Wednesday, 24 October 2018
Finance Bill 2018: Second Stage (Resumed)
I welcome the opportunity to contribute on the Bill. In recent years, I have always tried to contribute on budgetary matters in the House.
Unfortunately, the budgetary arrangement and debate this time around has not been to my satisfaction in the sense that I am now speaking on the Finance Bill in advance of getting an opportunity to speak on the budget itself so it is a bit disappointing. I acknowledge there are time constraints and other priorities but I believe that at the very least, Members should be allowed to debate the budget before the Finance Bill is brought to the floor of the Dáil. I still look forward to contributing to the debate on the budget.
One must look at the backdrop when any budget and the financial measures that flow from it are presented to the House. Certainly if one looks at where Ireland is positioned and the challenges it faces internally and internationally, one must accept that prudence is a critically important component in developing financial strategies for any country, particularly an open economy like ours. Added to this is the uncertainty brought about by Brexit, which is clearly upon us, the lack of direction from the UK perspective in how we progress with Brexit and the EU's inability to answer the questions because they have not yet been raised from the UK's point of view. With that in mind, we must accept that we are in uncharted waters in terms of the impact it could and will have on the Irish economy and that of Northern Ireland. From that perspective, prudence is critically important. We must make sure that we go as near as possible to running a budget surplus or at least not a very large deficit. That in itself is critically important.
The rainy day fund has been discussed. It is a good idea because we know that if there are headwinds and we are buffeted, there is something there to limit the damage they would have on the economy and the Government and State will have an immediate capacity to inject a stimulus into the economy in the event of it requiring it. Consequently, a rainy day fund is prudent. People will ask why we would not spend that money now when we face the huge challenges that exist and argue that this would address many of the problems. Doing that on a continuous basis means that we would never get to the point where we try to address the counter-cyclical problems we have faced as a nation for many years. The rainy day fund will benefit us. In a way, we had a rainy day fund previously in the National Pensions Reserve Fund, which was, of course, raided on numerous occasions to try to shore things up in the face of the critical situation the nation faced from 2007 to 2010. That in itself proves that having access to a reserve in challenging times is a positive thing.
When one looks again at the budget and what we are trying to achieve with it, one must accept there are a couple of key areas that need support on a continuous basis. I am not talking about support in the sense of a handout from the State. I refer to small and medium-sized businesses, SMEs, and what they need is incentivisation and a stimulus. We pride ourselves on removing red tape and making it easier to do business. We think of ourselves as the best little country in the world in which to do business but when one distils it down, we are not the best. It is just that our SME sector is very innovative in its own right. However, it does not get the support from Government in terms of taxation policy and other soft supports to encourage and foster enterprise and innovation, to reward risk and in the event of things going wrong, to support the sector. Equally, when things go very right and a business does exceptionally well and has moved on and taken on more employees and at some stage, there is a wish to sell it on, there is an inherent barrier facing the people who have invested their money in establishing and developing the business. When they want to extract themselves from that business, there are inhibitors in terms of taxation policy. We must look at that, particularly with regard to SMEs, intellectual property and copyright and software design where the asset requirement is not massive but is mobile. Very often, those companies will leave our shores and go elsewhere as they plan to grow and expand with the idea in mind that at some stage when they are disposing of the business, they will not be caught by huge capital gains tax. I believe we must address this. If we are talking about stimulating innovation and enterprise and fostering people in terms of getting involved in this type of activity, we must allow them at least some benefit after years of work and investment. This is a key area that must be addressed.
Another area that must be addressed is access to seed capital. Again, we are not great at this when one looks at other areas of the world, particularly the west coast or even the east coast of the United States, as well as the UK, where there is incentivisation to back risk and provide private seed capital. This is not very evident in this country. Again, it requires changes to taxation policy. I know that as a nation, we are risk averse in many things but I believe there should be incentivisation to encourage people who have access to money to invest it in start-up businesses and that in the event of it going right, there is a reward but equally, in the event of it going wrong, losses can be written off etc. This is a key area that must be addressed.
There is no doubt that we are burning through our competitiveness at an alarming rate. We applaud ourselves for the fact that unemployment has dropped substantially in recent years down to a rate of approximately 4.2% or 4.3% to the point where we need to attract migrant workers to key areas of the economy to ensure the economy can sustain itself and grow and that labour is there to serve the needs of certain key areas of the economy. However, we are hiding behind the fact that our competitiveness is under major threat. All the indices and matrices the Government will use will indicate that is the case. The cost of energy, insurance and childcare along with rates are huge barriers to our competitiveness. All these issues come about because of policy decisions by Governments. Policy decisions by Governments have consequences for these areas of the economy, which have consequences for SMEs. Childcare is an area we have failed to grasp on numerous occasions and not only in the context of it being a barrier to and undermining our competitiveness. It is a barrier to a functioning society. We should accept that it is inherently wrong for families across this country to spend so much of their money on putting a roof over their heads and childcare. We are bordering on a situation where our society does not have any surplus in terms of being able to invest in social capital. Individuals and families are unable to invest in their social capital because they are slaves to bricks and mortar if they have a mortgage or slaves to the rental sector if they rent. They are equally enslaved to childcare costs. This is not acknowledged in a policy-driven manner. If we do not address these issues, we will store up huge societal problems. I do not mean to be alarmist but everybody will accept that people with children need to have money to invest in them - in the social aspect of their development. It is fine to talk about putting a roof over their heads but if there is so much pressure in that house because the family cannot afford other things that are important for the development of an individual, we are clearly undermining society and storing up bigger problems down the road. This budget has fundamentally failed to address the key areas of shelter and childcare and I have outlined the reasons I believe this to be the case.
It applies to the economy as well and to our competitiveness.
Pressure must come on for wage increases if people are paying €1,400 or €1,600 a month for a room in south Dublin. This is happening. The idea that we can consistently force people to pay exorbitant costs for in mortgages or rents and that will not have a knock-on effect on our competitiveness defies logic. One does not need to be an economist to accept that this is an issue. Any handy home economics student would know that. We have, collectively, failed to come up with solutions in this House to address the issue. It is camouflaged while the economy is growing, but any pressures will find our competitiveness out and there will quickly be massive job losses and SMEs under major pressure again. The pressure will come from employees because of the cost of living. People will have no choice. They must live somewhere and, if they have children, must provide childcare. There is little being done. There have been few efforts to even address it.
The cost of credit must also be addressed. A recent report from the Central Bank showed that Ireland has the highest interest rates in the eurozone for residential mortgages and SME lending. Our pillar banks are pillaging us and gouging profits from the pockets of mortgage holders and SMEs. A cursory look at the interest rates charged across the eurozone shows that Ireland is at the top of the tree. Our pillar banks pay the lowest deposit rates but charge the highest interest rates. They then issue, with great fanfare, the profits they are making every now and again. In a sheltered economy like ours, where there is little competition in the credit market, it is obvious they will make lots of money. They are gouging it from mortgage holders and small and medium-sized businesses. A variable interest rate in this country, over the lifetime of a 25-year mortgage, means an Irish family will pay €60,000 more compared with the average in the eurozone. The government then says various sectors of the economy are competitive and the country is competitive. Ireland would be much more competitive if the banks accepted they have a role to play in ensuring reasonably priced credit is available to mortgage holders and to small and medium-sized businesses but they do not.
There is ostrich syndrome on this issue. Everybody is afraid to challenge banks, including the Central Bank. We saw how inept and incompetent the Central Bank and regulators were in previous times. There is deference again being shown to the banking industry. Bank officials are back high on the hog again and, at the same time, failing to provide credit at reasonable costs where there is almost no risk, particularly in the domestic mortgage market. They are pillaging and gouging us. The average interest rate in the eurozone is 1.77%; in Ireland, it is 3.3%. That is double the rate.
Small and medium-sized businesses face the same issue. It is almost impossible to get lending to them. Banks are spending a lot of money trying to convince us that they are lending to small and medium-sized businesses. A cursory assessment would show that they are not lending where there are key demands in the economy for credit. The Credit Review Office in the Department of Business, Enterprise and Innovation should be wound up. It is a waste of time and I say that as one of the people involved in trying to establish it a number of years ago. It does not have teeth and it does not have the capacity to assess the credit market. We need independent assessment of what lending our banks are doing.
I do not believe the Central Bank always acts as an honest broker when it is delving into the banks. The proof of that lies in its lethargy and ineptitude in dealing with the tracker mortgage scandal. It was forced by the Committee of Public Accounts, the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach and others to take action. Officials were slow to act. That is another key area of policy that must be addressed to ensure the banks are competitive.
The Government can borrow. Interest rate charges to the Government are among the lowest in the eurozone. At the same time, our banks are charging the highest rates. There is an inherent difficulty in the banks that must be addressed. The Government should be proactive in establishing an independent assessment of banking practices in this country, if the Central Bank is incapable, too inept or unwilling to do it. Something must be done. Every day, people who are taking out mortgages are enslaving themselves for 25 years. A mortgage in another part of the eurozone will cost €60,000 less over the lifetime of that mortgage. That money could be invested in children and their hobbies and the social capital of the house; something productive in our society. The banks will not allow us do that.
The 2017 brief for the Minister for Business, Enterprise and Innovation makes numerous references to investment in rural Ireland. There have been recent difficulties with broadband provision. Delivering the roll-out of broadband is beyond whoever is in charge of the Department of Communications, Climate Action and Environment. We have been talking about it for years. It has been raised continually in this House for 20 years. Rural broadband has been around this House as an issue as long as I have, yet there are still 542,000 homes without access to reasonable broadband. I live less than three miles from St. Patrick's Bridge in Cork as the crow flies and, if not for being able to access satellite broadband, I would be down to 1.2 Mbps on my line. That is three miles from St. Patrick's Bridge, which spans the River Lee in Cork city. We want to ensure Ireland is a modern, vibrant country that can not only attract foreign direct investment but can elevate itself as well. We could provide more resources into rural Ireland if there was a broadband service. It could become self-stimulating. People could work from home, rather than having to always go to urban areas. i have been informed by many multinational companies that up to 15% or 20% of their workforce could work from home if broadband services were better. People are dragging their children out of bed and into the car every morning, haring the across the countryside to drop them to childcare facilities at 7.30, and going off to work for some company, all because we, as a nation, have not got our act together. Broadband is a critical part of any modern economy and must be delivered quickly. The lack of ambition and lack of ability to deliver broadband is a scandal. I do not know who to blame, or at whom to point the finger, but the Department that has been overseeing this for a number of years has failed to make inroads into this issue of strategic importance to rural Ireland.
I made a special effort to be here because I feel the Finance Bill deserves that attention even if it is not always given the attention it deserves. The Bill gives effect to many elements of the budget and very significant things often happen in the detail of the Bill which have real consequences for our society. However, because of the nature of those, particularly taxation measures, being complex and technical, it often happens that nobody gets it at the time.
I commend the Department of Finance officials and others who worked on the Bill on producing legislation like this. The consequences of it are not their fault; that is down to policy decisions. However, they have to give technical effect to it, which is a pretty amazing task when one considers some of the complex detail of the Bill, which I still have not got my head around. We will need to do considerable study and scrutiny as we go on to Committee Stage to really see what it all means.
I will make a few general comments about what is at stake in the budget and will deal with a few specific areas that the Bill deals with or does not deal with. Most ordinary people were completely underwhelmed, if not deeply disappointed, at what the budget did not do in respect of the big social crises that face society, most obviously the housing crisis and the lack of local authority housing.
It has just been reported that the homelessness figures are up again, with another 171 people homeless, many of them children. Nearly two and a half years after the launch of Rebuilding Ireland circumstances are getting worse. It is a shame and a scandal; it is a stain on our society. It makes a mockery of the claims of economic success and recovery when we have historic numbers of people and children living in emergency accommodation with no signs of this abating. There is an utter failure to build local authority housing and to control a private market that is out of control in terms of rental costs and property prices. A huge protest prior to the budget pleaded with the Government to make a radical change in policy and allocate a dramatic increase in resources to provide local authority and affordable housing. That was not dealt with.
Some extra money was allocated to address the health crisis, mostly to deal with an overrun in a health service that is completely crumbling. We have shocking statistics and human stories about waiting for basic operations for scoliosis, hips and cataracts. Home care packages are promised to people but not given to them. I could go through the list of failures in the health service.
Something not talked about but which I have mentioned a few times since the budget is the very worrying situation in third level education. The Irish Universities Association is deeply concerned about the dramatic increase in numbers of going into third level not being matched by increased investment in the sector both in capital investment and student investment. Ireland is effectively at the bottom of the European league table for the amount invested per student in third level education. Our universities are tumbling down the international rankings. Students will confirm that poverty is rampant among them, which is why many of them are out on the streets. That is not just a case of injustice and hardship for students and teachers, but is a real threat to the economy.
On climate change, major fines are coming down the line and the Government is doing nothing significant on climate change. In trying to judge what a budget is trying to address and assess its impact, it does not get more basic than housing, health, education and climate change. On all of them, it fails. It does not do anything significant on any of those areas.
Where that general and correct perception relates to the Finance Bill is that when some of us on this side propose dramatic increases in investment in these areas, the Government claims we just do not have the money. The Taoiseach would often say that in an ideal world the Government would do all these things but it just does not have the money. That is the big lie. We do just have the money. Ireland is wealthier than it has ever been. The rate of economic growth would confirm that, would it not? We have spectacular levels of economic growth, outpacing any other European country, but we do not feel it in basic services.
The money is going to vulture funds, banks, property speculators, landlords and corporations which are making mind-boggling profits. The figures are so staggering that they do not even mean anything to people because there are so many zeros at the end of the profits they are making. To put it in simple terms, in the time that Fine Gael has been in government, pre-tax corporate profits have doubled. They have gone from €77 billion to €144 billion. As that comes from the latest available figures which are two years out of date, they are probably even greater than that now. They also pay pitifully low levels of tax.
One of the features of the budget, about which I tweeted the other day is an anti-tax avoidance measure mentioned by the Minister, Deputy Donohoe. This measure will generate nothing. That is how seriously the Government takes anti-tax avoidance when we know there is rampant tax avoidance by multinationals over issues such as intangible assets. There are accusations of abuse of tax reliefs in the film industry. We know that the property sector is benefitting from enormous tax reliefs and there is even pressure to give more tax reliefs to landlords and vulture funds.
We have the absolutely shocking scandal of section 110, which I keep raising. At the Committee on Budgetary Oversight I asked the Minister to tell us how much tax revenue is foregone through section 110, a tax relief given to property investors who came in here and invested at the bottom of the market and have now seen the value of their investment go through the roof in terms of rents and property value. They will pay no tax under the section on the rental revenue they make as long as they keep their investment for seven years, or on the capital gains. Can the Minister tell us how much revenue has been foregone on that bearing in mind what is happening with property? He cannot tell us because he cannot estimate it. He does not know how much tax revenue has been foregone. Imagine giving a tax relief like that. Property developers must love this place. Where else would they get a tax relief worth billions of euro and a Minister who cannot even tell us how much it is worth? It is an absolute scandal.
