Joan Burton (Dublin West, Labour) | Oireachtas source

I am aware the Minister for Finance is fond of reading and the theatre. He might well have looked to Shakespeare’s plays to provide him with a title for his address today. "As You Like It", would, I guess, be his first choice, a nice romantic tale to please the punters - something, however small, for everyone in the audience. Now that a few hours have passed, my own judgment would lean towards "Much Ado About Nothing" for today’s less than dramatic offering.

The White Paper published last Friday reveals a total spend, current and capital, of close to €60 billion. Today we devote a whole day to dissecting plans to add about another €1 billion to this. The discussion today is about €1 billion out of €60 billion - all this fuss and argument over not much more than 1% of the total. We have been stuffed to the gills with rhetoric and bloated promises about jam tomorrow, based on optimistic scenarios of perpetual growth that could blow up in everybody’s face if Brexit goes horribly wrong. The big boast today is that we have a balanced budget for the first time in a decade. I am not as enamoured of this as the Minister and Taoiseach. First, it is an obligation of current European rules rather than a specific decision of an Irish Government. Second, the incorporation of capital investment spending in the total distorts the picture. We should join with other European states in having this policy adjusted to enable specific investment projects to be outside the deficit calculation. That is the only way we are going to revive many of the European economies and put in place vital infrastructure for people in this country and other European countries.

This budget is framed by the past and seems set on repeating some of the mistakes. We are now ten years on from the eve of the financial crisis, which started in September 2007 with a run on the Northern Rock bank. In his budget of that year, the then Minister for Finance, Brian Cowen, defiantly proclaimed over and over again the mantra of those days, "Ah but, the fundamentals are sound." The Minister for Finance previous to Brian Cowen relied on stamp duty revenue and used it to pay for tax cuts and permanent spending increases - his name was Charlie McCreevy. Those policies of unsustainable tax revenues laid the foundations of Ireland’s ruin. Today, unfortunately, the Minister for Finance has been tempted to travel down the same path. I am amazed that Fianna Fáil seems to have totally forgotten how it blew up the finances of the country. Today the Minister for Finance has raised €400 million from a 4% increase in non-residential stamp duty to pay for tax cuts and spending increases. Have we learned nothing from the past? A budget framed on transactions in the volatile Irish property market is laying the foundations of future crisis. One of the central lessons for Ireland from the crash was not to rely on transaction taxes on property to fund tax cuts and increases in current expenditure, yet this policy is a pillar of today's budget. I cannot understand it. While I understand the context of the Minister’s actions, here we are today as history repeats itself.

There is another aspect that is deeply troubling. Never before have I seen such a commercially sensitive tax increase leaked days in advance of the budget. This raises serious questions about the competence and the ethical framework of these budget leaks. Tonight the Dáil will vote to raise commercial stamp duty from 2% to 6%. Members can be assured that in the last 48 hours, property sales of millions of euro, possibly billions, were rushed through. We are all aware - at least, I am aware - of the devices that can be used to mitigate the tax, given the property sector knew about this, such as resting contracts and selling shares in properties as opposed to the underlying assets. We have been blinded by announcements by the Minister but nobody has so far looked at this fundamental issue. I recall a day when the current Commissioner, then Minister of State, Mr. Phil Hogan, actually resigned because of budget leaks which were only potentially advantageous to players in different sectors of the market. I am agog at this and think it is a real error of judgment by the Government.

The Charles Dickens character, Mr. Micawber, viewed a balanced family budget as defining total happiness while even a trifling deficit was the cause of total misery. A homeowner could be thrilled if he or she balanced income and expenditure but what if the roof of the family home was leaking or the house needed expenditure on better windows to retain warmth?

I do not cheer a balanced budget as a great virtue at a time when there are such yawning gaps in our nation’s roads, railways and communications, not to mention the blatant failures to meet basic targets for climate change and renewable energy.

