Thursday, 14 July 2022
Summer Economic Statement: Statements (Resumed)
As the Leas-Cheann Comhairle was reading the list of various Topical Issue matters, it brought into focus what we are talking about here. While the summer economic statement may paint a rosy picture, when you listen to those matters raised, you hear of all the various issues throughout the country that are affecting people. These are the issues of services mainly that are so devoid in so many areas throughout the country. While summary statistics may paint a certain picture, they often hide the reality for so many people. That is what we recognise in this debate.
A number of issues need to be dealt with in the justice area in the upcoming budget. There are significant delays in the courts service and courts system that are causing much anxiety and problems for many people, particularly in the family court service but indeed in all the court services. There needs to be an emphasis in the budget to make sure resources are put in place to alleviate that. That is one of the issues that needs to be dealt with.
In regard to An Garda Síochána and the numbers of gardaí, community gardaí is a real issue for people throughout the country, especially in urban areas where we have high crime statistics. That needs to be dealt with.
On the broader stuff, the issue of us having these bumper corporation tax receipts has been talked of as a potential problem down the road. The issue is that a small number of large corporations are producing a large section of that taxation. We have no difficulty with that. We need to see those corporations pay their proper share of taxation, which they had not done for a very long time, an issue we have all recognised and which is possibly one of the reasons they are now starting to pay a little closer to the proper rate of 12.5%, which they were supposed to have been paying up to now. That said, I understand a large portion of that is down to intellectual property and issues around that, which is something that may end in the future.
That tells us the Government needs to have another plan and not for us to put all our eggs in the one basket of foreign direct investment, FDI, as the means to deliver for our economy. It should also build another economy, our domestic economy, particularly in our regions and in the region I come from, the north west, where we have significant problems with infrastructure and investment and which we need to see the Government step up to the mark and provide for. That can only happen if the Government has a commitment to do that. In the national development plan and all of the furore that was around it, we saw great plans put in place but, unfortunately, for many people in the north west in particular and in many other parts of the country, we have seen very little delivery. We hope this budget will address that.
The issue we are most critical of at this time is the cost-of-living problem. So many people are finding it so difficult to manage and the Government is so slow to react to it. There has to be a commitment by the Government to deliver for the people who are at the base of our economy, who are working hard, who are doing everything they can to pay their way and who find it so difficult. When they look to the Government for assistance, they have up until now got very little. I will pass on to my colleague.
Deputy Andrews, Deputy McGuinness and Deputy Kenny dealt with some of the realities of the world people are living in. It is a matter of the services that are not being dealt with. It is a matter of failures over many years, such as CervicalCheck, thalidomide and women dealing with the mesh issue. It is a matter of disability services and mental health services. We are all dealing with the issues of no psychologists, no psychiatrists, no consultants, no special needs assistants, SNAs, no speech and language therapists, SLTs, and no occupational therapists, OTs. The preparatory work has not been done to ensure we have the throughput for training, that the people are in place and that we can deliver the service. We go round and round the garden and we do not get to the place we need to be.
We can talk about glorious figures and all the rest of it. I will not even go through what Sinn Féin or anybody else called for here in relation to an emergency budget. We all realise people are under severe, significant pressure at this time. The Government has said it is not going down the road we would have liked it to go, and it has put all its eggs in the basket of the budget. We need to ensure that budget delivers for people because they are under severe strain. We can talk about inflation rates, but everybody knows this is not about the figure of 9.6%. It is about the cost of putting fuel in your car. It is about the cost of paying your electricity bill. It is about the cost of childcare and housing. These are the original sins we brought to party in this State. These are the problems we did not deal with and everyone has to deal with in society. Until we deal with those issues, we will have a cost-of-living crisis no matter what the international situation. The Government cannot do everything, but it can definitely do more. The pressure is going to be on and it will have deliver in this budget.
The Government has shown utter disrespect for democracy this week by barrelling through a deluge of legislation that was guillotined without proper scrutiny. It is a cynical tactic. It shows contempt both for this House and for the people. Some of us have protested very strongly at the Business Committee about this. Unfortunately, however, the Business Committee is not a democracy and the Government does what it likes.
The Government has shown further contempt for this House and, far more importantly, for hundreds of thousands of workers, students, pensioners, low- and middle-income households by failing to take serious measures to protect them from the crushing cost-of-living crisis and the housing and homelessness crisis that are imposing terrible suffering on people at the moment, by going off on this summer recess without taking serious emergency measures to address that, and then, today, not even having the respect to stay for two hours for the last opportunity Deputies have to present the concerns, hardships and difficulties people are facing before the budget. It is utterly disrespectful.
It is why I am very glad that the Cost of Living Coalition, which is a coalition of pensioners, students, trade unionists, single parents groups, Travellers groups and so on, has named the date for what I hope will be a massive national demonstration to put manners on this Government on Saturday, 24 August 2022. When the Government shows that level of disrespect where not only does it not take measures to respond to a dire cost of living and housing crisis, but it will not even stay to listen to those who are trying to present those concerns on the last day of the Dáil term, the only answer is people power. We had to do the same on water charges to get people out on the streets. I sincerely hope that tens of thousands take to the streets to send that message to this Government before it makes the final decisions on budget 2023. When workers, pensioners and students have effectively had their incomes and wages cut by 10%, because that is what inflation means, people are being made poorer. In fact, the less well-off people are, the poorer they are made because the cost of living increases in energy, heating, electricity, petrol, food, diesel and housing disproportionately hurt the people who are least able to deal with them. We, and people on the streets, will be demanding that as an absolute minimum the Government inflation-proofs people's incomes and that we see wages, pensions, student grants, social welfare benefits, disability payments, fuel allowances, living alone increases, child benefit and all of the things that potentially keep people out of poverty - although many people are being driven into poverty - increased at least to the level of inflation. Many of those who are denied supports because their income is marginally above income thresholds and are driven over a cliff when their income goes over those thresholds. They get no support.
I am absolutely furious that this Government has broken its promise to review the social housing income thresholds. It promised that there would be an announcement on that before the summer break. It has gone off without doing so. As the Economic and Social Research Institute, ESRI, pointed out, ten years ago 47% of households in this country were entitled to social housing and social housing support. People were lucky to get a council house, but at least they might get some financial support through HAP and the rental accommodation scheme, RAS. The number has dropped from 47% to 33%, a massive stealth cut. Working people who could not afford the extortionate rents and house prices used to get at least some financial support from the State. That has been slashed. The Government has done nothing, even though it has been sitting on the review of that for five years now. The review was published in December 2021, yet the Government will show us the results. It is a nasty, nasty stealth cut. There are issues with all sorts of other thresholds. This week I raised the case of a former An Post worker, now a pensioner, who is getting a semi-State pension. That is all he gets. He is living below the official CSO poverty line. He is not entitled to fuel allowance, a living alone increase or the household benefits package. It is absolutely disgusting. Those thresholds need to be raised for people who need help more than ever. They were struggling before this cost of living crisis, but now they are being absolutely crucified and many of them are being denied any support at all. For those who are getting support, it is totally inadequate. In reality, the income they receive and supports they are getting are worth 10% less than they were previously, if not more.
