Tommy Broughan (Dublin Bay North, Independent) | Oireachtas source

It was comical listening earlier to the response of Deputy Michael McGrath and Fianna Fáil, still torn between pretending to be an Opposition party and being a party of government. Of course, this a Fine Gael-Fianna Fáil administration which has cobbled together the budget before us. This is the 11th austerity budget since autumn 2008 when Fianna Fáil began a decade of austerity and capped expenditure. I welcome some of the small restorations of payments in what is essentially a standstill budget. I sent in my own submission to both Ministers, which outlined a number of measures I felt could have been included with even a reasonably extended fiscal space, significantly beyond the €1.2 billion provided for in this budget.

The report of the Committee on Budgetary Oversight, which was published recently, reflects many hours of meetings and outlines members' views following the hearings on the fiscal context for budget 2017, including the risks and opportunities for our economy, especially during and post-Brexit; the amount of fiscal space; the need to increase capital expenditure, especially in housing, health and education; the need for a new model of child care; future strategies on taxation policy, including the forensic estimation of tax expenditures; and the closure of tax avoidance loopholes such as section 110, qualifying investor alternative investment funds, QIAIFs, and real estate investment trusts, REITs. I thank Oireachtas staff and the committee Chairman, Deputy John Paul Phelan, for these hearings. It was regrettable that we did not meet representatives of key bodies in civic society but they made presentations to us as individuals Members. I hope that will take place in 2017 for the 2018 budget.

I remain totally opposed to the continuing suffocating application of the EU budgetary rule with its expenditure benchmark, convergence margin and reference rate, and debt rule, which combine to continue the austerity era cap on Government expenditure. I argued as forcefully as possible at the committee that every effort should be made to limit the impact of the EU budgetary rule on 2017 spending. This is particularly the case with regard to capital expenditure, which is still greatly constrained. In my independent submission to both Ministers, I urged that consideration be given to a number of revenue raising measures to expand the fiscal space to approximately €3 billion. These included the introduction of a wealth tax on the wealthiest 5% of all households. It was estimated last year that would yield up to €400 million. Many leading economists such as Professor Thomas Piketty and Professor Joe Stiglitz have said that a wealth tax is the hallmark of an advanced country in the OECD as part of its revenue raising arsenal. The restoration of the capital gains tax and capital acquisition tax rates from 33% to 38% would have yielded an additional €178 million in a full year I also argued for an increase in the stamp duty on shares from 1% to 1.5%, which would yield an additional €220 million a year. That took place in the context of the discussion on the financial transactions tax which the Minister for Finance told the committee he is still not keen on advancing, despite the fact that 11 OECD partners are moving forward with it.

Closing section 110 and other tax avoidance loopholes and ensuring the effective rate of corporation tax is 12.5% would significantly increase stable corporation tax revenues by between €650 million and €2 billion per annum. The effective rate seems to have increased in the past two years with the Minister at long last introducing legislation to implement the base erosion and profit sharing, BEPS, programme. It is disappointing that the Department of Finance, in its budget briefing documents, estimates that section 110 and funds changes and measures to tackle offshore tax evasion will realise only €80 million in 2017. That is difficult to believe if the job is carried out properly by the Department. I also called for an increase in Revenue personnel through the addition of 200 audit and compliance staff and I estimated that would produce an additional Exchequer yield of up to €100 million per annum, but the Minister has only provided for an additional 50 audit and investigation staff, which he says will yield €50 million. However, the departmental briefing documents indicate the yield will be lower.

Budget 2017 should have begun the process of equalising rates of excise on automobile fuels between petrol and diesel vehicle engines because of the health concerns about carcinogens in particulate matters. I drive a diesel car but the equalisation of the rates has occurred in Great Britain and Northern Ireland and it is opportune for us to move in the same direction. The introduction of the sugar tax and the vacant sites levy could have been brought forward to next year.

As my colleague, Deputy Thomas Pringle, said, the increase in the State pension and the other weekly social welfare payments by €5 per week is a welcome, tiny step but it is deplorable that this increase will not come into effect until March 2017. The increase from 75% to 85% in the Christmas bonus for 2016 is also an Ebenezer Scrooge-like increase for hard-pressed families. These increases represent expenditure of €301 million against a minimum package of at least €500 million which the Minister should have brought forward. That would have included a more significant increase for pensioners of at least €7 per week. It is also regrettable that child benefit cuts have not been further restored by at least €5 more per child per month and that family income supplement thresholds were not increased by at least €5.

