election. There was no reduction in tax rates in four successive budgets, only increases in VAT that were paid for the most part by families on modest and lower incomes. It is curious that this period of zero reductions in tax rates coincided with the arrival of the Minister for Justice, Equality and Law Reform, Deputy McDowell, as a full member of Cabinet. It is an amazing legacy for somebody who talks endlessly about tax cuts that he failed to secure a single one in four years.

Instead of tax cuts in those four years, most working taxpayers had to pay more. The standard rate band was frozen in value for two years and more workers than ever – almost a third, or 666,000 – paid tax at the higher marginal rate. This amounted to an effective tax increase for such persons. Today’s reductions are no more than delayed compensation for the punitive measures imposed in three budgets, as well as the unjust and unfair increase in the VAT rate, which has still not been rescinded.

I thank the Minister for today’s reductions but he should not expect people to cheer too much. He built up the reserves to pay for these cuts by a vicious regime of hidden increases, stealth taxes and charges in the last four years.

Many of the 52% of taxpayers who pay for private health insurance are on modest incomes. For these ordinary, hard-working and hard-pressed families, the increase in the cost of private beds in public hospitals will mean another round of insurance increases .

It says much about this Government that it cuts the top rate of income tax but not the lower one, and that it pays for this reduction by reducing the scope of other tax reductions. We have always argued that a wider standard rate band and additional tax credits are the best way to achieve tax justice. I am aware the Minister shares this view because he has said so on several occasions, as has the Taoiseach. I am sure Mr. Seamus Mallon will forgive me for using his famous phrase in a different context. What we have today is tax reform for slow learners. On the way, serious injustice was done to people who were forced to pay tax at 42%, as well as PRSI, on modest overtime payments, bonuses or wage increases.

This is a typical Fianna Fáil-Progressive Democrats budget, one that benefits the wealthy few rather than the hard-working many. The headline reductions in taxation will be welcomed by hard-pressed families. It remains the secret of our tax code, however, that tax is often only for the little people and is generally most onerous for them. In 2006, a single worker who earns €32,000 per year and €1,000 in overtime pays tax at 42%, plus up to a further 4% in PRSI. After today’s budget, a single worker earning €34,000 will pay tax at 41% and PRSI on any overtime earnings or bonuses he or she receives.
It is not surprising that people in such circumstances wonder at a Minister who facilitates a situation where more than 1,000 of the most wealthy citizens, including 32 millionaire earners, pay an effective tax rate of between 0% and 5%. The Minister supplied these figures for 2003 in a reply less than ten days ago. No amount of massaging the figures, Enron style, can deny that dysfunction in our tax system. The point about lower taxes is that for tax justice to work, and to allow us to fund schools, hospitals and other public services, everyone must pay their fair share.

A reduction of 1% in the top rate of tax is worth zilch to a person earning less than €34,000 per annum. The Minister’s tables indicate there are 1.7 million workers who pay tax at 20% or less. The reduction in the higher rate of tax is worth nothing to them. By his own account, only some 400,000 people will benefit from it. For a worker earning €84,000, the value of the cut is some €520; for those on €168,000, it is worth approximately €1,360; and it is worth €1,903 to those earning €250,000.

This budget is an example of Enron economics and Humpty Dumpty accounting. I am particularly interested in the tables set out in the Budget Statement. The table on page C22, for example, shows the numbers paying tax at the various rates. I asked my colleague and party leader, Deputy Rabbitte, to bring a copy of last year’s Budget Statement for comparison purposes. Last year, we were told that 658,000, or 31.9%, of taxpayers paid tax at the higher rate. In another example of Enron accounting, the Minister has performed magic by suggest that only 19%, or 438,000, will pay at the higher rate following the changes in the budget. The smile on the Minister’s face indicates he knows this is a good stroke. Some 250,000 workers have disappeared from the cohort of those paying the higher tax rate. I believe it was Tommy Cooper who used to say “Just like that”. Just like that, 250,000 workers have disappeared. It is a good trick and the Minister has done well.

According to the Minister, 1.75 million workers will now pay tax at 20% or less. In other words, they will pay a higher rate of VAT than income tax. That is some achievement in terms of tax justice. The reality, however, is different. At the recent Fianna Fáil Ard-Fheis, I heard both the Minister for Finance and the Taoiseach proclaim that this reclassification would allow the Government to claim it had met its promise that only 20% of workers would pay tax at the top rate. All this happened in the blink of an eye. In late September, on the first day following the summer recess, I received a table that was calculated in the original format. Some of the Minister’s handlers have since been to work to recast the table.

