Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

A new paid parental leave scheme will be introduced in November 2019 to provide two extra weeks' leave to every parent of a child in their first year. I intend to increase that to seven extra weeks over time.

To support working families and to ensure that work pays, next March, I will increase the earnings disregard for the one-parent family payment and introduce a maintenance disregard for the working family payment.

I am also introducing a set of measures that focus on increasing the living standards of the most vulnerable in our community. This includes increases to the qualified child payment of €2.20 per week in respect of under 12s and €5.20 per week in respect of over 12s, as well as a €25 increase in both back-to-school clothing and footwear allowance rates. These supports aim to ensure that national economic growth translates into rising living standards and falling poverty, especially for our children.

EDUCATION

Education also offers an important avenue to enhanced living standards, delivering benefits for individuals and for society. Uncertainty around Brexit and other risks to the economy underscore the need for us to continue to invest in our people.

That is why I am allocating €10.8 billion to the Department of Education and Skills in 2019. That is a 6.7% increase on 2018 and includes funding of €66 million to meet our changing demographics. That will allow for almost 1,300 additional posts in schools in 2019. The Government is also increasing the standard capitation rate per pupil by 5%.

The Government is investing more than €1.8 billion to support children with special educational needs. That will allow for up to an additional 950 special needs assistants to be recruited in 2019, bringing the total number to more than 15,900.

In last year's budget, I announced a 0.1% increase in the national training fund, NTF, levy and I indicated that I would consider further incremental changes. I am satisfied that further modest increases of 0.1% in both 2019 and 2020 are appropriate.

That enables me to provide more targeted investment to meet the skills and education needs of our people with more than 15,000 new places in the higher education and further education and training sectors, including more than 1,200 craft and earn-as-you-learn places; 1,100 traineeships; more than 8,000 places through Skillnet Ireland and Springboard; and 5,000 new lifelong and flexible learning opportunities.

That investment, along with the almost 3,500 additional undergraduate places being funded in 2019, represents a significant response to the global uncertainties facing the economy, including Brexit.

In response to the recommendations of the independent review of the NTF, the Government will use part of the surplus in the fund to establish a multi-annual, ring-fenced human capital initiative of €300 million over the period 2020 to 2024, which includes the period of Brexit. The initiative will increase investment in higher education courses throughout the country.

I am allocating an additional €196 million for capital in education in 2019. This will support the creation of up to 18,000 additional permanent school places and 5,000 replacement places; facilitate the further upgrade of ICT infrastructure in schools; and provide €150 million for investment in higher education, further education and training, and research.

The long-term focus on investing in education has allowed Ireland to attract and develop world leading businesses across a range of sectors. That is needed because of Brexit but it also provides us with new opportunities to attract and to create new businesses.

SUPPORTING BUSINESS AND SMES

To support that, I am allocating funding of €950 million to the Department of Business, Enterprise and Innovation in 2019, which is an increase of 9% on last year. That is because SMEs provide most of our employment and additional Government support for this sector is crucial in light of Brexit.

I am, therefore, pleased to announce the launch of a future growth loan scheme for SMEs and the agriculture and food sector. The Government will bring in new legislation to implement this scheme, which will provide up to €300 million. That builds on the €300 million invested through the Brexit loan scheme last year and forms an important part of the Government's Brexit initiative.

I am also providing more than €110 million for Brexit measures across a number of Departments, including funding for essential customs requirements and other targeted measures.

As part of the national development plan, NDP, I have established a disruptive technologies innovation fund, which makes €500 million available for co-funded projects including enterprise and research partners over the period to 2027.

Key Employee Engagement Programme

The key employee engagement programme, KEEP, came into effect on 1 January this year to help SMEs to attract and retain employees in our highly competitive labour market. I am aware that take-up has been less than expected and I have decided to take early action now.

I am increasing the ceiling on the maximum annual market value of share options that may be granted to 100% of salary. I am also replacing the three-year limit with a lifetime limit and increasing the overall value of options that may be awarded per employee from €250,000 to €300,000. Those changes will help support SMEs to compete for skilled staff.

Employment and Investment Incentive

Following on from the review of the employment and investment incentive, I intend to bring forward a priority package of measures in the finance Bill to address the main problems identified and to increase its efficiency and effectiveness.

The measures provide certainty for businesses to enable them to plan for the future. Another way in which certainty will be provided to businesses is through a consistent approach to corporation tax policy.