Given the risks to the economy, the vice-grip of the EU fiscal rules and the ongoing huge deficit in infrastructural provision, major tax cuts and new tax expenditures should have been avoided in this budget. The Minister for Finance said the budget package of €1.3 billion favours expenditure increases over revenue reductions by a ratio of 3:1. Some constituents feel that USC reforms are necessary but it should not be abolished. I recommended that the SIPTU proposals for the USC should be proceeded with. The cuts in the USC of 0.5% in the 3 lower rates, the tiny increase in the 2.5% rate ceiling and other changes will cost the Exchequer €335 million, but the distributional analysis in annex A of the Minister's presentation show tiny weekly gains of between €2 and €7 for taxpayers and households earning less than €55,000 a year. He said taxpayers would not be throwing their hats in the air today and given these figures, they certainly will not. The so-called "squeezed middle", the middle ranking salary cohort of citizens and households, deserve some easing of the income tax burden in 2017. A key initiative in this regard would have been to widen the income tax standard rate tax band or to index tax bands and credits but, again, this has been avoided by both Ministers.

The Minister for Finance wants to re-establish a rainy day fund from 2018 when the budget will be in surplus. Previously, we had Charlie McCreevy's €1 billion savings fund Much of it, unfortunately, was put into rescuing the banks. However, the parallel decision to now also aim for a debt-to-GDP ratio of 45% by 2025 seems incongruous in the context of funding deficits in health, education and key national infrastructure. Ireland, at a ratio of 76% debt to GDP, is now well on the way to reaching the 60% Stability and Growth Pact goal.

To address the unmet needs of the health system, including the move to universal health care for all citizens, an additional €1 billion was needed for the health budget in 2017.

At least €100 million of this should have been allocated to intellectual disability services and to good mental health promotion and care for children and younger citizens. Today, the Minister, Deputy Paschal Donohoe, announced a package for additional health spending of just under €500 million and trumpeted the fact that our under-resourced health system spending, at €14.6 billion, had reached the highest level in our history. However, I welcome the medical card coverage for all children on the domiciliary care allowance. We know that hospital waiting lists are also at an all-time high at 535,000 people, a disgraceful figure for which the Minister for Health, Deputy Simon Harris, is responsible. In my constituency there are no plans to immediately begin construction of a new emergency department at Beaumont Hospital or for additional beds there or at other key hospitals across the country.

On the subject of disability services, I have received briefings from St. Michael's House, St. John of God and Prosper Fingal indicating the ongoing need to provide additional funding for placements for many young people, especially the 18 year old cohort which graduated in 2015, and for additional capital and personnel resources. I estimated that the further provision of these services in Dublin Bay North and the other 40 constituencies would cost €100 million per year; therefore, I look forward to hearing how the Minister of State at the Department of Health, Deputy Finian McGrath, achieved this later this evening or tomorrow.

The Minister for Public Expenditure and Reform, Deputy Paschal Donohoe, rightly calls education the bedrock of our society but almost the entire additional spending of €458 million in the budget is needed just to meet our demographic needs and it is disappointing that no major initiative was taken in relation to the pupil-teacher ratio or capitation grants at first or second levels. An action plan has recently been published by the Minister for Education and Skills, Deputy Richard Bruton, but where are the costings? Where is the money for it in the budget today? There is no sign of it, as the INTO has rightly stated. I agree with the Irish Congress of Trade Union's pre-budget submission that, in the medium term, funding for education should be set at the equivalent of 7% of GDP.

The Union of Students in Ireland made a powerful case to me for the investment of an additional €140 million in the higher education sector, but the Ministers have today only allocated an extra €36.5 million. They talked about an Exchequer-employer investment funding mechanism, whatever that means. I strongly support Barnardos campaign for an additional €142 million for high-quality, affordable child care for all families, which includes the introduction of a child care subsidy to support parents of children under three and further support for the ECCE programme. The rise in early years funding of €120 million is, therefore, welcome, including the extra €86 million for the ECCE scheme and the free pre-school scheme. At the meetings I attended, all members of the Committee on Budgetary Oversight were at one on one area of expenditure, namely, capital investment. Professor Tom McDonnell of Nevin Economic Research Institute made the valuable point to our committee that capital spending was below our depreciation rate of 2% of GDP. That is unsustainable and, while it is going up to €4.5 billion for 2017, it is still within the range of 2% of GDP and still not enough for key areas of investment such as housing, education, transport and other areas where there are infrastructural deficits.

The help-to-buy housing scheme will not address the huge problem that young couples have arising from the application of the macroprudential rules. It is the responsibility of the Minister for Finance, Deputy Michael Noonan, to ask the Governor of the Central Bank to rectify these, but he has dodged it. I wanted a much bigger programme of spending on social housing, but it seems that the key element of meeting the household needs of 21,000 housing applicants is to have 15,000 households availing of the HAP in 2017.

Fianna Fáil, Fine Gael and the Independents could have significantly expanded the fiscal space to give better protection for the most vulnerable citizens and to invest in health, education and housing.

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