One of the problems with this guff is that it is necessary to get complex spreadsheets off the Revenue website. Fair play to Revenue for producing them. However, the small print is tiny. This spreadsheet lists all the tax reliefs and there are loads of them.
Some of them really jump out. One of my favourites concerns intra-group transactions, which are transactions between two parts of the same company. The latest available figure is €9 billion in tax reliefs. The Comptroller and Auditor General confirmed some of this. We have been saying this for a few years. In the past few weeks, the Comptroller and Auditor General brought out a report referring to this matter. Ninety of the richest people in Ireland, whose average earnings are more than €50 million per year, are paying less tax than the average industrial worker. The Comptroller and Auditor General states the reason is that there is a myriad of tax reliefs, deductions and allowances that he estimates are allowing €216 billion in profits not to be taxed at all. He estimates this could cost €29 billion in tax revenue over the term of the reliefs. Imagine what €29 billion could do for housing, health, education and the effort to deal with climate change. It is staggering what it would do. It would transform this country. I have outlined what is in the small print.
Does this Finance Bill tackle any of this stuff? That is the big question. I mentioned that the avoidance measure in the budget — the one avoidance measure — has a figure of zero beside it. Clearly, the budget does not do much in this regard.
There are more tax reliefs in some areas than others. We will have to scrutinise them. Some may have merit. There are to be tax reliefs for gyms and childcare facilities in workplaces. These could be good but they could be abused. Therefore, we need to think about them. Of course we want to make child care cheaper and we want people to be fit but we do not want well-paid executives essentially giving themselves free child care and free gym equipment while the relief is not available to ordinary people. It could be just a way of writing off against tax and giving an additional benefit to the wealthy. I do not know whether this is the case; we will have to scrutinise it. I am sure the officials can help. These provisions have to be examined because one never knows what could be included.
There are to be wear-and-tear allowances for biogas vehicles. These could be good. I hope this is an environmental measure. There are to be reliefs for energy-efficient equipment but let us not forget how the renewable energy initiative in the North turned out. There were people in the know buying loads of equipment for which they did not even need to avail of a tax relief. They were burning wood chip they did not need to burn to benefit from the tax relief. I am not saying there are problems but we need to scrutinise all the measures.
I want to say a good word about one provision. There may be more that are good. I am referring to a matter I have been campaigning on a lot, prompted by people in the film industry. I refer to the section 481 tax relief. This is a very generous relief, worth approximately €70 million per year, given to the film industry. I would like to see €140 million going to the industry. In fact, in our budget submission, we doubled the provision for the arts. Much of this would go towards film and other art forms but the investment, given its size, would have to have a real economic and social impact for the country. Prompted by those in the industry, particularly workers, I have raised here the very serious concern that the tax relief has not been policed properly. I also raised the concern that the figures for employment generated through the relief by the relatively small group of production companies that have been getting the overwhelming majority of the benefits from it, were totally made up. I presume generating employment is the purpose of the relief.
I am not a member of the arts committee but I attended a meeting to see what those concerned had to say about this matter. They said there were 17,000 jobs in the Irish film industry. If that were the case, there would be a pretty good return on €70 million. If, however, one talks to people working in the industry, one learns there are not 17,000 jobs. There are not 7,000 jobs, and there may not even be 3,000. There may in reality be about 700 people working in the industry today. This is because nobody has a permanent job in the industry. The people getting the money are getting it through special purpose vehicles through which they essentially absolve themselves of any responsibility for their employees. They have a hire-'em-and-fire-'em workforce whom they hire on a project-to-project basis, but the work is totally precarious. This is despite the fact that section 481 relief has specific requirements.
The Taxes Consolidation Act requires the provision of quality employment as a condition of benefitting from the tax relief. There is, however, most precarious employment, or a lack of employment, in the industry even though it is getting €70 million through a tax relief. This is not acceptable. I could create more than 700 jobs directly with €70 million. If it were 17,000 jobs, it would be great but when there are only about 700 jobs, which are not permanent and which are totally precarious, there is something problematic, to say the least.
In the past few weeks, Mel Gibson made allegations confirming some of these points. He is not the only one. I do not know whether the allegation is true as it has to be investigated but it is worrying if Mr. Gibson says Irish production companies were abusing the system and artificially inflating their claims for expenses in order to benefit more from the section 481 tax relief on the basis that expenses are tax deductible. That is a serious problem. I am glad the Bill does tighten it up. There has been a focus on it. I have certainly spoken on this on several occasions in the House. It was discussed by the arts committee and so on. There was some attempt to address the matter. There is a lot of detail but I am glad to see the matter is to be addressed. It is stated that the Revenue Commissioners will have the power to find out whether the conditions of the relief are actually being met by the production companies. That has to happen. It is a bit like what was going on in the construction sector with bogus self-employment and rogue builders employing people on a completely precarious basis, not paying taxes and so on. In fact, there is a quite strong overlap between what goes on in the construction industry and what goes on in the film industry, particularly for many grades of workers. This has to be addressed.
Let me respond to what some of the producers say about this, in addition to Screen Ireland. The latter tried to defend the status quoby saying film is just a precarious industry and that is the way it is. It claims I do not understand and that film is different. I was chatting to somebody I met on the street who is knowledgeable about animation. We have a big animation industry. There is no precarious work in this industry. Animation is based on film but workers have proper training. They get jobs in animation companies and then make movies. This is episodic work also but it seems that we have got it right in the animation industry. The standard of Irish animation is fantastic. Ireland is a serious player internationally in terms of the big movie industry. Has that anything to do with the fact that we have proper, secure, decent terms of employment for many of the people who work in the animation industry? We need to monitor, in a very tight way, the investment being made absolutely correctly in the film industry. We want to see more of this investment because we have a massive pool of talent in this country. We will not, however, get the best out of the talent pool socially or in terms of employment, the proper treatment of workers or the quality of film production if the staff are not treated properly. They must be given a proper training structure. If one goes to the bother of learning about what are often very technical, creative difficult steps involved in the making of films, one should not have to live a precarious existence for the rest of one's life.
I am glad the Bill is addressing some issues in the film sector that I have not had time to discuss. We will scrutinise it further on Committee Stage. However, credit where credit is due and while most of the credit goes to the film workers who have agitated for this, I am glad the Government has listened.
First, I acknowledge the amazing work done by the PBO in making what is involved in the budget and the Finance Bill accessible in readable English. Not everybody has a background in economics or finance. There are some general points from the work the PBO has done that are important to take on board and make a reality. One question is about the timing of its work, which depends on the timing of the work that goes to the office from the Departments. This is a vital matter if we are serious about scrutiny of the budget. There have been nine budgets during my time as a Member and I often wonder about the wisdom of the instant reaction to the budget. As soon as the Minister makes the speech, we are handed a massive tome on the budget and there is an instant reaction across the House. How does that qualify as real scrutiny at that stage, especially now that we have the services of the PBO to contribute to the scrutiny? That office tells us there is scope for greater use of evidence in public policymaking. When we get the budget, we also receive the Supplementary Estimates. We know that approximately €700 million more will be required for the health Vote later this year. One has to wonder how many other Supplementary Estimates will be introduced that are not taken into account at the initial stages.
It is not just the PBO that is indicating a need for caution on Brexit in the budget. Economists and other groups are saying the same. Companies and organisations are feeling the negative effects of Brexit. I accept it is difficult to prepare for all types of Brexit but the worst-case scenario must also be addressed. Economic growth is expected in the short and medium term but if Brexit is not orderly, it could be disruptive and have dreadful effects on trade. Hard Brexit and no-deal Brexit must also be considered, but they do not appear to have been.
The first aspect of the Bill I will discuss is corporation tax. I voted for the exit tax on the transfer of assets overseas because there have been examples of foreign companies coming here, availing of all we have to offer in terms of tax breaks and incentives, an educated labour force and so forth, and then moving on because they got a better deal somewhere else. Corporation tax provides 13.2% of Exchequer revenue. It is not sensible to rely for revenue on a source that is not consistently reliable in the long run. This is a small number of foreign national owned multinationals whose employees are also responsible for contributing significant income tax and so forth. The corporation tax figures must be more transparent and accessible. We have to know what the minimum effective rate is. We are advised that it should be 6%, but there must be more transparency around this.
As regards taxes generally, our overall tax take remains lower than that of most of our EU peers. Our ranking is tenth. Remaining a low-tax economy will have repercussions on the economy, society and infrastructure. We are aware of the demands and needs, particularly in health and housing. There appear to be positives with capital gains tax but only if one is the child of parents. There is nothing except bills and high taxes for people in Ireland who do not have children. This is a glaring injustice to a section in society. These people have worked, paid their taxes, were able to buy a house or property and were able to save, but they have no children. They would like to leave their property to a relative or friend without that person having to pay exorbitant tax bills. There is an injustice here, and it is a penalty for not having children.
There are positive aspects to the Bill. There are some increases, which are always much more welcome than decreases. I refer in particular to the Christmas bonus. It was most unfair when it was removed. Its loss and then its restoration made a significant difference. With regard to the rent-a-room relief, I have met a number of people who rent a room. Some of them are elderly and living alone and it has been invaluable to them not just in terms of the extra income it provides but also in terms of company. However, there are some who have difficulty with taking in a student full-time and an occasional Airbnb rental suits them better. I hope they will not be persecuted. The single rooms in their houses are not contributing to the housing crisis.
As regards the increase in the price of tobacco, earlier we discussed the Sale of Illicit Goods Bill. There is an almost annual increase in the price of cigarettes but it has not led to a massive decrease in the number of smokers. The awareness campaigns, incentives and assistance to help people to stop smoking are much more valuable. The price increase can be a prohibitive factor but it would be good if the yield from the increase was given to those campaigns. Lung cancer remains the main cancer killer for both men and women but it has been getting less public and political attention than other cancers. There could be potential for the increase to be directed accordingly. The increase in tobacco price is increasing the sale of illegal cigarettes, which we discussed earlier. That is thriving in parts of Dublin Central. The retailers who are tax compliant and employers and are selling a legal and controlled product are losing out while the illegal sales are continuing. The Healthy Ireland survey of 2018 shows the stark reality that the percentage of smokers in deprived areas is 10% higher than the rate in better off areas. They are the smokers who will buy the illegal cigarettes.
The tax on sugar sweetened drinks is welcome, but it is just scratching the surface of the obesity problem among children, teenagers and other groups living in certain areas of Ireland due to fast foods, lack of exercise and pastimes that increasingly involve gadgets and sitting. The ban on running and jumping in playgrounds and school yards is health and safety gone mad and arises from the insurance claims for ordinary and natural accidents resulting in sprains and breaks that are relatively easily healed. There is a need for joined-up thinking among Departments, including the Department of Finance and the local authorities, on how the budget could address the issues Healthy Ireland has been highlighting, be it in the form of incentives or otherwise.
There was certainly a case for the increase in VAT for some sectors of the hospitality industry, but there should have been some positive discrimination in favour of smaller businesses, whether in Dublin or outside it. I refer to the smaller hotels, restaurants, cafés, coffee shops and so forth. It was unfair for them because some of them are experiencing a great deal of difficulty recruiting staff. Part of that is due to the dropping of the apprenticeship scheme that had been in operation 20 or 30 years ago. Accommodation is another factor that affects their recruitment of staff. The jump from 9% to 13.5% will be difficult for smaller businesses. I have also been contacted by hairdressers. Many of them are on a low income anyway so when the VAT is increased that will be passed on to customers. Customers may feel the increase is too much and stop using the service which, of course, will lead to a loss of employment. VAT is a key element in Exchequer funding, and, in 2017, it amounted to €13.3 billion. The PBO is warning about Brexit, and if there is no agreement between the UK and the EU our VAT system will be exposed to tax competition and the possibility of fraud and evasion relating to cross-Border trade with the UK and Northern Ireland.
Another aspect of the VAT regime relates to therapy sessions with qualified counsellors and psychotherapists. There is much emphasis on the need to look after mental health by encouraging people who experience anxiety, depression or other issues to see a counsellor or a psychotherapist, instead of the pill for every ill syndrome that we had previously. I do not understand why these qualified counselling services are not considered medical care. We could broaden the definition of "medical care" to bring it more in line with the philosophy and ethos of A Vision for Change.
A 1% increase in the duty on retail betting is proposed. The larger betting companies will be able to absorb that as their retail presence means a much wider margin spread. This measure will hit smaller retailers disproportionately. Businesses may close, affecting local jobs in communities. We are aware of the increasing problem of gambling addiction, but that addiction is not seen a great deal in those small bookmakers where somebody will come in and spend a few euro occasionally or a few times a week.
The industry tells us it is trying to address addiction by offering self-exclusion and assistance to those who are addicted to gambling but I believe the industry could do a lot more. The major contributor to gambling problems and addiction is online, phone and app gambling. This service offers credit incentives, 24-7, for 365 days a year. A person could gamble online 24-7, for 365 days a year on his or her laptop. The person could be on a laptop at 3 a.m. This service is offered by the bigger retailers. Contrast this scenario with the person going into the local bookies with a few euro for a bet. We know where the problem lies. We need to tax online gambling. Why not a duty on profit as opposed to turnover?
The Healthy Ireland survey, which was launched this morning, tells us that people in deprived areas are more likely to engage in risky behaviours such as binge drinking, smoking and unhealthy eating. It is all damaging to health. One third of those who live in deprived areas have a long-standing illness compared to less than one quarter of people in other areas. The report says that the Government's Healthy Ireland framework seeks to reduce the inequalities that exist. Where is this provided for in the budget? Where are the measures that will contribute to a healthy Ireland, regardless of where a person lives and regardless of a person's financial circumstances? The number of smokers in deprived areas is 10% higher than in other areas. This is fuelled by the increase in illegal cigarette sales.
According to the ESRI, the austerity budgets hit certain sections of the country harder than others. Budgets since then have been trying to redress that. The International Day for the Eradication of Poverty is 17 October. The mantra for this day is "Leave no one behind". Last week I was visited the famine statues for a very special event held there every year. At that event, young women and men from the various projects in the north and south inner city of Dublin, including schoolchildren, give their testimonies on what poverty is like. Sometimes we sit here and talk about poverty but we do not know what it means to be poor. Listening to those young people is a humbling experience and it brings home what we need to address in budgets. I am aware that it has started but there is a need for further gender-proofing, poverty-proofing and equality-proofing so that we ensure of fair budgets from here on.
I am glad to get the opportunity to raise a number of issues relating to the budget. When we talk about the budget, right around the country people anticipate or hope that their sector or their cause will get funding. We welcome the positive aspects of the budget but there are many other aspects of it that neglect and do not adequately address the issues that need to be addressed.
