Seán Fleming (Laois, Fianna Fail) | Oireachtas source

I welcome the opportunity to speak on the Finance Bill 2018. It is important that we have a good discussion on this significant legislation which runs to 149 pages. I will generally talk about the budget as that is what the Finance Bill is based on. However, there is a lot of small print in the Finance Bill which I hope will receive detailed scrutiny at Committee Stage. This is merely an opportunity to raise some general points.

The budget was passed on the basis of a commitment that Fianna Fáil entered into some years ago that we would support three budgets providing they met certain conditions. It was not a blank cheque or an open-ended guarantee: there were specific provisions in the confidence and supply agreement. They have been honoured, we would not be here today had they not been, but it is important that we put on record that we came to that table with specific requirements. Over the three budgets, we are happy to have seen some major improvements as a result of our input. The previous Government prior to the last general election was a Fine Gael-Labour Government that did not need the support of the Opposition as it had a massive overall majority. It made a series of very regressive budgets. All the commentary, national or international, would verify that. We have seen a turnaround in recent years, not because there is more money to spend but it was a question of how it was decided to spend it. It depends on one's political philosophy whether one agrees with regressive or progressive budgets. Everyone likes to talk about being progressive but not everyone wants to practice it in reality. During the last Government, available resources were being split almost two to one in favour of taxation increases. That was happening because there were cuts in expenditure during those times and the ratios were going in that direction. Fianna Fáil's view towards the end of that Government's life, after several regressive budgets, was that we needed fairness in society and in our budgeting and we demanded and pushed to get a 50:50 balance between expenditure and taxation in those budgets. We pushed heavily for that from the Opposition benches. I think that people began to listen because they knew that while it is all well and good to cut services, people were suffering unnecessarily because the cuts were too indiscriminate across the board. Coming into the last election, we wanted to ensure that there would be a minimum of a 2:1 ratio between investment in public services to tax cuts which would allow the switch to progressive budgets.

We have been successful in achieving that. This year we have pushed it further and allowed a 3:1 split. I believe people appreciate that. There is a slight downside to it, depending on what is one's particular situation. I will mention it straight away. The low-paid worker was the person left out on this occasion. I speak to staff I know, people who are working, and they gained perhaps €4 from this budget. Those people go out to work, are stuck in traffic jams on the way to and from work, and they received only €4 a week extra in this budget. They see others who are perhaps not putting in the same effort receiving more money than they received on this occasion. We have to be very careful to encourage people to go to work. It is important that future budgets concentrate specifically on that area.

The argument can be made that many low-paid workers have been taken out of the tax net and that their tax cannot be reduced by much more because we would hollow out the core of our tax base - employment taxes - by doing so. A balance has to be struck, and I feel that low-paid workers were let down on this occasion. They are the people making sacrifices to go out to work. There is an income in their households, so they are not eligible for social housing, medical cards or extra benefits such as the back to school allowance. They see other people who are not putting in 30 or 40 hours of work per week gaining these benefits. I am asking for a threshold in future budgets for people such as low-paid workers, people in receipt of State payments through social welfare, pensioners who have contributed all their lives, people who have contributed to their payments by way of jobseeker's benefit or those on jobseeker's allowance. If there is to be a general increase in future budgets, nobody should come out of the budget process with less than a certain amount, for example a €5 minimum increase for everyone.

In the confidence and supply agreement we focused successfully on reducing the USC for low and middle income earners. We also raised the old age pension by €15 over the last number of budgets. These changes would not have happened without our influence. People will take it for granted, and that is life; people move on very quickly. We helped to increase the carer's allowance, the disability allowance and unemployment benefits by €15. I have to credit Deputy O'Dea who every summer nails his colours to the mast and puts everyone on notice that certain issues have to be addressed. They are not red-line issues because we do not operate on that basis, but he makes himself very clear. We also helped to secure the extended mortgage interest relief, benefitting up to 4,000 homeowners, and helped to increase the home carer's tax credit and earned income credit. Some of the matters I have mentioned are specifically in the Finance Bill and will not come into law until it is passed.

