Tuesday, 8 October 2019
Financial Resolutions - Budget Statement 2020
There will be a great deal of sadness, frustration and disappointment in hundreds of thousands of homes tonight as older people in retirement and on pensions from the Department of Employment Affairs and Social Protection, carers and people with disabilities who rely on social protection incomes look down the list and see that there is nothing in the budget for them. A pensioner couple will get nothing. While I welcome the increase in the living alone allowance, what about pensioner couples? Do they not have an entitlement to some consideration from the Government? According to the ESRI, inflation next year will be approximately 1.5% without Brexit. However, the ESRI has stated that if there is a difficult Brexit, inflation could rise, particularly for the price of cheaper foods. Those Members who do a weekly supermarket shop will know that many foods are imported from England. One does not have to be an economist to know that if there is a hard Brexit, those prices will rise. Who will they hit? They will hit those on the lowest incomes, whether as a result of low pay, reliance on social welfare or retirement payments, who are shopping around for bargains. The ESRI estimates that in the event of a no-deal Brexit, the cost will be between €892 and €1,360 per household. Over and over again, the Minister for Finance said the budget was based on a no-deal Brexit. Nevertheless, the Government has decided to leave the poorest and most vulnerable people in the country out of the Brexit considerations. Can any of the Ministers of State who are present explain that? It is an unbelievable error of judgment with reference to the people the ESRI has told us are most likely to suffer from a difficult Brexit.
I refer to pages 90 and 91 of the budget 2020 expenditure report which the Ministers of State opposite have and can check for themselves. It states the State pension which is €248.30 this year will be €248.30 next year. The widow's pension which is €208.50 this year will be €208.50 next year. The rate for those in receipt of unemployment benefit is €203 this year and it will be €203 next year. A couple of concessions have been made. We welcome the increase in the living alone allowance, from €9 to €14, which is the first increase since I increased it as Minister some years ago. The Government has given children over 12 years whose parents are unemployed and on social welfare payments an extra €3 per week. It has given children under 12 years whose parents are unemployed and on social welfare payments €2 per week. There is nothing for all those families in work who rely heavily on child benefit. While there is some allocation for childcare subsidies, it is a mess in respect of children who are under four years old. What about children over four years? They eat and will want to be reflected in the household budget in the event of a difficult Brexit, but there is nothing in it for them. While I welcome the increase in the child dependant allowance, is the Government completely insensitive to the position of families on low incomes, social welfare incomes or retirement State pension incomes who will get nothing in the budget? If one looks at their costs, it is clear that some will be impacted on by the carbon tax.
It is a particular disgrace in the context of the scenario the ESRI has set out on the impact of a no-deal Brexit that there was not one word from the Minister for Finance on an increase in the minimum wage. When I was Tánaiste, I oversaw the introduction of legislation and arrangements, including the Low Pay Commission, to get to people who were working hard on the minimum wage. We were meant to pass on 1 January 2020 the magic threshold of €10 per hour, but there was nothing today from the Minister on it. I assume, therefore, that the increase in the minimum wage of approximately 30 cent has been parked pending Brexit. That means that all of those low paid workers will get nothing, even though they are the ones likely to be affected most by price rises in the event of a difficult Brexit. We agree with the budget referencing the difficulties of Brexit. We have been supportive of the Government in the three years since the Labour Party left office in getting the best possible Brexit deal for Ireland. However, I wonder what happened to the Minister for Employment Affairs and Social Protection, Deputy Regina Doherty, at the Cabinet table. Was she sand-bagged that she emerged with such a dreadful outcome? I know how hard it is to fight as a Minister for a share of the available funding, but she appears to have sold the pass. The people who are likely to be affected most have actually been left out.
The annual budget is akin to an NCT for the Government. It is an opportunity to look carefully under the bonnet, check the breaks, inspect the engine and give the tyres a few hard kicks to see if they are roadworthy. A vital task of all Deputies in the House is to sit Ministers down, tell them to breathe deeply and have a proper, no holds barred examination of their stewardship.
One duty that falls on us here is to use the budget debate to put the public finances under an intense and fierce scrutiny. We need also to expose the Government's often shifting and contradictory outlooks on the key issues of Brexit, climate change and the nation's economic state at a time of great international turbulence. These questions need to be asked repeatedly until Ministers run out of excuses, fantasies about tax cuts, and places to hide. Our task here is to nail persistent evasions, to puncture the make-believe narratives and unpick the deceptions that are at the heart of the Government's story.
