Gerald Nash (Louth, Labour) | Oireachtas source

This legislation gives effect to many of the proposals announced in the budget just over two weeks ago. As we know, this is the final Finance Bill of the Government's term. Make no mistake, this is an election budget and this is an election Finance Bill. I described budget 2025 as "all gravy". Now the gravy has dried up and it is revealed, as I said on budget day, that once that happened, there would be little or no real meat served up on the plate to sustain anyone once the once-off measures and various transparent gimmicks dried up.

For the first time, it is not money that is holding our country back but a lack of ambition. This conservative coalition is so lacking in vision that the only thing it could think of doing was to use the unprecedented resources we now have to give some of that money back to people. It is not as if the country has a shortage of problems. We have a housing crisis, the scale of which we have never encountered before. We have an overwhelmed health service with emergency departments such as that in my own area, Our Lady of Lourdes Hospital, Drogheda, warning people this week to stay away unless their situation is critical. We have a creaking public transport system. Trains in my area are bursting at the seams. We have child poverty levels that should shame us and that have in fact grown by 30,000 since 2022 when Leo Varadkar pledged to tackle this scandal by the root. Capital investment levels are below the record level of 2008, with a much larger population to provide for and the climate, ageing and digital transitions to resource. There is about as much targeted at tax cuts that nobody asked for as there is at the universal public services we all depend on. There is no additional spending on social housing and public housing provision. There is no plan to revolutionise our childcare system and introduce, as Labour has proposed, a nationalised public childcare model. There is a end and a stalling to the progress of the provision of free GP care to more children and families. All told, Fianna Fáil and Fine Gael, once rivals but now virtually indistinguishable, have managed to make this rich country feel poor for too many. This is not the stuff of political rhetoric or an empty political charge. There is much made, after each budget, and rightly so, about whether or not a budget is progressive and objectively fair. I ask the Minister to heed, not my words, but the words of Social Justice Ireland in its post-budget critique and analysis. It did not put a tooth in it when it stated:

... despite [the] vast resources, the Government's five budgets have been ... regressive. ... Notwithstanding an enormous spending package, an ultimately regressive set of measures will be the enduring legacy of Budget 2025.

The measure of success of an administration should be that it left the place in better shape than how it found it. Objectively, this Government did not. Through its political choices, the Government has created a country of winners and losers, with the evidence for this running through this Finance Bill. This budget sees the rich-poor gap widen by €27.27 a week. It has been noted that a couple with only one earner on €100,000 per year comes out of Fine Gael and Fianna Fáil's five budgets €73 per week better off. Contrast that with the experience of a couple with only one earner on €30,000. This couple is only €3.34 per week better off than in 2020.

The promise to protect social welfare rates has been broken yet again. When an increase of €20 plus was needed on the pension, €12 was given. That would never have been allowed by Fianna Fáil in the past. When the confetti of once-off social measures blows away with the next breeze, it will show that the buying power - the real-world value of the pension and other payments - has not kept pace with inflation.

The most abused term in the Irish political vocabulary is "once-off measures". The answer to the cost-of-living crisis for the least well-off has been a battery of rinse-and-repeat temporary measures to support incomes. Like the advertisement for the homeware store on the radio says, once they are gone, they are gone. What we have, for so many people in Ireland, is not a cost of living crisis but an income adequacy crisis. However, this has not registered with Fine Gael and Fianna Fáil. In this budget and in others, the two parties have picked sides and made choices. More was written about and briefed to the media in the interminable run up to this budget on the apparent injustices of inheritance tax thresholds, on retirement relief for parents handing on businesses to their kids, on how landowners might dodge a tax designed to see more homes built than on what we should be doing to end the scourge of child poverty or to directly build more homes for working people. This is telling and it gives an insight into the voters Fine Gael and Fianna Fáil are courting. Instead of an Ireland that works for all, ahead of this election, it is clear where the Government's priorities are and they are shown front and centre, in this Bill.

I will turn again to the assessment by Social Justice Ireland because it is important. It states, "when temporary measures fall away, those on higher incomes will have benefitted most from changes to taxation and benefits since 2020". Some of the social welfare once-off measures are temporary but tax cuts are permanent. This will be the legacy the Government will leave after five years, as we all prepare to face the electorate in a few weeks' time. The Government cannot even rely on the pretence of good economic, for three reasons. Three finance Ministers in and the Government is still driving a coach-and-four through its 5% fiscal rule. This rule made no sense anyway other than to provide Fianna Fáil with a fig leaf of respectability after it burned the house down in the 2000s.

