Gerald Nash (Louth, Labour) | Oireachtas source

I am pleased to have the opportunity to speak on the Finance Bill. This legislation gives effect to many of the substantial proposals announced in budget 2023 in late September. This summer saw the longest run-in to a budget in many years at a time of great uncertainty and anxiety. In many ways, budget 2023 flattered to deceive. It is worth remembering that, even with the expenditure of an additional €11 billion between this month and 31 December 2023, this Government will have managed to widen the gap between the rich and the poor by €199. That is not my analysis but the analysis of Social Justice Ireland. We are dealing exclusively with the Finance Bill today but, for completeness, we must look at all of the budget measures in the round.

This is the time of the year when we get to see the political colour of a government's money. It is true that, with €4.1 billion to be spent between now and the end of the year in addition to the resources already committed, many of those who rely upon the State will receive significant once-off cash support to help them through to the end of the year. A lump sum and double payments are a good way of using our social protection system to target money where it is needed most. However, when these once-off measures are gone, they are gone. In early January, when the sugar rush wears off, budget 2023 proper will reveal itself to be what I and independent commentators know it to be, a conservative budget. As the Economic and Social Research Institute, ESRI, has said "Compared to indexing tax and welfare policies in line with inflation since 2020, Budget 2023 leaves households worse off on average." Increases to tax credits and welfare payments that are below forecasted inflation will see many lower-income households experience real-term cuts to their living standards unless there is a repeat of the lump sum, double week and energy credit payments, poorly targeted as they are, in the middle of next year.

These are the facts. In other words, if you are poor today, you are going to be poor this time next year. Budget 2023 is merely designed to get people through the next few months and we will see where we are then. There is no vision as to how to make the structural changes to our economic and welfare model that we need to take as many as possible of the 600,000 people experiencing poverty in this country out of that serious situation. Nobody is claiming that that any budget or government can completely insulate all of our citizens from the worst effects of the cost-of-living crisis but we can do better than budget 2023 has managed.

We are living through an unprecedented time and the only thing of which we are certain is uncertainty. Our best guess is that our economy will continue to grow next year, albeit at a slower rate. Inflation is likely to be at approximately 8% next year. Tax revenues will continue to roll in at high rates, although we cannot and should not take anything for granted. Wages will rise but for lower and middle-income earners in the everyday economy, those wage rises will not come anywhere close to matching the rising costs of energy, rents, mortgage interest rates, transport and food. Against this backdrop, it is frankly inexcusable that core weekly social welfare rates will not go up by the €20 they need to if they are to beat or at least match inflation. The purchasing power of those who are most in need will fall off a cliff. It is absolutely inevitable that we will be back here in February or, more likely, March to debate new spending measures to address these issues. Mark my words; that is going to happen.

When I speak of those most in need, I do not only mean those on social welfare but also those who get up early in the morning and work hard all week. The Finance Bill gives effect to the personal tax changes announced in the budget. Some 67% of the €1.26 billion allocated for personal taxation measures will benefit higher earners only. In order for the proposed tax changes to even have the appearance of being more fair, a decision could have been taken, for example, to taper off credits for those earning in excess of €100,000, clawing back some of the benefit for higher earners. What is the practical effect of these tax changes? Someone with an income of €100,000 will gain approximately €900 a year. However, people earning between €25,000 and €35,000 will gain less than €200. By no definition is that fair. To put this in clear terms, the budget and, by extension, this Bill provide the least for the very large cohort of workers earning between €15 and €20 per hour. That is a fact and it is very hard to reconcile with the rhetoric we often hear from the Tánaiste and others about supporting the squeezed middle. These workers are the very definition of the squeezed middle. I note the changes made with regard to the application of the 2% rate of USC for those on the national minimum wage, which are a good thing, but we should note that PRSI thresholds remain unchanged. This has the effect of slightly increasing the PRSI burden on a full-time minimum wage worker as the reduced rate threshold for those earning less than €424 is not changing. The Labour Party's own analysis shows that, in a worst-case scenario, many minimum wage workers could immediately lose 30% of their increase while those on a full-time wage of €19,000 per annum may lose 35%.

This is simply scandalous. It is unconscionable that the Government, which put so much stock in raising the tax bands for higher earners in budget 2023, could simply disregard this cohort of workers. I ask that the Minister and the Minister for Social Protection take a closer look at that issue in the context of this Bill and the Social Welfare Bill.

