Joan Burton (Dublin West, Labour) | Oireachtas source

This budget marks a decisive shift. The economy is growing, unemployment is falling and confidence is returning. The first phase of the recovery is complete and we are now starting the second phase, restoring living standards for families, older people and low- and middle-income workers. This budget will cement the economic recovery by sharing the fruits of that recovery in a fair and equitable manner that gives the greatest proportion of the gains to low- and middle-income workers.

This is a fair budget. Families, older people and low- and middle-income workers will benefit. Businesses will remain competitive. Through shared prosperity, all Irish people will begin to feel the recovery in their daily lives and in their standard of living. We will not do anything to imperil the recovery. The Government will continue to do what is right for Irish families. There will be no return to the recklessness of the past.

The 2015 budget is built on the foundations of economic recovery. It is crafted to sustain that recovery and to broaden it out so that it nurtures both social and economic renewal. It is a fair and prudent budget. It combines modest but focused increases in public expenditure to address clear and identifiable needs with adjustments in taxation which target available resources to the benefit of low- and middle-income families in a responsible way. At the same time, we have ensured that the ongoing repair of our public finances is continued and that we achieve our targets for public debt and deficits within a comfortable margin of safety.

Budget 2015 ensures that the economic dividend from the recovery is used to invest in sustainable growth, communities and public services. On the expenditure side, compared to earlier ceilings which envisaged reductions in spending across Government Departments of almost €1.4 billion next year, the Government will increase expenditure by €639 million. This will allow for investment in priority areas such as affordable housing provision, the health service, education and social protection, while maintaining overall expenditure levels within prudent limits.

The co-existence of severe housing shortages in major urban areas with widespread vacant property in other areas of the country is a clear manifestation of the dysfunctional nature of housing policy during the boom years. This is a social and economic problem that we must address immediately to prevent it from becoming a crisis. Our commitment to resolve this issue is clearly demonstrated by the commitment to capital investment of over €2.2 billion for social housing provision over the next three years. This capital investment is part of a multi-faceted approach which combines a number of tax incentives to encourage supply, additional current and capital expenditure to provide additional social housing units in the short term and a number of off-balance-sheet vehicles for the provision of affordable housing in the medium term.

Providing for the health of our citizens is a key priority for the Government. The Government will provide some €13.1 billion for the delivery of health services in 2015 to ensure that core services will continue to be delivered and improved, including in our mental health services.

One of Ireland’s key assets is its educated workforce. The importance of education to our society, to our economy and to individuals, families and parents cannot be overstated. The Government is providing €8.3 billion to education in 2015. This will include funding for 1,700 additional full-time posts, comprising 920 mainstream teachers, 480 resource teachers and 365 special needs assistants. Our teachers do a great job. We have growing numbers of young people and I am happy that there will be extensive recruitment of teachers and people who work in schools next year. In addition, during the term of office of my colleague, Deputy Quinn, and the current Minister for Education and Skills, more than 150 new schools have been built in a time of very deep recession. I hope all Deputies will have a chance to visit some of those schools, because they are a testament to what Ireland can do when we all act together.

Additional resources of approximately €30 million have been found to address real needs in the agriculture sector, such as the smooth transfer of land from older farmers who wish to retire to younger farmers in need of that land.

On the revenue side, additional taxation raising measures amounting to approximately €700 million have been set aside, and instead, a modest and carefully targeted package of income tax reductions of approximately €500 million will boost the disposable incomes of low- and middle-income families. All the available levers, including rates, bands and thresholds, have been employed to deliver a progressive income tax reform which targets relief at low and middle income earners. It is a complex set of changes to target that group, but targeting low and middle income earners is the best policy in terms of tax reform in this country at present. The changes in the universal social charge, USC, including an increase in the entry point to €12,012, a broadening of the lower rate band and cuts of 0.5% to the two lowest rates, will be of particular value to lower-earning workers.

In the income tax code, the standard rate band has been increased by €1,000 for a single person, which is double for a couple where both are working, and the top marginal rate has been reduced by 1%. Again, it is a carefully modulated structure of changes.