In terms of general expenditure issues, we helped provide extra expenditure for the recruitment of 2,400 new gardaí and for the restoration of the postgraduate grant for low-income students. That area had been seriously neglected. We all know that education is the way forward and we have to support it. We also supported the increase in the capitation grant, the cost to a school for each student attending, by 10%. Most importantly, guidance counsellors have been reintroduced. Looking back, anyone who had anything to do with cutting guidance counsellors in schools should regret their actions. There is not one Deputy in this House who does not know a teenager who has committed suicide. School children have committed suicide, children who were lost and did not know where they were going and who needed some form of counselling. Perhaps they did not need career guidance, but had those children had a counsellor in their schools they would have had a person to go to. This Oireachtas has let some students in schools down, some of whom are not here now. Perhaps the presence of a counsellor in a school, regardless of his or her title, could have provided a person the children could have gone to speak to. We need to ensure that we deal with that immediately, because the area of mental health should be further prioritised, as other speakers mentioned. I am aware that is on the expenditure side and it does not specifically appear in the Finance Bill, but it is germane to the budget. We have further funding for the National Treatment Purchase Fund of €75 million, but the queue for the National Treatment Purchase Fund is now as long as the queue to get an outpatient appointment or an appointment for a procedure to be carried out in some of the main hospitals. Over the years we have also boosted funding to the third level education sector.

I believe the hospitality industry was not fairly treated in having to absorb the major increase in VAT. I accept that accommodation is doing very well and that urban areas are doing well. However, there are small towns around the country with little restaurants and cafés trying to serve a few lunches, providing coffee, scones or muffins during the course of a day, and the extra cost for those places will be very severe. Some of the food retailers should have been exempted from this measure. It is done now; there was a trade-off between that and increasing excise duty on diesel and petrol. There is a downside to this, and I hope we do not see too many repercussions from this measure in small rural areas. Perhaps what happened was that those making the decisions walked down Molesworth Street or Kildare Street, which are full of new coffee shops. Previously there were just a few coffee shops with American names, but now there are London, Spanish and Italian names, and French restaurants, all of which sell coffee. I can understand if people who live, work and circulate within a mile or two of this building think that every café in the country is roaring and so they can afford an increase in VAT, but if one goes out past the M50 it is a different story.

The financial package is perhaps a bigger question for another day, but Fianna Fáil is not happy about the last-minute changes to the budget, especially the fact that it was not made aware of the €700 million extra for health until very late in the day. Of course that money had to be allocated, but why was the €700 million extra needed for health? I will say categorically that in the last five years the Estimate for the Department of Health has been announced dishonestly by the Minister on budget day. I saw the figures at the Committee of Public Accounts last week on the Supplementary Estimates across various Departments. The Department of Public Expenditure and Reform was before the Committee of Public Accounts last week, and Supplementary Estimates were required in each of the past five years. They were also required for issues such as pensions for the Defence Forces. My mind struggles to process the fact that Government accounting cannot produce a more accurate figure for something that is not too difficult to calculate. There is a systematic policy in the Department of Health, the Department of Public Expenditure and Reform and the Department of Finance where they understate what they know will be the outcome. Those Departments act deliberately, and it is dishonest. We have said this for several years now: what I am saying today is not new. Every year the pattern re-emerges. It might be okay if it happened once, twice or three times, but when it is happening year in and year out it is clear that it is a systemic failure built into the system and I believe that is dishonest.

