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Ó Caoláin: This is not a time for throwing bouquets at Finance Minister

2 December, 2004


Scandal is that gross inequalities have persisted in an affluent economy

Sinn Féin Dáil leader, Caoimhghin Ó Caoláin TD described the Budget as an admission that opportunities to create real change since 1997 had been "deliberately spurned". He said while the "economic background to the Budget is a buoyant and successful economy - the social background paints a very different picture". "The scandal is that gross inequalities have persisted in an affluent economy," he said.

Deputy Ó Caoláin went on to say, "This is not a time for throwing big bouquets at the Minister and the Government. Very belatedly some measures are being taken to address inequity. But we should be much further ahead. In fact we should be seven years further on."

While welcoming the social welfare increases, some of which he said were "substantial", Deputy Ó Caoláin pointed out that they come "on top of a low base of welfare rates which will still see people struggling on a weekly basis."

The Cavan/Monaghan TD described the increases in Child Benefit as "disappointing" and said it was "disgraceful that nothing has been done to improve Child Dependent Allowances", which he maintained "shows a clear lack of priority in this Budget for the needs of children."

Deputy Ó Caoláin was also critical of Minister Cowen‚s defence of the 12.5% Corporation Tax rate saying that Banks and other financial institutions who, he said, "have ripped off the Irish public right, left and centre, should have been hit with a special increased tax rate that would be ring-fenced for disadvantaged communities."

Full text of speech follows:

Full text of speech by Caoimhghin Ó Caoláin on Budget 2004

No Government in the history of this State had the opportunities to create real change that were available to this Fianna Fáil/PD Coalition Government since 1997. Minister Cowen‚s first Budget is a tacit admission that those opportunities were deliberately spurned and that McCreevy economics massively favoured the property speculators, the high flyers and the very wealthy who were facilitated in refusing to pay their fair share to this society. But the question we must ask is has anything really changed?

Last June the electorate gave Fianna Fáil a sharp lesson and that party, with its characteristic political astuteness, realised that the people were sick of the McCreevy approach and something would have to be done. It was a time for a new image. So Champagne Charlie was shown the door and we had the longest running Cabinet reshuffle in history. The Taoiseach emerged in his light red anorak and proclaimed himself a socialist.

That is the political background to Budget 2005. I have no hesitation in welcoming many of the measures announced yesterday ˆ quite a number of them were demands that we in Sinn Féin had raised not this year or last year, but for the past seven years and in eight pre-Budget submissions up to and including Budget 2005.

The economic background to the Budget is a buoyant and successful economy with growth at over 5% and increased employment. For a decade now the Irish economy has experienced record growth. Government revenues were never higher. Tax receipts have consistently exceeded forecasts ˆ up 15% during 2004.

But the social background paints a very different picture. The scandal is that gross inequalities have persisted in an affluent economy. It is totally unacceptable that after the years of prosperity presided over by this Government, around 20% of the population of this State live in poverty and have incomes so far below the average that they endure economic hardship.

So this is not a time for throwing big bouquets at the Minister and the Government. Very belatedly some measures are being taken to address inequity. But we should be much further ahead. In fact we should be seven years further on.

I welcome the social welfare increases, a number of which are substantial. At the same time they are on top of a low base of welfare rates which will still see people struggling on a weekly basis.

Child Benefit has been increased by •10 and •12 per month and that is very disappointing. It is disgraceful that nothing has been done to improve Child Dependent Allowance. The value of the Child Dependent Allowance has decreased by 25% since it was frozen in 1994. This shows a clear lack of priority in this Budget for the needs of children.

In our pre-Budget submission Sinn Féin called for a range of comprehensive measures, both budgetary and legislative, to address the massive deficit in the provision of childcare. We saw increased Child Benefit and CDA as essential measures to help parents with childcare costs. Minister Cowen has failed to appreciate this need. The increased allocation for the Equal Opportunities Childcare Programme is, however welcome. That said the total dependence on this programme to meet childcare needs is not sustainable. There will be a need for more affordable and accessible places.

The Estimates extended medical cards to a further 30,000 people. But that‚s still 170,000 short of what was promised before the General Election. And there are over 100,000 fewer people with medical cards than when this Government took office in 1997.

Yesterday, Budget Day, in reply to a Dáil Question from me, the Tánaiste and Minister for Health and Children Mary Harney stated that while the GP-only card will cost approximately •250 per year, the cost per year of the full medical card is •1,000 per year.