I recognise the extra spend that has been put into health again this year, but I am worried that, like all the other money, it will be consumed by the HSE. While I recognise that we have to have managers, it is evident that the HSE is top heavy with administrative staff and we do not have enough front-line staff. Our front-line staff are not paid adequately to ensure they remain in our health service to provide the healthcare that we need to provide for people who present as sick and who have health problems and issues. There is not a house in the State where someone is not affected one way or another as the days go by.
I wish to highlight to the Minister of State what is and is not happening in University Hospital Kerry in Tralee. We have had five Ministers for Health and I have raised this issue so many times; for the past five months there have been no orthopaedic operations. There have been emergency surgeries but no elective surgery has taken place in the hospital for the past five months. I would plead this case. It would not be too much for the Minister for Health to visit the hospital and challenge the manager to see what is going on there. I ask that the Minister would meet the hospital manager. On two or three occasions we have been given indications that these services would start, perhaps at the start of September or the middle of September. Then they were to start on 15 October and on 1 November. Now the services have not started. I feel that it will now go into the new year. This is not good enough when elderly people are roaring in pain to have their hips replaced. I know of one man who cannot sit down; he either has to stand or lie down. That has been his story for four or five months. He cannot see anybody as no one will see him. Another person was so bad with pain for his knee problem that he had to go to Belfast last week to be seen and to get treatment.
Earlier, the Taoiseach said that treatment waiting list numbers were going down. I can assure him that the numbers have gone down in Kerry for people waiting on cataract, hip or knee procedures. This is because Deputies Michael Healy-Rae and Michael Collins and I have a bus going to the North every weekend. People are brought up to the North at the weekend and they are being seen and treated during the weekend. That does not happen in the hospitals in the South where elective surgery does not happen over the weekend. Up North, healthcare staff work around the clock to ensure people are dealt with properly. It is sad to think that elderly people have to go away early in the morning and get on a bus. I admire them for wanting to help themselves. They get on a bus and travel the seven-hour journey to Belfast. They must stay overnight and they get seen to the next day. They then have to travel back again. One man who went on that bus, whose grandfather had his cataracts removed in St. Catherine's Hospital in Tralee 50 years ago in 1968, had to wait seven years for his procedure. He would still be waiting only I took him up to the North of Ireland on the bus where he had his two eyes done. This man is now driving a bus himself. That is the gospel truth.
Tralee hospital is short of consultants, specialists and front-line nurses. We are told that the HSE will advertise for these positions - and maybe it is - but we do not know what is happening. People cannot say, "My leg will only get bad when the consultant arrives". This will not happen because people get sick and they have no control over it. They would certainly like to be well but old age and hard work happens. We will see how concerned our Minister for Health is in ensuring there is money available for abortions.
There will be €12 million, wherever that was found. All of a sudden money was found to carry out abortions. There was lot of talk from the Taoiseach this morning about the Tuam babies and what happened there. What happened there was a scandal to God but what is going to happen to these babies? Where are they going to be put? What grave are they going to have? Will they have a grave? I have asked that question but there has been no answer to it. It beggars belief to think that we are trying to save people and get them back to health while ensuring that we are going to have money to pay for abortions and ensuring that we will have the staff to carry them out. It just does not make sense.
Kenmare hospital is only half opened. It has now been there for eight years and it only half opened. It is the same in Dingle. The site was provided free of charge by the farmer who gave it and we cannot open the rest of it. There are offices in a good part of it. On suicide, it is clear that we are not giving enough money towards mental health and not addressing the issues in that area. The level of suicide in one small pocket of Kerry is such that there have been four suicides in as many weeks, or maybe a bit more. There is an average of 25 people on trolleys in Tralee general hospital. People are waiting to see consultants who are not even there. Again, it is down to the HSE. We just cannot understand it.
The jump from 9% to 13.5% in the VAT rate for the hotel, restaurant and hostelry industry is a major blow to all of Kerry, which is predominantly a tourism county, because in 2009 and 2010 it was the hotel industry and that sector that brought a bit of life back to the county, as did farming. Farming was looked down on but when the farming industry is going well, it brings up the rest of the community around it. Places like Killarney, Kenmare, Dingle, and, indeed, Castleisland and Crag Cave provide attractions and amenities for the people who come in great numbers to our county and they have been doing great work. The Minister of State must realise, however, that most of those places are closed from this time of year until St. Patrick's Day. They depend on the busy months to survive, to sustain and to improve their product. This is a big blow to them.
I and many other people thought that if the rate were to be increased, it should have been done as a gradual transition. If it was raised by 1.5% each year, in three years we would have reached 13.5%. People would have worked towards that and perhaps it could have been accepted. Hairdressers were outside the gates yesterday. They are also very hurt by the increase. It was a savage increase for them. To be competitive they will either have to forgo any profit they were making or, as one hairdresser said to me, they will not be able to take on young trainees because they just will not have the funds to do so.
We are worn out from talking about housing. Each and every Member here is as concerned as the next. There are so many reports and so many actions and different things. The Government keeps saying it is not a matter of funding. Will the Minister of State please explain why up to 50 people are waiting for rural cottages in Kerry and yet only ten will be built from 2016 to 2021? These people have the sites themselves. I was even told by one young person whom I asked about it the other day that nobody will even come out to see him for three years. Imagine that, when he has the site himself and we are talking about putting roofs over people's heads.
Rents have increased. There are a lot of complaints about landlords. I would say that 99% of landlords are fine, but they also find themselves on a tough wicket. If they get €150 a week for a house and are taxed at 50% or 52%, it means that they are only getting €75. The Government is actually getting half of the rental value of the house. The landlord has to provide for the upkeep and the insurance and pay all the other things to ensure that the house is standing in reasonably good shape. Under the tenant purchase scheme, local authorities used to always get a bit of money to do up voids and vacant houses. The scheme that is there at present will not allow 80% of the people who apply to buy out their local authority house to do so. We are waiting for the Government to review that and I would be very grateful if the Minister of State will explain that again to his colleague.
Demountable homes do not cost very much but we are not allowed to have them in Kerry any more unless there is a fire or flooding. It was always an acceptable standard of housing for a lone farmer whose house went into bad repair and could not be repaired or who, for one reason or another, had a site and a place for a septic tank and everything. We are not allowed to have them any more. That is a departmental guideline. We can only have them in the event of a fire or a flood.
I spoke about agriculture this morning. The farmers were begging for €200 per suckler cow. They will get €40 through the beef genomics scheme but this scheme is not what it set out to be. Farmers are now being asked to weigh the calves and the cows. This is dangerous work that involves health and safety issues. To gain this €40 they will have to spend approximately €20. We are being told that many people are getting out of this scheme, and will be getting out of it next year, because it is too hard, overcomplicated and bureaucratic. Many farmers, as I said, are exiting the scheme.
We are talking about jobs. The provision of jobs is vital for the survival of rural areas. I, like other Deputies, cannot understand what is happening at present to the jobs in Bord na Móna in the heart of our country. If we survive long enough, this country will be all environmentalists and no one will be working if the environmentalists continue to get their way as they have been. There is now going to be a rush. We believe that all the Departments are going to visit the place and strategies will be put in place to see where they can find jobs for these fellows from Kildare, Longford, Offaly and Roscommon. I know one man who has been there since he was 16 years of age. He is now 59. Where is he going to go? Why did the Government - we will not just blame this Government, but the last one too - not talk to the people in these places and see what could be done to provide jobs for them if the Government is going to make them lose the jobs they have?
It is absolutely ridiculous. What they were doing was sourcing what was their own and selling briquettes and turf. There is nothing wrong with that. As I have said today and other days, if Ireland was totally emission free, it would only mean 0.13% in the worldwide context. That is the truth. It would amount to 0.13% in the world overall. We are tripping over ourselves to meet these guidelines, the 2030 Paris agreement or whatever, yet in China and Japan, they cannot see their noses or feet with the smog and smoke. That is a fact. The Government will paralyse the people with carbon taxes and stop them cutting turf for sale in the midlands. If these environmentalists get their way, they will stop people cutting turf in their own places where they have traditionally cut it over the years. That is how my grandmother survived and that is how she reared my father and all the rest of them by selling a bit of turf to the local garda or whoever it was. They did not hurt the country or the world one little bit. With regard to the people who are still doing it, it was grand to see them at it this summer when the weather was fine. It is not so nice when it rains; it is tough then. It is wrong to try to tell the people in the midlands who were working in Bord na Móna that we will get some other job for them because the environmentalists are saying they are doing harm and affecting climate change. The climate changed back over the years and it is a fact. I will say it again because it is the truth and when one is telling the truth, it is not a lie. The temperature has risen by less than 1% since 1850. That is the truth. It is God's gospel truth. It has risen by less than 1% since 1850 and we are going to drive people down through the ground. We will make the people in Kildare, Offaly, Roscommon and Longford give up their jobs for these environmentalists who have these mad kinds of notions. I would say if we looked to each and every one of those environmentalists, not one of them has ever hired a man or a woman or has never paid a fellow on a Friday evening because if they had, they would realise money does not fall out of the sky and that one has to work for it. Friday evening comes very fast when fellows have to be paid. If they are not going to be paid in the midland counties and if they do not have jobs - it is hard to see where they will come from all of a sudden - the Government and the State will have to pay social welfare to them. Everybody else who remains working will be contributing towards that cost.
With regard to women's pensions, we hope the issue of the women who were wrong-changed in their pensions as a result of the 2012 changes introduced by the then Minister, Deputy Burton, will be addressed in the coming year. There were also women before that who worked in the home and who were never recognised and many do not get a pension of their own. They get paid on their husband's pension but they still need to be recognised because they played a part in the formation of our country. They are the women who brought the people who are running the country today into the world and fed them and reared them. We should not forget about them. Their numbers are diminishing because they are getting older. They should have been recognised in this budget.
I appreciate the opportunity to contribute to the debate. The Bill gives legislative effect to the budget. The budget was primarily based upon the VAT increase in the hospitality industry from 9% to 13.5%. According to the Minister for Finance, it will yield in the region of €466 million. It is possible that revenue from tourism will drop as a consequence of this measure. I am conscious we voted on this on budget night but this measure may be counterproductive because since the measure was introduced in 2011, 65,000 jobs have been generated in the hospitality sector. The revenue generated in this sector has increased by more than €2 billion. I question the wisdom of it. Recently at a breakfast briefing in my constituency in Mullingar an example was given of a cafe owner who has four staff and a turnover of €200,000 per annum. As a result of the VAT increase and the increase in the minimum wage, the cafe owner will have to find an additional €10,000 in 2019. That is €10,000 on a turnover of €200,000. It is a lot of money. It calls into question the long-term viability of a business like that. It is not only about that cafe owner; it is also about the small bed and breakfasts or hairdressers who were protesting earlier. Some bed and breakfasts only operate seasonally. They open from March to October and close for the winter months. I am thinking about service industries that are located outside of Dublin and the tourists hotspots. What fed into this was the fact that hotel rates in Dublin are high and hotels in Dublin are doing fine. As a result of that, the hospitality industry the length and breadth of this country seemed to be flying. It was a flawed analysis. I hope I am wrong but I think the measure will be counterproductive and will put a lot of pressure on the hospitality sector outside of the main tourist areas. The Minister whose job it is to protect the hospitality sector and the tourist industry, Deputy Ross, failed at Cabinet. He came in here two days after the budget, gave three and a half minutes of huff and bluster and blamed everybody for why he could not maintain the 9% VAT rate. He blamed the industry for standing up for itself. The cheek of an industry standing up and advocating on behalf of its members. I remind the Minister, Deputy Ross, that in August this year he contributed to the hysteria in the silly season, during a time of slow news, when he was out advocating that the hotel industry was milking the system. In that article he said that those large hotels would be penalised. He could not demonstrate what he meant by a large hotel and he tried to reassure the restaurants, small hotels, bed and breakfasts that all would be okay because he was going to protect them in the budget. Perhaps if he focused more on his own portfolio at the time of the negotiations instead of looking for his granny grant, or his split the house in two grant, he might have had more success. The Minister of State, Deputy Moran, spoke on my local radio station and seemed to blame us on this side of the House. He said it was our fault and that the four musketeers in the Independent Alliance had tried their best but failed. He said we gave no advantage. Given the fact we abstained on the budget, we were a major assistance to this Government. We abstained and the Government now pursues its own revenue generating measures.
I understand from departmental officials that they are not adverse to a satellite account being set up to record exactly what the tourism industry contributes on an annual basis.
That should have been done first to see what contribution tourism makes on an annual basis in order that we could have a true analysis of the economic activity, which would have been far better. On the €35 million increase that was secured, the Minister of State must engage with the sector and look at the regions that will be most adversely affected as a result of this VAT hike.
Another sneaky measure that will have a huge impact on tourism in the regions has been included in the Bill. I refer to the provision in section 36 regarding vehicle registration tax, VRT. This proposed measure could have a huge impact on the tourism industry. There has been no consultation or information on how it could potentially damage the rural tourism industry, which, as already stated, is reeling from the impact of the increase in the VAT rate. As Deputies know, this VRT has been available to the car rental industry since 1993 and the mechanism is based on a refund of the VAT payable on the VRT element of the car price in order to broadly maintain parity with the pre-1993 tax position. The relief amounts to an average of between €600 and €700 per car. According to the industry, 50% of the car hire fleet in Ireland is enabled through the existing mechanism and that there is a real threat to the industry should it be removed.
My main concern with the proposed changes relates to the areas outside Dublin city, Galway and Cork. When tourists come to Ireland and stay in guest houses, whether they be in Connemara, Kenmare, Longford, Mullingar or other areas in which there is not a huge network of public transport, almost all of them travel in hire cars. The Wild Atlantic Way is a great initiative, which must be acknowledged and commended, but how do people tend to travel along it? They fly into the country and then hire cars and use bikes. The introduction of this measure will add further cost for tourists who visit the regions. Internationally, proposed price hikes and our inability to manage capacity will make the rental industry extremely uncompetitive. One of the reasons or excuses given by the Department of Finance for the introduction of this measure is that section 39, which relates to the free movement of vehicles, is expected to minimise the impact of section 36. However, section 39 is not expected to take effect until next July and there is no guarantee that the scenarios outlined in it will transpire, particularly in light of the uncertainty of what will happen in the aftermath of Brexit in March. Section 39 states that there will be free movement of goods, meaning that we can satisfy our pent-up demand for additional cars through imports from European countries. I am sure the Minister of State and his officials are aware that there are only two other European countries, namely, the UK and Cyprus, in which people drive on the same side of the road as their Irish counterparts. With the UK leaving the EU, we will be unable to import from it. Will it be viable to import from Cyprus? I do not think so. I request that, at a minimum, what is proposed should be deferred and that consultations be entered into with the industry in order to ensure that there are no unintended consequences and that the hospitality and tourism sectors, which have felt the real brunt of the measures of this budget, will not be obliged to endure a further tax hike.
