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

I apologise for being late but I was detained in the Lower House.

As a former Member of this House, I am very pleased to have the opportunity to contribute to the Seanad’s debate on the Budget Statement 2019, which the Minister for Finance and Public Expenditure and Reform presented to Dáil Éireann earlier today.

The budgetary measures announced today are being made in the context of a strong and growing economy. Gross domestic product, GDP, is expected to grow by 7.5% in 2018 and 4.2% in 2019. There are an 380,000 more people at work today than there were in 2011 and the rate of unemployment is at its lowest level in a decade. The progress that has been made since the economic crisis has been extraordinary. Significant challenges remain, however. We continue to suffer the longer-term impacts of the crisis, most notably in the slow recovery of the construction industry. We also need to guard against the competitive pressures that inevitably arise in a fast growing economy. The measures outlined in today’s budget will help address these issues.

There are also significant external factors that may significantly impact on society and the economy, not least Brexit. The Minister for Finance, Deputy Donohoe, stated today that Brexit is the political, economic and diplomatic challenge of our generation. I fully agree. While we continue to work to achieve an agreement that minimises the impact of Brexit, we are preparing for all eventualities. This budget will help to ensure that Ireland is in the best possible position to respond to the challenges that Brexit will bring. It does so by eliminating the headline deficit; achieving the medium-term budgetary objective of balancing the budget; building up the rainy day fund; reducing the debt burden; and investing in infrastructure and education.

Due to the strength of our economy our public finances have improved. The progress we have made means that we will reduce our deficit to 0.1 % in 2018. Building on this progress, the Government will balance the budget next year for the first time since 2007, a significant achievement.

In a growing economy with low unemployment and strong public finances, it is only right that central government act responsibly by future-proofing the public finances and preparing for the next inevitable slowdown. For this reason, we have also committed to run budget surpluses in the future and to use them to reduce debt. The Government has also created the rainy day fund to increase the State’s resilience to larger economic shocks. The fund will be capitalised with €1.5 billion from the Ireland Strategic Investment Fund and supplemented with an annual contribution of €500 million from the Exchequer, starting from 2019.

Our commitment to responsible budgeting is also reflected in the decision to withdraw the temporary stimulus measures introduced for the hospitality and tourism sector. Given current economic buoyancy, it is appropriate to do so. It is clear that the measure achieved its objectives. Ending the special rate of VAT will raise €466 million in 2019 and allow the Government to avoid reliance on once-off increases in other tax heads, particularly corporation tax. It also allows us to reprioritise expenditure to a number of key areas. The decision to restore the 13.5 % rate of VAT for this sector enables funding to be reassigned to priority areas such as housing and health. It is prudent and responsible management of the public finances.

I will now outline some of the key measures contained in today’s budget. Along with further developing our preparations for the inevitable disruption Brexit will bring, the budget is focused on addressing the housing crisis, protecting the most vulnerable in our society and ensuring we continue to improve our competitiveness. The largest increase in expenditure in budget 2019 is in housing, to which the Government is allocating €2.3 billion. When added to the additional funding local authorities are allocating for housing next year, this amounts to an increase of 25% on the 2018 allocation. This level of support underlines our continuing commitment to addressing the housing and homelessness crisis. Some of the figures cited in the Lower House are wrong. Sinn Féin Deputies indicated the increase in funding for housing was €80 million. That is absolutely wrong. The State has never spent as much money on housing as it will spend next year.

Although all the key indicators of supply are positive and activity is ramping up considerably, there is still a long way to go to improve access for those at risk of homelessness and to increase affordability for low and middle income earners. Slightly less than €1.25 billion has been allocated for social housing. This funding will help deliver 10,000 new social homes in 2019 through a combination of construction, acquisition and leasing. This investment will bring the number of new social housing units provided under Rebuilding Ireland since 2016, to almost 31,000 units. In recognition of the extreme challenges being faced by those experiencing homelessness, an additional €30 million has been allocated for homelessness services. This will bring spending on homelessness services to €146 million in 2019.

To help address the real problems young people have in buying a home, the Government has allocated €89 million to the serviced sites fund. This will be followed by further funding in 2020 and 2021, bringing total funding available under the fund to €310 million. This funding is being provided to local authorities to deliver low cost affordable housing. It will provide for a discount of up to €50,000 per affordable home and will support the delivery of approximately 6,000 affordable homes over the lifetime of the fund.

Providing suitable accommodation to our citizens is just one of the priorities of Government. Others include provision of a modern, fit-for-purpose health system and ensuring the most vulnerable in our society are provided for through the social welfare and education systems. The Government is providing an additional €1.05 billion to the Department of Health for 2019. This will bring the health allocation to a new record of €17 billion in 2019. We are committed to using these resources to protect the most vulnerable in our society. The 2019 allocation will include an additional €84 million for mental health services, bringing the total available funding for mental health to €1 billion. There is also an increase of €150 million in funding for disability services. Total spending on disability services next year will be almost €2 billion.

The allocation for health will also facilitate a range of additional services, including initiatives proposed under Sláintecare. These include a €25 increase in the weekly income threshold for general practitioner visit cards, a 50 cent reduction in prescription charges from €2 to €1.50 for all medical card holders over the age of 70 and a €10 reduction in the drugs payment scheme threshold from €134 to €124 per month.To further the Government's policy of discouraging smoking, the excise duty on a pack of 20 cigarettes will rise by 50 cent, with a pro rata increase on other tobacco products. That will bring the price of cigarettes in the most popular price category to €12.70.