In Alices Adventures in Wonderland, Humpty Dumpty said in a scornful voice that when he used any particular word, “it means just what I choose it to mean, neither more nor less”. Likewise, when the Minister for Finance produces a table showing table rates, it means whatever he chooses it to mean, no more nor less. If he is to acknowledge the rules to the slightest degree, he must explain why he has undertaken this fix. It is an Enron-style massaging of the figures. If the Government wishes to restate the figures, it should follow the rules and explain exactly what it is doing, instead of trying to pull a fast one.

I will put forward a simple test for the Minister’s consideration and I ask him to tell me whether I am right in my conclusion. Should a person earning more than €34,000 be offered an overtime or bonus package of €1,000 in the weeks before Christmas, what will be the effect on his or her pay packet? Will the tax be deducted at 20%? Absolutely not. It will be deducted at 41%, in addition to some 4% in PRSI.

If a nurse, married to a garda, earns €1,000 for an extra long weekend’s work, when she examines her payslip, she will not see a 20% tax deduction but a 41% one plus PRSI. People will know the answer when they check their wage packets.

For some time I requested that budgetary tables be included in the statement and today they have been restated without so much as a blush. I suppose it is about the election.

After five years of this Government, it is time to take stock of what has been achieved. In the five years, the Government’s spending programme has been awesome. The shortcomings on the delivery side have been no less striking. If the Tánaiste were in the Chamber, he would be asking the Minister for Finance if he got away with it. Despite the glowing promises made before the last election and the unprecedented tax revenues the Government has enjoyed, improvements in public services have not been delivered. We are still waiting for the promised increases in hospital beds, the promised reduction in class sizes to 20 for children of nine years and under and the promised levels of social and affordable housing for young people to start out on the property ladder.

While the package for care in the community is welcome, it is but a sticking plaster measure that will go nowhere near the core of the problems in our health care system. The headline figure for health spending is a large increase but it is still a lower percentage of national wealth when compared to other European countries. Sweden, for example, spends 60 cent on long-term care for every euro spent on health care while Ireland continues to spend only 12 cent. The effect of this massive underspend is seen in the trauma of overcrowded accident and emergency departments.
An extra €100 million package has been announced for health-related disability and mental health services. All Members were touched by Monday’s “Prime Time” programme on mental health services for children and the desperation experienced by parents. Of this extra package, €75 million is for disability while €25 million is for the programme on mental health, A Vision for Change. The waiting list in Deputy Moynihan-Cronin’s constituency for mental health services for children is four years. The €25 million will only see to the needs of counties Kerry, Kilkenny and Carlow, such is the level of need. Again, we say “thanks” but it is a very limited increase for a particularly needy area.

The health services employ more than 100,000 people, but the majority of employees feel they work hard and do not get due recognition. This is because of the bungling by the Minister for Health and Children and top management and poor organisation.

The biggest health policy change in the Government’s lifetime is the loss of direct accountability. Professor Brendan Drumm has become the Minister for Health and Children while Deputy Harney is just for decoration. A sceptical nation was told that the abolition of the health boards and the formation of the HSE was designed to give us a more efficient health service. It is now obvious that the objective of the Minister’s expensive reorganisation of the health services was not to improve service to the public, but to establish structures and processes to enable her to avoid having to answer for her actions and responsibilities either to the Dáil or the media.

There are now more than 3,000 people waiting at least one year for hospital treatments. Figures provided by the Minister last week show that 256 people are waiting for neurosurgery in Beaumont Hospital, 117 of whom have been waiting for over a year. In St. Vincent’s hospital, 175 are waiting for pain relief, 65 of whom have been waiting for over a year. In Crumlin children’s hospital, 674 children are on the surgery list, 199 of whom have been on the list for over a year. The national health strategy in 2001 promised that by the end of 2004, no patient would wait longer than three months. That is the reality in delivery.

It is even more shocking when we see the money it costs for this poor delivery of service. It is no wonder that an opinion poll yesterday showed that 58% of all voters and 60% of Progressive Democrats voters believe nothing has got better since Deputy Harney took over as Minister for Health and Children.

The Government backbenchers listened anxiously to what the Minister for Finance would do for first-time buyers and I am not sure they were impressed. They must know that every move made by the coalition in the housing market has ended in tears with no discernible improvement for first-time buyers. Ministers need to tread carefully when they try to use tax measures that appear to offer relief but end up boosting prices, as has happened more than once. It is a treacherous minefield and I see little genuine benefit in what has been announced in the budget. There is an urgent need to refocus policy to help the first-time buyer.

