Brendan Howlin (Wexford, Labour) | Oireachtas source

Today we are announcing the Government’s fourth budget. It is a significant day which marks the end of an era of budgetary austerity. This time last year, we estimated that to meet our budget deficit target, it would require further cuts of €1.3 billion on the spending side. That we are now in a position to increase expenditure, responsibly, indicates the progress we have made. To be forced to reduce expenditure for the past six years and seven budgets was unprecedented. That is the scale of the damage inflicted on the people by Fianna Fáil in government. We now have some flexibility to meet emerging demands and invest in public services. This is a further sign that we are normalising both politics and economics following the greatest economic crisis in our history.

Sustainable Recovery

As the Minister for Finance indicated, the Government’s priority is to keep the public finances on a sustainable path to recovery. The spending measures announced today are consistent with that goal. As we know only too well, the price to be paid for losing control of the public finances is high.

We committed to bringing the deficit to under 3% of GDP by 2015. Today we honour that commitment, not just to our European colleagues but to our own future generations. In fact, as the Minister for Finance indicated, our deficit target for next year is 2.7% of GDP.

As a Government, we have never believed in austerity for austerity’s sake. I do not believe further cuts are necessary. Economic and employment growth has always been the best solution to addressing the fiscal deficit.

Of course, arising from our acceptance of the fiscal treaty referendum, the public finances are now governed by the new European fiscal rules. As we pursue our path towards a balanced budget in structural terms, expenditure growth is limited by the medium-term growth capacity of the economy.

Comprehensive Review of Expenditure

Today, I will publish the Comprehensive Expenditure Report 2015 - 2017 which is now being circulated to Members, setting out expenditure measures for 2015 and departmental expenditure ceilings up to 2017. I will also be publishing, later this week, background papers on our spending options, including all departmental submissions received as part of the comprehensive review of expenditure.

Expenditure Ceilings

Gross current expenditure for 2015 will be just over €50 billion. This figure represents an increase in expenditure of €429 million on the 2014 Revised Estimates.

This increase in spending is targeted primarily at critical areas in social protection, health, education, justice and housing.

It is also intended that current expenditure will rise by further amounts in 2016 and 2017. The allocations published today contain some increases to meet service pressures we have identified. Further improvements will be announced next October in line with the Government's priorities. The extent of any such increases will be determined by future economic growth and the level of progress made towards our medium-term objectives.

I am also pleased to announce an increase of €210 million in the capital spending programme for next year. In 2015, capital expenditure will exceed €3.5 billion and the figure will increase further in 2016 and 2017. We are investing in our future and the detailed capital review, setting out priorities to 2020, will be published before the end of the year.

This brings the net overall increase in expenditure over last year to €639 million. This position is €2 billion better than we envisaged at this time last year.

Society - Housing

An out-of-control property bubble played a significant role in the economic crash. We have not been able to build enough houses in recent times to meet the demand that is being driven, thankfully, by our economic recovery. We have a supply deficit which has pushed up prices, particularly in urban areas. This, in turn, has led to a decline in the availability of social and affordable housing both for purchase and rent. The Government is committed to addressing this social problem. The Minister for the Environment, Community and Local Government has proposed a number of measures in the recently announced planning Bill and will shortly elaborate on the Government's social housing strategy for the period from 2015 to 2020. These measures are complemented by the announcements made by the Minister for Finance today to stimulate wider housing supply.

The Government is determined to meet the scale of social housing need with a level of investment commensurate with the scale of the challenge we face. Our strategy involves a multi-annual approach to significantly increasing the provision of social housing, one which combines a considerable increase in Exchequer investment with innovative approaches to improve supply. Therefore, I am announcing an overall capital investment of more than €2.2 billion for social housing provision for the next three years.

See this speech in context