The French novelist Voltaire wrote a short novel called Candide, whose famous character is a teacher called Pangloss who sees everything with unlimited optimism that all is for the best in this best of all possible worlds. Both the Taoiseach and his Minister for Finance constantly exhibit the telltale signs of the Pangloss mentality. I sometimes wonder if there is a rivalry between them as to which can outdo the other in persuading the public that all is for the best under their benign leadership. We all know this is far from true except to Fine Gael's true believers. The Taoiseach and Minister for Finance went AWOL on the issue of social welfare payments. Neither of them copped that the issue has a Brexit effect and that is amazing.
The summer economic statement is supposed to give an honest basis for the Committee on Budgetary Oversight to do its work. In practice, it has become like a light piece of summer fiction. Last year, the summer statement was woefully dishonest and bore no relation to the subsequent budget or to the final, end-of-year outturn. There has not been much difference this year and we again face the probability of extensive supplementary budgets in many key Departments, with the Department of Heath at the top of the queue as usual, with its voracious appetite for eye-watering additional funds to cover up the Minister's hapless inability to manage his budget year after year.
Let us recall one startling fact about the public finances for 2018. There was the usual forecast of spending and then there was the actual outcome at the end of the year of approximately €77 billion. The gap between the two was eye watering and I said at the time that the Minister found the approximately €1 billion that was missing down the back of the sofa. The Minister produced that money anyway on budget day. The Minister got his numbers wrong by multiples of billions. No wonder the Irish Fiscal Advisory Council has shredded his reputation and record and, indeed, those of this Government. Few Ministers have ever been taken to task as robustly as this Minister was in the council's most recent report early this summer. Its judgment, set out in 176 pages, was that the Government's spending plans were "not credible". Those plans were not credible then and they are not credible now. A chief executive officer in the private sector would be out on his ear for such a dismal result.
The Minister has been saved, time and again, by the massive income coming in from corporation taxes. The Taoiseach vainly boasted that we area raking it in when he was in Davos in January. He was up in the clouds. Even if we are raking it in, to what useful purpose are we doing so? In reality, that flow of cash has been a mixed blessing if its sole purpose is to rescue errant Ministers from the consequences of their financial incompetence and management.
This year was supposed to be different. The Department of Health received a generous Estimate with the express purpose of putting an end to the annual farce of late-year adjustments, but not a bit of it. The Minister for Health, Deputy Harris, is back again for another windfall, around the €400 million mark at the moment, and perhaps to increase that as we move to the end of the year. He does not even have the grace to apologise. Let us say the overruns will add up to €400 million, even though I think it may well be more in the end. Has that cash delivered any genuine improvements in health outcomes? It will not have improved waiting lists, trolley numbers or a whole list of defects that plague the health care sector. This money will not have the effect of achieving any significant advance in delivering Sláintecare. That €400 million should be available to deliver the kind of genuine game changers health care in Ireland needs. There are three maternity hospitals in Dublin: Holles Street, the Rotunda and the Coombe. Each has a well established and long agreed capital plan for development at a time when the number of births is increasing rapidly. The Rotunda wishes to transfer to Connolly Hospital in Blanchardstown. There is to be a new national maternity hospital at St. Vincent's to replace Holles Street and the Coombe is also due to be rebuilt.
There are also the many capital needs of existing general hospitals all over the country for extra beds, additional theatres, improved MRI and other diagnostic facilities. If the additional funds were needed to accelerate these projects, there would be no problem in approving the extra spend but that is not the case. We will be asked, in December, to wave through Supplementary Estimates for no other reason than ministerial failure to deliver results within budgets that had been already increased.
Quite simply, Fine Gael is not to be trusted with precious public funds. The proper verdict on their financial stewardship is that it has been unsafe and unsatisfactory. Incompetence is the hallmark of quite a number of people who sit on the Government's side of the Chamber. One cannot make a judgment on a policy by simply saying so many billions are to be spent in delivering it. The public will judge by results, not by grandiose plans and promised billions. Results so far have been few and far between.