On the housing crisis, here is a proposal. This is where I am really furious. No disrespect to the Minister of State, Deputy Noonan, but he is the Minister of State with responsibility for heritage and electoral reform. What on earth is he doing taking this debate rather than the Minister for Finance or the Minister for Public Expenditure and Reform? Really, I am talking to the officials, who hopefully will pass on some proposals. One of the main narratives that the Government has come out with is to say that we have all this extra corporate tax revenue, but we cannot spend it because it is not a sustainable source of revenue, that it is vulnerable to possible changes and we cannot actually use it to shield people from the cost of living and housing crisis that is absolutely crushing them. I have a suggestion on a sustainable way to spend that money and simultaneously address the crisis. The Government should use that money to buy up the empty properties that are lying around the country. According to CSO estimates, there are 35,000 rental properties and 45,000 houses that are sitting there empty when we are facing the worst housing and homelessness crisis in the history of the State. Buy them. It is a good investment, not a dangerous investment. It would add to the capital stock and housing stock, it would potentially reduce the amount spent on HAP payments and it would be a State asset. It would be an asset for the State when we have some of the lowest levels of social housing provision in Europe. The proportion of our housing stock that is social housing is 9%. The figures for Austria and Denmark are 25% and 19%, respectively. It is important for people in this country to know that all of Europe is being affected by the Ukrainian crisis and is seeing some increases in the cost of living and the cost of housing, but we are far worse off than anywhere else because we have a lower proportion of social housing, because we do not have the rent controls that they have in most of the rest of Europe and because most of the rest of Europe index-links social welfare payments, pensions and so on so they are shielded against the impact of inflation and cost of living increases. Do not hide behind the Ukrainian crisis.
Electricity prices in his country are 26% higher than the EU average. Housing and utility prices are 78% higher than the EU average. Rents in this country have gone up 70% in the last ten years and 19% in the last two years. In the rest of Europe over the last ten years rents have gone up by 13%, a fraction of what has happened here. There is something fundamentally dysfunctional. It is a key point about the cost of living and housing crises that while huge numbers of workers, students and pensioners are suffering, some people are gaining. For some people, it is not a crisis, it is a bonanza. It is a bonanza for the investment funds, the vulture funds, the energy companies, the big food distribution companies and the property speculators. They are making a fortune. Yet, this Government will not even contemplate some redistributive taxes or windfall taxes. Even the Johnson government was willing, albeit under pressure, to have windfall taxes to redistribute some of the super profits being made by these corporations to protect ordinary people from a crushing cost of living and housing crisis.
For the record, it is well-established parliamentary practice for a Minister of State to sit in for part or all of a debate, as the case may be. There is nothing extraordinary about the Minister of State, Deputy Noonan, being here. I do know that Deputy Boyd Barrett intends no offence to him.
Members should listen to one another. It is a debate. I think it is extraordinary that we have come to the stage in this House that terms such as big companies in the food sector, big companies in the ICT sector or big companies in the energy sector should become terms of abuse.
This is how we sometimes regard these companies, which have created between them the economic success we have enjoyed over the past decade, having come from a difficult position. They are now regarded as pariahs in this country. The truth is that many of those enterprises that receive so little attention and are treated with contempt in this House by the Opposition are the companies that have restored our economic sovereignty and have brought us back to a position where we have 2.5 million people employed and under 5% unemployment. The truth is, which it is not popular to hear in the House it seems, that unless we have enterprise success married with social progress and environmental sustainability, we are going to fail future generations. Many Members come into this House focus solely on the perceived and, indeed, real deficiencies in our public services, but we will not be able to deliver improved public services without the robust arteries of a strong food sector led by internationally competitive companies, a strong energy sector and a strong ICT sector. These are the arteries that underpin any successful economy in this world of ours. We then have the derision with which the Opposition treats those companies.
I was privileged to work with those companies at a time the economy was on its knees. They sought new markets, found new ways of solving problems and have generated very strong tax revenues for us. We are now in a position where we can use those moneys now to address what is an unprecedented global challenge. We must pay some attention to the difficulties these companies are facing, both small and large. We have rising interest rates, supply bottlenecks that are very real, and economic difficulties in many of their key markets. Those companies that are treated with such derision in this House are the backbone of this country and we have to ensure in this coming budget that we support and make sure they can continue to thrive in very difficult circumstances.
I am a long time in this House and I have witnessed the difficult times. I have seen the havoc that has been created for small, ordinary people who have borne the brunt of political mistakes when they have been made. Members who come into this House and find only fault with the public service and look to enterprise as some pariah that should pay more miss the point. We need to have those forces in harness and, especially with the Minister of State, Deputy Noonan, in the Chamber, I emphasise that environmental sustainability is a third pillar of that stool. We will not have the sort of society we want unless we can get those three pillars together: enterprise success, environmental sustainability and social progress, which can be framed by the former.
One of the other realities that emerges from the summer economic statement, which must be taken to heart, is that we cannot compensate everyone for the losses in income that have occurred as a result of the vast amounts we have to transfer abroad to pay higher commodity and energy prices. That is the sad reality.
Let us consider what is happening in other countries. Germany is now considering fuel rationing and it is debating how it will choose between keeping homes warm and keeping their industries going. That is the reality of the world we are living in. Members who say that this is a bottomless pool of money that the State should have to compensate everyone for the impact of the changes are deceiving the people. We have to be very careful and cautious in this budget and to look to where people are struggling and ensure that we support them. We also have to make sure that the decisions we make are ones that are resilient for the long term. It is not just about this year but the years ahead that will make certain that we can pass a strong society to the generations that will come after us.
I appeal to the Ministers to consider one priority above all else in the budget, which is to have a national resilience programme. Many opportunities could be seized to deliver shallow retrofits quickly, not just to the 500,000 houses that we hope to address over the coming decade, but to the 2 million households around the country, many of which are not protected by even basic retrofits or basic smart controls to allow them to cut down on their heat use. Some 1 million homes have smart meters and they are not being utilised because of general data protection regulation restrictions requiring people to opt in instead of arranging for opt out.
We are not developing the sharing platforms that could reduce our reliance on private motoring and private car ownership. We are not delivering the infrastructure to allow people to switch to electric vehicles which immediately ceases our dependence on electric vehicles. We are not taking seriously our commitment to halve food waste. Such waste is worth €700 for every household in the country. We are not helping people to make the switches between providers where well over €2,000 can be saved by helping people to switch or by changing the regulatory environment to make it more obligatory for the various suppliers to tell consumers that they are on higher payment plans than they need to be.
We must hold strong to an approach that recognises that we need mixed economy solutions to all of our challenges and not to pretend that the State is almighty and does not need the private sector to deliver success.
I welcome the opportunity to examine the summer economic statement.
Clearly, we have a challenging period ahead. The Government was not found wanting when it came to supporting incomes, jobs and enterprise during the Covid-19 pandemic. People recognise that the pandemic was handled reasonably well. However, the increased cost of living is having an impact on their standard of living. Inflation has moved beyond energy prices and is now impacting core inflation rates. The budget needs to be framed with this in mind. We need to see an increases to social welfare and pension rates to match that of core inflation rates. These costs are unlikely to reduce over the medium to long term. Core inflation is running at about 4%, so we need to see a €10 to €15 per week increase in social welfare rates.
