Paul Murphy (Dublin South West, Solidarity) | Oireachtas source

Last week, we had the international day for the eradication of poverty and the previous week we had the budget. We know that 780,000 people in Ireland are living in poverty, which is about one in six, including 250,000 children. Of those 780,000 people, 100,000 are in work and suffering from poverty. Some 700,000 people are on healthcare waiting lists and over 100,000 households are on waiting lists for social housing. The country has crisis after crisis.

On the night of the budget I described it as a tale of two budgets, one for the rich - the high earners, the developers and those at the very top of our society - and one for ordinary people, including those 780,000 people who suffer from poverty. The budget and the Finance Bill before us entrench that deep inequality and the poverty that exists in our society.

This is now the fourth budget and the fourth Finance Bill by this Government. Social Justice Ireland has done an analysis of those four budgets cumulatively. It stated:

Our analysis points towards the choices and priorities the Government has made. Overall these choices have given least to single welfare-dependent households and those on the lowest earnings.

In The Irish Timesjust before the budget came out, there was a similar analysis dating back to 2009. It involved case studies of people at different income levels, with different family situations and so on. The punchline was:

Worst of the bunch, however, is our low income worker, earning €22,000. She has seen her effective tax rate soar by 42 per cent since 2009, bringing her already low income down by €77 a month.

That compares with 2009. The accumulation of successive budgets that have favoured the wealthy at the expense of the rest has copper-fastened that situation and position with regard to inequality. Nothing in respect of this budget summed matters up better than the idea that as a result of Brexit, workers are going to have to wait. The very lowest paid workers will have to wait for a wage increase whereas the developers who will benefit from the help-to-buy scheme, the landlords who will benefit from the increase in the housing assistance payment and the rental accommodation supplement payments and the very highest earners who will continue to benefit from the massive SARP tax relief aimed at them will not. That sums up the discrimination in the Government's approach.

I will go through some of the sections now but we will go into them in more detail on Committee Stage. SARP is a very extreme, gross example of that very class-biased approach of the Government. It is very bluntly and nakedly a tax break for the richest, highest earners. To explain it to people who may not have heard of it and would certainly never dream of being eligible for it, in order to qualify a person has to be a foreign executive who has come here and be on an income higher than €75,000 a year. The relief extends up to an income of €1 million a year. If a person happens to be fortunate enough to be paid €1 million a year, he or she will benefit to the tune of €130,000. This represents a giveaway of public money on the part of the State. That €130,000 could be spent on many other things, for example, public transport, healthcare, education and, most importantly, housing, but the Government has chosen to give it to someone who already gets €1 million gross a year. It is an incredible tax break paid by the rest of us and by ordinary working-class people to those at the very top and it cost €9.5 million in 2015 and €18.1 million in 2016. As a result, the indication is that it is on an upward trajectory. That so much money will be given to the highest earners in our society is utterly scandalous at a time of so many social crises. It is scandalous that when one in six people is living in poverty, the Government would choose to persist with and extend that tax break for those already extremely wealthy people.

Another very good example of the neoliberal nature of the budget is the help-to-buy scheme. The Government in general and the Minister for Housing, Planning and Local Government in particular are always at pains to emphasise that his approach to the question of housing is not at all ideological, that it is extremely pragmatic and that he is just doing what will help resolve the crisis. The persistence with the help-to-buy scheme demonstrates that this is not the case. I accept that the Government believes it to be the case and that it is not informed by ideology when doing these things but the very decisions it makes in defiance of the evidence or in the absence of evidence to support its approach suggests that it is utterly blinded by the neoliberal in which it believes and by the vested interests of developers, etc., who benefit from those policies. After the money in the help-to-buy scheme passes through the hands of a certain section of first-time buyers, it ends up in the hands of developers. That is how it is going to work.

There is a reason that the Construction Industry Federation lobbied extensively for the scheme's introduction and then lobbied for it to be extended. It did not do that because it is a lobby group for first-time buyers. That is evidently not the case. The federation is a lobby group for construction companies and developers. The reason it did what I have outlined is that it thinks this will artificially sustain prices to the benefit of the balance sheets and profits of those entities. This will be €100 million a year that will find its way into the pockets of developers. It is based on an ideological view of supply side economics that will somehow incentivise these people to deliver more by continuing to give them more money. Its operation for the subset of potential first-time buyers who can avail of it is extremely inequitable. It does not help any ordinary person who is trying to buy a house because it pushes up prices and makes houses less and less affordable. The average price for a new three-bedroom house in the greater Dublin area in 2018 was €330,000. Due to the loan income rules, a couple or individual seeking to purchase would have needed a household income of approximately €85,000 to afford that. Even in the context of the Minister's definition to the effect that €240,000 is the figure which represents what constitutes affordable housing, people would require household incomes of more than €60,000. Affordable homes do not exist in most cases. What about the 50% of workers who earn €30,000 or less a year? They are simply not able to avail of the scheme. It is not the lowest paid who have any chance of availing of this money, it is the middle and higher income earners. However, the money then ends up in the hands of the developers in any event.