Last week the NTMA was able to sell bonds at a negative interest rate for long periods. These low rates will not last forever and at some time in the future we will look back and wonder why we did not fix the roof when funds could be borrowed for sensible capital works at very modest rates. I was pleased that the Minister did a sensible thing by paying back funds borrowed from the IMF and other sources during the bailout, which were very expensive, replacing expensive debt with cheaper bonds. Personally, I think he should have gone further and cleared as much of high rate legacy debt as possible at an accelerated rate. I am aware that the accumulated cost of debt service is a heavy annual charge, but an antiquated infrastructure imposes an equally heavy burden on the people and indeed on the economy and it limits our capacity as a nation to solve our housing and health needs. At so many of the sites in Dublin such as O'Devaney Gardens near where I live and Dominick Street there is not yet a brick on a brick. This is years after the Labour Party agreed, when it was in government, that those sites were to be prioritised for rebuilding for social housing. What is happening with the Government?

A budget debate offers a rare opportunity to look under the bonnet, so to speak, and see some features of the economy that can often be hidden from view but which have a significant impact on the lives of people. We talk a lot about taxes but I believe we need to talk just as much about wages. Thankfully we have witnessed the recent consecutive months of net jobs growth, an exceptionally long such streak of reduced unemployment. That in itself is undoubtedly good news and is a vindication of the relentless focus on jobs that the Labour Party pursued in government. The growth has brought the official unemployment rate down close to 5%. This is low by historical standards. Labour force participation, which counts the number of people working or actively seeking work, is also ticking upward. This indicates that people who may have given up on finding a job are starting to return to the workforce. The big question, however, is why the public mood is not more upbeat about the economy. Despite the sustained job growth there remains a deep dissatisfaction that the recovery has not been adequate to boost meaningfully the fortunes of ordinary families. One reason for such deep public scepticism is that wages have yet to grow substantially in line with the growth in jobs and in line with growing productivity. People are deeply disappointed with the sluggish wage growth, because their expectations have risen after years of consistent job growth. We are four or five years in to the official recovery now and working people are less patient. No minuscule tinkering with tax rates - let us face it, this is what we saw today - will alter that until the longstanding stagnation of wage rates is tackled.

It seems that we have gone a long way to deal with the job quantity issue but we have lagged too far behind on the quality issue. The gender pay gap has finally and belatedly come to the fore and needs a sustained sector by sector effort to close off this running sore. In more general terms we should recognise that workers are fully entitled to obtain a greater share of the fruits of quite dramatic levels of economic growth. To ignore this is to tolerate even greater and wider inequality and all the social disruption and strains such inequality brings. Interestingly, the IMF itself has come to the conclusion that inequality in incomes is now a serious barrier to economic progress in advanced economies. Christine Lagarde, the leader of the IMF, had these words to say in Brussels last year:

You do not have to be an altruist to support policies that lift the incomes of the poor and the middle class. Everybody will benefit from these policies, because they are essential to generate higher, more inclusive and more sustainable growth. In other words, if you want to see more durable growth, you need to generate more equitable growth.

She went on to cite IMF research which shows that if you lift the income share of the poorer paid people and the middle class by 1 percentage point, then GDP growth increases by as much as 0.38 percentage points in a country over five years. By contrast, if you focus those cuts on the rich by 1 percentage point then GDP falls by 0.08 percentage points. Ms Lagarde said: "Our findings suggest that - contrary to conventional wisdom - the benefits of higher income are trickling up, not down." This is an important recognition by the IMF of something that a lot of us understand in our day-to-day lives. The evidence is stark. Excessive income inequality actually drags down economic growth and makes growth less sustainable over time. We need to take this evidence on board and recognise its profound significance for wage policies and tax policies.

I want to make the additional point that a sustainable wage boost can encourage workers to make better provision for their pension pots. I am a strong advocate of auto-enrolment in private pension schemes, and this scheme is ready in the Department of Employment Affairs and Social Protection. Workers must have the capacity through better wages to save adequately for pensions. There are now annual reviews of the minimum wage but I believe this is now inadequate. The living wage should be the focus in all policy making. It is a well-researched concept based on firm evidence and it properly incorporates all the elements that enable an acceptable standard of living.