On the matter of personal taxation, I again ask the Minister to re-examine the question of tax liabilities for PAYE workers who enjoyed the benefit of the pandemic unemployment payment and the temporary wage subsidy scheme, TWSS. The demands are coming through the door. This could not come at a worse time for working people. It is jarring that the Finance Bill proposes to extend the special assignee relief programme for high rollers moving to Ireland to work with foreign direct investment firms, but someone whose industry was out of action during the first wave of the pandemic or whose employer had to claim the TWSS is left with a tax bill. These earners are likely to be on lower incomes and they are the most exposed to the cost-of-living crisis. I ask the Minister to look again at writing this liability off and absorbing that, especially given the current climate. Approximately 300,000 workers have yet to file tax returns. This amounts to a total of €219 million. Some TWSS beneficiaries are on the hook for up to €2,500. This bill would more than wipe out any benefits they might get from this year's budget.

We very much welcome the expansion of the special benefits exemption scheme. It is positive that, as a result of a resolution in the Dáil on budget night, workers can benefit from that expansion this year. That is covered in section 6.

The next section relates to the benefit-in-kind arrangements for cargo bikes. That is a welcome measure. When considering the question of benefit-in-kind, I ask the Minister to reflect on the timing of imminent changes to the application of benefit-in-kind to company cars. I have received a lot of contact on this matter, as have many Deputies over the last few weeks. If that change proceeds as planned, it will have a very serious impact on the incomes of those who have company cars for their work.

The energy crisis dominates everything these days. It is more than evident that businesses require assistance with their energy costs in order to keep operating and to maintain employment. Section 88 of the Bill provides for the introduction of the TBESS. The State will spend up to €1.2 billion between now and the end of February on the scheme, and it will inevitably have to be extended. In some ways, its poorly targeted nature reminds me of the way in which the domestic energy credit was designed. The local Centra that needs the support will get it but the Facebook data centre is also eligible. That may not happen. It may not be applied for. It would be quite perverse if it was. However I, note that all case I and case II businesses will qualify for the TBESS. If it is legally tricky to exclude energy-hungry data centres from the scheme, for example, then the Government should impose an extra levy of €10 per megawatt hour on their unit cost for electricity. This would more than claw back any benefit gained by any errant data centre that did apply for the scheme. The very idea that they are capable of applying and will be permitted to apply for the scheme does not sit well with people. This is a sector where electricity demand has tripled since 2015. Figures provided to me by the Minister for the Environment, Climate and Communications show that the levy of €10 per megawatt hour could see us claw back €40 million in revenue, which could be used to help domestic businesses and users across the economy and society who need additional support.

While we understand the need for short-term cash injections to help businesses with their energy costs, I have two fears about the operation of the scheme. The TBESS does nothing to help control the overall cost of energy. That is why the Government should push at EU level to cap the price of wholesale gas used to produce electricity. It should use the example provided by Spain, Portugal and elsewhere that appears to be working quite well. The second concern is this. One Louth retailer told me last week that even with the TBESS he is still having to pay €90,000 more this year in energy costs. Jobs will be lost. That €90,000 is the equivalent of three to four full-time jobs in the retail sector. That is why we need also need an energy wage subsidy scheme to keep people in work as the energy crisis hits. It is inevitable that jobs will be lost in the teeth of this crisis. I repeat my consistent appeal for the creation of a new German-style short-time working scheme to address these issues.

As we all know, housing is the single biggest social, and arguably economic, issue facing our country. Housing for All is a failing policy and no amount of spin will change this. It will not meet its targets this year on social housing, affordable housing or even in the development of private housing. There are a combination of housing-related measures in the Bill, all of them well-intentioned on an individual basis. However, they are piecemeal given the extent of the supply problem and the fact that the housing budget announced on budget day will go up by only 1% next year from a capital point of view. Construction inflation has gone up 14% in the past year. This is a real-terms cut in the capacity of the system to build more social and affordable homes. As a result of the very modest measures on the capital side in this budget, fewer public and affordable homes will be built than even under the Minister's inadequate plans.

The vacant homes tax has all the hallmarks of a token tax. In the end it will only apply to a small minority of vacant homes, maybe about 4,000, and the rate at which it is set means it will be relatively easily absorbed. On that basis, it simply will not disincentivise vacancy. A tax of €300 or so a year will not put too many people who have vacant homes off, especially as prices continue to rise, albeit at a slower rate. Let us be honest about that. The most efficient and sustainable way of providing decent housing quickly, addressing the scourge of dereliction and reviving town centres is to bring vacant homes and derelict sites back into use. As a start, the Labour Party proposed in our costed alternative budget a new vacant homes tax, initially set at €500 per unit. That would be open to reconsideration every six months based on how the market responds. This rate and the operation of the system should be kept under frequent review as regards its performance in bringing homes back into use.

