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

I thank the Senators who contributed. I will try to provide answers on as many of the issues raised as possible.

Senator Horkan mentioned the national children's hospital, the broadband plan and other capital projects. I can only give him the 2019 figures that were budgeted for at this time last year. There was current expenditure of €59 billion and capital expenditure of €7.3 billion, with an overall figure of over €65 billion for current and capital expenditure. That is an enormous amount. The two projects to which the Senator referred will be funded over years, one over decades. In terms of the overruns, there will be projects over that period which will cost more than anticipated while others will cost less. I have not really commented much on those two projects. However, the projects with which we do poorly in terms of pricing are those which we do only once. We started the Luas under price because we had not done such a project here previously. When we began work on the Jack Lynch tunnel 20 years ago, we had not done anything similar previously and the project was underpriced by 50%. For Terminal 2 at Dublin Airport, we had not done a project of that type before and it came in over price by 50%. Everybody said the sky was falling and nothing else would happen because of the underpricing. Terminal 2 is a great example. We were told when it opened, close to the peak of the catastrophe that was befalling us, that it would never be used. Six years later, it was full.

I remind Senators that when they were going around the country looking for votes from the county councillors five years ago, they were told that we would have to knock down all the ghost estates as quickly as possible because there were too many houses. Now we have a housing crisis. The then Minister for Finance, Deputy Noonan, was in this House five years ago and was scoffed at when he stated that our economy would take off like a rocket. Now, our GDP growth is slowing but the economy is still growing at a substantial rate. In fact, ours has been the fastest-growing economy in the European Union for the past four years. Senators must not forget these things. There are cycles. We are trying to judge where we are and where we are going to be in the aftermath of a potentially wild economic shock of a type that has never been measured before. That is extremely difficult. The swing from surplus to deficit is enormous. It is difficult and we are doing the best we can in the context of deciding what we are going to do. We have not hidden any figures. We are putting them all out there.

To touch on a couple of other aspects, Senator Horkan also asked about the €700 million expenditure and Senator Conway-Walsh questioned whether that is really the figure. Reference was made to the Christmas bonus. That is funded out of some of the social protection scheme, which is in surplus year on year. It is not a headline figure. That is from where some of the money comes. The social protection budget comprises the biggest departmental expenditure budget of the State. It is funded out of those two aspects and is about €300 million. It does not all come out of current expenditure or a new Estimate during the year. For the past three years, our figures have been ahead of target. We cannot just hold our breath and hope that it is going to be ahead of target. We are doing the best we can to predict the figures. The Department of Finance has been very good in recent years in the context of making such predictions.

I want to touch on some of the points raised by Senator McDowell. Like Senator Kieran O'Donnell, he referred to the level of indebtedness. We have a constraint in that our level of public and private indebtedness. I want to put that on record. We have a higher level of debt than we are comfortable with. Put in context, the level of indebtedness is 100% of GNI* but we are reducing it. We do not use the GDP figures because they do not quite compare fairly with jurisdictions that do not have the same level of foreign direct investment. While our indebtedness is at 100% of GNI*, the European average is 85%. Our gross national debt, which is approximately €205 billion, can be reduced by 5% or so because we have figures on our cash balances, such as the money we have in the banks, our investment there and other moneys potentially coming from NAMA. That brings us to indebtedness of about 95% of GNI*. No matter what way we analyse these figures, our national indebtedness is about 10% higher than the European average and we are not comfortable with that figure. That will remain a constraint should we have to borrow further in the future. Should we have the worst type of Brexit, namely, a wild and disorderly one with no deal, it could potentially mean that we will have to borrow billions in the future. However, we may not have the capacity to do so. Looking at where we are currently, because the Department of Finance, the Oireachtas and the Dáil put a structure in place, the markets are satisfied to lend to us at a rate of approximately 1%. That is quite an achievement when one considers where we were in 2009 or 2010, when the markets would not lend and the State and the people lost their economic sovereignty. Others came in and told us what to do. A programme was agreed and we have emerged from that.