I also wish to focus on the proposed 100% increase in the betting tax. I am not a gambler and I could count on two hands the number of times I have placed bets each year. I do not even play the lotto. It is not out of any love for gambling, therefore, that I speak on this matter, but I acknowledge that there are people who gamble as a past-time in a structured and ordinary manner without any problem. There are also people with gambling addictions and, as is the case with those who are addicted to alcohol, those additions need to be addressed. What is proposed in the Bill, however, is a doubling of the betting tax on turnover. It is not on profits but rather on turnover. This is extremely unfair and it runs the risk of being counterproductive. It reduces rather than doubles the revenue intake because there is a real possibility that the proposal will ensure that some betting shops will be obliged to close. Commenting on this proposal, Professor Anthony Foley stated that the overall negative Exchequer impact on the closure of 400 bookmakers could be approximately €35 million, while the losses to the Exchequer will be in excess of the gain from the increase from 1% to 2%. He also indicated that if gross margins could be so easily achieved without adverse business consequences, the industry would have already done so in order that it could operate on higher gross margins, and would have avoided many of the previous closures of some 400 shops with the possible loss of 3,168 direct and indirect jobs. This matter needs to be revisited. If the Government wants to get money from the gambling industry, surely there are other mechanisms by means of which we should be able to realise the desired revenue without potential job losses.
One revenue-generating measure the Government has failed to introduce relates to the tolling of foreign trucks in Ireland. Approximately 15,500 heavy goods vehicles trucks are registered here, while there are approximately 7,500 in Northern Ireland. Every time these trucks go abroad, they pay a tolling charge of €10 per day. When foreign trucks come into this country, however, there is no tolling charge. I am not saying my figures are 100% accurate, but the industry informs me that the loss to the Exchequer from this is in the region of €20 million. Perhaps this matter could be examined.
Section 99A of the Finance Act 1999, inserted by section 51 of the Finance Act 2013, provides for the repayment to qualifying road haulage operators and passengers that are in the diesel rebate scheme. There is a serious problem with the rebate scheme, which, due to the way it is structured, does not encourage people to register and go through the administrative process because they get only a 1 cent return. Belgium's excise duty is similar to that which applies in Ireland but its average diesel rebate was 13.8 cent in 2016 and 17.3 cent in 2017, while in Ireland the rebate was nil and under 1 cent in 2016 and 2017, respectively. If we take an imaginative approach, there is an opportunity to consider amending existing legislation and examine the position regarding the number of Irish trucks whose owners are "tank tourists", as I think they are called, whereby they fuel up abroad. That type of behaviour leads to a loss of revenue for this country. If we amend how our rebate system is structured, rather than lose all the trucks that go abroad, we could gain because the foreign trucks that come to Ireland would be able to benefit. This would be a way of regaining some of the money that is lost through illegal and illegitimate fuelling.
I understand that the Government proposes to vote against our Bill on illicit goods, another area that should be tackled which would bring in much-needed revenue. The Minister for Transport, Tourism and Sport, Deputy Shane Ross, failed in his duty by not ensuring these measures were introduced to ensure a level playing field with the haulage industry at a critical time as Brexit approaches.
Another area badly neglected was climate change. There was an awful announcement today in my region of the midlands with job losses in Bord na Móna. I was frankly astonished to hear the Minister, Deputy Flanagan, on "Six One" this evening, saying that the stakeholders must come together. They should have been working on this months ago. It is not something that has happened at the last minute, like a multinational pulling out with only 12 hours notice. This has been worked on for months. The fact that a comprehensive package has not been put in place in advance is nothing short of scandalous. However, we cannot ignore that climate change is a reality. Some in this House are insular and have no concern for what is happening in the developing world and the loss of innocent life because of climate change, but we only need to look at what has happened in our own country in the last 12 months and the extremes of weather from 4 ft or 5 ft of snow to hurricanes, floods and a prolonged period of hot weather causing drought. Why was this not addressed in the budget? In August this year, the Taoiseach acknowledged the need for a carbon tax but again there was no political will to commence that process. That was shameful. The reason we need to look at carbon tax is that in recent years the Government has failed to introduce measures to encourage people to consider renewables. We still have no guidelines for solar farms and in wind farms we are still working on the outdated guidelines of 2006. The retrofitting of houses is too slow and inadequately funded. I know of a lady in Athlone who cannot qualify for the fuel allowance because she is €7 over the limit, and as a result she cannot qualify to have her house retrofitted. It is absolutely crazy stuff. Only this year, the benefit in kind was extended by three years for electric vehicles to give some level of certainty. I asked for that last year. There are not enough charge points. On budget day, the Minister, Deputy Donohoe, made a virtue of the fact that we will have no more diesel buses from July 2019. I have put down a parliamentary question asking how many more diesel buses we will have in advance of July 2019. I predict it will be a significant number, and those buses will continue to operate for many years, in excess of a decade.
We have had no meaningful increase in the area of cycling as an alternative form of public transport, particularly in large urban areas. I recently visited Amsterdam as part of a delegation to see how it embraces alternative transport. Some 65% of citizens in the city of Amsterdam travel to work by bike where they have a commute of less than 20 minutes. Think of what that does for congestion and for the environment.
I will finish my remarks on the health budget. It does not relate directly to the Finance Act but the fact that it was necessary to introduce a supplementary budget for health is a disgrace. The mismanagement in the Department of Health, or maybe more accurately the HSE, is a disgrace. We cannot continue to pump money into it without greater efficiencies and greater value for money.
I wish to make a particular note on mental health. Two or three days after the budget, I attended a third level protest in Athlone Institute of Technology. There is no dedicated ring-fenced budget for third level institutions. At a critical time in a young adult's life, we must provide the necessary mental health services in our third level institutions. We have seen an increase in the allocation to that area as a result of the confidence and supply arrangement. When our contributions are examined, I ask that it be made known to the relevant officials that third level institutions there must have adequate services for those who are dealing with mental health issues.
I am very conscious that I speak here with my hands somewhat tied behind my back because we are facilitating an arrangement. In the context of that arrangement, I hope the Government takes on board some of the suggestions that I have made. I am not coming here looking for additional expenditure without showing where additional generation measures could be introduced, and in a manner that would not cost jobs or place an extra burden on people's pockets.
I welcome the opportunity to speak on the Finance Bill 2018. It is important that we have a good discussion on this significant legislation which runs to 149 pages. I will generally talk about the budget as that is what the Finance Bill is based on. However, there is a lot of small print in the Finance Bill which I hope will receive detailed scrutiny at Committee Stage. This is merely an opportunity to raise some general points.
The budget was passed on the basis of a commitment that Fianna Fáil entered into some years ago that we would support three budgets providing they met certain conditions. It was not a blank cheque or an open-ended guarantee: there were specific provisions in the confidence and supply agreement. They have been honoured, we would not be here today had they not been, but it is important that we put on record that we came to that table with specific requirements. Over the three budgets, we are happy to have seen some major improvements as a result of our input. The previous Government prior to the last general election was a Fine Gael-Labour Government that did not need the support of the Opposition as it had a massive overall majority. It made a series of very regressive budgets. All the commentary, national or international, would verify that. We have seen a turnaround in recent years, not because there is more money to spend but it was a question of how it was decided to spend it. It depends on one's political philosophy whether one agrees with regressive or progressive budgets. Everyone likes to talk about being progressive but not everyone wants to practice it in reality. During the last Government, available resources were being split almost two to one in favour of taxation increases. That was happening because there were cuts in expenditure during those times and the ratios were going in that direction. Fianna Fáil's view towards the end of that Government's life, after several regressive budgets, was that we needed fairness in society and in our budgeting and we demanded and pushed to get a 50:50 balance between expenditure and taxation in those budgets. We pushed heavily for that from the Opposition benches. I think that people began to listen because they knew that while it is all well and good to cut services, people were suffering unnecessarily because the cuts were too indiscriminate across the board. Coming into the last election, we wanted to ensure that there would be a minimum of a 2:1 ratio between investment in public services to tax cuts which would allow the switch to progressive budgets.
We have been successful in achieving that. This year we have pushed it further and allowed a 3:1 split. I believe people appreciate that. There is a slight downside to it, depending on what is one's particular situation. I will mention it straight away. The low-paid worker was the person left out on this occasion. I speak to staff I know, people who are working, and they gained perhaps €4 from this budget. Those people go out to work, are stuck in traffic jams on the way to and from work, and they received only €4 a week extra in this budget. They see others who are perhaps not putting in the same effort receiving more money than they received on this occasion. We have to be very careful to encourage people to go to work. It is important that future budgets concentrate specifically on that area.
The argument can be made that many low-paid workers have been taken out of the tax net and that their tax cannot be reduced by much more because we would hollow out the core of our tax base - employment taxes - by doing so. A balance has to be struck, and I feel that low-paid workers were let down on this occasion. They are the people making sacrifices to go out to work. There is an income in their households, so they are not eligible for social housing, medical cards or extra benefits such as the back to school allowance. They see other people who are not putting in 30 or 40 hours of work per week gaining these benefits. I am asking for a threshold in future budgets for people such as low-paid workers, people in receipt of State payments through social welfare, pensioners who have contributed all their lives, people who have contributed to their payments by way of jobseeker's benefit or those on jobseeker's allowance. If there is to be a general increase in future budgets, nobody should come out of the budget process with less than a certain amount, for example a €5 minimum increase for everyone.
In the confidence and supply agreement we focused successfully on reducing the USC for low and middle income earners. We also raised the old age pension by €15 over the last number of budgets. These changes would not have happened without our influence. People will take it for granted, and that is life; people move on very quickly. We helped to increase the carer's allowance, the disability allowance and unemployment benefits by €15. I have to credit Deputy O'Dea who every summer nails his colours to the mast and puts everyone on notice that certain issues have to be addressed. They are not red-line issues because we do not operate on that basis, but he makes himself very clear. We also helped to secure the extended mortgage interest relief, benefitting up to 4,000 homeowners, and helped to increase the home carer's tax credit and earned income credit. Some of the matters I have mentioned are specifically in the Finance Bill and will not come into law until it is passed.
In terms of general expenditure issues, we helped provide extra expenditure for the recruitment of 2,400 new gardaí and for the restoration of the postgraduate grant for low-income students. That area had been seriously neglected. We all know that education is the way forward and we have to support it. We also supported the increase in the capitation grant, the cost to a school for each student attending, by 10%. Most importantly, guidance counsellors have been reintroduced. Looking back, anyone who had anything to do with cutting guidance counsellors in schools should regret their actions. There is not one Deputy in this House who does not know a teenager who has committed suicide. School children have committed suicide, children who were lost and did not know where they were going and who needed some form of counselling. Perhaps they did not need career guidance, but had those children had a counsellor in their schools they would have had a person to go to. This Oireachtas has let some students in schools down, some of whom are not here now. Perhaps the presence of a counsellor in a school, regardless of his or her title, could have provided a person the children could have gone to speak to. We need to ensure that we deal with that immediately, because the area of mental health should be further prioritised, as other speakers mentioned. I am aware that is on the expenditure side and it does not specifically appear in the Finance Bill, but it is germane to the budget. We have further funding for the National Treatment Purchase Fund of €75 million, but the queue for the National Treatment Purchase Fund is now as long as the queue to get an outpatient appointment or an appointment for a procedure to be carried out in some of the main hospitals. Over the years we have also boosted funding to the third level education sector.
I believe the hospitality industry was not fairly treated in having to absorb the major increase in VAT. I accept that accommodation is doing very well and that urban areas are doing well. However, there are small towns around the country with little restaurants and cafés trying to serve a few lunches, providing coffee, scones or muffins during the course of a day, and the extra cost for those places will be very severe. Some of the food retailers should have been exempted from this measure. It is done now; there was a trade-off between that and increasing excise duty on diesel and petrol. There is a downside to this, and I hope we do not see too many repercussions from this measure in small rural areas. Perhaps what happened was that those making the decisions walked down Molesworth Street or Kildare Street, which are full of new coffee shops. Previously there were just a few coffee shops with American names, but now there are London, Spanish and Italian names, and French restaurants, all of which sell coffee. I can understand if people who live, work and circulate within a mile or two of this building think that every café in the country is roaring and so they can afford an increase in VAT, but if one goes out past the M50 it is a different story.
The financial package is perhaps a bigger question for another day, but Fianna Fáil is not happy about the last-minute changes to the budget, especially the fact that it was not made aware of the €700 million extra for health until very late in the day. Of course that money had to be allocated, but why was the €700 million extra needed for health? I will say categorically that in the last five years the Estimate for the Department of Health has been announced dishonestly by the Minister on budget day. I saw the figures at the Committee of Public Accounts last week on the Supplementary Estimates across various Departments. The Department of Public Expenditure and Reform was before the Committee of Public Accounts last week, and Supplementary Estimates were required in each of the past five years. They were also required for issues such as pensions for the Defence Forces. My mind struggles to process the fact that Government accounting cannot produce a more accurate figure for something that is not too difficult to calculate. There is a systematic policy in the Department of Health, the Department of Public Expenditure and Reform and the Department of Finance where they understate what they know will be the outcome. Those Departments act deliberately, and it is dishonest. We have said this for several years now: what I am saying today is not new. Every year the pattern re-emerges. It might be okay if it happened once, twice or three times, but when it is happening year in and year out it is clear that it is a systemic failure built into the system and I believe that is dishonest.
That leads us to the broader issue of budget secrecy. We should know the details of the budget in advance. The concept of arriving with a case, a folder or a CD with a budget statement is Victorian. It went out in the last century. We are open people, and we are not expecting a Victorian minister to come to this House and tell the children what goodies they are to receive this year. People's lives are much more complicated than an announcement on budget day can provide for. I would prefer that budget announcements were spread out. The Estimates for the next year should be discussed at the line Departments during September and October and signed off by the relevant Oireachtas Committee and the Parliamentary Budgetary Office in advance of the budget. The idea that we will discuss the Estimates of expenditure the following April or May is daft. The Estimates are announced on budget day; they should be debated, cleared and voted through before the commencement of the new financial year. I would favour a far more open process. Europe has brought about a bit more openness. We now must lodge our draft budget with the European Commission by 15 October every year, whereas previously we left it until much later in the year. People can now see what is proposed a few months earlier. When I think of the budget this year, I remember that the week it was delivered I ordered 1,000 litres of central heating oil. Last year it cost €700, and this year it cost €830. One fill of my central heating tank went up by €130, and I will probably have to do that a couple of times during the course of the year.
