Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank the Ceann Comhairle for the opportunity to speak on budget 2023. I am sharing my time with the Ministers of State, Deputies English and Calleary. This is my third budget as Tánaiste and Minister for Enterprise, Trade and Employment. In these three years, we have experienced many ups and downs. From Brexit to Covid restrictions to soaring inflation, we live in interesting times. We have not always got things right but we have always sought to protect lives and livelihoods as best we could, and protect jobs and businesses. We understand that the cost of living is rising. It is more expensive to do the weekly shop, to fill your car and pay your utility bills. So, budget 2023 is a cost-of-living budget, designed to help you and your family, with measures for the most vulnerable and the squeezed middle.

In this budget, we are putting more money back in your pocket by cutting income tax, increasing pensions, and increasing welfare payments for families, people with disabilities and carers, among others. We are helping you and your family with the cost of living in areas like childcare, public transport, the cost of putting a child through school or saving up for your first home. We are backing business by helping companies to pay their energy bills this winter. We are helping with the cost of going to college, by cutting fees, raising the student grant and making it available to more people. We are building safer and stronger communities by providing more resources to the Garda and the Defence Forces, who protect us. We are ensuring the best start for every child with major investment in childcare and early education. We are putting €2 billion aside this year, and €4 billion next year, in a reserve fund to protect Ireland from unexpected future shocks.

Understandably, businesses around the country are very worried heading into the winter. The cost of energy and of doing business is rising, interest rates are going up and consumer confidence is waning. Irish businesses can rely on us to back them and to protect jobs to ensure a strong economy. In this budget, we are announcing five new measures for businesses to help with energy costs. The first of these is thetemporary business energy support scheme, TBESS, providing qualifying businesses with relief on 40% of the increase in their electricity or gas bills up to a maximum of €10,000 per month per business unit. This will help small businesses the most, but also many medium and larger ones. It will be administered by the Revenue Commissioners, backdated to September, and will run until at least February 2023. The second is a €200 million targeted Ukraine enterprise crisis scheme to assist viable but vulnerable manufacturers and exporters.

This is specifically for businesses competing internationally and suffering the broader effects of the war in Ukraine, as well as increasing energy costs. There are two strands to the scheme and one strand will provide up to €2 million for energy-intensive companies. Eligible businesses must produce a business plan that shows how they will manage the crisis and get their energy costs down.

In recent years, the Government has stepped in to underwrite low cost loans for business. These State-backed loans are working well and 10,000 SMEs have availed of the €2 billion Covid credit guarantee scheme. To assist the wider business sector with liquidity and to invest in energy efficiency, we are introducing a €1.2 billion State-backed Ukraine credit guarantee scheme. This will provide low-cost working capital to SMEs and primary producers, including farmers and fishermen. We are also going to make €500 million worth of growth, sustainability and investment loans available to SMEs, including farmers and fishermen. This will be the successor to the future growth loan scheme. These will be long-term low-cost loans and a minimum of 30% of the lending volume must be targeted towards environmental sustainability purposes with the aim of helping SMEs to invest in sustainability and energy efficiency and lower their carbon footprints.

We are also allocating an additional €4 million in funding to the local enterprise offices to include a new grant for microenterprises for energy efficiency. The small firms investment in energy efficiency scheme will provide a grant to companies to encourage capital investment in projects to reduce carbon emissions. Many of our schemes to date focus on energy audits, better information and consultancy, but this one is cash towards the cost of investment; it is capital.

I am pleased to see many of my Department’s tax objectives announced by the Minister, Deputy Donohoe, in the budget. These will help to promote entrepreneurship, innovation and job creation, as well as helping with the cost of living.

On top of the five energy measures I mentioned, there are a further ten actions making up a 15-point plan for business. A substantial income tax cut will mean one can earn up to €40,000, or €80,000 for a two-income couple, before having to pay income tax at the higher rate. This will increase take-home pay and will help with consumer confidence and demand. It is a good basis for the Government to build on in future budgets. We are introducing improvements to the research and development tax credit so smaller companies can get cash more quickly. There will be a four-year extension of the knowledge development box to encourage companies to develop intellectual property, IP, in Ireland. There are several improvements to the key employee engagement programme, KEEP, share option programme to help companies reward and hold onto staff. There will be an extension of the special assignee relief programme, SARP, to attract more highly skilled jobs to Ireland. Section 481 film relief will be extended to 2028 in order to stimulate the creation of indigenous films in the State, and other forms of production. The small benefit exemption will be doubled so employers can give up to €1,000 in vouchers or gifts to employees each year. The 50% reduction in the excise on special exemption orders will help businesses in the night-time economy. There will be an excise relief scheme for small cider and perry producers, as well as improvements to microbrewery relief to assist our indigenous drinks industry. There will also be a VAT reduction for newspapers and news periodicals, including digital editions, from 9% to being zero-rated.