I want also to consider our level of personal indebtedness. I sat with some Senators on the banking inquiry. From 1997 to 2007, we went from the lowest level of private indebtedness in Europe to the highest. It was inconceivable to think that this was allowed to continue, but it was, and we went from approximately 47% GDP indebtedness to 240%. That is a scandalous and outrageous increase, but those factors do not influence us any more because the level of indebtedness is decreasing, although I accept that it is still too high. The level of private indebtedness is decreasing and that must happen. The public has been doing a number of things in the past decade. It has been paying down loans at a time when doing so has been difficult. It is quite an achievement to bring down that level of private indebtedness in the teeth of an economic storm such as that which we faced over the past decade. The public has done that because it is responsible and people do not want to be in the level of debt that might leave them without financial capacity if another economic shock were to happen. That is being responsible in businesses and privately and the State is doing the same. I am not kicking Fianna Fáil but the Government of which it was part and which was in office between 2004 and 2008 did terrific damage to the State. I am not looking back or rewriting history but it was irresponsible to continue to pursue the expenditure levels and the unsustainable model of taxation that obtained at the time. That irresponsibility led to the catastrophe that happened between 2008 and 2010. In 2011, the new Government came in to try and address it. I give the respect to the Government after 2008, with the then Taoiseach, Brian Cowen, who was the man in charge in the Department of Finance during the period about which I am so critical. That period wiped out the wealth of so many people, large number of whom are still too highly indebted.It wiped out those individuals' wealth. With business wealth and private wealth, the banking sector loss in that period was €140 billion wiped out. That was the cost. Brian Cowen and Brian Lenihan - Lord have mercy on him - did what was required, which was an enormous recalibration in one budget that was a €6 billion change. It was unheard of and when we look back we can ask how we did it and how it happened. Nobody wants the troughs and spikes to have to do that again. This is what Sinn Féin wants us to do again. There has never been more hypocrisy in Irish politics than what Sinn Féin is pedalling right now. I wanted Senator Conway-Walsh to stay and listen to what I am saying. Sinn Féin wants the Government to tax, tax, tax more and more, and spend, spend, spend more and more. That cannot happen. That has been tried during the period 2004 to 2010. It is not credible to do what Sinn Féin wants us to do. We cannot do it. There would be troughs and spikes. People would lose their wealth again and lose the expenditures that we want to put into services because the health budget and the social protection budget would be cut, possibly by €20 billion. If we have to go back to Sinn Féin's version of things a massive cut would happen and health is the next biggest expenditure item. I put it to the Senator that Fine Gael does not want to do that and I think she knows that. I have always said that we do not have everything right but we have not got everything wrong.

The infrastructural plans are ambitious. We need more public housing and we are spending more on this than ever before with €2.4 billion funding. There is a challenge in doing this that we add to the prospect of overheating the economy. Again, we are trying to do a balancing act. Senator McDowell referred to a responsive electoral cycle and this is what we are doing.

The Taoiseach has a strong personal view on tax cuts for medium earners. There are very few jurisdictions where people who earn the average industrial wage are in the higher tax brackets. When one adds in social protection payments the Irish higher tax bracket is 59%. How does a person who earns just over €35,000 go into that tax bracket? In the UK a person can earn £50,000 before he or she gets into the 50% tax bracket. It is a huge drag in trying to get foreign direct investment companies of every hue and colour to establish in Ireland, and the one reason is that the level of personal tax here is higher than in most other jurisdictions.

On another aspect of personal tax - and Senator Rose Conway-Walsh and Sinn Féin's farcical tax analysis - the tax take on income has doubled in quantum from the lowest point to where we are now in 2019. It has gone from €11 billion to €22 billion. That is an enormous doubling in a short period of time. I have made the point on the floor of this House previously, that this could not happen in any other jurisdiction, but it has happened here. The income tax take in Ireland from those on the average wage is too high and Fine Gael is trying to do something about that. During last November's Fine Gael conference the Taoiseach made the point that we will do this if the tax revenue's allow, but if they do not then it might take longer. We will be careful in the upcoming budget and we will deal with people as best we can.

Senator Boyhan spoke of budget transparency. There has been a huge improvement. Many of us remember the era when it was crash, bang, wallop and it all happened on one day and everything was a State secret until the morning. Given where we started we now have the stability programme update, SPU, and the summer economic statement, with papers having been put in place. We also have the Oireachtas Joint Committee on Budgetary Oversight and the establishment of the Irish Fiscal Advisory Council, IFAC. Deputy Michael Noonan has been quoted. IFAC is there to do a job, which is to scrutinise what we are doing economically, and it is doing that. IFAC had some harsh things to say but that is its job. Our job in the Department of Finance is to listen and take on board what IFAC says, and we do. IFAC also said that a lot of things were being done correctly, but this was not reported at all. This, however, is the manner of reporting.

Reference was made to public understanding of debt and the budget. I believe this is a good plan and how to present the information in such a way that the public will understand it easier and better is something we could take into consideration. I will be honest with Senators that I was in the Oireachtas for a couple of years before I could get my head around the arithmetic on budget day. I am not sure that anybody who says they are able to very quickly understand it all is telling the truth.

Senator Ó Donnghaile spoke about indebtedness. I put it to the Sinn Féin Senators that 2.3 million people are currently working in the State. We have never had 2.3 million people working before. This is an outstanding achievement. This Government got people back to work who potentially had no prospect of getting back to work. We are close to full employment and it is absolutely outstanding.

