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An Tánaiste and Minister for Enterprise, Trade and Employment, Mary Harney, T.D.
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An Tánaiste and Minister for Enterprise, Trade and Employment, Mary Harney, T.D.
Dáil Eireann, 4 December 2003
Yesterday, the Minister for Finance published this government's second budget and the seventh in a series from the coalition parties.It is a radical and reforming budget. A fair budget. A pro-enterprise budget.
Our programme of full scale decentralisation is bold and imaginative. No government in the history of the State has acted on this scale for the regions.
Our tax reforms and our social supports are clearly and consistently designed for the less well off.
Our initiatives for enterprise will transform industry through innovation.
Our sound management of public finances will sustain our economic and social progress.
This is a budget for a prosperous Ireland, a fair Ireland, a successful Ireland.
Economic strategy
We have come a long way in this country. Ten years ago this year, a book was published called 'The Jobs Crisis', a collection of the Thomas Davis lectures on RTE.The atmosphere captured in that book was gloom and despondency about jobs.
People wrote of a failure of the labour market, a failure of strategic thinking and a failure of the political culture that settled for mass unemployment.
Ten years on, no-one can suggest that our political culture, led by government, is prepared ever again to accept mass unemployment and emigration.
And with this budget, no-one can be in any doubt about us achieving balanced regional development.
This is a fundamental change in Irish life. I am proud of the role that my colleagues and I have played in it.
We will never again settle for the injustice and hopelessness that seemed impossible to lift in 1993.
We will never again settle for the unfairness and imbalance of an over-centralised State, over-centralised services and an over-centralised economy.
We've shown that there are economic answers, there is political determination, and there is strategic thinking.
Decentralisation
I believe that people elect politicians to get things done.They choose governments that will confidently pull the big levers of power, make strategic decisions, and implement big reforms.
Our decision to decentralise is right for our country - right in its scale, right in its ambition, right in its results.
Decentralisation can only work as a stimulus to the economic development of the regions if it is large-scale, not piecemeal. It can only work as government leading by example for investors if it involves major government offices. It can only work to inject energy and enthusiasm into communities throughout the country if a big number of people are involved in a lot of locations.
That is why the government is taking the big and ambitious way forward.
Over 10,000 public servants will be involved. It represents a tremendous opportunity for them, for their families and for the communities they will join.
I am fully confident decentralisation will play a major role in improving public services, bringing them much closer to the people.
It will change our mental map of Ireland. From now on, we will go around the country, not just up to Dublin.
We will become much more like European countries with thriving and balanced development around regional cities and towns.
Decentralisation will make our spatial strategy real. Our investment in roads and rail, hospitals, schools and universities will work all the better nationally and regionally.
In my area of ministerial responsibility, over 1,000 employees of the Department of Enterprise Trade and Employment and its agencies will move out of Dublin. Four of our major agencies are moving. Nearly half of our people will be involved. We've already moved some offices, but this is the biggest project yet.
I am very pleased that we will now be able to demonstrate to investors, both domestic and international, that the government leads by example when we encourage investment in the regions.
We can demonstrate the reality that investment everywhere in Ireland is investment in one gateway to the European market.
Economic and financial policies
Our radical decentralisation programme takes place in very best possible context: an economic strategy that is delivering sound finances, sustainable growth and strong social supports.Our economic strategy works. It has put Ireland to work and it will keep Ireland at work. 1.8 million of us are at work in Ireland now, 600,000 more than in 1993.
The last few years have been tougher. We have made the hard decisions. We have addressed the challenges created by the international slowdown.
Public spending is under control. We are increasing public spending in line with economic growth and our ability to pay. Better expenditure management means we have the resources to target public spending with more fairness and more effectiveness. It means lower borrowing costs by keeping debt low. It means we have the confidence and the competitiveness to grow.
Inflation is lower. This delivers better value for all of us - individuals and families, public and private sector. With the budget increases, low inflation means real improvements for the less well off. It means real improvements in standards of living. It means real protection for savings.
Taxes are low. Keeping taxes both low and fair continues to be at the heart of our economic strategy for jobs and growth.
Tax measures
Our tax policies are a means to an end. They work for fairness, for jobs and for growth.In the budget this year, we are again keeping taxes low across the board and we are keeping taxes fair.
Our tax reforms are designed first and foremost for the lower paid. 90 per cent of the minimum wage will be kept out of tax net. And this is the new, higher, minimum wage of €7 per hour that comes in next February.
We have made our tax system more progressive and more fair.
In 1997, the average industrial wage was the equivalent of €19,372. A single person earning this wage paid 14 per cent tax of it in tax.
In 2003, the average industrial wage has risen to €28,171, itself a mark of the economic progress we have made in six years. A single person on this wage paid just 6.8 per cent in tax.
In our time in government, earnings are up and taxes are down.
Our tax reforms and our tax cuts have delivered real benefits for the people on low and average incomes.
There has been criticism that we have not increased the standard rate band this year.
I do recognise concerns about the number of people paying the 42 per cent rate on marginal income. And I believe this should be addressed in future budgets.
But I will take no lessons about keeping taxes low from people and parties who bitterly opposed every hard-fought reduction we made in the top rate of tax - every single step of the way down from the infamous 65 per cent rate.
From some of the ill-informed comment, you would think we had actually lowered the standard rate band. Let me assure the House of the simple fact that no PAYE taxpayer will lose money from income tax policies in this budget.
People who earn more, pay more tax. You only pay at a higher rate if you increase your earnings, and on those higher earnings.
It used to be that people lost more than half of their overtime in tax. We've done away with that, permanently.