Energy costs are a slightly different matter. They may fall back next year or over the medium term if the war in Ukraine ends or as we shift to more renewable energies. However, this winter the cost of energy will be a major factor, particularly in Dublin were most households use natural gas. Wholesale gas prices are up to three times 2021 rates. If they stay at this level, people will be looking at significant energy bills.
It is disappointing in many respects that more was not done over the summer to prepare Ireland for the winter. Many of us in this House called for a national effort to insulate homes ahead of the winter. I have raised the need half a dozen times or more to provide solar panels for people with high energy use, for instance, those with medical needs, to help to defray some of the costs. Unfortunately, I have no progress to report. This window is rapidly closing and I ask the Minister and his colleagues in the various Departments to step in to provide significant support for those vulnerable households over the coming months.
The fuel allowance should be topped up by way of a temporary enhancement. We need eligibility expanded and a second band introduced for people earning slightly above the current eligibility limits. Pensioners with a modest private pension and people on carer's allowance also need to be looked after. The eligibility threshold for carer’s allowance needs to be increased and a second band created to support working families. These families are at the pin of their collar and do not have the capacity to make ends meet. Even a second band with a half payment for households that are slightly above the income threshold would offer some relief to them. If this cannot be done, perhaps the criteria can be loosened for appeals. We need progress in this regard. It is not possible for many carers to seek other income opportunities.
I welcome the recent allocation of funding to increase the back to school clothing and footwear allowance by €100. This will give families some relief as they prepare to return to school. Again, this is something I have called for in the recent past.
There will need to be a significant tax package in budget 2023. The relatively high rates of income tax for people with middle incomes needs to be addressed. These households are struggling to deal with the cost of inflation.
Tax relief in the form of adjustments to the tax bands is badly needed. It is ridiculous that people are being pushed into the higher 40% bracket with earnings of just €36,800. The equivalent in the UK is £50,271. I would favour some relief on USC or PRSI bands to ensure they are indexed for workers on lower incomes so they are no worse off. Others have mentioned health and education. I will not repeat what has been said, other than to support the temporary uplift in grants to deal with energy costs. We also need to closely examine pre-budget submissions from groups such as the Irish Cancer Society, Age Action and Alone to ensure their reasonable policy suggestions are given adequate consideration in advance of budget 2023.
The budgetary position for Ireland is relatively positive. I agree with many of Deputy Bruton's comments regarding the outlook for the budget and the expectation around the preparation for it. We expect to run a surplus and there is scope to manage things well. We need to be prudent and focused about what we target and where we target resources. I favour changes tied to core inflation rates with generous but focused emergency uplifts to help people deal with those energy costs. The focus must be on working families, pensioners, carers, workers on modest incomes and peoples on the margins.
Everett McKinley Dirksen, a US politician and civil rights activist, coined the famous phrase, "A billion here, a billion there, and pretty soon you're talking real money". Never in the history of the State have we had as large a sum of public money to disburse. It is €85.8 billion next year, up 6.5% on last year. With that also, never has our national debt been higher. It is €241 billion. Now we are talking real money. This whopping number is double the national debt at the end of 2011, which stood at €119 billion.
As before, a lot of public resources will be wasted in the mismanagement of that expenditure. I point the Minister of State toThe Irish Timesyesterday where the HSE announced an agreement to bring orthopaedic patients to Alicante to a new hospital built for €60 million, and how that compares to our dysfunctional procurement of the national children's hospital, now approaching €2 billion. No one knows how this poly-crisis affecting the global economy will unfold but in this country we had better hope and pray we have seen the worst of it because we are running out of wriggle room in the coming years if it gets any worse.
This Government, like all previous Governments, is all too quick to spend its way out of the early stages of a crisis. Have we not learned anything from the national nightmares of past years, all of which started with domestic financial indiscipline? Have we learned nothing from our past over-reliance on an unstable tax base? In the past, it was stamp duty from construction activity. Today it is corporate tax from foreign direct investment, FDI. Why is there a real unwillingness to tackle competitiveness and productivity issues in our economy, particularly in our mollycoddled professions of medicine, construction, finance, insurance, retail and law? Of course we would need measures to support the most vulnerable in the cost-of-living crisis but much more needs to be done to tackle the root cause of inflation in our competitive sectors.
We need to fix our own house before seeking the help of the international debt markets or the kindness of strangers, or implementing aggressive corporate tax strategies. These do much damage to our international reputation for being a well-managed economic partner.
Regarding the announced summer economic statement, the Government is signalling that it is keeping all people happy all of the time. It is now a magic money tree whose aspiration is to deliver a package that works to protect the long-term wellness of our economy and society but at significant cost. Not only is the Government spending fecklessly, we cannot see where the money goes.
I had two clarifying exchanges in the Dáil last week. In the first, the Tánaiste confirmed that he shares my view that the data in the summer economic statement is inadequate to allow Dáil oversight. When I put it to him that this was to give Cabinet members a free hand to support their own pet projects, largely in Cork and Dublin, the home constituencies of almost all senior Ministers, he could not refute my point using any data. In the summer economic statement we get again foggy sentiment rather than hard data and nothing like the proper granular data on public spending that we need, in particular on capital projects, as are available to every other OECD parliament. This feeds the practical sense that vast parts of Ireland, particularly the north east and west, midlands and our region of the south east, are frozen out of a fair share of capital spending. We see the money going in. It is €87 billion this year, €12 billion of which is going on capital projects. Of this €12 billion, the south east should get €1 billion and Waterford should get €300 million. With the data available to me, I estimate the south east got just €330 million, one third of its due.
The second clarifying discussion I had was with the Taoiseach on the recent vote of confidence. In exchange for durable and reliable support for the Government in the current and next semesters, I asked for nothing more than concrete delivery on the regional priorities committed to in the programme for Government and reiteratedad nauseam by Cabinet members. Priorities in acute healthcare, education and transport are what I sought. I asked the Taoiseach to provide political hope to the south east that some or any of our priorities would advance. I was not gauche enough to raise any specific project. I simply asked him to point to something positive in the works for the region, anything that was aligned with Government policy and regional priorities. I am sad to say that nothing could be identified.
I am repeatedly on the record of the House seeking explicit advancement of regional rather than constituency priorities. I will likely be asked to vote for the budget in the coming months, despite Government being unable to show any project in the works for the south east or any advance on the capital for the region's acute healthcare or capital investment in our higher education or infrastructure. All this in a region equating to 10% of the country. A billion euro here, a billion euro there and nothing like the €1 billion that is its fair share for the south-east region.
The future will tell if this summer economic statement was a macroeconomic mistake or a lost opportunity to get our house in order before further international hardship bites. However, it is clear, and the Tánaiste agrees, that it is a technically flawed presentation of our State's financial circumstances. We have the sizzle but are missing the sausage. We have engaging oratory and unengaged data. Along with that, our Taoiseach has made clear it holds nothing for the south-east region. Perhaps that is a shortcoming that can be addressed but the clock is counting down. If this summer economic statement is a requiem to celebrate the past two and a half years of the present Dáil's tenure, it is obvious that the snuff of this wake was and is reserved solely for Dublin and Cork consumption.
The summer economic statement is a key component of the annual budget cycle providing an economic context and setting outside of the parameters of the budget. Unfortunately, this year's statement has not provided any certainty to households struggling with the immediate effect of the cost-of-living crisis and serious questions surround the credibility of some of the figures published. It offers little hope to households struggling with the soaring cost of living this summer, as workers and families face increasing energy bills and food prices and a drop in living standards. What was needed was an immediate emergency budget before summer recess. These families cannot face a wait of eight weeks for the Dáil to return from the summer recess or a ten-week wait for the budget announcements that may not be implemented until next year.