There are matters that affect people's daily lives and have a greater influence on their finances than the announcement of the extra €4 a week for a low-paid worker. There is a lot of high drama regarding budget day and some of it could be taken out of it. We would all benefit from a calmer measure. Most people now see through it and have a good idea of what is coming.
The Tax Appeals Commission was underfunded and under-resourced. The Minister announced a review of the office which has been completed. He is providing extra staff. There are some phenomenal cases dealing with €1.7 billion tied up with the commission. That is not necessarily tax due but the amount in dispute. In some cases, it has been paid on account, while in others, it may be moneys claimed back. The potential tax due is about €1.1 billion. I wanted to put that on the record because when I have said it to colleagues, that subtlety has not come out.
There are three cases going on in the commission over several years. One involves €138 million and the two others involve €120 million each, a total of €360 million. We do not have an expected date as to when these cases might be concluded. There is no guarantee but there should be a target date. This is not the Apple money in the escrow account but other significant domestic cases. Again, we want to see the commission with the resources stepping up to the mark. We want to see progress in those cases. It is not good that somebody can delay the issue at length by going through the Tax Appeals Commission.
PAYE modernisation will be dealt with in section 56. How one gets one’s tax free allowance, tax certificate or tax credit will completely change. From 1 January, when employers make payments, they will be directly linked to the online Revenue system. Tax credits, overtime payments and USC will be in real time. Essentially, people’s tax affairs will be conducted by their employer in real time. It will modernise the system in line with those in other countries. This idea of people having to notify their employer of changes in circumstances will change. Deductions will be done by Revenue once an employer is running an approved payroll software system. It will bring a bonus of cashflow to the Exchequer as it will be a little quicker in having tax affairs up to date. It is efficiency and nobody will be asked to pay what they do not need to.
It seems the extra €1 billion from corporation tax receipts was a fluke. Nobody seems to know how it came about, but we know it came about due to a change in accounting standards. That change had to have been known a year ago because they do not happen overnight. They happen with year-end financial statements and are predictable. That it was not predicted suggests we do not have the level of accuracy in estimating tax receipts. We need accuracy to estimate expenditure properly during the current year. We have been off the track in recent years. The Minister for Finance should speak to the Revenue Commissioners and departmental officials to ensure a more robust and tuned-in forecasting system.
We all know we are heavily reliant on ten major companies for a large chunk of our corporation tax. That is fine while it is coming in, but some fine day it will go in the opposite direction. Where would we be if we did not have that extra €1 billion in corporation tax receipts? What would have happened to the shortfall of €700 million in the Department of Health, for example? This is a question the Minister for Finance should address in this Bill. He is freewheeling and enjoying times when the wind is at his back. It will not always be that way.
European standards for expenditure ceilings seem to be a moveable feast. If one asked three different people in the Department of Finance, Revenue and the Central Statistics Office, not to mind Europe, for a clear definition for the headroom based on the Estimates this year, one would get three different answers. There is wriggle room. We were all told these European treaties would help bring about a structure. We have not seen it, however, if we have these extra figures appearing 48 hours before the Budget Statement. Will the Minister ensure more accurate predictions in these areas?
I look forward to the Finance Bill progressing smoothly through Committee Stage. Our end of the bargain was that we would support three budgets, which includes the Finance and Social Welfare Bills. It is up to the Government as to what happens after that.
I welcome the opportunity to speak not just on the Finance Bill but on the budget itself. I was reminded, listening to Deputy Fleming, that this is the third budget in the current confidence and supply arrangement. It is the budget that the so-called experts who hang around the House said we would never get to. In fact, most of them thought we would not get through the first one, never mind the second or third one. It was delivered professionally and in a good spirit. There were disagreements along the way. As somebody who negotiated two of the budgets, I pay tribute to the Minister, Deputy Donohoe, for his professionalism and courtesy in the process. There were disagreements but they were handled professionally and in a courteous manner.
The three budgets combined have achieved progress. They might not have done so as quickly as we might like. Changes and substance were achieved, however, as a result of the confidence and supply agreement. Those who stood back from it like to kick it. I heard an Independent Deputy today speaking of 70 days of talks for the original confidence agreement and issues that were raised at it. He then chose to run away from those talks and not participate to deal with those issues. He feels free to highlight those issues from the corner to my left every day. It is important to reflect that, at a time when new politics is much criticised, achievements and differences were made. This budget and Finance Bill debate mark a chance to reflect on that.
People look at the big budget announcements every year and tot up how it will affect them, but the changes are minimal. One of the main planks of confidence and supply was to bring investment to services on the 2:1 ratio. That ratio has expanded over the years. One of the frustrations, however, is that while this investment is going in, the services are not necessarily improving. We have to be honest about this. One only has to look at the increasing hospital waiting lists. There are difficulties in filling the vacancies to address those waiting lists, with difficulties in attracting people to come back to work as consultants or GPs. We need an honest discussion as to where the budget day announcement goes. It always intrigues me that budget day gets this massive coverage and attention.
The Minister cannot poke his nose outside his door without a camera looking at him. He will then make an announcement of €15 billion or €16 billion for the health service. Last year the health service plan came out on the Wednesday before Christmas when everybody was not really looking at it, but it was even more important than the budget day speech because it contained the detail of where the money would be spent. Let us be fair - the chances of scrutinising a document published two days before Christmas are minimal.
The budgetary process in the past three years has intrigued me in terms of how we can improve and make it better and provide information for people. A lot of big money has been put into housing in recent years, but it is not delivering. We are not getting the new supply that we need. There seems to be a blockage in the Department of Housing, Planning and Local Government and a difficulty lies in its relationship with local authorities. The emergency accommodation list increased again today. I have never seen the situation in my office as severe as it is. There is no private rental accommodation and no social houses available. The staff in Mayo County Council are trying their level best in very difficult circumstances, but that is repeated all over the country. We are told that there is record investment; therefore, somewhere along the way that investment is being lost because it is not delivering on the ground.
I look at our difficulties in filling health service vacancies and the type of money the HSE is spending in providing agency staff relief at all levels, particularly in nursing, and recruiting nurses from abroad. Surely the intelligent way to spend the money is to put it into a proper comprehensive package to address the concerns of nurses. It would not require massive extra expenditure but a refocusing of expenditure.
Similarly, as we look at the difficulties in the health sector and how we encourage people to enter it, in some instances, it is not a pay issue but an issue with HR practice that belongs in a different era. There is now a different way of working; people like to take career and travel breaks. As I look at it, it seems that the system has not actually caught up with this demand and the need to be flexible for people who train in Ireland and in whose education we invest considerable amounts of taxpayers' resources. We expect them to come back to work in our system, but they are choosing not to do so in record numbers. Then we are left with vacancies which lead to hugely distressing situations for families in gaining access to services.
In the context of reform of the budgetary process, we must join the dots. After looking at the three most recent budgets in more depth than I ever looked at previous budgets, it is still a conundrum, on which we need to reflect and focus. The health service plan is an example. I could look at the housing plan, but the detail of the money invested in the health service plan announced by the Minister on budget day slips into the ether. If I were to take a bet on when this year's health service plan will come, I would guess it will be on the Thursday before Christmas. That is the plan that is implemented on the ground throughout the country; that is what needs our time; that is of what the Oireachtas needs to take ownership and it is the plan on which we need to challenge management as to why it is not delivering. We should not allow it to go without scrutiny.
This process has been sandwiched because on the day before the budget we received the Intergovernmental Panel on Climate Change report and today we had the announcement by Bord na Móna that it was completely changing its raison d'être, resulting in huge social and economic change for the communities affected. I must disagree with Deputy Danny Healy-Rae. Generally we get on well, but he is wrong on this issue. We are not exempt from climate change and cannot walk away from our responsibilities because this is a small country. We have a duty to lead. We have a capacity as a small country to lead on many international issues and have done so on peacekeeping, foreign aid and various issues and are respected for doing so. Similarly, we have a responsibility to lead on climate change, regardless of the size of the country. We have more of a responsibility to ourselves to lead on it as an island nation. If we need evidence, we have the weather patterns of the past 12 months since the Minister's second budget. We have been hit by three or four named storms; we had an extraordinarily dry summer, which has had a massive impact on the agricultural community, while storms have caused massive damage, demanding a huge response from local and national authorities and massive financial investment. This is not happening randomly; it is happening because it is part of a pattern of change in weather conditions.
What we need is a Government with the courage of former Deputy Mary Harney in the manner she took on the coal industry in 1991 and changed the atmosphere in this city in one process. I am afraid that the budget just did not reflect the challenge we face. As an Oireachtas - I include myself in this - we are sailing along hoping it will go away, but it will not. We have a duty to those who will come after us to take measures now that will allow Ireland to stand up as a small country and be an international beacon. We need incentives for people to change their behaviour. In his first two budgets the Minister introduced incentives for electric cars, but the infrastructure needed to support them is not in place. The Minister's colleague, Senator Lombard, conducted an interesting exercise over the summer. He drove from Cork to Dublin in an electric car to show the challenges in doing so in terms of the availability of infrastructure. For those of us who depend on our car not as a luxury but as a necessity and have long commutes, if we are to consider changing, the infrastructure must be put in place and the incentives must be improved or promoted better to show us that making the change is practical, as well as beneficial.
Similarly, we need to look at public procurement. Is it climate change proofed? We are having a discussion on building standards. All new State buildings need the highest levels of insulation. No longer should new public buildings be powered by oil. Let us take the lead and power them properly with renewables. I have been involved with the SEAI in refitting some social housing projects in the past year. We have refitted them and moved away from oil fired central heating and open fire heating systems to the new combined heat and power, CHP, system. The difference it has made in the houses is phenomenal, while the difference it has made in running costs is extraordinary, particularly in low income households. An extraordinary difference that I would never have imagined is in people's mental health when they have permanent heat that is not dependent on the vagaries of having a solid fuel supply. I have seen the difference one small example can make in so many ways. Every budget from here on will have to be climate change proofed. We will have to have the ambition, through the budget, be it through incentives or penalties because there will have to be a time when we will have to look at them, that we can be a beacon, regardless of the size of the country. We can lead by action on climate change and stand up for the country and our position.
The discussion on VAT rates is the most high profile in the context of the budget. The change from 9% to 13% will have an impact. It shows that we need to have a discussion on it. We need to understand how areas are chosen for inclusion in particular VAT bands.
There needs to be more transparency in that regard. The VAT system is in need of review. It is a hugely important tax and source of revenue but the common country-wide policy may no longer be as efficient or manageable as it once was. Dublin hotels and restaurants are booming but those in certain other areas of the country are not as healthy and may be more exposed to the United Kingdom market in terms of tourism or various working trends. Businesses in such areas are taking the same hit as those in markets that are healthy and strong and profitable.
I do not know why certain businesses are lumped together in terms of VAT rates. For example, why were hairdressing and hotel rooms put under the same band some decades ago? Dairy products are in a different band to other foodstuffs. It is time for an analysis of which items are under which band.
It is time to consider a proper financial model for local government which would give local authorities the option of levying city or local taxes which would allow them to fund not their day-to-day expenses but, rather, investment in tourism facilities or visitor attractions. That would allow them to ring fence a fund that would give them the capacity to become enablers of tourism and the service economy. The Minister, Deputy Donohoe, was involved in the Wild Atlantic Way. It showed that projects involving minimal investment but a lot of imagination and serious buy-in along the way can work. If local authorities had the capacity to invest properly in their communities, it would benefit tourism and enhance the effects of such successful projects.
On health, we must consider the area of GPs and consultants. We are facing a crisis in GP services. Rural communities are struggling to fill GP vacancies while patients in cities must wait five or six days to get an initial appointment.
Much of this comes back to the issue of services in communities, including rural communities. The discussion regarding post offices is ongoing. However, these issues do not just affect rural areas. How much space over retail units in Dublin is empty? How many lights are off in communities across the city which were heavily populated until 15 or 20 years ago? Previous Finance Acts brought in incentives to turn such empty spaces into liveable accommodation but those schemes did not take off. Many people, particularly older people, would take the option to live in a town and use the services available there. That would put life back into communities not just in towns in rural areas but also in cities. It would also provide part of the solution to the homelessness problem. We must match the existing initiatives with the areas where there is demand for accommodation and encourage people to avail of those initiatives and make that accommodation liveable. One such initiative was known as the living over the shop scheme. It is extraordinary that it has not taken off. I lay the responsibility for that at the door of the Department of Housing, Planning and Local Government. The incentives and schemes are there and the Department needs to promote them more and encourage people to avail of them. That would deliver people back into communities. The necessary services would follow into those communities.
Budget day involves 15 press conferences and hours of speeches. However, we must consider what people take from it once they have calculated how they will be personally affected. Much information and scrutiny is lost in the ether. The interest and drama revolves around one day and people forget about this Bill, the Social Welfare Bill and the various service plans that flow from the budget. Budget day has been changed to earlier in the year but the process has not been changed. We must ask ourselves whether the scrutiny of the process is fit for purpose in the 21st century. I could not currently answer that question in the affirmative, as indicated by some of the examples I have given.
I do not know if there will be a fourth or fifth budget under the confidence and supply agreement. Fianna Fáil has worked hard and constructively to get to the third budget and has achieved a significant amount. We will enter into the review of those three budgets in the same spirit of constructive participation and achievement and adopt the same responsible and businesslike attitude to the process.
It is important to state, as Deputy Calleary mentioned, that this is the third budget under the confidence and supply agreement. Some Members laughed and sneered and said it would not happen. Others abdicated their responsibilities as elected representatives and did not do what they ought to have done. I compliment the Minister, Deputy Donohoe, who is always straightforward and trustworthy. I also compliment those on my side of the House who took part in the difficult negotiations on the three budgets under the confidence and supply agreement. A deal was made in 2016 which, on the whole, has been honoured in so far as we have reached the third budget and, it is hoped, will soon see the passage of the Bill.
In the light of Brexit, it would be wrong not to attempt to have a budget passed considering the crisis which may exist very shortly. It will be a huge challenge for us one way or another. Quite frankly, very few people seem to know what will happen, but if Brexit occurs I have no doubt that it will cause many changes and be a significant challenge for the State. It is to be hoped that the ongoing negotiations will successfully lead to agreement, which is what all Members want. We must not have a hard border. If that occurs, we will be left with many serious challenges, as the Minister will agree.
All budgets involve give and take. I often wonder whether the big build up and presentation of the budget is the correct way to do it. That is not directed at the Minister personally. Obviously, books must be balanced and the figures must be right but in some regards we must modernise the approach to the budget. Perhaps it should not be such a big day in the year but, rather, should be a more relaxed process.
On housing and health, Fianna Fáil has made some progress. I acknowledge the role played by those on the Minister's side of the House who were prepared to listen to and work with us for the betterment of the country. Of course, although those concessions have been agreed, they do not solve everything.