It's fair. It's socially just. And it's what a low tax approach delivers.
Business initiatives in the Budget
For those who are working hard to start up, manage and develop businesses, we are saying, 'We're with you. We understand you. We value what you do.'True to our economic strategy and against the advice of others, we have not increased PRSI on jobs. We have not doubled capital gains tax. We have not increased corporation tax.
Instead, we have introduced a series of new measures so that the tax system further supports initiative, risk-taking and innovation.
R&D tax credit
The new tax credit for incremental research and development will give clear support to our strategy of transforming industry through innovation.Innovation and research is the key to our future and to becoming a knowledge economy. It's a European priority and an Irish priority. But up to now, we invest less than 1.5 per cent of GDP in research and development. That's less than the shared European target of 3 per cent, and a lot less than some leading countries like Finland and Sweden, with R&D investment already over 3 per cent.
The R&D tax credit complements our direct programmes of growing Ireland's research performance through the third level colleges, Enterprise Ireland and Science Foundation Ireland, along with the sectoral research agencies.
It dovetails with our major investment of over €340 million of public resources in R&D announced in the Estimates for 2004. In my Departmental vote, investment in research and development is up 36 per cent.
Patents
We are also removing stamp duty on the registration of patents. The encouragement of patents is also a European and national priority. We want to give all possible support to the generation of new ideas and products. We are underlining that Ireland intends to become a world leader in converting ideas into jobs.BES and Seed Capital
We are supporting new business start-ups and development by extending and improving the Business Expansion and Seed Capital Schemes. This will continue the practical support in the tax system for the real financing needs of these businesses.
Section 481
And by keeping Section 481 film relief until 2008, we will continue to build up expertise and employment in the film industry here.
Headquarters activities
We are also improving the attractiveness of Ireland as a location for headquarters activity.These initiatives show again how important the role our tax system plays in shaping the environment for enterprise and employment in our country.
It is an integrated system that we shape for the needs of our people and our economy. It is an essential part of our mix of policies that take account of our skill base, our location and our infrastructure needs.
Our low corporation tax rate will deliver over €5 billion in tax revenue next year. This is equivalent to nearly all our capital investment.
For these reasons as well as for our democratic life, it's vital that we keep national control over our direct tax policies in all aspects. This is the firm stance Ireland is taking at the negotiations over the new EU constitutional treaty.
Trade Union tax relief
I am pleased to highlight today the government is increasing tax relief for contributions to trade unions by members. Trade unions have made a strategic contribution to our economic success in successive partnership agreements. They have helped create stability, fairness and reform in our country while vindicating the rights of their members.
Pensions and social welfare payments
Every civilised society honours, respects and cares for the older generation.Our commitment to older people is fundamental to justice in our society. Our older people have worked to build our country. They have educated and reared the next generation. They have paid their taxes.
That is why we give top priority to the real value of pensions.
In 1997, my party colleagues and I first set an ambitious target of a £100 per week pension. This was adopted with our coalition partners in the Programme for Government in 1997. Our commitment was not alone delivered on, but exceeded, within four budgets.
The government set a new commitment to a €200 per week pension. And we are meeting that commitment too. This year's budget again increases pensions again, by €10 per week to bring the contributory pension up to €167.30 per week.
In every budget that I have been involved in, the government has increased pensions substantially, and well in excess of inflation.
On 1 January next, the weekly pension will be up by €60 in five years. That's an increase of 59 per cent, nearly three times price inflation of 22 per cent in those five years.
This is real economic progress, delivering real increases for pensioners, and real improvements in standards of living.
We have also prioritised resources to support people with increased social welfare payments. The social welfare rates will be increased by €10 per week.
Again, in five years, the 55 per cent increase in unemployment assistance far outstrips inflation in that time. This year, the lowest social welfare rates are increasing by more than three times expected inflation.
Overall, we are providing for €750 million more in social welfare payments than in 2003.
A visitor to Ireland who asks about our public priorities need only look at our Budget and Estimates. The largest single area of spending is social welfare. The next is health. Third is education.
We invest in fairness, we invest in our people, we invest in our services.
Child benefit
Parents are in the best position to make childcare choices for their children - be it in a crèche, at home, with family or neighbours, part-time or full time.The fair way to support all parents, and particularly mothers, is child benefit.
From next year, a family with two children will receive €3,158 in child benefit. A family with four children will receive €7,125.
Five years ago, a family with two children received just €960 and a family with four received €2,240.
Child support has been increased more than three times over in that time.
This is real, sustained support for all families. And it puts the naysaying about the standard rate tax band in perspective.
Disabilities
I am particularly pleased that the government has agreed in this Budget to provide a further €25 million for services for people with disabilities. This underlines our commitment to constant improvement here, recognising that, as a society, we are still building our services and supports, after a somewhat late start.I am pleased also with our further €100 increase in the respite care allowance and a 19 per cent increases in the income disregards for the carer's allowance.
Conclusion
Our economic and social strategy works.It has already resulted in the population increasing in every county in Ireland. It is a strategy that has resulted in employment increasing in every county in Ireland. And now it will result in government and public services working in every county in Ireland.
This is a budget for big change. It is a budget that makes a decisive step forward for balanced regional development. It is a budget that will change the face of Ireland and change our mental map of Ireland.
Our economic strategy is not to bring back the Celtic Tiger or to bring back anything else. It is forward looking.
It's about innovation, reform and change. We have designed the strategy, we are making the policies, we are taking the actions.
It is about the constant renewal of jobs and opportunity in our country. It is about finding new ways of succeeding, neither repeating the mistakes of the past nor simply repeating the successful formulas of the past.