This Government has been far too slow in recognising the effects of an almost certain economic slowdown in the USA, China and Europe. The erratic behaviour of the current US administration and very obvious evidence of a serious slowdown in the UK will compound the impact of Brexit, even if a deal is reached in the coming weeks. I find precious little evidence that serious attention is being paid to worrying international trends. The European Central Bank, ECB, is well alert to those trends and is adjusting its bond buying and interest rates to meet those challenges. Many of the big international companies operating here will weather any storms but our own domestic firms will find the going difficult should markets contract through a tit-for-tat trade war.
I have very little confidence that Ministers who fail so badly in managing finances in good times can be trusted when chill winds blow in from outside, even if Brexit ends up with a benign outcome. Not even Professor Pangloss could manage to get good news from that.
This was to be the climate change budget. I doubt the tepid measure announced today will push Ireland much farther up the league of international defaulters - laggard before and laggard still. In any overall strategy on climate change, the transport sector must be front and centre. If there is to be a genuine reduction in Ireland's collective carbon footprint, it will be primarily evident in the way we make the switch in how we transport people and goods. I have seen some An Post vehicles proudly boasting that they are zero-emission vehicles. It is a welcome sight and I hope to see more of the same in all of the vehicles used by public utility companies and public services. Could we have regular audits of how public organisations, such as the Office of Public Works, OPW, are moving to replace their fleets? It is then we will truly know how committed the State is to climate change goals.
There are solid public health grounds, aside from the climate issue, to secure cleaner air in our cities and towns by replacing polluting vehicles and fuels. We now know, from the excellent research done by the Environmental Protection Agency, that there are numerous illnesses, many life threatening, that flow from the polluted air we tolerate far too easily in this country. Many citizens die prematurely from asthma-related illnesses and thousands of others endure distressing and painful conditions that come entirely from the failure of the State to insist on clean air as a human right.
The Taoiseach and his Ministers delight in making grandiose announcements of new investment to expand public transport but their record on delivery falls far short of their lofty ambitions. I will highlight a few examples. Any day, morning or evening, the peak-time buses and trains that serve my constituency are packed to capacity. They are so overcrowded and such is the length of the journey that some joke that Dublin Bus or Transport Infrastructure Ireland will install toilets and perhaps a coffee dock on buses because a journey to the outer areas of my constituency that should take between 20 and 30 minutes takes about an hour and a half. The buses are jam-packed. This morning, a man on the bus told me that ten buses had passed him by before he was able to get onto one. The same is true of trains, which are packed to capacity. Those getting on at a later station need those Japanese train pushers to put people onto the train. The timescale for delivery of the extra train carriages required runs to years. Electrification of the principal commuter lines such as the Connolly to Maynooth service must be the imperative, as well as those to Kildare and Drogheda. We should set a timetable for an electric train to Portlaoise and on to Cork and Galway and Sligo. We have no ambition for the kind of transport that other countries take for granted. I am not at all convinced that the Minister for Transport, Tourism and Sport is in any way sufficiently engaged in delivering rail electrification on the scale urgently required. Nor am I convinced that the National Transport Authority is sufficiently equipped to advance the project while also managing BusConnects and the metro. The current arrangements are not adequate to secure the timely delivery of this group of transport projects. There are already significant delays in almost every single element of the plans, which have been announced repeatedly. Public resistance to particular parts of each separate project, notably in the case of BusConnects, has already undermined public confidence in how a much-vaunted project is proceeding. I have referred to several Dublin-based initiatives, which are costly and often disruptive, but other parts of Ireland have the same justifiable needs. Cork, Galway and Limerick all need public transport projects as responses to the current congestion that is both economically damaging and unsightly to all.
In this budget debate, I want to see clear evidence of serious commitment from all parties to a sustained multi-annual investment in top-class public transport that will also be a considerable contributor to low carbon and healthier cities and towns. I hear words, targets and promises from Ministers but fear they lack genuine credibility. It is not the dizzy amounts of capital that jump out from ministerial statements and umpteen launches that count but their proven inability to make delivery on time and within budget that marks them out as failures.
Another critical element is the retrofitting of homes. Many citizens are actively working, using personal savings and public grants, to cut their own carbon footprints and conserve energy. Their children, grandchildren and great-grandchildren are advising them how to do it. This is a moment when people want to do it. Hundreds of thousands of homes that were built decades ago require substantial renovation to upgrade their energy ratings. It will be a truly gigantic task to do this within a decade. One serious deficiency is the shortage of skilled labour for the particular task of conservation as distinct from routine construction activity for homes and offices. The Minister with responsibility for skills should come forward with a training programme to attract apprentices into this area. We do not have enough qualified personnel or dedicated contractors to concentrate on retrofitting homes to a very high standard. We require low-cost financial packages for homeowners, who recognise the value of work that will deliver real savings, to offset the cost of work, not to mention the added comfort which this work adds to homes.