An issue mentioned by many Members which causes me concern is the increase in the VAT rate for the hospitality sector. As I often stay in Dublin, I am familiar with the price of hotel rooms there. They are shocking. The prices being charged by some hotels in Dublin for a night's bed and breakfast are morally wrong. However, that is not the case all over the country. I accept that the drop in the VAT rate to 9% was of huge benefit to the sector, whether in counties Roscommon, Galway, Mayo or elsewhere. That is acknowledged by those in the industry.
From talking to them, I fear there will be some job losses. It will be a challenge because they do not have the footfall.
Running a hotel in a rural area where there are fewer people is very difficult. Insurance costs are colossal. I know that hotels in Dublin can easily state that they have more costs. That is a fair point but hotels in rural areas do not have the footfall. I am coming up against this in the context of a number of restaurants and hotels which, I acknowledge, did well in recent years but which now feel that what is proposed will be a spanner in the works. I know about the Minister's interest in tourism. There was a great sense of enthusiasm among politicians, those in the sector and community groups when the Hidden Heartlands brand was launched. However, much of that enthusiasm has ebbed away and that is a cause for concern. We can look at the promised €35 million fund. I would love to know when the Minister for Transport, Tourism and Sport will be able to reveal how that will work and how it will help hotels, restaurants and people in the sector who are going to face a challenge. The fund might save some businesses from going under. Could the change to the VAT rate not have been done in respect of turnover? Perhaps not and perhaps there are financial reasons for that. If it was done in respect of turnover, we could assess certain businesses at that higher rate and some at the lower. We will see how matters develop in this regard.
There are some measures in the budget to deal with Brexit, which is the big elephant in the room, and its aftermath. There is some appreciation of this in the Finance Bill but I worry about matters such as the collection of VAT on imports from the UK. If the UK leaves the EU, where do matters stand in this regard? That VAT is a significant consideration. I wonder whether this matter has been examined. If the UK leaves, will we experience difficulties and will it cost us money?
In the context of income tax, here are some benefits for taxpayers. I welcome the fact that the USC rate for low and middle-income earners is being reduced.
The budget is not perfect but it is the hand we have been dealt. It was important to allow this budget to go forward, particularly in the context of the country's stability at a time when it faces probably its greatest ever challenge, namely, Brexit.
I welcome the opportunity to contribute to the debate on the Finance Bill. I welcome the fact that the self-employed are getting closer to parity regarding the relevant allowance. The Minister is probably sick of listening to what is being said in this regard. Next year, Revenue will bring in a new system for employers. In fairness, Revenue is contacting employers to explain what this will involve. The message we are getting back is alarming. I am not talking about multinationals, I am referring to businesses such as hairdressers that have two, three, four or five employees. Under the new system whereby employers will be obliged to send information to Revenue every two weeks, accountants are already quoting employers fees of €450 per employee. This will do a great deal of harm to small businesses. If the Minister does nothing else, I ask him to examine this matter and identify how it might be resolved. I can obtain evidence for him if he requires it.
Accountants are quoting fees of €450 per employee in respect of the extra work they will have to do. We must bear in mind that it is more paperwork for them. What is proposed will cripple small businesses. Some of them might already be paying accountants between €1,200 and €1,500. This will double or increase even further if a business has three or four employees. It will be a major problem for businesses such as hairdressers and also nursing homes that have 15 to 20 employees.
In the context of the hotel sector, and as the previous speaker noted, it is a case of "You're damned if you do and you're damned if you don't". There is a hotel boom in Dublin but there will not be too many people looking for bed and breakfast accommodation on Monday, Tuesday or Wednesday nights in most small rural towns. I accept that it is difficult to achieve a balance; it is like a weighing scales. Dublin is doing fairly well. A person would struggle to get a room in the city at night. I am aware that something of the order of €460 million or €470 million will be taken in and that there will be €45 million or €46 million coming back off this, but it will have an effect on those small businesses. I do not know the ins and outs of the situation but I would have preferred a bed tax whereby we could have hit the establishments that are booming and protected those in smaller rural areas.
There are good aspects to the budget. I am not going to say that everything about it is bad. I welcome the measures for pensioners and the fact that the self-employed are getting nearer to the target, although it should have been reached it before this budget. At least we are getting there.
Ireland exports €12 billion worth of agricultural products. Agriculture was the backbone when everything else hit a wall. Some €73 million is being provided in respect of normal agricultural initiatives. However, an additional €103 million or €104 million is to be provided in respect of forestry. That will cause raised eyebrows because forestry does not bring in €12 billion per year. Those in rural areas, for example, beef farmers in the midlands, are going to suffer as a result of Brexit. The cattle sector is shaky enough at present and some of those involved in it would have part-time jobs with Bord na Móna. In that context, the announcement earlier about lay-offs at the company came as a bolt out of the blue. Has anyone ever asked whether we could put the jigsaw about which we are dreaming together? We are going to take 1.5 million tonnes of peat out of production as part of so-called decarbonisation, even though the ESB paid €20 per carbon credit for everything it used. I heard reports about what this was doing to the environment. The ESB was probably the only company in Ireland whose operations were carbon neutral, particularly when one considers what it bought each year. I am concerned about the small farmers and those struggling to raise beef cattle or suckler cows who have part-time jobs with Bord na Móna.
What is in place for them for next year? Has this been accounted for?
At the same time, we are talking about reducing imports. The Corrib gas field is at its peak this year. In 2025, it is expected to be gone. We have decided to reduce 1.5 million tonnes of milled peat and, at the same time, we will have to import it. Some people in the House have spoken about reducing our imports but it will be money going out of the country, people losing jobs and not working in rural areas. That is not good. One can have task forces and other things but it remains a worry for the future.
In agriculture, I have always said suckler cow farmers need more money. I am not saying the €40 allowance per cow in the budget is no good, but it will not save the suckler cow. We need to ensure that family farms are protected.
The Minister has made adjustments to tax. There are many people in middle Ireland who others might think are fairly well off, earning €40,000, €50,000, €55,000 or even €60,000. Those people might have kids in college and a high mortgage. They are the new poor in this country. They pay for everything and are entitled to nothing. That is a problem. I am meeting them day in and day out. I was just on the phone to such a family, and I would have hoped there would have been some alleviation for those people in the Finance Bill. They are losing farms. I spoke to people tonight who live in a western county. There is a receiver going in to them, even though they had an agreement, but Ulster Bank never gave them the letter and Promontoria will appoint a receiver and add more cost to it. There is nothing to facilitate those people. The figures in their case are about €230,000 or €240,000. There is nothing to facilitate those people to try to save their livelihood and live in that area. That is a major problem. I would have hoped there would have been something for them in the Finance Bill. We have been talking about that in this House forever and a day but nothing seems to change.
While there is extra money put towards housing in the Bill, we are not able to spend the money that we have in housing. We are tied up in red tape, policy documents, planning issues and we cannot get to the point of putting bricks and mortar into the ground. We can throw nearly any figure at the problem but we are not able to attain what we need to be spent.
The other thing coming down the line that I do not see much provided for it is the need to get more apprenticeships up and running. I do not see a carrot being dangled for that. While we talk about building houses, we nearly need them to build themselves because of the shortage of machine drivers to dig the ground, pipe layers, bricklayers and plasterers. That problem has been flagged for a few years. There were many of them during the boom, but they got disgusted and went to other employment and they are not going back into it. We have almost lost a generation. We need to focus on that.
I would prefer to keep costs down than to throw money at something. Affordable housing should be prioritised. I know the Minister has spoken about it. It needs to be driven at a faster pace. We are reaching a situation where a house is out of the reach for youngsters working in what I call front-line services. They will need more money. I built a normal house on my own site in 1999 for €50,000 or €60,000. If I say that to someone now, they will ask if it was a tent I put up. If house prices keep going up, wages will have to go up. This is how to redden an economy and leave it in a dangerous position. The front-line staff, such as nurses, gardaí and young teachers, are crucified, especially in Dublin and the main cities. They deserve to have a life and a house, the same as anyone else. It is a damnable thing to say that sometimes it might not pay to work. It should be made very attractive for those people to work, no matter where they are.
I welcome the funding for the N20 from Cork to Mallow and also for Collooney. I talked to the Department of Transport, Tourism and Sport yesterday. Balanced regional development is in the programme for Government and I spoke about it yesterday. We need to get the trans-European transport network, TEN-T, up and running for the western arc railway. We also need dual carriageways for the north, south, east and west of Ireland. Deputy Ó Cuív has spoken about this for many years. I am not only talking about one area. All areas should have the same opportunity. The road from Dublin to Galway has made Galway accessible.
The Finance Bill also mentions climate change. So-called environmentally friendly buses for Bus Éireann will cost 20% more, even if they are environmentally friendly and research is now proving to the contrary. There will be eight buses where previously there were ten from the same budget, so the budget has to increase by 20%. It will cost something like €3 billion for Iarnród Éireann to put electric lines down to run the trains. Do we have that type of money to spend? I question that. I worry that parts of the country will be left behind.
Returning to the roads, I know Collooney is mentioned in the budget, and that is good. Part of the N5 project is going to An Bord Pleanála. We need to drive this on as quickly as possible to ensure we try to attract more businesses to rural parts of Ireland to try to help them.
It is disappointing that there is no plan for a light rail system in Galway. That is required.
I note from the budget that the Minister spoke about investment in Dublin Port, Cork Port and Foynes. The Minister might remember there is also a port in Galway that could do with a few euro to ensure we could bring in ships and cruise liners. Farther along the coast, there is also Killybegs. We should not forget about the northern part of the country. I would have hoped some funding would have been given to that.
I welcome money for overlay at Knock airport.
Knock airport needs the connection of a good road from Tuam to Sligo. When people turn out now on any part of that motorway, there is motorway all the way to Shannon, which is great and appreciated, but they tend to go on the good road rather than the road that is tougher. We need to ensure we give equal status to all the airports around the country.
There are many houses left vacant in smaller towns, which may help alleviate problems in larger towns and cities. If someone can show they are willing to sign up to go there and stay for a few years, the local authority should be able provide some funding mechanism to do up a house and the person then pays it back through rent. I am not saying they should get it for nothing.
Unless we dangle the line of a tax credit for some of the smaller towns that are losing population there will continue to be pressure for more schools, hospitals and other infrastructure in the cities, making them struggle. We need to do something. I made one suggestion to the Department of Housing, Planning and Local Government that we do it on a points basis so that if a person moves to a different area while they are on a social housing list they should go to the top of the pile quicker which provides an incentive.
If the Minister takes note of nothing else I say, he should note this. What is happening with the self-employed is causing a lot of trepidation. I am talking about small businesses and not multinationals which can employ people to complete forms etc. Many small and medium-sized businesses that contact us are fearful of what has to be done. Every two weeks they have to complete all this paperwork and send it in. Many of them have openly said that a big company that is making plenty of profits might have someone there twiddling their thumbs. However, if one is basically just keeping the door open between rates and the different taxes that one pays, it is a struggle to have this thrown in on top. It may be something that has not been foreseen. I am not blaming anybody. However, when a problem comes before a person, they try to alleviate it or solve it rather than maybe closing a door. I know there is much uncertainty about Brexit and this on top of it has put a lot of worry on small businesses in villages.
I am pleased to have the opportunity to speak on the Bill. I am disappointed to note how few Deputies are around tonight. I received a list of speakers which showed Deputy Fleming, Deputy Calleary, Deputy Eugene Murphy, me, Deputy Michael Moynihan and Deputy Fitzmaurice. There were also meant to be Government and Sinn Féin speakers. However, there are no Government and no Sinn Féin speakers, which is disappointing. In previous times, Government Deputies always used the Second Stage of the Finance Bill as an opportunity to think out loud for themselves about things they found wrong with the system in a non-adversarial way. I have no time for the people who come into the House and just read out scripts prepared by somebody upstairs. I have often thought if that is what we do in this House, we might as well just put them online and be done with it.
The Finance Bill provides an opportunity to look at a number of issues. I first return to a hobbyhorse I have had for many years, which is the system's apparent love for complication. I do not mind if it is a big multinational with a team of accountants and other professionals working all sorts of tricks on one; one has to close them down and make it vastly complicated. I am talking about the ordinary taxpayer who might have a small self-employed income and a PAYE income or be working on a scheme. Not only do I find that they do not understand, but I have found that even with what would appear to be reasonably simple questions even officials in the tax office have to go and check because it is such a mass of rules.
The other day a PAYE question arose. It was an issue relating to the allowance for a widow or widower with a dependent child. The question was quite simple. Is the person allowed to get the individual allowance plus the allowance for being widowed with one child which is kind of tapered off over four or five years? When I rang the tax office, the person did not know and said they would come back. They subsequently came back and said that one could. Interestingly this person had made a return for three or four years and the tax office had not realised that it had overtaxed the person. Of course, the problem is that it is not possible to go back more than four years to correct mistakes even if the mistake is made by the tax office.
In another case somebody did not claim the working allowance one can claim - in other words in different employments there is an allowance. There are myriad different allowances for different employments and the cost of work. I would say half the country does not claim the allowance. If someone suddenly becomes aware of it and points out they never got it over the past seven years, the tax office will inform them that they can only claim it for the past four years. The Revenue can come after a taxpayer, but a taxpayer cannot come after Revenue.
Another person five years ago did not tick the box to claim the €1,650 employee tax credit, formerly known as the PAYE tax credit. Revenue did not spot it even though it was obvious PAYE income because it was filled in the PAYE box in the tax return. That person cannot get the €1,650 now. These issues cause huge alienation.
When I was a Minister I looked in despair at some of the forms my Department had. I often wondered how the hell we got involved in making a complicated form when many questions could have been much simpler. I stayed up one night and rewrote the form. I met the officials the next day because we were having one of these customer-friendly things we were all into - all this love-in and fora to be customer friendly. I told them that the next time they designed a form in any Department, they should go down to the far end of the Department and give that new form to somebody who has never seen the form before but is a full-time civil servant. I have great time for civil servants. I said if they cannot fill it and if they come back and ask what something means or how to answer something, it should not be given to the public who are not half as skilled in the ways of the world.
I absolutely believe if I gave 80% of the population a tax form to fill - they might have PAYE income, a very small amount of self-employed income and all the rest - they would come back with many questions. Should it really be like that?
I am interested in this PAYE modernisation. I can see the attraction from the State's point of view because it will get everything in by the fortnight and should have the details. That will be very handy, but handy for whom? If the information is used to be consumer friendly to the individual taxpayer, it is a great idea.
One thing that amazes me is that when somebody is issued with a tax form, the authorities already know the PAYE income. They have this information on the P35. That form is to become redundant but the authorities will still know the details. They will actually know by the week. Also known is the social welfare income one has because there is data-matching. I often wonder why the authorities cannot give the individual the relevant information on the form and state that if he or she is happy with it, he or she does not have to supply the information requested.