The Government’s legacy in housing is a mixed bag. Fortunes for some, massive house construction activity but frustration and anger among many whose dreams of home ownership are perpetually stopped by rising prices and the collapse of affordability. Nothing symbolises the failure of the Government to manage and distribute the gains of the Celtic tiger more than the current housing situation.
Let us take a representative young couple. John is a teacher and Niamh is a nurse, both in their late 20s and earning over €35,000 every year. They rent an apartment for €1,100 a month in Ongar, west Dublin, a community highlighted in last Saturday’s The Irish Times. They would like to get married in four years and start a family but before this, they would like to buy a home within a reasonable commuting distance of their jobs. It seems incredible that this young and ostensibly affluent couple cannot buy a home of their own. Their parents, when they married 40 years ago, could buy a home and settle down within a reasonable distance of their work. John’s older brother married in 1996 when the Celtic tiger was just beginning to roar and managed to buy a house.

John and Niamh want to know why the Government has rebalanced the property market and the chance of home ownership against them and in favour of a motley crew of landlords and investors. The Government’s housing statistics on record construction levels do not speak to John and Niamh. They are locked out from buying their own home. Tonight when they do the sums after the budget, they are unlikely to feel much more confident than they were last week, particularly when interest rates will increase by 0.25% tomorrow. For the average starter mortgage in the Dublin area, €330,000, this increase will cost €63 a month, wiping out the gains in the Minister’s increases.

The Minister did not say much on stamp duty. I was disappointed he did not include a left wing Fianna Fáil tax reform approach in the mix. He could have closed the loophole whereby those who bought the site of the Irish Glass Bottle Company in Ringsend saved €30 million in stamp duty. While the Minister did not want to tinker with stamp duty, he could have closed some of the loopholes. I am glad he is promising an exemption on sporting bodies. I have raised this several times through parliamentary questions and the media. I hope this will benefit the Cork GAA club which first raised it, because it deserves a break.

One of the people I am trying to assist is from the Taoiseach’s constituency. She is 34 years old. Let us call her Una. She has a 12 year old daughter, Mia. She has been parenting alone since Mia was born, has a good job in a State-funded body and earns just under €39,000 per year. She would like to buy an apartment from Dublin City Council for herself and Mia for between €210,000 and €240,000, but she has a continuous affordability gap of between €50,000 and €100,000.

If her parents could give her this amount she would be all right. She could then pay €12,000 per year for her mortgage and another €1,800 to €2,400 in management company fees for the apartment she wants. I have known this woman for a number of years and she is always just that little distance away. She cannot make it. She is one of the 6,000 people on Dublin City Council’s waiting list and is in the draw for affordable housing three times a year. As the Taoiseach knows, there is a draw for affordable housing in the city and 300 to 350 lucky people win the right to buy a home. That says it all.

Why has the affordability gap for people trying to buy a home constantly widened? I do not know if the Taoiseach appreciates that the average mortgage in Dublin is approximately €330,000. In the past 18 months the average repayment in Dublin has increased from €1,453 to €2,167 per month. That means buying a home in Dublin will cost between €12,000 and €24,000 per year, and one has to eat after paying that. To be in the market a single person probably needs an income of over €45,000 while a couple needs over €75,000. These large increases in mortgage repayments, high child care costs and increasing travel costs and travel times put a great financial strain on many families. They erode the quality of family life and people’s ability to sustain marriages and relationships.

The Taoiseach talks much about community and he values it greatly. The heart of a community is people in relationships or marriages and having children. The strain is too much with the kind of structure the Government has allowed to evolve in the housing market. It is pitted against the best and brightest young people who have good education and jobs. Although they are working hard and doing it right, they are not getting there. There was not much attention to them in today’s budget.

The Americans call this phenomenon “toxic debt”. This occurs when families and individuals buckle under the strain of buying and furnishing a house and having some quality of personal life. This Government, due to its incredible pandering to its friends the developers, builders and landlords is poisoning the opportunity to own a home for many of our best young people.

I read that this country has the longest waiting list for private helicopters and jets outside the United States. This is a mark of incredible affluence within a generation, and more power to them.

However, as we go up in the ratings for owning private jets and helicopters, the parties opposite seem to accept that owning one’s own home will not be a legitimate part of the Celtic dream for up to 25% of our working population. That is an incredible change in philosophy in the parties opposite.

I could talk about social housing and the poverty trap of rent allowance. Rent allowance costs the Government €400 million per year and I do not need to tell the parties opposite that when a person receives rent allowance his or her right to work is heavily restricted. If one is on social welfare one is put into a poverty trap and a property trap. One cannot work because one loses euro for euro, and because of this one will never be able to buy one’s own home, not even a social house rented from one’s local authority.

People on rent supplement face insecurity as tenants. The majority of them are in buildings that have never been inspected for basic facilities and safety. Extra rent is unofficially gouged out of them by landlords on a widespread scale. If they begin to earn anything they are immediately cut off from rent supplement. This would never have happened if Ministers cared about disadvantaged families and the poverty traps they face. This is not a problem for just a few families. Some 60,000 households receive rent supplement, which costs the taxpayer €400 million per year, and that goes straight into the pockets of our new landlord class.