We learned this morning that prices rose by 9.1% in the year to June 2022, the largest increase in 38 years. In answer to a parliamentary question from my colleague, an Teachta Doherty, the Minister for Finance confirmed that the summer economic statement was framed with the assumption of an inflation rate of 7% to 8%. What provision has been made for contingency if this is the situation and if it worsens further? On the subject of contingency, this Government often blames unforeseen events for poor performance, yet we have a lack of clarity on plans to contribute to a rainy day fund. Government Members often talk about the pensions time bomb, but we have no clarity on plans to top up the National Pensions Reserve Fund.
This uncertainty only adds to the stress and anxiety of workers and families who are struggling with rising prices and poor public services in the here and now. This week, we saw that Spain, having cut the cost of public transport by half, has now made train journeys of less than 300 km free of charge. Why does the Government not consider radical proposals such as this, which would make sense from a climate action point of view as well as a cost-of-living perspective? We have seen what is called an anti-inflation shield in Poland. The VAT rate on food, gas and fertiliser has been cut to 0%, the rate on electricity and heating has been cut to 5% and the rate on fuel has been cut to 8%. Why has the Government not done something similar here?
The Government could take decisive action that would have an immediate effect on inflation and relieve the pressure on families, farmers and hauliers but it chooses to fiddle while Rome burns. Deputy Bruton spoke about companies. Many farmers and hauliers operate as small companies and are struggling to keep their employees paid and supplied with work. We need to address the cost of diesel, insurance and so on as well.
It seems that every week one of the energy companies announces a price hike despite the fact that we are told we are producing vast amounts of electricity from wind turbines and have gas coming from the Corrib fields and the UK interconnector. At this stage, it looks like price gouging. We all know that is what is going on. What action will the Government take to address this massive contributory factor to inflation? Will it consider a windfall tax on energy profits? I suspect it will not because the lobbyists would not like that. With the Uber leaks and the Planning and Development (Amendment) (No. 2) Bill 2022, we have seen that this Government exists to keep lobbyists happy.
There are also serious questions surrounding the summer economic statement. The Government has provided no allocation for increases in public sector pay. Mr. Sebastian Barnes of the Irish Fiscal Advisory Council told the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach yesterday that full costings on actions to meet climate targets and deliver Sláintecare had not been provided by the Government. The allocation to fund the existing level of services remains unchanged from last year. This is despite the budget watchdog recently warning that these costs will increase as a result of inflation. As a result, we do not know what funding is available for new measures to improve public services, to deliver additional affordable housing and to increase social welfare rates in response to inflation.
Workers and families needed certainty that the Government would act immediately to support them in the face of a cost-of-living crisis this summer. They did not get that certainty from the summer economic statement. Workers and families needed clarity and certainty about budget 2023 and whether it will deliver in the core areas of housing, health, childcare and education. They did not get that either.
Last week, representatives of the Economic and Social Research Institute, ESRI, attended a meeting of the Committee on Budgetary Oversight, of which I am a member. One of the things that stood out was the mention of the lack of statistical information and the need to invest in the Central Statistics Office, CSO. We are not measuring properly. We cannot plan properly to address these issues. This is a basic requirement and this issue needs to be addressed. In speaking on that, the ESRI told us that it was approximately a year behind with its statistics. That is not solely due to Covid. We need to address all of those issues.
It is welcome to work within a budgetary structure in which we have a measured opportunity to reflect on income tax, the current economic position, the challenges the country faces and the necessary and appropriate budgetary responses. I always welcome the process of the summer economic statements and the autumn statements because it shows a State that is thinking, planning and reflecting on the challenges it faces and the information that is coming to it in an open and transparent way. Looking back over the last ten years, it can be seen how the budgetary process has evolved. While it is very dull and a bit of an anorak subject, this process has developed into one of the responsible, mature and evolved political institutions that are a hallmark of a developed, democratic and mature state. It sets out the reality of the need to protect the centre and where our income tax is coming from and the conditions associated with that.
There is a lot of discussion in this House of a failed state. There is a narrative that Ireland has failed in many different ways. There are glib attacks on those in the middle ground who create enterprise and take risks and on those who work and pay tax and who do not receive any State supports. There is a constant contempt for enterprise and, it seems, for those who work in it despite how dependent we are on enterprise for job creation. Over recent years, more than 700,000 jobs have been created by enterprise. They were not created by Government. Government creates the conditions for jobs to be created and only that. It can just as easily undo that and take away the conditions in which jobs and enterprises are created.
We have to ask a basic question because I never hear the answer from the Opposition benches. Do Opposition Deputies want to create and protect jobs - yes or no? Are they interested in creating, protecting and maintaining jobs - yes or no? Is that something they are interested in, because I never hear that?
Deputy Patricia Ryan was correct to mention agriculture and small enterprise. They are a part of what we are talking about when we talk about jobs. On income tax cuts, I was challenged by Deputy Mac Lochlainn who suggested they were tax cuts for the rich. They were tax cuts for middle-income earners, which the Deputy voted against. Are those in the Opposition interested in creating and maintaining jobs? I remember when the unemployment rate was at 15% and 16%. I remember, as I am sure Deputies across the House do, the social impact on families of job losses and the effects of emigration. There is no mention in this populist narrative of how emigration has been reversed and how enterprises have been able to create jobs. Again, while Government creates the conditions, it is enterprises that create the jobs.
In that same time, we have increased the minimum wage, begun moving to a living wage and substantially increased the supports available to employees of all different organisations. I refer to sick pay, the retention of tips and different types of leave for different social situations, including miscarriage. These are all important and all welcome but none of them matter if you do not have a job against which to bench them.
These are meaningless words at a time of full employment but we have seen how volatile the economy can be and how volatile geopolitics has been. The key watchword in the summer economic statement is "uncertainty". The near-term fiscal outlook is highly uncertain; of course it is when we consider what has happened in the last five years, never mind the last two. On the upside, we have been surprised by certain tax revenues but we have full notice that corporate tax, in particular, is uncertain and that we cannot build an economy or society upon it. We have to take the steps we can to preserve and protect that rather than steps to tax it and make the returns worse.
Those who work in the private sector should lean in and listen beyond the rhetoric. They should ask what are political parties saying about their jobs and their pay. Sinn Féin, for example, proposes four separate tax measures related to jobs worth nearly €1 billion. This includes a change to employers' PRSI. That is a tax on jobs. What does it even mean? It means fewer jobs, less risk-taking by employers and it being more expensive to create a job with the pot of revenue employers have available to pay incomes. It does not mean any sort of increase.
Do we want to pay a salary and keep people out of poverty - yes or no? Are we happy to take steps on tax to keep people out of social welfare bands? You cannot say, as some Deputies do, that people must be kept out of poverty while also voting against and complaining about tax cuts that attempt to do exactly that for workers. Some Deputies claim to represent workers but they do not represent workers who pay tax and to whom we want to give indexation so that they pay less tax and have a better opportunity to stay out of poverty. These might be policy inconsistencies but they mean real things for real people. Despite this, we only ever hear rhetoric and glib attacks on enterprise and tax cuts. However, these measures are targeted at keeping people in well-paid jobs, genuinely improving the conditions for people in jobs and making sure they take home as much of their pay, which they need more than ever because of the increase in the cost of living, as possible. That is really important.