I also want to touch on some important aspects. We have to continue our capital projects now and in the future. The first victim of the 2004-2008 Government was the capital budgets, which nearly stopped. That was a mistake. That spending should have continued. It is, however, easy to look back now and be wise with hindsight. Capital projects should have been funded and the M20 should have been built by now. The M20 will not just connect Cork and Limerick, it will also connect Cork with Galway. These are our second, third and fourth biggest cities. I am aware that some people think it is wrong to build roads and motorways but I absolutely disagree with that. Ireland is a large island with a small number of people and now we are better at transporting people around it. It is important to get those types of infrastructure projects over the line.

The corporate tax analysis will be presented within weeks. We have to present that analysis and if one looks at where Ireland has come from a number of years ago it has gone from €4 billion to €10 billion. This is a result of the changes made by this Government on the corporate tax analysis. It will not change from the headline rate. Senators Ó Donnghaile and Conway-Walsh have left the Chamber but I would put it to them that populism is dangerous. We see where populism has got the UK with Brexit. We must be careful to call out the Sinn Féin strategy, which is the old Fianna Fáil strategy and it is wrong. I am not having a go at Fianna Fáil but the mistakes of the past have been learned.

I find it a little amusing that Eir presented its numbers for the broadband plan of some €3 billion. Then they were through. I think it is great that Eir is able to do it now for €1 billion. An aspect of this certainly needs to stand up to scrutiny. If it is €1 billion now why was it not €1 billion when Eir presented its plan for €3 billion when the tender went in?

On the €700 million and Senator Dolan's query, there is a figure for demographics. There is €700 million in unallocated funding but the €2.1 billion package, which is allocated, has €500 million for demographics. As our population increases and as more people require health and education, €500 million is pre-built into that. There is €400 million for the public sector pay deal, which is agreed and in place. Some €300 million is allocated for carry-over costs from the figures calculated to start in 2019 but which will flow into 2020. When one adds up this €500 million, €400 million and €300 million one can see that much of the €2.1 billion that is allocated is allocated for demographics, for the public sector pay deal and for carry-over costs.A significant part of it will be forward spent. The €700 million has not been allocated but that will be done by the Government, with the agreement of Fianna Fáil, under the confidence and supply arrangement. That is to be done between now and the budget, based on what the Taoiseach expects to happen in the context of Brexit.

In light of Senator Dolan's suggestion, I will request that the Department of Finance consider a citizens' guide for people with disabilities. He spoke about people living on the edge. Some people want to paint Fine Gael as a mad, right-wing party. Fine Gael is a centrist party. Most politics is fought in the centre and most centrists have a bit of left and a bit of right. It is easy to paint people in one way but at least most parties in our jurisdiction operate in the centre. I support that because I believe it is the right way. aspect when compared with the politics of other jurisdictions. I support that and believe it is the right way.

Even during the financial crisis, the €20 billion social protection budget was maintained. That was quite an achievement. As I have often noted, very few jurisdictions could have brought in €11 billion in income tax and paid out €20 billion social protection payments in the teeth of that crisis. It was done to protect people on the edge. There remains a budget of €20 billion to protect those people and a budget of €17 billion for health. To put that in context, another €8 billion will be spent on the private health budget. When that is calculated by adding the two figures and dividing the sum by the number of people in the State, we spend more in Ireland on health than most other OECD countries. The amount is not the issue but rather how we spend it. As I have stated on dozens of occasions, it is difficult to reform a sector when people choose not to allow that reform to happen at the pace required.

On public services and social infrastructure, the latter comprises the social protection budget and the health budget. As already stated, I am pleased that most people in Ireland operate in the centre rather than to the hard left or hard right. That is good.

I have spoken for longer than I anticipated. In summary, we are in a very volatile period and that is how it will remain for some time. The British Conservative Party will elect a new leader at the end of July. I predict that the month of August will be extremely volatile. In September, the month in which party conferences are held in the UK, events will be even more volatile. That will be a better time for us to try to secure a deal between the UK and the European Union. I do not know if that will be possible but we must try. It has been very pleasing that, in the conversation on Brexit, Ireland has shown the benefit for a small nation of being supported by a continent during a difficult period. The other 26 member states of the EU have been superb in their support of Ireland. It is appreciated and we are grateful for it. I anticipate that the support will remain and may even get bigger and better. Many Brexiteers have been surprised by that because the expectation was the opposite. It was expected that Brexit would start the downfall of the EU but, in a peculiar and semi-perverse way, it has strengthened the it. Brexit has shown Ireland and the other small member states, of which there are many more than the larger ones, the benefit of being in a club and of being supported by a continent rather than being isolated and having the potential to be picked off when faced with difficult circumstances.

Ireland faces difficult circumstances. We have not hidden the figures; they are there for all to see. This could be a very disruptive period but we have the support of the EU and the Prime Ministers of 26 other member states. While there will be new Presidents and while a new Council, Commission and European Central Bank will be appointed, all those Prime Ministers have nonetheless supported our Prime Minister. The support of this Chamber, of parties generally in both Chambers and that which the Taoiseach has received show how much better it is to operate as a united group rather than with parties split or divided and causing disruption, as has been seen in the UK.