That leads us to the broader issue of budget secrecy. We should know the details of the budget in advance. The concept of arriving with a case, a folder or a CD with a budget statement is Victorian. It went out in the last century. We are open people, and we are not expecting a Victorian minister to come to this House and tell the children what goodies they are to receive this year. People's lives are much more complicated than an announcement on budget day can provide for. I would prefer that budget announcements were spread out. The Estimates for the next year should be discussed at the line Departments during September and October and signed off by the relevant Oireachtas Committee and the Parliamentary Budgetary Office in advance of the budget. The idea that we will discuss the Estimates of expenditure the following April or May is daft. The Estimates are announced on budget day; they should be debated, cleared and voted through before the commencement of the new financial year. I would favour a far more open process. Europe has brought about a bit more openness. We now must lodge our draft budget with the European Commission by 15 October every year, whereas previously we left it until much later in the year. People can now see what is proposed a few months earlier. When I think of the budget this year, I remember that the week it was delivered I ordered 1,000 litres of central heating oil. Last year it cost €700, and this year it cost €830. One fill of my central heating tank went up by €130, and I will probably have to do that a couple of times during the course of the year.

9 o’clock

There are matters that affect people's daily lives and have a greater influence on their finances than the announcement of the extra €4 a week for a low-paid worker. There is a lot of high drama regarding budget day and some of it could be taken out of it. We would all benefit from a calmer measure. Most people now see through it and have a good idea of what is coming.

The Tax Appeals Commission was underfunded and under-resourced. The Minister announced a review of the office which has been completed. He is providing extra staff. There are some phenomenal cases dealing with €1.7 billion tied up with the commission. That is not necessarily tax due but the amount in dispute. In some cases, it has been paid on account, while in others, it may be moneys claimed back. The potential tax due is about €1.1 billion. I wanted to put that on the record because when I have said it to colleagues, that subtlety has not come out.

There are three cases going on in the commission over several years. One involves €138 million and the two others involve €120 million each, a total of €360 million. We do not have an expected date as to when these cases might be concluded. There is no guarantee but there should be a target date. This is not the Apple money in the escrow account but other significant domestic cases. Again, we want to see the commission with the resources stepping up to the mark. We want to see progress in those cases. It is not good that somebody can delay the issue at length by going through the Tax Appeals Commission.

PAYE modernisation will be dealt with in section 56. How one gets one’s tax free allowance, tax certificate or tax credit will completely change. From 1 January, when employers make payments, they will be directly linked to the online Revenue system. Tax credits, overtime payments and USC will be in real time. Essentially, people’s tax affairs will be conducted by their employer in real time. It will modernise the system in line with those in other countries. This idea of people having to notify their employer of changes in circumstances will change. Deductions will be done by Revenue once an employer is running an approved payroll software system. It will bring a bonus of cashflow to the Exchequer as it will be a little quicker in having tax affairs up to date. It is efficiency and nobody will be asked to pay what they do not need to.

It seems the extra €1 billion from corporation tax receipts was a fluke. Nobody seems to know how it came about, but we know it came about due to a change in accounting standards. That change had to have been known a year ago because they do not happen overnight. They happen with year-end financial statements and are predictable. That it was not predicted suggests we do not have the level of accuracy in estimating tax receipts. We need accuracy to estimate expenditure properly during the current year. We have been off the track in recent years. The Minister for Finance should speak to the Revenue Commissioners and departmental officials to ensure a more robust and tuned-in forecasting system.

We all know we are heavily reliant on ten major companies for a large chunk of our corporation tax. That is fine while it is coming in, but some fine day it will go in the opposite direction. Where would we be if we did not have that extra €1 billion in corporation tax receipts? What would have happened to the shortfall of €700 million in the Department of Health, for example? This is a question the Minister for Finance should address in this Bill. He is freewheeling and enjoying times when the wind is at his back. It will not always be that way.

European standards for expenditure ceilings seem to be a moveable feast. If one asked three different people in the Department of Finance, Revenue and the Central Statistics Office, not to mind Europe, for a clear definition for the headroom based on the Estimates this year, one would get three different answers. There is wriggle room. We were all told these European treaties would help bring about a structure. We have not seen it, however, if we have these extra figures appearing 48 hours before the Budget Statement. Will the Minister ensure more accurate predictions in these areas?

I look forward to the Finance Bill progressing smoothly through Committee Stage. Our end of the bargain was that we would support three budgets, which includes the Finance and Social Welfare Bills. It is up to the Government as to what happens after that.

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