Seanad debates

Wednesday, 14 October 2020

10:30 am

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank the Cathaoirleach. This is my first address to the House and I am delighted to have the opportunity to come to the House to say a few words about budget 2021. I will engage with Senators on the different issues they may wish to raise.

In framing the budget, the Government has been faced with a level of uncertainty without precedent in modern times. We continue to live with the Covid-19 pandemic and also face the prospect of the United Kingdom trading with the European Union on World Trade Organization terms from 1 January next. In the face of these extraordinary challenges, budget 2021, which I prepared with the Minister for Finance, Deputy Donohoe, seeks to protect our economy and society by supporting businesses and livelihoods, and investing in key public services as we continue to live with this virus. Importantly, the budget also seeks to make progress on key programme for Government commitments that will benefit society over the longer term, namely, implementing Sláintecare, building more houses, greening our economy and supporting the labour market. As I said yesterday, we cannot wait until next year to make moves to further protect people and businesses. That is why I have made available an additional €500 million in exceptional expenditure measures between now and the end of the year. These measures include extending the commercial rates waiver in the fourth quarter of the year, which will help the funding position of local authorities and provide vital relief for businesses, and allowing Irish Water to unlock new housing development by providing it with an extra allocation of over €40 million for works between now and the end of the year. We have also provided €80 million to the Department of Education and Skills to accelerate works on its school building programme and to support its ICT and minor works schemes.

Many Senators have raised a number of the issues to which I am about to refer. We are now in a position to provide immediate funding for voluntary disability service providers, voluntary hospices and the wider community and voluntary sector through an additional allocation to the Covid-19 stability fund, which is so important for them. To clarify, there will be €20 million for the voluntary disability service providers, €10 million for voluntary hospices and €10 million of additional money will be invested in the Covid-19 stability fund for community, voluntary organisations and social enterprises. This is in recognition of the real difficulty that many of those organisations have had in fundraising over the past six months and the impact that this has had on their funding position.

Looking to next year, the key expenditure priorities for budget 2021 focus on: the provision of an envelope of €8.5 billion for our public services in order to address the challenges of Covid-19; a recovery fund of almost €3.5 billion to be used for measures to support the economy as we respond to the twin economic challenges of Brexit and Covid-19; incremental improvements in the delivery of public services across all areas of Government; and meaningful improvements in key priority areas like healthcare, housing, climate change and education.

The level of resources for which provision is made in budget 2021 is without parallel. The Revised Estimates for Public Services for 2020 published last December, which seems like a very different time now, set out an overall gross voted expenditure allocation of €70.4 billion. Taking into account the €3.4 billion relating to the recovery fund, public expenditure will increase by €17.4 billion above the expenditure planned for this year before the emergence of Covid-19 to €87.8 billion in 2021. This gives a sense of the scale of the additional expenditure we are making available to support the economy and public services. I acknowledge that we will be borrowing a significant amount of money in the short term in order to pay for these measures. Going into this year, our debt was in the region of €200 billion. By the end of next year, it is likely to be in the order of €240 billion. Notwithstanding that, this is the right package and the right thing to do. When the economy is weak, the State needs to step up, deliver investment and support and pursue counter-cyclical policies. That is exactly what we are doing.

Many people will have concerns about the level of borrowing. At this time, however, borrowing is the prudent thing to do. Interest rates are at record low levels and the funds raised will allow us to protect public health and livelihoods and invest in much-needed infrastructure across the country. I am confident that a renewed economy can generate tax revenue to ensure that our national debt will be on a sustainable footing.

In addition to taking these necessary steps to deal with the challenges posed by Brexit and Covid-19, we also need to make progress in the areas of health, housing and tackling climate change. This is why core health expenditure is to increase by €1.9 billion next year. This expenditure is targeted at building up permanent capacity and resilience in the health service. The funding provided will increase the permanent number of critical care beds to 321 by the end of 2021, add a further 1,146 acute beds and 5 million in additional home care hours on top of the 19 million hours provided in 2020. The provision of mental health services is a key priority for this Government, which is why I have made €38 million available to implement Sharing the Vision, our national mental health strategy.

