Medical Card
In addition to the measures of particular benefit to the elderly which I have already mentioned, I am also pleased to announce, in the context of the forthcoming UN International Year of Older Persons, that the income guidelines used to establish Medical Card eligibility for persons aged 70 years and over will be doubled over the next three years, beginning with an increase of one-third in the coming year. This will cost an estimated £3 million in 1999.
£29.6 million of today's Health increases are in the Social Inclusion area.
Education
The additional money provided today will increase spending on Education in 1999 to £2,623 million, an increase of over 9 per cent on the provision for 1998.
This Government is committed to improving opportunity at all levels of education because we see it as a key element in developing children and promoting social inclusion. The published Estimates already provide £205 million more than was provided in 1998 and allow for the largest increase in direct funding of primary schools in the history of the State. In addition, they provide for significant teaching and childcare assistant resources to assist children with special educational needs. I am today allocating significant extra funding to education initiatives relating to disadvantage. These additional initiatives, costing £19 million in a full year, will address, for instance, the problems of adult literacy, the need to encourage children to complete second level, and the development of the psychological services.
Another important improvement being provided for is the retention of teachers in second-level schools who might otherwise be re-deployed, to provide increased remedial services. This will give a substantial increase in the remedial service and will be focused on pupils with particular needs.
I am also providing an additional £1.5 million for the development of the Youth Service on top of the published provision of £13.3 million.
The details of all these initiatives will be announced by my colleague the Minister for Education and Science.
I believe that the total allocation to education in 1999 demonstrates clearly that the Government is determined to ensure that education remains a key priority.
Housing
This Government is concerned about the difficulties many people, especially those on low incomes, are experiencing in relation to housing at the present time. In order to help address this, Exchequer support for the local authority and social housing programmes was set at £269 million in 1999, up £45 million or 20 per cent on this year. The increased funding will, among other things, allow 600 extra local authority "starts", to bring the number of units to 4,500, the highest level of local authority housing since 1986. Almost £28 million of the £269 million has been made available for the redevelopment and refurbishment of local authority housing in Dublin including the continued redevelopment of Ballymun and a new five-year project for the redevelopment of the deprived areas in inner city Dublin. The allocation to local authorities for hostels for the homeless has doubled from £2 million to £4 million on the previous year's estimate. I am also providing today an extra £1 million for a Foyertype project for the homeless in Dublin.
Disabled Persons' Grant
To meet the increasing needs of people with disabilities, I am increasing the provision for the Disabled Persons' Grant Scheme. This extra Budget provision of £3 million in 1999 will bring spending on the scheme to £8.5 million next year.
Capital Expenditure
I am today allocating £2,308 billion for capital expenditure in 1999 - an increase of about 30 per cent over the 1998 out-turn. We must address the large infrastructural gap which still exists between this country and other EU countries with comparable levels of income. Closing this gap will require very substantial investment over a number of years - against the background of reduced EU structural and cohesion funding.
This investment is essential if the growth potential of our economy is to be maintained.
Preparations for the National Development Plan 2000-2006 have commenced. The amount of EU resources available for funding the country's development needs will decline in the post-1999 period. Notwithstanding this, the Government is determined that the next Plan will be structured and resourced to assist more balanced regional economic development, whilst also addressing national priorities such as infrastructural bottlenecks and social exclusion.
In the published 1999 Summary Public Capital Programme, I budgeted for an increase of 27 per cent on Voted Capital expenditure and I am making a further allocation of £92 million available in the Budget for investment. The measures involved are set out in Summary of 1999 Budget Measures. However, I would specifically like to mention three important items.
Rural Water Programme and Rural Depopulation
Rural depopulation is a serious problem. One way in which it can be alleviated and more people encouraged to settle outside the larger urban areas is by improving the infrastructure of small rural towns and villages. As part of the Government's effort to address this problem, I am allocating £50 million over the next three years to improve water and sewerage infrastructure in rural areas.
Two programmes are involved. The first is designed to upgrade water facilities in small rural towns and villages. The second programme will be directed towards improving water quality in private group schemes.
Public Private Partnerships
Earlier this year, I announced that the Government would be proceeding, on a pilot basis, with a number of public private partnership projects. My Department is working in consultation with other Departments to identify suitable projects. A number of projects are being considered.