It was interesting that the Minister for Finance did not mention a couple of things today. He never spoke about Sláintecare, the flagship programme of a Dáil that has not otherwise been terribly active. The Minister never referred to affordable housing and how young people who are working could get the wherewithal actually to buy a house. The Minister never mentioned at all the €5 million the Taoiseach is setting aside for his new strategic communications unit. The Minister, the Government and Fianna Fáil made no reference to child benefit. While I welcome the €5 increase from the end of March to people who receive social welfare, including our pensioners, the €5 is actually €3.85 per week. Why the cod that it is €5 per week? It is not. It is €3.85 per week. Pensioners know this and they have been talking about it already. What has the Minister for Finance, the Government and the Taoiseach, Deputy Varadkar, got against children over five years of age and against child benefit? This is the second year in row the Government has failed to address child benefit, which is one of the key income supports for families who have children.

There are two tables contained in the budget that show a series of case studies, one of which is Pamela the plumber - how enlightened - and the other is Sorsha and Annemarie, who are a married couple. These families see an increase of 0.9% to their income in the budget. This is probably one of the lowest increases in all the tables. Why is this? The only identifying factor I can see about Pamela the plumber and Sorsha and Annemarie is the fact that they have children. Families with children have done the worst from this budget.

For the second year, this is a calculation on the part of the Government and I hold Fine Gael, Fianna Fáil and the other people in government equally responsible for it. The Government's logic is that it is targeting preschoolers but children over five, particularly teenagers, are expensive too, as we all know. Children and the costs associated with them are not recognised under our tax code. Instead, child benefit is the only recognition and it is paid directly to the caring parent, usually the mother. This is the second year in a row that the Government has failed to increase the rate of child benefit, which is enormously important to people on low and middle incomes, particularly those who are in work. While I welcome the increase of €2 per week in the rate of child dependant allowance for those on social welfare, I am hugely angry that people who are in employment and have children have again been ignored, as evidenced by the failure to increase the rate of child benefit.

A disquieting feature of the budget arithmetic is its in-built reliance on the temporary windfalls that regularly flatter Exchequer returns, notwithstanding the fact that there is no certainty these will continue to accrue. In other words, we are back to the good old bad old days. The money raised this year from the sale of AIB is a case in point, while another is the transfer of Central Bank profits to the Department of Finance, a tidy sum for the past number of years due to the sale of the Anglo promissory notes. The amount of cash coming from that source will inevitably fall in future years and this could give rise to a gaping hole in the national balance sheet. This points to the need to look for future flows of income which do not depend on windfalls returns. Ireland's tax base is already too narrow to deliver the revenue a modern society with a socially progressive purpose requires.

Like many citizens, I was disturbed by the boastful claim of the boss of AIB that his bank would not have any tax liability for decades due to the loss-offset rule that enables companies to reduce and even eliminate all taxes where they have accumulated losses to carry forward. While that is a legitimate use of a long-established tax rule, it cannot mean that a profitable bank has no contribution to make for many years into the future. I want the forthcoming finance Bill to set out clearly that all financial institutions will have to pay their proper share, by whatever means necessary, whether it is through levies or otherwise. Now is the time for proper consideration to be given to joining other EU member states that wish to impose a financial transactions tax. I was hesitant about proposing this while London was a major financial centre that could have drawn business away from Dublin. Sweden's previous experience of a go-it-alone transactions tax was a salutary reminder of the mobility of finance capital. Now, however, London is diminishing in importance as a world finance centre as a result of Brexit.

A group of EU member states, including Germany and France, has indicated support for this measure. We should join them to advance the proposal as a common tax measure. I emphasise that a financial transactions tax is a very low tax of, for example, 0.01%, or 1% of 1%, on each financial transaction. Any purchase of shares or bonds or trade in derivatives or currency would be taxed at this exceptionally low rate. A financial transactions tax would be a deterrent to highly speculative transactions with very rapid trading and only minimal profits. Speculation would be less attractive were such a tax in place. I lost track of the number of reviews and studies in the budget. I think I stopped counting after 12. This is one, however, which should be examined. It is really important.

