Wednesday, 12 June 2019
Ceisteanna (Atógáil) - Questions (Resumed)
I propose to take Questions Nos. 5 and 6 together.
The economic division in my Department assists me, and the Government, in developing and implementing policy to deliver sustainable and regionally balanced economic growth and quality jobs, promote effective planning and delivery of infrastructure, including housing, and to ensure a whole-of-Government approach to data protection and broader digital issues.
There are 24 posts in the economic division, including one assistant secretary and three principal officers. It has units dealing with economic policy, economic infrastructure, regulation, and climate change, and digital issues.
My Department also has a dedicated unit on Brexit preparedness and contingency planning. This unit, working closely with the Department of Foreign Affairs and Trade, which has lead responsibility in this area, focuses on cross-Government co-ordination, planning and programme management, as well as communications on Brexit preparedness. It works closely with the economic division, and has a current staffing complement of ten.
The economic division includes officials with a range of relevant economic qualifications, including specialist staff recruited as part of the Irish Government Economic and Evaluation Service, IGEES, as well as at least five staff with either PhD or Masters qualifications in economic or other relevant policy disciplines, as well as others with extensive experience dealing with economic and related policy issues.
The division assists the work of two Cabinet committees and associated senior officials groups.
Cabinet Committee A deals with issues relating to the economy, labour market, competitiveness, productivity, rural development, digital economy and pensions.
Cabinet Committee D works to ensure a co-ordinated approach to the delivery and ongoing development of policy across the areas of infrastructure investment and delivery, housing, and climate action.
The division also leads Ireland's participation in the annual European Semester; prepares the annual national risk assessment, which provides an opportunity to identify and consider strategic risks on a structured basis - the 2019 draft national risk assessment was recently published for consultation; and liaises with the Central Statistics Office.
The division also leads the Future Jobs Ireland initiative in partnership with the Department of Business, Enterprise and Innovation. This aims to ensure we are well placed to meet future challenges facing the economy with a focus on quality, sustainable jobs and making sure Ireland is geared to secure the new jobs and new wealth of the future.
It focuses on innovation and technological change, improving SME productivity, developing skills and talent, increasing participation in the labour force and assisting the transition to a low-carbon economy.
A unit within the division works with the Minister of State with responsibility for data protection to ensure a cross-Government approach to data protection and broader digital issues. It provides the secretariat to the interdepartmental committee on data issues and to the Government data forum.
It is also currently leading, in collaboration with other relevant Departments, the development of a new overarching national digital strategy to enable Ireland to maximise the societal and economic benefits from digitalisation.
The division also provides me with briefing and speech material on economic and related policy issues.
Given its role, the division works closely with colleagues in the Departments of Finance and Public Expenditure and Reform, and with colleagues in other Departments, which have lead responsibility for specific policy areas.
This is an economic question. The Taoiseach attacked the Opposition without discernment, I notice. Everything good is done by the Government and everything bad by the Opposition. I will take no lectures from the Taoiseach on economic management. Mine was the only party that opposed and voted against the ruinous bank guarantee that led us into incredible difficulties, which were borne by the people of Ireland for such a long time. I know a record of economic good management accrues to my party and I take credit for that for my party. We established the IGEES, which was an idea that I had, to get the best graduates and to deploy them across all Departments, so they would have the capacity for proper economic evaluation across government. We championed the reform of the budgetary process.
The Taoiseach needs to be more discerning in his general criticisms.
Real criticisms are being levelled at the Government, which the Taoiseach needs to take seriously and not only by lip service. He has given significant promises for tax reductions in the context of the real demand for service improvements because of the incapacity of the State for the bones of a decade to invest in service improvements on the scale required. This means we must prioritise. Does the Taoiseach accept that we need to prioritise in the short term the improvement of public services to deal with demographic issues and deficiencies in public services over the coming times in areas like housing, social care and childcare as opposed to any commitment to tax reductions? Is that not the right and prudent way to go?
I wish to point out to the Taoiseach that under the confidence and supply agreement, Fianna Fáil has facilitated the past three budgets and has not taken an approach of wild expenditure commitments. Fianna Fáil has been highly responsible, as the Minister for Finance has confirmed. The Taoiseach might take note of that and have the generosity of spirit to acknowledge it because there would not have been a Government or an Oireachtas otherwise. We would have an election every year if such an approach were not taken based on policy.
The Taoiseach is not being honest or truthful on the budgetary framework. The bottom line is that the Taoiseach cannot square the circle in terms of what is available to spend and the promises that he has made. The bottom line is that housing and health are in dire straits. There is no question about that. They will need additional supports.
The fact of the matter is that it was the Taoiseach who made the tax pledge of €3 billion more than a year ago because he thought there would be a general election last year. Let us make no mistake about it. It was the Taoiseach who made promises in advance of the local elections, not anyone in the Opposition. The Taoiseach said, without even consulting in advance, that he would spend €3 billion despite the fact that the Secretary General of the Department of Public Expenditure and Reform said it was madness. Essentially, that is what he said. He did not use that language but anyone can read through the memorandum. It is a damning indictment of the Taoiseach's stewardship of these issues. The Secretary General said the circle cannot be squared.
The national development plan is becoming a fiction. The Secretary General said the Government would need €345 million for the children's hospital in the next two years and a further €1 billion for the broadband plan. The circle cannot be squared. We need some honesty in terms of the budgetary framework. Is it not the case that the Government cannot produce the hundreds of millions of euro that would be required to go anywhere near the Taoiseach's tax pledge, made more than a year ago, and still meet the housing and homelessness crisis as well as the health crisis?
