Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I have listened with interest to the contributions of Deputies to the debate on this motion. I will respond to some of the points and issues raised. First, I acknowledge that every person who spoke was supportive of the motion not to make the contribution to the rainy day fund, in view of the costs involved with Covid-19 and because there are other priorities at this particular point in time. As I mentioned in my opening statement, fiscal support of over €41 billion, which is nearly one fifth of the national income as measured by GNI*, was made available in 2020 and 2021 in the form of direct public expenditure, tax expenditures and below-the-line supports such as loans and guarantees. Given the continuing presence of the pandemic and the economic disruption it continues to cause, when we include the funds allocated for 2022 the total amount provided for stands at approximately €48 billion.

The total value of payments made to date under the Government's three main support schemes, namely, the pandemic unemployment payment, PUP, the employment wage subsidy scheme, EWSS, or its predecessor, the temporary wage subsidy scheme, TWSS, and the Covid restrictions support scheme, CRSS, is over €17.5 billion. Over €8 billion has been paid to households through the PUP and over €6.5 billion has been paid to employees through the EWSS and its precursor, the TWSS. Approximately €650 million has been paid to businesses through the CRSS.

The Government is steadfast in its commitment to there being no cliff edge to the EWSS. It has been an extremely successful policy instrument during these challenging times, one which has greatly assisted us in maintaining the link between employers and employees. As announced on budget day, the EWSS will remain in place in a graduated form until 30 April 2022. That is six months after the lifting of most public health restrictions and two months after the PUP ceases. The revised arrangements for the EWSS strike a balance between helping those businesses that continue to need support while recalibrating the scheme in light of the wider economic recovery.

Public spending next year will amount to €87.6 billion. The Government has been steadfast in its commitment to keeping this amount below the ceiling laid out in the summer economic statement. Our medium-term strategy sets out that over the next two budgets we will restore our public finances, phase out temporary Covid-related spending and repair our public finances. This strategy strikes the appropriate balance between tapering supports and investing in the domestic economy. In budget 2022, core expenditure will grow by 4.6% in line with the trend of growth in our economy and by 2022, we will only be borrowing for capital spending.

It is worth recalling how dramatically the budget landscape has transformed over the last two years and, in particular, how we entered the crisis with a budgetary surplus of €2 billion. While in the 2021 summer economic statement my Department forecast a combined deficit of just €34.5 billion for 2021 and 2022, by budget day this had been revised to €21.5 billion for both years, a reduction of approximately 40%.

Critically, this means our deficit this year in terms of the national income is falling significantly. As such, it is clear that we are reducing our overall borrowing this year and next year. Budget 2022 will bring our overall national debt to just under €240 billion. That means a debt of €50,000 for every man, woman and child in the country. This is not where we want to be when interest rates start to rise again. That is why we need to repair our public finances and put them back on a sustainable footing.

A number of Deputies spoke about housing. As everybody in this Chamber is well aware, a core, if not the core, challenge facing the country in the coming years is housing. The Government is determined to build more homes and total housing expenditure has more than doubled since 2016. As of 2021, it will be more than 40% above the peak level in 2008. The Government's Housing for All strategy targets delivery of, on average, 33,000 new homes per annum up to 2030. Housing construction has already rebounded rapidly this year and there have been almost 30,000 housing commencements in the 12 months to August of this year.

As part of the Housing for All strategy, under the Finance Bill 2021, the Minister for Finance is introducing a zoned land tax to encourage the use of land for building homes. The primary objective of the measure is to increase the supply of residential accommodation, rather than to raise revenue. Ensuring that people have access to home ownership in this country is a priority for the Government. Focusing directly on those trying to access the housing market, the help to buy scheme has been a significant support for first-time buyers of new homes. From 2022 onwards, the scheme is being continued at its current rates. Following the recent tax strategy group recommendation, the Minister has also announced a full review of the scheme will be carried out in the course of next year.

Also, on housing, as part of budget 2022, the Minister proposes to extend the relief for pre-letting expenses for landlords for a further three years. This will continue to encourage landlords into the residential rental sector to return empty properties to the market as quickly as possible. Deputies mentioned the importance of bringing vacant houses back into use. That is important not only in the private sector but especially in the public sector through our local authorities.

Given the likely continuing impact of Covid-19 on the public finances, it was clear from early 2021 that the making of the planned €500 million annual contribution to the rainy day fund was unlikely. Consequently, this was signalled in April 2021 in the stability programme update and the summer economic statement. The Act which established the rainy day fund requires the Minister for Finance to bring forward such a motion when he decides not to pay the €500 million to the rainy day fund from the Exchequer in any of the years from 2019 to 2023. As I said, we commend this motion to the House.

A number of issues were mentioned regarding the commitment to build back up the fund. I make clear in my opening contribution that the Minister for Finance wants to be in a position to add to the funds in the rainy day fund at some point into the future in order to be in a position to deal with any potential future economic crisis but to do so at this point in time does not make economic sense. I was also asked about the future of the rainy day fund. The Minister has made it clear that we are committed to adding to it as soon as resources permit.

I was asked about the lessons to be learned from the rainy day fund. The first lesson was not only learned but implemented. There was €1.5 billion in the fund at the end of 2019. That was used during the Covid crisis. Had we not that money in the fund at that time we would have had to borrow another €1.5 billion, which would have placed an extra burden on future taxpayers. I mentioned the national debt can be equated to a debt of €50,000 on the head of every man, woman and child in the country. Having that money in the fund has alleviated to some extent an increase in our debt.

Farming was mentioned by Deputies in the Cork region. I confirm an announcement made earlier today of €70 million to food producers and processors in the meat and dairy sector to help them deliver, diversify and win new markets and customers post Brexit. One of the Deputies from Cork said the Government is doing nothing for farmers. However, €28 million of that of €70 million was allocated to meat and beef and dairy processing facilities in County Cork. That is a commitment to Irish agriculture and to suppliers and farmers and suppliers, who will have modern processing facilities for their products, and will help win new customers abroad.

On behalf of the Minister for Finance, I commend the motion to the House.

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