My priority and that of Fine Gael in preparing for budget 2023 is maintaining conditions in a highly volatile and uncertain world so that we can retain employment and continue to attract employment because we know what an important social and economic measure that is.
It is about making work pay and making sure people, particularly those on middle incomes who are so caught and pressed due to not receiving State supports, are offered the chance to take home more of their pay. Those are the things that are most important to my party, and to me, and I look forward to the budget that delivers on them.
It is very welcome that we have the opportunity to contribute in the Dáil on the summer economic statement but also to reflect on the economic circumstances in which the State finds itself. In recent weeks, many people across the country have seen the extraordinary and cynical attempt by the Opposition, and more so Sinn Féin, to undermine the public's confidence in our Government. Listening to some of the rhetoric we have had to listen to over the past fortnight, you would think this country was on the verge of bankruptcy, that there are masses of people not in employment and that everything the State is doing is wrong. Nothing could be further from the truth. We have one of the lowest levels of unemployment in the world, our quality of life is among the highest in the world and we have one of the largest GDP ratios per capita in the world. Ireland is one of the best places to live or grow up in and has one of the highest standards of living on the planet. We have to put ourselves on that footing, backed up by statistics, which often do not suit the narrative of Sinn Féin. The reality is that this is a wonderful place to live.
The Government has been doing its level best over the course of the last two and a half years, since we came into power, to support families that are struggling and we will continue to do that.
In advance of the budget, we should take stock of the situation in the world economy. We are facing unprecedented uncertainty, which has driven large increases in interest rates. The euro and the dollar are on par for the first time in 20 years, which is going to cause more difficulty as we head into the winter. We are facing an energy security crisis, facing up to the reality that Ireland does not have enough gas to fuel our economy and we do not produce our own oil. These are challenges the Government will have to face up to and deal with. They will impact on every aspect of our society and economy. The reactionary nonsense of an emergency budget in response to everything that is going on is utterly contrary to the economic realities the Government has to face and what is responsible.
A lot of people, particularly those who work in our economy and in business, now have concrete reassurance that Sinn Féin has no idea how to handle the public finances. We need to be responsible in what we do with taxpayers' money. It is all about giving this or giving that and paying out more money here, there and everywhere. Nobody ever asks a question in this House about what we take in order to do that. I get the impression from the Opposition that one can keep lumping taxes on people who work hard in order to pay for more supports. However, that does harm to the economy because somebody has to pay the VAT we need to keep it going. Increasing corporation tax causes significant issues when it comes to attracting foreign direct investment, an area in which we are global leaders. Where are Sinn Féin's solutions to all the economic promises it has made? The business community in Ireland does not see those solutions either. That is a worry. The economy is a fundamental part of keeping society going.
We are an open, free, democratic country. Our economy has had unrivalled success over the last four decades. We have brought ourselves out of poverty to become world leaders in enterprise and trade. That is something we need to be proud of but, more important, it needs to be protected. There is a very dangerous political narrative developing in Ireland as the Opposition is sowing the seeds of hopelessness about Ireland's place in the world. Nothing could be further from the truth. It is about time members of the Government stood up and outlined that to the Opposition.
I am not saying everything is perfect. We should also outline the significant challenges and areas we need to improve upon. At a recent party meeting, I spoke about increasing supports for people who want to get their first home. In the situation we now find ourselves in, where there are unfortunately extremely high rents and record levels of foreign investment in domestic property, the Ministers for Finance and Public Expenditure and Reform need to grab the bull by the horns and tell the Central Bank that the tens of thousands of well-educated, young working professionals who want to buy their first home must be shown leniency when it comes to the deposit requirement. People say 0% deposit mortgages are a bad idea but for somebody's first home, separating it out from investment property, there should be some degree of leniency shown. These people have been renting for five or six years at extraordinarily high rents and in the majority of cases those rents are significantly higher than mortgage payments over a 25-year or 30-year period. That is something the Government needs to look at. If we do not do that, the social contract of getting an education, working hard, saving money and making the correct financial decisions in order to purchase a home, with which we have had so much success, will be broken. We need to do more work to protect it because it is at risk at the moment. That is something the Government needs to take on the chin. We are getting it wrong at the moment and more work needs to be done, alongside the record investment in the area of housing to increase supply.
I wanted to relay that message. I do not have a monopoly on talking about issues facing younger people but young prospective first-time buyers are to the pin of their collar in places like Cork and Dublin. That is something I would like the Government to look at ahead of the next budget. I also recognise the very positive work that has been done to shepherd our economy through Covid-19 and now through a war and record levels of inflation. That needs proper management and we have had that for the last two and a half years, despite what the Deputies opposite wish to tell us.
I agree with Deputy O'Connor on one thing. The Government did not get things right. With its record on housing, health and childcare, it has got them completely wrong. Another Deputy a few minutes ago talked about uncertainty. I will tell both Deputies about uncertainty. Sinn Féin Deputies know low and middle-income families as well. The Government does not have not a monopoly on these kinds of people. We know them. They come to our offices as well. They cannot afford to put food on the table. They are sleeping in cars, under the Government's watch. Fine Gael has been in power since 2011 and Fianna Fáil since 2016, whether it likes it or not, with the confidence and supply agreement. It is now two years in government. Do not start preaching to us on this side of the House and telling us we have not put forward solutions. We have brought forward solutions but the Government refuses to take them on board. When suggestions are made by Deputies on this side of the House it rejects them, week after week. That is the only thing the Government has done on a continuous basis and it is not working. Look at the figures and the way homelessness has gone up. People cannot pay rent. Families with two jobs cannot pay rent. They are struggling with childcare, which is another mortgage. Please do not start preaching to us over here that we do not know what is going on. We have these people coming to our doors and into our offices as well.
The consumer price index published this morning confirmed that the annual rate of inflation was 9.1% up to June, the largest increase in 38 years, when an annual inflation rate of 9.7% was recorded in the second quarter of 1984. When those figures are broken down, the largest increases were recorded in the costs of housing, water, electricity, gas and other fuels, which rose by 22.5%, and in transport, which rose by 20.4%. Looking even further into those figures, we can see where people need particular help. The cost of electricity, influenced by the headline figures I have just referred to, has risen by 40.9%. The cost of gas has soared by 57.2%, while the cost of home heating oil has skyrocketed by an astonishing 115.4%. The pressure on households and businesses across this country is immense and it is hitting poor, rural and lone parent families the hardest. Carers and families who have to run electricity-hungry medical equipment for their ill or disabled family members have always been left behind by the Government. That tradition has unfortunately not been addressed either.
I have spoken to the Minister of State about this and I have represented a number of these families since being elected to this House. They feel forgotten about. They get up early in the morning as well. Deputy Carroll MacNeill and the Tánaiste keep talking about people who get up early in the morning. These are people who get up early in the morning as well to go to work and they are still struggling under this Government's watch. It is a sad fact that as we speak one in three households lives in energy poverty. This significant portion of society is struggling to make ends meet. While the Government claims to have introduced over €2 billion worth of measures to support households since budget 2021, this misrepresents the level of support these lower income households have actually experienced.
