Stephen Donnelly (Wicklow, Independent) | Oireachtas source

I categorise the budget as politically cute and economically foolish. In spite of many proclamations over the past few years that we would not see a return to boom and bust election budgets, this budget is exactly that. What does it do? It gives many people a little bit of money back via income tax and the USC. Most people have suffered through the economic recession and a little bit of breathing space is welcome. However, all of the tax is offset by water charges. The net result for households this year is that the total amount of tax collected will remain the same but the net amount from higher income households will drop and the net amount from lower-income households will increase. That means the tax changes in this budget, together with the water charges, do not change the total tax but move the burden from higher income households to lower income households. This should not have been done.

The budget also avoid cutting spending where it should have been cut. An additional €500 million in new measures includes social housing, which am glad to see. There is an additional €900 million for something called demographic pressures. The detail of it is difficult to find because it is scattered throughout 200 pages of the report of the Minister for Public Expenditure and Reform, Deputy Howlin. Some €800 million in savings were meant to happen but have not happened. The result is that spending was supposed to reduce by €1.4 billion to address the deficit and the national debt. Instead of spending being reduced by €1.4 billion, spending is being increased by €1.4 billion in spite of real opportunities to save money. Let us take health care, about which we are all concerned.

What do we know? There has been an overspend this year in health of approximately €500 million, and there are two ways to tackle this. We can give the health care system an additional €500 million or we can find €500 million that should not be spent and take it out of the health system. The answer in this budget has been to provide the money, and that comes in spite of very real opportunities to save money.

In my budget submission I demonstrated how over €1 billion per year can be saved by moving from the amount we spend in Ireland per capita on pharmaceuticals to the amount spent in the UK. We should mandate the use of generics wherever possible and work with the National Health Service, NHS, to leverage its better buying power to save €1 billion per year. Deputy Adams stated earlier that the health system is under-funded, but I respectfully disagree. When we adjust for our young population, in Ireland we have the second-highest health care spend per capitaon Earth. Only the Americans spend more money in the sector. Our health system is not under-funded but it is badly run. Unfortunately, the answer for next year is not to make it run better but to give it more money. They are throwing more money into a bad system rather than fixing that system.

This budget has the feeling of Fianna Fáil budgets during the boom, but there is one very important difference, as Fianna Fáil had giveaway budgets with budget surpluses, whereas this is a giveaway budget with borrowed money. What is the result? Instead of closing the deficit, this budget includes measures to increase the deficit to the tune of €1 billion. Had the Government done nothing, the budget deficit would have fallen. At a time when we are still borrowing €5 billion, this budget is increasing the deficit. The troika has not been gone a wet week.

Who are the winners? The single biggest winners are the landowners, which is not surprising, as Fine Gael is appealing to one of its bases. There are 11 separate taxation policies for landowners in the budget. The other winners are high earners, who do marginally better than others, as the money they will get back in reduced taxes will more than offset the water charges. As parents and, arguably, as taxpayers, they will not be better off.

This brings us to the losers. If landowners and high earners win, who will lose? Lower-income households will clearly lose, and although they get a little back in lower income tax, more than that will be taken away in water charges. The self-employed have taken a hit again and I cannot understand why this Government has introduced an 11% universal social charge just for the self-employed. I do not understand what the Government has against the self-employed and why that group should pay the charge at 11% while a person in a PAYE job - which does not have the same risk as self-employment - pays the charge at a rate of 8%. The negative equity generation has been completely ignored, although there were opportunities to help it with local property taxes and mortgage difficulties. All of these have been ignored.

There have been no changes to the cost of child care, despite the fact that this country has the second-highest child care costs on Earth. This means there are many parents at home who want to and are ready to work but could not afford to do so if they could get jobs in the morning. In my budget submission I considered what a parent in Dublin or Wicklow with two kids would have to earn to make it reasonable to work. Based on current taxation, such a parent would have to earn €50,000 just to break even. That salary would pay the bill for taxes and child care as well as the cost of going to work. A salary of €70,000 would leave the parent worse off than somebody on basic social welfare. Nothing has been done for these people.

Lone parents have seen a marginal increase, but nothing has been done to reverse the really horrific cuts they have seen. Over the past five years, the proportion of lone parents suffering from deprivation has increased from one in four to one in two. One in two lone parents in Ireland and their children now experience deprivation. Students at primary, secondary and third level have also lost out. The pupil-teacher ratio is being maintained but it is not being improved. Schools are to see further cuts to their capitation grants, and the ongoing per-student cuts to higher level education continue in this budget. Pensioners and anybody with a private pension will also lose out. The 0.15% levy to the pension fund has been maintained despite previous promises from the Minister that he would get rid of it.

The question is, therefore, what should have happened with this budget. The Irish people have put up with much in cutting the deficit and this effort should not have been abandoned just because there might be an election next year. Efficiency savings such as that exemplified in the smart purchase of pharmaceuticals should have been identified and pushed through but they were not. There should have been investment in education, as the handling of such investment is both the single biggest threat and opportunity to the future prosperity of the country. The total amount going to education is falling in this budget, which is extraordinary.

The cost of child care should have been addressed. The Tánaiste promised such issues would be sorted out and we would have a Scandinavian-style child care model. As a parent of three kids, I assure anybody listening that we certainly do not have a Scandinavian-style child care model. The negative equity generation should have been supported through a fairer local property tax which could take account of negative equity or stamp duty paid. A much more hands-on approach to tackling the mortgage crisis could have been taken, and there is cross-party agreement in this respect. The Joint Committee on Finance, Public Expenditure and Reform published a very good report which identifies a raft of problems, including a lack of fairness and transparency, within mortgage crisis issues, and much of that could have been addressed in this budget. Entrepreneurs and the self-employed should have received the same taxation burden and supports as PAYE workers. Self-employed people and entrepreneurs should not have been hit in this budget with a higher taxation rate specifically for them.

The budget should have been tested for equality. For three years I have asked that when Ministers come to the Chamber with their documents on budget day, we be provided with a distributional analysis. They have again refused to do this, as they have done every year. I asked the then Tánaiste, Deputy Gilmore, to do it and he responded by calling me an opportunist. I asked the Minister for Public Expenditure and Reform, Deputy Howlin, to do it because he is a member of the Labour Party and he argued it would not be reasonable to test crisis-level budgets for equality. One could argue that the optimal time to test for equality is during a crisis, as that is when many nasty and painful decisions are made. Yet again, we do not know who this hits hardest. My sense is that it will yet again be another regressive budget, with women hit harder than men. We do not know. We will all be asked to vote on measures but we do not know their distributional effects.

This budget should have maintained financial discipline and targeted support where it is most needed rather than where it is felt there are votes. It should have boosted entrepreneurship rather than penalised it and it should have invested in education. Rather than looking to the next election, this budget should have looked to the next decade and the next generation. Unfortunately, it failed to do so.

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