Gerald Nash (Louth, Labour) | Oireachtas source

The Minister, Deputy Donohoe, is very welcome to the Chamber this afternoon. It is fair to say that it is a cliché that Members of the Opposition stand up on budget day and condemn the Budget Statement as a missed opportunity and so on. The Minister has heard that on far too many occasions for his own liking, but sometimes these old clichés and tropes can have an element of truth to them. I believe this to be the case this year. With additional spending of more than €17 billion, it takes a chancer to claim that nothing good whatsoever came from budget 2021, which is evidently untrue. Sadly, it took a pandemic to invest more in hospital beds and in an overburdened health service that has been crying out for more funding, more targeting of funding, and improvements in delivery of services. Much of what was in the Minister's October budget speech and reflected in the Finance Bill sees this Government hand out a series of sticking plasters to hold together creaking public services, with little or no systemic change flagged or planned. The opportunity to use this public health crisis and the unprecedented financing opportunities that are available at this time to create a better, fairer and more socially democratic Ireland has been missed. There is little sign in the Bill of a new direction for Ireland or what we might term a new social contract for the emergence of a different, more egalitarian, post-pandemic society and economic model. It is very much a case of business as usual.

I note the ESRI's commentary in the budget and the survey on income and living conditions, SILC, analysis, but the truth is that the failure to hike weekly social welfare rates will mean that for the second year in a row, Ireland's most vulnerable, those on small fixed incomes and those who depend on the State for their income, will have seen no cash increase paid to them. While it is not strictly a matter for this Bill, it is a point worth making. There are necessary tweaks in the Bill and some recent legislation to cover Brexit-related matters, but one of the biggest Brexit-related harms will be the cost of basic essentials for ordinary households that depend on the State for their incomes.

Such cost increases for normal, day-to-day goods such as foodstuffs, utilities and so on have a regressive impact, with the poorest families paying more.

However, inequality is not just about income. It is also about opportunities. Budget 2021 and this Finance Bill will increase wealth inequality and widen the opportunity gap between those who have a little, those who have some, and those who have a lot. We heard much talk in recent weeks about what was in the budget but the conversation about what was not in it was closed down very quickly in the political system and the media moved on from it. We should talk about what is not in the budget or in this Bill if we are to have a proper conversation about how to recast society and help it change direction into the future.

For example, neither the budget nor this Bill do anything about public childcare, which is perhaps the most economically and socially prudent investment of them all. The evidence from across the world is clear that a high-class investment in affordable and high-quality State childcare more than pays for itself, with up to a tenfold return cited in some studies. Under the Labour Party's vision of a new social contract, we would have supported families to ensure every child has a fair start. We would have invested €60 million as a first step to develop a universal public childcare service and an additional €30 million to ensure every childcare worker is paid a living wage of at least €12.30 an hour. Our childcare workers have been on the front line of Covid-19, caring for our children throughout this crisis, and they have been treated shamefully. They were on poverty wages both before and during the crisis and they will remain on poverty wages after this legislation passes through this House.

Childcare is one example but I could go on to speak about the progressive changes this Bill could have helped deliver. It could have reoriented how we do public and affordable housing, how we advance climate action and a just transition properly through a more progressive tax policy, and the promotion of greater investment in and use of public transport to help bring about the step change we need. It seems the Green Party has failed to make any substantial impact on this Bill, given the opportunities available. Many of the provisions in this Bill would have happened anyway in the Green Party's absence.

This Bill will result in the extension of bad, or at least questionable, policies that will cost the Exchequer a lot of money and which will disproportionately favour people who have more to their names than most. There is little or no objective reason for these policies to remain in operation. One such bad policy is the help-to-buy scheme. This Bill enables the extension of the scheme, which the ESRI has called "poorly designed" and which the Parliamentary Budget Office has shown has a deadweight loss of over 40%. In other words, this policy has been proven to promote activity that would have happened anyway but the State chooses to subsidise it in any case. This is not a housing policy. It is a developer's policy that drives the cost of housing further beyond the means of most people who dream of owning their own home. Announcements were made in the budget about a greater level of spending on subsidising private landlords via the housing assistance payment, HAP, and a reduction of stamp duty for large developers, as referenced earlier, rather than considering more investment in affordable housing on public land, which we require as a society.

