Gerry Horkan (Fianna Fail) | Oireachtas source

I thank the Minister of State for engaging with us today. He is probably the Minister who is here most often, dealing with both finance and public expenditure matters. Fianna Fáil is committed to facilitating a budget that invests in public services and targets tax reductions on low-income and middle-income earners. We are providing real leadership to create a stable and fair Government, unlike the political paralysis and uncertainty we see elsewhere in Europe. We are committed to the fiscal space and prudent financial planning to secure the centre ground of Irish politics.

Through the confidence and supply agreement, Fianna Fáil has already secured a shift in Government policy, with this budget being based on a 3:1 ratio of services to tax cuts. We have forced Fine Gael to abandon its US-style taxes approach. Fianna Fáil's guiding principle in approaching tax policy is that tax reductions should be focused on low and middle-income earners to ensure they get a break. In contrast with the US-style approach Fine Gael called for in the election, we have emphasised a minimum 2:1 ratio of investment to tax cuts and ensured it is enshrined in Government policy. This budget has met a 3:1 ratio because of the efforts of Fianna Fáil.

This is a Fine Gael budget but we have worked to achieve significant progress on key priorities set out in the confidence and supply agreement. Other parties such as Sinn Féin have played no constructive role in forming a government or giving real leadership on the budget. They threatened to plunge the country into another election, but Fianna Fáil stood up to the mark to ensure we had a stable government. This means we have avoided the political paralysis we currently see in Spain, which is facing into its third election in 12 months. Another election here would cost the State €40 million. We are committed to having an impact, not simply shouting about it. Thanks to the sacrifices of the Irish people, the economy is performing strongly, with an anticipated 5% growth rate in 2016. This means there is €1.3 billion in additional spending available in 2017.

However, a two-tier recovery clearly remains and new challenges have emerged that demand real political action. Brexit and the European Commission's Apple ruling mark fresh threats to Ireland's economic growth. Domestically, mounting industrial unrest and public spending pressures on areas such as health, housing and social protection present additional challenges. The Sinn Féin budget fails to recognise those challenges and instead proposes to hike up taxes by €1.7 billion. There is a net fiscal space of more than €1.3 billion available for additional spending in 2017. This was belatedly increased over the past week from €1 billion.The Irish Fiscal Advisory Council has endorsed the use of €1 billion maximum in the fiscal space in 2017, although it points out the total increase is €2.4 billion when demographics and the Lansdowne Road agreement are added in.

This is the first budget of three under the confidence and supply arrangement and is new ground for all parties. Fianna Fáil has secured key progress and will continue to hold the Government to account as an independent Opposition party. We do not expect to achieve everything in year one but do require substantive progress. Fianna Fáil has sought and achieved funding in key areas identified under the confidence and supply arrangement. These include tackling homelessness and securing affordable homes; decent jobs and enterprise; cutting family costs and improving the services on which they rely; and tackling crime and developing community services. We have placed our stamp firmly on this budget and its priorities.

There are several policies which directly reflect our confidence and supply arrangement and subsequent budget discussions. These comprise a 3:1 investment in services-to-tax reduction ratio; a €5 increase in the State pension; a €5 increase in working age payments; a new €15 million National Treatment Purchase Fund, a fund which was there under previous Fianna Fáil Governments; targeted universal social charge cuts by 0.5% across three rates; increase in Leader, CLÁR and RAPID programme spending; the expansion of the rural social scheme; the reduced capital gains tax rate to 10%; increased home care packages by 950; increased funding for the Irish language; increased €150 million capital funding to address the housing crisis; and a €55 million increase in rent supplement.

However, while Fianna Fáil has played a strong role in shaping the policies, this is a Fine Gael budget. There are several issues of which we are not supportive. There is the failure to reform the capital gains tax relief rate chargeable gains level from €1 million to entrepreneurs to ensure we can compete with the UK. The first-time buyer's grants scheme will only stoke up house prices and risk another boom and bust. It is a scheme which will only promote demand rather than increase supply. We also need to tackle construction costs. There have been minimal measures to cope with the fundamental challenge of Brexit. The presentation of a Brexit-proofed budget is simply more Fine Gael spin. There is a failure to address pupil-teacher ratios. The additional teachers announced will only deal with demographic demand. Other shortcomings include the failure to increase areas of natural constraint payments to farmers and the reduced funding to the arts, which has fallen by €1 million.

Capital expenditure has long been the Cinderella of budget day. The additional €250 million announced today above the pre-budget expenditure ceilings is a drop in the ocean compared to what is required to overhaul and future-proof the country's infrastructure. The current 2016-2021 capital plan lacks ambition. It is an exercise in electioneering, rather than a genuine effort to grasp the nettle of long-term planning. Its extension over six years is essentially used to manipulate the figures to bolster the appearance of significant increases in investment. In reality, the previous Government underspent in infrastructure every year and left Ireland lagging behind.

The confidence and supply arrangement outlines a commitment to a full review of the plan in mid-2017. This was a critical part of the overall agreement. It is vital that this review gives an opportunity to take crucial decisions on pivotal infrastructure projects designed to address areas such as housing, transport, broadband, flooding and the broader threats such as climate change. Fianna Fáil's election manifesto called for the establishment of a national infrastructure commission to take a long-term view on our capital spending over the next century. This commission should be tasked with planning over a 25-year period and moving Ireland towards decarbonising while achieving a gross domestic product investment of 5% in capital infrastructure. Post Brexit, it is imperative the EU moves to ramp up capital expenditure. EU rules around spending should be revised with a view to enabling member states to target investment in crucial infrastructure projects. This will help ensure the EU thrives in the aftermath of Brexit and is of most relevance to Ireland.

We see the budget as a work in progress and the start of the first year of the three-year confidence and supply agreement with Fianna Fáil. In as far as it goes, we welcome it.