Package was declaration of contrition, says McDowell

"The most dramatic declaration of contrition by any politician in the history of the State" is how the Labour party spokesman on finance, Mr Derek McDowell, described yesterday's Budget.

Responding to Mr McCreevy's move towards an income tax credit system, as opposed to further reductions in tax rates which began in the 1997 Budget, Mr McDowell asked: "Are we to take it from the Minister's capitulation that he now accepts that last year was all a serious mistake?"

Mr McDowell said the Budget had been flagged as one designed for social inclusion but the test of social inclusion was how it would treat social welfare payments.

In this regard the increase of £3 on the basic social welfare payment while wages had risen far higher, was in real terms, a reduction. The fact the Minister was budgeting for a surplus of almost £1 billion on top of the present year's surplus of £800 million made the situation with regard welfare even more incomprehensible, he said.

Arguing that the State is facing a crisis in the years to come over funding for old-age pensions, Mr McDowell said he would have suggested that we "set aside a fraction of our surplus for the next few years into a dedicated fund in order to finance pension liabilities for the problem that is coming at us some distance down the road".

Arguing that charging vehicle registration tax on cars by engine size could be counter-productive, Mr McDowell said the real way of "shifting people from their cars" is by means of public transport, for which he maintained there were no substantial moves.

Concluding that it had been a "bad Budget for the Minister for the Environment" Mr McDowell said the Budget had failed the 45,000 families on the housing list and ignored the housing crisis.