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

I thank all the Deputies who contributed to this debate. In particular, I thank Deputies Moynihan and Fitzmaurice for their contributions and for staying in the House for the conclusion of the debate on this very important legislation.

I want to offer two broad thoughts on the group of contributions I heard this evening, if I can, before I go on to deal with the content of them. The first is that, for many who would make the charge that those of us who practise politics and become public representatives here in the Dáil in some way live in a bubble separated from those who elect us, the contributions made by Deputies Fitzmaurice and Moynihan offer a very strong counterargument. The way in which each Deputy went through issues that are of concern to their constituents in a very detailed and constructive way shows very much the grasp that many in this House have of the challenges that our constituents face, of their needs, and of the way they are articulated. I acknowledge that, at a time in which the practice of politics and public life is coming under a lot of criticism and scrutiny, much of which is deserved, the contributions those two Deputies made in conclusion at the end of a busy day for many showed very clearly the focus that they and other Deputies, who are not present and who are dealing with other matters, have in representing their constituents.

I am very pleased that Deputy Calleary is back in the Chamber because his contribution made me think about the second point I would like to make. I acknowledge the way in which he approached what were, at times, very demanding negotiations over the past two years. I particularly remember one weekend before the first budget during which our good cheer and professionalism did not crack although we had some difficult matters to deal with. I acknowledge the way in which he has approached all of the engagement he and his party colleagues have had in respect of this budget and the previous two. I also acknowledge Deputies Michael McGrath and Cowen.

Before I comment on some of the very thoughtful points the Deputy made about the gap between resources available and outputs delivered, I want to touch on a point which he, Deputy Eugene Murphy and Deputy Fleming made. Other Government speakers would also have made it during this debate. It is that, as was said, many speculated that we would not get to this budget. Many speculated that this Dáil would not reach these achievements and end points. I remember in the very early days of this Dáil, which were at times very challenging, the speculation grew that the duration of the Dáil would not be long and that our output would be short. While all of us can always look back at things that could have been different or better, at a time in which a lack of compromise and, at times, of basic civility is evident in how politics in conducted elsewhere, I believe that many Deputies in this House have risen to the challenge of disagreeing with each other while agreeing to try to make progress and to deliver what they think is best for the country and for their constituents.

We can differ. I had parliamentary questions this morning in respect of the Department of Public Expenditure and Reform. I differed with every Deputy who put a question to me, including Deputies from Deputy Calleary's party, but I did not approach anybody from the point of view of seeing him or her as an enemy. I saw them as colleagues who have different views on policy matters from my own. We should be able to have an engagement with each other that may at times be heated, but at other times we should be able to reach agreement on matters, and we have.

A telling moment for me on this budget was when the Financial Resolutions passed on the night of the budget. They were the kinds of changes that many critics of economic policy in the past said this Dáil would not be able to do yet we did them. They were passed by significant majorities. Some Deputies abstained, some voted in favour and others opposed them but nonetheless decisions were made.

Deputy Calleary asked a number of very important questions, which I reflect on often, about how we can translate higher levels of resources into better services for those we are privileged to serve. I will put three points to the Deputy which helped me see what is the answer. It is something we need to look at even better in 2019 and beyond. The first point is on the issue of timing. Perhaps as a result of our parliamentary cycles and how accelerated media cycles have become, we make policy decisions and allocate resources behind those policy decisions but the outcomes take time to deliver. The best example of that is what we see happening in education, particularly at primary level, where decisions can be made about pupil-teacher ratios, SNAs and curriculums but the effects will only become apparent after quite a period of time has passed. Similarly in healthcare, we can make very significant decisions on very large amounts of money but most of that money, if used well, should be used well either for preventative uses or to stop health conditions from becoming particularly acute. It takes time to measure whether the allocation of additional funding has led to a better outcome. That said, I accept there are some decisions that should feed through into a quicker outcome but good policy decisions by their nature sometimes do not lead to policy outcomes that are immediate.

The second point I offer to the Deputy is that much of the additional resources we put in place at budget time should have a preventative effect. It is a lot harder to measure something not happening than it is to measure things happening that we are trying to stop happening. To give an example, it is far easier to measure the presence of crime than it is to measure how successful measures are by the gardaí to prevent it happening in the first place. I do not think our indicators in Ireland have caught up with that bit. We should put some thought into how we will do it.

I made a speech about my third point elsewhere a while ago, namely, the issue of how we can deliver better outcomes for our citizens. We do not give enough credit here to what can be achieved. I referred to parliamentary questions earlier. If one looks at our schools, a lot of issues are raised by Deputies in the House regarding what we believe education should be doing better and what we believe it can achieve particularly for our younger citizens who have special needs or who come from disadvantaged communities. Anybody who goes into a primary school or a classroom cannot help but be really impressed by all of the positive work that happens there.