The €500 million social welfare package last October saw social welfare rates rise by 2.5%, which as the Minister of State is aware, is far below the rate of inflation. In real terms, the most vulnerable, who are in receipt of those payments, have experienced a cut to their incomes. The bulk of the €500 million tax package last October went to just 20% of income earners. The Irish Fiscal Advisory Council stated that 90% of the measures this year, such as electricity credits, were untargeted. The public deserves more detail in the summer economic statement about where assistance will be provided for families. It leaves them in a state of limbo and uncertainty. The public deserves an emergency budget to deal with the immediate need low and middle-income families are experiencing. The Government refused that too. Many families do not have entitlements because of income limits, yet they are struggling with the cost of rent, childcare and keeping their homes warm.
Sinn Féin called for an emergency budget with sensible measures designed to support lower- and middle-income households. This included increasing working age social welfare rates and pension payments in response to inflation and introducing cost-of-living payments of €200 and €100 to low- and middle-income workers. The Government turned that down. While the Government refused to introduce an emergency budget to implement these measures, Sinn Féin was clearly successful in putting pressure on the Government to go in directions it did not plan to, such as introducing the recently announced increase in the back-to-school allowance and bringing forward the budget by two weeks, but its response remains too slow. Inflation is ploughing ahead but the Government is not acting to keep up with the drastic changes in people's lives.
The focus of budget 2023 must be to support workers and families in the face of the cost-of-living crisis and to tackle problems that have persisted and worsened under this Government. Housing, healthcare, childcare and education are just a few issues. The situation is dire, whether the Government likes it or not. The budgetary strategy outlined by the Government appears to be incapable of delivering on any of those priorities.
This has been an interesting debate on the summer economic statement. The document provides a snapshot of what is happening. On paper, things are going exceptionally well, with Government Members saying how great things are. When you look in more detail at what is happening and how people are reacting, the problem is people are just trying to survive. They should, in normal circumstances, be doing okay. Based on their wages, they should be doing all right, but they are struggling badly. It is happening across the board throughout the country. Much of it is down to the policies, or lack of policies, of this Government. Vulture funds, cuckoo funds, multimillionaires and people in the top 5% income bracket in this country are doing well and Government policies are working well for them. The mistake we often make on this side of the House is we think the Government is starting from the same place as us and that it wants to help people at the lower end who are in difficulty. That is not where the Government is coming from, which is a problem that leads to many misunderstandings and conflict in the House. From the point of view of the people the Government represents, the Government is doing well, but they are not the vast majority of people in this country. People who have been left behind consistently are not being looked after.
Much was made in the statement about the provision of €2.4 billion in the previous budgetary cycle. Some €1 billion of that was the €100 or more given to everybody for energy. A multimillionaire with ten houses would get ten times that. People who are struggling to get their children onto the bus for school, to clothe them and to pay their electricity bills get the payment once. How does that work? It was dressed up as being too difficult to do in a targeted way and said that it had to be done this way. It was seven months from when the Government said it would do it until the payments came through. The reality is that if it could not do it in a targeted way within seven months, it should not be in government. We see that problem all the time in this House. We give the Government credit by thinking it wants to help the people we are talking about, but it does not. Maybe we should change our arguments a wee bit.
The statement claims the economy has recovered to 5.6% above pre-pandemic levels and that things are going well in the State, yet we continue to see people having difficulties. I know of at least three food banks in my constituency of Donegal. That is a sad reflection on the Government. There are food banks all around the country. This is supposedly one of the richest countries in the world, as has been mentioned in the House. How can we expect citizens to rely on food banks to feed their families? It is a sad reflection on us and we should all be embarrassed about that. A food bank in Letterkenny is open two days a week. Another food bank opens regularly in my home town of Killybegs. It is unbelievable. There are food banks in Clare and elsewhere. The Government is quite happy and talks about how well the economy is doing. An economy is not doing well if citizens have to depend on food banks for their families to survive.
I was at a farmers' meeting a couple of weeks ago. There was a rake of spuds that were late for this season and were held over until the next season. They did not want them to go onto the market and were going to put them into silage pits to make silage from them. What would be wrong with packaging those spuds to give to the food banks so that people can survive? They were perfectly good spuds. There was nothing wrong with them. They were going to make them into silage. That is the kind of country that we live in, which this Government has created and is pursuing.
We see the consequences of the war. I heard the Tánaiste say earlier today that electricity costs are not significant for businesses. I would love for him to tell that to the business that came into my office which saw its ESB electricity bill increase from €1,988 per month to €3,400 for the month of May. That is a 42% increase in one month. How are those small businesses supposed to survive? The Government does not care about small businesses. All it wants to do is to keep the multinationals happy. Those small businesses employ people in rural areas around the country and keep them going. That needs to be looked at by the Government and be highlighted in the summer economic statement instead of having a gloss about how we are the best country in the world and so on. The reality is people on the ground do not feel or see that. They are not living it.
The issue of homelessness is raised every day in this House. A couple of weeks ago, Deputy Boyd Barrett brought up the case of a woman who works for Tusla to prevent homelessness among clients of Tusla who has herself been made homeless. That is telling. You could not make it up. This happens every day. It gets no traction at all with the Government. That is what is wrong with this statement. We hear about how great and positive things are. Things are not positive. No matter how much we stand up in the House to say how great things are and how we are the second best country in the world for this or the third best for that or how we have the most multinational development, people are hungry, scared and homeless throughout the country. People in Donegal cannot get into homeless accommodation. Every day, I deal with people who have been put out of their houses. The council cannot provide any houses for them because councils are not allowed to build houses. That happens every single day. This Government knows about it and will not do anything about it. That is a sad reflection on it, but it is happening right across the board.
Budget 2023 takes place against a backdrop of real uncertainty. People are feeling that uncertainty in their pockets at the moment. Between a war on European soil, the ever-present pandemic, the rising cost of living and the prospect of a potential UK trade war, these are no doubt challenging times. I am relieved to have steady and experienced financial leadership at a time like this. It is one of the main positives that our public finances puts us in a good position to weather this storm. Inflation is continuing to rise and this is eating into the hard-earned incomes of households and inhibiting businesses investment. In the face of these challenges, the Government cannot and will not bury its head in the sand. We will tackle these challenges head on.
Budget 2023 will be a cost-of-living budget, building on the €2.4 billion in financial supports that have already been provided to cushion the impact of higher prices on households. We must also, however, strike the right balance. Government policy will absorb some of the price shock but it cannot be used to absorb it entirely. This simply would not be economically viable. Budgetary policy should not and will not fan the flames of inflation and inadvertently add further inflation into the system. The lessons of past inflationary crises are very clear. The Government can no longer borrow at interest-free rates. Borrowing costs are on a rising trajectory. I strongly disagree with those who say we should simply borrow our way out of the current crisis.
Thankfully, our recent finances have been managed exceptionally well. The economy is recovering from the Covid-19 pandemic far quicker and far stronger than ever predicted, leaving us with an additional €6.7 billion. This gives me great confidence that we will be able to support the most vulnerable in these difficult times. While we are fortunate that tax revenue has held up remarkably well despite the challenging backdrop, much of this revenue comes from an increasingly narrow base. Corporation tax receipts have contributed greatly to our public finances. The Government is keenly aware, however, that this also represents a significant risk, with €1 in every €8 collected by the State coming from an exceptionally small number of firms. Obviously, this becomes a clear vulnerability in the public finances we need to be aware of. We cannot become overly reliant on tax revenue that may not always be there in future.
