4th December 2002
Budget is a fraud and a swindle - Ó Caoláin
Sinn Fein response to Budget in Dáil
This Budget represents one of the greatest frauds and swindles ever perpetrated against an Irish electorate. Only seven months have passed since the General Election. That was the Minister's last outing as Champagne Charlie. The bubbly was still flowing and the sky was the limit. Four days before the election the Minister told the people: ``I can confirm that there are no significant overruns and no cuttbacks whatsoever are being planned, secretly or otherwise.''
It's a long, long way from May to December.
It's a long way from Fianna Fáil/PD promises and the reality in this Budget.
We still haven't got an explanation of how the Minister could promise no cuts in the middle of May and then a few weeks later his Department was proposing cuts of some ¤900 million. It could only be massive incompetence or massive deception.
Today the deception is exposed. The Fianna Fáil election manifesto, the Programme for Government, the National Development Plan and the National Health Strategy have been thrown into the incinerator. The National Spatial Strategy might as well be the National Space Exploration Strategy.
The publication of the Book of Estimates caused widespread and justifiable anger throughout this State and the Budget just presented by the Minister for Finance will surely deepen that anger. Before the Budget we had already seen:
- the axing of the first-time home buyers' grant;
- the reneging on the promise to extend medical card entitlement to a further 200,000 people;
- the cut in the school building programme;
- the social housing cuts;
- the shortfall in the health budget;
- the cutting of 5,000 CE places;
This Budget has confirmed these cuts.
This Budget follows five years of squandered opportunities in every Budget presented by this Minister for Finance. We had and still have unprecedented wealth in this economy and the Government has failed to harness that wealth in a planned way to benefit all citizens.
We face these difficulties not simply because of the shortfall in the public finances which have arisen in 2002 - they result from mismanagement and the squandering of the unique opportunities of the past five years.
Minister McCreevy looked after the wealthy in all his Budgets and he has done it again. Those on lower income have been left behind once more.
Before the General Election Fianna Fáil made two promises they have now reneged upon in the most blatant manner. They promised to end hospital waiting lists in two years. They didn't even bother including that one in the Programme for Government. It was dumped as soon as the polls were closed.
They promised to extend the Medical Card to a further 200,000 people. Don't forget this was signalled before the last Budget as well. Now that promise is reneged upon a second time.
It is the low paid who fare worst in our health services and this Budget has not provided the resources required. For a better health service we need both resources and reform. The National Health Strategy is a fudge. It doesn't tackle the grossly inequitable two-tier system. It does not reform. But even the positive aspects of that Strategy are now thwarted by lack of resources. As signalled in the Book of Estimates this Budget does not keep the health services in line with medical inflation.
The wealth and the resources are out there in this economy to extend medical card entitlement. And remember this is not just a broken and forgotten election promise of 2002. This is a legitimate expectation that tens of thousands of families have had throughout the Celtic Tiger years. It is a right to which they are entitled. It is a shame and a disgrace that in 2002 after the most prosperous period in the history of Ireland, it is still wealth that determines the standard of health and the standard of access to health services for our people.
The reduction in Corporation Tax cost ¤329 million in 2002 alone. That money could and should have been used to improve the health services and extend medical card cover.
In an eve-of-budget cut this Government has hit people who are just over the income limit for the medical card. They must now pay ¤70 per month for medication before there they qualify for refund. This is the second increase in the threshold this year. It will hit people suffering from long-term illnesses like asthma and diabetes particularly hard.
The same announcement from the Minister for Health tried to disguise an actual rise in the hospital waiting lists by doctoring the figures.
If the Minister as he claims is interested in value for money why did he and his colleague the Minister for Health not initiate an immediate value for money assessment of the National Treatment Purchase Fund. This stop-gap measure sponsored by the PDs is subsidising the private health system. And while they are at it they could assess the overall cost of the subsidising of private healthcare in public hospitals.
This Government has broken its promise to parents who find themselves just over the income limit for the medical card and who must struggle to scrape together the money to bring their children to the doctor.
But the Government has kept its promise to the big corporations, to the multinationals who export their profits, to the banks and insurance companies and other financial institutions who fleece their customers and fleece this economy. In this Budget they are getting their promised cut in Corporation Tax from 16% to 12.5% - a massive reduction.
The ESRI estimated that business could sustain a Corporation Tax rate of 17.5% without loss of competitiveness. So why is this gift being given to those who need it least while those who need help most have been betrayed? Shame on this Government for such gross inequality, a move that typifies the approach of the past five years.