If, for example, somebody is in receipt of an invalidity pension and perhaps has a private pension, he or she has to write to the Department of Employment Affairs and Social Protection. This process has been made more complicated because 1 January is not the date used for everything. The simple thing is to write to the Department and ask it how much invalidity pension one got for the year. With that pension, there is the rate at the beginning of the year and the rate for the other part of the year, from 17 March. Then one has to calculate the Christmas bonus at 80%, 70% or, as I hope it will be this year, 100%. The tax officials already know the information, however.
The same applies to social welfare. I do not know whether the Minister ever filled out a pension form. This applies right across the board. The data-matching is possible. When filling out a pension form, one is asked about one's history of employment. What we do to get around all this work is write to the Department asking for the contribution record. When we get it, we ask the individual whether it looks right. If it does, we advise the person not to bother filling in all the detail but to copy the contribution record and throw it in with the file. My constituents are absolutely amazed by this because it saves so much hassle. It is time we started thinking of the consumer and making compliance easy.
We should get rid of the small tax reliefs. I have raised this for years. Small tax reliefs are great for aficionados. Unions love them, as do farmers. If, however, the ordinary punter is given a choice between claiming a bit here, there and everywhere and taking a credit of €200 or €300, he or she will take the flat credit and be done with it. If the Minister does not believe me, he should try it.
Years ago there was a scheme that compensated farmers for the loss of sheep. Of course, the IFA said its members' sheep would be worth a lot more than the going rate. Being ever generous, I said that if it could prove to me, with expenses and sales figures, that its members' sheep were making more than the standard price I was giving, I would consider the claims and make the payments. Of the 4,000 farmers, only four came back having bothered to do the accounts. The other 3,996 took the cheque and ran, saying it was awfully handy and that they got their money without hassle or complication.
Consider the circumstances when trying to fill out a medical card application form. This all goes round in a circle because all the officials have access to the relevant information. The medical card application form is the top of the tops. The officials have the information but insist on getting it from the applicant also. How many of us have received requests for P60s and so on when the Department could have got the information required at the press of a button?
The example I love most concerns what happens when the Department of Agriculture, Food and the Marine, on finding out some small farmer in the back end of Connemara has received €500 through a farm grant, looks for full farm accounts to see how much profit he has been making from the five acres of bog. He is told he has to make a tax return and have a tax assessment although he has no tax, USC or PRSI to pay in order to get a medical card. This country is mad.
As I said, much of the time the Department already has the information. If one submits the wrong information, the Department will say it is wrong because it already knows the correct information.
Could we start running the country for the people? A judgment was given in the case of Ó Beoláin. It was related to the Irish language. The late Mr. Justice Hardiman made a very fundamental point. He said the State places a burden on people but that means it should place a burden on itself in helping the people. It was a very interesting principle and one that could simplify life for many people. Not everything in life is about money. How many people passed things up because they are too complicated, and how many do not claim what they are entitled to because doing so is too complicated? So many schemes, tax reliefs and other measures involve significant frustration and complication for the ordinary people.
Everyone wants everything online. There are two problems with that, one being, as we know from the debacle of the past few weeks, that there are many places where there is no Internet available. I use a computer all day every day and do so many things online. I would not say I am stupid about doing things online but find some websites much easier to use than others. In other cases, it is very complicated to figure out what one is meant to do. Many websites are not very user-friendly. Therefore, insisting on online submission means people often have to pay for expensive professional advice to obtain very small sums of money.
It is time we simplified matters for the punter. I read the Bill and see all the lovely corporate stuff, which is fine. That is a different game and it is in a different league. The majority of the people, however, do not live sophisticated, complicated lives.
With regard to form 11, even if one's income is only €15,000 per year there are 48 pages of questions to respond to. The self-assessment part at the back is mind-boggling to those who try to fill it out. I suggest that the Minister go back to the office now, get the form, start filling it out and do the calculations with a view to seeing what goes where. I would have said the old-fashioned tax assessment gave the punter much more information. I do not know why the new system is as it is. It gives the authorities some very magical information but the document is not as useful as the old one, which referred to the income at the top. It then stated one's gross figure and one's personal allowances, including the PAYE allowance, income relief etc. It then had the calculation for the USC and PRSI. It was all on one page. The next page aggregated the whole lot and stated whether one owed money. The new form is much more complicated and gives a lot less information. When the Minister tries to fill out the form when he goes back to the office tonight, he will find out that I am not exaggerating what we are on about.
The budget tinkered at the edges. Unfortunately, with both the social welfare code and budget this year, we have just been playing around at the edges. There is no reform taking place. Reform is needed urgently. Reform is required to simplify taxpayer compliance and so people will understand their taxes.
We introduced the USC at a time of severe recession but it was a bit like Wellington's income tax, which was introduced initially to pay for the Napoleonic wars as a very temporary expedient. It is still with us. I never agreed in principle with the idea of three taxes. It is messy and complicated. When one tries to mesh all the rules, one finds the ordinary person does not really understand how his or her tax is calculated. He or she is entitled to understand that. I favour amalgamation into a two-tax system. The same amount of money would have to be taken in. It would have to be revenue neutral. We cannot live in an El Dorado in which there would be no taxes. We should take in the same amount of money but go back to a two-tax system, involving both income tax and social insurance payments, with the latter allowing the State to make all the social insurance payments in any year and leaving a little for the Social Insurance Fund.
The quicker we abolish the USC the better. With all its crinkles and complications it does not mesh in with the rest of the system.
I wish to make a further comment. Despite all the talk about successful cities, this city and most cities have two main features now. One is the fact that areas of huge deprivation, with by far the highest deprivation in the country, are in urban areas. That is a scientific fact. The second feature is gridlock in the mornings and evenings. If we continue to grow our cities as fast as we are doing and as planned we will never catch up. There are two ways in which we could begin to resolve that issue. One is to please the public servants and do what they overwhelmingly wish, which is to reinstitute a decentralisation programme. All the surveys of applications by people who want to go to Dublin or who want to get out of Dublin, where we can get the data from the Department, show that the majority are trying to get out, not get in. Anybody who says the decentralised Departments do not work as efficiently must prove their thesis because that certainly was not my experience. The Departments of Education and Skills and Employment Affairs and Social Protection that were decentralised work perfectly.
The second way is through our old friend broadband. One way to reduce traffic at peak hours is to provide good broadband for people everywhere so they can do more of their work from home, a practice that is becoming more common internationally. They would not have to face the nightmare of the commute into and out of the city twice a day for the arbitrary reason of being in an office at an arbitrary time and wasting their time, burning carbon unnecessarily and clogging the roads. That quiet revolution is taking place and the only thing holding it back is lack of broadband. People consistently contact me about getting the broadband they need at home. They work for all sorts of companies in various places. They tell me they can do half of their work from home rather than going into work every day. Imagine what that would do for the traffic. That is a very simple move instead of building lots of roads. It is interesting that IKEA, which is a very smart operator, has an entire section for the home office. It knows what is happening. The home office is becoming big.
I am really sorry that reform - simplification for the ordinary person and taking the drudgery out of life - is not in this Bill when the Minister already has the information.
I am grateful for the opportunity to contribute to the debate on the Finance Bill, which gives effect to the changes that have been announced in the budget and implements them in law. Our party has started on negotiations with the Government on housing, health and, indeed, the other major issue facing us which is Brexit and how that will unfold internationally and how it will affect us.
I wish to address a number of issues in the Bill. With regard to housing, many commentators say it is a huge issue for urban areas and the large cities, but the housing crisis affects small rural townlands across the country as much as it affects the large urban centres. We must deal with housing as a whole. There has been massive growth on the east coast and we see the demand for housing and the jobs that are available for young people there, but we must seek to have a rebalanced society and ensure that housing is available in every part of the country. That means all types of housing. My colleague referred to the complication of forms but there has been a huge tightening or complication in enacting housing policy. Every Deputy in the House says he or she wants more housing and more affordable housing that is within reach of ordinary people. If one does the calculations on the salaries that are paid to professionals or young people at any level, be it in the private or public sector, and one looks at the multiples of their salaries and the mortgages stretching over 25 to 30 years, it is tying them as slaves to making sure they have a roof over their head. One hears other commentators talk about the attitude in Ireland to housing and making sure we have a house. However, that is quite right because that basic instinct of Irish people regarding housing has stood the test of time. We must ensure affordable housing is available in all parts of the country.
I made a point yesterday to the Taoiseach and he said on two occasions that he did not understand it. I was talking about the major challenge facing Irish society over the next 20 years. Some 15% to 18% of our society is living in substandard accommodation. The people there have grown up on welfare and very low incomes. They are not engaging in society at any level, from the very young right up through the ages. They are outside of society and do not value the education system that is greatly valued across the country. Our policy must be to try to get more people actively participating in education so they can be educated to become full members of society and to have a better lifestyle and better social integration with everybody. It will cause fewer social problems. Some of the planning that provides for huge numbers of houses but no facilities leads to that. When the inner city was cleaned out back in the 1960s huge housing developments were built west of Dublin but no facilities were provided. Society has paid a price for that in terms of policing and so forth over recent decades. That is coming out of the taxes Deputy Ó Cuív mentioned for the public purse and what the budget sets down with regard to taxes. That tax is going to pay all these sectors. There is a cost to society and not only in terms of the human cost for people who are living in those conditions. These societies are not just in large urban centres but are in every community.
We must acknowledge the massive contribution education has made to society, particularly since free secondary education was introduced 50 years ago, and how it has effected change in almost three generations of people. It has had a hugely positive impact on our society, but we must consider those who are being left behind. There is a massive number of people who can contribute enormously to society. At a small level one can see where one or two families in a community did not finish second level education or consider third level education, yet they went on to become leaders in that community and enhance it. We must acknowledge the massive achievements that have been made but we also must be critical in terms of how we go about integrating people and the resources that are available at primary school and childcare levels. We must ensure that all children, whether they come from affluent parts of the country, rural areas or areas of deprivation, have an opportunity even where there is a challenge for them in moving forward.
I turn to agriculture and the budget. It has been a very challenging year for agriculture owing to a number of issues. There has been major pressure on the suckler cow herd. It is only right for me to declare my interest in this issue because I am a suckler cow farmer. During the marts in late August and early September there was despondency in the beef sector. These are farmers who are only willing to derive an income from sustainable farming enterprises. We have to make sure that when there is a new scheme to help farmers, it does not present further challenges or result in duplication of paperwork to further addle farmers in trying to gain the maximum amount in grants. Every year the Department cross-checks EU payments, the EU auditors look at them and there are many people making sure the money is being spent and channelled in the right way to farmers. Where there are overclaims to the Department of Agriculture, Food and the Marine or when issues are declared, the Department will write to the farmer in August or September to state there is a discrepancy in the payments. Let us consider the case of a farmer who wants to challenge this or make sure the Department's claim is or is not correct. In that situation perhaps it might keep to one side part of the payment or the percentage being challenged until the issue is resolved between it and the farmer and not hold up every single payment. Farmers came into this year, in particular, with a cash flow difficulty that has been encountered since this time last year following Storm Ophelia and continued through to this year. The Department should only take account of what is being challenged and pay the rest.
Last year there were low income loans which helped farmers enormously to pay creditors, merchants and so on. There is a need for clarity on that issue. We need to make sure they are put in place in the Finance Bill and delivered very early in 2019. One businessman who has a small business which he has operated for 40 or 50 years told me this week that cash had dried up completely. Disposable income has almost dried up in rural communities since 15 August. Farmers are finding it extremely difficult to obtain funds, receive payments or be paid.
With regard to available income, I raise the issue of the cost of education, third level education in particular. The income limits for third level grants are in the early €40,000's. I have met many parents who have one, two or three children going to college. They may be double income families who, on the face of it, one would say are doing well, but they have to meet the cost of third level education for their children who must travel to the cities to access third level institutes. They have to meet the cost of accommodation which has spiralled out of control. The Minister and every Deputy in the House understand these challenges. These families are looking at a cost of €15,000 or €20,000 per annum for education. This puts third level education out of the reach of a number of people. On Monday I was told that some families would only be able to afford to send only one or two members to third level education. That will balance our books, but it will have a detrimental effect on society as we move forward. The Minister has been on delegations across the globe and one of the great selling points is Ireland's great education system and well educated young people. We must continue to educate them to the highest possible level.
On the effects of increasing social welfare payments and how it comes into play, there are a number of little issues. Any practising politician might come across anomalies in the system. Carer's benefit is paid for two years to people who come out of employment to provide care for a relative who needs it, be it an elderly relative or a sibling or a child. The payment should be looked at seriously to see if it could be extended to cover a period of more than two years. There is room for it. There is no way anybody on the financial side of government can stand over the delays in paying carer's and disability allowances. When a person applies for carer's allowance for the family, he or she has withdrawn from a job to provide care for a loved one. The application process can take 14 weeks to complete. On the face of it, the problem can be easily solved. People who are qualified in processing such applications can clearly see if a person will qualify when the income details, medical reports and so on are produced, yet the process takes 14 weeks. There is then a further delay and sometimes the application can enter into the appeals process. If it is approved, the payment is backdated to the day on which the application was made; therefore, there is no financial gain to the State in holding up payments. The delay has to be looked at. Will the Minister say if there is a shortage of staff within the Department to process applications? We have seen how illness benefit payments were affected recently, with huge delays due to a change of software in the Department.
Fianna Fáil put health at the forefront of it policies for the budget to get a better deal for healthcare services. The extra money promised in 2018 has not delivered the required respite care services people need. People look forward to receiving respite care. Many families have come to us to explain that they have gone to the service provider to look for extra respite care services and that when the business case is made to the HSE - it is an appalling way to phrase what is a care need for an individual - it can take a long time for the application to get through the system. It may then be turned down or the family may only receive assistance on four days in every quarter. In 2017 the issue of respite care was discussed during Topical Issues debates, Leaders' Questions and questions on promised legislation, but it has not led to a satisfactory service. Families have been promised shared care services, that they will receive assistance on two, three or four days per week. These are families whose parents, for example, are advancing in years or who have looked after their loved one for 40 or 50 years. They were listed as a priority, but the shared care service budget is not in place. Yesterday the Taoiseach said more money was being put in through the budget for respite care services. I sincerely hope this funding will go directly to service providers to make sure they will be in a position to deliver respite care services families so badly need.
We have had many discussions on the allocation of home help hours and the work of people who deliver home help services. The home help service is one of the most innovative in the State. It delivers a huge dividend to the State in keeping people in their own home for longer and supporting families who have loved ones who need care. It is a fantastic system. People who applied for a home care package last June or July and were approved by the district nurse and the home care assessors are still waiting. The phrase that is always used by the State is "natural wastage", but the fact is people are always waiting for somebody to die in order that his or her home help hours can be freed for allocation to another person. That, unfortunately, was my experience during the summer.