It is about public sector modernisation, how public servants work, where they work, what they work at.
This Budget shows that our economic strategy is the whole of society and for every part of the country.
It is for people at work, people wanting work, and people who have completed work;
in the public sector, the private sector, and the voluntary sector;
in every county of our land.
For the young, for the old, for those in-between;
for those who need an extra hand;
for those with the ideas and energy to build our wealth;
and for those who enrich us with creativity and artistry.
Our budget is for all society, for a fair society, for a successful new Ireland of the regions.
(A copy of this speech is also available on the Departments website @www.entemp.ie/press.htm)
Budget represents "Social progress through investment and reform
Budget 2004 will result in a record of 11.2 billion Euro spend on social welfare next year.
Mary Coughlan T.D. Minister for Social and Family Affairs on Budget 2004This means that the Government's coffers will find and give payments of over eleven billion euro to support our elderly, our children, those who have lost jobs, and those who need our support.
That's a lot of money. It represents a real commitment to caring and supporting. It will be the largest amount of money ever, ever expended on social welfare payments in the history of the State..
This Fianna Fail led Government is always accused of being this or that. We're accused of looking after sectoral interests. Yes. We're accused of looking after special interest groups. Yes.
I agree. We do look after a sectoral interest, and the sectoral interest in our country that I am proud to look after are those who are old, those who have children, those who are unemployed, ill, or those who need our support because they are disadvantaged.
Yes we look after those people. Their voices are disparate. Fianna Fail in Government, in every ward, in every electoral area of this country, through our network of councillors, Senators and TDs have our fingers on the pulse of this nation.
We know that the vulnerable need our support and we
give that support - and Budget 2004 sets out in euros and cents our commitment.In Budget 2004 I can dismiss suggestions from misinformed critics who suggest that this is a right wing Government. That comes from critics who haven't done their maths. Critics are in the Baby Infants class. Because, if they looked at the financial figures, they wouldn't be putting their hands up to curry favour with Ms Media. They wouldn't be trying to mislead her and mislead the public.
In 2004 the social welfare spend will be approximately 11.2 billion euro.
Perhaps we are all a little immune to large spending figures - because in any other time that figure would be recognised for what it is, a historic announcement that a Government, any Government, and in this case, because of our own republican ethos, a Fianna Fail led Government is spending 11.2 billion euro on social welfare, a national record.
In total Government spend for 2004 means that for every ten euro spent - three euro will be spent on social welfare funding.
This money will go to an estimated 970,000 people who will claim a weekly social welfare payment next year. These funds will benefit approximately 1.5 million people - or about four out of every ten people in the State.
Never, never, before has any Government put so much emphasis on the social agenda.
And I say to our critics, look at the figures. Yes. Yes, we look after the country's biggest sectoral interest. Those who have no voice. Those who need our support, those who each week draw vital social welfare benefits - those who have been sold short in the past by the opposition parties - those who are seen as political playthings by the opposition parties.
I say this because the facts speak for themselves. The facts are that the opposition parties when they had their hands on the purse strings of the central Exchequer talked the talk, but failed to deliver.
The Labour Party President , who was formerly in my current post decided to salute the achievement of the people who built this state - and he gave them a derisory increase in their pension, in their twilight years of one pounds eighty pence. And, let's remember, that the current leader of the Labour Party, Pat Rabbitte, sat in the high chair at the Cabinet table where he nodded through his approval of this slight to our older people.
More recently, just after the last Budget I put a cap on the rate for rent supplements. The Labour party again acted very macho, trying to court MsMedia and dramatically insisted that people would be made homeless because of this reforming measure.
Again the facts deserve to be put on the record. The Labour party was wrong. Rents were stabilised or in fact reduced because it was clear that the social welfare system had helped to support rent increases, disadvantaging people seeking accommodation - and putting a burden on the public purse. And, nobody was made homeless as a result.
I say to you in "baby infants" on the opposition benches, what else have you got wrong, what other claims will you get wrong -and how can you be trusted to get it right?
Again this year I have engaged in a number of reforms of the social welfare code. I have done this to ensure that schemes are best focussed to help those in need, to update schemes where other social welfare payments have made original scheme payments outmoded, and ensured that funds from the taxpayers are spent ensuring the best alleviation of poverty, of disadvantage or the provision of supports.
And why have I done this? Because, the taxpayer is funding the social welfare payments system. The taxpayer deserves respect and deserves value for money.
I believe the taxpayer wants to ensure their money is spent efficiently - and if we are to tackle poverty lets make sure every single cent is spent effectively, let's make sure that for every euro we get one hundred cents worth of value.And I say to the opposition who have railed against reform - do you want value for money or would you prefer that a pensioner is short changed because the social welfare code needs reform, would you prefer that someone goes uncared for because the social welfare code needs reform, would you prefer that a child goes hungry because the social welfare code needs reform? Where is your sense of social justice?
This budget means that total social welfare expenditure will be €750 million higher than in 2003, an increase of over seven per cent.
An increase in spending of this magnitude demonstrates this Fianna Fail led Government's commitment to protecting the less well-off in our society at a time when economic circumstances have been far from their best.
Through this time, the Government has taken tough decisions to ensure that we remain master of our own destiny and that we are in a position to take advantage of a change in economic climate as it emerges to further our progress as an economy and a society.
The Government has set prudent management targets in place in relation to the public finances and social welfare spending has not been immune from these, especially when some schemes like rent supplement have been growing inexorably and eating up more and more of the resources which should be put into people's basic standard of living.