More money needs to be spent on housing and health to address the crisis in both of those things and in many areas of the public service too. The Irish Fiscal Advisory Council representatives said - I am on the committee - that if the Government is going to do that, then it must find extra sources of revenue. Those of us in People Before Profit are unique in that in every single budget submission we have put forward proposals for substantial extra revenue that could be raised by looking at closing tax loopholes that benefit the corporations, increasing employers' PRSI, as well as introducing wealth taxes and taxes on property speculation. We know vast sums of money are being made in that sector.
I want to ask the Taoiseach about affordable housing. We have a situation in the country now where people who are working in reasonably well-paid jobs do not have a prayer of being able to buy a house. Often this applies to couples. Cuckoo funds are swooping in and buying built-to-rent blocks. They are pushing out any prospect of people who are working on reasonable earnings ever being able to own a home. These are people who in the past would have got mortgages. Instead, they are living at home with their parents in overcrowded conditions. This is rampant throughout the country. This is because the Rebuilding Ireland home loan mortgage scheme is not properly funded, the Government has not delivered affordable housing, and the Government is allowing cuckoo funds essentially to control the construction market and everything that is built. Thus there is no affordable housing for people who are working hard and paying their taxes. They are seeking a reasonable expectation of being able to put a roof over their head, either rented or purchased, but the Government is failing in that regard. Do we not need extra resources going in? Do we not need the State to provide affordable housing or to provide extra resources to the Rebuilding Ireland mortgage scheme?
I think I picked up Deputy Howlin as saying that I criticised the Opposition without discernment, but if he looks back over the record, he will find that I actually was discerning. I specifically mentioned Fianna Fáil and Sinn Féin but not the Labour Party, which I acknowledge has a good record in Government in terms of managing the public finances. This was the case not only under the stewardship of Deputy Howlin but under that of Ruairí Quinn and the rainbow coalition Government too. The Labour Party has been less keen to demand extra spending than other Opposition parties. I specifically mentioned Sinn Féin, whose policy is to spend more, run a bigger deficit and do it through borrowing. That is absolutely reckless. I called out Fianna Fáil for the weekly demands for additional spending in different areas. That is ongoing and we will see if that continues over the next five weeks.
I have made proposals when it comes to tax policy. Essentially, I have proposed the equivalent of indexation. Incomes rise every year. If we do not increase the tax bands and tax credits in line with that-----
More and more people end up paying the higher rate of tax and that is not fair or right. It is costed at approximately €500 million per year to do that for the tax bands.
How can the Taoiseach square the circle? Where is the money going to come from? The Secretary General of the Department of Public Expenditure and Reform has a different view.
I am coming to that. It is the norm in other countries. It is the policy default position in many countries. Those countries index tax bands and tax credits. This is something that has been recommended by the ESRI. The ESRI has a report out on the issue today.
How is it done? According to the Irish Fiscal Advisory Council, the fiscal space this year is in the region of €3 billion. In future years it could be higher or lower depending on what happens with Brexit. A total of €500 million out of €3 billion fiscal space is approximately 20%. I was asked whether I would prioritise public services and infrastructure over tax reductions. Yes, I absolutely would. A tax package of approximately €500 million per year from a fiscal space of €3 billion represents a 4:1 split in favour of public services and infrastructure over tax reduction. In fact, it is a little to the left of what the Labour Party and Fine Gael Government did. We had greater tax packages in the last two budgets than we have had in the past or as I propose for the future.
I should say again that what I suggested and proposed as policy was to be done over the period of a five-year Government and not in this budget or necessarily in any one budget.
I stand over the Government's record when it comes to reducing income tax and USC. We have done both in the past three budgets and I make no apologies for that whatsoever. We have reduced the USC to take more low-paid people out of that net altogether and ensure that all people pay less. We have also raised the bar at which people pay the highest rate of income tax. I believe people pay that rate too soon in Ireland. In other countries this does not apply to people earning €35,000 or €40,000 per year. The average salary now in Ireland for someone working full-time is €47,000 per year. In most countries such people do not pay a marginal rate of 40% or 50%. They only pay that when they earn far more. People on average incomes in Ireland get a pay increase or an increment and do some overtime but lose more than half of that in income tax. That is unfair.
I will outline what we have done in the past three years, if we add it all up. Income tax and USC reductions have been worth approximately €1,500 per year to the average household. That was a good thing to do. It might not be a vast amount of money, but for a large number of people it is the equivalent of a monthly mortgage repayment, a month's childcare or a month's rent. That would not have happened otherwise. The average household would be that much worse off had it not been for the tax packages in the past three budgets.
As I mentioned before when referring to housing, approximately 18,000 new homes were built in Ireland last year, including houses and apartments.
We expect 22,000 or more to be built this year, and many of those new homes and apartments are affordable. They are not designated as such under an affordable scheme, but they are affordable. There are counties in Ireland, particularly outside of Dublin, where the average house price is €100,000 or €120,000. I accept that that is not the case in Dublin or in other urban areas, but there are large parts of the country where housing is affordable. Dublin and some urban areas are different and that is why we need a dedicated affordable housing scheme.
It is very much on the way. The Rebuilding Ireland home loan scheme is continuing to accept applicants. People are drawing down the money, and it is not all drawn down yet.