The social welfare system is there to protect all citizens and I am pleased to say that the Government has today increased all weekly social welfare payments by €5. The 100% Christmas bonus payment to all social welfare recipients has also been restored this year at a cost of €265 million.

The Government is also investing more than €1.8 billion to support children with special educational needs, allowing for an additional 950 special needs assistants, SNAs, to be recruited in 2019. That will bring the total number of SNAs to more than 15,900, a substantial commitment to help those most in need of assistance in the education system. The funding is part of a total of €10.8 billion that is being allocated to the Department of Education and Skills, a 6.7% increase on 2018. It includes funding of €66 million to meet our changing demographics and will allow for almost 1,300 additional posts in schools in 2018.

In response to the recommendations of the independent review of the national training fund, the Government will establish a multi-annual, ring-fenced human capital initiative of €300 million over the period 2020 to 2024. The initiative will increase investment in higher education courses across the country.

Our ability to continue to invest in education, and social services more generally, depends on our ability to maintain competitiveness. That is why this budget contained measures to continue the Government's support for small businesses. SMEs provide most of our employment and additional Government support for this sector is crucial in light of Brexit. A total of €950 million has been allocated to the Department of Business, Enterprise and Innovation in 2019. That is an increase of 9% on last year. Earlier, the Minster, Deputy Donohoe, announced the launch of a future growth loan scheme for SMEs in the agriculture and food sector. The scheme will provide €300 million in funding and together with last year's Brexit loan scheme, which also amounted to €300 million, forms an important part of the Government's Brexit response.

The year 2018 has been a difficult one for farmers. With that in mind, the Government is renewing the existing stock relief measures for a further three years. To help support more farmers cope with the problem of income volatility, the Government is extending income averaging to farms with off-farm trading income. In further support to farmers, an additional €57 million has been allocated in current expenditure to the Department of Agriculture, Food and the Marine in 2019. Some €60 million in current and capital Brexit-related supports will also be provided to improve resilience in the farm sector as well as supporting productivity improvements in the food sector.

To maintain our competitiveness, it is crucial that we continue to invest in the transport network. In 2019, €286 million will be made available to invest in new transport infrastructure such as: the N4 Collooney to Castlebaldwin road and the Dunkettle interchange; completion of the runway overlay project at Knock Airport and; design, planning and implementation of cycling and walking projects around the country. We are also improving and expanding public transport infrastructure and services through the provision of new buses, new and extended trams on the Luas and by increasing the amount of funding available to retrofit older parts of the public transport infrastructure.

Another important part of maintaining competitiveness is to reward work. The Government has repeatedly stated that the point at which people begin to pay the marginal rate of tax is too low. A key element of staying competitive is to remove disincentives to work additional hours for those on low pay. To continue the process of remedying that, the entry point to the higher rate of income tax for all earners has been raised by €750, from €34,550 to €35,300 in the case of a single worker. The third rate of the universal social charge, USC, has also been reduced from 4.75% to 4.5% to give a further targeted benefit to low and middle level incomes. For the 150,000 self-employed workers who make up an important part of the economy, the earned income credit will be also be increased by €200, to €1,350. The income tax changes announced today are responsible, sustainable and provide relief for those on lower and middle incomes.

Yesterday's report from the Intergovernmental Panel on Climate Change outlined the serious consequences of inaction on reducing greenhouse gas emissions. Budget 2019 builds on the commitments made in the national development plan, which represents a step change in funding commitments relating to climate action. One in every €5 in Exchequer investment in that plan will be devoted to addressing climate change. In 2019, the Department of Communications, Climate Action and Environment will invest more than €164 million in targeted measures to achieve Ireland's energy efficiency and renewable energy objectives, in line with the Government's national mitigation plan. Additional climate related measures across other Departments in 2019 include: €103.5 million for improvements in grant and premium rates for planting forests; the introduction of the beef environmental efficiency pilot, BEEP, to further improve the carbon efficiency of beef production; and €70 million for the targeted agriculture modernisation scheme, TAMS.

Turning to the area of policing, three weeks ago saw the publication of the report of the Commission on the Future of Policing in Ireland. The Government is committed to reform and modernisation in An Garda Síochána. To reflect this support, the allocation for An Garda Síochána has been increased by €60 million, or 3.5%. The increase allows for recruitment of up to 800 gardaí and will support Commissioner Harris to drive the reforms that citizens, and the gardaí themselves, deserve.

Other important initiatives announced today include: support for the first round of projects under the rural regeneration and development fund; major investment in the Defence Forces; and an extension of the three year tax relief for certain start-up companies until the end of 2021. The measures announced earlier will build resilience in the economy, ensure fiscal stability and, crucially, help prepare us for Brexit, in whatever form it takes. Budget 2019 continues the process of embedding the progress we have made in recent years. It provides record levels of funding for housing and health and eases the burden for those on low and middle incomes. Budget 2019 represents a progressive budget, with an emphasis on addressing real social needs and it does so in a sensible, responsible and sustainable way. I commend the budget to the House.