My Department continues to review its spending schemes and to ensure that their objectives remain valid and that positive outcomes are being achieved as efficiently and as effectively as possible. No one should claim that all schemes should remain unchanged indefinitely. Reform should be constant and is vital. This is all the more important when we consider the vast amounts of money that we spend through the social welfare system - 11.2 billion euro in 2004.
RENT SUPPLEMENT
Let me address, the question of reform of the Rent Supplement Scheme.Rent supplements were never intended to meet a persons long-term
housing needs. The scheme is not a housing programme but, in practice, over the years, has become such. It does not make sense to have two parallel but entirely separate programmes one operated by the housing authorities and the other by the Health Boards.Furthermore, the rent supplement scheme does not give a good long-term outcome to the individual. They have limited security of tenure, accommodation standards can sometimes be poor and they must remain on social welfare in order to retain their accommodation. Neither does the scheme give a good outcome to the State, as it provides poor long-term value for money and in effect, by-passes the priorities set by the local authorities in their housing programmes. This is why I have taken a number of initiatives in this area.
Rent supplement will continue to be available to people with housing needs whose safety or well-being is at risk, such as people with disabilities, the elderly or those experiencing severe social problems.
These measures will not affect people who are:
· on local authority waiting lists, even if renting for less than six months
· homeless as defined by the local authority under the Housing Act
· already tenants for six months
· currently receiving Rent Supplement
Full and sympathetic consideration will be given to the needs of people in implementing the new rent arrangements, with the involvement of the housing authorities.CRECHE SUPPLEMENT
The crèche supplement was introduced with the intention of providing assistance to the parent of a child who is in need of a short term emergency support. This can arise for example, to assist a parent who would not otherwise be able to avail of particular supports such as counselling services or addiction treatment programmes.The fact that the supplements are in payment for long durations in many cases indicates that they have become a long term child care support rather than the short term social support for which they were intended. My Department is discussing this matter with the Health Boards and the Department of Justice, Equality and Law Reform to ensure that appropriate alternative measures are put in place to address the crèche needs concerned. Let me reiterate, no creche will close as a result of this measure.
Let me set out the Government objectives which underlie the budget package: These are-
· To increase or maintain the value of all rates of payment in real terms,
· To continue to increase pensions in line with the Programme for Government commitment to increase the state pension to €200 by 2007,
· To make progress towards the NAPS target of €150 per week in 2002 terms of the lowest rates as indicated in the Review of the NAPS and in the partnership agreement, Sustaining Progress,
· To increase or maintain the real value of all QAA rates of payment and to ensure that they do not fall as a proportion of the associated personal rate.
· To provide real increases in income support for all families, but especially for those in poverty, in such a way that it is not dependent on the parents labour market status or income, through the implementation of a programme of increases in the level of Child Benefit.
· To ensure that the return from even low-income employment for those with families remains positive through improvements in Family Income Supplement.
As in earlier years, most of the social welfare package is going into increasing the weekly payment rates so as to protect recipients against increases in the cost of living and to make progress toward the various Government targets.
All the increases in the social welfare adult personal weekly rates are well ahead of the rate of inflation, which is expected to average at 2.5per cent in 2004. The increases range from six to eight per cent and in the case of the lowest social welfare payments are more than three times the rate of inflation.
Again we have increased :
q The main pensioner rate by 10 euro as we make further progress to our target of 200 euro by 2007,
q The rate for a pensioner couple will increase by 17 euro 70 cent per week,
q The pension rate for widow and widowers who are over 66 will increase by 11 euro and 50 cent to bring it into line with the main pensioner rate,
q We have also increased the qualified adult rate for those on invalidity pension by 16.10 per week,
q All other rates have increased by 10 euro - considerably above the projected rate of inflation - and sixteen euro, sixty cent for a couple. This brings the lowest social welfare rate up to 134 euro, 80 cent which constitutes very solid progress towards our 2007 target of 150 euro in 2002 terms.The increase in the lowest rates of social welfare payment is a highly significant process in combating poverty but also in reforming special add - ons which have been introduced to the social welfare system from time to time. For instance as part of the estimates process, I announced that the diet supplement scheme is being restructured to take account of changes in the level of social welfare payments generally.
The current basis for calculating the amount of supplement payable in individual cases was put in place in 1996. Since then the cost of diets has not been updated, the assessment of means has not changed and effectively the amounts paid have not changed.Since 1996 increases in social welfare payments have ranged from 57 per cent to 71 per cent for the majority of persons in receipt of diet supplement while the cost of food, according to the Consumer Price Inex has risen by 28 per cent. Consequently, the gap that the diet supplement was intended to address has narrowed over time.
In future, diet supplements will be based on the current cost of special diets, the current income of claimants and the premise that one should not have to pay more than one third of income towards food costs.
All current recipients will continue to receive the amount they currently get until such time as there is a change in his or her circumstances that would warrant a review of the supplement.
CHILD INCOME SUPPORT
Child poverty is one of ten special initiatives in the partnership agreement, "Sustaining Progress". The Government has signalled that it wants to put a renewed focus on the ways and means of how to tackle the problem of families in poverty.The Government's preferred approach has been to increase the universally paid child benefit rather than target additional resources at families on social welfare through child dependant additions to the main payments
Child Benefit payments have a number of advantages over the targeted approach.
· For some mothers Child Benefit represents a recognition of their work in the home.
· CB provides additional resources to families with larger numbers of children..Research shows that these are one of the at-risk groups for child poverty.
