Tuesday, 8 October 2019
Financial Resolutions - Budget Statement 2020
I will share time with Deputy Thomas P. Broughan. We will hopefully fill the time.
This budget shows that Brexit has been a godsend for the Government. There is no doubt that Brexit will cause difficulties for us, but it is how we go about dealing with that crisis that is important. It will show the measure of the State and the condition of our economy and politics when we see who is made responsible for it and who will carry the can.
I agree with previous speakers that the Government and the Fianna Fáil colleagues who keep it in power have made sure that the business classes will be protected during Brexit and that we, the ordinary citizens of this country who are struggling and also need to be protected from this threat, will be left behind. If we looked after our ordinary citizens and provided them with the resources to deal with the Brexit crisis by providing childcare and a proper health service that works, we could build the resilience of our whole society to survive the threat that Brexit contains.
The fact that Brexit dominates this year's budget despite the first surplus since the recession reveals the true vulnerability of Ireland's economic recovery and our economy in general. I was struck by the Minister's statement that we are responding to Brexit "with the resources of a well-run economy and the purpose and certainty of good government and responsible politics". How can the Government say this is a well-run economy when more than 10,000 homeless people are in emergency accommodation, our health system is in a state of collapse and child poverty remains consistently high? How can it make that claim when it has mismanaged large infrastructure projects such as the national broadband plan or the new children's hospital? That does not spell good governance or a well-run economy; it spells financial mismanagement. How can we respond to Brexit with that kind of economy?
Ireland has been placed in a vulnerable situation by Governments past and present. Fine Gael has opened up our society more than any previous Government. I refer to the significant influx of vulture capital, the financialisation of housing, speculative industries, outsourcing of social welfare services through programmes such as JobPath, the seductive corporation tax - of which the Apple affair is a case in point - and an encroaching private sector that has often compromised our health system.
In light of this vulnerability, we need examine how we can make structural improvements and better protect people's incomes, particularly in the case of a no-deal Brexit in which thousands of workers will be at risk of losing their jobs or income. There is no better time than now to support proposals such as a living wage. A living wage would build people's resilience against the difficulties that Brexit might contain for them. Establishing a living wage for the public sector would only amount to €55 million. That would send an important message to the rest of the economy that this is how the Government sees us surviving Brexit. In its response, the Government will call this fanciful thinking. Its members will say there is no way we can do this, that it is a load of rubbish. How would we ever pay for it? The answer is interesting.
Increasing the tax on in-shop and online betting would generate €150 million. Yet what has the Government done? It has given bookies an exemption on their first €50,000 in takings. It could remove certain tax reliefs, including standard rate discretionary non-pension-related tax reliefs above the annual cost of €10 million. That would generate €480 million, a tidy sum. If the Government standardised the rates of tax breaks on all private pension contributions, that would generate another €483 million. Social Justice Ireland has calculated that if a minimum corporation tax rate of 6% was collected, less than half of the rate of corporation tax in this country according to statute, an additional €1 billion would be raised. The Government could raise €1 billion just by ensuring that corporations paid 6% tax, even though it says our headline tax rate is 12.5%. That is astronomical. That is what the Government could do. It is not the case that it cannot do this; it has chosen not to. There are many more examples of revenue generating schemes that would not affect low-income households but would do much to target the wealth inequality in society.
Brexit is, of course, the big issue on our horizon. The Government has done its best to protect business from Brexit. That is necessary, but I believe it could do this in a different way. It could protect workers and ensure they have the resilience to withstand anything that happens. It could do that very simply, but that is beyond the thinking of the Fine Gael-Fianna Fáil Government we have in this country. It will not be able to do that.
This budget should buffer people of low incomes against a shock such as the UK leaving the EU. Instead, Fine Gael, the Independent Alliance and Fianna Fáil have put all their eggs into one Brexit basket. Some money must be set aside for Brexit contingencies, but part of this must protect people. In any case, Brexit is being used as an excuse rather than an economic fact. It is a convenient way for the Government to turn a blind eye to those struggling on low incomes and focus overwhelmingly on businesses and the private sector. That is one startling aspect of the budget. We must be aware of Brexit, but the Government could have introduce measures to help our citizens and make them more resilient. It continuously chooses not to do this. It is possible that Brexit will not have happened by the time the next budget comes around.
That would also then be a Brexit budget but the Government would probably decide not to protect people then either, but would look after its business friends.
The fiscal rules under which the Government works are used as an excuse for everything when it comes to budgetary matters. Those fiscal rules are flawed and poorly designed. This was highlighted in papers over the weekend by the most senior civil servant, Mr. Watt, with regard to how they should not be used and that they were meant for a specific time but that the Government continues to use them. The rules are too complex and easily gamed. There is very little transparency for those who are drastically affected by the rules. This provides the Government with an excuse not to address the housing or health crises. Figures released by the Comptroller and Auditor General showing that the net cost of the bank bailout is a staggering €34.6 billion give us an idea as to how pointless the rules are and how the Government has allowed the State to be held to ransom by the banks and by our European masters, who forced the banking bailout on us and created that problem for us.