Instead of this giveway to the rich the Minister should have retained Corporation Tax at 16% and returned Capital Gains Tax to 40%.
But there was even more scope for progressive tax reform. The recent report of the Revenue Commissioners showed that over 22,000 people in this State earn more that ¤100,000 per annum. Most of these people also benefit from the many tax avoidance schemes. The most recent National Economic and Social Council Report expressed its concern at ``the highly complex system of tax reliefs and the lack of any clear principles in the evolution of these reliefs''. The Minister has only tinkered with tax reform in this Budget. The wealthy still have their loopholes. The Minister should have created a new 50% band for incomes over ¤100,000.
The Minister has made a range adjustments in tax reliefs. In doing so he has all but admitted that these were inequitable and benefited the better off. Why did it take him five years to make these adjustments? It is because now, with the public finances in a tighter position, they have become an embarrassment and even this Minister has to remove them.
But there are may more he could have removed as part of a major review and reform of the tax system as called for by the NESC.
The Government has failed to take the lower paid out of the tax net as promised. People on minimum wage are still taxed. Income tax changes in this Budget have again benefited the better off disproportionately. The married couple with two children and one income gain ¤144 per week while the same family on ¤130,000 gain ¤269.
The Minister is relying on widespread and sweeping VAT changes to raise extra revenue. These changes will have a massive knock-on affect and they take no regard of income - once again they will hit those on lower income who will feel the increase in the cost of living. A whole range of costs and charges will hit them.
Over the last five budgets the richest 10% of the population has received 25% of the benefits from tax cuts while the poorest 20% received a mere 5%.
Again, me must contrast the cut in Corporation Tax in this Budget with the failure to take more of the low paid out of the tax net and with the totally inadequate increases in Social Welfare.
Given the increasing cost of living there should have been a minimum increase to ¤130 per week for the lowest social welfare weekly rates from ¤118.80 at present. The increase in this Budget is an insult. How is anyone expected to live with dignity on ¤124 per week.
It is the low paid and those on social welfare who most feel the effect of real cost of living increases such as increase in public transport fares and local authority charges and the forthcoming tv licence fees. These will offset the minimal welfare increases granted by the Minister.
There was outrage at the abolition of the first time buyers grant. The Minister has now introduced tax reliefs. But he has also increased VAT which will add thousands to the cost of new homes. This is a fraud. It is giving with one hand and taking away with the other.
This Budget will do nothing to address the ongoing housing crisis. The estimates cut the Local Authority and Social Housing Programme by over ¤57 million. That allocation was already totally inadequate to meet the housing needs of our people. Local authorities cannot provide homes for some 54,000 households on the waiting lists. They cannot carry out repair and refurbishment programmes. This Budget will make their situation even worse in the coming year.
This Government has relied almost totally on the private market to solve the housing crisis. The economic slowdown has done nothing to slow down rising house prices and the average price of a new home in this state is now ¤200,000. Again this Budget has done absolutely nothing to control land prices and house prices or to penalise the property speculators and developers who are ripping off first-time home buyers. While young people struggle to get a home, Minister McCreevy again looks after the biggest contributors to the Fianna Fáil party.
The Budget compounds this Government's betrayal of children attempting to learn in sub-standard and often dilapidated and rat-infested schools. Communities were misled before the General Election that their school building needs would be met. Again, this is something that could and should have been addressed during the Celtic Tiger years because it was necessary to make up for decades of underfunding.
The Government committed to a three stage implementation plan costing ¤1.27 billion to tackle Child Benefit and they have reneged on it. Children in this state are almost twice as likely than adults to experience poverty and a quarter of Irish children in this state are living in relative poverty. Our children are going to dilapidated schools, poorly maintained and resourced schools. Many of them are going there hungry. The Government has betrayed these children, it has targeted the most vulnerable of members of the most vulnerable sector of Irish society.
This Budget compounds the failures and the lost opportunities of the past five years. We have been living through a time when the effort and talent of Irish people turned around the economy, dramatically reduced unemployment and emigration and improved living standards. This coincided with the peace process and renewed hope for our future on this island. But the efforts and the talents of ordinary people who made progress possible have not been matched by this government in its management of the economy - anything but.
It required a government with vision and determination to ensure that all our people benefited in a new era and that the inequalities of the past were eradicated. Instead, inequality has been the hallmark of the last administration and of this one in its first Budget. It is time to build a real alternative and I look forward to Sinn Fein, with others, providing that alternative.
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