Taken together with the adjustment to the top rate of the universal social charge, these changes cap benefits for incomes of more than €70,000 per annum. While everybody gains, including those with significant earnings, higher gains are capped for incomes of more than €70,000. We have taken a fair approach that targets relief at low and middle income workers.

Budget 2015 provides an additional €3 billion in resources for the domestic economy compared to previous plans. This will help to sustain the already strengthening recovery in the domestic economy, which will support an additional 50,000 jobs next year, with unemployment set to fall further to 10% by the end of 2015. Unemployed people need to be ready to take up these jobs. The recently launched Pathways to Work 2015 programme maps the way forward to provide people with the necessary skills to return to work. To support the implementation of Pathways to Work, my Department, with the Department of Education and Skills, will spend €1.6 billion in 2015 to provide approximately 300,000 work and training places. This will give many people who are unemployed through no fault of their own, as well as their families and communities, the fresh start they want. In addition, €12 million has been allocated for JobPath in 2015, an initiative which will match the long-term unemployed with appropriate training and employment opportunities, not only in urban areas but also, in the tailored programme, in rural areas. We are also doubling the number of JobsPlus positions to 6,000, with a focus on young unemployed people. This will cost an additional €13.5 million in a full year. JobsPlus has been a major success and its benefits have not been confined to large cities such as Dublin, Cork and Galway but have extended to every town and village.

To ensure a focus on lower paid workers and in line with the Government's statement of priorities, a low pay commission will be established in 2015.

In the corporation tax system a suite of measures, including revisions to tax residency rules and adjustments to the research and development tax credit will maintain the competitive nature of the corporate tax structure, while sustaining a fair contribution from the corporate sector. In addition, a number of small measures have been targeted at start-up companies and small and medium enterprises, which form the backbone of employment creation in the economy.

The social welfare budget for 2015 is an example of the Government's wider approach. Overall expenditure will fall, thereby helping to ensure public finances remain strong. In 2012, 2013 and this year, the Department has returned money to the rest of the Government budget, particularly in the health area, through savings achieved as people return to work. Notwithstanding these transfers to other areas of the Government's budget, there remains scope for achieving almost €200 million of targeted increases in certain social welfare payments and new incentives to help people return to work. It is precisely because of the surge of people returning to work that these objectives can be achieved, which is the reason I am promoting them for next year. I want everybody present to become a persuader and help anyone they know who is not working to return to work. It is important to change the culture in this country. While we want to have a good social welfare system, we also want people in their working years to be in employment, including self-employment. All sorts of models are developing which offer a range of opportunities, particularly to younger people.

The Pathways to Work strategy has helped to ensure a reduction in unemployment from its crisis peak of 15.1% to its current rate of 11.1%. Having a job is the best single protection against poverty, the best path to a better and independent future for individuals and families and the best way to reduce expenditure on social welfare. Large numbers of people are anxious to return to work. If we can match those who wish to return to work with the employers who are beginning to hire, we will remove a significant proportion of people from the live register and achieve our objective.

All existing welfare supports and payments will be maintained in 2015 and there will not be any reductions in rates. Increasing employment has boosted PRSI receipts, while the decline in unemployment has reduced expenditure on unemployment supports. This has improved the finances of the Social Insurance Fund and released resources to fund a number of targeted measures that help other jobseekers return to work, increase child benefit and further protect vulnerable groups such as older people and people with disabilities. I am, therefore, announcing a number of initiatives costing €198 million which have four key objectives. First, we are assisting unemployed families to return to work by providing continued financial support. Second, we are helping all families, whether in work or unemployed, with the cost of raising children by providing a €5 increase in the monthly child benefit payment, followed by a similar increase next year. Third, we are recognising the additional pressures on pensioners and people with disabilities who are living alone by providing a small but significant increase. Fourth, we are helping vulnerable welfare households to meet the costs associated with water services.

