Gerry Horkan (Fianna Fail) | Oireachtas source

I thank the Minister. He is very welcome to the House. I welcome the opportunity to speak on the Finance Bill.

The budget was fair because Fianna Fáil was able to negotiate a confidence and supply agreement with the Government. This secured a 3:1 ratio in favour of spending on services over tax cuts and outlined areas of focus that would make Ireland a fairer and fundamentally more decent society.

Contrary to previous budgets under the previous Government, budget 2017 focused on the lower paid. The ESRI stated that budget 2017 is close to distributionally neutral overall, but with some additional resources targeted towards those on the lowest incomes. This budget represented a unique opportunity to address some of the issues facing us as a result of Brexit. Regrettably, the budget did not live up to expectations. Key areas of concern for Fianna Fáil include the lack of urgency around our preparation for Brexit, specifically the fact there is no provision to assist SMEs facing a depreciating sterling, very little provision for trade diversification to other countries and little provision to avail of the opportunities from Brexit where they may arise.

While no budget can be fully Brexit proof, and Brexit is very uncertain, this budget was sadly lacking in terms of the impact of Brexit. Most of the initiatives are extensions of existing programmes. While welcome, they do not assist companies affected by Brexit.

The decision by the people of the United Kingdom to exit the European Union in June of this year represents the single biggest challenge facing Ireland. The issue has serious political and economic consequences for the Republic and Northern Ireland. The UK accounts for 15% of Ireland's goods exports in 2014 and 20% of its services exports in 2014. It is also a source of imports, with almost 30% of our merchandise imports and 70% of overall imports originating from the United Kingdom.

While we do not know what form Brexit will take, a number of economic considerations are already clear and evident, specifically the depreciation of sterling against the euro. Given that sterling is trading at £0.89 to €1, Irish goods and services are now 16% more expensive than pre-referendum rates. This is hurting our businesses and costing jobs. Companies either have to increase their prices in the UK to account for it or take a hit in their cost base.

Hedging against currency fluctuation is a costly and tricky business requiring a lot of expertise. Many SMEs cannot engage in it because they lack the required resources and expertise. We proposed a national hedging strategy to assist such SMEs.

We do not need Article 50 to be invoked to know that we need to diversify our trade towards other countries. It is simply insufficient to allocate €3 million to Enterprise Ireland for Brexit-related activity. In addition, no extra funding has been given to IDA Ireland to attract companies affected by Brexit to Ireland.

Fianna Fáil believes that home ownership is essential to building and maintaining a prosperous society. Many dream of building a family around a family-owned home. However, this dream is being pushed further and further away by the housing crisis. House prices are continuing to rise due to a shortage of supply. Mortgage approvals have increased again in quarter 3 of 2016, suggesting there is plenty of demand.

The Government’s help to buy scheme is designed to add to this demand by giving first-time buyers of new properties a rebate of income tax from the previous four tax years. Our issues with this are that there was no impact assessment of the change carried out by the relevant Departments and experts and no consultation with the Central Bank on the potential impacts of this scheme on house prices and the housing market. We fear it will lead to a further increase in prices as demand is already strong and supply limited.

Supply is key to delivering what is needed in the housing market, in particular in the greater Dublin area. We fear the budget will lead to a further increase in prices. Fianna Fáil proposes that an independent impact assessment takes place 12 months after the beginning of the operation, and the Government has agreed to undertake such a review that will assess the scheme’s impact on house prices, house supply and the housing market in general. We also propose that the Government carry out a detailed analysis of the cost of delivering a new home in Ireland, and again the Government has agreed to this which we welcome.

We have submitted to the Central Bank that second-time buyers should be treated the same as first-time buyers and that first-time buyers should be rewarded for having a strong rental history. We support the moves to close the loopholes on section 110 companies and other funds regarding Irish property and mortgages, and we also support the tougher stance taken on offshore tax defaulters.

Currently, mortgage interest relief on rented residential property is limited to 75%. This will incrementally increase over the next five years to 100%. We are in support of this measure as it will encourage people into the rental market, where supply is limited.

With regard to the universal social charge, USC, the confidence and supply agreement stipulated clearly that any cut to USC needs to be directed at lower and middle income earners. As a result of the confidence and supply agreement, this has now been implemented. Over the last number of years, we have constantly asked for a reduction in capital gains tax, CGT, and through the confidence and supply agreement, the rate will decrease from 20% to 10% for entrepreneurs.

I want to welcome in particular the increases in capital acquisitions tax in group A from €280,000 to €310,000, in group B from €30,150 to €32,500 and in group C from €15,075 to €16.250. It is only right that people who have worked hard all their lives are able to pass on their assets to their children, in particular, without incurring penal tax rates.

Though modest, the increase in the home carer tax credit from €1,000 to €1,100 is also welcome. This assists people who are providing a valuable service to the country by caring for a loved one.

The Minister has provided great detail. We could discuss the Finance Bill for hours, but at this point in the process I want to welcome the Minister and thank him for his summary of the Finance Bill. I have pointed out some of the issues.

While there are very few houses in many parts of the country worth over €500,000 or €600,000, in parts of south Dublin there are very few houses worth under €500,000. We need to be aware that the housing market is different in different parts of the country. I am sure the Minister is aware of that, but one finds that what one gets in parts of Limerick, Mayo, Louth and various other parts of the country compared with what one might get in south County Dublin, where I was a counsellor for 12 and a half years, is very different.

At some point in time, consideration should be given to examining the market. It is what it is. Supply is limited, demand is high and many ordinary three-bedroom, semi-detached houses are selling for €400,000 and €500,000, and houses that are not much bigger are being sold for close to €1 million. We need to examine the issue. In conclusion, Fianna Fáil will honour its side of the agreement in respect of this budget. It is our intention to facilitate its passage through the House.