Gerald Nash (Labour) | Oireachtas source

I welcome the Minister to the House. I am pleased to contribute to this debate. It is important to have an opportunity to discuss the development of budgetary proposals and frame priorities for the year ahead. We pioneered this approach last year and it is continuing now. The proof of the pudding will be in the eating, by which I mean the capacity of the Government to take on suggestions from this House and the Lower House on how we should spread the proceeds and fruits of our economic recovery.

We are at an important point in our economic recovery and social development. Strategic decisions must be taken by the Government about what type of country and society we want to promote. We need therefore to consider long and hard how we will allocate the hard-won resources we now have. My own party served in government at an unprecedentedly difficult time. We did not have opportunities to invest in public services to the extent that we would have wished. However, as the economy recovered, growth stabilised and options became more attractive, we took the opportunity to invest proportionately more in our public services with the available resources, as against targeting tax deductions.

The Minister for Finance, Deputy Noonan, who also served in that Government, understood and supported that approach. I am glad that much of that Minister's analysis earlier on focused on the necessity to increase or at least retain the momentum of the Action Plan for Jobs process. Institutional change and changing our approach to enterprise policy development has made a huge contribution to jobs growth in recent years. I am proud of the role I played in rolling that out. By distilling the Action Plan for Jobs approach into the regions, thus creating a series of regional action plans for jobs, we ensured balanced economic and social development across the country.

Frankly, I am baffled that, given the demand in society to invest more in developing and supporting our social infrastructure and public services, Government policy as reflected in this summer economic statement is so disappointing. IBEC, trade unions and other stakeholders have pointed to the absolute need to address our savage public and private housing supply problem. If we fail to do so, there will be ongoing social and economic consequences. Yet the summer economic statement illustrates that public spending will only be a fraction of the anticipated growth in GDP. Between 2016 and 2021, nominal GDP is likely to increase by approximately 29%. Over the same period, the planned growth and gross current spending will be just under 10%. Taking account of the faster increase in capital spending, total gross spending increases by 13.3%. I am concerned, therefore, that the Government plans to allocate just over two thirds of the fiscal space available to spend on increases. The Labour Party is on public record as stating that it favours in the region of three quarters in this regard. A substantial proportion of the Government's available space will go to the elimination of the universal social charge. By definition, that will sadly favour the much better off in society. Regrettably, there is no provision for indexation in terms of tax rates. I am puzzled at what will be left of the available fiscal space, approximately €3 billion, and the amount to be allocated to the so-called rainy day fund - that very few people believe we need - if we simply stick to the fiscal rules to which we signed up. It is a missed opportunity, to put it mildly, to remit €1 billion each year for three years from 2019 onwards into a rainy day fund. I am of the view that a substantial minority of Members of this House and, I daresay, the majority of members of the public would prefer to see that money invested in social infrastructure such as, for example, housing. It is difficult to make the case for a rainy day fund when our public services are under so much pressure and when the requirement to restore and develop our public services and renew and invest in housing critically is so obvious and necessary. I ask the Government to reconsider the admittedly very eye-catching proposition of a rainy day fund, given the experiences we have had in recent years. It is eye-catching, as I said, but I do not believe it is necessary, given that if we stick to the fiscal requirements - which I am absolutely adamant we should do - the Exchequer will be in good nick, as it were. It is in the interests of society that we focus a much greater proportion of the available fiscal space on social infrastructure as opposed to tax cuts or any other approach that might be taken. That is something to which the Government should give serious consideration in the interests our society and the country's continued economic development.