There is so much the Government could have done in the budget, even in these difficult times. Some of the social welfare measures in the budget are piecemeal but they are there. The Government could have worked to make things easier for families on low incomes. We hear about Brexit relations, reliability and resilience. What about County Donegal, where the highest proportion of the population depends on social welfare and social transfers? How is the Government making them Brexit-resilient when it is not even looking at how Brexit will affect social welfare? That is a real problem. Benchmarking the minimum rates of social welfare payments to movements in average earnings should mean an increase of €9 per week. That would have done a lot to help people to deal with the cost of Brexit.
The health service is in crisis. Last week, the Taoiseach was crowing about how we now have a surplus of 0.5% in the budget. This surplus of 0.5% is driven by the fact the Government is not investing in health. Last week, I outlined in the Dáil Chamber how more than 100 posts in Donegal, which have been interviewed for and offered, are awaiting sanction from Dublin to go ahead. My colleague, Deputy Connolly, raised similar cases in Galway and there are other cases throughout the country. This is why we have a 0.5% surplus. It is because the Government is refusing to do anything. I would much rather see us working with a 1% deficit and providing those jobs to deal with the needs of citizens throughout the country.
Unfortunately, the Minister of State with responsibility for disabilities has just left the Chamber. What is remarkable about the budget is that there is nothing in it for disability. The most vulnerable people in our society have been completely ignored by the budget. I was hoping we would see the Government reinstating the rehabilitative allowance that went during the year but it remains gone. It is a shame on the Government, the Independent Alliance and Fianna Fáil that the budget does nothing to protect those most impacted by everything that happens. They will be the most impacted by Brexit, climate change and everything else that will happen but they have been completely ignored in the budget and this is a disgrace.
There is nothing in the budget with regard to mental health and this is disgraceful. Last year, €25 million of what was allocated was withheld from the HSE because the Government does not like the way it is doing it. This is a problem.
There are a small number of increases for education but there is still a huge deficit. If all of these issues were dealt with it would make people more capable of dealing with the effects and meeting the challenges of climate change and Brexit but the Government is not interested in that.
These are the headline issues. With regard to climate change, the Government has proposed a €6 increase to the existing €20 carbon tax. The Oireachtas Joint Committee on Climate Action advocated through a majority vote an increase of up to €80 per tonne by 2030 subject to a number of important provisions. As a member of the committee I did not support the increase in carbon tax because I did not trust the Government to adhere to it and I have been proved right. I was not surprised to hear at lunchtime that while carbon tax revenues will be ring-fenced, they will not be redirected in their entirety to households suffering from fuel poverty, which is what the committee agreed. I am alarmed to see that despite all of the good work carried out by the climate action committee, carbon tax revenues have become a goody jar that influential Independent Deputies with access to the Cabinet can dip into to curry favour with their electorates. We must get past this populist clientelism in politics. The Government needs to be forward thinking. We need schemes to target rural poverty and disadvantage throughout the country and not just in the midlands. Will the Minister ensure that future spending of carbon tax revenues will be carried out according to a strategic non-partisan and long-term vision to reduce emissions and help alleviate fuel poverty?
The committee's final report last March recommended a fuel poverty review in advance of any carbon tax increase along with measures to compensate those households that will be directly affected by an increase in carbon tax. As a member of the committee, I advocated measures that would deliver home retrofitting programmes for social housing and new rural transport services directly to those households that would be affected, in particular those households with exceptional energy needs that do not have ready access to alternatives. The Government did not do any of this. It did not publish the review in advance of the budget because it wanted to claim the budget.
At a recent meeting of the climate action committee, we heard from representatives of the Society of St. Vincent de Paul who expressed concern that fuel poverty is still a major barrier to quality of life and health outcomes among vulnerable and socially marginalised households. The organisation's work throughout the country shows that energy poverty remains a major issue affecting large volumes of households. According to a survey of income and living conditions in 2017, almost 400,000 people went without heating due to cost. Last year, the Society of St. Vincent de Paul spent more than €4 million on fuel and utilities for energy-poor households and approximately 70% of this expenditure was on solid fuel and oil. The combination of increased energy prices, poor quality housing and the persistence of low income has a significant impact on these households. Low-income households in rural areas, those living in social housing and the private rental sector and one-parent families are particularly exposed to the risk of energy poverty. I share these concerns, bearing in mind that households must approach the Society of St. Vincent de Paul directly for help, usually when people are in financial distress, and there is often a great deal of personal shame and hardship in approaching charities for help. Without these charitable supports, children in many households would go hungry and cold.
It is obvious to everyone that the solution is to improve the quality of housing and public transport for people on low incomes. The Government's approach turns the fuel allowance into a fossil fuel subsidy. If the carbon tax keeps increasing, raising the fuel allowance will do very little, if anything, to reduce emissions or compensate poor households. We know from details supplied by the Department with responsibility for climate action that only 34,000 households are being retrofitted annually. Most of these are shallow retrofits that will not be compliant with the zero carbon by 2050 target. To meet our target, 75,000 deep retrofits will need to be carried out annually by 2030 but it is not obvious that the skills and labour, never mind the low-cost finance, are available to meet this target. It is disappointing that the Minister's budget speech did not mention low-cost finance, which will be a critical lever to get homeowners to invest in home retrofitting.