Last year, the Minister for Health, Deputy Donnelly, more or less admitted on budget day, that the health budget was a fiction. The Government is now asking the Dáil for a massive Supplementary Estimate for health for this year. This is an admission of shockingly bad economic and fiscal management. Yesterday, spending of €1 billion above the figures announced just two weeks ago was revealed. This is for education, housing and social protection and before health. If the more exotic Members of the Opposition on this side of the House proposed budgets of that nature and in the way in which Estimates and so on are provided to this House, we would be looking askance at them. One can see why I firmly believe that this Government's reputation for sound and responsible management of the public purse is unwarranted, undeserved and unmerited.

Turning to the Bill itself and the personal tax and USC changes proposed, I was proud to establish the Low Pay Commission in 2015. It has delivered for the lowest-paid workers. It was, at best, unseemly, to see Ministers over the summer in their public statements, leaning on the commission to go easy on increases to the national minimum wage and any proposals that the commission might recommend. I remind the House that Ireland will be legally obliged to implement a living wage of 60% of median hourly earnings from 2026. I raise the questions around the minimum wage for this reason. I do welcome the provisions in Chapter 2 of the Bill in accepting the first recommendation on the rate of the national minimum wage for 2016 from the Low Pay Commission. It was accepted that whatever USC and PRSI changes were needed to ensure that those workers who are on the statutory minimum hourly rate, would take home as much, if not all of the increases for any given year. It was accepted that there would be changes to the USC and PRSI to make sure that, arising from any adjustments, people would be able to take home as much of that increase as possible. This measure was established by Labour and it is good to see that it is continuing.

I have said before that the Irish political system is unique in more ways than one. Only in Ireland have we the political right wing, the far left and populist nationalists agreeing on tax. Taxation and how we redistribute the revenue generated is the meat and drink of Irish politics. The point of agreement for the three groups seems to be the idea of getting rid of, or radically reducing the USC. Colleagues on the far left want to abolish the USC for those under €100,000.

The Sinn Féin Party wants to get rid of it for everyone on under €45,000 a year at a cost of €2 billion a year. That is fair enough and Deputy Doherty and others will make a cogent case for it. However, it is extraordinary that some parties that describe themselves as being of the left demand that the single most progressive and fair revenue-raising charge we have be more or less abolished. This is about having a serious plan as to how we generate the important revenue we need to run our public services if the USC was to go. I too am in favour of a move towards more taxes on non-productive assets and wealth. We in Labour are looking closely at the model introduced by our colleague in Spain, Prime Minister Sánchez, but nothing I have read from other Opposition parties tells me how the gap left from sundering the USC base could be responsibly filled. There is a responsibility on all of us who hold that view to address that question.

When it comes to those who do best from the tax changes in this Bill, again, it has been a case of a side being picked. The better off are doing better from these tax and USC changes. There is no doubt about that. That is especially the case for those with children. Labour is not against the idea of appropriate adjustments to the income tax and USC bases but we do not support cuts that are unfunded or that are paid for by windfall corporation tax receipts. There is scope to allow asset taxes to do more of the heavy lifting, shifting the tax wedge away from taxes on labour and shifting that balance. In our costed alternative budget, Labour proposed indexation against wage inflation of both personal tax and USC bands and credits alongside weekly social welfare rates. This would have cost just over €1 billion. It is fair for workers not to see the bulk of a wage rise going to the State when they get a pay increase.

In amendments to last year's Finance Bill, we proposed a form of indexation of personal taxation and income tax rates, bands and credits to take account of wage inflation. We argued that work on that initiative should be done every year in alignment with the summer economic statement. IFAC should be involved and it should take place well before the annual October budget. Many comparable EU countries do that. It would give some certainty to workers and employers and would provide some fiscal predictability. It is interesting that the Taoiseach aligned himself with the Labour Party's position a few weeks ago. We will see what view the Minister takes when I propose such an amendment on Committee Stage of the Finance Bill, whenever that might be. Will the Minister enlighten us as to whether he has changed his mind on when Committee Stage will be? There should be a quid pro quoas well. We should not have indexation of the personal tax system without a form of indexation being applied to our social welfare system. That is very important.

The publication yesterday of the medium-term fiscal and structural plan, the draft budgetary plan, was very important. It is interesting that, at the launch, the Minister stated "I am conscious that the underlying position is markedly less favourable and further progress will need to be made regarding future structural challenges over the medium term." From all of the evidence we have seen, we know that growth will slow in the next few years. We also know the risks associated with our reliance on windfall corporation tax receipts. With the extension of demand-led tax reliefs like help-to-buy, the second year of mortgage interest relief being confirmed in the Bill, the changes to the thresholds for inheritance tax and other measures provided for in this Bill that are, to put it mildly, questionable from a policy and progressivity point of view, we see that this is a government that has rarely taken its own advice.

