Brendan Howlin (Wexford, Labour) | Oireachtas source

-----a cut of over 11%. In July of this year, the Low Pay Commission recommended that the minimum wage be increased further, by 50 cent to over €9 per hour. The commission recognised that a recovery based on low wages was no recovery at all. Today, I am pleased to confirm that the Government will implement the commission’s proposal. From 1 January 2016, the statutory minimum wage will rise from €8.65 to €9.15 per hour. This means that under this Government the minimum wage has been increased by nearly 20%. This Government is committed to making work pay.

During the first three years of this Government, despite necessary reductions in public expenditure, resources were targeted where they were most needed. We protected core social welfare benefits. I am especially proud that we maintained the State pension. Since the beginning of 2012, we have invested more than €1.25 billion in school buildings. We have built 102 new schools and completed 71 largescale school extensions. We did more in the worst of times than our predecessors did in the best of times. Despite huge pressure, we sought to protect the young, the old and the vulnerable but we are conscious of the need to continue to address the challenges that face Irish families. Our aim is to ensure the recovery is felt in every home and in every community across the land. Later, I will outline the measures contained in this budget which will help us achieve that objective.

Fiscal rules

First, however, I repeat the context in which all budgetary decisions must now be made. The fiscal rules - ratified through referendum by our people in 2012 - ensure that public expenditure cannot rise above the potential growth rate of our economy. Our commitments under the Stability and Growth Pact are real.

In 2015, economic growth and greater than expected tax receipts have allowed the Government to improve services in a number of key areas. While remaining firmly within the fiscal parameters, we have had an opportunity to plan for the long term by targeting areas with demographic and demand pressures. The extra funding allocated this year will ensure that enough resources are also available for all Departments to provide quality services next year.

The measures give us a platform from which we can build. They mean that resources will be directed at areas with the greatest need and are consistent with long-term sustainable planning and development.

National economic dialogue

At the national economic dialogue in July, we listened to employers, trade unions, community organisations and many more. Our engagement with these groups helped to ensure that additional funding would be targeted at areas in which they would have the greatest impact. The spending measures contained in Budget 2016 are consistent with that approach.

Lansdowne Road agreement

The Lansdowne Road agreement typifies our commitment to responsible expenditure management. Legally, pay reductions in the public sector were predicated on there being a financial emergency. Thankfully, those emergency days are receding behind us. Therefore, an orderly unwinding of the financial emergency legislation which reduced pay is the prudent and correct thing to do. Moreover, as economic growth returns and private sector wages increase, it is only right that our nurses, gardaí, teachers and public servants generally see an improvement in their take home pay. During the crisis, their sacrifices allowed us to sustain quality public services. Efficient public services are essential to a modern society. When we came into office, reform of the public service was a key component of our strategy to meet the enormous challenges we faced. I am proud of the considerable reforms we have delivered since 2011. I commend public servants for their effort and commitment in this regard. I believe that the implementation of our Civil Service renewal plan and the wider programme of public service reform will continue to be a key driver of Ireland’s recovery. Unwinding the financial emergency legislation can only be done in a way that does not jeopardise our public finances. We learned the hard way that sustainability is the key to progress. Pay levels, like the public finances, need to be managed in a responsible, sustainable way, with the long-term interests of all our people at their core.

Expenditure ceilings

The expenditure allocations outlined today reflect this approach. In 2016, gross current expenditure will be over €51.4 billion. Capital expenditure will be an additional €3.7 billion.

Capital plan

The departmental ceilings in the documentation before the House include funding for the first year of expenditure on projects announced as part of the six-year capital programme, which we published in recent weeks. That €27 billion Exchequer investment will allow for large-scale investment in education, health, transport and all other sectors.

Current expenditure

Under current expenditure, allocations will target critical needs in child care, education, social protection, employment, health and housing. Multi-annual ceilings allow Departments to plan ahead. They take account of new measures and provide for population growth across our country. In line with economic growth, and within the parameters of the fiscal rules, planned public expenditure will rise again moderately in 2017 and 2018.

Child care

Child care is a key priority for Government. At the national economic dialogue in July and, indeed, in a range of reports published in this area, there was broad agreement on the need to focus on the issues of affordability and quality in relation to child care. Investment in child care has both social and economic returns. It acts as a key labour activation measure, particularly for women, allowing those who wish to work to take up the opportunity of work. It improves educational and social outcomes by providing our children with the best possible start. I am, therefore, increasing the current expenditure allocation to the Department of Children and Youth Affairs to over €1.1 billion.

I am happy to say that the increased allocation allows me to bring forward a package of measures to ease the burden on working families. We are extending the amount of time parents can avail of the very successful early childhood care and education scheme. From now on, children will be eligible for free child care from three years of age up until they are five and a half, or until they start primary school.

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