Duncan Smith (Dublin Fingal, Labour) | Oireachtas source

I welcome the opportunity to speak on the summer economic statement on behalf of the Labour Party. It is undeniable that the statement shows how well the economy is doing on paper right now, but this is only on paper. These abstract economic figures do not tally with the real lived experience of hard-pressed households in my own Fingal constituency and across the country. The only numbers that matter to them are the increasing price of food, energy and services. Strong GDP figures are not helping them pay the bills or get the kids back to school. Nor do they support those local business owners in the real economy who face ever-increasing costs, such as insurance and energy.

To paraphrase the President’s recent comments, being a star performer for the speculative sector is not what is important. Instead, what really matters for people are building affordable homes, investing in quality public healthcare and taking real measures to tackle the cost of living. The Government has consistently failed on all these fronts. The reality is our economic performance is largely driven by the multinational sector. Many of these are footloose companies which could up sticks tomorrow. Yet we remain completely over-reliant on them for revenue as the summer economic statement shows.

Just under half of the Government’s corporation tax receipts, worth €8 billion, might be unsustainable or at risk according to the Central Bank. We now have the crazy situation where just ten foreign multinational firms are paying half of all corporation tax. To say we have put all our eggs in one basket would be a gross understatement. We need to be clear that this is a short-term tax boon that will soon come to an end.

Labour's spokesperson for finance and public expenditure, Deputy Nash, has consistently warned about the overconcentration on corporation tax for years. We have called for the development of a new industrial strategy, one that creates decent sustainable jobs for the long term. The Government seems to have no strategic plan beyond milking the multinational cash cow in the short term. We already saw how the last Fine Gael-led Government squandered corporation tax receipts on expensive overruns, such as on the national children’s hospital. We need reassurance that these once-in-a-generation tax receipts will not be wasted again. Will the Minister give guarantees that such revenues will be used solely to fund infrastructural or one-off projects, or be added to the rainy-day fund?

In addition to corporation tax receipts, the summer economic statement shows bumper increases across other take headings. It is important to note that the summer economic statement only cites earlier analysis from the spring about tax revenue projections, whereas the most recent tax figures are ahead of these projections. In short, there will be much more tax available for spending in the budget. Much of this increase can be accounted for by inflation. Simply put, as prices have risen, so too have the Government’s VAT receipts. Budget 2023 must aim to put this tax windfall back into the pockets of those who need help the most.

Last month the Minister signed off on a further extension of the 9% VAT rate for the hospitality sector. At €500 million, this will come at a significant cost to taxpayers, but what benefit will they see? In many cases employers in this sector pay poverty wages. Basic services through the hospitality sector such as a cup of coffee, a couple of pints, a meal or a trip to the cinema remain out of reach for most ordinary working people as prices have steadily risen. Rather than tax breaks for big business and higher earners, budget 2023 must instead see cuts in consumption taxes for ordinary citizens. For instance, the 9% VAT rate on electricity, which took nine months to introduce, must be retained.

According to the summer economic statement, budget 2023 will focus on the cost of living with an overall package of €6.7 billion. Again, on paper, this looks impressive. But in reality, nearly half of this, €3 billion, is already committed to meet existing health, welfare and other calls on the public finances. This leaves just €2.7 billion to allocate in additional social protection, education, childcare and related spending on services. Most of this additional spending for public services will barely keep pace with inflation.

In addition, only €400 million has been put aside to help people through the cost-of-living crisis to the end of the year. To put this into context, a repeat of the €200 electricity credit for all households would cost €400 million alone. While everyone acknowledges that the €200 credit makes some difference, it has not gone the distance on electricity alone, never mind other utility services or cost-of-living pressures. It shows how far the Government needs to go.

We have seen Minister after Minister speculate on the return of the €200 electricity payment. This short-term political stroke will do nothing to solve the long-term problem of rising energy costs. At this stage it should be completely ruled out in favour of more long-term sustainable measures to tackle the cost of living. At a time of scarce resources, it is simply not acceptable that some of the richest households in the country and those with two or more homes get a €200 giveaway while people who are really struggling to make ends meet get the same.

Instead, Labour has proposed a €200 carbon credit for families with incomes under €50,000. This would be a targeted measure to help those who need it most – working families and those on stretched incomes. At €100 million, it would only cost a fraction of the Government’s recent energy credit. We have proposed that the remainder be used to bring some 150,000 working households into the fuel allowance net. This is something we are all hearing at our advice clinics. It is incredible that in the middle of a warm summer people are coming to our advice clinics seeking to get access to the fuel allowance of all things. It just shows the depth of the cost-of-living crisis. Many social protection measures could and should be introduced now.

We all know that moving the budget forward by 14 days is a tokenistic exercise.

The Taoiseach repeated this week that we are facing a winter of discontent. We are already living in a summer of discontent. The reality is that hard-working families are facing into a cruel autumn beyond this difficult summer, with rising childcare and back-to-school costs and the high price of keeping food on the table. The cost-of-living crisis is not a joke or a game for people. It is their daily lives and lived experience. People have their household budgets to draw up and they need certainty to plan for the autumn and winter months ahead.

The Government should not be playing politics with people's lives. Our social protection system is a prime example of this. Most countries, including the UK, index welfare payments so they automatically rise with inflation. This means that those who rely on the State for their income, whether pensioners, lone parents or people with a disability, will not be left short-changed when prices rise. Only Ireland retains a politicised budgetary process where stability in the core income of 1.6 million people is to be begged for each year. It is shameful that Ministers then claim credit for securing any increases that would be given as a matter of course if payments were indexed to inflation. The Government must finally put an end to this charade and provide real certainty for those on fixed incomes.

We must see more long-term investment in all our budgetary processes. Today, we saw the announcement of a health facility near Alicante in Spain that will be part of a licensed arrangement with the HSE for public patients using the EU cross-border directive scheme. I believe this initiative will be oversubscribed. The model of healthcare provided cannot be a combination of sun, sea, an operation and a cost to the individual getting the care. If those availing of the initiative are able to get a holiday, it will have to coincide with a much-needed, long-overdue planned procedure. If we are building, we should be building and increasing our health capacity here. We should be looking at primary care capacity in particular because that is where we can reduce waiting lists, diagnose people who are ill early and cure them in their communities. While I understand the EU cross-border directive is helpful, it is not the model by which we should be paring down the waiting lists that developed during the crisis.

On transport, we need to show a commitment to projects such as MetroLink. I am happy to see the Cabinet has signed off on MetroLink. We must also show that big projects such as that link in with active travel projects that are being rolled out, namely, cycle paths and better pathways for pedestrians. This is all linked to future-proofing public infrastructure. That is how the conversation should proceed. MetroLink does not exist in isolation from improved cycling infrastructure and other such measures that must be and are being introduced.

Families cannot take another summer of budget kite-flying. They can ill afford to wait for a "spin" budget in September. Instead, the Minister could provide real support and reassurance now with a few strokes of a pen, irrespective of whether the Dáil is sitting. The Labour Party has already indicated our desire to extend the sitting of the Dáil to pass an emergency summer budget. That discussion has been and gone, but we strongly encourage the Minister not to put off until tomorrow what he can do today.

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