CORPORATION TAX

Our long-standing 12.5% rate will not change. Corporation tax revenue has been growing strongly and a significant part of the growth for this year is due to changes in international accounting standards, IFRS 15. Approximately €700 million of the 2018 over-performance is estimated as one-off. As these receipts are not expected to repeat next year, they do not feature in projecting receipts for 2019.

We must be aware of the risks associated with the concentration of these revenues.

That is why I am setting aside some of this revenue for the rainy day fund. This means the risk of permanent expenditure on the basis of transient receipts is reduced.

Ireland's corporation tax roadmap, which I published in September, takes stock and recognises the changing international tax environment, outlines what Ireland has done and further actions we will take. This is a time of significant global change for business and my focus is on maintaining a competitive, outward-facing business environment while ensuring our tax regime is transparent, sustainable and legitimate.

I will introduce new controlled foreign company rules, in line with the Anti-Tax Avoidance Directive, ATAD, in the finance Bill 2018. This will apply for accounting periods beginning on or after 1 January 2019. I am also moving to introduce a new ATAD compliant exit tax regime to come into effect from midnight tonight. The exit tax will apply at a rate of 12.5% on any unrealised gains arising where a company migrates or transfers assets offshore, such that they leave the scope of Irish taxation.

The process of global tax reform is ongoing, and in addition to last year's measures, the corporation tax roadmap sets out a comprehensive plan of future actions on corporate tax reform. I have also committed to a review and update of Ireland’s transfer pricing provisions in 2019 to ensure our tax system is in line with international best practice.

TRANSPORT

In budget 2018, I allocated an additional €1.26 billion in capital investment from 2018 to 2021 to the Department of Transport, Tourism and Sport. Today, I am announcing that €286 million of this will be made available next year and will facilitate investment in new transport infrastructure such as the N4 Collooney to Castlebaldwin and the Dunkettle interchange; completion of the runway overlay project at Knock Airport; and design, planning and implementation of cycling and walking projects around the country.

We are also improving and expanding our public transport infrastructure through the provision of projects such as BusConnects, extended trams on the Luas and by increasing the funding available to retrofit older parts of our public transport infrastructure. I am also providing additional moneys to maintain and renew existing infrastructure, including an additional €40 million for pavement repair and rehabilitation works on regional and local roads. These changes are needed and will support the continued growth in our economy in the years to come.

TOURISM AND HOSPITALITY

The tourism and hospitality sector also plays a key role in our economy, providing balanced regional growth and supporting nearly 240,000 jobs. This Government has played its part in supporting the sector when it most needed it and since the introduction of the reduced VAT rate in 2011, overseas visitor numbers have increased by more than 3.4 million and tourism employment has increased significantly. The tens of thousands of additional jobs created means the sector has never supported more employment than it does today.

A Government's decision to provide stimulus to the economy is often an easy one to make and in the case of the tourism sector in 2011, the application of a reduced 9% VAT rate was justified. Judging when it is appropriate to withdraw stimulus measures is always more challenging.

I gave a commitment in last year's Finance Bill to undertake an economic analysis of the rate. The review found that the reduced rate had done its job. I believe that, in a new economic reality where the economy is strong, growth is broadly balanced and full employment is within sight, it is appropriate to increase the rate of VAT in the tourism sector to 13.5% from January 2019.

This measure will raise €466 million next year and allows me to achieve a number of priorities. First, it allows me to reduce our reliance on increases in other tax heads, such as corporation tax. This is something I have consistently said that I would do. In addition, it underlines my commitment to responsibly manage our finances and maintain a broad tax base. Second, the additional revenues raised through this measure will allow reprioritisation and new expenditure in a number of key areas. It will allow us to provide more housing, invest in education and childcare and contribute to the balancing of our books at a moment of national risk. This is responsible policy-making. It is appropriate for our economy and will overall benefit our society.

I am conscious, of course, that these changes will present a challenge to the tourism and hospitality sector. This is why I am allocating €35 million to the Department of Transport, Tourism and Sport to provide more targeted supports for the sector, including €4.5 million for regional initiatives such as Ireland’s Hidden Heartlands and the Wild Atlantic Way, and almost €10 million for the further development of our greenways.

OTHER TAX MEASURES

I am also introducing a number of other tax measures today.

Capital Acquisitions Tax

I recognise that there are concerns about the potential tax burden, in particular on the inheritance of the family home. I have, therefore, decided to increase the lifetime group A tax-free threshold that broadly applies to transfers between parents-----

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