Against this backdrop, budget 2023 will focus on providing further supports, through targeted measures, to those households who need it most. It is so important to stress that the households that most need the help are not only those on low incomes and social welfare support. The squeezed middle desperately needs help as well. These are ordinary folk earning a decent wage but who can no longer afford a decent quality of life because the cost of living has risen so much.
There is a lot of pressure on budget 2023 but, nonetheless, in the areas like health, housing, childcare, energy, transport and taxation, it must and it will deliver. The summer economic statement provides for a total budgetary package of €6.7 billion for 2023, of which almost €5.7 billion will be allocated for public spending and €1.05 billion for taxation measures. This will bring core spending growth for 2023 to 6.5% compared with 4.7% as set out in the stability programme update, SPU.
On the tax side, this is double the amount set in the original strategy and, once again, reflects the need to adjust the parameters given the higher than assumed inflation. A key objective of taxation policy in the forthcoming budget will be to avoid workers paying additional tax simply because they move through higher tax brackets because of inflation. It is important that any measure introduced to put more money back in people’s pockets is not lost to tax.
On the expenditure side, the provision of overall core spending of €85.8 billion will support the implementation of measures that can protect the most vulnerable in society, address public service pay, support improvements in our public services and our infrastructure, and ensure policy does not become part of the inflation problem.
The key priority over the medium term will be to slow the pace at which debt is accumulated. This is particularly important given factors such as our ageing population, climate change mitigation, the digital transition, and funding for a number of Government policy decisions, which will all put significant pressure on public finances.
We are in a time of uncertainty. Revenues performed strongly in the first half of this year, but the less favourable outlook for the second half of the year will no doubt have implications. No one will thank me for mentioning winter in the middle of July but there is no doubt that, as we head into the colder and darker months, spending on heat and electricity will only increase. This is a worrying prospect for a lot of families. They are already worrying about making ends meet in the winter months. This is why the Government must strike a really delicate balance between delivering timely and targeted support while at the same time ensuring the public finances remain on a sustainable trajectory for the future challenges that will come.
I have every confidence we can and will deliver on those ambitions.
As the week goes on and I listen to myself talking, I could say, "Is there any point?" I read the summer economic statement and I thank the Minister for setting out the parameters for what is possible within a budget. I was inspired to talk today having also read that HSE officials had attended the launch of a 60-bed private hospital in Benidorm. I did not realise the HSE has a commercial unit. The head of the HSE commercial unit called this an "exciting" development with "lucrative" possibilities for private developers in the hospital. This is in Benidorm. In the past we associated Benidorm with holidays, if we could afford it. This private hospital is part of a new major healthcare agreement. The HSE will pay up to the cost of what it would cost in Ireland but the procedures will be done in Benidorm. The general manager of the commercial unit of the HSE said this was a very "exciting" opportunity and that "It is a lucrative and very valid market for private providers".
I am aware the Minister is a very honest and hard-working Minister but can he seriously stand over that "lucrative" and "very valid" assessment? This is from the head of the commercial unit of the HSE, while I come from a city, and I am not exaggerating, where someone has been on a trolley for seven days. People have been waiting for two years to get a triage assessment. That could be done in the private hospital in Kilkenny or whatever hospital they use in Sligo. That is a two-year wait for a triage assessment and then a further two-year wait for the surgery, if the person is lucky. This is a city that saw two of its operating theatres go out of action in 2017. It took until this year to get them back in action. It seems to me the Health Service Executive is functioning to fund the private market. In my time, land was rezoned - although I did not and I refused to do it - for a further second private hospital in Galway. My memory might be a bit hazy so I will take the lower figures, but this was done on the basis that 20% of the beds at that private hospital would be kept as public beds. That was the mantra from Fine Gael and Fianna Fáil at the time to justify the rezoning of land for a private hospital. Not one single bed for the public materialised in that hospital.
Now we have the latest figures. I look at this statement and I am overwhelmed with the figures. If the truth be known, I am out of my depth with the figures they are so big. I tried again and I read the statement a second time. My colleague beside me thinks I am not 100% that I would read the document a second time to try to get it. This is what I did, however, to try to understand it and to be fair to the Minister. Then I see the story about the private hospital in Benidorm and I say, mother of Jesus, what is going on here? What have we learned, if anything? We seem to have learned nothing.
Let me be positive, first, in relation to it. Yes, the Minister and the Government did the right thing in supporting businesses and households during the Covid pandemic. I understand that more than €37 billion was provided. It is interesting it says most of it went on that. I do not know where the other funds went. In any event, I welcome that and it was positive. It was the right thing to do. It kept up the connection with the employers and with employment. I absolutely welcome that.
I then look at this document and see that it clearly sets out the challenges we are facing, including high debt, the cost of borrowing, which is related, and the other challenges. I do not like the term "ageing population", perhaps because I am going there myself. It is very negative. An ageing population is in there as a challenge. The rolling out of Sláintecare is there. There would be no need of Sláintecare at all if we get more hospitals like in Benidorm and elsewhere. We would not need Sláintecare because we could function without hospitals and export all of our patients abroad. People would have the added advantage of getting vitamin D.
Challenge 4 is exposure to corporation tax, which I will return to, and challenge 5 is the need to avoid adding to inflation. One euro in eight of tax comes from ten firms and one euro in four of tax receipts comes from foreign direct investment. I realise more than anyone, coming from Galway city, the importance of foreign companies but they must always be balanced. It seems to me this Government and the previous Government utterly ignored the risks of putting all our eggs in one basket. Suddenly, we are beginning to look at this because the Central Bank and other reputable organisations have told us it is not possible to keep going on like that. Now we need to think about what we will do with the extra and unexpected revenue we got this year. It was obvious even to me, and I am no expert in finance, that relying on this was unwise.
IDA Ireland and Enterprise Ireland brought in industry, which was very welcome but it was not done in an overall, integrated and sustainable way of doing business. I am thinking of Galway where all the industry - an outdated word - went into one industrial estate rather than being mixed across the city. It has created enormous problems with traffic and so on. It has one entrance and one exit. Councillors such as me at that time were left with egg on our faces although we had nothing to do with it, but we took the blame from the angry people on the ground who were stuck in traffic jams which were created by tunnel vision that anything from abroad was good and industry was good - and I am the first to say that - but it was not done in a greater context.
Have we learned anything? I do not think so. We talk about the rebound being better than we expected but Covid and the climate change emergency has told us we cannot rebound; we must change. We cannot go back to keeping going at the pace we were going but quite the opposite. I am extremely worried that we have learned nothing about sustainability and what that means in terms of climate change. The statement sets out no analysis whatever on the cost of the targets we have to meet. I am utterly on the Government's side about climate change measures but it must be done in a way that brings along people on the ground who are way ahead of us. Twenty years ago they were doing the right thing in Galway until everything was privatised. We can never do it on the basis of punishing the ordinary person who is doing their best and letting the polluters get away with it.
