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Financial Resolution No. 2: General (Resumed) (Continued)

Wednesday, 12 October 2016

Dáil Éireann Debate
Vol. 924 No. 2

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(Speaker Continuing)

[The Taoiseach: Information on Leo Varadkar Zoom on Leo Varadkar] The Government and the Oireachtas will be busy with an ambitious legislative programme that includes many issues of vital interest to our people.

The budget marks the start of a new phase in Irish life, politics and Government. It shows the partnership Government is working and delivering. We do not have the luxury of playing politics with people’s lives. We know that after all they have given and all they have endured, people now have the right and the expectation to look forward to a better and more hopeful future. They want to be able to look at the Government and see that all its Members have a sense of where they and their families are at in their lives. The budget is a first step but an important step. There will be no going back to the days of boom and bust. We must now move forward in partnership. In this context, the contribution of the Independent Alliance and members of my party, and our conversations with Fianna Fáil in respect of the confidence and supply agreement, are to be commended in the interests of the country. On this basis, I commend the partnership budget to the House.

Deputy Micheál Martin: Information on Micheál Martin Zoom on Micheál Martin The election of the Fine Gael and Labour Party Government in 2011 brought with it a decisive shift in budgetary policy. A progressive approach was replaced with one weighted to favour the very wealthiest. Five out of the five most recent budgets were regressive. Each year we heard speech after speech from Ministers talking about fairness, but the reality was always one of budgets which made Ireland a more divided and unfair country.

In February we had an election campaign in which a self-satisfied Government called on the people to keep it going. The core of this was a promise of US levels of taxation and the single largest tax cut ever promised in an Irish election. The people heard this and, in overwhelming numbers, they rejected it. No one can doubt the people voted for a significant change in policy. The core of this is defined by a demand for greater fairness and urgency in addressing a mounting series of crises which the previous Government allowed to develop. This budget marks one important move forward; the regressive and right-wing ideology of Fine Gael has been curbed. That party's plans for massive tax cuts weighted to the wealthiest have been stopped, and Ireland is not heading down the road to US levels of taxation and public services.

The budget is more progressive than any of the five which preceded it and it begins to undo some of the worst damage done by the previous Government. However, it consists of a series of individual measures which rarely fit within any coherent strategy. In most areas, the impact of specific proposals will be reduced because the Government has no idea of what it is trying to achieve and, of course, the policy of overspinning and underdelivering continues unchanged. This has nothing to do with the Government's minority status but everything to do with its drift and lack of either urgency or ambition.

The budget is not a major move forward but it is an important change of direction. It is, to quote the Minister for Social Protection, Deputy Varadkar, yesterday, the first fair and socially just budget in a very long time. It is a stark but honest admission that he and his colleagues used their dominant majority to introduce unfair and socially unjust budgets. The one and only reason for this change of direction is the confidence and supply arrangement with Fianna Fáil. This is not our budget, and it certainly does not fully reflect the policies on which we fought the election or included in our proposed alternative programme for Government, but it is a budget we have influenced in important ways. Unlike others, we have not taken a destructive all or nothing approach to working for the people we represent. We believe that every Member of the House has an obligation to be constructive. Such arrangements are common in Europe but have not been seen here before this year.

Fianna Fáil won a major mandate from the people in February based on a very clear set of promises. Alone of the Deputies elected to the Dáil, Fianna Fáil Deputies voted three times to remove the previous Government and put in place the only possible alternative Government. All of the speeches we are hearing from other parts of the Opposition, particularly the different shades of left, must be filtered through the fact they did nothing to remove Fine Gael from Government, so I ask them please to give us a break from their self-righteous posturing about us allowing the Budget to be passed. It is nothing but empty and cynical politics, which simply reinforces the fact they have no interest in using their mandates constructively.

It is hard to listen to accusations from Deputy Mary Lou McDonald about Fianna Fáil protecting its hide given her party's history. As far as we can see, and subject to implementation, the budget meets the basic commitments contained in the confidence and supply agreement. There are items which we believe should have been addressed in this year’s budget, and the handling of the process has been unacceptable, but the core redirection away from Fine Gael’s ideology has been achieved and therefore we will, of course, honour our agreement concerning the budget. However, let no one be in any doubt the lack of strategic purpose, the non-transparent figures and the shambolic process is not sustainable.

The basic economic background to the budget is positive in comparison to many countries, but contains very important causes for concern. Past strategic investments in education, skills, research, infrastructure and a pro-enterprise tax regime remain the primary drivers of economic growth. Completely absent from the speeches and documents issued yesterday was any engagement with the fact that we cannot stand still and we cannot take growth for granted. Just as the global economy is rapidly changing and throwing up new threats and opportunities, Ireland has to keep innovating if it is to achieve and sustain high living standards. This is a Government which has a fiscal policy and a political objective but no general economic policy. It has no proposals concerning any new strategic direction or objectives for the economy. The basic plans produced in the decade and a half before the previous Government took office remain in place, often repackaged in the covers of shiny new documents but with no substantive change. This is what is at the heart of the drift we see. For example, the two-tiered nature of the recovery, the split between high-skills employment and increasingly insecure employment, is the direct result of failing to engage with new problems.

The weak and directionless response to the Brexit vote is deeply serious. The budget should have included a number of specific scenarios for the impact of Brexit, but instead it is full of repetition of small measures, which are just tokenism. Brexit demands and requires further action. The list we received yesterday was very disingenuous. There was expansion of some issues already in previous budgets, but it was in no shape or form a coherent response to Brexit. The base scenario in the budget assumes an exchange rate for next year of 85 cent to a euro. Yesterday the exchange rate was 91 cent to a euro. Given the behaviour of the May Government, assuming that sterling will strengthen by more than 6% is worse than foolish. The Government needs to address this core issue because the devaluation of sterling represents the most immediate and very serious threat to Irish owned businesses exporting to the British market. It also has serious implications for the Border counties and North-South trade. The impact is already being felt and we have seen the fall out in the horticultural industry. There is no evidence in anything in yesterday's budget which seriously addresses these core issues. As I have stated, the negative impact of Brexit is not hypothetical, it is already hitting our exporters. The slow and partial response of the Government is a direct threat to economic growth. IBEC is calling for a currency crisis package and this should be considered. I would have thought it should have formed part of yesterday's budget.

In infrastructure, research, transport, industrial priorities and many other critical areas, there is no substance in the budget or in the Government’s ongoing work. This has nothing to do with the Government’s lack of a majority. I know there are those who wake up in the morning and have a fit of the vapours at the thought of a weak Government. They should remember we have just had five years of a Government with the largest majority in our history yet it failed to do any serious strategic planning and allowed problem after problem to escalate to crisis level, particularly in housing, homelessness and health.

Ministers have major policy resources available to them. Only they are in the position to develop detailed plans for their areas.

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