The resources generated by the kind of tax the Labour Party is proposing and a new vacant sites levy, coupled with better enforcement of existing derelict sites powers, could then be ring-fenced to allow local authorities to do the job they need to do in maximising their capacity to inspect vacant homes, register vacant sites, compulsorily purchase and transform those properties into habitable homes. Louth County Council did very good job a couple of years ago in bringing many vacant homes into use by using existing powers under its compulsory purchase order capacity, as provided for in law. That can be done but it is not done to a sufficient degree across the country. This is the low-hanging fruit. We should be bringing these homes back into use to ensure people who need homes are housed in an efficient and sustainable way. Sadly, there is no such ambition, or that level of ambition, from the Government to get the simple things on vacancy and dereliction right. All we need to know about that lack of ambition is reflected in this tokenistic vacant homes levy.

Section 6 extends the help to buy relief for a further two years. This is a temporary relief that is starting to look a lot more permanent. We are well aware of the assessments made by independent commentators and analysts, and even by the Department of Public Expenditure and Reform, on the effect of the relief on the market. We are also aware of the view of the ESRI and others that the help to buy scheme has had an inflationary effect on the price of housing. This is not the smartest public policy tool ever invented by any Government but clearly the Government is intent on sticking with it. It is undoubtedly a popular incentive and it is being used. All of the evidence shows that. The Minister is sticking with this proposition and that is reflected in the Bill. It will again be extended. As a critic of the scheme, I will be so bold as to make a suggestion.

Would the Minister consider extending eligibility, with conditions, for access to the scheme for those who may be divorced or who are legally separated? This matter is been raised with me on a number of occasions in recent weeks. In cases of a relationship legally ending, court orders will in many instances have required the sale of a family home. I am sure that conditions could be attached, or the level of aid permitted under the relief scheme could be adapted, to take any financial settlement into account. I have no doubt that the scheme could be altered to take account of this very human reality for many thousands of people.

As the Minister is aware, the new mortgage rules announced last week by the Central Bank have acknowledged this situation. Those who are divorced or legally separated will, from 1 January, now be considered first-time buyers. This is the right thing to do. Perhaps other policies and initiatives could take inspiration from this socially just move that was made by the Central Bank last week.

There are a couple of other issues I would like to cover. The Minister has reviewed his position on the concrete levy. This is a good thing. We are aware that any levy to be introduced in respect of poured concrete will inevitably be added to the price of homes. The Labour Party has argued - and costed in our alternative budget - that we should be examining instead the idea of a 2% tax on the profits of the construction sector. This would minimise the risk of any levy being passed on to first-time buyers. As we understand it, a measure like this has been deployed in the UK. For those construction industry operators who resisted it, restrictions were placed on their ability to trade and obtain planning permission. We need to look at something similar.

Inevitably, there is going to have to be a contribution by the construction sector to deal with the mica redress scheme and the construction defects in people's apartments. We are aware that up to 100,000 apartments are affected. As part of its alternative budget, the Labour Party would have provided €500 million to get a start on the mica redress scheme and on assisting those people who are living in defective apartments to address their needs and begin the resolution works that need to be undertaken.

It is good that the Minister has decided to abolish VAT on newspapers. This is a critical measure to protect the media and the critical role they play in our democracy. The abolition of VAT will help. Unfortunately, however, for many newspaper groups across the country, it may be too little too late. As we speak, local newspaper groups are making staff redundant. This is the case with the predominant newspaper group in my constituency, namely, that which publishes the Drogheda Independent. There are also issues for local radio broadcasters. It is not a matter for the Finance Bill but is strictly a matter for the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, Deputy Catherine Martin. I hope this is something the Minister will consider.

I will make a narrow, parochial appeal. The living city initiative has been in place for several years. It is working reasonably well. It covers the main cities, and it covers Kilkenny also. It continues to exclude larger towns in the country such as Drogheda and Dundalk. Drogheda is an especially historic town with an architectural heritage that needs to be protected. If we are to deal with dereliction and vacancy, the living cities initiative should be extended to towns that are larger than Kilkenny and equally as historic. I hope this is something the Minister will consider in due course.

I look forward to working with the Minister on Committee and Report Stages to enhance and amend the Bill.

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