Once again, no-strings-attached VAT giveaways are being given to sectors addicted to precarious pay and poor working conditions. The lowering of the VAT rate will cost in excess of €400 million in one year, but like the staycation subsidy, it is another poorly designed scheme with a suspect value. The Minister knows well that a VAT cut for the hospitality sector will benefit higher earners and consumers who have more discretionary income to spend. This is the same cohort whose savings have shot up over the past six months. They are not spending, not because they are short of cash but because of the pandemic. We do not have a demand problem in this country, but we do have a public health problem.

The Minister and his officials know as well as I do that the VAT cut introduced in 2011 very quickly outlived its usefulness soon after the date on which it was introduced. It did not go towards boosting the pay packets of low-paid workers and neither did it go towards making a meal out or a hotel room any cheaper. It was ultimately used, a few years after it was introduced, to boost the bottom lines of some very big and profitable hotel groups and fast food chains. As the Minister is determined to bring the VAT reduction in and it is already in place, this Bill should be amended to make the VAT rate cut contingent on the engagement of hospitality employers with a joint labour committee. That has been the law of this land since 2012, under a system both I and the Minister voted to introduce as Members of this House.

This time last year, my party called for the development of a wage support scheme similar to the temporary wage subsidy scheme, TWSS, for industries that would find themselves at risk in a no-deal Brexit. It took the pandemic for such a scheme to be rushed through. I welcome that the TWSS was introduced as it was very beneficial for businesses and workers. However, this Bill entails little reform of the employment wage subsidy scheme, EWSS. While I welcome the increase in subsidy rates since the start of the level 5 lockdown, this does not go far enough. We need to return to an income-linked scheme like the TWSS, which the Labour Party has called for with our new ObairGhearr scheme, based on the successful German short-time work scheme, to ensure workers do not lose out and that they are upskilled. Such a scheme would ensure State-subsidised workers do not lose out and are protected from economic dismissals or attempts to use the crisis as cover for cost cutting. It would also make employers, with the support of the State, provide tailored training plans to their individual workers as a condition of entry onto the scheme.

This is the best kind of long-term support we can provide as a State to make our SMEs more productive and competitive. This is not only possible, but is actually happening right now across Europe, in the Netherlands, Denmark and France, to name but a few countries. Similarly to those countries' schemes, the scheme we would like to see developed would exclude companies with bad taxation records and companies which pay big dividends to shareholders in the middle of a pandemic while on State support, give excessive pay packages or bonuses to executives or engage in share buy-back schemes.

More generally, tax policy changes included in budget 2021 and provided for in this Bill are projected to result in a net revenue loss of approximately €231 million in a full year, while the tax base is also set to narrow. This will make little sense to workers on wage subsidy supports or the pandemic unemployment payment, who will still be hit with a tax bill on the support they received during the crisis, as referenced under section 3 of this Bill. This comes on the back of many people facing a Covid-19 interest penalty on payment breaks for mortgages and loans. Will the Minister consider addressing this issue and giving people the same kind of tax breaks, tax warehousing and so on that the Government is providing to large businesses which are in difficulty because of this pandemic, under the same principle? Will he show the same kind of mercy to people on the pandemic unemployment payment, PUP, or who benefited from the wage subsidy scheme, who will find themselves with a tax bill based on the incomes they received through those State supports?

In our alternative budget, entitled A New Social Contract, we have shown how €1.8 billion could have been raised by targeting growth-friendly wealth and assets but, unfortunately, this Government has chosen to look the other way. We know from reports published yesterday that because of the situation in which we now find ourselves, a €930 million shortfall in corporation tax receipts has been forecast for October. The Minister has recognised that himself. It is very worrying indeed that there is an overdependence on corporation tax from a small number of companies in this country. That is not sustainable and that is why we need to have a mature adult conversation about ensuring our tax base is not further narrowed, in order that we can obtain the kinds of resources we need to operate top-quality, high-class public services in the modern day.

