Róisín Shortall (Dublin North West, Social Democrats) | Oireachtas source

I welcome the opportunity to speak on the Finance Bill. It is always good to have time and space between the announcement of the budget and the consideration of the Finance Bill because it gives an opportunity to clear away some of the fog and spin and to understand exactly the impact of the budget provisions.

One of the most disappointing aspects of budget 2023 is its permanent distributional effects. I have heard more than a few Government Deputies and a couple of Ministers say this is a progressive budget rather than a regressive one. I do not accept that, though there may be enough one-off payments to create the impression that the most vulnerable are being taken care of. There is €500 here and €200 there for certain groups. That is welcome and all very well but one thing is for sure: the permanent effects of budget 2023 will not be progressive. How can they be? An increase of €12 per week for those on social welfare, including pensioners, is about €624 per year for some of the most vulnerable in our society. They are the people who, as the CSO has pointed out, are being worst hit by the cost of living crisis. Contrast that with the benefit of €830 per year for someone earning €100,000 once all the income tax and USC changes are taken into account. How is that progressive? How is it progressive to give energy credits to everyone regardless of housing income or to give an effective double payment of energy credits to anyone sufficiently well-off to own a holiday home?

This budget could have done so much more to target its benefits. There is €500 for recipients of disability loans but no permanent cost of disability payments, something for which people with disabilities have been calling for years. There is a €400 payment for fuel allowance recipients but no permanent increase to the payment, leaving them with great uncertainty for the year ahead. There is €500 for recipients of the working family payment, which is all very well, but there is no extension of the fuel allowance to that group.

These supports are all very well but will not help people in the medium to long term or provide certainty for those who need long-term supports the most. They will not provide sustainable relief to those who can no longer afford the soaring prices for necessities like food, fuel, energy and rent. There are a number of one-off payments for many of those reliant on social welfare but the only people with any certainty for the future are those in the upper income brackets, who can be sure their tax cuts will be there in future years. Apparently, the Government plans to give them even more.

One of the things I found most notable about budget 2023 is the extent to which the Government's income tax cuts went so far beyond what had been flagged in the lead-up. The increase in the standard rate cut-off point is so out of proportion to what current circumstances justify that it can only be explained by ideology. Eight hundred million euro in 2023 on a tax cut that will be of no benefit to anyone earning less than €37,000 per year. This cut will cost more than €1 billion in a full year: this is a change that will only benefit approximately 20% of workers. How can that be fair?

I accept that some indexation of tax bands is warranted to keep the portion of income taxed at the higher rate roughly consistent, but there is little justification for the kind of indexation seen in the previous two budgets. That does not stop Government Deputies trying. In his budget speech, I heard the Minister again pushing the misleading idea that inflation leads to people paying more income tax. It does no such thing. People pay additional tax when they get salary increases. Wage growth has been far lower than general inflation.

How the Government can justify indexation of nearly 9% this year and of more than 13% over the last two budgets when the latest available numbers from the CSO suggest average weekly wages are only increasing at less than 2.5% a year is really beyond me. The Social Democrats proposed a third rate of tax of 43% on incomes above €100,000 but there is no interest from this Government in making any effort to claw back any of that gain from those at the very top. I cannot understand how any Government Deputy can justify a situation, particularly in the present circumstances when so many people are in crisis situations, that there is that level of tax break for the best earning people in this country, that is people earning €100,000. How can there be any justification for giving them a tax break and no effort whatever to create a sense of fairness and to achieve fairness by introducing any kind of clawback?

On energy supports, a failure to target supports is a recurring theme with this Government. Budget 2023's energy supports for households are a further example of this. More than €1 billion in supports has been pledged but households with large incomes will get just as much support as those with small, inadequate incomes. The excuse that it is too complicated to target low and middle income earners just does not wash. What has the Government been doing in almost one year since this kind of energy credit scheme was first proposed? Maybe it could have been excused to have a universal approach at the outset because the priority was to get money to people quickly. But to repeat the same exercise after so much time has passed where a more targeted approach could have been worked out is simply not good enough. If you are earning the minimum wage, you get €600. If you are earning €100,000 you get €600. If you happen to own two homes you get €1,200. The Social Democrats alternative budget proposed a system based on the temporary Covid-19 wage subsidy scheme, TWSS, used during Covid which would have allowed targeted payments to be processed in an efficient manner. It is very disappointing that the Government did not seem to pay any attention to taking this kind of fairer approach.

Another issue around energy is the failure to realise the potential of solar energy. The Government is way behind the curve on this. The grants are much too small and the impact of VAT on solar panels needs to be examined. I will request that a report is commissioned on this and I will move an amendment to that effect on Report Stage.

On business supports, at least it has been figured out how to target resources at the small and medium sized companies that need support to pay their energy bills. The proposed scheme mirrors proposals that my party made in its alternative budget which provided €1 billion for an energy crisis support scheme for business. It is important to remember that unlike the Covid crisis when wages needed to be supported the current crisis necessitates viable but vulnerable businesses being supported in paying their energy bills. The Government must learn the lessons of the mistakes it made in its Covid response to business. It must ensure that companies that avail of this support do not pay dividends to shareholders, do not make staff redundant and if it transpires that they did not need state support to remain profitable, there should be a clawback option. The purpose of this support is job protection. We want to ensure that businesses remain viable and trading. We do not want to inflate profit margins or waste money by handing it to businesses that are clearly unviable.