One of these is a major new venture in international telecommunications. There is an urgent need to develop Internet links between Ireland and major business centres in the US and Europe. I am therefore providing £12 million in 1999 to support the establishment of a public-private partnership which will build a new high capacity Internet link into Ireland. The Government will work in partnership with Irish and international telecommunications companies. As the private sector becomes more involved, public sector involvement will be reduced.
Year 2000
The Government has been actively addressing the year 2000 problem, which can arise with computers and other equipment. An interdepartmental committee has been addressing the matter, and Departments have been reporting to Government on the steps they are taking to deal with it and on the progress being made in achieving compliance. However, the full scale of the problem in relation to embedded systems, which are common in the health area in particular, and the costs of dealing with it are not yet fully known. But they could be large.
The matter can be dealt with to a degree by the normal process of replacing equipment funded by allocations already made in the 1999 Abridged Estimates. But it is prudent to provide more in case that course proves insufficient. I am therefore creating a contingency fund of £40 million for this purpose which will only be drawn upon if I am satisfied that it is essential. Provision for the fund will be included in the Revised Estimate Volume.
Overall Capital Increase
The cost of these and other capital measures will add a further £92 million to the capital allocations announced in the Estimates, bringing the total to £2,308 million in 1999 and giving an increase in Voted Capital in 1999 of 30 per cent over the latest 1998 out-turn. I am confident that the extra capital measures announced today will further enhance the economy's capacity to sustain continued economic and social development over the longer term.
In fact the total Exchequer capital investment for 1999 represents an underlying increase of £900 million or 65 per cent over the 1997 level.
Northern Ireland
The Government is continuing energetically to pursue the implementation of all aspects of the Good Friday Agreement. We confidently expect that agreement will very shortly be reached with the Northern parties on the six or more areas in which North-South Implementation Bodies are to be established - we expect and believe that, taken together, these will be significant and valuable public bodies. Detailed work on their functions and structures will then be urgently required to enable them to be established early next year, alongside the other institutions envisaged in the Agreement, including the North-South Ministerial Council. As soon as all the relevant details have been clarified, I will ensure that the resources necessary for their successful operation are made available.
Taxation
Taxation is fundamentally a matter of political choice. The individual election manifestos of Fianna Fail and the Progressive Democrats set out clearly and unequivocally our preferences. Despite opposition from many quarters - not just the parties opposite - the people of Ireland democratically decided the issue.
Therefore, as I pointed out in my first Budget last year, I intend to deliver over the five Budgets of this Government the tax proposals as agreed by Fianna Fail and the Progressive Democrats.
Furthermore, I have repeatedly - and ad nauseam to some - said that high rates in many areas of taxation - corporation, personal, capital, inheritance - lead to disincentive, evasion and finally less yield to the Exchequer, which ultimately constrains a Government from implementing progressive social policies to which all of us subscribe.
The cry from the opponents of this view is best summarised as follows: they would prefer less economic activity which would mean no money to implement such policies. I do not subscribe to that view.
Personal Taxation
Income Tax
Under Partnership 2000 the Government agreed to provide £900 million for personal tax reductions over the three years 1997-1999. Taking account of the reductions I am announcing today, the total amount actually provided is nearly £1,500 million.
The Government is committed to reducing the burden of personal taxation in order to reward effort and to improve the incentives to work.
Last year, I described my Budget as the first in a series of five. I delivered substantial tax relief to all taxpayers through a broadly-based package, concentrating particularly on cuts in both the standard and the top tax rates.
This year I am concentrating on a major reform of the tax system so as to remove as many people as possible from the tax net and to maximise the incentive to work. The full year value of the main personal reliefs which I am about to announce is £581 million.
Tax Credits
Last year I indicated that I had an open mind on the conversion of the basic income tax allowances into tax credits at the standard rate. The special working group on tax credits under Partnership 2000 has continued its work on addressing the practical and policy aspects of such a move. The attractions of such a move are clear. It would enable more resources to be devoted to those on lower incomes for a given Exchequer cost. It does this by equalising the value of the personal tax allowances to all taxpayers at the standard rate of tax. Thus in such a system every £1,000 of an allowance is worth £240 to each taxpayer.
The Government has decided that we should make a determined attempt to improve the position of the lower paid in this Budget and to remove as many taxpayers on low income from the tax net as is prudently possible. I am happy to announce that the Government has therefore decided to move towards a tax credit system by standard-rating the basic single and married personal allowances and the PAYE allowance.