All of us will have a lot of experience of dealing with constituents who have difficulties with our healthcare system. Most of us acknowledge the outcomes that are available in our health system once one gets into it and gets beyond the accident and emergency departments and primary care centres. Health outcomes have been transformed for this generation compared with the last one. In the cut and thrust of political debate we sometimes do not give enough credit to that. That creates a broader problem where we all, many of us motivated by good intentions, always focus on what is wrong and we are then in an environment where citizens are constantly reminded of, and experience themselves, what our public services cannot do. Perhaps we are not giving enough recognition to what public services are able to do.

I will refer to an issue I hear Fianna Fáil raise constantly, which it is right to raise. It is something the Fianna Fáil Party is proud of and which it should be proud of and that is the decision it made on free education. The impact of free education and its transformative effects on our country only became evident decades afterwards when we saw what happened with the modernisation of our economy and when we saw what happened to our society. People knew it was a big decision at the time but nobody could have known how big an effect it would have until after the passage of a number of years.

I wanted to respond to the points made because they are really important points about how an economy intersects with the needs of a society. I will also say a word about the detailed points other Deputies raised on the Finance Bill.

Deputy Doherty raised a number of points on which I strongly differ with him. He made a point about why we are investing any money at all in tax reductions and tax reform. I am sure we will tease it out on Committee Stage, but in the absence of decisions like this we would have at least 60,000 more citizens subject to the higher rate of income tax and the only reason would be the same workers are now experiencing wage growth after many years of wages either going down or stagnating.

Deputy Sherlock and Deputy Doherty also made the point that if workers' incomes are below a certain level, in particular below €25,000, the benefit such workers are getting from tax reductions are getting smaller and smaller. The real challenge we have here now is, for example, if one is a single worker earning €20,000, one's effective tax rate is now 6.9%. If the Oireachtas or a Minister for Finance makes a decision to cut that tax level even lower, it will cost the Exchequer overall a huge amount of money because to reduce a tax rate below that level for that level of income costs a lot to the State because it effects all taxpayers. The second thing is the effect of investing that gigantic amount of money will be to take more and more workers out of the tax nets. We do not want to do that. We want to be in a position where if one's income is above a certain level and if citizens' incomes are above a certain level more and more of them will make a contribution of some kind to the public services we have. Something that will be increasingly important to me and to Ministers for Finance for many years to come is how we manage this issue. We have the balance right. If one's income is below a certain level, the level of tax one is paying is low because one's income is low. If we begin reducing that rate even further, we will take people out of the tax net, it will cost the State a lot of money and the returns those workers will see in their purse or wallet will be very small. That is behind the issue that is being raised.

Deputy Cowen touched on a number of matters, particularly on the health service and housing. He voiced his concern about a number of matters.

In particular, he asked where we are with the EII. As we move the Finance Bill through Committee Stage, in particular section 23, it is my intention to look at how we can restructure that scheme to make it clearer and more certain for taxpayers.

Deputy Broughan raised a number of issues about the cost of different tax expenditure schemes. The EII scheme, in particular, cost €21.4 million in 2017, while the SURE scheme cost €1.9 million in 2016, which is the latest year for which the figures are available.

Deputy Durkan emphasised the need for us to remain competitive and the importance of the 12.5% corporation tax rate, to which I reaffirm my commitment as I did in my Budget Statement. As we look to ensure that our rate is competitive and that we retain our right under EU treaties to determine our tax base, we need to continue with our work to ensure progress is made on other issues with the corporation tax code and its interaction with global tax collection, for which the Finance Bill 2018 contains some important measures.

To return to Deputy Broughan's contributions, he asked for further detail on the progress of the section 481 film relief scheme. The Bill includes a number of measures that reflect the review that my Department carried out on the operation of section 481.

Deputy Cowen made reference to issues with the equalisation of DIRT and the life assurance exit tax. The reason I did not make further decisions on this comes back to the need to make choices and the need to allocate the resources of our taxpayers while having regard to the resources available to me on budget day.

A number of colleagues raised the Finance Bill provisions for betting tax and the change that I am introducing in the Bill. I understand the concerns that have been raised by colleagues about independent bookmakers and the challenges that small bookmakers will face because of this change. I must emphasise how low the level of taxation is, namely, 1%. In the lifetime of the last Dáil and in the recent lifetime of previous Governments, it was multiples of this. The revenue in this industry has gone up and up, as has the profitability within the industry, but the tax the State collects has not increased in line with that. I fully accept that measures like this have an effect on smaller operators and owners of smaller businesses in the sector but taxation, by its nature, must be applied to every sector of our economy. We should conform to the principle that as parts of our economy grow and as they have grown, they should contribute back to public services, especially if there are social costs from some of the economic activity that goes on in the sector. I believe this measure and decision are right. I look forward to explaining it further on Committee Stage and hearing the views of Deputies on the matter.

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