Tuesday, 8 October 2019
Budget 2020: Statements
The budget is based on there being a hard Brexit. I sat in the Dáil Chamber listening to the Minister for Finance, Deputy Donohoe, speaking for an hour and seven minutes, followed by contributions from Deputies Michael McGrath and Cowen. The Minister of State outlined much of what is in the budget, so I will not go into the detail of the various aspects. We all thought that some type of Brexit agreement would be achieved over the past three years but, unfortunately, it now looks more likely than ever that a no-deal Brexit will happen. We spoke on the Order of Business about how the British Prime Minister, Mr. Boris Johnson, and some of the people around him are looking for an opportunity to cut and run and seek an overall majority in an election. Regardless of the consequences for the United Kingdom, Ireland or other European Union countries, they are intent on their own political agenda for their own party political benefits. That makes it even more important for there to be stability in government at this crucial time in our nation's history. It is for this reason that Fianna Fáil is facilitating the passage of the budget through the Lower House.
The impact of a no-deal Brexit on the Irish economy and the Government finances cannot be underestimated. The Minister and various independent expert bodies have predicted up to 60,000 job losses and a potential loss to the economy of €6 billion. The political ramifications for the peace process are enormous. Fianna Fáil has ensured that budget 2020 offers support to the sectors and industries that will be most impacted by a crash-out Brexit, particularly agrifood, tourism and the small and medium enterprise, SME, sector. There will be approximately €1.2 billion set aside for Brexit measures, which is over and above the agreed budget parameter of an expansion of €2.8 billion in expenditure. An allocation of €200 million will be given across several Departments and agencies to increase the level of staffing, upgrade infrastructure at our ports and airports, and invest in information technology and facilities management. This will be spent regardless of what type of Brexit occurs. In a no-deal scenario, €650 million will be borrowed if needed, of which €110 million will go to enterprise, €110 to agriculture, €40 million to tourism, €390 million to other measures and €365 million to finance increased social welfare payments. While the package for a no-deal Brexit is welcome, the Government must ensure this funding, if needed, is rolled out as quickly and efficiently as possible. The moneys cannot be tied up in red tape and administration which could prevent companies from accessing the funding in a timely manner.
Fianna Fáil remains deeply dissatisfied with aspects of Fine Gael's governance of the economy, particularly in the areas of health and housing. However, we recognise that Ireland needs a stable Government at this critical time. Far from being the party of prudence, Fine Gael has presided in recent years over budgetary and capital mismanagement on a colossal scale. Since taking office, as outlined by my colleagues earlier, Fine Gael has spent at least €6.3 billion in excess of budget ceilings and has overseen the shambles that is the national children's hospital project, whose cost is seemingly out of control, and the national broadband plan. There is an obsession with spin, with announcements being made and measures introduced without an acknowledgement that those measures may not be implemented until, say, late the following year. That budgetary trick allows for lower costs in the current year, but the full-year cost is payable in the following years. The construction of the national children's hospital could cost well north of €2 billion, against an original estimation of less than €1 billion. The national broadband plan has yet to be signed off but is likely to cost nearly €3 billion, fewer homes than envisaged will be covered and, in the end, we will not even own the infrastructure.
Every year since 2012, Fine Gael has needed huge Supplementary Estimates to cover budgetary overspends, at a total cost of €6.3 billion. Last year, the health budget alone needed €645 million over and above the extra cost for the children's hospital. This year, an additional €300 million will be needed for the delivery of health services. Questions must be asked as to how the public finances are being managed. The Irish Fiscal Advisory Council, IFAC, in its pre-budget 2020 statement published earlier this month, reiterated its criticisms of Fine Gael in government and the slippage in expenditure plans. Its warnings in the report are stark, particularly when Brexit is factored into the outlook. The Fine Gael Government cannot afford any further slippage when it comes to expenditure, but it is extremely likely that the Department of Health and other areas of government will require supplementary funding again next year.
Corporation tax surges have covered much of the shortfall in funding to date. The Minister of State, when he was a Senator, was a fellow member of the Joint Committee on Finance, Public Expenditure and Reform when we looked at this issue. Since then, we have managed to raise huge amounts of corporation tax in excess of what was budgeted. That additional revenue is very useful and welcome but, without it, we would have been in serious trouble. Corporation tax receipts accounted for a record 18.7% of tax receipts in 2018 and the practice of using that over-performance to achieve budget balance targets carries significant risks. Within-year spending increases look set to arise again this year. Health spending looks likely to overrun, as I said, and the Christmas bonus will cost €300 million. In addition, the base level of spending on social payments in 2018 was higher than expected and, although official forecasts for 2019 were not revised accordingly, we could need another €500 million for Government spending in that area. All of these slippages show us that Fine Gael is not the party of fiscal prudence that it likes to pretend to be. For 2020, IFAC advised that the Government should stick to its plans for a €2.8 billion increase in spending, as set out in the stability programme update. If spending overshoots, this would reduce or eliminate the space we need for any unforeseen shocks.
We expect the usual criticism of the budgetary measures from certain parties. I will not bother mentioning any names, but some members of one of those parties are coughing behind me.