Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I welcome the opportunity to speak on the draft stability programme update that was published by the Department of Finance last night. I concur with those who have made the point that additional time should have been provided to study the document. I have read it but I would have liked more time to consider it in more detail. I have some initial comments to make. The stability programme update must be read alongside the speeches that have been made by the Ministers, Deputies Noonan and Howlin, this morning. We got a significant new piece of information about a change in the medium-term objective when we were told that the Government is availing of the additional fiscal leeway that the European Commission has allowed in order to move from a medium-term objective of having a balanced budget in structural terms to having a deficit of 0.5%. According to the speech we heard from the Minister, Deputy Noonan, this change will ultimately provide additional resources - one can call it "fiscal space" if one wishes - of approximately €1.5 billion. This will increase the projected overall fiscal space, or available resources, for the period from 2017 to 2021 to between €10 billion and €11 billion. Of course all of this is based on assumptions and projections. In the shorter term, the context of budget 2017 is now becoming clearer. When we received the most recent set of forecasts at the time of last October's budget, the expectation was that budget 2017 would have approximately €500 million of available resources. In the course of the discussions on Government formation we have engaged in over recent weeks, it was indicated to us that this figure was to increase to between €700 million and €800 million. The Minister, Deputy Noonan, has confirmed today that the figure is now likely to be approximately €900 million. This significant shift means that additional resources are available, which in turn will create issues around expectations and deciding on what this country's priorities should be.

As a party, Fianna Fáil very much welcomes the broad-based economic recovery that is now well under way. The priority for the incoming Government and for this Dáil, working collectively, must be to secure the economic recovery in the first instance. Only after we have made sure it is a fair and inclusive recovery can we decide what to prioritise as we make decisions on how to use the resources generated by that recovery. From our perspective as a political party, the whole purpose of having a strong economy is to deliver a fair society. That will be our pitch throughout the term of this Dáil as we set out our policy priorities. I will touch on a few of those priorities in a moment. This is the first significant debate in the Dáil on economic matters since the recent general election. Along with my colleagues in Fianna Fail, I look forward to a detailed engagement on the floor of the House and in the Oireachtas committees on a broad range of economic issues. We are very conscious of the responsibility placed on us by the Irish public. The prudent management of the economy is central to the fulfilment of that responsibility. I commend the officials in the Department of Finance on the work they did in preparing this document. The political backdrop to their efforts meant they had to work amid a great deal of uncertainty. This document, which is dry by its very nature, is important because it sets out the economic landscape which this country is now facing.

I wish to reiterate the key priorities of Fianna Fáil's economic strategy, as set out by my colleagues and I during the general election campaign. We are in favour of maintaining a supportive macroeconomic environment and sound public finances. We recognise that expenditure-increasing or revenue-reducing measures depend on projected economic growth. The projections remain quite strong, with growth of 4.9% projected for this year. We believe in improving the incentive to work and the reward from work through reductions in the tax burden, with an emphasis on those on low and middle incomes and the self-employed. A greater emphasis on maintaining and improving our cost base through ensuring competitiveness is a central consideration in policy-making. We believe in reducing operating costs and delivering improvements in infrastructure, skills and the banking sector. Over the course of this Dáil, we will flesh out our policies across a range of areas relating to these items and seek to build Dáil support for such measures. That is the new political reality in which we will all now operate. There is a need to try to build consensus, challenge one another more robustly and build support for measures that are being introduced.

The stability programme update we are debating today makes it clear that the risks to the Irish economy are now at their highest level since 2008. Indeed, the most acute risk - that Britain, which is our nearest neighbour, will leave the EU - will be determined within two months. This is a stark reality that we need to consider. When Ireland previously held referendums on its relationship with the EU, people voted on a specific treaty and, as such, it was a more straightforward task to work out exactly what the consequences of a vote in one direction or the other would be.

That is not the case in the situation now facing the United Kingdom. It is unknown at this stage what relationship Britain would have with the rest of the world, including Ireland, post-Brexit. Given the very deep and important economic ties between Ireland and the United Kingdom, this would have huge implications for Ireland.

Much of the election campaign discussion centred on how much money would be available in the next few years, on which issue I touched in my opening remarks. The way in which that debate proceeded left the public bewildered. The report does not address that issue definitively, although we have been given some additional information by the Minister on the floor of the House today. I note that the Government is now accepting that there will be an easing of the fiscal target in the context of the medium-term objective, MTO. At this stage I would like to reaffirm the position of Fianna Fáil as a political party. We affirm our commitment to meeting in full the domestic and EU fiscal rules. If Ireland's medium-term objective is revised by Government decision to a deficit of 0.5%, as now appears to be the case, in our view, Ireland should continue to target a balanced budget in both headline and structural terms. In simple terms, if we accept the slightly easier deficit target, we should continue to aim to outperform it. That is the Fianna Fáil position on the issue.

Fianna Fáil was the first party to come forward with proposals for a rainy day fund, which proposals we will outline in more detail to the House when normal business resumes. We also have many ideas about reform of the budgetary process. The Dáil reform committee is dealing with this issue, but in our view politics is entering a new era, one in which the ideas of Deputies on all sides of the House will have to be listened to in a meaningful way and considered for implementation. This new era also brings an entirely different way of considering budgetary measures. This process of scrutiny will have to commence long before the deadline of mid-October. That is the bottom line and we are all going to have to accept the new reality.

It is Fianna Fáil's belief that the focus of additional resources should be on improving public services and reversing some of the most damaging cuts, while at the same time outlining a pathway to reform and reduce the burden of taxation, with particular emphasis on low and middle incomes. The split in terms of expenditure and taxation should, in our view, broadly be 2:1, such that in the context of budget 2017 and there being €900 million available, the split should be approximately €600 million for investment in public services and €300 million for a tax package.

The Minister, Deputy Michael Noonan, is likely to hold a senior position in the incoming Government. Its number one priority must be tackling the housing emergency which has moved beyond the point of crisis at this stage. The issues of homelessness, the shortage of rental accommodation, as well as social housing accommodation, and the lack of a private housing supply are interconnected. What is required is an ambitious social housing building programme. There is also a need to address the barriers that are preventing a private housing supply from coming on stream. Tinkering at the edges will not address the issue. The fundamental challenge facing the incoming Government and the Dáil collectively is addressing of what is now a national emergency in housing provision. Fianna Fáil will be constructive in bringing forward ideas and proposals to help address the crisis.

I am glad to have had an opportunity to make some initial points on this issue. I look forward over the course of this Dáil term to working collaboratively on economic issues, acting in the national interest, in building on economic recovery, ensuring it is fair and inclusive, such that we use the fruits of the recovery to set out our vision for the country, while protecting decent public services and rewarding those who have an opportunity to work.

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