THE Minister for Finance, Mr Quinn, rejected claims that public expenditure was out of control. Replying to three days of debate on the Finance Bill, he said the Government remains firmly committed to the fiscal policy parameters set out in its programme, "A Government for Renewal".
This was developed specifically to guide the budgetary approach up to 1997. The 2 per cent real ceiling on current supply services spending was a demanding target, particularly when viewed against the much higher rates of real increase in recent years. The average annual real increase in gross current supply services spending between 1991 and 1994 was around 6 per cent.
Mr Quinn also took issue with suggestions that this year's Budget, left PAYE taxpayers worse off. Single people earning less than the average industrial wage, it was claimed, would be paying more than 50 per cent of their income in tax. "In fact, the average tax land PRSI take on these employees is much less - around 25 per cent, not 50 per cent."
Regarding the non-renewal of the PRSI allowance of £140, he said this was part of a package which included a PRSI-free allowance introduced last year and now standing at £80 a week in the case of full rate PRSI contributors.
The interaction of the tax and social welfare systems created difficulties for those on lower incomes moving into employment but this problem did not arise overnight. It resulted from policies applied over the last 20 years. He had introduced measures to alleviate it, including general improvements in tax and PRSI. But the issue was going to have to be tackled over time.
The final report of the expert group on the integration of tax and social welfare was expected soon and he hoped it would con lain a strategy.
A former finance minister and Fine Gael leader, Mr Alan Dukes, described himself as "modestly content" with initiatives in the Budget, but he said a future government would be justified in devoting a three to four-year period, eliminating the poverty trap created by the present tax and social welfare systems.
A real effort should be made to make it attractive to work rather than remain on the dole. The loss of rent allowances, family income supplement and the medical card made it unattractive to people to work for low pay.
The task force on long-term unemployment had failed to address the issue. "If we are to be really serious about turning economic growth into employment we must talk about the tax system."
The leader of the Progressive Democrats, Ms Mary Harney, said the social partners lacked confidence in the Government's ability to deliver radical, pro-employment tax reforms.
It was clear that IBEC and ICTU saw the road to negotiating, a successor to the PCW as "littered with obstacles". The absence of groups such as INOU and ISME also raised questions about whether the Central Review Committee which oversaw the PCW was really inclusive.
There was little point in entering a new agreement unless it provided for the dynamic management of the economy. "The successor to the PCW must be tax based and contain the sort of reform measures which will transform the Irish workplace. The Labour Party has presided over an explosion in public spending ink Government. Now is the time to call a halt and to end the failed policies of tax and spend." The Government's primary duty was to encourage enterprise and reward work."
Mr Brendan McGahon (FG, Louth) said Fine Gael was traditionally associated with middle-income and self-employed people who provided for themselves. "More than ever they need help. They are burdened down." The party should identify their cause and restate it.
Mr Eric Byrne (DL, Dublin South Central) said he was confident that when the Government came to the end of its term the remaining poverty traps and disincentives would have been eliminated and progress already made would be consolidated. The Social Welfare Bill dealt comprehensively with many of the poverty traps and the increases in personal tax allowances complemented these measures.
Mr Dan Wallace (FF, Cork North Central) said the Bill's proposals were designed not to cause offence to the diverse views of the Government parties. "It highlights the absolute nonsense in terms of major policy development of having far-left, centre and far-right hands on Government controls at the same time. It is perhaps not surprising that the resulting `mixed grill' of policies is neither healthy nor attractive."
The second stage was passed and the Bill was referred to the Dail Finance Committee.