Critically, the planned increase in capacity in the health service will be supported by funding for an increase in staffing right across the service of up to 16,000 people. I and colleagues in government have studied the lessons from past recessions when capital spending was cut, which exacerbated the economic downturn. We are not going to make that mistake. We are making a significant investment in the future of the country and progress in health and a range of other areas will be supported by a record level of Exchequer capital investment next year. Over €10 billion will be spent on major roads projects and active travel measures, and there will be significant investment in public transport to ensure that our recovery is a green one.

Building projects across the education sector will increase capacity for students and teachers. As well as ensuring a safe learning environment, it is important to note that these initiatives will provide employment opportunities for contractors and staff across all parts of the country. In addition, investment in broadband and in our Defence Forces will be prioritised.

A key priority of the Government is to address homelessness and the numbers of people on social housing lists. This will require that the State return to directly building new social and affordable houses in significant numbers. Such a programme, extending over a number of years, will increase supply and reduce price pressures for struggling individuals and families. The Department of Housing, Local Government and Heritage will receive an additional €500 million in capital funding next year, bringing the total capital allocation to €2.8 billion. This funding will support the delivery of 12,750 additional build, acquisition and leased units in the social housing stock. Of these , 9,500 will be build, with 800 targeted acquisitions and 2,450 leased homes. We have made the very conscious decision that we are going to shift the emphasis on to direct builds by local authorities and approved housing bodies. There will always be a need to work with the private sector and avail of turnkey projects and acquisitions, but we want to tilt the overall balance to be in favour of building public housing on public land.

In recognition of the massive challenges being faced, Government is providing significant supports for our labour market and for businesses. This builds on the measures delivered in the July stimulus, such as the extension of the pandemic unemployment payment, PUP, and the employment wage support scheme to the beginning of April next year.

Next year, we will also provide the investment for upskilling thousands of workers, including through: retrofitting courses; 4,000 new apprentices under the apprenticeship incentivisation scheme; supports through our local enterprise offices and Enterprise Ireland to assist SMEs and companies with the negative impact of Covid-19; and significant investment in tourism, arts, culture and sport to protect those most impacted upon by the Covid-19 restrictions.

We will also protect our economy from Brexit insofar as we can, with €340 million of voted expenditure allocated for next year. This includes an additional allocation to finalise work at our ports and airports and for hiring additional staff. As we seek to protect our economy from the impact of a no-trade-deal Brexit, the recovery fund we have established represents a significant allocation of resources that will enable us to respond in the most appropriate way in the context of the sectors of the economy that have been most affected.

Addressing the challenge of climate change will require an whole-of-government approach. All of our policies and strategies must point in the one direction if we are to make progress in achieving our long-term climate targets. The carbon tax is part of this and, as I said yesterday, every single additional euro raised through the increase in the tax will be returned to citizens by means of a package of supports to protect vulnerable people, secure a just transition and reduce our carbon footprint. Other changes to motor tax and large increases in funding for energy efficiency schemes will also make a difference.

The 2021 allocation for the Department of Education and Skills is almost €9 billion. This will support children with special education needs, the reduction in the pupil-teacher ratio at primary level and investment in school buildings.At third level, €3.3 billion will provide for a range of initiatives and deliver some respite for students at a really difficult time for them.

We all recognise that tourism is a sector under considerable pressure. Alongside the extensive tax measures announced by the Minister for Finance, Deputy Donohoe, the Government is providing an additional €55 million for a tourism business support scheme and €5 million for tourism product development, which I believe will be of considerable assistance at this time.

Similarly, as we all know, Covid-19 has had a devastating impact on arts, cultural and sporting activities. The allocation of €50 million in live entertainment supports and a €50 million increase in Arts Council funding, to €130 million, along with an increase of €36 million in funding for Sport Ireland, are in recognition of the Government's determination to support and preserve the cultural and sporting life of our nation, despite the unprecedented challenges.

In committing to a total expenditure package of €87.8 billion for next year, the Government is determined to take the necessary actions to protect our people, support our workers in returning to employment and help our businesses to recover. We are in the midst of a national economic fightback. It is my firm belief that we will emerge from this crisis with greater capacity in the health service, more effective training and education supports and a model of housing provision that reflects and addresses the needs of families across the State. It will take time but I am confident that, through a combination of government support, entrepreneurial effort and the skill and dedication of employees, we will restore employment to pre-crisis levels. Ultimately, the unity of purpose we have shown in tackling the health aspects of the Covid-19 virus is exactly the same spirit that will allow us to overcome the economic crisis. I have no doubt that Ireland will rise to the challenge.

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