It certainly has not taken the expert advice of the Commission on Taxation and Welfare, which published its report two years ago. It would be helpful if, in his response or on Committee or Report Stage, the Minister would take the opportunity to outline some of the measures he has adopted from the commission's report. Running through this Finance Bill, I see very few, if any. There may be one, namely, the introduction of a so-called mansion tax.

Housing is the single biggest social and economic challenge we face. There is plenty on housing in this Bill. More correctly, there is lots in it if you already have a home. There is little or nothing in this Bill that will see a single new home that is genuinely affordable built. We need radical change on the provision of housing. That is our view but it is not just our view. It is the view of everyone in the Opposition and it is also the view of the Housing Commission. As Deputy Doherty has said, we are still waiting for this Government to present its revised housing targets. We note that the budget announced more money for the LDA. We supported the creation of the LDA. It needs to be transformed into a State construction company, using some of the Apple tax windfall money to end the boom-and-bust cycle in housing and to ensure that the social and affordable homes we need to give people security are built. However, this Bill's provisions on housing seem to suggest a doubling-down on the same failed approaches. Looking at this year's and last year's Finance Bill, it is astonishing that the Government seems to think that the solution to the housing disaster that is holding our country back is the help-to-buy scheme, tax breaks landlords did not even ask for, the hacking away of the residential zoned land tax, small adjustments to the vacant homes tax, a further extension of mortgage interest relief and a small amendment to the stamp duty applied to bulk purchases by institutional investors. It evidently is not.

This week, I was contacted by a young couple in Drogheda. They are two professionals. They work hard and save hard. They have a deposit. Although they qualify for the help-to-buy scheme, they see through it. They have told me that they qualify for the help-to-buy scheme but that it has proven ineffective. They say that builders incorporate the €30,000 support into the overall price of the house, rendering the scheme almost irrelevant. That is a fact. They have cottoned on to this problem. Lots of others have. The Minister's own officials have routinely advised against extending the scheme. We are close to having handed out €1 billion since the scheme's inception but it has only managed to inflate the housing market and the price of homes. We also know about the deadweight effect of this initiative. We would be much better off winding down this economically stupid intervention and investing resources in building affordable and social homes and devoting more resources to cost rental.

It is similarly difficult to make the case for the further extension of mortgage interest relief for reasons that were very well rehearsed last year when this so-called temporary measure was introduced. There is plenty of blame to go around the House as regards the idea of mortgage interest relief. I am again looking at those who are set to benefit. The Government is pitting those younger buyers who bought at high interest rates in recent years against those who bought years ago and who had good years on tracker rates. This kind of intervention also does nothing for those who are on incredibly high interest rates and whose mortgages have been sold to funds. These funds are absolutely screwing people. Despite the fact that the regulations and advice seem to have changed somewhat, the reality is that these people cannot switch. The headline of an article written by Cliff Taylor, the respected journalist from TheIrish Times, last weekend said that this is the budget's craziest measure and that it is flying under the radar. This cannot go by without being properly interrogated. Of course, it will be left up to the next Government to pick up the mess and unwind this particular measure and others.

One way of making a meaningful difference in the provision of housing would be to introduce a much more effective and meaningful levy or tax on vacant homes. Vacancy is an absolute scandal. It is a gateway drug to dereliction. Towns, villages and cities across this country, including my own town, are absolutely beset by vacancy and dereliction. A small adjustment to the vacant homes tax is not going to prove effective at all. I look forward to working to amend various aspects of this Bill. In the limited time I have left, I will note that one way this Government could make it clear that it is serious about addressing vacancy and dereliction would be to extend the living cities initiative to the largest towns in this country, namely, Drogheda and Dundalk. It is bizarre that, over the last five years, Fianna Fáil and Fine Gael Ministers have denied that opportunity to my home town while providing it to a town half the size, namely, Kilkenny. My own home town of Drogheda is architecturally rich. There are many architectural conservation areas. However, the reality is that, under this Government's watch, because of the ineffectiveness of the CPO process, because people are turning a blind eye and because of the primacy of private property in the eyes of Fine Gael and Fianna Fáil, dereliction has taken hold.

The living cities initiative would help to address dereliction in places like my home town but it has been denied to it. It is a modest tax break. Those who own properties that are in difficulty tell me that would make the difference in terms of them transforming those properties and bringing them back into use as housing for people who need it or for commercial enterprises. I look forward to amending this legislation on Committee Stage, whenever that might be. Committee Stage is scheduled for 5 November and may very well be earlier. If the Minister of State has a view on that, it would be wise to inform the House shortly.

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