My head is like a jigsaw. I am thinking of all these figures and the legislation we are pushing through the Dáil this week which puts extra burdens on local authorities. We met the officials yesterday and some of the elected members. There is a shortfall of €20 million in Galway County Council and it has a shortage of staff. I have lost my note but I will be conservative by saying a shortage of 120 staff. Yesterday the Government was eloquently talking about preplanning meetings but there is no such thing because there are no staff to roll-out the climate change objectives. There are none. That is the reality on the ground.
Then there is housing. We are told by the experts that we must watch out for inflation. Listen to the Simon Communities. This thriving economy thinks it is okay for there to be collateral damage of 10,325 people homeless. Presumably that is just a little footnote to this economic and fiscal strategy. How can any economist or expert on finance say we are thriving if 10,325 people, and rising, are in homeless accommodation? How can any economist say we are thriving when not a single unit in Galway city or county comes in under the HAP or revised HAP scheme? I made this point briefly during the debate on the no confidence motion. We need a profoundly different way of doing things. We need free public transport. The Government has gone some way with free school transport but only for a year. We need free transport and we will save ourselves in the long term if we do that. We need public housing on public land and nothing else. That is the message that should be given and the order given to the Land Development Agency. We need public childcare. The statement has a picture of it and little pieces of a jigsaw where we are giving a little bit of money there. The population has risen to 5.2 million, which is great. Within that the number working is at a record high. An extra 100,000 women are working but we still have no public childcare.
I could go on but I am over my time and I keep to the rules.
While I am on my feet, I thank the ushers and all the staff here for the past couple of days. It has been a really busy few weeks here and I want to say a huge thank you to them all. It has been long hours on all of them and I want to use the opportunity to say that while I am here.
I thank all Deputies for their contributions. I have stayed here for two hours of them. The Cabinet Ministers have been very busy and there are a lot of meetings on today so I am more than happy to attend this debate on behalf of the Ministers for Public Expenditure and Reform and Finance.
I will make a couple of responses to some of the contributions that were made while I was here and then I will give my closing statement. Deputy Andrews spoke of the cost-of-living crisis. I agree wholeheartedly about what he said about sport and recreation. It is something the Minister of State, Deputy Chambers has been working on with significant investment in the area, recognising the significance of it for communities. I take his points about Debra Ireland too.
Deputy Shortall spoke about engagement. There is the Committee on Budgetary Oversight and Deputies engage in the briefings we receive, particularly in the run-up to the budget, and do so very positively on those and on the pre-budget submissions. There is ample engagement with Deputies and the Government on the budget. She made points about income inequality, something which the Government is attempting to address during its tenure.
Several Deputies spoke about emergency budgets. We have been clear about this. A €2.5 billion package has been put in place already, some of it targeted and some direct intervention. There were calls for an emergency budget followed by a motion of confidence in the Government. Opposition positions are not consistent on these things. Had the motion succeeded we would have entered into a serious period of uncertainty.
Deputy McGuinness made very valid points about the organisations he met with. However, he also made a very irresponsible point about climate change and addressing the climate challenge as some goal we believe in, referring to my own party. It is very unfortunate to say that in a week where half of Europe is on fire with rising temperatures. It is unfortunate he brought that in.
Deputy Martin Kenny spoke about regional investment.
I thank Deputy Bruton for his very useful intervention on enterprise success and what funds our economy. That is critically important. We are talking about taxation but it is the redistribution of tax income that is critically important. We need good enterprise success in this country to fund the social and environmental progress we all hope to achieve. He raised relevant points on shallow retrofits of homes and infrastructure. Deputy Bruton and I have spoken about this and the circular economy before. These are critically important.
I also thank Deputy Devlin who spoke about solar panels. Deputy Shanahan spoke about regional investment in the south east. I take on board the points made by Deputies Pringle, Browne and Higgins. I thank all Deputies for their contributions. It has been a useful debate and it is very much appreciated.
I echo much of what my colleagues the Ministers, Deputy Donohoe and McGrath, said in their opening remarks. The summer economic statement sets out a very significant budget package for next year in recognition of the changed economic landscape and, in particular, the cost-of-living challenge while also laying the groundwork to keep our public finances on a sustainable trajectory into the future. We are living in deeply uncertain times. Time and again we have been confronted with unprecedented challenges. Brexit reshaped our relationship with our closest trading partner. An historic pandemic caused economic turmoil on a massive scale and Russia's illegal and immoral invasion of Ukraine resulted in inflation at a level we have not seen in decades.
We did not foresee these events but we were prepared to address them. We were prepared because over many years we repaired the damage caused by the global financial crisis and carefully and gradually restored our public finances to a stable footing. This meant we could intervene to shield the economy from the most severe impacts of the pandemic and lay the foundation for a strong and broad-based economic recovery. Just months on from the lifting of public health restrictions, we have more people at work in Ireland today than ever before in our history.
We have continued to act to assist people with the cost-of-living burden. Between the pandemic and the response to inflation, we have made approximately €50 billion available over the past two and a half years. This has been necessary and justified, and the remarkable recovery we have seen in the labour market proves the Government made the right call.
We must recognise there are signs the global economy is slowing and the risks to our recovery are very much towards the downside. The summer economic statement outlines the Government’s intention to introduce a cost-of-living budget. A budget package of €6.7 billion is in place for next year. A package of this size demonstrates the Government’s commitment to assisting people with the cost-of-living issue while continuing to invest in our public services. This is a much larger package than was set out in the strategy published last year.
The sustainability of public expenditure requires that two criteria be satisfied: the level of core expenditure growth must be sustainable over the long term, and investment in expenditure must protect and deliver improvements in public services. The second of these criteria means our fiscal policy must be responsive to changes in the economic environment.
Core spending will now increase by 6.5% next year. This additional expenditure balances the need to protect core public services while ensuring budgetary policy does not become part of the inflation problem.
Government is also providing €4.5 billion in non-core expenditure for temporary measures. This expenditure will provide humanitarian support for refugees arriving from Ukraine as well as a more limited Covid provision for potential ongoing requirements.
The budget package reflects the changed economic environment at present. However, those of us in government also have a responsibility not to take short-term decisions that could ultimately jeopardise our future economic stability. That is why the Government has also restated its commitment to our medium-term fiscal strategy for the years beyond 2023, controlling current public expenditure at sustainable levels and rebuilding our fiscal resources. We will also ensure measures aimed at reducing cost-of-living pressures are carefully targeted so they do not add to inflation.
We are now projecting a very modest budget surplus for next year, but as has been highlighted previously, this is entirely a reflection of the rapid growth in corporation tax receipts. Were it not for these receipts, we would still be running very significant deficits. Corporation tax receipts, more than half of which come from just ten large companies, are not a sustainable basis for permanent spending commitments, as many Deputies mentioned this afternoon. We know from our own recent history that windfall tax revenues can suddenly disappear. A small headline surplus is a positive sign, but it does not paint the full picture.
The package for budget 2023 and the medium-term fiscal strategy set out in the summer economic statement recognise the changed economic environment and the need for Government to do more today, but they also reflect the reality that we cannot afford to continue to intervene on such a scale indefinitely, especially when much of the uplift in our tax revenue cannot be relied upon.
The Government has shown we can keep the public finances on a stable pathway. We have done so before. We have also shown over the past two and a half years that we will act when needed to support our economy and our citizens. The summer economic statement strikes the right balance.