Turning to housing, as I said some weeks ago immediately after the Ministers’ budget speeches, it is deeply concerning that the Government thinks that its tax on vacant homes is anything close to sufficient. It is, in fact, pathetically low. Three times the level of the local property tax may sound like a serious move until you realise that it amounts to 0.3% of the value of the property. How is that supposed to act as a disincentive to vacancy or dereliction when property prices are rising at multiples of that rate? It reads to me as an astounding statement of indifference to the problem of vacancy and a determination to maintain the status quo. The Social Democrats proposed a 10% tax on vacant homes with exemptions, of course, to be fair to people who have legitimate reasons to have their home empty, such as care or health reasons. We will submit an amendment to this effect.

If the Government is serious about tackling the issue of vacancy it must do much better than this. It needs a penal tax on vacant homes in order to unlock the huge potential that is there, particularly in the context of the housing crisis that we have at the moment. Consider all the commentary on vacancy and dereliction impacting the centre of Dublin and the Dublin Central constituency, the O'Connell Street general area and stretching into the north inner city. The same points apply to the centre of Cork. I had the opportunity to travel around the centre of Cork and see the extent of vacant homes. It is actually immoral at this stage to allow a situation like that in the context of a housing crisis where people are sitting on properties waiting for them to disintegrate and waiting for an opportunity to knock them and replace them with whatever commercial development. It should not be allowed. We need a penal tax that would stop that continuing.

While Fianna Fáil holds the housing brief, recent news that Fine Gael TDs are holding meetings to brainstorm on the housing disaster is surely further evidence of the desperation within the Government and the lack of confidence that even Government TDs have in the Housing for All policy which is dismally failing to meet even its own very anaemic targets. The rhetoric suggests that the Government is taking it seriously; the output does not.

It would be unfair not to acknowledge that there are a number of welcome moves in budget 2023 which will help to reduce the cost of living for those who are struggling. The reductions in childcare fees, the free provision of schoolbooks for primary school pupils and the abolition of inpatient charges in public hospitals our chief among those measures that have to be warmly welcomed, but the overall trend of investment in public services is worrying. As the Social Democrats constantly points out, if you really want to reduce the cost of living and give working people and families, particularly those with young children a break, it makes more sense to use the majority of available resources to invest in better quality public services and social infrastructure. This also requires that investment in public services at the very least keeps up with inflation. However, the Parliamentary Budget Office and the Irish Fiscal Advisory Council have calculated that about an extra €7 billion per year is needed to meet inflationary costs and to allow public services just to stand still. As far as I can see, this budget allocates less than half of that figure. This has huge implications for public services in 2023 and beyond and the impacts will be felt in the further erosion in the availability of vital supports.

It says a lot about this Government's priorities when you consider three key points. First, that the Government was so determined that income tax be indexed in line with inflation, despite there being absolutely no justification for that. Second, that those dependent on social welfare must accept increases well below the level of inflation.

Third, public services will be very negatively impacted because their funding increase is well below inflation also. In fact, as I said a month ago, it seems the overall theme of this budget is erosion of the tax base, with a consequent reduction in the money available for public services over the medium to long term. This just cannot continue.

The Government must chart a course towards the sustainable funding of our public services. We know this country needs more revenue to improve service delivery, look after an ageing population and meet its environmental targets. That is why the Government set up the Commission on Taxation and Welfare. However, having outsourced the job of finding the revenue, we all acknowledge we need to have an independent commission made up of experts from all fields of society. The immediate response from some Ministers to findings that do not fit their ideology has been to politicise and dismiss this work before giving it any proper consideration.

The reason the commission was necessary in the first place was that Fianna Fáil and Fine Gael, in government, have for so long refused to accept the need for revenue to increase as a proportion of national income. Those same parties like to poke fun at the supposedly unsound policies of the left, but independent expert groups, from the Commission on Taxation and Welfare to the Irish Fiscal Advisory Council, have consistently pointed out how these parties are asleep at the wheel when it comes to accepting fiscal realities and future-proofing our finances. Budget 2023 continues this trend. There is no concrete plan to reduce increasing overreliance on corporation tax receipts. There have been no updated costings for Sláintecare in the past five years, despite the inflation in that period. There are no proper costings of planned climate measures and no real ambition in this area. With windfalls being used to fund current spending, this Government has no overall financial plan and, it has to be said, not much credibility.

I have a point on the minimum wage. The Technical Group recommended that the living wage be increased to €13.85 to achieve a socially acceptable standard of living. The poor increase in the budget is widening the gap between what the minimum wage is now and what the living wage needs to be. Again, that is a very regressive move. It is widening the gap between the better-off and those on low pay and dependent on the living wage or minimum wage. The Government is not setting out a clear path to introducing a realistic living wage.

This point also applies to the difficulty we have in recruiting key staff, particularly in home care. The strong recommendation in the report of the Minister of State, Deputy Butler, on this matter is that, at a minimum, the living wage be the standard one. If we are serious about ensuring we have enough home care staff to meet the substantial care needs, we need to include the living wage in the tendering process for home care services.

The budget sounded very good in that it seemed to entail Government largesse. However, when we examine its detail, we see those most in need got least whereas those who are most comfortable and earning the most got long-term, secure increases in their incomes. That is simply not progressive and it certainly is not fair.

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