Chapter 1 of the Bill includes proposals to address USC issues as they relate to the increase in the national minimum wage of 10 cent an hour. This matter, along with issues relating to PRSI thresholds, have been addressed in most years since 2015 to ensure any rises in the national minimum wage find their way into the pockets of those who require those increase most, namely, the workers, and to ensure there is no cliff edge PRSI effect on employers. I am disappointed that a Government which has expressed a wish to achieve a living wage has chosen not to go further than the meagre proposition made by the Low Pay Commission.

The proposal in section 10 to extend the naval personnel seagoing credit is welcome but we need to go much further to enhance pay packets and improve the terms and conditions of the members of our Defence Forces. I know that project is under way and we need to focus on it as a country, and to recognise the important contribution that members of the Defence Forces make to State security and to our State more generally.

Chapter 4 of the Bill contains significant measures relating to the Covid restrictions support scheme, CRSS. This may be a minor issue but I want to raise it with the Minister. I was contacted yesterday by an on-course bookmaker from my constituency who informs me that his business and other similar businesses are excluded from the scheme based on the fact that they do not have bricks and mortar rateable premises. This misunderstands the nature of the business and that quite an expense is involved in paying for their pitch on racecourses throughout the year. These are operations that Horse Racing Ireland would have data and information on. I ask the Minister to look at this to see if access to the scheme could be provided for such businesses.

I imagine other Members of the House were contacted by Chambers Ireland regarding a possible anomaly in the operation of the CRSS system. It highlighted an important issue relating to businesses that form part of a supply chain for the tourism and hospitality sector. Due to level 5, these businesses have lost all or most of their revenue. Section 4.2.4 of Revenue's guidelines states that even if a business meets all of the other eligibility criteria for CRSS, it will not qualify for the scheme unless access to the location, for example, a warehouse, is restricted under Government guidance. These businesses, which are predominantly closed at the moment or running at a low level of activity because of the level 5 restrictions, need support to remain open to support the economic recovery when it comes. The relevant provision of the Finance Bill is in section 485(3)(b)(i) to be added to the principal Act. Chambers Ireland has been in contact with the Revenue Commissioners in this regard and I wanted to raise it with the Minister so that he can consider it before Committee Stage to see if this problem can be addressed.

Period poverty is a serious issue for many women. My colleague, Senator Rebecca Moynihan, has done significant work campaigning in this area. Sanitary towels and panty liners have a 0% VAT rate and section 44 of the Bill will see menstrual cups, pants and sponges included too. That is a welcome development and I give credit to the Minister and his officials for making those important changes. Has the Minister considered calls to reduce VAT on condoms in the interest of positive sexual health? I know a case was made to the Minister by the former Minister for Health, Deputy Simon Harris, in that regard at a point last year and I would like to hear the Minister for Finance's view on that.

I have been contacted in recent weeks by retail representative groups and I am anxious to see if the Minister will consider introducing measures in the Finance Bill to modify the small benefit exemption gift card initiative in order that the benefit remains in the State. I submitted a parliamentary question a few days ago and received a response yesterday. The response was a little disappointing. It seems that the Minister does not have any plans to change the small benefit exemption scheme at present to ensure that those resources remain in the State and are spent here. It may be the case that the Minister is restricted from doing that but I would appreciate if the Minister would put his position on that matter on the record of this House.

Is the Minister aware of an independent report, about which I provided details in a recent parliamentary question, detailing the benefit of the existing retail export scheme on supporting tourism in Ireland? I know the Minister plans to make changes in that regard in the Brexit omnibus Bill. I have been contacted by many businesses in areas across the country that depend on international tourism and are concerned about the impact of this proposition. If changes are made to the thresholds, they could put those businesses that are in difficulty under greater risk in future. I would appreciate if the Minister would look at that on Committee Stage of this Bill. I look forward with continued engagement with the Minister to finesse and add nuance to this Bill in, as Deputy Pearse Doherty said, a complicated time. It will be difficult to have the kind of engagement that Deputies would like to have and would generally have in the context of such significant legislation. The Minister can be assured of my co-operation and the co-operation of all Members of this House to get the best possible deal for the people of this country in a difficult time in our history, and to do the best we can for the people we represent at this anxious and challenging time for businesses and citizens.

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