For the social housing sector the situation is even more urgent. The Government has been advised by the Climate Change Advisory Council to spearhead a major industry upskilling effort by rolling out a phased social housing retrofitting programme. According to the reply to a recent parliamentary question, Government expenditure on improving the conditions in public housing was a paltry €134 million between 2013 and 2019. At approximately €2,000 per house this is clearly too low to make a substantial difference in comfort levels or to reduce fuel and heating demands. By contrast, it is estimated the Government will need to spend approximately €2 billion by 2030 to undertake deep retrofits for all local authority housing. What the Minister has proposed in the budget is utterly inadequate for the challenge that faces us.
The advantage in undertaking such an ambitious programme would be in the number of jobs it would create and the investment that would flow into poorer communities throughout the country. In its presentation to the Committee on Climate Action the Society of St. Vincent de Paul recommended that the Government invest in community energy advisers to work in partnership with the Sustainable Energy Authority of Ireland to engage and inform hard to reach energy users who would benefit most from energy efficiency schemes across all housing tenures. It also recommended that the Government ensure sufficient funding was available to allow local authorities to complete the energy retrofitting of social housing stock, with the objective of upgrading all existing stock in the next four years in order that all local authority housing would achieve a BER rating of B2 or more by 2030.
The Minister has announced the provision of €20 million for social housing retrofitting in the midlands as part of a planned just transition framework to be led by a new commissioner in co-operation with the National Economic and Social Council. The Government is going to set up a new quango, appoint a new commissioner and provide €20 million. It should provide €200 million to make a real stab at dealing with this issue. As the money would come back to the economy and benefit it, it would not have that cost. It would be possible to train people to work in this area and travel around the country generating jobs for themselves. The provision of €20 million is a welcome initiative, but it has taken the imminent loss of hundreds of jobs in the midlands to get a meaningful response from the Government. Trade unions and environmental groups have been warning about the need for an exit strategy from the use of peat and coal for over a decade. The writing has been on the wall for fossil fuels for years, especially since the adoption of the Paris agreement. Considering recent developments at Bord na Móna, the Government needs to learn to plan for a just transition. Instead of just reacting to events, it is important that the just transition fund be considered to be a pilot for future programmes which should be extended to other sectors and regions, for example, in agriculture and even fisheries in certain parts of the country but most especially Moneypoint which is due to close by 2025, if not before. The new task force should be required to report back to the Committee on Climate Action in order that the activities of the commissioner would be subject to oversight and scrutiny in a transparent manner, but that is not Fine Gael's way.
The greatest lack of ambition in the budget is in the area of transport. There is resistance in rural areas to carbon taxes because people are reliant on cars to get everywhere. As most people in County Donegal do not have access to public transport, making it free would make no difference to us. Private services are thin on the ground and when they run into financial difficulties, they just close with no safety net for passengers. We have seen this recently with the bus service from Inishowen to Letterkenny. There is a much higher rate of poverty and low incomes in the north west and it is unreasonable to expect people to switch en masseto electric vehicles which remain unaffordable, even with grants. We need public transport - buses, trains, shared mobility services and greenways - that meets the needs of commuters such that they will be prepared to leave their cars at home. The pathetic €9 million allocated for sustainable transport services is a gimmick and will do nothing to get people out of their cars. Greenways will be super for tourists, but they will not work for schoolchildren or commuters. The Government must do better. Emissions from transport are growing and account for 20% of total national greenhouse gas emissions. Diesel and petrol fumes are also responsible for poor air quality. while car dependency, in turn, is responsible for sedentary lifestyles.
The problem is that the traditional policy paradigm is reactive, tactical, piecemeal and end of pipe. The Government hopes carbon charges will incentivise people to change their ways by buying electric vehicles and turning down their heating systems. However, it is not dealing with problems of chronic pollution, environmental degradation and resource depletion. If it was, we would be seeing much firmer action to reduce the availability of fossil fuels, coupled with targeted investment across every sector of the economy aligned with a zero-carbon pathway. The scale of the climate crisis means that we need solutions on a commensurate scale. The €5 million allocated for agri-environmental measures, the €5 million allocated for peatland restoration and the €9 million allocated for sustainable mobility services are welcome, but they ignore the hundreds of millions of euro spent in aggressive marketing and on fossil fuel subsidies that are commonplace in this society. We are seeing the tweaking of existing policies instead of efforts to address the root causes. In addition, there is a severe implementation deficit between policy intent and outcome. Since 2011 we have been waiting for safe routes to schools to be implemented, with the smarter travel programme. The budget is where we expect to see policy implementation, but yet again Fine Gael has failed to grasp the opportunity to invest in lasting change towards sustainable economic development. That is true across the board.