Brendan Howlin (Wexford, Labour) | Oireachtas source

I also welcome the opportunity to contribute to the debate on what is now the summer economic statement. Members will recall that this originally was the spring economic statement. In government, Deputy Noonan and I determined we should have a spring economic statement to change the way the budget was done. The idea was that we would put all the economic data from the spring on the table in April in advance of the national economic dialogue, which we also established, in order that all the economic players - politicians, employers, the trade union movement, farmers, and social actors - would be able to debate real expenditure and what was available with real choices. It was to be paralleled with the comprehensive reviews of expenditure. The Minister will recall that we conducted two of those during our time in government. This statement would address the total fiscal space, the options to increase that by either additional taxation or reduced expenditure, rebalancing expenditure within it and, as the new Taoiseach said, to have a look not only at the margins but at the totality of expenditure because the notion that what we spend every cent on now is taken for granted and all we are talking about is the marginal additionality should not be the way. That sort of open debate was to happen and it was the centrepiece of new politics.

I went on the Dáil reform committee and the first and most important issue, championed by Fianna Fáil, was that we would do the budget in a different way. We were to have a budget oversight committee and budget oversight office to robustly test and cost proposals from individual parties or Members and to give real capacity to the House to analyse expenditure profiles from the Departments of Public Expenditure and Reform and Finance because, for many people, these tables are difficult and impenetrable, and I spent five years going through them.

As I was advised on my first day preparing a budget, the sums only have to add up on the day they are presented. By definition, they will not add up the day before or the day after because one is on a moving field. They only have to be right and perfectly accurate on the day they are published.

To put it bluntly, however, all of this new politics has come to nought. We had the national economic dialogue in a vacuum. We are now back to the old way of doing things, where everybody has a wish list about what they would like to do as opposed to having a framework in which we should operate this year in this budget or having an expenditure review to show the profile expenditure in every area and what are the real policy choices we want to make to do that. It really is disappointing that we are not having a real debate on real options. For all the pretence of it, we are actually doing things the old way.

The Holy Grail from the start of the economic crisis was to reduce our debt and annual deficit. We could not have a deficit greater than 3% of gross domestic product, GDP, and we had to reduce our national debt to 60% of GDP. We worked might and main to achieve all of that. When there was a distortion in GDP last year by the onshoring of corporate taxes and profits and because it suddenly became an advantage to us, that Holy Grail, that unmovable target, was no longer the relevant target. If there was an advantage to the State and the taxpayer, suddenly that was not to be seized upon because somehow it was a distortion. The collapse was not a distortion, but this was.

If one looks at how we tackle debt, from 1980 to 2016, the average level of debt was 72% of GDP. How was the historical low debt, prior to the economic collapse, of 22% of GDP achieved? It was not achieved by paying off the debt but by growing the economy, meaning the debt was actually much less significant. Most debt is never paid off but rolled over. Its impact is lessened by growing an economy and, therefore, the actual cost of the debt is reduced while the impact of the interest rates is minuscule. If one looks at developed economies and their level of debt, our actual debt - some would say it was falsified last year because of an inflated GDP - is 75% of GDP. The average rate of debt from 1980 was 73%. We really do have to have a better sort of argument about dealing with these issues.

As the Minister knows, I became nerdy about reading tables over the past several years. In Table 2, impact of budget 2017 on available fiscal space, it states in bold that it relates to the remaining nominal resources for 2018. The Departments of Public Expenditure and Reform, and Finance are telling us these are the available resources for us to determine as a democratic assembly next year. The table states we have €140 million to increase current expenditure, €180 million to increase capital expenditure and €220 million to reduce taxes, giving us a total fiscal space of €530 million. The Minister knows that is not true. He profiled additional current expenditure of €140 million when he knows the extension of the Lansdowne Road agreement alone will cost an additional €180 million. Accordingly, all the current expenditure he profiled, plus another €40 million on top of that, will have to be found before we make any decisions.

I know, for example, we spent an additional €920 million this year on health. The average for the past several years has been €500 million. The Minister, however, has not allocated anything to that. Is the assumption that there should be nothing additional for the health budget? Are there to be no additional social welfare payments next year? Of course, they will happen because, like last year, between now and our debate on these real facts and the presentation of the budget, the fiscal space will increase. Last year the spring or the summer economic statement - I get confused with the seasons - also suggested a fiscal space which we debated here. Between then and the presentation of the budget, the fiscal space had grown by €750 million, €500 million prior to the budget and another €250 million in the days leading up to the budget. The reality is that we do not have meaningful discussions of the true facts.

I am a passionate believer that we should spend more on public services now. We cannot afford the sort of €220 million the Government is allocating in tax reductions. That is not possible but we can debate those when we see the actual figures. I would be happy to debate the Labour Party’s plans on the universal social charge. We did not shout about it too much as it was a no-cost measure because we were clawing back at the top what we were giving to the bottom. The net cost was in the order of €70 million in our budget package. We did not trumpet that because it looked like a threadbare measure and we had increased other taxes to a greater degree. The overall Labour Party platform is not to reduce taxes but to expend on public expenditure.

These are the issues we need to debate in an open fashion in this Chamber. We must fight, not on a point-scoring basis, but on the basis that these are the options open to us in real terms. We cannot argue with tables that are demonstrably misleading because the Minister does not have €140 million of non-allocated current expenditure available. He can play a game of suggesting that the €180 million for the Lansdowne Road agreement extension has not been voted yet, meaning it is not a real call. No one budgets on that basis. We have an expectation - in the Minister’s case, a real hope - that the Lansdowne Road agreement extension will be supported. It will cost €180 million and we will have to provide for it if we are going to look at what else is at our disposal to do this work. I look forward to real and meaningful debates in the future rather than ten-minute statements on, to put it bluntly, an incomplete and inaccurate document.

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