· CB is not withdrawn as a person moves into employment or increases their earnings.In line with this approach we are increasing the rate of child benefit by 6 euro in the case of each of the first two children in a family, and 8 euro for the third and subsequent children. This will bring total expenditure on child benefit to a truly staggering 1.78 billion euro in a full year or an average of almost €1,680 for each child per year. This represents a huge level of commitment by the taxpayer to supporting parents in the very substantial costs of child rearing and caring.
The last number of budgets have made a significant real contribution to parents in a way that is not prescriptive in relation to circumstances and lifestyle choices. I look forward to making further progress on this next year.
SUPPORTS FOR CARERS
There are approximately 22,000 persons in receipt of carer's allowance and carer's benefit thus demonstrating the need for a form of income support to allow people to look after their own family and others at homeIn line with the commitments in the Agreed Programme for Government , next year will see a significant expansion in the income disregards for carers by €40 a week to € 250 for a single person and by €80 a week to €500 a week for a couple, at a cost of almost 8.25million euro.
The respite care grant will be increased by €100 to €835 next year and to €1,670 for carers who are caring for more then one person.
This measure will benefit some 24,000 carers and will cost an additional €2.48 million per annum.
In order to make further progress in the area of long-term care policy I intend to have a consultation document on relevant issues distributed to all interested parties as early as possible in the New Year.
SCHOOL MEALS
Earlier this year the School Meals Scheme had its first review since its inception ninety years ago, and now targets areas of disadvantage or children with special needs. Having doubled funding last year, I am pleased to announce a further expansion to this scheme with an extra €1 million provided in 2004 which will benefit an additional 3,000 children.
FAMILY INCOME SUPPLEMENT (FIS)
In announcing the abridged estimates for next year, I stated that the half-rate transitional payment for lone parents was to be discontinued and that in the future, the main support for lone parents on low incomes would be through the Family Income Supplement as it is for many lone parents currently and indeed other low income families. I would draw the attention of the House to the fact that this was one of the recommendations of a recent report by experts in the OECD.They suggested that the Family Income Supplement could be better promoted as a tool for providing financial incentives for lone parents to enter employment. To this end, I have increased all FIS earnings thresholds by 28 euro which will mean that the average family payment will rise by 16 euro eighty cent. I have also increased the minimum level of FIS payment from 13 euro to 20 euro per week to ensure that even those pushing at the edges of the increased thresholds will increase their return from employment.
Some media comment has suggested that resources for FIS payments had been reduced in the estimates process. This is incorrect as I had already provided for some additional places on the scheme as part of the estimates. I am also using part of the social welfare budget package to put additional resources of just over 10 million euro into FIS and I will be addressing the need to improve the take up of FIS among lone parents on low incomes.
BENEFIT AND PRIVILEGE
One of the more reasonable comments that was made in relation to the recently announced changes to rent supplement was that the operation of the benefit and privilege calculation in relation to unemployment assistance penalised some unemployed persons who were still living in the family home. This is due to the assessment of the value of board and lodgings being included in the calculation of entitlement.Last year, I started to make progress on one of the last remaining recommendations of the Commission on Social Welfare by abolishing this assessment for persons aged 29 and over. I am pleased to make further progress so that it will be abolished for persons aged 27 and 28 years and by increasing the minimum unemployment assistance payment where means are derived from parental income from just under 32 euro to 40 euro where there is an underlying entitlement to payment.
These measures will cost over €600,000 in a full year.
BACK TO WORK ENTERPRISE ALLOWANCE
The Independent Estimates Review Committee appointed by the Government last year to consider spending proposals from each Government department, recommended that in view of the fall in unemployment since the Back To Work Scheme was introduced, should be abolished. I am acutely aware of the fact that while there was a need to refocus the programmes, it remains a useful scheme and for many has provided a pathway out of dependence on social welfare benefits.Accordingly, the Government accepted my recommendation at the time that we did not abolish the scheme in its entirety but rather refocus it on those most in need of labour market intervention. This included the very long term unemployed or those on the live register for five years or more. This measure has allowed my Department to target the scheme on those groups and there has been considerable interest in the scheme from amongst those groups in the last year.
I am aware of the fact that the needs of persons moving into self-employment require earlier identification and intervention. My Department's experience has been that BTWEA is essential if people are to progress from unemployment to starting in business.
I am pleased to announce that persons on the live register for three years or more will in future be eligible for the Back To Work Enterprise Allowance which is specially targeted at those who can move into self-employment. This proposal is in line with the recommendation of the INDECON report to decouple the self-employed and employee aspect of the scheme.
I am also increasing the level of resources made available in employment supports such as the Special Projects Fund and the Technical Assistance and Training fund. The cost of these measures will be €2.8 million in a full year.
MABS
The abolition of a supplement paid by some health boards to persons who had made arrangements for debt settlement with creditors through the Money Advice and Budgeting Service has attracted recent comment. My concern arose from the fact that this supplement operated in an ad-hoc manner across a number of Health Boards only and, no matter how laudable the intention, could operate in effect as a subsidy delivered to creditors. Therefore while it is certainly the case that people need assistance in getting out of debt, the abolition of the MABS supplement makes a clear statement that the Supplementary Welfare Allowance scheme is not the most appropriate vehicle of delivery for this supportI am of the view that the MABS service itself is the most appropriate vehicle and I am pleased to increase funding for the service by nine hundred and sixty thousand euro over and above the increase in the estimates. This means that the total allocation to the MABS service will be over one point five million euro in excess of the 2003 allocation.