I turn to the issue of overseas aid. The Government has decided to seek a seat on the UN Security Council for Ireland in 2021 and has already marshalled a substantial diplomatic effort to achieve this purpose. While that is fine and dandy and would represent an important reputational boost for this country, it must involve a critical examination of the commitment to reach the UN development aid target of 0.7% of GDP each year. While that commitment had to take a back seat during the retrenchment period, it must now be revisited if our diplomats are to embark on an international canvass for UN votes. We cannot send them out to hunt for votes in some very remote corners of the globe with one arm as long as the other. More than 128 million people in 33 countries are in need of urgent humanitarian assistance while more than 65 million have been displaced from their homes by war and conflict. Last January, I made a private visit to Tanzania where I worked in development and third-level education many years ago. I spent some time on that visit looking at some really valuable projects sponsored by Irish Aid, of which we can all be very proud. While some of these involve very modest financial contributions, they produce excellent results in health care and other fields. As GDP and GNI* increase at a steady clip, so too must Ireland's aid budget. We are currently quite far behind, but the actual demand for aid has increased sharply due to political conflict and the dramatic effects of climate change.

I questioned the Taoiseach about this matter last week and was disappointed by his tepid response. On the one hand, he proposes substantially to increase Ireland's so-called global footprint by having more embassies and trade offices around the world. On the other, however, he does not seem to recognise that a greater global footprint means a corresponding expectation of higher contributions to international development. Apart from the moral issues involved, there are definite and practical advantages for this country if it plays a more active role in this area. Climate change knows no borders and the impact of climate change events are already causing immense population movements which are heartbreaking to witness. The allocation of €13 million, which is what is in the Estimate today, is inadequate and should be closer to €70 million. As a former Minister of State with responsibility for development and as someone who travelled extensively on behalf of Ireland during the term of the previous Government, I am aware that our programmes in Africa and, on a smaller scale, parts of Asia are our calling card, not unlike our culture, music, writers and poetry. These programmes are the reason people pay attention to Ireland and want its representatives to occupy high office in different international institutions.

To some extent, every budget is a primarily political statement but this is one of the most nakedly political I have seen since the days of Mr. Charlie McCreevy. Its primary purpose is to keep the show on the road for another year. I detect very few elements in it that put national needs front and centre. Instead, it is designed to secure party advantage more than for any other purpose. I classify it as confused and remarkably devoid of vision at a time of exceptional uncertainty for this country. As such, it is a perfect reflection of the Government that produced it. Its sole purpose is survival and to limp along from month to month. We were promised a brave new world, but we did not get it today.

I turn to rural Ireland and disadvantaged areas in urban Ireland. As Minister for Social Protection during the tenure of the previous Government, I worked very hard to ensure that no post office was closed except where it arose as a consequence of the death or retirement of a postmaster. I have seen enormous resistance in the Department of Finance to the development of community banking in Ireland and I see no reference to that today.

Major employers will not drop in to most parts of rural Ireland. We are dependent for creating social economic structures in rural Ireland to a significant degree on the post office and the development of alternative forms of banking, including community banking for which proposals have been brought forward time and time again. The Government claims to have a particular interest in rural Ireland but it has no vision and no imagination to support its economic development from the point of view of jobs, whether in services, post offices or community projects. There is a large reduction, for instance, in the spend devoted to community employment and Tús programmes to which I was connected and which I pushed as Minister. For Members who represent rural constituencies and, indeed, urban inner city constituencies, it is an awful mistake to fail to put a much higher value on the development of social enterprises in areas that are not benefitting from the same level of employment generation that we have witnessed in many large towns and cities. I would love a Minister to explain why there is a total absence on this. There is money for solar panels but what will help people who want to stay in rural Ireland to create or obtain sustainable employment and to develop their local communities?

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