Turning to my own Department’s Vote, budget 2023 increased our gross allocation to €940 million, representing a €36 million increase. Core current funding will increase by €13 million or 3.6%. This extra funding for the Department and its agencies, including Enterprise Ireland, IDA Ireland and the local enterprise offices, means we can maintain quick turnaround times on employment permits, help companies with the twin transition, digital and green, and create more jobs in all parts of Ireland, particularly through the IDA's regional property programme. Core capital funding of €514 million represents an increase of 4% or €20 million on our 2022 core capital allocation. The capital programmes funded by my Department have been crucial to the success of our agencies in maintaining and indeed growing our enterprise base, creating record numbers of new jobs. IDA Ireland’s enhanced budget will allow it to further progress the development of the advanced manufacturing centre and the National Institute for Bioprocessing Research and Training, NIBRT.

Additional capital funding is being provided to Enterprise Ireland to bolster the green transition fund, which incentivises businesses to install energy metering systems and facilitates investment in low-carbon, energy efficient equipment and processes. The funding for Enterprise Ireland's digital transition fund will also be increased to help more businesses to go online, export, use digital technologies to reach new markets and improve their productivity and competitiveness.

As the Minister, Deputy Donohoe, said yesterday, the pace of growth in the economy is expected to slow throughout the rest of this year as mounting inflation and higher interest rates bite. Negative sentiment might see firms hold back on investment and, as a result, the Department of Finance has revised downwards its forecast for modified domestic demand, the most appropriate measure of our domestic economy, to 1.25% for next year. For that reason, a counter-cyclical response is warranted but, crucially, we will not empty the tank now. We will keep resources in reserve so we can respond as the situation develops and prepare the country for future shocks.

We are directing €2 billion into the national reserve fund in 2022, and €4 billion in 2023. It means we will have banked a large share of the additional corporate tax revenues, will have ensured they do not fund permanent expenditure commitments and will have supplied the Exchequer with additional firepower to respond to challenges over the years ahead.

I believe this budget should help restore confidence in the economy. It is a big package but it is being financed by a strong economy with businesses doing well and a record 2.55 million people in employment. It is not being funded through borrowing, unlike in many countries, and we are putting money aside because nobody can predict how long this cost of living and energy crisis is going to go on for.

I want to comment briefly on the proposals coming from the other side of the House. The Opposition had written their speeches well before yesterday’s budget was announced. It was the usual replies. The Opposition said it was not enough, they were not the right measures and did not provide enough certainty. We know what the Opposition's plans are. Sinn Féin would lump taxes on ordinary families by stealth by not adjusting income tax for inflation or earnings. Put simply, a two-income couple each earning about €40,000 would pay more than €2,000 in tax under Sinn Féin than under this Government, if one considers the combined effect of the income tax reductions in this budget and last year's budget. Sinn Féin would also increase tax on inheriting the family home or a family business. It would not renew the help-to-buy scheme, which is worth up to €30,000 and has helped over 35,000 first-time buyers and couples buy or build their own homes. It is encouraging that 15,000 first-time buyers bought their first home in the past year. That is a 15-year high, and I want that figure to go much higher.

Sinn Féin also proposes four separate taxes worth €1.15 billion on higher income earners, including employers’ PRSI, a direct tax on jobs and a new rate of income tax. This would reduce foreign investment in growing sectors like pharma and ICT. Wealth, skills, investment and jobs would go elsewhere. The cake would shrink under Sinn Féin and there would be less for everyone. Rather than writing blank cheques for energy companies and emptying the tank now, we are planning for the uncertainty ahead, as every good budget should, by keeping some money in reserve.

The main objective of this budget is to put more money in people’s pockets and reduce the bills they have to pay. For any household budget, there are three elements. There is what the household gets paid, how much it gets to keep after taxes and how far the money goes. We are trying to help on all three fronts. We are ensuring incomes rise where we have influence, through the increase in the national minimum wage, the public sector pay deal, increases for pensioners and for people in receipt of welfare payments, such as carers and people with disabilities. We are reducing income tax so people get to keep more of the money they earned in the first place. We are making people's money go further by helping with some of the costs of living by reducing the costs of childcare, healthcare and the cost of putting a child through school or college. Long before this inflation crisis, many of those costs were too high in Ireland and out of kilter with European norms. Now is an opportunity to change that. These actions should be seen as part of a comprehensive anti-inflation strategy. These are not one-offs but are recurring measures.

Reducing the cost of childcare and extending early education will have wider benefits beyond improving household budgets for young families. It will improve the labour market by enabling more people to enter the workforce. It will advance equality for women. It is a pro-family measure in what was a very pro-family budget. It will improve educational outcomes for children because childcare is not just about caring for a child but is also about early education. These measures help now but they will also help in the long term.

I believe this budget strikes the right balance between helping people in the short term and preparing us for an uncertain future.

I commend the budget to the House.

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