I now turn to carbon taxes. Last June the CSO published an interesting study of environmental taxes, which revealed that such taxes contribute as much as €5 billion annually to the Exchequer under various headings. The report also estimated that Ireland paid a total of €4.1 billion in potentially environmentally damaging subsidies in 2016. We collect €5 billion in environmental taxes but then give €4 billion back in subsidies, some of which cause pollution. That lack of joined-up thinking must end. Each budget should contain a number of specific clawbacks of these subsidies by reducing both the tax reliefs and the direct subsidies. These subsidies just emasculate the effectiveness of environmental taxes because they actually encourage activities that add to the economy's carbon footprint. It is unfortunate that the climate change debate is obscured by arguments about one type of carbon taxes. The State’s response must involve a much wider suite of measures in respect of electricity and home improvements and above all, with a commitment to public transport on a scale never seen before.
Demography is another key word in the budget along with Brexit. On my first day as Minister for Social Protection I was given the usual briefing given to new Ministers. I had expected to be told of the pressures that I would face from the economic crash and the troika demands but I did not expect the blunt assessment of annual costs that would arise from an ageing population. People are living longer, an undoubted and welcome triumph of medical advances, and I was told that I would need to budget for an additional €200 million annually to pay the State pension even without any increases in rates. That is no less true today than it was then and there is a further dimension now. There is now a further dimension as the number of children is growing very fast. Indeed many European countries look on amazed and even envious as Ireland’s population grows in a way that is unique. Current CSO figures indicate a remarkable youth share of Ireland’s overall population, with more than 20% in the zero to 14 years age cohort. In the long term that is a fantastic bonus but right now, it brings substantial costs in healthcare, in safe maternity facilities, in parental leave entitlements and in education at all levels from early childhood to third level. The emphasis is on current costs and not enough attention is paid in the capital budget to meet these needs.
We all know how the Government has bungled the national children’s hospital with serious and unacknowledged consequences for every other aspect of the capital programme. Our maternity hospitals are in dire need of investment, schools need to be built on time when there is a population bulge, early childhood education has a paramount relevance both as a key component of childcare and as a proven catalyst for later educational achievement. At the other end of the age cycle, there are ever-increasing care needs for senior citizens. One thing that disappoints me is the shockingly slow pace of delivery of the scheme to enable workers to save for a supplementary pension to add to their entitlements to the State retirement pension. The Minister is not present to say what ever happened to the agreement on this scheme. We have not heard a word about that. There was lots of chat about it from the Taoiseach and then it simply vanished.
Many people at work are now denied a clear path to home ownership. It is one of the most disappointing things about the Government.
Fine Gael is going out of its way to end how in Ireland, people legitimately aspire to own a home and we therefore have a home-owning democracy. It is determined to change that and to put everything to do with housing, as far as possible, into the hands of landlords. This is going to have major effects on how we live and what happens to people in retirement.
The Taoiseach and his mates are content that people in their own age group should be happy to rent all through their working lives. One does not need a crystal ball to predict what this will mean decades from now, when that group comes to retirement age. They will need to continue paying rent from their retirement income, while those who manage to own their homes will have paid off mortgages and will not have this pressure on their monthly income in retirement. This alone is one reason that Fine Gael must think about what it is doing in housing and the imbalances it is causing, never mind the distress and damage being done to children and adults who are in long periods of homelessness.
I will make a brief comment on the cultural institutions. We had a visit recently to this House from writers who wanted to talk about putting books into school libraries in order that every child is encouraged to read books. World-famous authors, such as Anne Enright and Paul Murray, were present. It was a modest proposal but is one the Government should seriously consider. Every school should have a library and a modest fund to buy books that children can read. Similarly, every child should have an experience of a cultural event at least once a year.
I will conclude by noting that the Taoiseach has been happy to display his education in the classics, particularly when Prime Minister Johnson was here a few weeks ago. Given this classical education, I am sure he is well aware of the dangers of hubris and to the Government I now say, when hubris comes, can nemesis be far behind? This is a friendly warning to this Fine Gael Government which I hope it will consider.