THE INTERNATIONAL YEAR OF THE FAMILY
The U.N. International Day of the Family will fall on 15th May, 2004. The Social Partnership Agreement for 2003-2005, Sustaining Progress, includes the commitment that "the Department of Social and Family Affairs will prepare a national programme focussing specifically on the development of family policy and supports to mark the 10th Anniversary of the International Year of the Family."As part of the budget package I have allocated €1m to fund the celebration of this anniversary. Ireland's observance of the year is particularly important on this occasion, as Ireland will hold the Presidency of the European Union during the first half of 2004.
FAMILY AND RESOURCE CENTRES
I established the Family Support Agency earlier this year to support families, promote continuity and stability in family life and prevent marital breakdown, and to foster a supportive community environment for families at local level. I have allocated additional funding of 1.69 million euro to this agency -
· To establish new Family Mediation Service offices in the North-West and Midland regions. This is in pursuance of the Governments longstanding commitment to establish a nation-wide Family Mediation service.
· To provide additional funding to organisations providing marriage and family counselling services to facilitate the provision of an accessible nation-wide counselling service provided by voluntary and community organizations.
· To expand the Family Resource Centre Programme towards the Government target of 100 centres throughout the country and roll out an evaluation model for Family Resource CentresPOVERTY PROOFING OF SOCIAL WELFARE BUDGET PACKAGE
The composition of the social welfare package has been assessed in line with the poverty proofing guidelines set out in the National Anti-Poverty Strategy. Given the considerable size of the budget package, it is important that it should make a contribution to improving the lot of the least well off in our society and to making progress on the Government's poverty objectives.Based on research I believe that this spending will have an impact on poverty rates by reducing relative income poverty by about 2 percentage points. Given this and the considerable real increases in the level of basic payments, more than three times the rate of inflation, I am confident that this package will make a significant contribution to the Government's poverty reduction targets.
We can make social progress if we make adequate investment, but we also need to consider reforms of schemes which have become outmoded.I have sought, and will continue to seek, social progress through investment and reform.
I commend this Budget to the House.
Thursday 4th December 2003
John Bruton TD on Budget 2004 and Decentralisation in the Dáil Chamber
I want to express some personal concerns about one matter I regard as of paramount importance - the effect of the budget on the efficiency of the Irish civil service. I speak as somebody who has enormous admiration for the Irish civil service, and who regards the Irish Civil Service as one of the great achievements of the Irish State.Kevin O'Higgins and others who insisted, through the establishment of the Civil Service Commission, on the non-political character of the civil service did incalculable good for this country.
I speak also as a member of the Government which introduced the Top Level Appointment Commission (T.L.A.C.), the purpose of which was to ensure mobility within the civil service and to end the confinement of talent within individual departments. The Irish civil service has thus had an essential unity, a unity that has underpinned the unity of the State itself.
I have personal worries, which I hope I can explain in this speech, on the effect which the budget will have on this great Irish institution. I raise these concerns as queries. I hope they will be satisfactorily answered.
It is wrong to describe the move of 10,000 civil servants out of Dublin as decentralization. It is recentralisation of parts of the civil service to a series of different places.
Let me stress that I strongly favour a policy of genuine decentralization.
A genuine policy of decentralization would involve devolving decision-making to regional offices of every department in every region. So, instead of housing policy being made for all of Ireland in Dublin or in Wexford, it would be being made in six or seven different locations, one in each region for each region, by regionalized offices that had discretion, within an overall policy envelope set nationally.
But this sort of genuine decentralization is exactly the policy that this government is now attempting to reverse with in the Health service. In the Health service we have had genuine decentralization, through its health boards, who have been making decisions in the regions, accessible to the citizens of those regions. This Government now proposes to do away with decentralized Health Boards, and to centralize health policy in a single national board.
This Government's policy is not one of decentralization, but of recentralisation. My criticism of some parts of the Government's proposal is they subordinate the effectiveness of senior decision-making in the civil service to other purposes.
At the end of the day the primary purpose of the civil service should be to make wise decisions, and to implement them efficiently.
I agree that there is great scope to move those who are involved in the implementation of policy out of Dublin. Implementation of policy is a mechanical process, and, using modern communications, it can be done from almost anywhere. Therefore it makes excellent sense to do it from lower cost locations than Dublin. On that basis there is room for moving considerable numbers of public servants out of Dublin. On the Minister's list, probably 5000 of the recentralised jobs are involved in implementation of policy, and there is no problem at all with moving those 5000 jobs to regional centres. It makes good sense for all sorts of reasons.
On the other hand, the making of wise policy at national level is something that requires constant and easy contact between senior decision-makers, across departmental boundaries. The making of wise policy also requires that senior civil service decision-makers be easily accessible to members of the public and to organizations who wish to make representations to them. On that basis, I am afraid I have to question the decision to recentralise in multiple locations the policy-making outside the capital functions of certain civil service and state bodies.
What is a capital city? Why do all countries have capital cities at all?
Capital cities exist, in most democracies, to make policy at national level. This is done in one place because there are inherent economies of scale to making national policy in one place.
Capital cities do not have to be the biggest city in a country. There is a very good case for having a western city, as the capital of Ireland, but I have to question the budget's attempt to dissolve the notion of a capital city altogether by dissipating the nation's policy formation function over a dispersed geographic area. I would be interested to know of any examples from other countries of policy-making, as distinct from policy implementation, being subdivided geographically in the way the budget proposes for Ireland.
Let me illustrate my questions.