There is no evidence that the scheme works to deliver more housing. Britain has a similar scheme and the Tory Government has agreed to wind it down in a few years' time. This is partly because of a study which demonstrated that half of those who availed of the scheme said they would have bought the houses in any case and did not need the scheme to buy them. Therefore, there is a massive deadweight. It demonstrates the ideological blinkers on the Government because surely, if so-called pragmatism is the logic for its housing policy, it would take this money and build houses. That is the simplest, most direct way of resolving the housing crisis, as opposed to giving the money to a subset of potential buyers and passing it on to developers and hoping that this will result in more homes being built.

That same ideological view or commitment to free market economics and the idea of nudging people into better behaviour through market incentives is expressed in the Government’s carbon tax. The Government’s credibility or any semblance of credibility it has on the environment is even less now two weeks on than it was on the night of the budget because, while trying to claim a concern about the environment and that it is in some way in line with those who were protesting for radical action to stop climate catastrophe, it has pushed ahead with a plan for one of the biggest liquefied natural gas, LNG, terminals in Europe, at Shannon.

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This is an investment of massive amounts of public money in fossil fuel infrastructure that will be with us for decades and will create an incentive to continue to rely on fossil fuels when we need to be transitioning rapidly to a zero net carbon economy by 2030. This is not just any fossil fuel. It is one of the dirtiest fossil fuels - fracked gas - with all of the health implications of that and the greenhouse gas effects of methane in particular. Therefore, there is less credibility than there was two weeks ago in the Government's claim that the carbon tax is about it being environmentally friendly. It is not. This is a regressive tax. It is about hitting working-class people hard. The Government accepts it is a regressive tax, as do the ESRI and those who are well off. Those who are well off will not notice the increase in the carbon tax over the next number of years, whereas for those who are less well off, it will impact a significantly greater portion of their income.

The fundamental point is it does not work. The evidence internationally shows it does not work. A study of 19 different jurisdictions concluded that it would take 110 years for it to have any substantial impact in the change that we need. Nobody, in particular none of the scientists in the 97% of scientists who understand and recognise the human impact in terms of climate change, believes we have 110 years to turn the situation around. We have only ten years to do so. The idea that we can rely on these market mechanisms to work their way through over a long period of time is utterly ridiculous. We need an entirely different set of policies and to break from that free market ideology. Fundamentally, we need a planned economy to pivot away rapidly from the fossil fuel-based economy that we currently have towards a zero carbon and renewable-based economy that we need as part of a green new deal with socialist policies.

Section 41 deals with the diesel rebate scheme increase for road hauliers. For average households there is no rebate on the carbon tax, but for hauliers there is a rebate on it in a circumstance where transport accounts for 20% of emissions in Ireland, with 25% of that amount apportioned to the freight industry. A haulage tractor uses approximately 1,500 litres of fuel in two to three weeks, which is approximately the same amount used in an average home per annum. Rather than giving a rebate on carbon tax to the haulage industry, we need to invest in electrifying the transport of goods and move the transport of goods onto rail in particular wherever possible. This is the way to achieve a serious cut in emissions as opposed to putting the burden onto working-class people and then paying the money back to hauliers.

Tax avoidance was a striking feature of the speech of the Minister, Deputy Donohoe, on the night of the budget. He made the point that the Government, very strangely, had discovered that there was a lot of tax avoidance going on through Irish real estate funds, IREFs, and similar schemes and that Revenue had identified that some IREFs had engaged in aggressive behaviour to avoid tax, as if that was a surprise. These schemes were set up to allow these people to avoid tax. Ireland is a tax avoidance hub, which is the reason there is €2.4 trillion worth of shadow banking activity here. Ireland is one of the biggest shadow banking hubs in the world and one the biggest tax avoidance centres in the world. The property corporate landlord sector is set up in a manner that facilitates massive tax avoidance. A representative of the UN wrote to the Irish Government about this and the impact in terms of human rights and the preferential tax treatment that was given to them. It is bizarre that it is presented in any way as being a surprise to the Government that there is massive tax avoidance taking place. It is at the very heart of the Government's capitalist developmental model.

While I welcome the moves in a number of different respects to close off some of these loopholes, there is a strong element of shutting the door after the horse has bolted. There are new tax loopholes being taken advantage of by these companies. Many of the former section 110 investors have moved on to investing in qualifying investor alternative investment funds, QIAIFs, and Irish collective asset management vehicles, ICAVs, and again are able to avoid paying tax on a massive scale. For example, the Davy Irish Property Fund, which has €2.5 billion worth in assets, made a profit of €190 million last year and paid zero corporation tax. The contrast between the treatment of the corporate landlord sector; high earners who can benefit from the special assignee relief programme, SARP, foreign earnings deduction, FED, and other schemes; the banks who continue to pay incredibly low rates of tax of, on average, about half the headline rate of corporation tax, with many banks, in particular Barclays, Royal Bank of Scotland, RBS, and Crédit Agricole, in reality paying less than 2% in corporation tax; and the treatment generally of working-class people and those on the lowest wages, who did not get an increase in basic payments in terms of social welfare and wages, or those whose increase in the minimum wage has been postponed, sums up the approach of this Government, which is to go with the neoliberal ideology that the market has to solve everything and we have to incentivise these people by funnelling the money to them in the hope that it will trickle down, when in reality the money under this system and the ideology and policies the Government pushes always flows upwards to those at the top who do not have to pay tax on most of it.

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