I propose to speak specifically about the new back to work family dividend. Through this scheme, long-term unemployed jobseekers with children who leave the social welfare system to return to work can retain the child related portion of their social welfare payment on a tapered basis over two years. People in the construction sector who may have lost their jobs should note that the scheme also applies to those who move to self-employment. This is important because recent developments in the construction industry mean many construction workers are self-employed. Those who leave the social welfare system to return to work will receive €1,550 per child in the first year of employment or self-employment and half this amount in the second year, while their work patterns recover and their income rises. The scheme will cost €22 million in 2015 and €46 million in a full year. The back to work family dividend will help increase the pace of the progress we are making in helping people to return to work and will assist the economic recovery. Combined with the employer incentives provided under JobsPlus and activation measures under the JobPath scheme, these measures will ensure people who have remained on the live register for a long period can benefit from the recovery in the labour market. Almost all of the families to which they will apply will also receive family income supplement, to which we are allocating a significant additional amount of money because of the numbers of people returning to work.

The budget, therefore, contains three measures aimed at families. It provides for an increase in child benefit for everyone who has a child, introduces the back to work family dividend for people returning to work and revamps the family income supplement, a well regarded and established scheme on which we will spend significantly more this year and next year.

On supports for children in general, the €5 increase in the child benefit rate will bring the monthly rate from €130 to €135 per child. This measure, which will cost €72 million in a full year, recognises the sacrifices families made during the economic crisis and the continuing difficulties they face. In the statement of priorities the Taoiseach and I made earlier this year, the Government promised a new deal on living standards for hard pressed families. The increase in child benefit is in line with that commitment.

On pensioners and people with disabilities, the living alone allowance will be increased by €1.30 per week, bringing the weekly rate from €7.70 to €9. This measure will benefit more than 177,000 people and will cost €12 million annually. The Government is committed to reducing the risk of poverty among marginalised groups, including older people and people with disabilities, in particular those who live on their own.

People living alone can be more vulnerable to economic deprivation than a two- or three-person household where, to some extent, resources can be pooled. The increase in the living alone allowance will help to address this risk and provide for a greater level of income adequacy both for pensioners and people with disabilities living alone. The payment was last increased in 1996. It is good that we have some resources available to target this particular group of people.

In line with the statement of priorities, I am introducing a water support payment of €100 to recipients of the household benefit package to help older people and other vulnerable groups meet the cost of water services. The €25 payment will be paid every three months directly to the beneficiary household at a cost of €42 million in a full year.

In addition, I am introducing a payment of €100 per annum to fuel allowance recipients who are not in receipt of the household benefits package. We signalled these changes in the statement of priorities last July. Subsequently, as Minister for Social Protection, I held extensive meetings with organisations interested in the area of social protection, including those representing older people and people with disabilities. They also included the Society of St. Vincent de Paul and organisations dealing with children. The budget reflects the advice and requests such groups gave to me on policy direction.

These measures will assist almost 700,000 households. It is not an individual payment but one payment for a household. A tax allowance for water charges at the standard rate for those in employment has already been announced by the Minister for Finance.

I now wish to mention the Christmas bonus. Christmas is a time of celebration but it is also a difficult time for families under strain who are dependent on social welfare benefits for financial support. I am pleased to announce that this year a Christmas bonus of 25% - a partial restoration of the Christmas bonus - will be paid to recipients of long-term social welfare payments.

There will be a minimum payment of €20. This payment will benefit over 1.16 million social welfare recipients at a cost of €65.5 million. The Christmas bonus was introduced in 1980. Those of us who work with old people or who have elderly relatives, will know that the bonus was very much appreciated. That payment allowed people some easement in dealing with the cost of Christmas. This is a recovery budget so I am happy to say that we should have a small dividend for elderly people whom we all respect. We want them to be able to have a little extra resources.

The social protection measures will, overall, help more people to return to work, particularly families with children. They will also support all families with children, as well as pensioners and people with disabilities living alone. In addition, the measures will assist low-income families on welfare to meet the costs associated with water services.

Throughout the crisis, the Government protected core social welfare rates and maintained a massively strong social welfare safety net. That was a political choice which both parties in this Government made very deliberately; it is not one that was followed in other bailout countries. Some Opposition Deputies advised us to follow other bailout countries, but we did not do so. We chose to maintain our strong social welfare system, rather than going down the road of default and throwing our hats at it. We chose to work it and create a sustainable and sustained recovery.

This is acknowledged by the ESRI, among others, which has pointed out that, unlike in other countries, income inequality has fallen in Ireland in recent years, largely because of the overall maintenance of the welfare system.

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