At the moment, if there is to be co-ordination of sports policy with rural development policy, the senior decision-makers involved are located in one city and can meet readily with one another, at a moments notice. In future the senior decision-makers on sports policy will be in Killarney, and the senior decision makers on rural development policy will be in Knock. If they are to meet, they will have to spend large amounts of a working day travelling from one centre to another centre. Spontaneous meetings, organized at short notice, will be completely impossible.
Let me give another example.
Let us suppose that the Cavan County Manager wants to meet senior decision makers in the Department of the Environment to discuss housing policy in Cavan. At the moment, he can do so by travelling to the Custom House. In future he will have to drive around Dublin, and all the way down to Wexford to meet a senior official that he needs to meet in the Department of the Environment. Conversely if the Wexford County Manager wants to meet senior officials in the Department of Communications about broadband roll out in Wexford, he will have to drive all the way form Wexford to Dublin, and then on to Cavan, and back again. Not very efficient.
At least these County Managers will get travelling expenses. What about a voluntary tourist association in Donegal that will have to travel all the way to Killarney to see the Department of Tourism. They will have to overnight whereas they can do all their business in one day under present arrangements, and if they use public transport they will probably have to come via Dublin anyway.
If the Minister for Justice, whose Headquarters is in Dublin, is to meet the Garda Commissioner, one or other of them is going to have to make the journey from the Department of Justice Headquarters in Dublin, to the Garda Headquarters in Thurles, or vice versa.
Furthermore, if a senior official in the Department of Justice wants to have a three-cornered meeting with the Gardai and the Prison Service, the meeting will have to take place somewhere between Longford, Thurles and Dublin.
It will be even more difficult for inter-Departmental committees to function. There are probably 300 or more inter-departmental committees or Boards on which civil servants are representing their Minister. The functioning of these inter-departmental committees will be made much more difficult by virtue of the fact that the civil servants involved will be in future coming to meetings from the four corners of Ireland, rather than from areas in close proximity to one another. The allocation for travelling expenses in the public service will have to be substantially increased to take account of the fact that the journey to meetings by senior decision-makers, which now can be accomplished after a ten minute walk, will in future only be accomplished after a three hour car or rail journey. Has the Minister done an estimate of the additional cost of running committees and boards like this, from the point of view of travelling expenses, overnight expenses, and the loss of executive time through travel as a result of his proposals?
I know that it will be said that it will be possible to do business by means of telephone, by fax, by e-mail, and even by tele-conferences. This is true, up to a point, but most modern businesses will say that there is no substitute for direct face to face human contact between senior decision-makers in the business. The Headquarters civil servants from Killarney, from Cavan, from Shannon, from Birr, from Wexford, and from Limerick will be in Dublin so much to appear before Dáil Committees, to brief their Minister for Dáil appearances, to take part in inter-Departmental Committees, and to meet delegations that are unable to travel to their new Headquarters, that they will have to be given a large special allowance to maintain a second home in Dublin, in addition to their home in the town of the new Headquarters of their Department.
One of the most consistent and serious criticisms of the civil service in Ireland has been the existence of "Departmentalitis".
"Departmentalitis" means the pursuit of narrow departmental objectives, rather than the overall objectives of Government policy. One of the aims of T.L.A.C., was to reduce "Departmentalitis" by allowing civil servants to move on promotion from one department to another. The more that individual departments are physically removed from one another, and the less formally and informally their staff are in contact with one another on a daily basis, the more severe will be the recurrence of the disease of "Departmentalitis".
We have been told that, for an individual civil servant, moving to one of the new Headquarters outside Dublin will be "voluntary". We should not forget that, for most people, a move to headquarters will be a promotion.
Thus, although declining the move to headquarters may be a voluntary choice to make, it will involve declining promotion and thus will involve damage to one's career.
In many cases this will then mean that the best people will not seek promotion, because promotion will involve disruption of the lives of their families, especially when one bears in mind that the spouses of most senior civil servants have their own jobs.
Thursday 4th December 2003
John Bruton TD on Budget 2004 and Decentralisation in the Dáil Chamber
I want to express some personal concerns about one matter I regard as of paramount importance - the effect of the budget on the efficiency of the Irish civil service. I speak as somebody who has enormous admiration for the Irish civil service, and who regards the Irish Civil Service as one of the great achievements of the Irish State.Kevin O'Higgins and others who insisted, through the establishment of the Civil Service Commission, on the non-political character of the civil service did incalculable good for this country.
I speak also as a member of the Government which introduced the Top Level Appointment Commission (T.L.A.C.), the purpose of which was to ensure mobility within the civil service and to end the confinement of talent within individual departments. The Irish civil service has thus had an essential unity, a unity that has underpinned the unity of the State itself.
I have personal worries, which I hope I can explain in this speech, on the effect which the budget will have on this great Irish institution. I raise these concerns as queries. I hope they will be satisfactorily answered.
It is wrong to describe the move of 10,000 civil servants out of Dublin as decentralization. It is recentralisation of parts of the civil service to a series of different places.
Let me stress that I strongly favour a policy of genuine decentralization.
A genuine policy of decentralization would involve devolving decision-making to regional offices of every department in every region. So, instead of housing policy being made for all of Ireland in Dublin or in Wexford, it would be being made in six or seven different locations, one in each region for each region, by regionalized offices that had discretion, within an overall policy envelope set nationally.
But this sort of genuine decentralization is exactly the policy that this government is now attempting to reverse with in the Health service. In the Health service we have had genuine decentralization, through its health boards, who have been making decisions in the regions, accessible to the citizens of those regions. This Government now proposes to do away with decentralized Health Boards, and to centralize health policy in a single national board.
This Government's policy is not one of decentralization, but of recentralisation. My criticism of some parts of the Government's proposal is they subordinate the effectiveness of senior decision-making in the civil service to other purposes.