I now turn to the issue of medical cards. There are people who apply for the over 70s medical card and do not qualify because they are perhaps €600 above the limit. However, they may have huge health issues.
The mechanisms need to ensure that the health of that person or family member who requires help or a medical card is taken into account. There is a mechanism within the medical card scheme for the over 70s that takes the medical condition as well as the financial situation into account. The delays in the approval of the medical card lead to a lot of challenges.
I genuinely believe that when a patient is diagnosed with cancer, he or she should given a medical card for six months automatically. If there is a cancer diagnosis, a medical card should be allowed for the period of treatment. Please God, the patient will go on to recover his or her health, but if there are issues that will be with him or her for a long time, only then should he or she have to go back over the bits and pieces Deputy Ó Cuív just mentioned - the P60s and all the rest of it. Such patients should, however, have an automatic entitlement to the card.
On infrastructure and our roads, there were many thoughts in respect of further funding but in the budget, in the Finance Bill and in our commentary we have to make sure that more money is given to local authorities to improve the local rural roads network. Over recent years a lot of damage has been done to rural roads. We have seen all of the issues. We have seen all of the major infrastructure projects, which are very badly needed. We have been waiting for generations for some of the major infrastructure projects, such as the N20 which goes through part of my constituency, Charleville and so forth. There was a briefing on that project back in January and one man said that it was his sixth time at a briefing in respect of the same road. That road and that network needs to interlink the south, Cork, Limerick and on up the west and open up the area for further development.
Decentralisation has been scoffed at by many people in these Houses but I will say the following about every single Department that has been decentralised. When we, as practising politicians in these Houses, are in contact with these Departments, whether in Letterkenny, Athlone or Portlaoise, and whether it is in respect of agriculture, education or social welfare, we see that they are top of the range. They are superb with regard to how they do their business. It is of enormous benefit to have these Departments in communities. From a wider point of view, it is better that the civil servants see what is happening throughout the country. While it is a small island, we cannot have everything centralised in one place in Dublin. We have to get a broader view of how we go forward.
Broadband has been debated, mentioned and talked about. We have to be serious about it and understand the challenges. I am sure the Government is waking up to the challenges and to the broadband issue. The promises made by Alex White and Pat Rabbitte when they were in the House with me amount to nothing. It is time that we accept that a semi-State body is the only way to make sure that there is broadband in Kiskeam as well as in Dublin or anywhere else. It is vitally important that we empower every single person living in every single part of this country to have the same access to online services as those anywhere else. We can then derive a huge amount of benefit from a regional development point of view.
One company, which has a base in Dublin and another just outside Kanturk in County Cork, is paying €800 per month for its broadband connection in Kanturk and €50 in Dublin. That is a major imbalance. We have to be serious about rural development and regional development. We have fine young people who are willing to live in every part of the country. We have to give them the chance and we have to empower these communities.
I could speak at length. I have got through three of the seven-----
I thank the Ceann Comhairle. I have got through three of the eight points I wanted to raise. We need to look at simplifying grant aid to communities because they are doing massive voluntary work and should be empowered to do so.
I thank all the Deputies who contributed to this debate. In particular, I thank Deputies Moynihan and Fitzmaurice for their contributions and for staying in the House for the conclusion of the debate on this very important legislation.
I want to offer two broad thoughts on the group of contributions I heard this evening, if I can, before I go on to deal with the content of them. The first is that, for many who would make the charge that those of us who practise politics and become public representatives here in the Dáil in some way live in a bubble separated from those who elect us, the contributions made by Deputies Fitzmaurice and Moynihan offer a very strong counterargument. The way in which each Deputy went through issues that are of concern to their constituents in a very detailed and constructive way shows very much the grasp that many in this House have of the challenges that our constituents face, of their needs, and of the way they are articulated. I acknowledge that, at a time in which the practice of politics and public life is coming under a lot of criticism and scrutiny, much of which is deserved, the contributions those two Deputies made in conclusion at the end of a busy day for many showed very clearly the focus that they and other Deputies, who are not present and who are dealing with other matters, have in representing their constituents.
I am very pleased that Deputy Calleary is back in the Chamber because his contribution made me think about the second point I would like to make. I acknowledge the way in which he approached what were, at times, very demanding negotiations over the past two years. I particularly remember one weekend before the first budget during which our good cheer and professionalism did not crack although we had some difficult matters to deal with. I acknowledge the way in which he has approached all of the engagement he and his party colleagues have had in respect of this budget and the previous two. I also acknowledge Deputies Michael McGrath and Cowen.
Before I comment on some of the very thoughtful points the Deputy made about the gap between resources available and outputs delivered, I want to touch on a point which he, Deputy Eugene Murphy and Deputy Fleming made. Other Government speakers would also have made it during this debate. It is that, as was said, many speculated that we would not get to this budget. Many speculated that this Dáil would not reach these achievements and end points. I remember in the very early days of this Dáil, which were at times very challenging, the speculation grew that the duration of the Dáil would not be long and that our output would be short. While all of us can always look back at things that could have been different or better, at a time in which a lack of compromise and, at times, of basic civility is evident in how politics in conducted elsewhere, I believe that many Deputies in this House have risen to the challenge of disagreeing with each other while agreeing to try to make progress and to deliver what they think is best for the country and for their constituents.
We can differ. I had parliamentary questions this morning in respect of the Department of Public Expenditure and Reform. I differed with every Deputy who put a question to me, including Deputies from Deputy Calleary's party, but I did not approach anybody from the point of view of seeing him or her as an enemy. I saw them as colleagues who have different views on policy matters from my own. We should be able to have an engagement with each other that may at times be heated, but at other times we should be able to reach agreement on matters, and we have.
A telling moment for me on this budget was when the Financial Resolutions passed on the night of the budget. They were the kinds of changes that many critics of economic policy in the past said this Dáil would not be able to do yet we did them. They were passed by significant majorities. Some Deputies abstained, some voted in favour and others opposed them but nonetheless decisions were made.
Deputy Calleary asked a number of very important questions, which I reflect on often, about how we can translate higher levels of resources into better services for those we are privileged to serve. I will put three points to the Deputy which helped me see what is the answer. It is something we need to look at even better in 2019 and beyond. The first point is on the issue of timing. Perhaps as a result of our parliamentary cycles and how accelerated media cycles have become, we make policy decisions and allocate resources behind those policy decisions but the outcomes take time to deliver. The best example of that is what we see happening in education, particularly at primary level, where decisions can be made about pupil-teacher ratios, SNAs and curriculums but the effects will only become apparent after quite a period of time has passed. Similarly in healthcare, we can make very significant decisions on very large amounts of money but most of that money, if used well, should be used well either for preventative uses or to stop health conditions from becoming particularly acute. It takes time to measure whether the allocation of additional funding has led to a better outcome. That said, I accept there are some decisions that should feed through into a quicker outcome but good policy decisions by their nature sometimes do not lead to policy outcomes that are immediate.
The second point I offer to the Deputy is that much of the additional resources we put in place at budget time should have a preventative effect. It is a lot harder to measure something not happening than it is to measure things happening that we are trying to stop happening. To give an example, it is far easier to measure the presence of crime than it is to measure how successful measures are by the gardaí to prevent it happening in the first place. I do not think our indicators in Ireland have caught up with that bit. We should put some thought into how we will do it.
I made a speech about my third point elsewhere a while ago, namely, the issue of how we can deliver better outcomes for our citizens. We do not give enough credit here to what can be achieved. I referred to parliamentary questions earlier. If one looks at our schools, a lot of issues are raised by Deputies in the House regarding what we believe education should be doing better and what we believe it can achieve particularly for our younger citizens who have special needs or who come from disadvantaged communities. Anybody who goes into a primary school or a classroom cannot help but be really impressed by all of the positive work that happens there.
All of us will have a lot of experience of dealing with constituents who have difficulties with our healthcare system. Most of us acknowledge the outcomes that are available in our health system once one gets into it and gets beyond the accident and emergency departments and primary care centres. Health outcomes have been transformed for this generation compared with the last one. In the cut and thrust of political debate we sometimes do not give enough credit to that. That creates a broader problem where we all, many of us motivated by good intentions, always focus on what is wrong and we are then in an environment where citizens are constantly reminded of, and experience themselves, what our public services cannot do. Perhaps we are not giving enough recognition to what public services are able to do.
I will refer to an issue I hear Fianna Fáil raise constantly, which it is right to raise. It is something the Fianna Fáil Party is proud of and which it should be proud of and that is the decision it made on free education. The impact of free education and its transformative effects on our country only became evident decades afterwards when we saw what happened with the modernisation of our economy and when we saw what happened to our society. People knew it was a big decision at the time but nobody could have known how big an effect it would have until after the passage of a number of years.
I wanted to respond to the points made because they are really important points about how an economy intersects with the needs of a society. I will also say a word about the detailed points other Deputies raised on the Finance Bill.
Deputy Doherty raised a number of points on which I strongly differ with him. He made a point about why we are investing any money at all in tax reductions and tax reform. I am sure we will tease it out on Committee Stage, but in the absence of decisions like this we would have at least 60,000 more citizens subject to the higher rate of income tax and the only reason would be the same workers are now experiencing wage growth after many years of wages either going down or stagnating.
Deputy Sherlock and Deputy Doherty also made the point that if workers' incomes are below a certain level, in particular below €25,000, the benefit such workers are getting from tax reductions are getting smaller and smaller. The real challenge we have here now is, for example, if one is a single worker earning €20,000, one's effective tax rate is now 6.9%. If the Oireachtas or a Minister for Finance makes a decision to cut that tax level even lower, it will cost the Exchequer overall a huge amount of money because to reduce a tax rate below that level for that level of income costs a lot to the State because it effects all taxpayers. The second thing is the effect of investing that gigantic amount of money will be to take more and more workers out of the tax nets. We do not want to do that. We want to be in a position where if one's income is above a certain level and if citizens' incomes are above a certain level more and more of them will make a contribution of some kind to the public services we have. Something that will be increasingly important to me and to Ministers for Finance for many years to come is how we manage this issue. We have the balance right. If one's income is below a certain level, the level of tax one is paying is low because one's income is low. If we begin reducing that rate even further, we will take people out of the tax net, it will cost the State a lot of money and the returns those workers will see in their purse or wallet will be very small. That is behind the issue that is being raised.
Deputy Cowen touched on a number of matters, particularly on the health service and housing. He voiced his concern about a number of matters.
In particular, he asked where we are with the EII. As we move the Finance Bill through Committee Stage, in particular section 23, it is my intention to look at how we can restructure that scheme to make it clearer and more certain for taxpayers.
Deputy Broughan raised a number of issues about the cost of different tax expenditure schemes. The EII scheme, in particular, cost €21.4 million in 2017, while the SURE scheme cost €1.9 million in 2016, which is the latest year for which the figures are available.
Deputy Durkan emphasised the need for us to remain competitive and the importance of the 12.5% corporation tax rate, to which I reaffirm my commitment as I did in my Budget Statement. As we look to ensure that our rate is competitive and that we retain our right under EU treaties to determine our tax base, we need to continue with our work to ensure progress is made on other issues with the corporation tax code and its interaction with global tax collection, for which the Finance Bill 2018 contains some important measures.
To return to Deputy Broughan's contributions, he asked for further detail on the progress of the section 481 film relief scheme. The Bill includes a number of measures that reflect the review that my Department carried out on the operation of section 481.
Deputy Cowen made reference to issues with the equalisation of DIRT and the life assurance exit tax. The reason I did not make further decisions on this comes back to the need to make choices and the need to allocate the resources of our taxpayers while having regard to the resources available to me on budget day.
A number of colleagues raised the Finance Bill provisions for betting tax and the change that I am introducing in the Bill. I understand the concerns that have been raised by colleagues about independent bookmakers and the challenges that small bookmakers will face because of this change. I must emphasise how low the level of taxation is, namely, 1%. In the lifetime of the last Dáil and in the recent lifetime of previous Governments, it was multiples of this. The revenue in this industry has gone up and up, as has the profitability within the industry, but the tax the State collects has not increased in line with that. I fully accept that measures like this have an effect on smaller operators and owners of smaller businesses in the sector but taxation, by its nature, must be applied to every sector of our economy. We should conform to the principle that as parts of our economy grow and as they have grown, they should contribute back to public services, especially if there are social costs from some of the economic activity that goes on in the sector. I believe this measure and decision are right. I look forward to explaining it further on Committee Stage and hearing the views of Deputies on the matter.
That is fine. I wish to comment briefly on some of the other points that were raised here this evening.
I listened to Deputy Ó Cuív's comments about the need to simplify the tax code and the sharing of information between Departments, which is what underpins the public service cards. I agree with his point that if a citizen supplies information to the State, particularly when it is created by the State in the first place and then made available to the citizen, it should not be the case that the citizen must supply the same information to multiple agencies. It is a fair point and it is why the work is under way in the SAFE 2 process, where citizens who must provide information to the State receive a single digital identity which, once it is has been provided, is used by the State to ensure information is available to all Departments more quickly than it is now.
Deputy Fitzmaurice made points about agriculture, rural Ireland, transport and the challenges we face in how we can organise transport efficiently, but his key point was regarding his concern with the costs that are imposed on accounting firms as a result of PAYE modernisation, especially on smaller companies. I will take the point on board because PAYE modernisation confers an important benefit to the State overall, some of which deals with the point Deputy Ó Cuív made. I will examine whether there is any way I can raise the matter that Deputy Fitzmaurice outlined about how the modernisation could create a great deal of cost for smaller companies as a result of charges that are applied to them by accounting companies.
It is a big change to the tax code but I wish to see the roll-out of PAYE modernisation. The Deputy was good enough to acknowledge the Revenue Commissioners' efforts to reach out to companies. It has every chance of being a success but I know that issues such as the Deputy raised can certainly affect it.
Deputy Fleming made many points about health and housing, which are key themes of the budget overall. From the point of view of expenditure and the availability of resources, the clear choice that has been made is to allocate many additional resources next year to ensure those two key Departments have an even better ability to meet the needs of citizens who rely on them to provide services.
In conclusion, over the number of hours of this debate many Deputies referred to Brexit. I said in my Budget Statement this is the greatest diplomatic and political challenge of a generation. It is becoming more and more apparent to me that this is a challenge that will have many different stages. Given the diplomatic and political effort the Government is putting into this and the support that parties and the country offer on the issue, I am confident we will secure a positive outcome in regard to the withdrawal treaty. It will be demanding, however, and there will be much work that will happen up to that point. There will also be risks, as the Taoiseach outlined today, and it will change the economic and political prospects of the country. Budget 2019 went some way to helping us deal with those challenges, and I look forward to working with Deputies in the House on Committee Stage of the Finance Bill to ensure the passage of the budget.