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Finance Bill 2014: Second Stage (Resumed) (Continued)

Thursday, 6 November 2014

Dáil Éireann Debate
Vol. 857 No. 1

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Deputy Stephen S. Donnelly: Information on Stephen Donnelly Zoom on Stephen Donnelly In a moment I will talk about the specifics of the budget and things I would like added but first I would like the opportunity to review budget 2015 to see whether it stacks up against values I hold dear, along with other Members of Dáil Éireann across all parties.

Budget 2015 is regressive. The combination of water charges and income tax changes means this budget will take money from lower income households and give it to higher income households. This is not my opinion - it is a mathematical certainty. Previous budgets from this Labour and Fine Gael Government were regressive and Economic and Social Research Institute, ESRI, analysis supports this assertion. In other words, in those budgets the Government asked those who had least to contribute most but at least it asked everyone to contribute. This is the first year the Government has introduced a budget that takes cash from lower income households and gives it to higher income households. In real terms this means people on the minimum wage will lose money as a result of this budget and that money will be given to people on higher wages, like the Members of the Oireachtas. This seems neither a reasonable nor proper thing to do.

Budget 2015 is fiscally irresponsible. Until now this Government could take some credit for making hard choices and lowering the deficit. I do not agree with many of the choices that were made previously but at least the Government could say it met and exceeded targets that were set. The Troika is not out of the country a wet week. In the April stability programme update the Government identified measures for a deficit reduction target of €2 billion but less than nine months later, in what may be a pre-election budget, the Government reversed engines by €3 billion. This is not a marginal change - the Government has given it the full Bertie. However, it looks as though the Irish people may have changed. Despite this largesse, potentially before an election, Government satisfaction ratings continue to drop in the polls. Perhaps the public has decided the Fianna Fáil style of politics should no longer be tolerated.

Budget 2015 wastes public money and health care provides a clear example. This year health care spending will overrun by around €500 million. Some parts of the health service are run very well and others are run extremely badly and the Government could have aimed to improve procurement. I identified how around €1.1 billion could be saved over several years by forming a joint venture with the National Health Service, NHS, in the UK and mandating generics as was done in England and Wales. The Government could have examined the operation of the Health Service Executive to see how hospitals could be better run with better preventative care. It could have studied new and better ways to buy drugs, equipment and devices but instead the Government said to the health service "you overran by €500 million this year so you can have an additional €500 million next year". That is not a responsible way to handle public money, in my opinion.

The biggest failure of budget 2015 is the failure to invest in education. The net total increase in spending on education between this year and next year is €46 million - current expenditure is up €60 million and capital expenditure is down €14 million. This change amounts to less than 0.5% of the education budget and is also less than inflation. In real terms, this budget represents yet another cut to education and that is a really dumb thing to do. A school principal in Wicklow recently said to me that the cut in the capitation grant to his school meant he could not heat the school to the necessary extent. He asked me what he should do and I submitted a parliamentary question to the Minister for Education and Skills, Deputy Jan O'Sullivan, and asked what school principals should do when capitation grants are being cut. I pointed out that the principal to whom I spoke had run the numbers and could not keep the heat on when it was needed. I asked for the advice of the Minister and the reply I received said "capitation provided for general running costs and funding provided for caretaking and secretarial services may be regarded as a common grant from which the board of management can allocate according to its own priorities". Let us consider what this actually says to schools - capitation grants will be cut and if this means schools cannot keep the heat on the money should be taken from somewhere else. We are all trying to help schools in our constituencies and we all know they do not have money elsewhere to draw from. What should schools do? Perhaps they should have fewer tables and chairs for children and provide less paper. The response I received essentially says that if the heat must be turned off that is the school's problem and not the problem of a Department, such as the Departments of Finance, Public Expenditure and Reform and Education and Skills. This is not an acceptable way to govern this country.

Budget 2015 is nakedly political. We have heard much praise of the 11 measures that will return profits to people who own land and I have no problem with them. I have examined these measures and some seem very sensible. It is interesting, however, that Fine Gael, the farmers' party, has 11 measures to return profits to landowners but has neither 11, ten, eight nor five such measures for any other sector of society.

Budget 2015 attacks the self-employed and this is extraordinary. The Government keeps talking about the importance of entrepreneurs and the Taoiseach attended the recent web summit but the budget introduces a higher rate of tax for the self-employed. Again, this is extraordinary and I asked a few people who were previously involved in policy why it has been done. They said the feeling in the Civil Service and amongst TDs, all of whom are on public sector pay and pensions, is that self-employed people can reduce tax exposure in various ways so efforts should be made to compensate by taxing them more. As we all know though, the opportunities for a self-employed person to lower his or her taxation burden have been more or less cut out in recent years. The old mindset still remains. We try to encourage enterprise and entrepreneurship and recognise that the web summit was fantastic. We tell people to set up businesses, invest money, take risks and work hard but then we tax them more than civil servants and politicians in Dáil Éireann who, between them, make the rules and are safe. If the entrepreneurs fail they do not get the same social protections as everyone else but we claim to support them. This is hypocrisy at its worst and it must stop.

Budget 2015 is devoid of the information we all need. Regardless of one's view of the budget I hope all Members of Dáil Éireann agree that we have not been given sufficient information to do our jobs and interrogate it. Only Dáil Éireann can vote through finance Bills and we in Dáil Éireann are constitutionally obliged to hold the Cabinet to account. Along with others, for some years I have requested that a distributional analysis of the budget be provided setting out who gives, who takes, who wins and who loses. When I asked the then Tánaiste, Deputy Eamon Gilmore, for this information he accused me of being an opportunist. In this Chamber I recently asked the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, for such a distributional analysis of the budget but he refused because he said it would not be reasonable to assess crisis-era budgets in such a way. This is a preposterous thing to say to Members of Dáil Éireann.

A line item in the budget applies €900 million to what are called "demographic pressures" - I have no idea what such pressures are and there is no reference to them in the documentation. Hundreds of millions of euro in additional expenditure has been granted to something called "existing services" and, again, there is no further reference to this. About 36 hours ago in the finance committee I asked the Minister for Finance, Deputy Michael Noonan, for a reasoned document explaining why Ireland should not sign up for the financial transaction tax. He may be right that we should not sign up but we do not know and he refused to provide such a document. He said his job is to govern and make policy and that was the end of that - he was not minded to provide Parliament or the Oireachtas Committee on Finance, Public Expenditure and Reform with his rationale behind important decisions on taxation.

I am running out of time so I will send on the range of proposals that I would like the Government to consider. A clause in the Constitution has been interpreted in a way that means no Deputy or Senator can suggest an amendment to legislation that will cost money or raise money. In the context of the budget, if we in Dáil Éireann cannot propose anything that will cost money or raise money we cannot engage meaningfully on Committee Stage.

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