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Budget Statement 2018 (Continued)

Tuesday, 10 October 2017

Dáil Éireann Debate
Vol. 960 No. 1

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(Speaker Continuing)

[Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe] It means we will be doing the right thing at this point in our economic cycle, the right thing for those who want sustained investment in our public services and the right thing by those who will bear the burden of our debt in the future.

The Rainy Day Fund

  To further protect the economy and the national finances, I propose to establish the rainy day fund and transfer at least €1.5 billion to it from the Ireland Strategic Investment Fund to start it off. As set out in the summer economic statement, the annual contributions of €500 million will commence in 2019 after we have achieved the MTO in 2018. This is another important step in strengthening our national finances in a changing and risky world, especially in light of Brexit. To progress this initiative, I am publishing the consultation paper on the establishment of the fund today and I look forward to hearing the views of the Oireachtas on this matter in due course.

Sustainably Growing Investment

  I now want to confirm that total voted expenditure in 2018 will amount to just over €60.9 billion. This will equate to €12,700 for every person in our country. Of that sum, nearly €55.6 billion has been allocated to current expenditure to ensure the continued delivery of sustainable and high-quality public finances. This reflects the Government’s continued commitment to rebuilding and investing in our public services.

  Total voted capital spending for 2018 will amount to over €5.3 billion, an increase of €790 million on the 2017 allocation. This is central to our national response to Brexit. It will allow our State and agencies to properly plan major projects over the medium term, while also ensuring that communities and businesses can plan ahead. This will result in capital expenditure doubling between 2015 and 2021, from €3.7 billion to €7.8 billion in gross voted capital.

  This will bring Ireland’s public investment levels to among the highest in the European Union and will ensure we can deliver crucial projects in areas such as housing, roads and schools. A number of such projects are already having a real impact on improving people’s lives. To give some examples, last month the new M17 was opened between Gort and Tuam ahead of schedule and a new emergency department was opened at University Hospital Limerick , as was the renovated Páirc Uí Chaoimh. In Dublin, the Luas cross city will soon begin to carry its first passengers.

  This increased investment will deliver better public services, promote more balanced economic growth and help address the many challenges such as Brexit and climate change. We cannot repeat old mistakes. Ramping up capital expenditure by too high a level, for example, would be a dangerous and simplistic policy. It would very clearly risk excessive inflation, and the overheating of the construction sector and, therefore, our economy. This, in turn, would deliver poor value for money for the taxpayer.

Budgetary Stance

  The guiding principle in these choices is choosing the right budgetary stance. At the time of the summer economic statement, I announced that the unallocated fiscal space for 2018 would amount to a little over €500 million in nominal terms, and €180 million of that has since been committed to the public service stability agreement.

  To augment the resources for distribution in the budget, I am raising additional revenues of the order of €830 million, giving a total budget day package of €1.2 billion. Expenditure will receive an additional €898 million, in that €684 million is being used to fund current expenditure and €214 million will fund additional capital expenditure. I also will be introducing tax reductions on income worth €335 million.

  The budget increases gross voted current expenditure by over €1.8 billion or 3.4% compared with the expected outturn for 2017 excluding the water charge refund. This growth in current spending is less than the forecast real growth in the economy of 3.5%. This is dramatically different to the levels of increases in current expenditure the last time this country was in a full-employment situation between 2000 and 2007, when the average annual increase in current spending was an unsustainable 12%.

  I am increasing voted capital expenditure by €790 million from €4.5 billion this year to just over €5.3 billion in 2018, an increase of over 17%. This is about protecting our country’s economic future while investing in our schools, hospitals, child care and housing.

Housing

  Housing remains a crucial priority for the Government. I am very aware of the corrosive impact of homelessness on those who are homeless and on our society. I am also aware that many people living in the private rented sector wish to find more appropriate accommodation or move to their own homes but at the moment cannot do so.

  Our actions to support the sector, though, are bearing fruit. Commencement notices for new housing are up by 47%. Planning permissions are up by 49%. We are increasing our ambitions for what we will build directly.

  I am allocating a total of €1.83 billion for housing in 2018. Some 3,800 new social homes will be built next year by local authorities and approved housing bodies. I am increasing the housing assistance payment, HAP, scheme by €149 million in 2018. This will enable an additional 17,000 households to be supported and accommodated next year. This increased funding will also support the roll-out of the HAP place finder service across the country, thus allowing more households to move out of emergency accommodation and into rental properties.

  Funding for homeless services will be increased by a further €18 million to over €116 million to ensure that those who are homeless or in emergency accommodation and those who provide support for them have more resources to do this vital work next year. An increase of €31 million has been allocated to the social housing current expenditure programme. This will bring the total to €115 million and will deliver an additional 4,000 social housing homes next year.

  In addition to these extra resources next year, I am today also announcing an additional commitment to further accelerate the delivery of social housing from 2019. I am providing an extra €500 million for the direct building programme that will see an additional 3,000 new build social homes by 2021, as well as increasing the existing Rebuilding Ireland target of social housing homes to 50,000, of which 33,500 will be delivered through construction. The real way to tackle homelessness and to make housing more affordable for everyone is to increase housing supply.

  The existing local infrastructure housing activation fund is geared up to contribute to a significant expansion in housing delivery, with over 30 projects supporting the construction of 20,000 homes by 2021. I am providing additional Exchequer funding of €75 million for a second phase of the fund, which will also support the local authority delivery of affordable housing.


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