Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

It is a pleasure to be here this afternoon. I will be as brief and concise as I can because I know Senators want an opportunity to have their say. I apologise if I am too concise.I will try to strike a balance. I am more eager to have an opportunity to hear what Senators have to say, and hear their views and thoughts and take the opportunity at the end to respond. The overriding objectives of the budget are to safeguard our national finances and help to rebalance our economy, provide for steady and sustained improvement in people's lives and make sensible and long-term investments to benefit us now and in the future.

The budget is framed in the context of a number of existing and forthcoming challenges but also looks to create opportunities. The budget is also framed to comply with the confidence and supply agreement between the Government and the main Opposition party, Fianna Fáil, and it is appropriate to acknowledge its contribution.

As Senators are familiar with the detail of what has been announced by the Minister for Finance and Public Expenditure and Reform in the Dáil. I will focus on the key themes of the budget, namely, rewarding work, supporting housing, improving services, particularly health and education, increasing investment and Brexit. I will also address recent developments in international financial services and the cost of insurance.

The economy continues to perform well, with real growth at 4.3% expected for this year and 3.5% for 2018. This is perhaps most evident in the labour market. Employment has increased in each of the past 19 quarters and this has been well balanced across the sectors and regions. Employment at more than 2 million is at its highest level since 2008. Unemployment currently stands at 6.1% and is expected to average at 5.7% next year, which is a significant improvement since a peak of more than 15% in early 2012. At these unemployment levels we are close to what is considered full employment in Ireland.

The budget delivers the Government's long-standing target of balancing the books in structural terms next year by reaching the medium-term budgetary objective, better known as the MTO. Adhering to our budgets and ensuring continued growth will achieve a reduced debt ratio and will build upon the resilience of the economy and public finances. The rainy day fund, for which further details were announced today, represents a further important element in this strategy. It is also important to note the nation is still heavily in debt, as a nation and as a people. We are at 106% gross national income, and with regard to personal indebtedness of the people of the country, we are one of the most highly indebted nations in the world.

The Government is firmly committed to ensuring work is rewarded. The point at which an income earner attracts a higher rate of income tax is being increased next year by €750 per annum, raising the entry point for single earners to €34,550. This represents further progress towards ensuring people on average wages do not pay the higher rate of income tax. Changes have also been announced to the USC, with targeted reductions in the rates but no narrowing of the base. The lowest rate is reduced by 0.5% to 2% from 2.5%, and the ceiling has been raised to ensure full-time employees on the national minimum wage do not pay the upper rate of USC. The reduction in the 5% rate to 4.75% will reduce the top marginal rate of tax on incomes up to €70,444 to 48.75%.

There are also a number of initiatives to assist small and medium enterprises to deal with international challenges. The earned income credit is being increased by a further €200 to €1,150 per year from 2018. This will benefit more than 147,000 self-employed individuals, generating economic activity throughout the country. In addition, the key employee engagement programme, KEEP, has been introduced to help small and medium enterprises attract and retain key employees in a competitive international labour market by providing for advantageous tax treatment on share options.

The home carer credit has been increased by €100 this year to €1,200 per year, assisting more than 80,000 families where one spouse works primarily in the home to care for children or other dependents. A working group is being established to plan over the coming year the process of amalgamating USC and PRSI over the medium term.

The area of corporation tax has had substantial reforms in recent years and Ireland has played its part.Ireland offers a stable and competitive corporation tax system which is recognised internationally as one of the most transparent in the world. We are very clear that the 12.5% tax rate is and will remain a core part of our offering. Members will be aware that the Seamus Coffey report, published by the Minister for Finance last month, set out a roadmap for a number of reforms. One of the recommendations made in the report, relating to capital and interest allowances for intangible assets, better known as intellectual property, is being introduced with effect from midnight. The Minister has announced a consultation process as part of updating the international tax strategy.

The budget outlines a number of important developments for investment, with the allocation in 2018 being increased by €790 million. Total capital expenditure will more than double between 2015 and 2021, from €3.7 billion to €7.8 billion. That will make Ireland's public investment levels among the highest in the European Union and enable critical bottlenecks to be addressed. Taking a longer term view, the publication of the national investment plan and the national planning framework later this year will allow us to identify where we should target resources and capacity to support sustainable growth.