I want to talk about the environment and the spectre that is haunting the economic and financial plans of every advanced country, namely, the consequence of climate change. For all the attention this budget gives to it one would think our country has some natural exemption and that the Crossmolina floods did not happen. St. Patrick banished the snakes and the Minister, Deputy Cowen, has banished global warming as if it does not exist.

This is the first budget to contain a sweetheart letter. This is from our good friend, the Minister, Deputy Roche:
Mr. Dick Roche, TD, Minister for the Environment, Heritage and Local Government, invites interested parties to make submissions in relation to the rebalancing of annual motor taxes to provide an alternative through the motor tax system for the motoring public to drive cleaner cars and to impose penalties in respect of cars with higher CO2 emission levels. [Deputy Treacy did not have the chance to read this lovely little letter.] This invitation will be published on my website … submissions received will also be published on the website. [So what I say to him will be up there.] Submissions may be e-mailed to motortax@environ.ie or posted. [This is the good part.] All submissions should be received at the latest by 1 March 2007.

This is what the Government intends. The Government’s record on preparing our country for climate change is lamentable. I never thought the day would come when Irish public servants, who prided themselves on never being caught at anything by Brussels, would be willing to pay billions of euro in fines under the Kyoto Agreement rather than make some of the simple changes.

There was a culture among Irish public servants that we did not pay unnecessarily. However, today the Minister said he is allocating more funds for carbon purchases in Kazakhstan. When Borat hears about this he will come and visit us. It is unbelievable. It says it all when climate change is put in the hands of the Minister who cannot get the number of voters on the register right.

It is a pollute now, pay later policy. It is environmentally irresponsible nationally and internationally. Why should a rich country like Ireland add to the problem of global warming by increasing greenhouse gas emissions and leave the bill for future generations to pay? That is irresponsible politics and would be addressed by an alternative Government.

I am surprised that simple things have not been done, such as rigorous energy standards in the construction industry and major products under the national plan to be carbon-proofed. Large-scale schemes are needed to convert existing buildings to meet energy efficiency standards. Generous grant schemes to insulate the houses of older people would be beneficial and would keep them out of nursing homes such as Leas Cross. The ways to ensure an older person does not end up in a nursing home are sufficient income, a warm, dry house and mobility aid.

I commend the Minister for one part of the education section of the budget, the commitment to the so-called fourth level, investment in research and development through higher education institutes and universities. This will reap dividends if properly spent and will generate a culture of innovation and enterprise.

The Minister is less sure-footed in his approach to policy and investment at the other end of the educational spectrum, the early childhood years. Policy is woefully inadequate and confused but the evidence of its importance is overwhelming. This can be examined in respect of economic returns aside from social considerations. The National Competitiveness Council returns to this theme in many reports, citing evidence from high performing economies of the valuable role early childhood education plays in securing the best results at later stages.

The 1% reduction in the income tax rate is estimated at €228 million for one year. This figure could start a pre-school education system. The Minister chose to give it to top earners. It would have been better spent on our children to create proper pre-school education. On education, we are as far from Boston as from Berlin. It is not a question of low taxes or better public services. Low taxes are sustained by economic growth when one invests in education at every level.

The Minister emphasised prosperity and economic growth but the secret enemy of continued prosperity is inflation. No amount of heroic cheers can distract from the real dangers of high levels of inflation. For years we accepted a high level of inflation because of stealth taxes and charges generated by the Government, with little regard for long-term consequences. We can no longer pretend there is no downside. The Minister does not wish to refer to it but this week, as with every week, the country faces a record number of job losses. Factories are closing around the country. Workers at the gates of Leinster House today were from Castlemahon and lost out to cheap imports and cheaper labour thousands of miles away. As Fianna Fáil celebrates the budget in robust fashion, there are anxious meetings around family tables about what to do now that the spectre of redundancy is looming. If one is over 45 years of age, it is difficult to get a replacement job.

The smallest part of the budget speech was reserved for decentralisation. We could hardly read it. It is, at most, a long paragraph. If decentralisation was correctly managed, as was done by Labour in coalition with Fianna Fáil and in the Rainbow Coalition, more people would now be working in decentralised locations than is the case due to the political stroke Charlie McCreevy pulled here three years ago.

Stroke politics ruled the Minister’s predecessor but, clever as Charlie McCreevy was, his stroke of political genius was his political nemesis. One year later the Taoiseach threw him overboard at Inchydoheny and told him to swim to Brussels.

I advise the Minister to beware of hubris and nemesis. He should not celebrate too much saving up the people’s money for today’s splurge. What about those who are making a two hour trek to a very expensive house, those paying high child care bills and the unfortunate people on trolleys at accident and emergency units at the weekend? Excuse me if they do not share in the jollification and meter clapping today. When election time comes they might reach for their meter and they might bite back.