The revelation that the GP-only medical card is a quarter of the cost of the real Medical Card adds a dose of reality to the hype over this Budget.

Hospital charges and medicine costs have already been increased by the Government so that on health the Government is giving with one hand and taking away with the other. While the extension of free GP services to many more people will be welcome, the Government should not try to fool people into thinking that they are getting the full value of the General Medical Services Scheme. They will still bear the heavy cost of medicines which together with hospital attendances represent three quarters of the value of the medical card.

Let it not be forgotten that the PDs promised in 2002 that regarding the medical card they would "ensure income eligibility criteria would at least keep pace with movements in incomes". That hasn't happened, even after the Estimates and yesterday‚s Budget.

On taxation the removal of those on and below the minimum wage from the tax net is welcome - but again, it is something that could and should have been done by Minister McCreevy long ago. This government‚s tax cuts, between 1997 and 2002, saw only 5% of budget tax cut benefits go to the bottom 20% of earners. We are living with the legacy of McCreevy and yesterday represented a catch-up rather than a radical shift in direction.

For years we in Sinn Féin have been calling for a comprehensive review of the wide range of property-based tax reliefs and the closing of those through which wealth corporations and individuals are being allowed to avoid their fair share of tax. Minister Cowen yesterday promised the review but did not close off any of the tax dodges for which this Government is responsible - such as the tax giveaways for holiday home developments, hotels, multi-storey car parks, sports injury clinics - which benefit wealthy speculators.

We will probably never know how much has been lost to the public finances through these scams because the Government has never carried out a cost-benefit analysis of the huge range of such allowances.

Minister Cowen staunchly defended the 12.5% Corporation Tax rate. But the Banks, and other financial institutions, that have ripped off the Irish public right, left and centre, are major beneficiaries from this low rate. The Minister should have hit them with a special tax and ring-fenced it for disadvantaged communities.

Minister Cowen received plaudits from the benches opposite for the reduction in stamp duty for first-time buyers of second hand properties. Again this was long overdue and welcome but what will be done to ensure that the benefit is enjoyed by the buyers? Last night the auctioneers and valuers representatives were already out in the media saying that the reduction would be eaten up by increased house prices. That surely argues for the regulation of the price of housing, something this Government has refused to countenance.

Similarly, there is increased tax relief for tenants in private rented accommodation but if nothing is done to control rents they will continue to rise and this tax relief will amount to a subsidy to rack-renting landlords.

The measures for people with disabilities are welcome. Their implementation will need to be monitored very carefully, especially against the failure yet again of this government to deliver rights-based disability legislation. We don't know how much of this new funding will be swallowed up by the Government's proposed cumbersome bureaucracy that will be introduced as a consequence of the flawed Disability Bill.

This Budget shows that the Taoiseach‚s commitment to the UN target on Overseas Development Aid was no more sincere than his recent conversion to socialism. The reality is we have had an ODA freeze ever since he made that promise. We are the fourth wealthiest state in the world. But where other European states are giving in excess of 1% of GNP to ODA, we won‚t even give one half of one percent. The Government failure to honour this commitment brings shame on the country. Sinn Féin are calling for the introduction of legislation ringfencing the 0.7% for future budgets.

For the first time under this Government we see a net increase in Defence spending of over €41 million - despite prior denials by two Ministers for Defence that EU military commitments would result in spending increases. It would appear that they have now been caught out on this.

This Budget is deceptive, particularly as regards specific equality measures. Apparent increases in equality programmes barely cover the rate of inflation much less compensate for the deep cuts of the past two years.

For example, the additional 10% spending on the Status of People with Disabilities measure cannot compensate for cuts of 44% inflicted in 2003 and 19% in 2004. The 3% increase for the National Consultative Council on Racism and Interculturalism cannot compensate for the 63% cut in 2003. The National Action Plan on Racism - which was cut by 63% in 2003 and again by 76% in last year‚s budget - appears to have been completely eliminated. And the Minister for Justice apparently has no plans to replace the Citizen Traveller programme that he shut down. While Equality Monitoring appears to get a huge 41% increase, the reality is that this does not even come close to restoring levels of funding prior to the 48% and 18% cuts respectively in 2003 and 2004.

Finally, on agriculture, it has emerged that the stock relief for young farmers will only apply to those who have already received their training cert and therefore means nothing to those entering at present. The measures involve trivial amounts.

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