The Government's continued prioritisation of housing is clearly evident in the budget. The allocation of €1.83 billion for housing in 2018 will support the continued implementation of the Rebuilding Ireland action plan and the new initiatives and targets arising from the review of the plan. The increase of €149 million in the allocation for the housing assistance payment, HAP, scheme will enable 17,000 additional households to be supported and accommodated in 2018. Increased funding for homelessness services will support the provision of emergency accommodation and other supports for those who need them. Additional funding of €500 million is being provided for the direct building of an additional 3,000 social housing units to reach the Rebuilding Ireland target of 50,000 units by 2021. It is expected that 3,800 new social housing units will be delivered by local authorities and approved housing bodies next year. Further measures have been announced to support an increase in the supply of housing in the coming years. They include making up to €750 million of the Ireland Strategic Investment Fund, ISIF, available for commercial investment in housing finance, changes to stamp duty on commercial property, the vacant site levy and the new deduction for pre-letting expenses.

It is clear that Brexit is one of the most significant challenges we face. It will bring with it permanent changes in our trade patterns. As it represents a structural change, it is important that we respond appropriately. The Minister for Finance has announced a Brexit loan scheme to assist small and medium businesses to undertake the innovation and sourcing of new European and international markets that will be needed in response to Brexit. The loan scheme, developed in conjunction with the Tánaiste and Minister for Business Enterprise and Innovation and the Minister for Agriculture, Food and the Marine, will provide up to €300 million at a competitive rate for SMEs, including food businesses which are uniquely exposed to the UK market, to help them with their short-term working capital needs. In addition, the budget for the Department of Business, Enterprise and Innovation will enable the recruitment of a further 40 staff across the Department and enterprise agencies to bolster our ability to proactively respond to the challenges and opportunities arising from Brexit. The retention of the 9% VAT rate for the hospitality sector will help to mitigate the impact of Brexit on the tourism and hospitality sector, particularly outside Dublin. The cost of the tax forgone is €490 million in a full calendar year.

An effective health service is essential to our well-being. The budget provides additional funding of €685 million for the sector, an increase of 5%. Health funding is now at record levels. It will support the recruitment of some 1,800 additional front-line staff. It will also provide for an increased allocation for the access plan which will ensure patients will be able to avail of the medical care they need in the most appropriate setting for them. As part of the access plan, funding for the National Treatment Purchase Fund has almost trebled, to €55 million in 2018. Prescription charges for medical cardholders will be reduced. Additional funding is provided for primary care services. An increased capital allocation will permit investment in critical health infrastructure, including the national children's hospital and a range of primary and community care schemes. With the level of resources being provided, a focus on value for money in the health sector is essential. Health policy is being supported by increased taxes on tobacco and sunbeds and the introduction of the sugar tax.

Education is an important foundation for society and the economy. The increased allocation in budget 2018 will provide for additional teaching posts, reduce the primary pupil-teacher ratio and increase the number of special needs assistants. In addition, the national training fund levy is being increased to provide additional funding for the further education sector next year. Additional capital will address the infrastructure needs of the higher and further education sectors. It is important to highlight that for the first time the further training sector will have a capital programme which is going from zero to €53 million.

The Government's commitment to dealing with crime is evident in the provision of additional resources for the recruitment of an additional 800 gardaí and 500 civilian staff during 2018. However, the increased spending is contingent on a commitment to drive reform throughout the organisation.

Fairness is important at all times, particularly for more vulnerable members of society. All weekly social welfare payments, including disability allowance, carer's allowance, jobseeker's allowance and benefit and the State pension, are to be increased by €5 per week from 26 March 2018. Measures have also been announced to facilitate working families in receipt of the one-parent family payment, jobseeker's transitional benefit, family income supplement and the qualifying child payment.

The budget introduces a broad range of measures, on some of which I have touched. However, significant increases have been announced in the areas of child care, child protection and tackling crime, with measures for the arts, in respect of climate change, agriculture, food production and rural development, all of which will lead to real progress.

How am I for time, a Leas-Chathaoirligh?