At the end of the day the primary purpose of the civil service should be to make wise decisions, and to implement them efficiently.
I agree that there is great scope to move those who are involved in the implementation of policy out of Dublin. Implementation of policy is a mechanical process, and, using modern communications, it can be done from almost anywhere. Therefore it makes excellent sense to do it from lower cost locations than Dublin. On that basis there is room for moving considerable numbers of public servants out of Dublin. On the Minister's list, probably 5000 of the recentralised jobs are involved in implementation of policy, and there is no problem at all with moving those 5000 jobs to regional centres. It makes good sense for all sorts of reasons.
On the other hand, the making of wise policy at national level is something that requires constant and easy contact between senior decision-makers, across departmental boundaries. The making of wise policy also requires that senior civil service decision-makers be easily accessible to members of the public and to organizations who wish to make representations to them. On that basis, I am afraid I have to question the decision to recentralise in multiple locations the policy-making outside the capital functions of certain civil service and state bodies.
What is a capital city? Why do all countries have capital cities at all?
Capital cities exist, in most democracies, to make policy at national level. This is done in one place because there are inherent economies of scale to making national policy in one place.
Capital cities do not have to be the biggest city in a country. There is a very good case for having a western city, as the capital of Ireland, but I have to question the budget's attempt to dissolve the notion of a capital city altogether by dissipating the nation's policy formation function over a dispersed geographic area. I would be interested to know of any examples from other countries of policy-making, as distinct from policy implementation, being subdivided geographically in the way the budget proposes for Ireland.
Let me illustrate my questions.
At the moment, if there is to be co-ordination of sports policy with rural development policy, the senior decision-makers involved are located in one city and can meet readily with one another, at a moments notice. In future the senior decision-makers on sports policy will be in Killarney, and the senior decision makers on rural development policy will be in Knock. If they are to meet, they will have to spend large amounts of a working day travelling from one centre to another centre. Spontaneous meetings, organized at short notice, will be completely impossible.
Let me give another example.
Let us suppose that the Cavan County Manager wants to meet senior decision makers in the Department of the Environment to discuss housing policy in Cavan. At the moment, he can do so by travelling to the Custom House. In future he will have to drive around Dublin, and all the way down to Wexford to meet a senior official that he needs to meet in the Department of the Environment. Conversely if the Wexford County Manager wants to meet senior officials in the Department of Communications about broadband roll out in Wexford, he will have to drive all the way form Wexford to Dublin, and then on to Cavan, and back again. Not very efficient.
At least these County Managers will get travelling expenses. What about a voluntary tourist association in Donegal that will have to travel all the way to Killarney to see the Department of Tourism. They will have to overnight whereas they can do all their business in one day under present arrangements, and if they use public transport they will probably have to come via Dublin anyway.
If the Minister for Justice, whose Headquarters is in Dublin, is to meet the Garda Commissioner, one or other of them is going to have to make the journey from the Department of Justice Headquarters in Dublin, to the Garda Headquarters in Thurles, or vice versa.
Furthermore, if a senior official in the Department of Justice wants to have a three-cornered meeting with the Gardai and the Prison Service, the meeting will have to take place somewhere between Longford, Thurles and Dublin.
It will be even more difficult for inter-Departmental committees to function. There are probably 300 or more inter-departmental committees or Boards on which civil servants are representing their Minister. The functioning of these inter-departmental committees will be made much more difficult by virtue of the fact that the civil servants involved will be in future coming to meetings from the four corners of Ireland, rather than from areas in close proximity to one another. The allocation for travelling expenses in the public service will have to be substantially increased to take account of the fact that the journey to meetings by senior decision-makers, which now can be accomplished after a ten minute walk, will in future only be accomplished after a three hour car or rail journey. Has the Minister done an estimate of the additional cost of running committees and boards like this, from the point of view of travelling expenses, overnight expenses, and the loss of executive time through travel as a result of his proposals?
I know that it will be said that it will be possible to do business by means of telephone, by fax, by e-mail, and even by tele-conferences. This is true, up to a point, but most modern businesses will say that there is no substitute for direct face to face human contact between senior decision-makers in the business. The Headquarters civil servants from Killarney, from Cavan, from Shannon, from Birr, from Wexford, and from Limerick will be in Dublin so much to appear before Dáil Committees, to brief their Minister for Dáil appearances, to take part in inter-Departmental Committees, and to meet delegations that are unable to travel to their new Headquarters, that they will have to be given a large special allowance to maintain a second home in Dublin, in addition to their home in the town of the new Headquarters of their Department.
One of the most consistent and serious criticisms of the civil service in Ireland has been the existence of "Departmentalitis".
"Departmentalitis" means the pursuit of narrow departmental objectives, rather than the overall objectives of Government policy. One of the aims of T.L.A.C., was to reduce "Departmentalitis" by allowing civil servants to move on promotion from one department to another. The more that individual departments are physically removed from one another, and the less formally and informally their staff are in contact with one another on a daily basis, the more severe will be the recurrence of the disease of "Departmentalitis".
We have been told that, for an individual civil servant, moving to one of the new Headquarters outside Dublin will be "voluntary". We should not forget that, for most people, a move to headquarters will be a promotion.
Thus, although declining the move to headquarters may be a voluntary choice to make, it will involve declining promotion and thus will involve damage to one's career.
In many cases this will then mean that the best people will not seek promotion, because promotion will involve disruption of the lives of their families, especially when one bears in mind that the spouses of most senior civil servants have their own jobs.
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